REGAN, SHULTZ SLATED TO TESTIFY TODAY ON IRAN ARMS SALES BEFORE SENATE PANEL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91-00587R000100710007-8
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: March 16, 2011
• Sequence Number: 7
• Publication Date: December 16, 1986
• Content Type: OPEN SOURCE

Sanitized Copy Approved for Release 2011/03/16 :CIA-RDP91-005878000100710007-8
STAT
ARTtr,? APPEARED
ON PA6E ~
Regan, Shultz Slated to Testify Today
On I ran A rms Sales Before Senate Panel
O
The move comes as the committee is about
~, to turn over its mandate to a select com?
mittee to be named today by Senate Re-
publican Leader Robert Dole of Kansas
and Democratic Leader Robert Byrd of
West Virginia.
In allowing Mr. Regan to testify, the
White House waived its right to claim ex?
ecutive privilege to show that it is cooper-
ating with Congress, as President Reagan
says he has urged. But that cooperation
may shed little light on the connection be-
tween the Iranian arms sales and the di-
version of profits to the Nicaraguan insur?
gents. [n past statements :lir. Regan has
said that while he supported the notion of
sending arms to Iran to further ties with
Congress,inveshgators continueo to pore
over records. But so far, probers have ~
found surprisingly little immediate evi-
dence on how the covert operation func?
cloned.
Federal Bureau of Investigation agents
probing the Iran-Contra connection, admin-
istration sources said, have found no ~ffi-
STAT
y atvE YEx an AYiD ocEes
.Yla((Rcporterv ~~(Tt+F: W ~L1. STREET J~11'RN.~1
WASHINGTON-W'hRP House Chief of
Staff Donald Regan and Secretary of State
George Shultz are scheduled to testify be-
fore the Senate Intelligence Committee
today on the secret sales of arms to Iran
and the diversion of some profits to Nica?
raguan insurgents.
An associate described :'vii. Regan as
"itching to testify publicly." But while the
committee may allow him to release part
of his testimony, Chairman David Duren-
berger i R.. Minn. i said last night that the
chief of staff will be heard behind closed
doors as is the committee's customary
practice.
Mr. Regan and Secretary Shultz are
slated to be followed Wednesday by Attor?
hey General Edwin Meese and Defense
Secretary Caspar Weinberger. Mr. Duren?
Berger said the panel hoped to make public
a summary of. its findings this month.
"The issue of authority, who has author-
ity to do what, is an important issue in this
investigation," said Mr. Durenberger. Mr.
Regan is expected to be questioned about
what the chairman described as "multi-
ple" secret findings signed by President
Reagan to authorize covert activities but
never reported to Congress. The findings
311 relate to [ran and fall into roughly a
two-month period from December 1985
through January 1986. Mr. Durenberger
said, but their numbers exceed those de?
scribed in Parker accounts.
While still frustrated in following all of
the money from the arms sales, the chair-
man said that evidence the committee
compiled induated a 'chunk" had gone
to the Nicaraguan insurgents. Beginning in
:liay and June this year. he said, a crude
supply line dependent ~m trucks switched
to a more snphishcatPd ~~ne using air
drops.
William Casey, the director of the Cen?
tral Intelligence .agency, had been sched-
uled to testify today. But yesterday he was
admitted to Georgetown University Hospi?
cal for observation after what hospital offi-
cials called a "minor cerebral seizure."
George Lauder, a i'La spokesman, said
the "3?year-old Mr. Casey was resting and
alert. Mr. [cruder said dir. Casey didn't
appear to have suffered a stroke, and
added that his condition wasn't related to a
recent change in medication fur an unre?
laced ailment. which the CIA spokesman
didn't identify.
By calling in cabinet ranked members
of the National Security Council, the com-
mittee was reaching the highest rungs of
the administration beneath the president.
cial documents showing how the sales were
financed or where the proceeds went. The
sources said that ahigh-level interagency
committee called the Planning Coordina-
tion Group normally oversees al! covert
operations. But in this case, the sources
said, most of the group's members, includ-
ing undersecretary of State Michael .ar-
macost, undersecretary of Defense Fred
[kle, and Vice President George Bush's
foreign policy adviser, Donald Gregg, were
kept in the dark.
In addition, intelligence sources said
so-called moderate elements there, he that former National Security adviser
knew nothing of any profits being skimmed John Poindexter directed that the Nahonal
and sent to the Nicaraguan rebels. Security Council staff's director of intelli?
The new Senate committee will have six
Democrats and five Republicans. among
the potential chairmen, congressional
sources say, are Sens. Daniel Inouye ~ D.,
Hawaii ~ and Howell Heflin ~ D., Ala. i . The
House bipartisan leadership also is ex?
pected to announce its own 15-member
panel later this week. Sources say Rep.
Lee Hamilton ~ D.. Ind. i , who met yester?
day with Speaker-designate Jim Wright of
Texas, is one potential chairman.
In comments yesterday, Sen. Duren?
Berger indicated that much of the story
about the administration's covert Iranian
operation and diversion of funds to Nicara?
gua is known already. But Senate Demo?
oats going into a meeting last night were
skeptical about the information available
so far, and also about recent calls to give
prospective witnesses immunity.
"We're a long w?ay from knowing what
has happened," said Sen. David Boren ~D.
Okla.i, who will be chairman of the lntelli?
Bence Commutee in the new Congress that
meets next month..lnd Sen. Sam Nunn ~ D.
Ga.i, the future chairman of the .-limed
Sen?ices Committee. rejected the notion of
granting immunity to potenna! witnesses
at this point.
CIA Director Casey has testified at
length in recent weeks about the CIA's role
in the arms sMpment to Iran, saying the
agency first helped ship U.S. arms to [ran
in November 1985, before President Rea?
Ban formally authorized [;.5. arms sales to
that country, according to administra?
lion and congressional sources. But his tes?
timony has left a number of questions un- i
answered about the CIA's role in the Iran-
Contra operation.
Little Evidence on Operation
I Bence policy, Kenneth de Graffenreid, be
kept ignorant of the Iran arms sales. More-
over, the sources said, when Mr. de Graf-
fenreid began inquiring about L'.S. policy j
toward Iran, Vice Adm. Poindexter or?
dered him to stop.
"This operation was completely off-
line," said one knowledgeable intelligence
source.
Administration sources said the unusual
secrecy, even within the administration.
was built into the policy from the start. ~
partly to keep details of the operation from !
top officials who opposed it. They said two
NSC staff members, Howard Teicher and
the late Donald Fortier, first recom-
mended U.S. "material aid" to Iran in ~
draft National Security Decision Directive
they wrote in June 1985.
In their cover letter explaining the draft
memo to their boss, then National Security
.adviser Robert :McFarlane, Messrs. Fr~r
her and Teicher predicted that their rec-
ommendations would be controversial, ac
cording to sources who have seen the docu
merits. The sources said the two NSC staff
members suggested that their draft direc-
tive be forwarded to Secretary of State
Shultz and Defense Secretary Weinberger.
but placed on "close hold." meaning the
cabinet officers couldn't share it wuh their
aides.
dir. McFarlane, the sources said, ac-
cepted his aides' recommendation and
placed the draft directive on close hold in
his uwn cover memos to llir. Shultz and
dir. Weinberger. Both cabinet secretaries,
the sources said, opposed the proposal ,n
memos to :lir. McFarlane.
"Very soon afterwards, the policy w~Pnt
underground." said one intelligence
source.
While senior administration officials C.S. intelligence sources also said that
were called to answer questions before CIA operatives in Central America picked ~
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up evidence that the Contras had a new
supply line last spring, and some agents
worried that the Contras' new suppliers ap?
parently included businessmen and former
CIA agents with close ties to a former
agent. Edwin Wilson, who was convicted of
selling explosives to Libya.
But these agents never reported their
concerns through official channels, the
sources said. partly because laws and reg-
ulations prevent CIA officers from report-
ing on the activities of Americans abroad.
except when countet~intelligence operations
are involved. [n addition, the sources said.
Mr. Casey had instructed his agents t~
s ve the Contras a wide berth, to avoid
charges that the CIA was violating con-
gressional restrictions on helping the insur-
gents.
`Everybody was trained to look 'he
other way wherever the Contras were con?
cerned." said one intelligence source.
"That was very deeply ingrained. The
agency was paranoid about it."
3teanwhile. the FBI has begun looking
into the reported theft of a legal file con-
taining information on sales of weapons
and nuclear reactor devices to Iran by Al-
bert Hakim.
Mr. Hakim and his business partner.
former Air Force Maj. Gen. Richard Se?
cord, have been described by authorities
as "major actors" in the administrations
secret sales of weapons to Iran. and fun-
neling of funds to :Nicaragua through num-
bered Swiss bank accounts. '.41x. Hakim.
who has had past ties with the CIA, has
controlled a series of companies in Iran
and Switzerland and currently is involved
in a Virginia-based venture with Mr. Se-
cord called Stanford Technology Trading.
File Stolen From Law Office
According to Lt. Tom K. Davis of the
Santa Clara County. Calif., Sheriff's office,
the Cupertino. Calif., law office of Horace
E. Dunbar Jr. was broken into Saturday
night. and a thick legal file on Mr. Dun-
bar sGhent. Mr. Hakim, was stolen.
Mr. Dunbar s secretary said yesterday
that he wouldn't take reporters' calls. But
according to Lt. Davis. Mr. Dunbar told
police "reluctantly" that the file. which
was the only item missing after the theft.
contained "information concerning the
sales of weapons and nuclear devices-re-
actors-to Iran." Police said Mr. Dunbar
told them that the sales involved ~Ir. Ha?
kim and a party in South Korea. Mr. Dun-
bar told police that the file was large and
had been begun in 1983.
Probe of Meese
The House and Senate Judiciary com-
mittees are looking into whether Attorney
General Meese may have impeded a Jus?
~ tree Department investigation into allega?
bons that some of the groups backing the
Nicaraguan rebels violated federal arms
export laws and trafficked in narcoflcs.
The committees also want the matter in?
vestigated by the independent counsel to
be appointed shortly to inquire into the
funds diversion.
Congressional investtgators say theJus-
tice Department's internal watchdog, the
t)ffice of Professional Responstbility, also
plans to begin a preliminary probe of the
departments handling of the case, which
has drawn complaints from some Demo-
cratic lawmakers. Department spokesmen
have denied that dir. Meese or other offi-
cials hindered the investigation.
The fact-finding efforts also will look
into a request by Mr. Meese. made around
the end of October, that the FB[ and the
f'.S. Customs Service temporarily delay in?
~esngation of Southern .air Transport, a
Miami-based cargo airline that has been
!inked to arms shipments to the Nicara?
guan rebels and to Iran.
[t also u?as disclosed yesterday that the
Army may have charged the CIA an artifi?
dally !ow pace for the 3.u0h T04ti' missiles
delivered for shipment .o Iran early this
year. A senior Pentagon official said the
FBI is probing the negotiations between
?he Armv ;tad the C[A to determine
whether there was wrongdoing or stmpty a
pricing mistake. According to Defense De?
partment officials. the CIA may haze to
pay the Army additional funds on top of
'~ the 312 million already paid far the mis?
;Iles.
One explanaa~~n 'ur 'he pacing irregu-
i laxity is [hat the Armv ~,harged the l'IA far
~~Ider missiles 'h.in ~.~~~~~ de!r.~ered. But
Pentagon offlci:;.s ~n!d ;he FBI is seeking
to determine whether :he paring dispari~.~.
had anything ;~, do ~sith 'he ,e~,er~iuon ~~f
profits 'hat .~.?r, passed ~>n 'n 'he \i~~.:r~i~
guan C~mtrns.
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