Frontline; 906; High Crimes and Misdemeanors

FRONTLINE November 27,1990 High Crimes and Misdemeanors

ANNOUNCER: Four years ago this week, the Reagan administration admitted for the first time that there had been an arms for hostages deal with Iran, and that money from the deal was diverted to the Nicaraguan contras. Attorney General

EDWIN MEESE: The only persons in the United States government that knew precisely about this, the only person, was Lieutenant Colonel North.

HELEN THOMAS, UPI: Why wasn't the President told?

EDWIN MEESE: Because somebody didn't tell him, that's why.

ANNOUNCER: Tonight on FRONTLINE, the story of how the Iran Contra scandal was actually run from the Oval Office.

ROBERT McFARLANE, Former National Security Adviser: It was a matter of the President going on with a very strong will to do what he wanted to do.

WARREN RUDMAN [R] Vice Chairman, Iran-Contra Committee: Here was a case where the Congress's absolute power to fund the foreign policy of America was subverted by a White House that was determined to do something else.

BILL MOYERS: It was, in effect, a coup.

ANNOUNCER: Tonight on FRONTLINE, Bill Moyers examines a Constitutional crisis: "High Crimes and Misdemeanors."

BILL MOYERS: It would be one of the last messages left in Oliver North's computer files.

READER: [North to Poindexter] "I am honored to have served the President, you and your predecessors these past five and a half years. I only regret that I could not have done so better. My prayer is that the President is not damaged by what has transpired and that the hostages will not be harmed as a consequence of what we now do. Finally, I remain convinced that what we tried to accomplish was worth the risk. We nearly succeeded. Hopefully, when the political fratricide is finished, there will be others, in a moment of calm reflection, who will agree. Warmest regards, Semper Fidelis."

BILL MOYERS: Semper Fidelis, "Always faithful." But a Marine's oath of loyalty is to the Constitution of the United States, above his commander-in-chief. When that loyalty is reversed, it can lead to this: a moment in our history without precedent, the former President of the United States summoned to testify at the criminal trial of his National Security Adviser.

JUDGE: Mr. President.

RONALD REAGAN: Your honor.

COURT CLERK:: Sir, would you raise your right hand.

JUDGE:: The clerk will administer the oath to you.

COURT CLERK:: Do you solemnly swear that the testimony you are about to give in the cause now before this court shall be the truth, the whole truth and nothing but the truth, so help you God?

RONALD REAGAN: I do.

COURT CLERK:: Would you please state your full name and spell your last name for the record?

RONALD REAGAN: Ronald Reagan-R-E-A-G-A-N.

BILL MOYERS: Admiral John Poindexter was charged with lying to Congress and obstruction. In his defense, he had called his former boss to the witness stand.

RICHARD BECKLER, Attorney: Good morning, Mr. President.

RONALD REAGAN: Good morning.

RICHARD BECKLER: You and I have never met or talked before, so let me just take a minute and just introduce myself. My name is-

BILL MOYERS: For 10 hours over two days, Ronald Reagan was questioned about crimes that could have brought down his presidency.

RICHARD BECKLER: Now, just in a very general sense, Mr. President, I take it you have some recollection of the events that led up to what is now called, for lack of a better word, the "Iran-Contra affair" or the "Iran-Contra event"?

RONALD REAGAN: Yes. The, did you-

RICHARD BECKLER: Yeah, just-I'm just-I was just asking if you had some rec-some general recollection about the event.

RONALD REAGAN: Yes. It was a covert action that was taken at my behest.

BILL MOYERS: It was four years ago that we first learned of the scandal triggered by Ronald Reagan's "behest"-four years, and it isn't over yet. We keep learning about the vast spider web of secrecy organized by the White House to carry out the President's orders. Because of sources and records revealed during the trials that followed the Congressional investigation, and because of the Freedom of Information Act, we can get a fuller picture of what went on, who knew and who was actually responsible. Among those documents are the computer notes the President's men didn't manage to destroy, minutes of secret meetings where the decisions were made and the personal notebooks of Oliver North. What they tell us is more than one more chapter in the running battle between Congress and the White House to control foreign policy. That's an old story. What they tell us is what happens when that conflict goes underground. What they tell us is this. Both the Iran and contra operations shared a command post here in the Executive Office Building next to the White House. From here, Oliver North dispatched his computer messages.

READER: [North to Secord] " The unit to which we wanted to drop in the southern quadrant of Nicaragua is in desperate need of ordnance resupply. Hope we can make this happen right this time. If we are ever going to take the pressure off the northern front, we've got to get this drop in quickly."

BILL MOYERS: Lieutenant Colonel North was supervising a war in Central America.

READER: [North to McFarlane] "There is great despair that we may fail in this effort and the resistance support account is darn near broke. Any thoughts where we can put our hands on a quick $3 million to $5 million?" [McFarlane to North] "I've been thinking about the blowpipe problem and the contras. Could you ask the

CIA to identify which countries the Brits have sold them to? I ought to have a contact in at least one of them. How are you coming on the loose ends for the materiel transfer? Anything I can do? If for any reason you need some mortars or other artillery, please let me know."

BILL MOYERS: The contra army had been organized by the United States to destroy the leftist government of Nicaragua. North's job was to supply the guerrillas.

READER: [North to McFarlane] "There is an urgent need for additional intelligence. It is therefore proposed that, weather permitting, SR-71 and U-2 aircraft be used."

READER: [McFarlane to North] "President approved."

MICHAEL DEAVER, Asst. to the President 1980-1985: He was just the kind of a guy that Ronald Reagan would like.

INTERVIEWER: What do you mean?

MICHAEL DEAVER: He was bright-eyed and bushy-tailed and crisp and seemed to have answers right at the tip of his tongue. It always bothered me that the President of the United States was getting his information from this guy instead of getting it from Cap Weinberger or the Chairman of the Joint Chiefs. Here was a young lieutenant colonel who was an authority on Central America, the Middle East and all sorts of things being brought in to brief the President of the United States. He would fly over to Beirut for the weekend as the National Security team member, come back into the Oval Office on Monday morning and brief the President on what was going on over there.

BILL MOYERS: The other half of Iran-Contra began here in the Middle East, in decisions made in the very first days of the new administration. Here, American interests and American lives were caught between volatile and violent factions. The year before Reagan's election, Iranian fanatics had seized the U.S. embassy in Teheran. Washington responded by declaring Iran a "terrorist nation" and imposing an arms embargo. The regime that had so reviled America, whose leader still denounced the U.S. as a "great Satan," was prohibited by U.S. law from receiving American arms directly or indirectly. But America's chief ally in the region, Israel, wanted to sell American arms to the Ayatollah irrespective of the law. For the scheme to work, the Israelis needed willing players in the new administration and they had them early on. Ambassador

NICHOLAS VELIOTES, Asst. Secretary of State 1981-1983: It seems to have started in earnest in the period probably prior to the election of 1980 as the Israelis had identified who would become the new players in the National Security area in the Reagan administration. And I understand some contacts were made at that time.

INTERVIEWER: Between? Ambassador

NICHOLAS VELIOTES: Between Israelis and these new-these new players. Now, my own personal first-hand knowledge starts when I am assistant secretary of state in early February, 1981. And within a few months, we received a press report from

TASS that an Argentinian plane had crashed and according to the documents crashed in Soviet territory -this was chartered by Israel and it was carrying American military equipment to Iran. It was clear to me after my conversations with people on high that indeed we had agreed that the Israelis could trans-ship to Iran some American-origin military equipment. And the net result was a violation of American law.

BILL MOYERS: Israel hoped that arming the Ayatollah would keep the deadly war going between its enemies Iran and Iraq. The Israelis signaled their intention to the Reagan State Department in advance and the State Department secretly said yes. Ambassador

NICHOLAS VELIOTES: Very small and informally done, but of course you couldn't do it informally. That's what the laws were about. But I think you see here certain germs of the later Iran Contra.

BILL MOYERS: Thousands of miles distant and almost simultaneously, the Iran-Contra scandal was taking root in Nicaragua. The contra war was begun as a covert CIA operation with administration assurances that they were simply trying to stop the arms flow in Central America, not overthrow the Sandinistas. But in early 1984, Nicaragua's harbors were mined. The operation was performed by Latin mercenaries in the direct employ of the CIA.

HONDURAN MERCENARY: [through interpreter] The missions were always controlled by the CIA. Those of us who fought who were, so to speak, the cannon fodder, were Honduran, but we were controlled by the Gringos. They gave us the orders. We sabotaged harbors, refineries, shipyards, bridges. We never used our own uniform. We used contra uniforms so that the foreign press will think the contras were doing all the work and the Americans could walk away with , their hands clean.

BILL MOYERS: 'Though there had been no declaration of war by the U.S. Congress, It is was very much America's war. And when Congress did learn of the CIA's direct role in the operations, tensions over the undeclared war exploded.

GEORGE MILLER: This is a war against the people of Nicaragua. This is a war against the government of Nicaragua. This is not a war about stopping the arms flow.

ROGER STUMP: Hen we go again. Once again, when the going gets tough, the United States quits.

DAVID BONIOR: And you may think they will overlook the contras' terrorist tactics, but you are wrong. The American people are outraged.

BILL MOYERS: The Constitution is explicit. It gives Congress, and Congress alone, the power to declare war. The last presidential war had left bitter memories.

HENRY HYDE: Saigon, 1975-I can still see the helicopters lifting off the embassy while the tears and the arms outstretched of the people who believed in us, who trusted in us recede into the distance as we abandon them, and now-

GEORGE MILLER: And now we're engaged with some 15,000 people in the overthrow of this government. That is the purpose and that is what this Congress, three successive times, has rejected. It's what's overwhelmingly rejected by the American people and no number-

BILL MOYERS: Congress also controls the purse strings, so when this debate ends, Congress exercises its fundamental Constitutional power. The Boland Amendment will outlaw the use of U.S. funds for military operations in Nicaragua. The White House will face a stark choice; either respect Congress's decision or devise a way around the law. As the official minutes from this June, 1984, meeting of the President's National Security Planning Group make clear, that choice will be made at the very top.

READER:

[National Security Adviser Robert McFarlane] "There seems to be no prospect that the Democratic leadership will provide for any vote on the Nicaraguan program."

[The President] "It all hangs on support for the anti-Sandinistas. How can we get that support in the Congress? We have to be more active."

[U.N. Ambassador Jeanne Kirkpatrick] "If we can't get the money for the anti-Sandinistas, then we should make the maximum effort to find the money elsewhere."

[Secretary of State George Schultz] "I would like to get the money for the contras also, but Jim Baker said that if we∑ go out and try to get money from third countries, it is an impeachable offense."

[CIA Director William Casey] "Jim Baker said that if we tried to get money from third countries~ without notifying the oversight committees it could be a problem."

[Secretary Schultz] "Baker's argument is that the U.S. government may raise and spend funds only through an appropriation of the Congress."

[The President] 'We must obtain the funds to help these freedom fighters."

[Vice President George Bush] "The only problem that might come up is if the United States were to promise to give these third parties something in return, so that some people could interpret this as some kind of an exchange."

[Farlane] "I certainly hope none of this discussion will be made public in any way."

[The President] "If such a story gets out, we'll all be hanging by our thumbs in front of the White House until we find out who did it."

BILL MOYERS: Although some of his own advisers had raised the specter of impeachment, the President will decide to continue the war. He had taken his case to the Congress, as the Constitution prescribes. He had fought it out politically, as the Constitution assumes, and the President had lost. [interviewing] In 1984, when Congress flatly prohibited American aid to the contras, did President Reagan understand what Congress meant when it said that?

ROBERT McFARLANE: Yes, I believe he did. He just didn't believe that it was a legitimate authority of the Congress to say that, that he, rather than the Congress, determined how he would conduct, in this case, the support of the freedom fighters.

INTERVIEWER: So he chose to disregard Congress?

ROBERT McFARLANE: Yes.

RICHARD BECKLER: Congress passed a bill called-what has been referred to as the Boland Amendment. Do you recall that?

RONALD REAGAN: Yes, and it was consistent with the attitude of Congress toward this whole thing.

RICHARD BECKLER: And what was that?

RONALD REAGAN: Well, we had to fight to get any level of help for the contras and they kept getting more resistant as time went on and as we had to replace moneys that had already been used up and so forth, until finally they just-they just shut off the spigot and tried to make it that we could not give any help.

ROBERT McFARLANE: He believed this was a political struggle.

INTERVIEWER: Well, then, why didn't he go public and say to the American people, "We're going to get aid for the contras and we-I'm going to ask you to decide who is right, Congress or me?

ROBERT McFARLANE: Well, I think to take a stand on principle, which I'm saying this was for him, that would have been the right course. The people on his staff, the legislative leadership of his White House, -, said, "No, that will never wash. It will get you a huge Congressional backlash that will be expressed in everything from your budget to domestic programs.

INTERVIEWER: In other words, ''You can't win the argument"?

ROBERT McFARLANE: That's right.

INTERVIEWER: Publicly, openly?

ROBERT McFARLANE: Not with the Congress, no.

BILL MOYERS: 1984 is an election year, and in election years peace is good politics. A national poll taken in the summer showed almost 70 percent of the public disapproved of the President's policy in Central America, so his P.R. men keep the lid on. [interviewing] In 1984, you're moving toward the reelection campaign. The President was doing well in the polls. He had lost the battle in Congress on aid to the contras. The President could have gone public. He was a terrific politician when it came to communicating to the masses. Why didn't he do that?

MICHAEL DEAVER: He did. You know, after the election, he went to the people.

INTERVIEWER: Yes, but not in the election and the election isn't...isn't the election where we should fight these things out?

MICHAEL DEAVER: I can't answer that. Whether it was simply because the Congressional people were telling him this was not the time or what, I can't answer that.

INTERVIEWER: And weren't the polls telling him that, in fact, his position was not that popular on Central America?

MICHAEL DEAVER: Absolutely.

INTERVIEWER: You didn't want the campaign for reelection to be fought out around Central America.

MICHAEL DEAVER: Absolutely. Never. Because if weld have fought the campaign on Central America, we might have lost.

BILL MOYERS: The administration had failed to carry the Congress and wouldn't chance it with the voters, so they turned to subterfuge.

READER: [North to McFarlane, August 28th, '84] "Calero suggested if he could not make it to the U.S. by the end of the week, North could meet with him on Friday in Honduras. Recommendation: that you authorize travel orders." [McFarlane] "Exercise absolute stealth. No visible meeting, no press awareness of your presence in the area."

BILL MOYERS: Throughout the election year, exercising stealth, they conduct their war from the White House.

READER: [The President] "How would the resistance take them out?" [CIA Director Casey] "They could attack them on the ground and there is the chance that they could mount an operation against the ship that offloads them at Bluefields."

[Secretary of State Schultz] ''We should, however, make it clear to the resistance that we do have certain minimum requirements: no U.S. personnel on the operation, no direct CIA involvement in the attack."

[National Security Adviser McFarlane] "There's also the matter of public perception. We need to recognize that whether or not we help, we will be blamed."

[Secretary of Defense Caspar Weinberger] "That's right. The danger is in doing something without preparing the public and changing their perception."

[The President] "Let me throw some flies in the milk on this one. Several months ago, I made a speech about Soviet ships delivering tanks and other military equipment to Nicaragua. That certainly didn't arouse any great public outcry against the Sandinistas. I don't see how going public with our concerns is going to help." [Secretary Weinberger] "No matter what, we need to start preparing the Congress."

[The President] "After the resistance acts, we can raise it with the public and Congress."

[Chief of Staff James Baker] "This is the worst time of all to try to prepare any public opinion on any activities in Central America."

BILL MOYERS: In 1985, Ronald Reagan once again took his oath to uphold the Constitution, to see that the laws are "faithfully executed."

JUDGE: -Bible and raise your right hand and repeat after me. I, Ronald Reagan, do solemnly swear-

RONALD REAGAN: I, Ronald Reagan, do solemnly swear

JUDGE: -that I will faithfully execute-

RONALD REAGAN: -that I will faithfully execute

JUDGE: -the office of President of the United States-

RONALD REAGAN: -the office of President of the United States-

JUDGE: -and will, to the best of my ability-

RONALD REAGAN: -and will, to the best of my ability

JUDGE: -preserve, protect and defend-'

RONALD REAGAN:. -preserve, protect and defend

JUDGE: -the Constitution of the United States-

RONALD REAGAN: -the Constitution of the United States

JUDGE: -so help me God.

RONALD REAGAN: -so help me God.

BILL MOYERS: With the election behind them, the President's men are more defiant of Congress than ever. They look elsewhere for money to support the contra war. They will seek it from wealthy Americans and from friendly governments abroad.

READER: [North notebooks, February 4, '85J "Highest levels increasingly inclined to contribute $2 million. Need White House indication."

BILL MOYERS: The President himself takes the lead, asking for money from the heads of state of third countries, allies dependent-on American weapons or money or both. Saudi Arabia's King Fahd is the first to step forward after CIA director Casey approached him for assistance.

READER: [North notebooks, March 4, '85] McFarlane meeting. Plan includes $25 million to $50 million, third country support, CIA intelligence. Center the activity in the White House."

ROBERT McFARLANE: I was describing specifically the donation King Fahd volunteered, February of '85, and that that would be given to the contras and that they would use it to carry on the struggle.

BILL MOYERS: What did you mean when you talked about the "center of activity in the White House"?

ROBERT McFARLANE: Well, it had come from Fahd to the President at the White House and it had gone from there to the contras.

BILL MOYERS: The money is clearly intended to keep the contras in the field while U.S. aid is prohibited. At least 10 countries will be solicited for military support, including Israel, South Korea, Panama and Taiwan.

READER: [North notebooks] "Need to have contact with Taiwanese. Need some overture with Korea. Sultan of Brunei, $100,000 for Calero."

SAM DONALDSON, ABC News:

Mr. President, did you personally ask third countries to contribute money to the contras?

RONALD REAGAN: Sam, I made an opening statement and I have said that I'm not going to answer any questions on those things until this is over. If I were going to answer any questions, I'd say "no."

RICHARD BECKLER: Do you recall having a meeting with King Fahd of Saudi Arabia?

RONALD REAGAN: I do. And as he was leaving the Oval Office and I was escorting him to the door, he told me of the contribution that he had been making to the contras. There had been no discussion of that in our meeting until he told me that. And his last words were that he was going to double it.

RICHARD BECKLER: Did he tell you what the amount was that he was going to double? '

RONALD REAGAN: Yes.

RICHARD BECKLER: What was that amount?

RONALD REAGAN: A million dollars.

RICHARD BECKLER: So he was going to double it to $2 million?

RONALD REAGAN: Yes.

RICHARD BECKLER: And do you recall what your response to him was when he told you that?

RONALD REAGAN: Yes, I said "I think that's fine."

RICHARD BECKLER: That was $2 million per month, I take it. Correct?

RONALD REAGAN: You know, the silly thing is, my memory-I was just remembering it as a year. You may be right. I-it's just my memory and having to hark back to it, I just thought he was talking about the total each year that he was giving.

RICHARD BECKLER: Do you recall having a meeting, as well, with a head of state of an Asian country? And I'm going to ask you to just tread a little bit lightly here, because we can't discuss what the particular Asian country might be. But does that jog your memory at all?

RONALD REAGAN: No, it doesn't.

RICHARD BECKLER: I figured it might not. But that-

RONALD REAGAN: No, I-as a matter of fact, I never made any effort to find out which of our friendly countries and so forth were engaged in this or doing anything. I thought it was better unmentioned.

BILL MOYERS: But unmentioned favors can produce unmentioned demands, putting American policy at the mercy of its secret partners. A president who chooses to act entirely on his own, secretly and off the record, has neutralized the checks and balances of democracy. The rest of the government, and the people, are shut out... By 1985, there is a new hostage crisis in the Middle East. Pro-Iranian terrorists in Lebanon have kidnapped seven Americans, including one possessed of vital American secrets, the CIA station chief in Beirut. C

WILLIAM BUCKLEY, Hostage: I am well, and my friends Benjamin Weir and Jeremy Levine are also well. We ask that our government take action for our release quickly.

BILL MOYERS: Despite the individual pleas, the administration's stated policy is firm.

RONALD REAGAN: Freedom, democracy and peace have enemies. The United States gives terrorists no rewards and no guarantees. We make no concessions. We make no deals.

BILL MOYERS: But through high level contacts in Israel, the administration learns Iran might be willing to make a deal, swapping hostages for arms. As the President's recovery from surgery, his advisers gather at his bedside to make the case. For 100 American-made Tow missiles, Iran will release four of the seven hostages. The arms will move through Israel to provide deniability.

RICHARD BECKLER: Mr. McFarlane came out to the hospital and Don Regan, your chief of staff, was there, and' he gave you a little bit of overview as to what Israel was doing. Do you recall that at all?

RONALD REAGAN: I recall that I had visits every once in a while, there at the hospital. I have to tell you, I can't really recall what those visits were about. Nothing was tremendously earthshaking, according to my memory, but I'm afraid that I wasn't maybe quite up to pinning things down.

BILL MOYERS: Hardly has the President returned to the White House from the hospital than the deal is implemented. The public knows nothing about it, but after two shipments totaling more than 500 missiles, only one hostage, Benjamin Weir, is released. The administration holds the news for three days while the President, the Vice President and their advisers debate how to handle it. Oliver North is finally designated to draft the welcome home script.

READER: [North notebooks, September 16, '85J "In the name of the President of the U.S., I welcome you back to the U.S.A. Family has been through trauma beyond measure because of love for you. What happens to those left behind depends totally on you. Greatest Christian task may be in the next few days ahead. Revelations regarding your release will accelerate competition for holding others; killing; new seizures."

BILL MOYERS: By the end of 1985, the hostages, like the contras, have become a presidential obsession. Reagan is determined to satisfy the hostage families by the holidays. It is Oliver North who turns the President's obsession into action, secretly bartering missiles for men.

READER: [North notebooks, December 1, '85] "Six hundred Tows equals one release. Six hours later, 2,000 Tows equals three releases. Twenty-three hours later, 600 Tows equals one release."

REPORTER: Do you think the President is willing to cut some kind of a deal, any kind of a deal, to win the release of the hostages?

HOSTAGE RELATIVE: All I know is that his stance is that we do not negotiate with terrorists.

READER: [North to Poindexter, November 20, '85] "The Israelis will deliver 80 Hawks at noon on Friday, 22nd November. These 80 will be loaded aboard three chartered aircraft owned by a proprietary which will take off at two-hour intervals. There is the requirement for 40 additional weapons of the same nomenclature. Ten million dollars in payment for the first 80 has been deposited in the appropriate account. There is the distinct possibility that at the end of the week, we will have five Americans home and the promise of no future hostage-takings in exchange for selling the Israelis 120 Hawks. It isn't that bad a deal." [North notebooks, November 26, '85, Meeting with Poindexter] "Ronald Reagan directed operation to proceed. If Israelis want to provide, then we will replenish. Call from Poindexter. Schultz aware. Cargo must be listed as machine parts, spares for oil industry."

BILL MOYERS: So the President approves yet another hostage deal, a third shipment of arms. Most of his advisers are with him. They will not notify Congress as the law requires. There will be no formal presidential authorization beforehand, also required by law. But they will contrive a cover story about equipment for drilling oil. Despite the sale, no hostage is released. Vice President George Bush expresses his appreciation anyway.

READER: [Note from Vice President Bush to Colonel North] "Dear Ollie, As I head off to Maine for Thanksgiving, I just want to wish you a happy one, with the hope you get some well-deserved rest. Your dedication and tireless work with the hostage thing and with Central America really gives me cause for great pride in you and thanks. George Bush."

BILL MOYERS: In Central America, the Saudi money is virtually all that is keeping the contras going, so the White House begins to lean on the small, dependent governments there, like Honduras. The deal is simple. "You help the guerrillas bring down Nicaragua, we'll help you with weapons and money." It is a quid pro quo verging on bribery and they know it.

READER: [February 20, '85, North to McFarlane] "It is very clear from the debate that the legislative intent was to deny any direct or indirect support for military, paramilitary operations in Nicaragua. To date, all administration officials have been able to state to the Congress that we have not approached any other government to support the resistance. Once the memo and the attached cable are transmitted, we will no longer be able to make such a claim. We still believe that our original concept of an emissary is the proper way in which to proceed."

BILL MOYERS: They are leery of using the U.S. ambassador to enforce the deal. He could be called before Congress for questioning. So the White House sends an emissary who can deliver the goods immune from accountability. As the government itself will eventually admit in Oliver North's trial, Vice President Bush delivers the quid: more than $100 million in expedited military, economic and

CIA assistance, the stuff that keeps governments in power. And Honduras agrees to the quo, serving as a base for the contras in the war against Nicaragua.

GEORGE H. W. BUSH: Honduras-there was no quid pro quo.

BILL MOYERS: As President, George Bush will still deny what his own government had acknowledged in open court.

GEORGE H. W. BUSH: And for those who suggest there was, the onus is on them. The word of the President of the United States, George Bush, is there was no quid pro quo. The records of the meeting demonstrate that there was no quid pro quo. Thank you for asking that question.

BILL MOYERS: Honduras knows how to work the deal it struck. Just two

months after the Vice President's visit, Honduran president Suazo arrives in Washington to meet with Reagan, Bush and much of the cabinet. He is there to up the ante by asking for more aid. Another quid pro quo is at the heart of the meeting.

READER: [McFarlane to Oval Office, May 21, '85] "It will be important to reiterate to Swazo the importance we attach to his continued cooperation in enabling the FDN to remain a viable element of pressure on the Sandinistas. Without making the linkage too explicit, it would be useful to remind Swazo that in return for our help, we do expect cooperation in pursuit of our mutual objectives. You could underline the seriousness of our security commitment, which the Hondurans seem to regard as the main quid pro quo for cooperating with the FDN.

RONALD REAGAN: In return for our help in the form of security assurances, as well as aid, that we do expect cooperation-that we feel that there's an obligation on their part to-

RICHARD BECKLER: So in other words, some aid and assistance was given to them, you would expect some aid and assistance back from them in combating the spread of the Sandinistas?

RONALD REAGAN: Yeah.

BILL MOYERS: Honduras will become the eighth largest recipient of American economic and military aid in the world. It is a country the size of Tennessee. In fact, every country in Central America will be pressured, intimidated or solicited by officials of the U.S. government seeking help for the contras. The administration has created a private foreign policy operation outside the channels of government, unaccountable to Constitutional control. It is in constant need of money. By early 1986, the President has approved three shipments of missiles to Iran. They have bought the release of just one hostage. Of the six others held the summer the trading began, one has been killed in captivity, five remain. The dealings go on and so do the denials.

RONALD REAGAN: The decision is, at what point can you pay off the terrorists without endangering people from here on out once they find out that their tactics succeed.

CHRIS WALLACE:,

Are you still opposed to negotiating with terrorists?

RONALD REAGAN:

has always been a position of ours, yes.

BILL MOYERS: But at 10 high level meetings, top officials have discussed the arms shipments to the terrorists. George Bush has attended at least five. He also heads the President's Task Force on Terrorism.

GEORGE H. W. BUSH: Today, I am proud to deliver to the American people the result of the six months' effort to review our policies and our capabilities to deal with terrorism. Our policy is clear, concise, unequivocal: We will offer no concession to terrorists because that only leads to more terrorism. States that practice terrorism or actively support it will not be allowed to do so without consequence.

BILL MOYERS: What is stated as official policy is reported as official policy. They find it easy to protect their secrets. Admiral

JOHN POINDEXTER: Hi, Sam. How are you?

SAM DONALDSON: What are you planning? Any new strikes? Admiral

JOHN POINDEXTER:Well, as the President says, we're not telling.

SAM DONALDSON: OK.

BILL MOYERS: The newest secret is that the last arms shipment netted a profit of $800,000. So behind the scenes, prompted, by CIA director Casey, they debate a new and larger transaction: selling American weapons themselves directly to Iran instead of through Israel. This way they can set the price and control the profits.

RICHARD BECKLER: Mr. President, do you recall at all that it would be better for the United States to be shipping these weapons directly rather than having Israelis ship weapons and then being replenished by the United States? Does that ring any bells with you at all, Mr. President?

RONALD REAGAN: No, I don't recall that coming up at all. As a matter of fact, to this day I don't know who finished the delivery of the missiles. I know that we could not have flown a plane into Iran and that would have destroyed the whole covertness of the operation and exposed these individuals.

RICHARD BECKLER: Did you at any time recall being informed by Admiral Poindexter as to who some of the people were that were working on this-this Iranian missile project, if you will?

RONALD REAGAN: The only name that I recall being involved out at that end of it was Colonel North.

READER: [North to Poindexter, January 4, '86 Draft memo to the President] "Since the Israeli sales are technically a violation of our Arms Export Control Act embargo for Iran, a Presidential Covert Action Finding is required."

BILL MOYERS: To make it legal, the President will sign a secret finding declaring further shipments to be important to national security.

READER: [Memorandum for the President from John Poindexter, January 17, '86] "The Iranians have indicated an immediate requirement for 4,000 Tow weapons. Both sides have agreed the hostages will be immediately released upon commencement of this action."

BILL MOYERS: It is clear the government is trading arms for hostages, but despite the legal requirement that Congress be informed, the President will postpone notification indefinitely.

READER:

[Poindexter to the President] "The President was briefed verbally from this paper. The Vice President, Don Regan and Don Fortier were present."

[Poindexter to McFarlane, February 1, '86] "The hostage plan is still working and it calls for the hostages to be released on 9 February. Schultz and Weinberger still disagree on policy grounds but are cooperating. Bill Casey, Ed Meese, Don Regan and I are fully on board this risky operation, but most importantly, President and Vice President are solid in taking the position that we have to try."

[North to McFarlane, February 27, '86] ''With the grace of the good Lord and a little more hard work, we will very soon have five American citizens home and be on our way to a much more positive relationship than one which barters Tows for lives."

[McFarlane to North, February 27, '86] "Roger, Ollie. Well done. If the world only knew how many times you have kept a semblance of integrity and gumption to U.S. policy, they would make you Secretary of State. But they can't know and would complain if they did. Such is the state of democracy in the late 20th century."

BILL MOYERS: The Iranians accept 1,000 more missiles without releasing even one hostage, but they pay triple market price for the weapons and the deal generates a $5.5 million profit. The arms sales have become big business, off the shelf and off the books, accountable only to the inside traders. The profits will wind up not in the U.S. Treasury but in a private slush fund, what North, Casey and company now call "the enterprise." Nearly $4 million of it will keep the contras supplied with the weapons of war despite the Congressional ban. The profits from the arms deals added to the money raised from third countries enable the President to evade the Constitution's most basic check on a president's power.

READER: [Poindexter to Don Fortier, May 2, '86] "Yesterday, in a meeting that I had with the President, he started the conversation with, 'I am really serious. If we can't move the contra package before June 9, I want to figure out a way to take action unilaterally to provide assistance."

[North to Poindexter, May 16, '86] "You should be aware that the resistance support organization now has more than $6 million available for immediate disbursement. This reduces the need to go to third countries for help. It does not, however, reduce the urgent need to get the

CIA back in the management of this program. Unless we do this, we'll run increasing risks of trying to manage this program from here, with the attendant physical and political liabilities. The more money there is, the more visible the program becomes. While I care not a whit what they say about me, it could well become a political embarrassment for the President and you."

RICHARD BECKLER: Could you please describe to the jury what you know about Oliver North and what his job was when he was working in the White House?

RONALD REAGAN: It was my impression, and not from any specific reports or anything, that in-through all of this that he was communicating back and forth between, and the need for the support of the contras and so forth.

RICHARD BECKLER: When you say "communicating back and forth between," could you be a little more explicit for the jury? Even though you and I might know-

RONALD REAGAN: Yeah.

RICHARD BECKLER: -maybe explain

RONALD REAGAN: Well, I mean, between-

RICHARD BECKLER: -to the jury what you're referring to.

RONALD REAGAN: -between the contras and their situation and ourselves and the things that we must do for them.

ROBERT McFARLANE: President Reagan doesn't retain very much of what comes h.is way on a given day and if he read something in the morning and were to be asked about it a week or so later, he might very well not remember it. Many people are like that. Certainly, we all forget things, but he-

INTERVIEWER: Of this importance, something of this magnitude, an off-the-shelf effort to help the contras, the freedom fighters who were so important to him? He would forget the details?

ROBERT McFARLANE: Well, the President on hearing that would draw a conclusion, "Is this right or wrong?" And he would say, certainly, "This is right." But saying it's right then enables him to clean the memory desk and to say, "OK, what I heard is right and I've forgotten a little bit about what it was, but it was right," and not parse the politics, the legalities, the other implications of it.

DAN WEBB, Attorney: You were not aware and did not learn of North's activities in supplying the contras with military aid. Is that correct?

RONALD REAGAN: Well, I'm not sure I'm understanding this. My major was in economics, not law. The-

DAN WEBB: I'm asking you what you-what I believe you just told me a moment ago, which is that you did not learn of that back in 1985 and 1986 when it was going on. Did you not just tell me that a few moments ago?

RONALD REAGAN: Well, what I'm saying is that 1-I could answer it, and even then in a general way, as to the-what his what his task was and what he was doing, but I wasn't following it day by day so that I could pin down and say, ''This is what he is doing today and this"-I can't-1-I just don't have that kind of a memory.

DAN WEBB: But do you stick by the answer then in your interrogatory that you did not know and did not learn of that activity? That's my question to you.

RICHARD BECKLER: Objection.

JUDGE: Sustained.

RONALD REAGAN: Well, what activity?

RICHARD BECKLER: [unintelligible] You don't have to answer that.

ROBERT McFARLANE: Every day he got intelligence reports in black and white by the CIA-was reporting, "Here's what we are learning in Nicaragua," and it included the supply of weapons, the supply of money. So the President could have said, "Gee, who could that be? John, Ollie, what's going on?" So the point is that if I were in Colonel North's shoes, I would have drawn the same conclusion that the President knows, the President supports, and carried on.

READER: [Poindexter to North] "I am afraid you're letting your operational role become too public. From now on, I don't want you to talk to anybody else, including Casey, except me, about any of your operational roles. In fact, you need to quietly generate a cover story that I have insisted that you stop."

BILL MOYERS: May, 1986: the President approves a secret trip to Teheran by Robert McFarlane. The Iranians have said they will receive an emissary provided he brings spare parts for missiles. McFarlane does, but no hostage is released. Returning to Washington discouraged, he reports to Reagan and Bush.

READER: [Notes of McFarlane briefing of Ronald Reagan and George Bush] ''We did not succeed in getting the hostages' release. The current state of government in Iran lacks competence. The competents were decapitated. I recommend no more meetings until the hostages are released."

DAVIDJACOBSEN, Hostage: This video is being recorded on the 25th day of July, 1986. I am David Jacobsen, the hospital director of the American-

BILL MOYERS: As with the secret deals in Central America, the secret deals with Iran have left the United States open to blackmail.

JACOBSEN: -on which date I was taken political hostage. That was 424 days ago.

READER: [North notebooks, July 27, '86] "Criminals are leading Iran. They hate the U.S. The longer this goes on, the worse things will be."

[Casey to Poindexter] "If there is no U.S. government contact, it is entirely possible that Iran and/or Hezbollah could resort to the murder of one or more of the remaining hostages."

[North to Poindexter] "Despite our earlier and current protestations that we want all hostages before we deliver anything, this is clearly not the way they want to proceed. Bottom line is that if we want to prevent the death of one of the three remaining hostages, we are going to have to do something.

BILL MOYERS: Again, the White House faces a choice: Go on with the torturous game -another shipment, perhaps another hostage -or, as McFarlane now recommends, call it quits. Poindexter and North push to proceed and they ask Vice President Bush to consult with the Israeli end of the operation: this man, Amiram Nir. The Vice President's chief of staff writes the minutes of their meeting.

READER: [Notes of meeting] "Nir said, 'We are dealing with the most radical elements. They can deliver, that's for sure. They fear if they give all hostages, they won't get anything from us ... We have no real choice than to proceed.' The Vice President expressed his appreciation and thanked Nir for having pursued this effort despite doubts and reservations throughout the process."

BILL MOYERS: Twenty-four hours after the Vice President's meeting with Nir, President Reagan approves a sixth shipment to Iran.

ROBERT McFARLANE: The President chose to continue the policy. That's his choice to make. He was elected. I wasn't. It was a matter of the President going on with a very strong will to do what he wanted to do, against my advice.

INTERVIEWER: Others in the White House were arguing otherwise with him, to continue the arms deal. Is it possible that North and Casey and others who were arguing that the deal continue had gotten very attached to the off-the-shelf operation, to the arms deal, because they wanted the profits from that to go to the contras?

ROBERT McFARLANE: It's possible, yes. .

INTERVIEWER: Do you think that was the case?

ROBERT McFARLANE: Well, the complexion on the Hill, the outlook for getting more money there was not so great, so that's a very plausible thing. I think that's likely.

INTERVIEWER: So the arms deal itself had become more important than the fact that the hostages had not been released?

ROBERT McFARLANE: Probably for Colonel North. To the President, the hostages were always the issue.

BILL MOYERS: The hostages had become a cash cow for the undeclared war. The sixth shipment generates a profit of $8 million, but no hostage is released. Instead, two more are taken. The enterprise reaps another windfall with a seventh shipment in October. This time, the Iranians let one hostage go, but only after seizing another. It's the fall of '86, and the enterprise is flourishing-off the books, in the dark, running its own foreign policy wholly unaccountable. By the bedrock value of the bottom line, it's succeeding. It's made a profit of $16 million by inflating those prices charged to the Iranians. Some of that profit has gone to the contras, along with at least $34 million from other countries, and some of it to secret projects we'll never know about. It's as if Richard Nixon, told by Congress in the '70s to shut down the war in Vietnam, had nonetheless sustained it with private donations from multi-national corporations, or as if some future president were to wage secret war against, say, Israel, with a slush fund from other governments. We'd find that preposterous, but it happened in the Reagan era without great outrage. It happened because our system of checks and balances, the gravity force of democracy, has failed us. The power of the government to deny is enormous and the President's men worked hard to keep the country in the dark.

LARRY SPEAKES White House Spokesman: Still another story of a version of how we will fund the contras, this was; through economic aid to Honduras. I think we'll stay with our standard line that we're-we'll seek full funding and not try t, go into any details.

BILL MOYERS: Only a few reporters were enterprising enough to try to uncover what was going on.

JOHN WALLACH, Hearst Newspapers: In the summer of 1983, wrote the first story that the United States was planning to mine the harbors of Nicaragua. At the time when my story appeared, I was-was called a liar. The story was flatly denied at the State Department and the White House.

INTERVIEWER: Who called you a liar?

JOHN WALLACH: Well, Bill Casey. Bill Casey had some communications with my superiors and went out of his way to deny the story.

READER: [North notebooks] "Roberts called from The Time Working on premise that laws have been broken. Call from Claire. Article very bad. Making foreign policy around intent of Congress."

BILL MOYERS: North's network tracked the handful of reporters who kept working the story. He knew exposure meant the end.

ROBERT PARRY, Associated Press: I contacted the Nation Security Council staff and asked them about what we had at the point, which was that there was a program that was being directed a Colonel North, who was at that time virtually unknown, and that this organization was providing third-country and private support to the contras during the period of the Congressional cut-off. Of course at that point, the White House flatly denied everything.

READER: [White House Press office to McFarlane] "Bob Parry, Associated Press, who can be tough but has awfully good sources, has one question for you. Quote -'It's my understanding that someday at end of 1983 or beginning of 1984, Reagan instructed McFarlane orally to arrange for private and other outside non-U.S. government funding for contras. Is that true?' What should I tell him?" [McFarlane] "It is absolutely untrue."

INTERVIEWER: Did you feel on the spot when a Bob Parry would come to you and ask you if that's true? Did you feel constrained to tell him no because of-

ROBERT McFARLANE: Well, on that specific occasion, he happened to have his dates wrong, so he was factually wrong, it's pretty easy. But I take your point. When you know what is going on and somebody is nibbling at the edges, yes, it's always difficult to draw the line between presidential order and the public trust, and in this case, Parry happened just to be wrong, so it was easy to say, "You're wrong," but-

INTERVIEWER: Wrong on the facts, but

ROBERT McFARLANE: That's right.

INTERVIEWER: -not wrong on the truth.

ROBERT McFARLANE: Well, not wrong on the spirit of his charge. Could I be comfortable in saying "no" to that? Yes, I could be comfortable because of the rules of the game.

BILL MOYERS: In 1985, the House Intelligence Committee officially asked McFarlane, as National Security Adviser, about reports of North's activities.

READER: [Reading letter from Robert McFarlane to Lee Hamilton] "Dear Mr. Chairman, I can state with deep personal conviction that at no time did I or any member of the National Security Council staff violate the letter or spirit of the law. At no time did we encourage military activities. We did not solicit funds or other support for military or paramilitary activities, either from Americans or third parties.

LEE HAMILTON, [D] Chairman, House Intelligence Committee, 1985-1987: The stories appeared in the press. I call up the National Security Adviser. ''What's going on here," is my question. He comes back and says, "We're in total compliance with the Boland Amendment. We're not doing the things that the press says we're doing. We're not raising money. We're not giving tactical military advice. I'll come up and talk to you about it. You come down to the White House." We did both. We went down to the White House. We talked to the National Security Adviser. We had him come up to the committee. He talked to us there. And we had total assurance, absolute assurance, that the Boland Amendment was being complied with, not only in the letter but in the spirit of the law. Well, we accepted that. Not just me-I accepted it. I have to take responsibility for that, but the other members of the committee did, as well.

BILL MOYERS: When McFarlane's successor, John Poindexter, was formally asked what he knew, his letter repeated and amplified the deception. Official after official lied, each making it harder for the next to tell the truth. It was his advisers who wrote the misleading letters to Congress, but reading them in court, the President reveals who inspired them.

RONALD REAGAN: I'm in total agreement. If I'd written it myself, I might have used a little profanity.

ATTORNEY: Thank you. I have no further questions on this particular letter.

BILL MOYERS: Why didn't you subpoena North and McFarlane when this flurry of stories were circulating and you had written him and said, ''What's going on?" and he wrote you back and said, "Absolutely not. There's been no violation. I give you my own word." Just to be sure, why didn't you subpoena-

LEE HAMILTON: Well, we had their cooperation. When these-

BILL MOYERS: But their deceitful cooperation.

LEE HAMILTON: Well, as it turned out, deceitful cooperation. But we didn't know that at the time. Unsubstantiated stories on the one hand, the word of the President's National Security Adviser on the other. And in that circumstance anybody, I think, would tilt towards the National Security Adviser.

ATTORNEY: What about Congressman Lee Hamilton? Do you recall whether or not he took any position with regard to this or had any interest in what the administration was doing?

RONALD REAGAN: Well, of course I'm familiar with that name but I can't pin down now where he was in all of that.

ATTORNEY: At one point, Lee Hamilton was chairman of the House Intelligence Committee.

RONALD REAGAN: Yes.

ATTORNEY: And-

RONALD REAGAN: I don't recall-I don't recall what position h was taking or where he was. There's 435 of them, remember?

ROBERT McFARLANE: His disdain for the Congress led him to say simply, "Don't tell them." The President really disdained those institutions.

INTERVIEWER: He disdained Congress?

ROBERT McFARLANE: Yes.

INTERVIEWER: How did that reveal itself?

ROBERT McFARLANE: Well, when any given policy initiative -and should emphasize, I'm talking about national security affairs -w; proposed or adopted, the President's view was that the Constitution conferred upon him the authority to conduct the foreign affairs of the country. He did not seek to respond to criticism to the Congress in careful way.

BILL MOYERS: For all its powers of investigation, Congress accepted the White House denials and the press accepted the official view reality as its primary beat.

LOU CANNON, Reporter: Mr. President, why don't we openly support those 7,000 guerrillas that are in rebellion against this, rather than giving aid through covert activity?

RONALD REAGAN: Because we want to keep on obeying the laws of our country, which we are obeying. [laughter]

LOU CANNON: If I can follow up, sir, do you think that the-

BILL MOYERS: Deception had become an inside joke.

LOU CANNON: Doesn't the United States want that government replaced?

RONALD REAGAN: No, because that would be violating the law.

ROBERT PARRY: There was not the kind of courage that you might expect from the editorial level of saying, "These ,stories are well reported. The facts are solid. Let's keep going with it." There was a great deal of timidity at that time. It-there was not the sense of really getting to the bottom of this story.

JOHN WALLACH: If a president is popular, it has a very strong impact on the kind of press coverage of the presidency. The more popular a president is, the harder it is for reporters to write negative stories.

ROBERT PARRY: I thought we'd never get to the bottom of it. I thought at that point that the White House had won, that the White House had been able to contain this incredible scandal, and they'd been able to contain it because of both the timidity of Congress, the refusal of members of Congress to do their jobs and to do serious oversight of what the White House was up to, and because the press had been unwilling to go against the government officials who were out there telling them these things which were not true.

BILL MOYERS: The Washington press corps had backed away from trying to get at the truth and Congress had backed down. In the nation's capital, it was business as usual. Having carried the day, the White House might have carried on indefinitely, acting alone, above the Congress and beyond the law. They didn't count on this.

EUGENE HASENFUS: My name is Gene Hasenfus.

REPORTER: Can you tell us how you came to be here?

EUGENE HASENFUS: I was shot out of the sky.

BILL MOYERS: A cargo plane carrying military supplies to the contras is shot down over Nicaragua. Within hours, an agent for the enterprise relays the news to Washington in a phone call to a member of the Vice President's staff. Vice

GEORGE H. W. BUSH: See, what was alleged in the paper was that out of the Vice President's office, we were running this operation in Nicaragua, that Hasenfus is involved in it, and it's absolutely, totally untrue. I can deny it unequivocally.

BILL MOYERS: Oliver North knows the Hasenfus plane will be traced to the same company the enterprise has been using to ship arms to Iran. The shadow government has begun to unravel.

READER: [North notebooks, October 10, '86] "Southern Air Transport exposure equals Iran hostage exposure."

BILL MOYERS: But before the press or the Congress put two and two together, a Lebanese magazine breaks the news of secret U.S. overtures to Iran, including the gift of a Bible signed by Ronald Reagan and delivered by Oliver North. Again, the President of the United States denies the truth.

REPORTER: Mr. President, do we have a deal going with Iran, as some say?

RONALD REAGAN: No comment, but could I suggest an appeal to all of you with regard to this. The speculation, the comment and all on a story that came out of the Middle East and plus had no foundation, that all of that is making it more difficult for II in our efforts to get the other hostages freed.

BILL MOYERS: Efforts at damage control begin on high. North's office may have been the command post, but the CIA, the Defense Department, the Attorney General, the Vice President and the President have been involved in the Iranian arms deals. All of them, plus the State Department, are tangled up in raising money or supplies for the contras. This has been no rogue operation.

ABE SOFAER, former State Department Legal Adviser: There were people in the State Department and they knew that Ollie and the rest of them in the White House were up to something.

BILL MOYERS: Judge Abraham Sofaer was legal adviser to the State Department.

JUDGE ABE SOFAER: -in terms of Secretary Schultz, there's a tremendous danger in pursuing something a little bit, because then someone can say, "Ah, you knew and you approved." And you didn't know really, and you didn't approve, really. Ambassador

NICHOLAS VELIOTES: Those outside of the original circle who were beginning to understand made it an effort not to know. I know one senior official, not in the State Department but I won't mention him, who said to me, "It was very hard every day. We spent a lot of time trying to avoid knowledge of that nonsense that was going on."

BILL MOYERS: Not knowing had become a virtue.

RONALD REAGAN: It will eliminate the widespread but mistake! perception that we have been exchanging arms for hostages. . have directed that no further sales of arms of any kind be sent to Iran.

CHRIS WALLACE: Aren't you saying to terrorists, "Either you 0 your state sponsor," which in this case was Iran, "can gain from the holding of hostages"?

RONALD REAGAN: No, because I don't see where the kidnapper! or the hostage-holders gained anything. They didn't get anything. They let the hostages go. Now, whatever is the pressure that brought that about, I'm just grateful to it for the fact that we got them.

1st REPORTER: Could you explain what the Israeli role was here?

RONALD REAGAN: No, because we, as I say, have had nothing to do with other countries or their shipment of arms or doing what they're doing.

2nd REPORTER: Are you telling us tonight that the only shipments with which we were involved were the one or two that followed your January 17th Finding and that whatever your aides have said on background or on the record, there were no other shipments with which the U.S. condoned-

RONALD REAGAN: That's right. I'm saying nothing but the missiles that we sold-and remember, there are too many people that are saying "gave"-they bought them.

JUDGE ABE SOFAER: I wrote a memo to Schultz, urging Schultz to save-basically, save the President from these people who were briefing him, to go in and tell the President what the facts were and to get the President to disown it, to basically walk away from these kind of rationalizations and all this sort of little white lies and fuzzy things that were being put in his head prior to his press conference. That was the battle then. After that, that was the battle.

BILL MOYERS: In this battle, some will stick with lying. It has worked so far. CIA director Casey is summoned by Congress to testify about the arms deals. So North, Poindexter and Attorney General Meese gather to go over the CIA's draft of his testimony. That draft lays out the agreed-upon cover story.

READER: [CIA insert to Casey's Testimony on Capitol Hill: "We in the CIA did not find out that our airline had hauled Hawk missiles into Iran until mid-January when we were told by the Iranians. The cargo was described to us as 'oil-drilling spare parts.' "

BILL MOYERS: Oliver North enlarges the lie, changing the words to say no one in the entire government knew. When Abe Sofaer sees this, he threatens to blow the whistle.

JUDGE ABE SOFAER: It would be unacceptable to me. I would be forced to resign.

INTERVIEWER: You said in your deposition that you were worried about-that there was a cover-up in the making, at that point.

JUDGE ABE SOFAER: Yes.

INTERVIEWER: And what were the implications? What would have been the implications of that?

JUDGE ABE SOFAER: Impeachable. Now you're talking-you're talking about a violation of law, a felony.

INTERVIEWER: Lying to Congress, in other words?

JUDGE ABE SOFAER: Lying to Congress, whatever else you have to do. Once you start down that road, the end is terrible, whatever it is, for your clients.

REPORTER: Have you broken the law?

WILLIAM CASEY CIA Director: No, no.

BILL MOYERS: Appearing before closed sessions of the Intelligence Committees, Bill Casey says no one knew they were shipping arms Poindexter also meets with members of Congress. He too lies, then returns to his office to destroy documents he thinks would be politically embarrassing to the President. And all the while, the nation's highest law enforcement official, Ed Meese, is meeting privately with the players involved.

READER: [McFarlane to Poindexter] "I spent a couple of hours with Ed Meese today, going over the record with him. It appears that the matter of not notifying about the Israeli transfers can be covered if the President made a "mental finding" before the transfers took place. Well, on that score, we ought to be OK because he was all for letting the Israelis do anything they wanted at the very first briefing in the hospital. North notebooks: "Intent of President is important. Reagan said he would support. "Mental finding."

BILL MOYERS: It is a retroactive cover story. They will say that instead of actually signing an order as required by law, the President will simply have approved it in his head. Over the next three days Attorney General will keep the Justice Department's criminal commission and the FBI out of his official inquiry. Instead, he relies on political appointees in his inner circle.

[interviewing] Did you find that the President had that authorized policy, that decision-had made that decision?

CHARLES COOPER, Assistant to the Attorney General: terms of the-

INTERVIEWER: Hawks.

CHARLES COOPER: -Hawks?

BILL MOYERS: Charles Cooper was one of the Attorney General's top assistants.

CHARLES COOPER: Actually, to tell you the truth, it's been two years now since these events were at the forefront of my mind. And my recollection, though, is that the President was not personally involved or authorizing of that particular transfer, but my recollection is at this point vague.

BILL MOYERS: In the scramble to sort out the arms deal, which they already knew to be illegal, an undated memo providing evidence of illicit diversion of money to the contras is found in North's office over lunch here, the Attorney General is told about it.

CHARLES COOPER: And once the contra diversion was discovered, Moyers, the other stuff, you know, faded, you know, into background.

INTERVIEWER: Because?

CHARLES COOPER: Because the contra diversion suddenly made the rest of it pale in importance.

INTERVIEWER: Why did it make it pale?

CHARLES COOPER: For both political and legal reasons. The political reality was that this would be a very, very controversial piece of information.

INTERVIEWER: Could hurt the President a great deal?

CHARLES COOPER: Yes, it could. Yes, it could.

BILL MOYERS: Less than half an hour later, North calls the Attorney General. At North's request, Meese agrees to put off meeting for hours until the next afternoon. When they do meet, North asks if the cover page on the diversion memo has been found. It would have revealed who received and saw the memo. The answer is no.

[interviewing] Given the seriousness of the situation, why didn't the Attorney General or you immediately order that all the documents in Oliver North's and John Poindexter's possession be sealed so they couldn't be destroyed?

CHARLES COOPER: You know, the point is the destruction of documents that took place is something that only sealing offices with FBI agents and the rest of it would have prevented. You've got to have some reason to suspect that that is a necessary measure to take before you take such a dramatic action as that. You know, if you hear rustling in your bushes in front of your house, you don't open fire before you, you know, look out the window.

BILL MOYERS: By the time he talks to the Attorney General, North has been shredding documents for a day and a half. After his own meeting with Meese, Poindexter begins erasing computer messages. By the third day, there will be nothing left. Five thousand messages will have been destroyed. Saturday night, Meese huddles with Casey in Casey's suburban home. As in his private meetings with Poindexter and McFarlane, the Attorney General will take no notes. Oliver North works his shredder through the next night until accidentally tripping an alarm at 5:00 o'clock Monday morning. By then, there is little recorded memory of what the President might have been told.

RONALD REAGAN: And now, I'm going to ask Attorney General Meese to briefyou1st

REPORTER: Do you still maintain you didn't make a mistake, Mr. President-

REPORTERS: [crosstalk]

RONALD REAGAN: Hold it!

1st REPORTER: Did you make a mistake in sending arms to Teheran, sir?

RONALD REAGAN: No, and I'm not taking any more questions and in just a second I'm going to ask Attorney General Meese to brief you on what we presently know of what he has found out.

REPORTERS: [crosstalk]

2nd REPORTER: Is anyone else going to be let go, sir? Is anyone going to be let go-

RONALD REAGAN: No one was let go. They chose to go.

REPORTERS: [crosstalk]

SAM DONALDSON: What about Secretary Schultz, sir? Can you give Secretary Schultz a vote of confidence, if you feel that way?

RONALD REAGAN: I give you Attorney General Meese.

REPORTERS: [crosstalk] Attorney General

EDWIN MEESE: That's what I'm going to say, what it's all about. Why don't I tell you what is the situation and then I'll take your questions.

THOMAS: What about the President? Why wasn't the President told? Atty. Gen.

EDWIN MEESE: The President was told as soon as we found out about it. He-the President knew nothing about it until I reported it to him. I alerted him yesterday morning. We still had some more work to do and then I gave him the detail that we had yesterday afternoon.

COOPER; We were quite convinced that if the President himself did not make this piece of information known to the public, that it could well lead to, you know, extraordinary possibilities in terms of

INTERVIEWER: Impeachment?

CHARLES COOPER: Possibly impeachment, even. The point being that if that had been disclosed by a news organization, for example, it was view that it would not have been possible to convince many people that this was something the President was not involved in.

JUDGE ABE SOFAER: The administration got a hold of itself, and we then went on governing America and, I think, extremely successfully. And I think that's been very frustrating to people who wanted to make another Watergate scandal out of the whole matter. We took a big hit, but we cut our losses.

READER: [from Oliver North] "There is that old line about 'You can't fire me, I quit.' My prayer is that the President is not further damaged by what has transpired. I remain convinced that what we tried to accomplish was worth the risk. We nearly succeeded.

DANIEL INOUYE: Colonel North, please rise. Do you solemnly swear that the testimony you are about to give will be the truth, the whole truth and nothing but the truth, so help you God? Lieutenant Colonel Oliver North.

BILL MOYERS: In the summer of 1987, Congress finally launches a formal investigation. The committee is stacked with supporters of the President's policy in Central America and chaired by the man who accepted the deceptions all along.

OLIVER NORTH: Throughout the conduct of my entire tenure at the National Security Council, I assumed that the President was aware of what I was doing and had, through my superiors, approved it.

ROBERT McFARLANE: And I translated that expressed wish of the President to Colonel North and others on my staff. He also, the President, expressed this to the Secretary of State, Defense, Director Casey. It was no secret. Admiral

JOHN POINDEXTER:After working with the President for five and a half years, the last three of which were very close, probably closer than any other officer in the White House except the Chief of Staff, I was convinced that I understood the President's thinking on this. Col.

OLIVER NORTH: I believe that the President has the authority to do what he wants with his own staff, that I was a member of his staff, that Farlane was and that Admiral Poindexter was and that in pursuing the President's-

BILL MOYERS: The declaration that a president can do in office what he pleases is a presumption of power crying out for Constitutional debate. But the committee does not appear eager to challenge it or to summon the will to question a popular president.

PAMELA NAUGHTON, former Assistant U.S. Attorney: Clearly, from the outset, there were many decisions made that hampered the investigation. I don't know what the reasons, but-

BILL MOYERS: Pamela Naughton, a former assistant U.S attorney, was one of the committee's investigators.

<PAMELA NAUGHTON: The initial one was obviously setting an unrealistic deadline for the ending of the investigation. You cannot begin, especially such a complex and international investigation as we did, and then say, "But we're going to finish it on this date." You don't know when you're going to finish it. You don't know where the investigation and the evidence is going to lead. The minute you tell a subject of an investigation, "Don't worry. We're all going to go away in another few months," there is every incentive, then, to simply stall and stonewall and wait until we, indeed, go away. And that's, unfortunately, what happened.

LEE HAMILTON: These are matters that ought to be determined by-

BILL MOYERS: Knowing they had been deceived all along and told too little, they now seemed concerned about learning too much.

LEE HAMILTON: It is a political decision to keep the time down. A President was in danger of being crippled by these events and we did not think it was to the country's benefit to extend this out for a long period of time.

THOMAS POLGAR, Iran-Contra Committee Investigator: The people we were investigating weren't dumb-

BILL MOYERS: A veteran of 34 years with the CIA, Thomas Polgar was also one of the committee's investigators.

THOMAS POLGAR: And they realized perfectly well that since there is a deadline, they can delay the game, so to speak, and that any delay would be to their advantage.

<PAMELA NAUGHTON: Many of the documents we received from the department were long after the witnesses had testified. And then you would get hand-written notes showing that what they told you in testimony and what was in their notes were two different things. And where could you go?

THOMAS POLGAR: It was ridiculous that the de facto objects of the investigation -the

CIA, the Justice Department, the White House were made the judges of what they should release and what they should sanitize.

<PAMELA NAUGHTON: It was a conscious decision not to do certain things that would have revealed more about the President's activities. It became clear that we had not taken the steps that we should have taken to get at the whole truth.

BILL MOYERS: The whole truth would have taken Congress and the country to the heart of the Constitution. It would have meant, above all, deciding if the President's men had violated the law at his instruction or with his knowledge, whether or not Ronald Reagan did indeed take care that the laws be faithfully executed.

WARREN RUDMAN:, [R] Vice Chairman, Iran-Contra Committee: Here Was a case, the only one that we know of, where the Congress's absolute power to fund the foreign policy of America was subverted by a White House that was determined to do something else, that converted American military hardware to money and that some of that money found its way into supporting a policy that a majority of the Congress had opposed. I think, when you get into that kind of Constitutional subversion, you've got a very serious matter on your hands and those who think it was -quote -"a blip" don't understand the Constitution. That's what! Believe.

BILL MOYERS: When I heal' you talk, I hear Warren Rudman talking about high crimes and misdemeanors.

WARREN RUDMAN: Yeah. Well, if the President himself had known that, it would have been. There was no proof that he did.

LEE HAMILTON: High crimes and misdemeanors is a phrase pertaining to the impeachment process of the President, and we have no direct evidence. What we have is really indirect evidence of what the President's men did, not what the President did.

BILL MOYERS: Left hanging was the issue of unchallenged presidential power.

LAWRENCE WALSH: Independent Counsel: If a president should decide to act on his own, then he is raising a substantive controversy or a substantive issue with Congress. He's taking something from Congress that it is supposed to have. But then if he lies about it, he raises a second Constitutional issue, because he's not responding honestly to Congress and he's emasculating the system of checks and balances that the Constitution counts on. We were trained to believe that everyone is subject to the rule of law and this has been true for centuries, ever since the 12th century when a great lawyer said that "The King is beneath no man but beneath God and beneath the law, because the law maketh the King."

1st REPORTER: Mr. President, what did you know about money going to the contras?

RONALD REAGAN: All I know is, this is just going to taste wonderful and I'm looking forward to tomorrow.

2nd REPORTER: Vice President Bush, did you know about the contra aid or not, sir? Vice

GEORGE H. W. BUSH: I sensed that there was-that we were sending arms and I sensed we were trying to get hostages out, but not arms for hostages.

3rd REPORTER: Did you really begin to smell a rat, here? I mean, did you begin to say-Vice

GEORGE H. W. BUSH: Not really. No.

3rd REPORTER: -"This is beginning to smell like arms for hostages." Vice

GEORGE H. W. BUSH: Not really. I could see that it was-got a little close, but not-not enough to say, "No, this is not arms-this is purely arms for hostages." But you know, I'll tell you, I saw some reference in one of these stories to "the 9:00 o'clock meetings." Let me tell you how it works. Somebody comes in there, like, there's Don Regan, me and the President. "Anybody hear anything new on the hostages today? Has it moved forward at all?" "No, but we'll ask Poindexter." Poindexter would come in the room. "No, we haven't had a report." And that's the end of that meeting and then you go and talk about the budget or talk about something else. But when I hear that the hostages are going to be released in three days, and it doesn't take place, I'm concerned about it. I'll express-"What's happening, there? These people legitimate to deal with? Is it working or not?" It's that kind of thing. But there's no question about trying to jump away from it. I support the President. I stood with the President solidly. I did not think it was arms for hostages. After all the facts were in and all the disclosures made and all the revelations about the individuals involved known to me, I say, "Hey, this was wrong." So you learn by your mistakes. You make corrections. And you go forward.

4th REPORTER: One last question-Vice

GEORGE H. W. BUSH: Yeah, last one, right here.

BILL MOYERS: The power passed and with it, the secrets.

JUDGE: I do solemnly swear-

GEORGE H. W. BUSH: I, George Herbert Walker Bush-

BILL MOYERS: Like his predecessor, George Bush has avoided responsibility for any wrong-doing in the Iran-Contra scandal: .

GEORGE H. W. BUSH: -that I will faithfully execute the office of President of the United States-

JUDGE: -and will, to the best of my ability

GEORGE H. W. BUSH: -and will, to the best of my ability-

JUDGE: -preserve, protect and defend the Constitution of the United States-

GEORGE H. W. BUSH: -preserve, protect and defend the Constitution of the United States-

JUDGE: -so help me God.

GEORGE H. W. BUSH: -so help me God.

JUDGE: Congratulations.

BILL MOYERS: The basic Constitutional issues still have not been confronted. Can a president, on his own, wage his war that Congress opposes? And how are we, the people, to hold our leaders accountable if we're kept in the dark about their deeds? What happened in Iran Contra was nothing less than the systematic disregard for democracy itself. It was, in effect, a coup, a spirit at odds with liberty. Officials who boasted of themselves as "men of the Constitution" showed utter contempt for the law. They had the money and power to do what they wanted, the guile to hide their tracks, and the arrogance simply to declare what they did was legal. The frightening thing is not that it almost worked, but that it could happen again. The state of democracy almost guarantees it will. The men responsible for Iran-Contra, except for a few, have been absolved, exonerated or reprieved and gone on to better things. The government continues to hide its dirty linen behind Top Secret classification. And just last month, with little debate and scant attention from the media, the House and Senate agreed on a new intelligence bill giving the President wider power than ever to conduct covert operations using any agency he pleases. Next time, the crimes of Iran-Contra may not be crimes at all, or even misdemeanors. For

FRONTLINE, I'm Bill Moyers.