In the Iran-Contra Affair, U.S. officials in the Reagan Administration, with help from civilians, continued to assist Nicaraguan rebels called the Contras or Sandanistas, although Congress had cut off funding with the Boland Amendments, beginning in 1982. By 1984, there was a covert action, taken in specific opposition to Congressional funds cutoff, to continue Contra support. The financial arrangements were extremely complex, involving sales of weapons to Iran through an Israeli intermediary, and they expanded to include an attempt to ransom hostages in the Middle East.
It remains unclear if President Reagan was aware of specific plans, if he had plausible deniability, or if the effort was controlled by Director of Central Intelligence William Casey and some White House staff members.
In 1982, the Congress of the United States viewed Reagan Administration's anti-Sandinista policies with extreme skepticism. Their efforts resulted in passage in late 1982 of an amendment introduced by Representative Edward Boland (D-Massachusetts) to the Fiscal Year 1983 Defense Appropriations bill. This first of a series of Boland Amendments prohibited the Central Intelligence Agency (CIA), the principal conduit of covert American support to the contras, from spending any money "for the purpose of overthrowing the government of Nicaragua."
The Democratic majority report stated, "The Central Intelligence Agency was the U.S. Government agency that assisted the contras. In accordance with Presidential decisions, known as findings, and with funds appropriated by Congress, the C.I.A. armed, clothed, fed and supervised the contras. Despite this assistance, the contras failed to win widespread popular support of military victories within Nicaragua." After the Boland Amendments were passed, however, CIA no longer supported the Sandanistas, although an unofficial and clandestine activity, the Iran-Contra Affair, was begun by some government officials and private citizens.
Reagan's posture towards the Sandinista government was highly controversial. His Administration definitely circumvented the Boland Amendment, although it is not clear what he personally knew and ordered, and what was done in his name by White House staff and the then-DCI, William Casey.
A number of actions were taken by National Security Council staff, actions that the Boland Amendments had forbidden to the CIA. While the CIA, as an organization, was not allowed to act in this manner, Director of Central Intelligence William Casey took part in White House/NSC discussions and actions to follow the Reagan policy.
The NSC staff's efforts to assist the contras in the wake of Congress's withdrawal of funding took many forms. Initially it meant extending its earlier initiative to increase third-country contributions to the contras. Casey and McFarlane broached the subject of such funding at a June 25, 1984, meeting of the National Security Planning Group (NSPG), consisting of the President, Vice President Bush, Casey, (National Security Advisor) Robert McFarlane, Secretary of State George Shultz, Secretary of Defense Caspar Weinberger, United Nations Ambassador Jeane Kirkpatrick, Chairman of the Joint Chiefs of Staff Gen. John Vessey, and presidential adviser Edwin Meese . Shultz warned that any approach to a third country could be viewed as an "impeachable offense," and convinced the group that it needed a legal opinion from Attorney General William French Smith. McFarlane agreed and told the group not to approach any foreign country until the opinion was delivered. McFarlane said nothing about what he already had obtained from the Saudis.
Questions arose as to the propriety of certain actions taken by the National Security Council staff and the manner in which the decision to transfer arms to Iran had been made. Congress was never informed. A variety of intermediaries, both private and governmental, some with motives open to question, had central roles. The N.S.C. staff rather than the C.I.A. seemed to be running the operation. The President appeared to be unaware of key elements of the operation. The controversy threatened a crisis of confidence in the manner in which national security decisions are made and the role played by the N.S.C. staff.
As a supplement to the normal N.S.C. process, the Reagan Administration adopted comprehensive procedures for covert actions. These are contained in a classified document, NSDD-159, establishing the process for deciding, implementing, monitoring, and reviewing covert activities.
After the Boland Amendment was enacted, it became illegal under U.S. law to fund the Contras; National Security Adviser Robert MacFarlane, Deputy National Security Adviser Admiral John Poindexter, National Security Council staffer Col. Oliver North and others continued an illegal operation to fund the Contras, leading to the Iran-Contra scandal. At that point, members of the National Security Council staff continued covert operations forbidden to the CIA.
- Lawrence Walsh (4 August 1993), Final Report of the Independent Counsel for Iran/Contra Matters
- Congressional Committee Investigating Iran Contra majority report, 18 November 1987
- Excerpts from the Tower Commission's Reports