TIME: Almanac 1993/TIME Almanac 1993.iso/time/102891/1028480.000

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                ▒+L+            █;▄;                                        ╚EXCERPT, Page 36

COVER STORIES

"Reagan Knew Everything"


In Under Fire, an autobiography written in great secrecy, North
says the emphasis on the "diversion" of funds to Nicaragua's
contras was itself a diversion -- to protect the President.
In fact, believes the former Marine lieutenant colonel: "Reagan
Knew Everything"

By Oliver L. North

    [(c) 1991 by Oliver L. North From Under Fire by Oliver L.
North and William Novak, published by HarperCollins Publishers]


    On Nov. 25, 1986, at five minutes past noon, President
Ronald Reagan and Attorney General Edwin Meese marched into the
crowded White House briefing room to face the press and the TV
cameras. As I watched from my office in the Old Executive Office
Building, the President explained that he hadn't been told the
whole story of our secret arms sales to Iran and that he had
asked the Attorney General to look into the matter. He then
announced that Admiral John Poindexter, his National Security
Adviser, had resigned, and that Lieut. Colonel Oliver North had
been "relieved of his duties on the National Security Council
staff."

    What?

    Before I could catch my breath, the President turned over
the microphones to the Attorney General and left. Then Ed Meese
dropped the bomb: some of the profits from the arms sales to
Iran had been diverted to the Nicaraguan resistance, the
contras. The White House press corps actually fell silent for
a second or two. Then the barrage began. Did the President know
about this?

    Meese: The President knew nothing about it until I
reported it to him.

    What?

    Well, then, who did know?

    Meese: The only person in the U.S. government that knew
precisely about this, the only person, was Lieut. Colonel North.

    What?!

    Meese: Admiral Poindexter knew that something of this
nature was occurring, but he did not look into it further. CIA
Director Casey, Secretary of State Shultz, Secretary of Defense
Weinberger, myself, the other members of the NSC -- none of us
knew.

    What?!

    "What Colonel North did -- is that a crime? Will he be
prosecuted?"

    Meese: We are presently looking into the legal aspects of
it as to whether there's any criminality involved.

    Criminality?!

    For three weeks, ever since our Iran initiative had been
exposed by a Beirut magazine, the Administration's strategy had
been unspoken but unmistakable: this must not become another
Watergate. And so in November 1986, somebody -- probably Donald
Regan, the White House chief of staff, or Nancy Reagan --
decided that there could not be even the hint of a cover-up.
Before the news media could cause any damage, the White House
itself would disclose the story.

    The Administration chose to focus almost exclusively on
the "diversion," and there was certainly a lot to be gained by
presenting it that way. This particular detail was so dramatic,
so sexy, that it might actually -- well, divert attention from
other, even more important aspects of the story, such as what
else the President and his top advisers had known about and
approved.

    And if it could be insinuated that this was the exclusive
responsibility of one mid-level staff assistant at the National
Security Council (and perhaps his immediate superior, the
National Security Adviser), and that this staffer had acted on
his own (however unlikely that might be), and that, now that you
mention it, his activities might even be criminal -- if the
public and the press focused on that, then maybe you didn't have
another Watergate on your hands after all. Especially if you
insisted that the President knew nothing about it.

    I had expected to leave, and maybe even be fired -- but
not quite so publicly. Still, I'd had plenty of warning that my
days at the NSC were numbered. I was, after all, deeply
involved in two major, secret and politically explosive
projects, the Iran initiative and the contras, and both had
begun to unravel a few weeks earlier.

    Shortly after the Sandinistas shot down a contra resupply
plane with American Eugene Hasenfus on board, William Casey, the
director of the CIA, had said of the operation, "Shut it down
and clean it up." Somebody's head would have to roll, and
offering me up as a political scapegoat was part of the plan --
although Casey believed there would be others. "If it comes
out," he had told me, "it will go above you, buddy." And after
it did come out, he said, "It's not going to stop with you."

    But never in my darkest nightmares did I imagine that
anything I had done in the service of the President, my
Commander in Chief, could lead to criminal charges.

    As soon as the press conference was over, everybody's
favorite Watergate question began to reverberate: What did the
President know, and when did he know it? According to the polls,
a majority of the American people believed that President Reagan
did know.

    I thought so too.

    And now, five years later, I am even more convinced:
President Reagan knew everything.

    Ronald Reagan knew of and approved a great deal of what
went on with both the Iranian initiative and private efforts on
behalf of the contras, and he received regular, detailed
briefings on both. He met on several occasions with private
donors to the resistance and, it appears, personally asked a
foreign leader -- King Fahd of Saudi Arabia -- to double his
contribution. I have no doubt that he was told about the use of
residuals for the contras, and that he approved it.
Enthusiastically.

    There is an additional possibility: people around the
President, and perhaps even President Reagan himself, were
involved in an effort to protect the highest office in the land
-- and the man who occupied it.

    In his memoirs, Ronald Reagan wrote, "We sent word to the
lawyers representing Oliver North and John Poindexter, who knew
what had happened, that I wanted them to tell the entire truth
and do nothing to protect me." I was surprised to read that,
and I asked my lawyers if they ever received such a message.
They hadn't. In fact, nobody from the Administration ever asked
me to tell the truth. The only message I heard was "exonerate
the President."

    -- On Dec. 11, H. Ross Perot, the Texas entrepreneur, met
with Brendan Sullivan, my lawyer. "Look," he said, "why doesn't
Ollie just end this thing and explain to the FBI that the
President didn't know? If he goes to jail, I'll take care of his
family. And I'll be happy to give him a job when he gets out."

    -- On Dec. 17, a military aide to Vice President Bush
visited me and Brendan Sullivan. He suggested that I waive my
Fifth Amendment rights and absolve the President of
responsibility. Naturally, we wondered: Had this officer come
on his own? Had he been sent? I still don't know.

    -- At the end of January, Paul Laxalt, one of Ronald
Reagan's oldest and closest political friends, offered a legal
memorandum to my defense team arguing that I would not waive my
Fifth Amendment rights if I chose to state publicly that the
President did not know about the diversion. My lawyers rejected
this proposal out of hand.

    It's also possible that these approaches were part of a
pattern that began even earlier, with President Reagan himself.
A few hours after the Nov. 25 press conference, a White House
operator tracked me down in a Virginia hotel. When President
Reagan came on the line, I expressed my regret for what had
taken place, and that the Iran initiative had blown up in our
faces.

    "Ollie," said the President, "you have to understand, I
just didn't know."

    Looking back, I wonder why he put it quite that way, and
whether he was implying more than I realized at the time. He
could have said, "Ollie, why didn't you tell me about the
diversion?" Or "Ollie, believe me, I didn't know what was going
on." Instead, it was, "You have to understand, I just didn't
know." I now wonder whether he was alone when he made that call.
Was Don Regan standing beside him? Or Nancy? Maybe what the
President was really trying to tell me was: Look, Ollie, you and
I know better, but the line we're putting out is that I didn't
know, so please go along with it.

    It's possible, of course, that President Reagan meant
exactly what he said. On the other hand, he was almost always
scripted, and I don't have to stretch hard to imagine Donald
Regan giving careful thought to the language the boss should
use.

    Many friends and supporters say, "You knocked yourself out
carrying out his policies and even risked your life by going to
Tehran. Don't you feel betrayed?"

    Sometimes I do. In terms of the difference he made in the
world, I'm very glad he was President for eight years. Yet he
could have ended years of suffering for me and my family -- by
granting a pardon or by shutting down the office of the special
prosecutor. Is that betrayal? Well, it sure as hell wasn't
supportive.


    Putting a Lid on the Kettle

    [A predecessor to both the Iran initiative and the contra
resupply scheme was a William Casey-inspired covert program,
Operation Tipped Kettle. In 1983-84, hundreds of tons of
Soviet-bloc weapons captured from the Palestine Liberation
Organization by the Israelis were transferred by the CIA to the
contras. But the disclosure that the CIA had mined Nicaraguan
harbors infuriated Congress and put the lid on Tipped Kettle --
and other aid.]


    The mining led to a spate of hearings. When Tony Motley,
Assistant Secretary of State for Inter-American Affairs, was
called before the House Intelligence Committee, the Congressmen
jumped all over him. "This is terrible," one said. "We're
involved in illegal, covert actions, and we're killing sailors
from other countries."

    "Just a minute," Tony replied. "Let me put this thing in
context. Fewer people were killed by these mines than died at
Chappaquiddick."

    Maybe that's why Tony didn't last too long in the job. As
good as he was, you can't talk like that and stay very long at
the State Department.

    For many in Congress, mining the harbors was the last
straw. Instead of providing additional money for the resistance,
the House gave us a new Boland amendment, the most restrictive
of the five passed between 1982 and 1986, cutting off all aid
to the contras. When that happened, a lot of people expected
the resistance to wither on the vine and disappear. But
President Reagan had no intention of abandoning the contras.

    In the fall of 1983, Robert McFarlane, the National
Security Adviser, asked me for a list of countries that might
be approached. In late March 1984, Bill Casey sent Bud a memo
telling him that he, Casey, was "in full agreement" that
McFarlane should "explore funding alternatives with the Israelis
and perhaps others." After he received the Casey memo, Bud made
a rare visit to my office. He said, "I want you to have the
resistance open up an offshore bank account so that a foreign
contributor can make deposits directly into it."

    Naturally, I wondered who that foreign contributor might
be, but I knew better than to ask. McFarlane knew I would be
asking Casey how to set this up, and I assumed he didn't want
to put the CIA director in an awkward position. Casey was
continually being called up to Capitol Hill to answer questions,
and life was a lot easier if he didn't know those kinds of
answers.

    I walked down the hall to Casey's office in the OEOB.
"I've been told to have the resistance set up an offshore
account," I said, "and I could use some help."

    Casey leaned back on his chair. He was chewing on a yellow
wooden pencil. "Is it the Saudis?" he asked.

    "I don't know."

    "Come on, don't bullshit me. It's the Saudis, right?"

    "Honestly, I don't know."

    Casey smiled. "Well, it must be. How much are we talking
about?"

    "I don't know that either."

    He peered at me skeptically over his glasses. Then he
picked up the secure phone and asked for a number. When somebody
picked up at the other end, Casey asked, "If a third party
wanted to help our friends down south, who can we trust to
handle the money?"

    When Casey hung up, he said, "Calero's your man." Adolfo
Calero was a prominent figure in the resistance. "He should set
up an offshore account if he doesn't have one already. The
money shouldn't come all at once. Have it arrive in regular
payments, every month."

    Then Casey held school. "Here's what to do," he began. I
took out a notebook. "Put that away," he said. "If you have to
write everything down, you don't belong in this business. The
money should go directly from a foreign account into Calero's
offshore account. It shouldn't come into this country at all.
Do it with a wire transfer."

    "What, exactly, is a wire transfer?"

    Casey sighed. He had spent most of his life in the
financial world and had even served as chairman of the
Securities and Exchange Commission. Asking Bill Casey about a
wire transfer was a little like asking Einstein, "Excuse me,
professor, but what is a square root?"

    "Why does it have to be an offshore account?" I asked.

    "Two reasons," he replied. First, all Nicaraguan bank
accounts in the U.S. had been frozen. Second, the Treasury
Department monitors large transfers of funds in and out of
American banks. Someone was bound to notice these transactions
and start asking questions.


    "You're Talking Too Much"

    In February 1985, King Fahd of Saudi Arabia arrived in
Washington on a state visit. During his meetings with the
President, he agreed to provide additional funds to the
resistance. When the money began to arrive, Calero used it to
buy weapons and supplies. He often called me for advice, and
soon we conferred about everything, from where the contras could
buy surface-to-air missiles to the need for more obstetricians
in the base camps.

    One afternoon, Casey called me from his office at the
Intelligence Community Staff Building on F Street. "Can you come
over and see me right now?"

    I threw on my coat, ran over to F Street, and took the
creaky old elevator to Casey's office. He said, "You're talking
too much."

    "What do you mean?"

    "On the phone. How often are you talking to your pal in
Honduras? Three, four times a week?"

    "Something like that."

    "All in the clear, right?"

    "Yes."

    "Well, it's got to stop." Casey said these calls made it
too easy for the Soviets to listen in on my talks with Calero.
He handed me a small black book with a series of little pockets
inside. "Have you ever used one of these?"

    "No. How does it work?"

    He shook his head, as if to say, Do I have to explain
everything? "It's a code book," he said. "You get one, he gets
one. You change the code numbers on a set pattern. Now you can
talk without giving away the store."

    All you had to do was enter the relevant words --
Honduras, Nicaragua, guns, ammo, medicine, planes -- then line
them up with the code numbers in the book, which could be
changed every day. It was low-tech but effective. Somebody
listening in would have virtually no idea what you were talking
about.

    Later, when more people were involved in our contacts with
the resistance, Casey called me in again. "What are you doing
about security?" he asked. "Your COMSEC [communications
security] stinks." Casey was concerned about the Soviets'
ability to monitor calls from their listening post in Lourdes,
Cuba. What had begun as a simple link between Adolfo and me soon
involved more than a dozen people on at least two continents.
Adolfo and I were still using the original code books, but that
didn't protect the others. Casey recommended a new, American-
made encryption device manufactured by TRW, the KL-43.

    The code books and communications equipment may have
helped keep the Soviets and the Cubans from knowing the details
of what I was doing to support the resistance, but the secret
kept spreading. There must have been well over 100 people in
our government (including State, Defense, CIA, the White House
and Congress) who knew at least some of what was being done. As
the CIA phased out and I became the focal point for the
resistance, we tried to tighten that circle. But for a covert
operation, there sure were a lot of people who knew about it --
at least until the great plague of amnesia that hit Washington
in the fall of 1986.

    As the summer of 1984 came to an end, I felt as if I were
straddling a canyon. On one side was the resistance, always
expanding, always needing more. On the other was the CIA, which
was steadily withdrawing its support. The canyon was growing
wider by the day. Unless I had help, and soon, I was going to
fall in. But Casey could see what was happening, and he asked
me to come out to CIA headquarters at Langley on a Saturday
morning to discuss the state of the resistance. I described the
problems that were developing in the wake of the CIA's
withdrawal. "Money alone isn't enough," I said.

    He nodded. "I know. And it'll only get worse in October,
when all our people will be gone. You need somebody who can
help you out." He leaned back and looked up, as though the
answer was written on the ceiling. Whenever he did this, it was
all I could do to restrain myself from looking up there with
him.

    "Do you know Dick Secord?" he asked.

    "The Air Force general? I know who he is. I talked to him
a couple of times."

    "That's the guy," said Casey. "He's got the right
experience for this sort of thing. He knows the right people,
he gets things done, and he keeps his mouth shut. Why don't you
call him?"


    The Diversion Begins

    [North and Secord, a retired Air Force general with long
experience in clandestine operations, created Project Democracy,
supplying the contras with Soviet-bloc and other weaponry,
medical supplies and spare parts aboard a fleet of aircraft
financed by private benefactors like Joe Coors and governments
including Saudi Arabia and Taiwan. Eventually, Secord's business
partner Albert Hakim, an expatriate Iranian, was able to help
North in Iran, which soon became his other major account at the
NSC.

    North picked up the Iran account on Nov. 17, 1985, when
Bud McFarlane asked him to help Israeli Defense Minister
Yitzhak Rabin get a shipment of American-made Israeli HAWK
missiles into Iran. The effort to enlist Iran's help in freeing
the Western hostages held in Lebanon in exchange for arms
shipments was soon in full swing. In May 1986, North flew to
Tehran with McFarlane, Israeli antiterrorist adviser Amiram Nir,
the NSC's Howard Teicher and the CIA's George Cave. But it
quickly became clear that the man who arranged the trip, a
Paris-based expatriate Iranian arms merchant named Manucher
Ghorbanifar, had been overpromising both sides. After several
days of fruitless meetings, McFarlane aborted the mission.
Despite his disappointment, North was relieved to get out of
Iran without having to use the six lethal white, triangular
pills Casey had given him.

    While keeping the Ghorbanifar channel open -- it was
"Gorba," as North called him, who hatched the notion of
diverting profits from Iranian arms sales to the contras --
those involved in the initiative sought other means of dealing
with the Iranians. Hakim helped put them in touch with one of
Iranian Speaker Hashemi Rafsanjani's nephews, a man not in
government but well connected to it. North found "the Nephew"
realistic about what could be accomplished both in the release
of hostages and in developing a dialogue with Iranian moderates.]


    I believe it made sense to open a dialogue with Iran and
search for pragmatists or moderates in its government. At the
time, it seemed that selling a small amount of arms to Iran was
worth the risk to make it all work. But a quid pro quo
arrangement of arms for hostages? This placed all of us in a
moral quandary. Human life is sacrosanct, but making what people
would inevitably see as concessions to terrorists was a terrible
idea -- especially since it violated our prohibition on arms
sales to Iran. The decision to proceed was made well above my
level, but I became a willing participant.

    For me, the most difficult aspect of the endeavor was
accepting that we had established a price for a human life: 500
TOW missiles. To this day, I find this part of our Iran
initiative the most troubling.

    There were other problems. Premature disclosure of our
dealings with Iran might not only harm the hostages but would
also damage American prestige abroad and the President's
effectiveness at home. And dealing with the kidnappers, even
through intermediaries, might merely encourage them to take more
hostages.

    Despite the negatives, for me the moral issue was still a
very tough call. It's easy to condemn trading arms for
hostages, but the State Department had achieved no success using
diplomatic channels. "Fix it," McFarlane had said, and that's
all I needed to hear. It was the kind of challenge I thrived on.

    I could have quit.

    Instead, I jumped in with both feet.


    [While North was meeting with the Nephew in early October
1986 in Frankfurt, Germany, where they were working toward what
would become the release of hostage David Jacobsen, North
learned via CNN that the Sandinistas had shot down Hasenfus'
C-123 over Nicaragua. "My heart stopped," writes North. "I
didn't recognize the name, but I certainly knew what this
meant."

    North hurried back from Frankfurt and was summoned to CIA
headquarters at Langley, where Casey ordered him to shut down
Project Democracy. He began shredding everything he could find
that pertained to the private contra-aid effort but returned to
Europe to continue talks with the Nephew. Soon, however,
pamphlets describing the McFarlane mission were being circulated
in mosques in Qum and Tehran -- the work of rival factions
opposed to reconciliation with the U.S., according to the
Nephew. The story soon made its way into the Beirut magazine Al
Shiraa and from there into the American press.]


    Shortly after the Al Shiraa revelations, Admiral
Poindexter asked for a chronology of the Iran initiative.
Because my own involvement in the Iran initiative had not begun
until I heard from Rabin in November 1985, I relied on others
for earlier details. The chronology started out as two pages but
soon expanded to 20.

    On Tuesday, Nov. 18, at about 8 p.m., Bud McFarlane came
to my office to "lend a hand" in reworking a draft of the
President's remarks for the press conference scheduled for the
following night. He proposed several changes to Admiral
Poindexter, including a denial that the U.S. had approved any
shipments to Iran before January 1986. When he had finished
working on the President's remarks, Bud made the same changes
on the chronology.

    By now, President Reagan, Admiral Poindexter and Don Regan
had met with various congressional delegations to discuss the
Iran initiative, and all had studiously avoided any mention of
our involvement in the 1985 shipments. On Nov. 12, when
President Reagan and his senior foreign policy advisers met with
the congressional leadership at the White House, the President
pointedly omitted any reference to his O.K. for Israeli TOW
shipments in the summer of 1985 or to his December 1985 finding
retroactively authorizing the Iranian initiative.

    From then on, the President and his senior advisers were
committed to this version of events. In his speech to the nation
on Nov. 13, the President made no mention of U.S. government
approval for, or involvement in, these early shipments.

    By the time McFarlane finished his rendition of the 1985
events, his account coincided with the President's. In
describing the HAWK shipment from Israel to Iran, Bud totally
altered the facts about the delivery and our role in it, making
it appear that we didn't even know about it at the time.

    To this day I don't know McFarlane's reasons for these
changes. I have mine, and at the time, that was enough; we knew
from our intelligence and from meetings with the Iranians that
the HAWK shipment of November 1985 had infuriated the Iranians.
They had been led to expect a long-range system that could
shoot down high-altitude Soviet and Iraqi aircraft. But HAWK is
a low-altitude, relatively close-in system.

    When the Iranians had confronted us with these problems,
we had assured them that we'd had nothing to do with that
particular shipment. With the agreement of the Israelis, we
presented ourselves as the good guys. "Deal with us from now
on," we said. "You can return those HAWKs, and we'll help you
get what you need."

    In November 1986, I still didn't want us to reveal our
connection with that 1985 shipment. If the U.S. was perceived
as having played any role in that transaction, the Beirut
kidnappers might take out their anger on the hostages. We also
feared that additional hostages might be seized. We were also
concerned that any revelation of our role in the 1985 shipment
could harm the Nephew. He might end up being targeted as the
fall guy in Tehran, especially if it was revealed that shipments
to his country had gone through Israel. By then, I fully
expected to lose my job. But in Iran, after all, the word
"firing" is often followed by the word "squad."


    The Secret Within a Secret

    There was still another reason for not disclosing our role
in the 1985 shipment from Israel. The original presidential
finding that Reagan had signed in December 1985, authorizing the
covert shipment of arms to Iran, had been worded in such a way
as to make the Iran initiative sound like nothing more than arms
for hostages:

    "Scope: Hostage Rescue -- Middle East. Description: The
provision of assistance by the Central Intelligence Agency to
private parties in their attempt to obtain the release of
Americans held hostage in the Middle East . . . As part of these
efforts certain foreign materiel and munitions may be provided
to the government of Iran, which is taking steps to facilitate
the release of the American hostages."

    Any disclosure of this finding would have been enormously
embarrassing for the Administration, especially since the
President continued to insist that the Iran initiative was not
about arms for hostages.

    On the afternoon of Nov. 21, John Poindexter and I sat in
his office and discussed the problem. In January 1986, the
President had signed a second finding, which made clear that the
Iran initiative was much broader than simply arms for hostages.
This second finding spelled out the President's goals: to
create an opening to Iran, to help bring about an end to the
Iran-Iraq war and to recover the hostages. The admiral believed
the poorly worded first finding had been effectively superseded
by the second finding.

    If that first finding was ever revealed, the President
would be humiliated. The admiral asked Paul Thompson, his
lawyer, to bring in the signed original 1985 finding. Admiral
Poindexter then tore it in half and placed it on the coffee
table. This was one of the charges on which he was later
indicted and convicted. He was punished by politicians who were
out to get the President. What happened to John Poindexter was
an outrage.

    In changing the chronology and in destroying the
superseded finding, Bud and the admiral had taken steps to
preserve lives and to protect the President. But there were
other matters too that we didn't want anyone to know about. No
version of the chronologies mentioned "the secret within a
secret." We were trying to avoid the political explosion that
such a revelation would entail -- and we were certainly right
about that.

    We also knew the Iranians would be furious if this story
came out. They had been taken to the cleaners and charged
enough for the weapons to fund the Nicaraguan resistance and
other projects as well. If it was revealed that these funds were
used to support the contras, the Iranians might well go
ballistic. After all, they had been supporting the Sandinistas.
While the government of Iran had no great sympathy for
communism, it apparently believed the Sandinistas qualified for
that old Middle Eastern proverb: the enemy of my enemy is my
friend.

    Meanwhile, back in my office on the night of Nov. 18,
McFarlane asked me, "Did you ever take care of that other stuff
-- way back then?"

    "Other stuff?"

    "What did you do with that?" He gestured toward my
computer. Taped to the monitor was a list of six NSC document
control numbers that Bud had written out and given to me more
than a year earlier. The numbers referred to memos I had written
to Bud in 1984 and 1985, seeking his approval for some of my
efforts in support of the Nicaraguan resistance. In the fall of
1985, Bud had directed me to remove any reference to my support
activities and his knowledge of them. I still hadn't done it.

    In the summer of 1985, two prominent members of Congress
started asking questions about the NSC's involvement in secret
support for the Nicaraguan resistance. Michael Barnes, chairman
of the Western Hemisphere Subcommittee of the House Foreign
Affairs Committee, was a leading opponent of the President's
policies in Central America. Lee Hamilton, chairman of the House
Intelligence Committee, was less vocal than Barnes but also
opposed military aid for the resistance. Both wrote McFarlane,
asking whether the NSC had indeed been supporting the
resistance. Barnes specifically asked about reports of contact
between me and the contra leaders.

    There are two ways to protect a secret when you're asked
about it directly. One is simply not to answer. The other is to
lie.

    I argued with Bud that we shouldn't answer these letters.
This was precisely the kind of situation that Executive
privilege was invented for. Bud said my approach was too
confrontational. Instead, he invoked his own form of Executive
privilege. He lied. In letters and meetings with various
Congressmen, he flatly denied that the NSC, in general, and
Oliver North, in particular, were involved in these activities.

    After Barnes renewed his request to see documents, Bud
called me in. "Ollie," he said, "some of these need to be
fixed." Bud explained that the memos, all of which I had sent
to him, were inconsistent with what he had said and written to
Congress and that they were "problematical." He handed me a
piece of paper on which he had written the numbers of six NSC
documents. Bud said I should remove all references to my
operational role and make the memos consistent with what he had
said and written to Congress. But I didn't understand why
McFarlane had selected only certain memos when I had written
dozens that were equally problematical.

    "Just take care of it," McFarlane said, showing me a
document he had already changed. "And from now on, no more memos
with this kind of detail."

    Until Bud came to my office on Nov. 18, 1986, I still
hadn't got around to revising these papers. With so many other
NSC memos that revealed similar information, I just didn't see
the point. But when Bud brought it up again, I dutifully
started removing references to my operational role and to
McFarlane's knowledge of it, just as he told me to.

    But it was too late. I was still working on these papers
when I was fired. It wasn't until 1989, during my trial, that
I finally understood why Bud had selected these six documents.
Bud knew they all revealed his detailed awareness and approval
of my activities and perhaps, to his way of thinking, the
President's as well.


    Left Out in the Cold

    On Thursday afternoon, Nov. 20, Bill Casey and I walked
back to the OEOB together after a meeting and talked for a few
minutes in his office. As I started to leave, he said, "It's
going to be O.K. down there."

    I gave him a puzzled look.

    "You know, Nicawogwa." (He never could pronounce the name
of the country that was always on his mind; at meetings people
would go out of their way to try to get him to say it.) Casey
went on, "You did a good job. We're back in" -- he was
referring to Congress's approval of $100 million in aid to the
resistance -- "but you kept them going."

    This turned out to be the last real conversation we ever
had. Casey died on May 6, 1987.


    [In closed-session testimony before the House Intelligence
Committee, Casey claimed he had no knowledge of the 1985 HAWK
shipment until January 1986. But he pointedly suggested that the
members "might be fascinated to know what Oliver North had been
doing operationally to help the Nicaraguan resistance." In doing
so, Casey was fulfilling a warning he had given North early on:
he would sacrifice him if it meant saving the rest of the
Administration. The committee didn't seem interested.

    But aides to Attorney General Ed Meese, who launched his
own investigation that same week, were to become very much
interested. On Saturday, Nov. 22, William Bradford Reynolds and
John Richardson from Justice came to North's office, where he
helped them sort through and copy his files, while he went about
his own business -- including shredding some documents.]


    The following afternoon, Sunday, I went to Ed Meese's
office in the Justice Department shortly after 2. Ed opened the
meeting by asking me to try to recall everything that had
happened on the Iran initiative. "Don't worry about trying to
protect the President or anyone else," he said. "Just tell me
the story."

    It may sound strange in view of what happened next, but
the tone of our discussion was friendly and casual. I didn't
expect this meeting to be especially dramatic. I thought we were
still trying to put the best face on what happened -- to reveal
enough to satisfy Congress and the press but not so much as to
endanger the hostages.

    About an hour into the meeting, Meese said, "Is there
anything else that can jump up and bite the President on the
ass?"

    "Not that I can think of," I replied.

    "How about this?" he said, handing me a nine-page
document. It was an April 1986 memo from me to Admiral
Poindexter detailing a planned arms shipment to Iran and
specifically mentioning $12 million in residuals from the arms
sales that would go to the Nicaraguan resistance.

    Oh, shit, I thought.

    This was precisely the kind of document I had shredded. Or
so I thought.

    "Where did this come from?" I asked.

    "That's not important," said Meese. "Did this happen?"

    "No, that particular shipment never took place," I said.
This was true, but the next question was inevitable.

    "Well, did anything like this ever take place?"

    I paused. This was the secret within a secret that was
never supposed to be revealed. But there was no way I was going
to lie to Ed Meese. After what seemed like an eternity, I said
yes.

    The earth didn't shake. The walls didn't come crashing
down. Nobody said, "Get out the handcuffs! This man has violated
the Boland amendment!"

    Ed Meese was certainly interested but gave no hint of what
was to come just two days later at the Nov. 25 press
conference. The meeting ended shortly before 6 p.m. As Meese was
leaving, I expressed concern about the safety of the hostages.
"I certainly hope this won't be made public," I said. Famous
last words.


    By the summer of 1987, the White House was willing to give
up just about anyone or anything that would permit the upper
echelons of the Administration to survive -- even allowing the
actions of those who had served the Administration to be
criminalized.

    When I arrived at the Senate Caucus Room to begin my
testimony on July 7, 1987, the scene was a lot more raucous than
I expected after watching the Iran-contra hearings on TV for
seven weeks. Directly in front of me, photographers were
shooting like crazy. Just beyond the photographers, on an
elevated, double-tiered dais, sat the 26 members of the
Iran-contra committee and their innumerable staff. The room
reminded me of a miniature Colosseum when the lions were about
to be released.

    I was well aware that some committee members were already
convinced I was the villain. That was fine, because I wasn't too
crazy about some of them either. To me, many Senators,
Congressmen and even their staff members were people of
privilege who had shamelessly abandoned the Nicaraguan
resistance and left the contras vulnerable to a powerful and
well-armed enemy. And now they wanted to humiliate me for doing
what they should have done!

    Brendan Sullivan had agreed that before I testified
publicly the committee could ask me one question in private.
Their most burning question was whether I had told the President
about the "diversion." I explained that, while I had never
discussed it with him, I had always assumed that he was aware
of what I was doing and had, through my superiors, approved it.

    The committee's infatuation with the diversion distracted
attention from many other things that the President and his
Administration had done to support the contras during the Boland
prohibitions. And it kept attention focused on me, which
appeared to be just what the committee and the Administration
wanted. It left John Poindexter and me out in the cold.


    The Smoking Gun?

    [After full-scale inquiries by a presidential commission,
a joint committee of Congress, the office of special prosecutor
Lawrence Walsh and the press, North was eventually brought to
trial on 12 counts. When he was indicted, he immediately
resigned from the Marine Corps, though "it had been my identity
every day for close to 20 years, and I had expected it would
continue to be for another 10 or 15."

    North believes that as part of the White House strategy of
protecting the President by diverting blame for Iran-contra from
him, "anonymous sources made a concerted effort to portray me
as an unreliable renegade, and the press lapped it up, never
stopping to ask how I could possibly have done all this on my
own." Even the special prosecutor's office apparently failed to
pursue evidence that North believes might have led to a wider
investigation.]


    By far the most interesting piece of evidence that Brendan
didn't use was what we called the "smoking gun in the closet"
tape. (The title comes from a deliciously mixed metaphor that
appears in the first line of the transcript.) This tape was
supposed to be nothing more than a routinely recorded telephone
conversation between employees in two different Manhattan
offices of New York's Citibank on June 17, 1987, about three
weeks before I testified at the congressional hearings. But in
a coincidence almost too bizarre to believe, leaking through the
conversation between the two bank employees was a second
dialogue between two men on the subject of the Iran-contra
hearings. From their discussion, it's clear that one of these
men had appeared before the congressional committee.

    The bank gave the tape to the FBI, and the following
summer, Barry Simon, a member of my legal team, found it in a
pile of potential evidence that was provided to us by the
prosecution. Although most of the conversation between the two
men was remarkably clear, we were never able to determine who
they were. But there was no doubt as to what they were
discussing:

    A: Yeah, there's a smoking gun in the closet. Reagan knows.

    B: Listen . . .

    A: I told the committee. There was no -- I told the
committee there was -- I had nothing to do with those papers.
Ollie North knows about it. Reagan knows . . . Reagan knows
about it . . .

    B: Listen, he ain't testifying.

    A: . . . and the . . . and the other, the other people
involved do know about that.

    B: [Unintelligible.]

    A: Well, you have to go to the committee.

    B: [Unintelligible] the committee.

    A: You have to go to the committee, not me.

    B: Listen . . .

    A: Somebody's got to bring this up.

    B: [Unintelligible.]

    A: I think somebody ought to go; somebody's got to be
responsible for this.

    B: [Unintelligible.]

    A: Reagan . . . Reagan knows. Reagan has all the memos.

    B: He's got all the memos? I thought he tore all that
stuff up.

    A: No. He's got all the memos, and there are copies.

    B: Didn't you burn that stuff?

    A: No.

    B: Oh, jeez. I warned you about that.

    A: Nobody . . . no . . .

    B: It's going to hit the papers like crazy.

    A: Nobody told me to.

    B: [Unintelligible.]

    A: [Unintelligible.] No.

    B: What about your secretary? She couldn't get the stuff
copied?

    A: Not all of it.

    B: [Unintelligible] about Reagan [unintelligible].

    A: Well . . ., I'm getting out of this thing, and if
somebody comes to me, I'm blowing the cover.

    B: I'll tell you, if I go down, I'm taking you with me.

    A: Well, me too.

    B: You and your . . . secretary . . . [unintelligible].

    A: I'd better call you back. I think we're tapped.

    B: I think so.

    A: All right. 'Bye.

    When Barry first heard the tape during preparations for
the trial, he was flabbergasted. "Listen to this!" he called
out, and we all gathered to hear it. Barry played it over and
over to see if I could identify the voices. Was one of the men
Don Regan? It just didn't sound like him. Regan would have come
across as more arrogant; these men were clearly anxious. My
guess was one of them was Ed Hickey, head of the President's
military office, who has since died. Hickey was interviewed
around this time by the committee and had been involved, with
me, in a hostage-rescue attempt by the Drug Enforcement
Administration, funded with profits from the Iran arms sale.

    But that's just a guess. Whoever these men were, it was
clear that somebody was in possession of important documents,
some of which had been destroyed. But what? And how exactly did
all this fit into the Iran-contra story?

    When I was unable to identify the voices, Brendan and
Barry took the tape to the White House. On July 28, 1988, they
met there with Arthur B. Culvahouse, the President's counsel,
and one of his aides. As Barry described it later, Culvahouse
blanched when he heard the tape, and his aide appeared shaken.
Both men denied any knowledge of it, and as far as they knew,
no other government agency had been asked about it either. And
yet the special prosecutors had received this tape months
earlier.

    Well, said Brendan, would you help us get to the bottom of
this and let us interview the President about it? Two months
later, the answer came back no.

    Apparently, the special prosecutor's zeal in pursuing John
Poindexter and me did not extend to finding out who was on that
tape or what documents they were discussing. Nobody at the White
House, the FBI or the special prosecutor's office was interested
in helping us. And it's safe to assume that nobody on the
congressional committee heard this tape either. If they had, it
surely would have leaked.

    Without being able to identify the voices, we were not
able to use the tape in court. The special prosecutor might
never have given it to us, except that he was required to do so
under the rules of evidence. But neither they, the FBI nor the
White House ever revealed its existence.


    Keeping Faith


    [North was eventually acquitted of nine counts but found
guilty on three, including helping to obstruct Congress and
tampering with documents. But on Sept. 16, 1991, Walsh asked
Federal Judge Gerhard Gesell to drop all charges because he
would be unable to show that testimony in North's trial had not
been prejudicially tainted by the testimony he gave under
immunity to the congressional Iran-contra committee. "It was
finally over," writes North.]


    According to the conventional wisdom, Iran-contra occurred
because a small group of misfits and renegades, working out of
the White House basement, rose above the law and carried out
their own foreign policy, whereupon their superiors were shocked
-- shocked -- to learn what they had done.

    It makes for a good story, but that's not what happened.

    I never saw myself as being above the law, nor did I ever
intend to do anything illegal. I have always believed, and still
do, that the Boland amendments did not bar the National
Security Council from supporting the contras. Even the most
stringent of the amendments contained loopholes that we used to
ensure that the Nicaraguan resistance would not be abandoned.

    From 1984 on, I did my best to keep faith with two groups
that I cared about deeply, and whose fate President Reagan had
put at the top of his agenda: our hostages in Lebanon and the
contras. The Iran initiative ended in failure, but that's not
to say it wasn't worth trying. Had we succeeded, not only would
all the hostages have come home, but we would have opened a new
relationship with a country that is still important to our
national security.

    Our Nicaraguan initiative was more straightforward and for
me, at least, presented no great moral quandary. Until Congress
resumed its funding for the contras, we fulfilled the mission
assigned by the President: to keep the resistance alive. Our
goal was to enable the contras to exert the kind of pressure on
the Sandinistas that could ultimately lead to a free and
democratic Nicaragua. Early in 1990, our efforts were
vindicated when a coalition of anti-Sandinista groups scored a
decisive electoral victory over Daniel Ortega and the
Sandinistas.


________________________________________________________________
HOW IRAN-CONTRA UNFOLDED

    Dec. 1, 1981. President Reagan signs "finding" authorizing
CIA assistance for contras in Nicaragua.

    May 21, 1983. State Department launches Operation Staunch to
discourage sale of arms to Iran by other nations.

    April 6, 1984. Wall Street Journal exposes CIA mining of
Nicaraguan harbors as Reagan lobbies for $24 million in contra
aid.

    Oct. 12, 1984. Third and most restrictive of Boland
amendments forbids all U.S. intelligence agencies to support the
contras.

    March 6, 1985. Associate Press bureau chief Terry Anderson
is kidnapped in Beirut.

    July 18, 1985. Reagan approves Iran initiative in meeting
with Robert McFarlane at Bethesda Naval Hospital.

    Sept. 14, 1985. Shipment of 408 TOW antitank missiles goes
from Israel to Iran (96 were shipped on Aug. 20). Next day,
hostage Benjamin Weir is released.

    Nov. 24, 1985. U.S. HAWK missiles bound for Iran arrive in
Israel.

    Jan. 22, 1986. Iranian arms merchant Manucher Ghorbanifar
proposes "diversion" of profits from Iran arms sales to contras.

    April 4, 1986. North, in message to Poindexter, proposes
diverting $12 million in Iran arms profits to contras.

    May 25, 1986. McFarlane, North and others arrive in Tehran
to negotiate sale of arms and release of hostages.

    Sept. 25, 1986. Congress okays $100 million in lethal and
nonlethal aid to contras.

    Oct. 5, 1986. Plane carrying American Eugene Hasenfus and
10,000 pounds of arms is shot down in Nicaragua.

    Nov. 2, 1986. Hostage David Jacobsen released following
shipment of 500 TOW missiles to Iran.

    Nov. 3, 1986. Story from Beirut magazine Al Shiraa
describing McFarlane's trip to Tehran reaches U.S. press.

    Nov. 13, 1986. On nationwide TV, Reagan denies he traded
arms for hostages.

    Nov. 25, 1986. Reagan and Attorney General Ed Meese announce
discovery of "diversion," resignation of Poindexter and firing
of North.

    Dec. 19, 1986. Lawrence Walsh appointed special prosecutor.

    July 7-14, 1987. North testifies under immunity before Iran-
contra committee.

    March 16, 1988. Special prosecutor Walsh indicts North.

    May 4, 1988. North convicted on three counts, acquitted on
nine.

    Sept. 16, 1991. Walsh drops all remaining charges against
North after court rules that testimony of key witness McFarlane
was tainted by his exposure to North testimony given under
immunity.


________________________________________________________________
ABOUT THAT CAKE . . .

    In November 1986, when the world learned of our visit to
Tehran, it was widely reported that we brought a Bible signed by
President Reagan and a cake in the shape of a key -- to
symbolize our desire to open a new relationship with Iran. The
report about the Bible was wrong. But we did bring a cake. It
was not, however, in the shape of a key. Moreover, it had no real
connection with our mission.

    Manucher Ghorbanifar, our channel to the Iranians, had asked
that we bring a cake as a gift for his aging and widowed mother,
who lives in Tehran. Because that was one of Gorba's easier
requests, Amiram Nir and I bought a large, rectangualr chocolate
layer cake at a kosher bakery in Tel Aviv. Aboard the plane, I
carefully laid the cake box on the sink in the galley. During
the flight, when I opened the cabinet above the sink to look for
coffee cups, I noticed the matched sets of pistols we had brought
as gifts on the same shelf as the dishes. Each set of pistols
was packed in an elegant case with a handsome brass key.

    As I reached for the cups, one of the keys fell onto the
uncovered cake, making a sizeable indentation. When I saw how
deeply the key had fallen, I left it there, hoping it would look
like an intentional decoration. "Well," I said to a collegue,
"we can always tell Mrs. Ghorbanifar that this is the key to our
hearts."

    Ghorbanifar's gift never reached his mother. When Nir and I
wandered down the hall of the Tehran Hilton, several of the
revolutionary guards were playing with the pistols . . . and
eating the cake.

________________________________________________________________
NOT ANOTHER MULLAH!

    At several points during his 1986 visit to Washington, the
Iranian emissary we called the Nephew asked for a brief
intermission so he could pray. He hadn't brought his prayer rug,
so one of my collegues offered his mulitcolored gym towel. All
this praying led me to make several references to Abraham, the
biblical father of Judaism, Christianity and Islam. I also
stressed that President Reagan was a man of God. But I apparently
pushed the religious comments a little too far.

    Finally, the Nephew's keeper took Richard Secord aside to
complain. "General," he said, "what's with this guy? We just
left a country full of muallahs. And what do I find here but
another lousy mullah!"

________________________________________________________________
THE ULTIMATE COVER-UP

    Project Democracy became the operator of a seven-plane air
force, consisting of three Maules, two C-123s, and two C-7s.
Later, during the many investigations, one of the few questions
that nobody ever bothered to ask was what happened to those
planes. It wasn't until much later that I learned the answer.

    After the Hasenfus incident, in which one of the C-123s was
shot down over Nicaragua, CIA Director William Casey told us to
shut down the contra supply operation, and all the pilots,
maintenance men and mechanics who had been hired went home on
commercial flights, leaving planes and equipment behind.

    Later, in an effort to tidy up the loose ends from Project
Democracy, the CIA undertook an extraordinary operation. First,
they had the little air force flown to a remote airfield. Then
an enormous crater was dug with bulldozers. The planes were
pushed into the pit, covered with explosives and blown up. The
remaining wreckage was saturated with fuel and cremated. The
fire burned for days. When the smoke finally cleared, the
charred remians were buried. It was probably the only time an
entire air force had ever been given a funeral. One might call
it the ultimate cover-up.

________________________________________________________________
BICKER, BICKER

    Like everyone in the national-security community, I couldn't
help being aware of the continual squabbling between Secretary of
State George Shultz and Secretary of Defense Caspar Weinberger.
Part of their rivalry was institutional: the Defense Department
tends to be more suspicious of the Soviet Union; State, by its
very nature, is more inclined toward compromise and
reconciliation. But this conflict was personal, and the hostility
inevitably spilled down into the bureaucracies.

    Whenever Shultz spoke during meetings of the National
Security Planning Group in the White House Situation Room,
Weinberger would slouch down and close his eyes. When Shultz was
finished, Weinberger would usually speak up in disagreement.
Sometimes -- especially on Central America -- he'd talk as if
Shultz had never spoken.

    They fought constantly -- in front of the President, in
meetings and through public statements. Sometimes you had the
feeling that one of them took a more extreme position just to
annoy the other guy. They had apparently been at each other's
throats for years -- ever since 1970, when Weinberger worked for
Shultz in Nixon's Office of Management and Budget. According to
local lore, their conflict had continued at Bechtel, where
Shultz was president and Weinberger general counsel.

    It was also reflected in their very different personalities.
Shultz was certainly the more interesting of the two. In public
he always tried to portray himself as the cautious, behind-the-
scenes conciliator, struggling to stay out of the limelight.
But he struck me as just the opposite: a man who loved the
attention of the media and wanted to be seen as being in charge
of foreign policy. In private meetings he was contentious,
especially with Weinberger and Casey, and he frequently
contradicted them in meetings with the President. He also struck
me as the more ambitious of the two. Later I learned that
Shultz had told one of his aides he saw Iran-contra as an
opportunity to become National Security Adviser as well as
Secretary of State.

    Weinberger, on the other hand, was clearly uneasy in front
of the media and would often stutter and stammer his way
through a press conference. He was far more effective when he
held forth in the Situation Room, where his perspectives were
clear and concise. He knew that for the U.S. to have credibility,
we had to have military strength. Shultz, however, didn't seem
to care deeply about any particular issue -- so long as he got
to negotiate it.

    Just about the only thing that Shultz and Weinberger seemed
to agree on was that they were both strongly opposed to our
dealings with Iran. Thier oppositon was real enough, but in
Shultz's case, especially, I believe he made sure that if the
Iran initiative failed, he could credibly claim that he had
opposed it.

    The story came out that Shultz had threatened to resign over
the policy. I don't believe it. I'm confident that if he had
walked into the Oval Office and said, flat out, "Either this
Iran business stops or I'm leaving," the initiative would have
been stopped in its tracks. As much a President Reagan cared
about the hostages, after Alexander Haig left, he couldn't afford
to lose a second Secretary of State.

    Had Shultz and Weinberger been as strongly opposed as they
later claimed, it would never had continued. Consider the impact
if both men had gone in together to see the President and said,
"Hey boss, we finally found something to agree on. Either this
thing stops or we're both out of here." Instead, as pragmatic
politicians, they kept their options open.

________________________________________________________________
AND THEY BOUNCED CHECKS TOO

    During my appearance before the joint committee, Republican
Congressman Henry Hyde of Illinois made a remarkable statement
about the hypocrisy of the hearings. Referring to Congress, he
said:

    "If we don't like a law, Colonel, and you guys ought to learn
this at the NSC and then the Administration, you just exempt
yourself. You see, we exempt ourselves from OSHA, the
Occupational Safety and Health Act. We exempt ourselves from the
Ethics in Government Act; no special prosecutors are going after
us. We have our own committee of our own brethern that'll take
care of that. We are exempt from equal employment opportunity;
none of that because we're political people. The Budget Act?
Waive it, pass it, kid the people, and waive it. Every time
something comes us that's in excess of the budget, pay no
attention to it.

    "Now, if we can't ignore the law or exempt ourselves from it,
we play games with the process. Do you know how we got our pay
raise? . . . You know what we did in the House? We waited . . .
until 30 days had elapsed, until it was vested, it could not be
unvested . . . We waited until it was locked in, and then we got
to vote on it. And we could tell out constituents, 'I didn't
vote for that pay raise.' That's the way we do things. So
there's much to be learned from watching us."

________________________________________________________________
"WITH WINGS AS EAGLES"

    On July 7, 1987, the first morning of my testimony before the
joint congressional committee, an elderly woman I had never seen
before handed me a little card. During those days, my lawyers
wouldn't allow me to read anything except specific materials
relating to the inquisition, and Brendan Sullivan, my lawyer,
snatched the card from my hand even before I looked at it.

    By the time we walked into the hearing room, I had forgotten
about it. But just before we sat down, Brendan put the card in
front of me. Every time we stood up to leave during a recess, he
picked it up and took it with him, and every time we returned, he
put it back. Imprinted on the card was a biblical verse:

    They that wait upon the Lord
       shall renew their strenght;
    They shall mount up with wings as eagles.
    They sahll run and not be weary.
    They shall walk, but not faint.

       -- Isaiah 40:31

    As I went through an extraordinary experience, that card was
in front of me the whole time.