After President Ronald Reagan took office in 1981, he decided to rely mostly upon Cabinet members and their department staffs for advice, and issued a directive putting them — rather than National Security Council staffers — at the helm of various regional groups and sub-committees within the NSC. He also downgraded the role of the national security adviser, assigning him to report to the White House chief of staff and blocking direct access to the president. While those moves were aimed at reducing internal conflict, a Congressional Research Service report later concluded that giving cabinet members control "tended to reduce the possibility that all sides of a given issue would be laid before the full NSC or the President" [source: Best].
Instead of providing information, giving advice and fostering cooperation among agencies, the NSC's staff instead became more involved in running the Reagan Administration's covert actions — including some that were being run outside of the traditional intelligence apparatus and the law as well. After Congress passed the 1984 Boland Amendment, a law that cut off U.S. government money for the Contra rebels in Nicaragua, NSC staff became part of a secret effort — headed by NSC staffer Lt. Col. Oliver North — to raise funds from other countries and private contributors. According to a Congressional investigation report, that effort eventually developed into "the Enterprise," a private organization that "had its own airplanes, pilots, airfield, operatives, ship, secure communications devices and secret Swiss bank accounts."
Some of the money raised with the help of NSC staffers even was funneled to efforts in the U.S. to influence public opinion and pressure Congress members to support restoring aid to the Contras [source: Iran-Contra Report].
The Enterprise also became involved in secret deals in 1985 and 1986 in which Israel sold missiles to Iran on behalf of the Reagan Administration in an effort to obtain the release of hostages held in Lebanon. Some $18 million of the $30 million in proceeds from those sales were then diverted to support the Contras [source: Iran-Contra Report, Pbs.org].
When the operation was uncovered, it blew up into a massive public scandal, complete with televised Congressional hearings and an independent counsel investigation. North was convicted in federal court of three charges related to the scandal, though his convictions were later overturned [source: Ostrow].