In August 1985 Reagan approved a plan by Robert McFarlane, National Security Agency (NSA) advisor, to sell more than 500 TOW antitank missiles to Iran, via the Israelis, in exchange for the release of Americans held by terrorists in Lebanon. (Reagan later denied that he was aware of an explicit link between the sale and the hostage crisis.) The deal went through, and as a follow-up, in November 1985, there was a proposal to sell HAWK antiaircraft missiles to Iran. Colonel Oliver North, a decorated Marine attached to the NSA's staff, was put in charge of these and subsequent negotiations. A number of Reagan's senior cabinet members, including Secretary of State George Shultz, Secretary of Defense Caspar Weinberger, and White House Chief of Staff Donald Regan, began to express reservations about this trade with Iran, for it was not only diametrically opposed to the administration's stated policy but was also illegal under U.S. and international law.
Nonetheless, Reagan continued to endorse arms shipments throughout 1986, and in all more than one hundred tons of missiles and spare parts were exported to Iran by the end of the year. The policy's success in hostage releases proved limited, however, because while some Americans were set free as acts of quid pro quo, others were quickly taken captive in their turn.
Meanwhile, North had begun secretly funneling the funds from the missile sales to Swiss bank accounts owned by the Nicaraguan Contra rebels, who used the money in part to set up guerrilla training camps run by agents of the Central Intelligence Agency (CIA). All this was in direct violation of the Second Boland Amendment, a congressional law passed in October 1984 that specifically forbade the U.S. government from supporting any paramilitary group in Nicaragua. To what extent North's superiors knew of the Contra connection at this stage remains unclear, as is the final amount of money supplied to the Nicaraguans, although it is thought to have been on the order of tens of millions of dollars. Later investigations suggested numerous accounting irregularities by North, but these were never proven.
On 3 November 1986, the affair became public when a Lebanese magazine, Ash-Shiraa, revealed that the Americans had been selling missiles to the Iranians. Reagan responded with a televised statement in which he denied any arms-for-hostages deal, and U.S. Attorney General Edwin Meese was ordered to conduct an internal inquiry. North and his secretary, Fawn Hall, immediately began shredding incriminating documents, but on 22 November Meese's staff discovered material in North's office that linked the Iranian shipments directly to the Contras. Meese informed Reagan, and on 25 November the U.S. Justice Department announced its preliminary findings to the press. North was fired, and National Security Advisor John Poindexter, who had replaced McFarlane, promptly resigned.
The following month, Reagan appointed an independent commission to investigate the affair, chaired by former Texas Senator John Tower. The commission's March 1987 report severely criticized the White House for failing to control its NSA subordinates, which led to the resignation of Regan. An apparently contrite President Reagan admitted to having misled the public in his earlier statements, although he pled sins of ignorance rather than design. A subsequent congressional inquiry lambasted the president for failings of leadership but decided that he had not known about the transfers of money to the Contras.
In 1988 independent prosecutor Lawrence Walsh indicted North, Poindexter, and twelve other persons on a variety of felony counts. Eleven were convicted, but North and Poindexter were later acquitted on Fifth Amendment technicalities. At the end of his term in office in December 1992, President George H. W. Bush pardoned six other persons implicated in the Iran-Contra scandal, including Weinberger and McFarlane.
Draper, Theodore. A Very Thin Line: The Iran-Contra Affairs. New York: Hill and Wang, 1991.; Walsh, Lawrence. Iran-Contra: The Final Report. New York: Times Books, 1994.; Wroe, Ann. Lives, Lies and the Iran-Contra Affair. New York: Tauris, 1991.