On November 25, 1986, after a Lebanese newspaper broke the story of arms-for-hostages, Attorney General Edwin Meese revealed that illegal funds had been diverted to the Contras. Reagan downplayed the weapons which were delivered to Iran. He stated that TOW missiles were "hand held" and that they all could be "transported in one cargo plane." Reagan also asserted, "The TOW anti-tank missile is a purely defensive weapon. It is a shoulder-carried weapon. And we don't think that in this defensive thing -- we didn't add to any offensive power on the part of Iran." The TOW missile weighed 56.3 pounds and was four feet long. The complete system required a crew of four people. In addition, TOWs could be used offensively by Iran to attack Iraqi tanks.
It took several days before North's White House office was sealed, so he and his secretary, Fawn Hall, were able to shred damaging papers in this time period.
Reagan attempted to convince the public that his administration was not dealing with Khomeini but with "moderate elements" within the country. Reagan sent both McFarlane and North on a goodwill trip to Teheran to meet with Khomeini and to present him with an autographed Bible and a cake in the shape of a Bible. The Khomeini government refused to allow them to meet with anyone, and they only waited on the Teheran tarmac for several hours before returning to the United States. Because McFarlane's frustration level increased and because he continued to wrestle with the unethical American covert operations, he resigned as Reagan's NSC adviser and was replaced by Navy Admiral John Poindexter.
The next year, a joint Congressional hearing was created to investigate Iran-Contra. The committee granted immunity to North, thus forcing him to testify. North bragged that the United States carried out an illegal covert operation to fund the Contras in Central America. Since the Boland Amendment prohibited the funding of the Contras in their effort to overthrow the leftist Sandinista government in Nicaragua, the NSC sought other avenues. The first was to convince Congress to allocate funds for "humanitarian aid." However, this money was used illegally to arm the Contras and was terminated after several months. Therefore, the NSC had to look for other sources of funds.
North testified that he took it upon himself to carry out "Operation Democracy." He boasted that the profits from the illegal arms sales to the Khomeini regime were placed in secret Swiss bank accounts and that dummy CIA fronts such as Lake Resources in Florida. These funds were used to purchase weapons with which to arm the Contras in Central America. This was carried out by North along with Hakim, Secord, and Singlaub.
North skimmed $50,000 from a secret cash account which was set up by the Contras. Secord helped arrange for weapons which were illegally obtained with profits from the sales to Iran and then shipped south to the Contras. Hakim was a military sales agent who worked as a middleman with Secord. Hakim was quoted after President Carter's aborted hostage rescue in Iran in 1979: "He couldn't have been happier when the Carter administration needed." Air Force General John Singlaub, who was president of the World Anti-communist League, became involved in raising funds overseas for the Contras in 1981.
On the domestic front, North solicited donations from various wealthy people. Claiming that communism was entrenched in Nicaragua and that it would move northward, he was able to solicit $80,000 from Adolph Coors. An $80,000 Cessna spotter plane, to be used in flights over Nicaragua, was purchased. North called wealthy widows, promising them photo sessions with Reagan if they made large contributions. One wealthy woman contributed $200,000 and was rewarded with a five minute meeting with Reagan. Billionaire Ross Perot supplied $2.3 million to North in an attempt to liberate Beirut CIA station chief Buckley in Lebanon. The sultan of Brunei contributed $1 million, and King Fahd of Saudi Arabia turned over $32 million.