IRAN FUNDS WERE DIVERTED; POINDEXTER, NORTH OUT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000402920012-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: February 8, 2012
• Sequence Number: 12
• Publication Date: November 26, 1986
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2012/02/08: CIA-RDP90-00965R000402920012-5
ARTICLE WPRED
ON PAGE
WASHINGTON POST
26 November 1986
Iran Funds Were Diverted;
Poindexter, North Out
T By David Hoffman
Waahmgtoo Post Staff Writer
President Reagan yesterday announced
the resignation of national security adviser
Vice Adm. John M. Poindexter and the fir-
ing of a key deputy, Lt. Col. Oliver L.
North, following the disclosure of a clandes-
tine web of financial transactions in which
profits from the sale of American weapons
to Iran were diverted to help rebels fighting
the Nicaraguan government.
A shaken and grim-faced Reagan, con-
fronting the most serious crisis of his pres-
idency, told reporters "I was not fully in-
formed" about "one of the activities under-
taken" in the secret weapons shipments to
Iran. "This action raises serious questions
of propriety," he said.
Attorney General Edwin Meese III an-
nounced that $10 million to $30 million in
profits from weapons shipped to Israel and
subsequently sold to Iran were depdsited in.
Swiss bank accounts and "made available to
the forces in Central America" fighting the
Sandinista government of Nicaragua. The
money was diverted during a period in
which Congress had cut off U.S. military aid
and prohibited American officials from help-
ing the rebels.
Administration sources said that Justice
Department officials discovered the di-
verted funds late last week when they were
attempting to piece together a chronology
of events in the Iran arms shipments. Ac-
cording to an administration account of the
discovery, a secret intelligence "intercept"
quoted Iranians and perhaps others discuss-
ing the price of the weapons in amounts
that appeared to be far greater than their
actual value, triggering a search for the
profits and the reason they were diverted,
the sources said.
The departures of Poindexter and North
occurred on a day of deepening contradic-
tions and disappointment at the White
House, where officials were reeling from
three weeks of disclosures about the secret
Iran operation that have seriously damaged
Reagan's credibility and set the stage for
renewed confrontation with Congress.
Congressional leaders said they would
conduct their own investigations into the
Iran and Nicaraguan operations, and some
said Reagan's foreign policy is in "total dis-
array." Meese said he would also pursue his
investigation, and Reagan announced he
would create a special review board to ex-
amine the role and procedures of the Na-
tional Security Council staff. Sources said
former Senate Armed Services Committee
chairman John Tower (R-Tex.) would be
named today to chair the panel.
The statements by Meese and others
rekindled questions about how aware Rea-
gan was of the activities of his administra-
tion's senior officials. Meese repeatedly
said Reagan knew nothing about the oper-
ation. Meese said North was the
only person in the U.S. government
who "knew precisely" of the trans-
actions, but added that Poindexter
"did know that something of this na-
ture was occurring, but he did not
look into it further." Meese said lat-
er that "there may have been others
who may have been working in
some capacity" with North. Meese
also said that Poindexter acknowl-
edged to him on Monday that he
knew some aspects of the Ni-
caraguan operation and told Meese
then that he intended to resign.
Meese said former national se-
curity adviser Robert C. McFar-
lane, Poindexter's predecessor, also
knew of the operation.
In London, where he was making
a speech, McFarlane said in a state-
ment that, "in May of this year in
connection with a mission to Iran I
was advised by Col. North in gen-
eral terms that such a [transfer
h-id taken place after my departure
from government. Based upon the
summary. account I took it to have
been a matter of approved policy
sanctioned by higher authority.
These transfers were reported to
have taken place this year. At no
time was it raised or considered
during my service in government."
Many others inside the adminis-
tration and outside questioned
Meese'- statement that tha Mi
carafuan operation was ke t secret
from other senior policymakers in
the government and from the U .S.
intelligence community. In an inter-
view with NBC News last night,
former secretary of state Henry A.
Kissinger said, "I cannot imagine a
lieutenant colonel or even an admi-
ral like Poindexter doing this with-
out somebody knowing."
The administration sources said a
leading candidate to replace Poin-
dexter is Navy Secretary John F.
Lehman Jr. Other candidates are
said to include former NATO am-
bassador David Abshire; former
United Nations ambassador Jeane J.
Kirkpatrick and Undersecretary of
State for Political Affairs Michael
H. Armacost.
Reagan pledged that "future for-
eign and national security policy
initiatives will proceed only in ac-
cordance with my authorization."
His decision to create the special
review board appeared to be a re-
sponse to growing questions from
senior State Department officials
and members of Congress about
whether the White House had over-
stepped the proper function of the
National Security Council by run-
ning covert operations out of its
basement offices in the West Wing.
Shortly after Reagan's announce-
ments, State Department spokes-
man Charles E. Redman announced
that Secretary of State George P.
Shultz had prevailed in his effort to
gain control of future U.S. policy
toward Iran. Shultz designated Ar-
macost to take charge of the de-
partment's effort to revamp the
Iran initiative and seek release of
Americans held in. Lebanon.
Shultz has been the subject of
intense speculation that he would
leave the administration because of
his opposition to the covert Iran
arms sales, but yesterday he de-
clared his support for Reagan's pol-
icy to reach out to factions in Iran,
and said he intended to be "very
much a part of the effort to bring
them to fruition."
Reagan promised to make public
the results of the administration
investigation, and continued to in-
sist that his basic policy toward Iran
was not flawed.
"I'm deeply troubled that the im-
plementation of a policy aimed at
I~III(