by Tim Weiner
North had worked out the money end of the arms-for-hostages swap. The Pentagon would transfer thousands of TOW missiles to the CIA. The cost to the agency was a cut-rate $3,469 per missile, a crucial fact known to very few people. Secord, on behalf of the CIA, would pay $10,000 apiece, generating $6,531 in gross profits, pocketing his fair share, and then transferring the net to the contras in Central America. Ghorbanifar would cover the $10,000 cost and then some by marking up the missiles again when he sold them to the Iranians. Depending on how many weapons the United States could sell to Tehran, the contras stood to gain millions.
In late January, Defense Secretary Weinberger ordered his chief aide, the future secretary of state, Colin Powell, to transfer one thousand TOW missiles from a Pentagon warehouse to the custody of the CIA. The missiles went through Richard Secord and Manucher Ghorbanifar into Iran in February. The Iranian broker marked up his prices munificently before the weapons reached Tehran. When the cash flowed back, the CIA reimbursed the Pentagon with a technique familiar to money launderers everywhere. Its checks were broken up into sums of $999,999.99 or less. CIA financial transfers of $1 million or more required a routine legal notification to Congress. Secord received $10 million for the one thousand missiles from Ghorbanifar. Most of the profit was earmarked for the contras.
In an April 4, 1986, memo, Lieutenant Colonel North laid out the big picture for Vice Admiral John Poindexter, the new national security adviser to the president. Once everyone’s costs were covered, he reported, “$12 million will be used to purchase critically needed supplies for the Nicaraguan Democratic Resistance Forces.” As North famously observed, “it was a neat idea.”
Only one element was missing from this elaborate calculus: the hostages. Four hostages were being held in July 1986. Six months later there were twelve. The willingness of the Americans to provide weapons to the Iranians only increased the appetite for hostages.
“North’s rationale, which was supported by those in the CIA who were helping him, was that the kidnappers in Lebanon were a different group from those who were getting the payoffs,” said the American ambassador in Lebanon, John H. Kelly. “‘Our Shi’ites are reliable. It is a different group of Shi’ites that are doing the kidnapping.’ It was total hogwash!”
Casey and a handful of his loyal analysts concocted the notion that the weapons deals would signal support to political moderates in the government of Iran. This was a grievous example of the way in which “the CIA was corrupted” during the Reagan administration, in the words of Philip C. Wilcox, Jr., the State Department’s principal intelligence officer and its highest-ranking liaison to the CIA in the late 1980s. There weren’t any moderates left in the government of Iran. They had all been killed or jailed by the people receiving the weapons.
“I HOPE IT WILL NOT LEAK”
The proceeds of the arms sales and the millions Casey had finagled from the Saudis put the CIA back in business in Central America.
The agency set up an air base and a network of safe houses for weapons shipments outside San Salvador. The base was run by two veteran anti-Castro Cubans on the CIA’s payroll. One was Felix Rodriguez, the man who had helped capture Che Guevara. The other was Luis Posada Carriles, who had just escaped from a Venezuelan jail, where he was being held for his central role in the terrorist bombing of a Cuban passenger jet that killed seventy-three people.
By the summer of 1986 they were dropping ninety tons of guns and ammunition to the contras in southern Nicaragua. In June Congress did an about-face and authorized $100 million in support for the war in Central America, effective October 1. On that date, the CIA would have its hunting license back. For a moment, it looked like the war was going their way.
But the CIA’s elaborately concealed arms network was coming apart. The station chief in Costa Rica, Joe Fernandez, was serving as an air traffic controller for the weapons shipments, and he had a rough airstrip cleared for clandestine flights. But the new president of Costa Rica, Oscar Arias, who was working for a negotiated peace in Central America, had warned Fernandez to his face not to use the airstrip to arm the contras. On June 9, 1986, a CIA plane loaded with weapons took off from the secret air base outside San Salvador in bad weather, made an unscheduled landing at the airstrip, and sank axle-deep into the mud. Shaking with fear and anger, Fernandez got on the phone, called San Salvador, and ordered his CIA colleague to “get that plane the hell out of Costa Rica!” It took two days.
That same month, Felix Rodriguez began to realize that someone in the supply line—he suspected General Secord—was profiting from their patriotism. On August 12, he tried to blow the whistle in a meeting with another old friend—Vice President Bush’s national security adviser, the CIA veteran Don Gregg. It was, Gregg concluded, “a very murky business.”
On October 5, 1986, a teenage Nicaraguan soldier fired a missile that brought down an American C-123 cargo plane ferrying weapons from San Salvador to the contras. The sole survivor, an American cargo handler, told reporters that he worked under contract for the agency. Felix Rodriguez made a panicked call to the office of the vice president of the United States. When the plane went down, North was in Frankfurt trying to cut a new arms-for-hostages deal with Iran.
On November 3, weeks after the tale of the secret deals was first revealed in anonymous leaflets scattered on the streets of Tehran, it was published by a little weekly in Lebanon. It would be months before the full story came out: Iran’s Revolutionary Guards had received two thousand antitank missiles, eighteen sophisticated anti-aircraft missiles, two planeloads of spare parts, and some useful battlefield intelligence through the good offices of the CIA. The arms shipments “added significantly to Iranian military capabilities,” said Robert Oakley, the counterterrorism coordinator. “The intelligence we passed to them was also of significant help.” But the Iranians had been cheated. They were complaining, with good reason, that they had been overcharged 600 percent for the last shipment of HAWK parts. Ghorbanifar himself had been caught short; his creditors were pursuing him for millions, and he threatened to expose the operation to save his skin.
Casey’s covert operation was coming undone. “The person who managed this whole affair was Casey,” said the State Department’s in-house counsel, Abraham Sofaer. “I don’t have any doubt about it. I knew Casey from before. I admired and liked him, and when I blew the whistle on the whole thing, it was Casey who, I felt, regarded what I had done as treason.”
On November 4, 1986, election day, Rafsanjani, the speaker of Iran’s parliament, revealed that American officials had been to Iran bearing gifts. The next day, Vice President Bush recorded in his taped diary: “On the news at this time is the question of the hostages. I’m one of the few people that know fully the details…. This is one operation that had been held very, very tight, and I hope it will not leak.”
On November 10, Casey went to an extraordinarily tense meeting of the members of the National Security Council. He steered Reagan toward making a public statement that the United States was working on a long-term strategic plan to foil the Soviets and the terrorists in Iran—not trading weapons for hostages. The president parroted the line. “We did not—repeat—did not trade weapons or anything else for hostages,” Reagan told the nation on November 13. Once again, as in the U-2 shootdown, as at the Bay of Pigs, as in the war in Central America, the president lied to protect the covert operations of the CIA.
This time very few people believed him.
It took five more years to free the last American hostages. Two never came back. Peter Kilburn was murdered. After enduring months of torture and interrogation, the CIA’s Bill Buckley died in chains.
“NO ONE IN THE U.S. GOVERNMENT KNEW”
The congressional intelligence committees wanted a word with Bill Casey, but he chose to follow tradition and leave the country at a moment of crisis for the CIA.
On Sunday, November 16, Casey flew south to review the troops in Central America, leaving his deputy Bob Gates to clea
n up the mess. The hearings were reset for the coming Friday. The five intervening days were among the worst in the agency’s history.
On Monday, Gates and his subordinates started trying to piece together a chronology of what had happened. The director put Clair George and his clandestine service in charge of preparing his testimony to Congress. The intent was not to tell the truth.
On Tuesday, staff members of the intelligence committee summoned George to a closed hearing in a sealed and electronically secured vault in the dome of the Capitol. He knew that a year earlier the CIA, without legal authorization, had traded arms for hostages. Under close questioning, he did exactly as the president had done five days before: he lied.
Overnight, Gates sent another of Casey’s assistants down to Central America to deliver a draft copy of Casey’s proposed testimony and to bring the director back to headquarters. On Wednesday, Casey started writing a new version on a legal pad as he flew back to Washington. But he soon found that he could not read his own handwriting. He started dictating flowery prose into a tape recorder. It was a jumble. He tossed the work aside.
On Thursday, Casey carried the original draft in his briefcase to the White House for a meeting with North and Poindexter. As they put their heads together, Casey scrawled a note on his draft saying that “No one in the U.S. Government knew” about the November 1985 HAWK flight of the CIA. It was an extraordinarily bold lie. He returned to headquarters and met in the director’s seventh-floor conference room with most of the agency’s leadership and many of the officers directly involved in the Iran arms shipments.
“The meeting was an unmitigated disaster,” remembered Casey’s executive staff director, Jim McCullough. Dave Gries, another of Casey’s closest aides, said that “no one present was able—or perhaps willing—to fit together all elements of the Iran-contra puzzle.”
“The atmosphere at the meeting was surreal,” Gries recalled. “Many of the participants seemingly were more interested in protecting themselves than in assisting Casey, who was visibly exhausted and at times incoherent. It was clear to McCullough and me that the next morning we would be accompanying a badly confused Director to Congress.”
On Friday, Casey delivered closed-door testimony to the congressional intelligence committees. It was a farrago of evasion and befuddlement, accompanied by one riveting fact. A senator asked if the CIA had been shipping secret support to both Iran and Iraq as the two nations slaughtered each other. Yeah, Casey said, we’ve been aiding Iraq for three years.
Over the weekend, North’s memo to Poindexter about skimming millions from the Iran arms sales and funneling the money to the contras turned up. Both men had been shredding and destroying documents furiously for weeks, but North somehow missed that one.
On Monday, November 24, Vice President Bush dictated a note for his diary: “A real bombshell…. North had taken the money and put it in a Swiss bank account…to be used for the contras…. It’s going to be amajor flap.” It was the biggest political uproar in Washington since Richard Nixon left town.
Four days later, Casey convened a conference of American intelligence chieftains from CIA, State, and the Pentagon. “Feel very good about our community having worked together for six years more effectively than most of our government without any significant failures,” his talking points read. “No scandal and a good many solid successes.”
“THE SILENCE SEEMED TO LAST FOREVER”
Ever since Watergate, it was not the crime but the cover-up that destroyed the powers of Washington. Casey was in no shape to cover up. He staggered and stumbled through a week of incoherent testimony on Capitol Hill, lurching in his chair, unable to string sentences together. He could barely hold up his head. His aides were aghast. But they kept pushing him.
“Bill Casey had a lot to answer for,” said Jim McCullough, his staff man and a thirty-four-year CIA veteran. “It is doubtful that the operation would have ever gotten off the ground—much less be sustained for well over a year—without his acquiescence and support.”
Casey attended a memorial dinner for the slain CIA officer Bob Ames in Philadelphia on the evening of Thursday, December 11. He returned to headquarters at 6:00 a.m. on Friday for an interview with a Time magazine reporter named Bruce van Voorst. The agency had often turned to Time for a public-relations boost in moments of crisis. Van Voorst was a dependable man. He had served for seven years at the CIA.
The agency set the ground rules: thirty minutes for Iran-contra, thirty minutes for a review of the CIA’s many accomplishments under Casey’s command. McCullough had heard Casey give the good-news spiel many times before. He was confident the director could recite his lines even in a state of exhaustion. The first half hour proved an ordeal, but when it was over, the softball question came right down the plate: “Mr. Casey, could you talk a little about some of the Agency’s accomplishments under your leadership?”
“We all breathed a sigh of relief and relaxed,” McCullough recalled. “But Casey stared at van Voorst as if he could not believe or did not understand the question. He said nothing. The silence seemed to last forever.”
Monday morning, December 15, Casey had a seizure in his seventh-floor office. He was wheeled out on a stretcher before anyone really grasped what had happened. At Georgetown University Hospital, his doctors determined that he had an undiagnosed central nervous system lymphoma—a malignant spider’s web spreading in his brain, a rare disease, difficult to detect. It often led to inexplicably bizarre behavior in the twelve to eighteen months before it was discovered.
Casey would never return to the CIA. Bob Gates went to see him at the hospital on January 29, 1987, on orders from the White House, carrying a resignation letter for the director to sign. Casey could not hold the pen. He lay back on the bed, tears in his eyes. Gates went back to the White House the next day and the president of the United States offered him the job—“a job no one else seemed to want,” Gates reflected. “No wonder.”
Gates served as acting director of central intelligence for five excruciating months, until May 26, 1987, but his nomination was doomed. He would have to wait for the wheel to turn again. “It quickly became clear that he was too close to whatever Casey was or was not doing,” said the next director of central intelligence, William Webster. “Bob’s approach had been that he did not want to know. In these circumstances, that was not acceptable.”
Webster had been running the FBI for nine long years. He was a square-jawed, squeaky-clean, apolitical Carter appointee, one of the few emblems of moral rectitude left standing in the Reagan administration after the Iran-contra imbroglio. He once had been a federal judge and preferred to be addressed by the honorific. The attraction of appointing a man named “Judge” to run the CIA was obvious at the White House. Like Admiral Turner, he was an upright Christian Scientist and a man of moral conviction. He was not a Reagan man; he had no political or personal connection with the president. “He never asked me for anything,” Webster said. “We never talked business. It was not a buddy-buddy relationship. Then, at the end of February 1987, I got a call.” Reagan was all business now. On March 3, the president announced Webster’s nomination as director of central intelligence and praised him as “a man who is committed to the rule of law.”
The same was never said about Bill Casey. After he died on May 6, at age seventy-four, his own bishop denounced him from the pulpit at his funeral, as Presidents Reagan and Nixon listened in silence.
Casey had nearly doubled the size of the CIA over six years; the clandestine service now had some six thousand officers. He had built a $300 million glass palace to house his new hires at headquarters; he had mobilized secret armies around the world. Yet he left the agency far weaker than he found it, shattered by his legacy of lies.
Bob Gates learned a simple lesson serving under Casey. “The clandestine service is the heart and soul of the agency,” he said. “It is also the part that can land you in jail.”
42. “TO THINK THE
UNTHI
NKABLE”
The president of the United States confessed to the American people that he had lied to them about trading arms for hostages. The White House tried to spin the political whirlwind toward Casey and the CIA. Neither the man nor the institution could put up a defense. Congress summoned Casey’s officers and agents to testify. They left the impression that the United States had hired a gang of con men and thieves to run its foreign affairs.
The arrival of Judge Webster heralded a hostile takeover at the CIA. Congress and an independent counsel set out to determine what exactly Casey had been up to. Operations were suspended, plans shelved, careers shattered. Fear shot through agency headquarters as three dozen FBI agents carrying subpoenas stalked through the corridors, opened double-locked safes, and thumbed through top secret files, gathering evidence for obstruction of justice and perjury charges. The leaders of the clandestine service underwent interrogations and envisioned indictments. Casey’s vision of a CIA free from the restraints of law had brought them to grief.
“It took me months to get a clear understanding of what had happened, and who had done what to whom,” Webster said. “Casey left behind a lot of problems.” Chief among them, Webster thought, was a tradition of defiant insubordination. “People out in the field had felt they needed to act on their own,” he said. “They weren’t supposed to act without approval from the boss. But chiefs of station felt: I am the boss.”
The officers of the clandestine service were sure that Webster—instantly dubbed “Mild Bill”—had no grasp of who they were, what they did, or the mystique that held them together. “No one else can understand it,” said Colin Thompson, who had served in Laos, Cambodia, and Vietnam. “It’s a mist you dip into and hide behind. You believe you have become an elite person in the world of American government, and the agency encourages that belief from the moment you come in. They make you a believer.”
