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North Says Israel May Have Hatched Idea to Channel Profits to Contras

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Lt. Col. Oliver North said Wednesday that he believed Israel may have originated the idea of using the profits from the sale of arms to Iran to support the Contra rebels in Nicaragua.

Testifying for the second day before the Senate-House committee investigating the Iran-Contra affair, North said Iranian arms dealer Manucher Ghorbanifar first made the proposal to him. North said the late William Casey, then director of the Central Intelligence Agency, and other CIA officials had told him that “they believe Mr. Ghorbanifar to be an Israeli intelligence agent.”

Ghorbanifar made the suggestion “point blank and he made it, by my understanding, with the full knowledge and acquiescence of the Israeli intelligence services, if not the Israeli government,” North said.

The Israeli government has always maintained that it had no part in the diversion of funds to the Contras.

North said he met with Amiram Nir, a counterterrorism specialist for the Israeli government, and Ghorbanifar in Europe in January 1986, and expressed his concern about the Iran initiative, since he noted he was President Reagan’s “point man” on the policy against making any deals with terrorists or those that support terrorism.

The former National Security Council aide said that Ghorbanifar took him aside into a bathroom and suggested the profits — or “residuals,” as North called it — be used to help the Contras. He said Ghorbanifar knew of his involvement in the U.S. effort to support the Contras.

For the first time, “the whole idea was made more palatable,” North said. “I must confess to you that I thought using the Ayatollah’s money to support the Nicaraguan resistance was a right idea.” He added that he still believes that it was not wrong to do so.

North said the money was used for the Contras in February, May and October 1986. However, he noted he was surprised to learn during the Congressional hearings that the Contras received only $4 million of the $12 million available to them.

SAID NIR MADE SUGGESTION

North added that when Nir met with him in Washington in late December 1985 or early January 1986 to urge continuation of the Iranian initiative, the Israeli suggested that profits from any arms sale to Iran could be used “supporting other activities.”

It was not made clear what these activities were, but North noted that Israel was concerned with having the United States replenish the 503 TOW anti-tank missiles it sold to Iran in 1985.

In addition to aiding the Contras, North said the profits were used to fund the Iranian initiative, pay for the replacement of TOWs to Israel and “to continue other activities which the Israelis very clearly wanted and so did we.”

He did not explain what these “activities” were, since the information is classified.

SAID HE HAD APPROVAL FROM ABOVE

North said that while he supported structuring the arms sale to provide funds for these objectives, he had received approval from his superiors. But he has maintained that President Reagan did not know about it.

He stressed that before it became public, the Iranian initiative was successful in seeking “an opening to a more moderate regime in Iran,” stopping Iranian Shiite terrorism against Americans and achieving the release of three Americans held hostage in Lebanon.

He noted that when the initiative was revealed he was working with the Israelis to open a “second channel” to Iran to bypass Ghorbanifar, who had been the middle man up to then.

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