472NOT15.DOC					September 8, 1996

	 REPORT OF THE PRESIDENTS SPECIAL REVIEW BOARD
	TOWER COMMISSION REPORT, Part III

The arms transfer to Iran.

Stage One: NSC staff seeks a new look at United States policy on Iran.
McFarlane fails in efforts to have the interagency process validate his
notion that there were Iranian moderates who could be strengthened with
United States assistance.

NSC staff tries a second time to get interagency validation--this time
with a Special National Intelligence Estimate.

Israelis provide a vehicle: Iran wanted United States origin
Tube-launched, optically tracked, wire-guided missiles (TOW), and Israel
had them.

Section 662 of the Foreign Assistance Act, Hughes-Ryan Amendment,
prohibits covert operations by the Central Intelligence Agency unless and
until the President finds such operations important to the national
security of the United States. 

NSC staff manages the arms sale and diversion of funds to the Contras.

Part IV: what was wrong.

Flawed Process

	1. Contradictory policies

		arms sales to Iran contradicted official policy.

	2. Flawed Decision-making process

		Full review before President inadequate.

		Operation not vetted at lower levels.

		Process too informal.

		Congress never notified.

	Weak Legal Basis for Action

	Arms Export Control Act: unlawful to export arms
without a license and congressional notification for 	sales over $14
million.

	Hughes-Ryan Amendment regarding Presidential
finding of a national security interest and
Congressional notification of covert actions.

	National Security Act specifies advance or
timely notification to Congress for conduct of covert operations.

SENATE AND HOUSE SELECT COMMITTEES ON IRAN CONTRA

Covert Action in a Democratic Society

Executive Order 12333 Reagan refers to covert action as special activities
planned and executed without United States role being acknowledged.
Plausible deniability is a key aspect of covert actions.

INTERAGENCY PROCEDURES TO AUTHORIZE COVERT ACTIONS
	
Interagency review, NSC directive from President, review of the
expenditure by a congressional committee by consensus. 

Hughes-Ryan Act of 1974 after efforts to destabilize Allende of Chile:
Required that President personally approve all covert actions as important
to national security.

POWERS OF CONGRESS AND THE PRESIDENT

1936 Curtiss-Wright Case: Congress by statute had delegated to President
the power to prohibit the sale of arms to countries in an area of South
America, if the President thought that the prohibition would promote
peace. At issue was the power of the President where Congress had
expressly authorized the President to act.

NSC staffer argued that the Congress only had power of the purse in
Iran-Contra. As long as public monies are not spent, Congress has no role
in restraining the President.

North contended that Professor John Norton Moore told him that Bolan did
not apply to the NSC staff.

RULE OF LAW

Use of Donated funds to Evade Congress Power of the Purse

Section 501 of the National Security Act requires that Congress be
notified of all covert actions except if President decides to do so  in a
timely manner after the operation. 
 
Breckinridge: Covert Action/Special Activities