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- <text id=91TT1595>
- <title>
- July 22, 1991: The Cover-Up Begins to Crack
- </title>
- <history>
- TIME--The Weekly Newsmagazine--1991
- July 22, 1991 The Colorado
- </history>
- <article>
- <source>Time Magazine</source>
- <hdr>
- NATION, Page 14
- IRAN-CONTRA
- The Cover-Up Begins to Crack
- </hdr><body>
- <p>A former CIA official admits the agency lied about its knowledge
- of the secret plan to fund the Nicaraguan rebels. Even worse,
- U.S. spymasters may have been entangled with a notorious criminal
- enterprise.
- </p>
- <p>By Richard Lacayo--Reported by Jonathan Beaty/New York and Bruce
- van Voorst/Washington
- </p>
- <p> Until last week the Iran-contra scandal seemed ready to
- fade from the courts, the news and the mind. After costing more
- than four years and $25.5 million, the investigation headed by
- special prosecutor Lawrence Walsh was limping to a close. A
- federal appeals court had overturned Lieut. Colonel Oliver
- North's felony conviction, and a retrial seemed unlikely. The
- same outcome seemed possible for former National Security
- Adviser John Poindexter's conviction.
- </p>
- <p> Then the scandal roared back to life with a series of
- stunning developments. They suggested that:
- </p>
- <p>-- Top intelligence officials had engaged in covering up
- the Reagan Administration's attempts to evade a congressional
- ban on aid to the Nicaraguan rebels by siphoning off profits
- from secret arms shipments to Iran.
- </p>
- <p>-- The Iran-contra affair may be only part of a broader
- and previously undisclosed pattern of illegal activities by
- intelligence agencies during the tenure of Ronald Reagan and his
- CIA chief William Casey. Sources close to the unfolding
- investigation of the Bank of Credit & Commerce International
- told TIME that U.S. intelligence agencies, including the CIA,
- maintained secret accounts with the globe-girdling financial
- empire, which has been accused of laundering billions of dollars
- in drug money, financing illegal arms deals and engaging in
- other crimes.
- </p>
- <p> The discovery of the CIA's dealings with B.C.C.I. raises
- a deeply disturbing question: Did the agency hijack the foreign
- policy of the U.S. and in the process involve itself in one of
- the most audacious criminal enterprises in history? Items:
- </p>
- <p>-- Alan Fiers, head of the CIA's Central America task
- force from 1984 to 1986, pleaded guilty on Tuesday to two counts
- of lying to Congress about when high-ranking intelligence
- officials first learned of the illegal diversion of funds to the
- contras. Fiers said he became aware of the diversions and
- informed Clair George, then the CIA's deputy director for
- operations, in the summer of 1986. But, Fiers said, George
- ordered him to deny any knowledge of the transfers when he
- testified before the House intelligence committee that October.
- In exchange for being allowed to plead guilty to two
- misdemeanors instead of more serious felonies, Fiers is now
- assisting Walsh's investigation. With his help, Walsh will
- probably seek a perjury indictment of George and perhaps other
- present and former government officials.
- </p>
- <p>-- Three days after Fiers entered his plea, the New York
- Times disclosed that Walsh possesses tapes and transcripts of
- hundreds of telephone conversations between CIA headquarters in
- Langley, Va., and agents in Central America. The talks occurred
- during the period when North, former Air Force General Richard
- Secord and his business partner Albert Hakim were operating
- their secret arms pipeline. The tapes--which have been in
- Walsh's hands for three years--were recorded on a system that
- George installed at the agency's operations center in the early
- to mid-1980s.
- </p>
- <p> In recent months Walsh has used the tapes to prod the
- memory of North and other reluctant witnesses before the grand
- jury that is still gamely looking into the scandal. The tapes
- are expected to furnish evidence that could lead to further
- indictments. Some transcripts of the recordings have been
- examined by staff investigators for the congressional
- Iran-contra committees. But curiously, until last Friday, no
- member of the Senate intelligence committee was aware of the
- recordings.
- </p>
- <p>-- Investigators probing B.C.C.I. have told TIME that the
- Iran-contra affair is linked to the burgeoning bank scandal.
- Former government officials and other sources confirm that the
- CIA stashed money in a number of B.C.C.I. accounts that were
- used to finance covert operations; some of these funds went to
- the contras. Investigators also say an intelligence unit of the
- U.S. defense establishment has used the bank to maintain a
- secret slush fund, possibly for financing unauthorized covert
- operations. More startling yet, even before North set up his
- network for making illegal payments to the contras, the National
- Security Council was using B.C.C.I. to channel money to them.
- The funds were first sent to Saudi Arabia to disguise their
- White House origins; then they were deposited into a B.C.C.I.
- account maintained by contra leader Adolfo Calero.
- </p>
- <p> The Iran-contra affair has been characterized by U.S.
- officials as a rogue operation managed by overzealous members
- of the National Security Council. But if Fiers is correct,
- top-ranking CIA officials not only knew about the operation and
- did nothing to stop it; they also participated in an illegal
- cover-up.
- </p>
- <p> One of the first casualties of the disclosures could be
- the nomination of Deputy National Security Adviser Robert Gates
- to head the CIA. Though Fiers did not implicate Gates in the
- deception, some Senators find it hard to believe Gates' claim
- that he knew next to nothing about the Iran-contra scheme when
- he served as Casey's principal deputy. Four years ago, that
- suspicion forced Gates to withdraw after Reagan picked him to
- succeed Casey, who was dying from brain cancer.
- </p>
- <p> Those misgivings appeared to have faded when George Bush
- chose Gates to replace William Webster. But the mounting
- questions about the scandal could put his nomination on hold.
- The Senate intelligence committee, which had expected to begin
- its hearings on Gates this week, decided to hold off. Members
- may want to question Fiers, George and perhaps others about what
- Gates may have known. If the committee's uncertainty drags on,
- it could run into the August congressional recess, which would
- delay hearings until September.
- </p>
- <p> Sensing the threat to Gates' confirmation, Bush rushed to
- defend his nominee. He implored the Senate not to leave Gates
- "twisting in the wind" through the summer. "Get the men up there
- who are making these allegations," Bush demanded. "Isn't that
- the American system of justice--innocent until proven guilty?"
- </p>
- <p> But Gates is just one more figure twisting in a resurgent
- storm. Suddenly a number of unanswered questions assume a new
- urgency. Just what did Ronald Reagan--and George Bush--know?
- And when did they know it?
- </p>
- <p> Beyond that, the discovery of the secret
- intelligence-agency accounts in the renegade B.C.C.I. raises a
- whole new set of unsettling possibilities. The most serious is
- that U.S. spymasters may have been undertaking unauthorized
- covert operations and all the while furthering the ends of
- B.C.C.I. By providing clandestine services for intelligence
- agencies in numerous countries, B.C.C.I. was able to cloak its
- activities in an aura of national security and thereby stave off
- investigations from banking officials in the U.S. and abroad.
- </p>
- <p> In 1988 Gates is reported to have told a colleague that
- B.C.C.I. was "the bank of crooks and criminals." Yet when
- customs agents investigated the bank in 1988, they found
- "numerous CIA accounts in B.C.C.I.," says former U.S.
- Commissioner of Customs William von Raab. Those, he says, were
- being used to pay agents and "apparently to support covert
- activities."
- </p>
- <p> Senate investigators, who have known of the agency's links
- to the bank, have demanded an explanation from the CIA--so
- far, without getting a satisfactory response. One question they
- might ask is whether the CIA link to B.C.C.I. explains the
- Justice Department's slowness in pursuing its case against the
- bank. Last year the Justice Department tried unsuccessfully to
- persuade the Florida state comptroller not to lift B.C.C.I.'s
- license to operate in that state.
- </p>
- <p> Armed with Fiers' testimony and the treasure trove of CIA
- phone tapes, Walsh is likely to seek more indictments. In
- addition to George and perhaps other CIA officials, there are
- two potential targets outside the agency: former Assistant
- Secretary of State Elliott Abrams and Donald Gregg, now U.S.
- ambassador to South Korea. In his plea Fiers says he lied to
- Congress at a Senate intelligence committee hearing on Nov. 25,
- 1986. On the same day, Abrams testified that no one at the State
- Department knew of the diversion of funds. A few days later,
- when Abrams made a second appearance before the lawmakers,
- Democratic Senator Thomas Eagleton of Missouri angrily accused
- him of having lied earlier. "You've heard my testimony," Abrams
- said during their exchange. "I've heard it," Eagleton replied,
- "and I want to puke."
- </p>
- <p> Fiers may also implicate Gregg, a onetime CIA officer who
- served as a foreign policy adviser to then Vice President Bush.
- Gregg was a close friend of Felix Rodriguez, another former
- agent, who became a crucial link in the North pipeline to the
- contras. But Gregg has repeatedly denied before Congress that
- the office of the Vice President recruited Rodriguez. One
- tantalizing entry in North's diary indicates that on Jan. 9,
- 1986, North and Fiers had a phone conversation about Rodriguez.
- It reads, "Felix talking too much about V.P. connection." Was
- the reference to Gregg or to Bush?
- </p>
- <p> Walsh's biggest worry may be that the Senate intelligence
- committee will call Fiers and George as witnesses at Gates'
- confirmation hearing. Last July a federal appeals court set
- aside North's 1989 conviction on the ground that some witnesses
- who testified against him may have been influenced by his
- congressional testimony about Iran-contra. That testimony could
- not be used against North in court because Congress had granted
- him immunity. Concerned that future Senate testimony by Fiers
- or George might also be put beyond his reach by a grant of
- immunity, Walsh last week issued a pointed warning to the
- committee not to imperil his case. "Our investigation has
- reached a point of significant breakthrough," Walsh said. "To
- jeopardize this progress in a vain hope of getting quick facts
- as to an individual nomination would be regrettable."
- </p>
- <p> In one respect, at least, Walsh is right: an individual
- nomination is no longer the central issue. The main questions
- now focus on whether the intelligence community covered up
- illegal acts and how high the conspiracy reached.
- </p>
-
- </body></article>
- </text>
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