Iran-Contra Affair

The Iran-Contra Affair was a political scandal in the United States that came to light between 1985 and 1987, involving the secret sale of arms to Iran by the Reagan administration in exchange for American hostages held in Lebanon, with the profits illegally diverted to fund the Contras in Nicaragua in violation of congressional prohibitions. The scandal exposed the agency's direct management of the Contra war and the National Security Council's transformation into an operational intelligence agency based inside the White House.¹²

Congressional Prohibitions

Between 1982 and 1986, Congress passed a series of amendments (known as the Boland Amendments) prohibiting the Central Intelligence Agency, the National Security Council, or any other U.S. government agency from providing military aid to the Contras. The Reagan administration circumvented these prohibitions through a network of private operatives and foreign governments.²

Key Figures

Oliver North and the Enterprise

Oliver North, a Lieutenant Colonel in the United States Marine Corps serving on the National Security Council staff, ran an illegal Contra resupply operation from the White House. He was alleged to have received drug profits from Monzer Al-Kassar, a Syrian kingpin and arms dealer, which were then used to purchase arms for the Contras. The United States Tower Commission probe into Iran-gate specifically revealed that Al-Kassar had been paid $1.2 million by North's co-conspirator, General Richard Secord, to facilitate the movement of weapons from Israel to the Contras.¹³

North's "Enterprise" used Ilopango Airbase in El Salvador to funnel weapons to the Contras and reportedly brought cocaine back on return flights.⁴

Arms-for-Hostages Middlemen

Adnan Khashoggi, an international arms merchant, and Manucher Ghorbanifar, an Iranian arms dealer, served as crucial middlemen in the arms-for-hostages exchange. Khashoggi was found to have borrowed money for these arms purchases from the now-bankrupt BCCI, with financial backing from Saudi and U.S. sources. Ari Ben-Menashe, a self-proclaimed Israeli military intelligence officer, played a role in exposing the scandal by tipping off an obscure Lebanese magazine. Barbara Honegger, a former Reagan White House aide, alleged in her book October Surprise that Monzer Al-Kassar's heroin smuggling network in Italy was utilized to launder NATO arms stocks, diverting them to Iran with the assistance of corrupt Italian intelligence officials linked to the secretive fascist Masonic lodge, P2.¹

Indictments and Pardons

Dewey Clarridge, former chief of the CIA's Latin American Division, was indicted on seven counts of perjury. Joseph Fernández, CIA station chief in Costa Rica, was indicted on four counts. Alan Fiers, who took over the Contra project in 1984, pleaded guilty to withholding information from Congress. All were pardoned by former CIA director George H.W. Bush.²

Connection to Drug Trafficking

The Kerry Committee investigation found evidence of drug trafficking within the Contra supply network, but the Iran-Contra investigating committee refused to examine those connections. Kerry investigation director Jack Blum told Gary Webb: "We were even dumped on by the Iran-Contra Committee. They wouldn't touch this issue with a ten-foot pole."²

During Oliver North's congressional testimony in July 1987, two men from Baltimore jumped up in the audience with a banner reading "Ask about the cocaine smuggling" and shouted questions about drug dealing before being dragged out by police.²

The Shootdown That Broke the Scandal

The scandal broke open when Barry Seal's drug-hauling airplane, a Fairchild C-123K called The Fat Lady, was shot down over Nicaragua by a Sandinista soldier with a SAM-7 missile in 1986. Eugene Hasenfus, a former Air America cargo handler, survived the shootdown. The plane had been based at Mena, Arkansas before Seal sold it and it began flying weapons-hauling missions for North and the FDN. Congressional records show North was being regularly briefed by the CIA on Seal's joint CIA-DEA sting operation against the Sandinistas and allegedly leaked the information to the press shortly before a critical vote on Contra aid.⁵

The Octopus Connection

The Iran-Contra Affair was a significant component of Danny Casolaro's broader "The Octopus" investigation. Casolaro believed that this scandal was deeply interconnected with the PROMIS Software Scandal and the BCCI scandal. He obtained documents related to Iran-Contra arms deals, including photocopies of checks drawn on BCCI accounts for Adnan Khashoggi and Manucher Ghorbanifar, from his confidante Bob Bickel. Bickel, in turn, had acquired these documents from October Surprise source Richard Brenneke. The name of Ian Stuart Spiro also appeared in Oliver North's personal notebooks documenting the Iran-Contra Affair, and Spiro's death was subsequently linked to a spy network and the affair itself.¹