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Regan Says Diversion Shocked the President : Tells Reaction to Use of Iran Arms Profits

July 31, 1987|KAREN TUMULTY and SARA FRITZ | Times Staff Writers

WASHINGTON — President Reagan "visibly was shook . . . and recoiled" when he was told that profits from U.S. arms sales to Iran had been diverted to Nicaragua's contras , former White House Chief of Staff Donald T. Regan told Congress' Iran-contra investigating committees Thursday.

Reagan's shock upon hearing the news was so convincing, Regan testified, that "I'd give him an Academy Award" if the former actor was feigning surprise. Regan is expected to conclude his testimony today, and will be followed by Defense Secretary Caspar W. Weinberger.

Regan's account, lauded by both Democrats and Republicans on the committees as candid and credible, reinforced the claim of John M. Poindexter, Reagan's former national security adviser, that the President knew nothing of the diversion of money to the contras during the period when Congress had banned U.S. aid to the rebels.

Became Central Issue

The congressional investigators had made the President's knowledge of the diversion, which apparently was carried out in his name by White House aide Oliver L. North, into the central issue of their three months of hearings, which probably will end early next week.

As chief of staff for a President who did not involve himself in details, Regan was known for putting an iron grip on most aspects of White House operations. His testimony provided the committees with their first Oval Office perspective on the foreign policy disasters that plummeted the Administration into its worst crisis.

In vivid, salty and often humorous detail, he described how the President became the victim of a frustrating "bait and switch" operation by the Iranians on whom he had pinned his hopes of opening a long-range relationship with the regime of the Ayatollah Ruhollah Khomeini and gaining the release of Americans held hostage by Iranian-backed terrorists in Lebanon.

Regan Tells Impatience

Regan recalled expressing his own impatience as early as February, 1986, when the Iranians failed to secure the release of U.S. hostages after receiving their first direct shipment of 1,000 TOW anti-tank missiles from the United States.

"I told (Reagan) I thought we ought to break it off, that, you know, we'd been snookered again," Regan testified. "And how many times, you know, do we put up with this rug-merchant type of stuff?"

However, the Administration was to be "led down the garden path," as Regan put it, four more times before public exposure last November forced the end of the secret arms sales.

The former chief of staff also expressed bitterness over his own unceremonious ouster from the White House last February. He made it clear that he believed he was the victim not of the President's political adversaries but of others within the White House.

"I don't mind spears in the breast," he said. "It's knives in the back that concern me."

Regan added a wry note to his explanation of why Reagan hesitated before he allowed Poindexter, one of the architects of the Iran arms sales and diversion of profits to the contras, to resign. Regan said of the President: "He's not the type that likes to go around firing people--ironic statement coming from me."

A Friendly Reception

In marked contrast to six months ago, when Regan's truculent disregard for congressional sensibilities had made him an unpopular figure among both Democrats and Republicans on Capitol Hill, Regan's testimony drew a friendly and supportive reception from the committees.

"I am delighted to be discussing these issues with a man who has the ability to tell the truth," said Rep. Jack Brooks (D-Tex.), who has been harshly critical of many witnesses.

Regan, now earning his living on the lecture circuit and from a $1-million contract for his White House memoirs, undercut the significance of a key piece of evidence in the investigation: a memo found by Justice Department officials in North's office that describes the diversion scheme.

He said the undated, unsigned document, for which investigators have found no cover letter, did not appear to have been one that would have reached the President. "This thing here is much too loose," Regan said. "It's not in the proper form."

Poindexter's Testimony

Poindexter, a rear admiral, told the committees several weeks ago that he deliberately did not inform Reagan of the diversion because he sought to protect his commander in chief from what he realized would be enormous political embarrassment if the scheme ever became public.

However, Regan said Poindexter offered a dramatically different explanation when Regan asked for his resignation last Nov. 25. At that time, Regan said, Poindexter pretended to be ignorant of the details of the diversion.

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