PRESIDENT PERSONALLY APPROVED RANSOM PLAN, MCFARLANE INSISTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000504550006-0
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: February 9, 2012
• Sequence Number: 6
• Publication Date: May 15, 1987
• Content Type: OPEN SOURCE

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Declassified in Part - Sanitized Copy Approved for Release 2012/02/09: CIA-RDP90-00965R000504550006-0
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IMAM 1 U,ASHINGTON POST
15 May 1987
President Personally Approved
Ransom Plan, McFarlane Insists
Unreported Covert Operation
Said to Involve CIA Ands
2 By Dan Morgan and Walter Pincus
Former national security adviser Robert C. McFar-
lane, contradicting White House denials, insisted yes-
terday that President Reagan personally approved a
secret operation to free U.S. hostages in Lebanon by
paying $2 million in bribes and ransom.
Testifying for the fourth day before House and Sen-
ate panels investigating the Iran-contra affair, McFar-
lane said he had discussed the matter with the presi-
dent, Vice President Bush and "probably Mr. (Donald
T.1 Regan," who was then White House chief of staff.
Attorney General Edwin Meese III, McFarlane added,
provided legal clearance for it. McFarlane said he would
have to "think about" the extent of knowledge by Sec.
retary of State George P. Shultz.
Congressional investigators have pursued the ransom
episode because it apparently involved another covert
intelligence operation by the administration which, con-
trary to law, was neither formally authorized with a
presidential "finding" or reported to Congress. It was
also disclosed yesterday that the Central Intelligence
Agency had donated $50,000 to the project without the
necessary notification to congresses watchdogs
McFarlane's remarks about Reagan's authorization
of ransom came after White House spokesman Marlin
Fitzwater reported that the president said he "did not
know there was ever a plan for ransoming hostages,"
and had never discussed the matter. Fitzwater
reaffirmed the statement yesterday.
McFarlane said government record-keeping
on the matter had been "fully above board and in
-writing," but then added he did not know if it was
"written down on paper or not." A White House
official familiar with the documents said the pres-
ident's aides have found no evidence to support
McFarlane's claim that Reagan approved the
ransom plan.
A spokesman for Meese said the attorney gen-
eral would have nothing to say yesterday about
the ransom plan. "If and when the attorney gen-
eral is called to testify before the committees,
that will be the appropriate time for him to dis-
cuss this and all other matters," he said.
McFarlane's four days of testimony constantly
veered between detailed congressional question-
ing on his own activities and McFarlane's often
meandering ruminations on broad foreign policy
questions. When pressed on particular docu-
ments or actions, the former top foreign policy
adviser in the White House several times lost his
usual composure and responded angrily. He ap-
peared more at ease when given the chance to
philosophize about government, education and
foreign affairs.
House committee Chairman Rep. Lee H. Ham-
ilton (D-Ind.) summed up by noting the irrecon.
cilable "disparity" between McFarlane's broad
appeals for administration honesty in dealing
with Congress, and McFarlane's actual perform-
ance in specific instances, in which administra-
tion activities in Central America were concealed
from legislators.
These discrepancies left members with
enough questions for Sen. Sam Nunn (D-Ga.) to
say late yesterday that some witnesses, includ-
ing McFarlane, might be called back to clear up
contradictions.
One significant conflict with McFarlane's tes-
timony emerged with the very next witness, As-
sistant Secretary of State Gaston J. Sigur Jr.
Sigur said that while working for McFarlane at
the National Security Council (NSC) in the sum-
mer of 1985, Sigur solicited a contribution for
the Nicaraguan contras from an Asian country
and had told the national security adviser of his
efforts.
Sigur said that in June or July 1985 he was ap-
proached by Lt. Col. Oliver L. North, then an
NSC aide, who said that "he and Mr. McFarlane
were interested in finding out what the situation
was" with regard to obtaining a contribution
from "Country Three," identified privately as
Taiwan. The Taiwanese representative told
Sigur that such assistance, if given, would have
to be channeled through the U.S. government.
But when Sigur reported this stipulation back
to McFarlane, the national security adviser said
the money transfer could not be handled that
way.
Asked by Senate committee counsel Mark A.
Belnick whether McFarlane expressed surprise,
Sigur said, "No, because I prefaced my remarks
by saying, 'in accordance with what Col. North
had said you and he wanted me to do.' "
Asked whether McFarlane had warned him
against soliciting funds, Sigur said, "Not to my
knowledge. I don't recall that at all."
Monday, however, McFarlane testified con-
cerning the same episode. But he said that when
Sigur "reported this to me-and I'm a little hazy
on the results-but I do know I was very firm in
saying to him, 'Absolutely no participation by you
or any other staff member in any kind of ap-
proach to this country. If they want to make a
gift, it's their business and they must do it bilat-
erally themselves, not with us.' "
Sigur testified that eventually North asked
him to arrange a meeting with the Taiwanese of-
ficial to introduce him to a contra leader. Some
time later, the Taiwanese official advised Sigur
that his government had decided to provide $1
million in humanitarian assistance to the contras.
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In October 1985, North again asked him to ap-
pr' ach the, Taiwanese and eventually another
mi, in was, contributed.
In connection with Sigur's testimony, Sen.
Warren B. Rudman (R-N.H.) disclosed that the
$2 million Taiwanese contribution was trans-
ferred into the Swiss bank account of "that great
world humanitarian organization, Lake Re-
sources." It was a sarcastic reference to the main
account controlled by Albert A. Hakim, and used
to finance military purchases for the contras by
the "enterprise" of retired Air Force major gen-
eral Richard V. Secord.
"Country Three might be somewhat disturbed
that their several million dollars presently, con-
ceivably, may be in a certificate of deposit in the
name of Albert Hakim," said Rudman.
Textiles Bill Woven Into Picture
A new element was added yesterday to the
controversy over the Reagan administration's
solicitation of foreign countries on behalf of the
contras when Rep. Ed Jenkins (D-Ga.) noted that
the White House was seeking funds from Coun-
try Three (Taiwan) at the same time Congress
was debating a bill limiting textile imports from
that same country.
Jenkins helped draft the textile bill which
passed the House in October 1985, the Senate in
November and was vetoed in December by Rea-
gan on grounds that it was protectionist legis-
lation.
According to Sigur, the second solicitation was
made just as the bill was being debated in Con-
gress. The State Department, according to
Jenkins, lobbied vigorously against the legisla-
tion.
"I could go back to my district or around the
country and say while I was fighting for this bill,
unbeknownst to me, one of the nations that was
severely impacted was secretly giving millions of
dollars to the Executive branch that later vetoed
the bill," said Jenkins. "That ought to be disturb-
ing to me, don't you think?"
"I agree, sir," said McFarlane.
Presidential spokesman Fitzwater asserted
yesterday that any solicitations by Reagan of
third countries to help the Nicaraguan rebels
would have been legal, regardless of restrictions
imposed by Congress. "I don't think we have
ever felt it's against the law to solicit money
from third countries-for humanitarian [pur-
poses] or arms," Fitzwater said.
The controversial ransom operation, men-
tioned only in passing last week during question-
ing of Secord, is emerging as a problem for the
president and his aides. According to testimony
and documents, it involved the use of Drug En-
forcement Administration (DEA) officers and in-
formants to locate Americans held in Lebanon
and their captors, and developed over an 18-
month period in 1985 and 1986.
According to a June 1985 memorandum writ-
ten by North, the operation was to culminate in
the bribing of guards and delivery of the hos-
tages off the coast of Cyprus in May 1986, after
a ransom payment provided through $2 million
donated by Texas businessman H. Ross Perot.
den. Paul S. Trible Jr. (R-Va.) said DEA had
told investigators that the operation had been
initiated by Edward Hickey, former director of
the White House military office, and now chair-
man of the Federal Maritime Commission. DEA
initially provided $30,000 and two agents for the
White House-directed operation. Later, the CIA
contributed its funds to "keep the oroiect going."
Trible said,
He said that other money was transferred
from bank accounts under the effective control
of North and Secord in Switzerland, and distrib-
uted to DEA agents.
Trible said Congress should have been notified
as required by legislation on covert intelligence
operations. He added that the ransom program
was clearly contrary to the official administration
position against dealing with terrorists.
At the time of that memo by North, Reagan
gave a speech after the release of victims of the
June 1985 hijacking of a TWA jetliner in which
he said that the United States gave terrorists "no
rewards." He added, "We make no concessions,
we make no deals."
Congress was not notified, and no hostages
were ever rescued as a result of the ransom plan.
A Justice Department source said yesterday
that Meese and DEA director Jack Lawn had de-
tailed two agents to the NSC. but that it was
with the understanding that the agents were to
be us for intelligence gathering and not o r-
ations. The two agents involved have provided
information to the congressional committees and
f Fe federal grand jury run by independent coun-
EA utilizes a global network of undercover
agents and local informants, and is reported to
have sources in Beirut. DEA officials assumed
that such sources could be useful in locating hos-
tages but did not realize the extent of the oper-
ational program as conceived by North, accord.
ing to persons knowledgeable about the agency.
Hickey could not be reached for comment.
On his final day of testimony before the House
and Senate committees investigating the Iran-
contra affair, McFarlane said he stood by his sto-
ry that he had not solicited funds from Saudi Ara-
bia on behalf of the contras. A story in yester-
day's editions of The Washington Post reported
that McFarlane had twice solicited Saudi officials
for contributions, the second time after Con-
gress had terminated military aid to them.
McFarlane made an unannounced visit to the
McLean, Va., residence of Saudi Ambassador
Bandar Bin Sultan to see King Fahd during his
Washington visit in February 1985, according to
The Post's account. Afterwards, according to a
diplomatic source, McFarlane asked Bandar for a
$15 million Saudi contribution to the contras.
"I remember no such meeting, sir," McFarlane
told Rep. Jack Brooks (D-Tex.) .... "I don't be-
lieve there was any meeting at the residence."
McFarlane revealed that Reagan called him
Tuesday night and told him he had watched the
hearings and found that they "shed more light
than anything up to now."
at.
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Testimony Gets Modification
Addressing the overriding question of his four
days of testimony-the president's involvement
in actions that might have violated congressional
restrictions on aid to the contras-McFarlane
yesterday modified his Wednesday statement
that the president "had a far more liberal inter-
pretation" of the restrictions than McFarlane.
That had been "probably a poor choice of
words on my part," he said. He only wanted to
suggest that Reagan strongly believed that the
tradition of helping "freedom fighters" was an old
one in the United States.
One of the more striking examples of Reagan's
help for the contras came in McFarlane's de-
scription of Reagan's intervention to free up a
shipment of arms to the contras in early 1985.
On that point, also, his testimony underwent
changes.
Monday, McFarlane said that Reagan had
called the head of a Central American country af-
ter a local military commander had seized a
contra arms shipment following the congression-
al ban on further military aid to the rebels.
McFarlane agreed with Senate counsel Arthur L.
Liman that the commander had taken the vote as
a "license" for him to take the contras' arms.
Yesterday McFarlane gave another reason:
The country "had become very, very unwilling to
serve as a transit point for weapons going to the
contras because they thought it might engender
Nicaraguan attack of them." They wanted "as-
surance" from the president of U.S. military sup-
port in such an event, he said.
Reagan's phone call to the head of the coun-
try, identified by sources as Honduras, resulted
in the release of the arms.
Staff writers David Hoffman, Howard Kurtz and
Mary Thornton and staff researcher Michelle
Hall contributed to this report.
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