532 ChaPter^10
abduct additional American citizens. Sure enough, three more hostages were
taken to replace the three released. Secretary of State George Shultz observed
that the ill-conceived plan had produced a “hostage bazaar.” At the same time,
some reporters had uncovered a scheme to use private air transport companies
owned by the CIA to pick up cocaine in Central America and sell it in the
U.S., then use the profits to help support the Contras. The administration
denied the “Contra-Cocaine Connection” and even the Democrats were not
enthusiastic about investigating it, but many still accept the story today.
In November 1986 when the arms-for-hostages deal was revealed in the
press, the President offered a televised denial that any such operation took
place: “In spite of the wildly speculative and false stories of arms for hostages
and alleged ransom payments,” he announced, “we did not — repeat did not
— trade weapons or anything else for hostages, nor will we.” Meanwhile, as
Reagan was denying one set of illegal activities, North was busily destroying
documents to protect those involved in not only the arms-for-hostage deal
but also those involved in shifting a portion of the proceeds of the sales to
the Contras in Nicaragua. Investigating the arms-for-hostage deal, Attorney
General Edwin Meese had discovered that $18 million of the $30 million paid
by Iran was missing. North explained that the diversion of funds had been
done under the direction of Poindexter and, he assumed, the President. In later
testimony before Congress, Poindexter asserted that he had made “a very
deliberate decision” to divert the funds without first asking Reagan. Reagan
went before the American people in March 1987 and announced, “A few
months ago, I told the American people I did not trade arms for hostages. My
heart and my best intentions still tell me that’s true, but the facts and evidence
tell me it is not.” The American people generally accepted his explanation, and
felt sympathy for an aging Reagan who was in the early stages of Alzheimer’s
Disease. Americans did not want to believe that their President had lied to
them. The alternative, however, was equally disturbing: the President was out
of touch with the actions of his own Administration.
Over the next eight years, an independent counsel, Lawrence Walsh, investi-
gated Iran-Contra. Fourteen members of Reagan’s Administration were
charged with operational and cover-up crimes. Poindexter, North, and
McFarlane were convicted; North’s and Poindexter’s were overturned on
technicalities and President George Bush, Sr. pardoned McFarlane. Bush issued
five additional pardons, including one to Defense Secretary Caspar Weinberger