Iran-Contra Affair

What the claim says

The Iran-Contra affair is the name given to two secret policies of the Reagan administration that were run largely by the staff of the National Security Council (NSC) and were joined when money from the Iran sales was diverted to the Contras. The claim, as critics make it, is that senior officials sold weapons to Iran in an effort to free American hostages held in Lebanon, despite an embargo and declared US policy; that they kept the Nicaraguan Contra rebels supplied while Congress had banned such aid; that part of the profit from the Iran sales was diverted to the Contras; and that officials then misled Congress and the public and destroyed records to hide what they had done.

Independent Counsel Lawrence Walsh's final report describes two operations coordinated by NSC staff. In his words the sales of arms to Iran "contravened United States Government policy and may have violated the Arms Export Control Act", and the support given to the Contras "violated the Boland Amendment ban on aid to military activities in Nicaragua". He stressed that the diversion, although the most dramatic element, was not what made the operations unlawful.

Two questions that are often bundled with that documented core are handled separately below, because the official record treats them differently: how much President Reagan knew about the diversion, and whether the CIA tolerated cocaine smuggling by people linked to the Contras.

Background: the Contras and the Boland Amendments

The Reagan administration backed the Contra rebels fighting Nicaragua's Sandinista government, a posture Walsh describes as highly controversial, with the CIA as the principal conduit of covert American support. Congress responded with a series of amendments named for Representative Edward Boland. The first, passed in late 1982, barred the CIA from spending money "for the purpose of overthrowing the government of Nicaragua". In December 1983 a compromise capped Contra funding for fiscal 1984 at $24 million.

According to national security adviser Robert McFarlane, President Reagan instructed him to keep the Contras alive "body and soul", an instruction McFarlane passed to NSC staff officer Oliver North. By May 1984 McFarlane had persuaded Saudi Arabia to contribute $1 million a month.

The decisive amendment was part of the fiscal 1985 appropriations law that Reagan signed on 12 October 1984. It provided that no funds available to the CIA, the Defense Department "or any other agency or entity of the United States involved in intelligence activities" could be spent to support, "directly or indirectly, military or paramilitary operations in Nicaragua". Walsh dates the prohibition from October 1984 to October 1986; Congress released $100 million of Contra aid on 17 October 1986.

To comply, the CIA and the Defense Department withdrew personnel from Central America, "leaving a void that North was to fill", in Walsh's words. Walsh found that CIA Director William Casey was instrumental in pairing North with retired Air Force Major General Richard Secord as a Contra-support team. The money for the Contras' weapons came from foreign governments, from wealthy American donors and, eventually, from the Iran arms sales. All of it fell under North's control, and through him that of Secord and Albert Hakim, and was run through a network of corporations and Swiss bank accounts that they put at North's disposal. Walsh calls the arrangement the Enterprise.

The Iran initiative, 1985-1986

By mid-1985 several Americans were held hostage in Lebanon. In July 1985 an Israeli intermediary, David Kimche, told McFarlane that Iranians in contact with Israel could show good faith by using their influence in Lebanon to obtain the hostages' release, and would expect a reciprocal gesture, most likely military equipment. Reagan expressed interest and told McFarlane to explore it. Shultz and Defense Secretary Caspar Weinberger opposed arms sales.

Israel shipped 96 TOW anti-tank missiles to Iran on 20 August 1985 and 408 more on 14 September, and one hostage was freed on 15 September. In November 1985 an effort to move HAWK anti-aircraft missiles through Israel went badly, with only 18 delivered, and the CIA's part in it forced the drafting of a presidential Finding authorizing covert action. Reagan signed one on 5 December 1985. It stated that the CIA's activities were part of an effort to secure hostages' release in exchange for weapons, directed that Congress not be notified, and retroactively approved what had already been done.

On 17 January 1986 Reagan signed a further Finding authorizing the use of third parties to transfer weapons. The CIA bought TOW missiles from the Army and, through Secord, 1,000 were delivered to Iran in two lots of 500, on 18 and 27 February. No hostages were released.

In May 1986 McFarlane, North and two others flew to Tehran, Reagan having been briefed on 12 May. After about three and a half days of talks, Walsh writes, little was accomplished. His tally for the whole series of dealings is one hostage freed after the 1985 shipments, two more in 1986 (in July and November), and two new Americans seized in September 1986. The congressional committees concluded that the United States armed Iran "but attained neither a new relationship with that hostile regime nor a reduction in the number of American hostages".

Whether the 1985 shipments were illegal is itself contested. Walsh noted that the Reagan Justice Department took the position after November 1986 that they did not violate the law, but said that position did not match the advice given at the time: Weinberger told Reagan in 1985 that the shipments were illegal, and Attorney General Edwin Meese expressed concern in his initial inquiry that they might have been.

The diversion

The diversion grew out of the way North structured the sales. In late November 1985 the Enterprise found that $800,000 was left over from $1 million Israel had deposited for the abortive HAWK shipment, and North told Secord to apply it to the Contra resupply operation. Walsh notes that no US-generated proceeds were involved, but the principle of a diversion was in place. In January 1986 North learned that the Iranians would pay $10,000 for each TOW; he negotiated a price of $3,700 per missile from the Defense Department without disclosing the difference, and routed the Iranian payments through an Enterprise account before the CIA was paid. By April 1986 he had written a memorandum for his superiors that explicitly described how proceeds from the Iran sales could be used to support the Contras. When the party returned from Tehran in May, North told McFarlane that some proceeds were going to the Contras; McFarlane did not reveal this when he briefed Reagan on 29 May.

The congressional committees later put numbers on it. Of a $16.1 million profit from arms sales to Iran, they concluded that at least $3.8 million was used for Contra assistance.

Exposure and cover-up, October-November 1986

On 5 October 1986 Nicaraguan soldiers shot down an American cargo plane carrying supplies to the Contras. The surviving crewman, Eugene Hasenfus, said he worked for the CIA. On 3 November a Lebanese publication, Ash-Shiraa (spelled Al-Shiraa in Walsh's report), reported McFarlane's trip to Tehran.

Reagan denied on 6 November that arms had been sold to Iran, according to Walsh's chronology. On 13 November he acknowledged that weapons had been sent but told the nation that the charge that they were shipped as ransom was "utterly false" and that the United States "has not swapped boatloads or planeloads of American weapons for the return of American hostages."

On 21 November Poindexter destroyed the only known signed copy of the December 1985 Finding, saying he feared it would embarrass the President, and North shredded stacks of documents that evening. The next day Justice Department lawyers reviewing NSC files found a copy of North's April 1986 memorandum explaining the diversion. Meese questioned North on 23 November. On 25 November Reagan and Meese announced at a televised press conference that proceeds had been diverted to the Contras, that Poindexter had resigned and that North had been reassigned to the Marines.

Walsh later wrote that Meese's inquiry "was more of a damage-control exercise than an effort to find the facts". Meese was not among the 14 people Walsh charged. For Weinberger, Walsh found that handwritten notes he withheld from Congress and from the Independent Counsel until Walsh's office discovered them in late 1991 showed that his early testimony, that he had only vague information about the 1985 sales, was false. Weinberger was pardoned before he could be tried.

What the three investigations found

The Tower Board. Reagan appointed a President's Special Review Board on 1 December 1986, chaired by former Senator John Tower with former Senator Edmund Muskie and retired Air Force general Brent Scowcroft. Its report, issued on 26 February 1987, said the President "did not seem to be aware of the way in which the operation was implemented and the full consequences of U.S. participation". The Board said it could not reach a conclusive judgment on whether Reagan approved the 1985 shipments in advance, but that on balance it was plausible that he did. On the diversion it recorded that the President said he had no knowledge of it before his conversation with Attorney General Meese in late November 1986, adding that "No evidence has come to light to suggest otherwise." On 4 March 1987 Reagan told the nation: "A few months ago I told the American people I did not trade arms for hostages. My heart and my best intentions still tell me that's true, but the facts and the evidence tell me it is not."

Congress. The Senate and House created select committees on 6 and 7 January 1987. Public hearings began on 5 May 1987, North testified under a grant of immunity in July, and the committees issued a joint report in November 1987. The majority wrote that the common ingredients of the Iran and Contra policies were "secrecy, deception, and disdain for the law". On the President it said the record was incomplete because of the shredding of documents and Casey's death, but that the "ultimate responsibility for the events in the Iran-Contra Affair must rest with the President". Eight Republican members dissented: in their view the mistakes of the affair were "mistakes in judgment, and nothing more", and there was "no constitutional crisis".

The Independent Counsel. Walsh was appointed on 19 December 1986 and his report, dated 4 August 1993, was made public on 18 January 1994. It concluded that high-ranking administration officials violated laws and executive orders; that the Iran operations were carried out with the knowledge of, among others, Reagan, Vice President George Bush, Shultz, Weinberger, Casey, McFarlane and Poindexter, of whom only Weinberger and Shultz dissented from the policy; and that officials systematically and willfully withheld contemporaneous documents and deliberately deceived Congress and the public once the operations were exposed. Walsh also rejected the congressional majority's picture of a "cabal of zealots" on the NSC staff, writing that the affair was the product of two foreign policy directives by Reagan, executed by the NSC staff with the knowledge and support of high officials at the CIA and the State and Defense departments.

Prosecutions, reversals and pardons

Walsh's summary of prosecutions counts 14 people charged. Eleven were convicted, four after jury trials (North, Poindexter, Thomas Clines and Clair George) and seven by guilty plea (Carl Channell, Richard Miller, Hakim, McFarlane, Elliott Abrams, Alan Fiers and Secord). Two of the convictions were overturned on appeal. Two defendants, Weinberger and Duane Clarridge, were pardoned before trial, and the case against Joseph Fernandez was dismissed. A company controlled by Hakim, Lake Resources, also pleaded guilty to a corporate felony.

Most of the pleas were to false-statement or withholding offenses. McFarlane pleaded guilty in March 1988 to four misdemeanor counts of withholding information from Congress, and Fiers and Abrams each pleaded to two. Secord pleaded guilty to a felony count of false statements to Congress. Clines was convicted of four tax felonies connected to his earnings from the Enterprise and served a 16-month prison sentence. George was convicted in December 1992 of two felony counts of false statements and perjury before Congress.

North was indicted in March 1988 and stood trial on 12 counts. In May 1989 he was convicted of three: accepting an illegal gratuity, aiding and abetting the obstruction of a congressional inquiry, and destroying documents. On 20 July 1990 an appeals panel vacated the convictions so that the trial court could determine whether his immunized testimony to Congress had influenced trial witnesses, and on 16 September 1991 the case was dismissed on the Independent Counsel's motion. Poindexter was convicted on 7 April 1990 on all five counts he faced, among them conspiracy, two counts of obstructing Congress and two of false statements, and was sentenced to six months in prison. On 15 November 1991 the appeals court reversed those convictions on the ground that immunized testimony may have influenced witnesses; the Supreme Court declined review on 7 December 1992 and the indictment was dismissed in 1993. Both reversals turned on the immunity problem. In his report Walsh asked Congress to recognize that grants of use immunity to principals "will virtually rule out successful prosecution". The central conspiracy charge had already been dismissed in January 1989 because classified information the defense needed was not declassified, although Judge Gerhard Gesell had upheld it as a matter of law.

The cover-up cases ended in pardons. Weinberger was indicted on 16 June 1992; after a dismissal and a re-indictment, four counts remained and trial was set for 5 January 1993. On 24 December 1992 President Bush pardoned him, along with Clarridge, McFarlane, Abrams, Fiers and George. Bush's proclamation called the prosecutions "the criminalization of policy differences" and said "The proper target is the President, not his subordinates; the proper forum is the voting booth, not the courtroom." Walsh responded: "The Iran-contra cover-up, which has continued for more than six years, has now been completed." His report records that Bush was the first President to grant a pardon on the eve of a trial. Absent evidence that the pardon was secured by corruption, Walsh did not take the matter to a grand jury. The Associated Press later summarized the legal result as an investigation that cost $47 million and sent just one person to prison.

Casey, who died before the investigation could question him, was never formally investigated. Walsh wrote that fundamental questions about his state of mind could not be answered.

The CIA, the Contras and cocaine: a separate record

Allegations that people connected to the Contras smuggled cocaine were examined separately from the Iran-Contra prosecutions, and the findings are narrower than popular retellings.

In April 1986 Senator John Kerry took information about drug-trafficking links in the Contra supply network to the chairman of the Senate Foreign Relations Committee, Richard Lugar, who agreed to a staff inquiry. In April 1987 responsibility for the investigation passed to the committee's Subcommittee on Terrorism, Narcotics and International Operations, which Kerry chaired. Its report, dated December 1988 and printed in 1989, concluded that individuals who provided support for the Contras were involved in drug trafficking, that the Contra supply network was used by drug-trafficking organizations, and that elements of the Contras knowingly received assistance from traffickers. It also found that the State Department made payments to traffickers from funds Congress authorized for humanitarian aid to the Contras, and that US officials involved in Central America failed to address the drug issue for fear of jeopardizing the war effort. But it stated: "The Subcommittee did not find that the Contra leaders personally were involved in drug trafficking."

In August 1996 the San Jose Mercury News published the "Dark Alliance" series by Gary Webb, alleging that a California drug ring had "funneled millions in drug profits to a Latin American guerrilla army run by the U.S. Central Intelligence Agency". On 11 May 1997 the paper's executive editor, Jerry Ceppos, wrote that "we did not have enough proof that top CIA officials knew of the relationship."

CIA Inspector General Frederick Hitz investigated at the request of the Director of Central Intelligence. His Volume I, made public on 29 January 1998, found no information that anyone acting for the CIA had any direct or indirect dealing with the three California dealers named in the series, Ricky Ross, Danilo Blandon and Norwin Meneses. It did find that Blandon and Meneses were affiliated with California Contra support groups and made financial contributions to them, though it could not substantiate the amounts they claimed. In a separate San Francisco cocaine case (arrests in January 1983), Volume I found that, after learning of it in July 1984, the CIA contacted prosecutors to protect what it believed was an operational interest in a Contra support group; the Inspector General says the CIA mistakenly thought it had an interest to protect. A CIA cable indicates that about $36,000 seized from one defendant was returned at the CIA's request; the prosecutors said they returned it for other reasons, and the Inspector General found that the CIA's actions did not appear intended to influence the outcome of the trial, which ended in the defendant's conviction.

Volume II, dated 8 October 1998, found no information that the CIA or its employees conspired with or assisted Contra-related individuals or groups in drug trafficking to raise funds. It also recorded that the CIA received drug-trafficking allegations about several dozen Contra-related individuals and one Contra group. In 1984 the CIA received allegations that five individuals linked to a Costa Rica-based Contra group were in a drug-trafficking conspiracy with a known narcotics trafficker; it broke off contact with the group that October but continued to have contact through 1986-87 with four of the individuals involved. In some five cases the CIA pursued confirmation of such allegations, and in other cases it ended a relationship after receiving them. In another six, its knowledge of the allegations "did not deter their use" or employment by the CIA, and in some cases it did not act to verify the allegations even when it had the opportunity to do so. The Inspector General found that the CIA "acted inconsistently" in handling the allegations. The report also found no information that the CIA told Congress about eight of the ten Contra-related individuals on whom it had received such allegations while the fiscal 1987 statutory prohibition on aiding Contra groups that retained a member found to engage in drug smuggling was in force, from October 1986 to December 1987.

What remains disputed or unknown

The central open question is whether Reagan knew of the diversion. Poindexter testified that he did not tell the President but believed Reagan would have approved; the congressional report says North said he never told the President but assumed he knew. In a February 1990 videotaped deposition for Poindexter's trial, Reagan said he had "no knowledge then or now that there had been a diversion." Walsh wrote that no direct evidence was developed that Reagan authorized or was informed of it, that only Poindexter could supply such evidence and he denied passing it on, and that North's destruction of records eliminated any documentary proof. Walsh also thought it doubtful that Reagan would have tolerated Iran's affronts in 1986 unless he knew the sales were supplying money to the Contras. That is an inference, not a finding, and Walsh concluded that it could not be proved beyond a reasonable doubt that Reagan knew of the underlying criminal facts.

Vice President Bush is a second gap. Walsh found that, contrary to his public pronouncements, Bush was fully aware of the Iran arms sales, but obtained no evidence that he knew of the diversion, and Bush refused to be interviewed again. Interpretation is contested too: the congressional majority called the affair the work of zealots on the NSC staff, the minority called it mistakes in judgment, and Walsh called it the product of presidential policies that skirted the law.

Iran-Contra in later conspiracy talk

Where Iran-Contra is invoked as a precedent for claims of hidden government, the record supports narrower points. Walsh observed that the problems were not those of rogue operations but of executive branch efforts to evade congressional oversight, and that major aspects of the affair would never have been uncovered had all the officials who tried to destroy or withhold their records succeeded. In Walsh's account the secrecy was pierced by a plane shot down over Nicaragua and a report in a Lebanese publication, and the diversion itself came to light when Justice Department lawyers found one memo North had not shredded. That is evidence of how oversight can fail, not of a standing hidden command structure.

What is documented, and where the claim outruns it

Independent counsel records, congressional investigations, and administration statements establish the core arms-for-hostages and Contra-support scandal. Walsh charged 14 people and obtained 11 convictions, several of which were later overturned or pardoned, and found that officials at the top of the administration knew of the Iran sales and deceived Congress.

The unsupported leap is treating the proven scandal as proof that every later foreign-policy controversy follows the same hidden command structure. Retellings also go beyond the record in specific ways. No investigation proved that Reagan ordered or knew of the diversion. The count is 14 charged and 11 convicted, not 14 convictions, and six of the 11 convictions, along with two cases that never reached trial, were overturned or pardoned. Walsh's own report rejects the idea of a rogue operation. And the Hitz reports found no information that the CIA conspired in or assisted Contra-linked drug trafficking, while documenting cases in which the CIA kept working with people about whom it had drug allegations.