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A Lawyer & National Security Cover-ups

By Robert Parry
May 4, 2005

Lawrence Barcella, a former prosecutor under fire for a false affidavit used to convict ex-CIA officer Edwin Wilson on terrorism charges, took part in what appears to be another national security cover-up – of evidence that Republicans sabotaged President Jimmy Carter’s hostage negotiations with Iran in 1980.

Two years ago, Wilson’s 1983 conviction for selling weapons and explosives to Libya was thrown out by an outraged federal judge after he learned that a government affidavit – denying that Wilson was in contact with the CIA – was a lie. Wilson, who is now out of prison, has filed complaints against Barcella with the District of Columbia Bar Association, according to ABC News’ “Nightline,” which interviewed Wilson for a story that aired on April 27.

Barcella denied wrongdoing in connection with the bogus Wilson affidavit, which concealed about 80 contacts between Wilson and the CIA during the time period when Wilson was selling materiel to Moammar Khadafy’s Libya, then considered a chief sponsor of international terrorism.

But Barcella also appears to have withheld evidence in another national security investigation of the so-called “October Surprise” case, allegations that the Reagan-Bush campaign interfered with President Carter’s efforts to free 52 American hostages before the pivotal 1980 election. In 1992-93, Barcella headed a House task force which investigated the accusations and exonerated the Republicans.

Accepted Wisdom

The House task force report “debunking” the October Surprise allegations was accepted by Official Washington as the final word on the controversy. But subsequent discoveries have shown that the Barcella-led task force hid substantial evidence pointing toward Republican guilt as well as the involvement of some Barcella associates in the scandal.

In an interview for my book, Secrecy & Privilege, Barcella acknowledged that some evidence was kept from the public and that the task force’s exculpatory findings were issued despite the late arrival of incriminating evidence that was not fully evaluated.

One of the hidden pieces of evidence supporting the October Surprise allegations was a 1993 report produced by the Russian government about its intelligence information on the 1980 hostage crisis. The Russian report stated that then-vice presidential candidate George H.W. Bush and other Republicans met secretly with Iranian representatives in Europe, as several October Surprise witnesses had alleged.

The Russian report, which was classified as “confidential” by President George H.W. Bush’s administration during its final 10 days in office, was never officially released to the American people. I found a copy in House task force files that had been boxed away in a Capitol Hill storage room.

“We got the stuff from the Russians just a few days before” the House task force report was set for release on Jan. 13, 1993, Barcella told me. Since the task force’s official mandate had expired on Jan. 3, 1993, about a week earlier, Barcella said the task force felt there was nothing that could be done with the Russian material.

“We weren’t going to be able to look into it, whether it was new information, disinformation or whatever it was,” Barcella said.

When I asked why the House task force didn’t just release the Russian report and let the public decide about its merits, Barcella cited its classification as precluding its disclosure. No effort was made to declassify the Russian report either then or later, nor were any public references made to this evidence that contradicted the House findings. [For details on the Russian report, click here.]

‘Raiders of the Lost Ark’

Barcella said he envisioned the Russian report and other unreleased task force material disappearing into some vast warehouse, “like in the movie ‘Raiders of the Lost Ark.’”

In reality, the boxes were moved to an obscure office off the Rayburn House Office Building’s garage and stacked up in an abandoned Ladies Room, where I found them in late 1994. Over the past several weeks, we have been posting some of the documents on the Internet at Consortiumnews.com.

In the interview, Barcella told me that he urged Rep. Lee Hamilton, D-Ind., the House task force chairman, to extend the October Surprise investigation for a few more months because new evidence kept arriving in late 1992, but that Hamilton refused.

Instead of reflecting that uncertainty, however, the task force’s report categorically rejected the October Surprise allegations and portrayed the accusers as liars. Some witnesses, including former Israeli intelligence officer Ari Ben-Menashe, were referred to the Justice Department for perjury prosecutions. The referrals were leaked to the press, but no charges were ever filed.

When I recently asked Ben-Menashe about his opinion of Barcella, the former Israeli intelligence officer answered sarcastically, “Barcella ought to be on the [U.S.] Supreme Court. He's proven himself to be a very reliable guy.”

Since 1993, some key elements of the House task force report – particularly its complicated alibis on the whereabouts of Ronald Reagan’s campaign chief William Casey – have collapsed under scrutiny. But the report’s contemptuous tone effectively has prevented a reopening of the historical mystery.

[For a detailed account of the October Surprise case, see Robert Parry’s Secrecy & Privilege: Rise of the Bush Dynasty from Watergate to Iraq.]

Tough Prosecutor

One reason the task force’s findings were so widely accepted was Barcella’s reputation as the tough federal prosecutor who brought renegade CIA officer Edwin Wilson to justice in the early 1980s.

Barcella’s role in the Wilson case was lionized by author Peter Maas in the 1986 book, Manhunt, which recounted how Barcella masterminded Wilson’s capture by luring Wilson out of hiding, to the Dominican Republic, where he was snatched and hustled to the United States for trial.

Barcella capitalized on his reputation in the Wilson case to land the job as chief counsel of the October Surprise task force after the House agreed in 1991 to investigate the longstanding suspicions of Republican interference in Carter’s Iran hostage negotiations.

According to more than two dozen witnesses, including Iranian officials and international intelligence operatives, Republicans held secret meetings with Iranian emissaries behind Carter’s back. Some witnesses claimed that the Reagan-Bush goal was to thwart a pre-election hostage release, the so-called October Surprise.

As it turned out, Carter did fail to secure the hostages’ freedom before the election and national anger over the humiliation gave momentum to Reagan’s landslide victory. The hostages were ultimately freed on Jan. 20, 1981, immediately after Reagan was sworn in.

Though some Carter administration officials found the timing suspicious, questions about the hostage release disappeared until the mid-1980s when the Iran-Contra scandal broke, with disclosures that the Reagan-Bush administration had engaged in other secret arms-for-hostage negotiations with Iran in 1985-86.

As more Iran-Contra secrets spilled out in 1987, evidence emerged showing that the Reagan-Bush team had winked at third-country shipments of U.S. armaments to Iran as early as 1981. Some Iran-Contra witnesses began alleging that those shipments were part of a payoff by the Republicans for Iran’s secret cooperation during the 1980 campaign.

Fierce Counterattack

The allegations prompted a fierce counterattack by Reagan-Bush loyalists who saw the allegations as a challenge to the legitimacy of the era’s Republican rule.

Plus, by 1991, when the House agreed to investigate, President George H.W. Bush was the triumphant leader in the Persian Gulf War and many influential people in Washington regarded the Iran-Contra scandal – and any side issues – as unworthy of further national attention.

Barcella stepped forward as one of the first applicants seeking the job of chief counsel for the October Surprise task force. On the surface, he appeared to be a reasonable choice, largely because of his prosecutorial experience in the Wilson case.

But today even that victory has lost its shine with the discovery that Wilson’s conviction hinged on a U.S. government lie. The false affidavit, which rejected Wilson’s claim that he had been cooperating with the CIA, was read twice to the jury before it returned the guilty verdict in 1983.

Jury foreman Wally Sisk told “Nightline” that without the government’s affidavit, the jury would not have convicted Wilson. “That would have taken away the whole case of the prosecution,” Sisk said.

The discovery of this prosecutorial abuse – after Wilson had been imprisoned for two decades – led U.S. District Judge Lynn N. Hughes in 2003 to vacate Wilson’s conviction for selling military items to Libya. Hughes said overturning the conviction was justified because the prosecutors submitted the false affidavit and failed to correct it.

“There were, in fact, over 80 contacts, including actions parallel to those in the charges,” Hughes wrote in his decision. “The government discussed among dozens of its officials and lawyers whether to correct the testimony. No correction was made,” until Wilson managed to pry loose an internal memo describing the false affidavit and revealing the internal government debate about whether to correct it.

In an interview with “Nightline,” Wilson called Barcella and another prosecutor “evil” for their role in the deception. “Once they got me convicted, then they had to cover this thing up constantly,” Wilson said. “They wanted to make sure that I would never get out of prison.”

Barcella, who was the supervising prosecutor in the case, has said he doesn’t recall seeing the affidavit before it was introduced and has denied any impropriety afterwards, when other government officials challenged the affidavit’s accuracy.

Back-Scratching

Barcella emerged from Wilson’s conviction as a star Washington lawyer with a sterling reputation. But there soon were signs that Barcella was someone who tolerated the back-scratching ways of Washington.

According to Maas’s Manhunt, prosecutor Barcella entertained a nighttime visit in 1982 from Michael Ledeen, a neoconservative writer who then was working as a State Department consultant on terrorism. Ledeen and Barcella were personal friends. Barcella had sold Ledeen a house and the two aspiring Washington professionals shared a housekeeper.

That evening, Ledeen was concerned because two of his associates, legendary CIA officer Ted Shackley and Pentagon official Erich von Marbod, had come under suspicion in the Wilson case.

“I told Larry that I can’t imagine that Shackley [or von Marbod] would be involved in what you are investigating,” Ledeen told me. “I wasn’t trying to influence what he [Barcella] was doing. This is a community in which people help friends understand things.”

Barcella also saw nothing wrong with the out-of-channel approach.

“He wasn’t telling me to back off,” Barcella told me. “He just wanted to add his two-cents worth.” Barcella said the approach was appropriate because Ledeen “wasn’t asking me to do something or not do something.” Later, Shackley and von Marbod were dropped from the Wilson investigation.

In the context of Barcella’s later role in the October Surprise case, however, the Ledeen connection raised other conflict-of-interest questions. The House task force staff discovered that Barcella’s friend, Ledeen, was considered an informal member of the Reagan-Bush campaign’s “October Surprise Group,” which supposedly monitored Carter’s hostage negotiations and plotted Republican counter-strategies.

Ledeen also had other connections to the October Surprise case, including work that Ledeen and Shackley had done for the Italian intelligence service SISMI in 1980. At the time, Shackley, who had quit the CIA, also was serving as an emissary for then-vice presidential nominee George H.W. Bush on the Iran hostage issue.

[For more on Shackley’s role in the October Surprise case, see Parry’s Secrecy & Privilege. For documentary evidence on Shackley’s work with Bush on the October Surprise issue, click here.]

Deletions

In the October Surprise files, I discovered a “secret” draft copy of the House task force report that differed significantly from what was issued publicly. For instance, the final report deleted the names of six informal members of the Reagan-Bush campaign’s “October Surprise Group.” They were Michael Ledeen, Richard Stillwell, William Middendorf, Richard Perle, General Louis Walt and Admiral James Holloway.

In other words, the reference to Barcella’s friend, Ledeen, disappeared from the final report, much the way Ledeen’s friends, Shackley and von Marbod, disappeared from the Wilson case. [To read a portion of the “secret” draft report, click here.]

Other references that could have highlighted Barcella’s conflicts of interest in the October Surprise case also ended up on the cutting room floor.

For instance, the alleged October Surprise roles of one Barcella client, the scandal-plagued Bank of Credit and Commerce International, and his law partner, Paul Laxalt, weren’t mentioned in the public report.

Barcella represented BCCI in the late 1980s as the Middle Eastern-based bank was trying to frustrate press and government investigations into its worldwide fraudulent activities, which included money-laundering for drug traffickers and for intelligence operations.

Barcella’s law firm – Laxalt, Washington, Perito & Dubuc – collected $2.16 million in legal fees from BCCI from October 1988 to August 1990, according to a Senate Foreign Relations Committee report on the BCCI scandal. As part of his work for BCCI, Barcella tried to discourage journalists who were sniffing out BCCI’s secret ownership of First American Bank in Washington.

BCCI popped up on the October Surprise radar scopes through BCCI’s dealings with two key suspects, Iranian banker Cyrus Hashemi and Casey associate John Shaheen. Shortly after Reagan’s Inauguration in 1981, the FBI intercepted a message to Hashemi about BCCI delivering a payment from London via the Concorde supersonic jetliner, a possible October Surprise payoff that was not mentioned in the final task force report.

Laxalt, the lead partner in Barcella’s old law firm, also represented a potential conflict of interest. The former U.S. senator from Nevada was one of Reagan’s closest political allies and was chairman of the 1980 Reagan-Bush campaign. The Senate BCCI report said Barcella worked directly with Laxalt on the BCCI account.

Barcella told me that he didn’t believe that that work created a conflict of interest for his participation in the October Surprise case. But financial connections between alleged October Surprise conspirators and Laxalt also were left out of the final report. [See Parry’s Secrecy & Privilege.]

Backing Down

Almost from the start of the October Surprise probe, Barcella didn’t behave like a hardheaded prosecutor determined to break through any obstacle or ready to challenge possible cover stories from powerful politicians.

For instance, when the Secret Service refused to fill in gaps in George H.W. Bush’s alibi for the weekend of Oct. 18-19, 1980 – when some witnesses claimed Bush had secretly traveled to Paris – Barcella agreed to a strange restriction on the evidence. He was allowed to see the name of a supposed alibi witness but not to question the person.

In other words, possibly for the first time in investigative history, a suspect (Bush) was allowed to supply the name of an alibi witness who supposedly could vouch for his innocence but only if investigators didn’t check out the alibi or question the witness.

Later, when Ronald Reagan’s lawyers balked at delivering documents from his presidential library, Barcella protested but then quickly surrendered. According to a letter that I found in the task force’s unpublished files, Barcella wrote to Reagan’s personal attorney Theodore Olson on Sept. 22, 1992.

“Your letter indicates that the library was unable to locate and, therefore, did not send, some of the documents requested by the Task Force staff,” Barcella wrote. “In addition, some of the documents they did send do not appear to correspond to the request noted on the list of requested documents, e.g. the date, title or number of pages do not correspond.”

But then Barcella added, “Although we are disappointed that we have not received every document we tabbed for copying, time constraints do not permit us to pursue this issue further at this time.” Barcella was giving up on a document request with more than three months to go in the investigation.

‘Trap Door’

Still, even as the task force pressed ahead toward its “debunking” of the October Surprise charges, new evidence kept intruding, causing concern that the exculpatory findings might not stand up to history.

Barcella ordered his deputies “to put some language in, as a trap door” in case later disclosures disproved parts of the report or if complaints arose about selective omission of evidence.

“This report does not and could not reflect every single lead that was investigated, every single phone call that was made, every single contact that was established,” Barcella suggested as “trap door” wording in a memo dated Dec. 8, 1992. “Similarly, the Task Force did not resolve every single one of the scores of ‘curiosities,’ ‘coincidences,’ sub-allegations or question marks that have been raised over the years and become part of the October Surprise story.” [To see the “trap door” memo, click here.]

But some of the information that arrived during the investigation’s final month would deal not just with “curiosities,” but with central questions of the mystery.

Former Iranian President Abolhassan Bani-Sadr sent a detailed account of the internal Iranian struggle over how to react to the Republican hostage overtures. David Andelman, a biographer of French intelligence chief Alexandre deMarenches, testified that deMarenches had admitted to arranging secret meetings in Paris between Republicans and Iranians.

Former CIA officer Charles Cogan testified that he recalled a conversation in Casey’s office in 1981 – after Reagan’s campaign chief became CIA director – when there was a reference to having done something to interfere with Carter’s October Surprise. [To see the context for Cogan's “secret” testimony, click here. To read part of Cogan's testimony, click here.]

Finally, there was the Russian report, which asserted that both President Carter and the Reagan-Bush campaign were negotiating with Iran in 1980. [For more on the Russian report, click here.]

Nevertheless, Barcella put the finishing touches on the report clearing the Reagan-Bush campaign. He often seemed more intent on burying the October Surprise suspicions than engaging in a rational debate about the evidence.

Blocked Dissent

When Rep. Mervyn Dymally, a Democratic member of the task force, tried to lodge a dissent against some of the absurd alibis that the task force had used to supposedly establish Casey’s whereabouts, Barcella fiercely opposed Dymally’s reservations.

In reviewing the task force report, Dymally's staff aide, Marwan Burgan, had detected obvious flaws in the report’s logic, including the claim that because someone wrote down Casey’s home phone number on one day that proved Casey was home, or that because a plane flew from San Francisco directly to London on another important date that Casey must have been onboard.

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 Barcella enlisted Hamilton to pressure Dymally into withdrawing the dissent.

Dymally, who was retiring in 1993, told me that the day his dissent was submitted, he received a call from Hamilton warning him that if the dissent was not withdrawn, “I will have to come down hard on you.”

The next day, Hamilton, who was becoming chairman of the House International Affairs Committee, fired the staff of the Africa subcommittee that Dymally had headed. The firings were billed as routine, and Hamilton told me that “the two things came along at the same time, but they were not connected in my mind.”

Hamilton said his warning to Dymally referred to a toughly worded response that Hamilton would have fired off at Dymally if the dissent had stood. Hoping to salvage the jobs of some of his staff, Dymally agreed to withdraw the dissent.

So the House Task Force’s report was shipped off to the printers with its conclusion that there was “no credible evidence” of Republican double-dealing with Iran over the 52 American hostages in 1980.

Now, however, with more documentary evidence undermining that conclusion and Barcella’s legal reputation under challenge from former CIA officer Wilson, the October Surprise “conventional wisdom” – that it was just some nutty “conspiracy theory” – seems shakier than ever. 


Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His new book, Secrecy & Privilege: Rise of the Bush Dynasty from Watergate to Iraq, can be ordered at secrecyandprivilege.com. It's also available at Amazon.com, as is his 1999 book, Lost History: Contras, Cocaine, the Press & 'Project Truth.'

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