Iran-Contra Affair

Overview
In possibly the most embarrassing and irresponsibility display of incompetence and immorality in the history of the United States, between 1985-1987, under the Reagan Administration, multiple individuals including Robert McFarlane, Caspar Weinberger and Oliver North sold weapons to Iran. This was considered immoral as, at the time, the U.S. was claiming to be an ally of Saddam Hussein's Iraq, which was currently waging war against Iran. With the funds of these sales, the Reagan Administration funded multiple Nicaraguan Contras, or so-called "Freedom Fighters". The immorality of this stage of the process was that what the Reagan Administration labeled "Freedom Fighters" were rebels who attempted to attack a legitimate, though Socialist, government, FSLN, indirectly by directly attacking the civilians of that country; generally, in the U.S., these are people that one calls "Terrorists". The "good intention" of this program was to discretely fund these Contras, who would return Nicaragua to the same style of government it was before the revolution (which empowered socialist FSLN), and limit communism in South American countries. The problem with that was that communism was coming as a relief for most of these countries; the "democratic" U.S.-supported "presidents" were, in fact, dictators from the Somoza family, none of whom where ever actually elected, and all of whom murdered, tortured and extorted innocent civilians.

Points of Stupidity and Incompetence
The worst parts of the scandal:
 * The U.S. also hoped to strike a deal with Iran to release U.S. hostages in exchange for co-operation in the deals. This ended up demonstrating to the world that the U.S. can be extorted by taking hostages, something many terrorists did later
 * The paranoia of Nicaragua becoming a dangerous Socialist country was completely unjustified, as it was generally accepted that, should the need arise, the U.S. could turn Nicaragua into a barren wasteland using missiles and bombers in less than 24 hours
 * This also made the entire need for a U.S.-controlled Nicaraguan government unnecessary, as the socialist government was better for the people, the U.S. would not have had to fund it, and it would have remained a benign nation

Consequences and Punishments
Oh wait, there were none.

Or at least, virtually none. Of the 12 individuals who where confirmed to be involved, the 4 "masterminds", including those listed above, were given no more than 2 years probation each, though sometimes less, the 6 "high-up executives" were given no worse than the "masterminds", and the 2 "lower-executives" were each given 2 years probation, and one was also given a $5,000 fine. The 20 most aware involved individuals were all pardoned later by George H. W. Bush, and some were pardoned so quickly that they didn't even serve a full year of probation, nevermind 2 full years.

Potential Involvement of Ronald Reagan
Although Reagan has denied accusations that he was aware of the affair, there has been evidence indicating otherwise. While a document that actually contains sufficient proof to confirm the widespread theory that Ronald Reagan was directly involved.

Saddam Hussein
After the Iran-Contra scandal came to light, Saddam Hussein was understandably distrusting and upset with the United States- his "ally" had just given his enemies the weapons that they needed to at least begin to retaliate. This was later proven to have sparked Hussein's idea later to manipulate the U.S. into giving him the proper resources to invade Kuwait, and then do so.

Nicaragua
When FSLN sued the U.S. in the International Court of Justice, the ICJ ruled in its favour. However, the U.S. refused to pay for damages dealt by the Contras they funded, and remained immune to anything else Nicaragua could do due to its permanent position on the Security Council. This was political equivalent of flipping Nicaragua the bird.

Source: en.wikipedia.org