Plumbing the CIA's Shadowy Role

By Ed Magnuson.

The thin, slightly stooped figure shuffled inside a cordon of burly bodyguards to take the witness chair in Room 2118 of the Rayburn House Office Building. Staring down at him from their two rows of seats, the members of the House Foreign Affairs Committee itched to ask their questions. If anyone should know the dark secrets behind the Iran-contra connection, this was the man. He heads all of the nation's intelligence agencies. He has a special fondness for clandestine operations. He holds Cabinet rank and sits on the National Security Council, and his advice and friendship are deeply valued by the President. The huge oaken doors of the hearing room swung shut.

William Casey, Director of Central Intelligence and boss of the CIA, emerged through the same doors 5 1/2 hours later. He had testified about the growing scandal during all that time without a recess. When it was over, the 73-year-old former New York City lawyer and self-made millionaire seemed drained -- and his inquisitors disturbed. They were appalled mostly by how little the CIA chief professed to know. The head of an intelligence network that has snoops planted in hostile governments around the globe and has eavesdropped on Kremlin officials as they talked on their limousine telephones claimed to be largely uninformed about the most audacious foreign policy venture of his own Government.

"It is shocking that the chief intelligence officer of the U.S. Government seems to know less about this affair than the average American who reads the daily press," declared Democratic Congressman Stephen Solarz of New York. Contended Connecticut Democrat Samuel Gejdenson: "If Casey really knows as little as he tried to portray, he ought to be fired for incompetence. And if he knew more, he ought to be fired because the President instructed his people to be forthcoming." Casey had replied "I don't know" to so many questions that the answer began drawing laughter from some committee members. Said Pennsylvania Democrat Peter Kostmayer: "He seemed quite befuddled and confused."

Casey confused? His manner may be bumbling and his mumble legendary, but associates contend that Casey, a speed-reader with an ability to assimilate complex information quickly, has one of the sharpest minds in the Government. "Bill Casey's the brightest guy I've met in my life," declares Stanley Sporkin, a former CIA counsel and now a federal judge. Casey's speech grows softer and less articulate, intimates say, when he does not like the questions being put to him. "His mumble becomes decidedly worse when he has to talk to Congress," notes one old friend. Anne Armstrong, chairman of the Foreign Intelligence Advisory Board, explains that Casey "doesn't spill his guts to anybody without a reason. If we don't ask the right question, we won't get the correct answer." One Congressman who grilled the CIA chief observed, "Casey talked like he was on trial."

In a sense, he was. The CIA's fingerprints have been found all over Iranscam. U.S. arms reached Iran in CIA-chartered cargo planes. Part of the payments for the weapons went into a CIA account in Switzerland. The CIA first directed the covert arming of the contras in Nicaragua; when this was outlawed by Congress in June 1984, the agency monitored the secret resupply of munitions to Ronald Reagan's favorite "freedom fighters."

Yet in his congressional testimony and in an interview with TIME several days later, Casey professed to know little about the clandestine arms shipments to Iran, or who had placed money in the CIA account to pay for them. He claimed to be unaware that profits from arms sales had been diverted to the contra forces until shortly before Attorney General Edwin Meese disclosed this to a startled nation on Nov. 25. "I don't know anything about diversion of funds," Casey told TIME. "The NSC was operating this thing; we were in a support mode."

He knew even less, Casey claimed under oath, about who had funded the flights that airdropped arms to the contras inside Nicaragua. The CIA had gathered intelligence on the contras, he says in the interview, "but we didn't know and they weren't telling us about their funding and about their procurement."

Is this mixture of involvement and ignorance credible on the part of the nation's top spook? One former high CIA official aware of the Company's procedures doubts it. Casey, this source speculates, must have been involved in the secret arms deals with Iran "from the beginning." The role of Marine Lieut. Colonel Oliver North as the National Security Council's point man, says the former official, gave the CIA "plausible deniability." According to this theory, the CIA played its role without leaving a paper trail. Casey, he says, could have told his key people, "If you get a call from Ollie North, do what he asks."

Going beyond theory, this CIA veteran claims that he had been asked by several middle-level CIA officials whether "opening a bank account on oral authority makes them vulnerable to prosecution." He has advised them to "get whatever protection they can" from the congressional committees. Members of the intelligence oversight committees confirm that they have received such inquiries from a number of deeply troubled CIA agents.

Minnesota Republican Senator David Durenberger, chairman of the Senate Select Committee on Intelligence -- which has also grilled Casey in closed session -- is less certain that the Director is concealing his own knowledge of the affair. "A whole lot of guys in the CIA knew a little something about this," he says. "They all had pieces of it. I suspect Casey had most of it . . . but nobody (at the CIA) understood the big parameters of it," a reference to the diversion of the arms profits.

On one crucial matter of timing, Casey's congressional testimony seemed candid -- up to a point. The White House credibility on the scandal has come to rest on Meese's Nov. 25 contention that no one in the Government was aware that funds had been diverted to the contras except North and his boss, then National Security Adviser John Poindexter.

The hearing room grew deathly still as the Foreign Affairs Committee listened to Casey drop his one bombshell. He told the Congressmen that on Oct. 7, seven weeks before the Meese revelation, he had a brief meeting with New York Businessman Roy Furmark, a longtime acquaintance and a man for whom Casey had provided legal advice in the 1970s. Furmark had informed Casey that two Canadian businessmen had backed a heavy investment in the weapons deals, had not been repaid, and were threatening to file lawsuits that would expose the whole affair.

Furmark has told TIME that he first visited Casey in the Executive Office Building next to the White House on Oct. 7, cited his complaints, and suggested Casey check a Swiss bank account listed to Lake Resources -- one of the CIA's depositories for the Iran arms money. "He said he knew nothing about the arms deal with Iran," Furmark said of Casey. "He asked me whether I knew Poindexter, and I said no. He then picked up the phone and tried to ! reach Poindexter but couldn't." Furmark next saw Casey on Oct. 16 when he joined the Director and his wife on a flight from Washington to New York City. Casey told Furmark that he had not yet found out about any missing money, but promised to keep digging.

Persisting, Furmark visited Casey in his Langley, Va., headquarters on Nov. 24, the day before Meese announced that the contras were receiving money from the Iran weapons deals. Furmark told Casey that Manucher Ghorbanifar, an Iranian middleman in the arms deal, was claiming that the missing money had gone to the contras. Said Furmark: "Casey placed a call to Don Regan but couldn't get him. He then tried Poindexter and could not get him either. Finally he called North and said, 'There is a man here who says you owe him $10 million.' He chatted with North for a while, hung up and told me, 'North says the Israelis or the Iranians owe you the money.' I protested the runaround. He called a subordinate and ordered him to see what agency files contained on Lake Resources. He got his answer and told me that the only reference to this bank account appears in connection with my first complaint to him on Oct. 7. He then called a Mr. Cooper at the Justice Department and told me he drew a blank there as well."

Casey, who appeared to be stalling Furmark, says he had conveyed his friend's complaints to Poindexter on Oct. 8. "He was surprised and concerned about it," Casey says of Poindexter. "I advised him I thought he ought to get prepared to pull the whole story together and make a public statement. He said he didn't want to do that because it was an ongoing operation. They were hoping to get some hostages out." Casey advised Poindexter to get a lawyer and then took another surprising step: he asked North whether any CIA people had been involved in any diversion of funds. According to Casey's testimony, North said no.

Didn't the Furmark episode contradict Meese's assertion that Casey had been ignorant of the fund diversion? Not really, Casey later told newsmen. Furmark's story gave him only a "whiff" that money had been diverted and caused him to start "asking some questions." But he had not been sure of the diversion to the contras, he insisted, until Meese made his announcement.

But one difficulty with Casey's claim of ignorance is that Meese had vaguely cited U.S. intelligence "intercepts" as tipping him off to the fund diversion. Such intercepts normally come from the monitoring of radio and telephone transmissions overseas by the National Security Agency. Technically, Casey has top authority over the NSA. All such intercepts normally go to the CIA, and almost certainly any matter of this importance would reach his desk. It seems incredible that Meese would somehow pick up this information before Casey did. Furthermore, the notion that the Administration had to eavesdrop on foreign communications to find out what its own operatives were up to strikes many in Washington as astonishing.

The Casey style of operating offers one conceivable explanation of how he could have been unaware of the money diversion. "If he likes a project, he will learn every single detail of it," contends a former CIA colleague. "If he doesn't, he won't even bother to look at the file. You might as well throw the file into the trash can." Yet any project that might lead to the release of the American hostages in Lebanon and at the same time fund the contras had to be one that Casey would love dearly. The CIA chief, explains this former associate, "is very loyal to Reagan and likes to please him as much as possible. He knew Congress had handed Reagan a humiliating defeat on the contra aid. He knew Reagan had publicly pledged to explore other avenues of assistance to the contras. No amount of plausible deniability is going to convince me that he did not know and did not tell Reagan."

Certainly Casey was especially eager to free William Buckley, the CIA station chief in Beirut who was seized there on March 16, 1984. The Director wanted Buckley back for strong emotional and personal reasons, but also security considerations: Buckley carried secret information on CIA operatives in much of the Middle East. He knew "his own officers, agents, double agents and contacts in Lebanon," says one CIA insider. "I thought it was vital to get him out," Casey says. The fear that Buckley might be tortured for information by his Shi'ite captors was a real one. In September 1985, after the first delivery of U.S. arms through Israel, the CIA expected Buckley to be freed in return. Instead, the Rev. Benjamin Weir was released. And in the very next month Islamic Jihad announced that Buckley had been executed. Casey says he is "99% sure" that Buckley is indeed dead.

As evidence that the CIA was not violating any laws, agency officials last week cited Casey's action after Congress in 1984 ended military funding of the contras, even through other countries. At that time, the Director sent a worldwide, all-posts message warning that any violation of this ban would be "political dynamite." But a middle-level CIA operative disputed this version from the agency higher-ups. "We all knew any help that got to the contras was good news," this source insisted. "Everybody would inform their superior of a success in the supply effort as soon as possible. I heard my superiors say several times that 'old Bill is going to love this' when news of weapons or fund deliveries arrived. It's not conceivable that Casey would not run to Reagan with the good news as well."

As more information emerges on both the Iranian adventure and the contra military resupply, the names of former CIA agents and assets keep appearing. Eugene Hasenfus, the American captured by the Sandinistas after his C-123K cargo plane was shot down over Nicaragua on Oct. 5, had performed similar work as a CIA "cargo kicker" over Laos during the Viet Nam War. A more significant connection is George Cave, who was a young CIA agent in Tehran in 1953 when the Company helped engineer the coup that restored the Shah of Iran to power. In the mid '70s Cave served in Tehran as deputy CIA station chief, and the Shah took a personal liking to the suave agent who spoke fluent Farsi. Cave retired from the CIA shortly after the Shah was overthrown. Yet on the arms-laden U.S. cargo plane that flew former National Security Adviser Robert McFarlane into Tehran last May 28 to establish the first high-level U.S. Government contact with Iran in years, there again was Cave, representing the CIA.

It is convenient, say CIA insiders, to claim that former employees retain no affiliation with the Company. But on retirement all agents are asked to sign statements saying whether they will accept future assignments. They need not do so, but many find the pay as contract agents handy, and some yearn to recapture the excitement of secret work. If contract agents get in trouble, the CIA can deny any connection. But in fact free-lancers report to a "case officer," says one former CIA official, and thus "the agency knows everything. That's why it is very hard to believe Oliver North or anybody else could use CIA resources and personnel to pull this off without Casey's knowing."

An unfortunate effect of the current fiasco is that Casey's widely recognized revitalization of the CIA is suffering a severe jolt. Casey has hiked the agency's budget by 50% (to an estimated $1 billion) during his six- year tenure. He has markedly improved the quality of the agency's intelligence analyses, partly by creating a better balance between the Company's capabilities in ELINT (electronic intelligence gathering) and HUMINT (human intelligence gathering, meaning spies and informers), which had been given short shrift. Having been a World War II operative for the old Office of Strategic Services (the CIA's precursor), Casey has retained a fondness for covert activities, and his reputation and elan have made him a hero within the agency. Yet the high morale at the CIA is in danger of evaporating as Iranscam unravels. Says one friend: "Everything that Bill Casey has achieved could be destroyed by the Iran-contra connection."

The same observation could be made about the achievements of Casey's friend and boss, Ronald Reagan. Like Reagan, Casey has put himself into a difficult bind about a scandal that occurred on his watch: even while denying his complicity, he is admitting to an appalling ignorance of what went on around him.

With reporting by Raji Samghabadi/ New York and Bruce van Voorst/ Washington