1980 October Surprise: Anything Goes With These Types

Tuesday, January 30, 2007
1980 "OCTOBER SURPRISE"

The Consortium
The Russian Report

On Jan. 11, 1993, Russia 's Supreme Soviet sent a secret cable to the U.S. Congress. The cable claimed that Russian national security files held evidence that two U.S. Presidents and two CIA directors had committed an act of treachery with Iran 's radical Islamic government in 1980.
Despite its explosive potential, the document was kept from the American people. It was buried in a pile of cardboard boxes, left behind with a host of other unclassified and secret papers in an obscure storage room on Capitol Hill: a real-life "X-Files."

October Surprise X-Files (Part 1): Russia 's Report By Robert Parry

WASHINGTON -- On Jan. 11, 1993, the nation's capital was readying itself for the Inauguration of President Bill Clinton, the first Democrat to sit in the Oval Office in a dozen years. Temporary grandstands were going up along Pennsylvania Avenue . The city brimmed with a celebratory air that fills the capital whenever a grand event like an Inauguration takes place. But in an obscure set of offices near the U.S. Capitol, a congressional task force was coping with another problem, one that had seeped out over those same twelve years to stain the Republican victory that had last changed party power at the White House, in 1980.

The House task force was concluding a year-long investigation into claims that Ronald Reagan's 1980 presidential campaign had interfered with President Carter's negotiations to free 52 Americans held hostage in Iran . A mixed bag of Iranian officials, foreign intelligence agents and international arms dealers had alleged a Republican deal behind Carter's back. But the task force had decided there was "no credible evidence" to support allegations that the Reagan campaign had blocked Carter's possible "October Surprise" of an election-eve hostage return.

Carter's failure to free those hostages over 444 days had sealed his political doom and boosted Reagan from a neck-and-neck race to a resounding electoral victory. The hostages' release, as Reagan was completing his Inaugural Address on Jan. 20, 1981, opened a floodgate of patriotic fervor that reshaped the political landscape and made Reagan a hero.

The possibility that this pivotal moment in modern American history had resulted from a nearly treasonous dirty trick had drawn understandably angry denials from Reagan-Bush loyalists -- and even from Democrats who feared that the public would lose faith in politics if the charges proved true.

So, with a collective sigh of relief, the House task force debunked the charges by adopting an elaborate set of alibis for the key players, particularly the late CIA director William J. Casey, who had run Reagan's campaign. One of the Casey alibi dates was nailed down, according to the task force, because a Republican operative had written Casey's home phone number on a piece of paper that day, although the operative admitted that he had no recollection of reaching Casey at home.

Nevertheless, with a host of such dubious alibis, the 968-page report was shipped off to the printers, with a public release set for Jan. 13, 1993. Washington journalists, already briefed on the task force findings, were preparing to praise the report as "exhaustive" and "bipartisan."
But two days before the news conference, a cable arrived from Moscow . It was a response to a query dated Oct. 21, 1992, that Rep. Lee Hamilton, D-Ind., who headed the House task force, had sent to Sergey Vadimovich Stepashin, then chairman of the Supreme Soviet's Committee on Defense and Security Issues. Hamilton asked Stepashin -- whose job was roughly equal to chairman of the Senate Intelligence Committee -- what information the Russian government had about the so-called "October Surprise" charges.

The Supreme Soviet's response was delivered to the U.S. Embassy in Moscow by Nikolay Kuznetsov, secretary of the subcommittee on state security. Kuznetsov apologized for the "lengthy preparation of the response." It was quickly translated by the U.S. embassy and forwarded to Hamilton .

Carter vs. Reagan

To the shock of the task force, the six-page Russian report stated, as fact, that Casey, George Bush and other Republicans had met secretly with Iranian officials in Europe during the 1980 presidential campaign. The Russians depicted the hostage negotiations that year as a two-way competition between the Carter White House and the Reagan campaign to outbid one another for Iran 's cooperation on the hostages. The Russians asserted that the Reagan team had disrupted Carter's hostage negotiations after all, the exact opposite of the task force conclusion.
As described by the Russians, the Carter administration offered the Iranians supplies of arms and unfreezing of assets for a pre-election release of the hostages. One important meeting had occurred in Athens in July 1980 with Pentagon representatives agreeing "in principle" to deliver "a significant quantity of spare parts for F-4 and F-5 aircraft and also M-60 tanks ... via Turkey ," according to the Russian report. The Iranians "discussed a possible step-by-step normalization of Iranian-American relations [and] the provision of support for President Carter in the election campaign via the release of American hostages."

But the Republicans were making separate overtures to the Iranians, also in Europe , the Russians claimed. "William Casey, in 1980, met three times with representatives of the Iranian leadership," the Russians wrote. "The meetings took place in Madrid and Paris ."

At the Paris meeting in October 1980, "R[obert] Gates, at that time a staffer of the National Security Council in the administration of Jimmy Carter and former CIA director George Bush also took part," the Russians said. "In Madrid and Paris , the representatives of Ronald Reagan and the Iranian leadership discussed the question of possibly delaying the release of 52 hostages from the staff of the U.S. Embassy in Teheran."

Both the Reagan Republicans and Carter Democrats "started from the proposition that Imam [Ruhollah] Khomeini, having announced a policy of 'neither the West nor the East,' and cursing the 'American devil,' imperialism and Zionism, was forced to acquire American weapons, spares and military supplies by any and all possible means," the Russians wrote. According to the report, the Republicans won the bidding war.

"After the victory of R. Reagan in the election, in early 1981, a secret agreement was reached in London in accord with which Iran released the American hostages, and the U.S. continued to supply arms, spares and military supplies for the Iranian army," the report continued. The deliveries were carried out by Israel , often through private arms dealers, the Russians said. Spares for F-14 fighters and other military equipment went to Iran from Israel in March-April 1981 and the arms pipeline kept flowing into the mid-1980s.

"Through the Israeli conduit, Iran in 1983 bought surface-to-surface missiles of the 'Lance' class plus artillery of a total value of $135 million," the report said. "In July 1983, a group of specialists from the firm, Lockheed, went to Iran on English passports to repair the navigation systems and other electronic components on American-produced planes." Then, in 1985, the weapons tap opened wider, into the Iran-contra shipments.

The Russian 'Bomb'

The matter-of-fact Russian report was stunning. It also matched other information the task force had. The Israelis, for example, had shipped U.S. military spares to Iran in the early 1980s, with the acquiescence of senior Reagan administration officials. But the Russians weren't clear about where their information came from or how reliable it was.

After receiving the Russian report in January 1993, a U.S. Embassy political officer went back to the Russians seeking more details. But the Russians would state only that the data came from the Committee on Defense and Security Issues. The embassy political officer then speculated that Moscow 's report might have been "based largely on material that has previously appeared in the Western media."

But apparently, there was no serious follow-up -- even though Moscow , the communist enemy in the 1980s, claimed to possess incriminating evidence about two CIA directors (Casey and Gates) and two U.S. Presidents (Reagan and Bush). Though the Russian claims about Carter's negotiations with Iran might cause embarrassment, Carter, as President, possessed the constitutional authority to negotiate with a foreign power. The Republicans did not.

Task force investigators felt the Russian report could be safely dismissed because one section took seriously the allegations of former Israeli intelligence official Ari Ben-Menashe, an Iranian-born Jew. Ben-Menashe had testified to Congress that, as an Israeli intelligence officer, he participated in Paris meetings between senior Iranians and Republican emissaries in October 1980. Ben-Menashe had placed Casey, Bush and Gates at those meetings as well.

But Bush, who was Reagan's vice presidential running mate in 1980 and President during the task force investigation, denied being in Paris. So did Gates, who was Casey's deputy director at CIA and Bush's CIA director. (Casey died in 1987 before the October Surprise issue surfaced.)
When Ben-Menashe went public in the early 1990s, the Israeli government first called him an imposter and claimed he had never worked for Israeli intelligence. But confronted with documents proving Ben-Menashe's employment, Israeli officials reversed themselves and admitted that Ben-Menashe had worked for Israeli military intelligence from 1977-87. Nevertheless, they continued to attack his truthfulness. The House task force also rejected Ben-Menashe as lacking credibility. For his part, Ben-Menashe, now living in Canada , still insists that he was telling the truth.

After finding the Russian report in a remote storage room on Capitol Hill, I contacted one well-placed official in Europe who checked with the Russian government. "This was real information based on their own sources and methods," the official told me. As for the possibility that the report was blowback from the U.S. media, the official insisted that the Russians "would not send something like this to the U.S. Congress at that time, if it was bullshit."

Instead, the Russians considered their report "a bomb" and "couldn't believe it was ignored," the official said. Not only did the House task force keep the extraordinary Russian report secret, it ended up in a cardboard box among hundreds of documents, some unclassified and others "secret." The document boxes were piled, ingloriously, on the floor of a former Ladies' Room which had been converted into storage space, deep inside a parking garage of the Rayburn House Office Building .

The Ladies' Room Secrets

Stored away in a converted Ladies' Room on Capitol Hill, dusty boxes contained startling evidence of Republican dirty tricks in the 1980 presidential campaign -- and of a bipartisan cover-up that continues to this day.

From secret payments to an Iranian banker to incriminating CIA discussions, the documents painted a picture of political deceit at the highest levels of national power and of a fraud perpetrated on American history: another chapter of the October Surprise X-Files

October Surprise X-Files (Part 2): The Ladies' Room Secrets By Robert Parry

WASHINGTON -- After its release on Jan. 13, 1993, the House task force report on the October Surprise controversy quickly hardened into historical concrete. Its conclusion that there was "no credible evidence" to support the allegations of Republican sabotage in the 1980 Iran hostage crisis won acclaim across the political spectrum.

Columnist David Broder lauded Rep. Lee Hamilton, D-Ind., the task force chairman, as the "conscience of Congress" for repudiating the accusations of GOP wrongdoing. No one, it seemed, examined the quality of the investigation or listened to the few dissenting voices.

But in the months following the task force's findings, more foreign leaders in positions to know told other Americans that there was more to the October Surprise story than the task force found. Palestine Liberation Organization chairman Yasir Arafat informed American journalist Richard Fricker that senior Republicans had traveled to Beirut in 1980 seeking avenues to the Iranian leadership.

In a May 1993 videotaped interview in Tel Aviv, former Israeli Prime Minister Yitzhak Shamir was asked "was there an October Surprise?" and he responded "of course, it was." In another interview, retired Israeli General Yehoshua Saguy, who was head of Israeli military intelligence in 1980, said Prime Minister Menachem Begin claimed American approval for Israel 's secret 1980 weapons shipments to Iran . But the approval had not come from President Carter, who had angrily objected to the shipments when he learned of them.

The French Spymaster

Alexandre deMarenches, the man who ran French intelligence in 1980, privately mocked the House task force findings and let stand the sworn testimony of his biographer that he (deMarenches) had arranged meetings between Ronald Reagan's campaign chief William J. Casey and Iranians in Paris in October 1980.

In December 1992, deMarenches's biographer, David Andelman, an ex-New York Times and CBS News correspondent, had testified before the task force that deMarenches had discussed the Paris meetings while the two were writing deMarenches's autobiography, The Fourth World War. After Andelman's testimony, the task force called deMarenches. But when the imperious French spymaster failed to return the call, the task force concluded, paradoxically, that Andelman's testimony was "credible" but lacked "probative value."

These newer witnesses also were corroborating longstanding claims about Republican interference that had been made by top Iranians of the period, including Iran 's President Abolhassan Bani-Sadr, Foreign Minister Sadeq Ghotzbadeh and Defense Minister Ahmed Madani. Other testimony supporting the October Surprise charges had come from intelligence agents with confirmed ties to Israel , France and the United States .

But the dismissive House task force report effectively buried the October Surprise story as an historical issue. Washington 's conventional wisdom readily accepted that there had been no Republican contacts to Iran in 1980; that Casey, George Bush and other Reagan campaign officials had been falsely accused.

Then, last year, senior representatives of Iran 's current government held informal talks in Europe with Americans close to President Clinton. Like deMarenches, these Iranians were amused at how wrong the House task force had been. Casey indeed had made secret overtures to Iran during the hostage crisis of 1980, these Iranians said.

The new Iranian claims were relayed to the highest levels of the Clinton administration. But fearing how a reopened October Surprise investigation might look, the White House refused to reconsider the House task force findings. For reasons perhaps explained best by Washington 's acute sense for sniffing career danger, the October Surprise story had become one of the capital's most powerful taboos.

The Ladies' Room Files

Given that reality, I hesitated before seeking access to the task force's raw files. But having learned of the new Iranian claims, I decided to go ahead. I obtained permission from the House International Relations Committee to examine the task force's unclassified papers. I was told that there had not been a single prior request for these records that had been collecting dust in an obscure office off the Rayburn House Office Building 's parking garage, across from the U.S. Capitol.
To reach the files required taking the Rayburn building's elevator to a sub-basement floor and then winding through the musty underground garage almost to the car exit at the building's south side. To the right, behind venetian-blind-covered windows was a small locked office. Inside were a few desks, cloth-covered partitions, phones and a rumbling old copying machine.
At the rear of the office was a converted Ladies' Room, now used for storage. The task force's taped boxes sat against the wall, under an empty tampon dispenser which still hung from the salmon-colored tiles. I began pulling the tape off the boxes and poring through the files. Not only did I find unclassified notes and documents about the task force's work, but also "secret" and even "top secret" papers that had been left behind, apparently in the haste to wrap up the investigation.

A few "secret" depositions were there, including one of a senior CIA officer named Charles Cogan. Cogan testified that he had attended a 1981 meeting at CIA headquarters in Langley, Va., in which a high-ranking Republican commented to Casey about their success in disrupting Carter's "October Surprise," the term used to describe President Carter's hope for a last-minute release of the 52 American hostages held in Iran.

FBI Wiretaps

Another box contained a "secret" summary of FBI wiretaps placed on phones belonging to Cyrus Hashemi, an Iranian financier who had worked for the CIA in 1980. Hashemi also was a key Carter intermediary in the hostage talks. But in fall 1980, the wiretaps showed Hashemi receiving a $3 million deposit arranged by a Houston lawyer who claimed to be associated with then-vice presidential candidate George Bush.

After the 1980 election, the Houston lawyer was back on the phone promising Hashemi help from "the Bush people" for one of Hashemi's failing investments. And shortly after President Reagan's Inauguration, a second mysterious payment to Hashemi arrived from London by Concorde, via a courier for the Bank of Credit and Commerce International (BCCI).

There were notes, too, describing Bush's active involvement in monitoring President Carter's Iran hostage negotiations. According to one set of notes, dated Oct. 27, 1980, Bush instructed foreign policy adviser Richard Allen to funnel last-minute information about the negotiations back to him via Theodore Shackley, the CIA's former associate deputy director for operations.
Still, another file contained a summary of all "secret" and "top secret" State Department records on arms sales to Iran in the 1980s. One "top secret/sensitive" document recounted private meetings that Secretary of State Alexander Haig had with Middle Eastern leaders during a trip in May 1981. The leaders told Haig about the continuing secret flow of weapons from Israel to Iran .

I also found a "confidential" October Surprise report that had been sent by Russia 's Supreme Soviet informing the task force that Moscow 's national security files contained evidence that Casey, Bush and other Republicans had negotiated secretly with Iranians in Europe in 1980. [See "The Consortium," Dec. 11, 1995, Vol. 1, No. 1]

All of this information had been excluded from the House task force report. And after the report was completed, the documents were left unceremoniously behind on the floor of the converted Ladies' Room.

'A Trap Door'

Other task force papers in the boxes revealed how flimsy the report's October Surprise debunking had been. Even, task force chief counsel E. Lawrence Barcella was nervous about the weaknesses. On Dec. 8, 1992, he instructed his deputies "to put some language in, as a trap door" in case later disclosures disproved parts of the report or if complaints arose about selective omission of evidence.

"This report does not and could not reflect every single lead that was investigated, every single phone call that was made, every single contact that was established," Barcella suggested as "trap door" wording. "Similarly, the task force did not resolve every single one of the scores of 'curiosities,' 'coincidences,' sub-allegations or question marks that have been raised over the years and become part of the October Surprise story."

But as the documents made clear, many of those "coincidences" left out were historically important. The October Surprise story connected some of the world's most powerful figures in secret interlocking business deals. The documents also revealed an investigation that not only overlooked a few "curiosities" or failed to mention a "lead" or two, but an inquiry that consistently slanted the evidence.

The boxes of documents revealed that the task force used false alibis on Casey's whereabouts for key October Surprise dates; withheld relevant documents and testimony that clashed with its conclusions; dismissed credible witnesses who supplied unwelcome support for the allegations; and accepted dubious -- if not blatantly false -- testimony from Republicans.

Conflicts of Interest

In addition, the task force's files contained new evidence of conflicts of interest for the House investigators, particularly chief counsel Barcella. In the 1980s, he had been a lead attorney for the corrupt international bank, BCCI, which paid his firm more than $2 million to shield it from press and governmental investigations. At that time, Barcella also was a law partner of Paul Laxalt, who had been chairman of the Reagan-Bush campaign in 1980.

Indeed, the Ladies' Room files showed that a fascinating chapter of recent American history -- the story of the pivotal 1980 election -- had been seriously miswritten. Even if one still judges that the evidence falls short of proving an explicit Republican-Iranian "deal" to delay the release of the 52 American hostages, the facts do point to significant GOP interference in President Carter's negotiations during the campaign.

Much of that missing history was there in the documents.

Bill Casey' Iranian

Iranian banker Cyrus Hashemi was a mystery man of the 1980s, a nexus point for scandal, from accessing vaults of the corrupt BCCI to opening doors to the Iran-Contra Affair. But for years, the FBI withheld key wiretaps of Hashemi's secret conversations.

Now, from a dusty box in a Capitol Hill storage room, a classified summary of those incriminating calls has been recovered. It fills in crucial missing pieces of the history of the Reagan-Bush era: another chapter of the October Surprise X-Files

October Surprise X-Files (Part 3): Bill Casey's Iranian By Robert Parry

WASHINGTON -- On Sept. 23, 1980, in the midst of the Reagan-Carter presidential race, two men from Houston placed phone calls to an Iranian banker at his swank office in a mid-town Manhattan skyscraper. The two men had a cryptic message. They informed the banker, Cyrus Hashemi, that "a Greek ship captain" would be delivering a $3 million deposit from Beirut to Hashemi's offshore bank headquartered in the Netherlands Antilles .

Hashemi was told the "Greek ship captain" would use the name "Fibolous." One of the Texans, a former judge named Harrel Tillman, considered himself a 30-year friend of George Bush, the Republican candidate for Vice President. Hashemi, in 1980, was acting as a principal intermediary for President Carter's frantic efforts to free 52 Americans held hostage in Iran .
On Nov. 20, after President Carter failed to spring the hostages and lost to Ronald Reagan, Tillman was back on the phone with Hashemi, this time about the "purchase of [a] refinery," according to a "secret" FBI wiretap summary. Tillman said he had been in touch with Vice President-elect Bush and had consulted with "the 'Bush' people" about the troubles that Hashemi and his business associate, John Shaheem, were having with a bankrupt oil refinery in Newfoundland .

"Bush people would be cooperative with this matter and make it a showcase," Tillman said, according to the summary. "But the 'Bush' people would not act on it until after the Inauguration" in January 1981.

Interviewed this past week about those 1980 phone calls, Tillman said he recalled nothing about either the $3 million deposit or the promises from the "Bush people." "I don't remember having that conversation," Tillman told me. He acknowledged, though, being questioned about the calls by congressional investigators in 1992, but added that he could not recall the substance of that interview either. "I'm not trying to be evasive," he insisted.

But the ex-judge did add another twist to the mysterious phone calls. Tillman said that besides supporting the Reagan-Bush ticket in 1980, he was working as a consultant to Iran 's radical Islamic government. Tillman also felt President Carter had bungled the hostage crisis.

Still, whatever the reason for the $3 million deposit -- whether it was a payoff or an unrelated business deal -- it added to Hashemi's already-deep dependence on the Republicans. Hashemi worked closely with former Nixon administration official Stanley Pottinger and was a business associate of John Shaheen, a Republican businessman who counted among his best friends William J. Casey, then in charge of the Reagan-Bush campaign.

A Madrid Meeting?

Hashemi's ties to Casey and Shaheen would be central to allegations that the Reagan-Bush campaign sabotaged President Carter's hostage talks. Hashemi's older brother, Jamshid, claimed that Cyrus and Casey began collaborating secretly on the Iranian hostage issue in the spring and summer of 1980.

According to Jamshid Hashemi's sworn testimony, Cyrus arranged a clandestine meeting in Madrid between Casey and a radical Iranian mullah, Mehdi Karrubi, in late July 1980. At the meeting, Casey allegedly opened a back-channel to Iran that disrupted President Carter's hostage negotiations and ensured Ronald Reagan's resounding victory that November.

As many as two dozen other Iranian, European and Middle Eastern officials made similar assertions of GOP interference. But in January 1993, after a year-long investigation, a special House task force concluded that "no credible evidence" existed to support allegations of a Republican dirty trick. One of the task force's principal arguments for the debunking was that a careful review of secret FBI wiretaps on Cyrus Hashemi's phones from September 1980 to February 1981 found nothing to support the so-called October Surprise charges.

So when I gained access to boxes of the task force's raw records in an obscure Capitol Hill storage room (see The Consortium, Dec. 21), I was startled to discover a "secret" FBI wiretap summary that revealed a much more complex story than the House task force's sanitized version of events.

For instance, while the task force was aware of the $3 million "Greek ship captain" deposit and the potential conflict of interest it represented for Cyrus Hashemi, no mention was made of it in the House report. Nor did the task force explain financial connections that tied Shaheen and Hashemi to wealthy figures from the Philippines , the Middle East, the corrupt Bank of Credit and Commerce International, and the ousted royal family of Iran .

All those links gave Hashemi powerful motives to betray President Carter -- and, in each one, William Casey was in the background.

'Two Faces'

The wiretap summary showed almost daily contacts between Cyrus Hashemi, a worldly financier in his 40s whose phone calls included chats with high-priced prostitutes, and John Shaheen, the fast-talking former officer in World War II's Office of Strategic Services. Shaheen and Casey, who met in the OSS , also had worked together on the failed Newfoundland oil refinery that Hashemi and Tillman discussed in the wiretapped conversation.

Indeed, on Sept. 22, the day before the first calls from Houston, Hashemi was on the phone discussing how to line up a $40 million loan to help Shaheen regain control of the refinery.That same week, Hashemi and Shaheen hashed over schemes for opening a bank together, possibly in Asia with some Philippine investors.

On Sept. 25, Hashemi and Shaheen discussed a " Hong Kong deal," according to the wiretaps. On Oct. 14, the two men were arranging a meeting with Philippine bankers and businessmen. Hashemi expressed concern because he had already deposited "a large sum of money in a bank in the Philippines ."

In mid-October 1980, even as Hashemi supposedly was helping President Carter's last-ditch effort to resolve the hostage crisis, the Iranian banker began work with other Republicans lining up arms shipments to Iran , including parts for helicopter gunships and night-vision goggles for pilots.

The FBI wiretap summary also contained references to Hashemi lying about the hostage issue. On Oct. 22, 1980, the FBI bugs caught Hashemi's wife, Houma , scolding her husband about his denials that he had discussed the hostages with Iranian Prime Minister Mohammed Rafsanjani. "It is not possible to be a double agent and have two faces," Houma warned Cyrus.

The next day, Oct. 23, Shaheen again was in Hashemi's office at 9 West 57th St. , using one of the bugged phones to brief a European associate, Dick Gaedecke, about the latest developments in the hostage negotiations. Hashemi was keeping Shaheen, Casey's pal, fully informed about President Carter's hostage strategies.

A Reagan Link?

On Oct. 24, the FBI recorded another cryptic note suggesting Hashemi's close ties to another prominent Republican. Using Cyrus Hashemi's initials, it read: "CH-banking business about Reagan overseas corp.," according to the wiretap summary.

The possibility of a Reagan-Hashemi link was not entirely new. It arose initially in 1992 when Reuters news agency quoted FBI sources in New York as saying that agents heasrd Ronald Reagan on one Hashemi tape. But the congressional investigators said Reagan was not recorded speaking on the 548 tapes made available to Congress, except for some television background noise.

But the investigators were unable to explain an eight-day gap on one tape. Eleven others were blank, a condition possibly caused by intentional erasure, according to tape experts. Still, the House task force found nothing suspicious about this pattern.

In clearing the Republicans, the House report also left out testimony from Iran 's former Defense Minister, Ahmed Madani, who stated that he, too, had chastised Hashemi for collaborating secretly with the Republicans behind President Carter's back. Madani testified that Hashemi offered to bring Casey to a hostage discussion during the campaign.

"We are not here to play politics," Madani said he responded. The discussion convinced Madani that "Casey wanted to fish in troubled waters" and that Hashemi was "double-dealing" President Carter.

In the transition period after Ronald Reagan's victory, the FBI picked up more conversations about Hashemi's GOP ties. On Nov. 20, the same day as Tillman's call about the "Bush people," Hashemi boasted to fellow Iranian Mahmood Moini about ties to Casey, who was then running President-elect Reagan's transition office. "I have been, well, close friends ... with Casey for several years," Hashemi told Moini.

Although the Carter administration had finally frozen Hashemi out of the hostage talks because of the arms dealing, the shrewd Iranian banker kept his hands in. On Jan. 15, 1981, Hashemi met with Iranian Revolutionary Guard officials in London and opened an account for them with 1.87 million pounds (roughly equal to $3 million), according to the FBI wiretaps. The money apparently was to finance arms sales.

On Jan. 19, 1981, the last day of the Carter Presidency, Hashemi was back on one of the bugged phones, describing to a cohort "the banking arrangements being made to free the American hostages in Iran ." Hashemi was also moving ahead with military shipments to Iran . "How should we proceed with our friend over there?" the associate asked Hashemi. "I'm just a little bit nervous that everyone is trying to move in on the action here."

The hostages were released the next day, immediately after Ronald Reagan's Inauguration.

BCCI Flies the Concorde

Over the next weeks, unusual deposits continued to flow into Hashemi's offshore bank, the First Gulf Bank and Trust Company. In early February 1981, the FBI recorded a call alerting Hashemi that "money from BCCI [is] to come in tomorrow from London on Concorde."

Within days of the BCCI-Concorde call, the new Justice Department ordered the wiretaps pulled from Hashemi's office. Though the FBI and field prosecutors wanted to use the wiretap information immediately to mount an arms trafficking case against Hashemi, the proposed indictment languished for more than three years. Even then, in May 1984, when the evidence finally went to a grand jury, the Justice Department insisted on tipping off Hashemi, allowing him to cancel a flight from London to New York and avoid arrest.

Less than a year later, in early spring 1985, Israeli arms dealers, Albert Schwimmer and Ya'acov Nimrodi, arrived at a luxury London hotel to meet with Cyrus Hashemi, Saudi financier Adnan Khashoggi and an Iranian intelligence man named Manucher Ghorbanifar. Hashemi was proposing more weapons sales for Iran.He was working again with John Shaheen and Bill Casey, who was President Reagan's director of the CIA.

A year later, still in London , Hashemi fell suddenly ill with what was diagnosed as acute leukemia. He died on July 21, 1986. But what Hashemi had started in that London hotel room would become known a few months after Hashemi's death as the Iran-Contra Affair.

Follow the Money

An intimidating array of individuals and forces wanted President Carter ousted from the White House in 1980. Some were driven by ambition; others by money; and still others by revenge. Together, they were over-powering.

Newly revealed documents, meant to stay hidden from the public, now show the interlocking relationships that operated behind the facade of American democracy: a chilling chapter of the October Surprise X-Files

· October Surprise X-Files (Part 4): The Money Trail By Robert Parry

WASHINGTON -- It was the start of winter, December 21, 1992, but the mild Washington weather was still like fall. In a secure conference room, a senior CIA Middle East specialist sat down to give a classified deposition to a special House task force investigating the October Surprise controversy.

The task force had already drafted its report, which firmly rejected allegations that the Reagan-Bush campaign sabotaged President Carter's Iran hostage talks in 1980. The distinguished gray-haired CIA man, Charles G. Cogan, had been called to tie down a loose end or two.

But Cogan started his testimony with a startling recollection. He remembered an off-hand remark that he had heard in 1981, during a meeting between then-CIA director William J. Casey and a prominent Republican, Joseph V. Reed. Cogan said he was finishing a meeting with Casey in the director's seventh floor office at CIA's campus-like headquarters in Langley , Va. , when Reed arrived.

Knowing Reed, a longtime top aide to Chase Manhattan's David Rockefeller, Cogan lingered at the door. Cogan said he had a "definite memory" of a comment Reed made about disrupting President Carter's "October Surprise" of a pre-election release of 52 American hostage held in Iran . But Cogan said he could not recall the precise verb that Reed had used.

"Joseph Reed said, 'we' and then the verb [and then] something about Carter's October Surprise," Cogan testified. "The implication was we did something about Carter's October Surprise, but I don't have the exact wording." (Another congressional investigator, who discussed the recollection with Cogan in a less formal setting, concluded that the verb apparently was the past tense of an expletive related to sex.)

Though supposedly seeking evidence of just such a Republican action, the task force lawyers did not welcome Cogan's testimony. Republican lawyer (and former CIA official) David Laufman asked if Cogan had since "had occasion to ask him [Reed] about this?"

Yes, Cogan replied, he had asked Reed about it, after Reed moved to a protocol job at the United Nations. "I called him up," Cogan said. "He was at his farm in Connecticut, as I recall, and I just told him that, look, this is what sticks in my mind and what I am going to say [to Congress], and he didn't have any comment on it and continued on to other matters."

"He didn't offer any explanation to you of what he meant?" exclaimed Laufman.

"No," answered Cogan.

"Nor did he deny that he had said it?" asked another task force lawyer Mark L. Shaffer.

"He didn't say anything," Cogan responded. "We just continued on talking about other things."
And so did the task force lawyers at this remarkable deposition. They even failed to ask Cogan the obvious follow-up: How did Casey react to Reed's remark about doing something to President Carter's October Surprise? Instead, Cogan's testimony, like so many other pieces of incriminating evidence, would be excluded from the final report and locked away with classified information that was intended to stay outside the public's reach.

A Hostile Witness But the Cogan deposition was one of the "secret" documents left behind, apparently by accident. It was mixed in with unclassified material that I was allowed to examine in an obscure Capitol Hill storage room. (See "October Surprise X-Files" series for more details.)
I also discovered the notes of an FBI agent who tried to interview Joseph Reed about his October Surprise knowledge. The FBI man, Harry A. Penich, had scribbled down that "numerous telephone calls were placed to him [Reed]. He failed to answer any of them. I conservatively place the number over 10."

Finally, Penich, armed with a subpoena, cornered Reed arriving home at his 50-acre estate in Greenwich , Conn. "He was surprised and absolutely livid at being served at home," Penich wrote. "His responses could best be characterized as lashing out."

Reed threatened to go over Penich's head. In hand-written "talking points" that Penich apparently used to brief an unnamed superior, the FBI agent wrote: "He [Reed] did it in such a way as to lead a reasonable person to believe he had influence w/you. The man's remarks were both inappropriate and improper."

But the hard-ball tactics worked. When Reed finally consented to an interview, task force lawyers treated him with kid-gloves. Penich took the interview notes and wrote that Reed "recalls no contact with Casey in 1980," though Reed added that "their paths crossed many times because of Reed's position at Chase." In 1979, Reed had spearheaded the Rockefeller lobbying to get the shah admitted into the United States for cancer treatment, an event that led to the seizure of the U.S. Embassy in Teheran.

As for the 1981 CIA visit, Reed added that as the newly appointed U.S. ambassador to Morocco , he "would have stopped in to see Casey and pay respect." But on whether Reed made any remark about obstructing President Carter's October Surprise, Reed claimed he "does not specifically know what October Surprise refers to," Penich scribbled down. The task force lawyers did not press too hard.

Most glaringly, the lawyers failed to confront Reed with a key piece of evidence that would have impeached his contention that he had "no contact with Casey in 1980." According to sign-in sheets at the Reagan-Bush campaign headquarters in Arlington , Va. , which the task force had obtained, Reed saw Casey on September 11, 1980.

On that visit, Reed accompanied David Rockefeller; Owen Frisbie, Rockefeller's Washington lobbyist; and the late Archibald Roosevelt, a Chase adviser and a legendary CIA veteran of Middle East operations, including the 1953 plot that restored the shah to the Peacock Throne.
'Flying Dutchman' In the quarter century after that CIA operation, David Rockefeller's bank profited handsomely from the shah's deposits. But when the shah was ousted in January 1979, Chase faced serious exposure as the new Islamic government ordered $6 billion pulled from Chase's vaults.

Besides the money, Rockefeller and his aides were furious at President Carter's treatment of the shah. Former Secretary of State Henry Kissinger lamented that the shah had been turned into a real-life "Flying Dutchman," fleeing from one temporary shelter to another, from Egypt to Morocco to Mexico to the United States to Panama , before returning to Egypt where the shah died on July 27, 1980.

But Cogan's testimony about the Reed-Casey conversation also pointed the way toward a major investigative avenue that the task force had little desire to go down. The shah's family (the Pahlavis) had close financial ties not just to Rockefeller and Chase Manhattan but to William Casey's personal business circle.

According to a 1984 CIA memo given to the task force, Casey recruited his old World War II spy chum John Shaheen and Iranian banker Cyrus Hashemi in 1979 to sell off property in New York City belonging to the shah's Pahlavi Foundation. At that time, the radical Islamic government in Teheran was claiming that property as its own and the shah's family was desperate for the cash.
The early Casey-Shaheen-Hashemi partnership on this Iranian business deal was important, because in 1980 Hashemi became one of President Carter's principal intermediaries on the hostage crisis and Casey was in charge of Ronald Reagan's campaign. The Casey-Shaheen-Hashemi connection made the October Surprise allegations far more credible.

Though Cyrus Hashemi died in 1986, his older brother, Jamshid, testified under oath before the task force that Cyrus had arranged July 1980 meetings in Madrid where Casey discussed the hostages with a radical Iranian mullah, Mehdi Karrubi. Jamshid's testimony was at the heart of the October Surprise charges that Casey derailed President Carter's hostage talks.

But the House task force cast aside the CIA memo and concluded that there was "no evidence" that Casey had met Cyrus Hashemi before the 1980 election in November. In the public report, the task force briefly mentioned the CIA memo, but deleted the identity of the foundation. The word "Pahlavi" was excised, thus obscuring the significance of the information.

A Marcos Bagman Also missing from the report was evidence that Cyrus Hashemi had worked with Casey ally Shaheen on other lucrative business schemes tied to the Pahlavi fortune. For instance, FBI wiretaps of Cyrus Hashemi's New York City office in fall 1980 discovered that Shaheen and Hashemi were planning to invest millions of dollars to establish a bank together, possibly in Hong Kong with Philippine investors. (See Consortiumnews.com's "Bill Casey's Iranian.")

The bank deal took final shape two days after President Reagan Inauguration and the near-simultaneous release of the 52 American hostages whom President Carter had failed to free. On January 22, 1981, Shaheen opened the Hong Kong Deposit and Guaranty Bank with $20 million that had been funneled to him through a Rockefeller-connected lawyer in Geneva , named Jean Patry.

The bank sported on its board other powerful world players, including Herminio Disini, known as Philippine President Ferdinand Marcos's personal bag man. Indeed, a Shaheen lawyer told me that Shaheen flew to Manila in early 1981 to meet face-to-face with Marcos, the man whom Shaheen considered really "in charge." The lawyer said the Hong Kong bank was a way for Marcos "to get his hands on some of the Arabs' Euro-petrodollars."

In 1980, Marcos also may have delivered secret payments to Casey. According to a letter revealed in the Philippines after Marcos's overthrow in 1986, President Reagan wanted files about those payments back before Marcos fled to Hawaii . The letter, purportedly written by Marcos's executive assistant, Victor Nituda, stated that Sen. Paul Laxalt, R-Nev., "expects all documents checklisted during his last visit or the deal is off." One of the files was marked "1980 SEC-014, Funds to Casey." Another file was slugged "1980 SEC-015, Reagan Funds Not Used."
While in exile in Hawaii , Marcos reportedly boasted to visitors that he gave $4 million to Ronald Reagan's 1980 campaign, contributions that would have violated federal election laws -- and might explain why Marcos was allowed to profit off the Hong Kong bank.

From 1981-84, Hong Kong Deposit and Guaranty did pull in hundreds of millions of petrodollars, just as Marcos had hoped. The bank also attracted high-flying Arabs to its board of directors. Two directors were Ghanim Al-Mazrouie, the Abu Dhabi official who controlled 10 percent of the corrupt Bank of Credit and Commerce International, and Hassan Yassin, a cousin of Saudi financier Adnan Khashoggi and an adviser to BCCI principal Kamal Adham, the former chief of Saudi intelligence.

Though Cyrus Hashemi's name was not directly connected to the Hong Kong bank, he did receive cash from BCCI. An FBI wiretap of Hashemi's office in early February 1981 picked up an advisory that "money from BCCI [is] to come in tomorrow from London on Concorde."

The Missing Millions In 1984, the Hong Kong Deposit and Guaranty collapsed and an estimated $100 million disappeared. The crash put Shaheen in hot water again, but he died of liver cancer in 1985 so the bank's loss was buried with him, in his estate. The biggest loser in the deal -- the mystery $20 million investor from 1980-81 -- apparently did not want any publicity.
The House task force figured out who the bank's benefactor was. But, again, the House report left out this intriguing fact.

The $20 million that had capitalized Hong Kong Deposit and Guaranty, the money that was funneled through the Rockefeller lawyer in Geneva , had come from Princess Ashraf, the shah's strong-willed twin sister. The House task force interviewed Ashraf and accepted her bald statement that the $20 million was just a routine business investment.

In 1980, however, the deposed princess was one of Jimmy Carter's most implacable enemies. She blamed the President for failing to save the shah. His overthrow then led to the murder of her son. Ashraf suspected, too, that President Carter's team was desperate enough to trade the ailing shah for the hostages. According to The Shah's Last Ride by William Shawcross, she snubbed White House chief of staff Hamilton Jordan when their paths crossed in Panama in early 1980.

That Princess Ashraf was supplying $20 million to Cyrus Hashemi's American business partner, John Shaheen, while Hashemi was supposedly helping President Carter resolve the hostage impasse would normally be seen as evidence of a pay-off. So, too, might BCCI's curious Concorde money flight.

But as it turned out, the task force's chief counsel, E. Lawrence Barcella Jr., had worked as a lead attorney for BCCI in the late 1980s. BCCI paid Barcella and his firm more than $2 million, and the lead partner in the firm was former Sen. Paul Laxalt. Not the BCCI money, nor Ashraf's $20 million, nor the Philippine files were mentioned in the House report. The task force, it seemed, had no interest in following the money.

Saddam's 'Green Light'

In 1980, Iraq 's Saddam Hussein was suddenly a bigtime international 'player,' invited to the gaudy palaces of the Saudi Arabian monarchy. But there was an ulterior motive behind the flattering invitation: Saddam's army was the new protector of the petro-rich against the Iranian hordes.

Saudi Prince Fahd claimed to have a message, too, from the President of the United States . It was a missive that might have changed the course of history, another installment from the October Surprise

October Surprise X-Files (Part 5): Saddam's 'Green Light' By Robert Parry

WASHINGTON -- In summer 1980, Iraq 's wily president Saddam Hussein saw opportunities in the chaos sweeping the Persian Gulf . Iran 's Islamic revolution had terrified the Saudi princes and other Arab royalty who feared uprisings against their own corrupt life styles. Saddam's help was sought, too, by CIA-backed Iranian exiles who wanted a base to challenge the fundamentalist regime of Ayatollah Ruhollah Khomeini. And as always, the Western powers were worried about the Middle East oil fields.

So because of geography and his formidable Soviet-supplied army, Saddam was suddenly a popular fellow.

On Aug. 5, 1980, the Saudi rulers welcomed Saddam to Riyadh for his first state visit to Saudi Arabia , the first for any Iraqi president. The Saudis, of course, wanted something. At those fateful meetings, amid the luxury of the ornate palaces, the Saudis would encourage Saddam to invade Iran . The Saudis also would claim to pass on a secret message about President Carter's geo-political desires.

During that summer of 1980, President Carter was facing his own crisis. His failure to free 52 American hostages held in Iran was threatening his political survival. As he wrote in his memoirs, Keeping Faith, "The election might also be riding on their freedom." Equally alarming, President Carter had begun receiving reports that the Republicans were making back-channel contacts with Iran about the hostage crisis, as he would state in a letter to a journalist nearly a decade later.

Though it was unclear then, this multi-sided political intrigue would shape the history from 1980 to the present day. Iraq 's invasion of Iran in September 1980 would deteriorate into eight years of bloody trench warfare that did little more than kill and maim an estimated one million people. What little more the war did was to generate billions of dollars in profits for well-connected arms merchants -- and spawn a series of national security scandals.

In 1986-87, the Iran-Contra Affair peeled back some of the layers of secrecy, but bipartisan investigations dumped the blame mostly on Oliver North and a few low-level "men of zeal." Later inquiries into Iraqgate allegations of secret U.S. military support for Saddam Hussein also ended inconclusively. The missing billions from the sleazy Bank of Credit and Commerce International disappeared into the mist of complex charge and counter-charge, too. So did evidence implicating the CIA and Nicaraguan contra rebels in cocaine trafficking.

A similar fate befell the October Surprise story and President Carter's old suspicion of Republican interference in the 1980 hostage crisis. A special House task force concluded in 1993 that it could find "no credible evidence" to support the October Surprise charges.

Haig's Talking Points

Still, I gained access to documents from that investigation, including papers marked "secret" and "top secret" which apparently had been left behind by accident in a remote Capitol Hill storage room. Those papers filled in a number of the era's missing pieces and established that there was more to the reports that President Carter heard in 1980 than the task force publicly acknowledged. (For more details, see the first four issues of The Consortium.)

But besides undermining the task force's October Surprise debunking, the papers clarified President Reagan's early strategy for a clandestine foreign policy hidden from Congress and the American people. One such document was a two-page "Talking Points" prepared by Secretary of State Alexander Haig for a briefing of President Reagan. Marked "top secret/sensitive," the paper recounted Haig's first trip to the Middle East in April 1981.

In the report, Haig wrote that he was impressed with "bits of useful intelligence" that he had learned. "Both [ Egypt 's Anwar] Sadat and [Saudi Prince] Fahd [explained that] Iran is receiving military spares for U.S. equipment from Israel ." This fact might have been less surprising to President Reagan, whose intermediaries allegedly collaborated with Israeli officials in 1980 to smuggle weapons to Iran behind President Carter's back.

But Haig followed that comment with another stunning assertion: "It was also interesting to confirm that President Carter gave the Iraqis a green light to launch the war against Iran through Fahd." In other words, according to Haig's information, Saudi Prince Fahd (now King Fahd) claimed that President Carter, apparently hoping to strengthen the U.S. hand in the Middle East and desperate to pressure Iran over the stalled hostage talks, gave clearance to Saddam's invasion of Iran. If true, Jimmy Carter, the peacemaker, had encouraged a war.

Haig's written report contained no other details about the "green light," and Haig declined my request for an interview about the Talking Points. But the paper represented the first documented corroboration of Iran 's long-held belief that the United States backed Iraq 's 1980 invasion.

In 1980, President Carter termed Iranian charges of U.S. complicity "patently false." He mentioned Iraq 's invasion only briefly in his memoirs, in the context of an unexpected mid-September hostage initiative from a Khomeini in-law, Sadeq Tabatabai. "Exploratory conversations [in Germany ] were quite encouraging," President Carter wrote about that approach, but he added: "As fate would have it, the Iraqis chose the day of [Tabatabai's] scheduled arrival in Iran , September 22, to invade Iran and to bomb the Tehran airport. Typically, the Iranians accused me of planning and supporting the invasion."

The Iraqi invasion did make Iran more desperate to get U.S. spare parts for its air and ground forces. Yet the Carter administration continued to demand that the American hostages be freed before military shipments could resume. But according to House task force documents that I found in the storage room, the Republicans were more accommodating.

Secret FBI wiretaps revealed that an Iranian banker, the late Cyrus Hashemi, who supposedly was helping President Carter on the hostage talks, was assisting Republicans with arms shipments to Iran and peculiar money transfers in fall 1980. Hashemi's older brother, Jamshid, testified that the Iran arms shipments, via Israel , resulted from secret meetings in Madrid between the GOP campaign director, William J. Casey, and a radical Islamic mullah named Mehdi Karrubi.

For whatever reasons, on Election Day 1980, President Carter still had failed to free the hostages and Ronald Reagan won in a landslide.

A 'Private Channel'

Within minutes of President Reagan's Inauguration on Jan. 20, 1981, the hostages finally were freed. In the following weeks, the new administration put in place discreet channels to Middle East powers, as Haig flew to the region for a round of high-level consultations. The trim silver-haired former four-star general met with Iraq 's chief allies, Saudi Arabia and Egypt , and with Israel , which was continuing to support Iran as a counter-weight to Iraq and the Arab states.
On April 8, 1981, Haig ended his first round of meetings in Riyadh and issued a diplomatic statement lauding Saudi Arabia 's "dedication to building a better world and the wisdom of your leaders." More to the point, he announced that "the foundation has been laid during this trip for the strengthening of U.S.-Saudi relations."

After Haig's return to Washington, his top secret Talking Points fleshed out for President Reagan the actual agreements that were reached at the private sessions in Saudi Arabia, as well as at other meetings in Egypt and Israel.

"As we discussed before my Middle East trip," Haig explained to President Reagan, "I proposed to President Sadat, [ Israel 's] Prime Minister [Menachem] Begin and Crown Prince Fahd that we establish a private channel for the consideration of particularly sensitive matters of concern to you. Each of the three picked up on the proposal and asked for early meetings."

Haig wrote that on his return, he immediately dispatched his counselor, Robert "Bud" McFarlane, to Cairo and Riyadh to formalize those channels. "He held extremely useful meetings with both Sadat and Fahd," Haig boasted. "In fact, Sadat kept Ed Muskie [President Carter's secretary of state] waiting for an hour and a half while he [Sadat] extended the meeting."

These early contacts with Fahd, Sadat and Begin solidified their three countries as the cornerstones of the administration's clandestine foreign policy of the 1980s: the Saudis as the moneymen, the Israelis as the middlemen, and the Egyptians as a ready source for Soviet-made equipment .

Although President Carter had brokered a historic peace treaty between Egypt and Israel , Sadat, Begin and Fahd had all been alarmed at signs of U.S. weakness, especially Washington 's inability to protect the Shah of Iran from ouster in 1979. Haig's Talking Points captured that relief at President Carter's removal from office.

"It is clear that your policies of firmness toward the Soviets has restored Saudi and Egyptian confidence in the leadership of the U.S. ," Haig wrote for the presentation to his boss. "Both [Fahd and Sadat] went much further than ever before in offering to be supportive."

Haig said "Sadat offered to host a forward headquarters for the Rapid Deployment Force, including a full-time presence of U.S military personnel." Sadat also outlined his strategy for invading Libya to disrupt Moammar Khadafy's intervention in Chad . "Frankly," observed Haig, "I believe he [Sadat] could easily get overextended in such an undertaking and [I] will try to moderate his ambitions on this score."

'Special Status,' Money and Guns

Haig reported that Prince Fahd was "also very enthusiastic" about President Reagan's foreign policy. Fahd had agreed "in principle to fund arms sales to the Pakistanis and other states in the region," Haig wrote. The Saudi leader was promising, too, to help the U.S. economy by committing his oil-rich nation to a position of "no drop in production" of petroleum.

"These channels promise to be extremely useful in forging compatible policies with the Saudis and Egyptians," Haig continued. "Both men value the 'special status' you have conferred on them and both value confidentiality. I will follow up with [Defense Secretary] Cap Weinberger and [CIA Director] Bill Casey. ...The larger message emerging from these exchanges, however, is that your policies are correct and are already eliciting the enthusiastic support of important leaders abroad."

In the following years, the Reagan administration would exploit the "special status" with all three countries to skirt Constitutional restrictions on Executive war-making powers. Secretly, the administration would tilt back and forth in the Iran-Iraq war, between aiding the Iranians with missiles and spare parts and helping the Iraqis with intelligence and indirect military shipments.

When the Soviets shot down an Israeli-leased Argentine plane carrying U.S. military supplies to Iran on July 18, 1981, the State Department showed it, too, valued confidentiality. At the time, State denied U.S. knowledge. But in a later interview, assistant secretary of state Nicholas Veliotes said "it was clear to me after my conversations with people on high that indeed we had agreed that the Israelis could transship to Iran some American-origin military equipment."

According to a sworn affidavit by former Reagan national security staffer Howard Teicher, the administration enlisted the Egyptians in a secret "Bear Spares" program that gave the United States access to Soviet-designed military equipment. Teicher asserted that the Reagan administration funnelled some of those weapons to Iraq and also arranged other shipments of devastating cluster bombs that Saddam's air force dropped on Iranians troops.

In 1984, facing congressional rejection of continued CIA funding of the Nicaraguan contra rebels, President Reagan exploited the "special status" again. He tapped into the Saudi slush funds for money to support the Nicaraguan contra rebels in their war in Central America . The President also authorized secret weapons shipments to Iran in another arms-for-hostages scheme, with the profits going to "off-the-shelf" intelligence operations. That gambit, like the others, was protected by walls of "deniability" and outright lies.

Some of those lies collapsed in the Iran-Contra scandal, but the administration quickly constructed new stonewalls that were never breached. Republicans fiercely defended the secrets and Democrats lacked the nerve to fight for the truth. The Washington media also lost interest because the scandals were complex and official sources steered the press in other directions.

'Read Machiavelli'

When I interviewed Haig several years ago, I asked him if he was troubled by the pattern of deceit that had become the norm among international players in the 1980s. "Oh, no, no, no, no," he boomed, shaking his head. "On that kind of thing? No. Come on. Jesus! God! You know, you'd better get out and read Machiavelli or somebody else because I think you're living in a dream world! People do what their national interest tells them to do and if it means lying to a friendly nation, they're going to lie through their teeth."

But sometimes the game-playing did have unintended consequences. In 1990, a decade after Iraq 's messy invasion of Iran , an embittered Saddam Hussein was looking for pay-back from the sheikhdoms that he felt had egged him into war. Saddam was especially furious with Kuwait for slant drilling into Iraq 's oil fields and refusing to extend more credit. Again, Saddam was looking for a signal from the U.S. president, this time George Bush.

When Saddam explained his confrontation with Kuwait to U.S. Ambassador April Glaspie, he received an ambiguous reply, a reaction he apparently perceived as another "green light." Eight days later, Saddam unleashed his army into Kuwait , an invasion that required 500,000 U.S. troops and thousands more dead to reverse.

Where's Bill Casey?

In 1991-92, the October Surprise investigation was like a worldwide Where's Waldo game, trying to locate Bill Casey on crucial days in 1980. Two national magazines and a House task force claimed success, thus disproving that Casey sabotaged the Iran hostage talks. The game was over; Casey and the Republicans were innocent.

But from an obscure storage room on Capitol Hill comes a photograph showing that the Where's Bill game was fixed, that his face is not among the Bohemian Grove members who supplied the vital alibi, a troubling chapter about faked history from the October Surprise X-Files.

October Surprise X-Files (Part 6): Where's Bill Casey? By Robert Parry

WASHINGTON -- "We found a photograph from the Bohemian Grove for the last weekend of July," the congressional investigator boasted to me over the phone. I was stunned.
"You found a photograph from the Bohemian Grove?" I stammered.

The announcement might not have sounded that unusual. But for the few reporters who were investigating the October Surprise controversy, the statement that the House task force had located a photograph from the Bohemian Grove for the last weekend of July 1980 was big news. It was exactly the kind of hard evidence that we had been seeking to show whether William Casey was at that exclusive men's retreat in northern California or at a secret meeting with Iranian emissaries in Spain .

From the investigator's confident tone, it sounded as if the House task force finally had the smoking-gun evidence to disprove the allegation that Casey, as Ronald Reagan's campaign director in 1980, had disrupted President Carter's Iranian hostage negotiations, a dirty trick that bordered on treason and might have cinched a historic GOP victory.

As the October Surprise story belatedly heated up, in 1991-92, investigators had tried to fix Casey's whereabouts on a handful of days when several witnesses placed the Republican campaign chief at meetings in Madrid and Paris . Two of those mystery days were July 27 and 28, 1980, a Sunday and a Monday, when Iranian CIA agent Jamshid Hashemi testified that he was with Casey in Madrid at a two-day meeting with radical Iranian mullah Mehdi Karrubi.

But nailing down the whereabouts of Casey, a wily old World War II spymaster, had proved difficult. Documents and news clips did show that going into that late July weekend in 1980 Casey was in Arlington , Va. , at the Republican campaign headquarters. He disappeared from public view on Saturday, July 26; was missing Sunday and Monday morning; and then turned up late on Monday afternoon, July 28, at a World War II historical conference in London .

But where had Casey been from Saturday until Monday afternoon? Could he have gone to Madrid for a two-day meeting before flying to London ?

A Debunking Hysteria

At a pivotal moment in the October Surprise investigation (in November 1991), two national magazines, Newsweek and The New Republic, published matching cover stories declaring that records at the historical conference revealed that Casey arrived in London Sunday evening, July 27, and attended the next morning's session, July 28. That proved, the magazines declared in unison, that a two-day meeting in Madrid was impossible. The October Surprise story was declared a "myth."

The impact of those two magazine stories cannot be overstated. They convinced most of the Washington news media and many members of Congress that the longstanding suspicions of Casey's skulduggery were false. A kind of debunking hysteria followed, with other publications joining in a stampede that trampled any careful examination of the October Surprise facts.

But Newsweek and The New Republic were wrong; they had completely misread the London evidence. When more thorough interviews were done with Americans who had attended the London conference with Casey, it became clear that Casey was not there on either Sunday night or Monday morning. He arrived late Monday afternoon, as a notation on the attendance sheet corroborated. It said Casey "came at 4 p.m."

Typically, however, neither magazine corrected the major journalistic error that they had committed. The new information also received almost no mention in the rest of the national media. So millions of Americans were left believing that the two magazines had established a correct alibi for Bill Caseyand that the October Surprise story had been disproved.

Though inclined to join in the debunking, the House task force, which started work in 1992, was forced to recognize the glaring mistake by the two magazines. But instead of blowing the whistle, the congressional investigators simply began a quiet search for a new alibi to slip into the place of the old.

By fall 1992, the task force had settled on a new location for Casey's late July weekend whereabouts. The task force put him in the Parsonage cottage at the Bohemian Grove encampment in northern California .

According to this new alibi, Casey flew from Los Angeles to San Francisco on Friday, July 25, with Republican operative Darrell Trent. Casey then drove with Trent to the Bohemian Grove, arriving sometime late Friday evening. Casey stayed at the Grove until Sunday morning, July 27. He then went to San Francisco, boarded a British Airways flight, flew all night, and landed about lunchtime the next day, Monday, July 28, in London.

That itinerary left no time for a side trip to Spain, so Jamshid Hashemi's allegations of a secret two-day meeting in Madrid could be declared false a second time. The October Surprise charges were again dismissed as a "myth."

But there were problems, too, with this Bohemian Grove alibi. I and other reporters at Public Broadcasting System's FRONTLINE program had already investigated this possibility for Casey's whereabouts and found it to be untrue. We discovered clear documentary evidence that Casey actually attended the Grove on the following weekend, Aug. 1-3, not the last weekend of July.

Evidence in the Way

Indeed, the House task force's own evidence countered the Bohemian Grove alibi. According to Grove records obtained by the House investigators, Casey's host, Darrell Trent, was already at the Grove on Friday, July 25, while Casey was still in Washington . So they could not have traveled together from Los Angeles .

Further, the task force found a plane ticket for a flight that Casey did take that day. But it was not to the West Coast. It was a ticket for the Washington -to- New York shuttle. A Casey calendar entry then showed a meeting on Saturday morning, July 26, with a right-to-life activist who said she met Casey at his home in Roslyn Harbor , N.Y.

Other records supported FRONTLINE's interpretation that Casey had attended the Grove the following weekend. Republican campaign records revealed that on Aug. 1, Casey did travel to Los Angeles , where he hooked up with Darrell Trent. Also on Aug. 1, Grove financial records documented Casey and Trent making purchases at the Grove. In addition, there was a diary entry from Matthew McGowan, one of the Grove members at the Parsonage cottage. He wrote on Aug. 3 that "we had Bill Casey, Gov. Reagan's campaign mgr., as our guest this last weekend."
Still, regardless of these facts, the House task force insisted on the Bohemian Grove alibi. The congressional investigators showed a similar bias in handling the alibi for Casey on the other crucial date, Oct. 19, 1980. That's when witnesses claimed they saw the campaign director in Paris at another round of meetings with Karrubi, an assertion supported by four French intelligence officials, including the French spy chief Alexandre deMarenches who described the meetings to his biographer.

To overcome the Paris evidence, the task force relied on the decade-old memory of Casey's nephew, Larry Casey, who claimed he remembered his late father placing a telephone call to Bill Casey who was at the Republican headquarters in Arlington . Though Larry Casey had no corroboration for that memory, the task force accepted it as "credible."

But again, FRONTLINE reporters had been down that road -- and found it to be a dead end. I had interviewed Larry Casey on videotape in 1991, a year before his House testimony. In that interview, Larry Casey offered a completely different alibi, insisting that he vividly remembered his parents having dinner with Bill Casey at the Jockey Club in Washington on Oct. 19, 1980.

"It was very clear in my mind even though it was 11 years ago," Larry Casey said. But then I showed Larry Casey the sign-in sheets for the GOP headquarters. The entries recorded Larry Casey's parents picking up Bill Casey for the dinner on Oct. 15, four days earlier. Larry Casey acknowledged his error, and indeed an American Express receipt later confirmed Oct. 15 as the date of the Jockey Club dinner.

In 1992, however, Larry Casey testified before the House task force and offered the phone call alibi, which he had not mentioned in the FRONTLINE interview. Though I notified the House task force about this discrepancy, the task force was undeterred. It still used the phone call alibi to debunk the Paris allegations.

The Bohemian Grove Photo

This pattern of accepting silly alibis for Bill Casey had convinced me that the House investigation was little more than a whitewash. Clearing the late Bill Casey and Ronald Reagan's campaign pleased Republicans who wanted to protect the legitimacy of the 12-year Reagan-Bush reign. But the Democrats, too, seemed eager to go along, frightened of a head-on fight with the Republicans.

But my confidence was shaken by the House investigator on the phone and his photograph. A formal group photo of the Bohemian Grove members and guests at the Parsonage cottage on the last weekend of July 1980 would be the clincher. It would prove, finally, that Jamshid Hashemi was a liar and that the Madrid allegation was a myth.

"You found a photograph of Bill Casey at the Bohemian Grove?" I choked. A lightheadedness swept over my mind as I tried to reconcile how the seeming ironclad evidence against the Bohemian Grove alibi could have been so wrong.

But I sensed an uncertainty, maybe even embarrassment, at the other end of the line.

"Well," the investigator answered hesitantly, "Bill Casey's not in the photograph. Everyone else is. Darrell Trent, his host, is there. But Bill Casey's not in the picture."

"Bill Casey's not there?" I exclaimed in amazement.

"No, Bill Casey's not in the picture."

Still, in its published report, the task force ditched the photograph and other documents putting Casey at the Grove only on the first weekend of August 1980. The task force relied instead on one piece of paper, a notation written by Republican foreign policy adviser Richard Allen. On a note page dated Aug. 2, Allen had scribbled down Casey's Long Island home phone number.

That act of writing down the number proved, the task force sleuths concluded, that Casey was at home that day -- and thus not at the Grove. That, in turn, meant that Casey must have attended the Grove the last weekend of July. The task force embraced this strange argument even though Allen testified that "I can't tell you whether or not I got through" on Casey's number when he dialed it Aug. 2.

In other words, the seasoned House investigators decided that writing down a person's home phone number proved the person was at home, even if the phone went unanswered. Armed with such "logic," the task force completed its debunking of the October Surprise allegations.
On the Op-Ed page of the New York Times, the task force chairman, Rep. Lee Hamilton, D-Ind., cited the solid Casey alibis as a key reason why the task force report "should put the controversy to rest once and for all." (Jan. 24, 1993) Hamilton 's article was aptly entitled "Case Closed."

And so it stayed, until I learned that senior Iranian officials had informed intermediaries close to President Clinton in 1993-94 that the House task force had gotten the story all wrong. These Iranians asserted that they indeed had collaborated with Casey and other Republicans in 1980. But the Clinton administration, at its highest levels, chose not to reopen the "closed" investigation. President Clinton apparently felt the old fight was too risky and might detract from his high-priority domestic agenda.

It was then that I tracked down the House task force records in a barren storage room off the House Rayburn parking garage. In the boxes were documents, some "secret" and even "top secret," that contradicted many of the task force's conclusions. I dubbed these records, the October Surprise X-Files. (See the first five issues of The Consortium for more details.)

In one of the dozens of boxes, I found a color photograph of the 16 men who spent that pivotal last weekend of July 1980 in the Parsonage cottage at the Bohemian Grove. They were posed in a formal setting, with some older gentlemen seated in front and the other members and guests standing in elevated rows behind them. I looked at one man after another, searching for the tall, stooped, large-headed figure of Bill Casey. He was no where to be seen.

Bush & a CIA Power Play

The CIA Old Boys were reeling. In the 1970s, exposure of their dirty games and dirty tricks made the Cold Warriors look sinister -- and silly. Then, President Carter ordered a housecleaning that left scores of CIA men out in the cold.

In 1980, the CIA men wanted back in and their champion was former CIA director George Bush. With Bush and Ronald Reagan in power, the old spies could resume their work with a vengeance. The temptation was to do to Jimmy Carter what the CIA had done to countless other world leaders -- overthrow him, a frightening chapter from the October Surprise X-Files

October Surprise X-Files (Part 7): Bush & a CIA Power Play By Robert Parry

WASHINGTON -- With little more than a week left in the 1980 campaign, Republican vice presidential nominee George Bush was nervous. New polls put Ronald Reagan and Jimmy Carter in a dead heat. Then, while going to campaign in Pittsburgh , Bush got an unsettling message from former Texas Gov. John Connally.

Connally, a onetime-Democrat-turned-Republican, said the oil-rich Middle East was buzzing with rumors that President Carter had achieved his long-elusive goal of a pre-election release of 52 American hostages held in Iran . If true, Ronald Reagan's election was in trouble.

So, at 2:12 p.m., Oct. 27, 1980, George Bush called Richard Allen, a senior Reagan foreign policy adviser who was keeping tabs on Carter's hostage progress. Bush ordered Allen to find out what he could about Connally's tip. Allen's notes, which I discovered many years later in an obscure Capitol Hill storage room, made clear that Bush was in charge.

"Geo Bush," Allen's notes began, "JBC [Connally] -- already made deal. Israelis delivered last wk spare pts. via Amsterdam . Hostages out this wk. Moderate Arabs upset. French have given spares to Iraq and know of JC [Carter] deal w/Iran. JBC [Connally] unsure what we should do. RVA [Allen] to act if true or not."

In a still "secret" 1992 deposition to House investigators, Allen explained the cryptic notes as meaning Connally had heard that President Carter had ransomed the hostages' freedom with an Israeli shipment of military spare parts to Iran . Allen said Bush then instructed him to query Connally, who was in Houston , and to pass on any new details to two of Bush's closest personal aides.

The Blond Ghost

According to the notes, Allen was to relay the information to "Ted Shacklee [sic] via Jennifer." The Jennifer was Bush's longtime assistant, Jennifer Fitzgerald, Allen testified. "Shacklee" was Theodore Shackley, the legendary CIA covert ops specialist known as the "blond ghost."

During the Cold War, Shackley had run many of the CIA's most controversial paramilitary operations, from Vietnam and Laos to the JMWAVE operations against Fidel Castro's Cuba . When Bush was CIA director in 1976, he appointed Shackley to a top clandestine job, associate deputy director for operations.

But Shackley's CIA career ended in 1979, after three years of battling Carter's CIA director, Stansfield Turner. Shackley believed that Turner, by cleaning out hundreds of covert "old boys," was destroying the agency -- as well as Shackley's career.

After retiring, Shackley went into business with another ex-CIA man, Thomas Clines, a partner with Edwin Wilson, the rogue spy who later would go to prison over shipments of terrorist materials to Libya . Clines himself would be convicted of tax fraud in the Iran-contra scandal, another controversy in which Shackley's pale specter would hover in the background.

But in 1980, Shackley was set on putting his former boss, George ush, in the White House and possibly securing the CIA directorship for himself. Shackley volunteered his prodigious skills to Bush in early 1980. Though that fact has come out before, Shackley's involvement in the Iran hostage issue, the so-called October Surprise controversy, has been a closely held secret, until now.

In 1992, the House investigators should have jumped when they saw the Shackley tie-in. The task force, which was examining charges that Republicans sabotaged Carter's hostage talks, already knew that other ex-CIA men were managing a 24-hour-a-day " Operations Center " at Reagan-Bush campaign headquarters to monitor Iran developments. Richard Allen had called the ex-spies a "plane load of disgruntled CIA" officers "playing cops and robbers."

Some House investigators wanted the behind-the-scenes CIA role mentioned. A "secret" draft chapter of the House task force report, which I also found in the storage room, stated that: "Many of the [ Operations Center 's] staff members were former CIA employees who had previously worked on the Bush campaign or were otherwise loyal to George Bush." But that section was deleted from the publicly released version.

Another task force discovery -- also dropped from the final report -- was that conservative "journalist" Michael Ledeen, another Shackley associate, was privately collaborating with the Reagan-Bush campaign on the Iran hostage issue. The draft chapter said Ledeen was an unofficial member of the campaign's "October Surprise" group. A separate page of Allen's notes revealed Ledeen joining campaign director, William J. Casey, in a Sept. 16 meeting for what was called the "Persian Gulf Project."

In 1980, Shackley had teamed up with Ledeen as paid consultants to a "war game" for SISMI, the Italian intelligence service with close ties to the secret international right-wing Masonic lodge, P-2. As the 1980 campaign neared its end, Italian intelligence leaked a damaging -- and questionable -- story to Ledeen about President Carter's brother Billy and his business ties to Libya . Ledeen wrote the story for The New Republic without mentioning that he was working for SISMI or assisting the Reagan-Bush campaign. (See David Corn's The Blond Ghost, p. 359.)
Shackley had strong bonds to many CIA officers still in the government, too. Donald Gregg, who also has been linked to the October Surprise allegations, served under Shackley's command in Vietnam . In 1980, Gregg was the CIA liaison inside Carter's National Security Council, making him privy to secrets about the hostage talks. Gregg would later become national security adviser to Vice President Bush and a secondary figure in the Iran-contra scandal.

A Paris Tale

But the pivotal October Surprise question still turned on whether Reagan's campaign director Casey and vice presidential nominee Bush met face-to-face with Iranian mullahs in 1980. According to one set of allegations, the pair slipped off to Paris for such a meeting on Oct. 19, 1980.

Four French intelligence officials, including France 's spy chief Alexandre deMarenches in statements to his biographer, placed Casey at the Paris meeting. But two other witnesses, a pilot named Heinrich Rupp and Israeli intelligence official Ari Ben-Menashe, also claimed to have seen Bush in Paris that day. Ben-Menashe testified that Casey and Bush were accompanied by active-duty CIA officers.

Rupp, who says he flew Casey from National Airport to Paris , recalled that the flight left very late on a rainy night. The night of Oct. 18 indeed was rainy and sign-in sheets at the Republican headquarters showed Casey stopping at the Operations Center for a 10-minute visit at about 11:30 p.m. The headquarters in Arlington , Va. , was only a five-minute drive from National Airport . Casey also had no credible alibi for his whereabouts on that day. (See The Consortium, Feb. 14).

Bush, however, was a different story. He was under Secret Service protection and those confidential records listed him as taking a day off from the campaign at his home in Washington . Yet, there were troubles with Bush's alibi. None of the Secret Service agents could recall the two personal trips that Bush supposedly took in the morning and afternoon of Oct. 19.

Then, the Bush administration blocked access to one family friend listed as receiving a visit from the Bushes in the afternoon. The name was blacked out in the records given to the task force, and the investigators only got the name by promising to keep it secret and to never question the family friend.

In a bipartisan spirit, eager to repudiate the disturbing Bush charges, the House task force acquiesced to these unusual terms. Amazingly, the purported alibi witness was never interviewed. In its first public statement on July 1, 1992, the task force cleared Bush.

That decision meant the investigators found no need to explain another curious fact. At PBS FRONTLINE, we had discovered that on Oct. 18, 1980, a Chicago Tribune reporter named John Maclean told a U.S. foreign service officer, David Henderson, that a Republican source had supplied a fascinating tip -- that Bush was flying to Paris to discuss the hostages with Iranians.
That two strangers -- Maclean and Henderson -- would have discussed a Bush trip to Paris at the precise time that others would allege, years later, that Bush left the country should have raised the task force's eyebrows. At least, the investigators should have questioned the Bush family friend. But they didn't. (Allen's notes for that week reveal a meeting with Maclean, although the reporter has refused to divulge the name of his source.)

To the task force, the possibility that former and current CIA officers conspired with Republicans and foreign intelligence services to unseat a President of the United States was unthinkable. If true, it would have meant that elements of the CIA mounted a silent coup d'etat that undermined American democracy to put in place a President who would unleash the spy agency.

But certainly what followed in the 1980s pleased the CIA's hardliners. Under President Reagan's CIA director William Casey, CIA covert operations proliferated. Dozens of cashiered CIA officers were brought back on contract. Billions of taxpayer dollars were poured into CIA projects. The CIA was also spared Carter's nagging about human rights, as CIA-trained units launched death-squad operations throughout Central America and Africa .

A real politick Zeitgeist took hold in Washington . It tolerated drug smuggling by CIA-connected groups, including the Nicaraguan contras and the Afghan mujahadeen. It watched passively as CIA associates plundered the world's banking system, most notably through the corrupt Bank of Credit and Commerce International (BCCI), which also had paid off a key Iranian in the October Surprise mystery. (See The Consortium, Dec. 31)

Connally's False Alarm

Still, regardless of what did or didn't happen in Paris , Bush was jittery on Oct. 27, 1980. If Connally was right, Carter might have offered Iran a deal so sweet the mullahs couldn't refuse. But as it turned out, Connally's news was garbled. It was true that Israel had shipped military spare parts by air to Iran a few days earlier. But the shipment had been in defiance of Carter, not part of a solution to the hostage crisis.

In 1992, ex-President Carter told the congressional investigators that Israel 's Likud government had opposed his re-election. According to other notes I found in the storage room, Carter said that from April 1980, "I felt Israel cast their lot with Reagan." Carter sensed a "lingering concern [among] Jewish leaders that I was too friendly with Arabs."

But the House task force had little interest in pulling strings that might unravel a nasty national security scandal. Luckily for the CIA, the chief investigator, E. Lawrence Barcella Jr. was a favorite of the intelligence community and had worked closely with many of the figures implicated in the October Surprise affair.

For instance, BCCI paid Barcella and his law firm more than $2 million to fend off charges of corruption and money-laundering. At that time, Barcella's senior law partner was former Sen. Paul Laxalt, Reagan's finance chairman in 1980 who allegedly had covered up secret payments to the 1980 campaign from the Philippines Ferdinand Marcos. (See The Consortium, Jan. 15)
Barcella was also close friends with Michael Ledeen. The two men shared a housekeeper and socialized together. In 1982, when Barcella was the lead prosecutor in the Edwin Wilson case, Ledeen visited Barcella's home one night to urge that the prosecutor drop Shackley from the investigation.

Neither Barcella nor Ledeen saw anything wrong with Ledeen's out-of-channel contact. "He just wanted to add his two-cents worth," Barcella told me. "This is a community in which people help friends understand things," Ledeen explained. Shackley was soon cleared of complicity in the unsavory Wilson matter.

In 1993, Barcella would also find "no credible evidence" to support the October Surprise charges. But as we have shown in the first six parts of this series, a wealth of evidence that pointed in the opposite direction was left out of the final report.

For instance, there was no reference to BCCI's secret money deliveries to October Surprise suspects, no mention of Ledeen, Shackley or the other ex-CIA men assisting the Reagan-Bush campaign on Iran, no word about Laxalt and the Marcos money -and nothing about Bush's phone call.

Lies Spun into History

Better than Democrats, Bob Dole and other Republicans grasped the value of defending heroes, even imperfect ones. So the GOP battled the charges that Bill Casey and other Republicans played a nearly treasonous dirty trick to win in 1980.

The defense required enforcing absurd alibis, bullying investigators and massaging the facts. But it worked. The Democrats acquiesced and the Republicans proved that they respected history enough to falsify it, the final chapter of the October Surprise X-Files.

October Surprise X-Files (Part 8): Lies Spun into History By Robert Parry

WASHINGTON -- Bill Clinton's Inauguration ended the 12-year Reagan-Bush reign, but the Republicans still had the legacy. On Feb. 3, 1993, two weeks after Clinton moved into the White House, GOP congressmen took to the House floor to celebrate the debunking of the October Surprise allegations. During a "special order," Rep. Henry Hyde denounced the long-standing suspicions as a "myth." He trumpeted the bipartisan House task force's finding -- that William Casey and George Bush did nothing to undercut President Carter's Iranian hostage talks in 1980.

"October Surprise" quickly passed from allegation to Republican grievance. It would become a GOP battle cry, echoing through the next three years as Sen. Bob Dole and others demanded investigations of Clinton by citing the attention given the "baseless" accusations from 1980. House Democrats may have thought they were buying some political peace by clearing Casey and Bush on the 1980 matter. But the Democrats were wrong.

In a gleeful House colloquy, Hyde, a white-haired rotund Republican from Illinois , did acknowledge some weakness in the House task force findings. Casey's 1980 passport had disappeared, as had key pages of his calendar, Hyde admitted. He noted, too, that the chief of French intelligence, Alexandre deMarenches, had told his biographer that Casey, while Ronald Reagan's campaign director, did hold hostage talks with the Iranians in Paris in October 1980. Several French intelligence officials were corroborating that assertion.

But Hyde insisted that two solid blocks of evidence proved that the October Surprise allegations were false. Hyde's first cornerstone was hard-rock alibis for Casey and other suspects. "We were able to locate [Casey's] whereabouts with virtual certainty" on the dates when he allegedly met with Iranians in Europe to discuss the hostages, Hyde declared.

For instance, Casey had been in California on the late July 1980 weekend of a purported meeting with Iranians in Madrid , Hyde said. There was an alibi, too, that weekend for the late Cyrus Hashemi, a mysterious Iranian banker with ties to the CIA, Tehran 's radical mullahs and the corrupt Bank of Credit and Commerce International (BCCI). Hashemi was in Connecticut , Hyde said -- even though Hashemi's older brother Jamshid testified under oath that he and Cyrus were with Casey and a senior Iranian cleric in Madrid .

The second debunking cornerstone, Hyde added, was the absence of anything incriminating on FBI wiretaps of Cyrus Hashemi over five months in late 1980 and early 1981. Hyde noted that according to the task force report, "there is not a single indication that William Casey had contact with Cyrus or Jamshid Hashemi. ...Indeed, there is no indication on the tapes that Casey or any other individuals associated with the Reagan campaign had contact with any persons representing or associated with the Iranian government."

Cracked Cornerstones

But under any careful inspection, both of Hyde's cornerstones crumbled. The alibis were laughably bogus. The clear and documented record showed that the House investigators put Casey in California on the wrong weekend. (See The Consortium, Feb. 14, 1996)

Plus, the "proof" of Hashemi's presence in Connecticut consisted of phone records showing two one-minute calls, one from a lawyer to Hashemi's home and one back to the lawyer. There was no evidence that Hashemi received or made the calls, and the pattern more likely fit a call asking a family member when Hashemi was due home and the second call giving the answer.

The Republicans were wrong, too, about the absence of incriminating evidence on the Hashemi wiretaps. But since those wiretaps were secret in 1993, that argument was impossible to assess then. But when I accessed the raw House documents (which I dubbed the "October Surprise X-Files") in a remote Capitol Hill storage room many months later, I found a classified summary of the FBI bugging.

According to that summary, the bugs actually revealed Cyrus Hashemi deeply enmeshed with Republicans on arms deals to Iran in fall 1980 as well as in business schemes with Bill Casey's close friend, John Shaheen. And contrary to the task force's claim of "not a single indication" of contact between Casey and Cyrus Hashemi, the Iranian banker was recorded as boasting that he and Casey had been "close friends" for years. That claim was supported by a CIA memo which stated that Casey recruited Cyrus Hashemi into a sensitive business arrangement in 1979. (See The Consortium, Dec. 31, 1995)

But beyond that, the secret FBI summary showed Hashemi receiving a $3 million offshore deposit, arranged by a Houston lawyer who said he was a longtime associate of then-vice presidential candidate George Bush. The Houston lawyer, Harrel Tillman, also told me in an interview that in 1980, he was doubling as a consultant to Iran 's Islamic government.

After Reagan defeated Carter in November 1980, Tillman was back on the line promising help from the "Bush people" for one of Hashemi's floundering business deals. Then, the FBI wiretaps picked up Hashemi getting a cash payment, via a courier arriving on the Concorde, from the corrupt bank, BCCI. (For more details, see The Consortium, Dec. 31, 1995, & Jan. 15, 1996)

The House task force concealed these documents and then grossly miswrote an important chapter of recent American history. But even the primary author, the chief counsel, E. Lawrence Barcella Jr., saw potential problems caused by the report's omissions. According to another document I found in the storage room, Barcella ordered his staff "to put some language in, as a trap door" to allow a last-minute escape should complaints arise about selective use of evidence.
Barcella also needed to duck another problem -- conflicts of interest confronting him from the October Surprise case. Not only was the chief counsel friends with some of the suspects, he had earned more than $2 million from BCCI for his law firm which was headed by former Sen. Paul Laxalt, who had served as Reagan's campaign finance chairman in 1980. The conflict-of-interest difficulty was handled simply by purging any reference to BCCI and Barcella's associates from the final report. (See The Consortium, Feb. 29, 1996)

Dissent Denied

Inside the House task force, Barcella encountered some resistance to the report's bogus alibis and twisted logic. When a draft was belatedly shown to Democrats on the panel, in December 1992, one congressman, Mervyn Dymally of California , authorized the writing of a formal dissent.
Staff aide, Marwan Burgan, quickly spotted some of the report's absurd alibis, including the claim that because someone wrote down Casey's home phone number on one day that proved Casey was home, or that because a plane flew from San Francisco directly to London on another important date that Casey must have been onboard.

According to sources who saw Dymally's dissent, it argued that "just because phones ring and planes fly doesn't mean that someone is there to answer the phone or is on the plane." But Dymally's reasonable observations were fiercely opposed by Barcella, who enlisted the task force chairman, Rep. Lee Hamilton, D-Ind., to pressure Dymally into withdrawing the dissent.
If the dissent were not pulled, Barcella and Hamilton threatened to denounce Dymally for missing task force meetings and for not having Burgan cleared to review all the classified material. Hamilton warned Dymally, who was retiring from Congress, that he [Hamilton] would "come down hard" on Dymally. The next day, Hamilton fired all the staffers who had worked on Dymally's Africa subcommittee.

Seeing the firings as retribution (though Hamilton denied a connection), Dymally relented and withdrew the dissent, which was never made public. With the road cleared, the task force report, resplendent in its irrationality, rolled ahead to become the official history of the United States .
But the silencing of Dymally was only the final act in a long-running campaign to halt any serious accounting for Reagan-Bush misdeeds in the 1980s. Two weeks earlier, on Christmas Eve 1992, President Bush had pardoned six Iran-contra conspirators, effectively ending the Iran-contra investigation by independent counsel Lawrence Walsh. Bush also left office with his aides ripping out the hard discs of their computers and still stonewalling congressional requests for documents about the secret arming of Iraq .

Dole to the Defense

On Bush was aided in these national security cover-ups by a sometimes political rival, Senate Republican Leader Bob Dole. The dour Kansan, now seeking the Republican presidential nomination, played the same protective role for Bush that House Minority Leader Gerald Ford had for President Nixon in the early days of the Watergate scandal in the 1970s.

Throughout the Iran-contra affair and its spin-off scandals, Dole fought rear-guard actions to frustrate investigations. In doing so, he earned credit with the GOP's dominant right wing, which was in denial that Ronald Reagan could do anything wrong. At the Conservative Political Action Conference in 1993, Dole boasted how he had gone to the Senate floor "on countless occasions" to hector special prosecutor Walsh, often over petty issues.

"I've discussed his violation of Washington , D.C. tax laws, his first-class air fares, the lavish office space," Dole said. "I've talked about his breakfasts, his paid-for room service and dinners provided by American taxpayers." Dole bragged that he even examined the "political leanings" of Walsh's staff lawyers, some of whom were then set up for bashing in the right-wing press.
But on the October Surprise issue, Dole went straight for the jugular. Not content to harass an ongoing investigation, Dole mounted a filibuster against any independent Senate inquiry. On Nov. 22, 1991, Dole invoked party discipline to defeat a cloture vote and block special funding for the investigation.

When a Senate Foreign Relations subcommittee still sponsored a small-scale investigation, Dole's lieutenants, Sens. Mitch McConnell and Jesse Helms, summoned the chief counsel, Reid Weingarten, into a closed-door meeting. McConnell brow-beat Weingarten with personal insults. Helms barred Weingarten's investigators from interviewing witnesses outside Washington .

Though hamstrung by lack of funds and hampered by Republicans, Weingarten did make some significant discoveries. He obtained testimony corroborating claims that Casey had known Cyrus Hashemi before the 1980 election. His investigators found that some FBI wiretaps of Hashemi might have been intentionally erased. He revealed that key Casey records -- the 1980 passport and several calendar pages -- were missing and that the Casey family was withholding documents.

In the end, however, the best Weingarten could do was conclude that Casey had been "fishing in troubled waters" on the hostage issue in 1980 and was engaged in "informal, clandestine, and potentially dangerous efforts on behalf of the Reagan campaign to gather intelligence on the volatile and unpredictable course of the hostage negotiations."'

Thanks to the Dole filibuster, most of the October Surprise investigation was delivered into the friendlier hands of the House task force. Then, with crucial evidence hidden, the House task force concluded that Ronald Reagan won the Presidency without recourse to a very dirty trick.
In that way, the historical legitimacy of the Reagan and Bush presidencies was preserved.
Henry Hyde and the other Republicans could celebrate.

The Bushes & the Truth About Iran

By Robert Parry September 21, 2006

Having gone through the diplomatic motions with Iran , George W. Bush is shifting toward a military option that carries severe risks for American soldiers in Iraq as well as for long-term U.S. interests around the world. Yet, despite this looming crisis, the Bush Family continues to withhold key historical facts about U.S.-Iranian relations.

Those historical facts – relating to Republican contacts with Iran ’s Islamic regime more than a quarter century ago – are relevant today because an underlying theme in Bush’s rationale for war is that direct negotiations with Iran are pointless. But Bush’s own father may know otherwise.

The evidence is now persuasive that George H.W. Bush participated in negotiations with Iran ’s radical regime in 1980, behind President Jimmy Carter’s back, with the goal of arranging for 52 American hostages to be released after Bush and Ronald Reagan were sworn in as Vice President and President, respectively.

In exchange, the Republicans agreed to let Iran obtain U.S.-manufactured military supplies through Israel . The Iranians kept their word, releasing the hostages immediately upon Reagan’s swearing-in on Jan. 20, 1981.

Over the next few years, the Republican-Israel-Iran weapons pipeline operated mostly in secret, only exploding into public view with the Iran-Contra scandal in late 1986. Even then, the Reagan-Bush team was able to limit congressional and other investigations, keeping the full history – and the 1980 chapter – hidden from the American people.

Upon taking office on Jan. 20, 2001, George W. Bush walled up the history even more by issuing an executive order blocking the scheduled declassification of records from the Reagan-Bush years. After 9/11, the younger George Bush added more bricks to the wall by giving Presidents, Vice Presidents and their heirs power over releasing documents.

Impending War

But that history is vital today.

First, the American people should know the real history of U.S.-Iran relations before the Bush administration launches another preemptive war in the Middle East . Second, the degree to which Iranian officials are willing to negotiate with their U.S. counterparts – and fulfill their side of the bargain – bears on the feasibility of talks now.

Indeed, the only rationale for hiding the historical record is that it would embarrass the Bush Family and possibly complicate George W. Bush’s decision to attack Iran regardless of what the American people might want.

The Time magazine cover story, released on Sept. 17, and a new report by retired Air Force Col. Sam Gardiner – entitled “The End of the ‘Summer Diplomacy’” – make clear that the military option against Iran is moving rapidly toward implementation.

Gardiner, who taught at the National War College and has war-gamed U.S. attacks on Iran for American policymakers over the past five years, noted that one of the “seven key truths” guiding Bush to war is that “you cannot negotiate with these people.”

That “truth,” combined with suspicions about Iran ’s nuclear ambitions and Tehran ’s relationship with Hezbelloh and other militant Islamic groups, has led the Bush administration into the box-canyon logic that war is the only answer, despite the fact that Gardiner’s war games have found that war would have disastrous consequences.

In his report, Gardiner also noted that Bush’s personality and his sense of his presidential destiny are adding to the pressures for war.

“The President is said to see himself as being like Winston Churchill, and to believe that the world will only appreciate him after he leaves office; he talks about the Middle East in messianic terms; he is said to have told those close to him that he has got to attack Iran because even if a Republican succeeds him in the White House, he will not have the same freedom of action that Bush enjoys.

“Most recently, someone high in the administration told a reporter that the President believes that he is the only one who can ‘do the right thing’ with respect to Iran . One thing is clear: a major source of the pressure for a military strike emanates from the very man who will ultimately make the decision over whether to authorize such a strike – the President.”

A Made-up Mind

Washington Post columnist Charles Krauthammer, who reflects the thinking of influential neoconservatives, reached a similar conclusion – that Bush had essentially made up his mind about attacking Iran .

Krauthammer noted that on the day after the fifth anniversary of 9/11, Bush responded to a question about Iran by saying: “It’s very important for the American people to see the President try to solve problems diplomatically before resorting to military force.”

“‘Before’ implies that one follows the other,” Krauthammer wrote. “The signal is unmistakable. An aerial attack on Iran ’s nuclear facilities lies just beyond the horizon of diplomacy. With the crisis advancing and the moment of truth approaching, it is important to begin looking now with unflinching honesty at the military option.” [ Washington Post, Sept. 15, 2006]

Yet, before making such a fateful decision, shouldn’t Bush at least ask his father to finally level with him and with the American people about what happened in 1980 when the country was transfixed by Iranian militants holding 52 American hostages for 444 days?

At Consortiumnews.com, we have a special interest in that history because it was my discovery of a trove of classified documents pointing to the secret Republican negotiations with Iran that led to the founding of this Web site in 1995 and the publication of our first investigative series.
In the mid-1990s, the U.S. news media was obsessed with issues such as the O.J. Simpson trial and the so-called “Clinton scandals,” so there was little interest in reexamining some historical mystery about Republicans going behind Jimmy Carter’s back to strike a deal with Iran’s mullahs.

[The fullest account of this history can be found in Robert Parry’s Secrecy & Privilege, which was published in 2004.]

But that history now could be a matter of life or death for thousands of people in the Middle East, including Iranians, Israelis and American soldiers in Iraq .

False History

The false history surrounding the Iranian hostage crisis also has led to the mistaken conclusion that it was only the specter of Ronald Reagan’s tough-guy image that made Iran buckle in January 1981 and that, therefore, the Iranians respect only force.

The hostage release on Reagan’s Inauguration Day bathed the new President in an aura of heroism as a leader so feared by America ’s enemies that they scrambled to avoid angering him. It was viewed as a case study of how U.S. toughness could restore the proper international order.

That night, as fireworks lit the skies of Washington , the celebration was not only for a new President and for the freed hostages, but for a new era in which American power would no longer be mocked. That momentum continues to this day in George W. Bush’s “preemptive” wars and the imperial boasts about a “New American Century.”

However, the reality of that day 25 years ago now appears to have been quite different than was understood at the time. What’s now known about the Iranian hostage crisis suggests that the “coincidence” of the Reagan Inauguration and the Hostage Release was not a case of frightened Iranians cowering before a U.S. President who might just nuke Tehran .

The evidence indicates that it was a prearranged deal between the Republicans and the Iranians. The Republicans got the hostages and the political bounce; Iran ’s Islamic fundamentalists got a secret supply of weapons and various other payoffs.

State Secret

Though the full history remains a state secret, it now appears Republicans did contact Iran ’s mullahs during the 1980 campaign; a hostage agreement was reached; and a clandestine flow of U.S. weapons soon followed.

In effect, while Americans thought they were witnessing one reality – the cinematic heroism of Ronald Reagan backing down Iran’s Ayatollah Ruhollah Khomeini – another truth existed beneath the surface, one so troubling that the Reagan-Bush political apparatus has made keeping the secret a top priority for a quarter century.

The American people must never be allowed to think that the Reagan-Bush era began with collusion between Republican operatives and Islamic terrorists, an act that many might view as treason.

A part of those secret dealings between Iran and the Republicans surfaced in the Iran-Contra Affair in 1986, when the public learned that the Reagan-Bush administration had sold arms to Iran for its help in freeing U.S. hostages then held in Lebanon .

After first denying these facts, the White House acknowledged the existence of the arms deals in 1985 and 1986 but managed to block investigators from looking back before 1984, when the official histories assert that the Iran initiative began.

During the 1987 congressional hearings on Iran-Contra, Republicans – behind the hardnosed leadership of Rep. Dick Cheney – fought to protect the White House, while Democrats, led by the accommodating Rep. Lee Hamilton, had no stomach for a constitutional crisis.

The result was a truncated investigation that laid much of the blame on supposedly rogue operatives, such as Marine Lt. Col. Oliver North.

Many American editors quickly grew bored with the complex Iran-Contra tale, but a few reporters kept searching for its origins. The trail kept receding in time, back to the Republican-Iranian relationship forged in the heat of the 1980 presidential campaign.

‘Germs’ of Scandal

Besides the few journalists, some U.S. government officials reached the same conclusion. For instance, Nicholas Veliotes, Reagan’s assistant secretary of state for the Middle East , traced the “germs” of the Iran-Contra scandal to the 1980 campaign.

In a PBS interview, Veliotes said he first discovered the secret arms pipeline to Iran when an Israeli weapons flight was shot down over the Soviet Union on July 18, 1981, after straying off course on its third mission to deliver U.S. military supplies from Israel to Iran via Larnaca , Cyprus .

“We received a press report from Tass [the official Soviet news agency] that an Argentinian plane had crashed,” Veliotes said. “According to the documents … this was chartered by Israel and it was carrying American military equipment to Iran . …And it was clear to me after my conversations with people on high that indeed we had agreed that the Israelis could transship to Iran some American-origin military equipment.

“Now this was not a covert operation in the classic sense, for which probably you could get a legal justification for it. As it stood, I believe it was the initiative of a few people [who] gave the Israelis the go-ahead. The net result was a violation of American law.”

The reason that the Israeli flights violated U.S. law was that no formal notification had been given to Congress about the transshipment of U.S. military equipment as required by the Arms Export Control Act – a foreshadowing of George W. Bush’s decision two decades later to bypass the Foreign Intelligence Surveillance Act.

In checking out the Israeli flight, Veliotes came to believe that the Reagan-Bush camp’s dealings with Iran dated back to before the 1980 election.

“It seems to have started in earnest in the period probably prior to the election of 1980, as the Israelis had identified who would become the new players in the national security area in the Reagan administration,” Veliotes said. “And I understand some contacts were made at that time.”

Q: “Between?”

Veliotes: “Between Israelis and these new players.”

Israeli Interests

In my work on the Iran-Contra scandal, I had obtained a classified summary of testimony by a mid-level State Department official, David Satterfield, who saw the early arms shipments as a continuation of Israeli policy toward Iran .

“Satterfield believed that Israel maintained a persistent military relationship with Iran , based on the Israeli assumption that Iran was a non-Arab state which always constituted a potential ally in the Middle East ,” the summary read. “There was evidence that Israel resumed providing arms to Iran in 1980.”

Over the years, senior Israeli officials claimed that those early shipments had the discreet blessing of top Reagan-Bush officials.

In May 1982, Israeli Defense Minister Ariel Sharon told the Washington Post that U.S. officials had approved the Iranian arms transfers. “We said that notwithstanding the tyranny of Khomeini, which we all hate, we have to leave a small window open to this country, a tiny small bridge to this country,” Sharon said.

A decade later, in 1993, I took part in an interview with former Israeli Prime Minister Yitzhak Shamir in Tel Aviv during which he said he had read Gary Sick’s 1991 book, October Surprise, which made the case for believing that the Republicans had intervened in the 1980 hostage negotiations to disrupt Jimmy Carter’s reelection.

With the topic raised, one interviewer asked, “What do you think? Was there an October Surprise?”

“Of course, it was,” Shamir responded without hesitation. “It was.” Later in the interview when pressed for details, Shamir seemed to regret his candor and tried to backpedal somewhat on his answer.

Lie Detector

Iran-Contra special prosecutor Lawrence Walsh also came to suspect that the arms-for-hostage trail led back to 1980, since it was the only way to make sense of why the Reagan-Bush team continued selling arms to Iran in 1985-86 when there was so little progress in reducing the number of American hostages in Lebanon .

When Walsh’s investigators conducted a polygraph of George H.W. Bush’s national security adviser Donald Gregg, they added a question about Gregg’s possible participation in the secret 1980 negotiations.

“Were you ever involved in a plan to delay the release of the hostages in Iran until after the 1980 Presidential election?” the examiner asked. Gregg’s denial was judged to be deceptive. [See Final Report of the Independent Counsel for Iran/Contra Matters, Vol. I, p. 501]

While investigating the so-called “October Surprise” issue for PBS “Frontline” in 1991-92, I also discovered a former State Department official who claimed contemporaneous knowledge of an October 1980 trip by then vice presidential candidate George H.W. Bush to Paris to meet with Iranians about the hostages.

David Henderson, who was then a State Department Foreign Service officer, recalled the date as October 18, 1980. He said he heard about the Paris trip when Chicago Tribune correspondent John Maclean met him for an interview on another topic.

Maclean, son of author Norman Maclean who wrote A River Runs Through It, had just been told by a well-placed Republican source that Bush was flying to Paris for a clandestine meeting with a delegation of Iranians about the American hostages.

Henderson wasn’t sure whether Maclean was looking for some confirmation or whether he was simply sharing an interesting tidbit of news. For his part, Maclean never wrote about the leak because, he told me later, a GOP campaign spokesman had denied it.

Faded Memory

As the years passed, the memory of that Bush-to-Paris leak faded for both Henderson and Maclean, until October Surprise allegations bubbled to the surface in the early 1990s.

Several intelligence operatives were claiming that Bush had undertaken a secret mission to Paris in mid-October 1980 to give the Iranian government an assurance from one of the two Republicans on the presidential ticket that the GOP promises of future military and other assistance would be kept.

Henderson mentioned his recollection of the Bush-to-Paris leak in a 1991 letter to a U.S. senator, which someone sent to me. Though Henderson didn’t remember the name of the Chicago Tribune reporter, we were able to track it back to Maclean through a story that he had written about Henderson .

Though not eager to become part of the October Surprise story in 1991, Maclean confirmed that he had received the Republican leak. He also agreed with Henderson ’s recollection that their conversation occurred on or about Oct.18, 1980. But Maclean still declined to identify his source.
The significance of the Maclean-Henderson conversation was that it was a piece of information locked in a kind of historical amber, untainted by subsequent claims from intelligence operatives whose credibility had been challenged.

One couldn’t accuse Maclean of concocting the Bush-to-Paris allegation for some ulterior motive, since he hadn’t used it in 1980, nor had he volunteered it a decade later. He only confirmed it when asked and even then wasn’t eager to talk about it.

Bush Meeting

The Maclean-Henderson conversation provided important corroboration for the claims by the intelligence operatives, including Israeli intelligence officer Ari Ben-Menashe who said he saw Bush attend a final round of meetings with Iranians in Paris .

Ben-Menashe said he was in Paris as part of a six-member Israeli delegation that was coordinating the arms deliveries to Iran . He said the key meeting had occurred at the Ritz Hotel in Paris .

In his memoirs, Profits of War, Ben-Menashe said he recognized several Americans, including Republican congressional aide Robert McFarlane and CIA officers Robert Gates, Donald Gregg and George Cave . Then, Ben-Menashe said, Iranian cleric Mehdi Karrubi arrived and walked into a conference room.

“A few minutes later George Bush, with the wispy-haired William Casey in front of him, stepped out of the elevator. He smiled, said hello to everyone, and, like Karrubi, hurried into the conference room,” Ben-Menashe wrote.

Ben-Menashe said the Paris meetings served to finalize a previously outlined agreement calling for release of the 52 hostages in exchange for $52 million, guarantees of arms sales for Iran , and unfreezing of Iranian monies in U.S. banks. The timing, however, was changed, he said, to coincide with Reagan’s expected Inauguration on Jan. 20, 1981.

Ben-Menashe, who repeated his allegations under oath in a congressional deposition, received support from several sources, including pilot Heinrich Rupp, who said he flew Casey – then Reagan’s campaign director – from Washington ’s National Airport to Paris on a flight that left very late on a rainy night in mid-October.

Rupp said that after arriving at LeBourget airport outside Paris , he saw a man resembling Bush on the tarmac. The night of Oct. 18 indeed was rainy in the Washington area. Also, sign-in sheets at the Reagan-Bush headquarters in Arlington , Virginia , placed Casey within a five-minute drive of National Airport late that evening.

Other Witnesses

There were other bits and pieces of corroboration about the Paris meetings. As early as 1987, Iran ’s ex-President Bani-Sadr had made similar claims about a Paris meeting between Republicans and Iranians. A French arms dealer, Nicholas Ignatiew, told me in 1990 that he had checked with his government contacts and was told that Republicans did meet with Iranians in Paris in mid-October 1980.

A well-connected French investigative reporter Claude Angeli said his sources inside the French secret service confirmed that the service provided “cover” for a meeting between Republicans and Iranians in France on the weekend of Oct. 18-19, 1980. German journalist Martin Kilian had received a similar account from a top aide to the fiercely anti-communist chief of French intelligence, Alexandre deMarenches.

Later, deMarenches’s biographer, David Andelman, told congressional investigators under oath that deMarenches admitted that he had helped the Reagan-Bush campaign arrange meetings with Iranians about the hostage issue in the summer and fall of 1980, with one meeting held in Paris in October.

Andelman said deMarenches ordered that the secret meetings be kept out of his biography because the story could otherwise damage the reputation of his friends, Casey and Bush. “I don’t want to hurt my friend, George Bush,” Andelman recalled deMarenches saying as Bush was seeking re-election in 1992.

Gates, McFarlane, Gregg and Cave all denied participating in the meeting, though some alibis proved shaky and others were never examined at all.

Lashing Out

For his part, George H.W. Bush lashed out at the October Surprise allegations. At a news conference on June 4, 1992, Bush was asked if he thought an independent counsel was needed to investigate allegations of secret arms shipments to Iraq during the 1980s.

“I wonder whether they’re going to use the same prosecutors that are trying out there to see whether I was in Paris in 1980,” Bush snapped.

As a surprised hush fell over the press corps, Bush continued, “I mean, where are we going with the taxpayers’ money in this political year?” Bush then asserted, “I was not in Paris , and we did nothing illegal or wrong here” on Iraq .

Though Bush was a former CIA director and had been caught lying about Iran-Contra with his claims of being “out of the loop,” he was still given the benefit of the doubt in 1992. Plus, he had what appeared to be a solid alibi for Oct. 18-19, 1980, Secret Service records which placed him at his home in Washington on that weekend.

However, the Bush administration released the records only in redacted form, making it difficult for congressional investigators to verify exactly what Bush had done that day and whom he had met.

The records for the key day of Sunday, Oct. 19, purported to show Bush going to the Chevy Chase Country Club in the morning and to someone’s private residence in the afternoon. If Bush indeed had been on those side trips, it would close the window on any possible flight to Paris and back.

Investigators of the October Surprise mystery – including those of us at “Frontline” – put great weight on the Secret Service records. But little is really known about the Secret Service’s standards for recording the movements of protectees.

Since the cooperation of the protectees is essential to the Secret Service staying in position to thwart any attacker, the agents presumably must show flexibility in what details they report.
Few politicians are going to want bodyguards around if they write down the details of sensitive meetings or assignations with illicit lovers. Reasonably, the agents might have to fudge or leave out some of the facts.

Bush’s Alibi
As it turned out, only one Secret Service agent on the Bush detail – supervisor Leonard Tanis – claimed a clear recollection of the trip to the Chevy Chase Country Club that Sunday. Tanis told congressional investigators that Mr. and Mrs. Bush went to the Chevy Chase club for brunch with Justice and Mrs. Potter Stewart.

But at “Frontline,” we had already gone down that path and found it to be a dead end. We had obtained Mrs. Bush’s protective records and they showed her going to the C&O Canal jogging path in Washington , not to the Chevy Chase club.

We also had reached Justice Stewart’s widow, who had no recollection of any Chevy Chase brunch. So it appeared that Tanis was wrong – and he later backed off his claims.

The inaccurate Tanis account raised the suspicions of House International Affairs Committee counsel Spencer Oliver. In a six-page memo urging a closer look at the Bush question, Oliver argued that the Secret Service had withheld the uncensored daily report for no justifiable reason from Congress.

“Why did the Secret Service refuse to cooperate on a matter which could have conclusively cleared George Bush of these serious allegations?” Oliver asked. “Was the White House involved in this refusal? Did they order it?”

Oliver also noted Bush’s strange behavior in raising the October Surprise issue on his own at two news conferences.

“It can be fairly said that President Bush's recent outbursts about the October Surprise inquiries and [about] his whereabouts in mid-October of 1980 are disingenuous at best,” wrote Oliver, “since the administration has refused to make available the documents and the witnesses that could finally and conclusively clear Mr. Bush.”

Secret Flight

Unintentionally, Bush’s eldest son poked another hole in the assumption that the government would never doctor official records to help cover up international travel by a protected public figure.

For Thanksgiving 2003, George W. Bush wanted to make a surprise flight to Iraq . To give Bush’s flight additional security – and extra drama – phony flight plans were filed, a false call sign was employed, and Air Force One was identified as a “Gulfstream 5” in response to a question from a British Airways pilot.

“A senior administration official told reporters that even some members of Bush’s Secret Service detail believed he was still in Crawford, Texas, getting ready to have his parents over for Thanksgiving,” Washington Post reporter Mike Allen wrote. [ Washington Post, Nov. 28, 2003]
Besides falsely telling reporters that George W. Bush planned to spend Thanksgiving at his Texas ranch, Bush’s handlers spirited Bush to Air Force One in an unmarked vehicle, with only a tiny Secret Service contingent, the Post reported.

Bush later relished describing the scene to reporters. “They pulled up in a plain-looking vehicle with tinted windows. I slipped on a baseball cap, pulled ‘er down -- as did Condi. We looked like a normal couple,” he said, referring to national security adviser Condoleezza Rice.

Though the melodramatic deception surrounding Bush’s flight to Baghdad soon became public – since it was in essence a publicity stunt – it did prove the ability of high-ranking officials to conduct their movements in secrecy and the readiness of security personnel to file false reports as part of these operations.

Collapsing Alibis

By the late 1990s, other elements of the Republicans’ October Surprise alibis were collapsing, including pro-Reagan-Bush claims cited prominently by some news organizations, such as the New Republic and Newsweek. [For more details, see Parry’s Secrecy & Privilege or Consortiumnews.com’s “The Bushes & the Death of Reason.”]

With the Republican defenses falling apart and with many documents from the Reagan-Bush years scheduled for release in 2001, the opportunity to finally learn the truth about the pivotal election of 1980 loomed.

But George W. Bush got into the White House via a ruling by five Republicans on the U.S. Supreme Court to stop the counting of votes in Florida . Then, on his first day in office, his counsel Alberto Gonzales drafted an executive order for Bush that postponed release of the Reagan-Bush records.

After the Sept. 11, 2001, terror attacks, Bush approved another secrecy order that put the records beyond the public’s reach indefinitely, passing down control of many documents to a President’s or a Vice President’s descendants.

Thus, the truth about how the Reagan-Bush era began in the 1980s – and what was done to contain the Iran-Contra investigations in the late 1980s and early 1990s – might eventually become the property of the noted scholars, the Bush twins, Jenna and Barbara.

The American people will be kept in the dark about their own history, like the subjects of some hereditary dynasty. Without the facts, they also face the possibility of being more easily manipulated by emotional appeals devoid of informed debate. That moment has come sooner than many expected. The United States appears to be on the brink of a war with Iran , while many government officials and the citizenry are operating on historical assumptions derived more from fiction than fact.

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Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Secrecy & Privilege: Rise of the Bush Dynasty from Watergate to Iraq, can be ordered at secrecyandprivilege.com. It's also available at Amazon.com, as is his 1999 book, Lost History: Contras, Cocaine, the Press & 'Project Truth.'
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