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Former White House chief of staff Donald Regan testified...

By JOSEPH MIANOWANY, E. MICHAEL MYERS

WASHINGTON -- Former White House chief of staff Donald Regan testified today that President Reagan expressed such utter surprise when he was finally told of the diversion of Iran arms profits to the Nicaraguan Contras that 'I'd give him an Academy Award if he knew anything about this.'

'He couldn't have known,' Regan told the congressional Iran-Contra committees, recalling the president's 'deep distress' upon learning of the diversion scheme last Nov. 24.

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Regan also disputed the contention of John Poindexter, the former national security adviser, that the president would have approved the funds diversion if he had been told about it. 'I don't think the president of the United States would have condoned this had he known about it,' Regan said. 'I know I wouldn't. ... That would have been very much contrary to the Ronald Reagan I knew.'

Additionally Regan said that Poindexter told him shortly before resigning that he did nothing to stop the diversion scheme because he was 'disgusted' that House Speaker Tip O'Neill was 'jerking the Contras around' in opposing U.S. military aid.

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Regan, who said he reacted with 'horror' on learning of the diversion, described confronting Poindexter about the possibly illegal diversion as the national securty adviser ate breakfast from a tray at his desk on the morning of Nov. 25. He said Poindexter told him that he knew his aide, Lt. Col. Oliver North, 'was up to something ... but I didn't want to know.

'I guess I should have looked at it more,' he quoted Poindexter.

Regan's testimony, in a blunt, conversational manner, contradicted that of Poindexter, who told the committees earlier this month that he had approved the diversion scheme in advance.

Regan, who resigned under fire Feb. 27 because of a controversy over his role in the president's worst crisis, said he had known nothing of the diversion and if he had, 'I would have blown the whistle. There's no way I would have put up with this. I've worked with money for too long to know you don't do this.'

Regan is a former chief executive officer of Merrill Lynch.

The former chief of staff, who closely guarded access to the president, also testified he never heard anyone tell Reagan how the Nicaraguan Contra rebels were being supported after Congress banned military aid in 1984.

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Asserting he and the president were kept totally in the dark about the Contra aid effort, Regan said that at no time, in his presence, did anyone outline for Reagan efforts to solicit military aid from foreign countries for the anti-Marxist rebels.

He acknowledged, however, that he was aware of efforts to solicit 'humanitarian' aid for the Contras from the sultan of Brunei. The president has acknowledged previously that he discussed planned contributions with King Fahd of Saudi Arabia, who donated more than $30 million.

Regan described the president as stunned when Attorney General Edwin Meese told him on Monday, Nov. 24 that he had learned of the diversion of Iran arms sales funds.

'This guy (Reagan), I know, was an actor,' Regan said. 'And he was nominated at one time for an Academy Award, but I'd give him an Academy Award if he knew anything about this. He expressed complete surprise at this news. ... He couldn't have known.'

Regan said that when he went to Poindexter's office the next morning, he told him, 'When you go to see the president at 9:30, you'd better have your resignation with you.'

He said Poindexter obliged, and a short time later, appeared in the Oval Office and resigned. He said Reagan told Poindexter it was 'a shame this happened this way -- that a man with you great naval record has come to this end.'

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'There was sort of an awful silence,' Regan said, 'and Poindexter left the room.'

Regan said Thursday that when he told CIA Director William Casey of the diversion on Nov. 24, the spy chief reacted with surprise.

According to Sen. William Cohen, R-Me., however, Regan had said previously in his deposition to a House committee that Casey was 'not surprised or chagrined' when he told the agency director of the diversion. Regan also had said that Casey said the Iranians would be 'enraged' once they learned of overcharges, according to Cohen.

Regan told the panels Thursday that Casey tried to discourage him from making the scheme public because 'it might lead to the cutoff of Contra funding' by Congress, which had just renewed military aid, and because it could harm efforts to rekindle relations with Iran and free American hostages in Lebanon.

Regan said he rejected Casey's appeal, and the next day Meese triggered the Iran-Contra scandal by announcing the discovery of the diversion, Poindexter's resignation and the firing of North.

The former presidential aide also disclosed that Reagan tried to suppress details of the arms sales to Iran a week after the U.S. dealings were divulged by a Beirut publication.

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Regan said the president overrode his recommendation to go public with the arms deals on Nov. 10 because Reagan had been moved by an appeal from David Jacobsen, one hostage freed as a result of the deals, during a visit to the Rose Garden of the White House.

'Donnie, we can't endanger their lives,' Regan quoted the president as telling him. The comment echoed one made by Jacobsen when he angrily waved away reporters asking about the status of the other hostages.

Regan acknowledged that the president knew all along that a November 1985 shipment to Iran contained Hawk missiles, and that a 'cover story' had been devised by his aides to describe the cargo as oil-drilling equipment.

The false story was used in White House chronologies and in preparation for Casey's Nov. 21, 1985, testimony to Congress.

In his testimony, Regan contradicted the testimony of Poindexter and his predecessor as national security adviser, Robert McFarlane.

Regan said:

-Contrary to Poindexter's testimony, Reagan never approved a nine-point plan that included a swap of American hostages for 17 Lebanese Shiite terrorists imprisoned in Kuwait for bombing attacks on diplomatic installations, including the U.S. Embassy, in Kuwait.

-He had 'absolutely' no recollection of a Dec. 5, 1985, written presidential 'finding' that retroactively authorized CIA involvement in a November 1985 arms shipment to Iran. Poindexter said he destroyed the 'finding' signed by Reagan to save the president from embarrassment. But Regan testified, 'I have wracked my brain ... I have checked with members of my White House staff. No one can remember seeing that document.'

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-McFarlane, who resigned in December 1985, 'made clear' to him and the president a month earlier that an Israeli shipment to Iran contained U.S. Hawk missiles. McFarlane testified he thought the shipment contained oil-drilling equipment and did not know until May 1986 that the plane contained weapons. The conflict is significant because, if McFarlane knew the shipment contained weapons, he should have sought a written presidential authorization.

-He stood by his testimony before the presidential Tower Commission that the president never gave advance approval to the first Israeli shipment of weapons to Iran in August 1985. McFarlane testified that he received oral approval from Reagan.

Regan, who said he almost always was present when officials were meeting with Reagan, told the committees the president was told only generally how the rebels were fairing. At no time in his presence, he said, did anyone outline for Reagan efforts to solicit aid from foreign countries for the Contras.

Regan said that only five people could see Reagan without his approval: Poindexter, Vice President George Bush, the president's physician, Shultz and the military officer on duty at the White House. Even Casey had to go through Regan, although the late CIA chief occasionally asked to see the president alone to discuss 'hot' topics, he said.

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'The president obviously got briefings as to the status of the insurgency and how well the freedom fighters (Contras) were doing,' Regan told the congressional panels.

'From the point of view of how well the (Contra aid) operation was running, who was running it, it was never discussed in my presence,' Regan said.

Regan said the president was aware of efforts by private benefactors to provide aid to the Contras and occasionally would 'do a drop in' to talk with some wealthy Americans when they visited the White House.

But the former top aide said the president made no inquiries on his own about how the Contras were surviving when they were low on supplies during the period Congress banned military aid from 1984 to 1986.

'Did the president exhibit curiousity about where the Contras were getting money from?' asked Senate panel lawyer Terry Smiljanich.

'I don't recall him asking that,' Regan replied.

Regan's testimony may have further complicated the committees' efforts to determine 'who's lying and who's not lying?'

Meese, who spent most of his two days at the hearings fending off criticism of his initial inquiry into the case, was unable Wednesday to answer that nagging question.

He said, however, that he does not believe North's story that CIA chief Casey concurred in the plan to divert money to the Contras.

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'(Casey was) a person I would believe without question,' Meese declared when asked about the contradiction. 'I do believe Mr. Casey's statements to me.'

But Meese said that while there are many consistencies in evidence, other areas are 'more murky.'

Sen. George Mitchell, D-Maine, asked if Meese has concern that colleagues such as North, Poindexter -- and possibly Casey -- lied to him last fall.

'I absolutely find it a matter of great concern,' Meese responded. 'I don't condone, under any circumstances whatsoever, lying. ... And I think there is no reason, justification or excuse for it whatsoever.'

On other aspects of the scandal Wednesday:

-Rep. Peter Rodino, D-N.J., chairman of the House Judiciary Committee that oversees the Justice Department, criticized Meese for not asking enough of the pressing questions during his initial weekend inquiry Nov. 21-23. Meese hotly retorted, 'All the key questions, all, were answered during (that) weekend.'

-Meese indirectly acknowledged Poindexter lied to him by saying that when he first questioned the Navy officer about the diversion, Poindexter asserted he was only generally aware of the plan because North hinted about it. Poindexter admitted this month it was he who approved the diversion in February 1986.

-Meese said it is 'highly probable' the $8 million in Iran arms sales profits still frozen in Swiss bank accounts may belong to the United States after all, not to retired Maj. Gen. Richard Secord and his Iranian-born American partner, Albert Hakim, who handled much of the secret operations under North's purview.

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-When his long day of questioning ended after sunset, a pleased and partisan Meese told reporters: 'I think overall it'

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