"A Picture of Real Disarray"

By Jacob V. Lamar Jr

The bits and pieces of the Iran-contra scandal that have slowly leaked out have presented an unsettling image of Ronald Reagan's closest advisers: scheming, overreaching aides deliberately misleading one another while keeping an already out-of-touch President in the dark about their secret operations. That impression was reinforced last week with the release of a Senate Intelligence Committee report based on three weeks of hearings the panel held last December.

The most complete reconstruction of Iranscam yet, the single-spaced 65-page report presents a readable, dispassionate account of Administration officials pointing fingers and offering conflicting stories about who knew -- and did -- what, when. The result, says Oklahoma Democrat David Boren, the committee chairman, is a "picture of making foreign policy that was in real disarray." The picture shows:

-- Statements from White House Chief of Staff Donald Regan and former National Security Adviser Robert McFarlane contain flat-out contradictions about the President's attitude toward the Iran initiative. McFarlane insisted Reagan was interested and often enthusiastic about the approach to Iran and the effort to free the American hostages. Regan, however, testified that the President had serious misgivings.

-- CIA Director William Casey misled McFarlane about reports that Israel had been secretly selling arms to Iran since 1981. Had he known about the sales, McFarlane says, he would have changed his opinion about the U.S. approach to Iran. The Administration proceeded with the Iran initiative despite warnings from Secretary of State George Shultz that using Israel as an intermediary "could seriously skew our own perception and analysis of the Iranian scene."

-- Lieut. Colonel Oliver North deliberately bypassed the State Department when he distributed special intelligence reports on Iran to selected Government officials in September 1985. A few months later, however, North provided intelligence reports on the Middle East to Manucher Ghorbanifar, the Iranian merchant who was the middleman for negotiations between the U.S. and the Islamic nation.

-- When Attorney General Edwin Meese first learned from North last November of the diversion of Iran arms-money funds to the contras, he made no immediate effort to determine whether North's boss, National Security Adviser John Poindexter, also knew about the diversion or whether North had any higher authorization for his actions. The report noted that Meese's lapse might have given the two White House aides a chance to coordinate their stories. The committee reported, "Meese testified that it never occurred to him that there would be any collusions of an untoward nature."

Although the Senate report provides a chronology of the Iran affair, Boren ! stressed that the investigation is still incomplete. That was bound to be the case, since some of Iranscam's key players -- North, Poindexter and retired Air Force Major General Richard Secord, whom the panel identifies as a principal conduit of supplies to the contras -- exercised their Fifth Amendment rights and refused to testify. Nevertheless, the report will serve as an essential point of reference for the congressional select committees investigating the scandal.

Despite the committee's depiction of a fractious White House staff, the Administration welcomed the release of the document because the Senators found no "direct evidence" that the President knew of the illegal diversion of funds from the Iran arms sales to the Nicaraguan rebels. From the start of the controversy, Reagan's protectors have been seemingly obsessed with establishing the President's lack of culpability in the contra connection.

But the report called into question Reagan's oft-repeated defense that the weapons transactions were meant to foster ties with moderate elements in the Iranian government. While the lawmakers said that the arms deals may have begun as a diplomatic overture, they added that the Administration was motivated primarily by a "deep personal concern on the part of the President for the welfare of U.S. hostages both in the early stages of the initiative and throughout the program." After the report was published, White House Spokesman Larry Speakes admitted that the operation "could be interpreted as a trade of arms for hostages," but that, he maintained, was not the policy approved by Reagan.

The investigation found that Reagan may have known more about some of the private efforts to assist the contras than has been reported. Before holding a meeting with then Israeli Prime Minister Shimon Peres last September, Reagan was briefed by Poindexter on an Israeli proposal to ship a "significant quantity" of East bloc weapons to the Nicaraguan rebels. Chief of Staff Regan told the President that if Peres brought up the matter, "just say thanks." The committee found evidence that a shipment was engineered by Secord and Israeli Defense Minister Yitzhak Rabin.

Nowhere are the inconsistencies among Administration officials more striking than in the testimonies of McFarlane and Regan. Their disagreements begin with the first time McFarlane mentioned to the President the subject of arms sales to Iran. The then National Security Adviser visited Reagan at Bethesda Naval Hospital shortly after the President underwent surgery for colon cancer in July 1985. According to Regan, the President questioned the credentials of Ghorbanifar, the contact with Iran. Says the Senate report: "Regan testified that McFarlane defended Ghorbanifar on the basis of Israeli assurances, and the President authorized McFarlane to explore the channel."

McFarlane, however, told the Senators that he did not bring up Ghorbanifar at Bethesda, adding that he did not even learn of the arms merchant's identity until December of that year when he first met him in London. Yet McFarlane did mention Ghorbanifar in a cable to Secretary of State Shultz calling for renewed ties with Iran. The message was sent on June 14, 1985, a month before the Bethesda meeting. McFarlane explains that if he did use Ghorbanifar's name in the cable it was because he thought it was the identity of an aide to Iran's parliamentary leader, Hashemi Rafsanjani.

McFarlane maintained that on Aug. 8, 1985, Reagan authorized an Israeli shipment of U.S. weapons to Iran. Regan says that because of the President's doubts about Ghorbanifar, Reagan did not give approval for the arms sale. The chief of staff also claimed that he was present at a September 1985 White House meeting when McFarlane said to the President, "The Israelis, damn them, have sold 500 TOWs to the Iranians without U.S. knowledge." McFarlane testified that he simply informed Reagan and Defense Secretary Caspar Weinberger of the shipment and the subsequent freeing of an American captive, the Rev. Benjamin Weir. Reagan, said McFarlane, was "elated" by Weir's release and never expressed any displeasure at the weapons sale.

The Senate committee found that arms-sales profits were deposited into Swiss bank accounts controlled by Secord. The money was apparently transferred to accounts in the Cayman Islands and Panama controlled by Contra Leader Adolfo Calero. The investigators could not determine how much money was diverted to Calero's accounts or whether any of the funds ever got to the rebel forces in Central America.

Attorney General Meese, in his initial investigation of the Iran affair, discovered an unsigned, undated memorandum outlining the contra connection. According to the report, the memo "provided that $12 million of the residual funds from an arms transaction . . . would be used to purchase critically needed supplies for the Nicaraguan Democratic Resistance Forces." The lawmakers believe the memo was written on or after April 4, 1986, but they could not deduce "who, if anyone, saw it." In his testimony before the committee, Regan said neither he nor the President ever got a glimpse of the memo. Meese testified that when he confronted North with the paper, the colonel "was surprised and visibly shaken." North claimed the $12 million figure had been determined by Israeli middlemen.

How the Iranscam players managed, or mismanaged, the money flow remains a seemingly impenetrable mystery. The Senators found evidence that Israelis may have skimmed $2 million from arms-sales profits for unknown purposes. In one place, the report cites testimony that Israeli Agent Amiram Nir first suggested the diversion of funds to the contras; elsewhere the lawmakers point to evidence that the contra connection was the brainchild of Albert Hakim, an associate of Secord's. It is uncertain whether Ghorbanifar, the Israelis or some other party set the price for the weapons sales. Admits Senator Boren: "We've not been able to trace the financial chain." But to reconstruct the money trail, the various Iranscam committees will first have to unravel the Machiavellian machinations of the President's men.

With reporting by Michael Duffy/Washington