$3.5 MILLION FROM IRAN USED AS CONTRA AID, SECORD TESTIFIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000504550013-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: February 9, 2012
• Sequence Number: 13
• Publication Date: May 6, 1987
• Content Type: OPEN SOURCE

Sl Declassified in Part - Sanitized Copy Approved for Release 2012/02/09: CIA-RDP90-00965R000504550013-2
ART 1E APPEARED
ON PACT. -4_1. l
WASHINGTON POI
6 May 1987
$3.5 Million From Iran Used as Cont'ra AM, or
..T By Dan Morgan and Walter Pincus
WaIU. ton Poet Staff Writers
Seoor
C Retired Air Force major general Richard Y.
ending months of silence, revealed at the opening of
congressional hearings into the Iran-contra affair yes-
terday that about $3.5 million of the $18 million profit
from the 1985.86 sale of U.S. arms to Iran was used to
finance the airlift of military supplies and equipment to
the rebels fighting in Nicaragua.
Secord. the pivotal private operator in the affair that
has haunted the Reagan administration since it was ex-
posed last November, also told the opening joint session
of the Senate and House select committees that some
of the money went to three other operations at the di-
teectiofr of then-White House aide Lt. Col. Oliver L.
North.
These, he said, included purchase of $100,000 in
radio and telephone equipment for an unnamed Carib-
bean country, procurement of a small ship in April
:1986, and payment of Drug Enforcement Administra-
tion agents working on a separate project to locate and
rescue some American houtages in Lebanon.
The Caribbean expenditures were used to support a
covert project directed against Castro's Cuba and the
ship purchase last year was intended fork andestine
transmission of signals into Libya, according to a source
familiar with earlier investigations into the Iran-contra
affair.
The Iran arms sale profits became a "slush fund" for
covert projects worldwide run by North from the White
House, the source said. He added that the $8 million
that Secord testified was in Swiss accounts still con-
trolled by his partner, Albert A. Hakim, originally was
to be available for the North operation.
Secord appeared as the leadoff witness at the unusual
joint hearings and immediately leveled a bitter attack
on Attorney General Edwin Meese III for "prematurely
(going] public with grossly inaccurate disclosures about
our operations" last November.
"The decision of Mr. Meese, and possibly others, to
succumb to anxiety and ignorance is particularly unfor-
givable in light of the fact that had he been receptive he
could have been advised of the facts surrounding these
events before his announcement" that funds from arms
sales to Iran had been diverted to aid the contras fight-
ing the government of Nicaragua.
"This reasonable option was rejected, and we were,
instead, betrayed, abandoned and left to defend our-
selves."
Patrick Korten, a Justice Department spokesman,
said yesterday that the department had no comment on
Secord's testimony. Korten called attention to Meese's
statement at the November news conference that "the
president directed that we make this information im-
mediately available to the Congress and to the public."
Secord also testified yesterday that then-CIA Direc-
tor William J. Casey and a handful of other high govern-
men o fcia s n both the Central Intelligence Agency
and the State Department did give support to his activ-
ities on behalf of the contras. For the first time, Secord
disclosed that he had met privately with Casey to plead
for assistance to his operation during a time when Con-
gress had barred the CIA from providing such assist-
ance.
On one occasion, Secord testified, Casey said he
would look into the matter. Secord said he had no ev-
idence that Casey had done anything, but in a final
meeting Casey mused that Secord could get $10 million
from a foreign country, and believed "George could
make such an approach."
It was a reference to Secretary of State George P.
Shultz, who has acknowledged that he authorized the
solicitation of a $10 million donation from an unidenti-
fied government that has since been identified as
Brunei.
Secord's testimony began after a largely ceremonial
morning in the Senate Caucus Room where, for more
than two hours, members of the two committees gave
opening statements, a number of which referred to the
"historic" nature of their inquiry.
The statements of the Senate and House chairmen
made clear that they had already reached some tenta-
tive conclusions about the affair based on the vast
amounts of testimony and documents they have seen
during four months of preliminary investigations.
"The story is one ... not of secret diplomacy, which
Congress has always accepted, but secret policy-
making, which the Constitution has always rejected,"
said Senate select committee Chairman Daniel K.
Inouye (D-Hawaii). "It is a tale of working outside the
system and of utilizing irregular channels and private
parties accountable to no one on matters of national
security, while ignoring the Congress and even the
traditional agencies of executive foreign policy-
making."
Inouye added, "The story is not a pretty one. As it
unfolds in these proceedings, the American people
will have every right to ask, 'How could this have hap-
pened here?' . . . . It should never have happened at
all."
"High officials did not ask the questions they should
have asked," said Chairman Lee H. Hamilton (D-Ind.)
of the House select committee. "Activities were un-
dertaken without authority. Checks and balances
were ignored. Important meetings occurred without
adequate preparation. Established procedures were
circumvented. Accurate records were not kept, and
legal questions were not addressed."
However, both the Democratic chairmen acknowl-
edged that Congress also was being tested because
congressional oversight had not been vigorous.
"Can we avoid asking whether we were vigilant
enough in carrying out our oversight function?"
Inouye asked.
The two ranking Republicans, while acknowledging
that government failed, clearly differed in their em-
phasis.
Sen. Warren B. Rudman (R-N.H.), vice chairman of
the Senate select committee, said that there already
was "sufficient evidence to establish that this is an
COVA0
Declassified in Part - Sanitized Copy Approved for Release 2012/02/09: CIA-RDP90-00965R000504550013-2
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/09: CIA-RDP90-00965R000504550013-2
inexcusable fiasco of the first order."
Striking a note that was also hit by several other
Republicans, Rep. Dick Cheney (R-Wyo.), vice chair-
man of the House committee: suggested that Con-
gress, because of its own indecision and changes of
heart about assisting the contas, helped set the stage
for any abuses that took place.
"One important. question to be asked is to what ex-
tent did the lack of a clear-cut policy by the Congress
contribute to the events we will be exploring in the
weeks ahead," he said.
For three hours yesterday in the first of what is
expected to be several days of questioning, Secord
gave his version of how his involvement in aiding the
contras and, later, in providing support for the U.S.
arms sales to Iran, began. Under questioning from
chief House counsel John W. Nields Jr., Secord said
that he first seriously discussed private assistance to
the contras with North at a meeting in North's office
in July 1984.
At the time, North was a National Security Council
staff aide with responsibility for the contras, who
were about to lose U.S. military funding. Secord had
retired a year earlier after being a deputy assistant
secretary of defense, and gone into business with Ha-
kim.
North introduced Secord to contra leader Adolfo
Calero, who soon contacted him about selling military
equipment. Over the next year, Secord worked out
four arms deals with Calero, and gradually developed
his own team. After two arms deals that had been
arranged through a Canadian company called Trans
World Armament, Secord said, problems developed
and he brought in an old ex-CIA operative, Thomas G.
Clines, whom he described as having "a great deal of
experience in Latin America as a counterinsurgency
expert and an expert on the procurement of arms."
Clines, Secord said, obtained weapons from "East
bloc" countries and in Western Europe.
Arranging for the deliveries in Central America for
Secord was another member of his team: Rafael Quin-
tero (alias Ralph), a Cuban American who fought at
the Bay of Pigs and reportedly had taken part in co-
vert CIA operations under the direction of Clines. In
the early 1980s, Secord, Quintero and Clines were
investigated by federal authorities looking at the ac-
tivities of Edwin P. Wilson, a former CIA agent who
was later convicted of selling explosives to Libya. Se-
cord was not charged in the probe but said yesterday
that his military career had been cut short unjustly
because of the investigation.
Under the arrangement with Calero, Secord said,
the profit margin on the weapons sales averaged 20
percent, which he said was low in the arms business.
Secord said he shared the profits with Hakim and
Clines and by July 1985 had accumulated "several
hundred thousand dollars."
At that point, he said, he had a change of heart
about accepting the money. "It seemed to me that if I
did perform a good service (in Latin America], I would
have a good chance of going back into the govern-
ment." Not wishing to appear to have profiteered on
the contras in anticipation of a return to government
service, Secord told Hakim that he was renouncing
his share, he testified.
During the period of the arms sales to Calero, Se-
cord said, he had the impression that North was only
"in the information collection business." Secord said
North wanted to be kept informed of what arms were
going to the contras, 'ut he had no further involve-
ment,* and Secord said he did not see him very often
in the early part of 1985.
But in mid-1985, this changed, he testified. In early
July 1985 he met with North and Calero at an airport
hotel in Miami in a session that lasted until dawn.
North, he said, confronted Calero, complaining about
rumors of money being "wasted, squandered, and
even worse, some people might be lining their pock-
ets." Secord said that North warned that such reports,
if true, could be "ruinous."
Calero, in a telephone interview last night, said he
does not recall North raising the issue of squandered
funds and that the contras are able to account satis-
factorily for how they spent the money.
As a result of the meeting, it was decided to launch
a private airlift in support of the contras to replace
the U.S. government-sponsored support that had.
been terminated the previous October.
Secord said that Clines and Quintero both advised
him against leading such an operation, but North's
position was, "Somebody needed to do it. It had to be
done, or they [the contras] were going to be de-
feated."
Thereafter, Secord said, he met with North peri-
odically, and began organizing the private airlift with
the help of the companies of a former Air Force as-
sociate, retired lieutenant colonel Richard B. Gadd.
Secord said the main problem-money-was dis-
cussed with North. Sometime after the July meeting,
North told Secord that he would contact donors about
depositing money in the Swiss account then under the
control of Hakim, Secord's partner.
From then until February 1986, some $2.2 million
was donated to the account, Secord said. These funds
were used to purchase second-hand aircraft, pay pi-
lots and crews and begin building an emergency land-
ing strip in Costa Rica.
Once the operation got going, Secord attempted to
hire foreign pilots and crews to get around the prob-
lem of exposing Americans in case of an accident or a
capture. Secord said he contracted with a British firm
for two pilots and a loadmaster.
Secord testified that one of the cargo planes used to
deliver humanitarian aid to the contras under a State
Department program was also used to carry military
supplies because it was conveniently in the region.
According to documents released by the committee,
the direction to carry out the military mission came
from North.
In a related matter, President Reagan declared yes-
terday in a brief comment at the White House that he
did not know how money raised from donors to aid the
contras was used. He added that he had "no knowl-
edge that there was ever any solicitation by our peo-
ple with these people," an apparent reference to the
fund-raising for weapons purchases that led to last
week's guiltyF plea by Carl R. (Spitz) Channell, the
subject of independent counsel Lawrence E. Walsh's
first criminal charge.
d
cwbmted
Declassified in Part - Sanitized Copy Approved for Release 2012/02/09: CIA-RDP90-00965R000504550013-2
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/09: CIA-RDP90-00965R000504550013-2
Secord's testimony, as well as documents released
yesterday, revealed that there was internal dissension
in the ;,rivate_ airlift operation. Secord singled out a
Cuban American by the name of Felix Rodriguez as a
problem because "he voiced all kinds of dissatisfaction
with the overall operation, believed that, or at least
said that we were profiteering at the contras' ex-
pense.
At one point, Secord said, Rodriguez reported they
were selling old munitions when in fact they were
"shiny new and functioned beautifully." Rodriguez, a
former CIA operative who served in Vietnam under
Vice President Bush's current national security ad-
viser, was recruited by North to help in the resupply
project.
Later, in August 1986, one of Secord's assistants,
Robert Dutton, attended a meeting with North and
Rodriguez to discuss Rodriguez's claims about shoddy
material. "The meeting, however, did not go so well
and it was reported to me [that] Mr. Rodriguez had a
subsequent meeting with the assistant to the vice
president, Mr. (Donald] Gregg, and, I was told,
with the vice president as well.
Bush's office yesterday denied knowing of
such a meeting. In the past, Bush has claimed
that he never discussed the contra resupply pro-
gram with Rodriguez.
Secord said the private operation did receive
support from U.S. Ambassador Louis Tambs and
"a senior CIA field officer."
"They were simply giving us the right advice
and the right contacts and trying to be very help-
ful," Secord testified.
Secord, in response to a request from Nields
for examples of U.S. government officials who
gave support to his contra resupply operation,
also listed the U.S. ambassador in El Salvador as
well as "a senior CIA official in Honduras," an-
other CIA official in Costa Rica and Col. James
Steele, the chief of the U.S. military assistance
group in El Salvador.
Secord called Steele "a good moral supporter,
a friend, a good officer, but his rules were such
that he felt he couldn't give us any material sup-
port of any kind, including intelligence informa-
tion."
However, Secord had already testified yester-
day that Steele was one of the six individuals in
the contra resupply effort to whom North had
given an encryption device used for secure com-
munications. Massages sent on that network re-
ported and directed secret drops of material to
the contras.
Another U.S. official with a device was the
CIA station chief in Costa Rica, Secord said.
Secord said he had three meetings with Casey
between December 1985 and May 1986 during
which he described the needs of his contra op-
eration.
Casey, who resigned from the CIA after brain
surgery last winter, told Secord at their first se!-
sion that "they were appreciative of whet I was
doing ... and asked what he could do." In the
end, however, Secord said Casey was "noncom-
mittal He didn't promise we anything, but he
said he would look into it.*
Secord is scheduled to resume his testimony
today at 10 a.m.
Staff wrikr let Pick$nWo coetribeted to this
report.
3.
WHERE THE MONEY WENT: SECORD'S ACCOUNTING
$30 MILLION FROM ARMS SALES TO IRAN
PLACED IN LAKE RESOURCES' SWISS BANK ACCOUNTS.
$1 million spent
on unidentified
projects involving
neither Iran nor
the contras.
$3.5 million used
to finance contra
resupply
operations.
$6.52 million held
in account by
Swiss fiduciary for
benefit of Secord
business associate
Albert A. Hakim.
$3 million
$12 million paid
to U.S. Treasury.
arms sales
project,
primarily to
finance
transport of
arms.
About $2
million: use
of funds
not yet
determined
by Secord.
$1.36 million
placed in account
tied to Hakim.
Declassified in Part - Sanitized Copy Approved for Release 2012/02/09: CIA-RDP90-00965R000504550013-2