ARMS AFFAIR: PUZZLES WRAPPED IN ENIGMAS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000605480006-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: May 1, 2012
• Sequence Number: 6
• Publication Date: December 11, 1986
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2012/05/02 : CIA-RDP90-00965R000605480006-6
ctIKIS'1'IAN SCIENCE MONITOR
11 December 1986
Anas affair: puzzles
gypped in endgmas
By-Warren Richey and George D. Moffett III
Ste l"wn'terss o_f~Thee Ch`nstian Science Monitor
WashNgeon
It has been five weeks since a pro-Syrian Lebanese
weekly, Ash Shiraa, broke the news that the United
States was secretly shipping arms to Iran.
Since then, the controversy has broadened to include
reports that profits from the arms sales were funneled
to a secret Swiss bank account to aid rebel groups
fighting against Nicaragua's Sandinista government.
In the coming weeks the Justice Department, several
congressional committees, and the nation's news media
will be seeking answers to a growing list of unanswered
questions. Among them:
How much did President Reagan and his senior
advisers know about the Iran-contra operation?
Questions persist about when President Reagan
knew about and authorized the arms sales. (Related
story, Page 10.) Reagan has denied knowing about the
diversion of profits from the arms sale to aid the
Nicaraguan contras until being told by Attorney Gen-
eral Edwin Meese on Nov. 24. So far no one has directly
contradicted the President. But some in Congress say it
is unlikely that Mr. Reagan would have been unaware
of the funds transfers.
Attorney General Meese says information about the
operation was confined to three National Security
Council officials: former NSC chiefs
Robert C. McFarlane and Vice-Adm.
John M. Poindexter and a former
staff member, U. Col. Oliver L.
North.
But questions have been raised
about the possible knowledge of
other top White House 'officials.
Both White House chief of staff Don-
ald Regan and Vice-President Gegrge
have denied knowledge of the
contra connection. But skeptics
question whether Mr. Regan, who
holds tight control over the oper-
ation of the White House staff, could
have been ignorant of the activities
of subordinates like Admiral
Poindexter, Colonel North, and Mr_ .
McFarlane.
meanwhile, Mr Bush .a former di-
rector of the Central Intelligence
Agency has been ~e in news re-
ports to a secret contra resupply
operation through contacts with a
former CIA official who now serves
as Bush's Drincinal
natio -secure _
adviser.
Secretary of State George Shultz,
who opposed the Iran arms ship-
ments, says he was only "sporadi-
cally" informed of the shipments
and knew nothing of the Swiss bank
accounts until the story became pub-
lic two weeks ago.
$~ much did US intelligence
awes know about the Iran
contra connection?
The CIA arranged air transporta-
tion for at least one Israeli arms
shipmffi-t to Iran in Nnvemhir 198E
After the President signed a "find-
ing"
rrect US arms shhxn1986 ents to Iran, the
agency acted as middleman, arrang-
ing the transfer of US arms from
American stodq Its to Israel for
tra~~esldpegeat to.Irsn.
The CIA has admitted h
Iranian arms sales, including collect-
ing funds to reimburse the Pentagon
for the initial $12 million cost of
weapons sold to Iran. But questions
remain about whether the CIA
helped funnel some $ 10 million to
$30 million in profits from the sales
to a Swiss bank account maintained
to fund the Nicaraguan contras.
A reference by Attorney General
Meese in a Nov. 25 White House
press briefing to "a number of inter-
cepts" concerning the Iran arms deal
has stirred speculation that other US
intelligence agencies - particularly
the National Security Agency, which
intercepts and decodes electronic
transmissions and signals world-
wide - may have known of the Iran-
contra arrangement before it be-
came public.
CIA Director William ey says
he learned of the contra connection
only after it became public, but he
has admitted to hearing "gossip"
about secret sources of funding for
the contras. News reports say Mr.
Casey may have learned of the
contra connection from intelligence
sources a month before it was pub-
licly disclosed by Meese but appar-
ently failed to inform any senior ad-
ministration officials.
conbnllB(+I
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 Declassified and Approved For Release 2012/05/02 : CIA-RDP90-00965R000605480006-6
Casey is said to have learned of
o .The messages are said to
quote involved in the US
arms deals as saying they had been
significantly overcharged for the
weapons. It is unclear whether these
intercepts were the same ones re-
ferred to by Meese on Nov. 26.
What quantity of arms actually
reached Iran?
In a televised address to the na-
tion two weeks ago, Reagan said that
"everything that we sold [tran] could
be put in one cargo plane and there
would At lebe pkmW of mm left ow "
ant four direct ah1p i its
from the US and, according to Iran
expert Gary Sick of the Fbrd Fbun-
dation, as many as 12 indirect ship-
ments from Israel (sent on behalf of
the US as part of the arms-for-hos-
tages deal) have gone to Iran since
last fall. US shipments reportedly
included over 2,000 TOW antitank
missiles and 235 Hawk surface-to-
air missiles, plus radar equipment.
Attorney General Meese has esti-
mated the value of the direct ship-
ments at $12 million. But Mr. Sick
estimates that the total value of all
arms sent to Iran could range from
$500 million to $1 billion. Pentagon
officials have not specified the quan-
tity of US arms transferred directly
to Iran or indirectly through Israel.
Have US laws been violated in
the Iran-contra affair'.
The Justice Department has ap-
plied to a federal court for the ap-
pointment of an independent coun-
sel, or special prosecutor, to direct
an investigation into whether fed-
eral laws have been broken.
Legal experts point to two laws
that may have been violated by
sending arms to Iran the Export
Administration Act, which prohibits
the export or sale of goods to coun-
tries, including Iran, that participate
in state-sponsored terrorism; and
the Arms Export Control Act, which
regulates the commercial export of
arms. At issue here is whether the
President's January 1986 "finding"
took precedence over these laws.
Some members of Congress Say
the President violated the National
Security Act of 1947 by not provid-
ing "timely" notification of the arms
sale to congressional leaders.
Meanwhile, legal experts say
using profits from the Iran arms
sales to fund the Nicaraguan contras
could violate the Boland amend-
ment, which barred US intelligence
agencies, including the NSC, from
helping the contras wage their war
against Nicaragua's Sandinista government. The Boland
amendment was in effect from May 1984 to September
1986, when Congress lifted the ban.
Who controlled the Swiss bank accounts?
Ono CIA bank account, which may have received
contributions from Saudi Arabia, was apparently set up
The CIA has said it was involved in the transfer o ds
from the Iran arms shipments but denies involvement in
funneling profits from the arms deals to the contras.
In addition, State Department officials have acknowl-
edged that they persuaded the Sultan of the Southeast
Asian nation of Brunei to contribute several million
dollars to a Swiss bank account to help the contras. It is
unclear whether other countries may have contributed
to the fund and who managed the account.
Questions have also been raised about an account
mentioned by Colonel North in instructions to financier
H. Ross Perot. Mr. Perot agreed to provide $2 million in
secret payments in an attempt to help secure the release
of American hostages in Lebanon. The plan, allegedly
organized by North, never bore fruit.
Reports have also discussed a series of financial
transactions and bank accounts controlled by businesses
and associates of retired Air Fbrce Maj. Gen. Richard V.
Secord. General Secord has been identified as a close
associate of NSC staff member North and has been
linked to a secret effort to supply the contras through air
drops of weapons and ammunition.
The Justice Department has, reportedly asked Swiss
authorities to assist in an investigation of two bank
accounts and three individuals: North, Secord, and
Secord's business partner, Albert Hakim.
Who set up and ran the secret contra resupply
operation?
:ontinued
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 Declassified and Approved For Release 2012/05/02 : CIA-RDP90-00965R000605480006-6
The downing of a- transport plane over Nicaragua an
Oct. 5 has exposed an elaborate secret air resupply,
operation staffed by former US intelligence officials and
operatives. Investigators are looking into the possibility
that the profits from the Iranian arms deals may have
been used to fund the supply network. They are also
trying to discover whether US officials were directly
involved in the supply operation during the time the
Boland amendment was in effect.
Both North and Secord have been directly linked to
the Iran arms deal and to continued efforts to assist the
Nicaraguan contras. Secord has been tied to the supply
effort by former crew members involved in secret
resupply flights and by records of frequent telephone
calls from a "safe house" in El Salvador to Secord's
business and home.
North has been identified by Meese as the prime
operative in the Iran-contra affair. He is said to have
planned and run the shipping of arms to Iran and the
funneling of profits from those sales to Central America.
Declassified and Approved For Release 2012/05/02 : CIA-RDP90-00965R000605480006-6