The Iran-Contra Affair
Reagan's administration became embroiled in controversy, damaging his reputation as an honest communicator. In November 1986, word leaked to newspapers that the United States had secretly sold weapons to Iran, diverting approximately $30 million in profits from these sales to help the Contras fight the leftist Sandinista government in Nicaragua. If indeed arms had been swapped for hostages, it would embarrass the administration, for once the arms were in Iranian control, others could use them to capture additional hostages. But the matter was even more complex.
Initially, Reagan denied the allegations that arms had been swapped to win the release of U.S. hostages held by Lebanese terrorists (who supported Iran). Administration sources blamed the diversion of profits on Lieutenant Colonel Oliver North, a National Security Council staff member who directed the secret operations against Nicaragua. North had set up covert support for the Contras, including airplanes and secret bank accounts. He had reported his activities initially to his superior, National Security Advisor Robert C. McFarlane, and subsequently to McFarlane's successor, Admiral John Poindexter. Congressional hearings focused on whether and how Reagan was personally involved in the matter, and particularly whether his administration violated the Boland amendment (passed in 1984) forbidding U.S. military aid to the Contras. North denied the administration's claims that he'd acted independently. To complicate matters for the White House, North had a certain All-American patriotic fervor about him that appealed to people, making his testimony all the more believable.
It had been alleged that there were ties between the Contras and drug smugglers — this in an era where the first lady had publicly espoused a campaign for school children called “Just Say No” to drugs.
Admiral John Poindexter testified that he'd never told Reagan about the diversion of funds, but that the president had approved a direct arms-for-hostages deal with Iran. In the end, members of Congress admonished the administration for its incompetence in handling the secret operations and funding. But there was no overall investigation of Contras financing, for the investigative committee found no concrete evidence to suggest that Reagan had known of the diversion of funds to the Contras. Oliver North was tried and convicted in 1989 of obstructing Congress and unlawfully destroying government documents, but his conviction was later reversed. Poindexter was also found guilty, and this verdict was also overturned.
Just when everyone thought the matter was put to rest, it resurfaced for George Bush when he issued pardons for many high-level government officials charged or convicted of Iran-Contra activities. Independent prosecutor Lawrence E. Walsh issued a final report on the investigation in January 1994. He found no evidence that President Reagan had broken the law, but admitted that Reagan may have known about or participated in a cover-up of the scandal.
