The Iran-Contra Scandal

"We do many things at the federal level that would be considered dishonest
and illegal if done in the private sector."
Donald T. Regan, New York Times, August 25, 1988


On October 5, 1986, a US cargo plane was shot down over southern Nicaragua. Two of the crew members died in the crash, but the third, Eugene Hasenfus, parachuted to safety and was captured by the Sandinista army. Led out of the jungle at gunpoint, Hasenfus’s very existence set in motion an incredible chain of coverups and lies that would mushroom into one of the biggest scandals in American political history. (How quickly people forget...) Loosely known as the Iran-Contra affair, a bizarre network of arms sales to Iran designed to win release of US hostages being held in Lebanon and raise money to fund the Nicaraguan Contras, the botched enterprise took years to unravel, threatening both the Reagan and Bush presidencies in the process.

The highlight of the Iran-Contra affair came on May 5, 1987, when Congress began televised hearings into the matter that kept Americans riveted to their TV sets for weeks. The hearings made household names of bureaucrats such as Oliver North, Richard Secord, John Poindexter, Robert McFarlane, and Elliott Abrams, and flushed out colorful bit players such as Washington secretary Fawn Hall, Iranian businessman Albert Hakim, and Saudi billionaire Adnan Khashoggi. But if the truth proved hard to ascertain -- thanks in large part to the illegal shredding of key documents by North and his staff -- the hearings did expose huge tracts of the US government as weak and unprincipled, contributing to the nation’s growing distrust in the political process by the early 1990s.

Convictions were rare in the Iran-Contra affair (North’s and Poindexter’s were overturned on appeal), and the few verdicts that were handed down in court amounted to little more than slaps on the wrist. On December 24, 1992, outgoing president George Bush pardoned former secretary of defense Caspar Weinberger and five other defendants, asserting that it was "time for the country to move on." But independent counsel Lawrence Walsh, who spent more than seven years and $40 million unraveling the scandal and issued his own report on it in January 1994, saw it differently. "The Iran-Contra coverup," he said, "... has now been completed."

The Iran-Contra affair was the direct result of two major dilemmas facing the Reagan administration in the early 1980s: (1) how to fund, train, and arm an army of Nicaraguan exiles (known as Contras) to overthrow the socialist Sandinista government, especially after the US Congress made it illegal to do so in 1982, and (2) how to win release of American hostages being held by Islamic radicals in Beirut.

Although the CIA was originally authorized to oversee the Contras’ efforts in 1981, and CIA director William Casey embraced the mission wholeheartedly, Congress passed legislation two years later ordering the CIA to pull out. The so-called Boland Amendment made it illegal for the CIA either to aid the Contras or to provoke a war between Nicaragua and Honduras, and was toughened to include ALL sectors of the US government with the passage of the Boland Amendment II in 1984. But by that time, responsibility for supporting the Contras’ campaign had been shifted from the CIA to the National Security Council (NSC), where it wound up on the desk of Oliver North, the deputy-director for political-military affairs. A decorated Vietnam veteran with little or no regard for the law, North quickly established a vast and secret military supply system that employed retired CIA and Defense Department personnel, mercenaries, terrorists, and foreign saboteurs. Yet North never acted alone. In addition to revealing the mentorlike guidance of William Casey, declassified documents make it clear that knowledge, and in some cases direct approval, of the Contra-support effort existed in virtually every wing of the Reagan White House, including the Oval Office itself.

As the Nicaraguan civil war raged on, the Reagan administration became increasingly preoccupied with the growing number of Americans kidnapped in Lebanon. When Iran -- a nation that held 52 Americans hostage from 1979-1981 -- offered to use its influence to negotiate the release of the hostages in Beirut in exchange for the opportunity to buy US weapons, Reagan’s men agreed. The fact that Israel, a country reviled by most militant Muslims, agreed to serve as the go-between in the arms sales only adds to the strange nature of the deal.

Unfortunately, North, who assumed command of the arms sales in late August or early September 1985, and McFarlane, who helped him, turned out to be naive bumblers who were no match for the wily Iranian negotiators. Every time a US hostage was released, another was taken. Meanwhile, North cross-pollinated the Contra and Iran initiatives. By artificially inflating the prices of the arms, North was able to reap profits that could be diverted to funding the Contras. The arms shipments lasted from August 20, 1985 to October 28, 1988, and a total of more than 2,000 missiles and spare parts were shipped to Iran. But of the $16.1 million in profits raised, only $3.8 million ever went to the Contras. The rest was used to purchase equipment, such as a cargo freighter, that could be used in future unspecified operations.

But when the plane carrying Hasenfus was shot down -- and Hasenfus told his captors he believed he was working on a CIA-sanctioned operation, identifying two other operatives by their code names in the process -- the entire Iran-Contra scheme quickly collapsed. Vice President George Bush’s office was informed that a plane was missing just hours after Hasenfus was taken prisoner, and a CIA station chief in Costa Rica quickly followed with a coded message that warned the "situation requires we do necessary damage control."

In the case of North and other officials at the NSC, that meant shredding incriminating notes and documents and falsifying others to provide cover -- but not before President Ronald Reagan and Attorney General Edwin Meese went on national television, at noon on November 25, 1986, to report the "discovery" of these interrelated Iran and Contra operations and attempt to pin as much of the blame on North as possible. One hour later North was fired and his boss, NSC adviser John Poindexter, was allowed to resign.

A "blue-ribbon" panel headed by former US senator John Tower was appointed to investigate the Iran-Contra affair; it issued its final report on February 26, 1987. But while generally scolding President Reagan for his "hands-off management style," the report proved cursory and unwilling to tackle the scandal head-on. The televised congressional hearings that followed the Tower Commission made a temporary national hero (?!?) of North and revealed the entire investigation as flawed. In order to obtain the testimony of key players such as North and Poindexter, Congress granted them immunity, undermining the ability of Lawrence Walsh, the independent counsel, to successfully prosecute them afterward.

Key Witnesses and Testimony

Although most Americans struggled to comprehend the complex network of arms sales and Contra resupply that North and his associates had created, the joint House and Senate Iran-Contra hearings were nonetheless entertaining. Beginning May 5, 1987, and lasting until August 6, 1987, they featured more than 250 hours of testimony from 32 witnesses. If no bombshells were dropped by either the witnesses or the lawmakers -- and no "smoking gun" was ever uncovered linking Ronald Reagan directly to the whole affair -- American still found itself with a while new set of villains.

There was Fawn Hall, North’s secretary, who testified that she shredded some classified documents and smuggled others out of the NSC building by stuffing them down her boots and in the back of her blouse. There were Reagan staffers and Cabinet secretaries such as Donald Regan, Edwin Meese, Robert McFarlane, Elliott Abrams, and George Schulz, who provided details of a White House overrun with private-sector intermediaries. And there was a seemingly endless parade of low-level bureaucrats and shady arms dealers caught up in the web.

Coincidentally, the one witness who had the most to tell, CIA director William Casey, was discovered to have a brain tumor and died the day after the hearings began. Casey reportedly admitted his involvement in a deathbed interview with Washington Post reported Bob Woodward, although Casey’s widow denies Woodward ever got near her husband’s room.

North’s testimony proved to be the most colorful. Networks preempted their daytime soap operas to stay on the air for his testimony. Wearing his green US Marines uniform for the first time in years -- North normally wore a coat and tie at the NSC -- he bullied the congressional panel with equal parts pathos and patriotism, getting teary-eyed at will and wrapping himself in the American flag. Although North brazenly admitted lying before Congress, destroying evidence, operating US initiatives in violation of US law, and participating in a coverup, he said he did so in defense of America and added that President Reagan had called him a national hero.

When it was disclosed that North had accepted a $13,800 fence and security system as a gift from businessmen who were profiting on the arms sales, North testified that the fence was necessary to protect his family from terrorists. In order to distract public attention from this obvious and extremely unpatriotic case of bribery, North’s lawyers displayed a huge photograph of noted terrorist Abu Nidal. "I want you to know," said North, "that I’d be more than willing -- and if anybody else is watching overseas, and I’m glad they are -- I’ll be glad to meet Abu Nidal on equal terms anywhere in the world. OK?"

Congressional investigators simply could not bear the prospect of impeachment hearings, especially with the Reagan administration poised to reopen nuclear disarmament talks with the Soviet Union. Tired of the whole Iran-Contra affair, the joint congressional panel promptly closed up shop following Poindexter’s testimony in August, and issued its final report on November 17, 1987. Not surprisingly, that report conferred "ultimate responsibility" on the Reagan White House but allowed as how a "cabal of zealots" therein had "undermined the powers of Congress as a co-equal branch and subverted the Constitution." A minority report, however, signed by eight of the Republicans on the 26-member committee, found only errors of judgment, "no constitutional crisis, no systematic disrespect for the ‘rule of law,’ no grand conspiracy and no administration-wide dishonesty or coverup."

Outcome and Aftermath

Although Walsh, a staunch Republican, doggedly compiled cases against the Iran-Contra conspirators, even as he turned eight years of age in 1992, it was all for naught. Eleven defendants were convicted of crimes. The original charges ranged from perjury to defrauding the US Treasury, but these were plea-bargained down to minor felony and misdemeanor charges. McFarlane, who pleaded guilty to four counts of "withholding information" received the harshest penalty (two years’ probation, a $20,000 fine, and 200 hours of community service), but he was one of those pardoned by George Bush. The convictions of North (three counts of obstruction of justice, misleading Congress, and accepting an illegal gratuity) and Poindexter (five counts of conspiracy, obstruction of Congress, and false statements) were overturned on appeal because they had been granted immunity. Former CIA operative Thomas Clines was the only defendant to receive a prison sentence -- for falsifying tax records.

In his final report on the Iran-Contra affair, which was published January 18, 1994, Walsh concluded that both Reagan and Bush knew of the burgeoning scandal and participated "or at least acquiesced" in the coverup, but could find no evidence that either broke the law. Aftershocks from the Iran-Contra affair had dogged Reagan throughout his second term and may have contributed to Bush’s failed reelection bid in 1992. But it’s hard to know for sure. Distracted by events such as the 1991 Gulf War, the nation gradually lost interest in Iran-Contra, and it is doubtful that many Americans ever fully understood the scandal and its implications. In the end, all anybody knew was that a lot of politicians were breaking laws and lying to the country again, and this manifested itself in the deep cynicism many Americans began to harbor toward the political process.

While most of the players retired to lives of lucrative consulting or private business, only North stayed in the spotlight. Portraying himself as an antiestablishment politician and drawing support from conservative groups, North actually won the Republican nomination for the US Senate in Virginia in 1994. He spent $17.5 million on his campaign -- often battling denunciations from prominent Republicans -- but narrowly lost to the incumbent, Charles Robb.

From: "The 20th Century" by David Wallechinsky

Iran Contra Alumni in Bush Government

By The Associated Press, March 13, 2002

Former Iran-Contra figures who have been given jobs in the Bush administration:

-COLIN POWELL. In 1968, as a staff army major in Vietnam, Colin Powell played a direct role in suppressing the inquiry into the My Lai massacre, and into related atrocities against civilians. As a White House fellow during the Watergate years he earned a reputation -- but only for keeping his mouth shut.

As a military assistant to Caspar Weinberger during the Reagan administration, he helped to deceive Congress about the trading in heavy weapons with Iran, about the exchange of those weapons for hostages, and about the diversion of the illicit proceeds to finance another illicit operation in Nicaragua.

In Panama, in 1989, he helped shape an operation that totally disregarded international law and took many civilian lives.

During the Gulf War, he strongly opposed any military help for the Kurdish and Shia rebellions against Saddam Hussein.

In the Bosnian conflict, he publicly opposed any intervention against Slobodan Milosevic and his forcible creation of a "Greater Serbia."

As chairman of the Joint Chiefs of Staff under President Bill Clinton, he repeatedly intervened to influence political decisions, not only about the Balkans but about the right of homosexuals to serve in the military. Click here to read more about this particular member of George W. Bush's circle.

-JOHN POINDEXTER. Reagan national security adviser during Iran-Contra, the retired admiral is director of the Pentagon's Information Awareness Office. Created after the Sept. 11 terror attacks, the office uses computer technology to detect and analyze new kinds of military threats, including those from terrorist organizations. Poindexter was convicted in 1990 on five felony counts of conspiracy, making false statements to Congress and obstructing congressional inquiries. In 1991, an appellate court overturned the convictions and similar ones against former White House aide Oliver North. The court held that the government had improperly used immunized congressional testimony against them.

-ELLIOTT ABRAMS. A former assistant secretary of state for Western Hemisphere affairs, Abrams was hired by Bush last year as special White House assistant for democracy and human rights. Abrams pleaded guilty to withholding Iran-Contra information from Congress and was among six Iran-Contra figures pardoned on Dec. 24, 1992, by the first President Bush.

-OTTO REICH. Serving as assistant secretary of state for Western Hemisphere affairs, Abrams' old job. From 1983 to 1986, Reich led a State Department office accused of running an illegal covert domestic propaganda effort against Nicaragua's leftist Sandinista government. Senate Democrats blocked his nomination last year. Bush installed him with a ``recess appointment,'' allowing him to serve for a year. The formal nomination was resubmitted recently.

-RICHARD ARMITAGE. As deputy secretary of state, Armitage is No. 2 at the State Department after Secretary of State Colin Powell. The first President Bush nominated him to be Army secretary, but Armitage withdrew after his knowledge of Iran-Contra dealings as a top Pentagon official became an issue. In congressional hearings, he denied he had met an Israeli official to discuss the Iran arms sales. A classified Israeli intelligence report suggested otherwise.

-JOHN NEGROPONTE. A veteran diplomat serving now as U.N. ambassador, Negroponte's nomination was stalled for months by Democrats. They criticized his work as ambassador to Honduras in the 1980s, when the Central American country was used as a base for the U.S.-backed Contra rebels. He was approved quickly, however, after the Sept. 11 terror attacks.

-MITCH DANIELS. Currently director of the Office of Management and Budget, Daniels was Reagan's political director who participated in a White House political damage-control effort in 1986 and 1987. Daniels privately complained to associates at the time, however, that the White House account of the secret diplomatic initiative to Iran was not believable, according to various reports.

See also, Executive Summary

Further Resources

Firewall: The Iran-Contra
Conspiracy and Coverup

by Lawrence E. Walsh

The Iran-Contra Scandal:
The Declassified History

by Peter Kombluh (editor)

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