Original subtitles

Previously on Fiasco...

President Reagan's national security advisor,

Robert "Bud" McFarlane,

begins negotiations with Iran

and agrees to exchange weapons

for the release of American hostages.

The deal generates millions of dollars

that Oliver North and Richard Secord

divert towards the Contra War.

But after many shipments of weapons,

only one hostage is released,

and McFarlane loses faith and abruptly resigns,

only to be called out of retirement

for a top secret, face-to-face meeting

with Iranian delegates in Tehran.

The trip is a disaster that leaves the Americans

frustrated, demoralized,

and desperate for a new strategy.

As you know by now, there are plenty of twists and turns

in the story Americans know as Iran-Contra.

There was one twist in particular

that caught everyone by surprise.

Hello?

This is Hassan Sabra,

and he's kind of responsible

for breaking Iran-Contra wide open.

He did it in the pages of a Lebanese magazine

called Ash-Shiraa.

In the fall of 1986,

two secret operatives came to Sabra's office

with a tip that would change his life.

The article appeared

in the Lebanese weekly Ash-Shiraa

published in Beirut.

The editor, Hassan Sabra, explained

what he thought the Iranians want.

The news that Ronald Reagan

secretly traded Iran military equipment for hostages

is only the latest.

Trouble is, secrets don't keep very well.

And when they come out,

the damage to an administration's credibility

can last a very long time.

How would Reagan's administration react

when a little-known magazine editor in Beirut

stumbled upon the secrets they had been trying to hide?

Mr. President, is it true that you authorized

sending military supplies to Iran?

I've never heard such dissemination

of misinformation

since I've been here

as has been going on in the last several days.

They wanted us also to help

with the freeing of other hostages.

What would happen to those who exposed

all those secrets and upset the carefully laid plans

of the powerful people involved?

I'm Leon Neyfakh.

This is Fiasco.

The story of Iran-Contra.

While members of his administration were in Tehran

negotiating the release of American hostages...

- Thank you.

Really is great to be back on the campaign trail.

It almost feels like 1980 all over again.

...Ronald Reagan focused on the home front.

We love Ron! We love Ron!

We love Ron!

The president spent the 1986 midterms

traveling around the country, rallying support

for Republicans running for Congress.

Ladies and gentlemen,

the president of the United States,

President Ronald Reagan.

I need a congressman who will support me

instead of someone who opposes me 60% of the time.

During the second midterm,

congressional election is very, very tough.

You're really worn out by then,

and the opposing party has a lot to say.

Write it down.

Next January there'll be 53 Democrats

in the United States Senate

and 47 Republicans.

But, you know,

this talking about political differences and all

reminds me of a story.

It was a Democratic fundraiser at a downtown hotel.

And when they came out of the fundraiser,

there was a kid with some puppies,

and he was selling them.

"Buy a Democrat puppy. Buy a Democrat puppy."

But two weeks later,

the Republicans held a fundraiser in the same place.

When they came out, the same kid was there--

"Buy a Republican puppy. Buy a Republican puppy."

Kid says, "Now they got their eyes open."

Reagan's team had struggled

to come up with a message to campaign on.

They found one in a star-studded crusade

spearheaded by the president's wife, Nancy.

See this cute little vial here?

It's crack, rock cocaine, the most addictive form.

You think it's the glamour drug of the '80s?

Well, that's the point of this friendly little reminder.

It can kill you.

Well, the...

the decision to run that campaign was not mine.

But the decision to work on that speech was.

I met with the Reagans in California to hear them out

and listen to what they wanted to say.

And it was very, very important to her

and very, very important to him

to get that message across.

Now you can see why drug abuse concerns every one of us,

all the American family.

With the crack epidemic

surging in America's cities,

Reagan's anti-drug message

struck a chord with his base of voters

who believed in God and family values.

Are you afraid when you go out on the street

- at night? - Yes.

Why?

There's a lot of drug dealers.

They be shooting.

Drugs take away the dream

from every child's heart and replace it with a nightmare.

Each of us has to put our principles

and consciences on the line.

There's no moral middle ground.

Indifference is not an option.

I can't help but see all the young people

who are here in the audience,

and I have a special message to you from my roommate.

She said to tell you,

"When it comes to drugs, please, for yourselves,

"for your families, for your future,

"and for your country,

just say no."

I mean, if the Reagan administration

had "just said no"

to Contra drug smuggling

and to cavorting and collaborating

with drug smugglers,

they would never have been tarred and feathered.

My name is Martha Honey.

My name is Tony Avrigan.

And we lived and reported out of Central America,

based in Costa Rica for the 1980s.

We went down to Costa Rica

and really fell in love with it.

It seemed like a good place

to raise our kids and...

And so we decided to move there.

The only thing we didn't know was

our moving there sort of coincided

almost exactly with the CIA's taking a look at Costa Rica

and saying, "Hmm."

Martha Honey and Tony Avrigan

started to notice the Nicaraguan rebel force,

the Contras, setting up shop in Costa Rica.

And I remember one night,

soon after we moved there,

driving through a neighborhood,

and you'd look in the front window,

and there would be a Costa Rican family

having dinner, and then the next one,

a Costa Rican family sitting around the television,

and then the next one,

all these guys in kind of partial military uniforms

standing over a mimeograph machine,

and that was a Contra operation going on.

There began to be reports in the local press

that the U.S. government was involved

in facilitating operations out of there.

But our editors were very skeptical and said,

"Well, that's not what the State Department's telling us.

"They are telling us that the U.S.

is not involved militarily in Costa Rica."

Something wasn't quite adding up.

The waning days of the last session of Congress,

we passed the Boland Amendment.

Remember the Boland Amendment?

The House Intelligence Committee today

voted to cut off U.S. funds

for secret intelligence activities in Nicaragua.

The vote reflects a growing concern in Congress

that CIA funds are being used to overthrow

the Sandinistan government in Nicaragua.

Since official funds couldn't flow to the Contras,

the administration funneled private money

to the rebel forces fighting the war.

Oliver North's whole secret re-supply operations,

all of it was focused on Nicaragua,

but it was operating out of Costa Rica.

The U.S. wasn't supposed

to be helping the Contras.

But Martha and Tony were receiving clear evidence

that they were.

We made frequent visits up

to the southern front into Nicaragua.

It's a pleasure.

And suddenly,

they started showing us mortars

and small artillery pieces painted

in desert camouflage colors in the rain forest.

And they wore always these huge-sized pants

and huge boots made for 6'6" Americans.

And so they had their pants sort of up to their chest.

And the Reagan administration vehemently denied

anything was going on, but as we quickly learned,

all you had to do was open your eyes.

And while weapons and uniforms

were going into Central America,

something else may have been going out.

It was a difficult story to really prove.

But we kept kind of running into the drug trafficking,

and it sort of became a story that we finally had to take on.

Drugs are menacing our society.

They are threatening our values

and undercutting our institutions.

They're killing our children.

Even as the Reagan administration

was telling Americans to just say no...

We can defeat this enemy.

...some of the President's beloved

Freedom Fighters, the Contras,

were smuggling drugs into the United States.

But we still have much to do.

Despite our best efforts,

illegal cocaine is coming into our country

at alarming levels.

Drug smuggling is just one of a long list

of kind of the dark, dirty side of many paramilitary wars.

And the Contra war was no exception.

When Oliver North started to build

this secret resupply operation,

he used pilots who had already

been convicted of drug smuggling.

Why?

Because they were readily available.

And we interviewed a number of these pilots

who began talking about their ties to the CIA

and how they would fly into, for instance,

Homestead Air Force Base which was outside of Miami.

As an extra added bonus,

we could freelance on the way back.

Meaning what?

Well, I mean, we could--we could bring back our own cargo

without ever having to worry about interception,

arrest or anything like this.

Everything was taken care of.

They would leave the plane, but it would not be inspected

as other planes coming in were because it had drugs on it.

Given your experience,

who do you figure arranged all of this?

What's your best guess?

Had to be someone in either the top four--

three slots of the CIA as I know their organization.

The U.S. said, "Well, of course these pilots are going to say

they're working for the CIA to try to protect themselves."

Had to be someone that high up. It'd have to be.

Why?

Because who else can you get that's gonna know,

number one, the inner working of everything

but who can pick up a phone and say, "Let this happen"?

I would say the majority of people

working with Oliver North

were not involved in drug smuggling,

but there were enough people who were involved.

And that's wrong. That's criminal.

And it was just among the priorities

that the Reagan administration set

where the health and security against drugs

of young people and communities of color

in this country was inconsequential

compared to the top priority--

overthrowing the Sandinista government.

In order to bolster the Contra forces,

the United States created a base of operations

in the demilitarized country of Costa Rica.

This was not well received by the locals.

Last week saw one of the biggest ever

demonstrations held in this 35-year-old democracy.

Thirty thousand people

protesting at American pressure

upon Costa Rica to abandon

its traditional position of neutrality.

We sort of felt an obligation to,

you know, be reporting on what was going on.

But exposing the illegal covert activities

that the U.S. was carrying out,

I mean, it is a dangerous story to cover.

In 1984,

Tony Avrigan traveled to the Nicaraguan jungle

for a press conference led by the southern Contra leader

Eden Pastora.

As the press conference got under way...

...a bomb went off.

Seven people were killed...

including three journalists.

Tony was among the injured.

It would later come out the attack

had been carried out by a Sandinista sympathizer.

As the reporting on the war

and drug trafficking progressed,

Martha and Tony felt like

they were being watched and threatened.

We were out one day, and we came back,

and our files had been gone through

and were in a bit of chaos.

We quickly learned that someone

sent down a CIA operative to spy on us.

Part of it was to intimidate us.

We would check under our Jeep every day to see

if there was a bomb placed under it.

The most scary incident

was when we were mailed a packet of cocaine

and arrested as drug traffickers.

It was the DEA and the CIA

that mailed us a package of cocaine--

two agents from there.

It came in a package

of two books with a letter that said,

"Tony and Martha, here's a sample

"of the latest shipment of cocaine

"that we want to send up to Miami,

"but we want you to test it first to see

if the quality is good enough."

And the next day,

there were stories with photos of us saying,

"Journalists arrested as cocaine traffickers."

It was awful, because as you can imagine,

you know, all of our kids' friends,

their parents wouldn't send them to play with our kids.

I mean, how do you prove that you're not a trafficker?

We had been for such a long time

uncovering these things that the rest of the world

was denying or the State Department was denying.

And eventually what began to happen was for us

and a couple of other journalists,

the U.S. officials began calling

whenever we were reporting and say,

"This is not correct.

"What they are reporting is not correct.

You should not be using them. You should fire them."

For several years, Oliver North and his cohort

had been successful in keeping their covert activities

out of American media.

And one day, I, you know,

remember turning on the television,

and this big kind of disheveled American

being led out by these little Nicaraguans.

I mean, this was the smoking gun.

Eugene Hasenfus, an American from Wisconsin,

was walked out of the jungle in southern Nicaragua today.

His captors, Nicaraguan soldiers,

claim they shot down a cargo plane

carrying the American and three others

with a Soviet made surface-to-air missile.

My name is Gene Hasenfus.

Marinette, Wisconsin.

I was shot out of the sky.

In October of 1986,

a story broke out of Nicaragua

that made the Reagan administration's

military alliance with the Contras hard to deny.

Eugene Hasenfus

really was a soldier of fortune.

He managed to get recruited

to work on one of these airplanes

and airdrop weapons to the Contras.

These planes, they were perfect

for airdropping pallets of equipment

because they flew relatively slowly.

The drawback, of course,

was that these planes flew low and flew slow.

That made them easier targets for Sandinista gunners.

Amid the smoldering gear,

the Sandinistas found the bodies of Hasenfus's team--

two American pilots and their radio man,

a 17-year-old Nicaraguan boy.

The next day, deep in the jungle,

a group of soldiers found Hasenfus asleep in a hammock

that he had made out of his parachute.

All of a sudden,

we had an American prisoner of war in Nicaragua

in a war we weren't even supposed to be fighting.

I was staffing the CBS office in Nicaragua.

And I remember the Sandinista press officials

coming over to me and saying, "What do we do with this guy?"

The Sandinistas paraded their new hostage

in front of the press.

And he was captured around noon on Monday the sixth.

Thank you.

For the first time,

the government made public

sensitive documents found in the crash.

Until now, the Sandinistas have kept secret

that among the papers in the plane

was a list of 13 Contra pilots and their code names.

The objectives of our flights into Nicaragua

were to resupply the Contras.

He started singing like a robin.

Of course, that led to the--

to the whole story coming apart.

Hasenfus says he was working for the CIA.

He told an amazing story,

which was that he was told not to wear a parachute

and that everybody on the planes was told not to wear parachutes

because they wanted them to die if the plane was shot down

so that they wouldn't live to be able to testify.

Nearly every day, Sandinista soldiers drill

in Managua and throughout the country

to prepare themselves for the American invasion

they've long been predicting,

an invasion they say is symbolized by Eugene Hasenfus.

I'm glad you asked. Absolutely none.

As Reagan's team continued

to deny their involvement in the Contra War,

the American media had more questions than answers.

Who is Eugene Hasenfus?

No one seems to know anything

about it in Marinette, Wisconsin,

the town along the Green Bay shore

where Eugene Hasenfus lives.

He grew up here, played on the high-school football team.

He and his wife, Sally, and their three children,

live in this lakeside house just outside town.

We know he is an American citizen,

an ex-marine, a soldier of fortune in the Vietnam War,

and we know his transport plane

was shot down over Nicaragua.

Hasenfus's father says he had no idea

Eugene was in Central America,

but he did leave town five months ago.

All's I know is that he was going to Florida

to go to work, construction work.

And that's all I know on that part.

Eugene's brother, Bill,

got a different version.

He said he got a job with an air transport outfit

out of Miami hauling cargo.

His basing job was a loadmaster, a crew chief.

The two brothers often skydive together.

The last time Bill saw his brother was Labor Day...

when Eugene borrowed a parachute from him.

Reagan! Reagan! Reagan! Reagan! Reagan!

The confusion seemed to inspire the press

to uncover the truth.

With the midterms less than a month away...

the Reagan administration needed a cover story.

Mr. Secretary, can you give me categorical assurance

that Hasenfus was not under the control,

the guidance, the direction or what have you

of anybody connected with the American government?

Absolutely. That would be illegal.

We are barred from doing that, and we are not doing it.

This was not in any sense a U.S. government operation. None.

Members of the National Security Council

held a meeting in order to coordinate a response.

According to notes taken

by one of the officials present that day,

the decision was made to ask the Contras

to assume responsibility for the flight.

The Contras agreed.

This is a private effort,

and in no way is it an effort of a government

or of any agency of this government.

The White House insisted

that Hasenfus was a lone pilot

working for a private company

supplying arms to the Contras, end of story.

Do you feel more optimistic

than you did a few days ago now that you've had a chance

to talk both to the defense attorney and with your husband?

I won't feel completely optimistic

until I get him home.

Last night, in prison,

Gene Hasenfus signaled his irritation

at being continually forced by his captors

to answer questions in public.

What do I think about right now?

I don't like sitting here. I don't even want to be here.

No.

I've been bounced around to these rooms

in front of lights and cameras so much, you can't believe.

And it's--I'm not used to it, and I don't care for it.

Hasenfus, it turned out,

was the one hostage in the story of Iran-Contra

whom Reagan didn't seem interested in saving.

But then a news report came out

linking the resupply operation back to Oliver North.

Hasenfus and the people he was working for

had not been especially careful

in covering their tracks.

And reporters were able to get all of the phone records

of the safe house that Eugene Hasenfus

had been seen at.

And that included phone calls to Ollie North's office.

We've got some people,

perhaps in the National Security Council

who have been watching too many Rambo movies.

I personally believe it's imperative that we hear

from the National Security Council.

I think we need to hear from Mr. Oliver North

under oath.

It felt a little bit like Watergate,

that moment in Watergate

when all of a sudden you realize

this is a bigger story than we realized.

A CIA operation, a CIA-operated plane,

CIA-paid people were caught red-handed.

Sorry to trouble you, sir.

Could you just tell us what the press--

Why don't you go back home where you belong?

Yes. Could you tell us, sir,

what has happened to the money?

All kinds of people called me--

North, McFarlane, etcetera.

And the whole thing just started to unravel.

My front yard was filled with reporters

faster than you can say your name.

Why were they dealing directly with Oliver North?

Where was this money coming from?

Who had paid for the airplane?

Who had paid for the shipment?

And the biggest question,

the overarching question, of course, was--

how deeply was

the Reagan administration involved in this?

Up until this point,

Project Democracy had yet to encounter a problem

that couldn't be fixed with a bit of PR.

When the airplane went down

that contained arms

that were intended for the Contras,

it basically proved the case

that we had every right to be concerned

that the administration was doing something

violating the Boland Amendment.

That has always been something that the White House

says will never happen.

And yet it happened yesterday

with three Americans dying.

This city is awash with rumor,

intrigue, treachery.

Laws have been broken.

At the very center of the White House,

there has been the most unbelievable revelations.

The number of times that Oliver North's superiors

were called up to the subcommittee

to testify about news reports

that they were secretly resupplying the Contras

in violation of congressional law.

And they just falsified the testimony.

They lied again and again and again.

What you realize is that

people are operating on their own

without any kind of supervision,

without any kind of rule of law.

Basically, you're dealing with,

you know, a group that feels

it's licensed to do whatever the hell they want.

The curtain had really been pulled back

on these illegal operations,

and the scandal literally started

to unravel right there.

And then just a couple weeks later,

the Iran side of it escalated.

Just weeks after the Hasenfus crash in Nicaragua,

two operatives from Iran arrived in Beirut.

They were on a secret mission

to find a trustworthy journalist

and leak him a story.

The operatives knew Hassan Sabra

was a supporter of the Iranian Revolution.

Sabra's magazine, Ash-Shiraa,

had been reporting on the Iran-Iraq war for years.

Iraq's 190,000-man army

has been lavishly equipped by the Soviet Union.

For the Iraqi, it is a conventional war.

For the Iranians, it is nonconventional.

It is guerrilla warfare.

Responding to the Ayatollah's call,

thousands of young Iranians

have taken up arms against the Iraqis.

It is these amateur soldiers

who will have the job of trying

to break through the lines of Iraqi tanks and guns.

For years, Iran had been holding its own

in the conflict,

but in recent months, something had shifted.

It seemed to Sabra

that Iran had gained a decisive advantage.

The men from Tehran who had shown up

at Hassan Sabra's office seemed to have an explanation.

They told him that representatives

of the Reagan White House had been in Iran

to negotiate an unthinkable deal.

And it was a really good story.

I mean, all kinds of journalistic bells

started ringing in my head.

I said, "This is a scoop.

I have got to write this story."

It was so outlandish, you know,

the key and the cake and the Bible

and the fact that it was the Reagan administration.

You know, we were cut off from what was going on

in the rest of the world.

There was no electricity, so we didn't watch CNN a lot.

So this was really a newsmaker for me.

This was a scoop.

I think I may have called him

when I was writing the story.

I wanted to see if there was a story behind the story.

And, actually, there was.

For me, working for an American newspaper,

it was, "Wow, you know, this puts

the administration on the spot."

And there were all these contradictory things, you know.

The Americans were going around the world

telling Europe and others, "Don't sell weapons to Iran,"

yet they were doing it.

And the fact that it was so intimately involved

with the fate of the hostages.

So it was this tapestry of intrigue.

I was investigating all of this stuff.

I was talking to people I knew in the government.

And even they told me

they couldn't put the pieces together.

So none of us quite got to the nub of the matter until,

to our shame as journalists,

a Lebanese magazine called Ash-Shiraa

got a terrific scoop.

I wrote a really detailed story,

and my foreign editor,

who was friends with Bud McFarlane,

called him up and said,

"I want you to be honest with me.

Were you in Tehran in September?"

And McFarlane said, "No."

It had all the other details of the story.

But, in fact, he had gone to Iran in May.

So they played down the story.

There have been reports that you were carrying a cake

that was shaped like a key, that you were carrying a Bible,

that you took personal revolvers

for Rafsanjani as well.

Any parts of those reports true?

Tom, you know me better than that.

I don't do business that way.

And then Rafsanjani

gave a press conference in Tehran

in which he detailed

the story, you know, how they had met

and the key and the cake and the whole enchilada.

We were told that

he was carrying some pistol

for the individual authorities in Iran

and a cake.

It was the most important scoop that year.

The whole world paid attention to it.

When the story broke about our trip,

my wife and I were actually celebrating her birthday,

and we had just finished a wonderful dinner

when I got paged--

we still had pagers in those days--

by the White House Situation Room

to tell me about the Ash-Shiraa story

that revealed that a U.S. delegation

had come to Iran to try to, you know,

bring about the release of the hostages,

and we had brought a cake in the shape of a key

and other things that weren't quite accurate.

But enough of it was true

so that I immediately understood

that the future was going to be very different for my life.

That these were

straight "arms for hostage" swaps

immediately set off a storm in Washington

because that was not the policy of the United States.

It was a policy that Ronald Reagan

and his secretary of state, George Shultz,

had said they would not follow.

It would have been illegal to do it.

So what was this about?

Could I suggest an appeal to all of you

in regard to this, that the speculation,

the commenting and all?

On a story that came out of the Middle East,

it has no foundation,

that all of that is making it more difficult for us

in our efforts to get the other hostages freed.

You could be clever with your words and say,

"Yeah, we weren't really negotiating with terrorists,"

but, effectively, we were.

We negotiated with Israel to help Israel decide

to do something that terrorists wanted,

and then the terrorists did what they said

they were going to do and released those hostages.

So sometimes it worked,

and violence was averted.

And sometimes it didn't.

And as far as Weinberger

and Secretary Shultz were concerned,

we were dealing with terrorists,

and it made them very uncomfortable.

When the news broke,

we were getting onto Air Force One,

and a correspondent shouted to Reagan

a question about Bud McFarlane

going to Iran--

and could you comment on it?

And Reagan did not answer the question.

November 4, 1986

was not a good day for Ronald Reagan.

Good evening. Virtually all the polls

have closed in all of the states now.

And what we know at this hour is that the Democrats

have taken control of the United States Senate,

and it may be by a significantly larger margin

than even they had anticipated in their wildest hopes.

Well, Jane, clearly the new numbers

mean it's going to be a different ball game

for President Ronald Reagan

from here on through the end of his term.

Standing by in our Washington studios this morning

is White House Chief of Staff Donald Regan.

- Good morning, Mr. Regan. - Good morning, Bryant.

In spite of his campaign blitz,

the president had failed to inspire the nation

to keep the Senate on his side.

For the first time in his six years as president,

Reagan would be working with a Congress

under Democratic control.

Wasn't this, Mr. Regan,

a personal rebuff for the president?

I mean, we can run down the laundry list,

and, frankly, it looks pretty bad.

To make matters worse for Reagan,

the press would not let up on the Iran story.

The White House scrambled

to get on top of the story, but they had a problem.

Very few of them knew exactly what had gone on.

But there were plenty of officials

who wanted to jump in and control the story.

And so officials began telling stories

that conflicted with each other.

They told stories that didn't make sense internally.

We rather quickly came to realize

there is something seriously amiss.

In November of 1986,

the president once again hosted a ceremony

in the White House Rose Garden for a recently released hostage.

By now, this was a familiar ritual.

Unlike the other ceremonies,

this one was occurring amid a very public scandal

about covert arms sales to a terrorist country.

Mr. President, the Iranians are saying

that if you'll release some of those weapons,

they'll intercede to free the rest of the hostages.

Will you?

The White House's

awkward public attempts at evasion

only added to the press's interest.

I'm not supposed to take questions,

but I will answer that one, Sam.

At00 tonight, tune in, and you'll hear all.

And so, on the evening of November 13th,

Reagan delivered his first full public statement

on the Iranian arms deal.

Good evening.

I know you've been reading, seeing,

and hearing a lot of stories the past several days.

A charge has been made that the United States

has shipped weapons to Iran as ransom payment

for the release of American hostages in Lebanon,

that the United States undercut its allies

and secretly violated American policy

against trafficking with terrorists.

Those charges are utterly false.

Relying on the advice of his trusted aide,

John Poindexter, Reagan insisted

that what the White House had done

was consistent with their policy.

There's a saying in Arabic that,

"They're not doing it for the blackness of your eyes,"

you know, or the beauty of your eyes.

There's some other interest, some other agenda.

...those who commit terrorist acts...

It signaled to me that, in politics,

there is no idealism, there are no ideals.

There are interests.

Sometimes they intersect.

And what is expedient is the policy of the day.

Good evening.

This is the CBS Evening News, Dan Rather reporting.

A new Los Angeles Times poll just released indicates

only 14% of the American people

believe what President Reagan has told them

about his weapons deals with Iran.

He obviously designed the 12 minutes

to mislead or to sort of obfuscate.

And Ronald Reagan doesn't come off very well

when he does that.

I still feel strongly as a White House watcher

that the most important thing to them was,

the heck with policy,

let's get these hostages home before the election.

The speech was widely regarded

as a disaster for the president.

I certainly wasn't excited about his performance.

I thought that it was not a good explanation

of all that we were trying to do.

It concerned me because I began to realize

that the president wasn't going to be able

to explain this well to the American people.

It was a watershed moment

in the Iran-Contra affair.

Reagan had now publicly adopted

an inaccurate version of events,

and not only did the public think he was lying,

some members of his own administration

were losing confidence, too.

Soon, Secretary of State George Shultz,

who had always opposed the weapons sales to Iran,

gave an interview that revealed the power struggle

going on within the White House.

I had not been willing to go

on any of the shows or whatever.

And then I was told that a decision had been made

to stop all arms sales.

So I agreed to go on Face the Nation.

And as I was getting ready to go over to the studio

on a Sunday morning,

I was told the decision had changed

and arms sales were gonna continue.

But I was on the hook to go.

So Lesley, toward the end of her show,

said...

I'll ask it again--will there be any more arms shipments

to Iran, either directly by the United States

or through any third parties?

Under the circumstances of Iran's war with Iraq,

its pursuit of terrorism,

its association with those holding our hostages,

I would certainly say, as far as I'm concerned, no.

Do you have the authority to speak

for the entire administration?

No.

And I went back to my office

and I told my staff, "When I get back,

I won't be secretary of state anymore."

When the secretary of state

goes public with his lack of confidence

and his disagreements with the president,

it is an unusual event in Washington

and a sign something is deeply wrong.

I do have the sense

that we are witnessing the disintegration

of this administration's foreign policy.

Your presidency is tottering.

Do you realize this?

It can be saved, but only you can save it

and only if you will talk with us, the Congress.

And it seemed that Congress

now had plans of its own.

And in Congress, there is a mixture of astonishment

and outrage in both parties tonight.

NBC's John Dancy reports now that there were accusations

that the White House had broken the law.

It's like a very, very gigantic jigsaw puzzle

that's got a puzzle on both sides

and is three-dimensional.

So if you don't have great structural vision,

you're gonna have--

Yeah, a Rubik's cube is a better example.

You know, it was too much for the press

to try to uncover all of this.

There needed to be independent investigations.

We needed the subpoena power

that can come through congressional investigations.

The administration was awash in scandal.

But the biggest bombshell of all,

the illegal diversion of profits from the Iran deal

to the Contras, had yet to be discovered.

Ronald Reagan,

who was used to basking in the glow of stage lights,

suddenly found their glare to be a little too bright.

Meanwhile, with investigations looming,

one loyal foot soldier was preparing himself

to take the fall.