Scandals Walsh: Targeting A CIA Cover-Up

By JAY PETERZELL/WASHINGTON Lawrence E. Walsh

Was the illegal diversion of profits from Iranian arms sales to the Nicaraguan contras an unauthorized plot hatched by a small band of zealots in Ronald Reagan's National Security Council? Or did high-ranking members of the U.S. intelligence community not only learn about the scheme and do nothing to stop it, but unlawfully help to conceal it from Congress?

Those unsettling questions have become the focus of the investigation by Lawrence E. Walsh, who has been the Iran-contra independent counsel since December 1986. His inquiry is being assisted by Alan Fiers, former head of the CIA's Central American Task Force, who has admitted misleading Congress about when the agency first learned of the diversions. Fiers now says he became aware of the fund transfers during the summer of 1986 and warned the agency's deputy director of operations, Clair E. George, about them. But he charges that George ordered him to deny any knowledge of the U.S. role in supplying weapons to the contras when he testified before the House intelligence committee in October 1986.

Fiers' disclosures may lead Walsh to seek perjury indictments against George and others. They have also cast a shadow over President Bush's nomination of Deputy National Security Adviser Robert M. Gates to become the CIA's director.

Last week the Senate intelligence committee postponed Gates' confirmation hearings so that investigators can probe further his knowledge of the illegal supply effort. Some Senators find it hard to believe that Gates could not have known about an operation with which his boss, the late CIA chief William Casey, and his subordinates were familiar. Gates claimed repeatedly that he had only vague inklings about the unauthorized aid in late 1986, when he served as deputy to Casey. But late last week, in response to new reports that he was briefed several times on help to the contras, the White House acknowledged that Gates had played a central role in overseeing aspects of the plan -- but only the intelligence and communications parts that Congress had authorized.

Walsh discussed the case with TIME, including how disagreements with Attorney General Dick Thornburgh over the use of classified information hindered his investigation. Excerpts:

Q. You've had a lot of problems in this prosecution with classified information. How did that affect your work?

A. The classified-information problem is frustrating because there is no review of the subjective judgment of the intelligence agencies in saying they will not release information that a court has held necessary for a fair trial.

It's not just information that the government needs to prosecute its case. The problem also arises when the defendant asks for information he says is necessary for a fair trial and the judge agrees with him. And then the intelligence agency holds back that information on what sometimes seems to be an excessive claim of the need for the secrecy of information that is already publicly known.

In an ordinary prosecution by the Department of Justice, the Attorney General can overrule that determination. But the independent counsel does not have the power to do so. That decision remains with the Attorney General. Whereas the Attorney General is fully familiar with prosecutions by his own department, he is not comparably familiar with a prosecution by the independent counsel -- and indeed, I think he has less concern for it.

Q. Because it's not his prosecution, he's less willing to bear the pain of declassifying?

A. That's right. He would be loath to overrule the intelligence agencies in any event; but in his own case he's at least in a position to evaluate the importance of the prosecution.

In the Joseph Fernandez case I think he grossly underestimated the value of that case and the strength of that case. ((Fernandez, a former CIA agent, was accused of lying about his involvement in helping supply arms to the contras. The charges against him were dismissed in 1989 because Thornburgh would not release classified documents Fernandez needed to present his defense.))

Q. You think that if the Attorney General had understood the Fernandez case better he would have made the judgment differently about whether to declassify?

A. If he were truly concerned about the need for the prosecution to go forward. It was a key point for this investigation. Now the Fiers disclosures have in a sense leapfrogged the Fernandez case. But Mr. Fernandez -- as he acknowledged in public interviews -- was going to implicate his superiors. And he named them.

Q. Whom did he name?

A. He named Fiers and George.

Q. You thought the Fernandez case would enable you to travel up the CIA's chain of command?

A. Yes, that was the beginning.

Q. After the Fernandez case washed out, did you think that Fiers was another likely place to start up that chain of command?

A. That was the obvious next starting place. Because Fiers was the guy to whom Fernandez reported.

Q. The Fiers plea raises the issue of knowledge by CIA higher-ups and of a deliberate policy to cover up that knowledge. Is that accurate?

A. I don't want to characterize his statements, because he's obviously going to be a witness. But your interpretation of the statement, I think, is very fair.

Q. Is there a conflict in the agency deciding what information can be released when intelligence officials are themselves likely targets?

A. There certainly is the possibility of a conflict of interest. And without talking about Fiers, I have said previously that I feel that there is a doctrinaire approach to classified information and that the protection around it is excessive.

Q. So does it create a conflict of interest for the CIA to be recommending to the Attorney General what information can and cannot be released?

A. There is certainly an appearance of conflict of interest. And there can be a conflict of interest depending upon how the responsible person at the CIA views the matter. If he's concerned with protecting the agency or an officer or former officer of the agency from exposure, that's one thing. If he's concerned with the protection of information regardless of the reason for its exposure, that's something else.

Q. David Boren, the chairman of the Senate intelligence committee, wants to ask Fiers and George what Gates knew about Iran-contra. Do you plan to indict George?

A. I can't talk about our plans that way. But we recognize the need and desire of the committee to get as much information as it can. We hope that it can be done without in any way jeopardizing our investigation. And always the biggest threat to an investigation or prosecution is a grant of immunity to a witness. We hope that any immunity would be very sparingly used.

Q. The Fiers plea has raised the question of whether Gates knew about illegal support to the contras much earlier than he says he did and lied to Congress about this. It's hard to imagine the committee acting on his nomination without resolving that question. How can they resolve it?

A. You really have a dilemma here. An inquiry about one person in isolation is rarely satisfactory or credible. Rather than investigating the acts of a single individual, you have to build up a broad context, examining an activity and all its ramifications. That gives you the background to evaluate each individual and make a satisfactory decision about whether he's involved or not.

It really begins with a massive records search and the evaluation of the testimony of each witness in light of what has been learned from the records. And then the evaluation of each succeeding witness in light of what has been told by others.

So if the committee wants to know what happened five years ago, they are confronted with the need to make that kind of comprehensive investigation themselves, rather than just asking one or two people. Or they can await the outcome of our investigation.

Q. You are building up that sort of complex understanding of how things worked at the CIA?

A. Yes. Fiers' disclosures require us to look into a CIA cover-up.

Q. I take it Fiers' plea is not really the beginning of your look at the CIA.

A. I think you can assume we've been looking into this since the Fernandez thing.

Q. Gates was Casey's executive assistant in 1981. Some people see that as significant; an executive assistant tends to know everything his boss is doing. And that may be relevant in evaluating the relationship between Casey and Gates when he was his deputy.

A. ((Pause.))

Q. Well, you've said you were surprised by Fiers' admissions. Why?

A. By the specificity. Usually when defendants first decide to assist the prosecution they are more likely to do it in a generalized way. It doesn't seem to come out as clearly thought out as Fiers' statements in court were.

Q. Another conflict is whether Congress should investigate cases like Iran- contra because there is a need for public exposure, or wait for a criminal prosecution to bring the facts to light. How well do criminal prosecutions, even if you're willing to wait, serve the public-exposure interest in a case like this?

A. I think they serve it quite well. New facts do come out. The criminal process is much slower. It has to be in order to protect the legitimate interest of each defendant. But the information does come out in each trial.

Q. You've certainly gotten some new information from Mr. Fiers.

A. I think so.

Q. Do you feel vindicated, in terms of the usefulness of the office, by this break? You were in a frustrating situation for a while.

A. We were in a frustrating situation. I hesitate to use the word vindicated. The difficulty of the assignment which the office drew was obvious. And the difficulties were compounded by the immunity and classified information problems.

If additional disclosures come because of the testimony of any witness, and particularly a cooperating witness who is very well informed, why I think that adds to the value of the work of the office.

Q. How long are you going to operate?

A. If I finished up tomorrow, I could not say I hurried. ((Laughs.)) But obviously, we have to follow up the leads that come from the Fiers disclosures. We've been trying to wind up. But that isn't what happened. He's opened an area that has to be investigated.