Not Much Wiser Than Before

By Amy Wilentz

The meeting, according to Robert McFarlane, occurred on Aug. 6 or 7, 1985, upstairs in the White House living quarters, where Ronald Reagan was recuperating from his operation for colon cancer. Among the others present were Secretary of State George Shultz, Defense Secretary Caspar Weinberger and John Poindexter, who would later replace McFarlane as National Security Adviser. The question: Would the President approve shipment by Israel of American-made arms to Iran as part of a shaky scheme to free U.S. hostages in Lebanon? Reagan was aware of the dangers, McFarlane told a congressional committee last week, but in the end gave his go-ahead. "If Israel chooses to do that and then seeks to replace (the arms) with weapons from us," he quoted the President as saying, "then we will sell them."

By conveying that decision to Israel, McFarlane began Washington's official involvement in the dubious arms-for-hostages initiative that has evolved into the biggest scandal since Watergate. "It is not reasonable to believe that I would convey an approval against the President's wishes," McFarlane told TIME. But White House Chief of Staff Donald Regan testified last week that the President gave no such approval. Shultz checked his own notes and says he does not recall Reagan's doing so, nor does Weinberger, though McFarlane says he discussed the President's approval with both men. The President seems unable or unwilling to recall exactly what he ordered. The dispute is merely one of the many surrounding the Iran-contra connection. But it is emblematic of the difficulties involved in getting to the bottom of the affair.

The goal of the past few weeks, repeatedly professed by President Reagan and almost everyone else, was to get all the facts out as quickly as possible. But it didn't happen. As congressional committees wrapped up their extraordinary series of post-adjournment hearings, the lingering questions about Iranscam ranged from how it started to where all the skimmed profits intended for the contras ended up. Now it is the turn of Lawrence Walsh, the newly appointed independent counsel, and the select committees formed by the House and Senate to begin the task of sorting through a scandal that has taken on a life of its own.

After hearing 91 hours of secret testimony from 36 witnesses over three weeks, the Senate Intelligence Committee starkly conveyed the pervasive confusion. Republican Chairman David Durenberger concluded that the entire scheme to divert funds to the contras was handled by Oliver North, the fired National Security Council staffer who still refuses to testify. "There's no clear evidence in my mind," said Durenberger, "that North operated under anybody's authority." But ranking Democrat Patrick Leahy disagreed. "My firm thought right now is that he did not act alone." The two Senators concurred, however, that they had not yet discovered what money, if any, actually made it to the contras. "All the money could be sitting in a Swiss bank account as far as we know," said Durenberger.

The committee had hoped to get some of these missing pieces from CIA Director William Casey, who was scheduled to testify on Tuesday. But the day before, he suffered a seizure in his office and was taken by ambulance to Georgetown University Hospital. He underwent more than five hours of neurological surgery, during which doctors removed an apparently cancerous brain tumor. It is unlikely that Casey will soon be able to testify or return to work; his wife, who believes the problems were partly due to stress, wants him to resign. Casey's deputy director, Robert Gates, has taken over his duties for the moment.

Because of Casey's sudden illness, Regan ended up testifying sooner than expected. After more than five hours of questioning, Regan emerged. "I didn't duck any question, I didn't take any Fifth Amendment, I didn't invoke Executive privilege," he told reporters. Senator Dennis DeConcini, an Arizona Democrat, said Regan had told an "unbelievable story in a very believable way."

Poindexter and North remained unforthcoming; both have invoked their Fifth Amendment right not to testify about matters that could incriminate them. In order to show his eagerness to get their testimony out, Reagan issued a statement urging that the G.O.P.-controlled Senate committee grant the two former NSC officials limited immunity from prosecution. But his request was rebuffed as premature by members of both parties. "No point in it," said Republican Leader Bob Dole. Congressman Lee Hamilton, the Indiana Democrat who chairs the House Intelligence Committee and has been chosen to head the House select committee next year, said in an interview, "Whatever we do should be done after consultation with the independent counsel and after we have a better understanding of what the basic facts are."

Some Reagan supporters, including Vice President George Bush, urged that North and Poindexter should put their country ahead of their personal plight and testify voluntarily. Said Nancy Reagan: "If we could just get North and Poindexter to talk. Now it is up to them." But Reagan refused to make the request, as North pointed out. "The President hasn't asked me to give up my individual rights," the Marine colonel said. He added, "Men have died facedown in the mud all over the world to protect those individual rights." North also issued what sounded to many like a possible warning to the Administration to lay off: "I have over the last 23 days found myself abandoned and rejected by many of my so-called friends and former colleagues." A devout Catholic, he referred reporters to Psalms 7: 1 of the Bible: "O Lord my God, in Thee do I take refuge; save me from all my pursuers, and deliver me."

Attorney General Edwin Meese, meanwhile, faced questions about a request he made in late October to FBI Director William Webster for a ten-day delay in an investigation into the role played by Southern Air Transport in supplying the contras. Webster agreed. Meese had linked the request to "sensitive hostage negotiations." Some on Capitol Hill have charged that the content of Meese's request suggests that he had some idea of the connection between the Iran deals and the contras almost a month before he revealed it publicly. But Meese says he made his appeal at the behest of Poindexter, who told him that Southern Air was involved in carrying out a secret U.S. mission in the Middle East but who did not mention the diversion of funds to the contras.

The expanding investigation into such matters will inevitably dredge up revelations about the links that North and others had with the private effort to help the Nicaraguan rebels. During much of the past two years, there was a congressional ban on direct or indirect U.S. military assistance to the contras. Eugene Hasenfus, the American mercenary who was released last week, is expected to be among those called by Congress to testify next year. When asked if he would do so, Hasenfus replied, "Why not?"

In selecting a special prosecutor (now called an independent counsel) to probe the affair, a three-judge panel in Washington provided a broad mandate to investigate five areas, including the "provision or coordination of support for persons or entities engaged as military insurgents in armed conflict with the government of Nicaragua since 1984." The man they picked is Lawrence ("Ed") Walsh, 74, a former federal judge and Viet Nam peace negotiator. Born in Canada, he became a naturalized U.S. citizen in 1922 and spent much of his private career with the Wall Street law firm of Davis Polk & Wardwell. He is currently an attorney in Oklahoma City.

The Senate and House also picked the members of separate select committees that will launch Iranscam investigations when Congress convenes next month. The eleven members chosen for the Senate panel are generally cautious, low- keyed and relatively conservative. All have a background in law. The chairman: Democrat Daniel Inouye of Hawaii, who served on the Senate Watergate panel 13 years ago. The ranking Republican is Warren Rudman, a former New Hampshire attorney general and one of the Senate's most independent-minded members. The 15-member House committee will be chaired by Hamilton, with Richard Cheney of Wyoming, White House chief of staff under President Ford, as the ranking Republican. When asked last week whether he thought Reagan knew about the diversion of funds to the contras, Hamilton said, "The President says he doesn't know, and I assume he is telling the truth. The fact is that after weeks of investigation, we know relatively little about that diversion." He added that his committee hopes to hear from foreign participants, including Israeli officials and Saudi Arms Merchant Adnan Khashoggi.

With its murky connections to the private contra supply network in danger of trickling exposure, along with virtually all of its other covert activities, the Administration seems destined to be debilitated for months to come. The realization that the scandal has a life of its own added new urgency to the maneuverings of Reagan's old California cronies (and of his wife) to prompt a housecleaning. Yet Reagan continues to resist. "If anything," said Senator Paul Laxalt, a longtime friend, after seeing Reagan early last week, "his heels are dug in even deeper than before." Don Regan, annoyed with someone who again raised the subject of his resigning, reportedly responded, "You (expletive deleted) resign!"

Still, something has to give. The Administration has lost control of events: it has yet to get the facts out, and by omission the President has become a silent participant in the scandal, as past and present aides flounder about contradicting one another or refusing to divulge what they know. As a result, there are still as many unanswered questions as there were seven weeks ago. As the crisis festers, a vacuum is developing within the Administration. A replacement may have to be found for Casey. Spokesman Larry Speakes and Cabinet Secretary Al Kingon are leaving. Domestic Policy Adviser Jack Svahn has departed. If Regan goes, so will most of his assistants. Staffers are wondering who will replace these men, but a more compelling question is, Who can help make those selections?

A lot of the President's old friends are willing to offer their advice. Stuart Spencer, who helped manage most of his campaigns, came from California and met privately with the Reagans last week. Michael Deaver, still under investigation for his lobbying activities, will have Christmas dinner with the First Family. There is talk of Paul Laxalt coming into the White House as a counselor and of Drew Lewis, the former Transportation Secretary, being tapped as chief of staff. In the past, Reagan has acted on difficult matters during his year-end holidays in California. And that is where he was heading this week, for a few days of reflection and socializing before Round 2 of the Iranscam investigations begin.

With reporting by Barrett Seaman and Bruce van Voorst/Washington