MEESE DIDN'T ASK CASEY A KEY QUESTION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000403620001-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: February 27, 2012
• Sequence Number: 1
• Publication Date: April 19, 1987
• Content Type: OPEN SOURCE

I' Declassified in Part - Sanitized Copy Approved for Release 2012/02/28: CIA-RDP90-00965R000403620001-9
WASHINGTON POST
19 April 1987
Meese Didn't Ask Casey a Key Question
Attorney General Defends Failure to Discuss Possible Fund Diversion
By Bob Woodward
f and Howard Kurtz
Washington Post Staff Writers
At the invitation of CIA Director
19 William -I. rn , Attorney General
p Edwin I dropped by
Casey's home in McLean on the
evening of last Nov. 22 for a beer
and a chat about the attorney gen-
eral's day-old fact-finding inquiry
into U.S. arms sales to Iran.
Meese said in an interview that
Casey told him that intermediaries
who had helped finance the secret
arms deals "were saying either pay
us the money we're owed or else
we're going to try to make it look
bad."
Investigators working on the
Iran-contra affair now have con-
cluded that the Reagan administra-
tion was effectively being black-
mailed by Iranian intermediaries
and financiers who were owed $10
million they had advanced to finance
the arms sales. The intermediaries'
threats were relayed through New
York businessman Roy Furmark, a
longtime Casey friend who met five
times with Casey or his emissaries
and warned repeatedly that the ad-
ministration's secret arms deals
with Iran would be publicly exposed
unless the money was repaid.
Just hours before visiting Casey
that Saturday evening, Meese had
read the "smoking gun" memo,
found in Lt. Col. Oliver L. North's
White House files, which said $12
million from the Iran arms sales
would be spent on the contras. That
afternoon a Meese aide conducting
the weekend inquiry with him also
had read intercepts of conversa-
tions involvinju participants in the
arms sales to Iran which-accord-
ing to Senate sources who have
read them-strongly suggested
that something suspicious had hap-
pened to millions of dollars in the
deals.
But during their conversation
that evening, Meese said, he did not
raise the question of a possible di-
version of funds or ask Casey any
questions about it. He did not aues-
tion Casey-the director of all U.S.
covert operations-about what had
happened, Meese said, because he
thought such questioning might be
inappropriate and because he be-
lieved Casey knew nothing about
any diversion of funds.
Moreover, Meese said in the in-
terview in his office Thursday, his
close ally Casey did not raise the
subject either. This was the first
extensive interview Meese has giv-
en on his handling of the Iran-contra
affair.
Casey had invited Meese to come
by his home on Nov. 22 "to let me
know about something," Meese
said. That something was Fur-
mark's warnings about the unhappy
financiers.
Meese's inquiry-an attempt to
assemble the story of the Iran arms
deals for President Reagan, he
said-was initiated two days earlier
after Secretary of State George P.
Shultz had warned Reagan in a
tense meeting that Casey was plan-
ning to give misleading testimony
to Congress on Friday, Nov. 21,
about the arms sales.
Meese said he still believes there
was no need for the justice Depart-
ment to launch a criminal investi-
gation at that point. Instead, Meese
continued his informal inquiry and
questioned North the following day,
an interview that now cannot be
used as evidence because Meese
did not read North his rights.
Meese was asked: "Looking back,
were there enough signs at that
point for you to say to yourself,
maybe I shouldn't go and interview
Ollie North, maybe it's time to
bring the FBI in?"
"Not at all," Meese replied.
"There wasn't anything that would
have given that impression."
Even if he had known that profits
from the Iran arms sales were be-
ing diverted to aid the Nicaraguan
rebels, Meese said: "There are cir-
cumstances under which it all could
have been a very legitimate thing."
If the diversion was "authorized" by
then-national security adviser John
M. Poindexter, Meese said, it could
have been proper.
Meese said he was simply trying
"to put together a coherent summa-
ry" on the Iran affair. But although
he was gathering facts and not con-
ducting a criminal probe, Meese
said he followed his "instinct" in not
asking Casey about the memo,
which said that "$12 million [gen-
erated by the arms sales) will be
used to purchase critically needed
supplies for the Nicaraguan dem-
ocratic resistance forces."
Meese said: "One of the things
you don't do is you don't tell some-
body something until you know
what it's all about .... If I was go-
ing to have to talk to Casey about
this, if there was any indication that
he was involved or knew about it, I
wanted to find out what North knew
before I talked to Casey about it.
That was just a common sense way
of approaching it."
Asked whether this did not sug-
gest that Meese felt he was con-
ducting "kind of a quasi-criminal
inquiry" at the time he talked to
Casey, the attorney general replied
that "it's just kind of a natural in-
stinct" to avoid such questioning,
whether or not it was a criminal
investigation.
Meese said in the interview that
the unsigned, undated "smoking
gun" memo did not provide clear
evidence of wrongdoing. The memo
was a detailed, 2,000-word docu-
ment describing the history of the
arms-for-hostages deals and outlin-
ing the secret mission to Tehran to
be undertaken by former national
security adviser Robert C. McFar-
lane. The diversion of $12 million to
the contras was described in one
paragraph of the memo.
"At that time we didn't know if
this was a memo, somebody's pipe
dream, a proposal that had been
implemented, hadn't been imple-
mented or anything else. We just
had this thing there," the attorney
general said.
Declassified in Part - Sanitized Copy Approved for Release 2012/02/28: CIA-RDP90-00965R000403620001-9
 Copy Approved for Release 2012/02/28: CIA-RDP90-00965R000403620001-9
The day after the interview, a
Justice Department spokesman
called a reporter to add that several
drafts of the "smoking gun" memo
.had been found in White House files
that Saturday and that only one of
them contained the paragraph on
diverting funds to the contras.
Asked whether he viewed the
intermediaries' threats conveyed to
him Nov. 22 by Casey as attempted
blackmail, Meese said: "it didn't
sound to me like Casey thought
Furmark was blackmailing, but the
other people who were trying to
send these messages through Fur-
nmark were trying to, in effect, say
either pay us the money we're
owed or else we're going to try to
make it look bad."
Asked whether this seemed like a
key piece of information, he said:
"Not particularly at the time, no."
By the time Meese called in the
Federal Bureau of Investigation
after disclosing the diversion of
funds in a Nov. 25 news conference,
North and his secretary, Fawn Hall,
had shredded numerous National
Security Council documents and
altered others, according to in-
formed sources.
In the interview, Meese strongly
defended his handling of the four-
day inquiry, which is being scruti-
nized by congressional investigators
and by independent counsel Law-
rence E. Walsh.
"I doubt if there's any person
who's ever held the position of at-
torney general who'd have done it
differently," he said.
"I think we did all the right things
knowing what we knew at the time
.... If we had brought the FBI in,
we would have been criticized for
using the FBI for political purposes,
using them for something that had
nothing to do with criminality."
Meese agreed that In hindsight,
it looks far different." But he said
the recent criticism "makes it sound
like we knew something was wrong
and were trying to prove it.
"I've probably done more crim-
inal investigations than most people who
have ever been in this building ... and
there was nothing to indicate to me or to
anyone else who was with we that there
was anything wrong," he said.
Another problem, Meese said, is that
'this was the most sensitive thing that had
happened in the entire administration as far
as maintaining absolute security about it. As
a result, no records were kept. People
didn't write things down. I didn't write any-
tting down about it for the entire time."
In the five months since Meese disclosed
the clandestine aid to the contras, questions
have persisted about how much he knew
when he began the Nov. 21 inquiry with
Assistant Attorney General William Brad-
ford Reynolds and two other aides who had
m prosecutorial experience.
Sources said that the Senate intelligence
committee quietly alerted Meese before his
itquiry began that there were money
Iroblems involving the Iran arms
ales.
The sources said this occurred after the
panel sent an investigator, Edward P.
Levine, to the National Security Agency on
Nov. 20 to review intercepted communica-
tions involving intermediaries in the arms
deals that showed a pattern of overcharges.
Said one source, "Meese knew when the
21st [of Novembers rolled around that
there was big trouble and it was big mon-
ey." But in the interview Meese denied this,
saying, "I didn't get anything from the Sen-
ate intelligence committee, never had any
contact with them."
Justice Department spokesman Terry H.
Eastland said Meese and his assistants are
certain that the first they heard of NSA in-
tercepts was on Friday, Nov. 21, when a top
Meese aide attended Casey's closed-door
testimony before the Senate intelligence
panel and the intercepts were touched on in
the questioning.
Meese said he began the informal inquiry
because there was "confusion" within the
administration about the details of the Iran
arms sales as Casey was preparing his Sen-
ate testimony, and he feared the adminis-
tration might "look silly." Meese briefly dis-
cussed the matter with FBI Director Wil-
liam H. Webster on Nov. 21, and both
agreed there was no need for the bureau to
enter the case.
Even after Casey testified that day,
Meese said he pursued the inquiry all week-
end because the president wanted to dis-
cuss the Iran affair at a White House meet-
ing the following Monday.
Evidence reported by the Senate Select
Committee on Intelligence and the presi-
dentially appointed Tower commission
shows that by the time Meese visited
Casey's home on Nov. 22 Casey had known
of the possible diversion of funds for at least
six weeks.
On Oct. 7, Furmark went to Casey and
told him that the U.S. role would be ex-
posed unless the intermediaries were paid
the $10 million they were owed. Furmark
pressed the issue with Casey or his aides
four more times over the next seven weeks.
Furmark has said he was not involved in
any blackmail attempt and was merely act-
ing as an emissary for Saudi financier Adnan
Khashoggi, who was seeking repayment of
t.
the $10 million that two Canadian investors
had put up for the arms deals.
Casey also met Oct. 7 with Charle en,
then the CIA's national intelligence officer
for counterterrorism. Allen told the Tower
commission that he "raised the issue of di-
version to the contras" with Casey.
Asked whether he now believes in light of
this evidence that Casey had been aware of
the diversion of funds, Meese said, "I don't
want to conjecture on that. I have the feel-
ing that if Bill did know he probably would
have told me."
Asked whether the report by the Tower
commission provided sufficient evidence
that Casey had been warned of a possible
diversion, Meese replied: "Not necessarily,
because Bill wasn't able to testify." Since
undergoing surgery for a cancerous brain
tumor in December, Casey has been unable
to speak to investigators. He resigned as
CIA director in January.
Pressed about why he didn't ask Casey
Nov. 22 about the possible diversion of
funds cited in the "smoking gun" memo,
Meese said: "Because he wouldn't have
known anything about that."
Meese said Casey's account of the inter-
mediaries' threats to publicize the sale of
U.S. arms through Israel to Iran-transac-
tions orchestrated by officials on the Na-
tional Security Council staff-did not alert
him to any possible criminality. "Some Iran-
ians were arguing over money or haggling
over money .... I mean, who knows what
happens in Iran," Meese said.
Meese said Casey made "no reference to
Nicaragua" that evening. "I think that what
he said was that these fellows were going to
say if they didn't get their money they were
going to allege that money had been used
by Israel for projects of Israel or the United
States," Meese said.
Meese added that he was not sure wheth-
er Casey said this at their Saturday night
meeting or in memos Casey sent the attor-
ney general three days later.
The attorney general went to Casey's
home again at 7 a.m. on Nov. 25, hours be-
fore North was fired and Meese publicly
disclosed the diversion of funds. Meese said
the early-morning meeting with Casey was
"just basically to talk over the situation."
Declassified in Part - Sanitized Copy Approved for Release 2012/02/28: CIA-RDP90-00965R000403620001-9