Casey Wanted a Super-CIA Outside Government: North : 3 Senators Find Idea ‘Shocking’

WASHINGTON — Lt. Col. Oliver L. North said today that CIA Director William J. Casey dreamed up an ultimate goal for the millions of dollars in excess profits generated from the Iran arms sales: a super-CIA, outside of the government, working secretly for U.S. foreign policy goals.

“The director was interested in going to an off-the-shelf, self-sustaining entity that could perform functions for the United States,” North said, and he saw nothing illegal or unconstitutional about such an extra-governmental operation.

However, Senate panel member David L. Boren (D-Okla.), chairman of the Senate Intelligence Committee, said he was deeply concerned by the plan, calling North’s testimony “about the concept of the private slush fund very shocking.”

“We really would have a complete loss of constitutional government in this country if you could sell taxpayers’ property (and) set up a fund that the President and Congress would have no control over. That to me is a very alarming thought,” Boren said.

And Sen. William S. Cohen (R-Me.), another panel member, said the testimony about the Iran- contra fund was “perhaps one of the most serious revelations” of the hearing because it showed a plan to circumvent Congress for secret operations.

Pressed by Liman

North, testifying for a fourth intense day before the joint congressional committees, was pressed in sharp words by chief Senate counsel Arthur L. Liman about Casey’s plan for an outside agency to achieve foreign policy ends.

North refused to agree with Liman’s characterization that Casey’s use of the money meant creating “a CIA outside of the CIA.”

“When we needed an extra ship, to perform a certain task and there was no way to get one on short notice,” North said, he was able to produce one overnight at Casey’s request, using the funds.

“The director said, ‘We can’t find one anywhere else: Get a ship,’ ” North testified.

After that success, he said, he received a note from John M. Poindexter, his boss at the National Security Council, objecting that North’s operational role was becoming too public and ordering him not to talk to anyone else, including Casey, about it.

‘Ultimate Covert Operation’

Liman homed in on the Poindexter memo on not sharing information with Casey.

“Would you agree this here is the ultimate covert operation--even one you should not talk to the director of central intelligence about?” Liman asked.

“The problem that generated this note was that Director Casey had told someone on his staff that they could go to me for the ship,” North responded. “I was out of town or out of the office.”

The call was placed to the office of Ken deGraffenreid, then senior director of intelligence programs for the National Security Council, a man whom North identified as the normal contact with the CIA.

“That’s what generated this note,” North said. “It was not my indiscretion in that case, it was Director Casey’s, unfortunately.”

‘Off-the-Shelf Entity’

To that Liman responded: “So this business of covert operations reached a point where not only Congress was regarded as too indiscreet to be told, but that even the director of central intelligence made that list.” He referred back to North’s earlier testimony that he had lied to Congress and withheld information because he wanted to protect secret sources.

North said Casey, who died of brain cancer May 6, “was interested in the ability to have an off-the-shelf, self-sustaining entity to do certain activities on behalf of the Unites States.”

Asked whether he was not shocked by the proposal, North said there was not necessarily a violation of laws if Casey used the organization for covert activities. “Maybe I’m overly naive,” he said, “but what would be wrong with that?”

Liman: “Did Director Casey ever tell you this private organization would be subject to the oversight of Congress?”

North: “The discussion didn’t get that far.”

Asked whether the ship, which was used for making broadcasts off the shore of an unnamed hostile country, was not in fact bought with funds generated by the Iranian arms sales, North said, heatedly: “It didn’t cost the taxpayers of the United States a single cent.”

Earlier, North testified that he tried but failed to keep secret the diversion of Iranian arms sales profits to the contra rebels after former National Security Adviser Poindexter once told him, “This had better never come out.”

“I took steps to make sure . . . (it) didn’t and I failed,” North said.

North, under heightened security after receiving a death threat, also said President Reagan pressed his aides to seek the release of American hostages in Beirut “as early as possible.”

But he said the President never suggested a target date linked to elections or any other key domestic event such as his 1986 State of the Union address.

15-Minute Squabble

Republicans and Democrats on the panel opened the afternoon session with a 15-minute squabble over the tone and content of questions by Liman.

Rep. Bill McCollum (R-Fla.) charged Liman was “acting like a prosecutor instead of a fact-finder.” But Sen. Paul S. Sarbanes (D-Md.) defended the counsel, saying, “It is Arthur Liman’s responsibility to press hard for answers.”

Rep. Henry J. Hyde (R-Ill.) chimed in with praise for Liman, saying that as a staunch Administration supporter, “I’m delighted with the results” of the questions.

Senate panel chairman Inouye closed the debate: “The business before us is very serious. . . . We may have reason to laugh and chuckle, but what has been brought out to date gives me little cause to laugh.”

Earlier, Liman, noting that “failure is an orphan,” also questioned North about the involvement of other Cabinet members in the tortuous relationship with Tehran’s radical Islamic government.

The Marine, repeating the findings of the Feb. 26 Tower Commission report, said Secretary of State George P. Shultz and Defense Secretary Caspar W. Weinberger offered only token opposition to the arms deals, then backed out altogether.

Left to handle the operation, therefore, were Poindexter, his predecessor Robert C. McFarlane, Casey and North.