The MacNeil/Lehrer NewsHour

Intro

JIM LEHRER: Leading the news this Tuesday, General Secord told the Iran-contra hearings $ 3.5 million was diverted from the Iran sales to the contras. Gary Hart said he did nothing immoral last weekend in Washington. Attorney General Meese's relationship with the Wedtech Corporation is under investigation. And the U.S. Postal Service announced steps to raise the price of a first class stamp to twenty-five cents. We'll have the details in our news summary in a moment. Charlayne Hunter-Gault is in New York tonight. Charlayne?

CHARLAYNE HUNTER-GAULT: After the news summary we begin Day One of our McNeil-Lehrer special coverage of the Congress's Iran-contra probe. Then, extended excerpts from Gary Hart's first public defense. And an update on Amnesty Day for illegal aliens. News Summary

LEHRER: The Iran-contra hearings opened today with a detailed account of how the whole affair worked. It came from retired Air Force Major General Richard Secord, who was involved in both the Iran arms deal and the contra supply operation. He said $ 3.5 million in all was diverted from the Iran sales to the contras. He also said he understood the Reagan administration knew and approved of all of his activities. President Reagan told reporters this afternoon he knew of no illegal action.

Pres. RONALD REAGAN: I'm waiting to hear as much as anyone else. I told you over and over again everything that I know about all that took place [unintelligible].

REPORTER: Senator Inouye says you ought to check your memory about your statement that you knew nothing about illegal fundraising within your administration, sir.

Pres. REAGAN: There was no illegal fundraising as far as I know at this point. [unintelligible] as everyone else, I think -- out there in the country there were people that were contributing privately and in groups and giving money to aid the contras.

REPORTER: With weapons, sir?

Pres. REAGAN: I don't know how that money was to be used, and I have no knowledge that there was ever any solicitation by our people.

REPORTER: Did you know what Colonel North was doing? Did you know he was coordinating this?

Pres. REAGAN: No.

HUNTER-GAULT: An inquiry into Attorney General Edwin Meese's relationship with the scandal-ridden Wedtech Corporation is underway in the Justice Department. It was disclosed by an independent counsel looking into former White House aide Lynn Nafziger's lobbying efforts on behalf of Wedtech. The counsel, James McKay, said the inquiry could ultimately result in Meese's being included in his criminal investigation. Wedtech is a Bronx defense contractor that is at the center of corruption investigations by federal investigators and New York State prosecutors.

LEHRER: Gary Hart denied today that he did anything immoral with a Miami model last weekend in Washington. He said a Miami Herald story alleging misconduct was misleading and false. He spoke in New York City at a convention of newspaper publishers and challenged them to ask themselves searching questions about what is right and truthful. But the Democratic Presidential candidate did concede he made a mistake in associating with the Miami woman, 29-year-old Donna Rice.

GARY HART, Presidential candidate: Did I make a mistake by putting myself in circumstances that could be misconstrued? Of course I did. That goes without saying. Did I do anything immoral? I absolutely did not.

HUNTER-GAULT: The cost of mailing a letter will probably go up to a quarter sometime next year, the postal service announced today. Under a proposed new rate structure approved by the postal service's board, most other postage rates are also expected to rise an average of 16%. The increase has to be finally approved by the Independent Postal Rate Commission.

LEHRER: There was a new spy charge from Cuba today. The Cuban government issued a statement in Havana saying two agents of the United States CIA had been arrested. The two are identified as a woman U.S. citizen who is a Cuban exile, and her brother, and employee of the Ministry of Construction in Cuba. The announcement named the two as Gladys Oliva Garcia Hernandez and Nestor Garcia Hernanadez. There was no immediate comment from the U.S. government about the case.

HUNTER-GAULT: Tomorrow's all white election in South Africa has provoked anti-government violence. We have a report from Michael Beurk of the BBC.

MICHAEL BUERK, BBC [voice over]: One huge land mine had been planted on a dirt road just inside the South African border. It blew up a truckload of black workers late last night, killing one and injuring ten others. In Johannesburg there were two small explosions over the night, damaging a lamp post, but little else. The building will be used as a polling station tomorrow. Many soldiers have already cast their votes in order to be on continuous duty over the election period. They were out in considerable force in many black townships this morning, the start of a two-day stayaway protest from work. Bus stations were deserted as hundreds of thousands of blacks stayed at home. Police [unintelligible] on standby this evening, expecting more trouble tomorrow, as white South African goes to the polls.

HUNTER-GAULT: That's our news summary. Still ahead on the news hour, Day One of the Iran-contra probe. Day One of Hart's defense. And also Day One of Illegal Alien Amnesty. Iran-Contra Hearings

LEHRER: This was opening day for the Iran-contra hearings. Half of it was spent on opening statements from the 26 joint committee members. The other on the first witness, retired Air Force Major General Richard Secord. We have major excerpts from both halves. They will be introduced by our principal hearing monitor, Judy Woodruff.

JUDY WOODRUFF: Most of the 15 House members and 11 Senators on the Joint Investigating Committee used their statements to underscore the bipartisan cooperation on the committee. There was, however, tough criticism for the White House from both sides of the political aisle. The Chairman of the Senate Committee, Hawaii Democrat Daniel Inouye, led off by describing the committee's investigation. He said the next three months of hearings will look at what went wrong with the Reagan administration's Iran and Nicaraguan policies.

Sen. DANIEL INOUYE, Chairman Senate Select Committee: The story is one not of covert activity alone, but of covert foreign policy. No secret policy, which Congress has always accepted, but secret policy-making, which the Constitution has always rejected. It is a tale of working outside the system and of utilizing irregular channels and private parties accountable to no one on matters of national security, while ignoring the Congress and even the traditional agencies of executive foreign policy making. The story is both sad and sordid. It is filled with inconsistencies and often unexplainable conduct. None of the participants emerges unblemished. People of great character and ability, holding positions of trust and authority in our government, were drawn into a web of deception and despair.

Rep. LEE HAMILTON, Chairman, House Select Committee: Our concern here begins in 1984 when Congress and the President enacted the Boland Amendment. This law prohibited any agency engaged in intelligence activities from spending money in direct or indirect support of the contras. These hearings will be devoted to finding out what was done during the period that the Boland Amendment was in effect to supply the contras, by whom was it done, and at whose direction, what funds were raised, who raised the, where did they come from and how were they spent. What was the involvement of high officials and what did they know about the contra spy operation?

Sen. WARREN RUDMAN, Vice Chairman Senate Select Committee: By the time these hearings are concluded, the American people will learn the answers to the five final questions -- who, what, when, why and how. Of course, we will examine the role of the President and various Executive Branch officials. What actions did the President specifically approve of? What exactly did federal officials do? On whose authority was such action taken,and were any laws violated? There will be evidence of illegal behavior and contempt for our democratic form of government. There will be stories of greed and incompetence. There are many victims, especially the American people, who have a right to expect better from their government. While the investigation is still underway, we already have sufficient evidence to establish that this is an inexcusable fiasco of the first order.

Rep. DICK CHENEY, Vice Chairman House Select Committee: Mr. Chairman, these are hearings about important events. It's a case study, if you will, on the conduct of U.S. foreign policy. It's a very interesting story to be told about arms sales to Iran, about negotiations for hostages, and about support of the contras in Central America. Some will even say it is a fascinating story. But all of this has little meaning unless it's viewed within the broader framework of American foreign policy. A complete understanding of these events requires us to consider the context within which they occurred -- for example, the development of a private support network to assistant surgeons fighting the civil war in Central America makes little sense when considered in isolation. But it takes on a whole new significance when placed in the context of the following developments -- the establishment of a communist government in Nicaragua, an outpost of the Soviet empire on the North American continent; the infusion of hundreds of millions in military aid into Nicaragua from Cuba and the Soviet Union; overwhelming evidence of continued efforts by the communist government of Nicaragua to destroy subversion by subversion the fragile democratic governments of their neighbors in Central America; and of course, the U.S. Government policy, characterized by doubt and uncertainty, a policy which changed from supporting the contras to prohibiting official military assistance, to supporting military assistance within a few months. One important question to be asked is to what extent did the lack of a clear-cut policy by the Congress contribute to the events we will be exploring in the weeks ahead.

Rep. HENRY HYDE, (R) Illinois: I don't want to shatter the glow of bipartisan amity that suffuses this chamber when I suggest that when 535 cooks try to prepare their version of a foreign policy broth, you'd better approach it with a very long spoon. I do not wish to be misunderstood as defending everything that was done by members of this administration -- some of which did not serve our country well, and some of what not was done, such as the failure to notify Congress, also did not serve our country well. And the very cause they and some of us so deeply believe in -- democracy in Central America -- may have been irreparably harmed by their actions. But I am convinced the controversy we are about to investigate does not have to do at bottom line with who broke what law. That is an important dimension of our work, and we will find the answers. And what we don't find, I'm sure Judge Walsh will. But this debate is not essentially about narrow questions of legality. It is about some passionately held beliefs, one of which is the conviction that democracy and freedom will survive and flourish in our hemisphere and how best to achieve this.

Sen. SAM NUNN, (D) Georgia: All of us would like to see our hostages returned. We hope and pray for that every day, and all of us would like to see democracy in Central America. But we cannot abuse democracy at home in the pursuit of democracy abroad. The central issue thus becomes whether this administration upheld the law or flaunted the law.

Rep. JAMES COURTER, (R) New Jersey: Ronald Reagan chopped down trees in 1980 and hinted at what he would do to Iran if the hostages weren't returned. Ronald Reagan's administration is being chopped down by its secret eagerness to trade with terrorists while publicly denying it would ever do so. This administration's lack of frankness sometimes appalls me. Ronald Reagan should have had the courage of Ronald Reagan's own convictions. You can't just sneak policy upon the American people. Who but Ronald Reagan is to blame for jeopardizing that which he himself wanted to do?

WOODRUFF: Those were excepts from this morning's opening statements. This afternoon, the witness was retired Air Force Major General Richard Secord. He was selected as the first witness because of his involvement with both the Iran arms sales and the contra aid parts of the story. Secord is one of the few individuals with detailed knowledge of the complicated Iran-contra money trail. [voice over] It was Secord who reportedly controlled the secret Swiss bank accounts used to transfer funds for both the Iran and contra operations. It was Secord who chartered flights from Southern Air Transport to carry arms to Israel enroute to Iran, as well as to drop military supplies to the contra rebels in Nicaragua. One such flight was shot down in October. And when American hostage David Jacobsen was released in November, it was through an Iranian contact developed by Secord. Secord refused to answer any questions about his involvement before the Senate Intelligence Committee last December -- nor would he appear before the Tower Commission. But he appeared today, voluntarily, and without having been granted immunity from prosecution.

After he was sworn in, Secord proceeded to read from an opening statement, in which he was especially critical of Attorney General Edwin Meese.

Maj. Gen. RICHARD SECORD, U.S. Air Force, retired: I have decided to set the record straight to the best of my ability and to testify voluntarily without any inducement whatsoever. It is my hope that members of this committee and my fellow Americans will suspend judgment not only about us, but also about the objectives and the policies we were pursuing until after all the facts are placed upon the record. As you will shortly see, we did have some success. We also had our share of failure. But in all these endeavors, at least we tried. And I for one am not ashamed of having tried. If we were unconventional in some of our methods, it was only because conventional wisdom had been exhausted. If we had been successful in every respect, we would not be here today.

In agreeing to testify, I have returned to the position I embraced at the time the Attorney General for the United States prematurely went public with his grossly inaccurate disclosures about our operation. The decision of Mr. Meese -- and possibly others -- to succumb to anxiety and ignorance is particularly unforgivable in my judgment, in light of the fact that had he been receptive, he could have been advised of the facts surrounding these events before his announcement. This reasonable option was rejected, and we were instead betrayed, abandoned and left to defend ourselves. In the face of that abandonment, my instincts were equally self-protective, and I have refused until now to testify.

With the passage of time I have reconsidered, and I am now prepared to explain to all of you and to the American public precisely what I did. I am ready to answer your questions, Mr. Chairman.

WOODRUFF: Although committee members will share in the questioning of witnesses, today's questioning of Secord was conducted solely by House Chief Counsel John Nields.

JOHN NIELDS, Chief Counsel, House Select Committee: Mr. Secord, I take it there came a time in November of 1985 when you became involved in the sale of U.S. military equipment to Iran.

Gen. SECORD: That is correct.

Mr. NIELDS: Is that something you were asked to do, or something that you volunteered for?

Gen. SECORD: I was asked by Lieutenant Colonel Oliver North to assist.

Mr. NIELDS: Did that request come orally or in writing, or both?

Gen. SECORD: Both.

Mr. NIELDS: I would like you to turn to a document which has been marked "Exhibit 1" in the folder in front of you. It is a letter with a typewritten signature, Robert McFarlane, addressed "Dear Major General Secord." Is that the written request you just referred to?

Gen. SECORD: Yes, sir.

Mr. NIELDS: And is that actually signed by Mr. McFarland?

Gen. SECORD: No. It's signed by Oliver North for Robert McFarland.

Mr. NIELDS: Just so we get the record clear at the outset, Mr. Secord, who was Robert McFarland at that time?

Gen. SECORD: He was National Security Advisor to the President, and t the time within -- this was November 19th -- at the time was in Geneva with the U.S. delegation to the Summit.

Mr. NIELDS: Mr. Secord, the letter begins, "Your discreet assistance is again required in support of our national interest." Had your assistance been required earlier in support of our national interest?

Gen. SECORD: One year earlier in 1984 I had been asked if I would be interested in trying to assist the contras.

Mr. NIELDS: And who asked you if you were interested in that?

Gen. SECORD: Colonel North.

Mr. NIELDS: And were you in fact involved in assisting the contras in November 1985 at the time you received this letter?

Gen. SECORD: Yes.

Mr. NIELDS: What was the nature of the project that you were then engaged in, having to do with the contras?

Gen. SECORD: In November 1985, I was at the very beginning of a complex project we referred to as the Air Lift Project, a project which was designed to ultimately make air drops, parachute air drops, to various contra forces.

Mr. NIELDS: In Nicaragua?

Gen. SECORD: In Nicaragua.

Mr. NIELDS: No, Mr. Secord, such an operation I take it requires finances.

Gen. SECORD: Yes. It requires millions of dollars.

Mr. NIELDS: Where was the money supposed to come from to support this air supply operation?

Gen. SECORD: The money was coming from donated funds and these funds were coming, as I understood it, from private individuals and from some friendly foreign countries.

Mr. NIELDS: And where were these monies being put?

Gen. SECORD: In November of '85 they were being deposited in a Swiss bank account in favor of a company -- a [unintelligible] company, Lake Resources, Inc.

Mr. NIELDS: And who controlled the Lake Resources, Inc. account?

Gen. SECORD: Mr. Albert Hakim was the person who was in control of this account, and others that were created for various support purposes. But it was at my request and really under my oral direction.

Mr. NIELDS: And was Mr. Hakim then a business associate of yours?

Gen. SECORD: Yes, he was.

Mr. NIELDS: How did the donors know where to put the money, to your knowledge?

Gen. SECORD: I gave the account's name and number to Colonel North, and he in turn gave it to whoever was interested.

Mr. NIELDS: So I take it then, Mr. Secord, that at the time you received this letter requesting your assistance on the Iranian initiative, there was then in existence in Switzerland a bank account containing money for the benefit of the contras.

Gen. SECORD: That's correct.

Mr. NIELDS: And that bank account was Lake Resources.

Mr. NIELDS: At a later point in time -- February of 1986 and forward -- were the proceeds of arms sales to Iran also put into the same Lake Resources bank account?

Gen. SECORD: Yes, they were.

Mr. NIELDS: What was the total amount of money representing the purchase price of arms sold to Iran that was put into the Lake Resources or related Swiss bank accounts?

Gen. SECORD: Something over $ 30 million.

Mr. NIELDS: I take it by your answer that means something just a very little but over $ 30 million. So if you were speaking in round numbers, it would be $ 30 million.

Gen. SECORD: Yes, sir.

Mr. NIELDS: How much money was paid to your knowledge either directly or indirectly to the United States treasury out of that money?

Gen. SECORD: I believe it was about $ 12.3 million.

Mr. NIELDS: So in round numbers, $ 12 million.

Gen. SECORD: $ 12 million.

Mr. NIELDS: Now I want to ask you some questions about -- I think you'll agree there's a difference there of approximately $ 18 million. And I want to ask you some questions about where that money went. Before I do, let me ask you this -- up until a few days ago, did you have access to the records necessary to determine where that money went?

Gen. SECORD: No.

Mr. NIELDS: Who did?

Gen. SECORD: The Committee -- the House and Senate Select Committee have these records, which they received recently from Mr. Albert Hakim.

Mr. NIELDS: So, prior to that time, Mr. Hakim had the records.

Gen. SECORD: Correct.

Mr. NIELDS: Mr. Hakim identified in testimony given to this committee some eight Swiss bank accounts relating to the flow of this money that you've just been testifying about. Those records were then subpoenaed from him by the committees -- both committees -- and they are now undergoing a preliminary review by accountants who are working for the two committees. The records reflect that there is now in the bank approximately $ 1,360,000. In addition, Mr. Hakim testified to the committees that $ 6,527,000 of this money is presently being held in an account for his benefit by a Swiss fiduciary. Those two numbers total approximately $ 8 million, and if you subtract that from the $ 18 million difference you testified about a moment ago, that leaves $ 10 million presently unaccounted for. I understand you testified that $ 30 million came into these accounts, representing the purchase price of arms sold to Iran. That the cost of those goods to Lake Resources was $ 12 million. Am I correct so far?

Gen. SECORD: Correct.

Mr. NIELDS: Leaving a difference of $ 18 million. $ 8 million remains either in a bank or in custody of a fiduciary company in Switzerland, leaving a remainder of $ 10 million. Of that, something over $ 3.5 million was spent for the benefit of the contras. Am I correct so far?

Gen. SECORD: Correct.

Mr. NIELDS: Leaving a difference of $ 6.5 million or so. But of that approximately $ 3 million was spent on expenses in transporting the arms to Iran,leaving a difference of approximately $ 3.5 million. But of that, something over $ 1 million was devoted to purposes that you've identified in your testimony today that are neither Iran-related nor Nicaragua-related. Leaving a difference of approximately $ 2 million, and that figure you have not yet been able to give the committee the precise purpose of.

Gen. SECORD: That's correct.

WOODRUFF: Secord described his first meeting with contra leader Aldolfo Calero.

Gen. SECORD: I would guess that we talked for perhaps 45 minutes. What we talked about was really just one subject. He was interested in finding a new source of arms at prices lower than those which he had been told were being paid by the U.S., and he told me he had a list of these prices. He later gave me such a list. He said that of course one of their biggest problems was lack of money. He had very limited resources available to fund this contra army. It was a big worry. He had to find quality ammunitions and arms at as low a price as he could. So this was his concern. He told me off the top of his head the types of ammunition and arms he was interested in.

Mr. NIELDS: Had you previously ever been involved in arms transactions?

Gen. SECORD: Only in the U.S. Government, in which I was of course involved in a major way. But as a private individual, no. I am not an arms dealer.

Mr. NIELDS: Was there anything else that Mr. Calero needed besides arms?

Gen. SECORD: Well, over time he talked about a number of things he needed. But at that time he was talking only about arms. And he was concerned not just with pricing, I might add, but also with quality. Because they had some casualties in their ranks from faulty munitions, hand grenades blowing up in people's hands and other such problems. So he was very concerned about quality as well.

Mr. NIELDS: And he wanted you to procure some arms for him, I take it.

Gen. SECORD: He wanted me to explore the possibility of doing it, and to in effect, make a bid -- which is what we did at a later time.

Mr. NIELDS: When you say, "we" that's Mr. Calero?

Gen. SECORD: No, it's me. I took this listing that he gave me, which was an incomplete listing because he gave it to me just off the top of his head. And took this listing to an acquaintance of mine who is an arms dealer and has been for many, many years in Canada. And asked him to do a pricing exercise, availability exercise, and over a period of several months, he did work up a list with pricing.

Mr. NIELDS: And did you convey that list to Mr. Calero?

Gen. SECORD: Yes. And the list expanded as time went on. Calero liked the prices that we were coming up with, and the prices -- by the way, this was a strict commercial kind of transaction. There was nothing spooky about it, just a normal brokering deal. The prices were marked up in the process -- different markups for different line items, depending on the size. But between 20 and 30% was the markup, which is quite low in the arms business. And when you average it out, it turns out almost exactly to 20%.

Mr. NIELDS: I take it from what you're saying that you were to make a profit on these arms transactions.

Gen. SECORD: Yes. My partner and I were to -- by this time, I had a course told my partner Mr. Hakim what we were looking at. And it was intended that the profits generated would be shared by Hakim, myself and of course the arms dealer.

WOODRUFF: Besides former NSA aide, Oliver North, the other top government official Secord mentioned having talked to about aid to the contras, was former CIA Director William Casey. Again, Chief House Counsel John Nields was in charge of the questions.

Gen. SECORD: The meeting probably lasted 45 minutes, I would guess. As I said, just the two of us were there. It was a little bit humorous because at the start of the meeting he was doing most of the talking and I was making a few comments. But we were talking about two different countries, and I didn't realize it for about five minutes. He was talking about Iran, and I was talking about the Nicaraguan scene. So we were hemispheres apart for a while. And the Director is not the easiest guy I've ever communicated with, but I have great respect for the man, I want to make that very clear to the committee. He had a lot of strategic vision. After we got the talking past each other problem straightened out, we got around quickly to the subject of Central America, which was the purpose of the meeting. He was talking about Iran only because he knew I had had something to do with the Iran matter, which was not yet discovered. And I won't get into that right now. We talked about the situation in Latin America. I told him that I was not an expert on that area, that I felt inadequate about that area because I really didn't have any first hand knowledge of the geography or the people or anything else. But he was well aware that we were cranking up this air lift operation, [unintelligible] its importance. He asked me for my estimate of the situation -- by that he meant the overall military-political situation. And I gave him a brief explication, and I told him among other things that I felt the contras had no chance of prevailing, none whatsoever if we didn't get this air lift operation to the field, and even with it, even if we were very successful, I had grave reservations about their ability to achieve any military victories. Of course -- any significant military victories. I didn't see any real moves to create a viable southern front. And never was it done successfully thereafter. I -- although I knew they had many thousands more men than they could successfully arm and train, I didn't see the logistics capability, I didn't see the intelligence capability, and I did not see the leadership, which has got to be required for a decisive military victory there. Of course, it's possible that sufficient pressure could be generated by keeping them in the field to bring the Sandinistas to the table. I believe he shared my view of that situation -- at least at that time. He told me that they were very appreciative of what I was doing. He said I had his admiration, and asked what he could do. I explained to him that I needed intelligence information, as I've just discussed with you gentlemen. He took some notes on that. He was noncommittal, he didn't promise me anything. But he said he would look into it. Just as I was leaving that particular discussion, I said to him, "Mr. Director, if and when you get your hunting license back," -- which was kind of a crude way of referring to hoped for Congressional action -- "whatever assets we're creating right now," -- by that I had in mind the airfield which was just being scratched out and our [unintelligible] air lift operation and the material that went with it -- "it's yours. Just walk in and it's yours, that I assure you." He said, "Thank you very much," and I left.

Mr. NIELDS: You were referring to the assets that you were developing in connection with this air resupply operation, I take it.

Gen. SECORD: That's correct. As I said to you earlier, it was not a profit making venture for us, we were just trying to hold the line until we could get out of there.

Mr. NIELDS: When was your next meeting with Director Casey?

Gen. SECORD: The next morning was at my request and it was a very brief meeting that took place in -- I believe it took place in early February of '86. I don't have any notes on it, but I remember it fairly well.

Mr. NIELDS: How was that set up?

Gen. SECORD: I called North and asked him to set it up. And he did.

Mr. NIELDS: This one was at your request?

Gen. SECORD: My request. I went to see him because I was unhappy, and I told him, "Mr. Director, you and I are both too old to waste time beating around the bush. I've come here to complain." "Complain about what?" I said, "Complain about your organization." "What organization?" "The Task Force," I said. He said, "What Task Force?" "The Central American Task Force." "Oh, that one. What's the problem?" I said, "The problem is I'm not getting any support. I wanted intelligence information, guidance, whatever support you can give us, I want. We want every bit of support that we can get from you. But the [unintelligible] what we're getting is a lot of questions about the nature of our [unintelligible] organization, how's it organized, who own's it, who's got the shares, what's Secord doing? It's like an investigation of our organization. They're not supporting us." I didn't need to be investigated, I needed to be supported. And that was the nature of my complaint and I stated it firmly. Again, he said he would look into it. The meeting was a brief meeting.

And the last time I saw the Director it was quite a bit later, and I'm sorry, I cannot tell you what month it was in. I think it was before the May journey of Mr. McFarlane to Teheran in '86. But it might have been after, I'm not sure. But it was about that timeframe. This meeting concerned itself also with the contra matters. I happened to be North's office discussing something when the Director called Colonel North. And North said, "That was the Director. He wants to see me. Would you like to go with me?" I thought we were leaving the building, but we weren't, we were just going around the corner to another office where he happened to be -- the Director happened to be. I went in, he said, "Good to see you again, General." North and I sat down with him and the subject was raised, and I believe this was a continuing discussion Colonel North was having with the Director because it went right into the middle of the problem. And that was the growing shortage of funds to support the contras. North said this was becoming a really critical problem, that donations to the cause were tailing off, they hadn't been materializing as they should, there was shortage in virtually everything -- even food -- by this time.

The Director stated that he wasn't at all confident that they would be able to get a new bill out of Congress in too short a period of time. He said that some people over here, meaning the Executive Offices, seemed to think they were going to be able to get a new bill through rather rapidly off the Hill. But he didn't share that view. North turned to me and asked me to give my estimate of the situation. So I had to give my estimate of the situation again. So I ran through quickly what I thought I knew about the situation at the time. I told him this air lift operation -- which was my area of concern -- was always short of funds. We neededa lot of things, we needed new equipment. I wanted in particular to buy some [unintelligible] navigation systems for the airplanes, and they're very expensive. And we didn't have good weather radars either, and so on.

Casey asked me how much money was needed. And I said, "Well, that depends on what period of time you're talking about. Unless the U.S. Government gets back into the support of the contras, we're not going to make it." That was the message I wanted to impart -- it had to be done fairly soon, because these private efforts, while they can bridge a little but, they cannot supplant the kind of effort that can be put forth by a nation. No private organization ever has enough resources to do that kind of a job. I've already mentioned intelligence, and there are other areas.

He said, "Well, in a few months, the end of the summer, something like that." I guessed. I said it would take about $ 10 million, I thought. He said, "Ten million dollars, ten million dollars --" And then he mentioned a country which he thought might be willing to donate this kind of money. But then he said, "But I can't approach them." Why, I don't know. Why he couldn't approach them, I don't know, and he didn't say. But he said that two or three times. And then he said, then he looked at me and said, "But you can." I said, "But Mr. Director, I'm not an official of the U.S. Government. I don't think these people particularly are interested in solicitation from private citizens. I think that would be very foolish." And then he mused about it again, and then North said, "Well, somebody better damned well start looking into this right away, because it's a rather desperate situation." The Director stated that he believed that George -- meaning The Secretary of State -- could make such an approach, though. And the bottom line -- he said he would speak to the Secretary of State about this matter. And that was the last time I meet with the Director -- although again he thanked me for the efforts I had been involved with.

LEHRER: We will be running extended excerpts from each day's testimony from here on, as the news in the hearing room and elsewhere dictate. Still to come tonight, Gary Hart's speech to the publishers, and a report on Amnesty Day. Confronting the Critics

HUNTER-GAULT: Presidential contender Gary Hart offered his first public defense today against published reports that he spent much of the weekend in his Washington townhouse with 29-year-old Miami model Donna Rice. He labeled the charges first published in the Miami Herald as misleading and false. And declared he'd done nothing immoral. Hart addressed the issue before making a political speech scheduled long in advance of the weekend incident. Here are some excerpts from his New York appearance before the American Society of Newspaper Publishers.

GARY HART, Presidential contender: Last weekend, a newspaper published a misleading and false story that hurt my family and other innocent people, and reflected badly on my character. This story was written by reporters who by their own admission undertook a spotty surveillance to reach inaccurate conclusions based on incomplete facts, who after publishing a false story now concede they may have gotten it wrong. And who most outrageously refused to interview the very people who could have given them the facts before filing their story, which we asked, and urged, them to do. It is now nonetheless being repeated by others as if it were true. Last month when I announced my candidacy for the Presidency, I said that all candidates should be tested and that all of us should hold ourselves to the highest possible standards -- of competence to govern, of character, of vision and of leadership. I believe that even more today than I did then. And I had a very good idea of what I meant when I made that statement. Since the very first day I entered public life I've always held myself to a high standard of public and private conduct, and I always will.

But the events of the past few days have also taught me that for some of us in public life, even the most commonplace and appropriate behavior can be misconstrued by some to be improper. This just means that I have to raise my own personal standard even higher. Did I make a mistake by putting myself in circumstances that could be misconstrued? Of course I did. That goes without saying. Did I do anything immoral. I absolutely did not.

Those who seek national leadership submit themselves to many tests of personal character and fortitude, of integrity and substance, but also of determination and will of commitment to the nation's interest. I'm here today to restate my intention to insist that whatever may be delivered by the more brutal side of politics, this contest must and will focus on this nation's future. For that, and that alone, is what's at stake in 1988.

HUNTER-GAULT: Afterwards, Hart took questions from the audience of newspaper publishers. The first question, "To what extent are voters justified in examining a candidate's personality, character and values?"

Mr. HART: Voters are absolutely justified, directly and through the press, at interrogating everyone who seeks national leadership on every relevant detail, their background, their history, their family -- mostly their values and their principles and beliefs. One cannot separate policy from who we are, where we came from, what fashioned and shaped each of us. In the case of both Bob Dole and myself, our upbringing in rural Kansas. All those things go into it. Our church, our personal relationships. And I think the voters have every right -- probably up to the point where the questions become irrelevant to leadership and character. But ask anything they want. I know of no time in my own public life of 12 or 15 years -- or indeed since I announced for the Presidency in the last month -- where any voter or any citizen of this nation has asked me a question that was out of bounds or false-based or even irrelevant for this matter.

DICK CAPEN: My name is Dick of the Miami Herald. I would like to point out that it seems to me the issue is not the Maimi Herald -- it's Gary Hart's judgment. He's an announced candidate for President of the United States, and he's a man who knows full well womanizing has been an issue in his past. We stand by the essential correctness of our story, it's possible that at some point along the way that someone could have moved out of the alley door of his house, but the fact of the matter remains that our story reported on Donna Rice who he met in Aspin, who he subsequently met in Dade County. He acknowledged that he telephoned her on a number of occasions, it is a fact that two married men whose spouses were out of town spent a considerable amount of time with these people. It is also true that our reporters saw him and Donna Rice leaving his townhouse on at least three separate occasions. And now, of course, it's been revealed by Ms. Rice that she went with him on a cruise to the Bahamas. We've interviewed Mr. Hart, we've interviewed Mr. Broadhurst, and Ms. Rice yesterday, and we've given their comments full and prominent display in the Miami Herald. We've never speculated about what went on during any of Mr. Hart's meetings with Ms. Rice on these different occasions. And clearly at minimum, there's an appearance of impropriety. The thrust of this news story, whether it be in the Miami Herald or anywhere else in the country, remains that the public has a major interest in the integrity and judgment of a man who aspires to be President of the United States.

Mr. HART: Dick, what is the question? (laughter and applause)

Mr. CAPEN: My question, Mr. Hart, is how can we assess your judgment, given the factors of the past few days?

Mr. HART: Well, that's clearly something that each and every one of you will have to do, and more importantly, the American people. And the case is before them, and we'll see what their judgment is. Alien Amnesty

LEHRER: Finally tonight, an update on Amnesty Day. This is the day illegal aliens could start turning themselves in and become legal immigrants in the United States. It was a major part of the new immigration law passed by Congress last year. Our update report is from correspondent Tom Bearden.

TOM BEARDEN [voice over]: They opened the San Diego Legalization Office promptly at 8:00 this morning, admitting the first group of aliens to apply for amnesty. Only a few people were there when the doors opened, and some of them were afraid to be photographed. Critics of the INS had predicted chaos saying the agency wouldn't be ready to open the centers. And it did come down to the wire here.

Yesterday afternoon, workmen were hastily setting up rented furniture for the second time. Initially the agency thought that the $ 250,000 worth of furniture they purchased wouldn't arrive in time. But it showed up unexpectedly yesterday. They removed the rental equipment, only to discover that a lot of parts were missing. They finished reconstructing the waiting room at 9:00 last night. There have been other delays. The regulations under which the amnesty program will be operated weren't published until last Friday. And Chief Legalization Officer Bob Coffman says delays in delivering the application forms probably contributed to a slow first day.

BOB COFFMAN, legalization officer: One of our big glitches has been the lack of documents. They didn't have any papers to fill out. And they had to have medicals, and that takes -- they didn't even get the papers until Thursday, and medicals take three days, so this doesn't surprise me.

BEARDEN: When do you expect that the process might be well underway?

Mr. COFFMAN: I'd say by mid month.

BEARDEN: There were crowds at newly opened offices in other cities, but most locations we contacted today found themselves with fewer than 20 people present when the doors opened. There didn't appear to be any pattern. The Hermosillo family was among the first in line here. They've been in the U.S. illegally since 1977. (to family) How important is amnesty to you?

JOEL HERMOSILLO, Amnesty applicant: It's very important, it's my future. It's going to decide my future. Whether I'm a success or not a success.

BEARDEN: The San Diego office is just one of the 107 legalization centers that opened today all across the country. They won't be doing the job alone. The INS has contracted with a host of local social service agencies to do the initial screening of applicants for eligibility. Some of those agencies already have large backlogs.

WOMAN on PHONE: What it is is you have to prove you've been here since 1982.

BEARDEN: For weeks now, undocumented aliens have been crowding into processing centers like this one at St. Judes Shrine. Catholic Community Services is one of the INS's designated agencies to help aliens to go through the complex procedures that could eventually lead to citizenship. Legalization coordinator Maria Elena Verdugo says they've already received 10,000 applications and expect to process 30,000 people in the coming year.

MARIA ELENA VERDUGO, legalization counselor: When we first started the program, we thought that by this time we would have doubled that. But what is happening is that a lot of people are calling me and other staff members and volunteers and saying "We're waiting to see what happens with our relatives and friends before we come forward." We foresee a large number of applicants coming out of the woods after this first group has gone through and filed their applications and maybe gotten their temporary residency.

BEARDEN: Is that because they're suspicious of the INS?

Ms. VERDUGO: They're afraid of being deported, afraid of being identified, unsure -- a lot of these people do not have televisions, do not have radios. So what they hear is word of mouth. And many times word of mouth is some misinformation and some people that are not as positive as we are in this program. So that's the reason they are waiting to see what happens with other applicants.

BEARDEN: [voice over]: Not all the applicants fear the INS. Elias Medina is in the process of preparing his application. He's been in the U.S. since his mother overstayed her temporary visa in 1971. He was 4 years old at the time.

ELIAS MEDINA, Amnesty applicant: I've been here so long that I've been through my education. This is just a piece of paper to tell me it's going to be okay, I don't have to worry about my future plans. If I want to get into the service or whatever. It won't matter, I'll just have it there.

BEARDEN: But many others are afraid. One thorny problem has to do with families in which some members have been in the country long enough to qualify for amnesty, while others haven't. And there was concern that millions of people who don't meet the requirements will be driven even further underground than they are today. That they will be at the mercy of unscrupulous lawyers, denied the basic protection of U.S. law. The legislation gives aliens a year to file for amnesty. Critics have already said an extension will be necessary, given the delays already experienced. Estimates range as high as 4 million people may be eligible. But no one really knows how many will ultimately apply for citizenship.

HUNTER-GAULT: Once again, the main stories on this Tuesday. General Richard Secord told the Iran-contra hearings $ 3.5 million was diverted from Iran sales to the contras. Gary Hart said he made a mistake of judgment, but did nothing immoral last weekend in Washington. Attorney General Meese's relationship with the Wedtech Corporation is under review. And the postal service announced steps to raise the price of a first class stamp to twenty-five cents. Good night, Jim.

LEHRER: Good night, Charlayne. We'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.