Shultz Attacks Casey as Secretive, Meddler : Says CIA Director Provided ‘Faulty Intelligence’ to Bolster His Policy Ideas, Including Arms Swap

WASHINGTON — The late CIA Director William J. Casey provided “faulty intelligence” to President Reagan and other Cabinet officers to bolster Casey’s own policy ideas, including the arms-for-hostages swap with Iran, Secretary of State George P. Shultz charged Thursday.

In an extraordinarily frank attack on Casey’s handling of the intelligence process, Shultz said that the CIA chief meddled in diplomatic efforts, produced unreliable intelligence analyses and attempted to continue negotiations with Iran even after the secret Iranian arms sales were exposed last year.

“I hate to say it, but I believe that one of the reasons the President was given what I regard as wrong information, for example, about Iran and terrorism, was that the agency, or the people in the CIA, were too involved in this,” Shultz told the congressional committees investigating the Iran- contra scandal.

“Long before this all emerged, I had come to have grave doubts about the objectivity and reliability of some of the intelligence I was getting, because I had a sense of this,” he said.

Unusual Criticism

Casey, who died in May, often came under fire for his free-wheeling approach to covert operations and his resistance to informing Congress about CIA activities. But never before has a senior Administration official publicly criticized Casey’s management of the intelligence process and the analyses he provided the White House.

The issue is critical to the conduct of foreign policy because key presidential decisions are almost always made on the basis of analyses provided by the CIA and other intelligence agencies.

Allen W. Dulles, President Dwight D. Eisenhower’s CIA chief, once wrote: “The most serious occupational hazard we have in the intelligence field, the one that causes more mistakes than any foreign deception or intrigue, is prejudice. . . . Policy must be based on the best estimate of the facts which can be put together. That estimate, in turn, should be given to some agency which has no axes to grind and is not wedded to any particular policy.”

In his testimony, Shultz focused on a series of CIA analyses in 1985, when Casey and Robert C. McFarlane, then President Reagan’s national security adviser, were proposing negotiations with Iran over the objections of Shultz and Secretary of Defense Caspar W. Weinberger.

The CIA analyses argued that Soviet influence in Iran was growing and that the United States should provide weapons to the Tehran regime as a counterweight.

“I . . . feel that the intelligence that was the basis for the original recommendation was faulty and that it was tied in with the policy,” Shultz said.

Criticized by Tower Panel

The presidential commission headed by former Sen. John Tower (R-Tex.) also criticized the CIA for that analysis because it appeared that “the strong views of NSC staff members were allowed to influence the intelligence judgments.”

CIA Deputy Director Robert M. Gates, who was the agency’s chief of intelligence analysis at the time, has denied that the analysis was improperly influenced by policy considerations.

Shultz charged also that Casey and other officials provided faulty intelligence to President Reagan while the secret negotiations with Iranians were under way during 1985 and 1986.

“I felt that the intelligence that he was getting during that period was faulty about Iranian terrorism,” Shultz said.

State Department officials have said the CIA and NSC staffs argued that Iranian-sponsored terrorism declined significantly while the United States was selling weapons to Tehran. State Department analysts who did not know about the sales disagreed with that conclusion.

However, other officials, including several who were not Casey partisans, have said that Casey did not often interfere with the work of his intelligence analysts.

Disagreed With Analysts

And, earlier this week, Rear Adm. John M. Poindexter, another former national security adviser, testified that Casey openly disagreed with his own analysts’ view of the Iran-Iraq war. The analysts produced a report warning that Iran was gaining the upper hand in the war, but Casey embraced Israel’s view that Iraq was in the stronger position.

Shultz made it clear that his view was colored by a series of disagreements with Casey. Those included sharp conflicts over the Iranian arms sales and over a proposal to curb “leaks” of secret information by subjecting Cabinet officers and other officials to lie detector tests. Casey favored the polygraph plan, but Shultz blocked it by threatening to resign if it was implemented.

‘Uncomfortable With Me’

“I knew the White House was very uncomfortable with what I was getting from the intelligence community, and I knew they were very uncomfortable with me--perhaps going back to the lie detector test business,” Shultz said of the Administration’s internal conflicts in 1986.

Shultz said he had also clashed with Casey in December, 1986--a month after the secret arms sales were exposed--when he discovered that the CIA was still participating in clandestine negotiations with Iran, despite a presidential order--which Shultz obtained--barring the agency from the talks.

“It meant that the battle to get intelligence separated from policy--and control over the policy--was very much in play,” he said. “And the director of central intelligence wanted to keep himself heavily involved in this policy, which he had been involved in, apparently, all along.”

Shultz discovered also that the CIA was still dealing with the Iranians on the basis of a nine-point agenda that included a U.S. commitment to seek the release of pro-Iranian terrorists imprisoned in Kuwait in exchange for the release of American hostages--an idea Shultz angrily rejected.

Given Cabinet Rank

Shultz, in expressing his belief that future CIA directors should be kept out of the policy process, raised a question that was often debated--more discreetly--within the intelligence community during Casey’s tenure. Casey, a key adviser in Reagan’s presidential campaign in 1980, was the first director of central intelligence to be given Cabinet rank.

“One (lesson of the scandal) is . . . separating the function of gathering and analyzing intelligence from the function of developing and carrying out policy,” Shultz said. “If the two things are mixed in together, it is too tempting to have your analysis and your selection of information that’s presented favor the policy that you’re advocating. And, even if you’re very good at avoiding that, still--when it’s known that you are a strong advocate of a certain policy--the people who don’t share your view are bound to wonder about the intelligence.”

Shultz said he has discussed the issue with Casey’s successor at the CIA, former FBI Director William H. Webster, who has not been given Cabinet rank, and has been “very reassured . . . at the way he’s approaching it.”