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Senate Panel May Seek To Query Foreign Officials on Arms Sales

January 9, 1987

WASHINGTON (AP) _ Contrary to President Reagan’s assertion that he was not swapping arms for hostages, a Senate committee report says Reagan authorized resumption of arms shipments to Iran last January with the understanding all U.S. hostages would be released, NBC News reported Thursday.

The report by the Senate Intelligence Committee said the president gave his approval in January 1986 with the understanding that if the hostages were not released, there would be no more shipments, the network reported.

And while the report found no evidence the president knew about the diversion of money from Iran arms sales to Nicaragua’s Contra rebels, it raised questions about the roles of key administration officials.

For example, the report was critical of CIA Director William Casey, saying he had been less than candid with the Intelligence Committee when he appeared before the panel last November. The report indicates Casey had been aware of the possibility of the funds diversion as early as Oct. 7, 1986, several days earlier than he had contended, NBC said.

The report said the committee never established how much if any money was actually diverted from the arms sales to the Contras or whether Lt. Col. Oliver North, the White House aide who was the purported engineer of the diversion, was acting alone or with orders from above, NBC said.

But the report portrayed former National Security Adviser Vice Adm. John M. Poindexter, and North as frequently acting on their own and misleading or ignoring their White House superiors.

As for the president himself, the report drew only the conclusion that he seemed surprise when told that money had been diverted to the Contras, NBC said. The report said the committee could not prove or disprove whether Poindexter or North ever told the president that the Contras were being funded with the Iranian.

The Washington Post reported Friday that a background paper prepared for President Reagan last January when he approved the secret shipment of U.S. weapons to Iran said the sales would be discontinued if the hostages in Lebanon were not released after the first 1,000 TOW antitank missiles were delivered.

The background paper said using that approach with Iran “may well be our only way to achieve the release of the Americans held in Beirut,” the newspaper reported.

Reagan apparently was never given the paper but was briefed on it orally, a White House official told the newspaper.

The background paper, which was provided to the Senate Intelligence Committee, indicated that both Israel, an intermediary for the weapons transfers, and Iran “have agreed that the hostages will be immediately released on commencement of this action,” the Post reported.

All the hostages were not released, but the White House did not cease deliveries after 1,000 TOWs had reached Iran. U.S. officials undertook four separate weapons shipments after the document was written, eventually shipping more than 2,000 TOWs and spare parts that produced the release of two of the four Americans. Three more Amerians were subsequently taken hostage.

The White House issued a statement after the NBC report was aired, saying the Senate Intelligence Committee report “will underscore the fact that the president knew absolutely nothing about the diversion of funds from Iran to the Contras and that no such policy was ever approved by the president.”

Dan Howard, a White House spokesman, said: “The White House does not have a copy of the report and therefore it is difficult to respond to questions on its contents. It is essential that the full report be made available to the public rather than selected details. The report should be relased immediately.”

Sen. David Boren, D-Okla., chairman of the Intelligence Committee, issued a statement saying “I want to make it clear that the draft staff report which was inappropriately leaked to the press today was never adopted by the committee.”

He reiterated that the panel will continue to review the data it collected during a month-long investigation and put together a new version which he hoped could be released next week.

“Since this draft staff report, which the committee did not adopt, was prepared in great haste - not even finished in time to allow members of the committee to read - we hope to make a thorough search of all of the documents and testimony presented to our committee, to put together a fair and accurate report,” Boren said.

The report was obtained as probes into the affair moved forward on several fronts. Lawrence Walsh, the independent counsel, was said to be readying a grand jury investigation, and the senator who is heading a Senate investigation said his committee may question foreign leaders about the affair.

Sen. Daniel K. Inouye, D-Hawaii, said his select committee may send investigators to Israel, Switzerland, Brunei, and possibly Iran, as part of its quest to get a complete picture of the Reagan administration’s arms sales to Iran and financial dealings involving the Nicaraguan rebels.

Inouye said Thursday that any such travel would be closely coordinated with the State Department so that normal diplomatic channels would not be circumvented.

“Our committee will not deal directly with the state of Israel, for example. We would have to go through the State Department,” he said. “And if we are dealing with knowledgeable officials of Iran, we would have to deal with the State Department because that’s government-to-government.”

Meanwhile, a source close to Walsh’s investigation said the former federal judge plans to move quickly so that a grand jury is in position to begin hearing evidence by Feb. 1. The source discussed the plan on condition that he not be identified.

Walsh, given wide latitude by a panel of federal judges to delve into broad aspects of U.S. arms sales and private and public support for the Nicaraguan rebels known as Contras, had said last month he would use a grand jury - a standard procedure in such investigations.

In other developments, CBS News said Thursday it had obtained documents linking the purchase of Portuguese weapons for shipment to Central America to two retired military officers who were associates of North. Documents dated Feb. 14, 1985 show that 10,000 rifles, 10,000 grenades and five tons of TNT were ordered by a company called Energy Resources International, listing an address in Vienna, Va., a Washington suburb.

There is no company of that name at that address, but the building complex houses the office of retired Air Force Col. Richard Gadd and has been used as a mailing address for retired Air Force Maj. Gen. Richard Secord, CBS said.

Telephone calls from a safe house in El Salvador used by pilots in the Contra supply network were placed to Gadd’s office, CBS said. Secord has invoked the Fifth Amendment in refusing to testify to congressional committees investigating the Iran-Contra affair.

The destination of the weapons was given as Guatemala, but the Guatemalan general whose name appears on the papers, Cesar Caceres Rojas, told CBS News they were forgeries and said his army doesn’t even shoot the same caliber ammunition that someone ordered in his name.

Meanwhile, Assistant Secretary of State Elliott Abrams declared that only force will prod the Nicaraguan government into negotiations.

A new Central American peace mission by special envoy Philip C. Habib, announced Wednesday night at the State Department, followed a private meeting that Abrams and Habib had held earlier in the day in Miami with Rodrigo Madrigal Nieto, the foreign minister of Costa Rica.

Although Habib will sound out government leaders in the region on a Costa Rican plan to induce the Sandinistas to negotiate an end to their war with U.S.-backed Contra rebels, Abrams said only military force on ″the heavily armed communist regime″ in Managua would produce peace talks.

Appearing on Worldnet, a U.S. Information Agency telecast, Abrams reaffirmed the administration’s intention to ask Congress for additional military aid to the Contra rebels in Nicaragua. He said there was no longer any question on Capitol Hill that the Sandinistas were a ″menace″ to their neighbors. ″That debate is over,″ Abrams said.

The Pentagon said the battleship Iowa, equipped for the first time with ″eye-in-the-sky″ drone aircraft, will leave Norfolk, Va., on Friday for a show-the-flag mission off the coast of Central America.

The Pentagon denied there was any significance to the timing of the deployment, calling it just a demonstration ″of U.S. interests in the Central American region.″

In the House Thursday, Rep. Mel Levine, D-Calif., bemoaning ″a cesspool of unaccounted-for funds,″ introduced legislation to cut off further U.S. aid to the Contras until the investigation is completed and all previous aid is brought to account.

Also on Thursday, the House Select Committee investigating the arms deal held its first organizational meeting, drafted most of the rules that will govern its hearings and announced the appointments of four top staff members.

Committee Chairman Rep. Lee Hamilton, D-Ind., said John P. O’Hara, an attorney, former FBI agent and longtime House staff member will be the panel’s staff director and John Nields, a Washington attorney, will be its chief counsel.

The panel’s senior Republican, Rep. Dick Cheney of Wyoming, announced the appointments of Tom Smeeton, a former CIA official and House staff member, as Republican counsel, and George Van Cleve, a Cheney aide, as his deputy.

″We are anxious to begin hearings,″ Hamilton said, but added that staff members will have to sort through mounds of already collected data to prepare for interviewing witnesses.

He said the panel already has a preliminary list of witnesses, including Poindexter and North. He said the panel also will want to interview some foreign citizens, but did not name any.

In another development, Treasury Secretary James A. Baker III said the United States would consider returning impounded Iranian funds if officials in Iran were not connecting the money to cooperation on gaining the release of American hostages.

And a senior administration official, speaking on grounds of anonymity, said that President Reagan’s new national security adviser has ordered his staff to stay out of covert operations. But this official said that Frank Carlucci has reserved the option ″to do something special″ under certain conditions.

Carlucci, a onetime deputy secretary of defense and No. 2 official at the CIA, was named last month to run the National Security Council staff, succeeding Poindexter, who resigned after disclosure of secret arms sales to Iran and diversion of profits to Nicaraguan rebels.

Attorney General Edwin Meese III went on national television Nov. 25 to disclose that proceeds from the sale of U.S. arms to Iran - perhaps as much as $30 million - were diverted to the use of the Contra counterrevolutio naries.

Meese made the disclosure just after President Reagan announced the resignation of Poindexter and the firing of North, a NSC staff deputy.

North and Poindexter have refused to testify to committees of Congress, citing their Fifth Amendment rights against self-incrimination, as has retired Air Force Maj. Gen. Richard Secord, whose name has been prominently mentioned in connection with the program of arranging support for the Contra rebels.

Israel could be one possible destination for investigators working for the Senate select committee, because of that country’s reported role as an intermediary in shipping arms to Iran. Swiss banking officials and records could shed light on the movement of money involved in the deal and its diversion to aid Nicaragua’s Contra rebels, Inouye said.

Another piece of the puzzle may lie in Brunei, whose ruler sent $10 million to help the Nicaraguan Contras at the behest of U.S. officials during a time when the U.S. government was barred from offering military aid to the rebels. The money has never been accounted for, according to a still-secret Senate Intelligence Committee report on the affair, sources have said.

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