Washington — Former White House chief of staff Donald Regan, testifying in the congressional Iran-contra hearings, said the Reagan administration had fallen victim to a ``bait and switch'' scheme - with American hostages as the bait. Mr. Regan also injected further confusion into the tangled story of the affair by contradicting previous witnesses about President Reagan's role in the events of 1985 and '86 that led to the Iran-contra affair.
Mr. Regan, who resigned under pressure in February, depicted a White House beset by internal dissent and rivalries, where controversial policies were set and carried out with minimal oversight from the President and other high administration officials.
And he conceded that some White House officials concocted a ``cover story'' to hide the fact that the United States was trading weapons with Iran.
But Regan said he did not believe that President Reagan had advance knowledge of the diversion of funds to the contras. The President, he said, showed ``deep distress'' when being told about the diversion last Nov. 24.
``This guy, I know, was an actor,'' said Regan, but he added that the President's shock seemed genuine. ``I'd give him an Academy Award if he knew,'' Regan added.
The former chief of staff admitted that the administration had been ``snookered'' by Iranians, who held out the prospect of the release of American hostages in return for American arms - then repeatedly went back on their word and raised their demands.
And, he said, if the Iranians had not had control over the lives of American hostages, then President Reagan would never have approved the arms sales. That seemed to call into question Reagan's claim that the desire for a ``strategic relation'' with Iran - and not a swap for hostages - was the motivating factor behind the Iranian arms sales.
Regan's testimony further clouded the issue of just when the President did approve the arms sales. Earlier, Rear Adm. John Poindexter testified that on Dec. 5, 1985, the President signed a ``finding'' approving US assistance to Israel in providing weapons for Iran in exchange for the hostages.
But Regan, who sat in on the President's daily national-security briefings by Admiral Poindexter and kept track of the flow of paper into and out of the Oval Office, said, ``I certainly did not see that document.''
Regan disclosed, however, that only the staff of the National Security Council kept copies of some of the foreign policy papers signed by the President, and that sometimes the national-security adviser kept the only signed copy in his safe. That suggests the exact contents of NSC files shredded or destroyed by Poindexter and his former aide, Oliver North, may never be known.
Further, Regan disclosed that at times, former Central Intelligence Agency Director William Casey met alone with Reagan, especially when ``he had something hot.''
Colonel North claimed that Mr. Casey had extensive knowledge of the diversion of funds to the contras. Casey died earlier this year, before revealing his exact role in the Iran-contra affair or what he told the President. President Reagan, however, has repeatedly insisted that no one told him of the diversion.
Regan flatly contradicted the assertion of former national-security adviser Poindexter that the President would have approved of the diversion had he known.
``That whole idea would have been very much contrary to the Ronald Reagan I knew,'' Regan said.
Regan buttressed earlier descriptions of Poindexter as a man nearly obsessed with secrecy, so adept at ``compartmentalizing'' NSC operations that no one save Poindexter had overall knowledge of them.
As the Iran-contra affair was coming unraveled last November, Regan said, Poindexter was still withholding information even from President Reagan.
He described a rehearsal in which the President was preparing for a Nov. 19, 1986, press conference. It was customary, Regan said, for aides to play the part of aggressive reporters at these rehearsals, and for key advisers to critique the President's performance and suggest appropriate replies.
But even in these practice sessions, Regan said, ``Admiral Poindexter was trying to be oblique,'' apparently in an effort to keep even White House staff members from understanding the details of the Iranian arms sales. He said that Poindexter even made reference to a ``cover story'' that the US had helped Israel ship oil-drilling parts, and not weapons, to Iran.
``I think this kind of confused the presidential mind,'' said Regan, adding that the President was consequently ``on guard'' and ``botched'' the response to key questions about the arms sales. As a result, Regan said, a correction had to be issued after the press conference.
Regan acknowledged that he has come under criticism for his management of the White House, and for the ``chaos'' that descended on the White House as the Iran-contra affair unfolded.
But, said Regan philosophically, ``I'll tell my story and let history judge it.''