Senate Widens Arms Sales Probe

WASHINGTON--Senate investigators quizzed the CIA's No. 2 man for four hours and subpoenaed documents around the country yesterday in an expanding probe into the secret sale of arms to Iran and transfer of profits to Nicaraguan rebels.

President Reagan said Cabinet officers are free to decide whether to invoke the Fifth Amendment when their turn comes to testify.

A long-distance disagreement surfaced within the administration over the roots of the president's controversial Iranian arms policy. White House spokesman Larry Speakes said "we don't agree with" Defense Secretary Caspar Weinberger's contention that Reagan acted on bad advice when he decided there were responsible officials to deal with in Iran other than the "lunatics" who run the country.

Reagan, embroiled in the most serious crisis of his presidency, has defended his decision to sell arms to Iran as part of a secret diplomatic initiative to re-establish ties with the strategically-placed Persian Gulf nation. But he says he was unaware that money in connection with the sales was being funneled through a Swiss bank account to Contra rebels battling the Nicaraguan government.

The money was made available at a time when direct and indirect government military assistance to the Contras was prohibited by law, and there was evidence that the Justice Department was looking into the operations of a privately financed support program for Contra rebels in Nicaraguan.

The president announced Tuesday that his administration would seek appointment of an independent counsel to probe the issue, although the White House disclosed that Attorney General Edwin Meese III is still at work on the formal application.

Senate Republican and Democratic leaders met privately to discuss establishment of an 11-member "supercommittee" to take over the investigation in January, but in the meantime, the Senate Intelligence Committee pursued its own probe.

With extraordinary security provisions in effect, the panel heard first from unnamed U.S. officials involved in covert operations, then questionedCIA Deputy Director Robert Gates for more thanfour hours.

Sen. David Durenberger, R-Minn., chairman ofthe committee, said the witnesses were providing a"very candid response to the questions and a lotof helpful information."

The information, he said, is "opening moredoors that we have to send a subpoena through inorder to [compile] accurate information."

"We have people flying around the country thismorning serving subpoenas for documents. So thedocument search has become also a very, veryimportant part of this," he said.

The Minnesota Republican did not say whatdocuments the committee was seeking. But inMoultrie, Ga., Maule Aircraft Corp. said it hadreceived subpoenas for records on four aircraftfrom the U.S. attorney's office in Macon as wellfrom the Senate committee. The four airplanesinclude one reportedly sold to rebels in Nicaraguaby a firm headed by retired Air Force Maj. Gen.Richard V. Secord.

Secord has been identified by administrationofficials as an assistant to fired NationalSecurity Council aide Oliver North in arrangingthe Iranian arms sales and creation of a privatelyfunded air force to deliver weapons to the Contraforces.

Billy Fallin, an attorney for the firm, saidthe subpoenaed payment instructions and records oftelephone calls between Maule and the buyers havebeen turned over to authorities as requested. "I'mnot concerned about any wrongdoing on our part,"he added.

Durenberger said the committee will extend itshearing schedule beyond next week, and will soondecide which Cabinet officials to call to testify.He said those under consideration include themembers of the National Security Council--CIADirector William Casey, Secretary of State GeorgeP. Shultz and Weinberger--but not the president orVice President George Bush.

At the White House, Frank Carlucci, thepresident's newly appointed national securityadviser, said he will have direct access to theOval Office and has free rein to shake up thestaff and operation of the White House NationalSecurity Council.

He said he has put a 10-member team to worksizing up the NSC to determine "what kind ofchanges may be appropriate" in the wake of theIranian-Contra operation that was coordinated byan NSC aide.

Retiring House Speaker Thomas P. O'Neill Jr.,D-Mass., predicted that "everybody will be smokedout" in the investigations that will come, even ifthey use the Fifth Amendment to avoid answeringquestions.

But O'Neill, who has been a point-man forDemocratic opposition to Reagan for the past sixyears, added that the issue does not appear to bea Watergate-type scandal that will force thepresident to resign.

Speaking to reporters during a photo sessionwith Costa Rican President Oscar Arias, Reagansaid he has not "given any thought" to claimingexecutive privilege to prevent Cabinet secretariesfrom testifying.

Reagan defended the action taken by departednational security adviser John Poindexter andNorth in exercising their constitional rights,saying, "It is not new or unusual--it's happenedmany times before--that when there is going to bean independent counsel starting an investigation,that individuals that have no access to files orpapers or time for preparation for questions, havedone just exactly the same thing, so that theythen can be witnesses for the investigation."

Reagan himself was not asked about Weinberger'scomments, but chief administration spokesman LarrySpeakes took issue with the defense secretary.

"Obviously the president is on the record andso are the rest of us that there were moderatefactions in Iran that we were dealing with,"Speakes told reporters who questioned him. "So weare a little bit at odds with the secretary onthat one."

In comments Wednesday in Paris to Frenchreporters, the defense secretary said thepresident's advisers were wrong in telling himthat there were moderate elements in Iran withwhom Washington could negotiate. Weinberger saidit appeared that there is no one to talk with inTehran except "fanatical lunatics."

Weinberger said yesterday he believes theadvice originated with former National SecurityAdviser Robert McFarlane.

Appearing on both ABC and NBC morningtelevision programs, he said he was "horrified" tolearn that funds from the Iranian operation wentto the Contras. But he said he did not think thepresident's competence was at issue in thecontroversy