Conclusions, Special Prosecutor Regarding the Iran-Contra Investigation: Aug 4, 1993

[Historical Context: Events that became known as the Iran-contra affair led to a serious constitutional crisis during the presidency of Ronald Reagan over secret arms sales to Iran in order to finance war efforts in finance contras (counter-revolutionaries) fighting the Sandinsta government in Nicaragua. Examine the president's behavior and try to gauge how much he knew about the arms sales. Look for other evidence of illegal or questionable actions by members of his admninistration. The most relevant legal context are the "Boland Amendments," named for Edward Boland (D-Mass.), chairman of the House Intelligence Committee. The second of these amendments in 1984 specifically banned aid to the contra rebels from US funds. To circumvent the ban, Marine Lieutenant Colonel Oliver North ran a clandestine operation to secretly sell arms to Iran and divert the money to the contra rebels.

In December 1986 the U.S. Court of Appeals for the District of Columbia appointed an independent counsel, Lawrence E. Walsh, to investigate. His inquiry led to charges against fourteen individuals, off of whom were convicted of various crimes mentioned in the document that follows. Newly elected President George Herbert Walker Bush pardoned four pincciples, including Oliver North and John Poindexter. In 1993, five years after President Reagan left office and a year after President Bush was defeated for reelection, the independent counsel submitted a his three-volume Final Report]

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Executive Summary

In October and November 1986, two secret U.S. Government operations were
publicly exposed, potentially implicating Reagan Administration officials in illegal
activities. These operations were the prevision of assistance to the military activities of
the Nicaraguan contra rebels during an October 1984 to October 1986 prohibition on
such aid, and the sale of U.S. arms to Iran in contravention of stated U.S. policy and in
possible violation of arms-export controls. In late November 1986, Reagan
Administration officials announced that some of the proceeds from the sale of U.S.
arms to Iran had been diverted to the contras.

As a result of the exposure of those operations, Attorney General Edwin Meese III
sought the appointment of an independent counsel to investigate and, if necessary,
prosecute possible crimes arising from them.

The Special Division of the United States Court of Appeals for the District of Columbia
Circuit appointed Lawrence E. Walsh as Independent Counsel on December 19,
1986, and charged him with investigating:

(1) the direct or indirect sale, shipment, or transfer since in or about 1984 down to the
present, of military arms, materiel, or funds to the government of Iran, officials of that
government, persons, organizations or entities connected with or purporting to represent
that government, or persons located in Iran;

(2) the direct or indirect sale, shipment, or transfer of military arms, materiel or funds to
any government, entity, or person acting, or purporting to act as an intermediary in any
transaction referred to above;

(3) the financing or funding of any direct or indirect sale, shipment or transfer referred to
above;

(4) the diversion of proceeds from any transaction described above to or for any person,
organization, foreign government, or any faction or body of insurgents in any foreign
country, including, but not limited to Nicaragua;

(5) the provision or coordination of support for persons or entities engaged as military
insurgents in armed conflict with the government of Nicaragua since 1984.

This is the final report of that investigation.

Overall Conclusions

The investigations and prosecutions have shown the highranking Administration officials
violated laws and executive orders in Iran/contra matter.

Independent Counsel concluded that:

—sales of arms to Iran contravened United States Government policy and may have
violated the Arms Export Control Act;

—the provision and coordination of support to the contras violated the Boland
Amendment ban on aid to military activities in Nicaragua;

—the policies behind both the Iran and contra operations were fully reviewed and
developed at the highest levels of the Reagan Administration;

—although there was little evidence of National Security Council level knowledge of most
of the actual contra-support operations, there was no evidence that any NSC [National
Security Council] member dissented from the underlying policy—keeping the contras
alive despite congressional limitations on contra support;

—Iran operations were carried out with the knowledge of, among others, President Ronald
Reagan, Vice President George Bush, Secretary of State George P. Shultz, Secretary of
Defense Caspar W. Weinberger, Director of Central Intelligence William J. Casey, and
national security advisers Robert C. McFarlane and John M. Poindexter; of these officials,
only Weinberger and Shultz dissented from the policy decision, and Weinberger
eventually acquiesced by ordering the Department of Defense to provide the necessary
arms; and

—large volumes of highly relevant, contemporaneously created documents were
systematically and willfully withheld from investigators by several Reagan Administration
officials.

—following the revelation of these operations in October and November 1986, Reagan
Administration officials deliberately deceived the Congress and the public about the level
and extent of official knowledge of and support for these operations.

In addition, Independent Counsel concluded that the off-the-books nature of the Iran
and contra operations gave line-level personnel the opportunity to commit money
crimes.

Prosecutions

In the course of Independent Counsel's investigation, 14 persons were charged with
criminal violations. There were two broad classes of crimes charged: Operational
crimes, which largely concerned the illegal use of funds generated in the course of the
operations, and "cover-up" crimes, which largely concerned false statements and
obstructions after the revelation of the operations. Independent Counsel did not charge
violations of the Arms Export Control Act or Boland Amendment. Although apparent
violations of these statutes provided the impetus for the cover-up, they are not criminal
statutes and do not contain any enforcement provisions.

All of the individuals charged were convicted, except for one CIA official whose case
was dismissed on national security grounds and two officials who received
unprecedented pre-trial pardons by President Bush following his electoral defeat in
1992. Two of the convictions were reversed on appeal on constitutional grounds that in
no way cast doubt on the factual guilt of the men convicted. The individuals charged
and the disposition of their cases are:

(1) Robert C. McFarlane: pleaded guilty to four counts of withholding information from
Congress;

(2) Oliver L. North: convicted of altering and destroying documents, accepting an illegal
gratuity, and aiding and abetting in the obstruction of Congress; conviction reversed on
appeal;

(3) John M. Poindexter: convicted of conspiracy, false statements, destruction and
removal of records, and obstruction of Congress; conviction reversed on appeal;

(4) Richard V. Secord: pleaded guilty to making false statements to Congress;

(5) Albert Hakim: pleaded guilty to supplementing the salary of North;

(6) Thomas G. Clines: convicted of four counts of tax-related offenses for failing to report
income from the operations;

(7) Carl R. Channell: pleaded guilty to conspiracy to defraud the United States;

(8) Richard R. Miller: pleaded guilty to conspiracy to defraud the United States;

(9) Clair E. George: convicted of false statements and perjury before Congress;

(10) Duane R. Clarridge: indicted on seven counts of perjury and false statements;
pardoned before trial by President Bush;

(11) Alan D. Fiers, Jr.: pleaded guilty to withholding information from Congress;

(12) Joseph F. Fernandez: indicted on four counts of obstruction and false statements;
case dismissed when Attorney General Richard L. Thornburgh refused to declassify
information needed for his defense;

(13) Elliott Abrams: pleaded guilty to withholding information from Congress;

(14) Caspar W. Weinberger: charged with four counts of false statements and perjury;
pardoned before trial by President Bush.

At the time President Bush pardoned Weinberger and Clarridge, he also pardoned
George, Fiers, Abrams, and McFarlane.

The Basic Facts of Iran/Contra

The Iran/contra affair concerned two secret Reagan Administration policies whose
operations were coordinated by National Security Council staff. The Iran operation
involved efforts in 1985 and 1986 to obtain the release of Americans held hostage in
the Middle East through the sale of U.S. weapons to Iran, despite an embargo on such
sales. The contra operations from 1984 through most of 1986 involved the secret
governmental support of contra military and paramilitary activities in Nicaragua, despite
congressional prohibition of this support.

The Iran and contra operations were merged when funds generated from the sale of
weapons to Iran were diverted to support the Contra effort in Nicaragua. Although this
"diversion" may be the most dramatic aspect of Iran/contra, it is important to emphasize
that both the Iran and contra operations, separately, violated United States policy and
law. The ignorance the "diversion" asserted by President Reagan and his Cabinet
officers on the National Security Council in no way absolves them of responsibility for
the underlying Iran and contra operations.

The secrecy concerning the Iran and contra activities was finally pierced by events that
place thousands of miles apart in the fall of 1986. The first occurred on October 5,
1986, when Nicaraguan government soldiers downed an American cargo plane that
was carrying military supplies to contra forces; the one surviving crew member,
American Eugene Hasenfus, was taken into captivity and stated that he was employed
by the CIA. A month after the Hasenfus shootdown, President Reagan's secret sale of
U.S. arms to Iran was reported by a Lebanese publication on November 3. The joining
of these two operations was made public on November 25, 1986, when Attorney
General Meese announced that Justice Department officials had discovered that some
of the proceeds from the Iran arms sales been diverted to the contras.

When these operations ended, the exposure of the Iran/contra affair generated a new
round of illegality. Beginning with the testimony of Elliott Abrams and others in October
1986 and continuing through the public testimony of Caspar W. Weinberger on the last
day of congressional hearings in the summer of 1987, senior Reagan Administration
officials engaged in a concerted effort to deceive Congress and the public about their
knowledge of and support for the operations.

Independent Counsel has concluded that the President's most senior advisers and the
members on the National Security Council participated in the strategy to make National
Security staff members McFarland, Poindexter and North the scapegoats whose
sacrifice would protect the Reagan Administration in its final years. In an important
sense, this strategy succeeded. Independent Counsel discovered much of the best
evidence of the cover-up in final year of active investigation, too late for most
prosecutions.

Scope of Report

This report provides an account of the Independent Counsel's investigation, the
prosecutions, the basis for decisions not
to prosecute, and overall observations and conclusions on the Iran/contra matters.

Part I of the report sets out the underlying facts of the Iran and contra operations. Part
II describes the criminal investigation of those underlying facts. Part M provides an
analysis of the central operational conspiracy. Parts IV through IX are agencylevel
reports of Independent Counsel's investigations and cases: the National Security staff,
the private operatives who assisted the NSC staff, Central Intelligence Agency officials,
Department of State officials, and White House officials and Attorney General Edwin
Meese III.

Volume I of this report concludes with a chapter concerning political oversight and the
rule of law, and a final chapter containing independent Counsel's observations. Volume
II of the report contains supporting documentation. Volume III is a classified appendix.

Because many will read only sections of the report, each has been written with
completeness, even though this has resulted in repetition of factual statements about
central activities.

The Operational Conspiracy

The operational conspiracy was the basis for Count One of the 23-count indictment
returned by the Grand Jury March 16, 1988, against Poindexter, North, Secord, and
Hakim. It charged the four with conspiracy to defraud the United States by deceitfully:

(1) supporting military operations in Nicaragua in defiance of congressional controls;

(2) using the Iran arms sales to raise funds to be spent at the direction of North, rather
than the U.S. Government; and

(3) endangering the Administration's hostage-release effort by overcharging Iran for the
arms to generate unauthorized profits to fund the contras and for other purposes.

The charge was upheld as a matter of law by U.S. District Judge Gerhard A. Gesell
even though the Justice Department, in a move that Judge Gesell called
"unprecedented," filed an amicus brief supporting North's contention that the charge
should be dismissed. Although Count One was ultimately dismissed because the
Reagan Administration refused to declassify information necessary to North's defense,
Judge Gesell's decision established that high government officials who engage in
conspiracy to subvert civil laws and the Constitution have engaged in criminal acts. Trial
on Count One would have disclosed the Government-wide activities that supported
North's Iran and contra operations.

Within the NSC, McFarlane pleaded guilty in March 1988 to four counts of
withholding information from Congress in connection with his denials that North was
providing the contras with military advice and assistance. McFarlane, in his plea
agreement, promised to cooperate with Independent Counsel by providing truthful
testimony in subsequent trials.

Judge Gesell ordered severance of the trials of the four charged in the conspiracy
indictment because of the immunized testimony given by Poindexter, North and Hakim
to Congress. North was tried and convicted by a jury in May 1989 of altering and
destroying documents, accepting an illegal gratuity and aiding and abetting in the
obstruction of Congress. His conviction was reversed on appeal in July 1990 and
charges against North were subsequently dismissed in September 1991 on the ground
that trial witnesses were tainted by North's nationally televised, immunized testimony
before Congress. Poindexter in April 1990 was convicted by a jury on five felony
counts of conspiracy, false statements, destruction and removal of records and
obstruction of Congress. The Court of Appeals reversed his conviction in November
1991 on the immunized testimony issue.

The Flow of Funds

The illegal activities of the private citizens involved with the North and Secord
operations are discussed in detail in Part V. The off-the-books conduct of the two
highly secret operations circumvented normal Administration accountability and
congressional oversight associated with covert ventures and presented fertile ground for
financial wrongdoing. There were several funding sources for the contras' weapons
purchases from the covert-action Enterprise formed by North, Secord and Hakim:

(1) donations from foreign countries;

(2) contributions from wealthy Americans sympathetic to President Reagan's contra
support policies; and

(3) the diversion of proceeds from the sale of arms to Iran.

Ultimately, all of these funds fell under the control of North, and through him, Secord
and Hakim.

North used political fundraisers Carl R. Channell and Richard R. Miller to raise millions
of dollars from wealthy Americans, illegally using a tax-exempt organization to do so.
These funds, along with the private contributions, were run through a network of
corporations and Swiss bank accounts put at North's disposal by Secord and Hakim,
through which transactions were concealed and laundered. In late 1985 through 1986
the Enterprise became centrally involved in the arms sales to Iran. As a result of both
the Iran and contra operations, more than $47 million flowed through Enterprise
accounts.

Professional fundraisers Channell and Miller pleaded guilty in the spring of 1987 to
conspiracy to defraud the Government by illegal use of a tax-exempt foundation to raise
contributions for the purchase of lethal supplies for the contras. They named North as
an unindicted co-conspirator.

Secord pleaded guilty in November 1989 to a felony, admitting that he falsely denied to
Congress that North had personally benefited from the Enterprise. Hakim pleaded
guilty to the misdemeanor count of supplementing the salary of North. Lake Resources
Inc., the company controlled by Hakim to launder the Enterprise's money flow, pleaded
guilty to the corporate felony of theft of Government property in diverting the proceeds
from the arms sales to the contras and for other unauthorized purposes. Thomas G.
Clines was convicted in September 1990 of four tax-related felonies for failing to report
all of his income from the Enterprise.

Agency Support of the Operations

Following the convictions of those who were most central to the Iran/contra operations,
Independent Counsel's investigation focused on the supporting roles played by
Government officials in other agencies and the supervisory roles of the NSC principals.
The investigation showed that Administration officials who claimed initially that they had
little knowledge about the Iran arms sales or the illegal contra-resupply operation North
directed were much better informed than they professed to be. The Office of
Independent Counsel [OIC] obtained evidence that Secretaries Weinberger and Shultz
and White House Chief of Staff Donald T. Regan, among others, held back information
that would have helped Congress obtain a much clearer view of the scope of the
Iran/contra matter. Contemporaneous notes of Regan and Weinberger, and those
dictated by Shultz, were withheld until they were obtained by Independent Counsel in
1991 and 1992.

The White House and Office of the Vice President

As the White House section of this report describes in detail, the investigation found no
credible evidence that President Reagan violated any criminal statute. The OIC could
not prove that Reagan authorized or was aware of the diversion or that he had
knowledge of the extent of North's control of the contra-resupply network.
Nevertheless, he set the stage for the illegal activities of others by encouraging and, in
general terms, ordering support of the contras during the October 1984 to October
1986 period when funds for the contras were cut off by the Boland Amendment, and in
authorizing the sale of arms to Iran, in contravention of the U.S. embargo on such sales.
The President's disregard for civil laws enacted to limit presidential actions
abroad—specifically the Boland Amendment, the Arms Export Control Act and
congressional-notification requirements in covert-action laws—created a climate in
which some of the Government officers assigned to implement his policies felt
emboldened to circumvent such laws.

President Reagan's directive to McFarlane to keep the contras alive "body and soul"
during the Boland cut-off period was viewed by North, who was charged by
McFarlane to carry out the directive, as an invitation to break the law. Similarly,
President Reagan's decision in 1985 to authorize the sale of arms to Iran from Israeli
stocks, despite warnings by Weinberger and Shultz that such transfers might violate the
law, opened the way for Poindexter's subsequent decision to authorize the diversion.
Poindexter told Congress that while he made the decision on his own and did not tell
the President, he believed the President would have approved. North testified that he
believed the President authorized it.

Independent Counsel's investigation did not develop evidence that proved that Vice
President Bush violated any criminal statute. Contrary to his public pronouncements,
however, he was fully aware of the Iran arms sales. Bush was regularly briefed, along
with the President, on the Iran arms sales, and he participated in discussions to obtain
third-country support for the contras. The OIC obtained no evidence that Bush was
aware of the diversion. The OIC teamed in December 1992 that Bush had failed to
produce a diary containing contemporaneous notes relevant to Iran/contra despite
requests made in 1987 and again in early 1992 for the production of such material.
Bush refused to be interviewed for a final time in light of evidence developed in the
latter stages of OIC's investigation, leaving unresolved a clear picture of his Iran/contra
involvement. Bush's pardon of Weinberger on December 24, 1992 preempted a trial in
which defense counsel indicated that they intended to call Bush as a witness.

The chapters on White House Chief of Staff Regan and Attorney General Edwin
Meese III focus on their actions during the November 1986 period, as the President
and his advisers sought to control the damage caused by the disclosure of the Iran arms
sales. Regan in 1992 provided Independent Counsel with copies of notes showing that
Poindexter and Meese attempted to create a false account of the 1985 arms sales from
Israeli stocks, which they believed were illegal, in order to protect the President. Regan
and the other senior advisers did not speak up to correct the false version of events.
No final legal determination on the matter had been made. Regan said he did not want
to be the one who broke the silence among the President's senior advisers, virtually all
of whom knew the account was false.

The evidence indicates that Meese's November 1986 inquiry was more of a
damage-control exercise than an effort to find the facts. He had private conversations
with the President, the Vice President, Poindexter, Weinberger, Casey and Regan
without taking notes. Even after teaming of the diversion, Meese failed to secure
records in NSC staff offices or take other prudent steps to protect potential evidence.
And finally, in reporting to the President and his senior advisers, Meese gave a false
account of what he had been told by stating that the President did not know about the
1985 HAWK shipments, which Meese said might have been illegal. The statute of
limitations had run on November 1986 activities before OIC obtained its evidence. In
1992, Meese denied recollection of the statements attributed to him by the notes of
Weinberger and Regan. He was unconvincing, but the passage of time would have
been expected to raise a reasonable doubt of the intentional falsity of his denials if he
had been prosecuted for his 1992 false statements.

The Role of CIA Officials

Director Casey's unswerving support of President Reagan's contra policies and of the
Iran arms sales encouraged some CIA officials to go beyond legal restrictions in both
operations. Casey was instrumental in pairing North with Secord as a contra-support
team when the Boland Amendment in October 1994 forced the CIA to refrain from
direct or indirect aid. He also supported the North-Secord combination in the Iran
arms sales, despite deep reservations about Secord within the CIA hierarchy.

Casey's position on the contras prompted the chief of the CIA's Central American
Task Force, Alan D. Fiers, Jr., to
"dovetail" CIA activities with those of North's contra-resupply network, in violation of
Boland restrictions. Casey's support for the NSC to direct the Iran arms sales and to
use arms dealer Manucher Ghorbanifar and Secord in the operation, forced the CIA's
Directorate of Operations to work with people it distrusted.

Following the Hasenfus shootdown in early October 1986, George and Fiers lied to
Congress about U.S. Government involvement in contra resupply, to, as Fiers put it,
"keep the spotlight off the White House." When the Iran arms sales became public in
November 1986, three of Casey's key office officers—George, Clarridge and
Fiers—followed Casey's lead in misleading Congress.

Four CIA officials were charged with criminal offense—George the deputy director for
operations and the third highest-ranking CIA official; Clarridge, chief of the European
Division; Fiers; and Fernandez. George was convicted of two felony counts of false
statements and perjury before Congress. Fiers pleaded guilty to two misdemeanor
counts of withholding information from Congress. The four counts of obstruction and
false statements against Fernandez were dismissed when the Bush Administration
refused to declassify information needed for his defense. Clarridge was awaiting trial on
seven counts of perjury and false statements when he, George and Piers were
pardoned by President Bush.

State Department Officials

In 1990 and 1991, Independent Counsel received new documentary evidence in the
form of handwritten notes suggesting that Secretary Shultz's congressional testimony
painted a misleading and incorrect picture of his knowledge of the Iran arms sales. The
subsequent investigation focused on whether Shultz or other Department officials
deliberately misled or withheld information from congressional or OIC investigators.

The key notes, taken by M. Charles Hill, Shultz's executive assistant, were nearly
verbatim, contemporaneous accounts of Shultz's meetings within the department and
Shultz's reports to Hill on meetings the secretary attended elsewhere. The Hill notes and
similarly detailed notes by Nicholas Platt, the State Department's executive secretary,
provided the OIC with a detailed account of Shultz's knowledge of the Iran arms sale.
The most revealing of these notes were not provided to any Iran/Contra investigation
until 1990 and 1991. The notes show that—contrary to his early testimony that he was
not aware of details of the 1985 arms transfers—Shultz knew that the shipments were
planned and that they were delivered. Also in conflict with his congressional testimony
was evidence that Shultz was aware of the 1986 shipments.

Independent Counsel concluded that Shultz's early testimony was incorrect, if not false,
in significant respects, and misleading, if literally true, in others. When questioned about
the discrepancies in 1992, Shultz did not dispute the accuracy of the Hill notes. He told
OIC that he believed his testimony was accurate at the time and he insisted that if he
had been provided with the notes earlier, he would have testified differently.
Independent Counsel declined to prosecute because there was a reasonable doubt that
Shultz's testimony was willfully false at the time it was delivered.

Independent Counsel concluded that Hill had willfully withheld relevant notes and
prepared false testimony for Shultz in 1987. He declined to prosecute because Hill's
claim of authorization to limit the production of his notes and the joint responsibility of
Shultz for the resulting misleading testimony, would at trial have raised a reasonable
doubt, after Independent Counsel had declined to prosecute Shultz.

Independent Counsel's initial focus on the State Department had centered on Assistant
Secretary Elliott Abrams' insistence to Congress and to the OIC that he was not aware
of North's direction of the extensive contra-resupply network in 1985 and 1986. As
assistant secretary of state for inter-American affairs, Abrams chaired the Restricted
Inter-Agency Group, or RIG, which coordinated U.S. policy in Central America.
Although the OIC was skeptical about Abrams' testimony, there was insufficient
evidence to proceed against him until additional documentary evidence inculpating him
was discovered in 1990 and 1991, and until Fiers, who represented the CIA on the
RIG, pleaded guilty in July 1991 to withholding information from Congress. Fiers
provided evidence to support North's earlier testimony that Abrams was
knowledgeable about North's contra-supply network. Abrams pleaded guilty in
October 1991 to two counts of withholding information from Congress about secret
Government efforts to support the contras, and about his solicitation of $10 million to
aid the contras from the Sultan of Brunei.

Secretary Weinberger and Defense Department Officials

Contrary to their testimony to the presidentially appointed Tower Commission and the
Select Iran/contra Committees of Congress, Independent Counsel determined that
Secretary Weinberger and his closest aides were consistently informed of proposed
and actual arms shipments to Iran during 1985 and 1986. The key evidence was
handwritten notes of Weinberger, which he deliberately withheld from Congress and
the OIC until they were discovered by independent counsel in late 1991. The
Weinberger daily diary notes and notes of significant White House and other meetings
contained highly relevant, contemporaneous information that resolved many questions
left unanswered in early investigations.

The notes demonstrated that Weinberger's early testimony—that he had only vague and
general information about Iran arms sales in 1985—was false, and that he in fact had
detailed information on the proposed arms sales and the actual deliveries. The notes
also revealed that Gen. Colin Powell, Weinberger's senior military aide, and Richard L.
Armitage, assistant secretary of defense for international security affairs, also had
detailed knowledge of the 1985 shipments from Israeli stocks. Armitage and Powell
had testified that they did not learn of the November 1985 HAWK missile shipment
until 1986.

Weinberger's notes provided detailed accounts of high-level Administration meetings in
November 1986 in which the Pres-
ident's senior advisers were provided with false accounts of the Iran arms sales to
protect the President and themselves from the consequences of the possibly illegal
1995 shipments from Israeli stocks.

Weinberger's notes provided key evidence supporting the charges against him,
including perjury and false statements in connection with his testimony regarding the
arms sales, his denial of the existence of notes and his denial of knowledge of Saudi
Arabia's multi-million dollar contribution to the contras. He was pardoned less than two
weeks before trial by President Bush on December 24, 1992.

There was little evidence that Powell's early testimony regarding the 1985 shipments
and Weinberger's notes was willfully false. Powell cooperated with the various
Iran/contra investigations and, when his recollection was refreshed by Weinberger's
notes, he readily conceded their accuracy. Independent Counsel declined to prosecute
Armitage because the OIC's limited resources were focused on the case against
Weinberger and because the evidence against Armitage, while substantial, did not reach
the threshold of proof beyond a reasonable doubt.

The Reagan, Bush and Casey Segments

The Independent Counsel Act requires a report as to persons not indicted as well as
those indicted. Because of the large number of persons investigated, those discussed in
individual sections of this report are limited to those as to whom there was a possibility
of indictment. In addition there are separate sections on President Reagan and
President Bush because, although criminal proceedings against them were always
unlikely, they were important subjects of the investigation, and their activities were
important action taken with respect to others.

CIA Director Casey is a special case. Because Casey was hospitalized with a fatal
illness before Independent Counsel was appointed, no formal investigation of Casey
was ever undertaken by the OIC. Casey was never able to give his account, and he
was unable to respond to allegations of wrongdoing made about him by others, most
prominently North, whose veracity is subject to serious question. Equally important,
fundamental questions could not be answered regarding Casey's state of mind, the
impact, if any, of his fatal illness on his conduct and his intent.

Under normal circumstances, a prosecutor would hesitate to comment on the conduct
of an individual whose activities and actions were not subjected to rigorous
investigation, which might exculpate that individual. Nevertheless, after serious
deliberation, Independent Counsel concluded that it was in the public interest that this
report expose as full and complete an account of the Iran/contra matter as possible.
This simply could not be done without an account of the, role of Director Casey.

Observations and Conclusions

This report concludes with Independent Counsel's observations and conclusions. He
observes that the governmental problems presented by Iran/contra are not those of
rogue operations, but rather those of Executive Branch efforts to evade congressional
oversight. As this report documents, the competing roles of the attorney
general—adviser to the President and top law enforcement officer—come into
irreconcilable conflict in the case of high-level Executive Branch wrongdoing.
Independent Counsel concludes that congressional oversight alone cannot correct the
deficiencies that result when an attorney abandons the law-enforcement responsibilities
of that office and undertakes, instead, to protect the President.

Independent Counsel asks the Congress to review the difficult and delicate problem
posed to the investigations and prosecutions by congressional grants of immunity to
principals. While recognizing the important responsibility of Congress for investigating
such matters thoroughly, Congress must realize that grants of use immunity to principals
in such highly exposed as the Iran/contra affair will virtually rule out successful
prosecution.

Independent Counsel also addresses the problem of the Classified Information
Procedures Act (CEPA) in cases steeped in highly classified information, such as many
of the Iran/contra prosecutions. Under the Act, the attorney general has unrestricted
discretion to decide whether to declassify information necessary for trial, even in cases
in which Independent Counsel has been appointed because of the attorney general's
conflict of interest. This discretion is inconsistent with the perceived need for
independent counsel, particularly in cases in which officers of the intelligence agencies
that classify information are under investigation. This discretion gives the attorney
general the power to block almost any potentially embarrassing prosecution that
requires the declassification of information. Independent Counsel suggests that the
attorney general implement standards that would permit independent review of a
decision to block a prosecution of an officer within the Executive Branch and legitimate
congressional oversight.

Classified Information

In addition to the unclassified Volumes I and II of this report, a brief classified report,
Volume M, has been filed with the Special Division. The classified report contains
references to material gathered in the investigation of Iran/contra that could not be
declassified and could not be concealed by some substitute form of discussion.

Part XI— Concluding Observations

The underlying facts of Iran/contra are that, regardless of criminality, President Reagan,
the secretary of state, the secretary of defense, and the director of central intelligence
and their necessary assistants committed themselves, however reluctantly, to two
programs contrary to congressional policy and contrary to national policy. They skirted
the law, some of them broke the law, and almost all of them tried to cover up the
President's willful activities.

What protection do the people of the United States have against such a concerted
action by such powerful officers? The Constitution provides for congressional oversight
and congressional control of appropriations, but if false information is given to
Congress, these checks and balances are of lessened value. Further, in the give and
take of the political community, congressional oversight is often overtaken and
subordinated by the need to keep Government functioning, by the need to anticipate the
future, and by the ever-present requirement of maintaining consensus among the elected
officials who are the Government.

The disrespect for Congress by a popular and powerful President and his appointees
was obscured when Congress accepted the tendered concept of a runaway conspiracy
of subordinate officers and avoided the unpleasant confrontation with a powerful
President and his Cabinet. In haste to display and conclude its investigation of this
unwelcome issue, Congress destroyed the most effective lines of inquiry by giving
immunity to Oliver L. North and John M. Poindexter so that they could exculpate and
eliminate the need for the testimony of President Reagan and Vice President Bush.

Immunity is ordinarily given by a prosecutor to a witness who will incriminate someone
more important than himself Congress gave immunity to North and Poindexter, who
incriminated only themselves and who largely exculpated those responsible for the
initiation, supervision and support of their activities. This delayed and infinitely
complicated the effort to prosecute North and Poindexter, and it largely destroyed the
likelihood that their prompt conviction and appropriate sentence would induce
meaningful cooperation.

These important political decisions were properly the responsibility of Congress. It was
for the Committees to decide whether the welfare of the nation was served or
endangered by a continuation of its investigation, a more deliberate effort to test the
self-serving denials presented by Cabinet officers and to search for the full ramifications
of the activities in question. Having made this decision, however, no one could gainsay
the added difficulties thrust upon Independent Counsel. These difficulties could be dealt
with only by the investment of large amounts of additional time and large amounts of
expense.

The role of Independent Counsel is not well understood. Comparisons to United States
attorneys, county district attorneys, or private law offices do not conceive the nature of
Independent Counsel. Independent Counsel is not an individual put in charge of an
ongoing agency as an acting U.S. attorney might be; he is a person taken from private
practice and told to create a new agency, to carry out the mission assigned by the
court. It is not as though he were told to step in and try a case on the calendar of an
ongoing office with full support of the Government behind him, as it would be behind
the United States attorney. He is told to create an office and to confront the
Government without any expectation of real cooperation, and, indeed, with the
expectation of hostility, however veiled. That hostility will manifest itself in the failure to
declassify information, in the suppression of documents, and in all of the evasive
techniques of highly skilled and large, complex organizations.

The investigation into Iran/contra nevertheless demonstrates that the rule of law upon
which our democratic system of government depends can be applied to the highest
officials even when they are operating in the secret areas or diplomacy and national
security.

Despite extraordinary difficulties imposed by the destruction and withholding of
records, the need to protect classified information, and the congressional grants of
immunity to some of the principals involved, Independent Counsel was able to bring
criminal charges against nine government officers and five private citizens involved in
illegal activities growing out of the Iran/contra affair.

More importantly, the investigation and the prosecutions arising out of it have provided
a much more accurate picture of how two secret Administration policies keeping the
contras alive "body and soul" during the Boland cutoff period and seeking the release of
Americans held hostage by selling arms to Iran veered off into criminality.

Evidence obtained by Independent Counsel establishes that the Iran/contra affair was
not an aberrational scheme carried out by a "cabal of zealots" on the National Security
Council staff, as the congressional Select Committees concluded in their majority
report. Instead, it was the product of two foreign policy directives by President Reagan
which skirted the law and which were executed by the NSC staff with the knowledge
and support of high officials in the CIA, State and, Defense departments, and to a
lesser extent, officials in other agencies.

Independent Counsel found no evidence of dissent among his Cabinet officers from the
President's determination to support the contras after federal law banned the use of
appropriated funds for that purpose in the Boland Amendment in October 1984. Even
the two Cabinet officers who opposed the sale of arms to Iran on the grounds that it
was illegal and bad policy—Defense Secretary Caspar W. Weinberger and Secretary
of State George P. Shultz—either cooperated with the decision once made, as in the
case of Weinberger, or stood aloof from it while being kept informed of its progress, as
was the case of Shultz.

In its report section titled "Who Was Responsible," the Select Committees named CIA
Director William Casey, National Security Advisers Robert C. McFarlane and John M.
Poindexter, along with NSC staff member Oliver L. North, and private sector
operatives Richard V. Secord and Albert Hakim. With the exception of Casey who
died before he could questioned by the OIC, Independent Counsel and obtained
criminal convictions of charges of each of the men named by Congress. There is little
doubt that, operationally, these men were central players.

But the investigation and prosecutions have shown that these six were not
out-of-control mavericks who acted alone without the knowledge or assistance of
others. The evidence establishes that the central NSC operatives kept their
superiors—including Reagan, Bush, Shultz, Weinberger and other high
officials—informed of their efforts generally, if not in detail, and
their superiors either condoned or turned a blind eye to them. When it was required,
the NSC principals and their private sector operatives received the assistance of
high-ranking officers in the CIA, the Defense Department, and the Department of State.

Of the 14 persons charged criminally during the investigation, four were convicted of
felony charges after trial by jury, seven pleaded guilty either to felonies or
misdemeanors, and one had his case dismissed because the Administration refused to
declassify information deemed necessary to the defendant by the trial judge. Two cases
that were awaiting trial were aborted by pardons granted by President Bush. As this
report explained earlier, many persons who committed crimes were not charged. Some
minor crimes were never investigated and some that were investigated were not solved.
But Independent Counsel believes that to the extent possible, the central Iran/contra
crimes were vigorously prosecuted and the significant acts of obstruction were fully
charged.

Fundamentally, the Iran/contra affair was the first known criminal assault on the
post-Watergate rules governing the activities of national security officials. Reagan
Administration officials rendered these rules ineffective by creating private operations,
supported with privately generated funds that successfully evaded executive and
legislative oversight and control. Congress was defrauded. Its appropriations
restrictions having been circumvented, Congress was led to believe that the
Administration was following the law. Numerous congressional inquiries were thwarted
through false testimony and the destruction and concealment of government records.

The destruction and concealment of records and information, beginning at the twilight of
Iran/contra and continuing throughout subsequent investigations, should be of particular
concern. Oliver North's destruction of records in October and November 1986 caused
an irretrievable loss of information to the executive agencies responsible for regulating
clandestine activities, to Congress, and to Independent Counsel. John Poindexter's
efforts to destroy NSC electronic mail nearly resulted in comparable damage. CIA
Costa Rican Station Chief Joseph F. Fernandez attempted to hide phone records that
would have revealed his contacts with Enterprise activities.

This sort of obstruction continued even after Independent Counsel's appointment. In the
course of his work, Independent Counsel located large caches of handwritten notes
and other documents maintained by high officials that were never relinquished to
investigators. Major aspects of Iran/contra would never have been uncovered had all of
the officials who attempted to destroy or withhold their records of the affair succeeded.
Had these contemporaneous records been produced to investigators when they were
initially requested, many of the troublesome conflicts between key witnesses would
have been resolved, and timely legal steps taken toward those who feigned memory
lapses or lied outright.

All of this conduct—the evasions of the Executive branch and the Congress, the lies,
the conspiracies, the acts of obstruction—had to be addressed by the criminal justice
system.

The path Independent Counsel embarked upon in late 1986 had been a long and
arduous one. When he hired 10 attorneys in early 1987, Independent Counsel's
conception of the operational conspiracy—with its array of Government officials and
private contractors, its web of secret foreign accounts, and its world-wide
breadth—was extremely hazy. Outlining an investigation of a runaway conspiracy
disavowed by the President was quite different from the ultimate investigation of the
President and three major agencies, each with the power to frustrate an investigation by
persisting in the classification of non-secret but embarrassing information. Completing
the factual mosaic required examining pieces spread worldwide in activities that
occurred over a three-year period by officials from the largest agencies of government
and a host of private operatives who, by necessity, design and training, worked secretly
and deceptively.

The Role of Independent Counsel

Given the enormous autonomous power of both the Legislative and Executive branches
in the modern state, the rightly celebrated constitutional checks and balances are
inadequate, alone, to preserve the rule of law upon which our democracy depends.

As Watergate demonstrated, the checks and balances reach their limits in the case of
criminal wrongdoing by Executive branch officials. The combination of an aggressive
press, simple crimes, the White House tapes, and principled defiance by Department of
Justice-appointed counsel all combined to bring Watergate to its conclusion without an
independent counsel statute. It was apparent then, however, as it should be now in light
of Iran/contra, that the competing roles of the attorney general, as a member of the
Cabinet and presidential adviser on the one hand and chief law enforcement officer on
the other, create an irreconcilable conflict of interest.

As Iran/contra demonstrated, congressional oversight alone cannot make up for
deficiencies that result when an attorney general abandons that law-enforcement role in
cases of Executive branch wrongdoing. Well before Attorney General Meese sought an
independent counsel in December 1986, he had become, in effect, the President's
defense lawyer, to the exclusion of his responsibilities as the nation's top law
enforcement officer. By that time, crucial documents had already been destroyed and
false testimony given.

Congress, with all the investigatory powers it wields in the oversight process, was not
able to uncover many of these documents or disprove much of that false testimony.
That inability is structural, and does not result from ill will, impatience, or character flaw
on the part of any legislator. With good reason, Congress's interest in investigating
Executive branch wrongdoing extends no farther than remedying perceived imbalances
in its relations with the Executive branch. Except in the case of impeachment,
Congress's interest does not, and should not, extend to the law-enforcement goals of
deterrence, retribution and punishment.

In normal circumstances, these law-enforcement goals are the province of the Justice
Department, under the direction of
tion. An independent counsel is appointed only when the attorney general determines,
after a preliminary investigation, that high-level officials within the Executive branch may
have been involved in criminal activity or that the Department of Justice may be
perceived to have a conflict of interest. The problems of conflict are compounded in
CIPA because the issue involves classified information controlled by an intelligence
agency in a case charging one or more of the officials of that agency in criminal activity.
Congress could not have intended that CEPA—a statute designed to facilitate trials
involving classified information used by the attorney general to control prosecutions of
independent counsel.

Final Thoughts

The Iran/contra investigation will not end the kind of abuse of power that it addressed
any more than the Watergate investigation did. The criminality in both affairs did not
arise primarily out of ordinary venality or greed, although some of those charged were
driven by both. Instead, the crimes committed in Iran/contra were motivated by the
desire of persons in high office to pursue controversial policies and goals even when the
pursuit of those policies and goals was inhibited or restricted by executive orders,
statutes or the constitutional system of checks and balances.

The tone in Iran/contra was set by President Reagan. He directed that the contras be
supported, despite a ban on contra aid imposed on him by Congress. And he was
willing to trade arms to Iran for the release of Americans held hostage in the Middle
East, even if doing so was contrary to the nation's stated policy and possibly in violation
of the law.

The lesson of Iran/contra is that if our system of government is to function properly, the
branches of government must deal with one another honestly and cooperatively. When
disputes arise between the Executive and Legislative branches, as they surely will, the
laws that emerge from such disputes must be obeyed.

When a President, even with good motive and intent, chooses to skirt the laws or to
circumvent them, it is incumbent upon his subordinates to resist, not join in. Their oath
and fealty are to the Constitution and the rule of law, not to the man temporarily
occupying the Oval Office. Congress has the duty and the power under our system of
checks and balances to ensure that the President and his Cabinet officers are faithful to
their oaths.

Final Report of the Independent Counsel for Iran/Contra Matters, Vol. 1:
Investigations and Prosecutions, August 4, 1993 (Washington, D.C.: U.S.
Government Printing Office, 1993), xiii–xxi, 561–566.