TIME: Almanac 1993/TIME Almanac 1993.iso/time/caps/88/88capmil.6

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                                                                                March 28, 1988

IRAN-CONTRA

Conspiracy, Fraud, Theft and Cover-Up


Independent Counsel Lawrence Walsh presents his long-awaited
charges


Throughout his 15-month investigation of the Iran-contra
affair, Independent Counsel Lawrence Walsh has been a figure of
courtly stoicism. Amid the drama of last summer's congressional
Iranscam hearings, the stern-faced 76-year-old prosecutor
remained quietly in the background. Despite the court battle
over the constitutionality of his appointment and the barbs of
critics who said his probe was moving too slowly, he moved
calmly ahead with his search for evidence. But when he appeared
outside federal court in Washington last week, Walsh
uncharacteristically allowed his thin lips to curl into a tight,
satisfied smile. Finally, he could announce the fruits of his
meticulous labor:  a 23-count indictment that contained sweeping
charges of criminal dealings at the White House.

The targets were Ronald Reagan's former National Security
Adviser John Poindexter; fired NSC Aide Oliver North; and two
arms dealers, former Air Force Major General Richard Secord and
Iranian-born Businessman Albert Hakim. They were charged with
conspiring to defraud the U.S. by establishing and concealing
a plan for illegally supporting the Nicaraguan contras. The
federal grand jury also charged all four defendants with the
theft of Government property for siphoning off more than $17
million in proceeds from U.S. arms sales to Iran, and with wire
fraud resulting from the movement of the money through Swiss
bank accounts. The three counts together carry maximum
penalties of 20 years in prison and fines totaling as much as
$750,000.

In addition, Poindexter and North were accused of trying to
cover up their illicit actions by destroying and removing
documents and making false statements. North was charged with
lying to Attorney General Edwin Meese about NSC involvement in
the diversion of funds to the contras and writing misleading
letters to Congress denying that the NSC was supporting the
contras. Former National Security Adviser Robert McFarlane
pleaded guilty two weeks ago to misdemeanor charges for signing
the letters; he may testify against North. Poindexter was
accused of a peculiarly high-tech cover-up:  he purged his NSC
computer files of all messages relating to the contra supply
operation.

North, who told Congress last summer that he and Poindexter
were Iran-contra's designated "fall guys," bore the brunt of
the indictment. Piled onto the conspiracy and obstruction
charges were accusations that the Marine lieutenant colonel had
embezzled $3,400 worth of traveler's checks and received an
illegal gratuity by accepting a $13,800 home-security system
from Secord.

North was also accused of conspiring to defraud the Internal
Revenue Service by using the tax-exempt National Endowment for
the Preservation of Liberty to solicit $3.2 million in
contributions, which he used to buy lethal contra aid. NEPL
President Carl ("Spitz") Channell and Public Relations
Consultant Richard Miller pleaded guilty to the same charges
last spring, and presumably will testify against North. On all
the charges, North faces a possible sentence of 85 years in
prison and a staggering $4 million in fines.

He refused to take the bad news quietly. "I did not commit any
crime," North declared in a press conference at his lawyer's
office, his voice trembling with emotion. "I have been caught
up in a bitter dispute between the Congress and the President
over the control of foreign policy, the power of the President
to deter Communism in Central America, and his duty to protect
our citizens from terrorists acts abroad...I intend to fight
allegations of wrongdoing for as long as necessary."

North held another emotional news conference late in the week
to announce his resignation from the Marine Corps. True to his
sense of theater, he had traded in his olive-green uniform and
chestful of ribbons for a business suit, although his
resignation will not be effective until May 1. Continued
service in the Marines, said North, would be incompatible with
defending himself against the charges, particularly since his
lawyer may subpoena the "highest-ranking officials of our
Government."  The implication seemed clear:  if North was to
play the fall guy, he intended to drag some big shots down with
him. The list of top officials North's attorney may call on to
testify could very well include President Reagan and Vice
President George Bush.

Richard Secord responded to his indictment with contempt,
appearing on TV news shows to denounce Walsh's investigation as
a "witch-hunt." "The charges are absolutely ludicrous, and I
intend to grind them to dust," he declared. Poindexter and
Hakim, the more self-effacing participants in what Secord called
the "enterprise," commented only through their lawyers.

At the White House, the President refused to concede that some
of his former aides may have violated the law. "I have no
knowledge of anything that was broken," said Reagan during a
photo session with Israeli Prime Minister Yitzhak Shamir.
Reagan's remarks renewed speculation that he may grant
presidential pardons to the accused. White House Spokesman
Marlin Fitzwater reacted stonily to such suggestions. "We don't
discuss pardons," he said. "Period."

Certainly it would be politically risky for Reagan to exercise
his right to pardon before the presidential election. The move
could create problems for likely Republican Nominee George Bush,
whose role in the scandal remains a campaign issue. But after
Nov. 8, Reagan will have more than two months left in office.
Then only the judgment of history may prevent the President
from protecting the men he still regards as loyal patriots.

Pardon or no, Bush will continue to be confronted by questions
about his knowledge of the Iran-contra affair. Discussing the
indictment on the campaign trail last week, Bush said, "The
American people aren't interested" in the scandal anymore.
"They think it's been exhaustively looked into."  But Democratic
Presidential Candidate Richard Gephardt gave the Vice President
a taste of the criticism he stands to receive as the race heats
up. "George Bush has already pleaded guilty to exercising bad
judgment in what turned out to be the biggest American foreign
policy debacle in decades," said the Missouri Congressman.
"That's enough for me."

The candidates and the country have not heard the last from
Walsh. "The grand jury is not finished," the independent counsel
said as he announced the indictments. "This is simply an
interim report."  Thus the stage was set for more indictments
and more scrutiny of the scandal that refuses to die.

The 101-page indictment shed little new light on the tangled
Iran- contra affair; it simply places events in a criminal
framework. The grand jury treats the initiative to sell arms
to Iran in exchange for U.S. hostages as a legitimate covert
operation, not a crime. It is the abuse of that operation, the
diversion of funds and other related activities, that led to the
possible breaking of laws. The grand jury seems to have reached
the same conclusion as the Tower commission and the
congressional committees about Reagan's involvement in the
contra scheme:  the President was practically an innocent
bystander in his own Administration, oblivious to the
machinations of his overzealous aides.

Walsh cast a wide net around the four defendants by handing up
broad conspiracy charges as well as precise allegations of
skimming for personal benefit. Conspiracy convictions are
sometimes difficult to win. The Iran-contra defendants will
counter the charges by saying they believed they had
presidential authorization for their schemes to supply the
Nicaraguan rebels. But if Walsh can convince a jury that the
defendants were busy lining their pockets, it could help him win
guilty verdicts on the broader counts as well.

According to the grand jury, North was cagey and aggressive in
securing profits for the enterprise managed by Secord and Hakim.
In January 1986, for instance, North arranged to sell 4,000 TOW
missiles to Iran for $10,000 each. The Iranians paid $10
million for the first shipment of 1,000 TOWs. But North told
the CIA he had sold the weapons for only $3,469 apiece. The
U.S. Government, through the CIA, received just $3.7 million on
the deal. Some of the remaining $6.3 million was used to aid
the contras, but the bulk of it was retained by Secord and
Hakim. Walsh charges that the money is the rightful property
of the U.S., but the arms merchants have repeatedly said the
money belongs only to the enterprise.

The grand jury alleges that Secord and Hakim encouraged North
to remain on the NSC staff so they could continue to realize
"opportunities for substantial revenues and profits."  To
persuade North to stay in his White House post, Secord gave him
the expensive security system while Hakim established the "B.
Button" investment account, a $200,000 fund to be used for the
education of North's children. During his congressional
testimony, North passionately denied any knowledge of the Button
account and said he needed the security system to protect his
family from the terrorist Abu Nidal. It remains to be seen how
effective that explanation will be in a courtroom, where North's
rambling account will be constrained by rules of evidence and
a prosecutor's cross examination.

But if the defendants have their way, the Iran-contras case
will never come to trial. Defense attorneys will try to
undermine Walsh's investigation from two angles. In January a
federal appeals count ruled that the law authorizing independent
counsels is unconstitutional. Walsh is protected by a backup
appointment from Attorney General Edwin Meese. But the three
months' worth of evidence that Walsh gathered before Meese's
appointment could be ruled inadmissible if the Supreme Court
strikes down the independent- counsel law.

A legal challenge on immunity could also lead to a protracted
court battle. Poindexter, North and Hakim testified before
Congress under grants of limited immunity, preventing Walsh from
using any of their testimony against them. All but one of the
29 attorneys on Walsh's team avoided TV, the radio, newspapers
and magazines when immunized testimony was being aired or
discussed; the exception, designated as the "tainted"
prosecutor, was assigned to steer the others away from trouble.
Nevertheless, the defense will argue that the indictment was
affected by the forbidden testimony. The burden of proof is on
Walsh. "It's not just a matter of proving that the prosecutors
were in hermetically sealed isolation chambers for the last
year," says Philip Lacovara, a member of the Watergate
prosecution team, "but that the grand jurors were in the same
isolation chamber. That's not easy."  If Walsh loses that
challenge, the entire indictment could be dismissed. The
arguments could drag on for a year or more. By the time North
and his associates ever face a jury, Ronald Reagan may be long
gone from the White House.

--By Jacob V. Lamar.  Reported by Anne Constable/Washington


--------------------------------------------------------- THE
INDICTMENT

Conspiracy

All four--North, Poindexter, Secord and Hakim--are charged with
conspiracy to defraud the U.S., theft of Government property and
wire fraud for their involvement in diverting the profits from
Iranian arms sales to the contras, and transferring funds by
wire communications. North is also charged with conspiracy to
defraud the IRS by using a tax-exempt organization to raise
funds for the contras.

Cover-Up

North and Poindexter are charged with obstruction of Congress
and making false statements in deliberately misleading or
withholding information from Congress and other Government
officials about the diversion. North is charged with
"concealing, removing, mutilating, obliterating, falsifying and
destroying" official documents.

Payoffs

Secord and Hakim are charged with conspiracy to pay North
illegal gratuities:  Secord for providing a $13,800 security
system. Both are charged with offering financial assistance for
North's children's education. North is charged with receipt of
the system, lying about it, and with converting traveler's
checks given to him by Contra Leader Adolfo Calero.

--Cynthia Davis