http://en.wikipedia.org/wiki/Iran-Contra_AffairIran-Contra affairThe Iran-Contra affair was a political scandal which was revealed in 1986 as a result of earlier events during the Reagan administration. It began as an operation to increase U.S.-Iranian relations, wherein Israel would ship weapons to a moderate, politically influential group of Iranians opposed to the Ayatollah Khomeni; the U.S. would reimburse Israel with those weapons and receive payment from Israel. The moderate Iranians agreed to do everything in their power to achieve the release of six U.S. hostages, who were being held by the terrorist group Hezbollah. The plan eventually deteriorated into an arms-for-hostages scheme, in which members of the executive branch sold weapons to Iran in exchange for the release of the American hostages, without the authorization of President Ronald Reagan. Large modifications to the plan were conjured by Lieutenant Colonel Oliver North of the National Security Council in late 1985. In North's plan, a portion of the proceeds from the weapon sales was diverted to fund anti-Sandinista and anti-communist rebels, or Contras, in Nicaragua. While President Ronald Reagan was a supporter of the Contra cause, he did not authorize this plan, nor was he aware that the funds were being sent to the Contras.
After the weapon sales were revealed in November 1986, Ronald Reagan appeared on national television and stated that the weapons transfers had indeed occurred, but that the United States did not trade arms for hostages. The investigation was compounded when large volumes of documents relating to the scandal were destroyed or withheld from investigators by Reagan administration officials. On March 4, 1987, Reagan returned to the airwaves in a nationally televised address, taking full responsibility for any actions that he was unaware of, and admitting that "what began as a strategic opening to Iran deteriorated, in its implementation, into trading arms for hostages."
Many investigations ensued, including those by the United States Congress and the three-man, Reagan-appointed "Tower Commission". Neither could find any evidence that Reagan himself knew of the extent of the multiple programs. In the end, fourteen administration officials were charged with crimes, and eleven convicted, including Defense Secretary Caspar Weinberger. They were all pardoned in the final days of the George H. W. Bush presidency.
The affair
The affair is comprised of two matters: arms sales to Iran, and funding of Contra militants in Nicaragua. Direct funding of the Nicaraguan rebels had been made illegal through the Boland Amendment. The affair emerged when a Lebanese newspaper reported that the U.S. sold arms to Iran in exchange for the release of hostages by Hezbollah. Letters sent by Oliver North to John Poindexter support this. However, the Israeli ambassador to the U.S. claims that the reason was to establish links with elements of the military in Iran. It is also noteworthy that the Contras did not receive all of their finances from arms sales, but also through drug trafficking.