TIME: Almanac 1993/TIME Almanac 1993.iso/time/072291/0722100.000

Text File | 1992-08-28 | 10.5 KB | 226 lines

                                                                                NATION, Page 14

IRAN-CONTRA

The Cover-Up Begins to Crack


A former CIA official admits the agency lied about its knowledge
of the secret plan to fund the Nicaraguan rebels. Even worse,
U.S. spymasters may have been entangled with a notorious criminal
enterprise.

By RICHARD LACAYO -- Reported by Jonathan Beaty/New York and Bruce
van Voorst/Washington


    Until last week the Iran-contra scandal seemed ready to
fade from the courts, the news and the mind. After costing more
than four years and $25.5 million, the investigation headed by
special prosecutor Lawrence Walsh was limping to a close. A
federal appeals court had overturned Lieut. Colonel Oliver
North's felony conviction, and a retrial seemed unlikely. The
same outcome seemed possible for former National Security
Adviser John Poindexter's conviction.

    Then the scandal roared back to life with a series of
stunning developments. They suggested that:

    -- Top intelligence officials had engaged in covering up
the Reagan Administration's attempts to evade a congressional
ban on aid to the Nicaraguan rebels by siphoning off profits
from secret arms shipments to Iran.

    -- The Iran-contra affair may be only part of a broader
and previously undisclosed pattern of illegal activities by
intelligence agencies during the tenure of Ronald Reagan and his
CIA chief William Casey. Sources close to the unfolding
investigation of the Bank of Credit & Commerce International
told TIME that U.S. intelligence agencies, including the CIA,
maintained secret accounts with the globe-girdling financial
empire, which has been accused of laundering billions of dollars
in drug money, financing illegal arms deals and engaging in
other crimes.

    The discovery of the CIA's dealings with B.C.C.I. raises
a deeply disturbing question: Did the agency hijack the foreign
policy of the U.S. and in the process involve itself in one of
the most audacious criminal enterprises in history? Items:

    -- Alan Fiers, head of the CIA's Central America task
force from 1984 to 1986, pleaded guilty on Tuesday to two counts
of lying to Congress about when high-ranking intelligence
officials first learned of the illegal diversion of funds to the
contras. Fiers said he became aware of the diversions and
informed Clair George, then the CIA's deputy director for
operations, in the summer of 1986. But, Fiers said, George
ordered him to deny any knowledge of the transfers when he
testified before the House intelligence committee that October.
In exchange for being allowed to plead guilty to two
misdemeanors instead of more serious felonies, Fiers is now
assisting Walsh's investigation. With his help, Walsh will
probably seek a perjury indictment of George and perhaps other
present and former government officials.

    -- Three days after Fiers entered his plea, the New York
Times disclosed that Walsh possesses tapes and transcripts of
hundreds of telephone conversations between CIA headquarters in
Langley, Va., and agents in Central America. The talks occurred
during the period when North, former Air Force General Richard
Secord and his business partner Albert Hakim were operating
their secret arms pipeline. The tapes -- which have been in
Walsh's hands for three years -- were recorded on a system that
George installed at the agency's operations center in the early
to mid-1980s.

    In recent months Walsh has used the tapes to prod the
memory of North and other reluctant witnesses before the grand
jury that is still gamely looking into the scandal. The tapes
are expected to furnish evidence that could lead to further
indictments. Some transcripts of the recordings have been
examined by staff investigators for the congressional
Iran-contra committees. But curiously, until last Friday, no
member of the Senate intelligence committee was aware of the
recordings.

    -- Investigators probing B.C.C.I. have told TIME that the
Iran-contra affair is linked to the burgeoning bank scandal.
Former government officials and other sources confirm that the
CIA stashed money in a number of B.C.C.I. accounts that were
used to finance covert operations; some of these funds went to
the contras. Investigators also say an intelligence unit of the
U.S. defense establishment has used the bank to maintain a
secret slush fund, possibly for financing unauthorized covert
operations. More startling yet, even before North set up his
network for making illegal payments to the contras, the National
Security Council was using B.C.C.I. to channel money to them.
The funds were first sent to Saudi Arabia to disguise their
White House origins; then they were deposited into a B.C.C.I.
account maintained by contra leader Adolfo Calero.

    The Iran-contra affair has been characterized by U.S.
officials as a rogue operation managed by overzealous members
of the National Security Council. But if Fiers is correct,
top-ranking CIA officials not only knew about the operation and
did nothing to stop it; they also participated in an illegal
cover-up.

    One of the first casualties of the disclosures could be
the nomination of Deputy National Security Adviser Robert Gates
to head the CIA. Though Fiers did not implicate Gates in the
deception, some Senators find it hard to believe Gates' claim
that he knew next to nothing about the Iran-contra scheme when
he served as Casey's principal deputy. Four years ago, that
suspicion forced Gates to withdraw after Reagan picked him to
succeed Casey, who was dying from brain cancer.

    Those misgivings appeared to have faded when George Bush
chose Gates to replace William Webster. But the mounting
questions about the scandal could put his nomination on hold.
The Senate intelligence committee, which had expected to begin
its hearings on Gates this week, decided to hold off. Members
may want to question Fiers, George and perhaps others about what
Gates may have known. If the committee's uncertainty drags on,
it could run into the August congressional recess, which would
delay hearings until September.

    Sensing the threat to Gates' confirmation, Bush rushed to
defend his nominee. He implored the Senate not to leave Gates
"twisting in the wind" through the summer. "Get the men up there
who are making these allegations," Bush demanded. "Isn't that
the American system of justice -- innocent until proven guilty?"

    But Gates is just one more figure twisting in a resurgent
storm. Suddenly a number of unanswered questions assume a new
urgency. Just what did Ronald Reagan -- and George Bush -- know?
And when did they know it?

    Beyond that, the discovery of the secret
intelligence-agency accounts in the renegade B.C.C.I. raises a
whole new set of unsettling possibilities. The most serious is
that U.S. spymasters may have been undertaking unauthorized
covert operations and all the while furthering the ends of
B.C.C.I. By providing clandestine services for intelligence
agencies in numerous countries, B.C.C.I. was able to cloak its
activities in an aura of national security and thereby stave off
investigations from banking officials in the U.S. and abroad.

    In 1988 Gates is reported to have told a colleague that
B.C.C.I. was "the bank of crooks and criminals." Yet when
customs agents investigated the bank in 1988, they found
"numerous CIA accounts in B.C.C.I.," says former U.S.
Commissioner of Customs William von Raab. Those, he says, were
being used to pay agents and "apparently to support covert
activities."

    Senate investigators, who have known of the agency's links
to the bank, have demanded an explanation from the CIA -- so
far, without getting a satisfactory response. One question they
might ask is whether the CIA link to B.C.C.I. explains the
Justice Department's slowness in pursuing its case against the
bank. Last year the Justice Department tried unsuccessfully to
persuade the Florida state comptroller not to lift B.C.C.I.'s
license to operate in that state.

    Armed with Fiers' testimony and the treasure trove of CIA
phone tapes, Walsh is likely to seek more indictments. In
addition to George and perhaps other CIA officials, there are
two potential targets outside the agency: former Assistant
Secretary of State Elliott Abrams and Donald Gregg, now U.S.
ambassador to South Korea. In his plea Fiers says he lied to
Congress at a Senate intelligence committee hearing on Nov. 25,
1986. On the same day, Abrams testified that no one at the State
Department knew of the diversion of funds. A few days later,
when Abrams made a second appearance before the lawmakers,
Democratic Senator Thomas Eagleton of Missouri angrily accused
him of having lied earlier. "You've heard my testimony," Abrams
said during their exchange. "I've heard it," Eagleton replied,
"and I want to puke."

    Fiers may also implicate Gregg, a onetime CIA officer who
served as a foreign policy adviser to then Vice President Bush.
Gregg was a close friend of Felix Rodriguez, another former
agent, who became a crucial link in the North pipeline to the
contras. But Gregg has repeatedly denied before Congress that
the office of the Vice President recruited Rodriguez. One
tantalizing entry in North's diary indicates that on Jan. 9,
1986, North and Fiers had a phone conversation about Rodriguez.
It reads, "Felix talking too much about V.P. connection." Was
the reference to Gregg or to Bush?

    Walsh's biggest worry may be that the Senate intelligence
committee will call Fiers and George as witnesses at Gates'
confirmation hearing. Last July a federal appeals court set
aside North's 1989 conviction on the ground that some witnesses
who testified against him may have been influenced by his
congressional testimony about Iran-contra. That testimony could
not be used against North in court because Congress had granted
him immunity. Concerned that future Senate testimony by Fiers
or George might also be put beyond his reach by a grant of
immunity, Walsh last week issued a pointed warning to the
committee not to imperil his case. "Our investigation has
reached a point of significant breakthrough," Walsh said. "To
jeopardize this progress in a vain hope of getting quick facts
as to an individual nomination would be regrettable."

    In one respect, at least, Walsh is right: an individual
nomination is no longer the central issue. The main questions
now focus on whether the intelligence community covered up
illegal acts and how high the conspiracy reached.