Special Report: Among newly released archival records is the first U.S. documentary evidence that William Casey took a trip to Madrid possibly related to the 1980 October Surprise conspiracy. Doubts that Ronald Reagan’s campaign chief went to Madrid fueled a media frenzy in 1991 to debunk allegations of a secret GOP deal with Iran, says Robert Parry.

By Robert Parry

July 14, 2011 (Updated July 15, 2011)

In November 1991, as Newsweek and The New Republic were ridiculing the idea that Ronald Reagan’s campaign chief William Casey might have made a secret trip to meet Iranians in Madrid in 1980, a senior State Department official was informing George H.W. Bush’s White House that Casey indeed had gone to Spain on a mysterious visit.

State Department legal adviser Edwin D. Williamson told associate White House counsel Chester Paul Beach Jr. that among the State Department “material potentially relevant to the October Surprise allegations [was] a cable from the Madrid embassy indicating that Bill Casey was in town, for purposes unknown,” Beach noted in a “memorandum for record” dated Nov. 4, 1991.

In other words, as Newsweek and The New Republic were making the October Surprise story into a big joke in mid-November 1991, Bush’s White House had information that contradicted the smug self-certainty of the two magazines. Not surprisingly, the White House made no effort to clarify the record.

I found Beach’s memorandum among about 4,800 pages of documents identified by the George H.W. Bush presidential library as related to the so-called October Surprise controversy, the longstanding mystery of whether the Reagan-Bush campaign in 1980 contacted Iranians behind President Jimmy Carter’s back, thus undermining his efforts to gain freedom for 52 American hostages.

Carter’s failure to pull off an “October surprise” by winning release of the hostages was a key factor in Reagan’s landslide victory in 1980. Reagan got another boost when the Iranians released the hostages immediately after he was sworn in on Jan. 20, 1981.

Though Reagan talked tough about Iran and his handlers suggested that fear of him was why the Iranians surrendered the hostages on Inauguration Day the reality was different. His administration soon was giving secret approval to Israel to ship U.S.-manufactured weaponry to Iran. It had the look of a payoff.

Reagan’s politically risky move of secretly arming Iran was nearly exposed when one of the Israeli flights strayed into Soviet airspace in July 1981 and crashed. To cover the administration’s tracks, misleading press guidance was issued, according to Assistant Secretary of State for the Middle East Nicholas Veliotes.

The U.S.-Israeli arms pipeline to Iran stayed secret from the American people until November 1986 when despite Reagan’s long-running insistence that he would never trade arms with a terrorist state like Iran the operation was exposed. The scandal became known as the Iran-Contra Affair.

Yet even after the existence of the secret U.S.-Israeli arms pipeline was revealed, the Reagan-Bush administrations and congressional Republicans kept the investigative focus on the later chapter of the arms shipments, from 1985 to 1986, not the earlier phase that Veliotes and other insiders said could be traced back to Campaign 1980.

The reasons were obvious. While the secret arms sales to Iran in 1985-86 were legally questionable, any deal that predated Reagan’s inauguration as president could be viewed as treasonous.

A Spreading Scandal

For the first few years of the Iran-Contra investigation, the scandal stayed contained around the later years. However, that damage-control operation was threatened when more evidence began to emerge in 1991 about secret Republican contacts with Iran that dated back to 1980.

The possibility that the Iran arms-for-hostage scandal could jump the 1985-86 firebreak and spread back to 1980 endangered Republican rule in 1991 because the secret deals allegedly implicated then-President George H.W. Bush.

Faced with this danger, Bush’s White House worked frantically to beat back the widening threat. The newly released documents from the Bush library reveal that the White House coordinated with other federal agencies and congressional Republicans to delay, discredit and destroy the October Surprise investigation.

In this endeavor, the Bush team was aided immensely by neoconservative, right-wing and mainstream news outlets which saw the October Surprise allegations as potentially devastating to Israel, to Reagan’s legacy, and to the Washington Establishment. [See Consortiumnews.com’s “The CIA/Likud Sinking of Jimmy Carter.”]

By 1991, the Washington press corps also had grown weary of the complex Iran-Contra investigation, led by special prosecutor Lawrence Walsh. Among Washington’s many lazy journalists and jaded pundits, there was little stomach for an expansion of that complicated story back to 1980.

Thus, on the same weekend in mid-November 1991, Newsweek and The New Republic published matching debunking stories on the October Surprise case. At the center of both articles was an interpretation of attendance records for a historical conference in London in late July 1980.

From those records, both magazines concluded that Casey, then Reagan’s campaign chief, had been present for a morning session on July 28, 1980, and thus could not have attended a two-day meeting in Madrid, as described by Iranian businessman Jamshid Hashemi.

Hashemi, who was an official in Iran’s new revolutionary government, had been recruited by the CIA in early 1980 but claimed to have begun working behind the scenes with his financier brother, Cyrus, to help Republicans make contact with key Iranians. Cyrus Hashemi had personal business ties to William Casey.

Jamshid Hashemi said both in press interviews and in sworn testimony that he and his brother arranged meetings in late July 1980 in Madrid for Casey and a senior Iranian cleric, Mehdi Karrubi. Hashemi described those conversations as spilling over into a second day, as Casey sought to ensure that the Iranians would not release the hostages to Carter before the U.S. elections in November.

In the October Surprise debunking articles, Newsweek and The New Republic claimed to have shut the window on Casey’s whereabouts by placing him at the London conference on the morning of July 28, thus making a two-day Madrid meeting impossible and proving that Jamshid Hashemi was lying.

And, since the Casey-Madrid allegations were central to the October Surprise mystery, the whole story must be a myth, a “conspiracy theory” run wild.

White House Rejoicing

It is hard to overstate the impact of those matching debunking stories, splashed across the magazines’ covers. The articles and their sneering tone scared the Senate into backing away from a full-scale October Surprise investigation and the House acted as if it would only go through the motions before clearing Reagan and Bush.

The Republicans rejoiced and escalated their counteroffensive to shut down any further inquiries. The just-released White House documents show senior Bush officials and other Republicans circulating the magazine articles, which were used to bludgeon any remaining skeptics into submission.

Among neocon journalists in Washington, there was plenty of high-fiving. They had never liked the Iran-Contra scandal to begin with, since it put the Reagan administration and the Israeli government in a negative light.

In particular, ABC’s “Nightline” program came in for a nasty round of ridicule because it had highlighted Hashemi’s Madrid account. The producer who handled the Hashemi interview was soon out of a job.

Steven Emerson, the lead author of The New Republic’s story, basked in his glory as the new standard-setter for investigative journalism. Newsweek drew praise for its readiness to expose a baseless “conspiracy theory.”

The only problem was that both magazines had sloppily misread the London attendance records and had failed to do the necessary follow-up interviews, which would have revealed that Casey was not at the morning session on July 28 after all. He didn’t arrive until that afternoon, leaving the “window” open for Hashemi’s account.

At PBS “Frontline,” where I was involved in the October Surprise investigation, we talked to Americans and others who had participated in the London conference. Most significantly, we interviewed historian Robert Dallek who gave that morning’s presentation to a small gathering of attendees sitting in a conference room at the British Imperial War Museum.

Dallek said he had been excited to learn that Casey, who was running Reagan’s presidential campaign, would be there. So, Dallek looked for Casey, only to be disappointed that Casey was a no-show. Other Americans also recalled Casey arriving later and the records actually indicate Casey showing up for the afternoon session.

In other words, the high-profile Newsweek-New Republic debunking of the October Surprise story had itself been debunked. However, typical of the arrogance of those publications and our inability to draw attention to their major screw-up the magazines never acknowledged their gross error.

Update: I learned on Thursday that the journalistic malfeasance at Newsweek was even worse than sloppiness.

Journalist Craig Unger, who had been hired by Newsweek to work on the October Surprise story, told me that he had spotted the misreading of the attendance records before Newsweek published its article and alerted the investigative team, which was personally headed by executive editor Maynard Parker.

“They told me, essentially, to fuck off,” Unger said.

During my years at Newsweek, from 1987-90, Parker had been my chief nemesis. He was considered close to prominent neocons, including Iran-Contra figure Elliott Abrams, and to Establishment Republicans, such as former Secretary of State Henry Kissinger. Parker also was a member of banker David Rockefeller’s Council on Foreign Relations, and viewed the Iran-Contra scandal as something best shut down quickly.

Jumping to a false conclusion that would protect his influential friends and allies would fit perfectly with what I knew of Parker.

In November 1991, after the Newsweek-New Republic tandem finished jumping into the ring, there would be no serious reconsideration of the October Surprise mystery. The damage was done.

Still, the evidence of the Newsweek-New Republic error was so obvious that the House Task Force investigators had no choice but to jettison the magazines’ London alibi for Casey. But they then replaced it with another equally ridiculous one, putting Casey at California’s Bohemian Grove of all places and having him take an overnight flight from San Francisco to London, arriving on the afternoon of July 28.

That alibi was bogus, too. Casey actually attended the Bohemian Grove on the first weekend of August, not the last weekend of July, as documentary evidence and witnesses made clear.

But these continued absurdities spoke to the determination of Official Washington to put the October Surprise story to bed, a Zeitgeist that Newsweek and The New Republic had helped create with their false reporting in mid-November 1991. [For more details on this journalistic fiasco, see Robert Parry’s Secrecy & Privilege.]

White House Silence

Yet, what Beach’s “memorandum of record” suggests is that Bush’s White House knew in real time as Newsweek and The New Republic were trumpeting their misplaced certainty about Casey never going to Madrid that U.S. embassy officials on the ground were indicating that he had been there.

At this point, it’s still impossible to say what was in the Madrid cable that Williamson mentioned to Beach. The archivists at the Bush library in College Station, Texas, continue to withhold nearly one-quarter of the 4,800 “October Surprise” pages citing national security and other reasons. So, it is not clear whether the State Department ever turned over the cable or how conclusive it was.

Other documents at the Bush library suggested tensions within Republican ranks over how cooperative to be with the October Surprise investigation.

One document reveals that Secretary of State James Baker favored quicker production of documents and viewed “the delay/filibuster strategy of the House and Senate Republicans as counterproductive.”

Another set of cryptic notes, apparently reflecting comments from Republican national security official Gardner Peckham, makes apparent references to the State Department’s “‘anxiousness’ abt. awareness of Oct Surprise” and adds “believes DOS already has docs.” DOS is the common government abbreviation for the Department of State.

There are other signs that Republicans went to some length to conceal Casey’s clandestine travels in 1980.

In 1991-92, as October Surprise investigators tried to nail down Casey’s whereabouts on key dates, their efforts were frustrated by Casey’s family, which had received many of Casey’s personal records from the CIA after his death from a cancerous brain tumor on May 6, 1987. Casey had become Reagan’s first CIA director in 1981, was implicated in the Iran-Contra scandal when it broke open in fall 1986, and collapsed shortly before he was scheduled to testify.

Casey’s family grudgingly turned over his personal records to congressional investigators, but Casey’s 1980 passport was missing along with several pages from his personal calendar for that year.

From the Bush library files, there’s no indication that the White House told investigators about Williamson’s information regarding a Casey trip to Madrid. Nor did anyone in power do anything to stop the Washington press corps’ rush to judgment, which condemned Jamshid Hashemi as a liar and a perjurer.

Instead, the media stampede was allowed to surge forward, trampling anyone still foolish or brave enough to stand in the way and making a mess of U.S. history in the process.

[For more on these topics, see Robert Parry’s Secrecy & Privilege and Neck Deep, now available in a two-book set for the discount price of only $19. For details, click here.]

Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book,Neck Deep: The Disastrous Presidency of George W. Bush, was written with two of his sons, Sam and Nat, and can be ordered at neckdeepbook.com. His two previous books, Secrecy & Privilege: The Rise of the Bush Dynasty from Watergate to Iraq and Lost History: Contras, Cocaine, the Press & ‘Project Truth’ are also available there.