CIA Ignored Tips Alleging Contra Drug Links, Report Says

By Walter Pincus Washington Post Staff Writer Tuesday, November 3, 1998; Page A04 In September 1981, as the Reagan administration was approving a covert CIA program to finance anti-Sandinista exile organization attempts to overthrow the Nicaraguan government, "an asset" told the agency that one of the major contra rebel groups intended to sell drugs in the United States to pay its bills. The cable described for CIA headquarters a July 1981 drug delivery from Honduras to Miami, including the names of those involved, and called it "an initial trial run" by members of the Nicaraguan Revolutionary Democratic Alliance. An earlier cable had said the rebels felt they were "being forced to stoop to criminal activities in order to feed and clothe their cadre." Although the cables were circulated to the departments of State, Justice, Treasury and Defense and all U.S. intelligence agencies, the CIA neither followed up nor attempted to corroborate the allegations, according to a 450-page declassified version of a report by the CIA's inspector general released last month. Nearly a decade after the end of the Nicaraguan war -- and after years of suspicions and scattered evidence of contra involvement in drug trafficking -- the CIA report discloses for the first time that the agency did little or nothing to respond to hundreds of drug allegations about contra officials, their contractors and individual supporters contained in nearly 1,000 cables sent from the field to the agency's Langley headquarters. In a few cases, the report says, officials instructed the Drug Enforcement Administration to hold back inquiring about charges involving alleged drug dealers connected with the Nicaraguan rebels. The report also shows that at times, wide suspicions or allegations of drug trafficking did not disqualify individuals from being recruited for the CIA effort. Looking back, Frederick P. Hitz, the now-retired CIA inspector general who supervised the report, said, "We fell down on accountability. . . . There was a great deal of sloppiness and poor guidance in those days out of Washington." Hitz's report disclosed, however, that in 1982, after the CIA's covert support of the contras began, then-Reagan Attorney General William French Smith and CIA Director William J. Casey agreed to drop a previous requirement that agency personnel report information about alleged criminal activities when undertaken by persons "acting for" the CIA. The Smith-Casey agreement covered those associated with the contra effort. The provision remained unchanged until 1995, the report said.

The report also said the CIA gave Congress "incomplete" briefings that "often lacked specific detail." Jack Blum, counsel for a Senate Foreign Relations subcommittee that in the mid-1980s investigated contra drug activities, said after reading the report that many details were denied his panel. Instead, he said, "they put out stories that spun the facts against us," denying contra connections to drug activity. Although the report contradicts previous CIA claims that it had little information about drug running and the contras, it does not lend any new support to charges of an alliance among the CIA, contra fund-raisers and dealers who introduced crack cocaine in the 1980s in south-central Los Angeles. Those charges created a national sensation during the summer of 1996 when they were published in a series of articles by the San Jose Mercury News. The allegations, which were not substantiated by subsequent reporting by other newspapers, prompted a year-long CIA inquiry that produced two reports, including the one released last month. The first report found that there was no evidence to indicate that the CIA had any dealings with the California drug traffickers. The classified version of the second report, sent to Congress earlier this year, concluded that there was no evidence that the CIA "conspired with or assisted contra-related organizations or individuals in drug trafficking to raise funds for the contras or for other purposes." However, the unclassified report provides a wealth of anecdotes indicating that the CIA routinely received allegations about drug trafficking links to the contras. Although the report does not specify in most cases whether the allegations proved accurate, it suggests that in many cases the charges were simply ignored or overlooked because of the priority to keep the contra effort going. For example, a 1984 Defense Department attache report described Alan Hyde, a Honduran businessman, as "making much money dealing in 'white gold,' i.e. cocaine." A 1985 CIA cable quoted Hyde as boasting that he had a U.S. Customs Service agent "in his pocket" and friends in "Cosa Nostra." A July 1987 CIA cable reported that the Coast Guard had placed three ships owned by Hyde on suspected drug-smuggling lists. However, after an early offer to help the CIA was turned down, in 1987 Hyde was enlisted to provide logistical support to the contras. A CIA cable from the field said none of the prior reports were "firm proof that [Hyde] is involved in [drug] smuggling or nefarious activities." When questions were raised within the CIA about Hyde's background, a cable from the field argued that Hyde was being used for a short-term project that was an "operational necessity." This view was endorsed in a cable signed by the then-director of operations. A later cable said Hyde's role had been approved at the level of the deputy director of Central Intelligence, although the incumbent at that time, Robert M. Gates, told the inspector general he had no recollection of approving Hyde's employment.

The report contains a concluding item without comment. A March 11, 1993, cable discouraged counter-narcotics efforts against Hyde because "his connection to [CIA] is well documented and could prove difficult in the prosecution stage." There is no evidence in the report that the allegations against Hyde were proven accurate or that he was ever charged with a crime. Attempts to locate Hyde for comment for this article were unsuccessful. The CIA report shows that the agency did not follow up on allegations of drug dealing involving individuals, the so-called "benefactors," who were part of former White House aide Oliver North's program to evade legal restrictions on U.S. military aid to the contras through a secret supply operation run from Ilopango air base in El Salvador. An August 1985 CIA cable identified Carlos Alberto Amador, a veteran supply pilot for the contras, as someone who was to ferry planes from Miami to Colombia to be used in drug trafficking. A CIA headquarters cable nearly a year later attributed to a "DEA source" information that Amador was believed, as of April 1986, to have flown cocaine from San Salvador to Florida. The 1986 cable noted that Amador, a Nicaraguan with a U.S. passport, has access to Hangar 4 at Ilopango, which was used by North's "benefactors." A DEA report in April 1986 noted that the DEA wanted San Salvador police to investigate Amador and the contents of Hangar 4. After a U.S. Embassy official asked the CIA if it had any connection to Amador, CIA headquarters told its local station in San Salvador it "would appreciate Station advising [DEA] not to make any inquiries to anyone re Hanger [sic] no. 4 at Ilopango since only legitimate . . . supported operations were conducted from this facility," according to the IG report. The report also provides new allegations about rebels led by one of the best-known antiSandinistas, Eden Pastora. While the CIA has maintained that it cut off funding to Pastora in 1984 before his aides turned to drug dealers for financial and materiel support, the IG report indicates that Pastora's colleagues were suspected of involvement with drug dealers while the agency was supporting his operations. Pastora has denied knowledge of any funds coming to his rebel forces from drug traffickers. A different problem was represented in the case of Juan Ramon Rivas, one of the first rebel fighters to enter Nicaragua in 1982. By 1986, he had created a 5,000-person task force in the north and in March 1988 was selected as rebel chief of staff in the area. In November of that year, however, a DEA report identified Rivas as a fugitive from a Colombian prison who had been arrested on a drug charge. Rivas, a former member of the Nicaraguan National Guard, acknowledged to DEA officials that after the Sandinistas took power in 1979, he went to Colombia and became involved in

the drug trade. He told officials he was prepared to resign from the rebels if his past drug activities would be politically damaging to the cause. The CIA decided, however, that he remain at his post. A CIA lawyer said agency regulations "focus solely on individuals currently in narcotics trafficking. . . . What we have here is a single, relatively petty transgression in a foreign country that occurred a decade ago and that is apparently of no current interest to DEA." In the end, Hitz's report does not make it easy to sort out who is to blame. It consists of more than 1,000 items containing unsourced allegations about hundreds of individuals and companies, and none reaches a conclusion. Hitz said his aim in the report was "to try to find out what was on the written record . . . and not develop any cases to bring to closure. . . . This is grist for more work, if anyone wants to do it."
Copyright 1998 The Washington Post Company

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CIA Said to Ignore Charges of Contra Drug Dealing in '80s

By James Risen New York Times October 10, 1998 WASHINGTON -- Despite requests for information from Congress, the CIA repeatedly ignored or failed to investigate allegations of drug trafficking by the anti-Sandinista rebels of Nicaragua in the 1980s, according to a newly declassified internal report. In a blunt and often critical report, the CIA's inspector general determined that the agency "did not inform Congress of all allegations or information it received indicating that contra-related organizations or individuals were involved in drug trafficking." Beginning in 1986, the subject of contra drug trafficking became a focus for critics of the Reagan administration's policy toward Nicaragua who charged that the CIA was shielding drug smugglers to protect its anti-Communist covert action program in Nicaragua. That year Congress imposed a fund cutoff for any contra group that had members involved in drug trafficking. Despite that ban, the CIA failed to tell Congress about allegations it had received against at least eight individuals with contra ties. During the time the ban on funds was in effect, the CIA informed Congress only about drug charges against two other contra-related people. In addition, the agency failed to tell other executive branch agencies, including the Justice Department, about drug allegations against 11 contra-related individuals or entities.

The report quotes many active and retired CIA officers who served in Central America as saying they either did not hear or did not believe allegations of drug trafficking involving the contra rebels, with whom they worked closely. It also makes clear that the agency did little or nothing to investigate most of the drug allegations that it heard about the contras and their supporters. In April 1987, the acting director of central intelligence, Robert Gates, wrote in a memorandum that it was "absolutely imperative that this agency and our operations in Central America avoid any kind of involvement with individuals or companies that are even suspected of involvement in narcotics trafficking." The CIA investigation that began almost a decade later, however, found no evidence that the memorandum was distributed to anyone other than Gates' deputy for operations, Clair George. The new study is the second volume of the CIA's internal investigation prompted by a 1996 series of articles in The San Jose Mercury-News, which claimed that a "dark alliance" between the CIA, the contras and drug traffickers had helped finance the contra war with millions of dollars in profits from drug smuggling. The series also alleged that this network was the first to introduce crack cocaine into South Central Los Angeles. The first volume of the CIA inspector general's report, issued in January, dealt primarily with the specific allegations raised by the Mercury-News series and dismissed the newspaper's central findings. But the second volume is the result of a broader inquiry into long- unresolved questions about the contra program and drug trafficking. In all, the inspector general's report found that the CIA had received allegations of drug involvement by 58 contras or others linked to the contra program. These included 14 pilots and two others tied to the contra program's CIA-backed air transportation operations. The report indicates that information linking the contras to drugs began to emerge almost as soon as the contras came into existence -- and before it became publicly known that the CIA was supporting their effort to overthrow the Marxist-led government in Managua. In September 1981, as a small group of rebels was being formed from former soldiers in the National Guard of the deposed Nicaraguan dictator, Anastasio Somoza Debayle, a CIA informant reported that the leadership of the fledgling group had decided to smuggle drugs to the United States to support its operations. Eight months later, another report indicated that one prominent leader of the group, Justiniano Perez, was a close friend of a known trafficker. The agency's response also set something of a pattern. "No information has been found to indicate any action to follow up or corroborate the allegations," the report said. Similarly, it said, it found no information that the CIA followed up on FBI information about the Perez matter. The omissions of information were often glaring. In 1986, for example, Alan Fiers, then chief of the CIA's Central American task force dealing with the contras, responded to questions raised by Sen. John Kerry, D-Mass., about specific contra members and contra-

related companies. According to the report, Fiers responded to Kerry's questions about a contra logistics coordinator named Felipe Vidal by providing a sheet of information about his convictions for illegal possession of firearms in the 1970s, but without any mention of Vidal's arrests and conviction for drug trafficking. The report said that in at least six instances, the CIA knew about allegations regarding individuals or organizations but that knowledge did not deter it from continuing to employ them. In some other cases, the agency decided the allegations were not substantiated.
Copyright 1998 The New York Times Company http://www.nytimes.com/1998/10/10/world/cia-reportedly-ignored-charges-of-contra-drug-dealing-in-80s.html

Archives

C.I.A. Says It Used Nicaraguan Rebels Accused of Drug Tie By JAMES RISEN Published: July 17, 1998 The Central Intelligence Agency continued to work with about two dozen Nicaraguan rebels and their supporters during the 1980's despite allegations that they were trafficking in drugs, according to a classified study by the C.I.A. The new study has found that the agency's decision to keep those paid agents, or to continue dealing with them in some less formal relationship, was made by top officials at headquarters in Langley, Va., in the midst of the war waged by the C.I.A.-backed contras against Nicaragua's leftist Sandinista Government. The new report by the C.I.A.'s inspector general criticizes agency officials' actions at the time for the inconsistent and sometimes sloppy manner in which they investigated -- or chose not to investigate -the allegations, which were never substantiated by the agency. The inspector general's report, which has not yet been publicly released, also concludes that there is no evidence that any C.I.A. officials were involved in drug trafficking with contra figures. ''The fundamental finding of the report is that there is no information that the C.I.A. or C.I.A. employees ever conspired with any contra organizations or individuals involved with the contras for purposes of drug trafficking,'' a United States intelligence official said.

The new report is the long-delayed second volume of the C.I.A.'s internal investigation into possible connections between the contras and Central American drug traffickers. The investigation was originally prompted by a 1996 series in The San Jose Mercury-News, which asserted that a ''dark alliance'' between the C.I.A., the contras and drug traffickers had helped finance the contra war with profits from drug smuggling. The second volume dismisses those specific charges, as did the first volume, released in January. The series charged that the alliance created a drug trafficking network that introduced crack cocaine into South Central Los Angeles. It prompted an enormous outcry, especially among blacks, many of whom said they saw it as confirmation of a Government-backed conspiracy to keep blacks dependent and impoverished. The Mercury-News subsequently admitted that the series was flawed and reassigned the reporter. In the declassified version of the C.I.A.'s first volume, the agency said the Mercury-News charges were baseless and mentioned drug dealers who had nothing to do with the C.I.A. But John M. Deutch, the Director of Central Intelligence at the time, had also asked the inspector general to conduct a broader inquiry to answer unresolved questions about the contra program and drug trafficking that had not been raised by The Mercury-News. Frederick Hitz, then the C.I.A.'s inspector general, decided to issue a second, larger report to deal with those broader issues. Many allegations in the second volume track closely with charges that first surfaced in a 1987 Senate investigation. The C.I.A. is reluctant to release the complete 500-page second volume because it deals directly with contras the agency did work with. According to the report, C.I.A. officials involved in the contra program were so focused on the fight against the Sandinistas that they gave relatively low priority to collecting information about the possible drug involvement of contra rebels. The report concluded that C.I.A. officers did report on drug trafficking by the contras, but that there were no clear guidelines given to field officers about how intensively they should investigate or act upon the allegations. In all, the C.I.A. received allegations of drug involvement against about 50 contras or supporters during the war against the Sandinistas, the report said. Some of the allegations may have been specious, the result of Sandinista propaganda, American intelligence officials said. It could not be determined from the C.I.A.'s records how many of the 50 cases were fully investigated. But the agency continued to work with about two dozen of the 50 contras, according to American intelligence officials familiar with the report. They said the report had found that the agency was unable to either prove or disprove the charges, or did not investigate them adequately. American intelligence officials, who provided information about the report, declined to identify the individual contras who were the subjects of the drug allegations. But they did say that in addition to individual cases, the report found that drug allegations had been made against one contra organization,

a group known as 15th of September. That group was formed in 1980 and was disbanded in January 1982. The C.I.A.'s decision to classify this second volume has already been met with criticism in Congress. Senator John Kerry, Democrat of Massachusetts, who led a 1987 Congressional inquiry into allegations of contra drug connections, wrote a letter Thursday to the Director of Central Intelligence, George J. Tenet, asking that the report be immediately declassified. Mr. Kerry, who has reviewed the second volume of the inspector general's report, said he believed that C.I.A. officials involved in the contra program did not make a serious effort to fully investigate the allegations of drug involvement by the contras. ''Some of us in Congress at the time, in 1985, 1986, were calling for a serious investigation of the charges, and C.I.A. officials did not join in that effort,'' Mr. Kerry said. ''There was a significant amount of stonewalling. I'm afraid that what I read in the report documents the degree to which there was a lack of interest in making sure the laws were being upheld.'' http://www.nytimes.com/1998/07/17/world/cia-says-it-used-nicaraguan-rebels-accused-of-drugtie.html

CIA Knew of Contra Plan to Sell Drugs in U.S. Walter Pincus, Washington Post Published 4:00 am, Wednesday, November 4, 1998 Nearly a decade after the end of the Nicaraguan war -- and after years of suspicions and scattered evidence of Contra involvement in drug trafficking -- the CIA report discloses that the agency did little or nothing to respond to hundreds of drug allegations about Contra officials, their contractors and supporters contained in nearly 1,000 cables sent from the field to the agency's headquarters. In a few cases, the report says, officials instructed the Drug Enforcement Administration to hold back inquiring about charges involving alleged drug dealers connected with the Nicaraguan rebels. http://www.sfgate.com/news/article/CIA-Knew-of-Contra-Plan-to-Sell-Drugs-in-U-S-2980491.php

http://www.scribd.com/doc/117070568/US-Congresswoman-Maxine-Waters-Investigation-of-CIAContras-involvement-in-drug-sales-1996-2000

Exhibit 1 : U.S. Attorney General William French Smith replies to a still classified letter from DCI William Casey requesting exemption from reporting drug crimes by CIA assets. Source: www.cia.gov/library/reports/general-reports-1/cocaine/contra-story/01.gif

Exhibit 2: DCI William Casey happily agrees with William French Smith and signs the Memorandum of Understanding (MOU) exempting his agency from reporting drug crimes. This agreement covered both the Latin American conflicts and Afghanistan war. It remained in effect until August, 1995 when it was quietly rescinded by Janet Reno after Gary Webb began making inquiries for his series. The 1995 revision of the DoJ-CIA MOU specifically includes narcotics violations among the lists of potential offenses by non-employees that must be reported to DOJ. Source: www.cia.gov/library/reports/general-reports-1/cocaine/contra-story/13.gif

Exhibit 3: On February 8, 1985, Deputy Chief of DoJ's Office of Intelligence Policy andReview (OIPR) from 1979 to 1991, A. R. Cinquegrana signed off on this letter approving the MOU. Mark M. Richard, Deputy Assistant Attorney General with responsibility for General Litigation and International Law Enforcement in 1982, states that he was unableto explain why narcotics violations were not on the list of reportable crimes

except thatthe MOU had "other deficiencies, not just drugs." Source: www.cia.gov/library/reports/general-reports-1/cocaine/contra-story/14.gif