CIA Director William H. Webster said yesterday in a closed hearing of the Senate Select Committee on Intelligence that the Reagan administration opposes new legislation for the Central Intelligence Agency in the wake of the Iran-contra affair, according to two informed sources.
Webster told the committee that he sees no need for legislation that would require Senate confirmation of appointees to the post of CIA inspector general, the key recommendation for changing CIA management in the final congressional Iran-contra report released Wednesday.
The Iran-contra report said the inspector general, who reviews allegations of misdeeds by agency personnel, "appears not to have had the manpower, resources or tenacity to acquire key facts uncovered by the other investigations."
But Webster told the committee that such legislation is unnecessary because his internal review would result in needed personnel and policy changes. He promised to strengthen the inspector general's stature, but said he first wanted to review the conclusions of Washington lawyer Russell Bruemmer, who is doing a report on CIA's role in the Iran-contra affair.
Bruemmer, whose report is expected to be completed in four or five weeks, was an assistant to Webster when Webster headed the Federal Bureau of Investigation.
During yesterday's hearing, Webster also reiterated the Reagan adminstration's opposition to legislation introduced in the Senate and House that would mandate, without exception, that any new covert actions be reported to the congressional intelligence committees at least within 48 hours after initiation. The Iran-contra report also endorsed this approach.
President Reagan said in a letter Aug. 7 that he would notify Congress of covert activities within 48 hours "in all but the most exceptional circumstances." Key members of the Senate and House intelligence committees have criticized the president's position.
The question of notification was a central issue in the Iran-contra affair because the Iran arms sales were carried out as part of a covert action finding that was not reported to Congress for at least 10 months last year.
Yesterday's closed hearing dealt exclusively with legislative matters that are unclassified, the kind of testimony usually made in a public session, the sources said. One senator on the committee said yesterday that "too much goes on covertly and in closed hearings. It shouldn't. No one had thought about it."
A CIA spokesman declined comment, saying the committee had to release any information. A committee spokesman, David Holliday, said the CIA could release Webster's prepared remarks if it wanted to.
The congressional Iran-contra report recommended that new laws be passed requiring that both the inspector general and the CIA general counsel be confirmed by the Senate. Senate confirmation would give the two key officials more independence and more control over their investigations.
The Iran-contra congressional committees found that CIA field operatives repeatedly lied to the CIA inspector general during his various inquiries into allegations that the agency secretly assisted the Nicaraguan contras. A number of sources said that the inspector general is considered a pawn of senior CIA management and held in low esteem.
Webster told the committee yesterday that when he took over as FBI director in 1977 he was able to handle problems of misconduct internally and believed he could do the same at the CIA. He became CIA director on May 26, succeeding the late William J. Casey.
In recent years, the CIA inspector general position has not had the status it did 25 years ago, according to agency veterans. There have been four inspectors general since 1981, when Casey became director and Reagan took office.
Congressional investigators cited two examples where the inspector general's office failed to uncover key facts. In 1986, allegations surfaced that CIA officers based at a contra camp in Honduras arranged a resupply of arms to the contras using CIA helicopters, an activity prohibited by U.S. law.
In early 1987, these officers lied to committee investigators when questioned about their operations, according to congressional sources. In April, however, at about the same time that the congressional investigators were able to prove the helicopter flights had taken place, the CIA's inspector general informed the committees that one of the individuals involved had come forward and confessed, the sources said.
The inspector general, however, did his inquiry and his report was made available to the committees.
"He determined that it was a case of boys-will-be-boys," one congressional source said, characterizing the report as finding that delivering arms to the contras "was only violating regulations . . . can't be proven as a violation of laws because there was no criminal intent, and besides, we want energetic people that take initiatives."
The second example came after a cargo plane carrying arms to the contras was shot down over Nicaragua on Oct. 5, 1986. The CIA's inspector general opened an inquiry after the agency was linked to the flight by material at the site and comments by Eugene Hasenfus, only surviving crew member.
CIA officials, including Thomas Castillo, the agency's station chief in Costa Rica, lied to the inspector general about his role when questioned as part of the investigation. He also told a false story to the Senate intelligence committee.
Castillo changed his story -- admitting that he aided the resupply network -- after the staff of the Tower review board confronted him with records maintained by former National Security Council aide Marine Lt. Col Oliver L. North. The documents identified Castillo as part of the team that assisted the Hasenfus plane.
The CIA inspector general then had to reopen his inquiry into agency Central American covert operations. The CIA's acting director, Robert M. Gates, took the unusual step of saying that those who had lied earlier could come forward to tell the truth.