The Consortium

Bush & a CIA Power Play

The CIA Old Boys were reeling. In the 1970s, exposure of their dirty games and dirty tricks made the Cold Warriors look sinister -- and silly. Then, President Carter ordered a housecleaning that left scores of CIA men out in the cold.

In 1980, the CIA men wanted back in and their champion was former CIA director George Bush. With Bush and Ronald Reagan in power, the old spies could resume their work with a vengeance. The temptation was to do to Jimmy Carter what the CIA had done to countless other world leaders -- overthrow him, a frightening chapter from the October Surprise X-Files

By Robert Parry

WASHINGTON -- With little more than a week left in the 1980 campaign, Republican vice presidential nominee George Bush was nervous. New polls put Ronald Reagan and Jimmy Carter in a dead heat. Then, while going to campaign in Pittsburgh, Bush got an unsettling message from former Texas Gov. John Connally.

Connally, a onetime-Democrat-turned-Republican, said the oil-rich Middle East was buzzing with rumors that President Carter had achieved his long-elusive goal of a pre-election release of 52 American hostages held in Iran. If true, Ronald Reagan's election was in trouble.

So, at 2:12 p.m., Oct. 27, 1980, George Bush called Richard Allen, a senior Reagan foreign policy adviser who was keeping tabs on Carter's hostage progress. Bush ordered Allen to find out what he could about Connally's tip. Allen's notes, which I discovered many years later in an obscure Capitol Hill storage room, made clear that Bush was in charge.

"Geo Bush," Allen's notes began, "JBC [Connally] -- already made deal. Israelis delivered last wk spare pts. via Amsterdam. Hostages out this wk. Moderate Arabs upset. French have given spares to Iraq and know of JC [Carter] deal w/Iran. JBC [Connally] unsure what we should do. RVA [Allen] to act if true or not."

In a still "secret" 1992 deposition to House investigators, Allen explained the cryptic notes as meaning Connally had heard that President Carter had ransomed the hostages' freedom with an Israeli shipment of military spare parts to Iran. Allen said Bush then instructed him to query Connally, who was in Houston, and to pass on any new details to two of Bush's closest personal aides.

The Blond Ghost

According to the notes, Allen was to relay the information to "Ted Shacklee [sic] via Jennifer." The Jennifer was Bush's longtime assistant, Jennifer Fitzgerald, Allen testified. "Shacklee" was Theodore Shackley, the legendary CIA covert ops specialist known as the "blond ghost."

During the Cold War, Shackley had run many of the CIA's most controversial paramilitary operations, from Vietnam and Laos to the JMWAVE operations against Fidel Castro's Cuba. When Bush was CIA director in 1976, he appointed Shackley to a top clandestine job, associate deputy director for operations.

But Shackley's CIA career ended in 1979, after three years of battling Carter's CIA director, Stansfield Turner. Shackley believed that Turner, by cleaning out hundreds of covert "old boys," was destroying the agency -- as well as Shackley's career.

After retiring, Shackley went into business with another ex-CIA man, Thomas Clines, a partner with Edwin Wilson, the rogue spy who later would go to prison over shipments of terrorist materials to Libya. Clines himself would be convicted of tax fraud in the Iran-contra scandal, another controversy in which Shackley's pale specter would hover in the background.

But in 1980, Shackley was set on putting his former boss, George ush, in the White House and possibly securing the CIA directorship for himself. Shackley volunteered his prodigious skills to Bush in early 1980. Though that fact has come out before, Shackley's involvement in the Iran hostage issue, the so-called October Surprise controversy, has been a closely held secret, until now.

In 1992, the House investigators should have jumped when they saw the Shackley tie-in. The task force, which was examining charges that Republicans sabotaged Carter's hostage talks, already knew that other ex-CIA men were managing a 24-hour-a-day "Operations Center" at Reagan-Bush campaign headquarters to monitor Iran developments. Richard Allen had called the ex-spies a "plane load of disgruntled CIA" officers "playing cops and robbers."

Some House investigators wanted the behind-the-scenes CIA role mentioned. A "secret" draft chapter of the House task force report, which I also found in the storage room, stated that: "Many of the [Operations Center's] staff members were former CIA employees who had previously worked on the Bush campaign or were otherwise loyal to George Bush." But that section was deleted from the publicly released version.

Another task force discovery -- also dropped from the final report -- was that conservative "journalist" Michael Ledeen, another Shackley associate, was privately collaborating with the Reagan-Bush campaign on the Iran hostage issue. The draft chapter said Ledeen was an unofficial member of the campaign's "October Surprise" group. A separate page of Allen's notes revealed Ledeen joining campaign director, William J. Casey, in a Sept. 16 meeting for what was called the "Persian Gulf Project."

In 1980, Shackley had teamed up with Ledeen as paid consultants to a "war game" for SISMI, the Italian intelligence service with close ties to the secret international right-wing Masonic lodge, P-2. As the 1980 campaign neared its end, Italian intelligence leaked a damaging -- and questionable -- story to Ledeen about President Carter's brother Billy and his business ties to Libya. Ledeen wrote the story for The New Republic without mentioning that he was working for SISMI or assisting the Reagan-Bush campaign. (See David Corn's The Blond Ghost, p. 359.)

Shackley had strong bonds to many CIA officers still in the government, too. Donald Gregg, who also has been linked to the October Surprise allegations, served under Shackley's command in Vietnam. In 1980, Gregg was the CIA liaison inside Carter's National Security Council, making him privy to secrets about the hostage talks. Gregg would later become national security adviser to Vice President Bush and a secondary figure in the Iran-contra scandal.

A Paris Tale

But the pivotal October Surprise question still turned on whether Reagan's campaign director Casey and vice presidential nominee Bush met face-to-face with Iranian mullahs in 1980. According to one set of allegations, the pair slipped off to Paris for such a meeting on Oct. 19, 1980.

Four French intelligence officials, including France's spy chief Alexandre deMarenches in statements to his biographer, placed Casey at the Paris meeting. But two other witnesses, a pilot named Heinrich Rupp and Israeli intelligence official Ari Ben-Menashe, also claimed to have seen Bush in Paris that day. Ben-Menashe testified that Casey and Bush were accompanied by active-duty CIA officers.

Rupp, who says he flew Casey from National Airport to Paris, recalled that the flight left very late on a rainy night. The night of Oct. 18 indeed was rainy and sign-in sheets at the Republican headquarters showed Casey stopping at the Operations Center for a 10-minute visit at about 11:30 p.m. The headquarters in Arlington, Va., was only a five-minute drive from National Airport. Casey also had no credible alibi for his whereabouts on that day. (See The Consortium, Feb. 14).

Bush, however, was a different story. He was under Secret Service protection and those confidential records listed him as taking a day off from the campaign at his home in Washington. Yet, there were troubles with Bush's alibi. None of the Secret Service agents could recall the two personal trips that Bush supposedly took in the morning and afternoon of Oct. 19.

Then, the Bush administration blocked access to one family friend listed as receiving a visit from the Bushes in the afternoon. The name was blacked out in the records given to the task force, and the investigators only got the name by promising to keep it secret and to never question the family friend.

In a bipartisan spirit, eager to repudiate the disturbing Bush charges, the House task force acquiesced to these unusual terms. Amazingly, the purported alibi witness was never interviewed. In its first public statement on July 1, 1992, the task force cleared Bush.

That decision meant the investigators found no need to explain another curious fact. At PBS FRONTLINE, we had discovered that on Oct. 18, 1980, a Chicago Tribune reporter named John Maclean told a U.S. foreign service officer, David Henderson, that a Republican source had supplied a fascinating tip -- that Bush was flying to Paris to discuss the hostages with Iranians.

That two strangers -- Maclean and Henderson -- would have discussed a Bush trip to Paris at the precise time that others would allege, years later, that Bush left the country should have raised the task force's eyebrows. At least, the investigators should have questioned the Bush family friend. But they didn't. (Allen's notes for that week reveal a meeting with Maclean, although the reporter has refused to divulge the name of his source.)

To the task force, the possibility that former and current CIA officers conspired with Republicans and foreign intelligence services to unseat a President of the United States was unthinkable. If true, it would have meant that elements of the CIA mounted a silent coup d'etat that undermined American democracy to put in place a President who would unleash the spy agency.

But certainly what followed in the 1980s pleased the CIA's hardliners. Under President Reagan's CIA director William Casey, CIA covert operations proliferated. Dozens of cashiered CIA officers were brought back on contract. Billions of taxpayer dollars were poured into CIA projects. The CIA was also spared Carter's nagging about human rights, as CIA-trained units launched death-squad operations throughout Central America and Africa.

A real politick Zeitgeist took hold in Washington. It tolerated drug smuggling by CIA-connected groups, including the Nicaraguan contras and the Afghan mujahadeen. It watched passively as CIA associates plundered the world's banking system, most notably through the corrupt Bank of Credit and Commerce International (BCCI), which also had paid off a key Iranian in the October Surprise mystery. (See The Consortium, Dec. 31)

Connally's False Alarm

Still, regardless of what did or didn't happen in Paris, Bush was jittery on Oct. 27, 1980. If Connally was right, Carter might have offered Iran a deal so sweet the mullahs couldn't refuse. But as it turned out, Connally's news was garbled. It was true that Israel had shipped military spare parts by air to Iran a few days earlier. But the shipment had been in defiance of Carter, not part of a solution to the hostage crisis.

In 1992, ex-President Carter told the congressional investigators that Israel's Likud government had opposed his re-election. According to other notes I found in the storage room, Carter said that from April 1980, "I felt Israel cast their lot with Reagan." Carter sensed a "lingering concern [among] Jewish leaders that I was too friendly with Arabs."

But the House task force had little interest in pulling strings that might unravel a nasty national security scandal. Luckily for the CIA, the chief investigator, E. Lawrence Barcella Jr. was a favorite of the intelligence community and had worked closely with many of the figures implicated in the October Surprise affair.

For instance, BCCI paid Barcella and his law firm more than $2 million to fend off charges of corruption and money-laundering. At that time, Barcella's senior law partner was former Sen. Paul Laxalt, Reagan's finance chairman in 1980 who allegedly had covered up secret payments to the 1980 campaign from the Philippines Ferdinand Marcos. (See The Consortium, Jan. 15)

Barcella was also close friends with Michael Ledeen. The two men shared a housekeeper and socialized together. In 1982, when Barcella was the lead prosecutor in the Edwin Wilson case, Ledeen visited Barcella's home one night to urge that the prosecutor drop Shackley from the investigation.

Neither Barcella nor Ledeen saw anything wrong with Ledeen's out-of-channel contact. "He just wanted to add his two-cents worth," Barcella told me. "This is a community in which people help friends understand things," Ledeen explained. Shackley was soon cleared of complicity in the unsavory Wilson matter.

In 1993, Barcella would also find "no credible evidence" to support the October Surprise charges. But as we have shown in the first six parts of this series, a wealth of evidence that pointed in the opposite direction was left out of the final report.

For instance, there was no reference to BCCI's secret money deliveries to October Surprise suspects, no mention of Ledeen, Shackley or the other ex-CIA men assisting the Reagan-Bush campaign on Iran, no word about Laxalt and the Marcos money -and nothing about Bush's phone call.

(c) Copyright 1996

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