Unaware of Contras Link, Reagan Says

President Reagan said for the first time Monday that he had no prior knowledge of funds from Iranian arms sales being diverted to Nicaraguan rebels and declared that if it is warranted, “I would welcome” the appointment of an independent counsel to investigate the secret operation.

Reagan, responding to questions about the funds diversion, authorized White House spokesman Larry Speakes to tell reporters “flat-out that I had no knowledge whatsoever of it until (Atty. Gen.) Ed Meese briefed me on it (last) Monday afternoon.”

The President also ordered the National Security Council staff to stay out of such covert activities as the Iran operation until his special three-member commission completes its investigation of NSC workings.

‘Full Airing’ Sought

In remarks made at the formal launching of the work of the commission, headed by former Sen. John Tower (R-Tex.), Reagan called for a “full and complete airing of all the facts.”

And he declared: “The Department of Justice investigation is continuing with my full support and cooperation, and if they determine an independent counsel is called for, I would welcome that appointment.” Meanwhile, there were these developments in Washington as the White House and senior members of Congress focused intently on the unfolding story of the once-secret project:

--Former national security adviser Robert C. McFarlane spent about six hours behind closed doors with members of the Senate Intelligence Committee. Neither McFarlane nor members of the committee would disclose what was discussed.

--Shortly after McFarlane departed, Lt. Col. Oliver L. North, in his Marine Corps uniform, was seen entering the intelligence panel’s hearing room.

--Senate Republican leader Bob Dole of Kansas and Senate Democratic leader Robert C. Byrd of West Virginia met for about an hour to discuss Dole’s suggestion that the President call Congress into special session to create a select committee to investigate the matter. Byrd and other Democratic congressional leaders have refused to support the idea. Reagan said it was “under discussion.”

--State Department spokesman Charles Redman said that department officials, working under the supervision of Abraham Sofaer, the department’s legal adviser, are assembling documents that might assist the FBI investigation of the burgeoning scandal. He said that no documents had been forwarded to the FBI so far and that he did not know when any would be sent. Redman said Sofaer last week prohibited the destruction of any documents that might be relevant to the case.

Reagan’s remark denying any knowledge of the project, which was developed by his aides, was intended to clarify ambiguity left by his comment last Tuesday that he was “not fully informed on the nature of one of the activities undertaken in connection” with his policy toward Iran.

Attorney General’s Account

Meese has said that he told the President at the meeting on Monday of last week that between $10 million and $30 million in funds paid by Iran for American weapons was channeled to Swiss bank accounts controlled by Nicaraguan rebels who are trying to overthrow the Sandinista government.

That plan, developed during a period in which Congress had forbidden U.S. funding for military activities of the contras, as the rebels are known, was drawn up by North, who was a National Security Council staff member. North was fired from his job last Tuesday, and his White House boss, Vice Adm. John M. Poindexter, resigned from his post as the President’s national security adviser when a Justice Department investigation concluded that Poindexter had learned of the diversion of funds but did not pursue the matter.

Meanwhile, as questions continued to be raised about which White House officials in addition to Poindexter knew about the plan, Speakes was asked whether Chief of Staff Donald T. Regan had plans to resign. “Every indication is he does not,” the spokesman said.

Reagan, Panel Confer

Reagan met for slightly more than half an hour Monday with the three members of the Special Review Panel he appointed to study the operation of the National Security Council staff. They are Tower, the chairman; Edmund S. Muskie, a former Democratic senator from Maine and former secretary of state, and Brent Scowcroft, a retired Air Force lieutenant general who served as former President Gerald R. Ford’s national security adviser.

“I am determined to get all of the facts out and take whatever action is necessary,” Reagan said at the start of the meeting. “The work of this board and the Department of Justice investigation will do just that.”

He directed the panel, which has been given 60 days to complete its task, to determine “whether and under what circumstances the National Security Council staff was, and should be, directly involved in the operational aspects of sensitive, diplomatic, military or intelligence missions.”

As examples, he cited four such events: the hijacking by Palestinian guerrillas of the Achille Lauro cruise ship in the Mediterranean Sea in October, 1985; the June, 1985, hijacking of TWA Flight 847 shortly after it left Athens; the U.S.-led invasion of Grenada in 1983, and the Iran operation.

Waiting for Report

“I have directed the National Security Council staff not to participate in the actual operations associated with such activities pending the outcome of the report by the Special Review Board,” Reagan said.

Later, Tower told reporters that Reagan “will be available to respond to questions from us.” The former senator appeared reluctant to say whether the panel would seek to determine whether Reagan knew that the contras were receiving the money paid by Iran for the weapons.

But Muskie said in response to a question: “I would think it’s as relevant as all the other facts that we will seek to get. It is our objective to try to reassure the public when we are through that we have fully probed this problem.”

At the Capitol, Byrd, who will become Senate majority leader when the new Congress convenes next month, said that a special session of Congress to create a Watergate-style select committee “would send the wrong signal. It would create an atmosphere of crisis that isn’t necessary.”

Request for Counsel

Rather, he said, Reagan could order Meese to ask the federal court in Washington to name an independent counsel, formerly called a special prosecutor.

In the House, Majority Leader Jim Wright (D-Tex.) issued a statement saying: “I do not believe that a hurried special session of Congress would be either necessary or beneficial. There is a serious problem, but this is no occasion for panic or hysteria.”

Even some influential members of the President’s own party, including Assistant Senate Republican leader Alan K. Simpson of Wyoming and House Minority Leader Robert H. Michel of Illinois, were also understood to oppose a special session.

Nevertheless, Dole said that the idea is still being considered at the White House and will be discussed today when Republican leaders meet with the President. He indicated that he is advocating a special session because it would allow congressional investigators an opportunity to get organized and to hire staff before the new year begins.

As Soon as Possible

Dole, who is preparing to run for President in 1988, said it would be better for the Republican Party if the matter were fully investigated as soon as possible. He recalled that he was party chairman during the Watergate scandal and that, “having been through that one time, it seems to me we’ve got to cut our losses and do it as quickly as we can.”

Dole and Byrd agreed that an independent counsel should be appointed and that the Senate should create a select committee similar to the Watergate panel headed by the late Sen. Sam Ervin (D-N.C.). No select committee can be named unless Congress is in session.

“What we want to avoid is the paralysis of having a great number of committees, a great number of committee staffs, falling over one another, seeking to bring the same witnesses up, the same documents, the same day,” Byrd said.