U.S. Traded Arms for Hostages

WASHINGTON--The Tower commission will report that the United States sold arms to Iran to win the release of American hostages, despite contrary statements by President Reagan, but the panel could not determine how profits from the deal were diverted to Nicaraguan rebels, a source said yesterday.

Concluding a three-month investigation, the three-member board headed by former Sen. John Tower (R-Tex.), will deliver its findings to the president at 10 a.m. EST today and discuss its report at a news conference an hour later.

On the eve of the report's release, White House spokesman Marlin Fitzwater said Reagan had sent the board a letter last Friday, as it was completing its work, because "he simply felt there were other recollections and clarifications he wanted to provide the board."

In two meetings with the board, Reagan made conflicting statements about when he authorized the first shipment of U.S. weapons to Iran, according to published reports. Current and former White House aides have disputed each other on when Reagan approved the transaction.

An administration source said Reagan's letter offered yet a third version--that he simply had no recollection of when he approved the shipment and that he may have allowed himself to be influenced by the recollection of others.

Meanwhile, a source at the Tower commission said the panel concluded that an arms-for-hostages swap was at the center of U.S. contacts with Iran.

While the idea of trying to establish ties with a strategically important nation "may have been in the president's thoughts," the source said, "we didn't accept the notion of it being the driving force. That does not appear in fact to be what drove the program."

Neither of the sources would comment except on condition they not be named.

Reagan has insisted that a trade was not involved. "Let me say it was not my intent to do business with [Iran revolutionary leader Ayatollah Ruhollah] Khomeini to trade weapons for hostages, nor to undercut our policy of antiterrorism," the president said in a radio address Dec. 6.

Underscoring that argument, Fitzwater said, "The primary purpose was to try to make contacts with certain elements in Iran that would be favorable or friendly to the United States in a post-Khomeini government...not arms for hostages."

The Tower board, which interviewed nearly 60 witnesses-- including arms dealers Adnan Khashoggi and

Manucher Ghorbanifar--was not able to determine

how profits from the arms sales were diverted to

Contra rebels in Nicaragua, according to the

source.

"Our evidence [of the funneling of arms sales

proceeds to the Contras] is primarily

circumstantial," the source said, adding that the

investigation of that point was frustrated by the

refusal of former White House aides John M.

Poindexter and Lt. Col. Oliver L. North to

testify.

North was fired and Poindexter quit as Reagan's

national security adviser last November in

connection with the disclosure that profits from

the arms sales were siphoned for the Nicaraguan

rebels.

While predicting that the Tower board report

will be tough, Fitzwater said, "The president has

acted entirely appropriately throughout the whole

thing...The question is whether he did anything

wrong. I say no."

Scrapping plans for a weekend at Camp David,

Md., the president will remain in Washington,

reading the report and studying its

recommendations "with an eye to what he wants to

say next week," Fitzwater said.

Mitchell E. Daniels, Reagan's top political

adviser, suggested in an interview that the

president would be looking to pick a few fights

with Congress soon to counter the "unquestionable

damage" caused by the Iran-Contra affair as well

as the image of a man weakened by January's

prostate surgery.

"Having a bare-knuckles fight on a gut issue or

going out to a partisan event as soon as we are

able will be of value in reinvigorating the

president's base," Daniels said.

Democrats, who in the past have been wary of

criticizing the politically popular Reagan, went

after him yesterday for his inability to recall

whether he authorized the August 1985 shipment of

arms to Iran.

"The president can't seen to get--keep his tale

straight. He doesn't remember what he said and

when he said it," Senate Democratic Leader Robert

C. Byrd of West Virginia said, leaving the White

House after a meeting with Reagan on trade issues.

At a meeting Tuesday, Reagan challenged

listeners to recall what they were doing on Aug.

8, 1985--the date of a key meeting on the arms

sales--and concluded that "it's possible to

forget."

Rejecting that argument, Sen. Ernest Hollings

(D-S.C.), said it was not a case of remembering a

particular event on a particular day "but rather

forgetting that he violated his own policy against

terrorism. You can't forget that. ...I don't see

how he could forget it."