It may not be the American way, but in Washington, press leaks and persistent rumors are often the beginning of the end for high-profile presidential appointees. Gates has been done in once before. In 1987, when he was the deputy director of the CIA, Gates was forced to withdraw his nomination to be chief of the agency because of unanswered questions about his role in the Iran-contra scandal. For the next four years he rehabilitated himself, skillfully cultivating Congress and the press from his post at the CIA and then as George Bush’s deputy national-security adviser. Iran-contra faded off the front pages. So when Gates was again nominated in May to replace retiring CIA chief William Webster, the White House not unreasonably hoped the scandal was finally behind him. They guessed wrong.

Last week the seemingly interminable investigation by Iran-contra independent counsel Lawrence Walsh finally produced a breakthrough. Former CIA official Alan Fiers, who once ran the agency’s Central American Task Force, admitted that he, and, he charged, other senior CIA officials, had known of the secret diversion of funds to the contras–and that they had withheld that information from Congress. Outside the Beltway, Iran-contra may be little more than a memory, but in the jealous turf wars of Washington, members of the Senate Intelligence Committee were angry to learn that they had been misled by the agency they are supposed to oversee.

It is still far from certain that Gates was among the deceivers. But the Senate put off his confirmation hearings until next week to gather more information, leaving Gates to twist as the inevitable round of damaging press stories started up. On Friday night, ABC’s “Nightline” charged that the CIA failed to tell Congress about a covert operation–which the report claimed Gates supervised–that funneled arms to Iraq in the mid-’80s. At the time the United States was backing Iraq in its war against Iran by providing intelligence information and, according to the “Nightline/Financial Times Investigation,” cluster bombs and fuel-air explosives. The White House issued a denial, and Senate investigators said they saw no evidence to back up the report. Nonetheless, committee sources told NEWSWEEK that the Gates nomination “is in deep trouble,” as one aide put it. “We’re back to where we were with him in 1987.”

The Iran-contra scandal, it seems, won’t go away. Beyond Gates, Fiers’s revelations last week represent an embarrassment to Webster and the agency. Webster had assured David Boren, chairman of the Senate Intelligence Committee, that the late William Casey was the only CIA official who knew of the illegal diversion. “What Fiers is saying is that the committee was systematically lied to and people in the agency took part in a cover-up,” says another committee source.

Fiers agreed to cooperate with the investigation as part of a deal with the prosecutor. Last week he pleaded guilty to two misdemeanor counts of withholding information from Congress. In late summer 1986, Fiers says, White House aide Oliver North told him the United States was selling arms to Iran and using the proceeds to aid the contras. Fiers says he passed the information to the head of the agency’s Latin American division, who ordered him to report it to Clair George, then deputy director for operations. George served directly under Gates. “Now you are one of a handful of people who knows,” George told Fiers, according to Fiers’s account. George could not be reached for comment last week. Both Fiers and George would later tell Congress they knew nothing of the diversion until Attorney General Edwin Meese III made it public on Nov. 25, 1986.

So far the intelligence committee has no evidence that Fiers or George told Gates of the diversion. Gates has said that Casey cut him out of the loop on the Latin American operations and that he didn’t pry. He admits that he picked up some hints of the diversion before it became public, but says he ignored them because he considered the evidence “flimsy.” That was the accepted explanation–until Fiers revealed that Casey wasn’t the only one at the CIA aware of the diversion. “Now you have a situation where the man above Gates and the men below him knew what was going on,” says Sen. Howard Metzenbaum, a committee Democrat. “You have to wonder how come he didn’t know.”

The committee may try to compel Fiers and George to testify about whether they told Gates of the diversion. Senate Minority Leader Bob Dole is organizing committee Republicans for what might be a bruising battle over Gates’s confirmation. But GOP sources worry that Gates has become a victim of a new chill between the Hill and the CIA. “The committee feels that this is a crisis of its oversight ability,” says a GOP Senate aide. “They’ve been lied to too many times and they’re mad. So they’re going to take it out on Gates.” For Gates, the job he has coveted now appears as far away as it was four years ago.