The Iran Contra Affair broke headlines in November of 1986. The Reagan administration had been selling weapons to Iran via Israeli agents. The profit they made was then funneled to finance more weapons for right wing Contra rebels in Nicaragua. Congress had strictly prohibited US backing of both groups (see Boland Amendment) But hey, who needs a Reichstag, err… Congress.
Ronald Reagan claimed the weapons to Iran were to secure the release of 14 US hostages being held by Hezbollah in Lebanon. The first arms shipments occurred in 1981 but the hostages were taken later (NYTimes). Paying ransoms for hostages is strictly against US policy as it encourages terrorists to take more hostages in the future.
The sordid affair was investigated by the Tower Commission, three officials appointed by Ronald Reagan to investigate the Reagan administration’s involvement. They accused Reagan of a lax managerial style and implicated Oliver North, John Poindexter, and Caspar Weinberger. Good thing Reagan appointed the members.
North independently added fees to the weapons being sold to Iran. He also received support from the Sultan of Brunei. Some of those funds ended up in the wrong Swiss bank account.
Iraqi dictator Saddam Hussien (Case Study 30) and Iran’s Ayatollah Ruhollah Khomeini (Case Study 31)were locked in the Iran-Iraq War. The US was officially selling weapons to Iraq (including nerve and mustard gas). Without the arms sales Iran may have been defeated by the Iraqi army. Fromm (working for Aramco and calling himself Rommel) and company had gone to great lengths to get their boy in charge of Iran.
Several Indictments and convictions resulted from an investigation by independent counsel, Lawrence E Walsh. All the convictions were vacated or pardoned by President George Bush Sr after he lost his bid for re-election under advisement of his Attorney General, William Barr.
Hopefully that clears things up a little.