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Iran/Arms Transaction: Congressional Material: Joint Committee Report (4)
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Iran/Arms Transaction: Congressional Material: Joint Committee Report (4)
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Records of the Office of Counsel to the President (Reagan Administration)
Arthur Culvahouse's Office Files
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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Culvahouse, Arthur B.: Files
Folder Title: Iran/Arms Transaction: Congressional
Material: Joint Committee Report (4)
Box: CFOA 1130
To see more digitized collections visit:
https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives Catalogue: https://catalog.archives.gov/
THE WHITE HOUSE
WASHINGTON
November 2, 1987
MEMORANDUM FOR ARTHUR B. CULVAHOUSE, JR.
FROM:
ALAN CHARLES RAUL ARC
SUBJECT:
Declassification of Report: "October 1986:
Exposure Threatened"
This section of the Report is 27 pages long and arrived for
declassification on October 30. The salient points are noted
below:
P. 6 - "Poindexter called the Attorney General and asked him to
delay the investigations of SAT [regarding Hasenfus flight]
by the FBI and Customs. According to Meese, Poindexter told
him that the SAT employees were needed for the Iran
initiative. Meese also mentioned the Customs investigation
to Treasury Secretary Baker, who apparently did not act on
the request for delay. Meese told Associate Attorney
General Steve Trott to ask FBI Director Webster to delay the
SAT investigation for 10 days. On October 30 Trott called
Webster and asked him to delay all non-urgent investigative
activity regarding SAT, telling him that, without the delay,
the investigation could compromise sensitive hostage
negotiations. FBI headquarters checked with their Miami
office and was told the investigation could be delayed for 10
days. After more than 10 days had passed, Trott raised the
matter wit the Attorney General at the FBI's request, and
several days later Meese told him the FBI could proceed."
P. 15 - "Poindexter testified that he and Casey did not discuss
the diversion. Casey simply recommended, according to
Poindexter, that Poindexter seek the advice of White House
counsel with respect to disclosure of the diversion.
Poindexter, however, did nothing because he did not trust the
White House Counsel."
P. 21 - "According to North, the meeting with Furmark triggered
Casey to instruct North 'that this whole thing was coming
unravelled and that things ought to be 'cleaned up'
"
In response, North testified that he 'started cleaning
things up;' he 'started shredding documents in earnest after
[this] discussion with Director Casey in early
October
P. 23 - "The Fall Guy Plan Throughout the events of the
Iran/Contra affair, deception was viewed as a necessary
component. At the same time, according to North's
3
he 'was not a party to any plan to make Colonel North or to
make me, for that matter, a scapegoat. I He nevertheless
admitted that [periodically] Ollie would indicate that he
was 'willing to take the rap. I McFarlane flatly denied that
any 'fall guy plan' ever existed.
North testified that, but for the criminal investigation of
the Iran/Contra affair, he was prepared to go through with
the 'plan, resign in disgrace, and take the heat for the
President. (There is no evidence that the President was
aware of or condoned the 'fall guy' plan.) Nevertheless,
when an Independent Counsel was appointed an North was the
only person specifically named in the order of
investigation, North, who by then had retained counsel,
changed his mind and decided to protect himself. North
testified that he did not tell Casey or Poindexter of this
change in attitude."
THE WHITE HOUSE
WASHINGTON
November 2, 1987
MEMORANDUM FOR ARTHUR B. CULVAHOUSE, JR.
FROM:
ALAN CHARLES RAUL AGR
SUBJECT:
Declassification of Report: "Taken to the
Cleaners: The Iran Initiative Continues"
This section of the Report is 108 pages long and was received for
declassification on October 30. This chapter represents a merger
of two previous draft chapters reviewed by the declassification
committee entitled, "HAWK Parts for a Hostage," and "The Second
Channel." The text of the merged chapters is substantially
identical to its components.
P. 85n - "In discussing the plan for the release of the hostages,
North divulged to the Iranians classified materials of
particular senstivity."
THE WHITE HOUSE
WASHINGTON
November 2, 1987
MEMORANDUM FOR ARTHUR B. CULVAHOUSE, JR.
FROM:
ALAN CHARLES RAUL Ase
SUBJECT:
Declassification of Report:
November 1986: Concealment
This section of the Report is 53 pages long and arrived for
declassification October 30. The salient points are listed
below:
P. 1 - "The President, denying any arms-for-hostages trade,
wanted to say no more than that."
P. 5 - "The issue of public comment on the arms sales was
discussed during Poindexter's morning meetings with the
President on November 6 and 7. The President agreed that
'no comment' was the best policy given his hope, bolstered
by Poindexter, that additional hostages would yet be freed.
According to notes of the briefings taken by Rodney McDaniel
of the NSC staff, the President said that '[n]o way can
comment without further damage to changes of getting hostages
out. 1
Accordingly, on November 6, at an unrelated bill-signing
ceremony, the President stated in response to a reporter's
question that, 'the speculation, the commenting and all, on
[the Al-Shiraa] story' had 'no foundation,' although his
comments fell short of an outright repudiation of that
story. The President further stated that the speculation
about arms transactions between the United States and Iran
'is making it more difficult for us to get our other
hostages free.
P. 7 - "The President would have to make a statement. And so, on
November 10, he convened a meeting at the White House to
establish guidelines for that statement. Those in
attendance, in addition to the President, were the Vice
President, Shultz, Weinberger, Meese, Casey, Regan,
Poindexter and Alton Keel, then Deputy National Security
Adviser. The President said there was need for a public
statement, but he instructed his advisers to 'stay away from
detail.
P. 10 - "The meeting concluded as it began, when the President
had outlined the type of statement he wanted: 'We have not
dealt directly w[ith] terrorists, no bargaining, no ransom.
2
Some things we can't discuss because of long-term
consideration of people w[ith] whom we have been talking
about the future of Iran. 11
P. 18 - "The President thus committed himself [in his Nov. 13
address to the nation] categorically to the proposition that
there had been no trade of arms for the hostages and no
violations of law. Certain members of the NSC staff and of
the CIA, in turn, committed themselves to creating a version
of the facts for internal and public consumption that would
sustain this proposition."
P. 20 - "On November 12, 1986, Cooper sent a legal memorandum to
the Attorney General which concluded, among other things
that, so long as there was a Finding pursuant to the
Hughes-Ryan Amendment, the arms sales did not violate the
law.
P. 21 - "On November 17, Cooper received a draft chronology of
events in the Iran initiative prepared by the NSC staff. In
reviewing this chronology, Cooper learned for the first time
that arms had been transferred by Israel to Iran prior to
the January 17, 1986 Finding. Cooper informed the Attorney
General, who said that he, too, had been unaware of any arms
shipped to Iran prior to the January Finding.'
P. 22 - "In the morning on November 18, an executive branch
general counsels' meeting was held in the office of White
House Counsel Peter Wallison. This meeting was attended by
NSC counsel Thompson and by State Department Legal Adviser
Abraham Sofaer. Sofaer and Wallison expressed concern at
the meeting when Thompson refused to inform them of the full
facts surrounding the Iran arms sales. Sofaer pressed on
this point, and Thompson replied that he was acting on
instructions from Poindexter. He said that the
Congressional leaders would be given all the information
they needed to know, but that there was no need for the
President's counsel or the State Department's Legal Adviser
to know any more than Thompson was saying. Thompson sought
to reassure Sofaer and Wallison, however, by asserting that,
from a political standpoint, matters 'seemed calm and the
[Congressional Intelligence] Committees seem to be accepting
the position of the White House. I Sofaer did not accept
this explanation and sought a meeting with Poindexter, which
took place later that day."
P. 23 - "During the same day, November 18, Poindexter and Casey
spoke by secure telephone. A transcript of their
conversation indicates that they discussed meeting to
prepare for their Congressional briefings and for the DCI's
scheduled November 21 testimony on Capitol Hill. Poindexter
told Casey that the NSC staff had been 'putting together all
the chronologies and all the facts that we can lay our hands
on
With respect to the proposed preparation
3
meeting, Casey asked whether Poindexter intended to have a
lot of people present, specifically mentioning 'State' and
'Defense.' Poindexter responded that, 'I'd like to spend
some time just the two of us
Ed Meese
indicated
he should want to be helpful and so he would
like to be in at least one of the meetings.
P. 24 - "In the morning on November 19, 1986, Regan and Wallison
discussed the legal problems raised by the pre-Finding
shipments of arms by the Israelis."
P. 25 - "On November 19, the President vouched for facts which
were wrong. In his nationally televised news conference,
the President made the following assertions -- all of which
were incorrect
"
P. 26 - "Although the President denied any involvement in the
sales and said he could not explain the role of Israel, the
Israeli role had been mentioned prominently in the cover
memorandum on the basis of which the President signed the
January 17, 1986 Finding permitting the sales to go forward.
Further, while the President also stated at his news
conference that the United States had not condoned the
pre-Finding Israeli shipments, he told the Secretary of
State that day that he had known of the November 1985
shipment of HAWK missiles by Israel."
P. 27, 54n - "According to contemporaneous notes made by Shultz's
Executive Assistant, the President made this statement to
Shultz on November 19 prior to the press conference."
P. 31 - "Poindexter acknowledged only that he had instructed
North to omit any reference to the diversion. Otherwise,
both Poindexter and McFarlane claimed that they tried to
paint a true picture in the chronologies, and that any
failures were the result of faulty memory or, in the case of
McFarlane, an effort to 'gild' the facts. The record
refutes this claim -- for the 'errors' in the chronologies
were not simply incorrect dates or imperfect renditions of
meetings, but wholesale distortions of key events."
P. 33 - "Then, three separate discussions occurred during the day
on November 18, between North and each of Keel, Poindexter,
and Armitage, concerning the legality of the 1985 sales. At
10:30 a.m., Keel and North reviewed the questions the
President might be asked at the press conference on
November 19. Two of the questions were, 'did Israeli
shipments on our behalf violate the law?' and, 'did this
violate the Arms Export Control Act?' At 5:30 p.m. North
spoke to Poindexter, who referred to the pre-Finding period
and told North that the 'big issue then was legality.'
Then, at 6:00 p.m., Armitage called and told North the
lawyers were asking him about the Israeli shipments in 1985
4
and wanted to know whether the United States knew about
them. "
P. 37 - "However, following the three conversations North had on
November 18 with Keel, Poindexter, and Armitage regarding
the legality of the 1985 shipments, the story began to
change. On November 18, the chronology asserted that the
HAWK shipment was 'not an authorized exception to [U.S.]
policy, and was retrieved 'as a consequence of U.S.
intervention.' North conceded in his testimony that these
changes in the chronology were an attempt to deal with the
Arms Export Control Act problems that had been brought to his
attention in his earlier conversations.
After McFarlane's lengthy PROF message of November 18, the
HAWK shipment reference disappeared altogether from the
chronology and was replaced in its entirety with the precise
language recommended by McFarlane -- which made no reference
to arms at all
P. 40 - "The fictional accounts in the chronologies were not
limited to the 1985 shipments. For example, the chronologies
omitted the President's December 1985 Finding (which
retroactively 'authorized' the November shipment that the
United States had supposedly objected to) ; affirmatively
misrepresented that there had been consultation with 'all
appropriate' or 'relevant' Cabinet officials during the
initiative; and baldly asserted that all arms sales were
'within the limits of established policy and in compliance
with all U.S. law.' In short, the chronologies were
anything but accurate renditions of what actually had
occurred."
P. 41 - "As North testified, by creating an erroneous version of
the facts in the chronologies, those responsible were
'committing the President of the United States to a false
story.
P. 44 - "Cooper then returned to his office, spoke by telephone
to Sofaer, and asked if Shultz was certain of his November
1985 conversation with McFarlane. Sofaer replied that the
State Department had a contemporaneous note written by
Shultz's aide, Charles Hill, of a conversation between
McFarlane and Shultz on November 18, 1985, which contained
the word 'HAWKS.' Sofaer told Cooper that if Casey's
testimony were given in its current form, 'he would leave
the Government, to which Cooper replied 'we may all have
to.'
Cooper then telephoned Thompson, who advised that North and
McFarlane each stuck by his earlier story; that is, that
they had no contemporaneous knowledge that arms were shipped
to Iran in November 1985. Cooper did not know who was right
or wrong. In light of the uncertainty, he decided that
5
Casey could not testify as planned about the November 1985
shipment."
P. 47 - "The record makes clear that North, Poindexter, Casey,
and others were engaged in a deliberate attempt to falsify
the facts concerning the November 1985 HAWKS shipment. This
point was illustrated in Regan's testimony to the Committees.
Thus, Regan testified that, although he was Chief of Staff,
he was never consulted about the President's knowledge of
the November 1985 shipment during the frantic effort to
prepare a statement on what the U.S. Government knew for
Casey's testimony and Poindexter's Congressional briefing.
When asked at the hearing about the assertion that the U.S.
Government believed that the November shipment contained oil
drilling equipment -- Regan dubbed that claim, 'the cover
story.
THE WHITE HOUSE
WASHINGTON
November 2, 1987
MEMORANDUM FOR ARTHUR B. CULVAHOUSE, JR.
FROM:
ALAN CHARLES RAUL ASL
SUBJECT:
Declassification of Report: "November 1986:
The Attorney General's Inquiry"
This section of the Report is 90 pages long and arrived for
declassification on October 30. The salient points are noted
below:
P. 1 - "Cooper briefed the group on the discrepancies between the
proposed Casey testimony and the facts as recalled by others
in the Administration. The Attorney General decided to
propose to the President that he be commissioned to gather
the facts so that the Administration would be speaking with
one voice."
P. 5 - "Meese advised [FBI Director Webster] that the President
had asked him to conduct a factual inquiry because different
participants had different pieces if knowledge which had to
be reconciled. Meese declined an offer of FBI assistance
from Webster, stating that he saw nothing criminal in the
arms sales. Webster agreed that absent evidence of a crime,
the FBI should not be involved. Meese did not relate the
details surrounding Casey's testimony or the possible
violations of the Arms Export Control Act arising from the
1985 shipments. Meese also testified that he did notbring
in the FBI because he and Webster concluded that it would
not be 'appropriate.''
P. 6 - "North said he had asked Meese, 'can I have or will I have
24 or 48 hours, and Meese responded that he did not know
whether North would have that much time. The Attorney
General recalled no such conversation with North; North
denied it; and there is no other evidence that North met
with the Attorney General that day [Nov. 2]. Earl testified
further that North asked for Earl's Iran file, remarking
that '[i]t's time for North to be a scapegoat.' Earl stated
that, when he gave his file to North, he could tell that he
would never see it again. Earl was right."
P. 9 - "North instructed his secretary, Fawn Hall, to alter a
series of official action memoranda that he had written
during the previous year to then-National Security Adviser
McFarlane. These memoranda related to North's activities in
raising funds and facilitating the provision of military
2
assistance for the Contras during the period of the Boland
Amendment. McFarlane had told North a year earlier, during
the 1985 Congressional inquiry, that these memoranda raised
significant problems under the Boland Amendment.'
P. 11 - "The gist of his [North's] alterations was to eliminate
references to the funds raised for the Contras from third
countries during the Boland cut-off, and also to eliminate
or obscure passages in the documents which showed the NSC
staff's active role in facilitating the provision of
military intelligence and other lethal assistance for the
Contras during the same period."
P. 14 - "Poindexter, too, destroyed evidence. At approximately
3:00 p.m. on November 21, the Attorney General telephoned
Poindexter and requested that he make available for review
all documents relating to the Iran initiative. Poindexter
then ripped up the only signed copy of the President's
December 1985 Finding, which retroactively authorized U.S.
participation in the November 1985 arms shipment.
Poindexter admitted at the public hearings that he destroyed
this Finding because it described the Iran initiative as
unambiguously arms-for-hostages, and therefore would have
been politically embarrassing to the President. It also
would have stripped away the cover story concocted by the
NSC staff. It would never reach the investigators.
"Since the President had obviously been aware of the
December 1985 Finding at the time he signed it, Poindexter
could not explain why he thought that destruction of this
Presidential record would nullify its existence -- unless he
somehow felt confident that the President would either fail
to recall the Finding or deny that he had ever signed it.
As recently as a week before Poindexter's testimony, the
White House announced that I [o]ur position is that [the
Finding] never went to the President, period."
P. 18, 48n - "Ledeen also recalled in his deposition that, prior
to November 21, North had told him that the Justice
Department was investigating the possibly illegal sales of
HAWK missiles in 1985 and suggested that Ledeen retain an
attorney. North told Ledeen that he also had been advised
by someone from the Justice Department to get an attorney."
P. 20 - "According to McFarlane, the Attorney General said it was
preferable legally if the President had authorized the early
shipments.
Immediately after leaving the Attorney General's office,
McFarlane used a pay telephone outside of the Justice
Department to call North. North's notes of that call
indicate that McFarlane said he was told that the Arms
Export Control Act was not a problem and that "RR" [Reagan]
would be supportive of a 'mental finding.' McFarlane sent
3
Poindexter a PROF note later that evening similarly
describing his meeting with the Attorney General. In that
note he stated: '[I]t appears that the matter of not
notifying [Congress] about the Israeli transfers can be
covered if the President made a 'mental finding' before the
transfers took place. Well in that sense we ought to be OK
because he was all for letting the Israelis do anything they
wanted at the very first briefing in the hospital. Ed
[Meese] seemed relieved at that.
P. 24 - "Regarding the November 1985 shipment, Shultz said that
on November 18, 1985, McFarlane told him that Israel was
going to send HAWK missiles to Iran in a trade for the
release of U.S. hostages. Shultz also informed Meese and
Cooper that the President had told him earlier that week
that he [the President] had contemporaneous knowledge of the
November 1985 HAWK shipment."
P. 31 - "The Attorney General's methodology for conducting the
inquiry changed at this point [on Nov. 22]. Before
discovery of the diversion memorandum, all interviews were
conducted by the Attorney General with another Justice
Department official, and notes were taken. There
after, with
the exception of the North interview, all interviews
conducted by Meese were one-on-one, with no notes taken --
including interviews of Casey, McFarlane, Poindexter, Regan
and the Vice President."
P. 43 - "Then the Attorney General showed North the 'diversion
memorandum. The first page referred to U.S. acquiescence
in the August 1985 TOW shipment. Meese asked North to
explain if this was an arms-for-hostages deal. North said
that, although he discussed the strategic opening of Iran
with President Reagan, with the President 'it always came
back to the hostages. North said the President was drawn
to the linkage between arms and hostages and it was a
terrible mistake to say the President wanted the strategic
relationship with Iran because the President wanted the
hostages.
"
P. 44 - "The Attorney General asked North if he had discussed the
diversion with the President. North replied that Poindexter
was the point of contact with the President.
Meese pointed out that if the President had approved the
diversion, North probably would have a record of it. North
agreed and said he did not think it was approved by the
President. The Attorney General asked whether other files
might contain a document indicating Presidential approval,
and North said he would check."
4
P. 52 - "Meese went to the White House at 11:00 a.m. [on Nov. 29]
to meet with the President and Regan pursuant to an
appointment he had made earlier that morning. Meese
testified that he told the President that his team had found
a memorandum at the NSC which included plans to divert
excess funds from the Iran arms sales to the Contras. Meese
also said that North and McFarlane had confirmed this
diversion. The President, Meese said, was very surprised.
Meese told the President there was more factfinding to do
before he could give him a full report at the NSPG meeting.
Regan had quite a different recollection of the morning
events. Regan testified that Meese told him about the
diversion prior to meeting with the President. Regan
described his own reaction to news of the diversion as
'horror, horror, sheer horror. According to Regan, Meese
told him that North had done the diversion, and Regan said
the President needed to be immediately informed. Meese said
he did not want to tell the President until he could nail
down some other things. They went to see the President, but
told him only that the factfinding inquiry had uncovered
some serious problems and that they would need to meet later
that afternoon."
P. 58 - "Poindexter testified that Meese never asked him if the
President knew of the diversion. Although Meese testified
at his deposition that he did ask that very question, he
stated at the public hearings that he had not asked so
direct a question, but only whether anyone else in the White
House knew. Poindexter testified that he did not tell the
Attorney General he actually approved the diversion, because
he wanted the President and his staff to retain
deniability."
P. 65 - "Regan then asked Poindexter [on Nov. 25] how the
diversion could have happened. Poindexter replied that he
had thought something was going on with North. Regan asked
why he never looked into it; and Poindexter replied,
according to Regan: 'I knew it would hurt the Contras, and
the way those guys on the Hill are jerking around, I
was afraid it would hurt them too much, so I didn't look
into it. In Poindexter's testimony, however, he did not
recall Regan asking him about the diversion. Both Regan and
Poindexter agree that Regan never asked Poindexter whether
the President knew.'
P. 67 - "At 9:30 a.m. the Vice President, Regan, Meese, and
Poindexter met with the President. Poindexter told the
President that he was aware of the plan to divert funds to
the Contras, and he tendered his resignation in order to
give the President 'the necessary latitude to do whatever
you need to do.' The President told Poindexter that it was
in the tradition of a Naval officer to take responsibility.
Poindexter then shook hands with those present and left.
5
Poindexter testified he did not tell the President that he
had actually approved the diversion because matters were in
flux and he wanted more time to think about it."
P. 68 - "At 10:15 a.m. the President met with the National
Security Council to brief them on developments. From
11:00 a.m. to noon, the President, Regan, Shultz, Meese, and
Casey briefed Congressional leaders. Meese began by telling
them about the diversion. Meese said North was involved
with possibly one or two other NSC staff or consultants.
The President said this was the only incident of this kind
and that Poindexter, although not a participant, had known
of it and had therefore resigned."
P. 70 - "Just before the President's announcement, Secord receive
word from North's office that Poindexter and North were
resigning. Secord called Poindexter and urged him not to
quit but to 'stand in there and fight' to get it all
straightened out. Poindexter told Secord it was too late
because he had already resigned. Secord demanded to speak
to the President but Poindexter told him it was too late,
'they had already built a wall around the President."
P. 72 - "Meese was specifically asked [at the Nov. 25 press
conf.] about arms shipments prior to the January 1986
Finding. Meese responded that there was one transaction in
which Israel shipped weapons without authorization from the
United States, and that the weapons so shipped were returned
to Israel. Meese added that the August-September and
November 1985 shipments were between Israel and Iran and
'did not involve, at that time, the United States.
Meese specifically stated that the President had not known
about the November 1985 HAWK shipment until February 1986.
Thus the Attorney General said: 'The President was informed
generally that there had been an Israeli shipment of weapons
to Iran sometime during the late summer, early fall of 1985,
and then he later learned in February of 1986 details about
another shipment that had taken place in November of '85,
which had actually been returned to Israel in February of
'86.'
These statements were contrary to what Meese and Cooper had
learned regarding CIA participation in the November 1985
HAWK shipment and regarding McFarlane's conversation with
Shultz on November 18, 1985. Meese's statements were also
contrary to the information Meese had received from Shultz
on November 22 that the President had told Shultz three days
earlier that he (the President) had known of the November
1985 HAWK shipment at the time. Meese did not tell these
facts to the press."
6
P. 76 - "The Attorney General [on Nov. 25] instructed Deputy
Attorney General Burns to call Wallison to ensure that
documents belonging to North and Poindexter were secured.
They agreed to meet again at 5:45 p.m.
When they actually did meet, at 6:40 p.m., Meese asked Burns
if he had secured the White House documents. Burns
indicated he had not done so and left the room to make the
call. As it turned out, Burns did not get through to
Wallison until the next afternoon, November 26. But the
documents had in fact already been secured by an NSC staff
officer. A letter requesting segregation of the documents
was not sent until November 28, 1986, six days after
discovery of the diversion memorandum."
P. 77 - "North stood at attention while the President spoke to
him. There is some dispute about the substance of this
conversation. North testified that the President told him,
'I just didn't know, which North understood to be a
reference to the diversion. Earl testified that North had
told him that the President said, 'it is important that I
not know. North testified that perhaps he told Earl that
the President felt it was important that North know that he,
the President, did not know of the diversion. Craig Coy,
who was present when North related the Presidential
conversation to Earl, testified that he did not recall North
saying anything about the President's statements concerning
his knowledge. Hall testified that North told her that
President had said, 'I just didn't know.
P. 78 - "There is no dispute, however, that during the phone
call, the President told North that he was 'a national
hero.' Indeed, the President has publicly acknowledged
making this statement.
At 4:40 p.m., Meese was called by Israeli Prime Minister
Peres. The Prime Minister told Meese that the Government of
Israel was concerned about Meese's claims in his press
conference and was about to issue a statement. Mr. Peres
said the Israelis had transferred 'defensive arms' at the
request of the United States. He also told Meese that the
Israelis had not paid anything to any Contra acccount. The
Prime Minister explained that the Iranians paid directly
into an account in Switzerland maintained by an American
company. He indicated that Israel -- which had been asked
by U.S. officials early on to take the rap if the arms sales
became public -- was not going to take the blame for the
diversion."
P. 85 - "November 27 was Thanksgiving. Fawn Hall received a
telephone call at home from Jay Stephens, an attorney on the
White House Counsel's staff. Press reports had appeared
claiming that documents pertinent to the Iran-Contra affair
7
had been shredded at the NSC. Stephens asked Hall whether
those reports were true. Hall told Stephens exactly what
she had earlier told North's attorney her response would be
to such a question: 'we shred everyday.' Hall admitted
during the public hearings that she misled Stephens to
believe that nothing unusual had occurred."
THE WHITE HOUSE
WASHINGTON
November 3, 1987
MEMORANDUM FOR ARTHUR B. CULVAHOUSE, JR.
FROM:
ALAN CHARLES RAUL AER
SUBJECT:
Declassification of Report: "How the NSC Staff
Took Contra Policy Underground"
This section of the Report is 128 pages long and arrived for
declassification on October 30. The salient points are noted
below:
P. 3 - "Beginning in May 1984, when the CIA-appropriated funds
for the Contras ran out, the National Security Council (NSC)
staff raised money for Contra military operations from third
countries with the knowledge of the President, supervised
the Contras' purchase of weapons, and provided guidance for
the Contras' military operations. The operational
responsibilities fell largely to Lt. Col. Oliver North, a
member of the NSC staff who reported to the National
Security Adviser, Robert C. McFarlane, and his deputy, Vice
Admiral John M. Poindexter.
In October 1984, the Congress passed and the President
signed the second Boland Amendment prohibiting the
expenditure of any funds in support of Contra military
operations by any agency involved in intelligence
activities. Rather than halting U.S. support for the
Contras, the CIA's withdrawal was treated as a call for the
NSC staff to take over the entire covert operation, raising
more money from a third country, arranging for arms
purchases, and providing military intelligence and advice.
The NSC staff went operational -- and underground."
P. 13 - "Introduced by Representative Edward P. Boland, the
amendment passed the House by a vote of 411-0, and was
adopted, in December 1982, by a Conference Committee of the
House and Senate. This first Boland Amendment prohibited
CIA use of those funds 'for the purpose of overthrowing the
Government of Nicaragua.'
P. 13, 22n - "In enacting the Boland Amendment, the Congress
rejected a bill that would have barred all covert action
funding, as well as an amendment that would have barred
Administration support of any insurgent group having the
purpose to overthrow the Nicaraguan Government."
2
P. 13 - "The internal contradictions of the Administration's
announced Nicaragua policy were carried forward in the new
law: Congress appropriated funds that would be used by the
CIA for Contra assistance, but at the same time rejected the
Contras' objective to remove the Sandinista Government."
P. 15 - "Challenged to defend the Administration's compliance
with the law, the President asserted in April [1983] that
there had been no violation of the Boland Amendment. There
would be none, said the President, because even a law he
disagreed with had to be observed: 'We are complying with
the law, the Boland Amendment, which is the law. [W]hat I
might personally wish or what our government might wish
still would not justify us violating the law of the land.'
When asked if his Administration was doing anything to
overthrow the Government of Nicaragua, he replied, 'No,
because that would be violating the law.
P. 19 - "The Administration responded to the threat of an aid cut
off in three different ways. First, the Administration
established a public relations office in the State
Department attempting to muster the public and Congressional
support necessary for the Contras. Second, anticipating
that a cut off might nevertheless occur, the Administration
developed a secret plan to stockpile weapons for the Contras
at the CIA. Finally, at the same time, to satisfy
Congressional demands, the Administration agreed to draft a
new Finding.
P. 20 - "White Propaganda: In June of 1983, the Administration
decided upon a new method of trying to win public support
for the President's policy in Central America. On July 1,
1983, then National Security Adviser Clark announced that
"the President had decided that the Administration must
increase our efforts in the public diplomacy field to deepen
the understanding of the support for our policies in Central
America.
As a result, an office of Public Diplomacy for Latin
American and Caribbean (S/LPD) was established in the State
Department, headed by Otto Reich, who eventually was given
the rank of Ambassador."
P. 21 - "The mission of the office -- public diplomacy -- was a
'new, non-traditional activity for the United States
government,' according to the State Department. In fact,
'public diplomacy' turned out to mean public
relations-lobbying, all at taxpayers' expense. The office
arranged speaking engagements, published pamphlets, and sent
materials to editorial writers. In its campaign to persuade
the public and Congress to support appropriations for the
Contras, the office used government employees and outside
contractors -- including Richard Miller and Francis Gomez
who would later work with North to provide contra
assistance."
3
P. 22 - "Later, the Comptroller General would find that some of
the office's efforts, in particular Johnathan Miller's
'White Propaganda, were 'prohibited, covert propaganda
activities,' 'beyond the range of acceptable agency public
information activities
In a September 30, 1987
letter, the Comptroller General concluded that there had
been a 'violation of a restriction on the State Department's
annual appropriations prohibiting the use of federal funds
for publicity or propaganda purposes not authorized by
Congress.'
P. 23, 51n - "The State Department's Inspector General concluded
in Audit Report No. 7PP-008 (July 1987) that 'there is no
evidence that S/LPD staff participated directly or
indirectly in any unlawful lobbying or that IBC spent s/LPD
contract funds for lobbying activities.'
P. 27 - "The new [1983] Finding also reflected a change of
tactics. Congress would not accept a Finding broad enough
to permit paramilitary operations conducted by U.S.
citizens. The Administration gave its assurances that aid
for paramilitary operations would be limited to third
country nationals. Casey told the President, the 'new
Finding no longer lets us engage in PM [paramilitary
operations].
Three days later, on September 19, 1983, the Finding was
signed. The next day, the Intelligence Committees received
briefings on it. Shortly thereafter, the Senate
Intelligence Committee voted to provide aid for a continued
covert operation in Nicaragua.
The new Finding, however, was not without problems. The
Administration's stated objective in supporting the Contras
was now to pressure the Sandinistas into accepting a treaty
that had to include free elections. If, as the President
believed, the Sandinistas could not win such an election,
they would never agree to such a treaty. Only the prospect
of a military defeat would push them toward a negotiating
posture. Yet, the renunciation of a military victory was
the price set by Congress for a bipartisan compromise. The
Finding thus contained within it a paradox that would haunt
the Administration's Nicaragua policy."
P. 32 - "At the end of December [1983], the President officially
authorized the mining of Nicaraguan harbors. Thereafter,
the mining and other operations increased incrementally. In
early January, the CIA proposed attacks against fuel supply
depots and transmission lines along the 'entire Pacific
coast of Nicaragua.' On January 7, three magnetic mines
were placed in Sandino harbor; on February 3, an air attack
destroyed a Sandinista 'communications and naval arms
depot'; and on February 29 Q-boats placed more mines at
Corinto."
4
P. 42 - "With or without appropriated funds, the Administration
planned to continue supporting the Contras. In McFarlane's
words, the President directed the NSC staff to keep the
Contras together 'body and soul.'
115n - "McFarlane Test., 5/11/87, at 12, 44-46. McFarlane
testified these were his words, expressing the President's
'sentiment.' McFarlane Test., 5/11/87, at 46. North
testified that, "[a]s they were relayed to me,' the words
'body and soul' 'were the words of the President.'
P. 42 - "In Poindexter's words, the President 'wanted to be sure
that the contras were supported.'
McFarlane assigned this responsibility to North, who
testified:
'I was given the job of holding them together
in body and in soul.
To keep them together as a viable political
opposition, to keep them alive in the field,
to bridge the time between the time when we
would have no money and the time when the
Congress would vote again, to keep the effort
alive, because the President committed
publicly to go back, in his words, again and
again and again to support the Nicaraguan
resistance."
P. 52 - "According to McFarlane, the President was informed of
the Country 2 contribution shortly after it took place.
McFarlane placed a note card into the President's morning
briefing book. He chose this method of informing the
President of the contribution to reduce any chance that
others at the President's daily briefing might become aware
of the funding scheme. After the meeting, McFarlane was
called in to 'pick up the note card which,' he recalled,
'expressed the President's satisfaction and pleasure that
this had occurred.'
McFarlane also testified he informed selected members of the
executive branch of the funding. 'Within a day or so, he
told Vice President George Bush, and at a weekly breakfast
with the Secretaries of State and Defense, he 'drew them
aside' and informed them that the Contras would be 'provided
for' until the end of the year. Neither Secretary,
according to McFarlane's testimony, asked the source of the
funds. McFarlane testified that it was 'likely' he told
then-Chief of Staff, James Baker, '[i]n the spring if '84,'
5
and that it was 'possible' he told then Counselor to the
President Edwin Meese III of the Country 2 contribution.
But McFarlane's account was disputed by other witnesses."
P. 54 - "On June 25, the National Security Planning Group met to
consider options for funding the Contras. In attendance
were the President, Vice President Bush, Secretary Shultz,
Secretary Weinberger, Director Casey, the then-Counselor to
the President Edwin Meese, and McFarlane. Director Casey
urged the President to seek third-country aid. Secretary
Shultz responded that he understood from Chief of Staff
James Baker, who was not present, that soliciting
nonappropriated funds was an 'impeachable offense.' Casey
responded that a Finding would take care of it. Meese
concurred, recalling that there was an opinion by Attorney
General William French Smith that provided authority for
using a Finding but Meese also noted that if an opinion were
sought, Justice Department lawyers should be given guidance
on what the opinion should say. The meeting ended without
any firm conclusion. McFarlane advised that no one was to
do anything without the necessary Justice Department
opinion. Although McFarlane had already secured the
contribution from Country 2, neither he nor anyone else
mentioned it."
P. 55 - "North made these plans to send Country 2 funds to Calero
despite his apparent knowledge of the legal difficulties
expressed earlier that day at the National Security Planning
Group meeting. His notes reflect that he was advised of
those discussions by Clarridge of the CIA. North recorded
phrases such as 'impeachable offense,' (presumably referring
to Secretary Shultz's remark) and 'going to French Smith --
reading on US seeking alternative funding.' The note
continues: 'Seek 3d party funding.
P. 56 - "Director Casey met with Attorney General French Smith
along with members of the Justice Department and the CIA
legal staff. In a memorandum recording the meeting, the
CIA's general Counsel, Stanley Sporkin, reported that in
response to Director Casey's question about the 'legal
limits' of funding options, the Attorney General stated:
that he saw no legal concern if the United
States Government discussed this matter with
other nations so long as it was made clear
that they would be using their own funds to
support the Contras and no U.S. appropriated
funds would be use for this purpose. The
Attorney General also said that any nation
agreeing to supply aid could not look to the
United States to repay that commitment in the
future. The DCI [Director of Central
Intelligence] made it clear that if there is
a possibility this option might be used, he
would advise the CIA oversight committees.
6
The Intelligence Committees were not advised of the
Country 2 contribution until 1987."
P. 59 - "The President has publicly stated that he was kept
informed of efforts by private citizens to aid the Contras."
167n - II ('As a matter of fact, I was very definitely involved in
the decisions about support to the freedom fighters. It was
my idea to begin with.')"
P. 59 - "Poindexter testified the President 'knew the contras
were being supported
by third-country funds and by
private support activity 1 There is no evidence,
however, to suggest that the President was ever informed
about an 'off-the-shelf" covert operation."
P. 63 form "In the summer of 1984, CIA covert assistance to the
Contras began to wane as funds were depleted. Meanwhile,
legislation -- the second Boland Amendment -- that would bar
the Agency from future support for the Contras had been
passed by the House in early August. According to
McFarlane, as the CIA stepped out of the picture, the task
of supporting the Contras fell to the NSC: [t]he President
had made clear that he wanted a job done. The net result
was that the job fell to the National Security Council
staff.
P. 65 - "While Boland II cut off all funding for the Contras, it
held out some hope for renewing Contra aid in the future by
providing that the Administration could seek a $14 million
appropriation on an expedited basis after February 28, 1985.
But, even as the bill held out a future hope, its sponsors
made clear that the law was intended to achieve an immediate
cut-off of aid. As Representative Boland put it, the law,
'clearly ends U.S. support for the war in Nicaragua. Such
support can only be renewed if the President can convince
the Congress that this very strict prohibition should be
overturned.
183n - "Congressman Hyde, an opponent of the Boland Amendment,
gave it a similar interpretation in urging members to reject
it. He stated:
[S]ection 107 ... forbids any assistance
to the freedom fighters in Nicaragua
....
Arm them and abandon them on a party line
vote. No food, no medicine, no ammunition,
not even moral support. We barely leave them
a prayer.
P. 66 - "Poindexter and North, who admitted assisting the Contras
in their military activities, had a different view. Both
testified that they did not believe that Boland II was
applicable to the NSC staff and that while the CIA could no
7
longer provide any assistance to the Contras, the NSC staff
was free to do SO. Poindexter put it succinctly: 'I never
believed, and I don't believe today, that the Boland
Amendment ever applied to the National Security Council
staff
Their superior, Robert McFarlane, was surprised by that
view. McFarlane, who denied authorizing the NSC staff to
provide military assistance to the Contras, maintained that
the 'Amendment governed our actions. In 'cutting off money
for the Contras,' he understood Congress to say 'we don't
want any money raised for the Contras.' McFarlane testified
that he repeatedly addressed the NSC staff with 'a kind of
litany of mine,
[not to] 'solicit, encourage, coerce,
or broker' financial contributions for the Contras.
According to McFarlane, he specifically told North to 'stay
within the law and to be particularly careful not to be
associated with or take part in any fundraising activities.
He dismissed his instruction to North to keep the Contras
'together body and soul' as meaning nothing more than 'smoke
and mirrors. What he intended North to provide was only
moral and political, not military, support."
P. 68 - "North stated that all of his acts were authorized by his
superiors, and Poindexter, speaking as one of those
superiors, confirmed that he had given North a 'broad
charter' to support the Contras and had 'authorized in
general,' North's actions in carrying out that charter.
McFarlane testified he was unaware of the breadth of North's
activities."
P. 69 - "Poindexter saw it the same way:
'Very frankly, we were willing to take some
risks in order to kept the Contras alive, as
I said, until we could eventually win the
legislative battle.
So for all intents and purposes, Colonel
North largely took over the -- much of the
activity that [the] CIA had been doing prior
to their being prohibited from carrying [on]
activity because of the Boland Amendment.
As Poindexter summed up North's role, '[0] nce the CIA was
restricted, North was the 'switching point that made the
whole system work
the kingpin to the Central American
opposition
"
Boland II did not deter North -- it simply reinforced the
need to keep what he was doing secret from Congress, the
public, and others in the Government."
8
P. 76 - "North's role was not limited to assisting arms
purchases. On direction from McFarlane, he gave political
advice to the Contras on unifying the different factions and
adopting a platform recognizing human rights and pledging a
pluralistic society. Even more critical for the Contras,
North provided military intelligence and advice.
The CIA and the DOD could not provide military intelligence
directly to the Contras, so North provided it himself.
North would obtain maps and other intelligence on the
Sandinista positions from the CIA and DOD, ostensibly for
his own use. North would then pass the intelligence to the
Contras using Owen as a courier."
P. 84 - "On November 28, Singlaub reported to North the reaction
of Countries 3 and 5, informing him he 'was prepared to go
and meet with senior officials in those governments.'
According to Singlaub, North concurred and gave the plan
'his blessing
[I]t was a good idea, he saw no
objections
Whether North was authorized to 'bless' Singlaub's [third
country solicitation] efforts is a matter of conflicting
testimony. According to McFarlane, to solicit or facilitate
aid from a third country was barred by the Boland Amendment
and he did not authorize North to pursue funding from third
countries. But according to North, he believed McFarland
had approved: 'he was aware of each and every one of [my]
actions to obtain money from foreign countries and approved
of it.' North defended his actions, testifying that
Country 3 had offered to make a contribution; he had never
made any 'solicitation" because that would be an improper
act for a government official."
P. 88 - "In early February 1985, Country 2 agreed to contribute
an additional $24 million. McFarlane informed the President
of the contribution by placing a note card in the
President's daily briefing book. The President again
reacted with 'gratitude and satisfaction,' expressing no
surprise. Unknown to McFarlane, Country 2 head of state had
already informed the President directly of the new
contribution. But the President did not mention this when
he briefed the Secretary of State and McFarland on his
meeting with the government leader." "
P. 90 - "When the President signed the Boland Amendment, he made
it clear he would return to Congress for additional Contra
support:
'I sincerely regret the inability of the
Congress to resolve the issue of continuing
certain activities in Nicaragua
I
am
signing this act with every expectation that
shortly after the next Congress convenes it
will provide adequate support for programs to
9
assist the development of democracy in
Central America.
P. 95 - "The pattern of weapons purchases from the Enterprise did
not vary: North would review the list of weapons before the
order was given; Calero would prepay the costs so that the
Enterprise served only as a broker without any of its
capital at risk; and the shipments would be made to a
Central American country with false end-user certificates
North arranged to supply to Secord.
In all, there were four shipments by the Enterprise -- two
by air and two by sea. The weapons came from Europe and
Asia, and consisted almost entirely of Soviet compatible
weapons. The mix of arms that Secord provided were chosen
after consultation with Contra leaders."
P. 105 - "But even without such active encouragement, the secrecy
shrouding North's efforts contributed to the appearance of
Contra self-sufficiency. As funds arrived, and weapons were
shipped, CIA intelligence reports confirmed that the Contras
remained not only a viable force, but were surviving on
their own, without apparent U.S. Government assistance. By
March, close to a year after U.S. Government aid had ceased,
Director Casey's subordinates provided Casey with briefing
materials, reporting surprise at the Contras' survival, but
noting there was little intelligence on how the Contras had
managed to flourish:
Since the cutoff of official funds to the
anti-Sandinistas in May 1984 they have been
able to field a viable guerrilla fighting
force, have increased their numbers, and
improved their tactical efficiency. It is
estimated that to maintain the level of
activity that they have it would cost an
estimated one and one half to two million
dollars per month. There is, however, no
intelligence on the source of this income,
except that it comes from private groups, and
possibly some U.S. business corporations.
P. 108 - "In a memorandum to McFarlane, North noted that the
Contras had sufficient funding for munitions to carry them
through October 1, 1985, but they needed money for the
following year. The fallback plan, sent to McFarlane on
March 16, called for Country 2, described as the 'current
donor, to contribute an addition $25 to $30 million to the
Resistance for the purchase of arms and munitions; for the
President to appeal to the public for contributions instead
of seeking a Congressional appropriation; and for a
tax-exempt foundation to be established to receive the
contributions. McFarlane rejected the idea of the
Presidential appeal, expressed doubt about seeking more
10
money from Country 2, and approved the establishment of a
tax-exempt foundation."
P. 111 - "In early April [1985], the Administration submitted a
Contra aid proposal to the Congress, along with its own
peace plan modeled on the San Jose Declaration. The
President pledged that lethal aid would only be provided if
the Sandinistas rejected the proposal. The plan provoked
controversy, and on April 23, the House rejected the
Administration's proposal by a two-vote margin.
When the House rejected the bill, the President's first step
was to reassure Central American leaders that he had not
given up on Contra aid. As to one country, the President
had special cause for concern: A military leader had seized
ammunition intended for the Contras. The President
telephoned the head of state and received an assurance that
the ammunition would be delivered to the Contras.
Publicly, the President expressed his determination 'to
return to the Congress again and again
Soon after
the House defeat, the Administration was back on Capitol
Hill hoping to mold a compromise in support of nonlethal
aid.
Meanwhile, Nicaraguan President Daniel Ortega traveled to
the Soviet Union, and throughout Europe, seeking renewed
assistance for the Sandinista forces. President Ortega's
visit to Moscow prompted the President to issue a warning to
Congress:
'And whatever way they may want to frame it,
the opponents in the Congress of ours, who
have opposed our trying to continue helping
those people, they really are voting to have
a totalitarian Marxist-Leninist government
here in the Americas, and there's no way for
them to disguise it. So, we're not going to
give up.'
President Orgeta's Moscow trip also prompted a renewed sense
in Congress that something had to be done to support the
Contras. With strong support from Congressional leaders,
President Reagan announced the imposition of economic
sanctions against Nicaragua on May 1, 1985."