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    "ocrText": "Ronald Reagan Presidential Library\nDigital Library Collections\nThis is a PDF of a folder from our textual collections.\nCollection: Culvahouse, Arthur B.: Files\nFolder Title: Iran/Arms Transaction: Congressional\nMaterial: Joint Committee Report (5)\nBox: CFOA 1130\nTo see more digitized collections visit:\nhttps://reaganlibrary.gov/archives/digital-library\nTo see all Ronald Reagan Presidential Library inventories visit:\nhttps://reaganlibrary.gov/document-collection\nContact a reference archivist at: [email protected]\nCitation Guidelines: https://reaganlibrary.gov/citing\nNational Archives Catalogue: https://catalog.archives.gov/\nTHE WHITE HOUSE\nWASHINGTON\nNovember 3, 1987\nMEMORANDUM FOR ARTHUR B. CULVAHOUSE, JR.\nFROM:\nALAN CHARLES RAUL\nAd\nSUBJECT:\nDeclassification of Report: \"The Enterprise\nAssumes Control of Contra Support\"\nThis section of the Report is 107 pages long and arrived for\ndeclassification on October 28. The salient points are noted\nbelow:\nP. 2 - \"Lt. Col. North asked [around the summer of 1985]\nGen. Secord and his associates to assume new\nresponsibilities that under the Boland Amendment the U.S.\nGovernment could not undertake. Secord agreed to continue\nto handle all future weapons procurement for the Contras and\nto acquire and operate a small fleet of planes to make air\ndrops of weapons, ammunition and other supplies to the\nContras in both northern and southern Nicaragua. North\narranged the funding for Secord to carry out these\nactivities, directing third-country and private\ncontributions to Secord that previously went to Calero.\nThese funds were later augmented by the diversion from the\nIranian arms sales that North, with Poindexter's approval,\ninitiated.\"\nP. 3 - \"The Enterprise, though nominally private, functioned as a\nsecret arm of the NSC staff in conducting the covert program\nin Nicaragua. While Secord controlled the operational\ndecisions of the Enterprise, North remained in overall\ncharge of the Contra-support program. He set the priorities\nand enlisted the support of an ambassador, CIA officials,\nand military personnel to carry out the air resupply\noperation. He dealt with crises as they arose, sometimes on\na daily basis. In carrying on these tasks, North had the\nunqualified support of Admiral Poindexter, who had replaced\nRobert McFarlane as National Security Adviser in December\n1985. \"\nP.\n4\n\"\n-\nthe NSC staff had secretly achieved what Congress\nhad openly disapproved in the Boland Amendment -- an\nextensive program of military support for the Contras. The\nBoland Amendment operated as a restraint on disclosure, not\non action, as the NSC staff placed policy ends above the\nlaw.\"\n2\nP. 15 - \"North's notebooks reflect that on September 10, 1985, he\nmet with Col. James Steele, a U.S. Military Group Commander\nin Central America and Donald Gregg, Vice President Bush's\nNational Security Adviser. Among the discussion topics\nNorth listed was a 'Calero/Bermudez visit to [the Airbase]\nto estab [lish] [istical] support/main [enance], as well\nas other possible locations for the resupply base. Gregg,\nhowever, testified that he did not know of the resupply\noperation prior to the summer of 1986.\nP. 24 - \"When Poindexter returned from his one-day trip to\nCentral America, he briefed the President on the morning of\nDecember 13, including informing the President on efforts to\nsecure the land necessary for the airstrip. Poindexter\ntestified, and his notes reflect, that Poindexter 'did talk\nto him [the President] about the private airstrip.\nP. 30 - \"In March 1986, a meeting arranged for a Costa Rican\nofficial with President Reagan at the White House occurred.\nThe meeting was simply a photo opportunity, attended as well\nby North and Castillo.\nAfter the Oval Office visit, North asked the official to\nmeet with Secord that afternoon to work out some issues\nconcerning the airstrip. At the meeting, the official asked\nSecord for a letter, which the official dictated, to the\neffect that the Costa Rican Civil Guard maintained control\nof the airstrip, have access to it for training purposes,\nand that ecological and environmental considerations apply.\"\nP. 44 - \"The Administration continued to seek an appropriation\nfor the CIA to resume its program of covert assistance to\nthe Contras. In early May, Poindexter said the President\ntold him 'If we can't move the Contra package before June 9,\nI want to figure out a way to take action unilaterally to\nprovide assistance.' Poindexter wrote his deputy, Don\nFortier, 'The President is ready to confront the Congress on\nthe Constitutional question of who controls foreign policy.\nGeorge [Shultz] agrees with the President that we have\nto find some way and we will not pull out.'\nNorth, who received a copy of Poindexter's PROF note,\nresponded immediately with a suggestion: The Contras should\ncapture some territory inside Nicaragua and set up a\nprovisional government. The President would respond by\nrecognizing the Contras as the true government and provide\nsupport. Asked by Poindexter whether he had talked to Casey\nabout his plan, North replied, 'Yes, in general terms. He\nis supportive, as is Elliott [Abrams]. It is, to say the\nleast, a high risk option -- but it may be the only way we\ncan ever get this thing to work.\n3\nP. 47 - \"On May 16, 1986, the President and his advisers\ndiscussed the issue of obtaining funds from third countries.\nIn a memorandum to the President for the NSPG meeting, North\nsuggested three ways to 'bridge the gap' in funding: (1) a\nreprogramming of funds from DOD to the CIA ($15 million in\nhumanitarian aid) ; (2) a Presidential appeal for private\ndonations by U.S. citizens; and (3) a 'direct and very\nprivate Presidential overture to certain Heads of State.\nThe last source of funds would, as North put it, eliminate\nthe need 'to endure further domestic partisan political\ndebate.\nDirector Casey opened the meeting and explained the Contras'\nneeds. The good news, he told the President, was that the\nContras had infiltrated more troops into Nicaragua than ever\nbefore, and the troops were now being resupplied by air.\nThe 'bad news' was that the resistance was operating under\nthe assumption that it would receive new funding at the end\nof May. Only $2 million remained from the humanitarian\nassistance appropriation.\nP. 48 - \"Later in the discussion, Secretary Shultz returned to\nthe subject of money: 'If we don't get money for the\nfreedom fighters, they will be out of business.' Noting the\nunlikelihood of an immediate Congressional appropriation,\nand the improbability that the intelligence committees could\nbe persuaded to reprogram funds, Shultz suggested that 'It\nwould be better to go to other countries and get it\n[funding] there. North added that the Intelligence\nAuthorization Act of 1986 permitted the 'State Department to\napproach other governments for non-military aid.'\nNo one at the meeting discussed the fact that a Middle\nEastern country had already given $32 million to the\nContras, including a $24 million donation committed to the\nPresident personally. Nor was it mentioned that several Far\nEastern countries had been approached for donations had\ngiven $2 million only 6 months earlier. Instead, Shultz was\ninstructed to prepare for review by the President a list of\ncountries that could be solicited.\"\nP. 49 - \"Poindexter testified that he understood the $6 million\nto which North referred was coming from the Iranian arms\nsales, but he did not tell the President the $6 million was\navailable. North testified that as he was leaving the NSPG\nmeeting he mentioned to Poindexter that Iran was supplying\n$6 million for the Contras but that he did not know whether\nhe was overheard.\nNorth wrote Poindexter that he did not know whether all\nthose present at the NSPG meeting, such as Chief of Staff\nDonald Regan, knew of 'my private U.S. operation.' On the\nother hand, North noted to Poindexter, 'the President\n4\nobviously knows why he has been meeting with several select\npeople to thank them for their 'support for Democracy' in\nCentAm.\nNorth also realized that disclosure of a significant sum of\nmoney earmarked for Contra support, but only made possible\nby arms sales to Iran, could prove politically embarrassing.\nThe more money there is (and we will have a\nconsiderable amount in a few more days) the\nmore visible the program becomes (airplanes,\npilots, weapons, deliveries, etc.) and the\nmore inquisitive will become people like\nKerry, Barnes, Harkins, et al. While I care\nnot a whit what they may say about me, it\ncould well become a political embarrassment\nfor the President and you.\nP. 50 - \"Poindexter approved North's recommendation to seek the\n$15 million reprogramming and responded to his concerns:\nGo ahead and work up the paper needed for the $15M\nreprogramming\nI understand your concerns and agree.\nI just didn't want you to bring it up at NSPG. I guessed at\nwhat you were going to say. Don Regan knows very little of\nyour operation and that is just as well.\nP. 53 - \"Asked by the official what Brunei would receive in\nreturn, Abrams responded, 'Well,\nthe President will\nknow of this, and you will have the gratitude of the\nSecretary and of the President for helping us out in this\njam. The official persisted, asking, 'What concrete do we\nget out of this?' Abrams responded, 'You don't get anything\nconcrete out of it. 1 Abrams then handed the account number\nNorth had given him which he had copied onto a slip of paper\nto the Brunei official.\"\nP. 54 - \"Rodriguez met with Vice President Bush in Washington\non May 1. He had arranged the meeting through the Vice\nPresident's National Security Adviser, Donald Gregg. The\nappointment scheduling memo for the meeting states: 'To\nbrief the Vice President on the status of the war in [a\nCentral American country] and resupply of the Contras.'\nMembers of the Vice President's staff gave conflicting\ntestimony over how this description was printed on his\nschedule. Sam Watson, the Vice President's Deputy National\nSecurity Adviser, testified that the memo was inaccurate,\nand that he did not provide the description. Phyllis Byrne,\nthe secretary who typed the memo, testified that Watson had\ngiven her the description.\nIn the Old Executive Office Building on his way to the Vice\nPresident's office, Rodriguez stopped by to tell North he\nwas leaving the operation. Rodriguez said North asked him\n5\nto remain in Central America, but he ignored the request.\nEscorted by Gregg and Watson, Rodriguez then met with the\nVice President.\nBefore Rodriguez could tell the Vice President that he was\nleaving Central America, North arrived and told the Vice\nPresident about the good job Rodriguez was doing.\nEmbarrassed to tell the Vice President he was going to\nleave, Rodriguez left the meeting without discussing his\nresignation, and eventually returned to Central America.\nRodriguez testified that 'at no point in any of this\nconversation did I ever mention doing anything that was\nremotely connected to Nicaragua and the contras.' Moreover,\nformer Senator Nicholas Brady, who was also present at the\nmeeting, testified that the resupply operation was not\ndiscussed.\"\nP. 57 - \"According to Rodriguez, North looked at the television\nand said: 'Those people want me but they cannot touch me\nbecause the old man loves my ass.' North did not recall\nthat part of his conversation with Rodriguez.\"\nP. 62 - \"North later complained to Gregg that Rodriguez had 'made\noff with an airplane,' and asked him, 'Will you call him and\nfind out what the hell is going on?' Rodriguez told Gregg\nhe had decided to tell Gregg 'about what had been going\non. \"\nP. 63 - \"On August 8, Rodriguez met with Gregg and set out his\nallegations about the Secord group. Gregg noted the points\nRodriguez made: 'using Ed Wilson group for supplies;'\n'Felix used by Ollie to get Contra plane repaired\n'a\nswap of weapons for $ was arranged to get aid for Contras,\nClines and General Secord tied in'; 'Hand grenades bought\nfor $3 - sold for $9.' Gregg, according to Earl, expressed\nshock about the involvement of Clines.\n154n, p. 92 - \"Sam Watson, Gregg's deputy, was also at the\nmeeting. His notes state: 'Felix -- Tom Clines, Secord --\nRipping off Contras -- Fraud, a crime to profit. N46663.'\nP. 63 - \"On August 12, Gregg convened a meeting to discuss\nRodriguez's allegations with a group of Administration\nofficials involved in Central American policymaking:\nSteele; Ambassador Corr; Deputy Assistant Secretary of State\nWalker; the Chief of the Central American Task Force; and\nfrom the NSC, Earl and Ray Burghardt. Gregg testified that\nhe 'went over the notes with the people who were there.'\nWithout mentioning North's involvement, Gregg emphasized\nthat he considered Clines not reliable but that he had faith\nin Rodriguez.\nGregg knew by this time that North was involved in the\n6\noperation. Rodriguez had made that clear at his Aug. 8\nmeeting, and Gregg's notes reflect that knowledge. Gregg\ntestified that at no time did he pass that information on to\nthe Vice President. Gregg did not report the meeting,\nbecause he believed it 'was a very murky business.\nWe\nhad never discussed the Contras. We had no responsibility\nfor it. We had no expertise in it. I wasn't at all certain\nwhat this amounted to\nI felt I had passed along that\nmaterial to the organizations who could do something about\nit, and I frankly did not think it was Vice Presidential\nlevel.\nP. 64 - \"Secord responded that there was more than '1 million\ndollars worth of equipment' in Central America owned by the\nEnterprise, which had no intention of abandoning them.\nSecord explained that the 'threat of air piracy lawsuit has\nnothing to do with [the Commander]. This was comment made\nto VP by Ollie ref Max [Felix Rodriguez] vice [the\nCommander\nP. 69 - \"When Dutton returned from Central America later that\nmonth, he met with North. North asked him to arrange a\none-day trip to the region so that he could personally thank\nthe pilots and crew. North told him, 'Bob, you will never\nget a medal for this, but some day the President will shake\nyour hand and thank you for it.\nDutton had also prepared a photograph album depicting the\noperation: the operational bases, drop zones, aircraft,\nmunitions, and the crew replete with assault machine guns\nand other assorted weapons. Dutton showed the album to\nNorth, who liked it and said he wanted to show it to 'the\ntop boss. North testified that he sent the album to\nPoindexter to show to the President, but never heard further\nabout the album. Poindexter testified that he did not show\nthe album to the President.\"\nP. 73 - \"In his report to Poindexter, North exaggerated his own\nrole in the crisis. In a PROF note, North told Poindexter\nhe had personally forestalled the crisis by calling the\nPresident of Costa Rica and threatening to cut off aid.\nNorth conceded to Poindexter that he may have overstepped\nthe bounds of his authority: 'I recognize that I was well\nbeyond my charter in dealing with a head of state this way\nand in making threats/offers that may be impossible to\ndeliver.' Poindexter responded: 'Thanks, Ollie, you did\nthe right thing, but let's try to keep it quiet. North\nadmitted in his testimony that he had not called President\nArias. He claimed, instead, that the PROFS message 'was\nspecifically cast the way it was to protect the other two\nparties engaged. By North's account, he misrepresented his\nactions to Poindexter, his boss, in order to conceal Abrams'\nand Tambs' contact with a foreign head of state.\"\n7\nP. 77 - \"Presidential Authorization and Knowledge - The President\ntold the Tower Review Board that he did not know that the\nNSC staff was assisting the Contras. After the Tower Report\nwas issued, however, the President said that private support\nfor the Contras was 'my idea.' The President knew of the\ncontributions from a Middle Eastern Country and, in fact,\nreceived the pledge on the largest of them. According to\nPoindexter, the President's policy was 'to get what support\nwe could from third countries.'\nIn general, Poindexter understood that the President wanted\nthe NSC staff to support the Contras, including encouraging\nprivate contributions. The President also knew, according\nto Poindexter, that North was the chief staff officer on\nCentral America who was responsible for carrying out the\nPresident's general charter to keep the Contras alive.\nPoindexter regularly reported to the President on the status\nof the Contras, the fact that they were surviving, and 'in\ngeneral terms' North's role in facilitating their survival.\nAs a result of these briefings, Poindexter thought that the\nPresident understood that both he and North were\ncoordinating the effort to support the Contras. Poindexter\nalso believed the President understood that 'Col. North was\ninstrumental in keeping the Contras supported without maybe\nunderstanding details of exactly what he was doing.'\nAs to the level of detail provided to the President on\nContra support operation, Poindexter testified that he\n'would not get into details with the\nPresident as to who was doing what. The\nPresident knew that there was a Boland\nAmendment, he knew there were restrictions on\nthe government. As he has said, I think,\nsince November of 1986, that he did not feel\nthat the Boland Amendment applied to his\npersonal staff and that that was his feeling\nall along. I knew that.\nHe knew the Contras were being supported, and\nwe simply didn't get into the details of\nexactly who was doing what.'\nPoindexter testified that on one occasion, he briefed the\nPresident with some specificity about the Contra support\nprogram, but understood that the President did not recall\nthe briefing:\n'Now, you know, the President doesn't recall\napparently a specific briefing in which I\nlaid out in great detail all of the ways that\nwe were going about implementing the\nPresident's policy, and I frankly don't find\n8\nthat surprising. It would not, frankly, at\nthe time have been a matter of great interest\nas to exactly how we were implementing the\nPresident's policy.'\nWithout briefing the President on the 'extraneous details'\nof how his policy was being implemented, however, Poindexter\ntold President Reagan of the construction of the Santa Elena\nairstrip in Costa Rica. Poindexter testified that in\nDecember, 1985, after he returned from Central America, he\nspecifically informed the President that 'private\nindividuals' were establishing the airstrip, at the same\ntime excluding 'the extraneous detail' that North, through\nTambs and Castillo, had facilitated the construction of the\nairstrip. Similarly, while Poindexter thought that the\nPresident was aware of North's role in supporting the\nContras, 'it did not include something as specific as\ndirecting Col. North to conduct air supply operations.\nNonetheless, North testified that he believed that the\nPresident approved his efforts to resupply the war. In\nfact, his actions support that belief. While Poindexter\ntestified that he did not show the photograph album\ndetailing the operation to the President, North testified\nthat he sent the album to the President through Poindexter\nand told Dutton that the President would thank Dutton for\nhis efforts.\"\nP. 81 - \"The covert program that North had developed outside of\nthe law, as well as the vagaries of the law itself,\ninevitably created conflicts of loyalties and shadings of\nduties among the persons whom he coopted to assist him.\nFelix Rodriguez was a close associate of Donald Gregg, the\nNational Security Adviser to the Vice President, and was in\nCentral America through Gregg's good offices. Yet North\ninstructed Rodriguez not to tell Gregg that he was secretly\nworking for North, and Rodriguez testified that he complied\nuntil the summer of 1986. According to North, Director\nCasey wanted to insulate the CIA's career employees from\nNorth's operation so that the CIA could not be charged with\na violation of the Boland Amendment. CIA felt constrained\nto report on U.S. citizens and its traditional role, a\npolicy which 'actively shunned information. We did not want\nto know how the Contras were being funded\nwe\nactively\ndiscouraged people from telling us things.\nThe CIA's Chinese Wall turned into a Potemkin facade as\nNorth sought out and secured the assistance of CIA in\nCentral America. Particularly after Congress amended the\nlaw to allow the CIA to exchange intelligence with the\nContras, many flights undertaken by the Enterprise were\nreported by CIA field offices to CIA headquarters; and CIA\npersonnel provided information necessary for the Enterprise\nto make accurate airdrops and avoid Sandinista fire.\n9\nNorth directed the Enterprise's efforts on behalf of the\nContras with Poindexter's approval and in the belief that\nthe President likewise concurred. The result was that, with\nthe help of other U.S. Government officials, North managed\nto provide to the Contras what Congress would not: a\nfull-scale program of military assistance.\" \"\nTHE WHITE HOUSE\nWASHINGTON\nNovember 4, 1987\nMEMORANDUM FOR ARTHUR B. CULVAHOUSE, JR.\nFROM:\nALAN CHARLES RAUL\nASC\nSUBJECT:\nDeclassification of Report: \"Covert Action in a\nDemocratic Society\"\nThis section of the Report is 52 pages long and arrived for\ndeclassification on October 30. The salient points are noted\nbelow:\nP. 1 - \"The Iran-Contra Affair raises fundamental questions about\nthe secret intelligence operations of the U.S. government.\nCan such operations, and particularly covert action, be\nauthorized and conducted in a manner compatible with the\nAmerican system of democratic government and the rule of\nlaw? Is it possible for an open society like as the United\nStates to conduct such secret activities effectively? And\nif so, by what means can these operations be controlled so\nas to meet the requirements of accountability in a\ndemocratic society?\"\nP. 2 - \"The result of those inquiries was a concerted effort by\nthe executive and legislative branches to adopt laws and\nprocedures to control secret intelligence activities,\nincluding covert actions, and to ensure that they would be\nconducted only with the prior authorization of the President\nand timely notice to Congressional committees specially\nconstituted to protect the secrecy necessary for effective\noperations.\nExperience has shown that these laws and procedures are\nadequate to the task if respected. However, in the\nIran-Contra Affair they often were disregarded. The\nflexibility built into the legislation and rules to allow\nthe executive branch to deal with extraordinary situations\nwas distorted beyond reasonable bounds. Laws intended to\nreflect a spirit of comity between the branches were abused\nwhen that commitment to cooperation was abandoned.\"\nP. 3 - \"The Director of the Central Intelligence Agency, William\nJ. Casey, and other officials showed contempt for the\ndemocratic processed by withholding information that\nCongress was seeking and by misrepresenting intelligence to\nsupport policies advocated by Casey.\n2\nCovert action is not defined in statute. However, Executive\nOrder 12333, issued by President Reagan in 1981, refers to\ncovert action as special activities which are defined as:\nSpecial activities means activities conducted\nin support of national foreign policy\nobjectives abroad which are planned and\nexecuted so that the role of the United\nStates government is not apparent or\nacknowledged publicly, and functions in\nsupport of such activities.\nThe Executive order also provides that the authorized special\nactivities may not include activities that are 'intended\nto influence United States political processes, public opinion,\npolicies, or media.\nP. 6 - \"What makes such activities 'covert' is not their effect,\nbut their implementation in a manner permitting 'plausible\ndenial' a concept that [Truman order] NSC 10/2 also\ncodified. U.S. action in support of indigenous groups were\nto be\nso planned and executed that any U.S.\ngovernment responsibility for them is not\nevident to unauthorized persons and that if\nuncovered the U.S. Government can plausibly\ndisclaim any responsibility for them.\nP. 8 - \"Covert action operations pose challenges for the\npolitical processes of the United States. As with other\nsecret intelligence programs and more sensitive defense\nprojects, appropriations and expenditures of these\noperations must necessarily be kept private. Thus, covert\nassistance to foreign governments and groups does not\nreceive the open debate other resistance programs do.\nParamilitary covert actions are in the 'twilight area'\nbetween war, which only Congress can declare, and diplomacy,\nwhich the President must manage. This type of activity is\nespecially troublesome as a constitutional separation of\npowers issue.\"\nP. 10 - \"While Congress has never provided specific authority for\nthe CIA or any other elements of the Government to conduct\ncovert actions, it has continued to appropriate funds for\nthese activities.\nWhen Secretary of Defense James Forrestal asked the Director\nof Central Intelligence (DCI) on 1947 whether the CIA was\nempowered to conduct covert activities, the Director replied\nthat the CIA could do so if the NSC approved the activities\nand Congress appropriated funds to carry them out.\n3\nA CIA's legal counsel put it in similar terms:\nIf the President gave us a proper directive\nand Congress gave us the money, we had the\nadministrative authority to carry out (covert\nactions) \"\nP. 14 - \"The investigations by the Church Committee in 1975 and\n1976 failed to turn up proof that Presidents had ordered\nassassinations of foreign officials, but some senior\nofficials indicated their belief that some Presidents had\nsecretly approved such activities. Many in Congress felt\nthat the problem was not so much that the CIA was\nundertaking covert action without the proper authority, but\nthat Executive approval had been given in a deliberately\nambiguous manner.\"\nP. 15 - \"Congress responded with the Hughes-Ryan Amendment which\naltered the approval process of CIA covert action\noperations. By requiring that the President personally find\nand approve all covert actions as important to the national\nsecurity, Congress sought to make the President responsible\nfor all covert operations. The U.S. Government might still\nbe able to deny publicly the responsibility for specific\nactions, but within the government there would be an\naccountable source of authority -- the President.\"\nP. 18 - \"The law provided that the Committees were to be notified\nin a 'timely fashion' of any covert action for which prior\nnotice was not given. The 1980 report on this provision by\nthe Senate Intelligence Committee states:\nThe Senate Select Committee and the Executive\nBranch and the intelligence agencies have\ncome to an understanding that in rare,\nextraordinary circumstances if the President\nwithholds prior notice of covert operations,\nhe is obliged to inform the two Oversight\nCommittees in a timely fashion of the action\nand the reasons for withholding such prior\nnotice.\nAccording to the Committee report, the law\nwas a compromise intended to codify the\n'practical relationship the Executive Branch\nand the intelligence oversight committees had\ndeveloped based on comity and mutual\nunderstanding, without confrontation\" and\nthus to 'carry this working relationship\nforward into statute.\"\nP. 20 - \"Despite occasional problems, this system [for covert\naction procedures] has proved workable. The Administration\nhas notified the oversight Committees of its proposals\n4\nincluding those of great sensitivity in which lives might be\nin danger in event of disclosure. In fact, the\nAdministration has said that both it and the Carter\nAdministration notified the intelligence committees of all\ncovert actions prior to implementation except the Iran arms\nsale operation. The President and senior intelligence\nofficials have indicated to Congress their satisfaction with\nthe Oversight Committees' role and with the prevailing\nprocedures, which also protects the CIA from charges that\nits actions are unauthorized. Indeed, the procedures\nimplemented by the Executive and by Congress preclude the\npossibility that the intelligence agencies would be blamed\nfor activities for which elected officials might wish to\ndeny responsibility.\"\nP. 22 - \"The Findings process also was circumvented. Covert\nactions were undertaken outside the specific authorizations of\nPresidential Findings. At other times, covert actions were\nundertaken without a Presidential Finding altogether.\nActions were undertaken through entities other than the CIA,\nincluding foreign governments and private parties. There\nwere claims that the Findings could be used to override\nprovisions of the law. The statutory requirements for prior\nnotice to eight key congressional leaders was disregarded.\nThroughout, along with the legal requirement to notify the\nIntelligence Committees in a 'timely fashion.\nP. 25 - \"The NSC staff then raised money for the Contras and,\nwith Secord's assistance, created an organization outside the\nGovernment to procure arms and resupply the Contras. There\nwas no Presidential Finding authorizing these activities.\nWhile the President has said that NSC staff encouragement\nof the Contras was his 'own' idea, the President had\npreviously told the Tower Board that he was unaware that the\nNSC staff was directly assisting the Contras.\nP. 26 - Efforts coordinated by North to ransom hostages\nconstituted another instance in which the legal requirements\nfor a Finding were dispensed with. This was in\ncontravention of the President's own directive, Executive\nOrder 1233, which provided specifically that all covert\nactions be subject to Presidential findings. Not only was a\nFinding dispensed with, but funds to support the operation\nwere raised from nongovernmental sources. The operation was\npursued despite the objection of CIA and some DEA officials\nand Congress was not notified.\nThere was also no written finding when the CIA became\ninvolved in the covert shipment of arms in November, 1985.\nMcFarlane said, 1 (t) he President was all for letting the\nIsraelis do whatever they wanted to do.' McFarlane in\nNovember, 1986, mused that U.S. participation in the initial\nIsraeli TOW shipments could be justified on the grounds that\nthe President had made a 'mental Finding,' and Attorney\n5\nGeneral Edwin Meese opined that the President's concurrence\nwas tantamount to an oral Finding and thus sufficient legal\nauthorization for the program. The Finding sought to\nauthorize retroactively the CIA-assisted shipment of arms.\nIt was drafted after the shipment was made and then signed\nby the President on December 5, 1985, only because of the\ninsistence of CIA Deputy Director John McMahon. This\nprocess ignored the central purpose of the Finding\nrequirement which is to ensure that the President has\nauthorized a covert action before it starts and that he is\nfully aware of it and accountable for this implementation.\nFurther, the 'unless and until' language of the Hughes-Ryan\nAmendment clearly required a Finding before the CIA could\nproceed.\"\nP. 28 - \"Neither the Finding relating to the Iran arms sales, nor\nany finding relating to assistance to the Nicaraguan\nResistance authorized the diversion of funds. Poindexter\ntestified that he believed the diversion would become\npolitically controversial if exposed, so he decided not to\ntell the President in order to give him 'deniability.\nP. 30 - \"In the Iran initiative, the Administration also used the\nFinding to avoid compliance with the laws regulating the\nexport of arms\nIn 1981, Attorney General William\nFrench Smith took the position that the limitations those\nstatutes imposed applied only to transfers undertaken\npursuant to the statutes. Moreover, the Smith opinion\nspecifically observed that Congress had provided for an\nalternative form of notice to the Intelligence Oversight\nCommittees for covert arms transfers carried out by the\nCIA. \"\nP. 31 -- \"When the Smith opinion was considered in the context of\nthe Iran Finding in January 1986, the requirement of some\nform of Congressional notification was ignored. Without at\nleast timely notice to the Congress, as required by section\n501 of the National Security Act, there was no justification\nunder the Smith opinion could not be used to conclude that\nthe Iran arms transfer was in compliance with applicable\nstatutes.\nLater in 1986, after the Iran Finding was issued, the Arms\nExport Control Act was amended to ban all arms exports to\ncountries that supported terrorism, unless there was a\nPresidential waiver and a report to Congress. Administration\nofficials, however, continued to rely on the Finding as the\ncontrolling authority, despite the fact that Iran was a\ndesignated terrorist country.\"\nP. 34 - \"Reference to the Smith opinion [in the Poindexter\nJan. 17 cover memo], which was predicated on notice to the\nIntelligence Oversight Committees, gave the President\nmisleading legal advice. Findings were intended to subject\n6\ncovert action to the accountability of the constitutional\nsystem, not to supplant law.\"\nP. 38 - \"Deputy Director Gates told the Senate Intelligence\nCommittee: 'Agency people, from the Director on down,\nactively shunned information. We did not want to know how\nthe Contras were being funded\nwe actively discouraged\npeople from telling us things. We did not pursue lines of\nquestioning. 1 When Gates first heard Charles Allen's\nsuspicions that a diversion of funds had taken place, his\n'first reaction was to tell Mr. Allen that I did not want to\nhear any more about it.\nP. 39 - \"As Clair George, pointed out, once members of the\nintelligence agencies begin to lie to others in the\nGovernment, 'the destruction of a secret service in a\ndemocracy' must follow. He added, 'I deeply believe (even)\nwith the complexities of the oversight process in the\nrelationship between a free legislative body and a secret\nspy service, (and) that frankness is the best and only way\nto make it work.\nP. 47 - \"The misuse of intelligence was a subject ancillary to\nthe mandate given the Committees by Congress. The\nCommittees included these examples because the serious\nimplications they pose for decision-making. This issue of\nintelligence by a Director of Central Intelligence, the\nNational Security Adviser or any Senior Intelligence\nofficial, frustrates the ability of those within the\nExecutive branch and Congress to arrive at decisions based\nupon sound national policy judgements.\nP. 48 - \"The Committees conclude:\n(a) Covert operations are a necessary component of our\nnation's foreign policy. They can supplement, not replace,\ndiplomacy and normal instruments of foreign policy. As\nNational Security Adviser Robert McFarlane testified, 'it is\nclearly unwise to rely on covert action as the core of our\npolicy.' The government must be able to gain and sustain\npopular support for its foreign policy through open, public\ndebate.\n(b) Covert operations are compatible with democratic\ngovernment if they are conducted in an accountable manner\nand in accordance with law. Laws mandate reporting and\nprior notice to Congress. Covert action findings are not a\nlicense to violate the statutes of the United States.\n(c) As the Church Committee wrote more than a dozen years\nago: 'Covert actions should be consistent with publicly\ndefined United States foreign policy goals.' But the\npolicies themselves cannot be secret.\n7\n(d) All government operations, including covert action\noperations, must be funded from appropriated monies or from\nfunds known to the appropriate committees of the Congress\nand subject to congressional control. This principle is at\nthe heart of our constitutional system of checks and\nbalances.\n(e) The intelligence agencies must deal in a spirit of good\nfaith with the Congress. Both new and ongoing covert action\noperations must be fully reported, not cloaked by broad\nfindings. Answers that are technically true, but\nmisleading, are unacceptable.\n(f) Congress must have the will to exercise oversight over\ncovert operations. The intelligence committees are the\nsurrogates for the public on covert action operations. They\nmust monitor the intelligence agencies with that\nresponsibility in mind.\n(g) The Congress also has a responsibility to ensure that\nsensitive information form the Executive branch remains\nsecure when it is shared with the Congress. A need exists\nfor greater consensus between the Legislative and Executive\nbranches on the sharing and protection of information.\n(h) The gathering, analysis of and reporting of\nintelligence should be done in such a way that there can be\nno question that the conclusions are driven by the actual\nfacts, rather than by what a policy advocate hopes these\nfacts will be.\"\nP. 50 - \"History reflects that the prospects for peaceful\nsettlement are greater if this country has adequate means\nfor its own defense, including effective intelligence and\nthe means to influence developments abroad.\"\nP. 51 - \"This country has been fortunate to have a military that\nis sensitive to the constraints built into the Constitution\nand to the necessity of respecting the Congress's\nresponsibilities. 'Like the military, the intelligence\nservices can function only with the trust and support of\ntheir countrymen.\nTHE WHITE HOUSE\nWASHINGTON\nNovember 4, 1987\nMEMORANDUM FOR ARTHUR B. CULVAHOUSE, JR.\nFROM:\nALAN CHARLES RAUL Are\nSUBJECT:\nDeclassification of Report: The Enterprise\nThis section of the Report is 97 pages long and arrived for\ndeclassification on October 30. The salient points are noted\nbelow:\nP. 1 - \"Almost $48 million flowed into the Enterprise. It came\nfrom contributions directed to the Enterprise by North from\nCarl \"Spitz\" Channel and Richard Miller, third countries,\nand others. It came from the sales of arms to the Contras\nand missiles to Iran. It came from the sale of weapons to\nthe CIA. The total would have been at least $10 million\ngreater had the Brunei contribution not been misdirected.\"\nP. 2 - \"In the financial records of the Enterprise, the\nCommittees found that:\n-- The plan -- which North attributed to Casey -- to create\na worldwise private covert operation organizations, with\nsignificant financial resources, was being implemented\nthrough a network of offshore companies administered in\nSwitzerland.\n-- The Enterprise took in nearly $48 million during its\nfirst 2 years. Its income-generating capacity came almost\nentirely from its access to U.S. Government resources and\nconnections: the contributions directed to it by North, the\nmissiles sold to Iran, and the brokering of arms to the\nContras as arranged by North.\n-- The Enterprise spent almost $35.8 million. It used its\nresources to finance covert operations not reported to\nCongress as required by law and, in some instances, not\ndisclosed to the President.\n-- The Enterprise generated a $16.1 million surplus from\narms sales to Iran. Before its operation came to a halt,\nthe Enterprise managed to spend at least $3.8 million of\nthat surplus on direct support for the Contras.\n-- Secord, Hakim, and Clines took self-determined\n\"commissions\" to reward themselves for their work on arms\ndeliveries to the Contras and the CIA. The commissions\n2\ntotaled approximately $4.4 million, with an average markup\nof about 38 percent over the cost of the arms -- not 20\npercent as asserted by Secord.\n-- Contrary to their testimony that they only took\n\"commissions\" out of the Enterprise accounts, Hakim and\nSecord also took more than $2.1 million out of the\nEnterprise companies for personal business ventures and\npersonal use. Some of these business ventures involved\nplans to sell weapons to the Contras at substantial profits.\n-- $7.8 million of the $12.2 million surplus generated by\nthe Enterprise remained under management in Switzerland when\nthe Enterprise ceased its operations. Most of the money was\nleft in the Enterprise bank accounts or in reserve accounts\nheld for the Enterprise. However, approximately $2.2\nmillion was held in several separate fiduciary accounts for\nthe benefit of the members of the Enterprise.'\nP. 24 - \"Hakim testified that, as a result of these kinds of\ndemands [by North], he was not sure who was making the\ndecision about the use of the Enterprise's funds -- North\nacting as an official of the U.S. Government, or he and\nSecord. As Hakim put it: 'whoever designed this structure,\nhad a situation that they could have their cake and eat it\ntoo. Whichever they wanted to have, a private organization,\nit was private; when they didn't want it to be a private\norganization it wasn't.\nP. 47 - \"In this Report, the term 'diversion' refers to that\nportion of the surplus from the Iran arms sale which was\nused to pay Contra-related expenses.\"\nP. 48 - \"The Iran arms sales generated a $16.1 million surplus\nfor the Enterprise. However, the Enterprise spent only part\nof that money, $3.8 million, for the Contras before its\noperations were stopped.\nAs of November 19, 1986, the day before the first money from\nthe Iran arms transactions was deposited into the\nEnterprise, the Enterprise had a cash balance of\napproximately $1 million. From November 20, 1985, through\nDecember 1986, the Enterprise received an additional $2.4\nmillion from donations to the Contras. During the same\nperiod, the Enterprise spent approximately $7.2 million on\nbehalf of the Contras. The shortfall -- $3.8 million -- was\ndiverted from the Iran arms sale surplus.\nP. 48, 49 - \"The diversion did not take place by accident. In\nfact, North helped set the price of the arms so level that a\nsurplus would be created which could to be used for the\nContras. According to Secord, North consistently instructed\nhim to use the surpluses generated from the Iranian arms\nsales for the Contra project. North apparently thought that\n3\nat least $6 million of the Iran surplus from the May\ntransaction alone would be used for the Contras. He sent\nPoindexter a PROF note on May 16, saying that the Enterprise\nhad 'more than $6 million available for immediate\ndisbursement. I Poindexter testified that he believed that\nthe Enterprise was giving the Contras all of the surplus.\"\nP. 84 - \"The CSF fiduciary agreement governing [Enterprise Fund]\nReserve 1 -- the one for covert operations -- provided that\nshould Hakim die, Secord would have direct control over it\nand should Secord die, North would have direct control.\nShould North die, the remaining portion of the Reserve would\nbe divided equally among the estates of all three men. The\ninstructions to CSF were irrevocable without the consent of\nall the beneficiaries. Hakim said that in setting up\nReserve 1, he simply followed the structure of the\nEnterprise from top to bottom as he understood it -- with\nNorth on the top.\"\nTHE WHITE HOUSE\nWASHINGTON\nNovember 4, 1987\nMEMORANDUM FOR ARTHUR B. CULVAHOUSE, JR.\nFROM:\nALAN CHARLES RAUL ACR\nSUBJECT:\nDeclassification of Report/House Minority:\n\"The Boland Amendments\"\nThis section of the Report is 32 pages long and arrived for\ndeclassification on October 29. The salient points are noted\nbelow:\nP. 1 - \"People listening to the public hearings on the\nIran-Contra Affair heard many statements about the \"spirit\nof the Boland Amendments.\" Everyone knows, the argument\ngoes, that Congress wanted to cut off all U.S. aid to the\nNicaraguan resistance. Congress did not anticipate that\nanyone on the National Security Council staff would support\nprivate and third country fundraising or give advice and\nhelp coordinate the private resupply effort. Colonel\nNorth's activities were a clear attempt, the argument\nconcludes, to circumvent the law.\nThere are two basic problems with this line of reasoning.\nFirst as Justice Frankfurter said in Addison V. Holly Hill\nCo., 'Congress expresses its meaning by words\nIt\nis\nno warrant for extending a statute that experience may\ndisclose that it should have been made more comprehensive.\nOne of the reasons there was so much discussion of the\n'spirit of the law' at the hearings is, as we shall show,\nthat it is difficult to argue the letter of the law had been\nviolated. In an important sense, however, this last\nstatement concedes too much. The fact is that Congress was\nnot animated by a single 'spirit' when it passed the Boland\nAmendments.\"\n=\nP. 4 - \"Finally, for fiscal 1987, Congress resumed full funding\nfor the resistance at a level of $100 million. As McFarlane\nsaid to Representative Courter during testimony, 'It is\nabsolutely out of the question to have a coherent policy\nwith that kind of a change in the legal framework.\nCongress's ambivalence expressed itself not only from year\nto year, but within years as well -- including the year of\nthe strictest Boland prohibition. If all we were talking\nabout was a clear expression of Congressional intent in the\nform of a strict prohibition, that clear statement would\nhave to govern for as long as it stayed in effect. The\n2\nfact, however, is that Congress was of more than one mind --\neven within the statute that contained the strictest Boland\nprohibition.'\nP. 7 - \"The Senate supporters of Contra aid were willing to agree\nto the conference report, and the President's was willing to\nsign the bill, only because there was a general\nunderstanding that a second vote [on $14M in Contra aid]\nwould be forthcoming, after the 1984 elections were out of\nthe way. Clearly, that understanding would have made no\nsense unless the resistance continued to exist. Thus,\nPresident Reagan's instructions to his staff to do whatever\nthey could within the law to keep the 'body and soul' of the\ndemocratic resistance together, and the actions he took that\nwere consistent with Congress's findings about the OAS\ncharter, all were entirely in keeping with the full spirit\n-- the spirit expressed by all of the participating members\nof Congress -- of even the strictest Boland prohibition.\"\nP. 9 - \"If Congress had simply wanted to prohibit all U.S.\nactivity that might help the resistance, there were plenty\nof easier ways available for it to have done SO. All it\nneeded to do was look at another very well known and similar\nlaw, the Clark Amendment, that cut off support to the\nresistance fighters in Angola in 1976. That language read\nas follows:\nNotwithstanding any other provision of law,\nno assistance of any kind may be provided for\nthe purpose, or which would have the effect,\nof promoting or augmenting, directly or\nindirectly, the capacity of any nation,\ngroup, organization, movement or individual\nto conduct military or paramilitary\noperations in Angola.\nCongress obviously knows how to write an air tight\nprohibition when it wants to. As in this example, it does\nnot write about agencies or entities, but simply bars\n'assistance of any kind' from any source.\"\nP. 11 - \"The Boland Amendment was not contained in the same\nappropriations bill that provides funds for the NSC. The\nDepartment of Defense Appropriations Act includes all of the\ntraditional elements of the Intelligence Community. The\nNational Security Council, in contrast, is and traditionally\nhas been funded together with the rest of the White House in\nan entirely separate appropriations bill for Treasury,\nPostal Service and General Government that is considered by\na separate appropriations subcommittee. If Congress had\nintended to cover the funds made available to the NSC staff\nfor salaries, in other words, it could easily have followed\nthe broad language of the Clark Amendment, the Arms Export"
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