You are familiar with exhibit 38A involving the DEA caper? [The exhibit appears at p. 537.]

Mr. McFARLANE: Yes, sir.

Mr. RUDMAN: That describes a plan to bribe some people to free two hostages for a million dollars apiece?

Mr. McFARLANE: Yes, sir.

Mr. RUDMAN: You approved it?

Mr. McFARLANE: The Attorney General approved it.

Mr. RUDMAN: And the Attorney General approved it. You both approved it.

Mr. McFARLANE: Yes, sir.

Mr. RUDMAN: Did it involve the use of a couple of agents and ransom money to be supplied by Ross Perot, if he was willing to provide it?

Mr. McFARLANE: Yes, sir.

Mr. RUDMAN: Was that an intelligence activity? And if it wasn't, What kind of an activity was it?

Mr. McFARLANE: Well, it wasn't intelligence in the context of gathering intelligence. It was within the scope of the 1947 Act concerning the CIA.

Mr. RUDMAN: It was within that scope, was it not?

Mr. McFARLANE: I think it was.

Mr. RUDMAN: In fact, Oliver North tried to carry this out, which was a policy that had been approved by you. In fact, there was $200,000 used to try to start the process? .

Mr. McFARLANE: That's correct.

Mr. RUDMAN: On the face of that memoranda, there is an acknowledgement that the Attorney General of the United States, Mr. Meese, whom you probably discussed it with since DEA was under his jurisdiction, approved it?

Mr. McFARLANE: Yes, sir.

Mr. RUDMAN: To your knowledge, was a finding ever signed for this activity?

Mr. McFARLANE: No, sir.

Mr. RUDMAN: Were congressional committees, House or Senate Intelligence Committees ever notified of this activity?

Mr. McFARLANE: No, sir.

Mr. RUDMAN: Should they have been?

Mr. McFARLANE: No, sir.

Mr. RUDMAN: Tell me why.

Mr. McFARLANE: I will. It is more than passing strange to me that we cannot aspire to a policy which is more effective to deal with terrorism. Now, it is undeniable that some countries are good at it and they are good because terrorists know that whenever they commit terrorism against Israel, something, somehow, somewhere is going to happen. Now, it may not always be arms. It may not be pre-emptive attack. It may be negotiation. It may be bribing, but you can be goddammed sure if any Israeli is caught, he's going to have his government going after people who did it. Now, that is to be a differentiated approach. Now, I don't pretend that in the United States we can pursue that. The reason we cannot is because we must have a policy at all times compatible with American values. And I agree to that. But I believe that our government must have the gumption enough to be able to differentiate between those terrorist events which are susceptible to violence and those which are not.

Mr. RUDMAN: So if I understand your answer, it fell within the parameters of the act. There was no finding, but you believe it was so sensitive that there should not have been a notification, though the law might have required it? .

Mr. McFARLANE: No, sir. I don't feel that way at all. You are distorting what I said.

Mr. RUDMAN: I am just repeating your answer. .

Mr. McFARLANE: I don't think you are. My answer was the kind of activity the DEA people undertook normally would also fit the description of activities the CIA undertakes or the FBI or the Army on occasion with special trained units. None of those others opt to report to the Congress either. My point was simply to say—

Mr. RUDMAN: So your suggestion was if there is ambiguity III that law, the law ought to be changed?

Mr. McFARLANE: That wasn't my point.

Mr. RUDMAN: Your point was that a finding was required. There was no finding. There was no notification.

Mr. McFARLANE: I am not being critical. I am trying to figure out—

Mr. McFARLANE: It was handled by the CIA.

Mr. RUDMAN: There was a finding?

Mr. McFARLANE: There was no finding.

Mr. RUDMAN: I think we have your answer.

Mr. McFARLANE: A finding was not appropriate. The CIA did not undertake to do anything.

Mr. RUDMAN: Of course, that would always give rise to the possibility that things that the CIA might normally do might be delegated to some other part of the government by people who are unscrupulous. Certainly not you, Mr. McFarlane, but others who might be unscrupulous might delegate it to someone, and therefore evade the reporting requirements. I am sure that is something that concerns you as much as it does us.

Mr. McFARLANE: It does, yes, sir.

Mr. RUDMAN: Thank you very much.