Weapons for Iran, money for Nicaragua, and a secret operation linking the two.
The Iran–Contra Affair is a crazy story involving hostages, secret bank accounts, and tricks to get around the law. It made Americans question how much power the President really has.
How did two different secrets become one big scandal? And who was punished in the end?
[00:00:04] Hello, hello, hello, and welcome to English Learning for Curious Minds, by Leonardo English, the show where you can listen to fascinating stories and learn weird and wonderful things about the world at the same time as improving your English.
[00:00:20] I'm Alastair Budge, and today we are going to be talking about the Iran-Contra Affair.
[00:00:27] It’s the American scandal involving Ronald Reagan, missiles, revolutions, rebels, hostages, dodgy arms dealers, the US Constitution, covert operations, Swiss bank accounts, and the seemingly unrelated countries of Nicaragua and Iran.
[00:00:47] It’s a particularly long and complicated one, but it is fascinating, so let’s not waste a minute and get right into it.
[00:00:57] If you are the sort of person who yearns for power, you can’t do much better than becoming the president of the United States. You are essentially the chief executive of the world’s richest and most powerful country. You can do what you want.
[00:01:16] Of course, you can’t do everything you want.
[00:01:20] The US Constitution has a rigid set of checks and balances, in the form of the other branches of government: Congress and the Judiciary.
[00:01:31] Pretty much every president in American history has found themselves blocked in some way by the laws and wishes of these other branches, some more than others.
[00:01:44] Ronald Reagan was no exception.
[00:01:48] He had been elected in a landslide victory in 1980, partly due to the unpopularity of his opponent, the sitting President Jimmy Carter, and partly on a platform to bring back conservative values.
[00:02:06] And one of Reagan’s big personal beliefs was in the danger of communism, not just in the United States, but all over the world.
[00:02:18] A big part of this was the concept known as “domino theory”, the idea that if one country fell to communism, it would spread like a virus, infecting all the neighbouring countries before continuing all over the world.
[00:02:35] And Reagan, despite plenty of evidence to suggest that communism wasn’t as viral as its greatest critics suggested, well, he wasn’t prepared to take any chances.
[00:02:49] His staunch belief was that communism was one of the great dangers facing the world, and he was prepared to do whatever it took to stop it, especially if it showed signs of approaching the American border.
[00:03:05] And this was hardly a Reagan invention; the CIA had spent decades secretly financing groups opposed to communism, everywhere from Latin America to Africa.
[00:03:18] One of the groups the US had been financing was called the Contras. It was a right-wing guerrilla group fighting against the communists that had come to power in Nicaragua after the Sandinista Revolution.
[00:03:33] Now, Nicaragua isn’t particularly close to the United States; you have Honduras, El Salvador, Guatemala, Belize and Mexico which act as a buffer.
[00:03:45] But it was still too close to home.
[00:03:49] So the CIA provided financial and military support to this group that would stir up trouble in Nicaragua, doing everything it could to disrupt the left-wing Sandinistas.
[00:04:02] Now, we’ll press pause on the Contras, as we now need to move right over to the other side of the geopolitical chessboard to a region in which the United States had other interests, interests that seemed to be completely unrelated to Nicaragua, but would turn out to be more related than initially thought.
[00:04:26] In 1979, the Iranian Revolution led to the overthrow of the Shah of Iran and the swift transition from a Western-leaning monarchy to an Islamic Republic hostile to Western influence.
[00:04:42] Later that year, a group of students stormed the US embassy and took 66 Americans hostage. This would come to be known as the Iran Hostage Crisis, and would last from November 1979 to January 1981, with the last hostages being released on the day of Ronald Reagan’s inauguration as president.
[00:05:08] As a result of the hostage crisis and of the Republic of Iran’s stated aim of spreading Islamic fundamentalism through the Middle East, the United States cut off all ties with the country, even going so far as to declare it a “state sponsor of terrorism”.
[00:05:28] This was a perfectly reasonable assessment; Iran was and still is the largest sponsor of terrorist groups in the region.
[00:05:36] But there were several problems with the United States breaking off all contact with the country, both for Iran and for the US.
[00:05:46] For Iran, it meant cutting off a vital source of military equipment.
[00:05:53] Under the Shah, Iran had been one of America’s best customers.
[00:05:58] Billions of dollars’ worth of U.S. jets, tanks, and missiles had been shipped to Iran.
[00:06:06] When relations broke, Iran was left with a shiny arsenal it couldn’t maintain. This was a problem, and an even greater one after September of 1980, when Saddam Hussein decided to invade Iran.
[00:06:23] For the United States, on the other hand, the loss of a former key ally could mean further instability in an already volatile region. And in fact, selling Iran the weapons it needed to fight off the Iraqi threat was no bad thing.
[00:06:40] A little war between Iran and Iraq actually served American interests quite nicely. The US didn’t want either side to emerge completely victorious, and the best possible scenario was a drawn-out conflict that left both parties weaker.
[00:07:01] And there was a third interested party: Israel.
[00:07:06] Israel had similar goals to the US when it came to supplying Iran with weapons: keep Iran and Iraq busy fighting amongst themselves, so that both emerge weaker.
[00:07:18] Now, I appreciate that things are getting complicated, but let me add one more country to the mix: Lebanon.
[00:07:27] Lebanon in the 1980s was in a state of chaos.
[00:07:32] The country had been torn apart by civil war, and in the middle of it, groups backed by Iran, including Hezbollah, had begun kidnapping Americans in Beirut.
[00:07:44] Journalists, teachers, and diplomats were taken and held for years. Even the CIA station chief, William Buckley, was taken.
[00:07:56] Their captors demanded the release of Hezbollah operatives being held in Israeli jails.
[00:08:03] This wasn’t going to happen; Ronald Reagan had built his reputation on never negotiating with terrorists, and it would be a huge public humiliation to go back on this, especially with the memory of the Iran Hostage Crisis still fresh in everyone’s minds.
[00:08:22] But, he did want the American hostages home safe, and it would certainly be convenient if there were some way of making this happen.
[00:08:34] And so, by the mid-1980s, the stage was set.
[00:08:39] On the one side, Nicaragua and the Contras.
[00:08:43] On the other, Iran, desperate for weapons, officially America’s sworn enemy, but also the only country with enough influence on Hezbollah to help secure the release of American hostages in Lebanon.
[00:08:59] And in the middle, Israel.
[00:09:02] Now, it’s important to stress that, even though we now talk of the “Iran-Contra Scandal”, the Iranians had nothing to do with the Contras, at least directly.
[00:09:15] And there wouldn’t have been any “scandal” were it not for Congress getting in the way.
[00:09:21] Bringing it back to the three branches of government we talked about at the start, starting in 1982, Congress passed a series of laws that would come to be known as the Boland Amendments, which prohibited United States intelligence agencies from providing funding for the Contras.
[00:09:42] Now, there was a series of amendments because each one went slightly further in terms of what was prohibited; we won’t go into the details of each one, but the important thing was that the clear intention was to stop U.S. involvement in Nicaragua’s war.
[00:10:01] There were several reasons for this, from the documented human rights abuses committed by the Contras through to a general public weariness of US involvement in the domestic affairs of other countries.
[00:10:15] And on paper, that was the end of it. The United States was now legally forbidden from funding the Contras.
[00:10:23] Now, to understand the next chapter of this story, we need to understand a bit more about the power dynamics within the Reagan administration.
[00:10:35] Ronald Reagan was very much a “big picture” man.
[00:10:39] He had strong convictions — fight communism, support freedom fighters, stand tall against America’s enemies — but he wasn’t a details person.
[00:10:51] He liked to set the general direction, then let his advisers work out the details of how to actually implement it. He would be brought memos to read or documents to sign off on, but he wouldn’t always read them, even before adding his signature.
[00:11:09] Remember this, as it’ll be important later on.
[00:11:13] What this meant was that his administration was filled with people who understood their role as interpreting what Reagan wanted and translating it into action.
[00:11:25] As long as they were executing his broad wishes, they had the green light to get creative.
[00:11:33] The first “creative” project was to do with getting the US hostages back, and this conveniently tied in with the problem of how to continue supplying the Iranians with weapons, despite Iran having become a sworn enemy of the United States.
[00:11:52] How it went was something like this.
[00:11:56] The Americans were approached by an Iranian named Manucher Ghorbanifar.
[00:12:03] He was a shady individual, a “devious character” according to Ronald Reagan and "one of the most despicable characters I have ever met", according to Robert MacFarlane, a National Security Advisor who we’ll meet again in a few minutes.
[00:12:19] He was a dodgy fellow, but he claimed to have influence within the Iranian regime.
[00:12:27] He told the Americans that if they supplied Iran with missiles, Iran would put pressure on Hezbollah to release the hostages held in Lebanon.
[00:12:40] Ghorbanifar wasn’t doing this out of the goodness of his own heart, of course; he stood to collect a healthy commission on the sale.
[00:12:50] The trade would all be facilitated through Israel, so the US would transfer the weapons to Israel, which would then secretly send them to Iran. In practice, Israel supplied some missiles from its own stocks, with U.S. approval, and would later be replenished by the United States.
[00:13:11] The Iranians would pay the agreed price, and the hostages would be released.
[00:13:17] It all went to plan, apart from the small detail that not all the hostages were released.
[00:13:24] In fact, what happened was almost the opposite.
[00:13:28] Yes, the Iranians got their missiles. Yes, Ghorbanifar pocketed his commission. But instead of releasing all the American hostages, Hezbollah freed one and then promptly kidnapped another.
[00:13:42] It became a grim game of hostage musical chairs: one out, one in.
[00:13:49] Now, this was all very much done behind closed doors; it wasn’t public knowledge. And there was debate within the White House about what to do next.
[00:14:01] Ghorbanifar said that the Iranians needed more missiles, and they would make sure the hostages were released if they were only sent a new batch, but this time of more sophisticated HAWK missiles.
[00:14:16] Despite the obvious reservations about Ghorbanifar’s trustworthiness, his clear financial incentive to broker as many deals as possible, and his claims to have influence, which may have been exaggerated, the Americans decided to go ahead.
[00:14:33] They had opened the door to Iran, and there were people inside the Reagan administration who thought that, despite the obvious risks, this was still worth pursuing.
[00:14:44] Robert McFarlane, the National Security Adviser, and his successor John Poindexter, they believed that engaging Iran could be part of a longer-term strategy, not just to free hostages, but to build bridges with so-called “moderates” inside the Iranian regime, moderates that Ghorbanifar promised existed.
[00:15:09] But, again, the same thing happened.
[00:15:12] Iran got its weapons, Ghorbanifar got his fat commission for brokering the detail, and all but one of the hostages remained in Lebanon.
[00:15:24] In fact, there is another character in this story you might remember from another episode: the Saudi arms dealer, Adnan Khashoggi.
[00:15:32] He was a key associate of Ghorbanifar and provided connections and financing for the deals. If you’d like to hear more about his fascinating and very dodgy life, episode number 466 is the one for you.
[00:15:48] Now, the man on the American side tasked with running the day-to-day details of this operation was a Marine lieutenant colonel called Oliver North.
[00:16:01] North worked in the National Security Council staff, the NSC, and he was the sort of officer who prided himself on “getting things done.”
[00:16:14] One of the things he was tasked with was finding creative ways to get around the Boland Amendment, the legal amendment prohibiting the US from providing federal funding for the Contras.
[00:16:27] One thing he did was make it clear to American allies that if they provided funding for the Contras, this could get them favourable treatment from the US.
[00:16:39] And several countries were perfectly willing to donate, giving money to the Contras, essentially on behalf of the United States.
[00:16:48] There was $32 million from Saudi Arabia.
[00:16:52] The Sultan of Brunei, on the other hand, transferred $10 million to a Swiss bank account, which was intended to be transferred to the Contras.
[00:17:03] Funnily enough, North made a mistake with the account number, and it was transferred to a 60-year-old Swiss businessman instead.
[00:17:13] And perhaps even more bizarrely, the man who received this $10 million transfer from the Sultan of Brunei didn’t question it, but instead transferred the money to a different account, and would later say he didn’t think anything of this large transfer, as he was expecting a big deposit anyway.
[00:17:33] He wasn’t prosecuted for this, so I guess the lesson there is that if you accidentally receive $10 million into your bank account from the Sultan of Brunei, just say you were expecting it and it’ll all be ok.
[00:17:47] Now, North might have had a mix-up with the Sultan of Brunei, but he was pretty efficient when it came to everything else.
[00:17:56] One of his responsibilities was moving the money around from the Iranian weapons sales.
[00:18:04] And some time around 1985, it’s thought, he noticed something interesting: there was $850,000 sitting in a Swiss bank account, profit left over from the weapons sales to Iran.
[00:18:21] It turned out that Ghorbanifar, true to Reagan’s assessment of being a “devious character”, had been massively overcharging the Iranians for the weapons, charging them 600% more. This had meant a much bigger commission for Ghorbanifar, but it also meant that with each trade, the US government would make a significant profit.
[00:18:46] What if this money could be diverted to the Contras?
[00:18:51] It was all “off the books” anyway, and it seemed to provide a neat solution: Iran got its weapons, which could, Ghorbanifar promised, lead to the return of the hostages, the surplus from this would go towards the funding of the Contras, and this wasn’t technically in violation of the Boland Amendment, because the NSC staff, as an advisory body in the Executive Office, wasn’t explicitly named like the CIA or the Pentagon.
[00:19:25] It existed in this legal grey area, this legal loophole.
[00:19:30] The world was a geopolitical puzzle, and this was how to solve it: neatly and tidily.
[00:19:38] So, once the principle was established — that money from Iranian arms sales could be siphoned off to fund the Contras — the operation began to grow.
[00:19:49] More shipments, more money, more intermediaries. An estimated $3.5 million diverted.
[00:19:57] Swiss bank accounts multiplied, more shady middlemen were brought in, and soon there was a parallel foreign policy running out of the basement of the White House.
[00:20:09] It was complex, it was secret, and it was completely outside the reach of Congress.
[00:20:16] It also didn’t really work.
[00:20:19] The more Americans dealt with Ghorbanifar and his Iranian contacts, the more obvious it became that this was a disaster in the making.
[00:20:28] Hostages weren’t really being freed. New ones were being taken.
[00:20:33] The Iranians, via Ghorbanifor, kept asking for more weapons, always promising that the next deal would be the last one needed.
[00:20:43] And inside the White House, not everyone even agreed on what the point of it all was.
[00:20:50] Was this about hostages? About opening a channel to Iran? Or just about keeping the Contras alive?
[00:20:58] The confusion was only just beginning.
[00:21:01] And what about Reagan himself?
[00:21:04] To this day, historians debate exactly how much he knew. He was briefed in vague terms, he nodded at memos, he signed off on broad directions. But he never seemed to focus on the details.
[00:21:22] This gave his advisers room to run, and run they did.
[00:21:28] Later, when the whole affair came to light, Reagan would insist he hadn’t authorised arms for hostages.
[00:21:36] But even so, even if you believe this statement and that he wasn’t leaning on his previous career as a Hollywood actor, it’s clear that his style of leadership — big on vision, light on detail — this was what allowed this all to happen in the first place.
[00:21:54] So, what happened next?
[00:21:56] Well, it might have all been kept under wraps, never revealed to the public, had it not been for an American aeroplane getting shot down over Nicaragua in October of 1986.
[00:22:10] The plane was carrying “60 AK-47 rifles, 50,000 AK-47 bullets, several dozen grenade launchers and 150 pairs of jungle boots", not exactly hand luggage for a romantic weekend away.
[00:22:27] All but one of the crew were killed. The sole survivor was a man named Eugene Hasenfus, who jumped out of the plane and activated his parachute.
[00:22:39] He was captured with flight logs, phone numbers, and documents that pointed to an extensive operation. He was questioned, and there was a press conference in which he stated that these flights into Nicaragua were the work of the CIA.
[00:22:56] Washington denied it, of course, but the crash blew open the Contra side of the story: the US government, in direct violation of the Boland Amendments, was still interfering in Nicaragua.
[00:23:12] And then, less than a month later, the other shoe dropped, this time from the Middle East.
[00:23:20] On 3 November 1986, a Lebanese newspaper published a scoop: the United States had secretly shipped missiles to Iran. The details were startling: anti-tank and anti-aircraft missiles, routed through third countries, all supposedly to win influence with “moderates” and help free hostages in Lebanon, influence that had no signs of being won, and hostages that were not released.
[00:23:53] Importantly, the two stories weren’t initially connected; they were two different scandals, and were both addressed separately.
[00:24:04] But from that point on, events moved quickly.
[00:24:09] On 13 November, Ronald Reagan addressed the nation. He insisted it hadn’t been “arms for hostages.” He spoke of reaching out to Iranian moderates.
[00:24:21] But the press and Congress smelled blood.
[00:24:26] And behind the scenes, there was panic. An internal investigation was launched.
[00:24:32] In the NSC offices, as investigators approached, Oliver North and his secretary shredded incriminating documents and memos. Notes were pulled, files disappeared.
[00:24:45] Unfortunately for them, and fortunately for justice and my ability to tell this story, some paperwork survived.
[00:24:55] There was an internal review led by the Attorney General, and his team found what no one had admitted in public: profits from the Iran missile sales had been diverted to the Contras.
[00:25:11] In that instant, two separate scandals snapped together into one: Iran–Contra.
[00:25:20] The cover was gone. Congressional hearings followed in 1987; Oliver North, with his crisp uniform, tidy hair, and unflinching tone, became the public face of the scandal.
[00:25:35] Appearing in his Marine uniform, Lt. Col. North defiantly defended his actions, portraying them as patriotic.
[00:25:45] An estimated 55 million Americans watched his first day of testimony, and “Olliemania” broke out across the country. Shirts and bumper stickers were sold, supportive prayer vigils were held, and hundreds of thousands of dollars were collected for his legal fees.
[00:26:05] The jury found North guilty on 3 of the 12 counts against him. He was sentenced to a three-year suspended prison term, two years probation, $150,000 in fines, and 1,200 hours of community service, convictions that were all overturned the following year.
[00:26:27] In terms of the others implicated, John Poindexter resigned. His predecessor, Robert McFarlane, was pulled back in for questioning.
[00:26:36] The independent counsel opened years of investigations.
[00:26:40] There were more convictions, but some were overturned on appeal.
[00:26:46] And in December 1992, then President George H. W. Bush issued pardons that closed the legal book if not the historical one.
[00:26:59] As for the legacy of the affair, well, you would be hard-pressed to argue that it’s the worst crime committed by a sitting American president.
[00:27:09] Historians to this day disagree on the extent of Ronald Reagan’s involvement, or even the extent to which he was aware of the details.
[00:27:19] And even if he knew, there are plenty of people who agree with the intention: it did, after all, seem like a neat solution to several problems. “Neat” was indeed the adjective North used to describe the idea.
[00:27:36] But it was in clear violation of US law, in terms of the financing of the Contras, and in contradiction to stated US policy, in terms of the sale of arms to Iran.
[00:27:50] To its critics, and Reagan’s critics, it was both illegal and hypocritical, as well as corrosive to constitutional checks and balances.
[00:28:00] And did it work? Well, the answer to that is more clear-cut: it did not.
[00:28:08] US-Iran relations are still frosty, Iran is still designated as a major sponsor of terrorist groups in the region, Daniel Ortega, the then-leader of the Sandinistas, is still President of Nicaragua, and for Hezbollah, taking hostages hasn’t exactly gone out of fashion.
[00:28:29] And as for the question of whether subsequent US Presidents learned any lessons from it, well, I’ll let you be the judge of that.
[00:28:39] OK, then, that is it for today's episode on the Iran-Contra scandal.
[00:28:44] I know it was quite a complicated one, with lots of moving parts and people to keep track of, but I guess that’s what happens when you conduct a game of geopolitical chess, involving Swiss bank accounts, American missiles, sworn enemies and Central American guerrillas.
[00:29:01] You've been listening to English Learning for Curious Minds by Leonardo English.
[00:29:05] I'm Alastair Budge, you stay safe, and I'll catch you in the next episode.
[00:00:04] Hello, hello, hello, and welcome to English Learning for Curious Minds, by Leonardo English, the show where you can listen to fascinating stories and learn weird and wonderful things about the world at the same time as improving your English.
[00:00:20] I'm Alastair Budge, and today we are going to be talking about the Iran-Contra Affair.
[00:00:27] It’s the American scandal involving Ronald Reagan, missiles, revolutions, rebels, hostages, dodgy arms dealers, the US Constitution, covert operations, Swiss bank accounts, and the seemingly unrelated countries of Nicaragua and Iran.
[00:00:47] It’s a particularly long and complicated one, but it is fascinating, so let’s not waste a minute and get right into it.
[00:00:57] If you are the sort of person who yearns for power, you can’t do much better than becoming the president of the United States. You are essentially the chief executive of the world’s richest and most powerful country. You can do what you want.
[00:01:16] Of course, you can’t do everything you want.
[00:01:20] The US Constitution has a rigid set of checks and balances, in the form of the other branches of government: Congress and the Judiciary.
[00:01:31] Pretty much every president in American history has found themselves blocked in some way by the laws and wishes of these other branches, some more than others.
[00:01:44] Ronald Reagan was no exception.
[00:01:48] He had been elected in a landslide victory in 1980, partly due to the unpopularity of his opponent, the sitting President Jimmy Carter, and partly on a platform to bring back conservative values.
[00:02:06] And one of Reagan’s big personal beliefs was in the danger of communism, not just in the United States, but all over the world.
[00:02:18] A big part of this was the concept known as “domino theory”, the idea that if one country fell to communism, it would spread like a virus, infecting all the neighbouring countries before continuing all over the world.
[00:02:35] And Reagan, despite plenty of evidence to suggest that communism wasn’t as viral as its greatest critics suggested, well, he wasn’t prepared to take any chances.
[00:02:49] His staunch belief was that communism was one of the great dangers facing the world, and he was prepared to do whatever it took to stop it, especially if it showed signs of approaching the American border.
[00:03:05] And this was hardly a Reagan invention; the CIA had spent decades secretly financing groups opposed to communism, everywhere from Latin America to Africa.
[00:03:18] One of the groups the US had been financing was called the Contras. It was a right-wing guerrilla group fighting against the communists that had come to power in Nicaragua after the Sandinista Revolution.
[00:03:33] Now, Nicaragua isn’t particularly close to the United States; you have Honduras, El Salvador, Guatemala, Belize and Mexico which act as a buffer.
[00:03:45] But it was still too close to home.
[00:03:49] So the CIA provided financial and military support to this group that would stir up trouble in Nicaragua, doing everything it could to disrupt the left-wing Sandinistas.
[00:04:02] Now, we’ll press pause on the Contras, as we now need to move right over to the other side of the geopolitical chessboard to a region in which the United States had other interests, interests that seemed to be completely unrelated to Nicaragua, but would turn out to be more related than initially thought.
[00:04:26] In 1979, the Iranian Revolution led to the overthrow of the Shah of Iran and the swift transition from a Western-leaning monarchy to an Islamic Republic hostile to Western influence.
[00:04:42] Later that year, a group of students stormed the US embassy and took 66 Americans hostage. This would come to be known as the Iran Hostage Crisis, and would last from November 1979 to January 1981, with the last hostages being released on the day of Ronald Reagan’s inauguration as president.
[00:05:08] As a result of the hostage crisis and of the Republic of Iran’s stated aim of spreading Islamic fundamentalism through the Middle East, the United States cut off all ties with the country, even going so far as to declare it a “state sponsor of terrorism”.
[00:05:28] This was a perfectly reasonable assessment; Iran was and still is the largest sponsor of terrorist groups in the region.
[00:05:36] But there were several problems with the United States breaking off all contact with the country, both for Iran and for the US.
[00:05:46] For Iran, it meant cutting off a vital source of military equipment.
[00:05:53] Under the Shah, Iran had been one of America’s best customers.
[00:05:58] Billions of dollars’ worth of U.S. jets, tanks, and missiles had been shipped to Iran.
[00:06:06] When relations broke, Iran was left with a shiny arsenal it couldn’t maintain. This was a problem, and an even greater one after September of 1980, when Saddam Hussein decided to invade Iran.
[00:06:23] For the United States, on the other hand, the loss of a former key ally could mean further instability in an already volatile region. And in fact, selling Iran the weapons it needed to fight off the Iraqi threat was no bad thing.
[00:06:40] A little war between Iran and Iraq actually served American interests quite nicely. The US didn’t want either side to emerge completely victorious, and the best possible scenario was a drawn-out conflict that left both parties weaker.
[00:07:01] And there was a third interested party: Israel.
[00:07:06] Israel had similar goals to the US when it came to supplying Iran with weapons: keep Iran and Iraq busy fighting amongst themselves, so that both emerge weaker.
[00:07:18] Now, I appreciate that things are getting complicated, but let me add one more country to the mix: Lebanon.
[00:07:27] Lebanon in the 1980s was in a state of chaos.
[00:07:32] The country had been torn apart by civil war, and in the middle of it, groups backed by Iran, including Hezbollah, had begun kidnapping Americans in Beirut.
[00:07:44] Journalists, teachers, and diplomats were taken and held for years. Even the CIA station chief, William Buckley, was taken.
[00:07:56] Their captors demanded the release of Hezbollah operatives being held in Israeli jails.
[00:08:03] This wasn’t going to happen; Ronald Reagan had built his reputation on never negotiating with terrorists, and it would be a huge public humiliation to go back on this, especially with the memory of the Iran Hostage Crisis still fresh in everyone’s minds.
[00:08:22] But, he did want the American hostages home safe, and it would certainly be convenient if there were some way of making this happen.
[00:08:34] And so, by the mid-1980s, the stage was set.
[00:08:39] On the one side, Nicaragua and the Contras.
[00:08:43] On the other, Iran, desperate for weapons, officially America’s sworn enemy, but also the only country with enough influence on Hezbollah to help secure the release of American hostages in Lebanon.
[00:08:59] And in the middle, Israel.
[00:09:02] Now, it’s important to stress that, even though we now talk of the “Iran-Contra Scandal”, the Iranians had nothing to do with the Contras, at least directly.
[00:09:15] And there wouldn’t have been any “scandal” were it not for Congress getting in the way.
[00:09:21] Bringing it back to the three branches of government we talked about at the start, starting in 1982, Congress passed a series of laws that would come to be known as the Boland Amendments, which prohibited United States intelligence agencies from providing funding for the Contras.
[00:09:42] Now, there was a series of amendments because each one went slightly further in terms of what was prohibited; we won’t go into the details of each one, but the important thing was that the clear intention was to stop U.S. involvement in Nicaragua’s war.
[00:10:01] There were several reasons for this, from the documented human rights abuses committed by the Contras through to a general public weariness of US involvement in the domestic affairs of other countries.
[00:10:15] And on paper, that was the end of it. The United States was now legally forbidden from funding the Contras.
[00:10:23] Now, to understand the next chapter of this story, we need to understand a bit more about the power dynamics within the Reagan administration.
[00:10:35] Ronald Reagan was very much a “big picture” man.
[00:10:39] He had strong convictions — fight communism, support freedom fighters, stand tall against America’s enemies — but he wasn’t a details person.
[00:10:51] He liked to set the general direction, then let his advisers work out the details of how to actually implement it. He would be brought memos to read or documents to sign off on, but he wouldn’t always read them, even before adding his signature.
[00:11:09] Remember this, as it’ll be important later on.
[00:11:13] What this meant was that his administration was filled with people who understood their role as interpreting what Reagan wanted and translating it into action.
[00:11:25] As long as they were executing his broad wishes, they had the green light to get creative.
[00:11:33] The first “creative” project was to do with getting the US hostages back, and this conveniently tied in with the problem of how to continue supplying the Iranians with weapons, despite Iran having become a sworn enemy of the United States.
[00:11:52] How it went was something like this.
[00:11:56] The Americans were approached by an Iranian named Manucher Ghorbanifar.
[00:12:03] He was a shady individual, a “devious character” according to Ronald Reagan and "one of the most despicable characters I have ever met", according to Robert MacFarlane, a National Security Advisor who we’ll meet again in a few minutes.
[00:12:19] He was a dodgy fellow, but he claimed to have influence within the Iranian regime.
[00:12:27] He told the Americans that if they supplied Iran with missiles, Iran would put pressure on Hezbollah to release the hostages held in Lebanon.
[00:12:40] Ghorbanifar wasn’t doing this out of the goodness of his own heart, of course; he stood to collect a healthy commission on the sale.
[00:12:50] The trade would all be facilitated through Israel, so the US would transfer the weapons to Israel, which would then secretly send them to Iran. In practice, Israel supplied some missiles from its own stocks, with U.S. approval, and would later be replenished by the United States.
[00:13:11] The Iranians would pay the agreed price, and the hostages would be released.
[00:13:17] It all went to plan, apart from the small detail that not all the hostages were released.
[00:13:24] In fact, what happened was almost the opposite.
[00:13:28] Yes, the Iranians got their missiles. Yes, Ghorbanifar pocketed his commission. But instead of releasing all the American hostages, Hezbollah freed one and then promptly kidnapped another.
[00:13:42] It became a grim game of hostage musical chairs: one out, one in.
[00:13:49] Now, this was all very much done behind closed doors; it wasn’t public knowledge. And there was debate within the White House about what to do next.
[00:14:01] Ghorbanifar said that the Iranians needed more missiles, and they would make sure the hostages were released if they were only sent a new batch, but this time of more sophisticated HAWK missiles.
[00:14:16] Despite the obvious reservations about Ghorbanifar’s trustworthiness, his clear financial incentive to broker as many deals as possible, and his claims to have influence, which may have been exaggerated, the Americans decided to go ahead.
[00:14:33] They had opened the door to Iran, and there were people inside the Reagan administration who thought that, despite the obvious risks, this was still worth pursuing.
[00:14:44] Robert McFarlane, the National Security Adviser, and his successor John Poindexter, they believed that engaging Iran could be part of a longer-term strategy, not just to free hostages, but to build bridges with so-called “moderates” inside the Iranian regime, moderates that Ghorbanifar promised existed.
[00:15:09] But, again, the same thing happened.
[00:15:12] Iran got its weapons, Ghorbanifar got his fat commission for brokering the detail, and all but one of the hostages remained in Lebanon.
[00:15:24] In fact, there is another character in this story you might remember from another episode: the Saudi arms dealer, Adnan Khashoggi.
[00:15:32] He was a key associate of Ghorbanifar and provided connections and financing for the deals. If you’d like to hear more about his fascinating and very dodgy life, episode number 466 is the one for you.
[00:15:48] Now, the man on the American side tasked with running the day-to-day details of this operation was a Marine lieutenant colonel called Oliver North.
[00:16:01] North worked in the National Security Council staff, the NSC, and he was the sort of officer who prided himself on “getting things done.”
[00:16:14] One of the things he was tasked with was finding creative ways to get around the Boland Amendment, the legal amendment prohibiting the US from providing federal funding for the Contras.
[00:16:27] One thing he did was make it clear to American allies that if they provided funding for the Contras, this could get them favourable treatment from the US.
[00:16:39] And several countries were perfectly willing to donate, giving money to the Contras, essentially on behalf of the United States.
[00:16:48] There was $32 million from Saudi Arabia.
[00:16:52] The Sultan of Brunei, on the other hand, transferred $10 million to a Swiss bank account, which was intended to be transferred to the Contras.
[00:17:03] Funnily enough, North made a mistake with the account number, and it was transferred to a 60-year-old Swiss businessman instead.
[00:17:13] And perhaps even more bizarrely, the man who received this $10 million transfer from the Sultan of Brunei didn’t question it, but instead transferred the money to a different account, and would later say he didn’t think anything of this large transfer, as he was expecting a big deposit anyway.
[00:17:33] He wasn’t prosecuted for this, so I guess the lesson there is that if you accidentally receive $10 million into your bank account from the Sultan of Brunei, just say you were expecting it and it’ll all be ok.
[00:17:47] Now, North might have had a mix-up with the Sultan of Brunei, but he was pretty efficient when it came to everything else.
[00:17:56] One of his responsibilities was moving the money around from the Iranian weapons sales.
[00:18:04] And some time around 1985, it’s thought, he noticed something interesting: there was $850,000 sitting in a Swiss bank account, profit left over from the weapons sales to Iran.
[00:18:21] It turned out that Ghorbanifar, true to Reagan’s assessment of being a “devious character”, had been massively overcharging the Iranians for the weapons, charging them 600% more. This had meant a much bigger commission for Ghorbanifar, but it also meant that with each trade, the US government would make a significant profit.
[00:18:46] What if this money could be diverted to the Contras?
[00:18:51] It was all “off the books” anyway, and it seemed to provide a neat solution: Iran got its weapons, which could, Ghorbanifar promised, lead to the return of the hostages, the surplus from this would go towards the funding of the Contras, and this wasn’t technically in violation of the Boland Amendment, because the NSC staff, as an advisory body in the Executive Office, wasn’t explicitly named like the CIA or the Pentagon.
[00:19:25] It existed in this legal grey area, this legal loophole.
[00:19:30] The world was a geopolitical puzzle, and this was how to solve it: neatly and tidily.
[00:19:38] So, once the principle was established — that money from Iranian arms sales could be siphoned off to fund the Contras — the operation began to grow.
[00:19:49] More shipments, more money, more intermediaries. An estimated $3.5 million diverted.
[00:19:57] Swiss bank accounts multiplied, more shady middlemen were brought in, and soon there was a parallel foreign policy running out of the basement of the White House.
[00:20:09] It was complex, it was secret, and it was completely outside the reach of Congress.
[00:20:16] It also didn’t really work.
[00:20:19] The more Americans dealt with Ghorbanifar and his Iranian contacts, the more obvious it became that this was a disaster in the making.
[00:20:28] Hostages weren’t really being freed. New ones were being taken.
[00:20:33] The Iranians, via Ghorbanifor, kept asking for more weapons, always promising that the next deal would be the last one needed.
[00:20:43] And inside the White House, not everyone even agreed on what the point of it all was.
[00:20:50] Was this about hostages? About opening a channel to Iran? Or just about keeping the Contras alive?
[00:20:58] The confusion was only just beginning.
[00:21:01] And what about Reagan himself?
[00:21:04] To this day, historians debate exactly how much he knew. He was briefed in vague terms, he nodded at memos, he signed off on broad directions. But he never seemed to focus on the details.
[00:21:22] This gave his advisers room to run, and run they did.
[00:21:28] Later, when the whole affair came to light, Reagan would insist he hadn’t authorised arms for hostages.
[00:21:36] But even so, even if you believe this statement and that he wasn’t leaning on his previous career as a Hollywood actor, it’s clear that his style of leadership — big on vision, light on detail — this was what allowed this all to happen in the first place.
[00:21:54] So, what happened next?
[00:21:56] Well, it might have all been kept under wraps, never revealed to the public, had it not been for an American aeroplane getting shot down over Nicaragua in October of 1986.
[00:22:10] The plane was carrying “60 AK-47 rifles, 50,000 AK-47 bullets, several dozen grenade launchers and 150 pairs of jungle boots", not exactly hand luggage for a romantic weekend away.
[00:22:27] All but one of the crew were killed. The sole survivor was a man named Eugene Hasenfus, who jumped out of the plane and activated his parachute.
[00:22:39] He was captured with flight logs, phone numbers, and documents that pointed to an extensive operation. He was questioned, and there was a press conference in which he stated that these flights into Nicaragua were the work of the CIA.
[00:22:56] Washington denied it, of course, but the crash blew open the Contra side of the story: the US government, in direct violation of the Boland Amendments, was still interfering in Nicaragua.
[00:23:12] And then, less than a month later, the other shoe dropped, this time from the Middle East.
[00:23:20] On 3 November 1986, a Lebanese newspaper published a scoop: the United States had secretly shipped missiles to Iran. The details were startling: anti-tank and anti-aircraft missiles, routed through third countries, all supposedly to win influence with “moderates” and help free hostages in Lebanon, influence that had no signs of being won, and hostages that were not released.
[00:23:53] Importantly, the two stories weren’t initially connected; they were two different scandals, and were both addressed separately.
[00:24:04] But from that point on, events moved quickly.
[00:24:09] On 13 November, Ronald Reagan addressed the nation. He insisted it hadn’t been “arms for hostages.” He spoke of reaching out to Iranian moderates.
[00:24:21] But the press and Congress smelled blood.
[00:24:26] And behind the scenes, there was panic. An internal investigation was launched.
[00:24:32] In the NSC offices, as investigators approached, Oliver North and his secretary shredded incriminating documents and memos. Notes were pulled, files disappeared.
[00:24:45] Unfortunately for them, and fortunately for justice and my ability to tell this story, some paperwork survived.
[00:24:55] There was an internal review led by the Attorney General, and his team found what no one had admitted in public: profits from the Iran missile sales had been diverted to the Contras.
[00:25:11] In that instant, two separate scandals snapped together into one: Iran–Contra.
[00:25:20] The cover was gone. Congressional hearings followed in 1987; Oliver North, with his crisp uniform, tidy hair, and unflinching tone, became the public face of the scandal.
[00:25:35] Appearing in his Marine uniform, Lt. Col. North defiantly defended his actions, portraying them as patriotic.
[00:25:45] An estimated 55 million Americans watched his first day of testimony, and “Olliemania” broke out across the country. Shirts and bumper stickers were sold, supportive prayer vigils were held, and hundreds of thousands of dollars were collected for his legal fees.
[00:26:05] The jury found North guilty on 3 of the 12 counts against him. He was sentenced to a three-year suspended prison term, two years probation, $150,000 in fines, and 1,200 hours of community service, convictions that were all overturned the following year.
[00:26:27] In terms of the others implicated, John Poindexter resigned. His predecessor, Robert McFarlane, was pulled back in for questioning.
[00:26:36] The independent counsel opened years of investigations.
[00:26:40] There were more convictions, but some were overturned on appeal.
[00:26:46] And in December 1992, then President George H. W. Bush issued pardons that closed the legal book if not the historical one.
[00:26:59] As for the legacy of the affair, well, you would be hard-pressed to argue that it’s the worst crime committed by a sitting American president.
[00:27:09] Historians to this day disagree on the extent of Ronald Reagan’s involvement, or even the extent to which he was aware of the details.
[00:27:19] And even if he knew, there are plenty of people who agree with the intention: it did, after all, seem like a neat solution to several problems. “Neat” was indeed the adjective North used to describe the idea.
[00:27:36] But it was in clear violation of US law, in terms of the financing of the Contras, and in contradiction to stated US policy, in terms of the sale of arms to Iran.
[00:27:50] To its critics, and Reagan’s critics, it was both illegal and hypocritical, as well as corrosive to constitutional checks and balances.
[00:28:00] And did it work? Well, the answer to that is more clear-cut: it did not.
[00:28:08] US-Iran relations are still frosty, Iran is still designated as a major sponsor of terrorist groups in the region, Daniel Ortega, the then-leader of the Sandinistas, is still President of Nicaragua, and for Hezbollah, taking hostages hasn’t exactly gone out of fashion.
[00:28:29] And as for the question of whether subsequent US Presidents learned any lessons from it, well, I’ll let you be the judge of that.
[00:28:39] OK, then, that is it for today's episode on the Iran-Contra scandal.
[00:28:44] I know it was quite a complicated one, with lots of moving parts and people to keep track of, but I guess that’s what happens when you conduct a game of geopolitical chess, involving Swiss bank accounts, American missiles, sworn enemies and Central American guerrillas.
[00:29:01] You've been listening to English Learning for Curious Minds by Leonardo English.
[00:29:05] I'm Alastair Budge, you stay safe, and I'll catch you in the next episode.
[00:00:04] Hello, hello, hello, and welcome to English Learning for Curious Minds, by Leonardo English, the show where you can listen to fascinating stories and learn weird and wonderful things about the world at the same time as improving your English.
[00:00:20] I'm Alastair Budge, and today we are going to be talking about the Iran-Contra Affair.
[00:00:27] It’s the American scandal involving Ronald Reagan, missiles, revolutions, rebels, hostages, dodgy arms dealers, the US Constitution, covert operations, Swiss bank accounts, and the seemingly unrelated countries of Nicaragua and Iran.
[00:00:47] It’s a particularly long and complicated one, but it is fascinating, so let’s not waste a minute and get right into it.
[00:00:57] If you are the sort of person who yearns for power, you can’t do much better than becoming the president of the United States. You are essentially the chief executive of the world’s richest and most powerful country. You can do what you want.
[00:01:16] Of course, you can’t do everything you want.
[00:01:20] The US Constitution has a rigid set of checks and balances, in the form of the other branches of government: Congress and the Judiciary.
[00:01:31] Pretty much every president in American history has found themselves blocked in some way by the laws and wishes of these other branches, some more than others.
[00:01:44] Ronald Reagan was no exception.
[00:01:48] He had been elected in a landslide victory in 1980, partly due to the unpopularity of his opponent, the sitting President Jimmy Carter, and partly on a platform to bring back conservative values.
[00:02:06] And one of Reagan’s big personal beliefs was in the danger of communism, not just in the United States, but all over the world.
[00:02:18] A big part of this was the concept known as “domino theory”, the idea that if one country fell to communism, it would spread like a virus, infecting all the neighbouring countries before continuing all over the world.
[00:02:35] And Reagan, despite plenty of evidence to suggest that communism wasn’t as viral as its greatest critics suggested, well, he wasn’t prepared to take any chances.
[00:02:49] His staunch belief was that communism was one of the great dangers facing the world, and he was prepared to do whatever it took to stop it, especially if it showed signs of approaching the American border.
[00:03:05] And this was hardly a Reagan invention; the CIA had spent decades secretly financing groups opposed to communism, everywhere from Latin America to Africa.
[00:03:18] One of the groups the US had been financing was called the Contras. It was a right-wing guerrilla group fighting against the communists that had come to power in Nicaragua after the Sandinista Revolution.
[00:03:33] Now, Nicaragua isn’t particularly close to the United States; you have Honduras, El Salvador, Guatemala, Belize and Mexico which act as a buffer.
[00:03:45] But it was still too close to home.
[00:03:49] So the CIA provided financial and military support to this group that would stir up trouble in Nicaragua, doing everything it could to disrupt the left-wing Sandinistas.
[00:04:02] Now, we’ll press pause on the Contras, as we now need to move right over to the other side of the geopolitical chessboard to a region in which the United States had other interests, interests that seemed to be completely unrelated to Nicaragua, but would turn out to be more related than initially thought.
[00:04:26] In 1979, the Iranian Revolution led to the overthrow of the Shah of Iran and the swift transition from a Western-leaning monarchy to an Islamic Republic hostile to Western influence.
[00:04:42] Later that year, a group of students stormed the US embassy and took 66 Americans hostage. This would come to be known as the Iran Hostage Crisis, and would last from November 1979 to January 1981, with the last hostages being released on the day of Ronald Reagan’s inauguration as president.
[00:05:08] As a result of the hostage crisis and of the Republic of Iran’s stated aim of spreading Islamic fundamentalism through the Middle East, the United States cut off all ties with the country, even going so far as to declare it a “state sponsor of terrorism”.
[00:05:28] This was a perfectly reasonable assessment; Iran was and still is the largest sponsor of terrorist groups in the region.
[00:05:36] But there were several problems with the United States breaking off all contact with the country, both for Iran and for the US.
[00:05:46] For Iran, it meant cutting off a vital source of military equipment.
[00:05:53] Under the Shah, Iran had been one of America’s best customers.
[00:05:58] Billions of dollars’ worth of U.S. jets, tanks, and missiles had been shipped to Iran.
[00:06:06] When relations broke, Iran was left with a shiny arsenal it couldn’t maintain. This was a problem, and an even greater one after September of 1980, when Saddam Hussein decided to invade Iran.
[00:06:23] For the United States, on the other hand, the loss of a former key ally could mean further instability in an already volatile region. And in fact, selling Iran the weapons it needed to fight off the Iraqi threat was no bad thing.
[00:06:40] A little war between Iran and Iraq actually served American interests quite nicely. The US didn’t want either side to emerge completely victorious, and the best possible scenario was a drawn-out conflict that left both parties weaker.
[00:07:01] And there was a third interested party: Israel.
[00:07:06] Israel had similar goals to the US when it came to supplying Iran with weapons: keep Iran and Iraq busy fighting amongst themselves, so that both emerge weaker.
[00:07:18] Now, I appreciate that things are getting complicated, but let me add one more country to the mix: Lebanon.
[00:07:27] Lebanon in the 1980s was in a state of chaos.
[00:07:32] The country had been torn apart by civil war, and in the middle of it, groups backed by Iran, including Hezbollah, had begun kidnapping Americans in Beirut.
[00:07:44] Journalists, teachers, and diplomats were taken and held for years. Even the CIA station chief, William Buckley, was taken.
[00:07:56] Their captors demanded the release of Hezbollah operatives being held in Israeli jails.
[00:08:03] This wasn’t going to happen; Ronald Reagan had built his reputation on never negotiating with terrorists, and it would be a huge public humiliation to go back on this, especially with the memory of the Iran Hostage Crisis still fresh in everyone’s minds.
[00:08:22] But, he did want the American hostages home safe, and it would certainly be convenient if there were some way of making this happen.
[00:08:34] And so, by the mid-1980s, the stage was set.
[00:08:39] On the one side, Nicaragua and the Contras.
[00:08:43] On the other, Iran, desperate for weapons, officially America’s sworn enemy, but also the only country with enough influence on Hezbollah to help secure the release of American hostages in Lebanon.
[00:08:59] And in the middle, Israel.
[00:09:02] Now, it’s important to stress that, even though we now talk of the “Iran-Contra Scandal”, the Iranians had nothing to do with the Contras, at least directly.
[00:09:15] And there wouldn’t have been any “scandal” were it not for Congress getting in the way.
[00:09:21] Bringing it back to the three branches of government we talked about at the start, starting in 1982, Congress passed a series of laws that would come to be known as the Boland Amendments, which prohibited United States intelligence agencies from providing funding for the Contras.
[00:09:42] Now, there was a series of amendments because each one went slightly further in terms of what was prohibited; we won’t go into the details of each one, but the important thing was that the clear intention was to stop U.S. involvement in Nicaragua’s war.
[00:10:01] There were several reasons for this, from the documented human rights abuses committed by the Contras through to a general public weariness of US involvement in the domestic affairs of other countries.
[00:10:15] And on paper, that was the end of it. The United States was now legally forbidden from funding the Contras.
[00:10:23] Now, to understand the next chapter of this story, we need to understand a bit more about the power dynamics within the Reagan administration.
[00:10:35] Ronald Reagan was very much a “big picture” man.
[00:10:39] He had strong convictions — fight communism, support freedom fighters, stand tall against America’s enemies — but he wasn’t a details person.
[00:10:51] He liked to set the general direction, then let his advisers work out the details of how to actually implement it. He would be brought memos to read or documents to sign off on, but he wouldn’t always read them, even before adding his signature.
[00:11:09] Remember this, as it’ll be important later on.
[00:11:13] What this meant was that his administration was filled with people who understood their role as interpreting what Reagan wanted and translating it into action.
[00:11:25] As long as they were executing his broad wishes, they had the green light to get creative.
[00:11:33] The first “creative” project was to do with getting the US hostages back, and this conveniently tied in with the problem of how to continue supplying the Iranians with weapons, despite Iran having become a sworn enemy of the United States.
[00:11:52] How it went was something like this.
[00:11:56] The Americans were approached by an Iranian named Manucher Ghorbanifar.
[00:12:03] He was a shady individual, a “devious character” according to Ronald Reagan and "one of the most despicable characters I have ever met", according to Robert MacFarlane, a National Security Advisor who we’ll meet again in a few minutes.
[00:12:19] He was a dodgy fellow, but he claimed to have influence within the Iranian regime.
[00:12:27] He told the Americans that if they supplied Iran with missiles, Iran would put pressure on Hezbollah to release the hostages held in Lebanon.
[00:12:40] Ghorbanifar wasn’t doing this out of the goodness of his own heart, of course; he stood to collect a healthy commission on the sale.
[00:12:50] The trade would all be facilitated through Israel, so the US would transfer the weapons to Israel, which would then secretly send them to Iran. In practice, Israel supplied some missiles from its own stocks, with U.S. approval, and would later be replenished by the United States.
[00:13:11] The Iranians would pay the agreed price, and the hostages would be released.
[00:13:17] It all went to plan, apart from the small detail that not all the hostages were released.
[00:13:24] In fact, what happened was almost the opposite.
[00:13:28] Yes, the Iranians got their missiles. Yes, Ghorbanifar pocketed his commission. But instead of releasing all the American hostages, Hezbollah freed one and then promptly kidnapped another.
[00:13:42] It became a grim game of hostage musical chairs: one out, one in.
[00:13:49] Now, this was all very much done behind closed doors; it wasn’t public knowledge. And there was debate within the White House about what to do next.
[00:14:01] Ghorbanifar said that the Iranians needed more missiles, and they would make sure the hostages were released if they were only sent a new batch, but this time of more sophisticated HAWK missiles.
[00:14:16] Despite the obvious reservations about Ghorbanifar’s trustworthiness, his clear financial incentive to broker as many deals as possible, and his claims to have influence, which may have been exaggerated, the Americans decided to go ahead.
[00:14:33] They had opened the door to Iran, and there were people inside the Reagan administration who thought that, despite the obvious risks, this was still worth pursuing.
[00:14:44] Robert McFarlane, the National Security Adviser, and his successor John Poindexter, they believed that engaging Iran could be part of a longer-term strategy, not just to free hostages, but to build bridges with so-called “moderates” inside the Iranian regime, moderates that Ghorbanifar promised existed.
[00:15:09] But, again, the same thing happened.
[00:15:12] Iran got its weapons, Ghorbanifar got his fat commission for brokering the detail, and all but one of the hostages remained in Lebanon.
[00:15:24] In fact, there is another character in this story you might remember from another episode: the Saudi arms dealer, Adnan Khashoggi.
[00:15:32] He was a key associate of Ghorbanifar and provided connections and financing for the deals. If you’d like to hear more about his fascinating and very dodgy life, episode number 466 is the one for you.
[00:15:48] Now, the man on the American side tasked with running the day-to-day details of this operation was a Marine lieutenant colonel called Oliver North.
[00:16:01] North worked in the National Security Council staff, the NSC, and he was the sort of officer who prided himself on “getting things done.”
[00:16:14] One of the things he was tasked with was finding creative ways to get around the Boland Amendment, the legal amendment prohibiting the US from providing federal funding for the Contras.
[00:16:27] One thing he did was make it clear to American allies that if they provided funding for the Contras, this could get them favourable treatment from the US.
[00:16:39] And several countries were perfectly willing to donate, giving money to the Contras, essentially on behalf of the United States.
[00:16:48] There was $32 million from Saudi Arabia.
[00:16:52] The Sultan of Brunei, on the other hand, transferred $10 million to a Swiss bank account, which was intended to be transferred to the Contras.
[00:17:03] Funnily enough, North made a mistake with the account number, and it was transferred to a 60-year-old Swiss businessman instead.
[00:17:13] And perhaps even more bizarrely, the man who received this $10 million transfer from the Sultan of Brunei didn’t question it, but instead transferred the money to a different account, and would later say he didn’t think anything of this large transfer, as he was expecting a big deposit anyway.
[00:17:33] He wasn’t prosecuted for this, so I guess the lesson there is that if you accidentally receive $10 million into your bank account from the Sultan of Brunei, just say you were expecting it and it’ll all be ok.
[00:17:47] Now, North might have had a mix-up with the Sultan of Brunei, but he was pretty efficient when it came to everything else.
[00:17:56] One of his responsibilities was moving the money around from the Iranian weapons sales.
[00:18:04] And some time around 1985, it’s thought, he noticed something interesting: there was $850,000 sitting in a Swiss bank account, profit left over from the weapons sales to Iran.
[00:18:21] It turned out that Ghorbanifar, true to Reagan’s assessment of being a “devious character”, had been massively overcharging the Iranians for the weapons, charging them 600% more. This had meant a much bigger commission for Ghorbanifar, but it also meant that with each trade, the US government would make a significant profit.
[00:18:46] What if this money could be diverted to the Contras?
[00:18:51] It was all “off the books” anyway, and it seemed to provide a neat solution: Iran got its weapons, which could, Ghorbanifar promised, lead to the return of the hostages, the surplus from this would go towards the funding of the Contras, and this wasn’t technically in violation of the Boland Amendment, because the NSC staff, as an advisory body in the Executive Office, wasn’t explicitly named like the CIA or the Pentagon.
[00:19:25] It existed in this legal grey area, this legal loophole.
[00:19:30] The world was a geopolitical puzzle, and this was how to solve it: neatly and tidily.
[00:19:38] So, once the principle was established — that money from Iranian arms sales could be siphoned off to fund the Contras — the operation began to grow.
[00:19:49] More shipments, more money, more intermediaries. An estimated $3.5 million diverted.
[00:19:57] Swiss bank accounts multiplied, more shady middlemen were brought in, and soon there was a parallel foreign policy running out of the basement of the White House.
[00:20:09] It was complex, it was secret, and it was completely outside the reach of Congress.
[00:20:16] It also didn’t really work.
[00:20:19] The more Americans dealt with Ghorbanifar and his Iranian contacts, the more obvious it became that this was a disaster in the making.
[00:20:28] Hostages weren’t really being freed. New ones were being taken.
[00:20:33] The Iranians, via Ghorbanifor, kept asking for more weapons, always promising that the next deal would be the last one needed.
[00:20:43] And inside the White House, not everyone even agreed on what the point of it all was.
[00:20:50] Was this about hostages? About opening a channel to Iran? Or just about keeping the Contras alive?
[00:20:58] The confusion was only just beginning.
[00:21:01] And what about Reagan himself?
[00:21:04] To this day, historians debate exactly how much he knew. He was briefed in vague terms, he nodded at memos, he signed off on broad directions. But he never seemed to focus on the details.
[00:21:22] This gave his advisers room to run, and run they did.
[00:21:28] Later, when the whole affair came to light, Reagan would insist he hadn’t authorised arms for hostages.
[00:21:36] But even so, even if you believe this statement and that he wasn’t leaning on his previous career as a Hollywood actor, it’s clear that his style of leadership — big on vision, light on detail — this was what allowed this all to happen in the first place.
[00:21:54] So, what happened next?
[00:21:56] Well, it might have all been kept under wraps, never revealed to the public, had it not been for an American aeroplane getting shot down over Nicaragua in October of 1986.
[00:22:10] The plane was carrying “60 AK-47 rifles, 50,000 AK-47 bullets, several dozen grenade launchers and 150 pairs of jungle boots", not exactly hand luggage for a romantic weekend away.
[00:22:27] All but one of the crew were killed. The sole survivor was a man named Eugene Hasenfus, who jumped out of the plane and activated his parachute.
[00:22:39] He was captured with flight logs, phone numbers, and documents that pointed to an extensive operation. He was questioned, and there was a press conference in which he stated that these flights into Nicaragua were the work of the CIA.
[00:22:56] Washington denied it, of course, but the crash blew open the Contra side of the story: the US government, in direct violation of the Boland Amendments, was still interfering in Nicaragua.
[00:23:12] And then, less than a month later, the other shoe dropped, this time from the Middle East.
[00:23:20] On 3 November 1986, a Lebanese newspaper published a scoop: the United States had secretly shipped missiles to Iran. The details were startling: anti-tank and anti-aircraft missiles, routed through third countries, all supposedly to win influence with “moderates” and help free hostages in Lebanon, influence that had no signs of being won, and hostages that were not released.
[00:23:53] Importantly, the two stories weren’t initially connected; they were two different scandals, and were both addressed separately.
[00:24:04] But from that point on, events moved quickly.
[00:24:09] On 13 November, Ronald Reagan addressed the nation. He insisted it hadn’t been “arms for hostages.” He spoke of reaching out to Iranian moderates.
[00:24:21] But the press and Congress smelled blood.
[00:24:26] And behind the scenes, there was panic. An internal investigation was launched.
[00:24:32] In the NSC offices, as investigators approached, Oliver North and his secretary shredded incriminating documents and memos. Notes were pulled, files disappeared.
[00:24:45] Unfortunately for them, and fortunately for justice and my ability to tell this story, some paperwork survived.
[00:24:55] There was an internal review led by the Attorney General, and his team found what no one had admitted in public: profits from the Iran missile sales had been diverted to the Contras.
[00:25:11] In that instant, two separate scandals snapped together into one: Iran–Contra.
[00:25:20] The cover was gone. Congressional hearings followed in 1987; Oliver North, with his crisp uniform, tidy hair, and unflinching tone, became the public face of the scandal.
[00:25:35] Appearing in his Marine uniform, Lt. Col. North defiantly defended his actions, portraying them as patriotic.
[00:25:45] An estimated 55 million Americans watched his first day of testimony, and “Olliemania” broke out across the country. Shirts and bumper stickers were sold, supportive prayer vigils were held, and hundreds of thousands of dollars were collected for his legal fees.
[00:26:05] The jury found North guilty on 3 of the 12 counts against him. He was sentenced to a three-year suspended prison term, two years probation, $150,000 in fines, and 1,200 hours of community service, convictions that were all overturned the following year.
[00:26:27] In terms of the others implicated, John Poindexter resigned. His predecessor, Robert McFarlane, was pulled back in for questioning.
[00:26:36] The independent counsel opened years of investigations.
[00:26:40] There were more convictions, but some were overturned on appeal.
[00:26:46] And in December 1992, then President George H. W. Bush issued pardons that closed the legal book if not the historical one.
[00:26:59] As for the legacy of the affair, well, you would be hard-pressed to argue that it’s the worst crime committed by a sitting American president.
[00:27:09] Historians to this day disagree on the extent of Ronald Reagan’s involvement, or even the extent to which he was aware of the details.
[00:27:19] And even if he knew, there are plenty of people who agree with the intention: it did, after all, seem like a neat solution to several problems. “Neat” was indeed the adjective North used to describe the idea.
[00:27:36] But it was in clear violation of US law, in terms of the financing of the Contras, and in contradiction to stated US policy, in terms of the sale of arms to Iran.
[00:27:50] To its critics, and Reagan’s critics, it was both illegal and hypocritical, as well as corrosive to constitutional checks and balances.
[00:28:00] And did it work? Well, the answer to that is more clear-cut: it did not.
[00:28:08] US-Iran relations are still frosty, Iran is still designated as a major sponsor of terrorist groups in the region, Daniel Ortega, the then-leader of the Sandinistas, is still President of Nicaragua, and for Hezbollah, taking hostages hasn’t exactly gone out of fashion.
[00:28:29] And as for the question of whether subsequent US Presidents learned any lessons from it, well, I’ll let you be the judge of that.
[00:28:39] OK, then, that is it for today's episode on the Iran-Contra scandal.
[00:28:44] I know it was quite a complicated one, with lots of moving parts and people to keep track of, but I guess that’s what happens when you conduct a game of geopolitical chess, involving Swiss bank accounts, American missiles, sworn enemies and Central American guerrillas.
[00:29:01] You've been listening to English Learning for Curious Minds by Leonardo English.
[00:29:05] I'm Alastair Budge, you stay safe, and I'll catch you in the next episode.
