SENATE PANEL REPORT ADDS TO DATA TYING ARMS SALE TO IRAN WITH FREEING HOSTAGES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP99-01448R000301230008-2
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: August 22, 2012
• Sequence Number: 8
• Publication Date: January 9, 1987
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2012/08/22 : CIA-RDP99-01448R000301230008-2
ARTICLE APPEARED
ON PAGE-611.---...
Senate Panel Report Adds to Data Tying
Arms Sale to Iran With Freeing Hostages
9 January 1987
By DAVID ROGERS
And JOHN WALCO1T
Staff Reporters of THE WALL STREET JOURNAL
WASHINGTON?A Senate Intelligence
Committee report offers new evidence that
the Reagan administration sold arms to
Iran more to win the release of American
hostages in Lebanon than Mr. Reagan
and other top officials have insisted?to
cultivate moderates in Iran.
The report, obtained yesterday by NBC
News, also says that more than two
months before Attorney General Edwin
Meese uncovered and revealed that profits
from the Iranian arms sales were being di-
verted to Nicaraguan rebels, Central Intel-
ligence Agency Director William Casey
and other top CIA officials had evidence of
the diversion.
Some Intelligence Committee members
have called the report flawed and incom-
plete because some documents used to pre-
pare it contain errors and three important
witnesses refused to answer the panel's
questions.
Comparatively little attention is given
to the Contra connection and supply net-
work, according to several sources famil-
iar with the report, and disputes remain
over how the testimony has been interpre-
ted and whether it is all reflected in the
staff analysis.
The committee this week narrowly
voted not to release the report. But White
House officials have urged that it be made
public, apparently because the committee
found no evidence that President Reagan
knew money from the arms sales was be-
ing funneled to the Nicaraguan insurgents,
known as Contras.
Provoking More Questions
The report doesn't answer several cru-
cial questions. It reveals, for example, that
Lt. Col. Oliver North, a National Security
Council staff member fired last November,
suggested diverting $12 million in arms-
sales profits to the Contras in an April 4,
1986, memo, NBC said. But the report con-
tains no evidence that any money actually
was given to the insurgents and no new in-
formation on where the profits from the
arms sales went.
Although Mr. Meese has said Lt. Col.
North and former National Security Ad-
viser John Poindexter were the only offi-
cials who knew of the diversion of funds,
the network said, the report says it isn't
clear whether Lt. Col. North acted alone.
"There's not a lot of new information in
it," one intelligence source said of the re-
port. "One thing it does is provoke more
questions."
0
Many of those questions concern what
the CIA's role was in selling arms to Iran
and sending aid to the Contras. According
to NBC, the report says that CIA Deputy
Director Robert Gates told the committee
it was agency policy not to ask where the
Contras were getting their funds, and that
Director Casey didn't answer the commit-
tee's questions satisfactorily.
Swiss Account Mentioned
The report NBC obtained says Man-
oucher Gharbonifar, an Iranian middle-
man in the arms sales, suggested to a CIA
official last March the siphoning off of
profits to the Contras. On Oct. 1, Charles
Allen, the CIA's National Intelligence Offi-
cer for counter-terrorism, told Deputy Di-
rector Gates that he suspected Iran arms-
sales money was being diverted. And on
Oct. 7, the report says, Messrs. Gates and
Allen raised their suspicions with Mr.
Casey.
Messrs. Casey and Gates asked Lt. Col.
North about possible diversions Oct. 9, ac-
cording to the report. Lt. Col. North de-
nied siphoning off funds but, for reasons
that aren't clear, mentioned a Swiss bank
account, the report says.
The following day, Mr. Casey learned
from an old friend, New York businessman
Roy Furmark, that fundswere being di-
verted from the Iran\ arms3ales? and on
Oct. 14, according to the report, Mr. Cates
ordered an internal CIA investigation after'
another meeting with Messrs. Casey and
Allen, NBC said.
Another leading question is why the ad-
ministration decided to sell arms to Iran in
the first place. In a nationally televised
speech last Nov. 13, President Reagan
said: "We did not?repeat, did not?trade
weapons or anything else for hostages. Nor
will we."
Intelligence sources said, however, the
report strongly suggests that Mr. Reagan
approved U.S. arms sales to Iran in two
written directives last January?primarily
to win the release of the hostages?and
that the president originally intended to
stop the sales if all the captives weren't
freed.
According to the network, the report
also says that Lt. Col. North, who was re-
sponsible for trying to free the hostages,
warned in a memo that if the U.S. stopped
sanctioning Israeli sales of U.S. arms to
Iran, "the hostages will die."
Release of Report
The unauthorized release of the report
infuriated senior Senate Democrats last
night after the days of argtunent over what
procedure to follow. There has been strong
pressure from the White House for prompt
disclosure of the document, and Thriller
Sen. Paul Laxalt, a Nevada Republican
and close friend of the president, had per-
sonally lobbied the outgoing chairman of
the Intelligence Committee, Minnesota's
Republican Sen. David Durenberger, to
complete action on the report last
month.
Mr. Durenberger also has been self-con-
scious that the Iran-Contra operation was
carried out during his tenure as chairman
and reflects serious weaknesses in the
oversight process. Details in the report are
drawn partly from a confidential memo
prepared by former CIA Deputy Director
John McMahon in late 1985. Yet despite his
evident concern over the operation, Mr.
McMahon apparently never came forward
to warn the oversight -committees in Con-
gress.
Now under Democratic control in the
new Congress, the Senate intelligence
panel is likely to speed up plans to release
its own alternative version of the report in
cooperation with the select committee in-
vestigating the Iran-Contra affair. This
version is expected to include further testi-
mony received in secret hearings in No-
vember and December.
But like the version released yesterday,
the alternative also will lack testimony
from Lt.. Col. North, Vice Adm. Poindexter
and Gen. Richard Secord, a retired
Air Force officer who helped carry out
Contra aid. The three men refused to tes-
tify, citing their constitutional right
against self-incrimination.
Separately, the White House spokes-
man, Larry'Speales, confirmed yesterday
that although the White House has made a
point of urging the committee to release its
report, the administration worked to sup-
press two parts of it.
Mr. Speakes said a small group of ad-
ministration officials that reviewed the re-
port had urged the deletion of details con-
cerning two contacts with Israel. One in-
volved a meeting between Vice President
Bush and Israeli terrorism expert Amiram
Nir last June 29 in Jerusalem. The other
involved a letter from President Reagan to
Israeli Prime Minister Shimon Peres.
Mr. Speakes suggested that the presi-
dent's letter and the reference to the vice
president's meeting were suppressed for
"diplomatic" rather than political rea-
sons.
Mr. Speakes described Mr. Bush's
meeting as "entirely appropriate." He also
said yesterday that "in retrospect, it's fine
to put it in" the report.
Mr. Bush's spokesman, Marlin Fitz-
water, said the meeting between the vice
president and Mr. Nir was arranged by Lt.
Col. -North. According to Mr. Fitzwater,
the two men discussed terrorism, the hos-
tage situation and Iran arms sales, but
didn't touch on the diversion of funds to the
Contras.
At the time of the meeting, the Israelis
were helping the U.S. in efforts to win re-
lease of American hostages held in Leba-
non, and aiding secret U.S. arms ship-
ments to Tehran.
Declassified and Approved For Release 2012/08/22 : CIA-RDP99-01448R000301230008-2