Cold Open

It’s around 12:40 in the afternoon on October 5th, 1986, somewhere in the skies over Nicaragua.

Eugene Hasenfus, a 45-year-old sturdy midwesterner and veteran Marine, crouches by the open backdoor of a Fairchild C-123 cargo plane. Below him, green treetops blur past, as Hasenfus scans the jungle for his target: a drop point. Beside him in the plane are tall crates loaded with 60 Soviet-made AK-47 assault rifles, 50,000 rifle cartridges, rocket-propelled grenades, and a hundred and fifty pairs of jungle boots.

The weapons and equipment are intended for the Contras, a rebel military group fighting to overthrow Nicaragua’s Sandinista socialist government. But today, the Sandinistas strike first.

Streaking up from the thick jungle below, a surface-to-air missile locks on and then hits the plane. Hasenfus is thrown back and to the floor as the plane shakes and twists violently to the right.

Flames engulf the cabin and Hasenfus struggles to regain his balance as the plane groans and rumbles, arcing toward the ground. Finally finding his footing, Hasenfus quickly checks the parachute he has on is secure, then leaps out the back of the flaming aircraft.

Eugene’s body jerks violently as he deploys his parachute, and he watches the plane he just leapt from roll over in mid-air, scrawling a smoky spiral in the sky.

Seconds later, the aircraft plummets into the Nicaraguan jungle and explodes.

Hasenfus drifts down through the treetops and hits the soft forest floor with a thud. He knows he’s lucky to be alive. But now he’s alone in the Nicaraguan jungle, and he is not supposed to be here.

Shortly after Hasenfus lands, he’s captured by soldiers of Nicaragua’s government. After questioning him for a short time, they lead him by gunpoint to a clearing where he’s met by a crowd of journalists. He calmly tells the reporters his name and his place of birth in Wisconsin. But what the journalists really want to know is how he ended up in Nicaragua. When they ask, he replies in a deadpan tone, “I was shot out of the sky.”

Eventually, Hasenfus will reveal more details about his backstory, and among them is the fact that he’s working on behalf of the American Central Intelligence Agency. It’s a bombshell revelation because the US Congress recently passed legislation prohibiting support for the Contras. Though Hasenfus will be released just two months after his capture, his confession will help spark a years-long investigation that will uncover a web of covert government operations, coined the Iran-Contra affair. President Ronald Reagan and his administration will try to deny or downplay their actions, but ultimately their illicit activities will be revealed, thanks to the capture of Eugene Hasenfus on October 5th, 1986.

Introduction

From Noiser and Airship, I’m Lindsay Graham and this is History Daily.

History is made every day. On this podcast—every day—we tell the true stories of the people and events that shaped our world.

Today is October 5th, 1986: The Iran-Contra Affair Unravels.

Act One: Bud McFarlane in Tehran

It’s May 25th, 1986, in the skies over Tehran, the capital of Iran, less than five months before Eugene Hasenfus will be captured.

48-year-old Robert “Bud” McFarlane looks out the window as his flight approaches the runway. He grabs the end of his tie and fidgets nervously. He closes his eyes for a brief moment as the plane shudders and makes its landing. Then he breathes a sigh of relief. The first leg of the journey is over. But now comes the difficult part.

Until his resignation the previous December, Bud was the National Security Advisor to sitting US President Ronald Reagan. For the last year, Bud has been working through back channels to negotiate an arms deal with Iran. It’s an extremely delicate task for a host of reasons. Since Iran’s revolution in 1979, the country has been hostile to the United States. As a result, diplomatic ties have been severed and the United States has been enforcing an embargo on Iran.

But despite the tensions between the two nations, Bud has continued working as the Reagan administration’s emissary, secretly selling weapons to Iran to use in their war against Iraq. Bud believes he can use the arms to secure the release of American hostages held by Lebanese terrorists with ties to Iran. But there’s also another incentive. Recently, Oliver North, a fellow Reagan staffer on the president’s National Security Council, found a new benefit of selling arms to Iran. By marking up the price, the Reagan administration has been able to make a profit and funnel money to the Contras, a Nicaraguan military group that Reagan hopes will overthrow that country's Soviet-aligned, socialist government.

The whole affair is messy and illegal. Congress has twice passed legislation prohibiting support for the Contras, and Reagan has repeatedly told the public that the United States will not negotiate with terrorists in Iran or anywhere else. But Bud knows that these shady dealings will be worth it if they can bring American hostages home safe.

Bud works to project strength and calm as he waits for the Iranians to welcome him, Oliver North, and their party of several other American officials. But as the minutes pass, Bud begins to get nervous. He anticipated a formal greeting from one of Iran’s leaders and a motorcade. But no one at the airport seemed to know they were coming. He can’t shake the dreaded possibility that the Iranians have lured the Americans into some kind of trap.

After 30 minutes though, a familiar face arrives. The Iranian arms dealer who has been brokering talks between the U.S. and Iran walks up to Bud and extends his hand. Bud expected a more formal welcome from a high-ranking Iranian official but conceals his disappointment.

Then the arms dealer leads Bud and the other Americans to a hotel where they will meet with Iranian officials. Bud begins talks with the Iranians with a show of goodwill. He hands them gifts - two pistols and a cake. But the cake is useless for the Iranians who are fasting in observance of Ramadan. They’re more concerned with the whereabouts of the weapons that were agreed upon. Bud’s plane carried just one shipment. And the Iranians demand to know about the rest of what they were promised.

Bud makes it clear that the United States will deliver the whole shipment when American hostages are returned safely. The Iranians counter that they’ll get in trouble with their superiors if they don’t receive the full shipment. And as a show of good faith, the Iranians promised to send a delegation to Lebanon where the Americans are being held.

Bud can hardly believe what he’s hearing. After months of negotiations and hours of travel, he arrived here ready to bring the Americans home. Now, he’s learning that the Iranians haven’t even taken the first step to secure their release.

Making matters worse, the men Bud is haggling with are all lower-level officials, who don’t seem to have the desire or authority to grant the Americans anything. After hours of back and forth, the meeting ends with no progress made.

Over the course of three more days, Bud and his team continue to negotiate with the Iranians, and at first, Bud is hopeful when the Iranians send higher-level officials to speak. But his optimism disintegrates when he realizes that their arms dealer go-between has over-promised to both sides.

The two countries are at an impasse. The United States won’t deliver more arms unless their citizens are freed. And Iran insists on receiving the arms before that can happen. As negotiations drag on, Bud realizes that American intelligence made a grave error in believing that Iran had total control of the hostages. So on May 28th, he boards a plane back to the United States, agitated and empty-handed.

When he returns home, Bud tells the President that the United States should quit negotiating with Iran. But after one of the hostages is eventually released, the President continues sending arms to Iran in hopes of bringing all the Americans home.

As the United States continues shipping weapons, more Americans are freed. But before the United States can celebrate, terrorists kidnap two more.

And while the Reagan administration figures out how to proceed, a fresh challenge emerges. On October 5th, Eugene Hasenfus is captured in Nicaragua, revealing the CIA’s operations there. Less than a month later, a Lebanese news magazine reports on the Americans’ trip to Tehran and the arms for hostage deal that was negotiated. The press will follow that story until they uncover a link between the Iranian arms deal and the US government’s support for the Nicaraguan Contras. Under increasing scrutiny, the Reagan administration will do everything in its power to cover up the full extent of what will come to be known as the Iran-Contra Affair.  

Act Two: Oliver North’s Shredding Party

It’s the evening of November 21st, 1986 in Washington, D.C., less than two months after Eugene Hasenfus was captured by the Nicaraguan government.

43-year-old White House staffer Oliver North opens the door to his office and heads straight to his safe, which is filled with files documenting the political scandal that’s been coined the Iran-Contra Affair.

Since Eugene Hasenfus’s plane was shot down in October, the National Security Council where North works has become a maelstrom. The revelation that the Reagan administration was going against Congress to support the Contras was quickly followed up by a news story about secret arms for hostages deals with Iran.

And while the media connects the dots, the White House has been working to put together a coherent story that downplays the wrongdoing and protects the president from blame. For weeks North has been shredding documents about his work in Nicaragua and Iran, but he’s running out of time. Tomorrow, two gentlemen from the Justice Department are stopping by to review his files. So tonight may be North's last chance to destroy evidence of the administration’s illegal operations.

North’s hands are steady as he unlocks the safe. He’s working under tremendous pressure, but the clean-cut Vietnam veteran doesn’t flinch. He’s been under enemy fire many times before and he knows what to do - keep his cool and focus on his mission. As he begins pulling documents from the safe, his secretary joins him. He hands her a stack with a knowing nod, and she gets to work feeding documents into the shredder as North continues pulling out papers. North moves through his files methodically and hands over stack after stack. As the shredder whirs, the secretary remembers the reams of notes and phone logs in the other room. North tells her to shred those too, and in a moment she’s back with more piles of paper.

Together, they spend the next 30 minutes shredding thousands of records. At one point they’re shredding so many documents that the machine jams. Without skipping a beat, they call in a repairman and soon get right back to destroying evidence. When they’re finished, North hopes he’s done his duty to protect the president. He knows he can’t completely erase all traces of his work – even after shredding thousands of records, there are thousands more left. But he prays that he’s done enough to keep the Justice Department at bay.

But unfortunately for Oliver North, this isn’t so. The next day, the two men arrive from the Justice Department. And as they sort through North’s files, they come across one which describes his plan to divert money from the Iran arms sales to support the Contras in Nicaragua.

The file will come to be known as the diversion memo and will play a central role in the ongoing governmental and press investigations.

The next week, President Reagan holds a press conference with his Attorney General. The President defends his decision to send arms to Iran but claims that the execution went awry. He places the blame on his National Security Council and vows to investigate what went wrong. But as a first step, he announces that his National Security Advisor, John Poindexter, will be stepping down and that Oliver North will be removed from the National Security Council.

In response to the growing scandal, Reagan also creates the Tower Commission, led by two former senators and a former National Security Advisor. Together, they formally investigate the scandal. And after several months, the Tower Commission issues a report that confirms the Reagan administration broke US and international laws by sending weapons to the Contras and Iran. But the Commission lays most of the blame on North, Poindexter, and the head of the CIA. The report criticizes President Reagan for lax oversight but stops short of assigning him any criminal responsibility.

The White House’s troubles though, are far from over as Congress begins its own inquiry. In July 1987, Oliver North is called to testify before a joint Congressional hearing. Donning his full military dress, North admits to shredding documents and to playing a central role in sending money to the Contras and weapons to Iran. Throughout his testimony, North is resolute and unapologetic. He rebukes Congress for cutting off aid to the Contras and frames his actions as part of his duty to the country.

North’s testimony will stand out among the 41 days of congressional hearings. While some will view his actions as egregious, others will see him as a patriot or a victim.

Ultimately, Congress will conclude that members of Reagan’s administration went around the Constitution by funding and arming the Contras, and negotiating with Iran, without Congress’s knowledge or approval. Their report will also name several officials, including North, who deliberately misled Congress.

But the Iran-Contra affair will not end there. While the Tower Commission and Congressional inquiry may have finished their probing, another investigation is just getting started. This one is led by an independent counsel determined to shed full light on the scandal and hold those behind it to account.

Act Three: Lawrence Walsh Interviews Reagan

It’s July 24th, 1992, in Los Angeles, California, five years after Congress concluded their investigation of the Iran-Contra affair.

Former deputy attorney general, Lawrence Walsh and two of his colleagues follow a secretary into the office of Ronald Reagan.

After Congress wrapped up their hearings in the summer of 1987, Walsh continued his digging as independent counsel in charge of the Iran-Contra investigation. He charged 14 people with criminal offenses including making false statements, withholding information from Congress, and conspiracy to defraud the United States. He prosecuted individuals from the National Security Council, the Defense Department, the State Department, and the CIA. Between the 14 charged, four were convicted by a jury, seven pleaded guilty, two were pardoned by current President George H.W. Bush before trial, and one case was dismissed due to withheld classified information.

Of the 11 that were convicted, President Bush pardoned four, including Bud McFarlane. Several convictions, including Oliver North’s, were also overturned on technicalities. But Walsh hasn’t given up trying to uncover the full extent of the crimes related to Iran-Contra, and there’s still one more man he’d like answers from.

It seems apparent that President Reagan knew the National Security Council had some awareness of his administration’s illegal activities, but the extent of his involvement is still unclear. So today, Walsh is deposing the former president in hopes of finding out what he knew and when.

Reagan greets Walsh warmly and offers him a bowl of licorice jelly beans. Walsh declines politely, before taking a seat and setting up his recorder and notebook. As the conversation gets underway, Reagan regales Walsh with stories of his time in office. He recounts meetings with world leaders with a proud smile. But when Walsh pushes the former president for details about Iran-Contra, Reagan has no answers. The aging president is suffering from the onset of Alzheimer’s disease. And whatever he might once have known, seems now lost.

Walsh struggles to contain his dismay. He tries reading portions of Reagan’s diary back to him to jog the president’s memory. But Reagan is only able to vaguely confirm that the words sound like they could have been written by him. Realizing the former president is now disabled, Walsh understands there’s no way to prosecute him for any role in Iran-Contra.

And despite years of investigation, Walsh’s work will stop short of confirming criminal wrongdoing by the President. His effort to indict the former vice president will also be stymied. Four years after issuing his final report, Walsh will publish an account of his experiences as independent counsel. The book Firewall: The Iran-Contra Conspiracy and Cover-Up, lays out the facts of Iran-Contra and argues that the Reagan administration was able to successfully stonewall his investigation. In doing so, they insulated the President from any fallout of the explosive scandal that began to unravel when Eugene Hasenfus was shot out at the skies over Nicaragua on October 5th, 1986.

Outro

Next on History Daily. October 6th, 1926. ‘The Jazz Singer’ premieres in New York City, introducing a new era of sound from motion pictures.

From Noiser and Airship, this is History Daily, hosted, edited, and executive produced by me, Lindsay Graham.

Audio editing by Muhammad Shahzaib.

Sound design by Katrina Zemrak.

Music by Lindsay Graham.

This episode is written and researched by Ruben Abrahams Brosbe.

Executive Producers are Alexandra Currie-Buckner for Airship, and Pascal Hughes for Noiser.