The Consortium

By Robert Parry

WASHINGTON -- The October Surprise controversy -- allegations that Ronald Reagan's 1980 campaign sabotaged President Carter's Iranian hostage negotiations -- is now before the U.S. Supreme Court, though the fact has received virtually no notice in the national media.

The issue was brought to the high court by former national security adviser Robert McFarlane who claims he was libeled by a 1991 Esquire magazine story linking him to both the alleged 1980 hostage dirty trick and to the Jonathan Pollard spy case.

McFarlane's lawyer, Forrest Hainline, took the libel suit to the Supreme Court in hopes of reversing earlier dismissals by the U.S. District Court and by the U.S. Court of Appeals in Washington. Both courts ruled that McFarlane failed to show that Esquire displayed a reckless disregard for the truth, the legal standard required when a public figure seeks damages for libel.

Mr. X?

McFarlane's suit specifically targeted quotes from former Israeli intelligence official Ari Ben-Menashe, who asserted that McFarlane participated in Republican back-channel contacts with Iran in 1980 and developed a "special relationship" with Israeli spymaster Rafi Eitan.

Ben-Menashe even has alleged that McFarlane was the mysterious "Mr. X" who gave Israel advice on what U.S. government secrets Israeli spy Jonathan Pollard should steal from American intelligence files. Pollard was caught in 1985, convicted of espionage and is currently in federal prison. Israel has never identified any other Americans who assisted Pollard's spy operation.

In court pleadings, McFarlane's lawyer has called Ben-Menashe a "liar" and argued that allowing the former Israeli intelligence official to accuse McFarlane of such acts of treachery crosses the "reckless disregard" line.

Esquire's lawyers countered by arguing that magazine writer Craig Unger went to extraordinary lengths to check Ben-Menashe's bona fides as an Israeli intelligence official and to test his reliability on other sensitive topics. For instance, in 1986, Ben-Menashe leaked details of the Iran-contra scandal to American journalists months before the story broke publicly. "I never caught him [Ben-Menashe] in a lie and I tried," Unger said in a deposition. "I tried to catch him in lies many, many times and I never did."

It was also clear that McFarlane had participated in at least one October Surprise-related meeting, a discussion at Washington's L'Enfant Plaza Hotel with an Iranian emissary who was offering to deliver the 52 American hostages in Iran to Ronald Reagan in fall 1980.

Then, in the early days of the Reagan administration, McFarlane was designated the U.S. point man for the "strategic relationship" between Israel and the United States. McFarlane later became a central player in the Iran-contra scandal, when President Reagan authorized the trading of U.S. arms to Iran in 1985-86 for the release of other American hostages then held in Lebanon.

New Evidence

In earlier legal briefs, Esquire argued narrowly that McFarlane, a public figure, simply had failed to demonstrate that the magazine acted recklessly and that it had no reason to believe the charges were false.

But the magazine's recent brief to the Supreme Court cites new evidence bolstering the October Surprise allegations, including the findings of The Consortium's investigation into a 1993 House task force report. The task force claimed it found "no credible evidence" to support the October Surprise charges.

As the Esquire brief notes, however, The Consortium conducted "an independent review of both classified and unclassified documents left behind by the House Task Force [and] concluded that 'the boxes of documents revealed that the task force used false alibis on [former CIA Director William] Casey's whereabouts for key October Surprise dates; withheld relevant documents and testimony that clashed with its conclusions; dismissed credible witnesses who supplied unwelcome support for the allegations; and accepted dubious -- if not blatantly false-- testimony from Republicans."

The new evidence discovered by The Consortium included testimony from a senior CIA official who was present at a 1981 meeting at which a prominent Republican boasted to then-CIA Director William Casey about their success in blocking Carter's attempted "October Surprise" of a last-minute hostage release. There were also secret FBI wiretaps of one of Carter's Iranian intermediaries receiving a $3 million deposit through a George Bush-connected lawyer and getting other lucrative business from a close Casey friend.

In addition, the House task force hid a 1993 report from Russia's Supreme Soviet stating that Moscow's national security files contained evidence that Casey and Bush did participate in meetings with Iranians to derail Carter's hostage negotiations. (For details, see the new monograph, The October Surprise X-Files: The Hidden Origins of the Reagan-Bush Era. )

Unlikely Victory

Another question arising from McFarlane's long-running legal battle with Esquire is who is paying for McFarlane's suit. His limited financial resources were depleted by his Iran-contra difficulties in the late 1980s. And to carry a complex legal case to the Supreme Court can cost millions of dollars. It is particularly unusual when the chances for a significant jury award are not good.

McFarlane's attorney, Hainline, declined to answer questions about how much the suit has cost. but denied that McFarlane was receiving outside assistance to finance the action. The Supreme Court could accept the case for a full hearing or reject it without explanation.

Meanwhile, McFarlane's lawsuit continues to chill other journalists who might want to explore the allegations of high-level wrongdoing contained in the Esquire article.

(c) Copyright 1996 -- Please Do Not Re-Post

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