Questions Turn Deadly Serious as Iran-Contra Probe Widens

WASHINGTON —  Early last November when the questions first began, the State Department’s top Latin American affairs official, Elliott Abrams, laughed hard when asked why reporters were suddenly hounding his close friend and fellow contras supporter, National Security Council staff member Oliver L. North.

“Because he fits the part that people on the left like to think of--a crew cut Marine who runs a secret war,” he said. “It’s everyone’s worst fear--a Marine colonel takes over the government.”

It was amusing then, when North was still a Terry-and-the-Pirates figure in the Reagan Administration’s cloak-and-dagger wars against Middle East terrorists and Nicaragua’s Sandinista government.

Drained of Humor

But six page-turning weeks into the saga of North, Iran and the anti-Sandinista contras, the worst crisis of President Reagan’s political career has drained the Administration of any humor about its plight. Now, the questions are deadly serious.

Did a handful of military men--among them North and Vice Adm. John M. Poindexter, along with ex-Marine Robert C. McFarlane--in fact seize control of key foreign-policy strategies from a nodding White House? Or are the President and his top aides--or other high-ranking government officials--concealing significant roles in the affair?

Did CIA Director William J. Casey, whose agency has sought to distance itself from the arms-and-hostages dealings, actually take an earlier and more active part in negotiations with the Iranians? And what about Casey and his agency with regard to shipments of arms and the diversion of funds to the contras?

Did North and Poindexter act alone, as the White House alleges, in diverting millions of dollars skimmed from the potentially illegal arms shipments to Ayatollah Ruhollah Khomeini’s regime for the benefit of the contras? And did those millions ever reach their intended destination?

Did the Administration know more than it admits about the ex-CIA contractors, the financiers and the arms merchants that North apparently used to prop up the Nicaraguan rebels?

The questions are not just sobering. They appear genuinely confusing even to those directly involved in tracking a scandal that has crashed out of the White House and sprawled, with dazzling speed, from Bern to Tehran to Brunei to Toronto.

“You’re going to be proud of us when the full story is known,” Alton J. Keel, interim national security adviser, told staffers after Poindexter resigned that post last Nov. 25. President Reagan called North a “national hero” even as he fired him for misconduct.

Since then, the FBI has probed claims that North shredded vital papers on the Iran-contras affair. Also, it has now been learned, the sole chronology of the Iran dealings upon which the White House has relied was written by North and is suspect on central facts. And about $10 million in secret contributions to the contras’ cause has vanished--so far without a trace--in a Swiss bank account controlled by North.

Moreover, the White House’s assertion that Reagan knew nothing of the first two arms shipments to Tehran, in late 1985, has been publicly disputed under oath by McFarlane, who was Reagan’s national security adviser at the time.

“We still don’t know what happened,” said a State Department official who helped run Operation Staunch, once the Administration’s showpiece effort to enforce the Reagan embargo and stop other countries from selling weapons to Iran. “We’re learning most of it from the papers.”

A skeleton of the Iran-contras affair has nevertheless begun to take shape.

The affair is now known to have begun no later than 1984 or early 1985, when the National Security Council and the CIA hinted that the United States should consider luring Iran toward moderation and away from the Soviet Union. It gained steam in mid-1985, when the Defense and State departments objected to proposals by McFarlane--and perhaps Casey--to offer the Iranians “material aid” as a first sign of good will.

The affair blossomed in late summer 1985, when the White House secretly sidestepped those objectors and told Israel to send two shipments of U.S. arms to the Iranians, winning freedom for one hostage in the process. It reached full fruit in early 1986, when the President--again secretly scotching protests from the State Department--ordered the CIA to arrange direct shipments of military goods from the United States to Iran, springing two more captives.

And it burst this fall, when Atty. Gen. Edwin Meese III belatedly announced that $10 million to $30 million in skimmed profits from the weapons sales was secretly diverted to the contras cause by North--in apparent defiance of a congressional ban.

Fleshing out the bones of the scandal so far has been an unavailing task for one Senate and two House committees, a team of Justice Department lawyers led by Meese and a complete roster of FBI criminal investigators. Still to come are probes by two Watergate-style congressional select committees and an independent counsel, once known as a special prosecutor.

“Do we have 100% of the facts as of now? We don’t,” a frustrated chairman of the Senate Intelligence Committee, Dave Durenberger (R-Minn.), said Friday. “Will we get 100% of the facts? I doubt if we’re going to get 100% of the facts.”

Sleuths Badly Hobbled

Despite Reagan’s self-professed intention to get the facts on Iran out quickly, Durenberger and other sleuths have been badly hobbled. Poindexter, North and others have refused to testify before Congress, citing their constitutional protection against possible self-incrimination. Among early participants, only McFarlane and private consultant Michael Ledeen have testified freely, and McFarlane’s account of the scandal conflicts with others on key points.

Swiss officials have refused to surrender data on the two private bank accounts through which Iranian weapons money appears to have flowed. The Swiss authorities say they want to cooperate, but contend that U.S. officials have not produced the necessary evidence of possible illegal use of the accounts.

And despite Administration promises of openness, both Senate and House investigators have complained bitterly that the White House has refused to turn over papers describing the arms sales and the diversion of their profits.

“There are some things that haven’t come out yet. There are a lot of people who are trying to keep them from coming out,” said a State Department official familiar with the contra program. “People are concentrating on saving themselves. It’s sauve-qui-peut (every man for himself).”

Without that evidence, investigators are hard put not only to determine who knew about the scandal, but even whether the scandal itself extends beyond poor judgment into illegality. Among the gray areas:

--Reagan has admitted signing documents that gave the CIA legal permission to arrange U.S. arms shipments to Iran starting in January, 1986. McFarlane has said--and Reagan aides have flatly denied--that Reagan also approved two earlier shipments of U.S. arms in November and August, 1985, that lacked a legal order lifting an arms embargo against Tehran.

--While Reagan has denied approving either of the 1985 shipments, the CIA has admitted aiding Israel in one of the deliveries of U.S.-made arms to Iran, in November, 1985. The CIA aid, apparently authorized by McFarlane and North, came without the presidential finding that appears to be required by law for similar covert missions.

Why Did CIA Act?

The CIA aid raises questions as to why the agency acted without a written presidential order and whether McFarlane or North hid their approval from Reagan.

--Meese has said that no one in the Administration, aside from North and Poindexter, knew of or approved a secret profit-skimming plan to funnel Iran weapon-sales profits to the contras . But one reliable source told The Times last month that Chief of Staff Donald T. Regan was regularly briefed on the diversion, an allegation Regan has unequivocally denied.

Last week, CIA Director Casey admitted in Senate testimony that he was informed of profit diversions at least a month before Meese’s investigation disclosed the operation. Casey reportedly told the Senate in a closed session that he questioned Poindexter about the profit-skimming, but did not inform the President or Regan.

The disclosure, along with other evidence suggesting that Casey had prior knowledge of the Iran dealings, has raised further questions about the extent to which Casey and the CIA knew of or encouraged the Iran weapons sales and the profit-skimming operation that followed.

--Congressional and FBI inquiries so far have not established what happened to the $10 million to $30 million in weapons profits, or another $10 million that was solicited by the State Department this year from the oil-rich sultanate of Brunei to help the contras and placed in a private bank account controlled by North.

Bank records may be crucial to determining how and whether the money went to the contras . Congress had banned military aid to the rebels during parts of the last two years, and weapons profits sent there under any circumstances may have been illegal if the profits are ruled to be the property of the U.S. Treasury.

It is ironic that the Congress still cannot pin down government involvement in supplying the contras, even though North’s role in the contra supply operation was suspected on Capitol Hill long before anyone knew about the Iranian arms shipments.

As early as last year, Rep. Lee H. Hamilton (D-Ind.), chairman of the House Intelligence Committee, demanded an explanation of North’s role and was called to the White House for a private briefing, according to committee sources. At that briefing, he was assured that North had no involvement in the matter.

That assurance has now been exploded by the last six weeks of revelations. Of all the remaining questions, the most pressing is whether the White House has been deceptive about the rest of the Iran affair as well.

“What can I tell you? The whole thing was bizarre,” one shell-shocked official said last month, after Meese revealed North’s secret money pipeline to the contras . “We always wondered how he kept the contra thing alive for two years. Now we know.”

Times staff writers Doyle McManus, Sara Fritz and Maura Dolan contributed to this story.