What happened: "The Iran-Contra Affair was a secret U.S. arms deal that traded missiles and other arms to free some Americans held hostage by terrorists in Lebanon, but also used funds from the arms deal to support armed conflict in Nicaragua. The controversial dealmaking—and the ensuing political scandal—threatened to bring down the presidency of Ronald Reagan."
Why it was so scandalous: "Iranian-backed terrorists were holding hostage seven Americans (diplomats and private contractors) in Lebanon. Reagan delivered [an] ultimatum to his advisors: Find a way to bring those hostages home. In 1985, [Robert] McFarlane sought to do just that. He told Reagan that Iran had approached the United States about purchasing weapons for its war against neighboring Iraq. [Soon] 1,500 American missiles had been sold to Iran, for $30 million... Reagan initially denied that he had negotiated with Iran or the terrorists, only to retract the statement a week later. Meanwhile, Attorney General Edwin Meese launched an investigation into the weapons deal, and found that some $18 million of the $30 million Iran had paid for the weapons was unaccounted for. ...Lieutenant Colonel Oliver North, of the National Security Council, came forward to acknowledge that he had diverted the missing funds to the Contras in Nicaragua, who used them to acquire weapons. North said he had done so with the full knowledge of National Security Advisor Admiral John Poindexter. He assumed Reagan was also aware of his efforts."