WASHINGTON — Lt. Col. Oliver L. North told congressional investigators Friday that he and the late CIA Director William J. Casey had a plan to establish their own clandestine alternative to the CIA--what Senate investigating committee Chairman Daniel K. Inouye (D-Hawaii) called "a secret government within our government."
As North described the plan, he and Casey would have used profits from the secret sale of U.S. arms to Iran to run an "off-the-shelf, self-sustaining, stand-alone entity that could perform certain activities" overseas. Unlike the CIA, the secret organization would not have to depend on Congress for its funds or notify lawmakers of its activities.
In an interview, Inouye characterized Casey and North's so-called "Project Democracy" in a single word: "Frightening."
Rep. Jenkins Upset
Rep. Ed Jenkins (D-Ga.) said he was upset that the covert machinery established by North, with Casey's approval, was apparently kept secret from all elected officials in the government--including not only Congress but President Reagan. Without the supervision of elected officials, he said, Administration appointees could give money to whomever they wished, regardless of U.S. policy.
"What I'm disturbed about is that there is not a single official elected by the people of this great nation that had any knowledge of that," Jenkins said.
Nevertheless, polls showed that North is winning in the battle for public support. His enormous success before the television cameras continued to bring in thousands of appreciative telegrams, a deluge of telephone calls to congressional offices and bouquets of flowers. His appearance has changed the tone of the hearings and has thrown the committee members into bouts of ideological squabbling.
North, whose nationally televised appearance before the committees will resume Monday, was fired last November from the National Security Council for his role as key operative in both the secret sale of U.S. arms to Iran and the diversion of profits to support the contras .
Approval of Superiors
While others in the Administration have attempted to portray North as a renegade, he spent his first four days before the committees insisting that everything he did had been approved by his superiors.
North said he never disobeyed an order from his bosses, former presidential National Security Adviser Robert C. McFarlane, who has already testified, and John M. Poindexter, who is scheduled to appear before the committees immediately after North, breaking his eight-month silence on his own role in the Iran-contra affair. But it was Casey, who died in May of brain cancer, whom North called his chief guide.
Senate committee counsel Arthur L. Liman, speaking to reporters, described North's rationale as a "Nuremberg defense. . . . Everything he did, he did on orders."
But unlike the Nazis who were convicted at Nuremberg of atrocities committed during World War II, North has not distanced himself from Administration policy. Instead, he has used his testimony as an opportunity to plead Ronald Reagan's case before millions of viewers.
North described Project Democracy, the secret operation established by himself and Casey to carry out covert operations, in only the vaguest of terms. He did not specify what he meant by the "certain activities" it was intended to engage in, indicating instead that he had discussed these activities at length with the panel in a closed session the previous night.
A chart found by the FBI in North's office indicated that he contemplated operations in Africa, the Middle East and South America. Before the exposure of the Iran-contra affair, Project Democracy had purchased a Danish ship that it used in unsuccessful hostage rescue missions, secret weapons shipments and an abortive attempt to exchange semiautomatic Soviet weapons with Iran for a Soviet tank.
Similar to Contra Network
North said Project Democracy's activities might be similar to the secret, private supply network that he had set up with Casey's guidance to support Nicaragua's rebels at a time when direct U.S. government aid was illegal. The rebels received contributions from private citizens and other governments and $3.5 million in diverted profits from the secret Iran arms sales.
"There were other countries that were suggested that might be the beneficiaries of that kind of support, other activities to include counterterrorism," North said.
Liman, suggesting that North and Casey sought to create a "CIA outside of the CIA," found it ironic that they called their operation "Project Democracy."
"Part of democracy here was that there was a law that said the President of the United States should authorize covert operations," Liman said.
Purchase of Ship