PRESSURE RISES FOR CONGRESS PROBE, SPECIAL PROSECUTOR IN IRAN SCANDAL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000403730012-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: March 9, 2012
• Sequence Number: 12
• Publication Date: December 1, 1986
• Content Type: OPEN SOURCE

-J.
Declassified and Approved For Release 2012/03/09_: CIA-RDP90-00965R000403730012-5
ARTICLE APPEARED 1- December 1986 ON PAGE .~ _
Pressure Rises for Congress Probe,
Special Prosecutor in Iran Scandal
More High-Level Ousters
In White House Sought
As Controversy Widens
By JOHN WALCOIT
And ANDY PASZTQR
WASHINGTON-The Reagan adminis-
tration's Iranian crisis is coming to a boil
with the almost certain appointment of a
special prosecutor and a Watergate-style
congressional investigating committee,
amid renewed calls for more high-level
ousters.
Yesterday, Senate Republican leader
Robert Dole of Kansas said President Rea-
gan this week should call a special session
of Congress to form a special House-Senate
committee to investigate the mushrooming
Iranian scandal. Senate Democratic leader
Robert Byrd of West Virginia also called at
least for a Senate select committee, al-
though he said he didn't like the idea of a
special session and would prefer for the se-
lect panel to begin in January, when the
Democrats take control of the Senate.
And Senate Foreign Relations Commit-
tee Chairman Richard Lugar, an influen-
tial Indiana Republican, called for a "new
staff" at the White House, including the re-
placement of Chief of Staff Donald Re-
gan.
There also were demands for a special
prosecutor from such politicians as former
Vice President Walter Mondale and New
York Democratic Sen. Daniel Patrick Moy-
nihan, who also called on the president to
move quickly to clean up the affair. "He's
got about 48 hours ... or it will be lost,"
Sen. Moynihan said on NBC-TV's "Meet
the Press."
Se aratel , there is increasin evidence
that the clandestine deallnrs with the ran-
ians involved a broad spectrum of individ-
uals inside an ou the
istration. moreover, seems clear that
these ea ngs began well before President
Reagan officially sanctioned them in Janu-
ary 1986.
Administration officials said that an
outside consultant on terrorism named Mi-
cha ee first negotiated a price7or
the TO antitank missiles that the Iran-
ians wanted in the autumn of 1985. But the
Pentagon complained that Mr. Ledeen had
negotiated an illegal "giveaway" price to
the Iranians and demanded that the price
be sharply increased. Mr. Ledeen has re-
fused to comment on his role in the Iranian
operation.
Meese's Ties
Over the weekend, the Los Angeles
Times reported that Attorney General Ed-
win Meese had decided to seek appoint-
ment of an independent prosecutor to in-
vestigate the Iranian affair. Justice De-
partment officials yesterday denied that a
final decision had been made, but some ad-
ministration aides conceded that such an
appointment appears inevitable, perhaps
within the next few days.
Given Mr. Meese's personal ties to Mr.
Reagan and his prior legal advice on arms
sales to Iran. even some administration of-
ficials contend he should remove himself
from the investigation-preferably by
seeking appointment of an outside investi-
gator. Speaking on behalf of Mr. Meese,
Justice Department spokesman Patrick
Korten said yesterday that everybody at
the department has been "thinking about
the point" at which Mr. Meese will have to
decide on whether to ask for a court-ap-
pointed prosecutor.
President Reagan, who returned here
yesterday from a California vacation, said,
"We'll do everything necessary to get the
truth and make the truth known."
Republicans and Democrats empha-
sized yesterday that extreme and speedy
measures were required to begin mending
President Reagan's wounded credibility.
Sen. Dole, on ABC-TV's "This Week With
David Brinkley," said the Iranian crisis
will "go on until the president seizes the in-
itiative" by convening a special congres-
sional session and cooperating with law-
makers.
`Protracted Paralysis'
Sen. Moynihan said there would be a
"protracted paralysis" within the adminis-
tration if the president doesn't act quickly.
On the same program, Sen. Lugar, saying
that administration policy "is in sham-
bles," asserted that Mr. Reagan "needs a
first-class, big-league staff."
Amid the growing confusion, the bal-
ance of Mr. Reagan's presidency may
hinge on the answers to three main ques-
tions about the arms sales to Iran and the
financing of Nicaraguan rebels. Have Mr.
Reagan and his advisers told the truth?
Has the administration broken the law?
And where has the money Iran paid for
U.S. arms gone?
Regardless of how these questions even-
tually are answered, the Iranian scandal
already has damaged the administration
by presenting a spectacle of buck-passing
and back-stabbing. Many of the charges
and countercharges now appearing in the
press reflect attempts by officials and in-
stitutions to distance themselves from the
mess, or else blame it on their bureau-
cratic rivals.
The administration still can recover
from the scandal, especially if a Justice
Department criminal investigation turns
up no evidence of felonies. But the admin-
istration's probe of its own actions has it-
self been under fire, and if investigations
find that the White House has been lying
or has flouted the law, the administration
could be decimated and the Democratic
Congress could seize control of the national
agenda.
(The disclosures surrounding the arms
sold to Iran could orce s~ ent Reagan,
who for six years pursued an activist and
often covert foreign c to settle for an
overt an Dro a v passive program dur-
ing his remaining time in office. See story
on page 24)
Because it bears directly on Mr. Rea-
gan's own credibility, the most important
question is: When did the president and his
top advisers first learn that profits from
U.S. arms sales to Iran were being fun-
neled to Nicaraguan rebels?
Mr. Meese said communications inter-
cepts first revealed hints of the operation
on Nov. 21 and Mr. Regan has said he
didn't hear of the secret financing to the
rebels, known as the Contras, until the fol-
lowing Monday.
No official has said President Reagan
knew about the diversion of funds to the
Contras before Nov. 21. Mr. Meese has
said the secret operation was run almost
entirely by Marine Corps Lt. Col. Oliver
North, a National Security Council staff
member who was dismissed last week.
There has been continuing bipartisan
skepticism that the Iran and Nicaraguan
operations could have been conducted by
National Security Council staff members
without the knowledge of senior White
House staff members. "I don't think Rip-
ley would believe that," Sen. Dole said yes-
terday.
Mr. Regan, Secretary of State George
Continued
Declassified and Approved For Release 2012/03/09: CIA-RDP90-00965R000403730012-5
 Declassified and Approved
Shultz, and Adm. William Crowe, chair-
man of the Joint Chiefs of Staff, all say
they were kept largely in the dark. Penta-
gon officials said Adm. Crowe first got
wind of the arms sales to Iran, though not
of the Nicaraguan connection, from a cas-
ual conversation he overheard at a meet-
ing of the top-level National Security Plan-
ning Group earlier this year.
But some of the officials who helped to
Ian an execute the secret operation said
the president, ice President George Bush,
and all r. Reagan's senior forei lic
and nationa -securit advisers
tration begin selling arms to Iran before
the president early this year waived an ex-
ecutive order prohibiting such sales?
Destruction of Documents
Law enforcement officials said the
haven't verified allegations y intelligence
sources and news reports that .t. Col.
North may have destroyed certain docu-
ments before the president fire ITt
Tugs a
7ITtypes of documents are routinely
shredded at the NSC every day, and it isn't
clear whether were dealing with some-
thing out of the ordinary," asserted one of-
ficial familiar with the investigation.
Sources close to Lt. Col. North said that
during most of the weekend on which he al-
legedly was destroying evidence, he was
questioned by Justice Department lawyers.
These sources said Lt. Col. North met with
Justice Department officials on Nov. 22
from 1:30 in the morning until late at
night, and again the following day until
midafternoon, when they said he went
home.
the out ines, thou h not the "operational
de aiT is ofw at was going on for 18
d
mop s. of the Defense Dei)artment an
the Central Intelligence Agency, these offi-
cials insist, helped remove weapons and
spare parts from U.S. arsenals and ship
t em to Iran even before Mr. Reagan ap-
proved a sa es last an. I. in a formal
intelligence "finding."
Apparent Discrepancy
In fact, these officials said, the Army
complained last autumn that Mr. Ledeen,
a senior fellow at Georgetown-University's
Center for Strategic and International
Studies who was acting as a consultant to
the National Security Council, had negoti-
ated a "giveaway" price for the TOW anti-
tank missiles.
Mr. Ledeen and an Iranian arms
dealer, Manucher Ghorbanifar, had agreed
on a price of less than $3.000 per missile,
the sources charged, but the price was re-
negotiated to $3,469 each after Army offi-
cials complained that it would be illegal
to sell weapons for less than the cost of re-
placing them.
Some White House aides also say State
Department officials who now are claiming
they were kept in the dark, "groused" last
summer about the wisdom of U.S. arms
sales to Iran, and about a secret trip to
Tehran last July by former National Secu-
rity Adviser Robert McFarlane and Lt.
Col. North.
Charge Involving Regan
Intelligence sources conceded that both
the CIA and the National Security Agency,
.
and perhaps the State Department aswell
icked u evidence of a new influx of aid
tote Contras earlier t is year, w en ae-
rial s imen of material to the Nicara-
guan rebels from a base in 131 Salvador
v.
picked up markedl
Finally, these same White House offi-
cials insist that Mr. Regan approved the
Iranian operation-and the Nicaraguan
connection-every step of the way. Mr. Re-
gan denied the charge last week.
The second critical question is whether
any officials broke the law, either by car-
rying out the secret operation or by trying
to keep the details of it from Justice De-
partment and Federal Bureau of Investiga-
tion and congressional investigators. Two
legal questions loom largest: Did adminis-
tration officials obstruct justice by destroy-
ing pivotal documents and did the adminis-
Issue of Legality
Although congressional Democrats have
suggested that Mr. Reagan's men appar-
ently broke the law, several administration
officials asserted that the operation itself
may not have been illegal, because no U.S.
government aid was given to the Nicara-
guan rebels in violation of a two-year con-
gressional ban on aid to the Contras.
Lt. Col. North, these officials said.
turned to Mr. Ledeen and other consultants
to negotiate the price of weapons sold to
Iran and to resupply the Contras in part to
sidestep congressional restrictions on U.S.
aid to the anti-Sandinista rebels.
"If no American aid was involved and if
the CIA was not the middleman for the
Contras, this thing may have bent the law
and violated ... its spirit, but not actually
broken it!' asserted one administration of-
ficial.
der the weekend, White House deputy
spokesman Dan Howard said that "we're
prepared to cooperate" with pending con-
gressional inquiries. "but we have to work
out some ground rules." The White House
is saying it will agree to let Lt. Col. North,
former National Security Adviser John
Poindexter and Mr. McFarlane testify if
they can be guaranteed not to have their
testimony used against them in any possi-
ble criminal proceedings. Legal experts
suggest this is unusual and unlikely.
Mr. Regan yesterday suggested he
might invoke executive privilege rather
than testify on the Hill. "I can't guarantee
that II'd testify) because the advice I give
the president obviously is a matter of exec-
utive privilege." He added, "I haven't
been asked ... and I don't know what I'd
add to what they already know."
According to intelligence sources. Lt.
Col. North is to appear this afternoon for
preliminary Questioning by the Senate In-
telligence Committee and its staff.
Another pivotal legal question is
whether the administration began sendliw
arms to the rebels without a forma o er
allowing it to do so. Administration offi-
cials now concede that at least one, and
perhaps two, shipments of U.S. arms were
sent to Iran via Portugal last fall, includ-
ing one shipment last November disguised
as oil-drilling equipment.
In fact, the officials said, a CIA-char-
tered carvo iet had in return to Iran to re-
cover some Hawk antiaircraft missiles af-
ter the Iranians refused to accept them-
The Iranians, the sources said, demanded
and eventually got an improved version of
the missile that had been bought by the
late Shah Mohammed Reza Pahlevi's re-
gime, but never delivered.
A third main avenue of investigation.
Justice Department officials said, is
whether some private individuals made
windfall profits from the secret operation.
which U.S. officials have estimated may
have involved as much as $42 million in
Iranian payments to numbered Swiss bank
accounts.
Profiting From the Sales
In one $19 million transaction. House
Majority Leader Jim Wright ID., Texasi
charged last week, the Contras got $3 mil-
lion and private arms merchants grossed
$4 million.
By checking memos, reconciling bank
records, and interviewing some of the par-
ticipants. administration officials said in-
vestigators hope to determine exactly how
much money the Iranians paid for U.S.
arms, how much was deposited in secret
Swiss accounts and how much eventually
made its way to the Contras.
Mr. Meese has said that no American
"actually handled any" of the funds di-
verted to the Contras. But Justice Depart-
ment officials are investigating whether
Lt. Col. North, some of his associates, or
middlemen, may have assisted in the
movement of the funds.
On Friday, administration officials said
the investigators hadn't yet received Swiss
bank records related to the Iranian arms
sales. But Justice Department officials ap-
parently believe they won't face major le-
gal problems in obtaining the documents.
Justice Department Role
The Justice Department's own perform-
ance in the case also has become an issue.
Officials confirmed that for at least two
months-and possibly much longer-the
FBI had been investigating the legality of
the aid flowing to the Contras.
After a chartered supply plane was shot
down in October, the FBI conducted a
"preliminary inquiry," but Justice Depart-
ment officials said the inquiry failed to
turn up any violations of U.S. laws. That
initial finding is being reviewed as part of
the overall investigation.
Now, however, administration officials
say the plane that was downed was part of
an aerial resupply operation run by retired
Air Force Maj. Gen. Richard Secord-an-
other of Lt. Col. North's consultants-and
was supported largely by the proceeds of
the Iranian sales.
Officials now say they want to know
how much profit, if any, Gen. Secord and
others, including Iranian and Israeli arms
dealers, made on their operations. One of
the Israeli participants in the scheme,
arms trader Yaacov Nimrodi, denied yes-
terday that he had made a profit on the op-
eration.
Declassified and Approved For Release 2012/03/09: CIA-RDP90-00965R000403730012-5