Until last week the Iran-contra scandal seemed ready to fade from the courts, the news and the mind. After costing more than four years and $25.5 million, the investigation headed by special prosecutor Lawrence Walsh was limping to a close. A federal appeals court had overturned Lieut. Colonel Oliver North's felony conviction, and a retrial seemed unlikely. The same outcome seemed possible for former National Security Adviser John Poindexter's conviction.
Then the scandal roared back to life with a series of stunning developments. They suggested that:
-- Top intelligence officials had engaged in covering up the Reagan Administration's attempts to evade a congressional ban on aid to the Nicaraguan rebels by siphoning off profits from secret arms shipments to Iran.
-- The Iran-contra affair may be only part of a broader and previously undisclosed pattern of illegal activities by intelligence agencies during the tenure of Ronald Reagan and his CIA chief William Casey. Sources close to the unfolding investigation of the Bank of Credit & Commerce International told TIME that U.S. intelligence agencies, including the CIA, maintained secret accounts with the globe-girdling financial empire, which has been accused of laundering billions of dollars in drug money, financing illegal arms deals and engaging in other crimes.
The discovery of the CIA's dealings with B.C.C.I. raises a deeply disturbing question: Did the agency hijack the foreign policy of the U.S. and in the process involve itself in one of the most audacious criminal enterprises in history? Items:
-- Alan Fiers, head of the CIA's Central America task force from 1984 to 1986, pleaded guilty on Tuesday to two counts of lying to Congress about when high- ranking intelligence officials first learned of the illegal diversion of funds to the contras. Fiers said he became aware of the diversions and informed Clair George, then the CIA's deputy director for operations, in the summer of 1986. But, Fiers said, George ordered him to deny any knowledge of the transfers when he testified before the House intelligence committee that October. In exchange for being allowed to plead guilty to two misdemeanors instead of more serious felonies, Fiers is now assisting Walsh's investigation. With his help, Walsh will probably seek a perjury indictment of George and perhaps other present and former government officials.
-- Three days after Fiers entered his plea, the New York Times disclosed that Walsh possesses tapes and transcripts of hundreds of telephone conversations between CIA headquarters in Langley, Va., and agents in Central America. The talks occurred during the period when North, former Air Force General Richard Secord and his business partner Albert Hakim were operating their secret arms pipeline. The tapes -- which have been in Walsh's hands for three years -- were recorded on a system that George installed at the agency's operations center in the early to mid-1980s.