Unpublished draft chapter of the congressional Iran-Contra

Re: Unpublished draft chapter of the congressional Iran-Cont

Postby admin » Sat Jun 03, 2017 2:04 am

d. Ellen Clayton Garwood

Ellen Garwood also testified at the Committees' public hearings. She had been a NEPL contributor on several occasions. She is a wealthy octogenarian widow from a well-known family in Austin, Texas.

Garwood first met North in 1984 at a Council for National Policy meeting. She had been briefed privately by him on the Contras' needs at least a handful of times, including once at a small airport in Dallas when North flew there to solicit Hunt in September 1985. [5/21/87, at 7-10; Garwood Dep. At 12-15, 16-18, 20, 28-30, 32-36].

Garwood traveled to Washington in April 1986 to attend meetings of NEPL contributors. Prior to the trip, Channell told Garwood that she would be presented with an appeal for much more money than had been requested of her before. [5/21/87, at 8-9g].

During the last day of the NEPL meetings, Channell asked Garwood to meet with him and North that evening in the hotel lounge. At the evening meeting, North told Garwood that the situation of the Contras was desperate. With tears in his eyes, North explained to her that the Contras were hungry, poorly clothed, and in need of lethal supplies. He emphasized that the Contra forces might not exist by the time the Congress renewed Contra aid. [5/21/87, at 9-10; Garwood Dep. At 33-34].

Either North or Channell then produced a small piece of paper with a handwritten list on it. They discussed the list in hushed tones outside of Garwood's hearing. After North left the lounge, Channell showed the paper to Garwood. The paper contained a list of weapons and ammunition, with a price opposite each category of items. She recalls that the list included hand grenades, anti-aircraft missiles, bullets, cartridge belts and other items. [5/21/87, at 10-12; Garwood Dep. At 34].

Channell told Garwood that the items were what the Contras needed to sustain their efforts and requested her to provide the amount necessary to purchase the listed lethal supplies. Channell transcribed a copy of the list for Garwood to take with her. [5/21/87, at 13; Garwood Dep. At 35-28].

To supply the items on the list, Garwood immediately contributed more than $1.6 million to NEPL; she wired $470,000 in cash and transferred stock valued at 1,163,506. For this same purpose, she contributed an additional $350,000 the next month. All told, she contributed 2,518,135 in 1986. Garwood stated unequivocally that the principal purpose of these April and May 1986 contributions was to purchase for the Contras the weapons and ammunition on the list provided by North and Channell. [5/21/87, at 14-16; Garwood Dep. At 58-61].

*****

These descriptions of the Hunt, Newington, O'Boyle and Garwood solicitations are not exhaustive. The Committees interviewed or deposed 13 of NEPL's significant contributors during the relevant time period, nearly all of whom reported personal contact with North. The Committees have received evidence that several of these contributors -- including John Ramsey of Wichita Falls, Texas, and C. Thomas Claggett, Jr., of Washington, D.C. -- made donations intended for the purchase of lethal supplies. Channell's records reveal that 12 contributors, including Newington and Garwood, accounted for slightly more than 90 percent of NEPL's contributions in 1985 and 1986.

By giving to the tax-exempt NEPL, the contributors were able to claim tax deductions even though their contributions were intended for the purchase of lethal supplies. The Committees have received evidence that several of these contributors claimed tax deductions for their NEPL contributions. For taxpayers in the 50 percent tax bracket, this meant that the public in effect paid for half of their gifts.
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Re: Unpublished draft chapter of the congressional Iran-Cont

Postby admin » Sat Jun 03, 2017 2:17 am

C. The Role of the President

In a May 19, 1986 PROF note to Poindexter, North wrote "the President obviously knows why he has been meeting with several select people to thank them for their 'support for Democracy' in Cent[ral] Am[erica]." [N12528]. In fact, what the President knew is a matter of some doubt.

The President, in his March 19, 1987 press conference said that he believed that contributors he met had donated money for political advertising for the Contras. [New York Times, 3/20/87, at A-10, Col. 4]. The minutes of the May 16, 1986 National Security Planning Group (NSPG) meeting reveal the same understanding on the part of the President. He stated, "What about the private groups who pay for ads for the Contras? Have they been contacted? Could they do more than ads?" [N 10298]. Similarly, in preparation for the January 30 briefing, Linda Chavez wrote a memorandum to the President, stated that "ACT and NEPL spent in excess of $3 million supporting the President's programs through public awareness using television and newspaper messages." [N 22715]. In fact, much of the $3 million was directed towards Contra support activities, including arms.

Poindexter, however, testified at his deposition that "[t]here wasn't any question in my mind" that the President was aware that the contributors he was thanking were giving to the Contras. [Poindexter Dep., 5/2/87, at 203]. He added that "in the White House during this period of time that we were encouraging private support, we really didn't distinguish between how the money was going to be spent." [Poindexter Dep., 5/2/87, at 202]. North testified that in writing his May 19 PROF note, he assumed that the President was aware that the contributions were for munitions, as well as other things, although he denied ever discussing this with the President. [7/7/87, at 241].

The President met with and thanked several large contributors for their support of his policies. David Fischer, former Special Assistant to the President, arranged Presidential photo opportunities or meetings with at least seven major Channell/Miller contributors in 1986. Fischer and Martin Artiano, a Washington lawyer, were paid steep fees by IBC (which charged these fees to NEPL) for arranging these meetings (among other services). Channell's statement to O'Boyle that these meetings carried a $300,000 price tag is substantiated by Edie Fraser's cryptic note to North (mentioned above); at least five of the six contributors who donated more than $300,000 to NEPL were invited to meet with the President.
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Re: Unpublished draft chapter of the congressional Iran-Cont

Postby admin » Sat Jun 03, 2017 2:27 am

D. The Role of David Fischer and Martin Artiano

In late November or early December 1985, Miller asked Martin Artiano, an acquaintance from the 1980 Reagan Presidential campaign, to help him find someone "who had some Washington experience at a relatively senior level" to provide "consulting" assistance to IBC on behalf of NEPL. [Artiano Dep. At 58-59]. When Artiano learned of IBC's needs, he contacted David Fischer, who had been a friend since they worked together as advance men in the 1976 Reagan campaign. [Artiano Dep. At 44-45].

After the unsuccessful 1976 Reagan effort, Fischer worked as an employee of Deaver and Hannaford, a public relations firm that did extensive work for Mr. Reagan. Fischer was in charge of Mr. Reagan's advance operations and served on occasion as his personal aide during the years of preparation for another Presidential run in 1980. [Artiano Dep. At 45; Fischer Dep. At 6]. During the 1980 campaign, Fischer became the full-time personal aide to Mr. Reagan, traveling on the campaign plane with the candidate. After the inauguration in January 1981, Fischer was appointed Special Assistant to the President with an office adjacent to the Oval Office. [Fischer Dep. At 9; Artiano Dep. At 46-50]. For the next four years -- until April 1985 -- Fischer was in almost constant contact with the President.

As President Reagan's second term began in early 1985, Fischer and his wife decided for personal reasons to move to Utah. By the fall of 1985, however, Fischer wanted to return to Washington and asked Artiano to let him know about employment or consulting opportunities. [Fischer Dep. At 159]. When contacted by Artiano about the IBC opportunity, Fischer authorized Artiano to pursue discussions with Miller on his behalf. [Artiano Dep. At 59].

When Miller decided to retain Fischer and Artiano, he sought Channell's concurrence because NEPL ultimately was to be the recipient of, and billed by IBC for, the "consulting" services performed by Fischer and Artiano. While all the participants recall that Fischer and Artiano agreed to act as subcontractors for IBC and provide services to Channell's organizations, there is sharp dispute over the terms of that agreement. This dispute is only sharpened by the absence of a written understanding.

Channell and Conrad insist that they agreed to pay Fischer and Artiano $50,000 for each meeting Fischer scheduled with the President for a NEPL contributor. Conrad claims to recall a meeting in December 1985 in Miller's office attended by Miller, Artiano, Fischer, Channell and himself at which Artiano broached, and Channell accepted, this proposal. [Conrad Dep., 6/10/87, at 179-180]. Channell recalls Fischer and Artiano making this proposals, but claims that he rejected it as too expensive. Instead, according to Channell, he opted for a straight retainer of $20,000 per month. [Channell Dep., 9/1/87, at 155-159]. Gomez recalls that Fischer and Artiano were to be compensated at least in part based on the number of Presidential meetings they could arrange for NEPL contributors. [Gomez Dep. At 61-64].

Fischer and Artiano vehemently deny that any such proposal was made or accepted. Artiano, who negotiated with Miller on behalf of Fischer, testified that they initially agreed to a two-year consulting contract for a monthly retainer of $20,000 a month. When he and Fischer realized the amount of work Channell demanded, however, Artiano testified that he requested a $50,000 "acceleration" to their retainer. This payment was made to them on January 31, 1986, and was split with Artiano. In July 1986, Fischer and Artiano recast their arrangement with IBC entirely, replacing the two-year consulting contract with a formal joint venture between "David C. Fischer and Associates" and IBC. [Artiano Dep. At 64-72, 78-90; Fischer Dep. At 35-38, 97-104, 111-119].

According to both Fischer and Artiano, they learned in early 1986 that Channell and Conrad were operating under the assumption that there was a straight fee-for-Presidential meeting arrangement. Artiano thereupon convened a meeting of all the principals and disabused Channell and Conrad of that notion. [Fischer Dep. At 104-105].

Miller's recollection lends some credence to everyone's account. He testified that the initial agreement, struck in December 1985, was a $20,000 a month consulting arrangement. He testified, however, that this initial agreement did not contemplate Fischer setting up meetings at the White House. Shortly after striking the original deal, according to Miller, Channell began to make increased demands upon Fischer, one aspect of which was setting up meetings between the President and major NEPL contributors. In exchange for servicing those increased demands, Fischer and Artiano demanded, through Miller, an acceleration of their retainer to $70,000 per month (that is, $50,000 per month more than the monthly fee of the original arrangement. When Miller relayed this demand to Channell, Channell suggested that, for such a sum, NEPL should get at least one meeting with the President each month. According to Miller, Channell ultimately did agree to this acceleration. [R. Miller Dep., 8/21/87, at 358-362].

All told, between December 1985 and February 1987, IBC paid Fischer $397,400 and Artiano $265,000. Artiano transferred $60,000 of his payments to Fischer. All of the payments were reimbursed by IBC by NEPL.

When asked about allegations regarding Fisher's compensation, the President's Chief of Staff, Donald Regan, testified that the allegations, if true, would be a "real embarrassment." According to Regan, "we thought he was doing it out of his concerns for the Contras and the goodness of his heart, a public pro bono type of thing." He continued: "To find out he was being paid for it was a real shock … [A]nyone getting paid for -- to get a group into the White House, we tried to block that. [7/30/87, at 152].

Fischer, however, contends that Regan knew by the first meeting between the President and Channell supporters -- in January 1986 -- that Fischer was acting as a paid consultant to the Channell organization. When he raised the subject with Regan, according to Fischer, Regan responded, "I hope you're being compensated for this." [Fischer Dep. at 48].
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Re: Unpublished draft chapter of the congressional Iran-Cont

Postby admin » Sun Jun 04, 2017 1:50 am

E. Roy Godson and the Heritage Foundation

In the summer of 1985, Oliver North asked Roy Godson, a consultant to the National Security Council, the director of the Washington Office of the National Strategy Information Center, and an Associate Professor of Government at Georgetown University, to raise money for the Catholic Church in Nicaragua. [Godson Dep., 9/10/87, at 53-57]. North informed Godson that Richard Miller would arrange for the transfer of any funds that were raised. [Godson Dep., 9/10/87, at 72]. Godson later met with Miller, who suggested two alternative routes for contributions: donations to the Institute for North-South Issues (INSI), an organization which Miller and his partner controlled; or money transfers directly to Miller's Cayman Islands bank account. [Godson Dep., 9/10/87, at 73-75].

Godson turned for assistance to Clyde Slease of Pittsburgh, Counsel to Richard Mellon Scaife and several Mellon family foundations. At a subsequent meeting in Pittsburgh, Slease told Godson he did not want to become involved in raising money for arms to the Contras. [Godson Dep., 9/10/87, at 61; Slease Dep., 6/11/87, at 4, 20-22, 24-28].

Godson contacted Slease at a later date and asked him if he would be willing to raise funds for the Catholic Church in Nicaragua. Slease expressed an interest but said that he wanted to meet with a higher level government official to verify that the Administration supported Godson's fundraising efforts. [Selase Dep., 6/11/87, at 26-34]k.

At the request of Slease, Godson arranged for a meeting with North and Robert McFarlane in the Situation Room of the White House, [16] where they explained to Slease the need for funds for the Catholic Church in Nicaragua. [Godson Dep., 9/10/87, at 68-70]; Slease Dep., 6/11/87, at 34-36]. Slease agreed to try to raise $400,000 for North's project. Slease then persuaded an acquaintance in Pittsburgh, John Donahue, to donate $100,000, and they settled on designating the Heritage Foundation as the recipient of the donation. [Slease Dep., 6/11/87, at 40, 56].

Donahue denied that his contribution was for the Catholic Church. He stated that his contribution was a straightforward gift to the Heritage Foundation and was given for no other purpose. [Donahue Interview, 6/11/87]. Slease, however, testified that he telephoned Edwin J. Feulner, President of the Heritage Foundation, and told him that Donahue would be donating $100,000 to Heritage and the Catholic Church in Central America. [Slease Dep., 6/11/87, at 57]. Godson then met with Feulner and explained that the funds were to be transferred indirectly to the Catholic Church via a transfer from the Heritage Foundation to INSI. [Godson Dep., 9/10/87, at 85]. In an interview with investigators from the Select Committees, Feulner, however, did not mention that anyone had ever indicated to him that the Catholic Church was the intended recipient of the grant. [Feulner Interview, 7/10/87].

The documentation of this grant disguises the objective for which it was solicited and the purpose for which the funds were used. In a letter to Feulner, dated September 12, 1985, Richard Miller, Treasurer of INSI, stated that the Heritage grant to INSI would be used for the following purposes:

1. The dissemination in Central America of materials designed to educate the public on the political and economic realities of United States policy objectives, and the collection of scholarly responses to the materials.

2. Phase one will be followed by a program of public information on the Central American view of United States foreign and economic policy and how it relates to the political and economic future of Central American countries. This element will be a feedback mechanism for a conference to be scheduled in 1986.

3. The collection and analysis of data in the first two phases will be completed prior to the conference. Then, United States scholars and policy makers will be given an opportunity to react to the analysis before the conference.

4. The Institute will provide all Conference arrangements and select the scholars to participate in this program from among U.S. and Central American figures.

Responding to Miller's grant request, Feulner sent Miller a check for $100,000 with a letter dated October 15, 1985, which stated:

My colleagues and I have discussed your proposal in some detail, and are pleased to respond in a positive way to it. Therefore, I am enclosing a check from the Heritage Foundation in the amount of $100,000 as you requested in your letter.


Feulner told Committee investigators that as far as he was concerned the grant to INSI was for the purposes stated in the September 12, 1985 letter from Richard Miller to Feulner.

After Heritage transferred the $100,000 to INSI, Miller instructed INSI to transfer $80,000 of the grant to his Cayman Islands account from which funds were withdrawn as directed by North. INSI retained a twenty percent administrative fee for its distribution of the grant. [Richard Miller Dep., 8/20/87, at 276-281].

Bank records obtained by the Committees from INSI, I.C., Inc. and Albert Hakim, show that at least some of the money was transferred to Lake Resources. The Bank records also indicate that most of the $80,000 simply was deposited into the general operating fund of I.C., Inc. and was used for a variety of purposes. There is no concrete evidence that the money ever went to the Catholic Church in Nicaragua. [INSI, Lake Resources bank records (Heritage)].

In addition to the $100,000 grant from Donahue, Slease arranged for $5,000 contribution from another friend, Herbert Barness. Barness made this contribution by a check payable to the Cayman Islands bank account. [Slease Dep., 6/11/87, at 44-52]. He also introduced Godson to John Hirtle, a stockbroker in Philadelphia. [Slease Dep., 6/11/87, at 53]. Godson arranged for Hirtle to meet with North in Washington. Following this meeting, Hirtle and North met again in Philadelphia with two prospective contributors. One subsequently donated $60,000 by check dated December 13, 1985 directly to INSI. [Macaleer Interview, 7/21/87]. Shortly thereafter, this amount was then transferred by INSI to the Lake Resources account in Switzerland. [INSI, Lake Resources bank statements (Macaleer)].
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Re: Unpublished draft chapter of the congressional Iran-Cont

Postby admin » Sun Jun 04, 2017 2:16 am

F. What Happened to the Money

Just as only a small fraction of the Iranian arms profits was used for the Contras, so only a small part of the money Channell raised for the Contras reached them. Fischer and Artiano received more than $650,000 or more than five percent of the total money raised, and Miller, Gomez and their companies retained a large percentage of the $5 million that IBC received from NEPL. A total of $2,740,000 was transferred by IBC to I.C., Inc., and $430,000 directly to Lake Resources. After deducting the payments to Fischer and Artiano, the balance, approximately $1.2 million, was retained by IBC for services and expenses on NEPL's behalf. [17]

This amount, however, is not all that Miller and Gomez received from the venture. Miller testified that North agreed in late 1985 that he and Gomez could begin to collect a ten percent commission on the payments funneled to the Contras through IBC and I.C., Inc. Miller stated that North said that the ten percent was reasonable since "most of the other people in the business of providing assistance to the Contras were taking 20 to 30 percent." [R. Miller Dep., 6/23/87, at 38]. North, in his testimony, denied that he had agreed to any specific percentage, but rather stated that he had approved "fair, just and reasonable" compensation to Miller and Gomez. [7/13/87, at 77]. Nonetheless, North's notebooks contain an entry for November 19, 1985, which states "IBC - 10%."

Miller and Gomez formed another Cayman Islands corporation in early May 1986, World Affairs Counselors, Inc. (WACI], to receive the compensation approved by North. Miller instructed his Cayman Islands agent to deduct automatically for WACI ten percent of all monies transferred to I.C., Inc. [R. Miller Dep., 8/20/87, at 226-228]. A total of $442,000 was taken by Miller and Gomez pursuant to this commission arrangement. Miller never told Channell that he and Gomez were receiving a ten percent commission approved by North. Both Miller and Gomez believed that once the Contra assistance money left NEPL, it was subject to North's total discretion and control. [R. Miller Dep., 8/20/87, at 228; Gomez Dep., at 88-89].

Including their commissions and fees, IBC, Miller and Gomez received more than $1.7 million from the money raised by NEPL for the Contras. Channell's take was also substantial, though apparently not of the magnitude of Miller's and Gomez's total compensation. He furnished his offices extravagantly and was lavish in his expenditures. He drew compensation for 1985 and 1986 totalling $345,000 while Conrad and his organization more than $270,000, extraordinary earnings for non-profit fundraisers.

Out of the money raised by NEPL, the Contras and their affiliated entities received only $2.7 million, with approximately $500,000 going to other persons and entities engaged in activities relating to the Contras. The money was routed to them through IBC and I.C., Inc. and disbursed at the direction of North to Lake Resources, Calero and other persons and entities. In virtually every case, Miller would tell North when money was available and North would then instruct him on what to do with it. The chart at the end of this Chapter depicts the flow of money. In addition, as described in the next section, more than $1.2 million was spent on political advertising and lobbying for the Contras.
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Re: Unpublished draft chapter of the congressional Iran-Cont

Postby admin » Sun Jun 04, 2017 2:30 am

G. Political Advertising for the Contras

Apart from financial assistance to the Contras, the major project of the Channell and Miller organizations in 1985 and 1986 was a "public education" and lobbying program in support of United States Government aid for the Contras.

The major vehicle in the "public education" campaign was a series of television advertisements prepared by the Robert Goodman Agency in Baltimore that cost NEPL $1,000,000. Adam Goodman of that agency, following the Senate's approval of the Contra funding bill in 1986, wrote a letter to Channell describing their achievement:

"By design, we launched the four-week national television ad campaign in Washington, D.C., in late February. This reflected the economy of reaching all 435 Members of the House (and 100 United States Senators) in one sitting. Beginning with Week 2, and running through the first decisive House vote in late March, we also aired spot commercials in 2 additional television markets across the country. These targeted markets, covering the home districts of nearly thirty Congressmen, experts considered to be at the core of the key 'swing vote' on Contra funding, added scope and credibility to the ad campaign. In fact NEPL's national television spot series was ultimately seen by more than 33 million people, or one out of every seven Americans."


[Letter from Adam Goodman to Spitz Channell dated March 31, 1986, reproduced as part of Channell Dep., Exhibit 1].

Supplementing the television programs were press conferences and speaking tours by persons supporting the Contras. These were arranged by IBC and another public relations firm, Edelman, Inc., retained by Channell, which was paid $92,000 by NEPL.

The Members of Congress who were targeted in 1986 prior to the vote on Contra aid were all Democrats. Although the list changed between the first and second votes on Contra aid, the main targets were Mike Barnes (Md.), J.J. Pickle (Tex.), Bill Hefner (N.C.), Charles Whitley (N.C.), Ed Jones (Tenn.), Jamie Whitten (Miss.), Bill Boner (Tenn.), Bart Gordon (Tenn.), Jim Cooper (Tenn.), Albert Bustamante (Tex.), Kika de la Garza (Tex.) and Romano Mazzoli (Ky.). [Adam Goodman Dep., Exhibit 3].

The entire effort, although paid for by Spitz Channell and his contributors, was actually managed by Rich Miller and others, including Kuykendall, Kemble, Cameron and Peter Flaherty, a representative of the Citizens of America. The highly sophisticated effort was directed at specific Congressional districts whose members were identified as wavering or vulnerable on the issue of Contra aid.

NEPL paid $115,000 for extensive polling by the Finklestein Company as an aid to selecting areas where television advertisements and speaking tours would most likely have a favorable effect on a Congressional vote. He also retained two companies, Miner and Fraser and the Lichtenstein Company, to generate letters to Congressmen supporting Contra aid, and he paid two lobbyists for their services in support of this effort: Dan Kuykendall, who concentrated on undecided Republicans and conservative Democrats, and Bruce Cameron, who focused on liberal Democrats.

Another organization, PRODEMCA, which had concentrated on Central American issues, also received payments from Channell to run newspaper ads supporting aid to the Contras on the eve of Congressional votes in 1986. Its representatives apparently participated in strategy sessions about enlisting Congressional support.

Cameron had been hired by Channell on the recommendation of Richard Miller and Penn Kemble. [Miller Dep., 9/15/87, at 614-616]. Kemble was the President of an organization called Friends of the Democratic Center in Central America (PRODEMCA) and was involved in a broad array of activities related to Spitz Channell's Central American Freedom Program and the Reagan Administration's efforts on behalf of the Contras. Although Kemble initially recommended to Miller and Gomez that Bruce Cameron be hired as a lobbyist for PRODEMCA, the relationship was eventually accomplished by Kemble and Cameron taking over Rob Owens' organization, the Institute for Democracy and Education in America (IDEA), changing its name to the Center for Democracy in the Americas (CDA), and recasting the board of directors naming Kemble as Chairman and Cameron as President. [Miller Dep., 9/15/87, at 615-616].

CDA received money from both NEPL and SENTINEL. [Channell Financial Records 1986]. Kemble was also one of the principals in the Institute for Religion and Democracy, which worked with Otto Reich's S/LPD office in the State Department and received some minimal funds from IBC. [IBC Cash Analyses (sorted), supra]. At the PRODEMCA offices, Kemble hosted legislative strategy sessions, in at least one of which State Department official Robert Kagan was a participant, prior to the 1986 Congressional votes on Contra aid. [See PRODEMCA Documents. Memorandum from Penn Kemble to Angier Biddle Duke, 2/23/87; D. Kuykendall Dep., 8/12/87, at 103-104]. PRODEMCA received three sub-grants from the National Endowment for Democracy for projects related to Nicaragua. [See Hearing before House Foreign Affairs Committee Subcommittee on International Operations, "Oversight of National Endowment for Democracy," May 14, 20 and June 11, 1986, at 43-48].
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Re: Unpublished draft chapter of the congressional Iran-Cont

Postby admin » Mon Jun 05, 2017 3:13 am

H. The Barnes Campaign

Congressman Mike Barnes, whose Congressional district adjoins Washington, D.C. and who was Chairman of the House Foreign Affairs Committee Subcommittee on Western Hemisphere Affairs, came in for special treatment. Barnes, along with Congressman Lee Hamilton, led the fight in the House of Representatives to halt military assistance to the Contras in 1986. Heavy television advertising was directed against Barnes even though the sponsors knew that there was no chance they could change his mind or his vote. They felt, however, that since these ads were scheduled to run in the Washington media market, they would be seen by all Members of Congress and serve as a warning. [Littledale Dep., 9/8/87, at 21-23; D. Kuykendall Dep., 8/12/87, at 112-113]. The Washington television campaign was supplemented by ad campaigns in selective targeted Congressional districts.

Barnes was also a candidate for the U.S. Senate in the Democratic primary in Maryland in 1986 and was an inviting target for his opponents. The Channell fundraising operation used Barnes as the excuse for a concerted fundraising effort in the summer of 1986. Notes taken by Channell's key fundraisers from a briefing by Channell were illustrative of the message that was being used on the clients and contributors:

"Barnes -- wants indict Ollie.

"Watergate babies -- want to get at the President through Ollie.

"Want another Watergate.

"Put Barnes out of politics.

"If we get rid of Barnes we get rid of the ringleader and rid of the problem.

"Special PAC to do only one thing: Only to rid Congress of Congressmen that are trying to undermine President in his anti-terrorist policies.

"Barnes trying to indict Ollie -- wants to get at RR -- trying to use R to elevate his Senate campaign -- if we can beat him he's out of Congress.

"Giddens re CIA, NIC, Embassy Security, destroy Barnes -- use him as abject lesson to others.

"RR informed on his return."


[Littledale Dep., 9/8/87, at 87-91; Shultz Exhibit No. 81].

Channell's operatives were so determined to defeat Mike Barnes in the democratic primary that they ran "independent" television ads on behalf of Linda Chavez that were supposedly designed to help Linda Chavez in the Maryland general election. They were directed against Barbara Mikulski, one of Barnes' principal opponents in the Maryland Democratic primary and the eventual winner. [Littledate Dep., 9/8/87, at 22].

Krishna Littledale, one of Channell's main fundraisers, told the Committees that these ads were primarily aimed at harming Mike Barnes' chances in the Democratic primary. [Littledale Dep., 9/8/87, at 22].

On September 9, 1986, the night of the Democratic primary in Maryland, Spitz Channell, Kris Littledale and Cliff Smith sent a telegram to Lt. Col. Oliver North exulting in the defeat of Mike Barnes. The telegram stated:

"Dear Colonel North:

We have the honor to inform you that Congressman Michael Barnes, foe of the freedom fighter movement, adversary of President Reagan's foreign policy goals and opponent of the President's vision for American security in the future has been soundly defeated in his big to become the Democratic candidate for the U.S. Senate from Maryland.

His defeat signals an end to much of the disinformation and unwise effort directed at crippling your foreign policy goals.

We, at the Anti-terrorism American Committee (ATAC), feel proud to have participated in a campaign to ensure Congressman Barnes' defeat."

Signed by
Spitz Channell
Cliff Smith
Kris Littledale


[Channell Document A0036004].

Nearly all of these activities -- television ads, lobbying, grassroots pressure and newspaper ads were funded by the same contributors who had been invited to the White House for Oliver North's briefings and who had met with the President.
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Re: Unpublished draft chapter of the congressional Iran-Cont

Postby admin » Mon Jun 05, 2017 3:24 am

IV. The Channell/Miller Network -- The End

A. The Beginning of the End


On October 18, 1986, the President signed legislation appropriating $100 million for the Contras ($30 million for humanitarian assistance and $70 million in unrestricted aid). The anticipation of this legislation led to a downturn in the activities of the Miller/Channell fundraising and assistance network after the summer of 1986.

With the disclosure in early November of the sale of arms to Iran, however, persons involved in the network became concerned that the story of the network would unravel and become public. This prescient concern led to meetings between Miller and North on November 20 and 21.

The initial meeting was requested by Miller. They met in the hallway outside of North's office in the Old Executive Office Building. Miller told North that he was worried about the possible legal ramifications and the costs associated with a legal defense. North told Miller that he should use the money left in the Intel Co-Operation (or I.C., Inc.) account (approximately $200,000) for any legal fees that might arise. [R. Miller Dep., 6/23/87, at 5-8].

North called Miller the next day, November 21, to arrange a meeting later that afternoon. Miller met North in the Old Executive Office Building, and North asked him for a ride to Dupont Circle. Miller told North that money was needed from a foreign source to fund public relations and congressional activities on behalf of the United Nicaraguan Opposition (UNO). Miller suggested contacting the Sultan of Brunei or the Saudis. North's response was "I gave one to Schultz already and he f----d it up." North also stated that "if Schultz knew that the Ayatollah was bankrolling this whole thing he'd had a heart attack." Miller did not understand either reference. [R. Miller Dep., 6/23/87, at 9-14]. Either that day or the day before, North told Miller that the Attorney General had advised North to obtain legal counsel. [18]
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Re: Unpublished draft chapter of the congressional Iran-Cont

Postby admin » Mon Jun 05, 2017 3:39 am

B. The Lowell Sun Allegations

On December 14, 1986, the Lowell (Mass.) Sun ran a story under the headline "Money from Iranian Arms Sales Was Used to Back Conservatives During 1986 Election." The story stated that "[a]bout $5 million from the almost $30 million in excess raised from arms sales to Iran was filtered to conservative political action groups" to "support candidates who backed President Reagan's pro-Contra and Star Wars policies." The only such group named in the article was NEPL.

The Committees have uncovered no evidence to substantiate the allegation that NEPL or any other of Channell's political action groups received any proceeds derived from the sale of arms to Iran. In this regard, the Committees have accounted for virtually all of the funds reportedly received by Channell's organizations during the relevant period, none of which were traceable to the Iranian arms sales. Similarly, the Committees have found no evidence that money from the Enterprise was paid to Channell's organizations.
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Re: Unpublished draft chapter of the congressional Iran-Cont

Postby admin » Mon Jun 05, 2017 3:43 am

C. NEPL Activities in December 1986

In December 1986, NEPL's staff received an unusually lengthy holiday vacation from December 15 to January 5, 1987. The reason given for this lengthy break was that the media were making it too difficult for the organizations to conduct their work and that the most sensible response was to close operations for a couple of weeks. [McLaughlin Dep. at 122-130].

Immediately prior to the extended holiday, two NEPL accounting employees were instructed by their supervisors to delete from the accounting records any and all references to the "Toys" project. As mentioned above, contributions intended for the purchase of lethal supplies generally were designated on NEPL's books for the "Toys" project. Alterations in the accounting records and related floppy disks were made to modify prior references to "Toys" to a neutral project named "CAFP TV" (presumably Central American Freedom Project -- Television Advertising). [S. McMahon Dep. at 50-54].

In addition, NEPL's principal accountant took all NEPL accounting materials home with him during the vacation, including financial records, bank statements, checkbooks, deposit slips and the like. [S. McMahon Dep. at 23-24].
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