The "Fall Guy" Fights Back

By Ed Magnuson

As Lieut. Colonel Oliver North spun out his story with a dazzling display of charm, guile and unbridled self-righteousness during his long-awaited appearance in the Iran-contra hearings, he portrayed himself as a dutiful junior officer, ever willing to "salute smartly and charge up the hill" at any order from his superiors. Yet the bemedaled Marine refused to fall on his sword and take full blame for the scandal that has wounded his Commander in Chief. Although he confessed candidly -- and defiantly -- to blatant lies and deceptions, North also threw what even he called "Ollie North's dragnet" over high officials of the Administration he had served. North's net fell only a carefully calculated distance short of the Oval Office.

Alternately subdued, passionate, angry and sarcastic, the onetime National Security Council aide testified that he had expected to "be dropped like a hot rock when it all came down." He had, indeed, been fired by President Reagan last Nov. 25, after Attorney General Edwin Meese revealed that the profits from U.S. weapons sold secretly to Iran had been used to send military supplies to the contras fighting the Sandinista government of Nicaragua. But North declared, "I never in my wildest dreams or nightmares envisioned that we would end up with criminal charges." Now faced with that dire possibility through the investigation of Independent Counsel Lawrence Walsh, North made it clear that he had rebelled against his self-described role as the Administration's appointed "fall guy." He would go, all right, but not alone.

Knocking down his previous story that he had been on such chummy terms with the President as to joke with him about the delicious irony of sending the Ayatullah's money to the contras, the Marine placed a proper bureaucratic distance between himself and the top boss. (This wisecrack, North conceded, had been uttered out of the President's hearing as he and his superior, National Security Adviser John Poindexter, left a White House meeting.) North said he had never even discussed his far-flung secret operations one-on-one with the President. But, he insisted, "I assumed that the President was aware of what I was doing and had, through my superiors, approved."

North had some basis for his assumption. He claimed he had sent not one but five memos "up the line" to Poindexter seeking presidential approval to divert the Iran arms proceeds to the contras. North went ahead and directed the diversion after each of three U.S. sales to the Iranians because Poindexter never told him that his proposals had been disapproved. He said he had "no recollection" of ever seeing Reagan's initials or check of approval on any returned document. He had shredded all but one of his copies and, incredibly, could not remember even looking to see if they bore approvals. It was the discovery on Nov. 22 of the one copy North had missed that hastened Meese's bombshell disclosure of the diversion three days later.

From the start, Reagan has insisted he did not know of any diversion plans, making it the litmus test of his credibility in separating himself from the scandal. The White House was unmoved by North's claim that he wrote five diversion memos; only the one found on Nov. 22 has turned up among the 250,000 documents the White House released to the congressional committees. Even if other versions exist, says one aide, so what? "There's nothing that says the President saw them."

North supported that position, testifying that on the day he was fired, the President called to console him and said, "I just didn't know." North denied having told an aide shortly after the call that the President had said, "It's important that I not know." If accurate, that subtle remark could suggest a cover-up by Reagan. But North insisted, "I don't recall the conversation that way."

North's persistence in declaring that "I was authorized to do everything that I did" creates obvious questions for Poindexter, who will follow him to the witness table. Did Poindexter just spike all diversion memos and let North proceed on his own? Poindexter's public testimony, predicts a congressional source who has heard his private interviews, will be "explosive."

Whatever the President's role in the diversion, North's sweeping testimony left the firm impression that the late CIA director William Casey had masterminded the covert operations that were designed to achieve two of Reagan's most cherished policy goals: to win the release of U.S. hostages in Lebanon, and to keep the contras fighting in Nicaragua, even if Congress would not provide U.S. funds for that purpose. When Congress passed the Boland amendment in 1984, specifically banning all agencies "involved in intelligence activities" from providing military support to the Nicaraguan rebels, Casey simply shifted his previous contra support operation to the NSC staff on the dubious grounds that the council was not covered by the proscription.

North described Casey, who died May 6, as his "personal friend and adviser" who "never once disagreed with any of the things that I was doing." Instead, Casey told him "how they might be done better." The two "communed" regularly, North explained, in a relationship that he understood was not to be "something that was publicly bandied about." North did not, it was apparent, even tell his chain-of-command bosses, Poindexter and former National Security Adviser Robert McFarlane, how much influence Casey had over the activities they ostensibly supervised.

It was Casey, North said, who had suggested as early as 1984 that retired Air Force Major General Richard Secord be enlisted as a commercial "cutout" to direct the airlift of military supplies to the contras. It was Casey who encouraged using Secord to handle accounts into which the millions of dollars in profits from the Iran arms sales were deposited. It was also Casey who enthusiastically embraced the idea of using those "residuals" to help the contras. "He referred to it as the ultimate irony," said North. "The ultimate covert operation."

North testified that Casey had given him a ledger in which to record the flow of money to the contras and other secret operations. At times this account contained as much as $175,000 in cash and traveler's checks, kept in North's office.

In a startling revelation, North said Casey had intended to expand this fund with the arms sales profits and use it as an "off-the-shelf, self- sustaining, stand-alone" fund for operations that the director felt the CIA could not or should not carry out. This would get around two bothersome legal requirements: having to seek presidential approval and then reporting the supersecret presidential "finding" to Congress. Democratic Senator Daniel Inouye, who presided over the hearings, called this an attempt to create a "secret government within our Government."

According to North, Casey also thought up the "fall guy plan," in which the ever loyal Marine would take the "hit" if any of the many secret operations were exposed, thus protecting higher officials -- especially the President. When the Iran-contra scam did unravel, the trail led quickly to North. A private U.S. aircraft carrying supplies to the contras was shot down over Nicaragua last Oct. 5, and the downed airmen were carrying telephone numbers that linked them with Robert Owen, North's personal courier to the contras. Two days later Casey learned that angry middlemen in the Iran arms sales were claiming they had lost millions and were threatening to expose the diversion. Thus in early October, North testified, Casey told him to "clean up the files." North went on a shredding binge that included the account ledger and had him turning documents into confetti on the day he was fired.

Virtually all the activities attributed to Casey by North sharply contradicted Casey's repeated declarations of not knowing what North was doing at the NSC. In his last interview before he died, the director in December told TIME that "I knew nothing of any diversions" until the investors threatened to reveal them. The CIA, Casey said, "didn't have any information" on where the contras were getting financial help.

In his bursts of candor, North pulled other officials more deeply into the scandal. "I'm not trying to pass the buck here, O.K.?" North declared angrily. "I did a lot of things and I want to stand up and say that I'm proud of them." But he denied acting alone as a "loose cannon . . . People used to walk up to me and tell me what a great job I was doing." Among them, he declared, was Secretary of State George Shultz, who opposed the Iran deals but, claimed North, "knew in sufficiently eloquent terms what I had done" for the contras. Shortly before he was fired, North said, Shultz took him aside at a party, "put his arm around my shoulder and told me what a remarkable job I had done keeping the Nicaraguan resistance alive." (A spokesman for Shultz said the Secretary had intended only to compliment North for boosting contra morale.)

North's unwelcome embrace also took in Meese, who had sat silent at a White House meeting on Nov. 20 while Casey, Poindexter and North proposed a false story that no U.S. Government officials had been aware the previous year that Israel had shipped Hawk missiles to Iran with the help of the CIA and the NSC staff. Meese claims that he did not learn of the Hawk sale until last November, but North asserted that the Attorney General knew of it the year before. In November 1985, North testified, he saw a signed copy of a now missing presidential finding that retroactively authorized U.S. participation in the sale. The Attorney General usually reviews such findings. A Justice Department spokesman denied again last week that Meese had ever been involved in the Hawk sale.

Deflecting the tough questions of the committee lawyers with lengthy answers and some deft jabs ("Don't get angry, counsel. I'm going to answer your question"), the combative North brazenly defended many of his actions. He even assailed members of Congress for putting him through what he called "this ordeal." Said North: "I don't mind telling you that I'm angry at what you have attempted to do to me and my family."

Rather than apologize for lying to congressional committees about his role in the contra military effort, North boasted, "I didn't want to show Congress a single word on this whole thing." Said he: "Lying does not come easy to me. But we all had to weigh in the balance the difference between lives and lies." Yet North seemed caught in a contradiction between this assertion and his insistence that his support for the Nicaraguan rebels was always in full compliance with the law.

North's shredding of documents was so brazen that one new revelation of this activity prompted even the committees' toughest interrogator, Senate Chief Counsel Arthur Liman, to sit back amid laughter and say, "I want to hear more about it. Go ahead." North claimed that even as three aides from the Attorney General's office pored over his Iran files on the day they found the lone diversion memo, he had walked right past them with other papers and fed them into his office shredder, which they could hear grinding away. Didn't anyone, asked Liman, say, "Stop . . . What are you doing?" Replied North with a grin: "They were working on their projects. I was working on mine." (The Justice Department later denied North's account.)

Some of North's deceptions were neither humorous nor motivated by lofty concerns about saving anything but his own skin. He admitted taking "hundreds of pages" of papers and many of his spiral-bound notebooks out of secure NSC offices to his home in suburban Great Falls, Va. Noting that North had complained about the lack of security at his house, Liman asked why he would do this. Back came the up-front answer: "To protect myself."

North used the fear that his family was not safe in their home as an effective excuse for one of the most damaging charges against him: his acceptance of the gift from Secord of a security system, in apparent violation of laws prohibiting Government employees from accepting compensation beyond their salaries. The Marine said he had received a death threat from Abu Nidal, the infamous Palestinian terrorist. Glenn Robinette, a former CIA technician who directed the installation of a $13,900 set of security devices at the house, had testified that two guards had been living in North's garage, but the North family had found this inconvenient and wanted less intrusive protection. Never mentioning the guards, North contended that he had turned to the FBI for protection and was told the agency could not provide it. He asked his "superiors," who told him that a secure phone could be installed and then expanded into a more elaborate system. This proved "not feasible," North said; he was about to leave on a secret mission to Tehran, a venture so risky that Casey had told him to take along the means to kill himself in the event that he was tortured to divulge secrets. North then mentioned the problem to Secord, who recommended Robinette's services and paid the bill.

In what North described as "probably the grossest misjudgment that I have made in my life," he admitted, "I tried to paper over that whole thing by sending two phony documents back to Mr. Robinette." North backdated two offers to pay for the system in response to two equally false invoices from the former CIA hand. Never entirely contrite, however, North declared, "Thank you, General Secord." And turning to the committees, he added, "You guys ought to write him a check because the Government should have done it to begin with."

North also linked the perils of the Tehran trip to an offer by Secord's partner Albert Hakim to "do something for my family" if he failed to return from Iran. North said he knew that Hakim was wealthy, and he was grateful for his assistance as a translator in the Iran negotiations. That is why, when Willard Zucker, one of Hakim's lawyers, asked Mrs. North to visit him in Philadelphia, the colonel advised her to do so. Hakim had testified that North would be the beneficiary of a $2 million will if both Secord and Hakim were to die; Hakim had also sought a "proper way" to funnel $200,000 to North's family.

But when Betsy North met Zucker, North testified, "there was no money mentioned, no will mentioned, no arrangement." The lawyer just asked about the family. After North returned from Tehran, the lawyer called again and inquired about the name of a family executor. North said he told his wife not to provide it, and they did not hear from the lawyer again.

North also explained why he had cashed traveler's checks, given to him by Contra Leader Adolfo Calero, at such places as a tire shop and a hosiery store. The checks, he said, were meant for use in his contra resupply and other covert operations. He kept "meticulous" records in the now destroyed ledger about his expenses, and when no funds were at hand, he spent his own money. Then he reimbursed himself when new checks arrived.

North accused the committees of "snickering" when the hosiery item was posted in a wall enlargement. "You know that I've got a beautiful secretary," he said of his assistant Fawn Hall. "And the good Lord gave her the gift of beauty, and the people snicker that Ollie North might have been doing a little hanky-panky with his secretary. Ollie North has been loyal to his wife since the day he married her." When he asked his "best friend" Betsy about the purchase, she told him, "You old buffoon, you went there to buy leotards for our two little girls."

Overall, North's defense was simple but masterly. He was just following orders. "If the Commander in Chief tells this lieutenant colonel to go stand in the corner and sit on his head," he declared, "I will do so." And if a question got sticky, North had another defense: "I don't recall." In his final morning in the week's testimony, the selective memory of the obviously bright officer failed on no fewer than 30 occasions. Earlier, North could not even recall why at one point $41 million had been deposited in the Swiss accounts controlled by Secord and Hakim.

North plucked the patriotic heartstrings perhaps more musically than even the President, turning to his favor a question about whether the day of his firing was "one of the worst days in your life." No, he replied, "most of those were days when young Marines died." The medals on his chest, said North, were really earned by the "young Marines that I led." He lectured the legislators on the Communist threat around the world, implying that he knew far better than they how to protect America against it.

The bravura performance drew a flood of flowers and yellow telegrams that swept to Capitol Hill in support of the man who starred at his own show trial. The "Olliegrams" were stacked on the witness table, as though shielding the colonel from any hostile questions. Jumping on the Ollie bandwagon, two Republican Congressmen interrupted the proceedings to criticize Counsel Liman for being too "prosecutorial." In fact, Liman approached North with unusual restraint, probing more for revelations about his superiors than to slash at his story. Explained Liman later: "This is not a trial. We're not handing down verdicts. These hearings are about democracy and how foreign policy is made."

Still, Liman and House Chief Counsel John Nields managed to sketch some broader themes than North's more limited view of how a democracy functions. Nields pounced on North's complaint that his contra support role had been publicized in Moscow, Havana and Managua. "All our enemies knew it," replied Nields solemnly, "and you wanted to conceal it from the United States Congress."

Liman rather sympathetically led North into nearly conceding that his superiors had abandoned him when all the secrecy was punctured -- which pushed the Marine officer into the difficult spot of trying to avoid portraying his bosses as either a willful part of a cover-up or too meek to defend their policy convictions. North had his most arduous time trying to justify the creation of Casey's covert "slush fund" that not even the President need be told about. (Some of the proposed uses were for U.S.-Israeli operations that North explained in a closed session.)

Asked Liman: "After all you've gone through, are you not shocked that the director of Central Intelligence is proposing to you the creation of an organization to do these things outside of his own organization?"

North: "Counsel, I can tell you that I am not shocked . . . You know, maybe I'm overly naive, but I don't see what would be wrong with that."

Liman: "Well, maybe you are . . ."

Nor could North ever adequately explain who was supervising the vast profits pouring into the Secord-Hakim accounts from Iran arms sales. No one in the U.S. Government, it seemed, had actually monitored the huge cash flow. North claimed that it was his job to tell Secord just where to send money and that he trusted the general to do whatever was directed. Yet North admitted he was "shocked" to learn that only $4 million had gone to the contras, while some $8 million remained in Secord's control. North challenged Nields' assertion that this money belonged to the U.S. Treasury, even while conceding that it was not Secord's to spend as he wished.

On the "smoking gun" memos in which North had outlined the diversion plans, Liman presented many documents in similar form but on far less significant topics that North had sent to Poindexter for presidential approval. These had been returned to the NSC aide's files with notes from the National Security Adviser indicating that Reagan had indeed given the plans a green light. The implication was clear: it would be extraordinary if a proposal for the diversion, with consequences serious enough to endanger the Reagan presidency, did not reach Ronald Reagan's desk. Unless, of course, North's foxy superiors had really intended to let the eager, can-do Marine twist slowly in the wind.

With reporting by Michael Duffy, Hays Gorey and Barrett Seaman/Washington