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Casey Knew About Contra Diversion, Book Says

September 26, 1987

WASHINGTON (AP) _ Former CIA Director William Casey, on his sickbed, told Washington Post reporter Bob Woodward he knew all along about diversion of money to the Nicaraguan Contras, according to published reports about Woodward’s forthcoming book.

Woodward’s book, ″Veil: The Secret Wars of the CIA,″ seems to shed light on a mystery that has stumped investigators for almost a year. Former White House aide Oliver North is the only other person to have said that Casey knew about the diversion of funds from arms sales to the Iranians.

The statement from Casey about the diversion of funds was not reported previously because Woodward, an assistant managing editor at the Post, had an agreement with Casey to use the material obtained in personal interviews only in the book, the newspaper reported in Saturday’s editions.

The newspaper also reported Woodward’s book shows that Casey personally went around official CIA channels and arranged for Saudi Arabian intelligence to engage in three covert operations.

One of the operations was an assassination attempt on March 9, 1985, in a Beirut suburb that claimed the lives of 80 bystanders. The intended victim, Sheik Mohammed Hussein Fadlallah of the Hezbollah faction, escaped harm.

Fadlallah later put the damper on anti-American activities by his Shiite Moslem faction after Casey approved the Saudi payment of $2 million in food, goods and university scholarships for Fadlallah’s followers, the Post said.

U.S. News & World report, which obtained galleys of the book, gave a similar account in an article that will appear on newsstands Monday and which was released late Friday to the media.

The Post and Newsweek magazine, owned by The Washington Post Co., had exclusive rights to print excerpts of the book. The Post is to begin running excerpts on Sunday, and Newsweek will have excerpts in the issue appearing Monday.

The conversation about the Contras was the last of more than four dozen interviews and conversations Casey and Woodward had from 1983 to 1987, the Post account said. Casey died May 6 of pneumonia after being hospitalized for months because of brain cancer.

″We talked at his house, at his office, on plane rides, in corners at parties, or on the phone,″ Woodward wrote. ″At times he spoke freely and outlined his views. At other times he declined.″

That last interview occurred in Casey’s room in the Georgetown University Hospital in Washington, several weeks after Casey had undergone brain surgery at the end of 1986.

Woodward, according to the U.S. News account, ″asked, almost rhetorically, whether he knew all along about the Contra diversion.″

″Casey nodded a frail yes,″ the report says.

When Woodward asked why, according to the magazine account of Woodward’s book, Casey replied twice, ″I believed.″ Casey nodded off to sleep before Woodward could complete his questioning.

″I didn’t get to ask another question,″ Woodward is quoted as writing.

Woodward verified Friday night to The Associated Press that the conversation took place as described in the magazine’s summary of the book.

The book, published by Simon & Schuster, is to be released Oct. 9. Attempts to reach the company for comment on U.S. News obtaining the galleys were unsuccessful. The switchboards at the company’s New York offices were closed late Friday.

The book says other operations arranged through Saudi King Fahd and his ambassador, Prince Bandar bin Sultan, were actions to help Chad resist Libyan invasion and to block gains by Italy’s communist party in the May 1985 elections, the Post account says.

According to the two reports, the book also reveals:

-Despite his loyalty to Ronald Reagan, Casey found the president too passive and indecisive. Casey believed that Reagan was comparatively friendless except for his wife, Nancy.

-Casey, who took over the CIA directorship in 1981, aspired to be Secretary of State and once suggested in a classified letter to Reagan that Secretary of George P. Shultz be fired. Shultz loathed Casey.

- The CIA at one time or another listed the late Lebanese President Bashir Gemayel and Salvadoran President Jose Napoleon Duarte among its ″assets.″ Gemayel’s Christian Militia received $10 million in covert aid. Duarte was more than a casual informant but was not fully controlled.

-The so called ″second-channels″ that North and others used in the Iran- Contra affair were a nephew of Hashemi Rafsanjani, speaker of the Iranian parliament, and the director of intelligence in the Iranian prime minister’s office. That official was not named.

-Aid programs, especially those to establish modern communications networks and strengthen security and palace defense forces, were used to increase CIA penetration in countries.

-The CIA had information that Egyptian President Anwar Sadat, who was assassinated in 1981, abused drugs and suffered anxiety attacks. Fahd drank heavily while he was a prince and Libyan leader Moammar Gadhafi likes to dress up in women’s clothes.

-The agency had more than 25 spies in the Soviet Union and Warsaw Pact nations as a result of Casey’s determination to improve intelligence gathering.

-A CIA investigation into the car bombing of the American Embassy in Beirut in 1983 came to a halt after a suspect died under too vigorous interrogation with a cattle prod.

-The CIA under Casey launched at least a dozen covert operations around the world. The CIA increased its budget for propaganda efforts, including money channeled to foreign newspapers, writers, think tanks and institutions.

-Two bugs were discovered in the office of former Sen. Barry Goldwater when the Arizona Republican chaired the intelligence committee. Government security workers did twice-weekly sweeps of the office but were unable to determine who planted the bugs.

CIA spokeswoman Sharon Foster said the agency had not seen the book and could not comment on it. ″After we’ve seen the book, we can’t even guarantee that we’re going to make a comment,″ she said.

U.S. News editor David Gergen refused to go into details about how the galleys were obtained, except to say it was through a third party this week. He said no money was paid for the galleys, and they were not obtained as review copies.

Newsweek said in a statement released late Friday:

″We’re delighted Bob Woodward’s book is provoking this much interest, since we think it will encourage people to read the full excerpts in the next issue of Newsweek magazine, on the stands Monday,″ the statement said.

Gergen said no one in the Post organization provided the galleys for the 500-page book.

The story was written by Mel Elfin, former Washington bureau chief for Newsweek.

″We went with the story the first opportunity we had,″ Gergen said, explaining that the galleys were obtained this week.

Woodward, when asked to comment on another publication reporting on his book, said, ″I think people can do book reviews.″

Gergen said the magazine’s story was not a book review because it contained independent reporting on what Woodward had written about.

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