Such was the situation in late 1992 as America reached an important turning point for whether the people would get to understand their recent history or not. A bipartisan House task force wanted to debunk allegations that Ronald Reagan’s campaign in 1980 had sabotaged President Jimmy Carter’s negotiations with Iran about freeing 52 Americans, who were taken hostage 30 years ago this week.

That alleged act of treachery, making Carter look weak and inept, set the stage for Reagan’s landslide victory on Nov. 4, 1980, exactly one year to the date after the hostages were seized. But the suspicions about this so-called October Surprise case only reached a critical mass in 1991-92 after several years of disclosures about the Iran-Contra arms-for-hostages scheme.

Despite Republican denials about any secret pre-election 1980 dealings with Iran – and the anger that the allegations drew from influential neoconservatives in the Washington press corps – a House task force was created to examine the case, although without much enthusiasm and mostly with an eye toward debunking the suspicions.

By November 1992, especially after President George H.W. Bush lost his reelection bid to Bill Clinton, the task force’s determination to proclaim the Republican innocence had solidified. The Democrats would be in control of the White House and Congress and were looking forward to bipartisan comity.

However, after Bush’s electoral defeat, the floodgates that had long protected the Reagan-Bush team gave way. To the dismay of the task force, evidence of Republican guilt poured in.

The new evidence was so powerful, including multiple corroborations of secret Republican meetings with Iranians behind Carter’s back, that task force chief counsel Lawrence Barcella saw no choice but to extend the investigation several months and to rethink the planned debunking.

Barcella told me later that he approached Rep. Lee Hamilton, a centrist Democrat who was chairman of the task force, with a request to give the investigators three more months to evaluate the new evidence.

But Hamilton, who prides himself in coming up with bipartisan answers to questions that otherwise might spur partisan conflict, said no. He ordered Barcella to wrap up the probe and to continue with the planned debunking.

Concocting Alibis

Hamilton’s refusal to extend the investigation forced the task force to improvise. It found itself with no choice but to concoct a series of irrational alibis for key Republicans, especially for William Casey, Reagan’s campaign chief in 1980 and later Reagan’s CIA director.

For the debunking to work, Casey had to be accounted for on crucial days because various witnesses had placed Casey in Europe at secret meetings with Iranian emissaries, including cleric Mehdi Karrubi, then a foreign policy adviser to Ayatollah Ruhollah Khomeini.

So, the task force constructed one Casey alibi around the fact that Reagan’s foreign policy aide Richard Allen had written Casey’s home number down in his notes on a specific day. Even though Allen had no record or recollection of reaching Casey that day, the task force cited the writing down of Casey’s home number as proof that Casey was at home.

For another key day, Oct. 19, 1980, the task force relied on the unsupported memory of Casey’s nephew Larry Casey, who claimed that his late father had called his brother, Bill Casey, that day and found him at work at the Reagan-Bush campaign headquarters in Arlington, Virginia.

Though Larry Casey had no corroboration for that memory, the task force cited it as “credible” and thus dismissed other evidence placing Casey in Paris at a meeting with Karrubi that day. The task force stuck to its conclusion even though I had notified the task force that Larry Casey had given me, in a PBS Frontline interview in 1991, an entirely different story for the same day.

Larry Casey insisted to me that he vividly remembered his parents having dinner with Bill Casey at the Jockey Club in Washington on Oct. 19, 1980. ”It was very clear in my mind even though it was 11 years ago,” Larry Casey said.

But then I showed Larry Casey the sign-in sheets for the Reagan-Bush campaign headquarters. The entries recorded Larry Casey’s parents picking up Bill Casey for the dinner on Oct. 15, four days earlier. Larry Casey acknowledged his error, and indeed an American Express receipt later confirmed Oct. 15 as the date of the Jockey Club dinner.

In 1992, however, Larry Casey had replaced the Jockey Club dinner with “the phone call alibi,” which he had not mentioned in the Frontline interview.

Though Larry Casey’s alibi was anything but “credible,” the House task force accepted it as solid proof.

Bush’s Whereabouts

An alibi for George H.W. Bush on that same day also had holes. Bush – as the vice presidential nominee – was under Secret Service protection, so it should have been easy to establish his whereabouts, but it wasn’t.

Bush’s redacted Secret Service records listed one non-public trip on Oct. 19, to the Chevy Chase Country Club, but it could not be corroborated either by club officials, Bush’s supposed guests or his Secret Service team.

Another reputed movement by the candidate that afternoon was to the home of a personal friend, but the Bush administration refused to disclose the identity of the friend. Eventually, in mid-1992, the administration agreed to tell a few task force officials the name of the personal friend but only if the congressional investigators agreed not to interview the witness.

The task force accepted this peculiar arrangement, even though one might have thought that then-President Bush would have been eager to clear up any suspicions by allowing an interview. No interview was ever conducted and the name of the supposed alibi witness remains secret from the American people.

Another person connected to the alleged Paris meeting on Oct. 19, 1980, CIA officer Donald Gregg, also struggled to come up with an alibi, ultimately producing a photograph of himself in bathing trunks at a beach. On the back of the photo, there was a stamp showing that the photo had been processed in October 1980, a point that proved nothing.

There were other problems with the alibis. Documents that investigators expected to find, such as Casey’s 1980 passport and key pages from his calendar, had disappeared.

Meanwhile, as December 1992 wore on, more and more evidence was arriving implicating Republicans in 1980 contacts with Iranians, including the sworn testimony of the biographer for the chief of French intelligence Alexandre deMarenches.

The biographer, journalist David Andelman, said deMarenches had described arranging meetings between Republicans and Iranians in the summer and fall of 1980, with one meeting held in Paris in October. But deMarenches demanded that the story be kept out of his memoir to protect the reputations of his friends, George H.W. Bush and William Casey, Andelman said.

Andelman’s testimony corroborated longstanding claims from a variety of international intelligence operatives about a Paris meeting involving Casey and Bush. But the task force brushed Andelman’s testimony aside, paradoxically terming it “credible” but then claiming it was “insufficiently probative.”

Contemporaneous Report

The task force also was aware of contemporaneous knowledge about the alleged Bush-to-Paris trip by Chicago Tribune reporter John Maclean. Maclean, the son of author Norman Maclean who wrote A River Runs Through It, said a well-placed Republican source told him in mid-October 1980 about Bush’s secret trip to Paris to meet with Iranians on the U.S. hostage issue.

After hearing this interesting tidbit, Maclean passed on the information to David Henderson, a State Department Foreign Service officer. Henderson recalled the date as Oct. 18, 1980, when the two met at Henderson’s Washington home to discuss another matter.

For his part, Maclean never wrote about the Bush-to-Paris leak because, he told me later, a Reagan-Bush campaign spokesman denied it. As the years passed, the memory of the leak faded for both Henderson and Maclean, until the October Surprise story bubbled to the surface in the early 1990s.

Henderson mentioned the meeting in a 1991 letter to a U.S. senator that was forwarded to me. In the letter, Henderson recalled the conversation about Bush’s trip to Paris but not the name of the reporter.

A Frontline producer searched some newspaper archives and found a story about Henderson that Maclean had written. Though not eager to become part of the October Surprise story in 1991, Maclean confirmed that he had received the Republican leak. He also agreed with Henderson’s recollection that their conversation occurred on or about Oct. 18, 1980. But Maclean still declined to identify his source.

The significance of the Maclean-Henderson conversation was that it was a piece of information locked in a kind of historical amber, untainted by later claims and counter-claims.

One could not accuse Maclean of concocting the Bush-to-Paris allegation for some ulterior motive, since he hadn’t used it in 1980, nor had he volunteered it a decade later. He only confirmed it when approached by Frontline and even then wasn’t particularly eager to talk about it.

Still, in December 1992, Hamilton had issued the order to end the investigation with a finding of Republican innocence – and contrary facts were not going to get in the way of that mission. [For a full accounting of the October Surprise evidence, see Robert Parry’s Secrecy & Privilege.]

Avoiding Dissent

For the task force, all that was left to do was to run the report past some bored congressmen and hope that no one looked too closely at the evidentiary gaps and the irrational alibis. That plan mostly worked but a staff aide to Rep. Mervyn Dymally of California spotted some of the absurd alibis.

One of those alibis was the bizarre claim that Richard Allen writing down Casey's home phone number proved that Casey was at home. Another alibi was that because a plane flew from San Francisco directly to London on another key date, Casey must have been onboard, even though actual documentary evidence refuted that.

According to sources who saw Dymally's dissent, it argued that "just because phones ring and planes fly doesn't mean that someone is there to answer the phone or is on the plane." But Dymally's reasonable observations were fiercely opposed by Hamilton.

Hamilton warned Dymally, who was retiring from Congress, that he would "come down hard" on Dymally if the dissent were not withdrawn. The next day, Hamilton fired all the staffers who had worked on Dymally's Africa subcommittee.

Seeing the firings as retribution (though Hamilton denied a connection), Dymally relented and withdrew the dissent, which was never made public. With that obstacle cleared, the task force report was shipped off to the printers.

The report was scheduled for release on Jan. 13, 1993, just one week before George H.W. Bush’s Presidency officially would come to an end. But there was still one more surprise for the October Surprise task force.

On Jan. 11, 1993, Hamilton received a response to a query he had sent to the Russian government on Oct. 21, 1992, requesting any information that Moscow might have about the October Surprise case.

The Russian response came from Sergey V. Stepashin, chairman of the Supreme Soviet’s Committee on Defense and Security Issues, a job roughly equivalent to chairman of the Senate Intelligence Committee.

In what might have been an unprecedented act of cooperation between the two longtime enemies, Stepashin provided a summary of what Russian intelligence files showed about the October Surprise charges and other secret U.S. dealings with Iran.

In the 1980s, after all, the Soviet KGB was not without its own sources on a topic as important to Moscow as developments in neighboring Iran. The KGB had penetrated or maintained close relations with many of the intelligence services linked to the October Surprise allegations, including those of France, Spain, Germany, Iran and Israel.

History had shown, too, that the KGB had spies inside the CIA and other U.S. intelligence agencies. So, Soviet intelligence certainly was in a position to know a great deal about what had or had not happened in 1980.

The Supreme Soviet’s response was delivered to the U.S. Embassy in Moscow by Nikolay Kuznetsov, secretary of the subcommittee on state security. Kuznetsov apologized for the “lengthy preparation of the response.” It was quickly translated by the U.S. embassy and forwarded to Hamilton.

To the shock of the task force, the six-page Russian report stated, as fact, that Casey, Bush and others had met secretly with Iranian officials in Europe during the 1980 presidential campaign. The Russians asserted that the Reagan-Bush team indeed had disrupted Carter’s hostage negotiations, the exact opposite of the task force’s conclusion.

As described by the Russians, the Carter administration offered the Iranians supplies of arms and unfreezing of assets for a pre-election release of the hostages. The Iranians “discussed a possible step-by-step normalization of Iranian-American relations [and] the provision of support for President Carter in the election campaign via the release of American hostages.”

But the Republicans were making their own overtures to the Iranians, the Russian report said. “William Casey, in 1980, met three times with representatives of the Iranian leadership,” the report said. “The meetings took place in Madrid and Paris.”

At the Paris meeting in October 1980, “R[obert] Gates, at that time a staffer of the National Security Council in the administration of Jimmy Carter and former CIA Director George Bush also took part,” the Russian report said. “In Madrid and Paris, the representatives of Ronald Reagan and the Iranian leadership discussed the question of possibly delaying the release of 52 hostages from the staff of the U.S. Embassy in Teheran.”

Both the Reagan-Bush Republicans and the Carter Democrats “started from the proposition that Imam Khomeini, having announced a policy of ‘neither the West nor the East,’ and cursing the ‘American devil,’ imperialism and Zionism, was forced to acquire American weapons, spares and military supplies by any and all possible means,” the Russian report said. The Republicans just won the bidding war.

”After the victory of R. Reagan in the election, in early 1981, a secret agreement was reached in London in accord with which Iran released the American hostages, and the U.S. continued to supply arms, spares and military supplies for the Iranian army,” the Russian report continued.

The deliveries were carried out by Israel, often through private arms dealers, the Russian report said.

What to Do

The matter-of-fact Russian report was stunning. It also matched other information the task force had. The task force had discovered that the Israelis, for example, had shipped U.S. military spares to Iran in 1981, with the secret acquiescence of senior Reagan-Bush administration officials.

Hamilton and his task force faced a quandary about what to do with the explosive Russian report, which – if accurate – made the task force report, which was then at the printers, not worth the paper it was being printed on.

Reputations, including Hamilton’s, could have been severely damaged. During his days as House Intelligence Committee chairman in the mid-1980s, Hamilton had come under criticism for ignoring early evidence about Oliver North’s secret contra-supply operations and getting blindsided by the covert military shipments to Iran in 1985-86.

When the Iran-Contra scandal finally broke in late 1986, Hamilton was named co-chairman of the investigative committee and quickly bought into White House cover stories that were later shattered by Iran-Contra special prosecutor Lawrence Walsh.

In January 1993, if Hamilton had to renounce his own October Surprise report, he might have been left with a tattered reputation, known as the Republicans’ favorite chump. He might not have built a glittering post-congressional career as a well-regarded senior statesman invited to sit on important panels like the 9/11 Commission and the Iraq Study Group.

So, in January 1993, Hamilton and the task force decided to bury the Russian report.

“We got the stuff from the Russians just a few days before” the task force’s own report was set for release, Barcella told me in an interview in 2004. “We weren’t going to be able to look into it, whether it was new information, disinformation or whatever it was.”

When I asked him why the task force didn’t just release the Russian report along with the task force report, Barcella responded that the Russian report was classified, precluding its disclosure to the public. There was no interest in pressing for its declassification, though Hamilton would have been in a strong position to do so and presumably the incoming Clinton administration would have cooperated.

Instead, the Russian report was simply boxed up and filed away with other unpublished information that the task force had collected in its year-long investigation. Barcella said he envisioned the material ending up in some vast government warehouse, “like in the movie ‘Raiders of the Lost Ark.’”

Actually, the Russian report found an even less elegant resting place. In late 1994, I discovered the task force’s documents, including the Russian report, in boxes that had been piled up in a former Ladies Room in an obscure office off the Rayburn House Office Building’s parking garage. [To examine the key “Ladies Room” documents, click here.]

Having hidden the Russian report and other incriminating evidence, Hamilton and his task force turned next to managing how the Washington press corps would treat the debunking report. The task force briefed friendly reporters making sure the debunking conclusion got wide dissemination.

Then, a news conference was held on Jan. 13, 1993, to release the task force’s findings. However, copies of the task force report were not given to reporters beforehand.

In a strange process, the copies of the task force report were kept shrink-wrapped at the front of the House Foreign Affairs Committee hearing room while Hamilton and his Republican co-chairman Henry Hyde conducted the news briefing, followed by questions mostly from reporters who had already bought into the debunking.

Copies of the task force report were only handed out after the news conference was over.

Then, to ensure that there would be little or no second-guessing, Hamilton composed an op-ed for the New York Times that was entitled “Case Closed.” The article cited the supposedly solid alibis for the whereabouts of Casey as the key reason why the task force findings “should put the controversy to rest once and for all.” [NYT, Jan. 24, 1993.]

Floor Speech

Ten days later, Henry Hyde took to the House floor to gleefully mock anyone who still doubted the October Surprise innocence of Ronald Reagan and George H.W. Bush.

During a "special order" speech, the white-haired Hyde did acknowledge some weaknesses in the House task force findings. Casey's 1980 passport had disappeared, as had key pages of his calendar, Hyde admitted.

Hyde noted, too, that French intelligence chief deMarenches had told his biographer that Casey did hold hostage talks with the Iranians in Paris in October 1980. Several French intelligence officials had corroborated that assertion.

But Hyde insisted that two solid blocks of evidence proved that the October Surprise allegations were false. Hyde said his first cornerstone was hard-rock alibis for Casey and other key suspects.

"We were able to locate [Casey's] whereabouts with virtual certainty" on the dates when he allegedly met with Iranians in Europe to discuss the hostages, Hyde declared. (Those alibis included Allen’s writing down Casey’s home phone number and Casey’s nephew recalling his father chatting with Casey on a specific day a dozen years earlier.)

Hyde also cited an alibi placing the late Iranian financier/CIA operative Cyrus Hashemi in Connecticut on a weekend when Hashemi’s brother, Jamshid, had testified under oath that Cyrus was with Casey and Iranian emissary Mehdi Karrubi in Madrid.

That “alibi” rested on phone records showing two one-minute calls, one from a lawyer to Hashemi's home and one back to the lawyer. There was no evidence that Hashemi received or made the calls, and the pattern more likely fit a call asking a family member when Hashemi was due home and the second call giving the answer.

FBI Wiretaps

The second debunking cornerstone, Hyde said, was the absence of anything incriminating on FBI wiretaps of Cyrus Hashemi over five months in late 1980 and early 1981 when he was under suspicion for his secret dealings with Iran.

"There is not a single indication that William Casey had contact with Cyrus or Jamshid Hashemi," Hyde said. "Indeed, there is no indication on the tapes that Casey or any other individuals associated with the Reagan campaign had contact with any persons representing or associated with the Iranian government."

But Hyde was wrong about the absence of incriminating evidence on the Hashemi wiretaps, although they were still secret in 1993 so Hyde’s argument was impossible to judge.

However, when I accessed the raw House task force documents in late 1994, I found a classified summary of the FBI bugging. According to that summary, the bugs revealed Cyrus Hashemi deeply enmeshed with Republicans on arms deals to Iran in fall 1980 as well as in financial schemes with Casey's close friend and business associate, John Shaheen.

And contrary to Hyde's claim of "not a single indication" of contact between Casey and Cyrus Hashemi, the Iranian banker was recorded as boasting that he and Casey had been "close friends" for years.

That claim was supported by a CIA memo which stated that Casey recruited Cyrus Hashemi into a sensitive business arrangement in 1979, a year before the October Surprise machinations.

Beyond that, the secret FBI summary showed Hashemi receiving a $3 million offshore deposit, arranged by a Houston lawyer who said he was a longtime associate of George H.W. Bush. The Houston lawyer, Harrel Tillman, told me in an interview that in 1980, he was doubling as a consultant to Iran's Islamic government.

After Ronald Reagan’s election in November 1980, Tillman was back on the line promising Hashemi help from the "Bush people" for one of his foundering business deals. Then, the FBI wiretaps picked up Hashemi getting a cash payment, via a courier arriving on the Concorde, from the corrupt Bank of Credit and Commerce International (BCCI).

The House task force had concealed these documents, allowing Hamilton and Hyde to miswrite an important chapter of recent American history.

Another irony of the falsified October Surprise history was that Hamilton’s wished-for bipartisanship never materialized. The Republicans pocketed the Democratic readiness to cover up for Ronald Reagan and George H.W. Bush – and then launched a partisan war against Bill Clinton.

To this day, now 30 years after Iranian radicals seized the American hostages, the real story of what happened and how the Republicans manipulated the process remains mostly unknown.

[For more information on this enduring mystery, see Consortiumnews.com’s “How Two Elections Changed America” or Parry’s Secrecy & Privilege.]

Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Neck Deep: The Disastrous Presidency of George W. Bush, was written with two of his sons, Sam and Nat, and can be ordered at neckdeepbook.com. His two previous books, Secrecy & Privilege: The Rise of the Bush Dynasty from Watergate to Iraq and Lost History: Contras, Cocaine, the Press & 'Project Truth' are also available there. Or go to Amazon.com.

To comment at Consortiumblog, click here. (To make a blog comment about this or other stories, you can use your normal e-mail address and password. Ignore the prompt for a Google account.) To comment to us by e-mail, click here. To donate so we can continue reporting and publishing stories like the one you just read, click here.

Back to Home Page