The key question was not whether they had acted illegally, but who should be punished and how. 

From its first days in office, the Reagan administration prioritized reversing perceived advances by communist regimes, supported by the Soviet Union and Cuba, in Central America. William J. Casey, Reagan's former campaign manager and Director of Central Intelligence, focused immediately on Nicaragua — a small, strategically located country on the Central American isthmus with a pro-Cuban and pro-Soviet government (under the Sandinista Liberation Front) that came to power in 1979 following the overthrow of longtime pro-American dictator Anastasio Somoza. Casey and others in the U.S. government were alarmed by the spread of communist influence, which they ascribed to President Carter's weak policies, and they believed that a Nicaraguan counterrevolutionary paramilitary force, the “Contras,” could lead a region-wide reversal, beginning in this small country.

In 1981, the CIA began secretly channeling weapons and money to the Contras. When Casey reluctantly shared this information with Congress a year later, the House of Representatives placed restrictions on U.S. aid. Representative Edward P. Boland, a Massachusetts Democrat, authored the first of a series of amendments to federal appropriations, which prohibited the use of covert resources to overthrow the Sandinista government in Nicaragua. The amendment passed the House (unanimously) and the Senate and President Reagan signed it into law.

Despite these restrictions, the CIA and the U.S. military increased their support for the Contras, claiming dishonestly that the aid was not signed to overthrow the Sandinista regime. In 1983, CIA-supplied aircraft bombed the Sandino Airport near Nicaragua's capital. In 1984, CIA helped the Contras mine the main harbors of Nicaragua — a violation of international law for which the International Court of Justice ruled against the United States.

These escalatory actions, combined with news coverage of human rights atrocities committed by the Contras and their supporters in neighboring Honduras, motivated Congress to introduce more restrictive legislation. A new Boland amendment, passed by the House and Senate in late 1984 and signed by President Reagan that December, prohibited all military assistance to the Contras or other groups in and around Nicaragua. The Reagan administration had defied congressional intent since 1982; after 1984 continued aid to the Contras was clearly illegal. 

The center for U.S. strategy toward the Contras was the National Security Council (NSC), located in the White House, staffed by Robert C. McFarlane, Admiral John M. Poindexter, and Lieutenant Colonel Oliver L. North, among others. These men believed that President Reagan wished to continue funding the Contras despite congressional prohibition. McFarlane also responded to Reagan's personal demand to help secure the release of American hostages held in the Middle East despite a stated U.S. policy of not negotiating with terrorists. These two priorities

— continued support for the Contras and the negotiated return of American hostages — merged in the NSC as a secret illegal plan for arms sales to Iran (the sponsor of many hostage-taking groups in the Middle East) and diversion of the revenue from the Iranian arms sales to the Contras.

Diverting weapons and cash across two continents required a long chain of secret deals with shady arms dealers, mercenaries, money changers, drug runners, and terrorists. The White House worked with all of these groups as it lied to Congress and the American people. American anti-tank and anti-aircraft missiles, originally sent to Israel, made their way to Iran, and cash for the diversion of those missiles made its way to dictators in Panama and Honduras. These figures in turn skimmed off their share of the funds before sending what was left to the Contras. The U.S. military then, at White House request, replenished the weapons Israel had diverted. This was American-sponsored organized crime. 

The revelation of these facts by enterprising journalists led to the joint congressional Iran-Contra hearings, preceded by a special review board (the “Tower Commission,” named after its chairman, Texas Republican Senator John G. Tower), whose findings were preliminary and based on limited investigation. In December 1986 a panel of three judges from the U.S. Court of Appeals for the Federal Circuit — empaneled as a Watergate-era check on executive abuses — appointed an Independent Counsel, Lawrence E. Walsh.

Over more than six years, he and his team of lawyers unraveled the lurid details of hidden NSC conversations, exotic CIA meetings, and repeated cover-ups rising to the level of the President himself. Reagan knew about the arms sales to Iran, which, at the very least, violated the Arms Export Control Act. Reagan also knew that his staff was continuing to support the Contras despite the Boland amendments — although it is not clear that the President understood how money from the Iranian arms sales was making its way to Nicaragua. Like many of his closest advisers, Reagan lied to Congress and the American people when he falsely claimed he was unaware of nearly everything.

Walsh chose not to prosecute the president, especially in light of Reagan's declining health after he left office. He also chose not to prosecute Vice President George H. W. Bush, who became President after Reagan. Walsh charged fourteen high-level officials with criminal behavior, including McFarlane, Poindexter, North, Defense Secretary Caspar W. Weinberger, and Assistant Secretary of State Elliott Abrams. In a move that echoed President Gerald Ford's pardon of Richard Nixon, President Bush pardoned Weinberger, Abrams, and three others on Christmas Eve 1992 — just before the end of his presidency. 

The Iran-Contra Affair embodied the

profound and systemic ethical lapses at the heart of the Reagan administration. The President did not benefit personally from the lawbreaking around him, but he did almost nothing to stop it. Out of greed and zealotry, his closest advisers repeatedly broke the law, lied to Congress, and stole government funds. More than one hundred high-level Reagan administration officials faced prosecution, and more than $130 billion was embezzled. Reagan's commitment to deregulation, aggressive military spending, and diminished oversight created a cocktail of corruption that was, in many ways, worse than Watergate.

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Copyright © 2019 by The New Press. Adapted from a longer essay which originally appeared in Presidential Misconduct: From George Washington to Today, edited by James M. Banner, Jr. Published by The New Press. Reprinted here with permission.