ALLEGATIONS OF CONNECTIONS BETWEEN CIA AND THE CONTRAS IN COCAINE TRAFFICKING TO THE UNITED STATES

 

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                   ALLEGATIONS OF CONNECTIONS BETWEEN CIA

                   AND THE CONTRAS IN COCAINE TRAFFICKING

                          TO THE UNITED STATES (1)

                                (96-0143-IG)

                                      

                        Volume II: The Contra Story

     _________________________________________________________________

   

   GLOSSARY OF TERMS

   

   INTRODUCTION

   

   QUESTIONS PRESENTED

   

   FINDINGS

   What were CIA's legal and regulatory responsibilities during the

       Contra program regarding the reporting of potential drug

       trafficking crimes?

       What policies and guidelines governed CIA's contacts during the

       Contra program with persons and organizations alleged to be

       involved in drug trafficking? 

       What do CIA Headquarters and field personnel recall regarding

       alleged drug trafficking by the Contras? 

       

   CONTRA ORGANIZATIONS

   What drug trafficking allegations was CIA aware of, and when,

       involving Contra organizations? How did CIA respond to this

       information, and how was this information shared with other U.S.

       Government entities? 15th of September Legion--Justiniano

       Perez/Manuel Porro/Juan Francisco Rivera/Hugo Villagra/Fernando

       Brautigan/Felix Alcides Espinoza/Edwin Hoocker

       

   SOUTHERN FRONT CONTRAS

   Central America and the Caribbean Map

       What drug trafficking allegations was CIA aware of, and when,

       involving Southern Front Contras? How did CIA respond to this

       information, and how was this information shared with other U.S.

       Government entities?

       The Southern Front Trafficking Reports

       Adolfo Jose Chamorro 

       Roberto Jose Chamorro

       Marcos Antonio Aguado

       Gerardo Duran 

       Alfonso Robelo 

       Octaviano Cesar 

       Edmundo Jose Chamorro

       Fernando Jose Chamorro

       Sebastian Gonzalez 

       Carol Prado 

       Jenelee Hodgson 

       Alfredo Cesar 

       Jose Davila 

       Harold Martinez 

       Rene Corvo 

       Carlos Alberto Amador 

       Jose Orlando Bolanos 

       Moises Nunez 

       Gustavo Quezada 

       Felipe Vidal 

       

   NORTHERN FRONT CONTRAS

   What drug trafficking allegations was CIA aware of, and when,

       involving Northern Front Contras? How did CIA respond to this

       information, and how was this information shared with other U.S.

       Government entities? 

       Adolfo Calero 

       Enrique Bermudez

       Mario Jose Calero 

       Juan Ramon Rivas 

       Stedman Fagoth 

       Roger Herman 

       Sebastian Pinel 

       Arnoldo Jose Arana 

       Jose Francisco Cardenal/Bergman Arguello/Eduard Jose

       Sacasa-Urouyo/Rolando Murillo/Juan Savala (or Zavala)/Renato

       Pena/Roger J. Ramiro 

       

   OTHER INDIVIDUALS INVOLVED IN THE CONTRA PROGRAM

   What drug trafficking allegations was CIA aware of, and when,

       involving other individuals supporting the Contra program? How did

       CIA respond to this information, and how was this information

       shared with other U.S. Government entities?

       Ivan Gomez 

       A CIA Independent Contractor 

       A Second CIA Independent Contractor 

       A Third CIA Independent Contractor 

       John Floyd Hull 

       

   PILOTS, COMPANIES, AND OTHER INDIVIDUALS WORKING FOR COMPANIES USED TO

   SUPPORT THE CONTRA PROGRAM

   PILOTS, COMPANIES, AND OTHER INDIVIDUALS WORKING FOR COMPANIES USED TO

       SUPPORT THE CONTRA PROGRAM 

       What drug trafficking allegations was CIA aware of, and when,

       involving pilots and companies supporting the Contra program? How

       did CIA respond to this information, and how was this information

       shared with other U.S. Government entities? 

       Frigorificos De Puntarenas/Ocean Hunter 

       SETCO 

       DIACSA 

       Vortex/Universal 

       Hondu Carib 

       Allegations Involving Other Companies Associated With the Contras 

       Southern Air Transport 

       Markair 

       Alan Hyde 

       Allegations Involving Air Crew Members of Companies that Provided

       Services to the Contras Under Contract or Subcontract with CIA 

       What was the nature and extent of CIA's knowledge of allegations

       of Contra drug trafficking at the Ilopango Air Base?

       To what extent did CIA disseminate "finished intelligence

       products" that included information about drug trafficking on the

       part of individuals, organizations, and independent contractors

       associated with the Contras? 

       To what extent did CIA share information with Congress regarding

       allegations of drug trafficking on the part of individuals,

       organizations, and independent contractors associated with the

       Contras? 

       

   APPENDICES

   Appendix A -- Jack Terrell

       Appendix B -- Frank Castro

       Appendix C

       Appendix D

       Appendix E

       

   EXHIBITS

   March 2, 1982 DoJ-CIA Memorandum of Understanding regarding "Reporting

       and Use of Information Concerning Federal Crimes"

       [1] - [2] - [3] - [4] - [5] - [6] - [7] - [8] - [9] - [10] - [11]

       - [12]

       February 11, 1982 Letter to DCI William Casey from Attorney

       General William French Smith regarding DoJ-CIA Memorandum of

       Understanding

       [1]

       February 8, 1985 DoJ Memorandum to Mark Richard from A. R.

       Cinquegrana, "CIA Reporting of Drug Offenses"

       [1]

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                             GLOSSARY OF TERMS

     _________________________________________________________________

   

   ADCI

   

   Acting Director of Central Intelligence

   

   ADDO

   

   Associate Deputy Director for Operations

   

   ADREN

   

   Nicaraguan Democratic Revolutionary Alliance, an anti-Sandinista group

   formed in 1980 and disbanded in 1982

   

   A.K.A.

   

   Also Known As

   

   ALA

   

   Directorate of Intelligence/Office of African and Latin American

   Analysis

   

   ARDE

   

   Democratic Revolutionary Alliance, an anti-Sandinista,

   political-military organization founded in Costa Rica in 1982

   

   ATF

   

   Department of Justice, Bureau of Alcohol, Tobacco and Firearms

   

   AUSA

   

   Assistant United States Attorney

   

   BOS

   

   Southern Opposition Bloc, an anti-Sandinista group founded in Costa

   Rica in 1985

   

   CATF

   

   Directorate of Operations/Latin America Division/Central America Task

   Force

   

   CGT

   

   French General Confederation of Labor

   

   CIA

   

   Central Intelligence Agency

   

   CMA

   

   Civilian Military Assistance

   

   CMS

   

   Directorate of Operations/Career Management Staff

   

   COPS

   

   Chief of Operations

   

   CONDOR

   

   Nicaraguan Coalition of Opposition to the Regime, an anti-Sandinista

   group based in Miami, Florida, and formed in 1985

   

   COS

   

   Chief of Station

   

   DCI

   

   Director of Central Intelligence

   

   DCOS

   

   Deputy Chief of Station

   

   DDCI

   

   Deputy Director of Central Intelligence

   

   DEA

   

   Department of Justice, Drug Enforcement Administration

   

   DGSE

   

   General Directorate of State Security, the Sandinista secret police

   and Ministry of Interior special forces

   

   DI

   

   Directorate of Intelligence

   

   DIA

   

   Defense Intelligence Agency

   

   DO

   

   Directorate of Operations

   

   DDO

   

   Deputy Director for Operations

   

   DoD

   

   Department of Defense

   

   DoJ

   

   Department of Justice

   

   DoS

   

   Department of State

   

   E.O.

   

   Executive Order

   

   EPS

   

   DO/Special Activities Staff/Special Operations Group/Evaluation and

   Plans Staff

   

   ERN

   

   Army of the Nicaraguan Resistance, a Contra organization formed in

   1987 consisting of the ERN/North front and the ERN/South front

   

   ERP

   

   Employee Review Panel

   

   FARN

   

   Nicaraguan Revolutionary Armed Force, the military arm of the

   anti-Sandinista Nicaraguan Democratic Union founded in 1980

   

   FBI

   

   DoJ, Federal Bureau of Investigation

   

   FDN

   

   Nicaraguan Democratic Force, an armed anti-Sandinista organization

   founded in 1982

   

   FRS

   

   Sandino Revolutionary Front, an anti-Sandinista, political-military

   organization founded in 1982

   

   FSLN

   

   Sandinista National Liberation Front, Marxist organization founded

   with Cuban help in 1961

   

   FY

   

   Fiscal Year

   

   GOC

   

   Government of Cuba

   

   GRN

   

   Government of National Reconstruction, official designation of the

   government of Nicaragua from July 1979 until January 1985

   

   HAC

   

   House Appropriations Committee

   

   HN

   

   Headquarters Notice

   

   HR

   

   Headquarters Regulation

   

   HPSCI

   

   House Permanent Select Committee on Intelligence

   

   IG

   

   Inspector General

   

   IMS

   

   DO/Information Management Staff

   

   INS

   

   DoJ, Immigration and Naturalization Service

   

   KISAN

   

   United Indigenous Peoples of Nicaragua, Atlantic Coast Indian

   organization established in 1985

   

   MDN

   

   Nicaraguan Democratic Movement, a social democratic party

   

   MFR

   

   Memorandum for the Record

   

   MINT

   

   GRN, Ministry of the Interior

   

   MISURASATA

   

   Miskito, Sumo, Rama, Sandinista All Together, an Atlantic Coast Indian

   organization formed in 1979

   

   MOU

   

   Memorandum of Understanding

   

   NHAO

   

   DoS, Nicaraguan Humanitarian Assistance Office

   

   NIE

   

   National Intelligence Estimate

   

   NIO

   

   National Intelligence Officer

   

   NOG

   

   DO/LA Division/CATF/Nicaraguan Operations Group

   

   NSC

   

   National Security Council

   

   OCA

   

   DCI/Office of Congressional Affairs

   

   OES

   

   Special Secret Operations Command of the 15th of September Legion

   

   OGC

   

   DCI/Office of General Counsel

   

   OGI

   

   DI/Office of Global Issues

   

   OIC

   

   Office of Independent Counsel

   

   OIG

   

   DCI/Office of Inspector General

   

   OIJ

   

   Costa Rican Office of Judicial Investigation

   

   OIPR

   

   DoJ, Office of Intelligence Policy and Review

   

   OMS

   

   DA/Office of Medical Services

   

   OS

   

   DA/Office of Security

   

   PAR

   

   Performance Appraisal Report

   

   PDF

   

   Panamanian Defense Forces

   

   PRA

   

   Permanent Resident Alien

   

   RN

   

   Nicaraguan Resistance, formed in 1987 by unification of BOS and the

   Unified Nicaraguan Opposition

   

   SAS

   

   DO/Special Activities Staff

   

   SAT

   

   Southern Air Transport

   

   SFRC

   

   Senate Foreign Relations Committee

   

   SICC

   

   Southern Indigenous Creole Community

   

   SOG

   

   DO/LA Division/CATF/Special Operations Group

   

   SOG

   

   DO/SAS/Special Operations Group

   

   SSCI

   

   Senate Select Committee on Intelligence

   

   UDN

   

   Nicaraguan Democratic Union, Southern Front Contra organization

   founded in 1980

   

   UNO

   

   Unified Nicaraguan Opposition in 1985-1987, joined with BOS in 1987 to

   form the RN

   

   USDAO

   

   U.S. Defense AttachÈ Office

   

   YATAMA

   

   The United Nations of Yapti Tasba--the Sacred Motherland, a Miskito

   Indian group formed by the 1987 merger of the anti-Sandinista forces

   of KISAN, MISURA, and MISURASATA

     _________________________________________________________________

   

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                                INTRODUCTION

     _________________________________________________________________

   

    1. Scope of IG Investigation. In August 1996, the San Jose Mercury

       News published a three-part series of articles entitled "Dark

       Alliance." The series discussed drug rings in California and their

       alleged connections to the Central Intelligence Agency

       (CIA)-backed Nicaraguan Contra resistance in the 1980s. On

       September 3, 1996, Director of Central Intelligence (DCI) John

       Deutch asked the CIA Inspector General to investigate these

       allegations of connections between CIA, the Contras and drug

       trafficking. A 17-person team was formed to conduct the

       investigation.

    2. The CIA Inspector General (IG) investigation included an

       examination of all information in CIA's possession concerning the

       individuals specifically cited in the San Jose Mercury News

       articles, and CIA knowledge of any drug trafficking allegations in

       regard to persons directly or indirectly involved in Contra

       activities, CIA assets, other individuals associated with CIA who

       dealt with the Contras, and companies and individuals involved in

       supporting Contra activities in Central America in the 1980s on

       behalf of CIA. The Report of Investigation consists of two

       volumes.

    3. Volume I. Volume I, The "California Story," addresses findings

       regarding whether CIA knew of narcotics trafficking by Ricky Ross,

       Norwin Meneses and Danilo Blandon in Southern California. It also

       includes findings related to whether CIA knew of the narcotics

       trafficking activities of Julio Zavala and Carlos Cabezas in

       Northern California, their possible ties to the Contras and CIA's

       contacts with the San Francisco U.S. Attorney's Office in

       connection with their prosecution. Volume I was issued as a

       classified report on December 17, 1997. An unclassified version

       and an unclassified overview were made public on January 29, 1998.

    4. Volume I of the Report describes in detail the San Jose Mercury

       News allegations; the Scope of the IG Investigation; the

       Procedures and Resources used in the investigation; the Origin and

       Development of the Contra Conflict; CIA's Involvement with the

       Contras; Cocaine Flows through Central America in the 1980s; and

       Results of Previous Investigations into Alleged Contra Drug

       Trafficking.

    5. Volume II. Volume II, The "Contra Story," addresses CIA's

       knowledge of any alleged drug trafficking by the Contras and

       persons or organizations who supported the Contra program in the

       1980s. Volume II was issued as a classified report on April 27,

       1998. The investigation included a review of any information in

       CIA's possession relating to:

          + CIA's knowledge of drug trafficking allegations regarding

            Contra-related individuals, organizations, independent

            contractors, and other individuals supporting the Contra

            program.

          + CIA's handling of, and response to, such drug trafficking

            allegations; and

          + CIA's sharing with other U.S. Government entities, including

            law enforcement agencies and the Congress, of such

            allegations.

    6. The investigation on which Volume II is based was not intended to

       prove or disprove the allegations or information received by the

       Agency concerning possible drug trafficking by specific

       individuals or organizations. Further, the description of such

       allegations or information in Volume II is not intended as

       representing the judgment of the Office of Inspector General (OIG)

       regarding the veracity of the allegations or information. The

       investigation also was not intended to review or evaluate the

       effectiveness of any CIA programs in Central America in the 1980s.

       Finally, factual information in Volume II regarding whether

       particular allegations or information were or were not shared with

       other U.S. Government agencies or the Congress does not represent

       a judgment as to whether or not such information was required to

       be so shared.

    7. Organization of Volume II. In the course of the investigation, OIG

       reviewed CIA records regarding hundreds of Contra organizations,

       Contra leaders, Contra supporters, and individuals and companies

       that were involved in the Contra program. Based on this review,

       several dozen Contra-related individuals and one Contra

       organization were found to have been the subject of allegations or

       information concerning involvement in drug trafficking. All

       information that was made available to the OIG from CIA records

       regarding these Contra-related organizations and individuals was

       examined.

    8. Volume II is divided into five separate sections pertaining to

       Contra-related groups of organizations and individuals that were

       found to have been the subject of drug trafficking allegations or

       information.

       ∑ Contra Organizations--Any Contra group that was known to CIA to

       have had an organizational policy of trafficking in drugs to raise

       money for the organization. The OIG investigation found

       information about only one such group.

       ∑ Southern Front Contras--Contra leaders, members and

       supporters--including those associated with the FRS, BOS,

       UNO/South, and ARDE--who were based primarily in Costa Rica.

       ∑ Northern Front Contras--Contra leaders, members and

       supporters--including those associated with the FDN, UNO, 15th of

       September Legion, ERN, MISURA, MISURASATA, and YATAMA--who were

       based primarily in Honduras.

       ∑ Other Individuals Involved in the Contra Program--Individuals

       operating on behalf of CIA in support of the Contras, including

       foreign nationals used by CIA as intermediaries with various

       Contra organizations.

       ∑ Pilots and Companies--Pilots and companies assisting in the

       Contra supply effort.

    9. Within each of these five categories, Volume II examines the

       organization or individual's background; the Agency's knowledge of

       drug trafficking allegations regarding the organization or

       individual; CIA's response to the allegations; and CIA's sharing

       of such allegations with other U.S. Government entities, including

       law enforcement agencies and Congress.

   10. Volume II also discusses the guidance that was available by

       statute, regulation, or CIA policy for dealing with known or

       suspected drug traffickers and how CIA personnel understood this

       guidance. The extent to which CIA disseminated intelligence

       relating to drug trafficking on the part of organizations and

       individuals associated with the Contras is also explained.

   11. This Volume also includes three exhibits and five appendices. The

       appendices discuss information and issues related to Contra-drug

       trafficking allegations and other matters that were deemed to be

       relevant to this investigation.

       

                     EXECUTIVE SUMMARY AND CONCLUSIONS

                                      

                                KEY FINDINGS

                                      

       Did CIA conspire with or assist Contra organizations or

       Contra-related individuals in narcotics trafficking to raise funds

       for the Contras or for any other purpose?

   12. CIA and CIA Employees. No information has been found to indicate

       that CIA as an organization or its employees conspired with, or

       assisted, Contra-related organizations or individuals in drug

       trafficking to raise funds for the Contras or for any other

       purpose.

       To what extent was CIA aware of allegations or information

       indicating involvement by Contra organizations or Contra-related

       individuals in drug trafficking? What did CIA do after becoming

       aware of such allegations or information?

   13. Contra-Related Organizations. CIA received information that one

       Contra-related organization--the ADREN "15th of September"

       group--engaged in drug trafficking for fund raising purposes. This

       anti-Sandinista group formed in 1980 and disbanded in January

       1982. No information has been found to indicate that other Contra

       organizations engaged in drug trafficking for fundraising or any

       other purpose, although individual members were alleged from time

       to time to be involved in drug trafficking.

   14. Contra-Related Individuals--Southern Front. CIA received

       allegations or information regarding drug trafficking by

       Contra-related individuals in the Southern Front that operated

       from Costa Rica. In 1984, CIA received allegations that five

       individuals associated with the Democratic Revolutionary Alliance

       (ARDE)/Sandino Revolutionary Front (FRS) were engaged in a drug

       trafficking conspiracy with a known narcotics trafficker, Jorge

       Morales. CIA broke off contact with ARDE in October 1984, but

       continued to have contact through 1986-87 with four of the

       individuals involved with Morales.

   15. The Morales Connection. In December 1988, the Senate Subcommittee

       on Terrorism, Narcotics and International Operations published a

       report entitled "Drugs, Law Enforcement and Foreign Policy." One

       section of that report summarized the involvement of ARDE/FRS

       members with drug trafficker Jorge Morales based upon Department

       of State information:

       Information developed by the intelligence community indicates that

       a senior member of Eden Pastora's Sandino Revolutionary Front

       (FRS) agreed in late 1984 with (Morales) that FRS pilots would aid

       in transporting narcotics in exchange for financial assistance . .

       . the FRS officials agreed to use FRS operational facilities in

       Costa Rica and Nicaragua to facilitate transportation of

       narcotics. (Morales) agreed to provide financial support to the

       FRS, in addition to aircraft and training for FRS pilots. After

       undergoing flight training, the FRS pilots were to continue to

       work for the FRS, but would also fly narcotics shipments from

       South America to sites in Costa Rica and Nicaragua for later

       transport to the United States. Shortly thereafter (Morales)

       reportedly provided the FRS one C-47 aircraft and two crated

       helicopters. He is reported to have paid the sum of $100,000 to

       the FRS, but there was no information available on who actually

       received the money.

       (Ellipses and parentheses are as they appear in the Subcommittee

       report.)

   16. In addition to the five individuals associated with ARDE, CIA

       received drug trafficking allegations or information concerning 16

       other individuals who supported Southern Front Contra operations

       based in Costa Rica.

   17. Contra-Related Individuals--Northern Front. CIA also received

       allegations or information concerning drug trafficking by nine

       Contra-related individuals in the Northern Front, based in

       Honduras.

   18. Other Individuals Involved in the Contra Program. CIA received

       drug trafficking allegations or information concerning five

       individuals who were used to support the Contra program.

   19. Companies, Pilots and Other Individuals Working for Companies Used

       in Support of the Contra Program. CIA received drug trafficking

       allegations or information concerning 14 pilots and two other

       individuals who were associated with companies that provided

       support for the Contra program. CIA also learned of drug

       trafficking allegations or information concerning three companies

       that were used to support Contra activities from 1984 until at

       least 1988.

   20. CIA received drug trafficking allegations or information

       concerning an individual who flew Contra support missions from

       Ilopango Air Base in El Salvador in 1985 and 1986.

   21. CIA also received other information in 1986 to 1989 regarding

       additional suspicious activities, individuals and aircraft at

       Ilopango Air Base. However, no information has been found to

       indicate that CIA was aware that this information indicated that

       Contra-related organizations or individuals used Ilopango Air Base

       for drug trafficking.

       What was the nature and extent of any statutory, regulatory, or

       policy guidance concerning CIA's handling of information about

       Contra-related organizations or individuals that were subject to

       allegations or information indicating they were involved in drug

       trafficking?

   22. Statutory Guidance. The Department of Defense and Military

       Construction Appropriations Act for Fiscal Year 1987, which

       authorized $100 million for Agency support to the Contras,

       included a prohibition on the provision of any assistance to any

       group that, among other things, retained in its ranks any

       individual "who has been found to engage in . . . drug smuggling .

       . . ."

   23. Executive Branch Guidance: Reporting Potential Crimes to

       Department of Justice. From August 15, 1979 to March 2, 1982,

       Attorney General Guidelines issued under Executive Order 12036

       required CIA to report to DoJ possible violations of "any" federal

       laws--thereby including narcotics laws--by persons who were

       employed by, assigned to, or acting for CIA. The definition of

       "employee" in the Guidelines included assets, agents and

       independent contractors. Reporting of possible violations of

       federal law by non-employees was limited to a specific list of

       types of offenses that did not include narcotics violations.

   24. From March 2, 1982 to August 3, 1995, a Memorandum of

       Understanding (MOU) between the Attorney General and the DCI under

       Executive Order 12333 governed reporting of potential crimes. That

       MOU continued to require CIA to report to DoJ possible violations

       of "any" federal laws--again thereby including narcotics laws--by

       CIA employees. However, because of a change in the definition of

       "employee," agents, assets and independent contractors were moved

       to the non-employee category and thereby subject to the list of

       reportable offenses that did not include narcotics violations. The

       MOU provided that CIA would continue to have the discretion to

       report any offense by a non-employee to DoJ in addition to the

       potential crimes that were specified in the MOU.

   25. A February 11, 1982 letter from Attorney General William French

       Smith to DCI William Casey that accompanied the MOU noted that the

       1982 MOU contained no formal requirement regarding the reporting

       of narcotics violations by non-employees and urged CIA's

       continuing cooperation with DoJ and the Drug Enforcement

       Administration. This letter did not, however, establish a legal

       requirement that CIA report potential narcotics violations by

       non-employees because no such requirement was included in the MOU.

       A February 8, 1985 internal DoJ memorandum stated explicitly that

       there was no requirement for CIA to report non-employee narcotics

       violations and suggested that the MOU would have to be

       renegotiated in order to include narcotics violations by

       non-employees as reportable crimes.

   26. In August 1995, the 1982 DoJ-CIA Crimes Reporting MOU was revised.

       Under that revised MOU, assets and independent contractors are

       again considered "employees" for crimes reporting purposes.

       Further, narcotics violations are included among the list of

       "non-employee" crimes that must be reported to DoJ.

   27. CIA Guidance. There was no Agency-wide regulation explaining the

       crime reporting responsibilities of CIA employees under E.O. 12333

       and the DoJ-CIA MOU until December 23, 1987.

   28. CIA's Directorate of Operations (DO) developed a draft DO Handbook

       in December 1980 that included a section that focused on

       restrictions and prohibitions regarding the use of narcotics

       intelligence collection agents who might be involved in narcotics

       trafficking. The instructions were not applicable to the

       Contra-related individuals or contractors discussed in Volume II,

       however, since none of those individuals or contractors were

       involved in the collection of narcotics intelligence. A summary of

       the 86-page draft DO Handbook was sent to all DO field stations in

       July 1982 and stated that the draft had been approved by the DCI

       and represented Agency policy. The DO Handbook was not formally

       issued until January 1996, however, more than 15 years later.

   29. On March 6, 1987, Headquarters sent a cable to CIA personnel in

       Central America that, among other things, included a statement of

       the prohibition in the FY 1987 Department of Defense and Military

       Construction Appropriations Act on providing assistance to any

       group that retained in its ranks any individual who has been found

       to engage in drug smuggling. A January 21, 1988 Headquarters cable

       to CIA personnel in Central America that were directly involved in

       supporting the Contra program also summarized that statutory

       restriction.

   30. On April 9, 1987, Acting DCI Robert Gates sent a memorandum to the

       Deputy Director for Operations (DDO) Clair George stating that it

       was imperative that CIA avoid involvement with individuals tied to

       the Contra program who were "even suspected of involvement in

       narcotics trafficking." The Gates memorandum instructed the DDO to

       vet contract air crews, air services companies and subcontractors

       with the Drug Enforcement Agency (DEA), U.S. Customs and the

       Federal Bureau of Investigation (FBI) to ensure that the Agency

       would not be involved in any way with individuals suspected of

       being involved in drug trafficking.

   31. Were relevant CIA regulations and policies timely and adequate?

       Then-current CIA regulations and policies did not address a number

       of drug trafficking issues that were repeatedly encountered by

       Agency managers and personnel during the Contra program:

          + CIA had no published regulations or policies that addressed

            CIA employees' contacts with individuals or companies that

            were known or suspected to have been involved in drug

            trafficking, unless they were part of a counternarcotics

            operation or program. The Contra program was not such an

            operation or program.

          + CIA had no regulations or policies regarding CIA's

            responsibilities to identify and pursue allegations or

            information indicating that organizations or individuals were

            involved in drug trafficking.

          + CIA had no regulations or policies that required that

            information be requested from DEA, the Customs Service, or

            U.S. Government entities, other than the FBI, regarding

            individuals or entities of whom CIA had knowledge of drug

            allegations or information.

          + ADCI Gates' April 1987 memorandum stating that it was

            imperative that CIA avoid involvement with individuals in

            Central America who were even suspected of narcotics

            trafficking was not issued in any form that would advise

            Agency employees generally of this policy.

          + Agency personnel involved in the Contra program were not

            generally notified until January 1988 of the prohibition in

            the Department of Defense and Military Construction

            Appropriations Act for FY 1987, which went into effect in

            October 1986, on assistance to any group that retained in its

            ranks any individual who was found to engage in drug

            smuggling. A number of CIA personnel who were involved in the

            Contra program say they were aware of the statutory

            proscription prior to 1988, but no written guidance was

            provided to Agency personnel for determining that an

            individual had been "found to engage in drug smuggling" under

            the FY 1987 provision.

   32. Recollections of CIA Personnel Regarding Alleged Drug Trafficking

       by the Contras. Notwithstanding the shortcomings in applicable

       regulations and policy, many employees and former employees say

       today that they understood the potential seriousness of

       information that linked participants in the Contra program to drug

       trafficking. Indeed, many say they believed that the Agency's

       policy was not to have relationships with such persons.

       

                                CONCLUSIONS

                                      

       Were CIA actions in dealing with Contra-related organizations or

       individuals that were subject to allegations or information

       indicating they were involved in drug trafficking consistent with

       relevant statutes, regulations and policies? 

   33. Statutory Requirements. The provision in the FY 1987 Department of

       Defense and Military Construction Appropriations Act called for a

       cutoff of funding to any Contra group that retained a member who

       "has been found" to engage in drug smuggling. During the period

       from October 1986 until December 1987 in which this prohibition

       was in effect, CIA was aware of allegations or information of

       varying credibility suggesting that ten Contras may have been

       involved in drug trafficking. Additional actions could have been

       taken by CIA in each of these cases to determine the credibility

       of the allegations and information in order to comply with the

       intent and spirit of the legislation.

   34. Executive Branch Requirements. CIA crimes referrals practices

       pertaining to potential federal narcotics violations were

       consistent with the applicable provisions of Executive Orders

       12036 and 12333, the Attorney General Guidelines under E.O. 12036

       and the 1982 MOU between the Department of Justice and CIA under

       E.O. 12333. No information has been found to indicate that the

       non-inclusion of narcotics violations by assets in the crimes

       reporting requirements of the 1982 DoJ-CIA MOU was intended to

       protect Contra activities.

   35. CIA Policies and Practices. CIA acted inconsistently in handling

       allegations or information indicating that Contra-related

       organizations and individuals were involved in drug trafficking.

       In some five cases, CIA pursued confirmation of allegations or

       information of drug allegations. In other acted to end a

       relationship after receiving drug trafficking allegations or

       information. In another six cases, CIA knowledge of allegations or

       information indicating that organizations or individuals had been

       involved in drug trafficking did not deter their useemployment by

       CIA. In other at least two of those cases, CIA did not act to

       verify drug trafficking allegations or information even when it

       had the opportunity to do so. In still other cases, CIA deemed the

       allegation or information to be unsubstantiated or not credible.

   36. With respect to air services companies, contract air crew members

       and other companies that were used to support the Contra program,

       CIA took prompt action in responding to ADCI Gates' April 9, 1987

       instructions by requesting relevant information from U.S. law

       enforcement agencies in addition to the FBI. However, CIA's

       actions in response to information received from law enforcement

       agencies that indicated a possible drug trafficking connection by

       air services companies and individual crew members were

       inconsistent. Despite such information, several pilots and one

       mechanic continued to be associated with their companies in

       support of the Contra program.

       To what extent did CIA share allegations and information

       indicating that Contra-related organizations or individuals were

       involved in drug trafficking with other U.S. Government entities?

   37. Congress. Although records of congressional briefings in this

       regard were incomplete and often lacked specific detail, CIA

       briefings of the congressional intelligence oversight committees

       on Contra-related matters occasionally included allegations or

       information indicating involvement by Contra-related organizations

       or individuals in drug trafficking. CIA determined what was

       responsive to the requirement of keeping the congressional

       intelligence oversight committees "fully and currently" informed

       about Contra-related drug allegations.

   38. CIA did inform the intelligence oversight committees in a timely

       manner of the 1984 allegations of association by ARDE members with

       drug trafficker Jorge Morales and their agreement for Morales to

       provide aircraft in exchange for facilitation of drug transport.

       However, CIA did not inform Congress of all allegations or

       information it received indicating that Contra-related

       organizations or individuals were involved in drug trafficking.

       During the period in which the FY 1987 statutory prohibition was

       in effect, for example, no information has been found to indicate

       that CIA informed Congress of eight of the ten Contra-related

       individuals concerning whom CIA had received drug trafficking

       allegations or information.

   39. Law Enforcement and Other Agencies. The March 1982 DoJ-CIA Crimes

       Reporting MOU did not require that CIA report to DoJ narcotics

       trafficking violations by assets, or independent contractors

       associated with the Contras because assets and independent

       contractors were not defined as "employees" for crimes reporting

       purposes. However, the 1982 MOU gave CIA discretion to report

       offenses not included in the MOU. This discretion was exercised in

       1984 when information pertaining to association by Southern Front

       Contra members with drug trafficker Jorge Morales was reported to

       DoJ. It also was exercised in a 1988 referral to DoJ of

       allegations of drug trafficking concerning another Contra

       official.

   40. Allegations and information indicating drug trafficking by 25

       Contra-related individuals was shared in a variety of ways with

       other Executive branch agencies, including law enforcement

       agencies as formal intelligence reports, cables and briefings in

       Washington, D.C., and the field. However, no information has been

       found to indicate that any U.S. law enforcement entity or

       Executive branch agency was informed by CIA of drug trafficking

       allegations or information concerning 11 Contra-related

       individuals and assets. Beginning in January 1988, CIA began

       providing a U.S. law enforcement agency's regional office in

       Central America with information received by CIA regarding

       possible drug-related or other suspicious activities at Ilopango

       Air Base. 

     _________________________________________________________________

   

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                            QUESTIONS PRESENTED

     _________________________________________________________________

   

   41. Volume II of this Report reviews the Agency's knowledge and

   handling of drug trafficking allegations regarding Contra-related

   individuals and organizations and others involved in supporting the

   Contras on behalf of CIA. The specific questions addressed in Volume

   II are as follows:

     * What were CIA's legal and regulatory responsibilities during the

       Contra program regarding the reporting of potential drug

       trafficking crimes?

     * What policies and guidelines governed CIA's contacts during the

       Contra program with persons and organizations alleged to be

       involved in drug trafficking?

     * What do CIA Headquarters and field personnel recall regarding

       alleged drug trafficking by the Contras?

     * What drug trafficking allegations was CIA aware of, and when,

       involving Contra organizations? How did CIA respond to this

       information, and how was this information shared with other U.S.

       Government entities?

     * What drug trafficking allegations was CIA aware of, and when,

       involving Southern Front Contras? How did CIA respond to this

       information, and how was this information shared with other U.S.

       Government entities?

     * What drug trafficking allegations was CIA aware of, and when,

       involving Northern Front Contras? How did CIA respond to this

       information, and how was this information shared with other U.S.

       Government entities?

     * What drug trafficking allegations was CIA aware of, and when,

       involving other individuals supporting the Contra program? How did

       CIA respond to this information, and how was this information

       shared with other U.S. Government entities?

     * What drug trafficking allegations was CIA aware of, and when,

       involving pilots and companies supporting the Contra program? How

       did CIA respond to this information, and how was this information

       shared with other U.S. Government entities?

     * What was the nature and extent of CIA's knowledge of allegations

       of Contra drug trafficking at the Ilopango air base?

     * To what extent did CIA disseminate "finished intelligence

       products" that included information about drug trafficking on the

       part of individuals, organizations, and independent contractors

       associated with the Contras?

     * To what extent did CIA share information with Congress regarding

       allegations of drug trafficking on the part of individuals,

       organizations, and independent contractors associated with the

       Contras?

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                                  Findings

     _________________________________________________________________

   

   What were CIA's legal and regulatory responsibilities during the

   Contra program regarding the reporting of potential drug trafficking

   crimes?

   

   Reporting Potential Crimes to Department of Justice

   42. Background. For over 20 years, CIA had broad discretion to report

       or not report information that came to its attention regarding

       potential violations of federal law by its employees, assets and

       other persons. According to a 1954 memorandum from CIA General

       Counsel Lawrence Houston to the DCI, Houston discussed the issue

       of reporting Federal criminal violations to the Department of

       Justice (DoJ) with Deputy Attorney General William P. Rogers on

       February 18, 1954. According to that memorandum, Rogers and

       Houston agreed that CIA would be responsible for determining

       whether a potential violation of criminal law by persons

       associated with CIA would be referred to DoJ for prosecution. This

       arrangement was based on the belief that CIA was in the best

       position to determine whether classified information might be

       revealed in the course of such a prosecution. The memorandum also

       stated that CIA would be obligated to refer to DoJ potential

       criminal matters that could be prosecuted without revealing

       classified information, and that any doubts would be resolved in

       favor of referring the matter to DoJ. Finally, Rogers and Houston

       agreed, according to the memorandum, that it was not necessary at

       that time to enter a formal agreement of any kind that would

       embody these understandings.

   43. In the mid-1970s, this arrangement became more widely known and

       was subject to criticism by the Congress and others.

       Then-Assistant Attorney General for DoJ's Criminal Division

       Richard Thornburgh wrote CIA General Counsel John Warner on July

       24, 1975 to remind CIA of its duty to comply with 28 U.S.C. 535, a

       provision of law that imposes a duty on every department and

       agency in the Executive Branch to report promptly to the Attorney

       General any information, allegations, or complaints relating to

       possible violations of Title 18 of the United States Code by

       officers and employees of the U.S. Government. Warner responded on

       July 29 and acknowledged that "any other informal referral

       agreement that may have been in effect in the past was abrogated."

       At the same time, however, Warner noted that the DCI was charged

       under the National Security Act of 1947 with "protecting

       intelligence sources and methods from unauthorized disclosure" and

       that CIA would be seeking DoJ's advice as to fulfilling this

       responsibility in regard to "cases that will be reported."

   44. CIA Regulation Regarding Crimes Reporting. As of November 28,

       1975, CIA's policy for reporting information regarding potential

       violations of federal criminal law by employees and others was set

       forth in Headquarters Regulation (HR) 7-1 a(7). That regulation

       provided:

       Information, allegations, or complaints of violations of the

       criminal provisions of the United States Code by CIA officers and

       employees, or relating to CIA affairs, shall be reported

       immediately by an employee to the Inspector General, who shall

       inform the General Counsel. Information, allegations, or

       complaints of violations of Title 18 of the United States Code

       involving Government officers and employees shall be expeditiously

       reported to the Attorney General by the General Counsel in

       compliance with 28 U.S.C. 535. Such report to the Attorney General

       shall include an evaluation of the impact, if any, of a

       prosecution on the national security or foreign relations of the

       United States, including intelligence operations which may be

       jeopardized or intelligence sources and methods which may be

       compromised thereby. CIA will not exercise a prosecutorial

       function. 

   45. E.O. 11905. A presidential directive that CIA report information

       to DoJ concerning potential violations of certain federal criminal

       laws by employees and non-employees was first established by

       President Gerald Ford in Executive Order (E.O.) 11905, dated

       February 18, 1976. The pertinent part of E.O. 11905--Section

       4(a)--stated:

       In carrying out their duties and responsibilities, senior

       officials [including those at CIA] . . . shall:

       . . . .

       (5) Report to the Attorney General that information which relates

       to detection or prevention of possible violations of law by any

       person, including an employee of the senior official's department

       or agency:

       . . . .

       (Emphasis added.)

       The preamble to Section 4 stated that:

       Unless otherwise specified within this section, its provisions

       apply to activities both inside and outside the United States, and

       all references to law are to applicable laws of the United States.

       The reporting obligations imposed upon CIA and other U.S.

       intelligence agencies by this provision exceeded those required of

       other federal agencies. Whereas the responsibilities of other

       agencies in this regard are limited by 28 U.S.C. 535 to potential

       violations of Title 18 by U.S. Government employees, E.O. 11905

       required CIA and other intelligence agencies to report all

       possible violations of any law by any person.

   46. A May 7, 1976 opinion by DoJ's Office of Legal Counsel confirmed

       the breadth of Section 4(a)(5) of E.O. 11905 by concluding that it

       required reports of possible violations of any law, civil or

       criminal, with respect to which DoJ had either investigative or

       prosecutorial jurisdiction. This opinion also noted, however, that

       the agencies were required to report such information to the

       Attorney General only when such information was acquired by them

       in the exercise of their functions under the E.O.

   47. E.O. 12036. On January 26, 1978, President Jimmy Carter signed

       E.O. 12036, "United States Intelligence Activities," which

       superseded E.O. 11905. Section 1-7 of E.O. 12036 contained the

       following language regarding the obligation to report federal

       crimes:

       The senior officials of each of the agencies within the

       Intelligence Community shall:

       . . . .

       (1-706) Report to the Attorney General evidence of possible

       violations of federal criminal law by an employee of their

       department or agency, and report to the Attorney General evidence

       of possible violations by any other person of those federal

       criminal laws specified in guidelines adopted by the Attorney

       General.

       . . . .

       (Emphasis added.)

       Section 4-204 of the E.O. defined "employee" as:

       Employee means a person employed by, assigned to, or acting for an

       agency within the Intelligence Community.

   48. E.O. 12036 thus narrowed the CIA's responsibilities with respect

       to reporting employee violations because it expressly limited the

       requirement to federal criminal violations. On the other hand,

       E.O. 12036 continued to require that intelligence agencies report

       any federal criminal violation by their employees, not just Title

       18 violations. For example, most narcotics violations fall under

       Title 21 and would not be reportable by other U.S. Government

       agencies under a literal reading of 28 U.S.C. 535. Moreover, E.O.

       12036 did not alter the fact that only the Intelligence Community

       agencies were required to report federal crimes by non-employees,

       although it did recognize that the scope of this portion of the

       reporting requirement could be narrowed by Attorney General

       guidelines.

   49. On September 15, 1978, CIA amended HR 7-1 to incorporate the

       changes required by E.O. 12036. With respect to the obligation for

       reporting potential crimes, the revision read:

    . . . .

       Information, allegations, and complaints of possible violations of

       Federal criminal law by CIA employees or any other person shall be

       reported immediately by any employee to the Inspector General who

       shall inform the General Counsel. The Inspector General shall

       provide to the General Counsel an evaluation of the impact, if

       any, of a prosecution of such a violation on the national security

       or foreign relations of the United States, including intelligence

       operations which may be jeopardized or intelligence sources and

       methods which may be compromised. Pursuant to 28 U.S.C. 535 and

       Section 1-706 of Executive order 12036, evidence of possible

       violations of Federal criminal law shall be reported expeditiously

       to the Attorney General by the General Counsel in accordance with

       procedures and guidelines adopted by the Attorney General.

       . . . .

   50. Attorney General Procedures for Crimes Reporting. On August 15,

       1979, pursuant to section 1-706 of E.O. 12036, Attorney General

       Griffin Bell promulgated two sets of guidelines. One guideline

       pertained to the reporting of federal crimes committed by

       employees of agencies in the intelligence community. The other

       related to the reporting of federal crimes committed by

       non-employees.

   51. The August 1979 Attorney General employee crimes reporting

       guidelines defined "employees" to include not only persons covered

       by the definition of that term in Section 4-204 of E.O. 12036

       (i.e., those who were employed by, assigned to, or acting for an

       intelligence agency), but also any former employees when the

       offense was committed during their employment or related to

       potential violations of statutory restrictions on the

       post-employment activities of former employees. With respect to

       employees of intelligence agencies, the guidelines required the

       General Counsel to refer to DoJ any "allegations, complaints, or

       information tending to show that any officer or employee may have

       violated a federal criminal statute that the agency cannot

       establish as unfounded within a reasonable time through a

       preliminary inquiry."

   52. The August 1979 Attorney General guidelines for reporting crimes

       committed by non-employees set forth several categories of federal

       crimes as to which reporting would be required:

          + Crimes involving intentional infliction or threat of death or

            serious physical harm (e.g., homicide, kidnapping);

          + Crimes impacting on the national security, defense, or

            foreign relations of the United States (e.g., espionage,

            sabotage, violations of the Trading with the Enemy Act,

            neutrality offenses); and

          + Crimes involving foreign interference with the integrity of

            United States Government institutions or crimes committed on

            behalf of a foreign power or in connection with international

            terrorist activity (e.g., bribery, election contributions,

            aircraft piracy, transportation of explosives).

       Potential violations of federal criminal provisions relating to

       narcotics trafficking were not included among the categories of

       reportable crimes by non-employees. The guidelines did, however,

       include language also authorizing the General Counsel to report

       information concerning any offense that the General Counsel

       believed should be reported to the Attorney General.

   53. On November 21, 1979, following the adoption of the August 1979

       Attorney General guidelines, CIA amended HR 7-1. HR 7-1a (7) of

       that regulation stated:

       Any employee who, in the course of official duty, becomes aware of

       any information, allegation, or complaint of possible violations

       of Federal criminal laws by any person, including a person

       employed by, assigned to, or acting for the Agency, is required to

       report immediately such information, allegation, or complaint to

       the General Counsel. The Office of General Counsel shall consult

       with the Office of Security and the Office of Inspector General

       when necessary in conducting a preliminary inquiry to determine

       whether a basis for referral exists and shall obtain from

       concerned Agency components an evaluation of the impact, if any,

       of a prosecution of such a violation on the national security or

       foreign relations of the United States, including intelligence

       operations which may be jeopardized or intelligence sources and

       methods which may be compromised. Pursuant to 28 U.S.C. 535 and

       Section 1-706 of Executive Order 12036, evidence of possible

       violations of Federal criminal law shall be reported expeditiously

       to the Attorney General by the General Counsel in accordance with

       procedures and guidelines adopted by the Attorney General

       . . . .

       This major revision of HR 7-1 established a requirement that CIA

       employees report information, allegations and complaints regarding

       possible violations of federal criminal law by any person directly

       to the General Counsel instead of indirectly through the Inspector

       General.

   54. On November 21, 1979, CIA issued Headquarters Notice (HN) 7-39,

       "Supervisors' and Managers' Responsibility to Report Evidence of

       Crimes to the Attorney General--Executive Order 12036, Section

       1-706." Section 4 of the HN addressed the issue of reporting

       potential crimes by employees:

    . . . .

       a. Employees. Senior officials of the Intelligence Community are

       required to report to the Attorney General evidence of possible

       violations by an employee of their department or agency of any

       Federal criminal law. The Executive order defines "employee" more

       broadly than the general or dictionary meaning of the word.

       "Employee" for the purpose of reporting crimes means a person

       employed by, assigned to, or acting for an agency within the

       Intelligence Community. Thus, for example, an agent, a

       safehousekeeper, a contract employee, or an independent contractor

       performing services for CIA is considered an employee. 

       In view of these obligations, all employees have been instructed

       to report to the Office of General Counsel when, in the course of

       official duty, they become aware of (a) any information,

       allegation, or complaint that an employee may have violated any

       Federal criminal law, and (b) any facts or circumstances that

       raise a suspicion in the employee's mind that a Federal criminal

       offense has been committed by a nonemployee.

       . . . .

       (Emphasis added.)

       On the same day, CIA issued a companion notice, HN 7-38, "Employee

       Responsibility to Report Evidence of Crimes to the Attorney

       General--Executive Order 12036, Section 1-706." This HN provided

       the following guidance to employees:

       . . . .

       3. In summary, all employees are instructed to report to the

       Office of General Counsel when, in the course of official duty,

       they become aware of (a) any information, allegation, or complaint

       that an employee may have violated any Federal criminal law, and

       (b) any facts or circumstances that raise a suspicion in the

       employee's mind that a Federal criminal offense may have been

       committed by a nonemployee. 

       . . . .

       HN 7-38 did not define the term "employee," but referred to HN

       7-39 and noted that it dealt with the same subject in much greater

       detail. HN 7-38 also advised employees who wished further

       clarification to contact their supervisor or Office of General

       Counsel (OGC).

   55. E.O. 12333. On December 4, 1981, President Ronald Reagan signed

       E.O. 12333, "United States Intelligence Activities," which revoked

       E.O. 12036. The provision of E.O. 12333 requiring reporting of

       crimes to the Attorney General was not revised in any substantive

       way, except for adding a specific reference to protecting

       intelligence sources and methods. Unlike the two previous

       Executive Orders, however, E.O. 12333 required the head of an

       intelligence agency and the Attorney General to agree on crimes

       reporting procedures.

   56. Section 1.7(a) of E.O. 12333 stated that heads of departments and

       agencies in the Intelligence Community should:

       Report to the Attorney General possible violations of federal

       criminal laws by employees and of specified federal criminal laws

       by any other person as provided in procedures agreed upon by the

       Attorney General and the head of the department or agency

       concerned, in a manner consistent with the protection of

       intelligence sources and methods, as specified in those

       procedures.

       (Emphasis added.)

       Section 3.4(c) of the E.O. defined "employee" in the same way as

       that term had been defined in E.O. 12036:

       Employee means a person employed by, assigned to or acting for an

       agency within the Intelligence Community. 

       As had been true under E.O. 11905 and E.O. 12036, the reporting

       obligations imposed upon CIA and other U.S. intelligence agencies

       by these provisions exceeded the obligations of other federal

       agencies. Whereas the responsibilities of other agencies in this

       regard are limited by 28 U.S.C. 535 to potential violations of

       Title 18 by U.S. Government employees, E.O. 12333 requires CIA and

       other intelligence agencies to report all possible violations of

       any law by any person.

   57. 1982 DoJ-CIA Memorandum of Understanding. To implement section

       1.7(a) of E.O. 12333 and replace the August 1979 guidelines

       promulgated by Attorney General Bell under E.O. 12036, a MOU

       between CIA and DoJ regarding crimes reporting was signed by

       Attorney General William French Smith on February 11, 1982 and DCI

       William Casey on March 2, 1982. (See Exhibit 1 for the full text

       of this Memorandum.) The MOU defined "employee" for crimes

       reporting purposes as:

          + A staff employee or contract employee of the Agency;

          + Former officers or employees of the Agency, for purposes of

            offenses committed during their employment; and

          + Former officers or employees of the Agency, for offenses

            involving a violation of the statutory limits on activities

            of former U.S. Government employees.

       This definition of "employee" was narrower than the definition of

       that term in Section 3.4(c) of E.O. 12333 which included any

       person "employed by, assigned to or acting for an agency within

       the Intelligence Community." (Emphasis added.) The effect of this

       omission was to move persons "acting for," but not employed by or

       assigned to, CIA from the "employee" to the "non-employee"

       category for crimes reporting purposes.

   58. The list of non-employee crimes that were required by the 1982

       DoJ-CIA MOU to be reported to the Attorney General was essentially

       the same as had been included in the August 1979 Attorney General

       guidelines. The only substantive change was that the 1982 MOU

       added certain violations of the Atomic Energy Act. As was the case

       with the 1979 Attorney General guidelines, the 1982 MOU did not

       include any type of narcotics violation among the lists of

       reportable crimes by non-employees. However, in language similar

       to that used in the portion of the 1979 Attorney General

       guidelines that applied to non-employees, Section IV D. of the

       1982 DoJ-CIA MOU stated:

       Notwithstanding any of the above provisions, the General Counsel

       may report any other possible offense when he believes it should

       be reported.

   59. On February 11, 1982, Attorney General Smith sent a letter to DCI

       Casey notifying him that he had approved the MOU and was sending

       it to Casey for his signature. (See Exhibit 2 for the full text of

       this letter.) The letter stated, in part:

       I have been advised that a question arose regarding the need to

       add narcotics violations to the list of reportable non-employee

       crimes . . . . 21 U.S.C. ß874(h) [sic] provides that "when

       requested by the Attorney General, it shall be the duty of any

       agency or instrumentality of the Federal Government to furnish

       assistance to him for carrying out his functions under [the

       Controlled Substances Act] . . . ." Section 1.8(b) of Executive

       Order 12333 tasks the Central Intelligence Agency to "collect,

       produce and disseminate intelligence on foreign aspects of

       narcotics production and trafficking." Moreover, authorization for

       the dissemination of information concerning narcotics violatons

       [sic] to law enforcement agencies, including the Department of

       Justice, is provided by sections 2.3(c) and (i) and 2.6(b) of the

       Order. In light of these provisions, and in view of the fine

       cooperation the Drug Enforcement Administration has received from

       CIA, no formal requirement regarding the reporting of narcotics

       violations has been included in these procedures. We look forward

       to the CIA's continuing cooperation with the Department of Justice

       in this area.

       (Emphasis added.)

       The letter did not request that DCI Casey concur in the

       expectations expressed by Attorney General Smith. On March 2,

       1982, Casey signed the MOU.

   60. The first part of the Attorney General's letter referred to 21 USC

       873(b). That statute provides:

       When requested by the Attorney General, it shall be the duty of

       any agency or instrumentality of the Federal Government to furnish

       assistance, including any technical advice, to him for carrying

       out his functions under this subchapter [Title 21 of the United

       States Code]. . . .

       The authority of the Attorney General to prosecute and litigate is

       not contained in Title 21 but rather is found generally in

       sections, 509, 516, 519, and 547 of Title 28. Those sections do

       not create a requirement to report narcotics violations to the

       Attorney General.

   61. The second part of the Attorney General's letter referred to

       Section 1.8(b) of E.O. 12333. Section 1.8(b) states that the CIA

       shall "Collect, produce and disseminate intelligence on foreign

       aspects of narcotics production and trafficking." That section

       also does not create a requirement to report narcotics violations

       to the Attorney General.

   62. The third part of the Attorney General's letter referred to

       sections 2.3(c) and 2.6(b) of E.O. 12333. Section 2.3(c) states

       that DCI and Attorney General-approved collection procedures shall

       permit an intelligence agency to collect, retain and disseminate

       "Information obtained in the course of a lawful foreign

       intelligence, counterintelligence, international narcotics or

       international terrorism investigation." Section 2.6(b) states that

       an intelligence agency is authorized to:

       Unless otherwise precluded by law or this Order, participate in

       law enforcement activities to investigate or prevent clandestine

       intelligence activities by foreign powers, or international

       terrorist or narcotics activities.

       Those sections do not create a requirement to report narcotics

       violations to the Attorney General.

   63. The Attorney General's letter also stated that:

       In light of these provisions [discussed above] and in view of the

       fine cooperation the Drug Enforcement Administration has received

       from CIA, no formal reporting requirement of narcotics violations

       has been included in these procedures.

       However, reporting of narcotics intelligence information to the

       Drug Enforcement Administration would not satisfy the requirement

       of section 1.7(a) of E.O. 12333 that potential criminal violations

       be reported to the Attorney General. While the 1979 Attorney

       General Guidelines under E.O. 12036 permitted reporting of

       potential federal crimes to appropriate law enforcement agencies

       in certain circumstances in lieu of reporting to the DoJ Criminal

       Division, the 1982 CIA-DoJ MOU required notification to the

       Criminal Division of any such referral to an investigative agency

       or to a United States Attorney.

   64. On March 2, 1982, DCI Casey wrote to Attorney General Smith

       stating that he had signed the procedures. DCI Casey's letter did

       not refer to the issue of reporting narcotics violations and did

       not indicate whether he agreed or disagreed with the statements in

       the Smith letter.

   65. On February 8,1985, A. R. Cinquegrana, Deputy Counsel for

       Intelligence Policy at DoJ, wrote a memorandum to Mark M Richard,

       Deputy Assistant Attorney General, Criminal Division, in which he

       stated:

       Pursuant to our discussion yesterday, attached are copies of the

       procedures governing CIA's reporting of crimes and the transmittal

       letters between the [Attorney General] and the DCI. As you can

       see, alleged violations of Title 21 [narcotics violations] by

       non-employees are not covered by the procedures to be reported. In

       lieu of formal reporting, however, the Attorney General's letter

       notes "the fine cooperation the Drug Enforcement Administration

       has received from CIA" and the Department's expectation of

       "continuing cooperation . . . in this area." Accordingly, it would

       appear that if CIA and DEA can work out a mutually satisfactory

       arrangement regarding the kinds of offenses at issue, there would

       be no need to modify the procedures, at least so far as

       non-employees are concerned.

       (Emphasis in original.)

   66. On January 5, 1988, in a letter to William F Weld, Assistant

       Attorney General for the Criminal Division that provided

       information regarding a possible violation of U.S. narcotics laws

       by Adolfo Chamorro, CIA General Counsel David Doherty noted that

       "Although this non-employee crime is not required to be reported

       under the Attorney General-approved guidelines, I am making this

       report because of the serious nature of the alleged offense." No

       information has been found to indicate that DoJ responded to this

       statement by the General Counsel.

   67. On December 23, 1987, the CIA's HR 7-1 was revised to incorporate

       the changes that had been established six years earlier by E.O.

       12333. With regard to crimes reporting, Section d of the revised

       HR stated:

    . . . .

       (5) All employees shall report to the General Counsel via their

       components facts or circumstances that appear to indicate the

       commission of a criminal offense . . . . Pursuant to Section

       1.7(a) of E.O. 12333, CIA is obligated to report, through its

       General Counsel, to the Attorney General possible violations of

       Federal criminal laws by employees and of specific Federal

       criminal laws by any other person as provided in the crimes

       reporting procedures in Annex D.

       (Emphasis added.)

       Annex D of the revised HR 7-1 consisted of the 1982 MOU between

       CIA and DoJ. The February 11, 1982 letter regarding narcotics

       violations that had been sent by Attorney General Smith to DCI

       Casey along with the 1982 MOU was not included in Annex D.

   68. 1995 Revision of the DoJ-CIA MOU. In August 1995, DoJ, CIA and

       other Intelligence Community agencies agreed to a revised MOU

       governing the reporting of crimes that superseded the 1982 MOU on

       that subject. This revised MOU remains in effect.

   69. Section II.A of the 1995 MOU defines an "employee" as follows:

       . . . a staff employee, contract employee, asset, or other person

       or entity providing service to or acting on behalf of any agency

       within the intelligence community.

       Thus, the broad requirement to report any potential violation of

       law by any "employee" has been extended once again beyond persons

       employed by CIA and to include those who are "acting on behalf" of

       the Agency. Also, for the first time, potential violations of U.S.

       laws related to narcotics trafficking are specifically included by

       the 1995 MOU in the categories of potential violations by

       non-employees that are required to be reported to DoJ.

   70. Coordination with DEA. On April 25, 1984, DEA and CIA revised an

       August 1978 MOU between them. The revised 1984 version of the

       DEA/CIA MOU, entitled "Procedures Governing Conduct and

       Coordination by CIA and DEA of Narcotics Activities Abroad,"

       focused on the collection and sharing of strategic narcotics

       intelligence and the issue of coordination at the field level. It

       did not mention CIA's crime reporting responsibilities under the

       1982 MOU between DoJ and CIA.

   71. The introduction of the revised MOU states that:

       [The MOU is] intended to promote coordination between the DEA

       Special Agent in Charge (SAC) and the CIA Chief of Station (COS)

       in matters of mutual interest, timely sharing of strategic

       narcotics intelligence and the prompt resolution at the

       Headquarters level of difficulties or disagreements. CIA and DEA

       have legitimate functions with regard to monitoring and countering

       international narcotics trafficking and production.

       The revised MOU defines "strategic narcotics intelligence" as:

       . . . includ[ing] information regarding the influence of narcotics

       production and trafficking on the economy of a country, possible

       corruption of government officials, geographic areas of narcotics

       production, narcotics trafficking routes, financial intelligence

       (movements of funds attributable to narcotics production and

       trafficking) and estimates of narcotics production.

   72. Individual Views of CIA Responsibility to Report Narcotics

       Violations Under E.O. 12036 and the 1979 Attorney General

       Guidelines. Bernard Makowka, an attorney in OGC from 1975-1989 and

       Chief of the Intelligence Law Division in 1982, states that

       narcotics violations by agents or assets did not have to be

       reported under E.O. 12036 and DoJ guidelines that existed at the

       time. According to Makowka, both CIA and DoJ were comfortable with

       this arrangement. Makowka says CIA did not want to be involved in

       law enforcement issues while DoJ did not want "tainted leads" from

       CIA which could not be used in criminal prosecutions because of

       national security concerns.

   73. Makowka also states that E.O. 12036 restricted CIA from

       disseminating information on U.S. persons and therefore certain

       narcotics violations could not even be reported to DoJ. Makowka

       further states that the definition of "employee" in HN 7-39 is not

       consistent with the way that the OGC interpreted the term

       "employee" as it applied to E.O. 12036. According to Makowka, HN

       7-39 could be read so as to require the reporting of agent crimes

       only when an agent was acting on behalf of CIA and that when the

       agent was acting on his own, no report would have to be made.

   74. Edmund Cohen, an OGC attorney and Chief of the Administrative Law

       Division in 1982, states that there had been an agreement between

       CIA and DoJ under E.O. 12036 that CIA would not necessarily have

       to report crimes, including narcotics violations, if such crimes

       involved classified information.

   75. The OGC attorney who served as Makowka's deputy in 1982 remembers

       being told by senior attorneys in OGC that there was a distinction

       made for reporting narcotics violations under E.O. 12036 in which

       the CIA would only report major narcotics violations to DoJ. He

       also notes that, in the late 1970s, CIA was not heavily involved

       in the collection of narcotics intelligence and it was not a high

       priority.

   76. A. R. Cinquegrana, Deputy Chief of DoJ's Office of Intelligence

       Policy and Review (OIPR) from 1979 to 1991, states that he does

       not believe that the 1979 guidelines required CIA to report

       narcotics trafficking violations as potential crimes by

       non-employees since the definition of "employees" under those

       guidelines included agents and assets.

   77. Negotiation of 1982 DoJ-CIA Crimes Reporting MOU. According to the

       OGC attorney who served as Makowka's deputy in the Intelligence

       Law Division in 1982, CIA and DoJ entered into discussions over an

       MOU to establish crimes reporting procedures shortly after E.O.

       12333 was issued by President Reagan. Approximately two months

       transpired between the issuance of E.O. 12333 and an agreement

       between the CIA and DoJ.

   78. The OGC attorney who served as Makowka's deputy in the

       Intelligence Law Division in 1982 states that CIA General Counsel

       Daniel Silver assigned him the task of writing the first draft of

       the MOU. He says that he used the Attorney General guidelines

       under E.O. 12036 as a starting point regarding the list of

       reportable crimes. He did not add any new crimes to the list in

       his draft MOU and instead simply took the list of crimes from the

       1979 guidelines. He also states that he received specific

       instructions from Cohen to narrow the definition of "employee" in

       the draft MOU from the definition in E.O. 12333. He recalls that

       there were not many changes between his draft MOU and the final

       MOU.

   79. Makowka remembers that the negotiations for all the E.O. 12333

       procedures took a long time to complete. Makowka oversaw the MOU

       negotiations for CIA but was one step removed from the day-to-day

       activities. Those responsibilities were handled by Cohen and his

       deputy for OGC, and says Makowka, the DO/Policy and Coordination

       Staff also was involved. Makowka also recalls that DoJ questioned

       everything in the E.O. 12333 procedures and says he assumes that

       DoJ carefully reviewed the MOU as well.

   80. Cohen recalls that the MOU was thoroughly coordinated with DoJ.

       Cohen says that the negotiations over the MOU involved the

       competing interests of DoJ and CIA. DoJ's interest was to

       establish procedures while CIA's interest was to ensure that the

       MOU protected CIA's national security equities.

   81. George Clarke, OGC's Chief of Intelligence Community Affairs in

       1982, remembers that there were many discussions between CIA and

       DoJ but does not recall the specific issues. Clarke does not

       recall any interagency disagreement over the crimes listed in the

       1982 MOU.

   82. While personnel from the DoJ's Criminal Division were not involved

       in the day-to-day negotiations, Cinquegrana says that OIPR kept

       them fully advised and consulted with them regularly as the draft

       developed. Cinquegrana says he and Mark Evans represented DoJ in

       the negotiations.

   83. Mark Evans and Jerry Schroeder, both of whom were OIPR staff

       attorneys in 1982, state that they have no recollection of having

       worked on the 1982 Crimes Reporting MOU, although both worked on

       other aspects of implementing other provisions of E.O. 12333.

       Neither had any idea of who else may have worked on this issue.

       Cinquegrana states that Deputy Assistant Attorney General Mark

       Richard and OIPR Chief Mary Lawton participated in some of the MOU

       discussions.

   84. Richard says he probably had some input into the MOU, but that it

       was negotiated by Cinquegrana, as Lawton's deputy.

   85. Exclusion of Narcotics Violations from Scope of Reportable

       Non-employee Crimes. Makowka remembers that the issue of narcotics

       violations was thoroughly discussed between DoJ and CIA before the

       MOU was signed. According to Makowka, DoJ questioned everything in

       the MOU and was very particular about every procedure listed in

       the MOU. He recalls that DoJ and CIA discussed the issue of

       whether narcotics violations should be in the list of reportable

       crimes and the parties arrived at an understanding where CIA would

       only report "serious, not run-of-the-mill, narcotics violations."

       Makowka believes that this represented a decision by CIA and DoJ

       to continue the practice established under the previous Executive

       Order in which only significant violations would be reported.

       Subsequently, Makowka added that DoJ and CIA agreed that

       significant narcotics transactions would continue to be reported

       even though not technically required under the MOU.

   86. According to Cohen, CIA's main concern was the collection of

       intelligence on narcotics, not law enforcement. He recalls that

       the only discussion between CIA and DoJ in terms of reporting

       narcotics violations to DoJ was in the context of Agency employees

       and the Agency reporting potential violations of law picked up

       through applicant and employee polygraphs. The deputy to the Chief

       of OGC's Intelligence Law Division in 1982 believes that the 1982

       MOU was intended to be a continuation of existing practices under

       E.O. 12036.

   87. Cinquegrana states that DoJ's Criminal Division reviewed and

       concurred with the non-employee criminal violations listed in the

       MOU. He believes that the Criminal Division had a better

       appreciation than OIPR for the kinds of crimes that should be

       included in the MOU. According to him, the list of crimes in the

       MOU seemed to represent at the time the categories of crimes that

       DoJ might expect to come to the attention of an intelligence

       agency during the course of its business. Cinquegrana does not

       remember any disagreements between DoJ and CIA relative to

       specific types of violations. From his perspective in OIPR, he

       believes the failure to include narcotics on the list of

       reportable non-employee crimes was an omission and not a conscious

       decision to exclude such matters.

   88. Mark Richard, Deputy Assistant Attorney General with

       responsibility for General Litigation and International Law

       Enforcement in 1982, states that he probably had some input into

       the MOU. He was unable, however, to explain why narcotics

       violations were not on the list of reportable crimes except that

       the MOU had "other deficiencies, not just drugs."

   89. Purpose of the February 11, 1982 Smith Letter. Cinquegrana says he

       remembers getting a telephone call "at the last minute" from

       Makowka who pointed out to him that the MOU failed to include the

       reporting of narcotics violations by non-employees. The draft MOU

       had already been cleared by all DoJ components--and was about to

       be signed by the Attorney General--when Cinquegrana reportedly

       found out about this omission. Instead of reopening the

       negotiations and clearing a revised MOU, Cinquegrana states that

       he and OIPR's Mark Evans prepared a letter from the Attorney

       General to DCI Casey. The letter was designed to show the

       importance of the subject of reporting narcotics trafficking

       without reopening negotiations, and that it was DoJ's expectation

       that CIA would understand DoJ's intent. Evans has no recollection

       of working on such a letter.

   90. Cinquegrana states that the letter was designed to create an

       expectation in the CIA that narcotics violations would be treated

       in the same way as the listed reportable crimes would be treated.

       Cinquegrana says that at that time DoJ hoped CIA would include

       guidance on narcotics trafficking reporting along with any

       guidance disseminated to its employees with respect to the MOU.

       Cinquegrana states that "we [DoJ] were trying to build the best

       case. . . . We anticipated that [narcotics violations] would be

       hard for the Agency to say 'no' to in terms of accepting the need

       to report such violations. And that 'responsible officials' would

       so realize." However, when asked about the specific effect of the

       Smith letter, Cinquegrana states that it would be going "too far"

       to conclude that the Smith letter added narcotics trafficking to

       the list in the MOU.

   91. For his part, Makowka has no recollection of having a conversation

       with Cinquegrana about the fact that the 1982 draft MOU did not

       include narcotics violations as reportable crimes. He attributes

       the Smith letter to someone at DoJ becoming uncomfortable at the

       prospect of the MOU not including any mention of narcotics.

       Makowka believes that the letter reflects the understanding

       between DoJ and CIA that only serious, not run-of-the-mill,

       violations would be reported. Makowka does not believe that the

       letter changed the list of violations that were required to be

       reported to DoJ.

   92. Cohen believes that the failure to add narcotics to the list of

       reportable crimes was an oversight by DoJ and that someone at DoJ

       became embarrassed on realizing that DoJ forgot to include

       narcotics violations in the list of crimes reportable to DoJ.

       Cohen speculates that the letter from DoJ was a "cover your ass

       type of document." His interpretation of the letter is that it

       implies CIA should keep doing what it had been doing before the

       signing of the MOU. Cohen believes that the language was vague and

       did not add narcotics trafficking to the list of crimes CIA is

       required to report, although as a practical matter he believes

       that it was better to err on the side of reporting.

   93. Clarke believes the intent behind the letter was that it was an

       oversight not to include narcotics violations in the list of

       reportable crimes. Thus, DoJ sought to make it clear that it

       expected the Agency to report such violations.

   94. Makowka's deputy in OGC's Intelligence Law Division in 1982

       believes that the intent of the letter was for the Agency to

       continue its past practice of reporting certain non-employee

       narcotics violations. He also thinks the Smith letter may have

       been a compromise in which CIA would report only major narcotics

       activities.

   95. Defining "Employee" in the 1982 MOU. Makowka recalls that his

       deputy and Cohen worked very hard to define the term "agent"

       during the MOU negotiations. He believes that an independent

       contractor is not a contract employee and therefore is not an

       employee for purposes of the MOU.

   96. Makowka's deptuy states that he was given explicit instructions

       from Cohen to develop a narrower definition of "employee" for the

       MOU than the language in E.O. 12333. The reason for doing so was

       to make a distinction between those people with staff-like access

       over whom CIA has a high level of control and agents and assets

       over whom CIA has limited control. He does not know whether DoJ

       was aware of CIA's reasoning for narrowing the definition. As

       previously noted, Makowka states that the definition of "employee"

       in HN 7-39 was not consistent with OGC's interpretation of

       "employee" and that the 1982 MOU was a joint effort by DoJ and CIA

       to refine language that would reflect the existing practice

       between CIA and DoJ under E.O. 12036.

   97. Cohen says he believes the term "contractor" as defined in the

       1982 MOU means a person with staff access. It was not intended to

       cover assets or agents.

   98. According to Clarke, CIA wanted to make crimes reporting

       procedures less onerous on CIA. Clarke believes that "employees"

       were considered to be individuals who were processed by CIA's

       Office of Personnel. Clarke says that crimes reporting

       requirements concerning employees did not cover anyone with whom

       the DO dealt operationally.

   99. Cinquegrana states it was his understanding that agents would not

       be considered employees under the MOU, although he would consider

       independent contractors as being covered under the category of

       "employee." At that time, he considered agents to be similar to

       informants used by law enforcement agencies. Cinquegrana also

       notes that OIPR "only knew what the Agency told us" regarding the

       status and duties of agents and assets.

   100. Gary Chase, Chief of OGC's Administrative Law and Management

       Support Division from 1986 to 1989, says the term "contract

       employee" is a term of art and did not include an asset and

       probably did not include an independent contractor.

   101. View of CIA Requirements Under the 1982 MOU to Report Narcotics

       Violations by Non-employees. OGC attorneys involved in the MOU

       negotiations--Makowka, his deputy, and Cohen--agree that the Smith

       letter did not--in the case of non-employees--have the effect of

       adding narcotics violations to the list of reportable crimes under

       the MOU.

   102. Prior to the 1982 MOU, Makowka states, CIA could report potential

       violations to the Federal Bureau of Investigation (FBI) or DEA and

       meet its crimes reporting obligations to DoJ. Under the E.O. 12333

       and the 1982 MOU, it was, however, no longer sufficient for the

       CIA to report crimes to DEA or FBI. Such violations would also

       have to be reported to DoJ, even if reported to the FBI or DEA.

       Makowka believes that OGC would take into account statute of

       limitations issues when deciding whether to report an allegation

       to DoJ.

   103. Cohen, who was in charge of making crimes reports to DoJ in the

       early 1980s, has no recollection of using the statute of

       limitations to avoid reporting a matter to DoJ. His view of erring

       on the side of caution was also the view of General Counsel

       Stanley Sporkin that, when in doubt, refer the matter to DoJ. Even

       though narcotics violations by non-employees were not covered by

       the MOU, Cohen states he would report a matter because not to do

       so might come back to haunt the Agency. On the other hand, he says

       that reporting of a matter really made no difference because DoJ

       never acted on the information.

   104. Gary Chase, responsible for CIA's crimes reports to DoJ between

       1986 and 1989, states that he is not familiar with the February

       11, 1982 Smith letter and had not seen the 1982 letter prior to

       1997. For him, the 1982 MOU was the definitive document that

       established CIA's responsibilities. Chase states that the 1982 MOU

       imposed no obligation on CIA to report narcotics violations by

       non-employees to DoJ.

   105. Cinquegrana states that he would have expected OGC to report

       narcotics violations by non-employees and not to look for reasons

       not to refer a matter. He also believes that CIA has no authority

       to make statute of limitation determinations because such

       responsibility lies with DoJ.

   106. Summation. Between August 15, 1979 and March 2, 1982, CIA was

       required by the April 15, 1979 Attorney General's guidelines under

       E.O. 12036 and HN 7-39 to report to DoJ any narcotics trafficking

       allegations relating to individuals, assets, or independent

       contractors who were associated with the Contras because assets

       and independent contractors were considered "employees" for crimes

       reporting purposes.

   107. As of March 2, 1982, the terms of the 1982 CIA-DoJ Crimes

       Reporting MOU under E.O. 12333 no longer required that CIA report

       to DoJ narcotics trafficking allegations regarding individuals,

       assets, or independent contractors associated with the Contras

       because assets and independent contractors were not considered

       "employees" for crimes reporting purposes.

   108. The February 11, 1982 letter from Attorney General Smith to DCI

       Casey that accompanied the CIA-DoJ Crimes Reporting MOU, did not

       create an additional requirement that CIA report to DoJ narcotics

       trafficking allegations regarding individuals, assets, or

       independent contractors associated with the Contras. However,

       Section IV. D. of the 1982 CIA-DoJ Crimes Reporting MOU gave OGC

       discretion to report any offense to DoJ in addition to those

       crimes specified in the MOU, including narcotics trafficking

       allegations regarding individuals, assets, or independent

       contractors associated with the Contras.

   109. The April 25, 1984 CIA-DEA MOU and its August 28, 1978

       predecessor defined and established procedures for the conduct,

       coordination and sharing of strategic narcotics intelligence

       information between CIA and DEA abroad.

   110. In August 1995, the 1982 CIA-DoJ Crimes Reporting MOU was

       revised. Under that revised MOU, assets and independent

       contractors are considered "employees" for crimes reporting

       purposes, and narcotics violations are included among the list of

       "non-employee" crimes that must be reported to DoJ. 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.

   111. Maintenance of Relationships with Persons Suspected of

       Involvement in Drug Trafficking. The Department of Defense and

       Military Construction Appropriations Act for Fiscal Year 1987,

       which authorized $100 million for Agency support to the Contras,

       included a prohibition on the provision of any assistance to any

       group that, among other things, retained in its ranks any

       individual "who has been found to engage in . . . drug smuggling .

       . . ." See Public Law 99-500, October 18, 1986, Section 204(b)(2).

       This prohibition was made known to CIA personnel in three Latin

       America Division Stations in March 1987. In January 1988,

       personnel in those Stations and three other Latin American

       Division Stations were informed of the prohibition.

       What policies and guidelines governed CIA's contacts during the

       Contra program with persons and organizations alleged to be

       involved in drug trafficking?

   112. CIA's DO developed a draft DO Handbook in December 1980 that

       included a section that focused on restrictions and prohibitions

       concerning contacts with individuals who might be involved in

       narcotics trafficking. The instructions were not applicable to the

       Contra-related individuals or independent contractors discussed in

       Volume II, however, since none of those individuals or independent

       contractors were involved in the collection of narcotics

       intelligence. A summary of the 86-page draft DO Handbook was sent

       to all DO field stations in July 1982 and stated that the draft

       had been approved by the DCI and represented Agency policy. The DO

       Handbook was not formally issued until January 1996, however, more

       than 15 years later.

   113. Headquarters sent a cable on December 14, 1981 to all DO Stations

       and Bases notifying Agency personnel that President Reagan had

       signed E.O. 12333 on December 4, 1981, thereby superseding E.O.

       12036. The main discussion in the cable concerned "the conduct of

       intelligence activities involving U.S. persons." In that context,

       the cable included reference to the E.O.'s authority for CIA to

       collect, retain and disseminate "information obtained in the

       course of a lawful . . . international narcotics . . .

       investigation."

   114. On June 26, 1982, Headquarters sent a cable to all DO Stations

       and Bases noting that Attorney General Smith had approved a

       variety of procedures implementing E.O. 12333 and governing CIA

       activities abroad. The cable transmitted a complete set of these

       procedures and noted that training teams would be dispatched to

       the field to brief personnel concerning the new procedures. Agency

       personnel associated with this training confirm that it took

       place. One officer associated with the training sessions recalls

       that questions regarding Agency dealings with drug traffickers

       were routinely raised in these training sessions in the field.

   115. January 4 and April 9, 1985, Headquarters cables to Central and

       South American Stations outlined a training program that was to be

       delivered by visiting teams of CIA personnel. The cable explained

       that the training would cover, among other things, the topics of

       "accomplishing goals within the parameters of the law and

       sensitivity to legal and political considerations." In a section

       of the cable addressing reporting of crimes, the cable noted that

       "reporting of narcotics violations is not mandatory but [CIA]

       policy is to report strategic narcotics movements." (Emphasis

       added.) The training also was to address the interface between DEA

       and CIA outside the United States.

   116. On April 9, 1987, Acting DCI (ADCI) Robert Gates sent a

       memorandum to Deputy Director for Operations (DDO) Clair George

       concerning air flights to Central America. In this memorandum,

       Gates addressed the standards for dealing with air crew members

       who were operating as contractors or subcontractors for the

       Agency. Paragraph two of the memorandum stated:

    . . . .

       It is 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. This must be true not only of those with whom we

       contract, but also their subcontractors. I believe it is essential

       that we obtain the names of all air crew personnel who have had

       any association with Agency contractors or subcontractors and vet

       those names through DEA, Customs, and the FBI--even though this is

       likely to be an onerous and occasionally inconvenient

       undertaking--and perhaps even hamper operations at times. 

       . . . .

   117. While several former senior Agency officials recall its

       substance, no information has been found to indicate that this

       memorandum, in its entirety, was disseminated to anyone at CIA

       Headquarters other than DDO George. With one isolated exception,

       no information has been found to indicate that the text or a

       summary of this memorandum was cabled to Agency field personnel

       who were involved in the Contra program. Nonetheless, the content

       of the memorandum was apparently widely known. For example,

       then-Central America Task Force (CATF) Chief Alan Fiers and CATF

       legal advisor Louis Dupart state that they were well aware of the

       ADCI's memo and interpreted it to apply broadly. A July 1987

       exchange of cables between Headquarters and a Central American

       Station, while not citing the memorandum, did cite Gates'

       prohibition against using suspected drug traffickers.

   118. A March 6, 1987 Headquarters cable concerning Department of State

       (DoS) actions regarding Adolfo Chamorro described the statutory

       provision barring assistance to a group with members who were

       found to be involved in drug trafficking:

       Section 204(8) [sic] of the Military Construction Appropriations

       Act of FY-87 which authorizes aid to the Nicaraguan Resistance

       forbids the provision of any aid to an organization which retains

       in its ranks any individual who has been found to engage in drug

       smuggling.

   119. On January 21, 1988, Headquarters sent a cable to Central

       American Stations summarizing congressionally-imposed restrictions

       on the Contra program. The cable urged that it be read by all

       field personnel and included the statement:

    . . . .

       No assistance . . . may be provided to any group that retains in

       its ranks any individual who has been found to engage in . . .

       drug smuggling . . . . As [addressees] are aware, some individuals

       within the [Contra] resistance have been excluded from further

       participation due to their past and well documented contact with

       drug smuggling or drug smugglers. [Addressees] are reminded that

       should evidence of involvement of drug use or smuggling come to

       their attention, they should report it to [Headquarters] and

       aggressively follow up. 

       . . . .

       What do CIA Headquarters and field personnel recall regarding

       alleged drug trafficking by the Contras? 

   120. A large number of CIA personnel and other individuals acting on

       behalf of CIA were involved in implementing the activities to

       support the Contras. The following are the views of individuals

       concerning--from a Headquarters or field perspective--what they

       observed, what they did or what they thought they were supposed to

       do in connection with allegations of narcotics trafficking by the

       Contras. Those commenting range from an Acting DCI, DDOs, Chiefs

       of CATF, and COSs, who dealt with substantial strategic and

       management issues, to an independent contractor operations officer

       who lived with the Contras in their military camps.

   121. The Headquarters Environment. Headquarters personnel assigned to

       the CATF during the 1980s indicate that CATF perceived itself as a

       group of dedicated officers who had one overriding priority: to

       oust the Sandinista Government. This task was, in their view,

       complicated by the actions taken by Executive Branch officials,

       intense scrutiny from Congress and the media, changing

       congressional restrictions, and independent activities undertaken

       through the auspices of the National Security Council (NSC). CATF

       personnel say it was understood that congressional restrictions

       had to be honored to preserve the program and the Agency's

       integrity. At the same time, they were determined that the various

       difficulties they encountered not be allowed to prevent effective

       implementation of the Contra program.

   122. Senior Agency and CATF managers indicate that they were aware of

       restrictions regarding Agency dealings with persons or

       organizations known to be involved in, or suspected of, drug

       trafficking. Further, these officers recall being aware that, if a

       crime were discovered, it had to be reported to Headquarters.

   123. Robert Gates, who served as Deputy Director of Central

       Intelligence (DDCI) from April 1986 to January 1987 and May 1987

       to March 1989 and ADCI from January to May 1987, says that it was

       his position that CIA had to determine whether the Contras were

       involved in drug trafficking. It was "a matter of self

       preservation," not only for the Contra program, but for the

       Agency. In general, Gates says that the Agency had an obligation

       to terminate its relationship with any asset who was suspected by

       U.S. law enforcement agencies to be engaged in drug trafficking.

       Furthermore, Gates states that the Agency had an obligation to

       determine whether its assets had past or present involvement in

       drug trafficking. Gates says that allegations of drug trafficking

       had to be checked out.

   124. Gates states that the intent of his April 1987 memorandum to DDO

       George was to instruct the DO not to have anything to do with

       known or suspected drug traffickers. Gates believes that the

       policy from his office concerning narcotics trafficking was clear

       and consistent.

   125. John McMahon, who served as DDO from 1978 to 1981, DDI from

       1981-1982, Executive Director in 1982, and DDCI from 1982 to 1986,

       recalls that CIA was obligated to report individuals who were

       suspected of narcotics trafficking. As DDCI, McMahon says that any

       criminal violation, including narcotics, had to be reported to the

       DoJ. Agency relationships with assets associated with the Contra

       effort who were suspected of drug trafficking should have been

       terminated and the information reported to DEA, McMahon says. The

       Agency had an obligation to determine whether individuals or

       organizations with which it became involved were engaged in drug

       trafficking. It was not enough just to terminate a relationship

       when narcotics trafficking was suspected, states McMahon.

   126. John Stein, who was the Associate Deputy Director for Operations

       (ADDO) from 1978 to 1981, DDO from July 1981 to July 1984, and

       Inspector General from 1984 to 1985, recalls that specific laws

       governed reporting of possible criminal activity. Stein says that

       Station officers and managers were supposed to report on narcotics

       matters and that "narco-trafficking had to be reported in all

       conditions." Stein says it would then be up to the DDO to decide

       how, but not whether, the information should be disseminated.

       "[Dissemination] is the only wise thing to do bureaucratically,"

       states Stein.

   127. Former CATF Chief Fiers stated in his written response to CIA/OIG

       questions that the April 1987 Gates memorandum prohibiting use of

       suspected drug traffickers was ". . . seen as a clear, direct

       instruction. It was understood to apply broadly, but it was

       equally understood that the area of concern was the logistics

       chain--also known as the Contra supply network. The memo was taken

       seriously."

   128. Louis Dupart, CATF's legal advisor from mid-1985 to mid-1988,

       says that documents such as the 1982 CIA-DoJ MOU regarding crimes

       reporting served as guidelines, but CATF took a "common sense

       approach" on the issue of crimes reporting. According to Dupart,

       directives are written for those who do not exercise good

       judgment, those "who operate too close to the edge." Dupart states

       that criminal activity would have been reported by CATF to the OGC

       lawyer who served as principal legal advisor to the DDO and the

       information would then have been referred to DoJ or the FBI.

   129. According to Dupart, CATF did not want anything to do with

       "tainted people," so it would not have to explain later why it

       dealt with such people. He points out that, beginning in the fall

       of 1986, the Iran-Contra scandal had broken and "we knew we could

       not deal with anyone who was tainted. Everyone was looking for

       drug involvement by the Contras: Congress, law enforcement, the

       media, everyone." Dupart says that, although the April 1987 Gates

       memorandum to DDO George was adhered to, the memorandum had little

       real impact because it merely reflected previously established

       CATF policy.

   130. An officer who served as Chief of CATF/Nicaraguan Operations

       Group (NOG) from 1985 to 1986 and as CATF Deputy Chief from 1986

       to July 1987, recalls that CATF management regarded drug

       trafficking as a "peril" to the Contra program because of the

       persons with whom CATF had to deal. However, he says that

       information relating to drug trafficking was not considered a

       collection or operational priority per se.

   131. An officer who served in the CATF from 1984 to 1985 as Executive

       Officer and the first NOG Chief recalls that there was "no time to

       pursue drug-related leads or information" due to the "press of

       business." He recalls that he just tried to stay ahead of the

       cable traffic and Bill Casey's desire to be more creative.

   132. An officer who was assigned to CATF in late 1987 and was CATF

       Chief from 1989 to 1991, notes that the top priorities were

       implementation of the Contra programs as well as foreign

       intelligence collection. As he recalls, Headquarters expected the

       Stations to report any information they acquired concerning the

       possible involvement in drug trafficking of individuals or

       organizations affiliated with the Contras or the Agency's Contra

       program. However, he says there was no requirement at the time to

       seek out such information systematically and aggressively.

   133. This officer states that the narcotics issue was a target of

       opportunity. He observes that all of the Central American Stations

       were seeking information that would link the Sandinistas to drug

       trafficking. The goal was to diminish the image of the

       Sandinistas.

   134. An officer who was LA Division Chief from 1986 to 1989 and CATF

       Chief from 1982 to 1983, stated in his written response to CIA/OIG

       questions:

       During the time I was C[hief]/CATF . . . , I recall there was

       little evidence of significant drug trafficking in the areas where

       the Contra forces were active (Honduras, Nicaragua, Costa Rica)

       except perhaps for some involvement by the Sandinistas. Later in

       the decade, cocaine from South America began to move more

       substantially into the US through the Central American area as

       pressure on trafficking in the Caribbean and other blue water

       areas increased. . . . Given the lack of credible data regarding

       Contra involvement in narcotics trafficking during the earlier

       years, however, I believe the primary focus with respect to drug

       trafficking was the continual monitoring required by our

       long-standing policy of insuring no involvement with any

       individuals or organizations involved in narcotics trafficking.

       The only rumors or reports I recall hearing of alleged Contra

       involvement in drug trafficking were anecdotal remarks I heard

       upon returning to LA Division in . . . 1986 from CATF personnel,

       particularly C/CATF [Alan Fiers] (who had direct responsibility

       for management of the Nicaraguan and Central American programs),

       to the effect that there had been some credible reporting of

       narcotics trafficking in the Southern Front (Costa Rica) . . . .

       While I cannot recall the existence of any reporting on any

       alleged Contra involvement in drug trafficking, I do not believe

       there were any requirements for special handling of such reporting

       nor do I recall any opposition or reluctance on the part of Agency

       officers to report on such topics.

       The officer also recalled:

       Everyone in LA Division and CATF was aware of the controversial

       political nature of the Nicaraguan and Central American programs,

       and everyone knew that special vigilance was required to ensure

       that there were no violations of law or policy guidelines in the

       implementation of the program, particularly regarding criminal

       activity, narcotics trafficking, human rights abuses, etc., on the

       part of members of the Contra movement. Further, no . . . programs

       ever conducted by the Agency during my tenure was [sic] ever run

       as transparently as the Central American and Nicaraguan programs.

       Congressional members and staffers traveled frequently throughout

       the area and received extensive and detailed briefings on

       virtually every aspect of the program. Over a period of years the

       staffers became intimately familiar with the Contra program, and

       they would have been the first to call our attention to any

       problems in reporting on allegations of drug trafficking by

       Contras or Contra-related individuals. Further, State Department

       officers were deeply involved in political aspects of the program

       and were equally attuned to the sensitivities involved.

       The 1987 funding resolution requiring a funds cutoff to any

       organization involved in drug trafficking had no special impact

       other than to reinforce a policy that was already in effect to

       eschew any contact with groups or persons credibly suspected of

       involvement in drug trafficking. I believe our principal reaction

       to the resolution was to re-emphasize the importance of remaining

       vigilant to this danger. 

       The Gates memo in April 1987, insofar as it referred to drug

       trafficking, repeated and reinforced a policy already in effect.

       As I recall, the memo was written in the aftermath of a problem

       involving an Air Branch proprietary or contractor and US Customs.

   135. The officer who was LA Division Deputy Chief from 1980 to 1981

       and LA Division Chief from 1984 to 1986, recalls that narcotics

       allegations regarding assets would be reported and the

       relationship with the asset would be terminated. "Handling assets

       with narcotics allegations in Central America [was] a no-no," he

       recalls. He says "Narcotics was a large issue with Latin America

       Division. What was not large was Contra involvement with

       narcotics."

   136. An officer, who served as NOG Chief from 1986 to 1988, says that

       "the general thing about people who would cause trouble was not to

       deal with them." However, there needed to be a basis for suspicion

       and a threshold, i.e., "suspected by whom and on the basis of

       what."

   137. The OGC attorney who succeeded Dupart in 1987 as the CATF legal

       officer states that the Agency decision regarding whether to use

       an individual who was subject to a drug trafficking allegation

       depended on the strength of the allegation and the reliability of

       the source.

   138. Despite this general understanding of Agency policy regarding

       drug allegations, CATF managers' recollections of the impact of

       the April 1987 Gates memorandum prohibiting the use of contractors

       or subcontractors who were involved in CIA air operations and were

       even suspected of drug trafficking indicate no specific

       implementation of that policy. The former NOG Chief, for example,

       does not recall anything specific about the April 1987 Gates

       memorandum, but recalls that it was around that time that CATF

       began to use more restrictive criteria for recruiting and

       maintaining relationships with individuals associated with the

       Contra program. He states that the instructions left no room for

       interpretation and that it was clear that CIA had to terminate its

       relationship with individuals who were suspected of drug

       trafficking. He notes that such decisions would have been made by

       CATF Chief Fiers in almost all cases.

   139. One of the former Deputy Chiefs of CATF does not recall any

       specific discussion in CATF about the April 1987 Gates memorandum,

       nor does he recall a change in policy or more restrictive vetting

       criteria for assets and contractors. Two branch chiefs who served

       in CATF from 1986 to 1988 and 1987 to 1991, respectively, also do

       not recall any specific discussions about the Gates memorandum.

       One of the former Chiefs of CATF says he recalls the Gates

       memorandum and also that Agency relationships with some pilots may

       have been terminated as a result. He believes that the policy of

       vetting contractors and subcontractors was strictly adhered to.

   140. The Chief of CATF's Special Activities Branch from 1986 to 1988

       recalls Fiers discussing the Gates memorandum and that the general

       thrust of the discussion was that CATF could not deal with any

       subcontractors or purchase any aircraft that had previously been

       implicated in drug trafficking. He says that Fiers did not express

       displeasure with these guidelines during the discussion, and that

       Fiers said the Agency had to be totally clean with regard to

       individuals and aircraft. He indicates, however, that the Gates

       memorandum had little practical impact because CATF "already had

       [relationships with] the FDN pilots," meaning that new pilots were

       not needed.

   141. Procedures for Vetting Contractors and Others. The April 1987

       Gates memorandum included a requirement that contractors and

       subcontractors be vetted through DEA and Customs as well as the

       FBI. On March 31, 1988, CATF sent a memorandum to then-DDCI Gates

       regarding use to support the Contra program of pilots and

       companies that may have been involved in drug trafficking. The

       memorandum, among other things, set forth CATF's approval criteria

       for individuals and companies that were involved in transporting

       equipment for the Contra program and indicated that, per Gates'

       instructions of "a year ago [that] the Agency has been extremely

       careful to properly vet all pilots, mechanics, and companies . .

       .," and explains that if "some derogatory information is found or

       alleged, but the various agencies do not believe it would be a

       problem for the U.S. Government to have a contract with the

       individual or company, a special approval is required which is

       signed by the chief of the division."

   142. A former Chief of CATF does not recall that a focused,

       "across-the-board" policy for vetting Contras with respect to drug

       trafficking was ever established. He states that, if there had

       been information supporting drug trafficking allegations against

       an individual, CIA would have "pulled out all the stops" to

       collect more information about the allegations. He recalls that

       there was a well established policy in CATF to vet Contra pilots

       to ensure that they were not linked to drug trafficking. He says,

       "The Agency has been extremely careful in properly vetting all

       pilots, mechanics, and companies."

   143. The former Deputy Chief of CATF says that, if someone had a

       background in narcotics or there were allegations of narcotics

       activities, the information was "checked out." He says that the

       narcotics problem was particularly difficult to deal with when it

       came to the leasing of aircraft. He observes that it was hard to

       find a plane without a drug record and most DC-6s had been placed

       on watch lists by DEA.

   144. The Chief of CATF's Special Activities Branch from 1986 to 1988

       was responsible for vetting air crews and other support personnel.

       He says that he does not recall any specific guidelines regarding

       the use of pilots who were known or suspected drug traffickers. In

       fact, he recalls that the whole policy was "bizarre" because the

       vetting process was focused on ensuring that the aircraft that

       were being used had no prior history of involvement in drug

       trafficking. He recalls that there was great sensitivity to making

       sure the aircraft were "clean" so as not to run afoul of the

       congressional oversight committees and that it was as if the

       planes, not the individuals, were the narcotics traffickers.

   145. The former NOG Chief says he does not recall the specific

       criteria for terminating a relationship with an individual who was

       alleged to be involved in drug trafficking. In his view, CATF was

       obligated to consider all derogatory information to be accurate.

       Back then, according to him, derogatory information from DEA or

       Customs, even if not substantiated, would have been enough to

       cause termination.

   146. The Field Environment. Managers and officers who were assigned to

       Central America during the 1980s recall that the overriding

       priority task of their Stations and Bases was to support the

       Contras. In the field, CIA sought to develop and support military

       forces that could successfully engage the Sandinista Army. This

       effort, along with the maintenance of relationships with the

       Contra leaders, dominated Station and Base efforts and resource

       allocations. Recollections are mixed regarding the extent to which

       drug trafficking allegations became known and were reported.

   147. A Central American Station's officers, who were responsible for

       handling Contra paramilitary activities in the 1980s, recall that

       the Station's main priority was to support the war effort. A

       former Deputy Chief of Station (DCOS) and Acting COS, says that

       "the Station was focused 99 percent on the [Contra] war effort"

       and that the "focus was always on the program." A Station officer

       states, "The focus was to get the job done, get the support and

       win the war." Another officer assigned to this Station adds that

       "the primary mission at [the] Station was supporting the Contras

       [and two other missions]." Another officer who was assigned to the

       Station in the mid-1980s says, "There was a war going on. The

       primary mission for seven years was fighting the Sandinistas." A

       paramilitary officer assigned to the Station in the mid-1980s

       recalls that his "only job was to train [Contras] in camps."

   148. Most Station officers state that they would have reported to

       their supervisors or Headquarters for appropriate action any

       narcotics trafficking or criminal information they acquired. Most

       officers recall no allegations of trafficking by the Contras,

       although some do recall unsubstantiated rumors concerning

       individuals associated with Eden Pastora.

   149. A Central American COS states that "narcotics was not something

       [Station personnel] were looking for in the 1980s, but that does

       not mean they would have ignored it if they had seen it." He says

       that his understanding of crimes reporting obligations since 1980

       was that anything that looked to be criminal in nature should be

       reported to Headquarters.

   150. The COS says he became aware of drug trafficking allegations

       against the Contras "fairly early" during his assignment. He says

       there was a group of "ne'er-do-well" people surrounding Eden

       Pastora who had histories that included criminal activity. He

       continues that "there was a range of derogatory information that

       may have included narcotics activities. Early traces revealed

       these folks should be treated carefully. Some were scoundrels." He

       indicates that the Headquarters reaction to derogatory information

       concerning Pastora's associates has to be considered in the

       context of DCI William Casey's overriding political objectives. As

       the COS explains:

       . . . yes, there is derogatory stuff and we would be careful in

       terms of counterintelligence and operational security, but we were

       going to play with these guys. That was made clear by Casey and

       [then-LA Division Chief Duane] Clarridge. 

       The COS says he is fairly certain that there was never any large

       infusion of drug money to the Contras because they "never hit the

       jackpot" in a way that would have indicated drug money or a

       substantial contribution.

   151. A Central American Station DCOS recalls that he "did not know

       anyone with drug connections."

   152. Another Central American Station DCOS states that he has "no

       knowledge of any Contras who were alleged to be involved in

       narcotics trafficking." He adds that, "if narcotics trafficking

       had been conducted by the Nicaraguan Contras, Agency officers

       would have found out." He emphasizes that Station officers "would

       have jumped out of their skin had allegations of trafficking into

       the U.S. been made."

   153. An officer who served as an Acting COS states that he did not

       recall any enunciation of a specific reporting policy regarding

       narcotics trafficking, noting that "if there was a crime, it was

       reported."

   154. An officer who served as DCOS, recalls that "counternarcotics was

       dealt with within the context of the Contra Program; when it came

       across the Station's screen it was reported, but otherwise it was

       not a factor."

   155. An operations officer assigned to a Central American Station

       recalls that "it went without saying that if one came into a

       situation involving a serious criminal allegation, it would be

       raised with Headquarters and made a matter of record." He also

       says that he did not at any time believe that Pastora or anyone

       associated with the Contras was involved in drug trafficking.

   156. An officer assigned to a Central American Station states that

       information on aircraft and personnel--including Contras--possibly

       involving in drug trafficking was reported to Headquarters and the

       DEA office in 1984-85. He recalls that the "CIA policy on

       drug-related information was [to] report the matter to CIA

       Headquarters, develop the information, run traces where possible

       and that CIA Headquarters was supposed to forward the information

       to the DEA." Another Station officer says, "Narcotics was just not

       on the radar screen at the time and [the country where he was

       assigned] was not a big transshipment point." He adds, however,

       that standard worldwide DO practice was to report any criminal

       activity to the COS who would then be responsible for forwarding

       the information to Headquarters.

   157. An officer assigned to a Central American Station recalls that

       she "never heard any rumors of drug trafficking" by the Contras.

       Another officer assigned to the Station recalls no allegation of

       trafficking by the Contras. He adds that "Contras may have been

       doing things we weren't aware of and we always didn't know what

       they were doing," but he didn't believe they were involved in

       narcotics.

   158. The former Acting COS says that he does not recall the procedures

       for vetting assets and contractors, but that "it was not normal to

       check automatically with law enforcement agencies."

   159. One Station officer recalls that, in effect, there was not much

       vetting of Nicaraguan assets. The officer recalls that she was not

       aware that any drug trafficking was taking place.

   160. An independent contractor operations officer, who was assigned to

       train and support the Contras in their camps, recalls that he

       never saw anything to indicate drug trafficking on the part of the

       Contras with whom he dealt. He says that in every place he served

       in connection with the Contra program he had access to everything

       about the Contras. Although there were a few individuals who used

       marijuana personally, he says he never saw anything that suggested

       drug trafficking.

   161. The independent contractor operations officer recalls that he was

       never tasked by the CIA officers with whom he dealt to determine

       whether there was any narcotics trafficking in the Contra camps.

       However, the officer also says that he believes that the

       allegations of narcotics trafficking by the Contras were "just

       something someone made up to cover up something else." He states

       that it was too evident that the Contras were getting money and

       help during the U.S. funding hiatus from somewhere and that

       narcotics trafficking allegations stemmed from efforts to explain

       the source of the support. In this light, he notes that Contra

       logistical personnel with whom he worked speculated that the

       flights that were sponsored by the U.S. private benefactors to

       support the Contras, must have been funded from the profits of

       narcotics trafficking. The independent contractor operations

       officer says that the Contra logistical personnel, noting that the

       Contras continued to receive food, medicine, ammunition and other

       aid during the U.S. Government cut-off of funds, "probably made

       the assumption that narcotics was paying for this."

   162. The independent contractor says he believes that these suspicions

       were unfounded. He describes the Contra logistics personnel

       suspicions as "just comments" and says:

       . . . it was an ideal situation to send drugs from [Central

       America] to the United States, but the Americans were too

       professional and had no reason to do so. Narcotics trafficking

       allegations were just rumors. If there was narcotics trafficking,

       it was probably from Nicaragua to the United States conducted by

       the Medellin cartel. 

   163. An officer, who was a Central American COS and later Deputy Chief

       of LA Division in the late 1980s, says that Honduras was not an

       attractive location for drug traffickers during this time period.

       A war was going on, it was a poor country, there were large

       numbers of U.S. military forces at Palmerola Air Base and

       elsewhere, there was a large U.S. radar system in operation that

       tracked aircraft throughout the region, and Airborne Warning and

       Control System aircraft operated in the area. Additionally, he

       recalls that the Contras controlled few, if any, airfields in

       Honduras. The geography of the country also was not conducive to

       drug trafficking by air. He notes that, for the most part, the

       land resembled a crumpled sheet of paper with few flat spots for

       landing strips. He says that, in his opinion, Guatemala, southern

       Mexico, or the Yucatan Peninsula were more desirable transshipment

       and refueling points for drug traffickers than Honduras.

   164. He says he recalls reports that members of Eden Pastora's

       Southern Front organization may have engaged in drug trafficking

       activities and that Pastora may have later made admissions to that

       fact. There were also rumors that Mario Calero, the brother of

       Contra Northern Front leader Adolfo Calero, may have been involved

       in drug trafficking. He notes:

       The rumors that Mario Calero may have been involved with drug

       trafficking while running an [aircraft] from Louisiana were not

       believed to be true and no credible reporting on any such activity

       was ever received.

       He says it was his understanding that the U.S. Customs Service and

       possibly the Immigration and Naturalization Service (INS)

       inspected all Contra-sponsored flights into and out of the United

       States to ensure there was no contraband, such as narcotics and

       weapons, on board.

   165. He notes that Adolfo Calero and Enrique Bermudez had modest homes

       in Miami during this time period. In Honduras, they lived even

       more modestly. He says he once visited Bermudez' home in Miami and

       was struck by the fact that Bermudez' wife had set up a hair salon

       in their home as a means of producing income. He comments that

       they certainly did not live as if they had access to large amounts

       of drug money.

   166. He says that, if CIA or other U.S. Government organizations

       operating in Honduras had acquired information indicating that the

       Contras were engaged in narcotics trafficking, it would have--or

       should have--been disseminated in intelligence reports. He makes

       clear that CIA was not alone in its intelligence collection and

       reporting efforts in Honduras and that large amounts of

       intelligence were collected by other U.S. Government agencies.

       Reports of Contra drug trafficking, he says, would probably have

       been a topic of discussion at the Interagency Working Group that

       was run by DoS official Elliott Abrams. For example, according to

       him, there may have been discussions at the Interagency Working

       Group concerning a Contra who was caught by the Contras growing a

       patch of "pot." The offender, as he recalls, was court-martialed

       by the Contras.

   167. An officer who was a Central American COS in the late 1980s and

       LA Division Chief from 1989 to 1993, recalls in his written

       response to OIG questions that a case involving Juan Rivas, a.k.a.

       "Quiche," was:

       . . . the only instance [he] can remember of a member of the

       [Contra's] Northern Front being tied to narcotics trafficking.

       [Northern Front leader Enrique] Bermudez himself . . . had never

       been accused to [his] recollection of carrying out or tolerating

       trafficking or traffickers. [He] recall[s] no sign that the

       Northern Front received money from traffickers. In fact they owed

       lots of money to the Hondurans for food during periods when we

       could not support them.

   168. An officer who served as a Central American Acting DCOS in the

       mid-1980s does not remember the provision in the FY87 $100 million

       funding legislation for the Contras directing that no funds could

       be provided to organizations whose members engaged in drug

       trafficking. Further, he does not recall receiving any special

       briefing regarding this condition for the funding. He observes,

       however, that such a condition would have been closely adhered to

       since such programs were very strict about compliance issues.

   169. A Station operations officer in the mid-1980s says he does not

       recall any rumors of Contra involvement in drug trafficking during

       his tour. Another Station officer says that there is "no way" the

       allegations contained in the San Jose Mercury News can be true.

   170. A logistics officer assigned to Central America in the mid-1980s

       says he once heard a rumor that the Contras had included marijuana

       in an air drop of supplies to troops in Nicaragua, but says he

       heard nothing more about the allegation. He says that it was his

       impression that the Contras were "military/ideological people

       rather than a criminal element." He observes that, from a

       logistical point of view, Contra operations were not conducive to

       drug trafficking. The material all came from "the North to the

       South." He does not recall any cargo going "from the South to the

       North" and believes the media allegations "sounded preposterous."

   171. An operations officer says that he never heard anything about

       drug trafficking and never saw any evidence of drug trafficking.

       In fact, he recalls that the Contra camps did not even have

       alcohol available and no drinking was allowed. A Station staff

       officer says that she does not recall hearing anything about drug

       trafficking in connection with the Contras at that time.

   172. An operations officer says that he obtained no information and

       heard no rumors during his tour about Contras engaging in drug

       trafficking. Noting that he had been a law enforcement officer

       prior to joining CIA, he says he saw no sign of drugs, "not even

       one marijuana cigarette," during his assignment. An officer

       assigned to Central America says that he was unaware of any Contra

       being involved in drug trafficking. The officer who served an

       Acting DCOS also says that he does not remember hearing any rumors

       or obtaining any information during his tour that linked the

       Contras in the country where he was assigned with drug

       trafficking.

   173. A Station operations officer says that he did not hear any rumors

       of drug trafficking by Contra members. However, he vaguely

       remembers hearing about the lack of security at one of the air

       bases and how easy it would have been to move drugs in and out of

       the base. However, he says he cannot recall the name of the base.

   174. A Station operations officer says that any information regarding

       drug trafficking by Contra leaders or any other asset would have

       been passed to Headquarters. He also states that he is unaware of

       any suppression by his supervisor or colleagues of information

       concerning Contra drug trafficking.

   175. A Station operations officer recalls that CIA personnel serving

       in the country "clearly understood we were to have nothing to do

       with anyone involved in narcotics trafficking and to my knowledge

       no one ever did." He says that any drug trafficking information

       would have been handled in regular intelligence reporting

       channels. He says he recalls no management resistance at all to

       processing any reporting on drug trafficking and adds, "If someone

       attempted to hide such information, I would report them."

   176. Finally, a Station operations officer says he does not believe

       that information regarding drug trafficking was ever suppressed by

       his colleagues or supervisors.

     _________________________________________________________________

   

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                            CONTRA ORGANIZATIONS

     _________________________________________________________________

   

   What drug trafficking allegations was CIA aware of, and when,

   involving Contra organizations? How did CIA respond to this

   information, and how was this information shared with other U.S.

   Government entities?

   

   15th of September Legion--Justiniano Perez/Manuel Porro/Juan Francisco

   Rivera/Hugo Villagra/Fernando Brautigan/Felix Alcides Espinoza/Edwin

   Hoocker

   177. Background. The military arm of the Nicaraguan Revolutionary

       Democratic Alliance (ADREN) was known as the 15th of September

       Legion. It was formed in 1980 and its principal leaders were

       Enrique Bermudez and Justiniano Perez Sala. Other leaders included

       Guillermo Mendieta Chaves, Alcides Espinoza, Ricardo "Chino" Lau,

       Manuel Porro, Manuel Villalobo, and Hugo Villagra.

   178. In May 1981, a Central American Station reported that the ADREN,

       Nicaraguan Democratic Union (UDN) and MISURASATA had agreed in

       principle to combine forces in a new organization. They would

       continue to use the name 15th of September Legion for the

       organization's military arm. The new organization, the Nicaraguan

       Democratic Force (FDN), was established in September 1981. The FDN

       General Staff included Enrique Bermudez, Justiniano Perez, Ricardo

       Lau, and Juan Francisco Rivera. The merger of the UDN and the

       ADREN, including its 15th of September Legion, into the FDN was

       completed in early 1982. Former ADREN leader Guillermo Mendieta

       Chaves was excluded from the new organization because he was

       suspected of being a Sandinista spy.

   179. The 15th of September Legion included a unit called the Special

       Secret Operations Command (OES). The Coordinator of the OES was

       Justiniano Perez. Other members included Fernando Brautigan,

       Alcides Espinoza, Edwin Hoocker, Ricardo Lau, and Gerardo Martinez

       Gutierrez. The unit was organized to increase ADREN's operational

       capabilities both within and outside Nicaragua.

   180. The ADREN to some extent engaged in kidnapping, extortion and

       robbery to fund its operations. A June 1981 Central American

       Station draft field intelligence report stated that ADREN leaders

       "see themselves as being forced to stoop to criminal activities in

       order to feed and clothe their cadre." The ADREN also engaged in

       the bombing of Nicaraguan civilian airliners and airliner

       hijackings as methods of attacking the Sandinista Government. The

       Station reporting from June 1981 through March 1982 identified the

       following 15th of September Legion members as having been involved

       in criminal activities: Brautigan, Hoocker, Lau, Martinez, Perez,

       Porro, Rivera, and Villagra.

   181. A September 1981 cable to Headquarters (discussed in more detail

       later in this section) indicated that ADREN had decided to engage

       in drug trafficking to the United States to raise funds for its

       activities. ADREN members Alan Downs and Edwin Hoocker reportedly

       had been involved in an initial delivery of drugs to Miami in July

       1981.

   182. The leader of the ADREN/OES, Justiniano Perez, resigned from the

       FDN in November 1981. Perez wrote a resignation letter in which he

       stated that he was leaving because of internal dissension and

       mistrust within the FDN leadership. A June 1982 cable to

       Headquarters reported that Enrique Bermudez, Chief of the FDN

       General Staff, had stated that the OES was involved in armed

       assaults and thefts to collect funds. According to Bermudez, Perez

       disclaimed responsibility but admitted he had lost control of the

       group.

   183. According to a March 1982 Headquarters cable, the FDN had ceased

       using the name "15th of September Legion" by early 1982. The name

       had become associated with a small splinter group led by Perez,

       Porro, Rivera, and Villagra. Its personnel were principally former

       members of the ADREN/OES. The group reportedly continued to

       conduct criminal activities to support its operations against the

       Government of National Reconstruction (GRN) and identified itself

       as the 15th of September Legion.

   184. Justiniano Perez Sala. In June 1982, Headquarters requested an

       assessment as to whether Perez "could be influenced to employ

       tactics other than those used by terrorists," if he were to be

       re-integrated into the FDN. In November 1982, with the support of

       MISURASATA leader Stedman Fagoth Mueller and the concurrence of

       the FDN, Perez re-joined the Nicaraguan Resistance (RN) as the

       Military Advisor to the MISURASATA.

   185. A January 1984 cable reported that "Perez is the only person in

       Honduras and in the entire FDN with the leadership, charisma, and

       military tactical ability to make the movement go forward in the

       manner CIA would like." However, beginning in December 1983, two

       Stations reported that Perez became involved in a disinformation

       scheme, along with Francisco Rivera, Hugo Villagra and a

       Cuban-American U.S. citizen that was directed against the

       political and military leadership of the FDN. In May 1984, Perez

       withdrew from active service with the MISURASATA, returned to

       Miami, and had become associated with a dissident Nicaraguan exile

       group led by Hugo Villagra and the Cuban-American citizen that

       eventually became known as the Nicaraguan Coalition of Opposition

       to the Regime (CONDOR).

   186. Manuel Porro Rubiales. A June 1982 cable identified Manuel Porro

       as a member of the FDN General Staff support unit. He was

       identified as an instructor at the FDN NCO School in an October

       1982 cable. A September 1986 cable discussed Adolfo Calero's

       hiring of Porro as an assistant. A September 1987 cable indicated

       that Porro also reportedly handled Adolfo Calero's funding

       transactions between Miami and San Jose, Costa Rica, banks.

   187. Juan Francisco Rivera Aguirre. In a May 1982 cable to

       Headquarters, Rivera was identified as FDN Chief of Logistics. A

       February 1983 cable reported that an FDN investigation had found

       Rivera guilty of misappropriating funds. According to a March 1983

       cable, Rivera had contacted Carol Prado and indicated that he

       would leave the FDN and travel to Miami. In May 1983, a Station

       reported that Rivera was alleging that the FDN was "coming apart"

       due to internal conflicts, cliques and lack of control by CIA.

   188. A June 1983 cable indicated that Rivera moved to Miami where he

       became one of the leaders of the dissident Nicaraguan exile group

       that eventually became known as the CONDOR group. According to a

       December 1984 Headquarters report, Rivera was active, along with

       Perez, Villagra and the Cuban-American citizen, in a

       disinformation campaign that attempted to ferment distrust between

       the Honduran military leadership and the FDN in Honduras. The

       CONDOR group's ultimate goal was to supplant the FDN leadership

       with its own members.

   189. Hugo Villagra Gutierrez. A November 1982 cable identified Hugo

       Villagra as the FDN Chief of Operations. In August 1983, he was

       appointed as the Tactical Field Commander of FDN Forces in

       Nicaragua.

   190. A December 1983 cable reported that Villagra had resigned from

       the FDN, claiming that he was not being supported by the FDN

       political and military leadership. Villagra moved to Miami and,

       according to a June 1984 Headquarters cable, became one of the

       leaders of the dissident Nicaraguan exile group that eventually

       became known as the CONDOR group.

   191. Other 15th of September Personalities: Fernando Brautigan. No

       information has been found to indicate that Brautigan joined the

       FDN after the demise of the 15th of September Legion in 1982.

       However, an April 1983 Central American Station cable to

       Headquarters concurred in his appointment as a Military Advisor to

       Emery Hudson's Miskito Resistance organization in Costa Rica as

       requested by Miskito leader Norman Campbell. Brautigan was

       identified as a member of the dissident Nicaraguan exile CONDOR

       group in a May 1986 cable to Headquarters.

   192. Felix Alcides Espinoza Rodriguez. According to a June 1983 cable

       to Headquarters, Alcides Espinoza was FDN Commander of Sagitario

       Base in June 1982. A November 1984 cable indicated that Espinoza

       was senior Military Adviser to MISURA.

   193. Edwin Hoocker Coe. No record has been found to indicate that

       Hoocker joined the FDN after the demise of the 15th of September

       Legion in 1982. However, an April 1983 Central American Station

       cable to Headquarters concurred in his appointment as a Military

       Adviser to Emery Hudson's Miskito Resistance organization in Costa

       Rica as requested by Miskito leader Norman Campbell. A June 1984

       FBI name trace request to CIA indicated that Hoocker had recently

       immigrated from Nicaragua and had taken up residence in Texas.

   194. Allegations of Drug Trafficking. In September 1981, a report to

       Headquarters relaying information obtained from an asset stated

       that the ADREN leadership had made a decision to engage in drug

       smuggling to the United States in order to finance its

       anti-Sandinista operations. Reportedly an initial trial run had

       taken place in July 1981 when ADREN member Alan Downs carried

       drugs in a suitcase on a flight to Miami. Once the drugs were

       delivered and paid for, Downs reportedly turned over the proceeds

       to Edwin Hoocker in Miami. No other information concerning Downs

       has been found. Reportedly the drugs belonged to an unidentified

       Honduran who was a native of the Bay Islands and who operated out

       of San Pedro Sula.

   195. A May 1982 cable from the FBI to CIA stated that reportedly

       "Justiniano Perez is a close friend of 'Paisa' (nickname) who is a

       Drug Trafficker." According to the cable, Perez told Paisa that

       "if [Perez] received financial assistance from Paisa he would make

       business concessions to him when and if Nicaragua were to be

       liberated."

   196. A February 1982 Headquarters cable, in response to a name trace

       request, indicated that members of the splinter group of the 15th

       of September Legion Group who had refused to join the FDN were

       using the Legion name in conducting robberies, drug smuggling and

       hijacking.

   197. CIA Response To Allegations of Drug Trafficking. No information

       has been found to indicate any action to follow-up or corroborate

       the allegations concerning ADREN/15th of September Legion drug

       smuggling into the United States. However, the September 1981 and

       February 1982 information against ADREN/15th of September Legion

       stemmed from a single source, and in October 1982, Headquarters

       issued a cable indicating that the source was thought to be

       untrustworthy and a possible agent of the Government of Nicaragua.

       A January 1982 Headquarters cable noted that an Agency asset

       should not meet Justiniano Perez and Francisco Rivera "who

       represent the 'Renegade' splinter group of the 15th of September

       Legion."

   198. No information has been found to indicate that the Agency pursued

       any action to follow-up or corroborate the May 1982 FBI

       information concerning Justiniano Perez's alleged close friendship

       with a reputed drug trafficker named Paisa and Perez's alleged

       promise to help Paisa later in return for financial assistance. No

       record of any individual named Paisa has been found in CIA

       records.

   199. Information Sharing with Other U.S. Government Entities. The

       September 1981 report that the ADREN intended to engage in drug

       smuggling to the United States was disseminated as an intelligence

       report on October 28, 1981 to the Departments of State and

       Treasury, FBI, U.S. Customs, Defense Intelligence Agency (DIA),

       and NSA. The report also was disseminated to the Ambassador and

       DEA representative in Tegucigalpa and to USCINC South. Several

       intelligence reports concerning the ADREN/15th of September

       Legion's criminal, non-drug trafficking, activities also were

       disseminated to U.S. law enforcement and intelligence community

       organizations between June 1981 and March 1982. No information has

       been found that this reporting was shared with Congress.

     _________________________________________________________________

   

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   Central America and the Caribbean Map

   

                           SOUTHERN FRONT CONTRAS

     _________________________________________________________________

   

   What drug trafficking allegations was CIA aware of, and when,

   involving Southern Front Contras? How did CIA respond to this

   information, and how was this information shared with other U.S.

   Government entities?

   

                   The Southern Front Trafficking Reports

                                      

       Agency Knowledge and Handling of Allegations of Southern Front

       Involvement in Drug Trafficking

   200. General Summary and Background. In October 1984, CIA began

       receiving reporting that Southern Front ARDE leaders had agreed to

       assist a Miami-based drug trafficker in bringing narcotics into

       the United States. The information from this series of reports was

       furnished to senior officials of U.S. intelligence and law

       enforcement agencies.

   201. CIA Records. In January 1984 Headquarters received information

       that indicated that helicopters purchased by Cuban-Americans on

       behalf of Eden Pastora's Contra organization--ARDE--were being

       held in a Miami warehouse owned by a businessman. A Miami-based

       Cuban-American was identified as the donor of the helicopters. In

       January a Headquarters cable noted that CIA had been advised by

       the FBI that Sarkis might be "subject to judicial [sic]

       investigation connected with alleged illegal activities." As a

       result, the Headquarters cable also advised that any Agency asset

       who was in contact with Sarkis be warned that "Sarkis may be

       involved in alleged drug trafficking."

   202. In May 1984, Headquarters received a cable regarding Carol Prado,

       a senior ARDE official. The cable noted that there was "little to

       add at this time to what has already been reported [concerning]

       Prado's involvement in illegal drug and gun activities." The cable

       noted that the Department of the Treasury, the U.S. Customs

       Service and the FBI were "aware of the activities of this group

       and are watching them closely."

   203. First Report. In October 1984, CIA received information

       indicating that senior ARDE officials, including several of

       Pastora's close associates--Adolfo Chamorro, Carol Prado and

       Gerardo Duran--had established a working relationship with a

       Miami-based drug trafficker. An October 1984 cable to Headquarters

       indicated that Adolfo Chamorro--Pastora's second-in-command--had

       just consummated a "mutual assistance agreement" with a

       Miami-based narcotics trafficker whose name was not known at the

       time of the report. The cable reporting this information to

       Headquarters noted that:

       [ARDE] would provide [ARDE] operational facilities in Costa Rica

       and Nicaragua to facilitate the transportation of narcotics, and

       would obtain the assistance of Costa Rican Government officials in

       providing documentation, in exchange for financial support,

       aircraft, and pilot training for the [ARDE]. 

       Further, the cable indicated that the unnamed Miami-based drug

       trafficker had:

          + Turned over helicopters to ARDE and made arrangements for a

            C-47 to be flown to El Salvador; and

          + Promised to pay ARDE $200,000 per month once the narcotics

            operations were underway. . . .

   204. In October 1984, a cable asked Headquarters for permission to

       share this information with the local Department of Treasury

       office. The cable noted that Treasury had an ongoing investigation

       of suspected arms smuggling by ARDE elements in the Miami area,

       and that the Department had previously said that ARDE

       representatives "were in contact with [a Miami-based

       Cuban-American]. . . who is suspected of trafficking in

       narcotics." No information has been found to indicate a

       Headquarters response to this cable. However the information was

       disseminated by Headquarters to a senior officer in the Department

       of Treasury and other senior U.S. Government, intelligence, and

       law enforcement officials in Washington shortly thereafter.

   205. October 1984 Sensitive Memorandum Dissemination. In October 1984,

       Headquarters disseminated a Sensitive Memorandum based upon the

       information that had been provided in mid-October. All the

       information was disseminated, except that a general reference to

       El Salvador as the destination for the C-47 flight was substituted

       for the specific reference to Ilopango Air Base.

   206. A "Headquarters Comment" was included in the disseminated

       Sensitive Memorandum that indicated it was not known "whether

       Pastora himself was aware of the narcotics angle of the

       agreement." An additional Headquarters Comment pointed out that

       confirmation had been received that the ARDE had recently acquired

       two helicopters and a DC-3 transport plane.

   207. The Sensitive Memorandum was disseminated to 13 senior U.S.

       Government, intelligence, and law enforcement officials by

       position title. Within CIA, this Sensitive Memorandum was also

       disseminated to senior officials.

   208. Second Report. An October 1984 cable to Headquarters reported

       that the name of the Miami-based drug trafficker with whom ARDE

       officials were dealing was Jorge Morales. The cable restated the

       terms of the mutual assistance agreement that had been reported in

       mid-October and added the following details:

          + On October 31, Gerardo Duran, an ARDE pilot who was flying on

            Morales' behalf, was scheduled to fly from Miami to the

            Bahamas.

          + Morales and Adolfo Chamorro were in the process of setting up

            "bank accounts in Miami through which to funnel the monthly

            payments to the ARDE once the working relationship between

            Morales and the ARDE is in full operation."

       No mention was made of Pastora in this report, except to identify

       him as the head of the ARDE.

   209. November 5, 1984 Sensitive Memorandum Dissemination. On November

       3, 1984, a Headquarters cable stated that the information provided

       on October 31 was being prepared for limited dissemination.

       Further, the cable advised that Headquarters intended to discuss

       with DoJ during the week of November 5 how to proceed regarding

       the handling of the source of the information--presumably in light

       of the information the source had provided regarding alleged

       narcotics trafficking. The cable advised that no direct action was

       to be taken with regard to Pastora. The Headquarters cable noted

       that:

       Given the volume and the detail of the evidence we have received,

       it is difficult to believe that an operation of this magnitude

       could be conducted within the [ARDE] without [Pastora's] approval.

       We have been fastidious about insuring that all information is

       passed to appropriate agencies on a timely basis and we must avoid

       at all costs an accusation that [CIA] condoned narcotics

       trafficking by [ARDE].

   210. On November 5, 1984, the information provided on October 31 was

       disseminated in Sensitive Memorandum format to 16 senior U.S.

       Government, intelligence, and law enforcement officials by

       position title.

   211. CIA Report to DoJ. On November 7, 1984, CIA General Counsel

       Stanley Sporkin attached a cover memorandum to the October

       Sensitive Memorandum and forwarded it to DCI Casey. Sporkin's

       memorandum indicated that the information had already been shared

       with appropriate officials in the U.S. Government, but stated that

       he intended to have OGC directly contact DoJ Criminal Division

       Deputy Assistant Attorney General Mark Richard in order to protect

       "the public as well as the Agency's interests." On November 19,

       1984, according to a January 15, 1985 OGC memorandum, an OGC

       representative orally briefed the Assistant Attorney General for

       the Criminal Division regarding the information.

   212. A November 26, 1984 OGC memorandum for the record (MFR) indicated

       that OGC and DO officers had met with DoJ, FBI and DEA

       representatives on November 9 and November 19 to discuss the

       substance and implications of the information that had been

       disseminated in October and November. According to the MFR, DEA

       reported at the November 19 meeting that Jorge Morales was

       awaiting trial in Miami, along with 13 other defendants, on

       federal charges of engaging in a Continuous Criminal Enterprise.

       It was agreed at that meeting, stated the MFR, that DEA would

       brief an Assistant United States Attorney (AUSA) in Miami about

       the information and that the AUSA would be asked, in turn, to

       discuss the matter with the Deputy Assistant Attorney General for

       the Criminal Division. Further, the MFR stated that the CIA

       representatives had agreed to make the source of the information

       available to be debriefed by DEA, the FBI and the AUSA.

   213. Third Report. According to a November 1984 cable to Headquarters,

       Pastora, Adolfo Chamorro and Roberto Chamorro were scheduled to

       travel to Miami on that same day and that two ARDE

       pilots--including Gerardo Duran--had already arrived in Miami. The

       purpose of this travel was for Pastora and the two Chamorros to

       meet Morales. Reportedly the pilots were probably going to

       undertake a narcotics-related flight on behalf of Morales. The

       report also indicated:

          + Adolfo Chamorro had established a bank account in Miami and

            that, to date, Morales had transferred approximately $30,000

            to the ARDE.

          + Morales appeared to be attempting to relocate his operations

            from the United States to Central America and the Bahamas.

          + Morales had indicated that he occasionally met with Fidel

            Castro in Cuba.

       According to a December 1984 cable to Headquarters, Pastora and

       his associates had arrived in Miami and were staying at the home

       of a Miami-based Cuban-American. Further, Pastora was scheduled to

       meet with Morales.

   214. December 1984 Sensitive Memorandum Dissemination. In December

       1984, the information reported in November was disseminated in

       Sensitive Memorandum format to 13 senior United States Government,

       intelligence, and law enforcement officials by position title.

   215. A December 1984 OGC MFR by Assistant General Counsel Betty Ann

       Smith indicated that OGC and DO officers had met on December 6,

       1984 with representatives of DEA and the United States Attorney's

       Office in Miami and briefed them regarding the information that

       had been provided in November. Further, according to the OGC MFR,

       the source of the information had been debriefed by a DEA agent

       during this same meeting.

   216. According to a December 1984 cable from Headquarters, CIA and DEA

       agreed during the December 1984 meeting that the source would

       report on any further ARDE/FRS narcotics trafficking. It was also

       agreed that subsequent information would be shared by CIA with the

       DEA and the Department of Justice.

   217. According to a December 1984 cable, Pastora had met with Morales,

       Sarkis and a Miami-based Cuban-American. Reportedly Pastora said

       that the meeting with Morales had not gone well. Pastora "did not

       like Morales' pressuring him to immediately meet [Pastora's] end

       of their arrangement, which is providing pilots and operational

       facilities in Costa Rica for Morales' drug operations." No

       information has been found to indicate whether this information

       was shared with U.S. law enforcement agencies or disseminated

       outside the DO.

       

                                Eden Pastora

                                      

   218. Background. Eden Pastora Gomez, whose "war name" was Commandante

       Zero, joined the Sandinistas in the early 1970s to seek the

       overthrow of Somoza. Especially popular after he stormed Somoza's

       National Palace in 1978, he was nonetheless excluded in 1979 from

       the Sandinista National Liberation Front's (FSLN's) nine-man

       Directorate and given relatively minor positions in the

       post-Somoza Sandinista Government. These setbacks displeased

       Pastora, and he also claimed to be dismayed by the leftward turn

       of the Sandinista regime. In 1981 Pastora broke with the

       Sandinistas, and he went into self-imposed exile in Costa Rica

       shortly thereafter.

   219. Pastora formed the FRS in early 1982 and allied his group with

       several other Contra organizations to form the Costa Rican-based

       ARDE in September 1982. Pastora led ARDE's military struggle

       against the FSLN until July 1984, when the organization's

       leadership replaced him. An ARDE spokesman attributed Pastora's

       replacement to injuries received in the May 1984 bomb attack

       against him at La Penca, but Pastora's leadership had also been

       undermined by his refusal to join forces with leaders of the

       Northern Front. Pastora left ARDE in 1986 and withdrew from the

       military effort.

   220. Between early 1982 and mid-1984, Pastora was the main recipient

       of the funds CIA channeled to Contras fighting on the Southern

       Front. However, the funding allocated by Congress for the Contras

       had been expended by August 1984, and CIA was forced to cease its

       material support. More comprehensive congressional restrictions on

       the Agency's ability to support the Contras took effect in October

       1984 and remained in place until December 1985.

   221. The cutoff of U.S. funding led associates of Pastora to begin

       looking for alternative sources of funds. In October 1984, CIA

       began receiving the reporting mentioned earlier that Southern

       Front leaders allied with Pastora had agreed to help Miami-based

       trafficker Jorge Morales bring drugs into the United States in

       exchange for his material and financial help to the Southern

       Front. A subsequent October Headquarters cable instructed those

       dealing with Pastora:

       . . . not to take definitive action to declare the relationship

       with [Pastora] terminated. Rather, we want to back away from the

       man leaving him guessing as to the status of his relationship with

       [CIA]. . . . We do not want to initiate contact with him under any

       circumstances, unless it is done for the purpose of manipulating

       him towards some objective clearly consistent with [U.S.] policy

       in the region.

   222. The Agency's relationship with Pastora was one of its most

       significant with a Contra leader. While the drug trafficking

       allegations were a factor in the decision to terminate that

       relationship, the October 1984 Headquarters cable indicated that

       the Agency was responding to other factors as well. CIA also

       judged that the advantages of dealing with Pastora were outweighed

       by the poor performance of his Southern Front fighting forces, by

       counterintelligence issues arising from his contacts with the

       Sandinistas in Managua, and by operational restrictions imposed by

       Congress.

   223. In November 1984, Headquarters instructed that "no direct action

       is to be taken with [Pastora]. Ideally, you will be able to avoid

       him altogether." A November reply stated that only four meetings

       with Pastora had occurred since July 1984 and that the last of

       these was on October 18. At the last meeting, it had reportedly

       been made clear that CIA could no longer provide any support,

       direct or indirect, to Pastora's organization.

   224. Allegations of Drug Trafficking. An October 1982 cable to

       Headquarters reported that INS had received information indicating

       that a meeting of Contra members was to be held in Costa Rica to

       discuss an exchange in the U.S. of arms for narcotics. A November

       1982 cable identified Pastora as one of those who would be

       attending.

   225. CIA began receiving reporting in October 1984 indicating that

       associates of Pastora in ARDE had agreed to work with known

       narcotics trafficker Jorge Morales. That same month Harold

       Martinez Saenz--a former deputy FRS commander--said that he could

       no longer support ARDE due to Pastora's ineffective leadership.

       Martinez had also stated that he did not want to become involved

       in drug and arms smuggling activities and corrupt handling of

       money, thus inferring that Pastora and his staff were involved in

       those activities.

   226. Regarding the arrangement allegedly worked out with Morales by

       Pastora's FRS associates in 1984, Adolfo Chamorro says that

       Pastora was not aware of Morales' drug trafficking activities

       until after the meetings in October 1984 and after Pastora himself

       had met with Morales in December 1984. Cables in 1985 indicate

       that Pastora "temporarily discontinued" the arrangement with

       Morales in early January 1985 when he realized the potential

       political fallout from dealing with narcotics traffickers. Pastora

       says that he ordered that the planes donated by Morales be

       returned when he learned that Morales was a drug trafficker.

   227. In April 1985, according to a Headquarters cable, the text of a

       February Sandinista radio broadcast from Managua alleged that

       Pastora and his associates were completing construction of three

       landing strips in the Guanacaste area of Costa Rica for light

       aircraft to be used for drug trafficking. The drug trafficking was

       being undertaken, the radio broadcast said, to substitute for the

       financing that was no longer available in the wake of a

       Congressional cutoff of Contra funding.

   228. An April 1985 cable to Headquarters reported that an employee of

       Alpa Airlines had said that the company was concealing cocaine in

       yucca shipments destined for the United States. The cable reported

       that two of the five persons reported to be owners of Alpa were

       Gerardo Duran and David Mayorga. Duran had already been identified

       as a close associate of Pastora. In addition, one of the planes

       allegedly used by Alpa Airlines was reported to belong to Pastora

       and ARDE.

   229. A December 1985 Headquarters cable stated that Adolfo Chamorro

       had told a Southern Opposition Bloc (BOS) member that a

       Panamanian, Cesar Rodriguez, was gathering drug money for Pastora.

       Rodriguez was identified in this cable as a narcotics trafficker

       who had business ties to Panamanian leader Manuel Noriega.

   230. A January 1986 cable reported to Headquarters that a Costa Rican

       associate of Pastora reportedly said that he had 200 kilograms of

       cocaine he wished to use in helping to finance Pastora's Contra

       activities.

   231. In June 1986 and July-August 1987, CIA was told of a trip to

       Panama by Jose Davila, Carol Prado and Pastora. During the trip,

       Pastora reportedly had accepted $10,000 from Cesar Rodriguez, who

       was described as a narcotics trafficker from Colombia.

   232. CIA Response to Allegations of Drug Trafficking. CIA terminated

       its relationship with Pastora in October 1984, within two weeks of

       receiving the first reporting about ARDE's drug-related dealings

       with Morales. While other factors were involved, the drug

       trafficking allegations weighed in the decision.

   233. A February 1986 cable requested an inter-Agency review of the

       information implicating David Mayorga in narcotics trafficking

       because he was one of Pastora's closest advisors. The same cable

       noted that this information "needs to be made available to those

       still bent on seeing that [Pastora] is given . . . funding." No

       information has been found to indicate that such a review took

       place.

   234. On March 1986, a Station asked Headquarters for specific

       instructions regarding what role Pastora was to play in the Contra

       unification agreement. The Station outlined the drug allegations

       against Pastora's associates in the cable and stated that:

    . . . .

       in COS' view, a political or other kind of accommodation with

       [Pastora] in which [the Agency] plays a known mediating role

       places [the Agency] in an untenable and unjustifiable position for

       which, in COS' view, there can be no reasonable or acceptable

       explanation.

       . . . .

       We will work through one united command structure, built around

       the one which is currently in place. We [w]ill not work through

       the existing FRS structure because, simply put, it is too badly

       penetrated by Sandinistas and too many of the players have been

       associated with narcotics smuggling. We will be willing to

       incorporate members from the FRS structure into t[h]e unified

       structure, but only after they have been given a thorough security

       screening. . . .

       . . . .

   235. Information Sharing with Other U.S. Government Entities. As

       explained earlier, the reporting tying Pastora and senior members

       of his group to drug smuggling operations into the United States

       was disseminated by CIA to a broad range of senior USG

       intelligence and law enforcement officials.

   236. OCA files indicate that the Agency forwarded to Steven Berry,

       Associate Counsel of the House Permanent Select Committee on

       Intelligence (HPSCI), on January 29, 1985, a response to a

       question regarding Pastora's possible consummation of a working

       arrangement with Colombian drug dealers. The Agency response noted

       that all relevant details had been reported in the program

       summaries to HPSCI. The response added that:

       To summarize, . . . intelligence reporting indicates that members

       of Pastora's organization (FRS) have agreed--either with Pastora's

       direct knowledge or tacit approval--to provide pilots and landing

       strips inside Costa Rica and Nicaragua to a Miami-based Colombian

       drug dealer in exchange for financial and material support.

       Information pertaining to Pastora's involvement in drug

       trafficking has been forwarded to the appropriate Enforcement

       Agencies. [sic] 

   237. On August 1, 1986, CATF legal officer Louis Dupart forwarded to

       CATF Chief Fiers, LA Division Chief and LA Division Deputy Chief a

       MFR for a meeting with HPSCI Staffer Mike O'Neil held on July 9,

       1986 in CATF Chief's office at O'Neil's request to discuss another

       topic. The memorandum stated that, in response to other questions

       from O'Neil, Chief/CATF said that Pastora had voluntarily

       renounced his role as a resistance leader.

   238. On April 25, 1986, Headquarters authorized the sharing with DEA

       of documents that described the October 1984 agreement between

       ARDE officials and Morales. DEA reportedly planned to use the

       documents as background information prior to debriefing Adolfo

       Chamorro in Miami.

   239. In July 1987, a Station reported to Headquarters that, unless

       advised otherwise, the Station intended to provide the local DEA

       office with a message from Octaviano Cesar. The message indicated

       that Marcos Aguado wanted to contact the CIA to provide specific

       information that tied Eden Pastora to "past drug trafficking."

   240. On July 31, 1987, CATF Chief Alan Fiers testified to the Senate

       Select Committee on Intelligence (SSCI) concerning the allegations

       that Morales had made in testimony at the Kerry Subcommittee of

       the Senate Foreign Relations Committee (SFRC) regarding Contra

       involvement in narcotics trafficking. Fiers discussed what CIA

       knew about drug trafficking allegations concerning Pastora and a

       number of former FRS/ARDE members. Fiers stated that the Agency

       did not have knowledge that Pastora was directly involved in the

       Morales narcotics deal, but also said:

       We have a significant body of evidence with regard to involvement

       of the former members of ARDE in the Southern Front--Pastora's

       people being directly involved in cocaine trafficking to the

       United States . . . .

   241. In addition, according to SSCI transcripts, Fiers used one of his

       biweekly meetings with the SSCI to share information with that

       Committee regarding allegations that Southern Front personnel were

       involved in narcotics trafficking. On October 14, 1987, Fiers

       stated to the SSCI regarding Pastora's plans to return to

       Nicaragua:

       We frankly don't very much care what [Pastora] does right now. We

       don't think it would be a terrible problem for us. You must always

       remember that the Sandinistas know what we know. This guy is a

       cocaine runner. Period. He ran cocaine. And they know that and we

       know that and they don't want him back. He's a hot potato for

       anybody.

   242. A January 4, 1988 MFR drafted by Robert Buckman, OCA, indicated

       that CATF provided a summary briefing on the Nicaraguan program

       for SSCI on the same date. At that briefing, Senator Bill Bradley

       inquired about allegations of drug trafficking, and Fiers

       responded that "Pastora had been involved with a Colombian

       trafficker, but the FDN was clean."

       

                            Adolfo Jose Chamorro

                                      

   243. Background. Adolfo Jose Chamorro Cesar, also known as "Popo," is

       a Nicaraguan citizen currently residing in Managua. He had U.S.

       Permanent Resident Alien (PRA) status from 1983 until 1990, when

       he became the Nicaraguan Consul General in Miami. He is the nephew

       of Violetta Chamorro, the first elected president of Nicaragua

       after the Sandinista regime, and the uncle of Roberto "Tito"

       Chamorro, another Contra figure.

   244. Adolfo Chamorro fought in the revolution to overthrow Somoza.

       Following Somoza's ouster in 1979, he served as an official of the

       FSLN. Chamorro's tenure as a government minister was short-lived,

       however, due to his arrest in 1981 in connection with a

       counter-revolutionary plot against the Sandinista Government. He

       then went into exile in Costa Rica. There he joined forces with

       Eden Pastora, his former FSLN commander, and the anti-Sandinista

       organization ARDE. In June 1983, Chamorro became the chief of

       military intelligence for ARDE.

   245. In the summer of 1984, Eden Pastora left the ARDE and reorganized

       the FRS. Chamorro followed Pastora and became the FRS Deputy

       Military Commander. In October, Chamorro traveled to Miami to

       raise funds to support the FRS/ARDE coalition. In October 1984,

       Chamorro's name was linked with possible drug trafficking. On July

       26, 1985, Chamorro broke with Pastora and the FRS and aligned

       himself with the newly formed BOS.

   246. Allegations of Drug Trafficking. The Southern Front trafficking

       reports that began to be received in October 1984 stated that

       Adolfo Chamorro had been instrumental in making the arrangement

       for drug trafficker Jorge Morales to supply monetary support and

       aircraft in exchange for the use of FRS pilots. Chamorro

       reportedly set up a bank account in Miami through which money from

       Morales could be transferred to FRS/ARDE.

   247. The reporting indicated that Chamorro and Morales had met again

       on October 30 to discuss their concerns about who within the

       Contras might have informed CIA about one of the aircraft that

       Morales had provided. Another meeting between Chamorro and Morales

       was reportedly planned for late November, this time to include

       Pastora. Chamorro says he was present at that meeting and that no

       conditions were attached to Morales' offer of support to the

       Contra cause.

   248. In January 1986 cables noted that Chamorro had a relationship

       with Gerardo Duran, an FRS pilot who was arrested in Costa Rica

       for smuggling cocaine. Although no direct connection could be made

       between Duran's smuggling activities and Chamorro, the

       relationship between the two men had been noted with interest by a

       Central American Station and the local DEA office.

   249. In October 1990, after the Contra war had concluded, the Miami

       Herald and El Nuevo Herald carried front-page articles charging

       that Chamorro, who was then serving as the Nicaraguan Consul

       General in Miami, had trafficked in narcotics from 1984 to 1986.

       The article stated that a Colombian pilot had testified during the

       trial of a Medellin drug lord that he had flown arms to Contra

       forces in Central America and cocaine shipments to Florida and

       that Chamorro was part of this arms/drugs network.

   250. Chamorro characterizes his meetings with Morales in late 1984 as

       appropriate since he was the director of logistics for FRS/ARDE.

       He maintains that the purpose of the meetings was to discuss

       support to FRS/ARDE and that neither he nor anyone in FRS/ARDE

       knew at that time of any drug trafficking allegations against

       Morales. Chamorro states that FRS/ARDE contact with Morales was

       terminated when the drug allegations became known. Chamorro says

       that none of the members of FRS/ARDE were involved in drug

       trafficking and they never knowingly accepted drug money. While

       Chamorro admits to having met Duran on several occasions, he

       states that he was not aware of any agreement between Duran and

       Morales. He explains, however, that Duran may have made his own

       deal with Morales to ship drugs.

   251. CIA Response to Allegations of Drug Trafficking. 

       By September 1986, Chamorro was one of the five BOS directorate

       officers. CIA was no longer opposing BOS and was providing

       support. A September 1986 cable to Headquarters had noted a

       suggestion made to BOS leader Alfredo Cesar that Chamorro should

       be interviewed by CIA Security because of his alleged involvement

       with drug trafficking. In January 1987, Headquarters instructed

       that it was to be emphasized to Cesar that U.S. Government funds

       could not be used to support Chamorro until the allegations

       against him were resolved.

   252. Chamorro thereafter agreed to be interviewed by CIA Security.

       Based on the results of that interview, CIA Security was led to

       believe it was highly probable that Chamorro was involved in drug

       trafficking. A February 1987 cable reported that BOS had accepted

       Chamorro's resignation and removed him from the BOS payroll.

   253. Information Sharing with Other U.S. Government Entities. As

       explained earlier, the 1984 Southern Front trafficking reporting

       was disseminated by CIA to a broad range of senior U.S. Government

       intelligence and law enforcement officials. The reporting noted

       that Chamorro had reached an agreement with a Miami-based drug

       trafficker to provide FRS facilities to transport narcotics in

       exchange for financial support, aircraft and pilot training, named

       the narcotics trafficker with whom Chamorro had struck the deal as

       Jorge Morales, and stated that another meeting was planned between

       Morales, Chamorro and Pastora.

   254. In January 1986, Chamorro was scheduled to travel to Washington,

       D.C., as part of a BOS delegation lobbying for support for the

       Contra movement. CIA Headquarters stated in a January 1986 cable

       that it was "attempting to highlight [Chamorro's] known

       involvement in drug activities to convince appropriate parties to

       forego meetings with BOS in [Washington]." On January 22, 1986,

       Acting DCI John McMahon sent letters to the Chairmen of the SSCI

       and HPSCI informing them that Chamorro would be visiting members

       of Congress during that week. McMahon wrote, "While I would not

       normally comment on visitors to Congress, I believe it essential

       that I provide you with some highly derogatory information on

       Chamorro . . . . Our information indicates that Chamorro . . . has

       been involved in drug smuggling to the United States." The letter

       went on to detail Chamorro's association with Jorge Morales. In

       addition, it gave information about other contacts Chamorro had

       with suspected drug traffickers and offered a briefing concerning

       Chamorro's activities.

   255. On January 24, 1986, a Central American Station informed

       Headquarters that it had discussed Chamorro several times with

       local DEA officers. The January 8, 1986 arrest of FRS pilot

       Gerardo Duran on drug charges in Costa Rica, explained the cable,

       made Chamorro's connection with Duran highly suspect. The Station

       stated that it had informed DEA of its interest in what Duran

       might have to say about that relationship when DEA questioned him

       after his release, which was "expected momentarily due to lack of

       Costa Rican willingness to prosecute."

   256. On January 6, 1986, the SSCI requested Agency comments regarding

       a December 27, 1985 article in The Washington Post alleging a link

       between the Contras and drug trafficking. The information from the

       1984 reporting about Chamorro and his dealings with Morales was

       included in CIA's January 13, 1986 reply.

   257. On April 25, 1986, a Station requested that DEA officials be

       alerted that Chamorro was due to arrive at Miami Airport after

       being arrested and expelled for illegally entering Costa Rica. The

       Station suggested that DEA officers in Miami might want to

       question Chamorro about possible drug trafficking. According to an

       April 1986 cable to Headquarters, Chamorro had been interviewed by

       DEA in Miami on April 25 and named others whom he alleged to be

       trafficking in narcotics, but did not incriminate himself. DEA

       chose to maintain contact with Chamorro, but a July 1986

       Headquarters cable declined CIA participation, asking only that

       DEA keep the Agency informed.

   258. On April 15, 1986, a Memorandum entitled "Contra Involvement in

       Drug Trafficking" was prepared by CIA in response to a request

       from then-Vice President Bush. This Memorandum, which was

       delivered to Bush by a CIA officer on April 15, 1986, was a

       summary of the 1984 Southern Front trafficking reporting

       concerning Chamorro's and Pastora's contacts with Jorge Morales.

       The CIA analyst who drafted the Memorandum says that there was no

       request for follow-up regarding the reporting that was summarized

       in the Memorandum. The analyst also says she was aware of no

       further mention of the Contras' involvement in drug trafficking in

       Agency intelligence disseminations until early 1987.

   259. On January 21, 1987, ADCI Robert Gates provided Morton

       Abramowitz, Assistant Secretary of State for the Bureau of

       Intelligence and Research, with a Memorandum that had been

       prepared by CIA to address all allegations then known to CIA

       regarding alleged Contra/drug trafficking connections. The

       Memorandum included the information from 1984 regarding Chamorro

       and his connections to Morales. DoS responded on February 9, 1987

       by demanding that Chamorro be removed from BOS membership, stating

       that "the law specifically directs that no funds are to be

       distributed to or through any resistance group that retains in its

       ranks any individual who has been found to engage in drug

       smuggling." CATF Chief Fiers replied to DoS, in an undated

       Memorandum, that CIA had taken immediate steps on learning of

       Chamorro's affiliation with BOS to have Chamorro removed as a

       member or affiliate of BOS. Fiers' Memorandum went on to say that

       CIA believed it was highly probable that Chamorro was involved in

       drug trafficking, and that all relevant information known to CIA

       had been shared with DEA and the FBI.

   260. On March 10, 1987, CATF provided CIA's OGC with two cables from

       February 1987 and March 1987, concerning Chamorro's "suspicious

       activities." These activities reportedly included dealing in

       stolen electronic equipment and allegedly warning his employees to

       inspect all incoming packages for drugs because he thought the FBI

       was watching him. CATF recommended on a routing sheet attached to

       the cables that OGC "report this information to the Department of

       Justice." A handwritten, but unsigned, note attached to the cables

       stated that the drug-related information was "probably reportable

       but does [Chamorro] have a direct role in the activity--he hasn't

       admitted to involvement." No information has been found to

       indicate how or whether this question was resolved. As explained

       in further detail below, this information was not reported to DoJ

       by OGC until January 1988.

   261. On March 5, 1987, according to an OCA Memorandum for the Record

       written by Robert Buckman, CATF Chief Fiers briefed the SSCI on

       the situation in Nicaragua. Fiers told the Committee that CIA

       believed it was highly probable that Adolfo Chamorro was involved

       in drug trafficking and that BOS risked losing its U.S. aid "if it

       did not fully sever its ties with Chamorro."

   262. On July 31, 1987, CATF Chief Fiers testified before the SSCI and

       stated that CIA had "unimpeachable" information that Chamorro had

       planned to meet Morales in November 1984.

   263. On January 5, 1988, CIA General Counsel David Doherty sent a

       letter to William Weld, Assistant Attorney General for DoJ's

       Criminal Division, informing him that the Agency was forwarding

       information concerning Adolfo Chamorro in accordance with Section

       1.7(a) of Executive Order 12333. The letter stated that Chamorro

       might be involved in smuggling drugs into the United States and

       that the Agency had information that Chamorro might have been

       involved in the sale of stolen electronic merchandise in Miami.

       The letter went on to say that "although this non-employee crime

       is not required to be reported, . . ." the Agency thought it

       sufficiently serious to share the information with DoJ. The

       General Counsel's letter was brought to the attention of the

       Iran-Contra Independent Counsel and DEA by Associate Attorney

       General Stephen S. Trott as an enclosure to a March 17, 1988

       letter to Associate Independent Counsel Guy Struve.

       

                           Roberto Jose Chamorro

                                      

   264. Background. Roberto "Tito" Jose Chamorro, a nephew of both former

       Nicaraguan President Violetta Chamorro and prominent Contra leader

       Adolfo Chamorro, was a Contra commander associated with the

       Southern Front forces. CIA records indicate that Roberto Chamorro

       first came to the attention of the Agency in 1984 when he was FRS

       Chief of Operations under Pastora's command. As of mid-1985,

       Chamorro reportedly was one of the FRS commanders who favored

       unification with other member groups in the anti-Sandinista

       forces. However, he reportedly believed that Pastora would have to

       be removed from military command for this to occur. By August 28,

       1986, Chamorro had aligned himself with Alfredo Cesar's BOS

       organization.

   265. According to a March 1, 1989 Department of Defense (DoD) cable,

       Roberto Chamorro "retired from the fight" in 1986 after learning

       that he would not be a commander in UNO.

   266. Allegations of Drug Trafficking. The October and November 1984

       reporting indicated that Roberto Chamorro--along with Adolfo

       Chamorro and Eden Pastora--would be attending a late November

       meeting with indicted drug trafficker Jorge Morales. No

       information has been found to indicate that Roberto Chamorro was

       actually present when the meeting took place in December 1984.

   267. In August 1985, Headquarters requested immediate "talking points"

       regarding U.S. objectives in Nicaragua. Included in the undated

       response were allegations of narcotics trafficking by some members

       of the FRS. This included Roberto Chamorro, but no details were

       provided to substantiate the allegation against him.

   268. In April 1987, a cable informed Headquarters of information from

       a DoS Embassy officer who reportedly had heard from a contact that

       Chamorro was part of a group involved in shipping cocaine from

       Nicaragua via Costa Rica to the United States. The cable reported

       that it had no way to evaluate the authenticity of the

       information.

   269. In July 1987, Jorge Morales testified before the SFRC

       Subcommittee on Terrorism, Narcotics and International Operations

       that he had met Roberto Chamorro in Costa Rica in 1984. He said he

       had asked Chamorro to supply him with bodyguards, but the

       bodyguards were never provided. When asked whether he had

       discussed drug trafficking while in Costa Rica, Morales replied

       affirmatively. However, he did not identify Roberto Chamorro as

       one of those with whom he reportedly had such discussions.

   270. CIA Responses to Allegations of Drug Trafficking. In August 1986,

       Chamorro was interviewed by CIA Security. On the basis of that

       interview, CIA Security did not have concerns about Chamorro's

       possible involvement in drug trafficking. Based on subsequent

       security interviews in January 1987, Security continued to not

       have concerns about Chamorro and drug trafficking.

   271. Information Sharing with Other U.S. Government Entities. As

       explained earlier, the 1984 Southern Front trafficking reporting

       included Robert Chamorro among those meeting with drug trafficker

       Morales. This information was disseminated by CIA to a broad range

       of senior U.S. Government intelligence and law enforcement

       officials.

   272. On July 31, 1987, CATF Chief Fiers testified before the SSCI that

       CIA had a "brief period of contact" with Roberto Chamorro, the

       purpose of which was "damage limitation." Fiers further stated

       that the Agency was aware of Chamorro's "checkered background" but

       opted to "take that tack [of having contact with him] to limit

       [Chamorro's] potential to do damage" to the unification process.

   273. A July 1987 cable to Headquarters indicated that senior ARDE/FRS

       pilot Marcos Aguado wished to discuss alleged drug trafficking

       within Pastora's group because Morales had reportedly implicated

       Aguado and Roberto Chamorro. The Station reported that it was not

       going to meet with Aguado due to counterintelligence concerns but

       had shared this information with the local DEA office.

       

                           Marcos Antonio Aguado

                                      

   274. Background. Marcos Aguado was a Sandinista Air Force pilot

       (1979-1980) and then an Aeronica Airlines commercial pilot until

       his defection in 1983 when he joined the Contra resistance. By

       September 1984, he was appointed Chief of Air Operations for the

       FRS/ARDE and was a personal pilot to FRS/ARDE leader Eden Pastora.

       Aguado made numerous flights over Nicaragua to supply FRS/ARDE

       troops and later was named Chief of Staff of the FRS/ARDE General

       Staff. Aguado, according to Eden Pastora, is also Pastora's

       son-in-law. According to an April 1983 Headquarters cable, Aguado

       had been offered a job flying an aircraft for the Southern Front.

   275. A December 1984 cable advised:

    . . . .

       . . . [Aguado] actively assisted [two individuals], Duran and

       Carol Prado in disruption of ARDE/MDN flight activities, and

       according to [another asset] was being sent to Ilopango to destroy

       the Islander aircraft, circa July 84. In addition, [Aguado]

       assisted in the [Pastora] [sic] search for the Cessna 310 that

       crashed 9 August on [Hull's] property, and the search for the

       pilot and helicopter stolen from [Pastora]. During this period,

       hostile threats against [CIA], [John Hull] and the former

       [Southern Front] pilot were noted.

       . . . .

       The cable also pointed out that Aguado had not flown any missions

       inside Nicaragua since September 1983. The cable also noted that

       Aguado "is closely associated with" Pastora, Adolfo Chamorro and

       Duran; "as such he may very well be actively participating in

       alleged narcotics activities . . . or at least aware of such

       activities."

   276. According to a December 1984 cable to Headquarters, Aguado "has

       been designated by Pastora as one of his 18 commandantes, to be in

       charge of air operations and logistics at Ilopango."

   277. Allegations of Drug Trafficking. The first indications to CIA of

       Aguado's possible involvement in drug trafficking were included in

       the October 1984 Southern Front trafficking information that:

       1. During a mid-October 1984 visit to Miami, Florida, Sandino

       Revolutionary Front (FRS) official Adolfo "Popo" Chamorro, reached

       an agreement with an unidentified Cuban narcotics trafficker

       whereby the FRS will provide operational facilities in Costa Rica

       and Nicaragua plus assistance with Costa Rican government

       officials in obtaining documentation in exchange for financial

       support, aircraft and pilot training for the FRS. The Cuban . . .

       made arrangements for a C-47 to be flown from Haiti to El Salvador

       by FRS pilot Marco [sic] Antonio Aguado Arguello on 16 October 84.

       2. The agreement with the Cuban also includes the training of two

       FRS pilots in Miami. The pilots will continue their FRS duties

       after the training but will also serve the traffickers by flying

       narcotics from South America to the FRS provided landing fields in

       Costa Rica and Nicaragua. From these staging areas the narcotics

       will be moved to the U.S.

       . . . .

       In April 1985, a Station reported to Headquarters that Aguado had

       used a DC-3—the civilian designation for a C-47—to

       deliver supplies to FRS/ARDE forces in southern Nicaragua on March

       29, 1985.

   278. A January 1986 cable stated that:

       [Marcos Aguado] should have knowledge of the recent arrest of

       Gerardo Duran Ayanegui regarding his alleged involvement in a

       shipment of 600 kilo[gram]s of cocaine from Jorge Morales

       (Colombian Mafia) to the U.S. Duran and Morales are closely

       associated with [Eden Pastora], [Aguado], Carol Prado, David

       Mayorga, . . . and others, all of whom, including [Aguado], are

       listed in Duran's phone book. Morales supplied [Pastora] with a

       C-47 aircraft and other air support; [Aguado] has piloted the C-47

       for [Pastora] and is believed to maintain close contact with the

       above personnel.

   279. The next Agency reporting of a drug-related allegation against

       Aguado came in an April 1986 cable to Headquarters. According to

       that cable, Adolfo Chamorro "plans to denounce Carol Prado, Eden

       Pastora and Marco [sic] Aguado as being the ones involved in

       drug-trafficking activities. Chamorro claims to have the evidence

       to prove this allegation." Headquarters was informed in an April

       1986 cable that DEA had debriefed Chamorro on April 25, 1986 and

       obtained no information concerning narcotics trafficking.

       According to the cable, "all Chamorro wanted to talk about were

       politics and war."

   280. In April 1987, a Station relayed to Headquarters information

       provided by a U.S. Embassy officer. The Embassy officer reported

       being told by a contact that Aguado, along with Carol Prado, David

       Mayorga, Adolfo Chamorro, Gerardo Duran, and another individual

       "are presently involved in shipping cocaine from Nicaragua via

       Costa Rica to the United States."

   281. In March 1988, a cable reported to Headquarters that a suspected

       Guatemalan drug trafficker--Reyner Veliz Cruz--had recently been

       traveling with Aguado and described Veliz and Aguado as "new

       inseparable friends." Although not specifically alleging drug

       trafficking, the cable reported that Veliz, with co-pilot Aguado,

       arrived at Ilopango air base from Guatemala in February 1988, in a

       twin engine aircraft. The cable also reported that the two arrived

       at Ilopango from Pavas in another twin engine aircraft later in

       February 1988. Finally, the cable reported that Veliz and Aguado

       arrived at Ilopango in March 1988 in the same twin engine aircraft

       after customs officials had departed and the airfield was

       supposedly closed. The same cable noted that Aguado could not

       obtain a U.S. visa due to his suspected links in the past with

       drug traffickers. However, Aguado reportedly "has bragged that he

       still works for CIA" and "the customs personnel at Ilopango assume

       that Aguado has connections with drug trafficking, as well as good

       contacts within the Salvadoran Air Force . . . ." In this cable,

       the Station stated its approval to share the information with DEA

       personnel in Guatemala.

   282. Enrique Miranda Jaime, a convicted drug trafficker, claims that

       Aguado flew weapons to Medellin, Colombia, during the 1980s and

       returned with cocaine that he stored at Ilopango. Miranda also

       alleges that Aguado was involved with Norwin Meneses and the

       movement of narcotics through Nicaragua. No information has been

       found to support Miranda's allegations.

   283. CIA Response to Allegations of Drug Trafficking. No information

       has been found to indicate that CIA ever attempted to develop

       additional independent information that would confirm or refute

       the allegations against Aguado. No information has been found to

       indicate whether CIA considered, or the reasons why they may have

       decided not to take, such steps.

   284. Information Sharing with Other U.S. Government Entities. The

       October 1984 reporting included information about Aguado's alleged

       role in moving a C-47 from Haiti to El Salvador. This information

       was disseminated as a sensitive memorandum to senior U.S.

       Government intelligence and law enforcement officials.

   285. According to a SSCI transcript entitled CIA Briefing on Drug

       Running, CATF Chief Alan Fiers, briefed SSCI Staff members on July

       31, 1987 concerning allegations of Contra involvement in drug

       trafficking. The transcript shows that Fiers included information

       relating to Aguado in this briefing and described Aguado's alleged

       involvement in the October 1984 Morales-Chamorro agreement.

   286. The transcript shows that Fiers also detailed for the SSCI Staff

       members Aguado's role in taking possession in Haiti of the C-47

       aircraft provided by Morales that was later used by Aguado in

       March 1985 to deliver supplies to ARDE forces. In the briefing,

       Fiers also provided the SSCI Staff members with a summary of

       information concerning four or five flights by Gerardo Duran to

       Miami on behalf of Morales.

       

                               Gerardo Duran

                                      

   287. Background. Gerardo Duran was a Costa Rican national who had

       close ties to Southern Front Contra personalities, including Eden

       Pastora, Carol Prado, Adolfo Chamorro, Jose Robelo, and Marcos

       Aguado. He served as a personal pilot for Pastora from 1984 until

       sometime in early 1985. He was employed as chief pilot for the

       Costa Rican-based aviation company, Alpa Aerolineas del Pacifico

       Fumigacions (Alpa Airlines), between 1985 and 1986.

   288. Allegations of Drug Trafficking. CIA first received allegations

       of Duran's possible involvement in drug trafficking in the October

       1984 Southern Front trafficking report. That report included

       information that Duran was scheduled to make a flight for Jorge

       Morales in October 1984 from Miami to the Bahamas.

   289. In November 1984, a cable informed Headquarters that Duran and

       another pilot were in Miami. According to the cable, the presence

       of Duran indicated a flight to move narcotics from Colombia to the

       Bahamas was imminent.

   290. In December 1984, a cable advised Headquarters of allegations

       that Duran had recently returned to Costa Rica, had access to a

       Cessna 404 Titan aircraft and appeared to be involved in drug

       trafficking.

   291. A February 1985 cable to Headquarters reported a possible

       connection between Duran and Pedro Portu, who "has a well-known

       background in narcotics trafficking." In February 1985, a Station

       reported to Headquarters that, according to "Popo" Chamorro, Duran

       was aboard an FRS Baron aircraft that had crashed in the Pacific

       Ocean while transporting an aircraft generator from Pavas airfield

       in Costa Rica to Ilopango air base in El Salvador. According to

       the cable, Marcos Aguado "believes that Duran was on another type

       of mission, possibly drug related."

   292. A March 1985 cable to Headquarters reported that "both [Adolfo]

       Chamorro and Geraldo [sic] Duran have accompanied [Jorge] Morales

       to the Bahamas to look over his operations." The cable noted that

       a belief "that Duran and Quesada [sic] travelled to the Bahamas

       from Miami and made flights for Morales."

   293. In March 1985, a cable noted that Duran had been suspected of

       making drug running flights to Miami and the Bahamas. Further, the

       cable stated that the "local [DEA] rep[resentative] reported that

       Duran is on their records as a trafficker and also for involvement

       in running Cubans into Mexico."

   294. An April 1985 cable to Headquarters reported that Marcos Aguado

       had said that "Duran is suspected of being involved in drug

       trafficking . . . ." The cable did not, however, state why Duran

       was suspected of drug trafficking.

   295. An April 1985 cable listed several names and noted that the

       majority of the reporting available to CIA concerning the listed

       persons, including Duran, had to do with alleged connections to

       narcotics trafficking. Also in April 1985, a cable to Headquarters

       reported that an employee of Alpa Airlines suspected that the

       company was transporting cocaine to the United States in yucca

       shipments and noting that Duran was the "chief pilot" for Alpa

       Airlines.

   296. In May 1985, a Station sent a cable to Headquarters that

       summarized reporting from two sources regarding the involvement of

       FRS personnel in narcotics trafficking. It noted that, although

       there was "a lack of hard evidence," Duran was one of "the two

       individuals consistently named by both sources" as being involved

       in narcotics trafficking.

   297. A May 1985 cable to Headquarters noted that, according to a

       contact, "Duran was on a drug flight when he ditched the Baron . .

       . in the Pacific [Ocean]." This was an apparent reference to the

       crash of an FRS-owned Baron aircraft while en route from Costa

       Rica to Ilopango air base in El Salvador that was described in a

       February 1985 cable.

   298. A July 1985 cable to Headquarters noted suspicions that Alpa "is

       being used as a front for narcotics operations," and that

       reportedly on June 8 David Mayorga had said that:

       … the 150 kilograms of cocaine that were captured near Barra

       Del Colorado, Costa Rica . . . in a Cessna Citation . . . were

       destined for Frudaticos to be packed into yucca for delivery to

       the U.S.

       The cable also reported that there were suspicions "that Sergio

       Sarcovik and [Carlos] Vikes arranged for the pilots of this

       aircraft to leave the country, probably in the Cessna 206 . . .

       with Gerardo Duran as the pilot."

   299. In January 1986, Duran was arrested by the Costa Rican Office of

       Judicial Investigation (OIJ) for his alleged involvement in

       cocaine trafficking. His arrest was the focus of a number of

       cables. A January 1986 cable advised Headquarters that:

       [Marcos Aguado] should have knowledge of the recent arrest of

       Gerardo Duran Ananegui regarding his alleged involvement in a

       shipment of 600 kilo[gram]s of cocaine from Jorge Morales

       (Colombian Mafia) to the U.S.

   300. In January 1986, Headquarters sent a cable asking for a query to

       be made to the local DEA offices for information they might have

       linking Gerardo Duran, "Popo" Chamorro, Jorge Morales, and David

       Mayorga to narcotics trafficking. A January 1986 cable to

       Headquarters stated:

       . . . Gerardo Duran, who is presently in jail after witnesses put

       him at the scene of a 600 kilo[gram] coke deal in Guanacaste, is

       Costa Rican, not Nicaraguan. We have reported on his recent

       arrest.

   301. In January 1986, Headquarters sent a cable that stated:

       Please provide whatever details are available . . . on

       ref[erenced] arrest of Gerardo Duran for alleged involvement in

       smuggling of 600 kilo[gram]s of cocaine to the United States. FYI:

       [w]e reported [Chamorro's] involvement in drug smuggling to

       Co[n]gress via [DCI] letter to Intelligence Committee Chairmen.

       Letter included reference to Duran arrest and we would appreciate

       details in event there is follow up inquiry from Congress.

   302. In January 1986, a cable to Headquarters noted obtaining from DEA

       a copy of the OIJ report of Duran's arrest and provided

       information based on that report. The cable stated that Duran was

       arrested on January 8, 1986 and had admitted to loading

       "bundles"—the cable did not specify that the bundles included

       narcotics—onto an aircraft at Tamarindo airport in Guanacaste

       Province in December 1985. The cable stated further:

       [OIJ] is still holding Duran but the decision to try him is

       pending. [Headquarters] will recall that [Manuel "Pillique"]

       Guerra and [Pastora] are quite close. In any event, [DEA] is

       certain they can get an indictment of Duran in Miami and they are

       pursuing that goal.

   303. A cable to Headquarters in March 1986 stated:

       Gerardo Duran, a [Pastora] pilot who [DEA] says was introduced to

       major narcotics trafficker Jorge Morales by [Pastora], is known by

       [DEA] to have participated in the air shipment of several hundred

       kilo[gram]s of cocaine from Liberia (Costa Rica) airport to the

       West Indies for onward shipment to the U.S. Duran himself was

       arrested by Costa Rican authorities for in-country possession of

       seven kilo[gram]s of cocaine and [DEA] is pursuing that case . . .

       and with the U.S. attorney.

   304. According to an April 1987 cable, the Costa Rican press reported

       that "Duran was re-arrested this last week as a suspect in having

       helped transport 450 kilo[gram]s of cocaine through Costa Rica."

       The cable did not specify the destination of the cocaine.

       According to the cable, Duran was "first arrested in December 1985

       with the same charge, but skipped bail." The cable also noted that

       Costa Rican "authorities suspect Duran of having ties with a

       smuggling ring which has used numerous airstrips in Guanacaste

       Province (Costa Rica) for clandestine drug flights."

   305. CIA Response to Allegations of Drug Trafficking. In May 1985, a

       cable advised Headquarters that "the Station is attempting to

       gather solid evidence . . . to confirm alleged weapons and/or

       narcotics trafficking by Duran and his [Contra] associates." The

       cable also suggested that:

       It would be useful if future messages regarding alleged

       narcotics/weapons trafficking indicate approval of passage to

       [DEA], or whether the data is already shared with [DEA] office.

       No information has been found to indicate that Headquarters

       responded to this suggestion.

   306. In January 1986, Headquarters sent a cable asking Stations to

       "query local [DEA] offices for information they may have linking

       the following [including Duran] to involvement in narcotics

       trafficking." A Station responded in January 1986, saying:

       [DEA] is aware of our interest in what Duran has to say about

       [Eden Pastora] and [Popo Chamorro] involvement in trafficking and

       will question him again after he is released. His release is

       expected momentarily due to lack of Costa Rican willingness to

       prosecute. However, [DEA] plans to prosecute him under a . . . law

       dealing with international trafficking; they think they can make

       the case stick, whereas [the Costa Ricans do] not.

       A January 1986 response from another Station stated:

       [DEA] records indicate that Gerardo Albert [sic] Duran Ayaneque,

       [sic] . . . was arrested for cocaine smuggling in January 1986. He

       had previously been suspected of smuggling drugs via aircraft in

       September 1985 . . . . Additional information on Duran is

       available to [DEA]/Miami case agent. If desired, please advise.

       No information has been found to indicate any response by

       Headquarters to the cable.

   307. Information Sharing with Other U.S. Government Entities. As

       explained earlier, the 1984-85 reporting that included information

       about Duran's alleged participation in the Morales-ARDE narcotics

       trafficking discussions was disseminated to a broad range of

       senior U.S. Government intelligence and law enforcement officials.

   308. A January 24, 1986 letter from ADCI John McMahon notified the

       SSCI and HPSCI that CIA had information concerning Adolfo

       Chamorro's involvement in narcotics smuggling. The letter reported

       Duran's arrest in Costa Rica for his alleged involvement "in a

       shipment of 600 kilo[gram]s of cocaine from [Jorge] Morales to the

       U.S." This letter was followed by a Headquarters cable requesting:

       . . . whatever details are available to Station on ref[erenced]

       arrest of Gerardo Duran for alleged involvement in smuggling of

       600 kilo[gram]s of cocaine to the United States. FYI: [w]e

       reported [Popo Chamorro's] involvement in drug smuggling to . . .

       Intelligence Committee Chairmen. Letter included reference to

       Duran arrest and we would appreciate details in event there is

       follow up inquiry from Congress. 

       As mentioned earlier, the Station responded in January 1986 with a

       cable providing Headquarters with details regarding Duran's

       arrest.

   309. An April 1986 CATF cable included detailed information concerning

       the 1984 arrangements between Chamorro and Morales. The cable also

       detailed Duran's 1986 arrest in Costa Rica as background material

       for an interview of Chamorro and authorized sharing the

       information with the local DEA office.

   310. On January 21, 1987, ADCI Robert Gates forwarded to Ambassador

       Morton Abramowitz, Assistant Secretary of State for Intelligence

       and Research, a memorandum that discussed allegations in CIA's

       possession regarding connections between drug traffickers and

       members of the Contras. This memorandum included Duran's

       connection with Morales, as well as his arrest in January 1986 "by

       Costa Rican authorities for his alleged involvement in

       transporting 600 kilo[gram]s of cocaine to the United States for

       Jorge Morales."

   311. On November 2, 1988, DEA sent a request to CIA for any

       information in CIA's possession concerning four people, one of

       whom was Duran. On December 14, 1988, CIA responded that it had no

       relevant information that had not been provided previously to DEA.

       

                               Alfonso Robelo

                                      

   312. Background. Alfonso Robelo was active in Nicaraguan politics for

       over 30 years. He was an original member of a five-person ruling

       junta of the Sandinista Government, a Southern Front Contra

       political leader and later Ambassador to Costa Rica during the

       presidency of Violetta Chamorro. Robelo's opposition to the

       Sandinistas crystallized in mid-1980 when he resigned his position

       on the Sandinista Council of State to protest the Council's

       expansion and addition of FSLN members. By early 1982,

       Robelo--along with Eden Pastora and Brooklyn Rivera--formed ARDE.

   313. Allegations of Drug Trafficking. An October 1984 cable to

       Headquarters reported that a Sandinista newspaper, El Nuevo Diaro,

       had stated on October 10, 1984 that Robelo and ARDE had accepted

       help from an unidentified drug trafficker in Miami. The article

       also said that two FRS/ARDE helicopters had been painted with a

       black substance to make them invisible to radar.

   314. In June 1987, CIA learned that Robelo had been contacted by two

       Bolivians--Enrique Crespou and Fernando Perou--who had offered to

       make a "significant" monetary contribution to the Contras. Robelo

       said that they offered $150 million to the Contras with "no

       strings attached." Robelo said that the Bolivians were evasive in

       their answers about the origins of the funds. Robelo was advised

       not to accept any money from the Bolivians until its origins could

       be determined.

   315. CIA Response to Allegations of Drug Trafficking. No information

       has been found to indicate that CIA took any actions to follow up

       on the 1984 Sandinista newspaper allegation that Robelo and ARDE

       were involved in dealings with a drug trafficker.

   316. In October 1988, a cable reported to Headquarters that Perou and

       Crespou had been accused during a press conference by Roberto

       Suarez Levy, son of imprisoned cocaine "king" Roberto Suarez

       Gomez, of being CIA agents. Suarez Levy also alleged that CIA and

       DEA were operating a cocaine lab in "Huanchaca," Bolivia. A

       Headquarters response stated that the only relevant information it

       had regarding Perou and Crespo was that they had met with Robelo

       in June 1987 and offered him $150 million for the Contras.

   317. Robelo says he does not recall the meeting with the Bolivians or

       their reported offer of $150 million. He does not deny that the

       meeting may have taken place, but states that he participated in

       approximately 10 situations when people offered to donate large

       sums of money to the Contras but did not do so.

   318. Information Sharing with Other U.S. Government Entities. No

       information has been found to indicate that CIA informed U.S. law

       enforcement or other agencies or the Congress about the 1984

       Sandinista newspaper allegation. CIA informed Congress about the

       alleged offer of $150 million from the Bolivians in 1997 in the

       context of another matter.

       

                            Jose Salvador Robelo

                                      

   319. Background. Jose Salvador Robelo Ortiz was a major figure in the

       Sandinista Party, serving first as an insurgent and later as a

       Sandinista Government official. By 1981, he devoted his full

       attention to Nicaraguan Democratic Movement (MDN) activities in

       San Jose with his cousin, Alfonso Robelo. His brother was Silvio

       Robelo, who was imprisoned by the GRN. Circa 1983, Jose Robelo

       became the Air Operations Coordinator within ARDE. He was later

       put in charge of maritime operations. Robelo gained a reputation

       for being disruptive and was considered to be of dubious

       reputation by the FDN. In September 1985, he was suspended

       indefinitely as Chief of UNO/Nicaraguan Revolutionary Armed Force

       (FARN) operations as a result of an internal investigation that

       held Robelo fully responsible for ordering the torture and

       execution of an alleged Popular Sandinista Army collaborator in

       August 1985. Although it is unclear when, Robelo later became

       active with the Southern Front again.

   320. Allegations of Drug Trafficking. The first allegations of

       Robelo's involvement in drug trafficking were received by CIA in

       December 1984 when he was identified as a continuing associate of

       Jaime Ibarra Pasos, a.k.a. Pachelli. Pachelli was reportedly a

       known drug dealer in San Jose who trafficked approximately two

       kilograms of cocaine each month within Costa Rica. Pachelli was

       reportedly a close associate of Sebastian Gonzalez.

   321. Also in December 1984, a CIA contact said that Gerardo Duran, a

       part-time FRS pilot, had recently returned to Costa Rica and had

       access to a Cessna 404. According to the contact, Duran reportedly

       had flown missions for Pastora and Robelo and might be involved in

       drug trafficking activities.

   322. In April 1985, a cable reported that Robelo was associated with

       David Mayorga and another individual. Mayorga and the other

       individual reportedly were involved in drug trafficking.

   323. In May 1985, a cable provided Headquarters with a summary

       overview of involvement of FRS personnel in narcotics trafficking.

       According to that overview, an ARDE Islander aircraft had made

       several trips to Miami and one to the Dominican Republic carrying

       Adolfo "Popo" Chamorro, who was implicated in drug trafficking.

       This aircraft reportedly was under the control of Robelo at the

       time. There was no indication of involvement by FRS personnel.

   324. The April 17, 1989 edition of the Nicaraguan newspaper La

       Republica included a story that international agencies had

       published statements, based on information from the SFRC, that

       Robelo was involved in drug trafficking. The accusations of his

       involvement were based on comments made to the SFRC by Robert

       Owen. In the story, Robelo reportedly denied participation in any

       drug-related activities and criticized Owen because his statements

       were unfair and Robelo could not defend himself. Robelo also

       reportedly emphasized that he always adhered to the laws and would

       be willing to answer any questions in order to prove his

       innocence.

   325. CIA Response to Allegations of Drug Trafficking. 

       A January 1987 cable to Headquarters noted that Robelo had been

       alleged historically to be involved in narcotics trafficking and

       that the Station had successfully obtained Robelo's severance from

       all Contra elements. A September 7 cable to Headquarters

       describing Robelo noted that "in the past [Robelo] has been

       accused of possible involvement in narcotics trafficking to

       support the Nicaraguan resistance military efforts."

   326. Sharing of Information with Other U.S. Government Entities. No

       information has been found to indicate that any of the information

       available to CIA regarding Robelo's alleged involvement in drug

       trafficking was shared with other U.S. Government agencies or the

       Congress.

       

                              Octaviano Cesar

                                      

   327. Background. During the 1980s, Octaviano Cesar, brother of BOS

       leader Alfredo Cesar, played a role in the Southern Front. Agency

       officers met occasionally with Cesar--usually in the United

       States--to gather information and to help promote unity among the

       Southern Front groups. These infrequent meetings ended after Cesar

       was interviewed by CIA Security in April 1987. Based on this

       interview, CIA believed it was highly probable that Cesar was

       involved in drug trafficking.

   328. Allegations of Drug Trafficking. The October 1984 Southern Front

       trafficking reporting noted that Miami-based drug trafficker Jorge

       Morales had a relationship with Octaviano Cesar and that Cesar had

       unsuccessfully sought to sell Morales blank Nicaraguan passports

       for $5,000 each. A second report claiming that Cesar had a

       relationship with Morales was received by Headquarters in January

       1985 when Morales reportedly had described Cesar as a close

       friend.

   329. On April 6, 1987, the CBS television program West 57th Street

       related allegations by Morales that Octaviano Cesar was his link

       to high levels of the U.S. Government regarding drug and arms

       smuggling. Further, the program reported that Cesar had

       accompanied Morales and Adolfo Chamorro on a trip to the Bahamas

       in late 1984, with Cesar and Chamorro agreeing to Morales' request

       that they carry checks for large sums of money through U.S.

       Customs on their return.

   330. An April 1988 cable notified Headquarters that Octaviano Cesar

       had been arrested by Costa Rican authorities. The charges were

       described as credit payment default to a local business. There was

       a suggestion made that the arrest was part of a harassment

       campaign by Costa Rican authorities due to Cesar's alleged ties to

       drug trafficking.

   331. CIA Response to Allegations of Drug Trafficking. As mentioned

       earlier, CIA disseminated the October 1984 information regarding

       Octaviano Cesar's links to Morales as a sensitive memorandum.

       Cesar was forced by CIA to resign from BOS, although he continued

       for some time thereafter to be involved in the group's affairs. In

       April 1987 CIA received a letter from Octaviano Cesar in which he

       denied the accusations by Morales and put himself at the disposal

       of the U.S. Government to proceed with any investigation that

       would clear his name.

   332. In April 1987, Octaviano Cesar was interviewed by CIA Security.

       Cesar was asked about his past association with Morales and

       allegations of drug trafficking. He reportedly stated that he had

       first been introduced to Morales around 1984 by Adolfo Chamorro's

       former wife, Marta Healy, and that he had been involved in

       additional meetings concerning Morales' offer of aircraft to the

       Southern Front forces. Regarding the 1984 trip to the Bahamas,

       Cesar said that the purpose was to test the flying skills of

       Marcos Aguado, and that he did not know of any other specific

       purpose until the return flight when Morales asked Cesar and

       Chamorro to claim when clearing U.S. Customs that several checks

       were theirs. Cesar reported that he had suspected that Morales was

       involved with drug money, but that his desire to help the Southern

       Front drove him to work with Morales. Cesar reportedly denied ever

       using or taking any money from Morales, except reimbursement for

       travel expenses. Cesar reportedly also said that Marta Healy had

       contacted him in late 1986 with a request from Morales that Cesar

       testify in the United States that Morales' drug trafficking had

       been undertaken to assist the Contra resistance. Cesar said that

       he had refused this request.

   333. Based on Cesar's interview, CIA Security believed it was highly

       probable that Cesar was involved in drug trafficking and involved

       in taking money from Morales. On May 4, 1987, CATF Chief Fiers

       prepared and sent a detailed report to Elliott Abrams, Assistant

       Secretary of State and Chairman of the Interagency for Nicaragua,

       regarding concerns about Cesar and drug trafficking.

   334. On July 21, 1987, Headquarters instructed several Latin America

       Stations to advise all personnel who were talking with Alfredo

       Cesar that Octaviano Cesar must avoid even the appearance of being

       involved in BOS activities. That same month, Alfredo Cesar agreed

       to bar Octaviano from serving in any official or unofficial BOS

       capacity.

   335. A cable notified Headquarters in September 1988 that Cesar had

       informed Southern Front leaders that he intended to return to a

       prominent role in the resistance. This was reportedly because he

       had received a letter from the SFRC, signed by SFRC Chairman

       Senator John Kerry, absolving Cesar of all drug trafficking

       charges.

   336. Information Sharing with Other U.S. Government Entities. As

       explained earlier, the 1984 reporting, which included the

       information connecting Cesar to drug trafficker Jorge Morales, was

       disseminated to a broad range of senior U.S. Government

       intelligence and law enforcement officials.

   337. An unsigned memorandum dated April 15, 1987 indicated that CIA

       had notified DEA's Miami office in January 1985 of Cesar's close

       association with Morales. The Agency informed DoS of suspicions

       regarding Cesar's involvement in drug trafficking in a July 20,

       1987 memorandum from the Deputy Director for of the Office of

       African and Latin American Analysis of the CIA Directorate of

       Intelligence (DI), to Ambassador Morton Abramowitz, Assistant

       Secretary of State for Intelligence and Research. The memorandum

       responded to a DoS request for information concerning alleged

       Contra-drug trafficking connections and stated that Cesar was

       probably involved in the Morales and ARDE narcotics-related

       arrangements. It further stated that Cesar had resigned from BOS

       following public accusations of his involvement in drug

       trafficking. Attached to the memorandum was a copy of the January

       21, 1987 memorandum concerning alleged Contra-drug trafficking

       connections that had been sent to Abramowitz by ADCI Gates.

   338. On April 30, 1987, CATF Chief Fiers briefed the SSCI regarding

       the Contra program. As described in a May 1, 1987 Memorandum for

       the Record, Fiers explained the background of allegations of

       Contra involvement in drug trafficking dating back to November

       1984. He added that Octaviano Cesar had a close relationship with

       Morales, was interviewed by CIA Security when this connection

       became known and that the focus of the interview related to

       concerns about drug trafficking.

   339. According to a July 31, 1987 Memorandum for the Record, Fiers

       briefed the SSCI and a HPSCI Staff member that same day and stated

       that Cesar had been interviewed regarding drug trafficking when

       the Morales allegations arose. Fiers said CIA believed it was

       highly probable that Cesar was involved in drug trafficking. Fiers

       noted that this was reported to DoS and that the Agency had

       informed Cesar's brother Alfredo that Octaviano Cesar must step

       down from his BOS leadership role immediately.

       

                           Edmundo Jose Chamorro

                                      

   340. Background. Edmundo Chamorro was, like his brother Fernando

       Chamorro, one of the principal members of the Eleventh of November

       movement that was involved in armed opposition to the Somoza

       regime in Nicaragua in the 1970s. A March 1981 cable informed

       Headquarters that Edmundo Chamorro had become one of the leaders

       of UDN/FARN.

   341. In a July 1, 1982 cable, Headquarters expressed "grave doubts"

       about Edmundo Chamorro's reliability and security consciousness. A

       January 1983 cable informed Headquarters that a senior UDN/FARN

       member had expressed concerns that Edmundo Chamorro was engaged in

       the "misuse of [resistance] funds and inciting the people to

       premature guerrilla and sabotage acts." In early February,

       Fernando reportedly removed Edmundo from the movement. In April

       1983, a Headquarters cable indicated that Edmundo Chamorro had "no

       leadership position of any sort in the UDN and has been excluded

       from active participation in the group's activities." The cable

       went on to say that Edmundo had "some serious character defects"

       and that his remarks were "often motivated by insecurity and

       vindictiveness."

   342. In response to a January 1986 request from Headquarters for

       updated information concerning Chamorro, a cable provided

       background information regarding Chamorro's "baggage." No

       information has been found to indicate any CIA contact with

       Edmundo Chamorro after 1983.

   343. Allegations of Drug Trafficking. A June 1986 cable to

       Headquarters stated that a local newspaper had published an

       article linking Edmundo Chamorro with drug traffickers. The Costa

       Rican Judicial Police reportedly had wiretapped conversations

       between convicted drug trafficker Horacio Pereira and Contra

       commander Sebastian Gonzalez Mendieta. The transcripts of the

       wiretaps allegedly indicated that Pereira and Gonzalez discussed

       the participation of several Contra leaders, including Edmundo

       Chamorro, in drug smuggling operations. In one conversation,

       Gonzalez reportedly advised Pereira to seek Edmundo Chamorro's

       assistance in providing logistics for drug transport.

   344. CIA Response to Allegations of Drug Trafficking. Upon learning of

       the Costa Rican newspaper allegations against Edmundo Chamorro, a

       June 1986 Headquarters cable asked for copies of the

       Pereira/Gonzalez wiretap transcripts that were mentioned in the

       article. Headquarters commented that "as it stands now it appears

       we are dealing with innuendo rather than hard facts about Edmundo

       and his connection to Gonzalez." In July 1986, Headquarters again

       cabled and stated, "Allegations of drug trafficking continue to

       plague our operations. Request status of . . . attempt to obtain

       [referenced] transcripts." A July 1986 reply expressed doubt that

       they could be obtained since they were being held as evidence to

       be used in court. No information has been found to indicate that

       the transcripts were pursued any further.

   345. Information Sharing with Other U.S. Government Entities. No

       information has been found to indicate that any information

       regarding Edmundo Chamorro's alleged involvement in drug

       trafficking was shared by CIA with any other U.S. Government

       entity or the Congress.

       

                           Fernando Jose Chamorro

                                      

   346. Background. Fernando "El Negro" Chamorro Rappaccioli, brother of

       Edmundo Chamorro, began his revolutionary career in the 1960s as

       the leader of a militant anti-Somoza organization known as the

       Eleventh of November. Although Fernando Chamorro's group was

       non-Marxist in doctrine, it worked closely with the FSLN to oust

       Somoza. In September 1978, Chamorro was arrested by the Somoza

       Government for anti-government activities. He was released, along

       with other political prisoners, in response to demands by FSLN

       activists who took over the National Palace in Managua. Upon his

       release, he left Nicaragua and was granted political asylum in

       Costa Rica.

   347. As of January 1982, Fernando Chamorro was based in Honduras and

       was playing a major role in the Contra movement. He was a leader

       of both the UDN and FARN--the military arm of UDN.

   348. CIA contact with Chamorro began in 1982, but according to a March

       1985 cable to Headquarters, Fernando Chamorro's "ineffective

       actions" had negatively influenced his relationship with the

       Agency. Thus, Station suggested that CIA sever its contact with

       him.

   349. An April 1986 cable informed Headquarters that Carlos Calvo, a

       former member of UDN/FARN, had been arrested at the Miami airport

       in October 1984 for attempting to leave the United States with

       $250,000 concealed in his clothing. According to the source, Calvo

       told the U.S. Customs Service that the money had been raised to

       support UDN/FARN and Fernando Chamorro had written a letter

       corroborating Calvo's story. A September 1986 cable verified to

       Headquarters that, although Fernando Chamorro reportedly had no

       previous knowledge of the money and no claim to it, he wrote a

       letter on Calvo's behalf on March 22, 1985 informing Customs that

       the money was meant to "help in the vital costs of the armed

       struggle for the liberation of Nicaragua." The letter also asked

       for assistance "in obtaining these, our sacred funds back." The

       money was not released by Customs. According to the September 1986

       cable, Chamorro admitted that he believed Calvo was involved in a

       money laundering operation, but said that he did not believe that

       the money was drug-related. He rationalized that "if the money was

       going to be lost, it might as well go to a worthy cause."

   350. A December 1986 cable to Headquarters reported that Chamorro had

       become the Southern Front Commander for UNO in December 1986.

       According to a December 29, 1986 cable to Headquarters, that

       "difficult as it may be to understand, [Chamorro] continues to

       hold considerable sway on most of the [UNO] commanders in the

       south." Fernando Chamorro resigned from UNO's political and

       military structures in March 1987.

   351. A December 1987 cable informed Headquarters that Chamorro's wife

       had been diagnosed with a malignant brain tumor. In August 1988,

       Chamorro was hospitalized after suffering a cerebral hemorrhage

       and subsequently died. Later that month, his wife died.

   352. Allegations of Drug Trafficking. On March 16, 1986, the San

       Francisco Examiner published a story alleging that a UDN/FARN

       official--Francisco Aviles--had three years previously been

       involved in writing a letter to the San Francisco U.S. Attorney

       requesting that $36,000 seized from California-based drug

       trafficker Julio Zavala be returned to Zavala because it was

       Contra money. An April 1986 cable to Headquarters stated that

       Chamorro had questioned Aviles about the allegation after learning

       of the story. When Aviles could not provide satisfactory answers,

       Chamorro reportedly expelled him from the UDN/FARN. No information

       has been found to indicate that Chamorro was aware of Aviles'

       actions prior to 1986, or that Chamorro himself had ever been tied

       to California-based drug trafficker Julio Zavala.

   353. A June 1986 cable stated that reportedly in August or September

       1984 "Costa Rican drug trafficker Norvin [sic] Meneses sought the

       cooperation of 'El Negro' [Fernando Chamorro] to move drugs" to

       the United States.

   354. CIA Response to Allegations of Drug Trafficking. 

       In March 1986, when the San Francisco Examiner published its story

       linking Aviles to Zavala and a California drug trafficking ring,

       CIA began an immediate inquiry into the matter. An April 1986

       Headquarters cable was sent to several Stations asking for all

       available information regarding the allegation that Aviles, a

       member of UDN/FARN under Fernando Chamorro, provided funds to

       Zavala. The cable stated that "we must act swiftly to ascertain

       the true facts. . . . We need to get the entire story

       immediately." In April 1986, a Station informed Headquarters that

       it had ascertained that Aviles was not personally associated with

       Chamorro, but served in the UDN/FARN as a human rights

       representative. Another Station reported in April that the FBI had

       found no evidence to link Zavala and the other arrested drug

       traffickers with Contra groups. A third Station also reported to

       Headquarters in April that its inquiry indicated that Chamorro had

       no links with, or knowledge of, any of those who had been arrested

       in connection with the California drug trafficking ring. According

       to an April cable to Headquarters, Chamorro stated that:

       UDN/FARN has never accepted large denominations of monies from any

       organization which did not first state the source of the

       contributions; Francisco Aviles was not involved in Southern Front

       activities in 1983 - the timeframe [of the California arrests]; .

       . . and Aviles has been informed verbally that he has been

       expelled from UDN/FARN, a written order to follow shortly. 

   355. No information has been found to indicate that CIA took any

       actions to follow-up or verify the June 1986 allegation that Costa

       Rican drug trafficker Norwin Meneses had sought Chamorro's

       cooperation to move drugs to the United States.

   356. Information Sharing with Other U.S. Government Entities. An April

       1986 Headquarters cable stated that DoS had been advised of the

       San Francisco Examiner story and of the Agency's findings

       regarding Chamorro's actions against Aviles. According to an April

       1986 Station cable to Headquarters, the story was also the subject

       of discussions between that Station and the FBI's Field Office.

   357. In February 1988, Chamorro was the subject of an ongoing criminal

       investigation by the FBI that reportedly had been initiated on the

       basis of information that a Station had provided to Headquarters

       in a July 1987 cable for passage to DoJ. According to the July

       cable, Chamorro allegedly had purchased several vehicles with

       funds that were intended for humanitarian aid. The cable requested

       that Headquarters "inform [FBI] and [DoJ] of [Chamorro's]

       appropriations of [Contra] property." No information has been

       found to indicate whether or how this request was acted upon by

       Headquarters.

   358. No information has been found to indicate that information

       regarding Chamorro's alleged involvement in drug trafficking was

       shared with other U.S. Government entities or the Congress.

       

                             Sebastian Gonzalez

                                      

   359. Background. Sebastian Gonzalez Mendieta (a.k.a. "Commandante

       Wachan") was a veterinarian by training who was involved in the

       effort to overthrow Anastasio Somoza in the late 1970s. He served

       briefly--in assignments relating to agricultural issues--in the

       post-Somoza Government established by the Sandinistas. However,

       Gonzalez claimed in 1981 that he had become disillusioned with the

       leftward turn of the Sandinista regime and relocated to Panama.

       There he joined forces with Eden Pastora and other disaffected

       Nicaraguans.

   360. During the early period of the Contra resistance, Gonzalez was

       initially associated with ARDE, primarily as a logistics

       coordinator, and played a liaison role between ARDE and the

       Panamanian Defense Forces (PDF). By late 1983, Gonzalez'

       relationship with ARDE had deteriorated, however, and he attempted

       to form a small band of fighters known as the Third Way Movement.

       Gonzalez subsequently moved to Panama and gradually lost touch

       with the Contras.

   361. Allegations of Drug Trafficking. A September 1984 cable to

       Headquarters, based on indirect information from Fernando

       Chamorro, alleged that Gonzalez had used several flights to Costa

       Rica from Panama to carry cocaine along with the communications

       gear he was transporting for the ARDE. The cable went on to report

       that Gonzalez had stored 11 kilograms of cocaine in Liberia, Costa

       Rica, and had taken 10 of those kilograms to an unknown location.

       According to the cable, Chamorro had also said that Panamanian

       leader Manuel Noriega, as well as Gerardo Hidalgo Abaunza--who was

       arrested by the Government of Costa Rica while in possession of

       the one additional kilogram of cocaine that Gonzalez had

       stored--were involved in the drug trafficking operation.

   362. In late September 1984, a cable reported to Headquarters that a

       Costa Rican press report stated that Gonzalez and another

       individual were involved in a flight that had crashed in the

       Pacific Ocean the previous week. It was implied that the plane, a

       Cessna 182 connected to Pastora's group, had no apparent business

       in the area of the crash and the crash would be investigated by

       the Government of Costa Rica.

   363. In February 1985, a cable to Headquarters stated that Gonzalez

       was "well known in police circles in Costa Rica," and that it was

       likely that the case involving Hidalgo's possession of a kilogram

       of cocaine would not be followed up. Another Station, commenting

       in a cable to Headquarters on the same day, referred to this cable

       and stated:

       [The cable] appears to indicate that case against [Gonzalez]

       rested solely on allegations made by Gerardo Hildago, who was

       caught red-handed by the Costa Ricans with several kilos of

       cocaine. . . . Assume from the overall tenor of [the cable] that

       drug case against [Gonzalez] is too weak to take to trial and that

       he is thereby to be cleared of the charges.

   364. A March 1985, cable reported to Headquarters that ARDE's security

       chief had linked Gonzalez to Alpa Aviation. Alpa Aviation was

       reported to be partially owned by drug trafficker David Mayorga.

   365. In May 1985, a Station reported its belief to Headquarters that

       Marcos Aguado, a Contra pilot, could provide "concrete evidence"

       of drug trafficking on the part of various Southern Front leaders,

       including Gonzalez. In August 1985, the Station reported to

       Headquarters that Alfonso Robelo had said that Gonzalez was linked

       to Tuto Munkel, a Nicaraguan who was reportedly engaged in drug

       trafficking, weapons smuggling and money laundering. Munkel, the

       cable said, reportedly supported Gonzalez' drug activities in

       Costa Rica.

   366. In October 1985, a Station reported to Headquarters that it had

       been informed by the local DEA office that Hugo Spadafora had made

       vague allegations to DEA several weeks earlier that Gonzalez,

       Manuel Noriega and Jose Ortiz Robelo were engaged in drug

       trafficking. The chief of the local DEA office met Spadafora twice

       and, according to the cable, Spadafora had promised that he would

       provide evidence of drug trafficking by Gonzalez. Spadafora was

       murdered in September 1985 and no information has been found that

       Spadafora furnished any information to DEA after his second

       meeting with the chief of the local DEA.

   367. An October 1985 cable to Headquarters discussed PDF requests that

       Gonzalez assist in:

       . . . defusing an effort by family members of slain rebel Hugo

       Spadafora to implicate Manuel Antonio Noriega in drug trafficking.

       [Gonzalez] has been asked to participate in a popular morning

       radio talk program scheduled for 21 Oct, in which [Gonzalez] will

       reveal and denounce a not yet public plan by Spadafora's brother,

       Winston, to obtain documents in Costa Rica which allegedly show

       that [Gonzalez] was involved in drug trafficking.

       A handwritten notation on this cable stated " . . . if the truth

       be known, we had reason to believe that [Gonzalez] has been

       involved in drugs about a yr [sic] - 1 1/2 yrs ago. . . ."

   368. According to a June 1986 cable to Headquarters, the June 13

       edition of the San Jose English language newspaper, the Tico

       Times, reported the sentencing of three people for drug

       trafficking. The article stated that local police had wiretapped

       conversations between Gonzalez and Horacio Pereira, one of those

       who had been arrested. Gonzalez allegedly had advised Pereira,

       described as a pool hall operator, to seek Edmundo Chamorro's

       assistance in providing logistics for transporting drugs.

   369. According to a February 1988 Headquarters cable, former

       Panamanian Consul General in New York Jose Blandon had linked

       Gonzalez to narcotics trafficking in testimony before a

       congressional subcommittee the previous week. The Headquarters

       cable asked for comment on the allegation. In response, with

       regard to the narcotics allegation, a February 1988 cable replied:

    . . . .

       6. Regarding Blandon's accusation, we also have no details and I

       agree that whatever Blandon said could well relate to the earlier

       Costa Rican-related allegations.... Those allegations periodically

       arose . . . . Each time, [Gonzalez] firmly denied them, saying

       that the allegations originated with, as I recall, Eden Pastora or

       "El Negro" Chamorro to discredit him as a potential rival. We

       don't have any records here on that whole affair . . . . 

   370. A former CIA independent contractor officer recalls that he was

       in Pastora's house in October 1983. The independent contractor

       says this was after the La Penca bombing and the situation was

       extremely tense. He says it was at this time that Spadafora told

       him that Gonzalez was involved in drug smuggling. The independent

       contractor says that he had a very close relationship with

       Spadafora, who "hated" Noriega and the United States, but saw the

       independent contractor as a Latin and not a person from the CIA.

       The independent contractor says Spadafora was the first to tell

       him that Noriega was smuggling drugs with the Contras and that

       Gonzalez was involved. The independent contractor states, however,

       that he and his colleagues never received any proof of the drug

       trafficking allegations against Gonzalez.

   371. The independent contractor says that Gonzalez ran a shoe store in

       Costa Rica and used shoe boxes to transport drugs. He says he

       never learned anything about the route used in Gonzalez' drug

       smuggling, other than that the drugs went from Panama to Costa

       Rica and then maybe on to the Dominican Republic.

   372. The independent contractor adds that he reported the

       Gonzalez-drug allegation in October 1983 to his superior, who

       replied that CIA had heard some rumors of drug trafficking

       involving the Contras. The independent contractor says they

       discussed the situation at his superior's home, including what was

       going on with Gonzalez as well as drug trafficking allegations

       involving Contra pilots and the nephew of Alfonso Robelo. The

       superior says he cannot recall who Gonzalez is.

   373. CIA Response to Allegations of Drug Trafficking.

       In response to the allegations regarding drug trafficking by

       Gonzalez received in September 1984, it was reported in September

       1984 that DEA had been asked for "assistance in verifying the

       story" and the local DEA office had confirmed the arrest of

       Gerardo Hidalgo in Costa Rica for possession of one kilogram of

       cocaine. It was requested that permission be granted to provide

       leads to the Government of Costa Rica as to the whereabouts of

       Gonzalez.

   374. In September 1984, authorization was provided to furnish

       information to the Government of Costa Rica regarding Gonzalez'

       whereabouts.

   375. An October 1984 cable to Headquarters on Gonzalez stated that

       reportedly Gonzalez denied any involvement in the cocaine

       trafficking incident that had been described in the September 1984

       cable. The October cable stated that Gonzalez had seen his

       accuser, Hidalgo, only twice in his life, once in the early summer

       of 1984 and again in September 1984 in Liberia. Gonzalez claimed

       that someone else was using his previously lost identification

       card to register at a hotel in Liberia and that he has a

       "Panamanian-issued travel document to show that he was in Panama

       at the very time he is said to have been visiting Hidalgo" in

       Liberia and that "he will use the document to clear himself with

       the Costa Rican authorities." In regard to the aircraft that was

       ditched off the coast of Nicaragua, the cable stated that:

       . . . [Gonzalez] said that he may have been mistakenly placed in

       the plane due to a similarity of names. The plane was piloted by

       [an individual with a similar surname]. According to [Gonzalez,

       this individual] is a pilot for [Fernando Chamorro]. [Gonzalez]

       said his own name is associated with the aircraft because he

       helped [Chamorro's] movement buy the aircraft and is listed as a

       [sic] owner of record.

   376. In response to the June 1986 San Jose Tico Times report of

       wiretapped conversations linking Gonzalez to a pool hall operator

       who had been arrested for drug trafficking, Headquarters sent a

       cable in June 1986:

       Appreciate heads up contained in [June 1986] cable re: Allegations

       of drug trafficking by Edmundo Chamorro and Juan [sic] Sebastian

       "Wachan" Gonzalez. Allegation also surfaced in evening news and

       has received some play here. In order to get a handle on

       allegation and in particular blow back on "El Negro" Chamorro,

       request station . . . obtain copies of transcripts of

       conversations outlined in para two ref. As it stands now it

       appears we are dealing with innuendo rather than hard facts about

       Edmundo and his connection to Gonzalez. Transcripts will shed

       light on nature of involvement with drug trafficking.

       In July 1986, another cable from Headquarters requested a status

       report regarding the Station's attempt to obtain the transcripts.

       A response on July 16, 1986 stated it would be difficult to

       acquire tapes being held as evidence in court. No information has

       been found to indicate that the transcripts were ever obtained, or

       that this matter was the subject of further cables.

   377. Information Sharing with Other U.S. Government Entities.

       According to a September 1984 cable to Headquarters, the San Jose

       DEA Office confirmed the arrest of Gerardo Hidalgo Abaunza on

       narcotics charges and the implications of Gonzalez' involvement.

       The cable also requested Headquarters "approval to provide leads

       [to Costa Rican law enforcement authorities] to whereabou[t]s of

       [Gonzalez] . . . ." The next day, Headquarters sent a cable that

       approved the request. An October 1985 cable to Headquarters noted

       that several weeks prior to that date Hugo Spadafora had made

       vague allegations to a local DEA officer concerning Gonzalez'

       links to narcotics trafficking. No information has been found to

       indicate that the allegations against Gonzalez were otherwise the

       subject of discussion between CIA and U.S. Government law

       enforcement agencies.

   378. Then-DDCI Gates sent a memorandum to the DDI and DDO on March 28,

       1988 asking for a briefing regarding Contra involvement in

       narcotics activities. The information that was provided to DDCI

       Gates in response on March 31, 1988 included information then

       available to CIA regarding individuals who were allegedly involved

       in or knowledgeable of ARDE narcotics trafficking. Allegations

       that Gonzalez was involved in narcotics trafficking were included

       in one of the documents that was compiled to support the briefing.

       No information has been found to indicate what was done by CIA on

       the basis of the information provided to DDCI Gates or whether it

       was shared further with the congressional oversight committees or

       other intelligence and U.S. law enforcement agencies.

       

                                Carol Prado

                                      

   379. Background. Carol Prado Hernandez was a civil engineer who held

       several key positions in the FRS. In 1983, he assumed

       responsibility for operation of a Nicaraguan exile press office in

       Miami, and also worked on acquiring arms for ARDE. From late 1983

       to 1985, Prado was working in the ARDE's logistics, propaganda and

       public relations sections and also serving as the communications

       chief. He was a close confidant of and advisor to Eden Pastora and

       headed the ARDE Headquarters staff in San Jose for a period of

       time.

   380. A May 1984 Station cable considered Prado to be a "troublemaker"

       and possible agent of the Sandinista Government. From 1984 through

       1987, however, Station Officers had occasional contact with Prado

       as part of their liaison with ARDE.

   381. Allegations of Drug Trafficking. In January 1984, based on

       information provided by the FBI, a Headquarters cable noted that a

       contact of Prado's, arms dealer Sarkis Garabed Soghanalian, might

       be involved in drug trafficking. At this time, Prado reportedly

       was a Miami resident.

   382. In May 1984 a cable to Headquarters reported an allegation that

       Prado was linked to drug trafficking. The cable reported that

       there was a request that CIA conduct an investigation of Prado's

       activities in Miami because of a belief that Prado had Pastora

       involved in "some kind of a drug deal." A May cable to

       Headquarters indicated that there was a report of a conversation

       between Prado and a Miami-based Cuban who helped fund and equip

       FRS/ARDE regarding the smuggling of Cubans into the United States.

       Reportedly there were also suspicions that Martinez and his

       colleagues were involved in drug trafficking.

   383. A February 1985 cable informed Headquarters that Prado had

       appointed Carlos Pacheco to coordinate all air drop supply

       deliveries to the Contras. Pacheco was described by the cable as a

       close friend of alleged drug trafficker Gerardo Duran. The cable

       also reported that the Pacheco appointment had led to speculation

       among Southern Front members that Prado had selected Pacheco in

       order to coordinate drug trafficking flights better.

   384. A March 1985 cable to Headquarters reported information that

       indicated that Prado's reputation was so tarnished by drug

       trafficking allegations that Pastora was prepared to remove Prado

       from ARDE as part of a proposed agreement with other Contra

       leaders to create a single opposition group and joint military

       command.

   385. A May 1985 review was cabled to Headquarters of allegations that

       FRS personnel were involved in drug trafficking. The review cited

       Prado and Duran as the Contras who were most frequently linked to

       drug trafficking allegations. It also contained information that

       Prado had started looking for alternative sources of funding for

       ARDE activities in 1983. Prado reportedly had made several trips

       to Miami, Haiti and the Dominican Republic with Miami-based drug

       trafficker Jorge Morales to look at unspecified "operations."

   386. A May 1985 cable to Headquarters stated that FRS/ARDE pilot

       Marcos Aguado could "easily" provide concrete evidence linking

       Prado, Pastora and other Southern Front Contras to drug

       trafficking. A June 1985 cable to Headquarters contained

       additional allegations of narcotics trafficking by Prado and

       Duran. According to this cable, it was alleged that Prado

       periodically received funds suspected of being drug profits from

       Duran. In a December 1985 cable to Headquarters, it was reported

       that Pastora had instructed Prado to obtain money from Duran and

       another individual, who was also alleged to be involved in drug

       trafficking.

   387. An April 1986 cable to Headquarters stated that Adolfo Chamorro

       had been arrested on April 22, 1986 for entering Costa Rica

       illegally. Chamorro asserted while in custody that Pastora should

       be replaced because he was incompetent and Prado should be removed

       because he was involved in drug trafficking.

   388. It was reported to Headquarters in an April 1986 cable that

       Chamorro had been interviewed by a Miami radio station after his

       return to the United States from Costa Rica. According to the

       cable, Chamorro claimed that Prado had been involved in illegal

       narcotics trafficking.

   389. A June 1986 cable to Headquarters passed an allegation that

       reportedly linked Prado to drug money by stating that Prado had

       accepted $10,000 from Cesar Rodriguez, a known drug trafficker.

   390. CIA Response to Allegations of Drug Trafficking. 

       The May 1984 cable to Headquarters that contained allegations of

       drug trafficking against Prado also included a request for further

       information about Prado from the Departments of Treasury and

       Justice. No information has been found to indicate that this

       request was pursued or that any other CIA response resulted from

       the allegations of Prado's connections to drug trafficking.

   391. The May 1984 cable also suggested that the Agency conduct an

       investigation into Prado's activities. No information has been

       found to indicate that this occurred.

   392. Information Sharing with Other U.S. Government Entities. No

       information has been found to indicate that information regarding

       Prado's alleged involvement in drug trafficking was shared with

       other U.S. Government intelligence or law enforcement agencies or

       the Congress.

       

                              Jenelee Hodgson

                                      

   393. Background. Jenelee Hodgson, a Creole member of the United

       Indigenous Peoples of Nicaragua (KISAN), was a leader of the

       Southern Indigenous Creole Community (SICC). In early 1980, she

       decided that the Sandinista revolution had lost its original

       direction and began opposing FSLN policies. After release from

       being jailed for three months because of her participation in 1980

       Creole protests in Bluefields, Nicaragua, she was harassed by the

       Sandinista police. In 1982, she went into exile in Costa Rica.

   394. Allegations of Drug Trafficking. A May 1986 cable advised

       Headquarters that Max Ewart, a Canadian who worked in KISAN's San

       Jose office, had claimed at a SICC meeting that Hodgson maintained

       close ties to the Sandinista regime through her two brothers, one

       of whom ran drugs into the United States for the Sandinistas.

       Ewart also reportedly claimed that Hodgson was closely associated

       with two other specifically named drug traffickers, and that she

       had arranged the release of one of them from imprisonment in Costa

       Rica for drug trafficking. The cable added the comment that it was

       believed Ewart had deliberately sought to discredit Hodgson and

       other members of the KISAN leadership group.

   395. A June 1986 cable to Headquarters stated that Hodgson reportedly

       answered the charges against her at a June 1986 SICC meeting by

       pointing out that most of the accusations were based on hearsay

       and propaganda printed in the Sandinista newspaper Barricada. She

       reportedly presented evidence of her finances and supplies to the

       troops in the field and succeeded in making her case before the

       Creoles.

   396. CIA Response to Allegations of Drug Trafficking. According to a

       May 1986 cable to Headquarters, Hodgson had said that in mid-1985

       she had stayed in the Miami home of a Nicaraguan Creole whom she

       had met through a cousin who was also living with the Nicaraguan

       Creole at the time. The cousin reportedly told Hodgson that he

       suspected that the Nicaraguan Creole and others were involved in

       illegal activities and urged Hodgson to leave. Hodgson said she

       met Ewart and witnessed the arrival of several crates of cocaine

       and its subsequent distribution to dealers at the Nicaraguan

       Creole's home. Hodgson reportedly said that the Nicaraguan Creole

       had supervised the distribution of this cocaine for Ewart. The May

       1986 cable commented that Hodgson's story was credible. No

       information has been found to indicate that the Agency attempted

       to investigate further the drug trafficking charges that had been

       made against Hodgson.

   397. A March 1987 Headquarters cable stated that Ewart had an unsavory

       record. The cable reported that he was involved in cocaine

       dealings in Florida and that it had been learned that in 1986 that

       Ewart was plotting, via unsubstantiated accusations of wrongdoing,

       to dispose of Hodgson and assume a leadership role.

   398. Information Sharing with Other U.S. Government Entities. No

       information has been found to indicate that the Agency

       disseminated to U.S. law enforcement agencies the Ewart

       allegations regarding drug trafficking by Hodgson that had been

       reported in May 1986. However, a June 1986 Headquarters cable

       indicated that CIA shared Hodgson's allegations about Ewart's drug

       trafficking with both the FBI and DEA. Headquarters also

       recommended in the June cable that this information be shared with

       the INS office in Miami. No information has been found to indicate

       that this was done, or that any of this information was provided

       to the Congress.

       

                               Alfredo Cesar

                                      

   399. Background. In the late 1970s, Alfredo Cesar Aguirre left

       Nicaragua and arrived in the United States where he became a

       spokesman for the FSLN. When the Sandinistas came to power in

       1979, Cesar returned to Nicaragua to become the Chairman of the

       Central Bank, a ministerial position. In May 1982, Cesar resigned

       from the Central Bank and went into exile in San Jose, accepting a

       position with the Costa Rican Government as a financial advisor.

       Shortly thereafter, Cesar joined Eden Pastora, also in exile in

       San Jose, in the Contra movement.

   400. In the mid-1980s, the United States sought to unify the

       splintered Contra movement. Cesar, as leader of BOS, opposed the

       signing of a unity accord. Headquarters stated in a January 1986

       cable that Agency officers met with Cesar in December 1985 and

       January 1986 to discuss efforts to achieve political unity among

       the Contras, as well as the need for him to distance himself from

       Southern Front leaders who were alleged to be involved in drug

       trafficking.

   401. A June 1986 Headquarters cable stated that Cesar had advised in

       June 1986 that he had signed the unity agreement with UNO.

   402. By late October 1986, Cesar still had not fully integrated BOS

       into UNO. Cesar was informed that there would be "no [repeat] no

       additional funds" without integration into UNO.

   403. A February 1987 cable informed Headquarters that financial

       support had been resumed for BOS in February 1987, but that it had

       been made clear that all future funding would be made through the

       unified Nicaraguan resistance. BOS was then incorporated into the

       unified Nicaraguan resistance.

   404. In August 1988, Cesar was selected as the chief Contra negotiator

       for talks with the Sandinistas. In June 1989, Cesar returned to

       Nicaragua.

   405. Allegations of Drug Trafficking. No information has been found to

       indicate that Cesar was the subject of any drug trafficking

       allegations, but his brother, Octaviano Cesar, was the subject of

       such allegations.

   406. CIA Response to Allegations of Drug Trafficking. According to a

       January 1986 Headquarters cable, CIA informed him when urging

       Cesar to join with UNO in January 1986 that he would have to

       divest BOS of drug-related "baggage," specifically Adolfo

       Chamorro. A September 1986 cable to Headquarters noted that Cesar

       had been reminded "on more than one occasion" that Chamorro had a

       "possible association with narcotics trafficking." In January

       1987, Headquarters cabled instructions for Cesar to be informed

       that U.S. Government funds could not be used to support any BOS

       member, such as Chamorro, until drug allegations against them were

       resolved. In February 1987, it was reported to Headquarters that

       Chamorro had been removed from the BOS payroll.

   407. In April 1987, Cesar's brother, Octaviano Cesar, was interviewed

       by CIA Security regarding drug trafficking. CIA Security believed

       it was highly probable that Cesar was involved in drug

       trafficking.

       

                                Jose Davila

                                      

   408. Background. Jose Davila Membreno was a vice president of the

       Social Christian Party--a democratic opposition party in

       Nicaragua, a Social Christian Party delegate to the National

       Assembly and a member of the post-Somoza Council of State. Also a

       member of the editorial staff of La Prensa until 1982, he went

       into exile in Costa Rica after Managua's imposition of a state of

       emergency. In September 1982, Davila was a founding member of the

       Nicaraguan Assembly of Democratic Unity--an exile group dedicated

       to political and civil action--but this group disintegrated within

       a year. At that point, Davila helped form another group--the

       Christian Democratic Solidarity Front--which joined ARDE in early

       1983. Shortly thereafter, Davila became one of ARDE's leaders.

   409. By 1984, Davila's influence within ARDE was in decline even

       though he remained a top official of the Christian Democratic

       Solidarity Front. In 1985, Davila aligned with BOS and was soon

       listed as a member of the BOS Executive Committee along with

       Adolfo Chamorro, Alvaro Jerez, Alfredo Cesar, and Bayardo Lopez.

       In May 1986, Davila, along with other ARDE field commanders under

       the command of Pastora and the FRS, agreed to align with UNO under

       the leadership of Fernando Chamorro. Davila also agreed to assume

       the responsibility for coordinating ARDE's political dealings with

       Chamorro and his staff. Davila then renounced his affiliation with

       BOS and Alfredo Cesar.

   410. Davila was pivotal in encouraging leaders of BOS to join forces

       with UNO, and was a key figure in the restructuring of the

       Southern Front in August 1986.

   411. Allegations of Drug Trafficking. Agency records include no

       allegations that Davila had engaged in drug trafficking. Issues

       did arise in regard to his admissions of affiliation with

       Pastora's associates who were connected to drug trafficking.

   412. CIA Response to Allegations of Drug Trafficking. 

       In view of Davila's associations, he was interviewed by CIA

       Security. CIA Security believed his denials of involvement of drug

       trafficking were highly questionable. On November 3, 1987,

       Headquarters advised that Fiers had briefed SSCI Senators Bradley

       and Cohen and SSCI Staff members on October 14, 1987 regarding the

       problems associated with Davila. Fiers reportedly had stated that

       the Agency had no narcotics-related information regarding Davila

       other than his unfavorable interviews with Security. According to

       the Headquarters cable, it was the conclusion of the SSCI staffers

       that to cease contact with an individual solely on the basis of a

       security interview would be premature and ill advised.

   413. No information has been found to indicate that CIA took any

       further action to attempt to resolve the drug trafficking issues

       relating to Davila.

   414. Information Sharing with Other U. S. Government Entities. A July

       1987 CIA cable to the FBI reported that CIA Security had concerns

       regarding Davila and the issue of narcotics trafficking.

   415. On October 14, 1987, Fiers briefed SSCI Staff members and two

       U.S. Senators regarding Davila's unfavorable security interviews

       due to narcotics-related issues. The SSCI transcript of that

       briefing and an October 14 Office of Congressional Affairs (OCA)

       memorandum for the record (MFR) regarding that briefing do not

       indicate the basis for the statement in the November 1987 cable

       that it was the conclusion of the SSCI staffers that to cease

       contact with an individual solely on the basis of a security

       interview would be premature and ill advised.

   416. The then-NOG Chief says that the lack of support in the SSCI

       transcript for the cable's assertion regarding Davila could have

       resulted from an informal, off-the-record discussion with the SSCI

       Staff members following the formal briefing. He states that there

       were always informal discussions following the official briefings

       and that guidance by Staff members was routinely proffered during

       these discussions.

   417. According to the SSCI transcript, DCI George Tenet--then a SSCI

       Staff member--was present at the October 14, 1987 briefing. He

       says he does not recall the Fiers briefing, although he recalls

       that Fiers briefed the SSCI on a weekly basis on the Nicaraguan

       activities. While he says there may well have been a briefing on

       Contra involvement in narcotics, he has no recollection of such a

       briefing. Concerning whether guidance was given to Fiers by the

       SSCI Staff regarding Davila, Tenet says he

       believes that while SSCI Senior Staff may have provided the advice

       referred to in the 1987 cable--he was not a member of the Senior

       Staff at the time[,] had no responsibility for covert action

       programs . . . and would not have been aware of discussions

       between SSCI and CIA which would have led to CIA [sic] staff

       advice.

   418. Fiers responded in writing to questions and stated that he only

       has a vague recollection of the briefing. Regarding the cable

       assertion that SSCI "staffers" concluded that the relationship

       with Davila should not be terminated based solely on the basis of

       a security interview Fiers wrote, "I don't recall which particular

       staffer approved it."

   419. The former Minority Staff Director James Dykstra says that it was

       unlikely that the SSCI Staff would express such a conclusion. He

       adds that Staff members might concur with something, but "not give

       direction that could be construed as a conclusion." He adds that

       "[The cable] doesn't have the ring of truth to it." He also notes

       that a statement by Fiers in the transcript regarding Davila that

       ". . . our druthers would be to continue to use him . . . "

       probably represented Fiers' request for permission to keep using

       Davila.

   420. With regard to SSCI protocol, the former Minority Staff Director

       James Dykstra says that Fiers could have had "an off-line

       conversation" with the Staff and could have interpreted a casual

       remark as "direction" or approval because it was what he wanted to

       hear. Dykstra also says that, if the Staff had provided Fiers with

       any sort of advice, he would hope it would have been followed with

       a written document. Dykstra goes on to say that, if the Davila

       case was a real issue, it would been raised with himself or SSCI

       Staff Director. He says that this kind of issue was clearly in the

       domain of the Chairman or Vice Chairman of the Committee. He adds

       that "advice like this [conclusion to keep Davila] would have been

       cleared through the Staff Directors who would have briefed the

       [SSCI] Chairman or Ranking Minority Member." He continues that the

       matter probably would have been discussed between the Chairman and

       the DCI at one of their meetings.

   421. No information has been found to indicate that the Davila issue

       was discussed between Fiers and SSCI Staff members at any time

       after the October 14, 1987 briefing.

   422. Louis Dupart, former CATF Compliance Officer and author of the

       November 3, 1987 cable, says that he does not specifically recall

       the October 14, 1987 SSCI briefing. He says that he would not have

       written anything in a cable that he did not believe to be true.

       Dupart says that he was "ultra sensitive" to such matters at the

       time. What likely happened, according to Dupart, was that Fiers

       explained the situation to the SSCI members and Staff and no one

       said during the testimony--or in the discussion after it was

       over--that the Agency had to get rid of Davila. Dupart believes

       that Fiers likely inferred, therefore, that it was "okay" to

       continue to use Davila in the Contra program.

       

                              Harold Martinez

                                      

   423. Background. Harold Martinez became deputy commander of FRS in

       circa 1982. He resigned this position in 1984 to join the ARDE. In

       1986, he became a principal member of BOS. In May 1988, he became

       the second-in-command under the Nicaraguan Resistance/Southern

       Front.

   424. Allegations of Drug Trafficking. An October 1984 cable to

       Headquarters reported that Martinez alleged drug involvement by

       Pastora and Pastora's chief military officers. Then Deputy

       Commander of the FRS, Martinez had said that he could no longer

       work or remain affiliated with Pastora because of what he reported

       to be FRS leadership involvement with drug trafficking, arms

       smuggling and mismanagement of funds. Martinez provided no details

       or evidence to support his belief regarding corruption within the

       FRS, but he terminated his association with Pastora shortly

       thereafter.

   425. In January 1987, CIA received information of Martinez's possible

       involvement in drug trafficking. In a December 1988 cable to

       Headquarters, it was reported to have been stated that Martinez "

       . . . undoubtedly had a connection with Pastora's drug activities"

       and warned against direct contact with either of the Martinez

       brothers.

   426. CIA Response to Allegations of Drug Trafficking by Martinez. A

       July 1987 Headquarters cable reported that a new BOS leadership

       was elected during its transformation into a political party, and

       a five member directorate was chosen that included Martinez.

       Alfredo Cesar, who had been selected to be president of the

       directorate, had reportedly said that Martinez' support within BOS

       was too strong to be opposed. A December 1988 cable reported that

       Martinez was second-in-command under Nicaraguan Resistance/South

       Commander Ganso in May 1988.

   427. Sharing of Information with Other U.S. Government Entities. No

       information has been found to indicate that information regarding

       Martinez' potential involvement in drug trafficking was shared

       with other U.S. Government intelligence or law enforcement

       agencies or the Congress.

       

                                 Rene Corvo

                                      

   428. Background. Rene Corvo, a Cuban-American veteran of the 2506

       Brigade and the Bay of Pigs invasion, was the leader of an

       independent, heavily armed, anti-Sandinista military unit

       consisting of approximately eight Cuban-Americans and 40

       Nicaraguans based in Costa Rica. Corvo reportedly stole equipment

       destined for the Southern Front to maintain his own force and

       divided equipment donated by Cuban-Americans between himself and

       Eden Pastora. In the late 1980s, according to information provided

       to the Agency by the FBI, Corvo was investigated for various

       Neutrality Act and arms trafficking violations and was rumored to

       be associated with plots against the lives of Pastora and U.S.

       Ambassador to Costa Rica Lewis Tambs.

   429. Allegations of Drug Trafficking. According to a December 1984

       cable to Headquarters, it was reported that Rene Corvo's unit was

       supported by Frank Castro and Corvo might be involved in drug

       trafficking by Castro. According to a December 1984 cable to

       Headquarters, Frank Castro reportedly was installing, or

       attempting to install, a cocaine processing laboratory in northern

       Costa Rica and was exploiting widespread paramilitary activities

       in northernmost Costa Rica as a cover for drug trafficking.

       Reportedly, Frank Castro sent his middleman to Costa Rica to

       purchase a ranch with a landing strip. Corvo was reportedly

       involved with Frank Castro and his middleman in this operation,

       and Corvo had traveled to Colombia shortly after returning to

       Costa Rica from Miami in November 1984, with the implication that

       this travel may have been drug-related. Further, Cuban-Americans

       supporting the Contra movement resented the alleged use of

       military activities as a cover for drug trafficking and feared

       that discovery and public exposure of the alleged drug trafficking

       would discredit Cuban-Americans and the insurgency in general. It

       was reported to Headquarters in December 1984 that reportedly:

       There are fears that Corvo, who has received support from Frank

       Castro, may be exploiting the military infrastructure in northern

       Costa Rica as cover for engaging in drug trafficking.

   430. In August 1985, it was reported to Headquarters that a

       clandestine landing strip at a ranch in Guanacaste Province of

       Costa Rica was under investigation by the Costa Rican Narcotics

       Division. There were suspicions, reportedly, that Fernando

       Chamorro and Jose Robelo Ortiz might have been involved in drug

       trafficking because they had visited the ranch on several

       occasions and were closely involved with Corvo.

   431. On March 6, 1986 and on March 17, 1986, the FBI interviewed Jack

       Terrell. Information obtained in those interviews was sent to CIA

       Headquarters in cables dated March 11 and March 24, respectively.

       According to the FBI cables, Terrell was associated with the

       Civilian Military Assistance (CMA) and said that he had met Corvo

       and several others in a Miami motel in either late 1984 or early

       1985. The cable reported that "tactics in Nicaragua" was the

       subject of discussion when Terrell was asked to leave the room and

       meet "Rene Corbo." According to Terrell, he was advised not to

       meet Corvo "because he is into drugs and arms and he works

       directly for Francisco Chanes." The cable said that Tom Posey told

       Terrell that Corvo could provide the CMA with money, weapons,

       transportation, and "everything we've been looking for." According

       to the cable, Terrell met an individual early the next morning who

       confirmed what Terrell had been told earlier:

       . . . regarding drugs, arms, Chanes, and Frank Castro and their

       relationship with Rene Corvo. [This individual] told Terrell that

       Frank Castro was the main liaison between the Colombian drug

       dealers and the Cubans.

   432. CIA Response to Allegations of Drug Trafficking. No information

       has been found to indicate that the Agency took any action to

       follow-up or verify any of the drug-related allegations against

       Corvo.

   433. Information Sharing with Other U.S. Government Entities. In April

       1986, CIA responded to a March 7, 1986, FBI request for

       information concerning Corvo and several other individuals. The

       CIA cable to the FBI noted that the Agency had received reports

       that Corvo was:

       . . . the leader of an independent, well-equipped, heavily armed

       anti-Sandinista military unit consisting of approximately eight

       Cuban-Americans and 40 Nicaraguans based in Costa Rica along the

       Costa Rican-Nicaraguan border. Corvo was described by members of

       his unit as a dedicated anti-Communist and Bay of Pigs veteran who

       is unpredictable and violent. In November 85 [it was] reported

       that Corvo is an uncontrollable hothead and infamous for his

       drinking bouts in Costa Rica. He is a divisive element in the

       Southern Front armed force and has also absconded with equipment

       destined for the Southern Front to maintain his own force. He also

       divided equipment donated by Cuban-Americans between himself and

       Eden Pastora for whom the equipment was not intended. In Dec 85 it

       was reported that Corvo was involved with Frank Castro's drug

       activities in Costa Rica.

   434. According to an October 16, 1986 OCA MFR, CATF Chief Alan Fiers

       briefed Senator John Kerry on October 15, 1986 in response to

       questions Kerry had raised after an October 10, 1986 Fiers

       briefing regarding the Nicaraguan Resistance. According to the

       MFR, Fiers

       . . . passed a series of prepared sheets responding to the

       questions to Senator Kerry, who read each one carefully and

       occasionally asked additional questions. These sheets concerned: .

       . . Rene Corvo . . .

       Also found in the OCA file is a separate, undated MFR that,

       although not described as such, may have been a copy of what was

       passed to Kerry regarding Corvo. That MFR contained a detailed

       summary of the reporting in December 1984 that alleged Corvo was

       involved with Frank Castro in installing a cocaine processing

       laboratory in Costa Rica. It also detailed the December 1984

       reporting of possible drug-related travel by Corvo to Colombia and

       the allegations that the military infrastructure in Costa Rica was

       being used as a cover for narcotics trafficking. The summary also

       noted that a search of Agency records regarding Rene Corvo for the

       prior four years, including a complete listing of messages from

       other agencies concerning Corvo, had revealed no indication that

       Corvo had ever been "indicted, charged or arrested for narcotics

       trafficking."

   435. At the conclusion of this briefing, according to the OCA MFR,

       there was an exchange between Fiers and Kerry concerning the

       possible complicity of various Contra personalities in drug

       trafficking to finance weapons purchases. The MFR stated that:

       Fiers' position was that there was no Agency evidence to support

       this charge. Senator Kerry responded that while he accepted CIA

       might not have evidence to this effect, his own investigations

       have produced evidence to the contrary. Fiers said he would be

       interested in seeing this evidence and Senator Kerry implied he

       would make the evidence available to Fiers. 

       

                           Carlos Alberto Amador

                                      

   436. Background. Carlos Alberto Amador Perez was a pilot for the

       Southern Front Contra forces during the 1980s. Although he was

       based in Costa Rica, he flew missions from Ilopango air base in El

       Salvador to deliver materiel to Contra forces inside Nicaragua as

       well as northern Costa Rica.

   437. An August 1984 cable to Headquarters requested information

       concerning five new ARDE pilots, one of whom was Carlos Amador.

       The cable noted no derogatory information concerning the five

       pilots. Headquarters responded in an August 1984 cable that it had

       no information concerning Carlos Amador.

   438. A November 1984 cable to Headquarters identified Amador as the

       primary ARDE Islander aircraft pilot.

   439. A November 1984 cable to Headquarters identified Amador as one of

       ten investors in the 1981 creation of an aero taxi company at Los

       Brasiles airport in Nicaragua. According to the cable, the

       company, Alas De Nicaragua, S. A. (Alas), was a front for the FSLN

       and had five aircraft. As of October 1984, eight pilots, one of

       whom was a member of the Nicaraguan General Directorate of State

       Security (DGSE), were known to be working for Alas.

   440. A February 1985 cable to Headquarters focused primarily on

       Ricardo Roberto Espinoza Castro, but referred to Espinoza and

       Carlos Amador as "the two new FDN pilots."

   441. In an August 1985 Headquarters cable, Amador was described as "an

       exmember [sic] of the National Guard, [who] became disaffected by

       the FSLN's gradual takeover of [Alas] and dropped out." According

       to an April 1986 cable:

       Circa August to December 1984, Amador was flying the ARDE Islander

       on these flights and his copilot was Roberto Espinoza. Amador

       stopped flying for the [Southern Front] in early 1985 and worked

       with the FDN in Honduras for a short period. After this, he went

       into "private business."

   442. The drafter of this cable says that his use of the term "private

       business" was a euphemism that related to what he thought were the

       Private Benefactors. The term was not, he says, intended to

       suggest narcotics trafficking.

   443. Allegations of Drug Trafficking. A February 1985 cable reported

       that Ricardo Roberto Espinoza Castro had been formerly employed by

       David Mayorga, who was suspected of being involved with the

       Southern Front in narcotics trafficking. According to a November

       1984 cable, Espinoza had been flying and working with Amador. A

       July 1985 cable stated that Espinoza "was flying as a co-pilot and

       mechanic for Carlos Amador" in October 1984.

   444. A July 1985 cable indicated that David Mayorga had been overheard

       telling Carlos Amador on June 8 that a 150 kilogram shipment of

       cocaine that had been seized in a Cessna Citation near Barra Del

       Colorado, Costa Rica, was destined for Frudaticos to be packed

       into yucca for delivery to the United States. The cable also

       reported that an aircraft that was to be purchased by Sergio

       Sarcovik had been ferried by Amador from the United States to

       Panama and that Amador used Marcos Hernandez to " 'fix' flight

       plans for flights into/out of Panama area."

   445. An August 1985 cable to Headquarters stated that reportedly there

       had been an August 14 meeting that had involved four individuals

       at Pavas airfield near San Jose, Costa Rica. According to the

       cable, plans were made at that meeting to ferry two airplanes from

       Miami to Colombia and those planes were to be used in a drug

       smuggling operation at a future, but unspecified, date. Further,

       Amador was to ferry these aircraft from Miami to Colombia, via

       Belize and Panama, and was scheduled to depart San Jose for Miami.

       Reportedly, Amador was to fly a Cessna 206 to Colombia and then

       return for a Titan aircraft.

   446. Referencing the August 1985 cable, another cable was sent on

       August 1985 to Headquarters providing additional information

       regarding Amador. According to the cable, Amador was scheduled to

       fly a Cessna 206 from Miami to Costa Rica, via San Salvador and

       Belize. Alpa had an airfield near Liberia in Guanacaste Province

       "which is used to receive and transship drugs." According to the

       cable, the "drugs are brought up from Colombia through Panama up

       to Limon, Costa Rica and then on to Alpa's private strip near

       Liberia." The cable identified other persons involved as probably

       Gerardo Duran, Sergio and Jorge Zarcovich, Carlos Viques, and a

       fifth individual. The cable explained that the information was

       viewed as "suspect," that is, not necessarily true, but noted that

       all of the information in the cable had been passed to the local

       DEA office.

   447. In April 1986, a cable to Headquarters reported information from

       a March 18, 1986 DEA report regarding Carlos Amador. According to

       the cable, the DEA report noted that Amador had recently flown a

       Cessna 402 from Costa Rica to San Salvador where he had access to

       Hangar 4 at Ilopango air base. The cable also indicated that

       a"[DEA] source stated that Amador was probably picking up cocaine

       in San Salvador to fly to Grand Caymen [sic] and then to south

       Florida." The cable also reported that "[DEA] will request that

       San Salvador police investigate Amador and anyone associated with

       Hangar 4." The same cable included information from another DEA

       report, dated April 8, 1986, that linked Amador with Hangar 14 at

       Tobias Bolanos International Airport in San Jose. The cable also

       stated that Hangar 14 was allegedly owned by Sergio and Jorge

       Zarcovic. These two individuals reportedly were under DEA

       investigation in connection with a shipment of cocaine that was

       seized in Miami.

   448. A June 1986 cable to Headquarters requested information

       concerning Carlos Amador. According to the cable, an Embassy

       officer who served as the point of contact for the regional DEA

       officer requested any information concerning Amador. According to

       the cable, the regional DEA representative said that Amador was

       suspected of being heavily involved in narcotics smuggling. Also

       according to the cable, the DEA representative had explained that:

       Amador is a Nicaraguan who has a US passport, operates out of

       Costa Rica, allegedly is helping the Contras, frequently flies

       into Ilopango airport in San Salvador, and carries unspecified

       official credentials. No information was provided as to why Amador

       is suspected of narcotics trafficking. The Embassy officer said

       that if Amador is connected to [CIA], [DEA] will leave him alone,

       but if not they intend to go after him.

       As explained later, Headquarters responded to this request the

       following day.

   449. A September 1986 cable from a Latin American Station reported

       the:

       . . . names of two individuals linked with Carlos Amador, a

       Nicaraguan-born legal resident suspected of involvement in

       narcotics smuggling (subject of previous traffic). The two

       periodically fly with Amador from Colombia to El Salvador, and

       recently flew from El Salvador to Curacao under suspicious

       circumstances. (They carried several barrels of ether as cargo,

       and after departing San Salvador turned off their radio navigation

       equipment.)

       The cable identified the two as Colombian pilots Victor Hugo

       Torres and German Vanegas. A September 1986 cable from a Latin

       American Station and an October 1986 cable from Headquarters

       indicated no information concerning Victor Hugo Torres or German

       Vanegas.

   450. Three years later, in September 1989, a Headquarters cable

       referred to the September 1986 cable and stated that Amador was

       suspected of narcotics trafficking. The cable also linked Vanegas,

       described as holding a Colombian pilot license, with Carlos Amador

       and noted that Vanegas "periodically flies with Amador from

       Colombia to El Salvador."

   451. CIA Response to Allegations of Drug Trafficking. An April 1986

       cable responded to the April 1986 cable that had connected Amador

       to probable movement of cocaine to Grand Cayman and south Florida.

       The cable stated

       . . . . that the only thing Amador … transported during these

       flights [from Ilopango in late 1984] was military supplies. [It

       has been] reported that Amador did fly into Ilopango several times

       during 1985 in light twin engine aircraft on trips from [the U.S.]

       to either Costa Rica or Panama. [There were suspicions that] . . .

       Amador was involved with narcotics.

       The cable also stated:

       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. 

       No information has been found to indicate whether this information

       was shared with DEA or that any response was received from DEA

       regarding the request that DEA be asked to avoid inquiries

       regarding Hangar 4.

   452. The drafter of the April 1986 cable says that he does not recall

       whether he followed up on the drug allegations reported in the

       cable. However, he says he is certain that Amador did not pick up

       cocaine from Hangar 5 and he is not aware of Amador ever being

       inside Hangar 4. Further, he states that these Contra supply

       aircraft either dropped their cargo in Nicaragua, or landed and

       were unloaded in Costa Rica. He also says that, "We were still out

       there looking in aircraft. They were empty and they would load

       supplies." He also says, "I was not aware of anything else they

       carried in the aircraft."

   453. The drafter of that cable notes that another entity conducted

       operations from Hangar 4. He says he is not certain about the

       nature or affiliation of that entity, but surmises it may have

       been associated either with Oliver North, the Private Benefactors,

       or the Nicaraguan Humanitarian Assistance Office (NHAO). In any

       event, he says he had no contact with anyone associated with

       Hangar 4. As for his request that DEA be asked not to make any

       inquiries regarding activities in Hangar 4, the officer says his

       statement was not intended to thwart an investigation of

       activities in Hangar 4. He concedes, however, that the language in

       the cable could be read to suggest a meaning he did not intend.

   454. According to the drafter, Amador could have come to Ilopango and

       visited the civilian portion of the air base, and the credentials

       issued to him by the El Salvadoran Air Force would have been

       effective on that side of the base as well.

   455. The June 1986 cable to Headquarters that requested information

       concerning Carlos Amador also noted that an Embassy officer who

       served as the point of contact for the regional DEA officer had

       requested information concerning Amador. According to the cable,

       the regional DEA representative had said without further

       explanation that Amador was suspected of being heavily involved in

       narcotics smuggling but that DEA would leave him alone if he were

       connected with CIA. On June 1986, a response to the cable stated:

       A. In November 1984 a Carlos Amador was reported to be a pilot

       with ARDE.

       B. In 1984 a Carlos Amador (born 1937) was reported to have been

       one of the original investors of the "Alas De Nicaragua, S.A."

       aerotaxi company, based in Los Brasiles airport. This company was

       at that time a front organization for the Sandinista National

       Liberation Front (FSLN). Amador had been a member of the National

       Guard but became disaffected by the FSLN's gradual takeover of

       above company and dropped out.

       C. In 1985 a Carlos Amador was reported to be involved in a

       Colombia to Miami drug smuggling operation. He was to serve as the

       pilot.

   456. In June 1986, Headquarters responded to the cable of June 1986.

       The Headquarters response provided essentially the same

       information as the previous June response, but with the following

       additional details:

    . . . .

       4. In April 1986, [Amador], described as a former ARDE member,

       flew a Cessna 402 from Costa Rica to San Salvador where [Amador]

       has access to Hangar no. 4. It is believed that [Amador] was

       picking up cocaine in San Salvador to fly to Grand Caymen [sic]

       and then to south Florida. [Amador] has a valid Salvadoran

       government I.D. that allows [Amador] to operate freely in that

       country.

   457. Amador was one of many pilots flying into and out of Ilopango.

       Each of the pilots who flew into Ilopango in support of the

       Contras had an identity document, issued at the direction of the

       Salvadoran Air Force Commander, that would allow the pilot to fly

       into Ilopango without having to clear Salvadoran Customs. There

       was no CIA involvement in the issuance of these documents. No

       information has been found to indicate how Headquarters knew that

       Amador had such a credential in June 1986.

   458. Information Sharing With Other U.S. Government Entities. In

       August 1985, Headquarters responded to the cable of the same date

       that reported that Amador was planning to ferry aircraft from

       Miami to Colombia for use in a planned drug smuggling operation.

       The Headquarters response stated:

       1. This cable documents for the record [the authorization]. . . .

       to pass substance of [the August 1985 cable] to [DEA]/Miami. We

       will provide identical information to [DEA Headquarters].

       2. Carlos Amador is possibly identifiable with Carlos Amador

       Perez, a pilot of Nicaraguan citizenship. Per . . . . [cable]

       dated . . . . November 84, Carlos Amador Perez is an ARDE pilot.

       Per . . . . [cable] dated . . . . August 84 is [sic] part of the

       new ARDE structure. Per . . . . [cable] dated . . . . November 84,

       Carlos Amador Perez was one of the initial investors of the Alas

       De Nicaragua SA, an aerotaxi company, based at Los Brasiles

       airport, which served as a front for the FSLN. Carlos Amador

       Perez, an exmember [sic] of the National Guard, became disaffected

       by the FSLN's gradual takeover of the company and dropped out. Per

       . . . . [cable] 

       dated . . . . August 84, [Amador] was to travel with [an

       individual], piloting a Cessna with tail number "Titans." (Note:

       Titan is perhaps a model rather than number.)

       The Headquarters cable also provided information regarding Jorge

       Zarcovik, and three other individuals. No information has been

       found to indicate whether CIA Headquarters actually passed this

       information to DEA Headquarters.

   459. Referencing the August 1985 cable, a cable to Headquarters later

       in August 1985 provided additional information regarding Amador.

       According to the cable, Amador was scheduled to fly a Cessna 206

       from Miami to Costa Rica, via San Salvador and Belize, on August

       24, 1985. Alpa had an airfield near Liberia in Guanacaste Province

       "which is used to receive and transship drugs." The cable stated

       that the "drugs are brought up from Colombia through Panama up to

       Limon, Costa Rica and then on to Alpa's private strip near

       Liberia." The cable identified other persons involved as probably

       Gerardo Duran, Sergio and Jorge Zarcovich, and two other

       individuals. The cable explained that the information was viewed

       as "suspect," that is, not necessarily true, but noted that all of

       the information in the cable had been passed to the local DEA

       office.

   460. No information has been found to indicate that information

       concerning allegations of drug trafficking by Amador was shared

       with the Congress.

       

                            Jose Orlando Bolanos

                                      

   461. Background. Jose Orlando Bolanos was a Nicaraguan who resided in

       the United States as a young man, was sent to a youth reformatory

       in New Jersey in the mid-1950s for one year for breaking and

       entering, served in the U.S. Air Force for six years, was

       convicted of burglary in New Jersey, and was deported in December

       1961.

   462. According to Agency records, Bolanos fled Nicaragua in mid-1979.

       Bolanos claimed in June 1981 that he was UDN's principal fund

       raiser and that he had elicited the support of the Argentine

       Government to support his anti-Sandinista activities.

   463. According to an August 1982 cable to Headquarters, Bolanos had

       said in June 1982 that he did not see the possibility of a

       Nicaragua free of communism and had retired from active

       participation in anti-Sandinista activities.

   464. A January 1989 cable to Headquarters reported that the FBI office

       in Tallahassee had provided Bolanos' name. Following a review of

       Agency records, Headquarters responded in a February 8, 1989 cable

       that provided a summary of information relating to Bolanos from

       Agency files. The summary included information regarding Bolanos'

       prior criminal record and his alleged involvement in a potential

       drug-related transaction in 1982--discussed further below.

   465. Allegations Of Drug Trafficking. A May 1982 cable reported to

       Headquarters that a DEA report indicated Bolanos had met in

       January 1982 with undercover DEA agents in Florida for the purpose

       of negotiating the sale of 1,000 kilograms of cocaine. Bolanos was

       reported to have asked for $25,000 to cover the expenses of

       introducing the undercover DEA agents to the Bolivian supplier of

       the cocaine.

   466. The cable added Bolanos was considered to be "strongly anti-drug

       but at the same time as an operator committed to the Nicaraguan

       counter revolution" and that Bolanos "is attempting to garner

       expense money to continue his fund raising efforts for the counter

       revolution."

   467. An officer says he recalls the 1982 DEA report and his May cable,

       and comments that Bolanos told him about a "scam" Bolanos was

       going to participate in to raise "expense money." The officer says

       it is his opinion that the events described in the May cable

       pertained to the scam and that Bolanos' intent was not to engage

       in drug trafficking but to " . . . take the [$25,000] and run."

   468. CIA received other allegations of possible illegal conduct by

       Bolanos unrelated to drug trafficking:

          + A February 1982 FBI report stated that Bolanos had claimed

            that a group of anti-Sandinistas he was affiliated with was

            responsible for a lethal bomb attack on the Nicaraguan

            Embassy in El Salvador.

          + In May 1986, a cable reported to Headquarters that Bolanos

            was implicated in an FBI investigation into a 1981 shipment

            of "light weapons" from Miami to "anti-Sandinista forces."

            The cable did not state whether Bolanos was the subject of

            the investigation.

   469. A December 23, 1992 U.S. Embassy/Guatemala telegram to DoS--with

       an information copy to the FBI--discussed a visa request by

       Bolanos. Citing information provided to the U.S. Embassy via a

       telephone call from a U.S. law enforcement agency, the Embassy

       telegram described Bolanos as someone who " . . . has been and

       continues to be extremely valuable to [two] government

       agenc[ies]."

   470. The Embassy telegram also referred to a Bolanos claim in an

       interview with a U.S. Embassy official that he had worked with the

       FBI on a plan to bring a controlled delivery of cocaine from

       Bolivia to Guatemala for eventual shipment to the United States.

       The telegram cited Bolanos as claiming that he " . . . did not

       want to miss an opportunity to secure extra funds for the Contras"

       and that "his assistance would contribute to the war on drugs (a

       personal passion) . . . ." Bolanos claimed, according to the

       telegram, that he " . . . . would [in return] keep the advance

       payment on the first delivery for transfer to the Contra

       organization."

   471. CIA Response to Allegations Of Drug Trafficking. In response to

       the May 1982 cable, Headquarters attempted to obtain from DEA

       Headquarters a copy of the report regarding Bolanos' meeting with

       undercover DEA agents to negotiate a cocaine sale. When this was

       unsuccessful, CIA asked a field Station to send a copy. No

       information has been found to indicate that CIA received a copy of

       the DEA report or took any other action in response to the

       allegations that had been received from DEA in 1982.

   472. Information Sharing with Other U.S. Government Entities. All

       allegations of possible drug trafficking by Bolanos were received

       by CIA from other U.S. Government entities. On February 7, 1982,

       DEA requested that CIA conduct a records check on Bolanos in

       connection with "an ongoing investigation" of an unspecified

       nature. CIA's February 1982 response provided information

       pertaining to Bolanos' anti-Sandinista activities and other

       biographic information that included his early criminal activity

       in the United States in the 1950s and 1960s. CIA also advised DEA

       to contact the FBI and DoS for additional information regarding

       Bolanos.

   473. The May 1982 allegation from a DEA report that Bolanos met with

       undercover DEA personnel to discuss a cocaine transaction in

       January 1982 was discussed in a January 21, 1987 Memorandum

       concerning alleged Contra drug trafficking connections that was

       coordinated with other Intelligence Community agencies and DEA.

       This Memorandum was prepared in response to a request from Morton

       Abramowitz, the DoS Assistant Secretary for Intelligence and

       Research at the time, for allegations in CIA's possession

       regarding connections between the Contras and drug traffickers.

       The Memorandum noted that Bolanos had been offered expense money

       by undercover law enforcement officers in connection with the

       proposed cocaine transaction, but had refused and the transaction

       was never consummated.

   474. A March 31, 1988 OCA MFR indicated that, on March 29, 1988, SSCI

       Staff Director Sven Holmes was provided a copy of the January 21,

       1987 Memorandum that had been sent to Ambassador Abramowitz. A May

       18, 1988 letter to the DCI from SSCI Chairman David Boren and Vice

       Chairman William Cohen indicated that the SSCI had "determined to

       commence an inquiry into those aspects of the narcotics

       trafficking problem in Latin America that fall within the

       Committee's jurisdiction." A June 6, 1988 DO position paper

       prepared for OCA in response to questions posed in the SSCI letter

       that were to be discussed in a June 8, 1988 meeting between CIA

       officials and SSCI Staff indicated that allegations against

       Bolanos were discussed in the January 21, 1987 Memorandum. The DO

       position paper did not describe the specific allegations against

       Bolanos.

   475. No information has been found to indicate that CIA officials

       discussed the drug trafficking allegations against Bolanos at the

       June 8, 1988 meeting with SSCI Staff members. A June 9, 1988 DO

       MFR describing the meeting did not refer to the Bolanos

       allegations.

   476. Subsequent to the February 1989 cable noting the FBI had provided

       Bolanos' name, a February 1989 Headquarters cable authorized

       passage to the FBI the "substance" of the file summary that

       Headquarters had provided in its February cable. The February

       Headquarters cable made clear, however, there was no authorization

       to pass any information to the FBI office relating to the January

       1982 meeting between Bolanos and undercover DEA personnel.

       Instead, there were instructions to "advise [the FBI office] that

       they may wish to check with [DEA] for further information."

   477. Markings on a December 2, 1992 unclassified U.S.

       Embassy/Guatemala telegram relating to a visa request by Bolanos

       indicate that the Agency informed DoS on March 19, 1993 that it

       should " . . . refer to the FBI, DEA and INS for possible

       information on Subject, as well as the [State] Department's own

       files."

   478. A May 1993 cable to Headquarters reported that the Immigration

       and Naturalization Service (INS) was conducting an investigation

       into allegations that Bolanos was engaged in cocaine trafficking,

       arms smuggling and illegal immigrant smuggling into the United

       States. The cable did not provide any specific information

       regarding the allegations, but asked Headquarters to provide

       information from Agency files pertaining to Bolanos that could be

       shared with the INS office.

   479. Headquarters responded in a June 1993 cable indicating that,

       since Bolanos was the target of a criminal investigation in the

       United States, information in CIA files pertaining to Bolanos

       should be disseminated "at Headquarters level." Nevertheless, a

       June 1993 cable from Headquarters provided a brief file summary

       relating to Bolanos' prior criminal record and his business

       interests and indicated approval to pass this file summary to INS.

       Moreover, the Headquarters cable stated that "INS should also be

       referred to DEA and the FBI for additional information . . .

       relating to Bolanos." However, the following day Headquarters sent

       a cable directing that the summary be used for internal purposes

       only and reiterated that INS should direct its inquiry to

       Headquarters. No information has been found to indicate any

       communications between INS and CIA Headquarters in this regard.

       

                                Moises Nunez

                                      

   480. Background. During the 1980s, Cuban-American Moises Nunez was

       affiliated--either as an owner or a senior manager--with three

       seafood companies: Productos Del Atlantico in Limon, Costa Rica;

       Ocean Hunter/Mr. Shrimp in Miami; and Frigorificos De Puntarenas

       in Puntarenas, Costa Rica. Frigorificos was among the companies

       that were used by the Department of State in the mid-1980s to

       channel humanitarian aid to the Contras. In the mid-1980s, Nunez

       was also a narcotics officer with the Government of Costa Rica.

   481. Allegations of Drug Trafficking. According to a November 10, 1986

       DEA Investigation Report, the DEA office in Costa Rica had, over

       two or three years, "received information from various sources

       regarding Nunez' alleged involvement in cocaine smuggling through

       Frigorificos De Puntarenas." The DEA Report noted that Nunez had

       entered the United States from Costa Rica in late 1985 in the

       company of a documented money launderer and that Nunez' name had

       been found among the personal papers of an individual arrested in

       connection with the seizure of cocaine.

   482. The November 1986 DEA report also cited "hearsay" information

       obtained from two sources who alleged that cocaine was flown from

       Colombia to Costa Rica, where it was unloaded at airstrips owned

       by John Hull and another U.S. citizen. The cocaine was then

       reportedly transported to Frigorificos for shipping as frozen

       seafood to Ocean Hunter/Mr. Shrimp in Miami. These sources

       identified Nunez and Frank Chanes as running the Frigorificos

       operation. No information has been found to indicate that either

       this November 1986 DEA Report or the information on which it was

       based was made available to CIA at that time.

   483. A September 1984 cable to Headquarters indicated a request had

       been made for traces concerning Nunez from the DEA. The cable

       indicated the response received was "no derogatory results from

       these traces," although no information has been found to indicate

       that the Agency requested traces on Nunez from DEA Headquarters at

       that time.

   484. A Headquarters cable in April 1986 provided a synopsis of an

       April 11 article in The Washington Post regarding an FBI probe

       into allegations that the Contras and their U.S.-based supporters

       were engaged in arms smuggling and narcotics trafficking. The last

       paragraph of the article noted that one Contra cocaine smuggling

       operation centered on an unnamed leading member of the 2506

       Brigade who owned a seafood export business he was allegedly using

       to smuggle cocaine into the United States. An April 1986

       Headquarters cable indicated that Headquarters believed Chanes was

       the individual referred to in this paragraph of The Washington

       Post story.

   485. American journalists Martha Honey and Tony Avirgan filed suit in

       U.S. federal court in May 1986 against individuals whom they

       alleged had been involved in the 1984 La Penca bombing and in drug

       trafficking to support the Contras. Nunez was among those named in

       the suit, the details of which were obtained at the time by CIA.

   486. According to the December 1988 Report of the Senate Foreign

       Relations Committee's Subcommittee on Terrorism, Narcotics and

       International Operations, titled "Drugs, Law Enforcement and

       Foreign Policy," Senator John Kerry had advised CIA, the Justice

       Department, DEA, State Department, and the NHAO in May 1986 of

       allegations he had received that Luis Rodriguez and his

       companies--Frigorificos and Ocean Hunter--were involved in money

       laundering and drug trafficking. No record has been found to

       indicate that CIA ever received this information from Senator

       Kerry.

   487. CIA Response to Allegations of Drug Trafficking. Immediately

       following the April 11, 1986 Washington Post story, a Headquarters

       cable asked for a determination to be made concerning the nature

       of the business relationship between Nunez and Chanes. The April

       response noted that the source of the information contained in the

       FBI report that was cited as the basis for The Washington Post

       story was Jack Terrell. It was noted that it had been reported

       many times that "Chanes is a close personal friend and business

       associate" of Nunez.

   488. An April 1986 response from Headquarters stated that the basis

       for the Agency's concern about Nunez was FBI information

       indicating that Chanes and "his partner" had offered the Civilian

       Military Assistance Group ten percent of the profits from the sale

       of frozen lobster. The cable indicated that this allegation,

       coupled with The Washington Post claim that one of the cocaine

       traffickers owned a seafood business, could cause trouble for

       Nunez if Chanes should be involved in "illegal activity."

       Headquarters acknowledged that it was aware of the Nunez-Chanes

       business relationship, but stated that it had no record of the

       precise nature of that relationship.

   489. A September 1986 Headquarters cable contained information from

       CIA files concerning Chanes. Among the reports cited was a January

       1986 cable reporting that DEA had seized over 400 pounds of

       cocaine that was concealed in cargo addressed to Ocean Hunter. The

       cable noted, however, that "there is no information to

       substantiate or refute that Chanes was either directly or

       indirectly involved in drug trafficking." No information has been

       found in CIA records to indicate that Chanes was ever arrested for

       or charged with drug trafficking.

   490. On March 25, 1987, CIA questioned Nunez about narcotics

       trafficking allegations against him. Nunez revealed that since

       1985, he had engaged in a clandestine relationship with the

       National Security Council (NSC). Nunez refused to elaborate on the

       nature of these actions, but indicated it was difficult to answer

       questions relating to his involvement in narcotics trafficking

       because of the specific tasks he had performed at the direction of

       the NSC. Nunez refused to identify the NSC officials with whom he

       had been involved.

   491. Headquarters cabled in April 1987 that a decision had been made

       to "debrief" Nunez regarding the revelations he had made. The next

       day however, a Headquarters cable stated that "Headquarters has

       decided against . . . debriefing Nunez." The cable offered no

       explanation for the decision.

   492. Then-CATF Compliance Officer and Policy and Plans Chief Louis

       Dupart does not recall why the decision was made not to send

       anyone to debrief Nunez. He says, however, that the Agency

       position was not to get involved in this matter, and to turn it

       over to others because "it had nothing to do with the Agency, but

       with the National Security Council. We. . . . told Congress and

       [Independent Counsel for Iran-Contra] Walsh. That's all we had to

       do. It was someone else's problem."

   493. Information Sharing with Other U.S. Government Entities.

       According to an April 13, 1987 MFR written by OCA's David

       Pearline, CIA Counterintelligence Chief Gus Hathaway and Dupart

       briefed Senators Rudman and Cohen of the Senate Select Committee

       on Secret Military Assistance to Iran and Nicaraguan Opposition on

       April 10, 1987 regarding Nunez' claim of his involvement with the

       NSC. Rudman and Cohen reportedly asked that the Senate Committee

       Staff interview Nunez on these matters. Dupart offered to

       facilitate an interview in a third country. No information has

       been found to indicate whether such an interview occurred.

   494. In his written response to CIA/OIG questions, Fiers states that

       he does not recall "precisely" why no one was sent to debrief

       Nunez. However:

       My recollection is that because of the NSC connection and the

       possibility that this could be somehow connected to the Private

       Benefactor program (otherwise known as the Iran Contra affair) a

       decision was made not to pursue this matter, but rather to turn it

       over to Judge Walsh [the Independent Counsel for Iran-Contra]. I

       don't recall exactly the decision making process; it is my

       recollection, however, that this was a group/consensus decision.

       Perhaps legal records will shed more light on this. 

   495. In September 1987, Nunez was interviewed in San Jose. The

       interview report indicated that Nunez denied any relationship with

       the NSC or with anyone doing work for the NSC. The report made no

       mention of drug trafficking. A February 1988 CIA memorandum

       indicated that information on Nunez was turned over to the

       Iran-Contra OIC in response to its requests for information

       relating to its investigation.

   496. In a December 12, 1991 memorandum, the DEA Administrator

       requested information from CIA concerning Nunez and any

       association he may have had with the Agency, indicating that Nunez

       had become involved in a criminal investigation. The U.S. Customs

       Service sent a request to CIA for information concerning Nunez on

       December 17, 1992. The Agency's responses to DEA on December 13,

       1991 and to Customs on December 14, 1992, respectively, made no

       mention of Nunez' possible involvement in drug trafficking,

       although Customs was referred to the Agency's Office of Security

       (OS) for additional information. No information has been found to

       indicate any further request from, or any further response to, DEA

       or the Customs Service in regard to Nunez.

       

                              Gustavo Quezada

                                      

   497. Background. Gustavo Quezada Acuna, also known as "Waykie," was a

       former Chief of Transportation in the Nicaraguan Air Force who

       left Nicaragua in March 1982 and was granted political asylum in

       the United States. Quezada joined the FDN air arm in early 1985.

   498. Allegations of Drug Trafficking. A March 1985 cable to

       Headquarters relayed information regarding connections between

       Contra figures and the Miami-based drug trafficker Jorge Morales.

       Contra and Costa Rican pilots were making drug flights for Morales

       in accordance with an agreement between Morales and "Popo"

       Chamorro. Reportedly Quezada and Gerardo Duran had been in contact

       with Morales and had made flights for Morales. The implication was

       that the flights that Quezada and Duran were making for Morales

       were drug-related, but the cable did not specifically state this.

   499. In a March 1985, a cable informed Headquarters that there were

       "rumors" among the Contras that Quezada "had become involved with

       narcotics traffickers." In addition, the local DEA representative

       had indicated that Quezada was "definitely in contact with known

       narcotics traffickers" and was involved in activities that had

       resulted in DEA confiscation in the United States of an aircraft,

       400 kilograms of cocaine and U.S. currency. The nature of

       Quezada's "involvement" or "contact with known narcotics

       traffickers" was not specified in the cable. The March cable did,

       however, offer the opinion that there was "no evidence at this

       time connecting [Quezada's] activity with [Pastora's] narcotics

       operation."

   500. A May 1987 U.S. Customs Service response to a CIA trace request

       stated that a 1986 Treasury Department record referred to

       Quezada's alleged involvement in narcotics smuggling via aircraft.

       No information has been found to indicate whether this information

       was based on the same allegations that were reported by DEA in

       March 1985, or on other activities by Quezada.

   501. CIA Response to Allegations of Drug Trafficking. The March 1985

       cable to Headquarters indicated that Quezada had provided both

       verbal and written reports in his defense. The cable noted,

       however, the written report had been reviewed and found not to

       address the allegation that he had been involved in activities

       relating to the DEA seizure of 400 kilograms of cocaine in the

       United States. The written report provided by Quezada had been

       shared, according to the cable, with the DEA Country Office.

   502. The March 1985 cable also expressed the opinion that whether

       Quezada was "a witting or unwitting accomplice [in drug

       trafficking] has yet to be determined, although all indications

       are pointing towards [Quezada] being aware of more significant

       information" than he had provided in his report. The cable

       indicated that CIA was sending a representative to a meeting

       between Quezada and representatives of a U.S. law enforcement

       agency in an effort to obtain his cooperation.

   503. A March 1985 cable reported to Headquarters that Quezada had met

       and agreed to cooperate with a U.S. law enforcement agency. The

       cable reported that the DEA representative had said that Quezada

       "possibly was unwitting of the recent narcotics trafficking

       activity as arrests and confiscation of materiel [sic] occurred

       after [Quezada] had broken contact." The cable reported that DEA

       would continue investigating to clarify Quezada's involvement in

       illegal activities in the United States.

   504. In May 1985, a cable informed Headquarters that Quezada had been

       contacted by the "infamous Gerardo Duran" and that Duran had told

       Quezada that Marcos Aguado--a pilot for Pastora--wanted to talk to

       Quezada.

   505. No information has been found to indicate that any further action

       was taken by CIA to resolve these allegations. No information has

       been found to indicate that CIA was ever advised after March 1985

       of the results of the DEA investigation into Quezada's possible

       involvement in drug trafficking.

   506. Information Sharing with Other U.S. Government Entities.

       According to cables reporting in March 1985, CIA and DEA officials

       met to discuss the allegations against Quezada. DEA was the source

       of the most specific allegations received by CIA regarding drug

       trafficking on the part of Quezada. CIA reportedly assisted the

       local DEA representative in gathering information that would

       clarify the validity of the allegations.

   507. No information has been found to indicate that information

       relating to allegations of drug trafficking by Quezada was

       provided to Congress by CIA.

       

                                Felipe Vidal

                                      

   508. Background. Felipe Vidal del Calvo, a Cuban-American, was

       associated with John Hull and, Moises Nunez.

   509. Vidal served as a logistics coordinator for the Contras. In

       November 1988, Vidal became an independent contractor for the

       Agency, continuing to work with the Contras.

   510. His employment with CIA was terminated in February 1990 because

       he had been linked in the Costa Rican press to the La Penca

       bombing. This media attention had, according to a January 1990

       cable to Headquarters, "raised his profile to an unacceptable

       level."

   511. Allegations of Drug Trafficking. A June 1986 FBI response to a

       trace request by CIA indicated that he had been convicted in Miami

       of several felonies between 1969 and 1980, including a 1971

       conviction for conspiracy to violate U.S. narcotics laws. The FBI

       response also indicated Vidal had been arrested in January 1977

       for selling marijuana and conspiracy to sell marijuana, although

       those charges had been dismissed. Vidal's complete arrest record

       was included in the Agency's Office of Security (OS) file

       regarding him. Other CIA records included a reference to his

       conviction for illegal possession of a firearm, but included no

       mention of his 1971 conviction, or 1977 arrest, in connection with

       narcotics trafficking.

   512. A December 1984 cable reported to Headquarters that Vidal had

       ties to Rene Corvo, a Cuban-American who might be involved in drug

       trafficking with Frank Castro. A June 1986 MFR written by CATF's

       Costa Rica desk officer concerning Vidal noted that Vidal had

       helped Corvo raise funds in Miami for the Contras and that he had

       joined Corvo's Cuban-American brigade in Costa Rica in mid-1983.

       This relationship ended in mid-1984, according to the MFR.

   513. In May 1986, American reporters Martha Honey and Tony Avirgan

       filed a civil suit against Vidal, Hull, Nunez, Adolfo Calero, and

       others, alleging that they were behind the 1984 La Penca bombing

       attempt on Eden Pastora's life and were funding their conspiracy

       through cocaine trafficking. These allegations were widely

       publicized in the U.S. and Costa Rican media. In 1990, a new round

       of press accounts, published in connection with a Costa Rican

       Public Ministry report on the bombing, identified Vidal and Hull

       as the masterminds behind the plot and said that the official

       report had called for charging the two with murder.

   514. CIA Response to Allegations of Drug Trafficking. A June 1986

       internal CIA OS memorandum noted that FBI trace results regarding

       Vidal "reflect an assortment of assault, robbery, narcotics and

       firearms violations." No information has been found to indicate

       that the information regarding Vidal's record that was made

       available to OS by the FBI was shared outside OS.

   515. CATF Compliance Officer Louis Dupart says that he was not aware

       of Vidal's 1971 conviction for narcotics trafficking, but notes

       that the OS would not have shared the arrest record with the DO

       because Vidal was a U.S. person. Dupart states that he would have

       questioned whether "we need this guy" had he known about Vidal's

       arrest record at the time of his recruitment.

   516. CATF Chief Fiers, in his written response to CIA/OIG questions

       states that he:

       . . . was aware that [Vidal] had a record of misbehavior and

       general thuggery as youth. I do not recall nor do I believe that

       it was ever mentioned that this included a drug conviction. 

   517. The June 1986 memorandum from OS stated that Vidal had completed

       a favorable security interview in February 1986.

   518. In January 1987, CATF advised the Station by cable that Vidal

       should have another security interview to determine whether he was

       involved with drug traffickers. Although the CATF cable dismissed

       the allegations in the Costa Rican press as a "rehash of

       Honey/Avirgan stories," it noted that it would be "prudent" to

       reexamine Vidal.

   519. Vidal was interviewed again by CIA Security in January 1987.

       According to a February 11, 1987 report, CIA Security did not have

       concerns about Vidal's alleged involvement in drug trafficking,

       since being involved in the Contra movement. On the basis of this

       report, a February 1987 Headquarters cable indicated that CATF had

       provided Vidal with documentation so he could continue working for

       CIA.

   520. In July 1987, CATF cable cited two worrisome concerns about

       Vidal. The first was that Vidal recently listed his former

       employer as Ocean Hunter, a firm allegedly linked to narcotics

       trafficking activity. Second, Vidal had recently been mentioned

       several times "by true name" in television and news commentaries

       regarding Contra involvement in narcotics trafficking.

   521. A July 1987 cable responded to Headquarters that the "negative

       repercussions" from Vidal's past employment with Ocean Hunter were

       balanced by the fact that he had favorable security interviews,

       and there were other indications of his reliability. In July 1987,

       the LA Division Chief asked OS to continue security processing. An

       August 10, 1987 response indicated that the Director of Security

       declined to continue security processing and that OGC had

       concurred in that decision.

   522. An August 5, 1987 memorandum explained OGC's reasoning for its

       concurrence in not continuing security processing involving Vidal

       again. According to the memorandum, Associate Deputy General

       Counsel Gary Chase advised against further security processing of

       Vidal because "narcotics trafficking relative to Contra-related

       activities is exactly the sort of thing that the U.S. Attorney's

       Office will be investigating." Thus, Chase reportedly expressed

       "concern over the possibility that the [security] process . . .

       could be exposed during any future litigation."

   523. No information has been found to indicate that Vidal was

       questioned a third time by the Office of Security. According to an

       August 1987 cable, however, Vidal was questioned by a CATF

       attorney in "July/August 87" regarding allegations of Contra

       involvement in drug trafficking. According to the cable, Vidal's

       answers satisfied the attorney. CATF Compliance Officer Dupart

       recalls that he was the attorney and that he was satisfied that

       Vidal had not been involved in drug trafficking during his

       relationship with CIA.

   524. In January 1990, after Vidal had again been accused in the Costa

       Rican press of being involved in the La Penca bombing,

       Headquarters decided to end his employment.

   525. Information Sharing with Other U.S. Government Entities.

       According to the December 1988 Report of the Senate Foreign

       Relations Committee's Subcommittee on Terrorism, Narcotics and

       International Operations, Senator John Kerry had informed CIA, DoJ

       and the Nicaraguan Humanitarian Assistance Office in May 1986 of

       allegations that Luis Rodriguez and two of his

       companies--Frigorificos De Puntarenas and Ocean Hunter (which

       employed Vidal in 1985)--were involved in drug trafficking. No

       information has been found to indicate that CIA ever received this

       information from Kerry.

   526. A January 1986 cable provided a biographic profile of Vidal to

       Headquarters. The profile included information that Vidal had been

       employed by Ocean Hunter in 1985. However, no information has been

       found to indicate that CIA was aware of Ocean Hunter's link to

       drug trafficking until a September 1986 Headquarters cable noted

       that DEA had seized 414 pounds of cocaine in Miami in January 1986

       that was concealed in a shipment of yucca from David Mayorga and

       was "allegedly addressed to Ocean Hunter, Inc."

   527. According to an October 16, 1986 MFR written by OCA's Deputy

       Director of Senate Affairs Alvin K. Dorn, CATF Chief Fiers briefed

       Senator John Kerry on October 15. The MFR indicated that Fiers

       provided Kerry with several "prepared sheets" responding to

       questions raised by Kerry following an October 10 Fiers briefing.

       One of the sheets provided information concerning Vidal, including

       his employment with Ocean Hunter, his relationship with Rene Corvo

       and his two convictions for illegal possession of firearms in the

       early 1970s. There was no mention in this sheet, however, of

       Vidal's arrests and conviction for drug trafficking.

   528. According to a July 10, 1987 OGC memorandum, the U.S. Attorney's

       Office for the Southern District of Florida was investigating

       neutrality and gun running violations by Contra-related

       individuals and was concerned that some of these individuals would

       "allege that they were conducting their activities on behalf of

       CIA or the National Security Council" if they were indicted.

       Consequently, in order to determine whether such a defense "would

       have any viability," the U.S. Attorney's Office had requested that

       CIA provide "any documents" in its possession "which report on the

       Contra-related activities" of 18 named individuals and companies.

       Vidal and Ocean Hunter were among the names on the U.S. Attorney's

       list. The OGC memorandum requested that the DO indicate whether

       CIA had a relationship with any of these individuals or companies.

       Handwritten notations on the list indicated that the DO advised

       OGC that no information had been found regarding Ocean Hunter. No

       information has been found to indicate why information in CIA

       files pertaining to Ocean Hunter was not reported to OGC at this

       time or whether the incomplete information was provided to the

       Florida U.S. Attorney's Office.

   529. A September 1988 Headquarters cable indicated that the

       Iran-Contra Independent Counsel had requested in April 1988 an

       interview with Vidal in connection with its prosecution of CIA

       employee Joseph Fernandez. The cable requested that the Station

       verify whether it had informed Vidal of the Independent Counsel's

       request in April. A September cabled response to Headquarters

       indicated that Vidal had been informed of the Independent

       Counsel's request, and that he had refused to meet with the

       Independent Counsel. Nonetheless, a March 1989 memorandum to

       then-General Counsel Russell Bruemmer from an OGC attorney

       indicated that CIA was trying to persuade Vidal to consent to an

       interview with the Independent Counsel and that consideration was

       being given to paying any legal expenses Vidal might incur. No

       information has been found to indicate whether Vidal ever met with

       the Independent Counsel.

     _________________________________________________________________

   

   [BACK]

   

   [BACK]

   

                           NORTHERN FRONT CONTRAS

     _________________________________________________________________

   

   What drug trafficking allegations was CIA aware of, and when,

   involving Northern Front Contras? How did CIA respond to this

   information, and how was this information shared with other U.S.

   Government entities?

   

                               Adolfo Calero

                                      

   530. Background. Adolfo Calero Portocarrero, an American-educated

       businessman and politician, was originally active--as were many

       other Nicaraguan political figures who went on to become Contra

       leaders--in working to bring down the regime of Anastasio Somoza.

       After Somoza's ouster in 1979, U.S. Embassy officials reported

       from Managua that Calero initially sought to work with the FSLN

       Government, claiming that all sectors needed to contribute to the

       political and economic reconstruction of Nicaragua. However,

       Calero had publicly criticized the Sandinistas by late 1980 for

       "setting themselves up as gods." In December 1982, he left

       Nicaragua in protest of FSLN policies.

   531. On leaving Nicaragua, Calero joined the FDN and became a member

       of its leadership. In January 1983, he traveled to Panama, Costa

       Rica and Colombia to seek support. That same month, he helped

       draft a FDN peace initiative calling for elections, pluralism,

       nonalignment in foreign affairs, and respect for individual and

       human rights. Calero later became President and Commander-in-Chief

       of the FDN, the preeminent Contra group that pursued resistance

       activities on the Northern Front from bases in Honduras.

   532. When pressures to unify the Contra forces led to the creation of

       UNO in mid-1985, Calero--along with Arturo Cruz and Alfonso

       Robelo--was named to share authority and decision making control

       of the military effort. Disputes with Cruz and Robelo led to

       Calero's resignation from the UNO leadership in early 1987.

       However, with the founding of a successor coalition, the

       Nicaraguan Resistance (RN), in May of that year, Calero was

       restored to a senior leadership position. In that position, Calero

       differed with Enrique Bermudez, the RN military commander, over

       strategies for cease fire negotiations.

   533. Allegations of Drug Trafficking. A number of Central American

       publications and public figures mentioned the Northern Contra

       Front forces in the context of broad-based charges of drug

       trafficking by the Contras. A cable informed Headquarters in

       February 1988 that a Nicaraguan exile had alleged at a meeting in

       Miami, Florida, that Enrique Bermudez, Adolfo Calero, Aristides

       Sanchez, and another individual were all involved in drug

       smuggling. The purpose of the meeting in Miami at which this

       allegation was made was to invite former Nicaraguan National Guard

       members to return to Nicaragua under a Sandinista amnesty program.

       The Nicaraguan exile reportedly offered no substantiation for his

       allegations. According to the cable, he had been characterized by

       both a U.S. law enforcement source and CIA as mentally unstable.

   534. CIA Response to Allegations of Drug Trafficking. According to a

       February 1988 Headquarters cable, CIA records were searched in

       February 1988 regarding the Nicaraguan exile in response to his

       allegations that Calero and other UNO/FDN leaders had engaged in

       drug smuggling. The cable indicated that a number of sources

       characterized him as unstable, a swindler and as having a

       reputation of being a drug dealer in Nicaragua before leaving that

       country in 1983.

   535. Information Sharing with Other U.S. Government Entities. In

       February 1988, the information contained in the February 1988

       cable concerning the drug trafficking allegation by the Nicaraguan

       exile against Calero and other Contra leaders was forwarded by CIA

       to the FBI.

   536. No record has been found to indicate that the allegation received

       by CIA regarding Calero and drug trafficking was reported to

       Congress.

       

                              Enrique Bermudez

                                      

   537. Background. Enrique Bermudez Varela served as an officer in the

       Nicaraguan National Guard Corps of Engineers from 1952-1979.

       During his military career, he was a student at the U.S. Army

       School of the Americas, the U.S. Army Command and General Staff

       College and the Inter-American Defense College. After completing

       his study at the Inter-American Defense College, Bermudez was

       assigned as the Nicaraguan Defense AttachÈ in Washington from 1976

       to 1979. During that period, Bermudez was openly critical of the

       Somoza Regime and its General Staff.

   538. Subsequent to the Sandinistas' consolidation of control in

       Nicaragua as the Government of National Reconstruction (GRN),

       Bermudez was identified in the first half of 1980 as the "War

       Chief" of the anti-Sandinista organization, Democratic Armed

       Force. In the spring of 1981, Bermudez was identified as the Chief

       of the Military arm of the Nicaraguan Democratic Revolutionary

       Alliance (ADREN), the 15th of September Legion. In September 1981,

       the ADREN merged with the Nicaraguan Democratic Union (UDN) and

       formed the Nicaraguan Democratic Force (FDN).

   539. Bermudez was ousted as the FDN's Chief of General Staff in late

       1982 as part of the restructuring of the FDN, and he was then

       appointed the "Political-Military Coordinator" of the FDN

       Directorate with responsibility for oversight of the FDN's

       military organization. Nevertheless, he remained the de facto

       leader of the FDN military organization. In January 1983, he

       identified himself as the FDN directorate member responsible for

       military affairs and effectively the "Commander-in-Chief" of FDN

       forces. In February 1984, the FDN General Staff was abolished and

       replaced by a combined Civil-Military command with Adolfo Calero

       as Commander-in-Chief and Enrique Bermudez as Chief, Military

       Affairs.

   540. Throughout the 1980s, Bermudez was dogged by attacks on his

       leadership and by accusations that he was a Somoza supporter and

       that he had attempted to recruit former Nicaraguan National Guard

       personnel into the FDN. Bermudez was finally ousted by the Army of

       the Nicaraguan Resistance (ERN)/North General Staff from his

       position as the resistance's senior military leader in February

       1990.

   541. On February 16, 1991, Bermudez was assassinated in Managua,

       Nicaragua. Speculation was widespread that he was killed by

       Sandinista supporters.

   542. Allegations of Drug Trafficking. A September 1981 cable informed

       Headquarters that reportedly Bermudez had advised the ADREN

       leadership against engaging in drug smuggling to the United

       States, but that a decision had been made to pursue such

       activities to finance ADREN's anti-Sandinista operations.

       Reportedly, as a result, an initial effort was made in July 1981

       when an ADREN member carried cocaine to Miami aboard a commercial

       flight. Although Bermudez was the ADREN Military Chief and a

       member of the ADREN leadership, there was no indication that he

       was directly involved in such activities.

   543. A February 1988 cable informed Headquarters that a Nicaraguan

       exile had alleged at a meeting in Miami, Florida that Enrique

       Bermudez, Adolfo Calero, Aristides Sanchez, and another individual

       were all involved in drug smuggling. The purpose of the meeting in

       Miami at which this allegation was made was to invite former

       Nicaraguan National Guard members to return to Nicaragua under a

       Sandinista amnesty program. The Nicaraguan exile reportedly

       offered no substantiation for the allegation that any of the named

       Contra leaders were involved in drug smuggling. Both a U.S. law

       enforcement source and CIA had characterized him as mentally

       unstable.

   544. CIA Response to Allegations of Drug Trafficking. The September

       1981 allegation that the ADREN had decided to smuggle drugs into

       the United States to finance its activities was disseminated by

       CIA on September 14, 1981 in a cable to the State Department; DIA;

       NSA; Commander-in-Chief, U.S. Southern Command; and U.S.

       Ambassadors in Central America. The information also was

       disseminated to DEA, FBI, Customs, Treasury, and Intelligence

       Community agencies on October 28, 1981 as an Intelligence

       Information Report.

   545. In February 1982, CIA Headquarters responded to a name trace

       request with a cable stating that Enrique Bermudez "is not

       associated with the 'renegade' 15th of September Legion members

       who are probably using their acquaintance with him as a means to

       gain some respectability." The 15th of September Legion was the

       designation of the military wing of the ADREN and was described by

       the Headquarters cable as engaged in criminal activities,

       including drug smuggling.

   546. A CIA records search was conducted in February 1988 regarding the

       Nicaraguan exile in response to his allegations that month that

       Bermudez and other UNO/FDN leaders had engaged in drug smuggling.

       The search, according to a February 1988 Headquarters cable,

       indicated that a number of sources characterized him as unstable,

       a swindler and as having a reputation of being a drug dealer in

       Nicaragua before leaving that country in 1983.

   547. Information Sharing with Other U.S. Government Entities. As

       mentioned earlier, a CIA intelligence report entitled "ADREN

       Operations to Smuggle Narcotics Into the U.S. to Finance Its

       Anti-Sandinista Activities" was disseminated to DEA, FBI, Customs

       Service, Treasury, and Intelligence Community agencies on October

       28, 1981. The report related the allegation that the ADREN

       leadership intended to smuggle drugs into the United States to

       finance its activities against the GRN. The report also included

       the allegation that, in the initial effort in July 1981, cocaine

       was carried to Miami aboard a commercial flight by an ADREN

       member. The information had been shared with the State Department,

       DIA, NSA, Commander-in-Chief, U.S. Southern Command and U.S.

       Ambassadors in Central America by cable on September 14, 1981.

   548. On February 9, 1988, the information contained in the February

       1988 cable concerning the drug trafficking allegation by the

       Nicaraguan exile against Bermudez and other Contra leaders was

       forwarded by CIA to the FBI.

   549. No record has been found to indicate that either of the

       allegations received by CIA regarding Bermudez and drug

       trafficking was reported to the Congress.

       

                             Mario Jose Calero

                                      

   550. Background. In the mid-1980s, Mario Calero, the brother of Contra

       leader Adolfo Calero, was the FDN's purchasing agent in New

       Orleans. An August 1985 cable to Headquarters reported that the

       FDN had contracted with a Honduran-registered airplane charter

       company named "Compania ORBE" to transport non-lethal aid from New

       Orleans to the FDN. The company was reported to be operating one

       DC-6. The cable indicated that FDN officials had become uneasy in

       dealing with ORBE officials because they charged the FDN unusually

       low rates, appeared to be overly eager to please and appeared to

       not be knowledgeable about certain aspects of the air charter

       business. As a result of these concerns, the FDN reportedly had

       decided that FDN personnel would not be allowed to accompany the

       DC-6 when it returned to the United States after each charter

       flight. Moreover, the cable indicated that Mario Calero had

       informed unnamed U.S. law enforcement officials that the ORBE

       aircraft was only under charter by the FDN when it carried FDN

       cargo from New Orleans to Honduras, and was not under FDN charter

       on its return flights to the United States.

   551. In July 1988, Mario Calero and six other individuals were

       indicted in Miami, Florida, for Neutrality Act violations

       involving arms smuggling. However, the charges against Calero and

       five of the six other defendants were dismissed in July 1989.

   552. Allegations of Drug Trafficking. A February 1986 cable to

       Headquarters reported an allegation that Mario Calero was engaged

       in drug trafficking. No specific details of the alleged drug

       trafficking were provided, although the cable noted that the

       individual making the allegation provided it to an FDN supporter

       following a meeting with Eden Pastora. No information has been

       found to indicate that CIA took any action to investigate the

       validity of the allegation. The FDN supporter and the individual

       who reportedly made the allegation say they do not know of any

       information linking Mario Calero to drug trafficking.

   553. An April 1988 cable to Headquarters reported that a person had

       been approached by several individuals, including Mario Calero,

       who were interested in locating an alternative airport for

       shipping supplies to the Contras. The individuals also reportedly

       indicated they had an unspecified association with CIA. The person

       who had been approached said that, although he had no basis for

       his suspicions, he was concerned that these persons might take

       advantage of his good name by sending illegal supplies to the

       Contras or engaging in drug trafficking.

   554. In December 1985, a cable reported to Headquarters that the

       Associated Press planned to publish a story on the FDN that

       included a claim that Mario Calero was taking kickbacks on FDN

       arms purchases. The cable did not provide any specific

       information, however, regarding the nature and extent of the

       alleged kickbacks.

   555. In December 1985, a cable informed Headquarters that rumors were

       circulating in the local Latin community to the effect that Mario

       Calero was personally profiting from U.S.-originated aid for the

       FDN that transited New Orleans and that CIA was aware of this. The

       cable also said that the FBI and U.S. Customs Service had received

       similar reports, some possibly generated by media inquiries

       regarding Calero's activities. The cable added that there was no

       information to substantiate the allegations and that there was no

       indication of any CIA contacts with Mario Calero in New Orleans.

   556. A December 1985 response observed that the allegations may have

       been based on jealousy and speculation, especially with respect to

       Mario Calero's expanded activities as a purchasing agent acting on

       behalf of the DoS-sponsored Nicaraguan Humanitarian Assistance

       Office (NHAO).

   557. CIA Response to Allegations of Drug Trafficking. No information

       has been found to indicate that CIA took any action in response to

       allegations of drug trafficking by Calero. However, a November

       1986 Headquarters cable warned that Mario Calero's poor reputation

       was a potential hindrance to the Contras:

       Mario Calero has one of the most seamy reputations of all the

       people involved in the Nicaraguan Democratic Resistance. Rightly

       or wrongly, he is seen as being up to his knees in corruption.

       Moreover, he is viewed as being nothing more than a hatchet man

       for the hardcore unreconstructed right of the FDN. In short, he is

       a symbol to our critics of all that is perceived to be rotten in

       the FDN. Whether or not this reputation is justified is

       immaterial: it is real. 

   558. Information Sharing with Other U.S. Government Entities. In March

       1986, CIA responded to a trace request from the FBI by noting that

       it had received unconfirmed allegations that Calero had accepted

       kickbacks. Additionally, the CIA response stated that CIA would

       appreciate any information the FBI could provide regarding the

       allegations. No information has been found to indicate such a

       response from the FBI.

   559. No information has been found to indicate that Congress was

       informed that CIA had received drug trafficking allegations

       against Mario Calero. However, a June 12, 1985 routing slip from

       the DO to CIA's Comptroller contained, as an attachment, DO

       responses to a number of questions regarding the Contras that the

       House Appropriations Committee (HAC) had asked CIA on May 2, 1985.

       One question related to allegations of corruption by Contra

       officials. A portion of the DO response to that question stated:

       There have been a number of allegations that Mario Calero may be

       skimming funds from NHAO but we have nothing to confirm it. The

       Agency is by law forbidden to engage in law enforcement activities

       in the U.S. . . . . 

       No information has been found to indicate the date and

       circumstances of CIA's conveyance of this information to the HAC.

       

                              Juan Ramon Rivas

                                      

   560. Background. Juan Rivas, whose war name was El Quiche, was a

       former Nicaraguan National Guard officer who joined the Contra

       resistance in 1981. Upon the organization of the FDN, he became

       the instructor of the first fighters to enter Nicaragua in July

       1982. He later helped organize the Jorge Salazar Force, an FDN

       combat unit, and became its commander. By August 1986, Rivas had

       constructed a task force of five regional commands with a total of

       5,000 combatants. He was selected to be Chief of Staff of the

       ERN/North in March 1988, the only candidate who apparently was

       acceptable to all the commanders.

   561. A CIA employee who dealt with the Contras from 1986 to 1988 says

       Rivas "was a subordinate of [ERN military commander] Enrique

       Bermudez and interfaced with representatives of the Agency as

       Enrique Bermudez would empower him to do so on any particular

       issue." In this regard Rivas was acting no differently than other

       Contra commanders.

   562. Allegations of Drug Trafficking. According to a February 1989

       cable to Headquarters, a Central American Station "was asked to

       check out a report in November 1988 received by the [U.S.] Embassy

       from DEA alleging" that Rivas was identical with a person of the

       same name who had reportedly escaped from a Colombian prison after

       being arrested on a drug trafficking charge.

   563. According to the February cable, a CIA contract officer noted

       Rivas had said he had deserted from the Nicaraguan National Guard

       in 1979 when the first combat with the FSLN began in southern

       Nicaragua. At that point, Rivas said he had relocated to

       Guatemala, acquired a false passport and shortly thereafter moved

       to Colombia to find work. Rivas reportedly said that he became

       involved in the drug trade at a low level--packaging drugs;

       transporting them within the city of Barranquilla, Colombia; and

       passing them to traffickers for overseas shipment. He claimed,

       however, that he did not personally smuggle drugs outside of

       Colombia. The Colombian authorities caught him, and he was sent to

       prison. Rivas, then 21 years of age, remained in prison for four

       or five months before escaping. He said that he then returned to

       Guatemala, decided not to return to the drug trade and joined the

       Nicaraguan resistance.

   564. The CIA independent contractor says pursuing this question with

       Rivas was very difficult, in part because Rivas was always

       surrounded by a lot of "gunmen." Thus, the independent contractor

       says he believed he might be at personal risk if he accused Rivas

       in their presence. Nonetheless, he says he attempted to verify the

       DEA information. The problem of the gunmen took some time to

       resolve, but eventually he was able to discuss the allegation with

       Rivas alone.

   565. The CIA independent contractor adds that Rivas had said that he

       had been involved in Colombia in taking drugs to ships in

       international waters. The CIA contract officer also says that

       Rivas told him he arranged the escape from the Colombian prison by

       paying a bribe.

   566. The CIA independent contractor says that he never saw Rivas again

       after their discussion. He states that he does not believe Rivas

       was involved in drug trafficking while working with the Contras.

       He notes that Rivas had a horse at the Yamales camp that was

       reputedly worth $100,000. However, he said that he does not

       believe the source of Rivas' funds was drug trafficking, but

       Rivas' family money and overcharging the Agency for supplies.

   567. As reported in a March 1989 cable to Headquarters, Bermudez said

       that, when Rivas joined the resistance forces:

       . . . he had quite a bit of money. At the time [Rivas] had just

       broken a relationship with [an American] who was the daughter of a

       very rich US citizen and those who met [Rivas] at the time assumed

       his money came from the girl and/or her father. [Rivas]

       contributed most of his remaining resources to the FDN cause and

       has only a small ranch in Guatemala left from his earlier

       relationship. Some in the FDN may have suspected at the time that

       the father-in-law was engaged in drug trafficking.

   568. CIA Response to Allegations of Drug Trafficking. Following

       receipt of the information the CIA contract officer obtained from

       Rivas, CIA briefed the U.S. Ambassador to Honduras and the Deputy

       Chief of Mission. The February 1989 cable to Headquarters reported

       that Rivas' departure from the ERN would be "devastating," but

       that there appeared to be no other option.

   569. In February 1989, Headquarters responded and requested that

       Rivas' admissions be discussed with the DEA representative at the

       Embassy, who was to be asked to take no action at that time and to

       "advise him that [the CIA] will inform [DEA Headquarters] on his

       behalf when appropriate." The cable also noted that it presumed

       the Ambassador would support this position in discussions with the

       DEA representative in view of the serious political damage to the

       U.S. Government that could occur should the information about

       Rivas become public.

   570. The cable also indicated that Headquarters was particularly

       interested in knowing whether the DEA representative was obliged

       to inform the Government of Colombia of the admissions and whether

       Rivas was on a DEA "watchlist." The cable also provided

       instructions to discuss Rivas' admissions with Enrique Bermudez

       and asked whether he had any prior knowledge of Rivas' drug

       connection. The cable contained a caution that it was important

       that no U.S. Government official encourage Rivas "to disappear"

       and that there were significant legal liabilities--not further

       explained--to providing Rivas any such advice or encouragement.

   571. In February 1989, a cable informed Headquarters that the Rivas

       case had been discussed with the DEA representative. The DEA

       representative reportedly said that there was no DEA action to be

       taken since the information concerning Rivas was "historic" and

       there was no indication of current trafficking by Rivas. The DEA

       representative also reportedly said that DEA had no obligation to

       inform the Government of Colombia and that Rivas was not on any

       DEA watchlist.

   572. On February 15, 1989, CATF sent a memorandum to Deputy Director

       for Operations (DDO) Richard Stolz outlining Rivas' background and

       his admissions of involvement in the drug trade in 1979. CATF

       proposed that, because of his importance to the Contras, Rivas be

       maintained as the Chief of Staff of ERN/North and that the House

       Permanent Select Committee for Intelligence (HPSCI) and the Senate

       Select Committee for Intelligence (SSCI) be briefed. The CATF

       memorandum noted that:

       . . . although this recommendation is not without political risk,

       the removal of Rivas, at this time, following the Central American

       Presidents' call for the dissolution of the ERN as an armed force,

       would adversely impact ERN morale and force integrity [sic] to an

       unquantifiable extent. 

   573. A February 22, 1989 note for DDO Stolz from Deputy General

       Counsel for Operations John Rizzo stated that:

       Under the circumstances, I do not believe that the existence of

       the 1979 drug charges requires us to remove Rivas as ERN/N[orth]

       Chief of Staff or otherwise disassociate ourselves from him. CIA

       regulations in this area focus solely on individuals currently in

       narcotics trafficking: we have to sever our relationship with

       anyone involved in trafficking to the United States, and we have

       to make a risk/benefit analysis about continuing to deal with

       anyone involved in trafficking outside the U.S. There is no

       indication that Rivas fits either category. 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. 

       (Underlining in original.)

   574. A March 1989 cable to Headquarters stated that the Rivas matter

       had been discussed with Bermudez the previous day. Reportedly,

       Rivas had already approached Bermudez and explained the problem.

       The cable noted that, according to Bermudez, Rivas indicated that

       he wished to resign from the resistance. Bermudez said he had

       calmed Rivas down and pointed out that his resignation at such a

       critical time would have "devastating affects [sic]." Rivas took

       some time off and then resumed his functions. He was, reportedly,

       waiting for guidance from Bermudez, "who recognizes the

       possibility of a scandal but does not want Rivas to leave."

   575. A March 1989 Headquarters cable noted that Deputy Assistant

       Secretary of State for Inter-American Affairs Cresencio Arcos,

       along with the CATF Chief of Operations, had met with Bermudez in

       Washington. Arcos reportedly told Bermudez that Inter-American

       Affairs Assistant Secretary-Designate Bernard Aronson and Acting

       Inter-American Affairs Assistant Secretary Michael Kozak had

       decided that Rivas' admission of involvement in drug trafficking

       in 1979 necessitated his separation from the Contras as soon as

       possible. In order to prevent Rivas' departure from being viewed

       erroneously by ERN troops as a signal of imminent demobilization,

       Arcos advised Bermudez that Rivas should fade gradually from the

       scene. Bermudez agreed with this assessment and said that Rivas

       would be amenable to this approach as long as he had a way to earn

       a living.

   576. In March 1989, a cable informed Headquarters that the Station's

       COS, the Ambassador and the Deputy Chief of Mission agreed that

       recent media coverage of ERN human rights violations made the ERN

       more vulnerable to drug trafficking charges "no matter how far

       removed." As a result of this discussion, the Deputy Chief of

       Mission was instructed by the Ambassador to meet with Rivas as

       soon as possible and inform him that he must leave the ERN. The

       cable reported that the Deputy Chief of Mission was also to ask

       Rivas if he knew of anyone else in the ERN who had been involved

       in drug trafficking.

   577. According to an April 1989 cable to Headquarters, Rivas announced

       on March 29 his intention to resign for medical reasons.

   578. At some unspecified time in early 1989, most probably in late

       April, a CATF officer drafted a cable to the Immigration and

       Naturalization Service (INS) regarding an application by Rivas for

       U.S. Permanent Resident Alien (PRA) status. The cable draft

       described Rivas' involvement in drug trafficking in Colombia as

       well as his arrest, incarceration and escape. It also described

       Rivas' service with the Contras, noting that he had served with

       distinction and saying that the Agency had no evidence that Rivas

       had been involved with illegal drugs since 1979. The draft

       concluded with a request "that Rivas' service be taken into

       consideration at the time that his application for PRA status is

       reviewed."

   579. The version of the cable that was actually transmitted to INS and

       the FBI on May 6, 1989 omitted the request that Rivas' service

       with the Contras be considered when his application was reviewed.

       The cable did, however, include all pertinent information

       concerning Rivas' admission of his involvement in drug trafficking

       in 1979.

   580. Information Sharing with Other U.S. Government Entities. As noted

       above, allegations of involvement in drug trafficking by Rivas

       were first brought to CIA's attention by the U.S. Embassy in

       November 1988 in the form of a request for further information

       concerning a DEA report. After confirmatory information was

       obtained from Rivas in late January 1989, it was shared almost

       immediately with the Ambassador and the Deputy Chief of Mission.

       It was then shared with the DEA representative. INS and FBI were

       informed by CIA of Rivas' past connection with drug trafficking on

       May 6, 1989 in connection with Rivas' application for PRA status.

   581. On March 15, 1989, a two-page memorandum prepared by CATF

       provided "talking points" for OCA to brief the HPSCI and SSCI

       regarding Rivas. The memorandum outlined Rivas' involvement in

       drug activities in Colombia in 1979, his arrest, incarceration and

       escape and briefly described his record as "the ERN/N[orth]'s most

       capable commander." It also noted that:

       During the month of February 1989, Rivas departed from Yamales. In

       early March 1989 he was in Miami, Florida seeking U.S. residency

       for himself and for his wife . . . . Rivas is not on the Drug

       Enforcement Administration (DEA) "watchlist," and, according to

       DEA, there is no indication that Rivas is currently involved in

       illicit drug activity. Further, DEA considers the information on

       Rivas "historical" and has no intention of informing the Colombian

       government about Rivas, nor would DEA normally do so. 

   582. According to a March 15, 1989 OCA MFR signed by the OCA Deputy

       Director for Senate Affairs Robert Buckman, he briefed SSCI Staff

       member David Holliday on March 15 concerning Rivas and told him

       that the Department of State had determined that Rivas "should be

       removed from his post and that Resistance leaders agreed." The

       March 15 MFR also stated that Holliday had said "that he would

       inform the Committee. He did not regard this as a serious matter."

       A March 10, 1989 OCA MFR written by OCA Deputy Director for House

       Affairs Norm Gardner stated that HPSCI Staff member Mike O'Neil

       was briefed on March 16, 1989 and that O'Neil "appreciated the

       briefing but had no real comments or remarks to make."

   583. A March 28, 1989 CATF MFR reported a March 17, 1989 briefing on

       the Nicaragua program for HPSCI Staff members Dick Giza, Mike

       O'Neil, Duane Andrews, and Steve Nelson. The allegations of drug

       trafficking concerning Rivas were identified in the MFR as one of

       the topics of the briefing. CATF Chief of Operations (COPS)

       reportedly informed the Staff members that the Department of State

       had decided that Rivas would be "separated from the Resistance"

       and that Arcos had informed Bermudez of this decision on March 14.

       The COPS also reportedly told the Staff members that Rivas and his

       wife were applying for PRA status in the United States. In

       response to a question concerning U.S. Government support for

       Rivas, the COPS reportedly said that the CIA was not planning to

       assist in resettling Rivas.

       

                               Stedman Fagoth

                                      

   584. Background. Stedman Fagoth led the MISURASATA Indian Movement, a

       loose knit organization of Indians from Nicaragua's Atlantic coast

       area. Fagoth's efforts in 1981 to raise money on behalf of the

       MISURASATA among exiled Nicaraguans in Miami apparently brought

       him to CIA's attention. Agency records indicate that Fagoth

       exhibited erratic behavior.

   585. Allegations of Drug Trafficking. A January 1985 cable asked

       Headquarters for any information pertaining to a U.S. citizen.

       According to the cable, the U.S. citizen had offered to provide

       DEA with information pertaining to alleged Sandinista drug

       trafficking. The U.S. citizen had reportedly claimed to DEA that

       he had an association with a group called "The American Freedom

       Fighters," which was actively providing various types of aid to

       "the anti-Sandinista forces in Nicaragua."

   586. A January 1985 cable--citing the Defense AttachÈ Office and other

       U.S. Embassy reporting--responded that the U.S. citizen, among

       other things, had allegedly sought Fagoth's assistance in stealing

       boats from Nicaragua. This reportedly was part of an alleged plan

       by the U.S. citizen that called for taking the boats to Honduras

       where they would be loaded with guns and then moved onto Colombia,

       where the guns would be exchanged for narcotics for the U.S.

       market. Headquarters, in a January 1985 cable, responded that it

       had no information in its files pertaining to the U.S. citizen.

   587. In November 1987, a cable to Headquarters reported a KISAN

       official who was now a political rival of Fagoth's had said that

       Fagoth had suggested to him and others in 1982 or 1983 that they

       should go to Colombia to raise money for "the cause." According to

       this KISAN official, who claimed to have declined Fagoth's

       suggestion, the clear implication was that the trip would involve

       a drug deal of some sort. However, he said that a senior advisor

       to Fagoth at that time had agreed to the trip.

   588. A November 1987 cabled response expressed skepticism regarding

       the portion of the November report that pertained to the senior

       advisor. According to the cable:

       Station finds it difficult to believe that [the senior advisor]

       would cooperate with [Fagoth] and go to Colombia on a drug deal to

       make extra money for the cause, especially since [the senior

       advisor] does not particularly care for or trust [Fagoth]

   589. An April 1988 cable to Headquarters stated that the senior

       advisor had said "in an effort to further denigrate [Fagoth]" that

       Fagoth had approached him in 1984 with a scheme to kill Colombian

       cocaine traffickers who were moving through "the Yucatan" to the

       United States and to seize the drugs they were carrying. The

       proceeds from the stolen cocaine reportedly were to go to the

       "Indian movement." The senior advisor claimed to have declined the

       offer, but believed that Fagoth and other associates probably had

       consummated the scheme. The senior advisor also claimed that

       Fagoth—along with two Honduran military officers—had

       sold marijuana or other drugs.

   590. CIA Response to Allegations of Drug Trafficking No information

       has been found to indicate that CIA followed up or pursued the

       drug-related allegations involving Fagoth to determine their

       validity.

   591. Information Sharing with Other U.S. Government Entities. Agency

       records indicate that CIA was in contact with the FBI regarding

       Fagoth.

   592. On July 7, 1987, CIA sent to the DoS copies of a summary report

       of "questionable activities on the part of Stedman Fagoth." This

       report included information from Agency records pertaining to

       alleged human rights abuses and the theft of U.S.

       Government-provided funds and materials by Fagoth that might "bear

       on his eligibility to receive [U.S.] support." The report also

       cited Fagoth's violence in dealing with his Miskito rivals and the

       charges of corruption linked to him. The report contained no

       references to the January 1985 allegations relating to Fagoth's

       possible involvement in a drug trafficking scheme with the U.S.

       citizen. The report predated the CIA's receipt--in November 1987

       and April 1988--of additional drug-related allegations against

       Fagoth.

   593. No information has been found to indicate that allegations of

       drug trafficking involvement by Fagoth were shared with the

       Congress.

       

                                Roger Herman

                                      

   594. Background. Roger Herman Hernandez, a Nicaraguan citizen, was

       political director of KISAN, a resistance organization composed

       mainly of Indians and Creoles that operated on the Atlantic coast

       of Honduras and Nicaragua. He was a strong supporter of U.S.

       policy in the region. By 1990, he was increasingly involved in the

       effort to reestablish democracy in the Atlantic coast region

   595. Allegations of Drug Trafficking. A December 1986 Tegucigalpa U.S.

       Embassy telegram reported that, according to an Embassy source,

       Herman and the Haylock family of Roatan Island in Honduras were

       smuggling cocaine into the United States. Herman had reportedly

       obtained cocaine from Nicaragua and used Hondurans who were

       friendly to KISAN or unidentified U.S. personnel to carry it in

       small quantities to his brother in Miami. The Embassy source also

       reportedly claimed that on two occasions the Nicaraguan diplomatic

       pouch had been used for this purpose and that the Haylocks were

       using one of their boats, originally modified to smuggle weapons

       to KISAN, to traffic in cocaine.

   596. The Embassy cable also noted that the Embassy could not vouch for

       the credibility of the source, and that Embassy checks revealed

       the source's colleagues were concerned that the source was

       "paranoid and mentally impaired." The cable also noted that the

       allegations against Herman may reflect "factional dissension

       within KISAN."

   597. Agency Response to Allegations Of Drug Trafficking. The December

       6, 1986 allegations against Herman were included in a January 1987

       Interagency Assessment regarding the Contras and drug trafficking

       that was prepared by CIA for the Assistant Secretary of State for

       Intelligence and Research. A February 9, 1987 memorandum to CATF

       Chief Fiers from Assistant Secretary of State Elliott Abrams

       proposed that CIA "formally ask DEA and any other appropriate

       agencies to undertake an investigation of [the] information [that

       had been] developed by the Agency" on Herman.

   598. Fiers responded in an undated memorandum to Abrams that CATF had

       directed the field to undertake a full investigation, which would

       include questioning by CIA Security, as soon as the Agency had

       learned of the allegations against Herman. The Fiers memorandum

       said that, when the results of this investigation were received,

       "should there be any questions in our minds that Mr. Herman has

       any connections with drug smuggling, it will be raised with the

       Interagency Group/Nicaragua."

   599. A CIA Security interview was conducted with Herman in February

       1987. Based on this interview, CIA Security determined it was

       highly probable that Herman was involved in drug trafficking. In

       further security processing in May 1987, Herman said that he was

       confused over the term "trafficking." He reportedly said that he

       thought "trafficking" referred to personal use of illegal drugs.

       After this interview, CIA Security did not have concerns about

       Herman and drug trafficking.

   600. Information Sharing with Other U.S. Government Entities. No

       information has been found to indicate that CIA reported the

       results of its inquiries into the drug trafficking allegations

       against Herman to Abrams or the Interagency Group.

   601. The drug allegations against Herman were included in the January

       1987 Memorandum prepared for Assistant Secretary of State

       Abramowitz. No information has been found to indicate that CIA

       acquired any other information linking Herman to drug trafficking.

   602. No information has been found to indicate that CIA advised

       Congress of the Embassy source's allegations regarding Herman or

       the results of CIA inquiries in response to those allegations.

       

                              Sebastian Pinel

                                      

   603. Background. A March 1981 cable to Headquarters identified Pinel

       (also spelled Pinell), a.k.a. "Chatan," as a "leader of one

       counterrevolutionary group in Honduras" and cited his views of

       paramilitary training options. A May 1981 cable to Headquarters

       concerning Nicaraguan counterrevolutionary groups made reference

       to "a smaller exile group under the leadership of Sebastian

       'Chatan' Pinel." A March 1982 cable to Headquarters reported on a

       Contra-related meeting in Tegucigalpa, Honduras, that was held at

       a house that "belongs to Sebastian Pinell Chatan [sic], a

       Nica[raguan] Contra sympathizer."

   604. A December 1980 cable to Headquarters regarding Sandinista

       deployments said, "There is a Sebastian 'Chatan' Pinel resident in

       Tegucigalpa and known ... as reputedly an anti-FSLN activist." A

       March 1981 cable to Headquarters that was sent in response to

       information regarding another Contra personality stated:

       "Sebastian Pinel, one of subject's comrades, is known, although

       extent of his involvement in counterrevolution [is] somewhat

       vague."

   605. Allegations of Drug Trafficking. A February 1985 Headquarters

       cable to DEA indicated that a source had said that Sebastian

       Pinel--described as a Nicaraguan exile living in Buena Park,

       California--may be involved in the dealing of cocaine. The cable

       also said that Pinel was reported by the source to be in Spain and

       that, although Pinel was reportedly "broke," he "may be on the

       verge of a major drug deal." The cable also said that Pinel was a

       "partner" and "best friend" of Horacio Pereira, a known drug

       trafficker. No information has been found to indicate the identity

       of the source of this information or the circumstances under which

       the information was obtained by CIA.

   606. CIA Response to Allegations of Drug Trafficking. Headquarters

       sent a cable to DEA in February 1985 reporting the alleged drug

       trafficking activities by Pinel.

   607. Information Sharing With Other U.S. Government Entities. The

       February 1985 Headquarters cable to DEA provided information to

       DEA regarding alleged drug trafficking activities by Pinel. No

       information has been found to indicate CIA informed Congress

       regarding Pinel's alleged drug trafficking activities.

       

                             Arnoldo Jose Arana

                                      

   608. Background. Arnoldo Jose Arana Garcia, also known as Frank Arana,

       was born in Nicaragua and held U.S. Permanent Resident Alien

       status during the Contra war period. Arana had been an officer in

       the Nicaraguan National Guard. Following the Sandinistas'

       overthrow of the Somoza regime, Arana emigrated to the United

       States. He joined the FDN's Special Air Branch in March 1983 and

       was identified in an October 1985 cable as Chief of Operations of

       the FDN air arm. A November 1985 cable from Headquarters indicated

       that Arana was the FDN's press officer. A May, 1989 cable

       indicated that Arana held a senior position in the ERN/North

       leadership.

   609. Allegations of Drug Trafficking. In April 1983, the Agency was

       informed by the FBI in response to a CIA trace request that Arana

       was under criminal investigation by a U.S. "presidential" task

       force on narcotics. No additional details were provided by the FBI

       at that time.

   610. A November 1985 Headquarters cable indicated that the Immigration

       and Naturalization Service believed that some members of Arana's

       family "may be in jail on drug charges." An FBI memorandum dated

       January 23, 1986 indicated that Arana was "alleged to be the

       primary pilot in a drug smuggling enterprise" involving his

       brothers and others. However, the FBI report noted that " . . . to

       date, there has been no prosecutive action." On May 14, 1987, DEA

       responded to a May Agency trace request and indicated that Arana

       had planned to smuggle 100 kilograms of cocaine into the United

       States from South America in October 1983.

   611. A May 1989 cable reported that ERN/North Air Force Commander

       Julio Gomez--who had previously held the same position in the FDN

       as had Arana-- said that "he always had doubts about Arana's

       activities." Gomez also claimed, however, that he had received a

       letter from a Texas police department indicating that an

       investigation into Arana's activities had revealed nothing

       illegal.

   612. The May cable also reported that Gomez had stated that the media

       in Texas had recently reported allegations of drug smuggling in

       connection with a helicopter ferry flight from Tegucigalpa to

       Brownsville, Texas. Arana was reportedly the pilot, and the

       helicopter was owned by Jose Perez. Gomez said that Arana and

       Perez visited the DEA office in Tegucigalpa to clear up the matter

       once they learned of the allegations. Gomez reportedly believed

       that the purpose of the flight was to get the helicopter to the

       United States where it could be dismantled and shipped to a

       further destination in the United States or Canada. He did not

       know whether the drug allegations were "well-founded."

   613. According to a June 1989 cable to Headquarters, CIA officers met

       with local DEA officers on June 14 in an effort to assess Gomez'

       story about the helicopter flight. Following this meeting, the

       cable reported, the DEA officers had confirmed that Arana had

       visited their offices in early May 1989 with Manuel Perez, Jose's

       brother. The cable reported that information from the DEA office

       in Texas seemed to clear Arana in the Brownsville incident, and

       DEA "thought it a closed case." The cable added, however, that DEA

       had uncovered additional information of possible drug trafficking

       involving the Perez brothers and that DEA believed, if "Arana is

       mixed up with the Perez brothers, he is probably dirty." The Perez

       brothers were the owners of record of SETCO--a small air services

       company that had been formed by Juan Matta Ballesteros, a

       convicted cocaine kingpin, according to DEA and U.S. Customs.

   614. CIA Response to Allegations of Drug Trafficking. As mentioned

       earlier, the FBI advised CIA in April 1983 that Arana was under

       investigation by a presidential task force on narcotics. Between

       September 1983 and December 1985, the Agency requested periodic

       updates from the FBI regarding the Arana investigation in an

       effort to resolve the allegations. The FBI responded on January

       23, 1986 that Arana and his brothers were involved in a drug

       smuggling enterprise. No information has been found to indicate

       that the FBI provided other updates to the Agency during this

       time. In 1988, the Agency twice requested updates concerning the

       Arana investigation from the FBI. No information has been found to

       indicate that the FBI provided the requested updates to the

       Agency.

   615. An unsigned, handwritten note was attached to the May 1989 cable

       that identified Arana as a senior member of the ERN/North

       leadership. The note stated: "Arnold Arana former Guardian

       National [sic]--still active and working, we [CIA] may have a

       problem."

   616. As to whether CIA should have pressed the FDN (ERN/North) to

       expel Arana because of the task force on narcotics investigation,

       CATF compliance officer Louis Dupart says that "an investigation

       is not proof of wrong-doing." Although Octaviano Cesar was

       expelled from UNO for suspected involvement in drug trafficking as

       a result of CIA concerns, Dupart says that the Cesar case was

       different because CIA Security believed it was highly probable

       Cesar was involved in drug trafficking.

   617. Information Sharing with Other U.S. Government Entities. The June

       1989 cable reporting on the meeting with local DEA officers

       regarding the drug trafficking allegations against Arana indicated

       that CIA was working closely with DEA on "several issues." No

       information has been found to indicate the nature, extent, or

       results of this cooperation as it pertained to Arana.

   618. No information has been found to indicate that the Agency

       provided information to Congress regarding allegations of Arana's

       involvement in drug trafficking. According to the official

       congressional transcript of a CIA briefing to SSCI Staff members

       on July 31, 1987, CATF Chief Fiers stated that "[CIA has] never

       found any evidence indicating that the FDN or those around the

       Northern Front, as it is known today, had been involved in cocaine

       or any drug dealings, and we have looked very closely at that."

       According to that transcript, Fiers did not mention that CATF had

       been informed by Agency counterintelligence personnel on May 21,

       1987 that Arana--an FDN official--was the subject of a

       presidential task force on narcotics investigation.

   619. Fiers' written response to questions states that he was not aware

       that Arana was the subject of a federal narcotics investigation.

       Moreover, his response states that:

       Since my beginning asociation [sic] with the Central America

       program up until being shown information about Arana by the IG, it

       was my firm belief that no member of the FDN known to me was the

       subject of drug smuggling allegations. (I was aware, however, that

       Arana was not a productive pilot, . . . . and spent too much time

       in Miami.) 

       

 Jose Francisco Cardenal/Bergman Arguello/Eduard Jose Sacasa-Urouyo/Rolando

        Murillo/Juan Savala (or Zavala)/Renato Pena/Roger J. Ramiro

                                      

   620. Jose Francisco Cardenal: Background. CIA records indicate that

       Cardenal, a former Vice President of the Nicaraguan Government

       Council of State, arrived in Miami, Florida, sometime in May 1980

       after having left Nicaragua as an opponent of the Sandinista

       Government. According to an August 1982 cable to Headquarters ,

       Cardenal was described as one of the early leaders of UDN/FARN

       "which splic [sic] from the ADREN group in Sept 80 [sic] and

       member of one of the Nicaraguan counterrevolutionary groups in

       March 81."

   621. According to a September 1982 cable:

       [Cardenal] is at present travelling extensively to try and unify

       various groups and factions of Nicaraguan exiles into a common

       front. He has an almost encyclopedic knowledge of Nicaraguan

       personalities and family histories which makes him especially

       adept at the establishment of relationships and political ties. An

       obsticleis [sic] the military arm of the [Contras], whose

       officials are jealous of their prerogatives, and not enthusiastic

       about coalitions or common fromts [sic]. The plans are to overcome

       that hostility, bring about a unification of factions and groups

       for the overthrow of the Sandinista regime and the installation of

       a democratic governemt [sic].

   622. According to a January 1983 cable to Headquarters Cardenal was

       ousted from the FDN over political differences with the FDN

       leadership. Following his ouster, Cardenal attempted to organize

       some of his followers into a rival organization--

       the Nicaraguan Insurrection Front--without success. According to a

       March 1983 cable, Headquarters reported that Cardenal "no longer

       holds any leadership position in any exile opposition

       organization."

   623. Allegations of Drug Trafficking. An October 1982 cable to CIA

       Headquarters reported that an informant in the local Nicaraguan

       exile community had provided information to the U.S. Immigration

       and Naturalization Service (INS) that indicated that Cardenal and

       other Contra-related individuals might be linked to drug

       trafficking:

       1. On 20 October 1982, an [INS] officer called . . . . to relay

       information he had received from an informant in the Nicaraguan

       exile community in the San Francisco area. According to this

       informant, there are indications of links between [a specific

       U.S.-based religious organization] and two Nicaraguan

       counter-revolutionary groups. These links involve an exchange in

       [the United States] of narcotics for arms, which then are shipped

       to Nicaragua. A meeting on this matter is scheduled to be held in

       Costa Rica "within one month." Two names the [INS] informant has

       associated with this matter are Bergman Arguello, a UDN member and

       exile living in San Francisco, and Chicano Cardenal, resident of

       Nicaragua. Cardenal was in San Francisco the week of 11 October

       1981 [sic] to speak at a freedom rally sponsored by a Cuban

       freedom group with reported links to Omega 7.

       2. The [INS] officer stated that he had called [the FBI], but was

       told that nothing could be done as the responsible agent was away

       on TDY for an uncertain period of time. His call to [CIA] was

       prompted by the report of a meeting in Costa Rica within the

       month. We have confirmed that the [FBI] agent is indeed away for

       an unspecified period of time and that he is the only one who

       could act on this matter.

       3. In view of para[graph] 2 above, is there anything that should

       [be done] with the information reported in para[graph] 1? The

       [INS] officer described his informant as quite reliable, although

       he has no independent means of verifying the informant's

       information. Both the [INS] officer and his informant are

       available to provide further information if needed. 

   624. CIA Response to Allegations of Drug Trafficking. An October 1982

       Headquarters cable responded to the October report and request for

       advice by stating:

       1. If there is good reason to believe that the allegations

       contained in para[graph] 1 . . . . may have some basis of fact,

       [Headquarters] would be interested in investigating them further.

       Request . . . . recontact [with] the [INS] officer in order to

       attempt to determine the following information:

       A. An evaluation of the [INS] source's access to this information.

       Did he learn it from direct involvement with the individuals named

       or from a third source? [Please] provide identity of source if

       available.

       B. Is the date mentioned in the last sentence of para[graph] 1 . .

       . (11 October 81) correct, or did the source mean 1982?

       C. Can the source provide any additional details regarding the

       alleged meeting to take place in Costa Rica? We would be

       interested in knowing who is scheduled to attend and under what

       auspices it is to be held? 

       . . . . 

   625. In a November 1982 cable to CIA Headquarters, a response stated:

       1. While the thread of activities reported in [the October 1982

       cable] and in this message leads abroad and involves several

       aspects of intelligence interest, in responding to [Headquarters]

       request for information we are discussing the alleged activities

       of several U.S. persons and verging on reporting of information

       which is more properly in the purview of U.S. law engorcement

       [sic] agencies. In drafting response to this message, request

       [Headquarters] comment on this aspect of our reporting so that we

       may provide all useful assistance within the limits of our charter

       re[garding] U.S. persons.

       . . . .

       3. According to the [INS] source, the UDN/FDN meeting in Costa

       Rica is scheduled to take place within the next three weeks. It

       was implied to [INS] source that the meeting will be a harbinger

       of future violence (no further information). Although the meeting

       is supposed to be secret, cameras will be allowed at the meeting.

       . . . The following also are expected to attend:

       UDN:

       Bergman Arguello Galo, . . . ; applicant for political asylum;

       Eden Pastora, "Commandante Zero";

       Eduard Jose Sacasa-Urouyo, . . . ; applicant for political asylum;

       Jose Rolando Murillo, . . . ; applicant for political asylum;

       and two U.S. persons.

    FDN:

       Renato Pena, . . . ; applicant for political asylum;

       and three others named by [INS] source but believed to be U.S.

       persons.

       . . . .

       6. In separate contacts with [INS], representatives of the

       [specific U.S.-based religious organization] have mentioned the

       [organization's] involvement with anti-Nicaraguan government

       groups. INS does not know if [the organization's] representatives

       will be present at the Costa Rica meeting, although [INS] assumes

       that some [organization] representatives will attend. [INS]

       officer noted that recently, a group of [organization] members

       from Guatemala and the Dominican Republic was in Seattle in

       transit to Honduras.

       7. The correct date for the San Francisco meeting sponsored by the

       Coalition for the Free World is 17 September 1982. Another meeting

       sponsored by this group is scheduled for 4 November 1982.

       Nicaraguan and [specific religious organization] groups are

       members of the coalition.

       . . . .

   626. In November 1982, CIA Headquarters replied in a cable that

       stated:

       1. Appreciate follow-up information on the subject of alleged

       Nicaraguan exile activities. [Headquarters] is understanding of .

       . . . position in [paragraph 1 of November . . . , 1982 cable]. In

       light of the apparent involvement of U.S. persons throughout,

       agree you should not pursue the matter further. [Headquarters]

       will affect [sic] coordination as necessary with [FBI] on this

       case; assume [INS] will make this and any additional information

       on the subject available to [FBI] San Francisco.

       . . . .

   627. A November 1982 cable to CIA Headquarters reported that:

       1. Per [the November 1982 Headquarters cable], we have contacted

       [INS] officer and asked him to ensure that [FBI] is kept advised

       of INS-acquired information on alleged Nicaraguan exile

       activities. [INS] officer stressed that he has offered the

       information to [FBI] several times, but has been rebuffed. He will

       try again, nevertheless.

       2. Since [the other November 1982 cable], [INS] source offered

       additional information, which may be of interest to you: during

       the week of 1 November 1982, Eden Pastora flew from Tegucigalpa to

       San Jose, Costa Rica. Canadian Consul-General in Costa Rica was on

       the same plane and recognized Pastora. [INS] source has been told

       that Juan Savala is head of the UDN/FDN training camp in Costa

       Rica near Lake Nicaragua. . . . During a meeting held in San

       Francisco on 4 November 1982, a U.S. person known to be affiliated

       with the Cuban Independence Movement, CID, stated that Eden

       Pastora will split with the UDN/FDN because of its alleged [CIA]

       ties. On the other hand, Fernando Chamorro, known as "El Negro,"

       wishes to make contact with CIA.

       3. We will have no further contact with [INS] on this matter

       unless advised otherwise by [Headquarters]. 

   628. No information has been found to indicate whether a meeting in

       fact took place in Costa Rica to discuss an exchange of narcotics

       for arms as described in the October 1982 cable. However, a

       November 1982 Headquarters cable discussed the alleged meeting and

       stated:

       1. It is HQS opinion that much of information contained in [the

       October 1982 and November 1982 cables] simply does not make sense

       (i.e., UDN/FDN cooperation, need to obtain armament through

       illegal means, shipment of arms to Nicaragua, involvement with the

       [specific U.S.-based religious organization]). We see a distinct

       possibility that the [INS] source was either intentionally or

       unintentionally misinformed. However, since the information was

       surfaced by another [U.S. Government] agency and may return to

       haunt us, feel we must try to confirm or refute the information if

       possible. To best [anyone's] knowledge, have the [Contras]

       scheduled any meeting in the next few weeks? If so, what

       information do you have regarding the attendees? Do you have any

       other information which might relate to contents of [referenced

       messages].

       . . . .

   629. A November 1982 response to Headquarters reported that:

       . . . . On 16 November, [Eden Pastora] has dispatched Carlos

       Coronel and Arturo Cruz, Jr. to U.S. for series of meetings, among

       them meeting with [FRS] supporters in San Francisco.

   630. No record has been found to indicate that Headquarters was

       provided with any additional information in response to the

       November Headquarters cable. Nevertheless, CIA records do indicate

       that Cardenal was in San Jose, Costa Rica, from around October 30

       or 31, 1982 until November 5, 1982 and again from around December

       27 to December 31, 1982 for meetings with Contra leaders. No

       information has been found to indicate that these meetings

       pertained to any exchange of narcotics for arms. Moreover, no

       information has been found to indicate what contacts, if any,

       Cardenal may have had with representatives of the specific

       U.S.-based religious organization. 

   631. Information Sharing with Other U.S. Government Entities. A

       January 1981 cable from the Bureau of Alcohol, Tobacco and

       Firearms (ATF) requested that CIA provide ATF with "brief

       background info[rmation] and any derogatory information" regarding

       Cardenal from CIA files. According to the ATF cable, Cardenal "is

       believed to be involved in violations of U.S. criminal laws under

       jurisdiction of ATF."

   632. In a February 1981 cable to ATF in response to the January 30

       cable, CIA provided biographical information regarding Cardenal

       and included information that Cardenal "was in contact with a

       group of Nicaraguans who are preparing an invasion of Nicaragua

       from Honduras and Costa Rica." The cable also referred the ATF to

       the FBI "for possible information on subject."

   633. Moreover, a February 1981 CIA cable to ATF in response to "your

       telephonic request dated 17 February 1981" informed ATF that:

    . . . .

       2. The files of the Directorate of Operations contain no

       additional information which would aid in the assessment of

       subject. Furthermore, this Directorate has no interest in Cardenal

       whatsoever.

   634. In a March 23, 1981 cable to CIA, the FBI reported that it was:

       . . . conducting a sensitive Neutrality Act investigation which

       may involve a Nicaraguan national, Francesco [sic] Jose Cardenal

       and an American citizen. Also possibly involved are two groups,

       the Nicaraguan Democratic Union and the Nicaraguan Armed

       Revolutionary Forces, both believed to be headquartered in

       Nicaragua with possible ties to the United States.

       In its cable, the FBI requested that CIA furnish it with any

       information from its files pertaining to the two individuals and

       groups.

   635. A March 1981 CIA cabled response provided the FBI with the same

       information that had been provided in February 1981 to ATF. The

       cable also included information that Cardenal had been

       unsuccessful in an attempt to obtain weapons and financial support

       from the El Salvador Government. Moreover, the cable stated that:

    . . . .

       3. This Agency has no information on [the American citizen]. 

       4. It is suggested that the Department of Treasury/ATF and the

       Department of State be queried for information on the Nicaraguan

       Democratic Union, the Nicaraguan Armed Revolutionary Forces (FARN)

       and for additional information on Cardenal. 

   636. In an April 1981 cable to CIA, the FBI reported that it was

       involved in a "pending investigation concerning possible violation

       of the Neutrality Act by Jose Fransesco [sic] Cardenal and

       others." According to the cable, the FBI--citing the information

       that CIA had provided in the March 25 cable--reported that a

       consensually monitored conversation had taken place between

       Cardenal and "a private individual cooperating with this Bureau"

       and that:

       The FBI feels this [conversation] may refer to your information,

       and your Agency should be aware the above conversation becoming

       [sic] public record if prosecution is forthcoming. The cooperation

       and the individual's identity will become public inasmuch as

       he/she has agreed to testify. 

   637. In its August 23, 1982 cable response to CIA, the FBI reported

       that:

       Jose Francisco Cardenal was the subject of an FBI Neutrality Act

       investigation in 1981. He was allegedly involved in the recruiting

       of personnel to participate in a military coup to overthrow the

       current Nicaraguan Government. In August, 1981 [sic] evidence

       collected on Cardenal was presented to the U.S. Attorney's Office

       for possible prosecution. Based on the facts presented, it was

       determined that there was insufficient evidence to proceed with

       prosecution.

       This Bureau has presently discontinued its investigation. We have

       no additional pertinent information not already known and/or in

       your possession. 

   638. In a memorandum to CIA dated March 8, 1985, the FBI requested a

       "name check request" on Cardenal. A March 1985 CIA cable to the

       FBI provided biographical information regarding Cardenal and

       information that Cardenal had been--according to an undated March

       1983 report--organizing "the Nicaraguan insurrectional front to

       mobilize popular support against the Sandinistas in Nicaragua." In

       addition, the cable stated that Cardenal "has shown a disregard

       for security by indiscriminately divulging details of confidential

       information."

   639. Bergman Arguello Galo: Background. According to the October 1982

       cable, an INS informant described Arguello as a UDN representative

       who was to attend a secret meeting in Costa Rica to discuss a

       narcotics for arms exchange. Moreover, the November 1982 cable

       indicated that Arguello was the individual who had discussed the

       purported narcotics for arms exchange.

   640. Information Sharing with Other U.S. Government Entities.

       According to a February 11, 1983 memorandum from CIA's OGC to the

       INS regarding Arguello:

       The Agency requests that you arrange for an asylum interview for

       the subject [sic] in your Miami District Office, on an immediate

       basis. We ask that the interview be conducted during the week of

       14 February 1983.

       It is our understanding that the subject has already submitted an

       application. On the chance that he has not, or that it cannot be

       located, we will instruct the subject to obtain new forms,

       complete them, and bring them to the interview.

       Thank you for your attention to this matter.

   641. No information has been found to indicate any INS response to the

       February 11 OGC memorandum. An INS Biographic Information Form

       G-325A signed by Arguello on "10-11-84" included a notation under

       "Other Agency Use" that stated "No Derogatory Information" and the

       date "14 Jan 85."

   642. On March 18, 1983, CIA requested that the FBI conduct "priority

       traces" on Arguello. A March 30, 1983 CATF memorandum from the FBI

       stated that " . . . FBI has no record on [Arguello]."

   643. Eden Pastora: Background. Eden Pastora is described in the

       November 1982 cable as a UDN representative who was to attend the

       secret meeting in Costa Rica regarding an exchange of narcotics

       for arms. No information has been found to indicate that Pastora

       attended such a meeting, although the November 1982 cable

       discussed earlier indicated that Pastora flew from Tegucigalpa,

       Honduras, to San Jose, Costa Rica, "during the week of 1

       November."

   644. Eduardo Jose Sacasa-Urouyo: Background. "Eduard" Sacasa was

       described in the November 1982 cable as a UDN representative who

       was to attend the secret meeting in Costa Rica regarding an

       exchange of narcotics for arms. CIA records indicate that an

       individual named Eduardo Sacasa-Urouyo was associated with the UDN

       during the 1980s and was a close associate of Fernando Chamorro.

       Other than the November cable, no information has been found to

       link Sacasa with drug trafficking.

   645. Rolando Murillo Escobar: Background. Murillo was described in the

       November 1982 cable as a UDN representative who was to attend the

       secret meeting in Costa Rica regarding an exchange of narcotics

       for arms. No other information has been found to link Murillo with

       drug trafficking.

   646. Information Sharing with Other U.S. Government Entities.

       According to a March 1983 CIA cable to the FBI that requested

       information in FBI files regarding Murillo, Murillo was described

       as "a former member of the Nicaraguan National Guard and former

       resident of the San Francisco area." Murillo reportedly was living

       in Costa Rica, according to the cable. A memorandum dated March

       30, 1983 stated that "FBI has no record on subject."

   647. Juan Savala/Zavala Mora: Background. Juan Savala was described in

       the November 1982 cable as "head of the UDN/FDN training camp in

       Costa Rica" where the INS informant claimed the secret meeting

       would take place to discuss an exchange of narcotics for arms. The

       November cable did not, however, indicate what role--if

       any--Savala would play at the meeting.

   648. CIA records indicate that a "Juan Zavala Mora" was a member of

       the UDN during the 1980s and was a close friend of Fernando

       Chamorro.

   649. No other information has been found to indicate that

       Savala/Zavala was suspected of drug trafficking or that he was

       related to--or otherwise linked to--Julio Zavala who, in 1983, was

       arrested in connection with The Frogman Case in San Francisco.

   650. Roger J. Ramiro: Background. According to the November 1982

       cable, Ramiro was described by INS as a "known narcotics violator

       who recently was indicted on a narcotics charge in Orange County,

       California." As reported in the cable, Bergman Arguello had

       "mentioned" Ramiro's name in connection with the alleged narcotics

       for arms exchange. No information has been found to link Ramiro

       with drug trafficking.

   651. Renato Pena Cabrera: Background. Pena, a convicted drug

       trafficker, was described in the November 1982 cable as an FDN

       representative who was to attend the secret meeting in Costa Rica

       regarding an exchange of narcotics for arms.

   652. Renato Pena says that he associated with Norwin Meneses. Pena

       also claims to have participated in Contra-related activities in

       the United States from 1982-1984 that were unrelated to his drug

       trafficking activities. Pena says that he served as an official,

       but unpaid, representative of the FDN political wing in northern

       California from the end of 1982 until mid-1984, having been

       appointed to that position by Edgar Chamorro. According to Pena,

       his duties on behalf of the FDN were related to public relations

       and distributing Contra-related literature to sympathizers. He

       claims that his activities on behalf of the FDN were all conducted

       in the United States and that he never traveled outside of the

       United States because of his immigration status as a political

       asylum applicant. Pena says that Norwin Meneses had Contra-related

       dealings with FDN official Enrique Bermudez. According to Pena,

       the specific U.S.-based religious organization that was allegedly

       involved with the Contras and drug trafficking was an FDN

       political ally that provided only humanitarian aid to Nicaraguan

       refugees and logistical support for Contra-related rallies, such

       as printing services and portable stages.

   653. Pena says that his personal drug trafficking activities were

       unrelated to the Contras, but claims that the Contras must have

       had alternative sources of funding since the money that the

       Contras received from the U.S. Government was "peanuts." Pena says

       that a Colombian associate of Meneses's named "Carlos" told Pena

       in "general" terms that portions of the proceeds from the sale of

       the cocaine Pena brought to San Francisco were going to the

       Contras. According to Pena, "Carlos" said something to the effect

       that "we are helping your cause with this drug thing . . . we are

       helping your organization a lot." Pena said "Carlos" did not

       provide him with any further information. "Carlos" has not been

       identified.

   654. Pena says that, when he was removed from his FDN position in

       mid-1984--possibly because Contra officials suspected him of drug

       trafficking--and replaced by a U.S. citizen, he was appointed to

       be the "military representative" to the FDN in San Francisco. He

       says this appointment occurred "in part because of Norwin

       Meneses's close relationship with [Enrique] Bermudez."

   655. The FDN representative in San Francisco who replaced Pena--who is

       a naturalized citizen who immigrated to the United States from

       Nicaragua in 1963--was active in Contra-related affairs in San

       Francisco during the 1980s. He says he first became involved with

       the Contras after an early 1980s visit to San Francisco by Contra

       leader Fernando Chamorro in which Chamorro asked for volunteers to

       support anti-Sandinista activities. On July 23, 1986, he says he

       was appointed to be the official FDN representative in San

       Francisco. Prior to his appointment, he says the FDN did not have

       an officially authorized representative in San Francisco. In 1986,

       the FDN opened an office at the Flood Building on Market Street in

       San Francisco with $5,000 provided by the FDN office in Miami.

       However, the office was closed some six months later because it

       was too expensive to maintain.

   656. The FDN representative in San Francisco who replaced Pena says

       that the Nicaraguan community in San Francisco was poor and the

       Sandinistas had considerable support there. "San Francisco was a

       Sandinista town," he asserts. He states that the net amount of

       funds raised for the Contras from the San Francisco community

       throughout the years was about $5,000. According to the FDN

       representative, the Contra support movement did not even have

       sufficient funds to sustain a mailing of brochures and other

       correspondence. He adds that people did not want to be on a list

       of Contra supporters for fear that the list would fall into the

       hands of the Sandinistas and cause difficulties for them or their

       families. As he recalls, the FDN did, however, make several radio

       announcements on local Spanish language radio stations. He says

       that membership in the San Francisco FDN was handled informally.

       Individuals who wanted to support the FDN could just attend

       meetings, dinners and participate in other related events.

   657. The FDN representative who replaced Pena says his activities on

       behalf of the Contras in San Francisco consisted primarily of

       helping to coordinate Contra fund raising dinners and meetings. He

       says he often used his personal funds as security deposits at the

       hotels and other locations where these functions were to be held.

       On one occasion, he says he made up an $1,800 shortfall out of his

       own pocket when a catered dinner at a local restaurant or hotel

       was under-subscribed.

   658. The FDN representative in San Francisco who replaced Pena says

       Renato Pena was not the official FDN representative in San

       Francisco, having never been appointed by the FDN directorate to

       any position. Instead, he says Pena was the self-appointed

       representative for the "military section" of the FDN. He says he

       learned of Pena's drug-related arrest six months after it

       occurred. He says some people in the FDN in San Francisco were

       critical of Pena and did not want Pena to continue his association

       with the movement after the arrest. However, Pena was never

       formally expelled from the FDN. According to Pena's successor,

       Pena sublet an office in San Francisco from drug trafficker Danilo

       Blandon's sister. Blandon's sister attended some FDN meetings in

       San Francisco.

   659. The FDN representative in San Francisco who replaced Pena

       believes that drug trafficker Norwin Meneses probably knew Enrique

       Bermudez since Meneses's brother and Bermudez had been senior

       Somoza officials. He says he met Norwin Meneses "a couple of

       times" when Meneses attended FDN support meetings in San

       Francisco. However, Meneses was never a member of the FDN, and he

       says he does not know whether Meneses provided funds, goods, or

       supplies to the Contras. He says he usually recognized most of the

       persons at the FDN meetings, since most of them lived in the

       community. He says he noticed when new persons or strangers

       attended the meetings, commenting that "Sandinistas probably also

       attended" the meetings. Average attendance at an FDN meeting, he

       says, might be 10 to 15 persons.

   660. The FDN representative in San Francisco who replaced Pena says he

       has no knowledge that Contra organizations--or individuals acting

       on behalf of the Contras--engaged in drug trafficking. However, he

       comments that "People that did [engage in drug trafficking] may

       have been taking advantage of the revolution--that is my opinion."

     _________________________________________________________________

   

   [BACK]

   

   [BACK]

   

              OTHER INDIVIDUALS INVOLVED IN THE CONTRA PROGRAM

     _________________________________________________________________

   

   What drug trafficking allegations was CIA aware of, and when,

   involving other individuals supporting the Contra program? How did CIA

   respond to this information, and how was this information shared with

   other U.S. Government entities? 

   

                                 Ivan Gomez

                                      

   661. Background and Relationship with CIA. The individual who was

       known by the alias "Ivan Gomez" was at various times a CIA

       independent contractor, spouse of a CIA employee, and a rejected

       applicant for staff status. Gomez was an Independent Contractor

       for Latin America (LA) Division by June 1982.

   662. According to a September 1982 cable from Headquarters, Gomez

       returned to Central America on permanent assignment in September

       1982 and continued to work as a trainer, coordinator and general

       liaison to ARDE and related groups.

   663. A January 1983 cable to Headquarters described Gomez' ability to

       engage with others, his effective reporting and his hard work. The

       Station cable, however, also raised concerns that Gomez was too

       close to ARDE.

   664. By the fall of 1983, the problem of Gomez' close ties to Pastora

       and ARDE that had been mentioned in the January evaluation of

       Gomez became an issue. An October 1983 Headquarters cable noted

       that:

       . . . we have become concerned over indications of a loss of

       objectivity and increasing signs of "clientism" on the part of

       [Gomez] toward [ARDE] and [Pastora] in particular . . . . [w]hile

       his own performance to date has been of extraordinary value . . .

       it is absolutely necessary for us to ensure the strictest clarity

       and accuracy in our reporting on and communications with the

       [ARDE]. 

   665. According to a September 1984 Headquarters cable, Gomez was under

       consideration for reassignment in the fall of 1984. This was in

       part because there had been reports that he was on a Sandinista

       target list for assassination. In October 1984, he was reassigned

       to another country where he served for the next two years and

       received favorable performance evaluations.

   666. In May 1986, Gomez married a CIA staff employee. As a result, CIA

       decided that he could no longer continue to serve in the field.

   667. A March 1987 Headquarters cable discussed Gomez' future

       employment with CIA as a result of his marriage to a staff

       employee. The cable stated that Gomez had been nominated to a

       career officer program. His file had been reviewed and it was

       wished to pursue additional processing, including questioning by

       Security. The cable further noted that his questioning by Security

       was scheduled for March 1987.

   668. An undated document concerning Gomez's FY 1988 activities that

       was prepared, probably in September 1987, noted that CIA was

       continuing to pay his salary "until such time as he is either

       picked up by another Agency component or is terminated." According

       to a similar undated document for FY 1989, Gomez' relationship

       with the CIA ended on March 31, 1988.

   669. The Security/Counterintelligence section of an undated document

       for FY 1989 concerning Gomez, probably written in August or

       September 1988, noted that Gomez' use in Central America:

       ended in late May 1987 after he married an Agency employee and

       subsequently initiated processing for U.S. citizenship. Efforts

       were made to use [Gomez] in other Agency programs; however, he was

       unable to [provide credible answers regarding drug trafficking].

       Consequently, [Gomez] was amicably terminated effective 31 March

       1988.

   670. A CIA officer reported having met with Gomez socially on December

       20, 1989 in the United States and that Gomez was bitter and

       unhappy about his termination from CIA and was threatening to take

       his complaint to President George Bush. The CIA officer also

       reported that Gomez had outlined a plan to expose the identity of

       CIA personnel serving abroad.

   671. In 1992, Gomez reportedly claimed he had information about a

       weapons shipment and was put in touch with a CIA officer. The

       officer observed that Gomez "seemed reluctant to meet with him.

       Gomez reportedly advised that he still harbored bad feelings

       regarding how and why his relationship with CIA was terminated." A

       March 1992 Headquarters cable instructed cognizant CIA officers to

       have no further contact with Gomez.

   672. Allegations of Drug Trafficking. In conjunction with his marriage

       to a CIA officer and possible employment by CIA as a staff

       officer, Gomez underwent a number of polygraph examinations in

       1986-1988. During a March 1987 polygraph examination, Gomez stated

       that in March or April 1982, prior to his employment with CIA, he

       had provided some assistance to family members engaged in drug

       trafficking and money laundering in the United states. In the

       first instance, he had written a check, in exchange for cash, for

       a cousin who was traveling from the United States to Latin

       America. Gomez said he believed the cousin was a drug money

       launderer, but did not believe he was engaging in a money

       laundering operation by writing the check. In the second instance,

       Gomez said that a brother who lived in Miami was a drug trafficker

       and had asked his brother-in-law to transfer some cash from New

       York to Miami. Gomez accompanied his brother-in-law to New York,

       where they picked up a bag containing $20,000 to $22,000 in cash

       and transported it to Miami. Gomez said that, at the time, he told

       his brother-in-law that "this was probably drug money." Gomez'

       response as to whether he had aided his brother in his trafficking

       activities and whether he had been involved in trafficking after

       he began working for CIA were in doubt.

   673. Gomez was subjected to another polygraph examination by CIA in

       April 1987. According to that report, Gomez changed his story

       somewhat concerning the bag of cash he had reported obtaining in

       New York for his brother:

       [Gomez] increased his estimate of cash from somewhere between

       $30,000 to $40,000. [Gomez] indicated he and [his brother-in-law]

       met an individual who was identified by the wearing of a yellow

       jacket. This individual then approached [them], struck up a

       conversation, and then provided the cash to [Gomez]. During later

       discussion of this incident, [Gomez] stated he knew this act was

       illegal at the time, but he consummated the act nevertheless. At

       the completion of [Gomez'] second session, testing in this area

       remained incomplete.

   674. According to a March 1988 polygraph examiner's report, Gomez was

       subjected to another polygraph examination on two days in March

       1988 as staff employment processing. During discussions with the

       examiner, Gomez reportedly said that his brothers had accumulated

       a business debt of about $2 million. According to Gomez, one had

       gone to Miami to run a money laundering operation for a group of

       drug traffickers to pay off the debt. Another handled the funds in

       Latin America. According to Gomez, when he visited his brother in

       Miami, Gomez saw that "his brother had many visitors whom [Gomez]

       assumed to be in the drug trafficking business . . . . However, .

       . . he never saw his brother either receive or distribute any

       drugs and/or money."

   675. According to the March 1988 examiner's report, Gomez provided yet

       another account of his acquisition of cash in New York:

       [Gomez'] brother-in-law informed [Gomez] that [his brother] had

       requested that he pick up $30,000 in a bar in New York City.

       [Gomez] stated that he accompanied his brother-in-law to the bar

       whereupon the brother-in-law stayed in the car while [Gomez]

       entered the bar and made contact with the individual who was to

       turn over the money. This individual took [Gomez] to an apartment

       where he gave him $15,000 and offered him some cocaine. [Gomez]

       stated he refused . . . . [Gomez] shortly thereafter, began to

       work for this Agency. . . . In June 1982, . . . [His brother] was

       arrested for drug trafficking. [Gomez] stated he had not had any

       involvement in narcotic trafficking activities.

       Based on the interview, the interviewer believes Gomez directly

       participated in illegal drug transactions, concealed participation

       in illegal drug transactions, and concealed information about

       involvement in illegal drug activity.

   676. According to the March 1988 examiner's report, the examiner

       discussed the different reasons Gomez had provided for his brother

       giving him money, differing and conflicting ways Gomez had said

       money was raised for his brother's legal expenses, and the

       differing accounts of the story concerning the passing of the

       money in New York--the amount was $20,000 or $30,000 or $15,000;

       the brother-in-law went into the cafe with Gomez to meet the

       person making the exchange or the brother-in-law did not go into

       the bar with Gomez to meet the person; the passage of the money

       took place in the cafe/bar or in an apartment. According to the

       report, Gomez tried to dismiss these discrepancies as

       inconsequential. However, "when the examiner continued to question

       [Gomez], he suddenly stood up, thanked the examiner, shook his

       hand and said words to the effect, 'that's all' and walked out."

   677. According to a March 1988 report of a CIA official who observed

       the March 1988 polygraph examination of Gomez, CIA was "especially

       concerned about any possible involvement with drug trafficking on

       the part of [Gomez]." The official's report also stated that "the

       impression was that [Gomez abruptly departed from the examination]

       because he was being questioned about drug activities which were

       unacceptably threatening to him, so he called it quits." The

       official's report concluded:

       the net impression . . . is that [Gomez] probably is concealing at

       least much more personal and direct involvement in drug smuggling

       than he can report . . . . The further impression is 

       that . . . he probably never had any intention of revealing his

       true involvement in drug activity. . . .

   678. The December 12, 1996 edition of the British newspaper, The

       Independent, commented on an Independent Television program that

       was being broadcast that night. According to The Independent,

       Carlos Cabezas, a convicted drug trafficker associated with Julio

       Zavala in the San Francisco Frogman Case, said:

       . . . he had met a CIA agent, Ivan Gomez, in Costa Rica who, he

       said, was there to make sure that all the profits went to the

       Contras and not into the back pockets of the drug dealers and

       smugglers. "They [not specifically identified] told me who he was

       and the reason he was there, . . . It was to make sure the money

       was given to the right people and nobody was taking . . . profit

       they weren't supposed to." 

       (Ellipses in original.)

   679. Cabezas was interviewed twice in 1997 and initially stated that a

       man named Ivan Gomez was present at least once in 1981 or 1982

       when Cabezas met with drug traffickers Horacio Pereira and Troilo

       Sanchez in Costa Rica to deliver funds derived from drug

       trafficking. Cabezas also stated that Gomez said he was with the

       CIA. According to Cabezas, Gomez participated in the meeting when

       Pereira and Sanchez discussed their drug smuggling activities on

       behalf of the Contras. Cabezas described Gomez as a Latin

       American, and, based on his accent, possibly from the Dominican

       Republic.

   680. In the second interview, Cabezas provided more details concerning

       his reported meeting with Gomez. He said the meeting took place in

       either April or May 1982 at a hotel in San Jose, Costa Rica.

       Cabezas stated that both Pereira and Gomez told him that Gomez was

       "the CIA's man in Costa Rica" and that "Gomez was there to ensure

       that the profits from the cocaine went to the Contras and not into

       someone's pocket." Cabezas again said that Gomez appeared to be a

       native of the Dominican Republic. Cabezas gave a physical

       description of Gomez and said he would recognize Gomez if he saw

       him again. Cabezas was then allowed to examine 16 photographs of

       Latin males. Cabezas identified one of the individuals in the

       photograph as being Gomez and a second person, who resembled the

       first, as also a possibility.

   681. Two of the 16 photographs shown Cabezas were of Ivan Gomez.

       Neither was identified by Cabezas as being Gomez. Moreover, the

       physical description of Gomez that was provided by Cabezas was

       three to five inches in height, and 40 pounds in weight, different

       from Gomez' actual physical characteristics. In addition, Gomez is

       not a Dominican. According to CIA records, Gomez also was not in

       Costa Rica in May 1982 when Cabezas says the meeting with Pereira

       occurred there, but was in the Washington, D.C. area being

       interviewed by CIA for potential employment. Further Gomez was not

       hired by CIA until June 1, 1982, nor has any information been

       found to indicate that he traveled to Costa Rica prior to June

       1982.

   682. Finally, the name "Ivan Gomez" was not recorded as his alias, and

       the passport and employment letters necessary for use of that

       alias to travel to Central America were not provided to Gomez,

       until June 1982. According to a CIA officer helping process him

       for his assignment, Gomez had suggested another name--"Juan

       Gomez"--as his alias and that suggested name was submitted for

       processing by the officer. However, Gomez' unclear handwriting

       resulted in "Juan" being read as "Ivan" during the approval

       process. Therefore, Gomez was not even aware until June 1982 of

       the Ivan Gomez alias that CIA ultimately provided to him.

   683. Cabezas mentions that he also saw Doris Salomon, wife of Julio

       Zavala, when he reportedly met Gomez at the Costa Rica hotel and

       that she was several months pregnant at that time. Salomon

       acknowledges that she stayed at that same hotel and did see

       Cabezas there and was pregnant with her son. However, the son was

       born in July 1981. In the spring of 1981 Gomez was still serving

       in the military of his home country.

   684. Ivan Gomez says that his physical appearance never matched that

       given by Cabezas. He also says he has never stayed at the hotel in

       San Jose identified by Cabezas as the meeting site and that the

       name Carlos Cabezas is not familiar to him. He acknowledges that

       the name Ivan Gomez was not the name he picked for his alias and

       that it appeared as a surprise to him on his alias documents.

       Gomez confirms that he was in the United States in March-April

       1982. Gomez says that a former lover of Pastora named Nancy

       provided his name to the Sandinista newspapers.

   685. Other public mentions of the name of Ivan Gomez appeared in the

       media prior to the 1996 and 1997 allegations by Cabezas regarding

       meeting Gomez in Costa Rica. For example, the name was included in

       the 1994 book Hostile Acts: US Policy in Costa Rica in the 1980s

       by Martha Honey, an American journalist. The book states, "the

       Agency . . . had a group of Costa Rican-based agents working

       directly inside Pastora's organization . . . . The head agent was

       Ivan Gomez, a Venezuelan . . . . "

   686. CIA Response to Allegations of Drug Trafficking. Agency records

       include an undated, unsigned document describing the June 29, 1982

       arrest of Gomez' brother. The document was not in an official form

       and was poorly typed on a sheet of newsprint paper. The charge

       against the brother was, according to the document, participating

       in a continuing criminal enterprise, and search warrants had "lead

       [sic] to arrest of 2 others and seizure of 2 [kilograms] of coke

       and $160,000." The document also stated that the brother had

       delivered 54 pounds of cocaine in 1982 to undercover agents of an

       unidentified law enforcement agency. The document appearing

       adjacent to this one in the file is dated August 26, 1982.

   687. The CIA desk officer from 1981 until late 1984 who dealt with

       Gomez says that she had heard sometime in 1982 that Gomez' brother

       had been arrested for involvement with drugs. She comments that

       Gomez did not appear to make any effort to hide his brother's

       arrest from CATF officers. It appeared to the desk officer, as she

       recalls, that several other Agency officers knew of the situation,

       but it fell into the category of a family problem and not one

       affecting Gomez professionally.

   688. The desk officer also recounts a conversation she had with Gomez

       sometime prior to the end of 1984 in which she asked Gomez

       directly, "Did you know anything about your brother's drug

       activity?" According to the desk officer, Gomez reacted strongly

       to the question and indicated he had nothing to do with his

       brother, drugs, or the incident that led to his brother's arrest.

       Gomez reportedly stated to her that he had no intention of

       visiting or helping his brother. Gomez reportedly also told the

       desk officer that he did not want to see his brother and that he

       had fought hard not to be tainted by drugs.

   689. An officer who participated in Gomez' interview for employment

       and later worked in CATF, says that he was aware that Gomez'

       brother had been arrested and convicted on narcotics charges. It

       is this officer's recollection that Gomez characterized his

       brother as "dumb" and said that he had a "disastrous lapse in

       judgment." The officer says he recalls that the charges against

       the brother may have related to a "money laundering deal" and adds

       that Gomez made no secret of his brother's arrest. The officer

       says he has no reason to believe that Gomez had anything to do

       with the brother's activities and expresses doubts that Gomez

       would have been personally involved in such activities. In any

       event, the officer says he did not believe that the brother's

       conviction was a factor relating to Gomez' suitability for CIA

       employment. Whatever responsibility there may have been for

       documenting the information regarding the brother, he says, would

       have rested with Gomez' CIA supervisors.

   690. Gomez says that he told his COS about his brother's arrest when

       it happened. As Gomez recalls, he informed the COS while they were

       riding in an automobile.

   691. Gomez says that the COS made no particular comment at the time,

       only that Gomez should not worry about the matter. Gomez says that

       he probably also told another operations officer and that he also

       told the Costa Rica desk officer and at least two other CATF

       officers. Nonetheless, according to Gomez, no CIA officers ever

       said anything to him about the situation involving his brother.

   692. The former COS recalls Gomez telling him about his brother's

       arrest, but says he recalls that the brother was arrested for a

       visa or immigration matter. The former COS says that, if the

       brother had been arrested on a narcotics charge, "there is no way

       that I wouldn't have made it part of the record." He says he

       recalls that the narcotics aspect of Gomez' brother's arrest came

       up in 1986, and his recollection is that it was raised by Agency

       security personnel. He says:

       It is inconceivable to me that on hearing this information I--or

       someone else--would not put it on record. Why would I have covered

       it up? I would have no reason to do so. [Gomez] was an employee. 

   693. The person who was DCOS at about the same time recalls that he

       spoke only briefly with Gomez about his brother's arrest. No

       details were ever discussed, he says, and Gomez seemed very

       sensitive about the subject and did not want to discuss it. The

       former DCOS says that, when knowledge of Gomez' brother's arrest

       became known to the Agency, there was no thought of looking closer

       into Gomez' background because he was a strong performer and the

       allegations concerned his brother, not Gomez. The former DCOS says

       that he never knew Gomez picked up money for his brother in New

       York City that may have been drug related. He adds that the former

       COS was more closely involved with Gomez than either he or the

       Costa Rica desk officer.

   694. The Agency's Office of Security (OS) prepared an October 1986

       memorandum outlining information known about Gomez and Gomez'

       career with the CIA. The memorandum noted that "record traces on

       [Gomez'] immediate family members revealed possible hits as

       possible drug traffickers and/or members of leftist organizations

       in [a Latin America country]." The memorandum also referred to

       trace results that identified one of Gomez' brothers as a drug

       trafficker, although the information appears to refer to a person

       who had a name similar to that of Gomez' brother but who was not

       related to Gomez. The memorandum also summarized information Gomez

       had furnished about the association of two brothers with narcotics

       trafficking during two 1986 Agency polygraph examinations that

       were part of the marriage review process.

   695. The source of the information in the OS memorandum relating to

       Gomez' family may have been, in part, a November 1985 FBI document

       that reported information from an informant. The FBI informant

       reportedly said that the informant learned while he was

       incarcerated that two of Gomez' brothers were both money

       launderers and large-scale cocaine importers. One brother was

       identified by the informant as arranging for cocaine shipments

       with well-known narco-trafficker Roberto Suarez. The FBI document

       made no mention of Ivan Gomez. The FBI document was included in

       OS, but not DO, files. No information has been found to indicate

       that officers in the DO who were responsible for Gomez' management

       and administration ever saw the FBI document.

   696. The polygraph examiner's report of Gomez' March 1987 polygraph

       noted that Gomez said he had attempted to "arrange a deal for his

       brother with U.S. authorities after his brother's 1982 arrest."

       According to the report, Gomez said that he discussed his

       brother's case with officials at the U.S. Embassy in his home

       country:

       In discussions with an agent of the . . . [Drug Enforcement

       Administration] at the U.S. Embassy . . . [Gomez] tried to arrange

       immunity for his brother in exchange for his testimony against DEA

       agents allegedly involved in narcotics trafficking. Furthermore,

       [Gomez] stated that he discussed his brother's case with

       unidentified members of the Office of Security at the U.S. Embassy

       . . . . Finally, [Gomez] was told by unidentified Headquarters

       personnel to stop pursuing the matter because he was "causing

       problems."

       CIA personnel say they do not recall giving advice to Gomez to

       stop contacting U.S. Government agencies in an effort to help his

       imprisoned brother.

   697. Gomez acknowledges that, after his brother was arrested, he

       contacted a U.S. DEA agent who was a good friend. Gomez says he

       asked the DEA agent whether his brother could volunteer to "help

       out," i.e., to cooperate with U.S. authorities. Gomez says the DEA

       agent called another one of Gomez' brothers, but Gomez says he

       does not know the details of that conversation. Eventually, the

       arrested brother decided not to cooperate because, according to

       Gomez, there were "lawyers in Miami" who said he would be killed

       if he did. Gomez also says that he may have told CIA officers that

       he was trying to put his brother in contact with DEA.

   698. The DEA agent with whom Gomez says he spoke recalls that Gomez

       told him about the brother's arrest. According to the DEA agent,

       Gomez thought that his brother could be a potential source for DEA

       and asked the DEA agent to talk to the family. The DEA agent

       recalls meeting with another of Gomez' brothers and that he

       appeared to be making some headway in ascertaining the facts

       surrounding the arrest. However, a sister walked in and entered

       the conversation. She became hostile and said that they did not

       need any help. The DEA agent says he left and did not have any

       further contact with the family.

   699. The DEA agent says he never learned the reason for the brother's

       arrest, and the family did not provide records of the arrest as

       the DEA agent had requested. Gomez' brother with whom the DEA

       agent met indicated only that the arrested brother had information

       that could be useful to DEA. The DEA agent could not remember

       whether he wrote a report concerning the contact with the brother,

       and says he did not contact the responsible DEA case agent. The

       DEA agent indicates that Gomez came from a good family that was

       not involved in drugs, except for the one brother. The DEA agent

       says he spoke to Gomez about his confrontational meeting with

       Gomez' brother and sister and that Gomez never pushed for another

       meeting or assistance for his brother. The DEA agent states that

       the assistance requested by Gomez was not unusual, and most times

       some assistance can be rendered in such circumstances.

   700. On May 20, 1987, an Employee Review Panel (ERP) was convened to

       discuss Gomez and his wife. A May 20, 1987 memorandum describing

       this ERP was written by the representative of the

       Counterintelligence Branch of the OS Special Activities Branch who

       presented the case to the ERP. That memorandum indicated that the

       meeting was characterized by the chairman as a "fact finding"

       session and that the discussion was detailed. An attachment to the

       memorandum described the issues to be considered by the ERP as

       including Gomez' travel to New York to "pick up approximately

       $30-40,000 for [his brother]. . . ," The brother's arrest and

       Gomez' cousin involvement in "laundering drug money." The ERP

       recommended, according to the memorandum, that "if the opportunity

       arises to repolygraph [Gomez], he should be directly confronted

       with the issues of personal affiliation with drug activities . . .

       ." The question of whether a crimes referral should be made to DoJ

       was discussed and left for OGC action--an OGC representative was

       present at the ERP. The memorandum recorded that "CMS

       representative [the Chief of CMS, Gomez' former COS] noted that

       [there] is still interest in [Gomez] as [career] candidate and

       that his application might be reinitiated in June 1987."

   701. The former Chief of CMS recalls that he did say at the ERP that

       there was still interests in Gomez, but notes that the memorandum

       describing the ERP may or may not accurately present the

       chronological order of the actual discussion at the ERP. He says:

       One could attribute to the memorandum the sense that [I] was

       fighting to keep [Gomez] on. That's not my style. Interest

       attenuated [in Gomez] in reality if it were going to be reported

       to DoJ. We were not going to the bitter end to protect him.

       Foreshortening of these notes could give this impression. This was

       not my mindset. 

   702. In a June 26, 1987 memorandum to OS, the LA Division Chief

       commented on a briefing LA Division had received regarding Gomez'

       "difficulty" with his questioning by CIA Security. The memorandum

       stated that "it will be the policy of LA Division to not accept

       [Gomez] for any assignment to Latin America until . . . any

       additional security processing is favorably resolved."

   703. A July 8, 1987 memorandum to the Chief of SAS from the supervisor

       mentioned previous in connection with Gomez, recommended several

       actions regarding Gomez. They included: no further polygraph

       examination until after Gomez' wife had completed her pregnancy

       period so as not to create "adverse stress on [Gomez] and spouse,

       affecting her pregnancy and possibly leading to miscarriage;"

       continuing Gomez' salary through February 1988, shortly after the

       birth of his child, while his wife was on Leave Without Pay; fund

       Gomez' language training in English; and polygraph Gomez after his

       wife's pregnancy in order to:

       . . . resolve all outstanding issues if possible. C/CMS wishes to

       clarify situation as it pertains to [Gomez], and future employment

       of spouse who also is due normal reinvestigation- sticky

       situation. . . . SAS should initiate action [for] further

       polygraph testing in early 1988 to resolve outstanding issues. If

       favorable results are obtained . . . and clarification of any

       prior narcotics activities are resolved, LA [Division] can then

       decide if in fact they desire to employ [Gomez].

       The recommended actions were concurred in by the Ground Branch

       Chief, the SOG Chief, the SAS Chief, and the CMS Chief, who wrote,

       "Concur fully with this approach."

   704. The former Chief of CMS says he does not recall specific

       discussions with the SAS supervisor, but notes that he and the

       supervisor were in regular contact concerning Gomez. In regard to

       the recommendation not to initiate action for another polygraph

       until Gomez' wife's baby was born, the former Chief of CMS says,

       "As I recall, the conversations focused solely on [the wife's]

       medical condition. It was a difficult pregnancy." He says he was

       not thinking at the time in terms of "cutting our losses" and

       terminating the relationship with Gomez. Asked if he thought that

       Gomez would pass the polygraph at this juncture, the former Chief

       of CMS comments that "anyone with this depth of a problem, the

       likelihood of passing is not good." He says Gomez was continuing

       to receive his salary and his wife was on Leave Without Pay. He

       says he wanted to create every opportunity to clarify the

       situation.

   705. The supervisor, in an undated MFR, reported that he and Chief of

       CMS met with Gomez and his wife on July 16, 1987. The meeting was

       to brief them on the plans to delay further polygraph testing

       until after the birth of their child and to sponsor Gomez' English

       language training. The memorandum noted that Chief of CMS:

       . . . reemphasized his intentions to reinitiate action with both

       OS and [Office of Medical Services], after the pregnancy period,

       to desensitize [Gomez] to any issues of concern and conduct the

       next polygraph sessions in Spanish language. It is hoped that a

       combination of OS and OMS efforts would favorably produce desired

       results.

   706. The former Chief of CMS says that he recalls the July 16, 1987

       meeting with Gomez and his wife.

       It was an extra step. There wasn't any other agenda. Here's a guy

       who worked directly for me. We owed it to him. I was directly

       involved as his former COS. It would not be seemly if I hadn't. I

       don't want [Gomez] to think when the going gets tough, the senior

       guy won't be there. I had been involved previously. It would have

       been very inconsistent if I hadn't continued. 

   707. The amendment to Gomez' contract providing for a termination

       bonus and a month's salary for each year of service was requested

       by the SAS SOG Chief on August 3, 1987 and approved by the EPS

       Chief on September 18, 1987. The request made no mention of the

       ERP recommendations, Gomez' possible involvement in his brother's

       drug trafficking activities, or the problems Gomez was having

       passing the polygraph examination.

   708. A September 1, 1987 cable to Headquarters submitted a Performance

       Appraisal Report (PAR) regarding Gomez. Gomez' Grade and Title

       were entered as "agent" and "covert action asset." The PAR gave

       Gomez an overall grade of "5," described as indicating

       "Performance occasionally exceeds the work standard and is good."

       The reviewing officer summarized Gomez' performance in the PAR by

       writing, "Subject is a dedicated, hardworking professional who

       contributed significantly to Station's overall intelligence

       mission." The PAR was identified as a "special request," but no

       information has been found to indicate that this PAR was requested

       by Headquarters. An undated, unsigned, handwritten note attached

       to the Headquarters copy of the cable noted, "Unusual to have PAR

       on asset."

   709. A January 6, 1988 MFR written by an OS officer reported on a

       January 5, 1988 meeting to discuss further polygraphing of Gomez.

       Attending the meeting were the then-DO Grievance Officer who had

       attended the May 20, 1987 ERP and who worked in CMS; the SAS

       supervisor; and the SAS desk officer who supported the surrogate

       operations officer program. The memorandum recorded that

       supervisor and the SAS desk officer:

       . . . stated that they are desirous of finding suitable Agency

       employment for [Gomez] outside of SAS. They feel that [Gomez] has

       shown extreme dedication and courage in his work with SAS . . .

       they also understand that [Gomez] walked out on his last polygraph

       test and that he had admitted to two instances of assisting in the

       laundering of drug money in the United States.

   710. A February 19, 1988 OS MFR noted that the LA Division Chief was

       asking for a memorandum that summarized Gomez' polygraph

       admissions. The OS officer wrote, "Apparently, C/CMS is trying to

       get LA Division to sponsor [Gomez] for Agency employment, which

       the LA Division Chief does not want to do." The memorandum also

       noted that another OS official had advised that LA Division should

       be told that:

       [the LA Division Chief should look to C/CMS/DO for information in

       the case, as [Chief of CMS] had been fully briefed. If [the LA

       Division Chief] wanted to talk with someone else, he may want to

       discuss the case with [the DO Grievance Officer] . . . . 

   711. The former Chief of CMS confirms that he was trying to have LA

       Division sponsor Gomez for Agency employment. He says that the

       February 1988 OS memorandum reflected the position he had

       consistently taken regarding Gomez. He explains his general view

       of the Gomez situation in the following way:

       In light of the 1997 context, I'd do things differently. Strictly

       speaking, the situation with his brother makes [Gomez] an

       accessory. This was a high risk, dicey, fuzzy situation. [Gomez]

       was a guy who served [CIA] well. He was loyal to us. I was

       supportive of him throughout. My view was: Let's get to the bottom

       of this--whatever was bothering him on the [polygraph]. And let's

       salvage a good officer. What comes across now is the lack of focus

       on the legal aspects. I wasn't alone, obviously. It is a striking

       commentary on me and everyone that this guy's involvement in

       narcotics didn't weigh more heavily on me or the system. We were

       looking more heavily on this officer's contribution than this

       incident, accidental or not.

       He points out that his characterization of Gomez as "an accessory"

       is "from a lay perspective, since I am not an attorney."

   712. Information Sharing with Other U.S. Government Entities.

       Potential Referral to DoJ. During the May 20, 1987 ERP that was

       convened to discuss Gomez and his wife, the OS representative,

       according to the May 20, 1987 memorandum regarding the ERP,

       "voiced strong sentiments that the drug related information

       [concerning Gomez] should be passed to the Department of Justice

       regardless of the legal requirement, or lack thereof." In

       response, "the OGC representative requested a written referral in

       order to initiate possible passage to DOJ." The memorandum also

       stated that Gomez:

       . . . has never been an employee of this Agency. He . . . is

       currently working as a[n] Independent Contractor; but he has never

       had a Contract External clearance. [Gomez'] employment status has

       been a matter of interest to OGC and the issue of required passage

       to DOJ hinged on this status (there is now no apparent requirement

       to pass to DOJ either in true name or as a John Doe). . . . It is

       recommended that a Memorandum for the Record be routed to OGC for

       their interest and final decision on passage of pertinent

       information to DOJ. 

       (Underlining in original.)

   713. The former Chief of CMS says that he does not specifically

       remember the OS representative saying at the ERP that Gomez'

       narcotics-related activity should be reported to DoJ. The former

       Chief of CMS states:

       the issue of getting DoJ involved seems perfectly logical, reading

       through [the record regarding the ERP]. My reaction now is that

       [the OGC representative's] view that Gomez is not technically an

       employee and therefore reporting may not be required is slicing it

       pretty thin. With today's standards, yes we should report it [to

       DoJ].

       He does not recall seeing a document in response to OGC's request

       at the ERP for a written referral. He says that his recollection

       is that the alleged violation was referred to DoJ.

   714. A June 12, 1987 memorandum from the Deputy Director for Personnel

       Security, to the OGC lawyer who had attended the May 20 ERP,

       outlines Gomez' "association with the Agency and his admissions of

       possible criminal activity." The OGC attorney addressed the

       question of reporting information concerning Gomez to DoJ in an

       August 20, 1987 memorandum for then-Associate Deputy General

       Counsel for Administrative Law and Management Support Gary Chase.

       The memorandum requested Chase's concurrence with the OGC

       attorney's recommendation that the information concerning Gomez

       not be reported to DoJ. In the memorandum, the OGC attorney

       reasoned:

       While [Gomez] could be guilty as a principal, accessory after the

       fact, or of conspiracy if he knew the money was part of a drug

       transaction, we have no evidence that he did know that critical

       fact. While the receipt of $35,000 cash in a paper bag should have

       (and probably did) raise his suspicions, I do not feel that the

       information available to us is sufficient to provide a basis for

       inferring criminal intent. The offense that might be involved,

       moreover, is not a non-employee offense required to be reported

       under the procedures [established by the 1982 Memorandum of

       Understanding (MOU) between DoJ and CIA regarding reporting of

       potential crimes]. (Although [Gomez] . . . has . . . been an

       independent contractor, he has never been an "employee" as defined

       in the [DoJ-CIA MOU]).

       On August 11, 1987, Chase concurred with the OGC attorney's

       recommendation, adding a note that his concurrence was "pursuant

       to delegation from the General Counsel of 25 June 1986 . . . ."

   715. The OGC attorney says that he believes that the standard at the

       time was properly applied. Gomez, as an Independent Contractor,

       was not an "employee." Therefore, whether a possible crime

       involving him should be referred to DoJ was covered by the

       non-employee portion of the 1982 DoJ-CIA MOU. Under that portion

       of the MOU, he says, this information regarding a possible

       narcotics violation was not required to be reported.

   716. The OGC attorney also comments that, at the time, OGC carefully

       reviewed cases to determine whether all elements of a crime were

       present as part of the consideration of whether to refer a matter

       to DoJ. Now the practice is to refer most matters and let DoJ make

       such determinations.

   717. Chase explains that the General Counsel had delegated authority

       to him to make crimes referral decisions and that Chase's

       signature noting his concurrence with the OGC attorney's

       recommendation reflected Chase's approval of the decision not to

       refer the matter to DoJ. Chase, commenting on the OGC attorney's

       memorandum, agrees that Gomez did not meet the criteria of an

       "employee" and that the offense in question, a possible narcotics

       violation, was not a reportable offense under the section of the

       1982 DoJ-CIA MOU on crimes reporting that dealt with

       non-employees. Chase opines that, therefore, there was no

       obligation to make a report to DoJ. Chase further notes that he

       does not view the conduct by Gomez that was described in the OGC

       attorney's memorandum as the kind of issue that should be rushed

       to DoJ. He notes that the incident in question had occurred five

       years prior to the date of the OGC attorney's memorandum, and the

       statute of limitations may have played a role in his decision not

       to refer the matter to DoJ.

   718. Chase, concerning the discussion in the OGC attorney's memorandum

       of Gomez' intent, says that whether intent is a factor in making a

       crimes referral depends on the specific potential crime and that

       specific intent crimes would require an intent finding. Chase

       states that the OGC attorney must have believed there had to be

       some kind of intent in order for there to be a crime. Chase says

       that transporting money, unlike transporting drugs, is not illegal

       on its face. Chase says, however, that he thinks the intent

       element might have been overemphasized in the OGC attorney's

       memorandum because OGC should only be interested in reporting

       facts in a crimes referral.

   719. No information has been found to indicate that the OGC

       attorney/Chase memorandum was ever distributed to the ERP members.

       The OGC attorney says that the crime referral itself was not an

       ERP issue, since that group focuses on employee actions. In

       retrospect, the OGC attorney says it "might have been wise to see

       that the ERP got a copy."

   720. FBI Trace Request. A May 19, 1989 cable to CIA from a Supervisory

       Special Agent in the FBI's Counterterrorism Section requested the

       status of traces the FBI had requested from CIA concerning Ivan

       Gomez on April 14, 1989. The May 19 cable was directed to the

       External Inquiries Branch in the DO's Information Management Staff

       (IMS) for action.

   721. A June 28, 1989 cable to CIA from another Supervisory Special

       Agent in the FBI's Counterterrorism Section requested trace

       information and "all information contained in your files"

       regarding Ivan Gomez. The responsibility for responding to the

       cable also was assigned on June 28, 1989 to the External Inquiries

       Branch in the DO's Information Management Staff.

   722. A June 30, 1989 letter to the CIA's Deputy Director of Security

       from the Chief of the FBI's Counterterrorism Section requested

       "all information contained in your files" concerning Ivan Gomez.

       An August 30, 1989 letter from the Chief of the FBI

       Counterterrorism Section to the Deputy Director of OS requested a

       response to its June 30, 1989 letter for all information in CIA

       files on Gomez. A handwritten note appears in pencil in the margin

       that "FBI-reviewed file on 14 June."

   723. A handwritten October 31, 1989 note to the Information Management

       Staff from a Special Assistant to the Associate DDO for

       Counterintelligence states, ". . . enclosed is the correspondence

       with FBI indicating we had 'no record' on [Gomez]. . . ."

       Subsequently, however, the Chief of the IMS Information Services

       Group, Information Research and Retrieval Branch wrote to the

       Chief, Information Services Group on November 2, 1989 and

       explained that the traces on Gomez for the FBI had been done by a

       person who had previously worked in the section, but was now

       helping with traces on an overtime basis. The memorandum noted

       that the search for records relating to Gomez had been conducted

       in at least one instance by his given name, not his surname. This

       reportedly explained why the Agency had produced a "no record"

       response to the FBI. The memorandum commented that the

       "consequences of missing a record for . . . the FBI . . . could be

       particularly severe" and, therefore, "effective immediately, all

       FBI material will be handled by full-time . . . staffers. As

       individuals who work with name tracing . . . full-time staffers .

       . . generally have a sharper sense for the accuracy of results . .

       . . "

   724. A November 1, 1989 memorandum from the OS, Special Activities

       Division, Special Investigations Branch to the Special Activities

       Division Chief described an interview of Gomez' wife concerning

       his activities. The memorandum indicated that OS officials had met

       with FBI agents on June 14, 1989 and:

       The FBI advised that they were aware of the fact that [Gomez] had

       worked for the Agency but that they had not traced him until May

       1989.

       The OS memorandum noted that OS had provided the FBI with an oral

       "summary of the security issues affecting" Gomez. According to the

       memorandum, "The FBI was, prior to this point, unaware of the fact

       that [Gomez] left the Agency under less than favorable conditions,

       that he had a brother convicted in federal court on felony drug

       charges or that [Gomez'] family was involved in the drug trade."

   725. According to the November 1 OS memorandum, an additional meeting

       between OS and FBI officials and also Gomez' wife had reportedly

       been held on July 31, 1989. The FBI acknowledged that the June 30

       FBI trace request had been initiated as a result of the June 14,

       1989 meeting with OS and that:

       . . . no reply was necessary as the requested information was

       passed on 14 June 1989 . . . . On 30 August 1989 the FBI sent a

       trace request referencing the 30 June 1989 request . . . . Contact

       with the FBI Supervisory Agent . . . confirmed that the 30 June

       1989 and 30 August 1989 traces request [sic] were for information

       already received in the 14 June 1989 meeting and were merely

       formalities. [The Supervisory Agent] advised that no new requests

       were being made and that it appears to be a clerical error in

       sending the follow-up request. 

   726. An October 26, 1989 CIA cable to the FBI's Counterterrorism

       Section states that Gomez:

       . . . served for the CIA . . . . from 1983 to 1988 when he was

       terminated amicably. During Subject's polygraph, [the results]

       precluded his continued use by this Agency. . . . FBI agent[s] . .

       . reviewed all available information on [Gomez] on 14 June 1984.

       The Office of Security reiterates that all available background on

       Subject has been made available to your [Headquarters].

   727. A November 13, 1989 OS letter to the Director of the FBI, for the

       attention of the Intelligence Division, confirmed that "all

       information contained in our files concerning" Gomez was provided

       to FBI Special Agents "in a meeting that occurred on 14 June 1989.

       Subsequent contact with these Agents disclosed no additional

       requests for information."

   728. No information has been found to indicate that information

       relating to possible involvement in drug trafficking by Ivan Gomez

       was provided to the Congress by CIA.

       

                        A CIA Independent Contractor

                                      

   729. Background and Relationship with CIA. A January 1983 cable to

       Headquarters first brought this future CIA independent contractor

       to the attention of CIA. An overseas DEA office had reportedly

       informed the CIA that he, a principal informant in a major U.S.

       drug case, had finished his work for DEA and wanted to work for

       the Agency. The cable described him as recommended highly by DEA.

       It also noted that he had spent three years in prison in

       connection with membership in an insurgent organization and that

       he had been "involved in narcotics-related affairs" after his

       release from prison.

   730. A March 1983 cable described this independent contractor's

       previous activities. It reported that he had been sentenced to a

       long prison term for plotting against the State, insurgency, use

       of false documents, desertion, stealing military property, being

       commander of a group of armed insurgents, and destroying public

       buildings with explosives. He was not convicted of an additional

       charge of assassination. He served, according to the March 1983

       description, six years of his sentence and was the beneficiary of

       an amnesty.

   731. A March 1983 request by a CIA officer to employ him noted that he

       had told the Agency that he became aware, as a private businessman

       in Latin America in 1980, of guerrilla groups using profits from

       drug trafficking to buy weapons. He claimed to have decided to

       conduct his own investigation of these activities. He said he had

       thereafter become the associate of a major drug trafficker and

       made four or five trips to Miami in 1980 to relay arrangements for

       various drug deals. In the fall of 1980, he had reportedly

       accompanied a group of traffickers moving drugs to Miami. He also

       claimed to have subsequently sought employment outside Latin

       America, where he initially contacted DEA and provided information

       on the drug trafficking with which he had been involved. He also

       later testified in a U.S. court against the leader of the group.

       In addition, he claimed that he was under the impression that DEA

       would offer him a job after he had given his testimony. Instead,

       he was provided a monthly stipend by DEA. The March 1983

       description made no comment about his drug trafficking activities,

       except to note that there was no reason to doubt they occurred.

   732. A November 1983 cable stated that this independent contractor had

       been on a CIA mission in July and August outside of Latin America

       and that he was then deployed to Central America where he would be

       used for the foreseeable future.

   733. The contract officer was reassigned within Central America in

       1986, but Headquarters was informed of insubordination on his

       part, and he was again reassigned. In early 1987, after

       questioning by CIA Security, CIA concluded that the contract

       officer probably was not fully cooperating and by early March

       1987, his employment had been terminated.

   734. Allegations of Drug Trafficking. No information has been found to

       indicate that any allegations were received by CIA of drug

       trafficking by this independent contractor during the time he was

       employed by CIA.

   735. CIA Response to Allegations of Drug Trafficking. The only

       information that appears to have been available to CIA concerning

       this independent contractor's involvement in drug trafficking

       related to his activities in the early 1980s, before he was

       brought to CIA's attention. The information regarding those

       activities that was provided by DEA, in addition to the further

       details offered later by the independent contractor, himself, was

       evaluated at the time that CIA established its relationship with

       him in March 1983. No information has been found to indicate that

       the Agency took any steps to collect further information or

       investigate his involvement in drug trafficking prior to his

       relationship with CIA.

   736. Information Sharing with Other U.S. Government Entities. In an

       August 1987 cable, CIA Headquarters described this independent

       contractor's background, previous association with DEA, work for

       the CIA, and the details of the termination of his relationship

       with CIA, and indicated that the information should be shared with

       the local DEA office.

   737. An August 1997 Headquarters cable included a description of the

       CIA's relationship him for passage to the DEA.

   738. No information has been found to indicate that information

       concerning his involvement in drug trafficking before he came into

       contact with CIA was provided to the Congress by CIA.

       

                    A Second CIA Independent Contractor

                                      

   739. Background and Relationship with CIA. According to a file review,

       CIA hired this independent contractor in January 1983 to serve in

       Central America to participate in supporting the Contras. From

       1983 to 1989, he was assigned to two Central American countries.

       From 1989 to 1994 he was assigned outside of Central America.

   740. No specific date for the termination of his relationship with CIA

       has been found. However, according to a July 5, 1994 cable, the

       relationship was terminated in 1994 for poor performance.

   741. Allegations of Drug Trafficking. On January 24, 1983, he was

       questioned by CIA Security as part of Agency security processing.

       According to the Security Officer's report, the contractor

       reported that in August 1980, prior to his first contact with CIA,

       he had accepted $1,000 from drug traffickers who were delivering

       cocaine paste from a port to an airstrip. He said he shared the

       money with two subordinate officers. He reportedly explained that

       the "only reason he had taken the money was because of [the U.S.

       military advisor to his unit] telling him to do so in order to be

       in a better position to obtain drug information."

   742. CIA Response to Allegations of Drug Trafficking. A February 8,

       1983 cable to Headquarters stated that his admission that he had

       accepted a $1,000 bribe from a narcotics smuggler was disturbing.

       However, the cable added:

       . . . to put the best face on a truly ugly development, we could

       only point out that had [he] chosen to do so, he could have

       accepted these payments on a daily basis, thus enriching himself

       to an unimaginable degree. He chose not to, however, and became

       the bane of the narcotraffickers' existence at great personal risk

       to himself and to the detriment of his military career.

       No information has been found to indicate that the U.S. military

       advisor was ever asked by CIA about the contractor's claim that

       the advisor had told him to accept the bribe.

   743. A March 11, 1985 Headquarters cable noted his comments from the

       1983 security interview. The cable stated that "it would be

       prudent to arrange for [interviews by CIA Security] at regular

       intervals."

   744. He was questioned again by CIA Security on June 18, 1986. The

       Security Officer's report stated:

       Regarding the issue of narcotics trafficking since his [last

       interview] in 1983, [he] stated that he has never engaged in

       narcotics trafficking. The one incident previously reported was

       done only to locate drug factories . . . and ultimately raid those

       factories. He did relate that he had learned that members of [the

       Contras] had been using the private aircraft belonging to

       [Pastora] to smuggle cocaine into [San Jose, Costa Rica]. He

       denied actually seeing this activity. He stated that this was

       reported to him by members of [the Contras].

       He was specifically [questioned] regarding any narcotics

       trafficking he may have engaged in since his [interview] in 1983.

       [CIA Security was satisfied with his answers and did not have any

       further questions regarding illegal drug trafficking.]

       No information has been found to indicate that his allegation

       during the questioning concerning the use of Pastora's plane to

       smuggle cocaine into Costa Rica was further investigated by CIA.

   745. A February 16, 1995 cable to Headquarters reported that an

       anonymous letter had been received by "numerous individuals and

       the press . . . charging various present and former military

       personnel with involvement in narcotics trafficking." The letter

       reportedly included the specific allegation that this contractor

       had, prior to 1981, murdered a drug trafficker who had been

       bribing him.

   746. The cable commented that the anonymous letter might have been "a

       way for some group or individual to get revenge on personal

       enemies." In the cable the Station also noted that it did not know

       the "veracity of the claims made in the letter." No information

       has been found to indicate that these allegations against the

       contractor were pursued further by CIA.

   747. An August 13, 1997 cable to Headquarters discussed a meeting to

       terminate the Station's relationship with a contact who had no

       connection with the Contra program. According to the cable, the

       contact alleged during the meeting that the contractor in the

       early 1980s (note: prior to his becoming a contractor with CIA)

       had raided a cocaine lab, seized an amount of cocaine, and staged

       a destruction of the cocaine, but actually sold it for himself.

       The Station commented that the contact and his source for his

       information were not reliable.

   748. Information Sharing with Other U.S. Government Entities. No

       information has been found to indicate that CIA reported the drug

       trafficking allegations against the contractor to other U.S.

       Government intelligence and law enforcement entities or the

       Congress.

       

                     A Third CIA Independent Contractor

                                      

   749. Background. The third independent contractor was interviewed by

       CIA Security on January 24, 1986, according to the October 1995

       cable. After serving in a Central American country, in 1990 he was

       reassigned and in 1993, he was assigned to other Latin American

       countries. He was also questioned by CIA Security in 1995 and

       1996.

   750. As a result of his inability to provide satisfactory answers

       concerning narcotics trafficking, CIA decided to terminate his

       employment.

   751. Allegations of Drug Trafficking. In a January 1986 Security

       Officer's report, his responses to questions about drug

       trafficking were less than satisfactory. A February 28, 1996

       memorandum from LA Division to the ADDO suggested that he be

       questioned again.

   752. According to a July 1995 report, he was questioned again in 1995

       with similar results.

   753. He was questioned for a third time in 1996 with similar results.

       According to a report of the third round of questioning, the

       contract employee could provide no explanation for his lack of

       credibility in his answers. However, he said that several years in

       the past, in the course of his work, he had received assistance

       from a person whom he subsequently learned was a drug trafficker.

   754. CIA Response to Allegations of Drug Trafficking. No information

       has been found to indicate any efforts by CIA to resolve or verify

       the drug trafficking issues that arose in the 1986, 1995 and 1996

       questioning of this contractor. The Agency decided in March 1996

       to end his employment.

   755. Information Sharing with Other U.S. Government Entities. No

       information has been found to indicate that information relating

       to this independent contractor's possible involvement in drug

       trafficking was shared with other U.S. Government intelligence or

       law enforcement entities or the Congress.

       

                              John Floyd Hull

                                      

   756. Background. John Hull, (a.k.a. John Hull Clarke and Juan Clark),

       a dual U.S. and Costa Rican citizen, resided during the period of

       the Contra resistance in Muelle De San Carlos, Costa Rica, where

       he owned one ranch and had a shared interest or management

       authority regarding five other properties. He allowed the Contras

       to use the airstrips and storage facilities on his properties and,

       over the course of the 1980s, was in contact with the Agency and

       senior Contra leaders—especially of the Southern

       Front—wealthy U.S. businessmen and senior U.S. Government

       officials.

   757. A former Agency officer says he received a visit after his

       retirement from Hull in 1989. This was after Hull left Costa Rica.

       According to the retired officer, Hull talked about his escape

       from Costa Rica and his pending extradition request. He also says

       that Hull said he was in Washington, D.C. to see a member of

       Congress.

   758. Allegations of Drug Trafficking. In November 1984, a cable to

       Headquarters reported an allegation that an ARDE pilot had alleged

       Hull's airfield "has been used for smuggling in the past and that

       some of the people who live in the area have been associated with

       contraband/drug smuggling." The report did not specify whether

       Hull had knowledge of the trafficking, nor did it indicate the

       source of the information, when the alleged trafficking took

       place, or any other details. Hull denies knowing the pilot who

       made the allegation, and he denies having knowledge of such

       activities. No information has been found to indicate that the

       pilot was ever present at any of Hull's airstrips in Costa Rica.

   759. A January 1985, cable informed Headquarters that Hull had said

       that the FBI was "investigating" his "relationship with Frank

       Castro." According to the cable, Hull said that "he has no contact

       or working relationship with Castro," although he was "aware of

       Castro's background--past involvement in terrorist activities and

       possible involvement in drug trafficking."

   760. Hull admits having met Frank Castro and says that Castro visited

       his ranch once with some Cuban-Americans. Hull notes that the

       Cuban-Americans had told him that Castro gave a lot of money to

       the Contras. Hull also says that it was rumored that Castro was

       involved in the drug business, but Hull does not know whether the

       money Castro gave to the Contras came from drug trafficking.

   761. According to a February 1985 cable to Headquarters, it was

       reported that Moises Ruiz Nunez had been interviewed by the FBI

       about Hull's relationship with Castro. Nunez said he told the FBI

       that "[Hull] has nothing to do with Castro and added that [Hull]

       knows that Castro should be avoided."

   762. On March 7, 1986, FBI Headquarters sent CIA a cable that provided

       information from an FBI interview of Jack Terrell. The cable

       reported that Terrell alleged that an airplane carrying cocaine

       arrived at Corn Island, Nicaragua from Colombia twice weekly.

       According to the cable, the aircraft was refueled at Corn Island

       before flying to Rama, Nicaragua, for unloading. Terrell had

       further alleged that, after unloading the cocaine, Cuban-Americans

       Rene Corvo and another individual would bring the cocaine to

       Hull's ranch for shipment to the United States. According to the

       FBI cable, both Terrell and Costa Rican authorities also believed

       that Dr. Hugo Spadafora, a former ARDE commander, was connected

       with drug trafficking at Hull's ranch.

   763. Hull says that he does not recall the name of the other

       individual, but he says he met Corvo several times and transported

       medicine and supplies to Corvo's training camps on the Northern

       border of Costa Rica from 1983 to 1985. According to a May 1986

       cable to Headquarters, Hull:

       . . . said that he met Rene Corvo twice, once in San Jose and once

       along the border area. Those meetings took place approximately

       six/eight months ago. [Hull] said that both Corvo and Terrell are

       "loose cannon" types whom he avoids at all cost.

       Hull says that it was "not possible" for Corvo and the other

       individual to ship cocaine from his ranch without his knowledge.

       Hull states, "If it were going on, I would have known." Hull also

       notes that there were no patterns of activity at his ranch that

       would have been similar to the twice weekly schedule of flights

       that was alleged by Terrell. Hull reiterates that he is "10,000

       percent" certain that he would have known about any such narcotics

       shipments from his ranch.

   764. In April 1986, a Headquarters cable stated that Senator John

       Kerry of the Senate Foreign Relations Committee had "assigned

       several staff members to conduct an intensive investigation of

       allegations of [Contra] involvement in illegal activities."

       According to the cable, the scope of the SFRC investigation

       included, among other things:

       . . . . An on going [sic] drug smuggling operation connecting

       Columbia [sic], Costa Rica, Nicaragua and the United States, in

       which Resistance members and their American supporters, . . .

       handled the transport of cocaine produced in Columbia [sic],

       shipped to Costa Rica, processed in the region, transported to

       airstrips controlled by American supporters of the Resistance and

       distributed in the U.S. 

       The cable did not allege misdeeds by Hull.

   765. According to the CBS West 57th Street broadcast on April 6, 1987,

       Gary Betzner said, "I took two loads, small aircraft loads of

       weapons to John Hull's ranch in Costa Rica and returned back to

       Florida with approximately a thousand kilos of cocaine." Betzner

       then stated that he returned with "500 each trip." He also alleged

       that personnel working for Hull "would load the aircraft. In both

       cases John Hull was there." Betzner also said that Hull

       "physically saw the bags" of cocaine that were loaded onto the

       aircraft. During this program, Betzner described a whistle as a

       means of communicating with personnel at Hull's airstrip before

       landing. Later in the program, Betzner said, "The second trip I

       went down, I didn't go back into John Hull's place. I went into

       another strip that was maybe 10 or 15 miles east of the place, but

       a little better strip." In denying these allegations on the same

       program, Hull said, "There's never been any drug movement through

       this zone or through any of our farms . . . . "

   766. Hull states that the allegations by Gary Betzner, including a

       "whistle" signal between pilots in the air and personnel at Hull's

       airstrip, are false. According to Hull, there was no air-to-ground

       communication system at his air strips that could be used as

       Betzner alleged.

   767. A December 1987 cable from Headquarters asked for background

       information concerning a U.S. pilot. According to the cable, this

       U.S. pilot had a "close relative" with "possible drug involvement

       . . . . [This U.S. pilot] normally based [his] aircraft at the

       Muelle De San Carlos private airfield in northern Costa Rica,

       which is owned by John Hull . . . ." Responses indicated no

       information had been found regarding this U.S. pilot.

   768. A January 1988, Headquarters cable advised, a Cuban-American,

       claimed he had been in contact with Hull. As of August 1986, the

       cable noted, the Cuban-American was being investigated by the FBI

       for smuggling and possession of marijuana.

   769. In October 1988, a cable to Headquarters stated that an

       individual, who had been accused of money laundering in Costa

       Rica, had threatened to implicate Hull, Agriculture Minister

       Alberto Esquivel and "U.S. intelligence in narcotics trafficking."

       Hull says that he does not know the individual and does not recall

       the threat.

   770. On February 10, 1988, Floyd Carlton testified before the Kerry

       Committee that Teofilo Watson piloted an aircraft carrying about

       530 kilograms of narcotics to Costa Rica that ended up on Hull's

       ranch. The transcript stated:

       Senator Kerry: And instead of appearing at that -- what field was

       it supposed to appear at?

       Mr. Carlton: I can't recall the name, but I could locate it on a

       map.

       Senator Kerry: Did you learn that that drug shipment appeared

       instead on another farm, another strip?

       Mr. Carlton: That is what we were told by a member of the civil

       guard in Costa Rica.

       Senator Kerry: Did he inform you that it landed on the strip and

       ranch of John Hull?

       Mr. Carlton: Yes, that is correct.

       Senator Kerry: And was Teofilo Watson, the pilot of the aircraft,

       at some time assassinated?

       Mr. Carlton: Yes.

       Senator Kerry: When was he assassinated?

       Mr. Carlton: I can't recall the date, the exact date. But one of

       the people who was to meet Watson told him not to land at the

       appointed place, but to change and land elsewhere. It was

       supposedly waiting for him there. They killed him and then took

       the airplane and the drugs to Mr. Hull's ranch.

       Senator Kerry: So this is the very occasion that he landed at the

       wrong field that he was killed. He was assassinated when he was

       met landing where he thought he was going, correct?

       Mr. Carlton: Yes, that is correct.

   771. A January 1989 cable to Headquarters reported that the Costa

       Rican Government had arrested Hull on charges that included

       illegal arms and narcotics trafficking. According to the cable,

       the chief of the Costa Rican Office of Judicial Investigation had

       said that Hull's arrest was "based on testimony of known narcotics

       traffickers arrested in Miami." These traffickers had alleged that

       Hull allowed "aircraft to utilize his property . . . for transit

       of drugs to USA."

   772. Hull says that, after he was arrested, he was stripped of his

       clothing and asked to sign an affidavit stating that he was aware

       that CIA was smuggling drugs. According to Hull, he was told that

       he would have his clothing returned and be set free if he signed

       the affidavit. Hull says that he refused to sign the document and

       was placed in a cell with 16 other prisoners.

   773. Agency records contain a copy of a January 13, 1989 Reuters

       article that reported information provided by a spokesman for the

       "Costa Rican judicial investigation department." According to the

       article:

       The investigation of Hull . . . began after a Colombian drug

       trafficker, George Morales, accused the American in a television

       interview of links with arms and drugs [sic] trafficking and of

       spying for the Contras.

   774. A January 13, 1989 Associated Press story reported that witnesses

       testifying before Congress had said "Hull's ranch was a way

       station for gun smugglers and cocaine traffickers." The Associated

       Press report also stated that "Convicted cocaine pilot Gary

       Betzner has testified that Hull once met his plane when it landed

       on the ranch to exchange Contra arms for Colombian cocaine." Hull

       responds that his grass airstrip was too short—only 1,600

       useable feet—and situated so that it could not be used as

       claimed by Morales and Betzner—hills on one end and a river

       on the other.

   775. Hull says that it was "impossible—flat impossible!" that

       someone could unload weapons and load narcotics on his property.

       He further asserts that all of the allegations about drugs being

       shipped from facilities controlled by him in Costa Rica came from

       convicted felons and that his airstrip was too short to

       accommodate the aircraft alleged to have used his airstrip. Hull

       states that, according to information he obtained from a

       representative of the manufacturer, the Cessna 402B aircraft,

       loaded as Betzner alleged, would have been 800 pounds over the

       gross weight to take off safely from a grass strip such as Hull's.

       Hull says that Betzner's allegations are "not true, not true! He

       made it up. He was coached."

   776. March 7, 1989 reporting explained that a Costa Rican judge had

       issued a ruling that charged Hull with "hostile acts" and "drug

       trafficking." Costa Rican court documents claimed that Hull and

       Contra pilot Gerardo Duran had met Morales in Miami to discuss the

       sale of drugs and weapons. Thereafter, planes piloted by Duran and

       Marcos Aguado had reportedly landed at Hull's airstrips carrying

       military supplies and, with his knowledge, left loaded with drugs.

       Allegedly 400 kilograms of cocaine had been transported to Miami

       from Hull's ranch at one time. On another occasion, according to

       Betzner, 1,000 kilograms had been transported from Hull's ranch to

       Florida. The court had ordered Hull's "preventive imprisonment."

   777. A July 1989 cable advised Headquarters that Hull had fled Costa

       Rica in mid-July. Hull says that he arranged his departure from

       Costa Rica and was flown to Haiti by a DEA pilot he knew.

       According to Hull, a Canadian pilot flew him from Haiti to Miami.

       Hull says that in Miami he stayed in the apartment of Moises

       Nunez.

   778. In August 1989 reporting indicated that Hull had been reindicted

       by the Costa Rican Government for "hostile acts" stemming from his

       Contra-related activities. An August 1991 cable to Headquarters,

       stated that "The drug charges [against Hull] have since been

       dropped, but Hull is now formally charged with being a conspirator

       in the 1984 La Penca bombing, and is the subject of a Costa Rican

       extradition request in the hands of the U.S. Department of

       Justice." Hull remains the subject of an extradition request by

       the Costa Rican Government.

   779. Hull says that the narcotics trafficking charges were dropped in

       July 1989. This occurred, he says, after the Costa Rican judge

       went to his farm, measured the landing strip and saw for himself

       that it was too short to be used as alleged.

   780. CIA Response to Allegations of Drug Trafficking. A November 1984

       cable stated that a Station Officer was "quite confident that

       [Hull . . . has not] supported any drug trafficking activity." The

       cable provided no further explanation regarding the basis for this

       statement.

   781. A February 1985 Headquarters cable noted that Hull "has become a

       political liability to the [Costa Rican Government] and a subject

       of interest to [U.S.] law enforcement agencies." A responding

       cable noted that the Station does not believe that Hull is

       involved with Frank Castro in any narcotics trafficking

       activities.

   782. A May 1986 cable from Headquarters stated:

       1. On 2 May 1986 [CATF] personnel met with representatives of

       [FBI] to review the status of their investigation into plan to

       blow up embassy in Costa Rica . . . . Figuring prominently in

       investigation is [Hull], according to information provided by Jack

       Terrell. . . . Nonetheless this allegation as well as one that

       [Hull's] driver "David" had been killed possibly by [Hull] figure

       prominently in Senator Kerry's staff's investigations into alleged

       improprieties in Central America. . . . . Request Station provide

       answers to the following questions:

       D. Does station have any information on [Hull] that indicates taht

       [sic] he might have violated U.S. laws. Terrell alledges [sic]

       that 42 kilo[gram]s of cocaine were smuggled into the U.S. from

       [Hull's] farm. This cocaine allegedly is smuggled into Nicaragua

       by Columbia [sic] drug smugglers with the knowledge of the

       Nicaraguan government and the assistance of Rene Corbo. Corbo gets

       a cut of the shipment to Nicaragua for his help and allegedly has

       an arrangement with [Hull] to move the drugs to [Hull's] farm and

       then into the U.S. . . . 

       2. No one is alledging [sic] that [Hull] actually did anything

       wrong at his [sic] time, but we must have . . . any information

       that Station has which might shed light on the questions raised .

       . . . It is our hope by doing our homework now to shut down

       allegations of improprieties by Senator Kerry's staff and avoid

       public hearings where it will be difficult if not impossible to

       disprove the allegations being made.

   783. According to a May 1986 cable, Hull denied all allegations by

       Terrell regarding cocaine movements through his property and

       "stated that to the best of his knowledge he has never violated

       any aspect of U.S. neutrality laws." Further, the cable stated,

       "to the best of Station knowledge, [Hull] has not been involved in

       any type of smuggling operations."

   784. A September 1986 cable stated that Hull "has . . . contact . . .

       with senior [U.S. Government] officials and wealthy [U.S.]

       businessmen supportive of his anti-Communist activities."

   785. Hull says that he was polygraphed by a private firm on February

       20, 1992. According to a copy of a polygraph examination report

       from that private firm, Hull's negative answers to three questions

       concerning whether, "from 1982 to about 1985" he made

       "arrangements to fly out cocaine," "ship[ped] cocaine out of one

       of your airstrips" or "knowingly permit[ed] anyone to use your

       airstrips to fly out cocaine" were deemed to "correspond to

       truthfulness."

   786. Eden Pastora says that there was "bad blood" between himself and

       John Hull, but states that he has no knowledge of drug trafficking

       by Hull. Pastora says that he recalls rumors of drug trafficking

       on Hull's ranch, but he says there were no facts. Pastora allows

       that Gerardo Duran may have misled Hull and used Hull's airstrip

       for some drug flights under the guise of humanitarian aid. Pastora

       also identified another pilot known as "Condorito" or "Condor" who

       was alleged to have been involved in drug running and who used

       Hull's airstrip. Pastora says that, if drug trafficking occurred

       on Hull's airstrips, he does not believe that Hull knew about it.

   787. Information Sharing with Other U.S. Government Entities. In April

       1982, CIA requested FBI traces regarding Hull. A June 1, 1982

       Memorandum For the Record (MFR) noted that the FBI had replied

       that "there were no identifiable FBI traces." In February 1985,

       several months after the first allegations arose that Hull was

       engaged in drug trafficking, Headquarters stated in a cable that

       it was "making discrete inquiries with appropriate law enforcement

       agencies as to derogatory information on [Hull]."

   788. On March 21, 1985, two months after Hull had said that his

       relationship with Frank Castro was being investigated by the FBI,

       a Headquarters cable stated that U.S. Government law enforcement

       agencies had no ongoing investigations of Hull. The cable noted

       that DoJ was curious as to why Hull believed he was being

       investigated.

   789. On March 7, 1986, the FBI sent a multi-part cable to CIA

       regarding neutrality matters in Honduras, Costa Rica and

       Nicaragua. These cables summarized the FBI interview with Jack

       Terrell in which he had made allegations regarding Hull's

       involvement in narcotics trafficking. On April 1, 1986, CIA

       responded to the FBI that, "If it would be germane to the FBI's

       neutrality matters investigation, this Agency is ready to provide

       a comprehensive briefing on Hull and his activities." No

       information has been found to indicate whether the FBI accepted

       this offer.

   790. A May 3, 1986, Headquarters cable stated that, on May 2, 1986,

       "[CATF] personnel met with representatives of [the FBI] to review

       the status of their investigation into plan to blow up [the U.S.]

       embassy in Costa Rica and blame it on the Sandinistas." The

       Headquarters cable noted that Hull figured prominently in that

       investigation, based on information provided by Terrell.

   791. On May 8, 1986, a cable noted:

       [Hull] stated that to the best of his knowledge he has never

       violated any aspect of U.S. neutrality laws. All allegations by

       Jack Terrell regarding cocaine movement on a farm belonging to

       [Hull] are false. 

       This cable continued by stating:

       To the best of Station knowledge, [Hull] has not been involved in

       any type of smuggling operations. His greatest sin has been to

       employ Nicaraguan refugees in menial jobs on his farm.

   792. According to a May 9, 1986 Headquarters cable representatives of

       CIA, DEA, FBI, DoS, the NHAO, and DoJ met with SFRC Staff members

       on May 7, 1986 to review allegations regarding Hull's alleged

       involvement in arms trafficking, drug trafficking and murder.

       According to the cable:

       Both [DoJ] and [DEA] were specifically asked if they have ongoing

       investigations of [Hull]. They both told the Staffers that there

       are no investigations presently in progress. However, because of

       the breath [sic] of the allegations made and our inability to

       respond to them, it is possible that [DoJ] may open an

       investigation of [Hull].

       The cable characterized the meeting as "largely unproductive as

       Kerry's Staffers were unwilling to provide details and sources of

       information that had provided information that pointed to

       violations of U.S. laws."

   793. CATF Legal Advisor Louis Dupart wrote an undated MFR concerning

       the May 7, 1986 meeting which noted that DoJ had said "there is an

       active and ongoing investigation" underway with regard to one

       alleged shipment of lethal weapons that arrived at Hull's ranch.

       According to the MFR, the CIA representatives stated that "Our

       sources reported [the shipment] only consisted of non-lethal

       supplies." With regard to the allegations of murder, Neutrality

       Act violations, conspiracy to commit murder, and drug smuggling,

       the MFR stated that "Both Justice and the DEA told the Staffers

       that they do not have ongoing investigations of Hull." As for the

       allegation that Hull "is some how [sic] responsible for the death

       of David [Hull's driver]," the MFR noted that "The Staffers were

       told that a thorough search of [CIA] records did not reveal any

       information on a driver named David." The MFR stated that "in a

       recent San Jose newspaper article, Rojas [the source of the

       allegation about David's murder] had repudiated the statements

       attributed to him." According to the MFR, "The Staffers out of

       hand rejected the information provided on Rojas saying they had

       another source, who they would not identify."

   794. A May 9, 1986 Headquarters cable referred to the May 7, 1986

       meeting and stated that DoJ and DEA had reported that they had no

       current investigations of Hull. However, the cable noted that "it

       is possible that [DoJ] may open an investigation of [Hull]."

   795. According to an undated MFR by Dupart, CATF Chief Fiers and OGC

       representatives met on July 9, 1986 with HPSCI Staff member

       Michael O'Neil regarding Hull. The MFR indicated that CIA reviewed

       and the allegations that Hull had violated U.S. law. According to

       the MFR, Fiers told O'Neil that CIA had "no information of Hull

       having been involved in violations of U.S. law" and that, since

       CIA was "not a law enforcement agency, we have not collected or

       sought any information on this." The MFR also noted that Fiers

       stated that "while it is possible that Hull had in fact violated

       the law, we have no knowledge of any violations."

   796. Sometime in October 1986, according to a November 25, 1987

       memorandum from Agency Office of Congressional Affairs Director

       David Gries to DCI Webster, Fiers briefed Senator Kerry on Hull.

   797. An October 16, 1986 MFR by OCA Deputy Director for Senate Affairs

       Alvin K. Dorn stated that Fiers briefed Senator John Kerry on

       October 15 regarding questions that had resulted from Fiers'

       October 10, 1986 briefing concerning the Contras. The MFR noted

       that Fiers presented "a series of prepared sheets responding to

       the questions to Senator Kerry, who read each one carefully and

       occasionally asked additional questions. These sheets concerned:

       [among others] John Hull."

   798. On July 31, 1987, Fiers briefed the Senate Select Committee on

       Intelligence (SSCI) about Hull's alleged relationship with Jorge

       Morales. According to an SSCI transcript of the briefing, Fiers

       stated:

       Morales saw John Hull in his, Morales' office, with [Marcos]

       Aguado in 1983. However, Morales didn't meet him. He didn't want

       to. Hull is very well know [sic] in columbia [sic] and Central

       America for his activities and his reputation dealing [sic] with

       CIA. Morales did not want any more dealings with government people

       other than what he had with Chamorro and Cesar.

       The SSCI transcript also noted that Fiers recounted the drug

       trafficking allegations by Morales against Hull:

       [Morales] also claims to have unloaded--that Hull's airstrip was

       used in loading and unloading of drugs [and that] Morales first

       heard about John Hull in 1981 from a Columbian [sic] friend.

       Morales said it was very well known John Hull's ranch was a

       facility for refueling and storing drugs. John Hull was in

       Morales' office in July 1983 with Gustavo Velez, a Columbian [sic]

       friend of Morales, to arrange delivery of 40 grenade launchers

       from Opaloca, Florida, to El Salvador. Morales' cargo airliner

       flew the launchers for Hull.

       According to the transcript, Fiers also said:

       It is possible that John Hull's ranch was used as a transshipment

       point for drugs. We never had any hard proof of that other than

       the claims made by various convicted narcotics traffickers. It is

       possible it could have been used without Hull's knowledge. It is

       also possible he could have been a willing accomplice in using it.

       We just don't have any significant information about that.

   799. On August 20, 1987, a CIA officer met briefly with the SFRC's

       Special Counsel to advise him that Headquarters was willing to

       brief him on matters related to Hull. According to a November 20,

       1987 OCA MFR, Louis Dupart and an OCA Legislation Division officer

       met with the SFRC's Special Counsel on November 20, 1987. The MFR

       stated that Senator Kerry was seeking a meeting with DCI Webster

       because "the Senator needed to convey his concerns about the

       matter on a 'political' level to a 'political' figure in the

       government . . . ." On December 22, 1987, DCI Webster advised

       Senator Kerry by letter that he had directed appropriate Agency

       officials to conduct "an in-depth review" concerning Hull and that

       the Agency was prepared to assist Kerry's investigation. The

       letter noted that further comment concerning Hull's activities was

       "appropriately left to the Department of Justice and [Iran-Contra

       Independent Counsel] Judge Walsh's office." No information has

       been found to indicate that the in-depth review referred to by DCI

       Webster was ever conducted.

     _________________________________________________________________

   

   [BACK]

   

   [BACK]

   

   PILOTS, COMPANIES, AND OTHER INDIVIDUALS WORKING FOR COMPANIES USED TO

                         SUPPORT THE CONTRA PROGRAM

     _________________________________________________________________

   

   What drug trafficking allegations was CIA aware of, and when,

   involving pilots and companies supporting the Contra program? How did

   CIA respond to this information, and how was this information shared

   with other U.S. Government entities?

   

   Allegations Involving Companies Supporting the Nicaraguan Humanitarian

   Aid Effort

   800. Background. In early 1986, Senator John Kerry began an

       investigation of allegations that elements of the supply network

       supporting the Contras were linked to drug traffickers. In April

       1986, Senator Kerry took the information he had developed to the

       Chairman of the Senate Foreign Relations Committee (SFRC), Richard

       Lugar, who agreed to conduct a staff inquiry into these

       allegations. In February 1987, the SFRC expanded the focus of the

       inquiry to include the impact of drug trafficking from the

       Caribbean and Central and South America on U.S. foreign policy

       interests. In April, the responsibility for this broader

       investigation was given to the Subcommittee on Terrorism,

       Narcotics and International Operations, chaired by Senator Kerry.

   801. The Subcommittee's report, "Drugs, Law Enforcement and Foreign

       Policy" ("the Kerry Report"), was published in December 1988 and

       identified six companies that had been owned and operated by

       convicted or suspected drug traffickers and were linked to the

       Contras. The companies were:

          + Frigorificos De Puntarenas

          + Ocean Hunter

          + SETCO

          + DIACSA

          + Vortex

          + Hondu Carib

   802. In August 1985, Congress had appropriated $27 million for

       humanitarian support to the Contras and designated the DoS as the

       executive agent for the purchase and distribution of all aid. As a

       result, the Nicaraguan Humanitarian Assistance Office (NHAO) was

       created in DoS under the direction of Ambassador Robert Duemling.

       The program reached its peak in March 1986 when it delivered over

       500,000 pounds of material to Aguacate, Honduras, on 11 chartered

       flights from the United States. The last NHAO flights were in June

       1986 and the program officially ended in October 1986. All of the

       companies, except for Ocean Hunter, that had been identified by

       the Kerry Report as being owned and operated by known or suspected

       drug traffickers were included among the organizations selected by

       DoS to supply humanitarian aid to the Contras through NHAO.

   803. CIA Vetting of Companies for NHAO. In July 1987, the Central

       Intelligence Agency's Office of Inspector General (CIA/OIG)

       published a Report of Inspection that noted that the NHAO--not the

       Agency--was responsible for administering the humanitarian aid

       program. The only Agency roles recognized in the "legislative

       history" of the statutorily-established program were to provide

       advice on the delivery of the aid and to monitor and verify its

       receipt by the Contras

   804. According to the 1987 CIA/OIG Report of Inspection, "Agency

       support was always at the behest of NHAO and appears to have been

       both legal and proper." Among the types of assistance the Agency

       provided the NHAO, according to the Report, was advice on

       contractors. Alan Fiers was interviewed by the CIA/OIG inspection

       team on April 27, 1987. The CIA interview report stated that Fiers

       said he and Ambassador Duemling "had frequent meetings regarding

       possible contract cargo carriers." Fiers also reportedly said he

       had "checked out" some of these carriers for Duemling.

   805. Fiers' written response to OIG questions during this current

       investigation stated that he "specifically recalls discussions

       with Ambassador Duemling" on the subject of vetting air carriers

       for the NHAO. "More specifically," Fiers writes:

       I personally steered them [NHAO] away from the Private

       Benefactors, I believe we guided them toward carriers they

       ultimately used, although I cannot recall the details exactly

       [sic] how the names of the carriers were initially brought to my

       attention. 

       With the possible exception of Vortex, no information has been

       found to indicate that this CIA vetting assistance for the NHAO

       included information regarding the six companies identified in the

       Kerry Report as having ties to drug trafficking.

       

                  Frigorificos De Puntarenas/Ocean Hunter

                                      

   806. Background. Frigorificos De Puntarenas ("Frigorificos") was a

       Costa Rican seafood company that was created as a cover for

       laundering drug money, according to grand jury testimony by one of

       its owners that is cited in the Kerry Report and testimony by

       Ramon Milian Rodriguez, the convicted money launderer who

       established the company. Frigorificos was owned and operated by

       Luis Rodriguez of Miami, Carlos Soto and Ubaldo Fernandez. Milian

       Rodriguez told Federal authorities about Luis Rodriguez' drug

       trafficking prior to Milian's arrest in May 1983. Moises Nunez was

       the General Manager of Frigorificos.

   807. The December 1988 Kerry Report indicated that the DoS used

       Frigorificos to deliver more than $261,000 in humanitarian

       assistance funds to the Contras in 1986. These funds were

       controlled by Rodriguez, who signed most of the orders to transfer

       the funds to the Contras.

   808. The Kerry Report further indicated that Luis Rodriguez owned

       another company--Ocean Hunter--that was linked to drug trafficking

       and money laundering. Ocean Hunter was a Miami-based seafood

       company that Milian Rodriguez had also established to enable Luis

       Rodriguez to launder drug money. Ocean Hunter imported seafood

       from Frigorificos and, according to testimony by Soto and Milian

       Rodriguez, intra-fund transfers were used to launder drug profits.

       Luis Rodriguez was indicted on drug trafficking charges by the

       U.S. Government in September 1987 and on tax evasion charges in

       April 1988 in connection with money laundering through Ocean

       Hunter.

   809. Allegations of Drug Trafficking. According to the December 1988

       Kerry Report, Senator Kerry informed the Department of Justice,

       DEA, CIA, and NHAO in May 1986 of allegations he had received

       involving Luis Rodriguez and his companies--Frigorificos and Ocean

       Hunter--in drug trafficking and money laundering. No information

       has been found to indicate that CIA ever received this information

       from Senator Kerry.

   810. On January 29, 1986, a cable reported to Headquarters that DEA

       had seized over 400 pounds of cocaine concealed in a container of

       yucca on January 23. The container was leased to David Mayorg--a

       close advisor to Eden Pastora. In September, it was reported that

       the container in question had been destined for Ocean Hunter.

   811. Ramon Milian Rodriguez. According to an undated, unsigned

       Headquarters memorandum, Milian was arrested by United States

       Customs in May 1983 as he was preparing to leave the United States

       with $5.6 million aboard his Lear jet.

   812. Information Sharing with Other U.S. Government Entities. CIA

       records indicate that the Agency provided some information to the

       SSCI between December 1986 and June 1988 regarding its contacts

       with Milian. A MFR dated December 10, 1986 to the SSCI stated that

       CIA had no relationship with Milian but had received unsolicited

       information regarding Sandinista drug trafficking from Milian in

       1984. During a joint briefing of the SSCI and HPSCI staffs on July

       31, 1987, Alan Fiers stated that the CIA had no relationship with

       Milian but had received unsolicited information. An MFR dated June

       23, 1988 from John Buckman answered questions originating from

       Senator John Kerry about Agency contacts with Milian. This MFR

       also stated that the Agency had no relationship with Milian. CIA

       records do not indicate whether any of the information originating

       from Milian was passed to law enforcement agencies.

   813. CIA Vetting Role. No information has been found to indicate that

       CIA played any role in NHAO's selection of Frigorificos as a

       conduit for the delivery of humanitarian assistance to the

       Contras.

   814. No information has been found to indicate that CIA played any

       role in NHAO's selection of Ocean Hunter as a conduit for the

       delivery of humanitarian assistance to the Contras.

       

                                   SETCO

                                      

   815. Background. A 1983 Customs Investigative Report stated that

       "SETCO Aviation is a corporation formed by American businessmen

       who are dealing with Juan Matta Ballesteros and are smuggling

       narcotics into the United States." Beginning in 1984, SETCO was

       the principal company used by the Contras in Honduras to transport

       supplies and personnel for the FDN.

   816. SETCO was chosen by NHAO to transport goods on behalf of the

       Contras from late 1985 through mid-1986. According to testimony by

       FDN leader Adolfo Calero before the Iran-Contra committees, SETCO

       received funds for Contra supply operations from the bank accounts

       that were established by Oliver North.

   817. According to U.S. law enforcement records cited in the Kerry

       Report, SETCO was established by Juan Matta Ballesteros, "a class

       I DEA violator." The Kerry Report also states that those records

       indicate that Matta was a major figure in the Colombian cartel and

       was involved in the murder of DEA agent Enrique Camarena. Matta

       was extradited to the United States in 1988 and convicted on drug

       trafficking charges.

   818. The FDN, and later ERN/North, also used SETCO for airdrops of

       military supplies to Contra forces inside Nicaragua.

   819. Allegations of Drug Trafficking. In a July 10, 1987 memorandum to

       the LA Division Chief, Assistant Secretary of State for

       Inter-American Affairs Elliott Abrams requested, among other

       things, that CIA share as part of a U.S. Government effort to

       "bring Matta to the United States to face charges" any information

       it had on Matta's activities in Honduras. Abrams noted that Matta

       had reportedly been considering "a number of business schemes for

       laundering his drug money." On July 24, 1987, CATF responded to

       the request from Abrams by sending a cable asking for information

       regarding Matta's activities in Honduras. An August 4 cable

       informed CATF that Matta had purchased "a small air cargo

       service," but did not provide the name of the company. No

       information has been found to indicate that Headquarters provided

       this information to Abrams or requested any follow-up reporting

       regarding Matta's purchase of the cargo service.

   820. On April 28, 1989, the Department of Justice (DoJ) requested that

       the Agency provide information regarding Matta and six

       codefendants for use in prosecution. DoJ also requested

       information concerning SETCO, described as "a Honduran corporation

       set up by Juan Matta Ballesteros." The May 2 CIA memorandum to DoJ

       containing the results of Agency traces on Matta, his codefendants

       and SETCO stated that following an "extensive search of the files

       and indices of the Directorate of Operations. . . . There are no

       records of a SETCO Air."

   821. The CIA officer who was responsible for handling the 1989 DoJ

       request says that she followed the usual procedures for tracing

       names. She says that the fact that no record was found indicates

       that LA Division had not entered SETCO into the name trace

       database. She also states that the officer who reviewed the draft

       when her proposed response to DoJ was sent to the Honduran desk in

       CATF for coordination should have informed her that the Agency did

       have information concerning SETCO, and should have provided that

       information to her. She notes, however, that most managers would

       not focus on a "no record" response.

   822. The draft response to DoJ indicated that a CATF officer

       coordinated on the draft. He says that he does not recall SETCO,

       never visited its facilities and does not recall coordinating on

       the response to DoJ.

   823. A former CATF Nicaraguan Operations Group Chief says that the

       officer who coordinated on the cable should have known about SETCO

       because it was common knowledge in CATF that the company was used

       to support the Contra program and he had probably been at SETCO's

       facilities at one time or another. He cautions, however, that

       there can be no certainty that the officer actually coordinated on

       the response. Although his name was entered as the coordinating

       officer, the former NOG Chief states that this does not

       necessarily indicate that the officer saw it. Someone else could

       have coordinated for him if he had not been available at the time.

       The former NOG Chief says that the only way to ascertain that the

       officer reviewed the document is to examine the routing slip with

       the actual signature. No routing slip has been found, however.

   824. A June 15, 1989 cable reported to Headquarters that DEA had

       "uncovered . . . information of possible drug trafficking"

       involving Manuel and Jose Perez, owners of SETCO Aviation. A June

       15, 1988 Headquarters memorandum regarding a May 1988 DO trace

       request concerning Matta indicated that Matta "normally put . . .

       businesses in the name of third persons" for his holdings in

       Colombia.

   825. Matta, who is incarcerated in the federal penitentiary in

       Florence, Colorado, says that he did not own or have any financial

       interest in SETCO, and claims he does not recognize the name.

   826. No information has been found to indicate that CIA received

       allegations that any SETCO aircraft were involved in drug

       trafficking during the Contra era. In late 1992, however, a

       Defense Department counternarcotics cable indicated that SETCO was

       being used in the Honduran Bay Islands by drug traffickers who

       concealed narcotics under dried fish in transport through

       Honduras. The cable did not indicate whether SETCO was aware of

       this transshipment operation.

   827. Information Sharing with Other U.S. Government Entities. No

       records have been found of information shared with law enforcement

       agencies.

   828. CIA Vetting Role. No information has been found to indicate that

       CIA played any role in NHAO's selection of SETCO as a conduit for

       the delivery of humanitarian assistance to the Contras.

       

                                   DIACSA

                                      

   829. Background. According to the December 1988 Kerry Report, DIACSA

       was an aircraft dealership and parts company whose president was

       Alfredo Caballero. During 1984 and 1985, the FDN chose DIACSA for

       "intra-account" transfers to conceal that some funds for the

       Contras were sent through deposits arranged by Oliver North. A

       February 8, 1985 cable to Headquarters described DIACSA as the

       "ARDE cover company" and indicated that DIACSA was used to

       purchase aircraft for ARDE. According to the Kerry Report, on

       January 23, 1986, Caballero, Floyd Carlton--a cocaine trafficker

       associated with Manuel Noriega--and five others were indicted and

       later convicted for bringing 900 pounds of cocaine into the United

       States and laundering $2.6 million. No information has been found

       to indicate that the Agency had any relationship with DIACSA or

       Caballero.

   830. Allegations of Drug Trafficking. A May 4, 1985 cable to

       Headquarters provided a summary of reporting concerning FRS

       personnel who may have been involved in drug trafficking.

       According to the cable, Caballero in February 1985 had offered to

       transport FRS supplies to Ilopango or Costa Rica in one of his

       aircraft if he could make the landing arrangements. The cable also

       reported that Caballero was the Miami representative of a company

       based in San Jose that was owned by David Mayorga. The cable noted

       that there were those who believed that Mayorga, Caballero and

       others were transporting drugs from San Jose to Miami.

   831. No other information has been found to indicate that Caballero or

       DIACSA were connected with drug trafficking or traffickers.

   832. Information Sharing with Other U.S. Government Entities. No

       information has been found to indicate that the Agency provided

       any information concerning alleged drug trafficking by Caballero

       or DIACSA to other U.S. Government intelligence or law enforcement

       agencies or the Congress.

   833. CIA Vetting Role. No information has been found to indicate that

       CIA played any role in NHAO's selection of DIACSA as a conduit for

       the delivery of humanitarian assistance to the Contras.

       

                              Vortex/Universal

                                      

   834. Background. According to the December 1988 Kerry Report, the NHAO

       had a contract in 1985-1986 with Vortex, an air transport company

       based in Miami, Florida, to move supplies for the Contras. Michael

       Palmer, the Company's executive Vice President, signed the

       contract for Vortex in November 1985. At the time the contract was

       signed, Palmer was under investigation by the FBI for drug

       smuggling, and a federal grand jury was preparing to indict him in

       Detroit.

   835. According to an April 6, 1988 memorandum to DCI Webster and DDCI

       Gates from David Pearline in OCA, Palmer testified that day to the

       SFRC Subcommittee on Terrorism, Narcotics and International

       Operations that he had gone to work for Vortex in 1985 or early

       1986. Vortex later changed its name to Universal Air Leasing.

       Palmer also testified that Vortex/Universal entered into a

       contract in late 1986 to service planes and deliver materiel to

       the Contras. Palmer denied that he was ever an Agency asset or

       employee.

   836. The April 6, 1988 memorandum also reported that Palmer had

       testified that he smuggled 120,000 pounds of marijuana into the

       United States in 1977. Palmer testified further that aircraft he

       used to smuggle drugs were later used to supply humanitarian

       assistance to the Contras. He asserted, however, that he was not

       involved in illegal drug smuggling while involved in supplying the

       Contras for the NHAO.

   837. Relationship with CIA. An October 3, 1986 MFR indicated that

       Fiers chaired a "final meeting" on October 2, 1986 concerning

       preparations to implement the $100 million support program that

       Congress was about to approve for the Contras. According to that

       memorandum, Vortex/Universal would be used under subcontract for

       logistical flights. An April 7, 1987 memorandum described Palmer

       as the focal point for obtaining crews, mechanics and spare parts.

   838. According to a March 25, 1988 memorandum to the Assistant General

       Counsel from the SAS legal advisor, the subcontract with

       Vortex/Universal included provisions for aircraft maintenance, as

       well as recruitment and training of air crews. An attachment to

       SAS legal advisor's memorandum indicated that Agency officers met

       with or spoke to Vortex/Universal personnel on several occasions

       and visited Vortex/Universal sites once and possibly twice between

       October 1986 and March 1987.

   839. According to an April 7, 1987 Agency MFR, Palmer said that Al

       Herreros, President of Vortex/Universal, was a law enforcement

       source of information. Palmer also reportedly said that both he

       and Herreros were doing "sting/scam" operations for DEA in April

       1986. According to the March 25, 1988 SAS legal advisor's

       memorandum to the Assistant General Counsel, the Agency's

       relationship with Palmer and Vortex/Universal was terminated on

       April 16, 1987.

   840. The former CATF contractor who oversaw support for the Contras at

       the time does not recall asking for traces concerning Palmer or

       Vortex/Universal. No information has been found to indicate that

       the Agency requested traces from other agencies regarding Palmer

       or Vortex/Universal before or during the period when Vortex was

       working for the NHAO.

   841. Allegations of Drug Trafficking. According to an April 21, 1987

       MFR by the LA Division Security Chief, a meeting was held on April

       13, 1987 between CIA officers and DEA officials regarding Michael

       Palmer's relationship with DEA. The MFR stated that then-Deputy

       CATF Chief had said that individuals at Vortex/Universal Air,

       though probably "suspicious," were never made witting that they

       were actually working for CIA through the Vortex/Universal

       subcontract.

   842. According to a March 26, 1987 memorandum to the Chief of the

       Policy and Coordination Staff, one of the Nicaragua program's

       DC-6s was searched on March 21, 1987 by U.S. Customs agents after

       it landed at the Miami airport. Palmer arrived to assist in

       obtaining clearance for the aircraft. A misunderstanding developed

       between Palmer and Customs officials with the result that Customs

       took the identification papers of Palmer and all the crew members.

       The March 26 memorandum indicated that the plane was given

       clearance by Customs only after discussions in Washington between

       Agency and Customs officials. Subsequently, according to an

       undated memorandum to DCI Webster from DDO Stolz, Customs ran

       traces on Palmer and the plane's crew and discovered that Palmer

       had been indicted in Detroit on drug trafficking charges. The

       March 26 memorandum also stated that the difficulties with Customs

       arose because Customs did not receive proper notification of the

       aircraft's arrival and the crew was not able to answer questions

       about the aircraft's ownership because it had not been properly

       briefed. Further, the plane was configured for airdrops and a

       weapon was found aboard.

   843. According to an undated Stolz memorandum to DCI Webster, "a CIA

       officer subsequently learned through a DEA official" that Palmer

       was a law enforcement source of information and a meeting was

       arranged between DEA and CIA officers. Although the memorandum

       indicates that a meeting between DEA and CIA officials regarding

       Palmer took place on April 21, 1987, it cannot be entirely ruled

       out that this was the same meeting as that which was described

       earlier in LA Security Chief April 21, 1987 MFR that indicates

       that a meeting between CIA and DEA officials took place on April

       13, 1987.

   844. In any event, the DEA officials reportedly told Agency officers

       in this meeting that Palmer was an "operative in a sensitive drug

       investigation/sting operation" and that his cooperation with DEA

       could be a determining factor as to whether the indictment would

       be prosecuted. When told that the Agency was considering

       terminating its relationship with Palmer, "DEA expressed concern

       regarding the possible impact that would have on their own 'big

       operation.'" Nevertheless, the Agency "informed DEA that we would

       direct the prime contractor to terminate all ties to

       Vortex/Universal Air Leasing and the prime contractor did so

       promptly, at least with respect to Agency operations."

   845. According to Palmer's testimony to the Kerry committee and a

       March 31, 1988 memorandum from the SAS legal advisor to the OGC

       Assistant General Counsel, Palmer contacted the Agency through the

       prime contractor's security officer and secretary. However, the

       March 26, 1987 memorandum indicated that Palmer contacted CIA

       officers as well as the prime contractor, in an effort to have the

       DC-6 released by Customs.

   846. The SAS Contracts Branch Chief at the time of the Miami incident,

       says that she called Air Branch after receiving a call from the

       prime contractor's secretary. She says that she then called Palmer

       who was waiting at a pay phone and told him that "we're working on

       it via Customs, and sit tight."

   847. The drafter of the March 26 memorandum says that it was standard

       procedure for subcontractors to have the telephone number of the

       an air operations officer in case there were maintenance problems

       with the aircraft. He states that the problem CIA faced with

       contractor and proprietary aircraft was that they looked like drug

       planes going back and forth regularly from Latin America to Key

       West or Miami. He says Customs assumed that anyone flying from

       Latin America was a possible drug trafficker. The aircraft and

       crews were suspect because they came from Miami and fit the

       Customs profile. He asserts that being branded a "druggie" by DEA

       or Customs did not mean much in the 1980s. The Agency, he asserts,

       thought that Customs often overreacted.

   848. According to an April 8, 1987 MFR by an OGC attorney, CIA

       officers met with senior Customs officials on April 7, 1987

       concerning the Miami DC-6 incident. According to the MFR, "Customs

       . . . was concerned that, because of the crews' records on this

       flight, some Agency flights could be used to smuggle drugs." In

       addressing this concern, the MFR indicated that CIA reaffirmed to

       Customs that CIA was not seeking any preferential treatment for

       Agency-sponsored flights and that "CIA expect[ed] that these

       flights will be treated the same as any other flights." This would

       include, according to the MFR, the right of Customs agents to

       search the plane and its contents and to seize any contraband.

   849. According to the OGC attorney's MFR, the Customs officials were

       satisfied that CIA's and Customs' understanding of the procedures

       were the same. However, Customs "was still concerned that some

       crew members may have previous involvement in drug trafficking."

       Customs officials then asked about CIA procedures to "check the

       crews hired for the Central American flights." The MFR indicated

       that an Air Branch Chief officer, explained that:

       . . . we have several contracts with different aviation companies

       and that while we trace the principal individuals with whom we are

       in contact, it is possible that these principals sub-contract for

       others who are not necessarily traced by us. In addition, the

       traces we do have been through Agency records and do not

       necessarily include criminal records available to DEA and Customs.

   850. According to the OGC attorney's MFR, Customs requested that CIA

       henceforth supply Customs with not only the name of the pilot and

       tail number of the aircraft, but also the names, dates and places

       of birth of all crew members and passengers on Agency-sponsored

       flights so that Customs records could be checked. Customs also

       asked CIA to supply this information for the crews and passengers

       of all Agency sponsored flights dating back to August 1984. The

       Air Branch officer "indicated that CIA had no problem in

       furnishing this data and that he would forward it as soon as

       possible." The last paragraph of the MFR indicated that:

       One issue that was not fully addressed at the meeting is the

       Agency policy on the use of pilots and crews who surface in

       Customs records with suspected or known involvement in drug

       trafficking. It may be that Customs will pay more attention to

       those flights whose crews are listed in their records. This is an

       issue that needs to be addressed further. It was mentioned in a

       preliminary fashion that we may wish to [question] suspected crew

       members as to their activities during their employment with us. 

   851. The Air Branch Chief also recorded the meeting with Customs in an

       April 7 memorandum to the Chief of Special Activities Staff. That

       memorandum indicated that he pointed out to the Customs officials

       that "It is virtually impossible to check on every individual who

       becomes involved in sub-contract situations with [CIA]."

   852. Following the Miami DC-6 incident and the April 7, 1987 meeting

       with Customs, ADCI Gates sent a memorandum to DDO Clair George on

       April 9, 1987 entitled "Customs and Agency-Sponsored Flights to

       Central America." That memorandum established more stringent

       vetting procedures for contractors and prohibited CATF from using

       known or suspected drug traffickers:

       It is 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. This must be true not only of those with whom we

       contract, but also their subcontractors. I believe it is essential

       that we obtain the names of all aircrew personnel who have any

       association with Agency contractors or subcontractors and vet

       those names through DEA, Customs and the FBI--even though this is

       likely to be an onerous and occasionally inconvenient

       undertaking--and perhaps even hamper operations at times. 

       OGC and the DO should work together with Customs to develop

       procedures to ensure that these instructions are carried out on a

       continuing basis. Furthermore, per my conversation with the

       Commissioner of Customs, it should be clear that CIA seeks no

       preferential treatment with respect to facilitating clearances and

       that Agency-sponsored flights are to be treated the same as any

       other flights. In those rare instances where sensitive cargo is

       involved, such Agency-sponsored flights will also be subject to

       Customs search . . . . 

   853. In response to the Gates memorandum, CATF requested traces from

       DEA, Customs and the FBI in April, May and June 1987 concerning

       Vortex/Universal, the prime contractor and the officers and

       employees of those companies. DEA responded in an April 28, 1987

       memorandum from the DEA Deputy Assistant Administrator for

       Intelligence indicating that Palmer had been arrested in Colombia

       in 1985 in connection with the seizure of an aircraft and 1,000

       pounds of marijuana. He was also, according to the DEA response,

       "criminally associated with aircraft N22VX (formerly N3434F),

       which is suspected of off-loading 19,000 pounds of marijuana" in

       Northern Mexico destined for the United States in September 1986.

   854. The April 28, 1987 DEA memorandum stated that Herreros was

       "criminally associated" with aircraft N3434F--the same aircraft

       that had been implicated in the suspected drug smuggling incident

       involving Palmer in Mexico. DEA's El Paso Intelligence Center had

       reported that Herreros had purchased this aircraft for $125,000 in

       cash for the purpose of marijuana smuggling. DEA also reported

       that Herreros was identified as being "criminally associated" with

       various aircraft in FAA "lookouts" in the late 1970s, and as an

       alleged part-owner of an aircraft that had been used to smuggle

       cocaine into Miami.

   855. The April 28 DEA memorandum also stated that Universal Air of

       Miami had been incorporated by three individuals. These

       individuals were reportedly investigated by DEA/Tucson for their

       association with a fourth individual in the distribution of

       multi-kilograms of cocaine during 1984-1985.

   856. Further, according to the DEA memorandum, an aircraft of the

       prime contractor had been seized at a Colombian airstrip in

       January 1978 along with "165 tons of marijuana." The prime

       contractor was also linked to the seizure of another aircraft in

       Colombia in January 1978, but the DEA memorandum did not indicate

       whether the seizure was drug related.

   857. The April 28, 1987 DEA memorandum also reported that an aircraft

       of the prime contractor had been modified in 1981 in a manner that

       led the source to believe the aircraft was to have been used for

       narcotics-related activity. A December 12, 1988 memorandum to the

       LA Division Deputy Chief from a CATF officer noted that " . . .

       these modifications are consistent with those needed for [Contra]

       airdrop activity." An unsigned, handwritten note in the margin of

       the CATF memorandum noted that there was "no activity [by the

       prime contractor] for [CIA] during this period."

   858. On May 13, 1987, Customs responded to the CIA trace request. The

       Customs response indicated that Al Herreros, Vortex/Universal's

       president, was a suspected drug trafficker. Customs' records

       reportedly indicated that Herreros "[was] believed [in 1985] to be

       engaged in smuggling narcotics via aircraft" and was doing

       business as Vortex Sales and Leasing. He was also reported to be

       associated with "documented smuggler" John Lett. In a June 24,

       1987 cable to CIA, Customs described the source of this

       information as "highly reliable" and noted that the source had

       acquired the information from Herreros himself.

   859. An August 18, 1987 FBI cable to Headquarters--in response to a

       May 1, 1987 CIA cable--and the April 28, 1987 memorandum from the

       DEA Deputy Assistant Administrator for Intelligence provided no

       derogatory information on the president of the prime contractor. A

       May 13, 1987 cable from Customs to Headquarters provided

       information that he had been involved in possible neutrality and

       munitions control violations in 1977. The FBI, DEA and Customs

       responses to the CIA trace request reported no links between him

       and drug trafficking. The DEA and Customs trace responses also

       indicated that other employees of Vortex/Universal and the prime

       contractor--Michael Palmer, Joseph Haas, Alberto Prado Herreros,

       Maurico Letona, Martin Gomez, Donaldo Frixone, and two pilots for

       the prime contractor--all of whom were affiliated with the CIA

       Contra support program, may have been involved in narcotics

       trafficking prior to their relationship with the Agency.

   860. On February 25, 1988, the Assistant General Counsel and an OGC

       attorney met with a representative from DEA's Office of General

       Counsel regarding the prosecution of Frank Correa--a Colombian

       drug kingpin. According to a March 8, 1988 Assistant General

       Counsel MFR regarding that meeting, the Agency became aware of

       federal criminal prosecution against Correa who was indicted in

       Detroit for drug trafficking. Palmer reportedly participated as a

       law enforcement informant in the September 1987 sting operation

       that resulted in Correa's arrest. The MFR stated that DEA provided

       funds for Palmer to lease a plane, hire a crew and pick up a load

       of drugs in Colombia. Correa flew back to the United States with

       Palmer and the drugs and was arrested when the plane landed in

       Michigan. As a result of Palmer's cooperation in this case, DEA

       reportedly was able to have Palmer's earlier indictment for drug

       trafficking dismissed.

   861. The Assistant General Counsel's MFR also noted that Correa's

       attorneys were alleging that Palmer was a CIA asset and that

       Vortex/Universal was an Agency proprietary. The claims were based

       on an April 4, 1987 CBS news story that alleged the Agency was

       protecting known drug dealers in order to carry out secret

       operations in Central America and focused on the Miami DC-6

       incident involving Palmer.

   862. The Assistant General Counsel was the OGC attorney responsible

       for any Agency involvement in the Correa case. She recalls that

       Correa's lawyers sought information concerning Palmer's

       relationship with the U.S. Government and the Agency undertook a

       file search in response to a "discovery request" from them.

   863. As part of the file search that was initiated on April 6, 1988,

       for information in response to the discovery request by Correa's

       lawyers, the SAS legal advisor sent a cable to the former CATF

       contractor who had overseen support for the Contras at the time

       and was now serving overseas. The SAS legal advisor's cable

       requested, among other things, "any information you may have

       regarding [CIA] suspicion or knowledge, or your suspicion or

       knowledge that Palmer and/or his associates at Vortex/Universal

       Air Leasing were involved in narcotics trafficking." The CATF

       contractor's April 8, 1988 reply stated that he "had no suspicion

       or knowledge of Palmer/Vortex narcotics trafficking

   864. On May 6, 1988, Agency officers--David Pearline, OCA; OGC's

       Assistant General Counsel; the OGC attorney serving as CATF

       compliance officer; and three other CATF officers--met with the

       president of the prime contractor to inform him that the "Hughes

       Subcommittee on Crime" intended to subpoena him as part of its

       investigation into alleged ties between CIA, the Contras and drug

       trafficking. According to a May 9, 1988 OGC MFR regarding the

       meeting, the president of the prime contractor stated that his

       company's relationship with Palmer and Vortex/Universal began in

       late 1985 when CIA's SAS Air Branch asked him to meet with

       Ambassador Duemling, Director of the NHAO. NHAO needed to find a

       replacement for the company it was then using for humanitarian aid

       flights. The president reportedly recommended Vortex/Universal

       and, after speaking with Herreros, put Palmer in touch with the

       NHAO. The MFR noted that he said he had only sporadic contact with

       Palmer during the time that NHAO contracted with Vortex/Universal.

   865. He also added at the May 6 meeting, according to the OGC MFR,

       that the CATF contractor had checked Vortex/Universal and Palmer

       with U.S. Customs and DEA at the time the NHAO was considering

       using Vortex/Universal as a carrier. Both agencies, he said, gave

       glowing reports concerning Palmer and indicated that he had worked

       with them on sting operations. The OGC MFR also indicated that he

       said he had told the CATF contractor who oversaw support for the

       Contras at the time in April 1986 that Palmer had been arrested by

       the FBI in Miami on drug trafficking charges. He also said that a

       decision had been made at that time that the president should have

       no further contact with Palmer. The president of the prime

       contractor stated that Palmer's subsequent indictment--in June

       1986--was discussed in November 1986.

   866. Agency records that describe the NHAO-Vortex/Universal

       relationship differ in one respect from the statements of the

       president of the prime contractor. A March 31, 1988 memorandum

       from the SAS legal advisor to the OGC Assistant General Counsel

       stated that the president of the prime contractor had recommended

       Palmer and Vortex/Universal to the NHAO, but made no mention of an

       Air Branch request that the president of the prime contractor meet

       with Ambassador Duemling. The former CATF contractor who oversaw

       support for the Contras at the time of the NHAO's contract with

       Vortex/Universal also stated in his April 8, 1988 cable that

       responded to the SAS legal advisor's request for information that

       the president of the prime contractor had recommended Vortex to

       NHAO on his own initiative, and that either the former CATF

       contractor or Fiers had concurred in the recommendation. The

       former CATF contractor's cable ended by pointing out that the

       "NHAO was in a position to accept or reject any carrier."

       According to the April 4, 1988 OCA MFR of a March 31 Agency

       briefing to the HPSCI, HPSCI Staff member Dick Giza stated that

       Fiers had said in a February 2, 1987 briefing to HPSCI that he had

       referred NHAO to Vortex/Universal.

   867. The president of the prime contractor says that he believes he

       learned of Palmer's arrest from someone in the Agency, but he

       cannot be sure because it was such a long time ago. Further, he

       recalls a lot of discussion with Agency personnel in the fall of

       1986 about Palmer's drug arrest. He recalls that the attitude

       among the participants in these discussions was that the Agency

       needed a plane that was "clean" and the fact that Palmer had been

       indicted for drug trafficking was "irrelevant."

   868. One of the air operations officers identified by the president of

       the prime contractor says that he was told by an Air Branch

       officer, whose name he cannot recall, at a meeting in late 1986

       that Palmer had been under investigation, but that everything was

       fine and Palmer was now in the clear. The officer says he does not

       recall being told that Palmer had been indicted for drug

       trafficking, but says the implication was that there were

       allegations that Palmer was a drug trafficker.

   869. A June 7, 1988 cable responded to a CIA/OIG request for

       information as part of an investigation into the Agency's

       connection with Palmer. The cable stated that the president of the

       prime contracting company had discussed Palmer at a November 1986

       meeting with FDN representatives. The president, according to the

       cable, mentioned that Palmer had been "questioned for a possible

       connection with drugs." Furthermore, the cable stated that Palmer

       had "volunteered" information at a meeting at Vortex/Universal,

       that he had been questioned about drug trafficking and that he had

       taken the issue "very seriously and had legally cleared the

       issue." The officer also stated in the cable:

       I have no knowledge or information that would make me suspicious

       that Palmer or Vortex [/Universal] were involved or connected with

       narcotic trafficking. The up front attitude and explanation from

       Palmer about the subject further dispelled suspicion. 

   870. Dupart states that he has no recollection of a May 1988 meeting

       at which, as claimed by the president of the prime contractor,

       Palmer's indictment was discussed, nor can he recall any other

       discussion of that subject with the president. Dupart notes that,

       in the aftermath of the Iran-Contra affair, matters like the

       Palmer case would not have been overlooked. The president, Dupart

       observes, is "loose with the facts."

   871. The OGC Assistant General Counsel recalls that the statement of

       the president of the prime contractor at the May 1988 meeting that

       he had discussed Palmer's arrest with a CIA official in

       1986--prior to the March 21, 1987 Customs incident--caused quite a

       stir at the meeting because Agency personnel realized this meant

       that erroneous information had been given to Congress in the March

       14, 1988 briefing. At that briefing, Agency personnel had stated

       that CIA was not aware of Palmer's arrest until after the Customs

       incident. Once they realized this, she says they went back to

       Congress and corrected the error.

   872. The OGC attorney who served as CATF compliance officer at the

       time, recalls the May 1988 meeting. However, she says she has no

       recollection of a discussion about drug trafficking. She says

       that, in general, drug trafficking was not a priority at the time

       in CATF--"it would not hit a register." She also has no

       recollection that any action was taken after the meeting. Two of

       the other officers the MFR indicated had attended the May 1988

       meeting with the president of the prime contractor do not recall

       participating.

   873. CIA's OIG opened an investigation regarding CIA's involvement

       with Palmer in May 1988. The CIA/OIG Investigator says that she

       was assigned the investigation on an "urgent basis." A May 16,

       1988 memorandum from her to Inspector General William Donnelly

       reporting the results of her investigation stated that OIG opened

       the investigation as a result of "Congressional concern" regarding

       allegations that "CIA had knowledge of and assisted Vortex

       Aviation pilot Michael B. Palmer's drug activities."

   874. A May 7, 1988 CIA/OIG cable to the former CATF contractor who

       oversaw support for the Contras at the time informed him that the

       president of the prime contracting company had said at the May 6

       meeting that he had told the contractor about Palmer's arrest in

       April 1986. The cable noted that the contractor had asserted

       earlier in his April 1988 response to the SAS legal advisor's

       cable that he was not aware of Palmer's involvement in narcotics

       trafficking and requested that he "clarify the facts." The former

       CATF contractor responded in a May 23 cable that he recalled being

       informed by the president of the prime contractor of Palmer's

       arrest. While he said he could not recall the exact date, it was

       after the NHAO flights ended. He also said he recalled that he

       "immediately" informed Fiers of the information about Palmer's

       arrest. The former CATF contractor's cable also said that he did

       not recall any other CATF personnel being present when he advised

       Fiers of Palmer's arrest.

   875. The former CATF contractor says he does not recall Fiers'

       response when told about Palmer's arrest in April 1986, but he

       assumes Fiers told Ambassador Duemling about it. The contractor

       states that he does not know much else about the Agency's handling

       of the Palmer incident because he was transferred in August 1986.

   876. The former CATF contractor also states that he cannot explain

       why--after being told of Palmer's arrest by the president of the

       prime contractor in April 1986--he replied to the SAS legal

       advisor's cable in April 1988 that he had no knowledge of it. He

       speculates that the SAS cable reached him when he was in the

       field, and those were "long days with many things happening." The

       Palmer issue, he says, was "probably not the most important thing

       that happened that day." However, he says that the OIG cable

       noting the comments of the president of the prime contractor

       jogged his memory when he received it in May 1988.

   877. Dupart asserts that, contrary to the former CATF contractor's

       account that he reported Palmer's arrest to Fiers sometime in

       early-1986, CATF was not aware of Palmer's arrest and indictment

       for drug trafficking until March 1987. He says he does not believe

       the former CATF contractor told Fiers about Palmer's arrest prior

       to March 1987 because the contractor would have had to go through

       Dupart on a matter like this and he has no recollection of ever

       discussing Palmer with the contractor. Moreover, Dupart states

       that "this was the kind of thing Fiers would have discussed with

       me, and no such discussion ever took place."

   878. Fiers, in his written response to CIA/OIG questions, states that

       he does not recall being told by the former CATF contractor about

       Palmer's arrest in April 1986. Further, Fiers says that he has

       spoken "on the record" about Vortex/Universal and Palmer--"perhaps

       with the Independent Counsel [for Iran-Contra], perhaps with

       members of Congress." Fiers' written response notes that he

       "certainly became aware" that Palmer was "a problem" in the "late

       spring or early summer of 1987" and that "he had to be distanced

       from Central America operations." Fiers' written response states

       that "without going into extensive review of the records to

       refresh my memory . . . I cannot comment further, other than to

       say that I had no information that Palmer was using our operation

       for drug smuggling." Fiers' written response asserts that he was

       unaware of any rumors or conversations concerning Palmer and drug

       trafficking.

   879. According to handwritten notes compiled by the OIG inspector in

       the course of the May 1988 CIA/OIG investigation, a detailee to

       CATF ran traces on Palmer in late December 1986 or early January

       1987. The detailee reportedly stated that there were "whisperings"

       about Palmer and the detailee "remembers explicitly" that the

       traces showed Palmer was "under investigation" for drug

       trafficking. The notes also stated that the detailee passed the

       derogatory information about Palmer from the traces to Fiers, who

       passed the information "on up the line and [a] decision [was] made

       at a higher level to go ahead and use [Palmer]."

   880. The OIG inspector's notes also stated that she discussed the

       information provided by the detailee regarding the Palmer traces

       with the SOG CATF Deputy Chief, who was the military detailee's

       supervisor beginning in May 1987. According to the notes, the

       Deputy Chief "reluctantly" said that she thought that the detailee

       was confused and that he was a "major stumbling block" concerning

       traces and that the detailee was "unable to distinguish between

       Agency and external traces" and that he believed there was "no

       need to trace people." The OIG notes indicated that the Deputy

       Chief said that she had to relieve the detailee of his duties "for

       cause," because he was causing unspecified problems.

   881. The Deputy Chief says that she did not verify whether the

       detailee had conducted traces on Palmer. She also says she does

       not recall learning that a trace had been done regarding Palmer in

       December 1986 or January 1987, prior to the April/May 1987 traces.

       The March 21, 1987 Miami DC-6 incident was when Palmer first

       "burst on people," the Deputy Chief states.

   882. The May 16, 1988 inspector's memorandum to IG Donnelly providing

       the results of her investigation regarding the Agency's

       involvement with Palmer stated her conclusion that allegations

       that CIA had knowledge of and assisted Palmer's drug trafficking

       activities were "without foundation." Further, the memorandum

       concluded that:

       . . . there is no basis for the allegation that an Agency employee

       was aware of Mr. Palmer's drug activities when that employee

       concurred in a recommendation of Palmer/Vortex, made by . . . [the

       president of the prime contracting company] circa December

       1985-January 1986 to the . . . Nicaraguan Humanitarian Assistance

       Office. 

       The memorandum did not mention any allegation or information

       indicating that CATF may have decided to use Vortex/Universal and

       Palmer after CATF reportedly became aware of Palmer's arrest and

       later indictment on drug trafficking charges. No information has

       been found to indicate that CIA/OIG produced a formal report

       concerning this investigation, or that the OIG inspector's May

       1988 memorandum was made available to CIA management by IG

       Donnelly.

   883. The OIG inspector says that she did not address the question of

       CATF's relationship with Vortex/Universal in her memorandum

       because she did not have enough facts at the time to reach a

       conclusion. She states that no one she interviewed could recall

       much about Palmer's drug arrest. Moreover, she says that she

       received little cooperation from CATF or the DO in response to her

       requests for documents. She recalls that CATF records "were

       unavailable, unobtainable and undiscoverable."

   884. She states that she tried to interview Dupart at the time

       regarding the Palmer issue, but he refused to discuss the matter

       because he had moved to one of the Intelligence Oversight

       Committee Staffs--HPSCI--and he believed commenting on the matter

       would be inappropriate. She says she never got around to

       interviewing Fiers because she was assigned another urgent

       investigation into Agency activities in Honduras. Dupart says he

       has never refused a request to be interviewed by OIG.

   885. She does not know why there is no record of a final CIA/OIG

       report concerning the Palmer investigation, but speculates that it

       may have been because she was told to drop everything she was

       working on in June 1988 to focus on the investigation involving

       Honduras. She says the Palmer issue may have "fallen through the

       cracks" as a result. No information has been found to indicate

       that the Palmer matter was examined subsequently by any CIA

       component other than CIA/OIG.

   886. Information Sharing with Other U.S. Government Entities. On March

       14, 1988, according to a March 29 MFR prepared by OCA's David

       Pearline, he and OGC's Assistant General Counsel described the

       circumstances surrounding the Miami DC-6 incident and the Agency's

       relationship with Palmer to the Judiciary Subcommittee on Crime

       Staff members. The Staff members reportedly asked whether the

       Agency had realized that Palmer was a DEA informant who had been

       indicted for drug trafficking. OGC's Assistant General Counsel

       responded, according to the MFR, that the Agency was not aware of

       Palmer's indictment or his DEA connection until the Miami DC-6

       incident. On learning of his indictment, she said, the Agency

       terminated the relationship with Palmer and Vortex/Universal Air.

       This information was also conveyed to the SSCI and HPSCI Staffs on

       March 31, according to the MFR.

   887. According to an April 4, 1988 MFR regarding the March 31 briefing

       to HPSCI Staff members, OCA expressed concern that Palmer would

       reveal the Agency's ties to the prime contractor at his upcoming

       testimony before the House Judiciary Committee Subcommittee on

       Crime. Further, OCA informed the HPSCI Staff members that the

       Agency anticipated that the Crime Subcommittee would press for

       operational information in its investigation into drug smuggling

       by the Contras. OCA requested the HPSCI's assistance in handling

       these inquiries. The MFR indicated that Michael O'Neil of the

       HPSCI Staff responded that the Judiciary Committee's inquiry had

       the full support of HPSCI members and that the HPSCI was not in a

       position to provide any assistance to CIA in limiting the

       Judiciary Committee's probe into intelligence activities that

       related to its investigation.

   888. Following the May 6, 1988 meeting, the president of the prime

       contractor, OGC's Assistant General Counsel, Pearline, and two

       CATF officers met on May 11 with two House Judiciary Subcommittee

       on Crime Staff members. A May 16 OCA MFR concerning that meeting

       reported that OCA had corrected the information given earlier to

       the Subcommittee Staff regarding when the Agency first learned

       that Palmer had been arrested for drug trafficking. OCA reportedly

       said that:

       . . . at least two Agency officers (Fiers and the [former CATF

       contractor]) knew about Palmer's drug dealing before the Agency

       agreed to buy an aircraft from [Vortex/] Universal Air Leasing and

       approved the subcontracting ... to [Vortex/] Universal Air Leasing

       of the servicing of aircraft flying resupply flights for the

       Contras. 

       OCA reportedly also informed the Staff members that the Agency was

       "still looking into this matter." The Subcommittee Staff requested

       that the Agency inform it of the results of any investigation. The

       same information, according to the MFR, was shared with David

       Holliday of the SSCI Staff and O'Neil of the HPSCI Staff on May 13

       and May 16, respectively.

   889. No information has been found to indicate that the results of the

       1988 CIA/OIG investigation or any other CIA inquiry into this

       matter were communicated to the SSCI, HPSCI, or the House

       Judiciary Subcommittee on Crime.

   890. CIA Vetting Role. As noted earlier, Agency records indicate that

       the president of the prime contracting company claimed in 1988

       that he had met with Ambassador Duemling of NHAO in 1985 and,

       during the course of the meeting, had recommended that NHAO

       utilize Vortex/Universal. However, Agency records differ in

       whether he says he contacted Ambassador Duemling on his own

       initiative or if he was responding to a request from CIA officials

       that he meet with the Ambassador. In any event, an April 4, 1988

       OCA MFR indicated that HPSCI Staff member Dick Giza said that Alan

       Fiers had said in a February 2, 1987 briefing to HPSCI that he had

       referred NHAO to Vortex/Universal. Fiers' written response to OIG

       questions also indicates CIA played some role in steering NHAO to

       Vortex/Universal since Fiers states that he "specifically recalls

       discussions with Ambassador Duemling" pertaining to the vetting of

       air carriers for NHAO.

       

                                Hondu Carib

                                      

   891. Background. According to the December 1988 Kerry Report, one of

       the pilots who flew Contra resupply missions for SETCO was Frank

       Moss. The Kerry Report also noted that Moss had been under

       investigation since 1979 for drug trafficking but reportedly was

       never indicted. In 1985, Moss formed his own company, Hondu Carib,

       which flew supplies to the FDN. The Kerry Report indicated that

       the FDN's arrangement with Moss and Hondu Carib was based on a

       commercial agreement between Moss and Mario Calero, the FDN's

       chief supply officer. Under that agreement, Calero was to receive

       an ownership interest in Moss' company.

   892. Also according to the December 1988 Kerry Report, one of the Moss

       planes that was used to ferry supplies to the Contras was chased

       off the west coast of Florida by the Customs Service while it was

       dumping what appeared to be a load of drugs. When the plane landed

       in Port Charlotte, Florida, an inspection revealed significant

       marijuana residue on board. The plane reportedly was seized by the

       DEA in March 1987.

   893. Allegations of Drug Trafficking. On March 31, 1984, Headquarters

       was informed by cable that Moss was among a group suspected of

       using a DC-4 owned by Hondu Carib in drug and arms trafficking

       through the Merida, Mexico International Airport. The aircraft

       reportedly flew from the United States to Honduras or Guatemala

       and then to Merida, ostensibly to pick up fish for export to

       Tampa. The aircraft had reportedly been searched by Mexican

       authorities and DEA agents with negative results. However, DEA

       agents were suspicious because of the aircraft's circuitous route

       and the fact that all of the individuals connected with the plane

       had previous drug trafficking records. This information reportedly

       had been brought to the CIA's attention by DEA because Moss and

       the others had claimed at the time of the search that they were

       connected with or worked for the Agency. No information has been

       found to indicate that Headquarters responded to the March 1984

       cable.

   894. A July 9, 1984 cable to Headquarters described Moss' company,

       Atlas Aviation, as a "shoestring cargo operation and hungry for

       business," that was "normally employed in transporting fresh fish

       and fruits from Central America and Mexico to the United States."

       The cable noted, however, that Atlas' "business profile fits the

       U.S. Customs narcotic trafficking profile," and the company was in

       the Customs computer as a "suspicious operation." Consequently,

       Atlas was "closely watched and thoroughly checked at all U.S.

       airports of entry and in Mexico, but not in other countries."

       Nonetheless, according to the cable, Atlas had a "clean record"

       with Customs and "will not become involved in drug trafficking or

       any other illegal activity which could damage their record."

   895. The July 1984 cable also pointed out, however, that Atlas is

       "hungry enough to walk a thin line in other countries," and that

       the company was aware of all international traffic regulations and

       procedures and "how to circumvent them if necessary." The Station

       added that Atlas had accomplished "very confidential modifications

       on [sic] low profile customers and aircraft for sensitive use."

   896. As mentioned earlier, the Kerry Report indicated that one of the

       planes Moss used to carry Contra supplies had been seized in March

       1987 by DEA after dumping what appeared to be drugs off the

       Florida coast and that significant marijuana residue was found on

       board at the time. According to an April 28, 1987 cable, the names

       of two CIA officers and their telephone numbers were included in

       Moss' notes that were seized by DEA when the aircraft was

       confiscated.

   897. At an April 7, 1987 meeting between CIA and Customs officials in

       connection with the March 1987 Miami incident involving Michael

       Palmer and a DC-6 Vortex/Universal aircraft, Customs officials

       also raised issues relating to the March 1987 seizure of Moss'

       DC-4. According to the April 7 memorandum summarizing that meeting

       that was prepared by the Air Branch Chief, Customs was informed

       that "there is no linkage of this aircraft or Mr. Moss to [CIA]."

   898. A May 12, 1989 FBI report concerning Moss indicated that DEA's

       search of Moss' aircraft in March 1987 had resulted in no

       narcotics evidence being discovered and that the aircraft had

       subsequently been released to Moss. Further, the FBI report noted

       that Customs had an open case on Moss as of November 1988, but

       there was no evidence to substantiate the drug trafficking

       allegations against him.

   899. On May 26, 1987, a cable reported to Headquarters that Moss was

       trying to generate business with the FDN by offering to fly air

       resupply drops inside Nicaragua. CATF responded on June 3 that it

       was concerned about Moss' possible ties to "druggers and the FDN."

       Headquarters also requested that the field "look into the ties

       with Moss and the FDN further and keep us advised." No information

       has been found to indicate that any further action was taken or

       that any additional information was generated in response to this

       request.

   900. A former CATF NOG Chief's initial recollection was that Moss may

       have been involved briefly with the Contra program, but that the

       Agency's relationship with him was terminated on the basis of

       something that happened with respect to keeping files on an

       aircraft. However, based upon further reflection and review of

       relevant records, he stated that Moss may have actually flown

       "stuff" for the Private Benefactors, not the Agency. No other

       Agency officers could recall any relationship between the Agency

       and Moss or his company. No information has been found to indicate

       any relationship between CIA and Moss or his company at any time.

   901. Information Sharing with Other U.S. Government Entities. Apart

       from the meeting with Customs officials on April 7, 1987, no

       information has been found to indicate that the Agency provided

       information concerning Moss or his company to other U.S.

       Government intelligence or law enforcement agencies or the

       Congress.

   902. CIA Vetting Role. A February 25, 1986 Headquarters cable noted

       that Moss had approached the NHAO in early 1986 with a proposal

       for Hondu Carib to provide air services for the NHAO. The cable

       requested information on the company's suitability for flying NHAO

       cargo missions. No information has been found to indicate there

       was a reply to this request. No information has been found to

       indicate that Agency personnel retrieved and considered the March

       and July 1984 cables regarding Moss and his companies or that the

       Agency requested further information from U.S. law enforcement

       agencies concerning Moss or Hondu Carib at this time. No

       information has been found to indicate whether CIA provided any

       information regarding Hondu Carib to the NHAO.

   903. A February 26, 1986 Headquarters cable indicated that the Agency

       received an inquiry from NHAO in February 1986 regarding the use

       of Hondu Carib as a conduit for the delivery of humanitarian

       assistance to the Contras.

       Allegations Involving Other Companies Associated With the Contras

   904. Allegations were made regarding two companies, Southern Air

       Transport and Markair--that were involved in supporting the

       Contras.

       

                           Southern Air Transport

                                      

   905. Background. Southern Air Transport (SAT) carried a variety of

       equipment, supplies and humanitarian aid for the FDN during the

       1980s.

   906. Allegations of Drug Trafficking. A January 21, 1987 memorandum

       from ADCI Robert Gates to Morton Abramowitz, Assistant Secretary

       of State for Intelligence and Research, stated that the U.S.

       Customs Service had advised CIA that the Customs office in New

       Orleans was investigating an allegation of drug trafficking by SAT

       crew members. The Gates memorandum noted that the source of the

       allegation was a senior FDN official. The memorandum indicated

       that the FDN official was concerned that "scandal emanating from

       Southern Air Transport could redound badly on FDN interests,

       including humanitarian aid from the United States."

   907. A February 23, 1991 DEA cable to CIA linked SAT to drug

       trafficking. The cable reported that SAT was "of record" in DEA's

       database from January 1985-September 1990 for alleged involvement

       in cocaine trafficking. An August 1990 entry in DEA's database

       reportedly alleged that $2 million was delivered to the firm's

       business sites, and several of the firm's pilots and executives

       were suspected of smuggling "narcotics currency."

   908. Information Sharing with Other U.S. Government Entities. As

       previously noted, a January 21, 1987 memorandum from ADCI Robert

       Gates to Morton Abramowitz, Assistant Secretary of State for

       Intelligence and Research, reported that U.S. Customs had informed

       CIA that the Customs office in New Orleans was investigating an

       allegation of drug trafficking by SAT crew members.

       

                                  Markair

                                      

   909. Background. A June 24, 1986 Headquarters cable indicated that

       Markair flew the last three support flights for NHAO in late June

       1986.

   910. Allegations of Drug Trafficking. On October 14, 1987, CIA

       requested traces concerning Markair from U.S. law enforcement

       agencies. The October 21 Customs Service response reported that

       the company was "strongly suspected" of owning an aircraft that

       had been used in 1984 to smuggle cocaine into the United States

       from South America. Further, according to Customs, the aircraft

       was sold that same year by Markair to "a large scale . . .

       [unnamed] drug trafficking organization recently convicted in

       federal court." Customs reported also that it was investigating

       the financial activities of Markair and its officers because of

       "large cash movements to and from Mexico and other foreign

       countries."

   911. An October 26, 1987 MFR by the CATF Deputy Chief indicated that

       he had contacted the Intelligence Section of the Customs Service

       that same day to determine whether the information in the Customs

       response to the CIA trace request was "sufficiently well-sourced

       to exclude Markair from contracting with the U.S. Government."

       According to the MFR, the Customs Intelligence Section indicated

       that the drug trafficking information was "only speculation." The

       MFR stated that Customs reportedly had confirmed that Markair had

       sold the aircraft to a major narcotics smuggling ring, but "the

       sale to this group may have been a legitimate business deal and

       not drug related." According to the MFR, Customs indicated that

       the information concerning Markair officers carrying large

       quantities of cash was "certain," but the Intelligence Section

       reported that "such behavior is common in the air charter business

       and thus is not by itself suspicious. Customs advises there is no

       current investigation open involving Markair." The MFR concluded

       by noting that the Customs Intelligence Section "would not

       exclude" the use [by the U.S. Government] of Markair "solely on

       the basis of information in Customs' files."

   912. Information Sharing with Other U.S. Government Entities. As noted

       earlier, an October 26, 1987 MFR indicates that the CATF Deputy

       Chief contacted the Intelligence Section of U.S. Customs on

       October 26 to discuss information provided by Customs regarding

       suspected drug trafficking activities by Markair.

       

                                 Alan Hyde

                                      

   913. Background. Alan Hyde is a Honduran citizen and businessman whose

       company, Mariscos Hybur, provided logistical support to the

       Contras from mid-1987 to late 1988 or early 1989.

   914. Allegations Of Drug Trafficking. A September 1984 report from the

       U.S. Defense AttachÈ Office (USDAO) in Tegucigalpa stated that a

       "Mr. Hyde," who "purportedly owns some 15 boats and a fish

       processing plant in French Harbor [Roatan]," said that "he is

       making much money dealing in 'white gold,' i.e., cocaine." A USDAO

       comment in the report stated that the description "fits that of

       Alan Hyde of Mariscos Hybur S.A." A February 27, 1985 Headquarters

       cable summarized traces received concerning possible maritime

       narcotics trafficking in the Caribbean and cited the September

       1984 USDAO report that "Hyde claims to be making a lot of money

       selling cocaine."

   915. On October 30, 1985, a cable to Headquarters reported that Hyde

       had boasted in mid-October that Hyde had two U.S. Customs Service

       agents "in his pocket." Hyde had reportedly also said that he had

       friends in the "Cosa Nostra."

   916. A December 1986 report from the U.S. Coast Guard's Miami office

       stated that organized criminal activity on Roatan Island had been

       increasing for the prior two years, according to two reliable

       sources. The Coast Guard report cited "rumors" that cocaine was

       warehoused on Roatan for shipment on coastal cargo and fishing

       vessels bound for south Florida. Named among the associates of the

       "organized criminal organization" were Hyde, owner of Hyde

       Shipping of Miami, and members of his family. The Coast Guard

       report also cited sources who named Hyde as the master of the

       vessel F/V Bobby in 1985 as a favor to Pablo Escobar, a major

       Colombian cocaine trafficker. Hyde was also rumored to be involved

       in loading cocaine into containerized cargo at Puerto Cortez,

       Honduras.

   917. On December 31, 1986, the U. S. Coast Guard/Miami issued a report

       to CIA indicating that Hyde's brother-in-law had sold up to six

       kilograms of cocaine in February-October 1986. The report also

       cited sources who claimed that Hyde Shipping purchased fishing

       vessels in Brownsville, Texas, in 1986 that were to have transited

       the Panama Canal, but instead sailed directly to Cartegena,

       Colombia, to be outfitted for drug smuggling.

   918. An April 22, 1987, Headquarters cable stated that U.S. Government

       law enforcement agencies were "very familiar" with Hyde and others

       on Roatan Island. These individuals, according to the cable, were

       believed to be involved in international drug trafficking.

   919. An unsigned, undated memorandum marked with a handwritten

       notation that stated "FM: USG C. July 1987" described Hyde as a

       "big time drug trafficker" who "probably runs cocaine to U.S.

       using the Hybur Clipper or Hybur Transport." It is "strongly

       believed," the memorandum stated, that the Hybur Clipper, a vessel

       operated by Hyde Shipping, "is or has been used to transport

       cocaine to Miami." Hybur Transport, it was noted, "is believed to

       have been used for cocaine transport as early as 1976." The

       memorandum cited three unsuccessful Coast Guard attempts--one in

       1976 and two in 1985--to capture Hybur vessels believed to be

       running drugs, and noted that a "Luis Hyde" of Roatan had been

       arrested in January 1985 by the U.S. Coast Guard aboard a

       freighter carrying 200 pounds of cocaine. Business cards for Hyde

       Shipping were reportedly found on board. The memorandum did not

       indicate whether Luis Hyde was a relative of Alan Hyde.

   920. A July 11, 1987 Headquarters cable stated that the U.S. Coast

       Guard had placed three Hyde vessels on its watch list for

       suspected drug smuggling. A July 20, 1987 cable to Headquarters

       reported that, according to Honduran military officers, there was

       a widespread belief that Hyde had been using his fishing fleet and

       personal plane for "at least the last five years for transporting

       illegal substances," including drugs. The cable added that Hyde

       was well connected to "highly placed Honduran officials" and that,

       while the allegations against him cannot be confirmed," the

       popular belief is that Hyde has insulated himself from prosecution

       by judicious use of his money."

   921. On September 23, 1987, the U.S. Coast Guard reported to CIA and

       other agencies concerning a smuggling network based in the Bay

       Islands located off the coast of Honduras. According to reliable

       sources cited in the Coast Guard report, Hyde was the "'godfather'

       for all criminal activities originating in the Bay Islands and the

       [Honduran] mainland." He had, the Coast Guard reported, allegedly

       maintained numerous bank accounts in Grand Cayman and in Panama,

       pressed the Government of Honduras to refrain from establishing a

       greater presence in the Bay Islands, and diverted weapons destined

       for the Contras. On October 9, 1987, a cable to Headquarters

       indicated receipt of a Honduran report that named Hyde and several

       others on Roatan as suspected narcotics traffickers.

   922. On March 17, 1988, the Agency's Directorate of Intelligence

       issued an intelligence assessment entitled "Honduras: Emerging

       Player in the Drug Trade." That assessment stated that a U.S.

       Coast Guard source had identified Hyde and another family in the

       Bay Islands as using their legitimate businesses to transport

       cocaine refining chemicals and guns from the United States to

       Honduras on commercial fishing vessels. The source reportedly

       alleged that the chemicals were destined for two cocaine

       processing labs on Roatan or for processing operations in

       Colombia. Another Coast Guard source cited in the assessment

       claimed Hyde had laundered $4-5 million through shell companies in

       Panama in 1986.

   923. A March 9, 1988 memorandum from the Acting LA Division Chief to

       DDO Richard Stolz pertained to the use of Hyde and Mariscos Hybur.

       That memorandum cited February 1988 U.S. Coast Guard reporting

       that Hyde headed an air smuggling ring that operated out of

       Honduras with contacts in the Tampa/St. Petersburg area.

   924. CIA Response to Allegations of Drug Trafficking. A CIA officer

       recalls that Hyde "offered his help" to the Agency in 1986.

       However, CIA decided to reject this offer, he says, because a

       records check with U.S. law enforcement agencies produced

       derogatory information.

   925. Another CIA officer recalls that there was a lot of radio

       communication between the field and Headquarters regarding Hyde.

       The first cable communication regarding these arrangements that

       has been found is a July 8, 1987 cable to Headquarters that

       included a summary of discussions with Hyde and indicated that

       using Hyde's vessels to ferry supplies would be more economical,

       secure and time efficient than using aircraft. The following day,

       July 9, CATF replied that information available at Headquarters

       indicated that Hyde might have ties to drug traffickers and

       directed CIA personnel "make no new commitments with Hyde until

       this information can be explored." The Headquarters cable,

       however, authorized a continuation of ongoing work.

   926. Headquarters requested on July 10, 1987 that DEA, FBI and the

       U.S. Customs Service provide traces regarding Hyde. A July 11,

       cable summarized the derogatory information that was available to

       Headquarters at the time, but added that none of this information

       was "firm proof that [Hyde] is involved in [drug] smuggling or

       nefarious activities." Nonetheless, the cable stressed that:

       We cannot . . . authorize [CIA] entering a relationship with

       [Hyde] until we are satisfied, through traces and the use of other

       [Security resources], that he is not a threat to the security of

       our operations. 

       A copy of this cable included a handwritten notation to: "Press

       this very hard it is not a good thing." CATF Chief Fiers says in

       his written response to OIG questions that the notation is his.

       CATF Nicaraguan Operations Group (NOG) Chief states that Fiers

       remained knowledgeable of the Hyde issue and made sure it was

       taken care of properly.

   927. A CIA officer recalls that it was not standard practice at the

       time to conduct traces concerning individuals or companies that

       were overtly supplying commercial services to CIA. He remembers

       receiving "mixed signals" from Headquarters in regard to the

       relationship with Hyde There was a lot of pressure from Fiers and

       DCI Casey to get the "job done," as he recalls, but there were

       also low level Agency "functionaries" who were mainly concerned

       with following procedures. These people "were playing to an

       audience," the officer adds, wanting to make sure the Agency would

       be protected in case the congressional intelligence oversight

       committees "came calling." A former senior logistics officer

       recalls that it was not unusual at that time for Headquarters to

       tell the field to do something and then act surprised when it was

       done.

   928. A CIA officer, whose component coordinated logistical support to

       the Contra program in the 1980s, says that it was Agency policy to

       run traces with other agencies regarding foreign contractors. She

       says Hyde was involved in an operation, there was derogatory

       information about him, and there was a need to make sure that

       everything was done right. She recalls that Fiers was constantly

       saying that "we need to know everything about this guy and getting

       [sic] proper approvals."

   929. A July 11, 1987 reply to the July 9 cable from Headquarters

       ordering no expansion of the arrangements with Hyde warned that

       to:

       . . . pursue other alternatives at this time . . . could have an

       obvious backlash from Mariscos Hybur . . . . A literal

       interpretation [of the Headquarters order] will bring the . . .

       effort to a halt

   930. A July 14, 1987 Headquarters cable advised that--even if the

       allegations against Hyde were to be favorably

       resolved--questioning of him still would be required concerning

       issues related to illegal drugs and arms trafficking. Headquarters

       concluded this cable by pointing out that "there is a very real

       risk that news of our relationship with subject, whose reputation

       as an alleged drug smuggler is widely known to various agencies,

       will hit the public domain--something that could bring our program

       to a full stop."

   931. On July 22, 1987, a Headquarters cable stated that:

       . . . the DDO [George] received the following directive from DDCI

       Gates in April of this year. "It is 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. This must be

       true not only of those with whom we contract but also their

       subcontractors." This directive and our consistent policy of

       avoiding use of individuals who have links to drug smuggling has

       served CIA well. We have been able to deny involvement with

       individuals and organizations accused of drug smuggling. We have

       initiated priority traces with several other U.S. Government

       agencies and departments to get the full story on Hyde and

       Mariscos Hybur. At this point, preliminary information . . . is

       not encouraging. 

       CIA personnel in the field were again directed in the July 22

       cable to look for alternative logistical means.

   932. A CIA officer in the field says that there was never any

       misunderstanding on the drug issue. No one wanted to become

       involved with narcotics traffickers, and everyone was keenly aware

       that Congress would end the Contra program were the Agency so

       involved. At the same time, he asserts that there was nothing

       solid concerning Hyde, nothing that could be regarded as hard

       evidence. "If these allegations were true, DEA and the Coast Guard

       would have got him," the officer notes.

   933. The former senior logistics officer states that he never believed

       the drug allegations against Hyde, whom he came to regard as a

       close friend. However, he allows that Hyde had 35 vessels at sea

       and it might have been possible for an employee of Hyde to use one

       of the boats for smuggling. He speculates that there were a lot of

       people in Honduras, including Honduran Government officials, who

       were jealous of Hyde and may have been the source of the drug

       trafficking allegations. The officer says that he was totally

       focused on getting the job done. After hearing the rumors, he

       discussed them and considered them with his supervisor, with the

       two of them taking "due care given the circumstances."

   934. A July 18, 1987, cable to Headquarters opposed the questioning of

       Hyde by CIA Security that had been suggested in the July 14

       Headquarters cable. The relationship with Hyde, the cable

       asserted, was "an overt, commercial transaction of short duration"

       similar to other commercial dealings CIA had, and it would be

       inappropriate to conduct an in-depth security questioning. The

       cable proposed to use Mariscos Hybur until the estimated project

       completion in less than two months because there was no

       alternative. Should Mariscos Hybur turn out to be the only viable

       long-term option, the Base added, it would then "reconsider"

       approaching Hyde to submit to questioning.

   935. On July 20, 1987, DEA responded to the July 10 CIA trace request

       and reported no derogatory information other than an October 1983

       report alleging Hyde's involvement in cocaine smuggling. On August

       20, Customs reported no derogatory information on Hyde. A July 20

       cable to Headquarters reported that Honduran Government files

       reportedly contained no derogatory information on Hyde, but noted

       that the Hondurans suspected Hyde of drug trafficking and of

       bribing Honduran officials to escape prosecution.

   936. On July 27, 1987, OGC attorney W. George Jameson, then-Counsel to

       the DO, provided Fiers with a legal opinion regarding the use of

       Hyde:

       I see no legal impediment to proceeding as planned. Neither the

       firm, nor its owner, Alan Hyde, is under indictment or

       investigation to your knowledge, and the allegations of drug

       trafficking are not substantiated. Moreover, you have no

       independent basis to believe the accusations are true, and intend

       to take steps to ensure no possibility of trafficking occurs in

       the course of carrying out the terms of the contract . . . .

       Obviously, CIA use of a known drug smuggler would raise

       significant legal and policy implications. When Congress

       authorized a Nicaraguan paramilitary program, it prohibited the

       assistance it authorized from being provided to "any group that

       retains in its ranks any individual who has been found to engage

       in . . . drug smuggling." Although not directly applicable to the

       situation at hand, I think the analogy is instructive and sets a

       reasonable standard on which to determine how to proceed. It does

       not appear to me from the information you have provided that this

       standard has been met. 

       (Emphasis added.)

   937. Jameson says that he was unaware in July 1987 when he authored

       the legal opinion to Fiers of the April 9, 1987 ADCI Gates

       memorandum prohibiting Agency use of known or suspected narcotics

       traffickers unless the allegations were cleared up. He states that

       his memorandum addressed only the legal issues, not operational or

       policy considerations. The Gates directive, he asserts, was a

       policy statement. Had he been aware of the Gates memorandum,

       Jameson says he would not have interpreted it to mean that Hyde

       could not be used, but that the Agency should do its best to

       obtain more information. In this regard, he says his own

       memorandum made clear that CATF needed to dig further into the

       allegations by checking with law enforcement agencies or with

       assets to determine whether these were reasonable allegations or

       unfounded. He was warning CATF to be careful. Jameson also says it

       should not be assumed or implied that he was aware of all that the

       Agency knew about Hyde at the time.

   938. On August 5, 1987, Fiers sent a memorandum to DDO Clair George

       recommending that George approve the use of Hyde. The memorandum

       summarized all of the available derogatory information and

       acknowledged that Hyde was "not attractive and is the type of

       activity [sic] we wish to avoid." Fiers added, however, that the

       Agency had no choice but to use Hyde on the grounds of

       "operational necessity." The Fiers memorandum explained that there

       would be controls on Hyde that "should minimize the risks." The

       contract would not require him to do business in or enter the

       United States. Fiers concluded the memorandum by noting that the

       Agency had shared the derogatory information regarding Hyde with

       the FBI, U.S. Customs Service, DEA, and staff members of both

       congressional oversight committees and had informed them of CIA's

       intent to use Hyde for a limited commercial contract. The

       congressional staff members, Fiers reported to DDO George, had

       posed no objections to the limited use of Hyde.

   939. Headquarters, in a cable dated August 8, 1987, stated that DDO

       George had approved the use of Hyde and Mariscos Hybur to provide

       logistical services to complete a project, after which all

       contacts must cease. A March 31, 1988 CATF memorandum to DDCI

       Gates also indicated that the decision to use Hyde and Mariscos

       Hybur was "made at the DDCI level." A CIA officer stated in a

       February 2, 1988 memorandum to the Chief of SAS that "The decision

       was made at the DDCI level to go ahead and use [Mariscos Hybur]."

   940. Then-DDCI Gates says that he has no recollection of approving the

       use of Hyde and does not recall the matter being brought to his

       attention.

   941. Gates recalls that he started "putting everything in

       writing--especially if it had to do with the Contras" because he

       had been "savaged" several months earlier in DCI confirmation

       hearings for not being aggressive enough in looking into the

       Contra program. He also says he almost certainly would have

       discussed any such approval with DCI Webster since the

       congressional Iran-Contra hearings were underway and Webster was

       conducting his own inquiry into CIA's role.

   942. Then-CATF Compliance Officer Louis Dupart asserts that Gates did

       in fact approve the use of Hyde. As he recalls, DDO George went to

       Gates saying, "We need to use him, but we also need to figure out

       how to get rid of him." Gates, according to Dupart, gave the

       approval, with the caveat that CATF end the relationship with Hyde

       as soon as possible. This was all done verbally, nothing was in

       writing, Dupart says, since "Gates would not put something like

       that in writing." The approval may have been attributed to DDO

       George in the August 8 cable, says Dupart, but it was run through

       Gates. The DDO did not do it on his own, Dupart says.

   943. Fiers states in his written response to OIG questions that:

       My belief is that Acting DCI [Gates] approved [Hyde's] use in a

       conversation with me. (I do not specifically recall a conversation

       in this regard, but I do believe one took place.) I also recall

       that the subject was highly controversial. I specifically recall

       that Headquarters--me included--did not want to use Alan Hyde. . .

       . After much discussion, I recall that we agreed that he could be

       used on a highly restricted basis, which essentially eliminated

       the possibility that he could use the . . . . operation in

       connection with any illicit activities. 

   944. In a September 29, 1987 cable, CATF requested a determination as

       to whether there was any substance to recent allegations that the

       "criminal families" on Roatan, including Alan Hyde, were stealing

       arms and ammunition destined for the Contras. Further, CATF

       directed that an appropriate person should travel to Roatan to

       attempt to buy weapons if there were substance to the charges.

       When asked why CATF did not take similar actions to verify the

       narcotics trafficking allegations against Hyde, the former Chief

       of NOG says "It was an issue of relative order of priorities . . .

       . [T]he issue of stealing our guns had a higher priority than

       verifying whether Hyde was smuggling cocaine into the U.S." Fiers

       states in his written response to OIG questions that he has "no

       recollection of Hyde being involved in gun smuggling. No

       information has been found to indicate that the instructions

       regarding the alleged arms thefts were executed.

   945. A November 9, 1987 cable informed Headquarters that Hyde had

       consented to being questioned by CIA Security. A CIA officer

       speculates that Hyde may have thought the request to take the test

       had something to do with the weapons that were showing up on

       Roatan. He notes that Hyde was concerned that this contraband

       would hurt the local community, and he did not want to be

       associated with this.

   946. No information has been found to indicate that CATF responded to

       the November 9 cable indicating that Hyde was prepared to be

       questioned by CIA Security or that any interview was ever

       conducted with Hyde. A former CATF officer does not recall why

       Hyde was never questioned, but notes that no interview was

       "required" since Hyde was used in a limited capacity as a

       contractor.

   947. On February 2, 1988, a CIA officer sent a memorandum expressing

       his misgivings about CIA's involvement with Hyde. He concluded the

       memorandum by stating his belief that "consideration should be

       given to [not] having any further involvement with the HYBUR [sic]

       organization." No information has been found to indicate that any

       action was taken in response to the memorandum.

   948. On February 19, 1988, the Defense AttachÈ in Tegucigalpa reported

       in a cable received by CIA that the Honduran military would be

       increasing coastal patrols in the Bay Islands because of concerns

       about drugs and arms smuggling. On February 24, 1988, a CIA

       officer sent a handwritten note to the CATF SOG Chief informing

       him of a conversation she had on that day with Dupart regarding

       the need to obtain additional approvals to use Hyde's facilities.

       The note stated that she also informed Dupart of the planned

       Honduran Government "drug-busting effort" against the Bay Islands.

       The note went on to say that "Because Hyde is reported . . . as

       the 'godfather of all criminal activities'--[especially] drug

       smuggling--in the Islands, it is likely he will be a target of

       this effort."

   949. CIA records indicate that the Agency continued to believe that

       Hyde's docking and storage facilities on Roatan would be needed to

       comply with the congressional mandate to keep in mothball status

       all equipment, aircraft, vessels, and supplies that had been used

       to support the Contras, pending authorization to continue the

       Nicaragua program. With these requirements in mind, the Acting LA

       Division Chief informed DDO Stolz in a March 9, 1988 memorandum

       that the Agency would have to lease additional storage facilities

       from Hyde. The memorandum also provided Stolz with the most recent

       derogatory information concerning Hyde, citing the allegations

       that a Hyde vessel was being used for drug smuggling and that Hyde

       was the head of an air smuggling ring with contacts in the

       Tampa/St. Petersburg area. The memorandum pointed out, however,

       that there was still no "hard evidence" against Hyde.

   950. On March 12, 1988 an extension of the Agency's contract with Hyde

       was approved by DDO Stolz. The extended contract was modified to

       allow use of Hyde's storage facilities on Roatan as long as the

       mothballing of Contra support assets was required. Other

       arrangements with Hyde would require prior Headquarters approval,

       according to the cable.

   951. Despite this March 1988 extension of the contractual relationship

       with Hyde, Agency records indicate that CATF was determined to

       terminate the relationship by June 1988 because of the receipt of

       continuing allegations of Hyde's involvement in cocaine

       trafficking and the pending expiration of the so-called mothball

       authorities on September 30. A June 29, 1988, CATF cable noted

       Headquarters "wishes" to limit any further contact with Hyde and

       directed CIA officers in the field to find another commercial

       firm. The field again objected to severing ties to Hyde in a July

       11, 1988 cable to Headquarters describing Hyde as being the only

       Honduran "delivery mechanism" for aviation gas. Field officers

       also reportedly believed that Honduran authorities would not allow

       another company to do business at the site.

   952. CATF replied in a July 29 cable that an alternative to Hyde

       "must" be found and informed the field that there would be no

       further Agency contact with Hyde even if the mothball authorities

       were extended. On September 22, however, the field requested

       permission to use Hyde's facility until the end of the hurricane

       season. In an October 27 memorandum, LA Division Chief requested

       Stolz' approval to continue the use of the Hyde facility until

       December 1998. CIA records indicate that Stolz approved the

       continued use on October 28, 1988 and that the Agency's

       relationship with Hyde apparently ended at the beginning of 1989.

   953. A March 11, 1993 cable discouraged counternarcotics efforts

       against Alan Hyde because "his connection to [CIA] is well

       documented and could prove difficult in the prosecution stage."

   954. Information Sharing with Other U.S. Government Entities.

       According to the October 9, 1987 cable that cited a Honduran

       report linking Hyde to drug trafficking, that information was

       shared with the DEA office in Honduras and the U.S. Consul General

       there "in his capacity as mission narcotics referent."

   955. Fiers' August 5, 1987 memorandum to DDO George indicated that the

       Agency had informed the FBI, DEA and Customs of its intention to

       use Hyde for a limited commercial contract. No information has

       been found to confirm the statement that the Agency actually

       informed these law enforcement agencies of its intention to use

       Hyde.

   956. An undated memorandum from Fiers to the ADDO and the LA Division

       Chief appears to have been written following a CATF briefing to

       the SSCI and HPSCI Staffs concerning Contra drug trafficking

       allegations in late July 1987. The memorandum indicated that Fiers

       had included information about Hyde in his briefing to several

       SSCI and HPSCI Staff members. According to the memorandum, David

       Holliday of the SSCI Staff had seen "no problems in using Hyde in

       the manner outlined [i.e., contracting with him to haul cargo]."

       The memorandum recorded, however, that Holliday said he wanted to

       discuss the matter with SSCI Chairman Boren before giving "final

       concurrence." The Fiers memorandum also noted that Thomas Latimer

       of the HPSCI Staff "was more forward leaning. He saw no problems

       and indicated we should proceed." Fiers indicated in the

       memorandum that he would contact Holliday during the following

       week to determine whether he had talked to Senator Boren. No

       information has been found to indicate a follow-up conversation

       between Fiers and Holliday concerning Senator Boren's views.

   957. An August 3, 1987 OCA MFR by Robert Buckman recorded a meeting of

       SSCI and OCA officers that day. Attending for the SSCI were Staff

       Director Sven Holmes, Jim Dykstra, Dave Holliday, Keith Hall, and

       Britt Snider. David Gries, Al Dorn, and Robert Buckman represented

       OCA. According to the MFR, Holmes questioned CIA's use of Alan

       Hyde in the Contra supply program in light of allegations of

       drug-related activities by Hyde. The MFR indicated that Fiers was

       contacted by telephone during the meeting and reportedly stated

       that Agency policy was that persons such as Hyde could be used in

       the Contra program if there were no ongoing investigations of

       wrongdoing or no outstanding indictments.

   958. On August 7, 1987, a memorandum from Alvin Dorn, the then-Deputy

       Director for Senate Affairs in OCA indicated that SSCI Staff

       Director Sven Holmes had been provided background information

       concerning Hyde, but wanted more. Holmes was reportedly also

       requesting information regarding Agency policies that governed

       operational use by CIA of persons with criminal backgrounds. A

       draft response to Holmes was completed by August 13 that stated,

       in part:

       . . . should the need . . . arise an assessment is made to

       determine whether the specifics of the criminal history or

       notoriety of the person is compatible with contemplated use; if

       there is an unacceptable degree of incompatibility, the individual

       is not used . . . . It [is] generally inadvisable to involve

       anyone in operational activities who is known to currently be

       pursuing a criminal activity that is subject to U.S. process. 

       No information has been found to indicate whether this draft

       response was ever made final or sent to the SSCI.

   959. An unsigned August 19, 1987 memorandum virtually restated

       verbatim the information in the memorandum Fiers had forwarded to

       DDO George on August 5. This memorandum contained a full

       exposition of the derogatory information concerning Hyde. No

       information has been found to indicate whether this document was

       provided to Holmes or anyone else.

   960. The Acting LA Division Chief's March 8, 1988 memorandum to DDO

       Stolz indicated that the SSCI and HPSCI would be briefed

       concerning the Agency's plans to extend the Hyde contract. No

       information has been found to indicate that these briefings took

       place.

   961. The Acting LA Division Chief requested guidance from DDO Stolz in

       a March 9, 1988 memorandum regarding whether to inform law

       enforcement agencies of the extension of the Hyde contract. No

       information has been found to indicate any response or decision

       regarding this request.

       Allegations Involving Air Crew Members of Companies that Provided

       Services to the Contras Under Contract or Subcontract with CIA

   962. Background. Following the March 21, 1987 incident at the Miami

       airport involving U.S. Customs and an Agency DC-6 operated by

       Michael Palmer of Vortex/Universal Air Leasing, ADCI Gates sent a

       memorandum to DDO Clair George on April 9, 1987 directing that all

       contractor and subcontractor air crew personnel be vetted with DEA

       and the U.S. Customs Service as well as with the FBI. This was

       necessary, wrote Gates, to protect the Agency against even

       indirect involvement with drug trafficking.

   963. Thereafter, CATF requested traces during April, May and June 1987

       from DEA, U.S. Customs and the FBI concerning employees of

       Vortex/Universal and the prime contracting company. In addition to

       linking Michael Palmer and Al Herreros of Vortex/Universal to drug

       trafficking, information provided by DEA and Customs in response

       to these CIA trace requests also indicated that two employees of

       the prime contractor and seven employees of Vortex/Universal were

       suspected of having drug trafficking connections.

   964. Moreover, CIA, through the use of a trusted resource, developed

       information to indicate that three other individuals—all of

       whom were employed by the prime contractor—might have some

       connection to drug trafficking.

   965. A Prime Contractor Pilot. According to DEA information provided

       to CIA on April 28, 1987 a contractor pilot was:

       . . . listed as the pilot of [aircraft registration number] . In

       1981, the aircraft was placed on lookout because [he] was

       suspected of smuggling drugs into the United States from the

       Bahamas. The lookout was later canceled. 

   966. According to Customs information provided to CIA on May 13, 1987

       from the Treasury database, the pilot was the subject of a 1982

       report of alleged drug smuggling. According to the Customs report,

       he was alleged to have used an aircraft with the same registration

       number that was cited in the April 28, 1987 DEA information.

   967. A June 1, 1987 CIA cable to Customs requested further information

       on the pilot and three other individuals in an attempt to

       determine the validity of the information that Customs had

       provided to CIA in its May 13, 1987 cable. According to the June 1

       cable, CIA:

       . . . . would appreciate details on the sources of information,

       including any available assessments on the reliability of the

       sources and their access to the information (for example, whether

       through direct involvement in the alleged activity or via

       hearsay). . . .

       In its June 24, 1987 response, Customs referred the CIA to the

       U.S. Coast Guard for further information pertaining to the pilot.

       However, no information has been found to indicate CIA contacted

       the U.S. Coast Guard regarding the pilot.

   968. On April 29, 1986, the pilot was questioned by CIA Security as

       part of the clearance process to work under the prime contractor.

       A May 1, 1986 report of that questioning indicated that the pilot

       admitted to extensive use of illegal drugs and to selling

       marijuana to friends on several occasions in the late 1960s and

       early 1970s. He claimed that these sales occurred at social

       functions and that he did not make a profit from this activity.

       The report noted that although he was questioned intensively on

       these matters, CIA concluded that his answers were probably

       credible. According to the report, the pilot was advised of CIA's

       policy regarding the illegal use of drugs and he agreed to abide

       by that policy.

   969. A December 22, 1988 CIA memorandum indicated that an aircraft

       that Customs identified as belonging to the prime contractor and

       suspected of drug smuggling in 1981-82 had been sold by the prime

       contractor in November 1979, but subsequently had been stored at

       the prime contractor's facility. It was unclear, the MFR noted,

       whether the pilot had been flying this aircraft as an employee of

       the prime contractor or as a charter pilot for the new owners. The

       December 1988 MFR indicated that more information would be needed

       from Customs in order to determine whether the aircraft and the

       pilot had actually been involved in drug trafficking. No

       information has been found to indicate that CIA sought additional

       information from Customs or any other source to follow-up or

       verify this information.

   970. No information has been found to indicate that the results of

       questioning regarding drug use by the pilot were provided to U.S.

       law enforcement agencies. No information has been found to

       indicate that information regarding allegations of drug

       trafficking by the pilot was provided to Congress.

   971. A Second Prime Contractor Pilot. According to a June 8, 1987 DEA

       cable, a second pilot was suspected of being "the pilot of an

       aircraft that was placed on lookout [sic] for suspected drug

       smuggling."

   972. He was hired on June 25, 1987 as a pilot for the Contra program

       with temporary approvals.

   973. An October 21, 1987 Headquarters cable indicated that the pilot

       had resigned from the Contra program. An October 23 cable to

       Headquarters urged that a strong effort be made "to try and turn

       him around," because he was "unquestionably the premier DC-6

       captain." On December 3, Headquarters cabled that the pilot had

       agreed to continue in the Contra program. A December 10

       Headquarters cable indicated that "investigative efforts" were

       underway to "clarify" the drug trafficking allegations. The cable

       stated that questioning by CIA Security "will be scheduled as soon

       as possible."

   974. No information has been found to indicate any further

       investigative efforts were pursued by CIA. No information has been

       found to indicate when CIA's relationship with the pilot was

       actually terminated.

   975. No information has been found to indicate that information

       regarding allegations of drug trafficking by the pilot was

       provided to Congress.

   976. An Aircraft Mechanic. CIA Security questioned this mechanic was

       conducted on December 2, 1986. According to the report cabled to

       Headquarters on April 3, 1987, the information provided by the

       mechanic led CIA to conclude that he was probably involved in drug

       trafficking. Further, the report indicated CIA's view that, even

       under intense questioning, he was also withholding information

       regarding people he knew who were involved in the Contra program

       and drug trafficking. According to the report, the mechanic

       refused to identify any of these individuals, although he claimed

       that one of them had recommended him for the Contra program.

   977. An April 20, 1987 Headquarters cable provided instructions that

       the mechanic was to be removed from his job pending the results of

       a second round of questioning by CIA Security. An April 24, 1987

       memorandum from the LA Division Chief to DDO Clair George and the

       Director of Security indicated that the mechanic had been advised

       that he would have to undergo a third round of questioning to

       resolve the drug trafficking questions.

   978. The mechanic was questioned again on May 10, 1987. According to

       the Security report of June 22, the mechanic admitted to smuggling

       a small amount of marijuana for his personal use into the United

       States in 1968. He also admitted that he "fostered drug

       transactions on a few occasions" while with the U.S. military in

       Vietnam. He reportedly asserted, however, that he never personally

       dealt illegally in drugs. Based on the information he provided,

       CIA concluded that his answers were probably credible. The report,

       however, did not indicate whether he was questioned regarding the

       other individuals in the Contra program who might be involved in

       drug trafficking and to whom he had referred in December 1986.

   979. No information has been found to indicate that the Agency took

       any further action to pursue or verify the information regarding

       the mechanic or to determine the identities of the other

       individuals.

   980. No information has been found to indicate that information

       regarding allegations of drug trafficking by the mechanic was

       provided to Congress or to other U.S. Government agencies.

   981. A Third Pilot. This pilot was hired by the prime contractor in

       November 1986 in support of the Contra program and

       was questioned by CIA Security on December 2 and December 4, 1986.

       As a result of the information the pilot provided on both dates,

       CIA concluded that this pilot was probably involved in drug

       trafficking. The pilot was questioned further on December 11 and

       December 12, 1986 without the issues being clarified.

   982. No information has been found to indicate that the Agency took

       any further action to pursue or verify the information developed

       during questioning by CIA Security.

   983. No information has been found to indicate that information

       regarding drug trafficking by the pilot was provided to Congress

       or to other U.S. Government agencies.

   984. A Fourth Pilot. This pilot was hired by the prime contractor for

       the Contra program in late 1986. He was questioned by CIA Security

       on December 2 and December 3, 1986. Based on the information he

       provided, CIA concluded that the questioning was not productive.

   985. No record has been found to indicate any further action by CIA to

       follow-up or verify this information. No information has been

       found to indicate to what extent or for how long he was employed

       by the prime contractor to support CIA's Contra program.

   986. No information has been found to indicate that information

       regarding drug trafficking by the pilot was provided to Congress

       or to other U.S. Government agencies.

   987. Vortex/Universal employees. The seven individuals identified

       through DEA and Customs trace responses as suspected drug

       traffickers who were employed by Vortex/Universal were:

          + Joseph Haas

          + Donaldo Frixone

          + Martin H. Gomez

          + Martin Alberto Gomez

          + Irving Silva

          + Mauricio Letona

          + Stephen Herreros.

   988. According to information DEA provided to CIA on April 28, 1987,

       Haas, Frixone, Silva, and Stephen Herreros had been implicated

       with Michael Palmer in a September 1986 drug smuggling incident in

       northern Mexico involving 19,000 pounds of marijuana destined for

       the United States. The DEA response also reported that Haas,

       Frixone and Martin Alberto Gomez had been crew members on the DC-6

       that was involved in the March 1987 incident at Miami

       International Airport.

   989. Joseph Haas. Haas was reportedly a long-time informant for a U.S.

       law enforcement agency.

   990. Haas had been hired by Vortex/Universal in December 1986 to

       assist in providing crew support for air drops in support of the

       Contras. The April 28, 1987 DEA memorandum appears to have been

       the first indication to the Agency that Haas was suspected of

       involvement in drug trafficking and had been a suspected marijuana

       trafficker since 1984. According to an April 7, 1987 MFR prepared

       by a CIA Contracts Branch Chief regarding a conversation she had

       with the president of the prime contractor on that date, Haas had

       been "taken off" CIA's payroll as of April 1 because he had gone

       to work for a U.S. law enforcement agency in the United States. No

       information has been found to indicate that the Agency had any

       further contact or relationship with Haas.

   991. DoJ and DEA requested information from CIA concerning Haas in

       1985, 1987 and 1991. A December 16, 1987 OGC memorandum indicated

       that the Assistant U.S. Attorney for the Eastern District of New

       York requested CIA information concerning Haas in May 1985 because

       he was likely to be a witness in an arms smuggling case--U.S. v.

       Schwartz and Berg, et al.

   992. A December 7, 1987 letter from the U.S. Attorney for the Eastern

       District of New York again requested information from CIA

       regarding its relationship with Haas in connection with the "Berg"

       prosecution because of "inquiries from the press, and from defense

       counsel, asking if Haas is involved in any type of covert

       operations to aid the Nicaraguan contras [sic]." These inquiries,

       according to the letter, also involved questions concerning the

       "Vortex Affair." The letter indicated that Haas' involvement with

       CIA might be used by the defense to "impeach Haas' testimony" as a

       witness for the prosecution.

   993. An undated internal CIA memorandum in response to the U.S.

       Attorney's December 1987 request indicated that Haas had been "a

       contractor of Vortex/Universal which was a subcontractor of an

       Agency prime contractor." The memorandum noted that Haas had been

       employed by Vortex/Universal from "approximately December 1986 to

       April 1987." In answering the U.S. Attorney's request regarding

       any relationship between CIA and Haas, the memorandum made no

       mention of the April 1987 DEA and Customs trace responses that

       linked Haas to drug trafficking.

   994. On September 9, 1988, CIA received a request for information from

       the DEA Administrator concerning Haas and Michael Palmer. ADCI

       Gates responded to the request in an October 1988 memorandum that

       briefly outlined the CIA's relationship with Haas, and indicated

       that the "Agency has had no contact, direct or indirect, with Haas

       since April 1, 1987." ADCI Gates' memorandum also noted that the

       Agency had directed that the prime contractor sever its ties with

       Vortex/Universal following the March 21, 1987 Miami airport

       incident involving U.S. Customs and the subsequent discovery of

       drug trafficking information relating to Haas.

   995. An October 4, 1988 memorandum to the Director of Congressional

       Affairs from David Pearline of OCA's Legislative Division

       indicates that CIA may have informed the House Judiciary Committee

       of information pertaining to Haas. According to the memorandum,

       which discussed an October 3, 1988 meeting between Pearline and

       Congressional staff employees Haydon Gregory and Jim Dahl of the

       House Judiciary's Subcommittee on Crime:

    . . . .

       3. The Committee staff also made two additional inquiries while I

       was present. The first inquiry concerned the relationship we had

       with Joseph Haus [sic], a pilot who flew resupply flights for the

       Contras. The staff felt we may have provided some information on

       Mr. Haus [sic]. (FYI: I checked my memos for the record on our

       earlier briefings and could not locate a reference to Mr. Haus

       [sic], but the CATF compliance officer believes we may have

       provided some information during a briefing of the staff in May.)

       . . . .

   996. Donaldo Frixone. Frixone was, according to information DEA

       provided to CIA on April 28, 1987, implicated along with Michael

       Palmer and others in the September 1986 drug smuggling incident in

       northern Mexico involving 19,000 pounds of marijuana destined for

       the United States. Frixone was hired by CIA for Contra aerial

       missions from early 1983 to June 1985. Frixone's relationship with

       CIA was terminated in June 1985 for Frixone's refusal to follow

       his supervisor's instructions.

   997. Following the termination of his relationship with CIA, Frixone

       was hired by Vortex/Universal in late 1986 or early 1987 as a

       pilot in support of Contra logistics operations. Frixone was

       killed on January 23, 1988 when his aircraft was shot down during

       an air drop over Nicaragua.

   998. On July 13, 1983, CATF cabled a Station and requested that it

       verify allegations made in May 1981 that Frixone had been arrested

       on a drug trafficking charge. The Station replied on July 22 that

       it had received confirmation that Frixone had been arrested for

       drug trafficking in the Dominican Republic in August 1980.

   999. Frixone was questioned by CIA Security on July 19, 1983.

       According to the report, Frixone said that he had been arrested

       for trying to steal an airplane in the Dominican Republic, but was

       exonerated by a jury. The report did not mention the drug charge,

       but noted that "upon instruction by [a CIA] representative, [the

       Security Officer] did not [follow up on] the subject's story" of

       the arrest incident. No information has been found to indicate

       that CIA undertook any further action to follow up or verify the

       information about Frixone's arrest for drug trafficking before the

       termination of the initial Agency relationship with him in June

       1985.

   1000. A May 20, 1987 cable indicated that Frixone had admitted to

       Dominican police that he and his accomplices were planning to go

       to Colombia to pick up marijuana and that he was to be the pilot.

       The cable added that Frixone and the others had been released by

       the judge in November 1980 because of "insufficient evidence."

   1001. A June 30, 1987 Headquarters cable indicated that the

       allegations against Frixone and several others would have to be

       "clarified" before approval to use them could be initiated.

       Further, the cable stated that investigative efforts were underway

       and that all the individuals would be questioned by Security "as

       soon as possible."

   1002. No information has been found to indicate that Frixone was

       questioned again or that further investigative efforts were made

       in this regard by CIA or other U.S. Government entities.

   1003. No information has been found to indicate that information

       regarding allegations of drug trafficking by Frixone was provided

       to the Congress or to other U.S. Government agencies.

   1004. Martin Horatio Gomez. Gomez, a native of Medellin, Colombia, was

       an aircraft mechanic for Vortex/Universal. After about nine

       months, his contractual relationship with the Agency was

       terminated on March 8, 1989 for "lack of interest."

   1005. The Agency was informed by DEA and Customs in April and May 1987

       that Gomez was "criminally associated" with aircraft N50314.

       According to the April 28, 1987 DEA memorandum, the aircraft was

       owned by a Miami company and was suspected of being used to

       transport marijuana or cocaine from Colombia to the United States.

       On May 13, 1987, Customs provided information to CIA that

       indicated that Gomez had been suspected of involvement in currency

       and narcotics smuggling as of 1984 and that he was associated with

       "numerous alleged narcotics traffickers. . . ."

   1006. A June 1, 1987 CIA cable to Customs requested further

       information on Gomez and three other individuals in an attempt to

       determine the validity of the allegations. According to the June 1

       cable, CIA:

       . . . . would appreciate details on the sources of information,

       including any available assessments on the reliability of the

       sources and their access to the information (for example, whether

       through direct involvement in the alleged activity or via

       hearsay). . . .

       In its June 24, 1987 response to CIA, Customs reported it had no

       additional information regarding Gomez.

   1007. No information has been found to indicate that Gomez was

       questioned by CIA Security. No information has been found to

       indicate that information regarding allegations of drug

       trafficking by Gomez was provided to the Congress.

   1008. Martin Alberto Gomez. Gomez, an aircraft mechanic, became a

       naturalized U.S. citizen in July 1986. CIA was informed by DEA on

       April 28, 1987 that Gomez allegedly had been involved in a drug

       smuggling organization as of 1981. Another alleged member of that

       organization was Martin Horatio Gomez, whom the DEA response

       indicated might have been his father.

   1009. Martin Alberto Gomez was questioned by Security on August 29,

       September 1, and November 3, 1988. The totality of the information

       he provided led CIA to conclude that he probably was involved in

       drug trafficking.

   1010. In an October 5, 1988 memorandum, an officer in the Office of

       Security wrote that Gomez "has not cooperated during [two attempts

       to question him] and it is not likely his attitude will change

       with additional processing." The memorandum therefore recommended

       that "[the cognizant CIA office] be requested to cancel interest"

       in Gomez. A November 15, 1988 memorandum from an Operational

       Evaluation Section officer to the Chief of the Staff and

       Operations Branch indicated that SAS had refused to "cancel

       interest" in Gomez, and that he was given a third opportunity for

       clarification on November 3, 1988. According to the memorandum,

       major concerns remained concerning the use of illegal drugs." His

       relationship with CIA was terminated in "mid-March 1989."

   1011. No information has been found to indicate that information

       regarding drug trafficking by Gomez was provided to the Congress

       or to other U.S. Government agencies.

   1012. Irving Silva. Silva, as noted in the April 28, 1987 DEA report,

       was implicated with Palmer in the September 1986 drug smuggling

       incident in northern Mexico involving 19,000 pounds of marijuana

       destined for the United States.

   1013. According to a February 29, 1988 memorandum to OGC's Assistant

       General Counsel regarding CIA contacts with Vortex/Universal Air

       Leasing, Silva was employed part-time by Vortex/Universal from

       December 1986 to January 1987 to provide navigational training to

       the ERN. The April 28, 1987 DEA trace response implicated Silva in

       the September 1986 Mexico marijuana smuggling incident.

   1014. No information has been found to indicate that Silva was

       questioned by CIA Security or that the Agency took other action to

       follow-up or verify the information linking Silva to drug

       trafficking. No information has been found to indicate when CIA

       terminated its relationship with him.

   1015. No information has been found to indicate that information

       regarding allegations of drug trafficking by Silva was provided to

       the Congress.

   1016. Mauricio Letona. Letona apparently was hired by Vortex/Universal

       in late 1986/early 1987 along with Haas and others under the

       subcontract with the prime contractor in support of CIA assistance

       to the Contras.

   1017. The Agency terminated its relationship with Letona on May 8,

       1987. A May 13, 1987 Customs cable to CIA indicated that Letona

       had been suspected in 1980 of using his affiliation with an El

       Salvadoran airline to smuggle cocaine.

   1018. No information has been found to indicate that information

       regarding allegations of drug trafficking by Letona was provided

       to the Congress.

   1019. Stephen Herreros. The April 28, 1987 DEA response to a CIA trace

       request reported that Herreros was listed in the files of the El

       Paso Intelligence Center as having been involved in the September

       1986 marijuana smuggling incident along with Palmer and other

       Vortex/Universal employees.

   1020. No information has been found to indicate the nature of

       Herreros' relationship with Vortex/Universal or that he had any

       relationship with CIA. No information has been found to indicate

       that CIA took any action regarding the information relating to

       Herreros and drug trafficking.

   1021. No information has been found to indicate that information

       regarding allegations of drug trafficking by Herreros was provided

       to the Congress.

       What was the nature and extent of CIA's knowledge of allegations

       of Contra drug trafficking at the Ilopango Air Base?

   1022. Background. Between 1981 and the 1984 congressional funding

       cutoff, the Agency provided support services to the Contra program

       from the El Salvadoran air base at Ilopango--located a few miles

       to the east of San Salvador. Ilopango Air Base was controlled by

       the Salvadoran military but was used by CIA as a storage point and

       staging area for shipments of supplies to the Contras. In the

       course of these functions, CIA personnel had frequent contacts at

       Ilopango with Contra pilots and other personnel who came to

       Ilopango to pick up supplies. CIA personnel were frequently

       present at Ilopango and sometimes assisted when supplies were

       loaded onto aircraft operated by Contra pilots.

   1023. To support CIA activities at Ilopango, CIA occupied a newly

       constructed warehouse and hangar in 1984--commonly referred to as

       Hangar 5--and relocated to it activities that had been conducted

       in a smaller nearby hangar-- commonly referred to as Hangar 4.

       After CIA had moved out of Hangar 4, it was used in 1985 and 1986

       by NHAO and the Private Benefactors in support of their

       Contra-related operations. Hangars 4 and 5 shared a common

       aircraft parking area and were located on a restricted area of the

       Ilopango air base that was controlled by the Salvadoran military.

       Another area of Ilopango air base was devoted to civil aviation.

       Access to that area reportedly was not restricted.

   1024. Following the 1984 congressional funding cutoff, supplies that

       remained at Ilopango were distributed to the Contras by CIA

       personnel. Thereafter, visits by CIA personnel to Ilopango

       occurred less frequently. Contra personnel, however, continued to

       visit Ilopango in connection with support being provided to the

       Contras by NHAO and the Private Benefactors.

   1025. Following congressional approval of the $100 million Contra

       support program in October 1986, Ilopango Air Base had much less

       importance to the Contra program.

   1026. There have been three main sources of allegations of drug

       trafficking at Ilopango—a U.S. citizen, Celerino Castillo and

       a CIA/DEA source known as STG6. The allegations of each of these

       sources and what CIA knew about them are described below.

   1027. Allegations of Contra drug trafficking at Ilopango—a U.S.

       citizen. According to an October 23, 1986 cable to Headquarters,

       the "narcotics coordinator" at the U.S. Embassy in Tegucigalpa had

       said there would be an arrest in San Salvador of a specifically

       named American citizen. According to the cable, the U.S. citizen

       was to be arrested:

       . . . on narcotics trafficking charges. [The U.S. citizen] will be

       arrested today or tomorrow by regional [DEA] agent [Celerino

       Castillo] and charged with cocaine trafficking to the U.S. [U.S.

       Embassy/Tegucigalpa] alerted [CIA] because [the U.S. citizen] is

       allegedly some way involved [sic] with [Max Gomez] and also

       allegedly has [United Nicaraguan Resistance/FDN Directorate]

       contacts and operates his business out of [Hangar 4], supposedly

       using [Private Benefactor] pilots and aircraft as part of his drug

       network. [The U.S. citizen's] home in San Salvador was raided

       about one month ago and guns and a variety of drugs were

       discovered. [DEA] believes [the U.S. citizen] will attempt to use

       publicity of his alleged [U.S. Government] ties to defeat any

       prosecution on drug charges. We have no other details on this

       matter and are not likely to receive more since regional [DEA

       representative] operates from Guatemala City. . . . 

       (Emphasis added.)

   1028. Allegations of Contra drug trafficking at Ilopango--former DEA

       Special Agent Celerino Castillo. In his book Powderburns: Cocaine,

       Contras & the Drug War (© Celerino Castillo III and Dave Harmon,

       1994), former DEA Special Agent Celerino Castillo alleged that

       Ilopango was used by the Contras to support Contra drug

       trafficking activities. According to Powderburns, much of

       Castillo's information relating to alleged Contra drug trafficking

       at Ilopango was provided to him by DEA informants, one of whom

       reportedly worked at the civil air section of Ilopango air base.

       In Powderburns, Castillo referred to this informant at Ilopango as

       "Hugo Martinez."

   1029. In Powderburns, Castillo said he arrived in Guatemala in October

       of 1985 and served until 1990 in the regional DEA office in

       Guatemala City. Castillo's responsibilities while assigned to the

       regional DEA office included El Salvador. Castillo said that, soon

       after his arrival in Guatemala City, his duties brought him into

       contact with CIA officials both in Guatemala and in El Salvador.

       Castillo alleged in Powderburns that, in at least two instances,

       he discussed the allegations relating to Contra drug trafficking

       with CIA officials.

   1030. The first instance related to a discussion that Castillo said he

       had with the San Salvador COS in 1986. As related in Powderburns:

       . . . On August 15, I met with Jack McCavett , the mild-mannered

       CIA station chief in El Salvador. Again, I repeated my evidence

       against the Contras. McCavett denied any connection between the

       CIA and the Ilopango operation. As far as [William] Brasher was

       concerned, McCavett said "He doesn't work for me. He works for the

       Contras and Ollie North, and we have nothing to do with that

       operation."

       Three days later, McCavett called me into his office and pulled

       $45,000 in cash out of his desk drawer. "I've got money left over

       from my budget I need to spend," he said. "Take this for your

       anti-narcotics group. Go buy them some cars." McCavett didn't

       mention the Contras, but I suspected he was trying to buy me off.

       The CIA, to my knowledge, had never given the DEA this kind of

       gift. I wrote out a receipt and handed it to him, took the stack

       of bills, and gave it to Adame and Aparecio. They bought three

       much needed vehicles for [an El Salvadoran Police organization].

   1031. In the second instance cited in Powderburns, Castillo claimed he

       discussed Contra drug trafficking activities with "Randy Kapasar,

       a CIA agent in Guatemala:"

       He knew I was investigating the Contras. I knew he was helping

       them. I expected him to deny my evidence of the Contras'

       narcotrafficking but he followed Sofi's reasoning: "Cele, how do

       you think the Contras are gonna make money? They've got to run

       dope, that's the only way we can finance this operation."

   1032. Allegations of Contra Drug Trafficking at Ilopango—STG6.

       CIA records indicate that, from September 16, 1986 until August 7,

       1989, STG6 was an Agency contact who provided information

       pertaining to drug trafficking and other subjects. He was turned

       over to DEA following the termination of his relationship with CIA

       on August 7, 1989.

   1033. On at least two occasions, STG6 provided CIA with lead

       information that related to possible Contra drug trafficking

       activities at Ilopango. The first report of this nature was

       described in a September 23, 1986 cable to Headquarters. According

       to the cable, STG6 provided the names of two Colombians who were

       linked to Contra pilot Carlos Amador. Amador, the cable stated,

       was "suspected of involvement in narcotics trafficking."

   1034. The second report from STG6 to CIA regarding possible Contra

       drug trafficking at Ilopango was described in a March 23, 1988

       cable to Headquarters. According to that cable, STG6 had reported

       that a Guatemalan citizen and suspected drug trafficker named

       Reyner Veliz had recently been traveling with Contra pilot Marcos

       Aguado.

   1035. CIA Records: A U.S. Citizen. Apart from the U.S. citizen's

       claims and an April 8, 1987 cable to Headquarters reporting an

       unsolicited telephone call from the U.S. citizen, no information

       has been found to indicate that CIA had any relationship with the

       U.S. citizen. Also, no information has been found to indicate that

       the U.S. citizen's activities in El Salvador were related to the

       Contras in any manner, other than the October 23, 1986 cable

       reporting and a reference to him and the Contras in an April 25,

       1986 cable--described further below--pertaining to the arrest of

       suspected American mercenaries in Brazil.

   1036. The April 25, 1986 cable --as mentioned earlier--also made a

       reference to the U.S. citizen and the Contras. This cable provided

       an update regarding the arrest of American citizens suspected of

       being mercenaries in Brazil. According to the cable, the detainees

       had been visited in prison by the U.S. citizen and another person,

       "both of whom are apparent friends of several of the detained

       mercenaries." Regarding the U.S. citizen, the cable stated that:

       . . . visiting U.S. Consul. . . .who previously served in San

       Salvador, told [Consul General] on 25 April he remembers [the U.S.

       citizen] as being associated with [CIA] in San Salvador as a

       military advisor to Contras operating on the Honduran border with

       El Salvador.

   1037. In response to the October 23, 1986 cable regarding the U.S.

       citizen's pending arrest in El Salvador, an October 25, 1986

       Headquarters cable requested any available information regarding

       whether ". . . there is any truth to [the U.S. citizen's] claims

       of contact" with the United Nicaraguan Resistance/FDN Directorate

       as well as "possible operations" conducted out of Hangar 4 at

       Ilopango. The Headquarters cable also provided a lengthy summary

       of earlier instances in which the U.S. citizen's name had appeared

       in CIA records:

          + A cable had reported on August 27, 1986 that the U.S. citizen

            had provided night vision equipment to the Salvadoran

            military as part of a contract that he had with the

            Salvadoran Government. He reportedly told Salvadoran and U.S.

            military officials in El Salvador that CIA had "paid his

            salary in the past and made some broad hints as to a current

            [CIA] relationship."

          + A May 14, 1986 cable stated that the U.S. citizen had become

            a subject of investigative interest to the U.S. Customs

            Service's Office of Special Investigations in New York for

            allegedly exporting equipment not licensed for export. The

            U.S. Customs Service said that it would remove his name from

            its watchlist if his activities were connected to the CIA or

            other U.S. intelligence organizations. CIA file reviews had

            found no information to indicate that the U.S. citizen was

            connected to CIA and, thus, the U.S. Customs Service

            "intended to continue their investigation with a goal of

            prosecuting him." Further,

       . . . the most recent incident which aroused [U.S. Customs

       Service] suspicions occurred on 3 May 1986 when [the U.S. citizen]

       was supposedly forced to make an emergency landing in his plane in

       the general area of Tamiami, Florida. [He] told fire department

       officials who responded to his landing that he was carrying two

       large cases of top secret material (whether equipment or documents

       unclear). He asked the fire department people to secure the

       material while he went to the nearest airport to clear customs.

       After having gone through a clearance procedure which made no

       mention of the "sensitive" material, [the U.S. citizen] returned

       to the fire department building, retrieved his two cases, and

       disappeared. As a result of this and other incidents, [he] was

       placed on an [U.S. Customs Service] watchlist which would ensure a

       very stringent search of him and his possessions/vehicles any time

       he surfaced at an [U.S. Customs Service] office or branch.

          + A May 15, 1986 cable reported that, following the May 3

            crash, DEA personnel had asked if CIA had any connection with

            the U.S. citizen. According to the summary, DEA had reported

            that he told firemen responding to the crash that three

            Salvadoran passengers traveling with him were being

            transported to Fort Bragg, North Carolina "on behalf of

            [CIA]" The U.S. citizen, according to DEA, reportedly offered

            the firemen a $100 bribe if they "would not report his

            activity relative to the Salvadorans to authorities." The

            cable had also stated that DEA planned a "follow-up

            investigation" of the U.S. citizen on suspicion of narcotics

            trafficking.

          + July 1, 1986, cable reported that at a June 27, 1986 meeting

            with FBI and Metro Dade Police Department representatives

            that, when the U.S. citizen returned to retrieve two

            suitcases that he had left in the custody of fire officials

            following the crash, he was accompanied by a Metro Dade

            reserve police officer "who also claimed connection with

            [CIA] and vouched for [him]." According to the summary,

            further inquiry into the Metro Dade reserve police officer's

            involvement in the matter had been delayed by police

            officials "for fear of interfering with a [CIA] operation."

            The cable went on to state that a review of CIA files at that

            time had revealed no information concerning the reserve

            police officer or the names of the Salvadorans who allegedly

            were passengers on the U.S. citizen's airplane.

       According to an October 29, 1986 response to the October 25

       Headquarters cable, "preliminary checks" with senior Contra

       officials regarding any contacts between the FDN and the U.S.

       citizen were "negative."

   1038. A March 26, 1987 cable to Headquarters reported that the U.S.

       citizen and another individual had been arrested by Dominican

       Republic authorities upon landing an airplane in that country. The

       airplane contained various types of military-related equipment.

       According to the cable:

       [The U.S. citizen and his companion] also claim to be involved in

       military training in Central America and are reluctant to discuss

       what they are doing and for whom. Intentional or not, they are

       leaving the impression that they are working for [CIA].

   1039. A March 27, 1987 cable to Headquarters reported that the U.S.

       citizen had recently sought to sell equipment to the Venezuelan

       Government and that a Venezuelan official said that the U.S.

       citizen "showed him 'State Department credentials' . . . and [he]

       claimed that he worked for [a Central American Station']."

   1040. A March 27, 1987, cable in response to the March 26, 1987 report

       summarized what was known about the U.S. citizen's activities in

       El Salvador:

       [The U.S. citizen] has falsely represented himself on prior

       occasions as being associated with [CIA]. He has no relationship

       with [CIA] but he was in San Salvador until two or three months

       ago, trying to sell weapons and military gear of various kinds to

       the Salvadoran military. He left El Salvador in a hurry after a

       police search of his house here uncovered a large quantity of

       various unlicensed, unregistered military arms, including hand

       grenades. When last we heard he was under investigation by U.S.

       Customs in relation to this incident. He was also under

       investigation earlier by DEA for possible narcotics smuggling. He

       seems to have a history of inventing supposed contacts with the

       USG[overnment], particularly [CIA], which he then uses to pursue

       his various business interests.

       . . . .

   1041. According to an April 8, 1987 cable to Headquarters and several

       Stations, a CIA officer serving abroad had received an unsolicited

       telephone call from the U.S. citizen. The cable reported that he

       told the officer during the call that he had been given the

       officer's name and telephone number from the commanding officer of

       the USMILGROUP. The cable, in noting that the commanding officer

       of the USMILGROUP was out of town, said the gist of the U.S.

       citizen's conversation with the officer was:

       "You don't know me, but I got your name from [commanding officer,

       USMILGROUP]. I was just down there and I sell night vision

       equipment. [Commanding officer, USMILGROUP] thought it might be a

       good idea to talk to you." [The U.S. citizen] said he planned

       another visit . . . . on/about 24/25 April and wondered if there

       would be an opportunity to talk with [the officer].

   1042. In a follow-on cable on April 9, 1997 to Headquarters, it was

       confirmed that the commanding officer of the USMILGROUP had indeed

       passed the officer's name and phone number to the U.S. citizen

       after telling the COS that "there was DoD contractor in town

       selling the . . . military night vision equipment and wanted to

       know if the police would have any interest." According to the

       cable, the commanding officer of the USMILGROUP did not mention

       the name of the contractor, but had passed the officer's name to

       the U.S. citizen on the assumption that the COS would concur.

   1043. In an April 10, 1987 cable, Headquarters provided guidance with

       respect to contacts with the U.S. citizen:

       [Headquarters] appreciates information provided . . . . regarding

       telephone conversation with [the U.S. citizen]. As Station is

       aware, [he] is notorious for falsely claiming [CIA] affiliation in

       addition to his involvement in other nefarious schemes. In light

       of this fact, Station is urged to politely but firmly refuse

       further contact with [the U.S. citizen]. Please advise any further

       attempts by [him] to contact other Station/Mission personnel. 

   1044. According to an April 13, 1987 cable to Headquarters, :

       . . . MILGROUP commander is in contact with [the U.S. citizen] and

       presumably will meet with [him] when latter arrives near end of

       month. We have no desire to give [him] another window into this

       mission and we will follow [the April 10 Headquarters] guidance

       accordingly, but wonder . . . whether it would be more in line

       with an embassy officer to hear him out and then turn off the

       contact? . . . . 

       The cable also asked Headquarters "whether we should have [the

       U.S. citizen's] plane carefully searched. We think the Customs

       Police should do so."

   1045. In its April 16, 1987 response, Headquarters provided explicit

       instructions: "Station to avoid contact with [the U.S. citizen]."

       Further, the Headquarters cable stated that:

    . . . .

       [The U.S. citizen] must be considered [a United States] person

       since he is evidently a resident and able to freely enter and exit

       the country. [CIA] should not become involved in making any

       decision whether or not to search his plane. We note that there is

       no indication in [his] file of any warrant outstanding against

       him.

       . . . .

   1046. The U.S. citizen's name appears in other Agency cables. However,

       as stated earlier, no information has been found to indicate that

       he or his activities had any connection to CIA or the Contras.

   1047. CIA Records: Castillo's contacts with CIA officials. CIA records

       indicate that in mid-1986, CIA planned an expenditure of $45,000

       to purchase three vehicles for the Government of El Salvador. The

       money was accounted for in CIA records on August 18, 1986, the

       same date Castillo alleged in Powderburns that he received $45,000

       from a person he refers to as COS McCavett. Although no

       information has been found to indicate the process by which the

       vehicles were purchased and given over to the Salvadorans, no

       information has been found to indicate that the transaction

       involved Castillo or DEA in any manner.

   1048. CIA Records: Contacts with STG6. STG6 became a CIA contact in

       late 1986. CIA records indicate that DEA had an ongoing

       operational interest in STG6. According to a November 18, 1987

       cable to Headquarters, a regional DEA office had indicated that

       this particular individual was a "source of information regarding

       illegal aircraft movements/narcotics trafficking" at Ilopango air

       base.

   1049. A January 18, 1988, cable to Headquarters noted that the DEA

       representative had said that the DEA regional chief had been

       briefed regarding STG6 prior to DEA expressing interest in him:

       STG6 has access to valuable and unique information by virtue of

       his job and [he] said that [DEA] needs this data regarding

       movement of aircraft in the region. Station wished to pass this

       view so that appropriate STG6 information can be passed to [DEA]

       for action.

   1050. Information provided by STG6, on occasion, was transmitted with

       a request that the information be passed to the regional DEA

       office or shared directly with a representative from the regional

       DEA office during meetings with CIA personnel. Of these reports,

       only one had any apparent Contra connection:

          + A March 23, 1988 cable indicating that Guatemalan citizen and

            suspected drug trafficker Reyner Veliz was traveling with

            Contra pilot Marcos Aguado. Included in this cable was a

            request that this information be passed to the regional DEA

            office with the following caveat: "Please omit specific

            locations of travel and location of source [i.e., STG6]"."

   1051. According to a July 31, 1989 cable to Headquarters, CIA officers

       met with a representative from the DEA's regional office in

       Guatemala City on July 24-28, 1989. As a result of that meeting,

       an offer was made to the DEA representative to turnover STG6 to

       DEA.

   1052. According to an August 1, 1989 cable, DEA "definitely agrees to

       take over STG6." Headquarters approved the turnover of him in an

       August 2, 1989 cable.

   1053. Individual Statements: CIA personnel. A CIA officer who was

       closely aware of events at Ilopango during the 1981-1983 time

       frame and from May 1984 until May 1986 recalls that, until the

       1984 congressional cutoff of funds, he had frequent contacts with

       Contra pilots. After the cutoff, these contacts diminished,

       although certain authorized contacts were permitted to continue.

   1054. The officer says he has no knowledge of drug trafficking at

       Ilopango. He comments that he frequently observed and--prior to

       the 1984 funding cutoff--sometimes assisted with the loading of

       supplies onto Contra aircraft at Ilopango. He is very doubtful

       that illicit drugs could have been placed on board Contra aircraft

       during the times he was present. Moreover, he notes that the

       aircraft he observed being loaded with supplies were destined, not

       for the United States, but for Contras operating in Central

       America. Following the 1984 funding cutoff, he says he continued

       to observe and monitor the activities of Contra aircraft.

   1055. According to the officer, the Salvadoran Air Force provided the

       Contra pilots with identification cards that allowed the pilots to

       bypass Salvadoran customs upon landing at Ilopango and also

       allowed them unrestricted access to the air base. He says the

       commanding officer of Ilopango, General Juan Bustillo, was a

       staunch supporter of the Contras and, because of this support, he

       authorized the pilots to be issued the identification cards to

       facilitate such access. The CIA, according to the officer, had

       nothing to do with the issuance or control of these identification

       cards.

   1056. The officer says Contra pilots sometimes parked their aircraft

       at a location some distance away and in an area of the military

       side of Ilopango that was not easily observable from the base

       control tower or from the nearby civilian side of the airfield.

       Particularly after the 1984 funding cutoff, Contra planes could

       easily come and go from Ilopango without CIA knowledge, he says.

   1057. A helicopter pilot who worked for a CIA contractor at Ilopango

       from 1984 until 1986 says he was instructed by CIA to keep Contra

       personnel at arms length following the 1984 funding cutoff. He

       says he has no knowledge of Contras using Ilopango for drug

       trafficking.

   1058. A senior CIA officer who was aware of CIA activities at Ilopango

       does not recall learning of any specific allegation relating to

       Contra use of Ilopango to support any drug trafficking activities.

       He does, however, recall that there were unsubstantiated

       drug-related allegations against Contra pilot Marcos Aguado.

   1059. Another senior officer recalls that he asked the officer who was

       closely aware of events at Ilopango to look into allegations of

       drug trafficking by the Contras or others and that the officer was

       never able to confirm any of the allegations.

   1060. A third senior officer who had some awareness of activities at

       Ilopango says he has no knowledge of Ilopango being used by the

       Contras for drug trafficking.

   1061. Another officer who possibly would have been aware of activities

       at Ilopango says he knows of no Contra drug trafficking activity

       at Ilopango and opines that the Salvadoran Ilopango base

       commander, General Bustillo, would not have tolerated such

       activity.

   1062. Another retired CIA officer who frequently visited Ilopango says

       that he has no recollection of Contras coming through Ilopango

       during his tour in Ilopango. "I can be definite that [the Contras]

       never came to my attention," he says.

   1063. An officer who says he met former DEA Special Agent Celerino

       Castillo in Guatemala and, on one occasion, worked with him and

       others on a project unrelated to the Contras, recalls Castillo

       discussing suspected narcotics trafficking at Ilopango, but

       recalls that Castillo made no specific reference to possible

       Contra involvement in those activities. Contrary to Castillo's

       claims, this officer emphatically denies that he had any knowledge

       of Contra drug trafficking activities at Ilopango or elsewhere. He

       also denies that he made any statement to Castillo relating to

       such knowledge. He also denies that he ever asked Castillo to back

       away from any narcotics investigation.

   1064. Felix Rodriguez retired from CIA in 1976. He was an advisor to

       the Salvadoran military in a private capacity at Ilopango from

       February 1985 until the late 1980s. Rodriguez also assisted the

       Private Benefactors at Ilopango in providing aid to the Contras.

       Rodriguez states that he has no knowledge of any alleged Contra

       drug trafficking activities being conducted from Ilopango or

       elsewhere. Rodriguez also says he personally knew the U.S. citizen

       in El Salvador, that he dealt with the Salvadoran military as a

       salesman of various military related equipment and that he had no

       apparent links to the Contras. Rodriguez denies having any

       knowledge of any alleged drug trafficking by the U.S. citizen, but

       says he understands that he was banned from making further sales

       to the Salvadoran military when Salvadoran officials determined

       that he was allegedly charging the Salvadoran military exorbitant

       prices for military equipment.

   1065. Individual Statements: DEA Personnel. A DEA intelligence analyst

       recalls that he participated in DEA's review of Castillo's

       allegations regarding drug trafficking activities at Ilopango. The

       analyst also states that he participated in DEA's coordination of

       the January 21, 1987 Memorandum from Acting DCI Robert Gates

       regarding allegations of Contra drug trafficking that was

       requested by Assistant Secretary of State for INR Morton

       Abramowitz. He recalls that DEA found no information to support

       Castillo's allegations linking the Contras to drug trafficking.

       "It was [DEA's] experience that all of the Contra allegations

       lacked substance . . . ," he asserts.

   1066. Individual Statements: A U.S. Citizen. The U.S. citizen denies

       any involvement in smuggling weapons or drugs. He says he never

       worked for CIA and was never recruited to work for CIA. He also

       says his only connection with the Contras was that he once met

       "one Contra pilot" briefly. He says he does not recall the pilot's

       name or the particular circumstance of the meeting. The U.S.

       citizen claims that Salvadoran authorities allowed him to utilize

       Hanger 3--not Hangars 4 or 5--at Ilopango to install equipment in

       Salvadoran military helicopters. According to the U.S. citizen,

       CIA controlled Hangars 4 and 5 and he never entered those hangars.

   1067. Information Sharing with Other U.S. Government Entities. In

       addition to the instances described earlier wherein information

       relating to alleged drug trafficking at Ilopango was shared with

       DEA, allegations that Ilopango air base may have been used by the

       Contras for drug trafficking were discussed in the January 21,

       1987 Memorandum from Gates to Abramowitz concerning alleged Contra

       drug trafficking connections that was coordinated with other

       Intelligence Community agencies and DEA prior to its

       dissemination. According to the Memorandum:

       In March 1986, DEA/Guatemala began receiving reports of suspicious

       activities at Ilopango Airfield in San Salvador, El Salvador.

       According to . . . DEA [information], a hangar at the airfield was

       being used by traffickers to store cocaine en route to the U.S.

       The hangar reportedly was being used in transporting arms to the

       Contras. DEA/Guatemala investigated these reports and decided

       there was insufficient evidence to warrant pursuing a drug

       investigation. DEA did, however, inform the U.S. Customs Service

       of other information discovered in the course of the investigation

       that related to possible weapons smuggling activity. 

   1068. In a January 21, 1987 letter to Abramowitz that accompanied the

       Memorandum regarding alleged Contra drug connections, ADCI Gates

       discussed DEA plans regarding allegations of drug-related activity

       at Ilopango:

       We are told that DEA Headquarters plans to follow up on the matter

       of the adequacy of DEA/Guatemala's investigation of alleged drug

       trafficking at Ilopango Airfield in El Salvador . . . . DEA will

       report additional information as it becomes available. The

       Intelligence Community has no information independent of DEA

       regarding this matter. 

   1069. A March 31, 1988 Office of Congressional Affairs Memorandum for

       the Record indicates that SSCI Staff Director Sven Holmes was

       provided a copy of the Gates-Abramowitz Memorandum on March 29,

       1988.

       To what extent did CIA disseminate "finished intelligence

       products" that included information about drug trafficking on the

       part of individuals, organizations, and independent contractors

       associated with the Contras?

   1070. The Analytic Environment. Agency analysts who were responsible

       for counternarcotics issues during the 1980s indicate that three

       factors accounted for the small number of finished intelligence

       products during the 1980s that related at all to the Contras and

       narcotics trafficking. First, Central America in general was not a

       high priority counternarcotics target for the Agency before 1986.

       This reflected primarily the focus of U.S. Government policymakers

       on Latin American drug suppliers, in particular the Medellin

       Cartel in Colombia. According to a CIA officer, who was Assistant

       National Intelligence Officer (NIO) for Narcotics from 1984 to

       1986 and Chief of a division in the DI's Office of Global Issues

       (OGI) dealing with international narcotics from 1986 to 1989, the

       counternarcotics effort was "consumed" with the Medellin Cartel

       because it was the main actor in the cocaine trade. The Agency

       concentrated on targets, such as the Cartel, as to which DEA had

       operations underway or in the planning stages that intelligence

       could support.

   1071. The CIA officer recalls that Central America was on the screen

       occasionally because the Colombian cartels were setting up

       alternative transit routes there--particularly in Guatemala and

       Nicaragua--in an effort to circumvent the U.S. interdiction

       effort. Even so, the region was "just a blip on the scope" for the

       most part. This CIA officer and several other Agency analysts note

       that, with respect to Nicaragua, the U.S. policy focus was on the

       Sandinista Government's involvement in narcotics trafficking--not

       on that of the Contras. The policymakers, one analyst asserts,

       really wanted to "get" the Sandinistas on this subject.

   1072. The second factor, which was a consequence of U.S. policymaker

       priorities, was that the DO assigned a low priority to collecting

       intelligence concerning the Contras alleged involvement in

       narcotics trafficking. As a result, Agency analysts had only a

       small number of reports on which to base their analysis. According

       to CIA records, only three DO reports regarding Contra drug

       trafficking were found to have been disseminated between October

       and December 1984. These were the reports describing the alleged

       agreement between Pastora's associates and a Miami-based drug

       trafficker involving material support for the Contras in return

       for the trafficker's access to the Southern Front's pilots and

       landing strips.

   1073. Furthermore, the reports were disseminated as "Sensitive

       Memorandums," a format that required strict access control. The

       internal dissemination lists for the reports indicate that all

       three were shared with the Directorate of Intelligence's (DI's)

       Office of African and Latin American Analysis and with the

       National Intelligence Officer (NIO) for Latin America. The NIO for

       Narcotics received two of the three reports. However, the Office

       of Global Issues (OGI), which was responsible for counternarcotics

       analysis in the DI, did not receive copies of the reports.

       Further, the strict access controls made it difficult for analysts

       to incorporate information from the reports into finished

       intelligence products that would have a broader dissemination.

   1074. The analyst who drafted a Memorandum for Vice President Bush in

       April 1986 that related to potential Contras' involvement in drug

       trafficking recalls that OGI analysts who worked on

       counternarcotics issues were not aware of those reports at the

       time--October to December 1984--that they were first disseminated

       inside and outside the Agency. However, she says that CATF Chief

       Fiers did make the reporting available to her in April 1986,

       stipulating that it could be used only for the Memorandum she was

       preparing for Vice President Bush.

   1075. A CIA officer, who was a Division Chief in ALA from 1984 to

       1986, says that he does not recall any significant reporting in

       autumn 1984 with respect to the alleged agreement between

       Pastora's associates and Miami drug trafficker Morales. Nor does

       he recall any credible narcotics reporting during his tenure that

       would have merited treatment in a finished intelligence product.

   1076. The Assistant NIO and the then-NIO for Latin America say that

       the DI was largely unaware of the totality of DO reporting on the

       issue of Contras and narcotics trafficking. The former of the two

       officers notes that there was a sharp divide in those days between

       the DO and DI narcotics analysis and there was not a "free flow of

       information." He states that, although the DO would cooperate in

       providing information for certain high priority tasking such as

       the January 21, 1987 Memorandum from ADCI Gates to Assistant

       Secretary of State Abramowitz, the DO had to be pulled along on

       the counternarcotics effort for the most part. The former of the

       two officers adds that the DO became very engaged in Latin America

       after April 1986.

   1077. The then-NIO for Latin America says that ALA's Division and the

       DO's LA Division had an agreement that the ALA analysts could

       review relevant operational cables. LA Division, however,

       determined what was relevant, and "so-called administrative

       traffic" involving DO assets was off limits. Further, he states

       that the DI and National Intelligence Council did not believe that

       the Contras were an effective insurgent force, thus causing

       problems for CATF. Consequently, he says, he always felt that

       Fiers was not showing the analysts any reporting that would cause

       problems for the Contra program. He cannot document what reporting

       might have been withheld from him "because . . . you don't know

       what you're not seeing."

   1078. The former ALA Division Chief says that the relationship between

       his DI division and CATF was fairly collaborative even though

       Fiers would not be at the top of his list of good collaborators.

       He asserts that Fiers "played a lot of things close to his vest"

       as he should have. However, everything of substance was fully

       discussed among Assistant Secretary of State Elliott Abrams, Fiers

       and the NIO/Latin America. He recalls discussions of Contra

       stealing, smuggling and other wrongdoing, but no discussion of

       narcotics trafficking. Narcotics was not one of the topics of

       concern at the time.

   1079. An officer, who served as LA Division Chief of Reports from 1979

       to mid-1984 and then served as the ALA Division Chief's deputy in

       the DI until 1986, says that she is not aware that anyone

       associated with the Agency suppressed reporting concerning drug

       trafficking by the Contras. She avers that she would have been "in

       Fiers' face" were he to "fool with the information to make [CIA]

       look good." Concerning the lack of finished intelligence

       concerning the Contras and drug trafficking, she states that the

       issue would not become apparent without DO reporting, and the

       analysts would keep whatever information became available in a

       file until there was a reason to do something with it.

   1080. The third factor explaining why very little finished

       intelligence was produced by the DI regarding Contra drug

       trafficking was that Agency analysts had limited access to

       reporting from federal law enforcement agencies at the time. The

       former ALA Division Deputy Chief points out that DEA, not the DO,

       was the primary collector of narcotics trafficking information in

       the early 1980s. Along these lines, one DI analyst recalls that

       DEA was even reluctant to provide this reporting, probably because

       it pertained to ongoing investigations. A senior DI officer

       recalls that CIA analysts had routine access to strategic and

       tactical DEA intelligence reporting, but not to law enforcement

       investigative and operational information.

   1081. CIA only disseminated three finished intelligence products

       during the 1980s that related at all to potential Contra

       involvement in narcotics trafficking. These were: (i) a 1985

       National Intelligence Estimate (NIE) concerning the international

       narcotics trade; (ii) an April 1986 Memorandum for Vice President

       George Bush; and (iii) the January 1987 Memorandum from Acting DCI

       Robert Gates to Assistant Secretary of State for Intelligence and

       Research Morton Abramowitz.

   1082. 1985 National Intelligence Estimate. National Intelligence

       Estimate (NIE) 1/8-85, "The International Narcotics Trade:

       Implications for US Security," was published in November 1985. One

       paragraph dealt with trends in the "narcotics industry" and noted

       that the "continued expansion of trafficking routes through

       Central America" was of "particular concern because of the number

       of antigovernment insurgent groups active there." The paragraph

       went on to note:

       We have no confirmed reports that link Central American insurgent

       groups with drug trafficking, but we cannot rule out the

       possibility that individual contacts have already occurred. 

       The estimate made no explicit reference to the Contras or any

       other specific insurgent group in Central America.

   1083. A senior DI officer says that the Contras were not dealt with in

       the NIE because the focus of the estimate was on the "bad

       guys"--individuals, groups, and governments, such as the

       Sandinistas, that were hostile to U.S. interests. The Contras, he

       states, were regarded as friends and were outside the scope of the

       Estimate. There was never any discussion about including them; "it

       just never came up." The then-NIO does not recall any discussion

       among Intelligence Community analysts who participated in the

       production of the NIE concerning the acquisition of more

       intelligence reporting concerning insurgent groups and their ties

       to narcotics traffickers.

   1084. 1986 Memorandum for Vice President Bush. On April 6, 1986, a

       Memorandum entitled "Contra Involvement in Drug Trafficking" was

       prepared by CIA at the request of Vice President Bush. The

       Memorandum provided a summary of information that had been

       received in late 1984 regarding the alleged agreement between

       Southern Front Contra leader Eden Pastora's associates and

       Miami-based drug trafficker Jorge Morales. Morales reportedly had

       offered financial and aircraft support for the Contras in exchange

       for FRS pilots to "transship" Colombian cocaine to the United

       States. CIA disseminated this memorandum only to the Vice

       President.

   1085. The DI/OGI analyst who drafted the Memorandum says that there

       was no follow-up. Furthermore, the analyst recalls no further DI

       discussion of the Contras' alleged involvement in drug trafficking

       until the Memorandum that was written for Assistant Secretary of

       State Abramowitz in 1987.

   1086. 1987 Memorandum for Abramowitz. The most comprehensive

       discussion of alleged Contra narcotics trafficking was included in

       a January 21, 1987 Memorandum from Acting DCI Robert Gates to DoS

       Assistant Secretary for Intelligence and Research Morton

       Abramowitz. The genesis of this Memorandum, entitled "Assessment

       of Alleged Connections Between Drug Traffickers and

       Anti-Sandinista ('Contra') Groups," was a January 9, 1987

       memorandum from Abramowitz to then-Deputy Director of Central

       Intelligence Gates indicating that Assistant Secretary of State

       Elliott Abrams had expressed concern about the possible

       involvement of Contras in narcotics trafficking and had requested

       an Intelligence Community study "on an urgent basis." The

       memorandum from Abramowitz indicated that Abrams wanted the study

       "to pull together all foreign and domestically-generated

       information that is available, rumors and all, and provide an

       assessment of the credibility of the charges." Further, the

       memorandum to Gates indicated:

       The Assistant Secretary believes that it is essential that we know

       before the rest of the world if any of those whom we have funded

       are engaged in this business so that they can be expelled from the

       ranks of the resistance. 

   1087. The Memorandum to Abramowitz was written under the auspices of

       the NIO/Narcotics and was drafted jointly by officers from the DO

       and the DI's Office of African and Latin American Analysis. In

       addition to DO reporting, the assessment relied heavily on DEA

       information. Six topics were addressed, including:

          + Allegations discussed in three disseminated DO reports of

            October, November and December, 1984 concerning Pastora,

            Adolfo Chamorro, Gerardo Duran, David Mayorga, and Jorge

            Morales;

          + Statements to FBI and DEA undercover agents by Orlando

            Bolanos, who claimed to be in command of an anti-communist

            movement in Nicaragua called the " Internal Front," that he

            planned to smuggle cocaine into the United States;

          + The Frogman Case, which involved Nicaraguan drug traffickers

            who had been apprehended in early 1983 while swimming ashore

            near San Francisco, including information indicating that an

            unnamed suspected drug trafficker had placed 51 calls to a

            telephone in the FDN office in San Francisco that was later

            learned to have been listed to one of the defendants in the

            case. The defendant's name was not given;

          + "Suspicious activities" at Ilopango air base in El Salvador;

          + An allegation that Roger Herman, political director for the

            Contra group, KISAN, was involved in cocaine smuggling into

            the United States; and

          + Allegations that the ranches of "two [unnamed] U.S.

            nationals" in Costa Rica, were used to smuggle weapons to the

            Contras and cocaine into the United States.

   1088. The Memorandum prepared for Abramowitz concluded that there was

       "no indication that anti-Sandinista groups that have received or

       now are receiving support from the U.S. Government have engaged in

       drug trafficking to fund their operations." Moreover, according to

       the Memorandum, DEA and FBI officials, along with Intelligence

       Community leaders, said that "no credible information exists to

       support" allegations of Contra involvement in drug trafficking

       that "have surfaced over the past four years, particularly when

       renewed funding for the Nicaraguan insurgency was under

       consideration in the U.S. Congress."

   1089. The Memorandum also concluded that, if Contra organizations had

       unwittingly received donations from sympathizers who derived the

       funds from drug trafficking:

       . . . our best judgment is that the donations probably reflected

       personal decisions on the part of the donor rather than an

       organizational effort on the part of an anti-Sandinista group. 

       Further, the Memorandum stated that "we have no information

       suggesting Pastora's personal involvement" in the alleged

       agreement between his associates and Miami drug trafficker

       Morales, but "he may have been aware of them given his apparently

       close association with these individuals."

   1090. A January 21, 1987 transmittal letter that ADCI Gates attached

       to the Memorandum when it was sent to Abramowitz indicated that

       the Memorandum was being released with two qualifications:

          + DEA Headquarters planned to follow up on the matter of the

            adequacy of a DEA investigation of alleged drug trafficking

            at Ilopango.

          + The U.S. Customs Service was investigating allegations by

            Mario Calero that crew members working for Southern Air

            Transport might have been involved in drug trafficking.

       The transmittal letter concluded with the observation that:

       . . . as future drug trafficking cases surface it is likely that

       we will see more assertions of Contra connections. Such assertions

       may take the form of self-serving stories by traffickers for use

       in their legal defenses as well as allegations by the Sandinistas

       to discredit the insurgents. 

   1091. According to a senior DI officer, Gates made it clear in

       commissioning the Memorandum that the issue raised by Abrams and

       Abramowitz must be addressed "head on and let the chips fall where

       they may." This officer recalls that the core judgment of the

       analysts involved in producing the Memorandum was that only a

       handful of Contras might have been involved in drug trafficking.

       No one believed, he recalls, that there was a major conspiracy or

       drug trafficking network at play. Concerning the Ilopango issues,

       the senior DI officer states that DEA had sent a DEA officer to El

       Salvador to investigate and the officer had concluded there was no

       substance to the allegations.

   1092. A March 31 1988 MFR by OCA Director John Helgerson indicated

       that SSCI Staff Director Sven Holmes had been provided a copy of

       the January 21, 1987 Memorandum that had been prepared for

       Assistant Secretary of State Morton Abramowitz.

       To what extent did CIA share information with Congress regarding

       allegations of drug trafficking on the part of individuals,

       organizations, and independent contractors associated with the

       Contras? 

   1093. CIA records indicate that CIA notification to Congress regarding

       allegations of drug trafficking occurred primarily in response to

       congressional inquiries until 1984 and did not focus on the

       Contras specifically. For example, on July 14, 1982, DDCI John

       McMahon testified before the SSCI concerning the issue of "United

       States Government Current and Projected Efforts on International

       Illicit Drug Trafficking." The questions posed to McMahon at that

       time by the SSCI Staff related to the overall Intelligence

       Community strategy and reporting responsibilities concerning the

       narcotics issue. The relevant portions of the SSCI transcript of

       this hearing contained no explicit references to any connection

       between the Contras and drug trafficking.

   1094. DO "Nicaraguan Program Summary" Information. As mentioned

       earlier, three intelligence reports were disseminated by the DO to

       senior officials in the intelligence and law enforcement agencies

       between October and December 1984. These reports indicated that

       senior Southern Front leaders associated with Eden Pastora had

       concluded a mutual assistance agreement with Miami-based drug

       trafficker Jorge Morales. During the fall of 1984, the information

       provided was also reported in a CIA publication titled the

       "Nicaraguan Program Summary," a weekly report that was provided to

       the SSCI at its request. The weekly publication emphasized

       military activities, but also reported information about "funding,

       arms and other materiel assistance obtained by the Contras from

       (or promised by) third governments and private sources."

   1095. The information first appeared in the DO "Nicaraguan Program

       Summary - Week Ending 21 October 1984," dated October 24, 1984.

       This edition included a special entry entitled "Private Support"

       that stated:

       Adolpho [sic] Chamorro and Marco Antonio Aguado said that the FRS

       had obtained in early October 1984 two helicopters and one fixed

       wing aircraft. This support was reportedly the result of

       Chamorro's and Aguado's recent trip to Miami to secure funds and

       material support for the FRS.

   1096. Another DO "Nicaraguan Program Summary -

       14-28 October 1984," dated October 28, 1984, provided additional

       information to the SSCI:

       Unconfirmed reports have been received which tie Pastora and

       several command-level members of his organization with [sic] drug

       smuggling operations in the United States. According to these

       reports, the FRS reached an agreement with an unidentified Cuban

       narcotics trafficker in Miami to provide operational facilities in

       Costa Rica and Nicaragua plus assistance with Costa Rican

       Government officials in obtaining documentation. In exchange, the

       FRS would receive financial support, aircraft, and pilot training.

       We have relayed this information to appropriate law enforcement

       agencies and will apprise the Oversight Committees of additional

       developments. 

   1097. The DO "Nicaraguan Program Summary - Week Ending November 11,

       1984," dated November 11, 1984, provided still additional detail:

       In late October 1984, negotiations were allegedly completed

       whereby a Colombian narcotics trafficker would support the FRS

       with funds and aircraft in exchange for the use of FRS pilots in

       the drug trafficker's narcotics activities. Under the terms of the

       agreement, the FRS would provide an unspecified number of pilots

       for use in narcotics transportation in exchange for the loan of a

       Cessna 404 aircraft for use in FRS military operations in Costa

       Rica and El Salvador as well as monthly payments of U.S. $200,000.

       Information at this time suggests that this drug operation is part

       of the activity previously described in the last Nicaragua Program

       Summary. We are in the process of acquiring additional details and

       are coordinating future actions with the Department of Justice. 

   1098. Other Information Sharing with Congress. On January 29, 1985,

       the Agency forwarded to Steven Berry, HPSCI Associate Counsel, a

       response to a question he had raised regarding Pastora's possible

       consummation of a working arrangement with Colombian drug dealers.

       The Agency response noted that "all relevant details have been

       reported in the Nicaraguan Program Summary." The response added

       that:

       To summarize . . . intelligence reporting indicates that members

       of Pastora's organization (FRS) have agreed--either with Pastora's

       direct knowledge or tacit approval--to provide pilots and landing

       strips inside Costa Rica and Nicaragua to a Miami-based Colombian

       drug dealer in exchange for financial and material support.

       Information pertaining to Pastora's involvement in drug

       trafficking has been forwarded to the appropriate Enforcement

       Agencies. 

   1099. On January 6, 1986, the SSCI requested Agency comments

       concerning a December 27, 1985, Washington Post article entitled

       "Nicaragua Rebels Linked to Drug Trafficking." A similar request

       was levied the next day by HPSCI Staff Director Tom Latimer. CIA's

       reply to both Committees was provided on January 22, 1986 in a

       letter signed by ADCI McMahon. The letter described the Agency's

       knowledge of Adolfo Chamorro's involvement with Morales, provided

       information about other contacts Chamorro had with suspected drug

       traffickers and offered a briefing concerning Chamorro's

       activities. In addition, the letter mentioned Gerardo Duran's

       arrest in Costa Rica and Duran's connection to Morales.

   1100. According to a May 7, 1986 MFR prepared by Louis Dupart of CATF,

       CIA representatives met with Richard Messick, Chief Counsel of the

       Senate Foreign Relations Committee (SFRC), on May 7, 1986. Messick

       reportedly called the meeting to "permit members of Senator [John]

       Kerry's staff to outline in greater detail information which they

       had uncovered that pointed to violations of U.S. law"--primarily

       related to the activities of John Hull. According to this MFR,

       William Perry of the SFRC staff, Charles Andreae of Senator

       Richard Lugar's staff, and Ronald Rosenblith, Jonathan Winer and

       Dick McCall from Senator Kerry's staff represented the Congress.

       CIA was represented by John Rizzo, OCA Legislative Affairs Chief;

       George Jameson, Counsel to the DDO; and Louis Dupart, CATF Policy

       and Plans Chief. DoS was represented by William Walker, Deputy

       Assistant Secretary of State for Inter-American Affairs;

       Ambassador Duemling, Director/NHAO; and a representative from the

       DoS Office of the Legal Advisor. Representatives from Justice,

       FBI, and DEA also attended. The Dupart MFR concluded that:

       . . . Overall, the meeting was not fruitful. Kerry's Staffers were

       unwilling to provide details or identify their sources. Without

       this information it was impossible to meaningfully rebut the

       allegations that have been made of violations of U.S. law. 

   1101. According to a May 8, 1986 MFR written by a CATF officer, she,

       Rizzo, Dupart, and David Pearline, met with SFRC Chief Counsel

       Messick again that day to continue discussions about Senator

       Kerry's investigation:

       Messick feels that Kerry's staff sandbagged him by not providing

       all of the relevant correspondence. He noted that he had received

       a letter written by the U.S. Attorney in San Francisco that

       refuted the [drug] charges that members of the [Contras] had been

       involved in drug smuggling.

       The MFR also noted discussions in this meeting regarding the

       nature of the information that American journalists Tony Avirgan

       and Martha Honey had to support their allegations of murder,

       attempted murder and drug smuggling and the relationship of their

       witnesses to the Kerry investigation. According to the MFR,

       Messick said that:

       [Senator] Kerry called Senator Lugar on 7 May . . . to request a

       five day hearing on his allegations . . . . Lugar was apparently

       not sympathetic and told Kerry that he will have time to air his

       information but will not have five days of hearings on his

       allegations alone. Messick said the hearing will be in early June

       and will probably be two morning sessions. 

   1102. Additionally, the May 8, 1986 MFR stated that Messick was told

       that the FBI had "extensive information on the people who had been

       interviewed by Kerry's staff . . . . " Dupart reportedly told

       Messick that "[Dupart] could not discuss in detail the information

       provided by the Bureau" and that Messick "would have to go to the

       Bureau for the details." The MFR stated that the meeting lasted

       one hour and a half and "at the end it was agreed that we would

       keep in touch."

   1103. An August 1, 1986 MFR from Dupart to CATF Chief Fiers and the LA

       Division Chief recorded a July 9, 1986 meeting with HPSCI Staff

       member Mike O'Neil on John Hull. According to the MFR, the meeting

       was held in CATF Chief Fiers' office. Dupart wrote in his MFR that

       Fiers noted that:

       We have no information of Hull having been involved in violations

       of U.S. law. Further, since we are not a law enforcement agency,

       we have not collected or sought any information on this.

       Consequently, while it is possible that Hull had in fact violated

       the law, we have no knowledge of any violations. We would have

       reported them to the Department of Justice per standard Agency

       procedures. 

       The MFR further stated that, in response to other questions from

       O'Neil, Fiers said that Pastora had voluntarily renounced his role

       as a resistance leader.

   1104. A March 5, 1987 MFR written by OCA's Robert Buckman indicated

       that Fiers and the ALA Deputy Director briefed SSCI members and

       staff concerning Nicaragua that same day. The MFR noted that those

       attending the briefing had been informed that "the BOS risked

       losing its U.S. aid if it did not fully sever its ties with Adolfo

       "Popo" Chamorro" because of his possible involvement in drug

       dealing.

   1105. An April 30, 1987 CATF MFR indicated that CATF Chief Fiers

       briefed the SSCI concerning the Nicaraguan program on the same

       date. According to the MFR, Fiers explained the allegations

       regarding Southern Front involvement with drug trafficking dating

       back to late 1984. Fiers stated that, on learning of the

       arrangement that was made between Jorge Morales and senior ARDE

       leaders, CIA had "turned [the matter] over [to] DEA." The MFR also

       stated that Fiers had added that Octaviano Cesar--brother of BOS

       leader Alfredo Cesar--had a close relationship with Morales and

       that Cesar was questioned when this connection became known and

       Cesar's answers caused CIA to conclude that Cesar was probably

       involved in drug trafficking. Further, Fiers told the SSCI that

       the DO had learned that one of its air crew subcontractors was

       under indictment in Detroit and that CIA was now asking the FBI

       and DEA to run traces on all subcontractors involved in the Contra

       program.

   1106. CIA received a letter from Representative Charles B. Rangel,

       Chairman of the U.S. House of Representatives Select Committee on

       Narcotics Abuse and Control, dated May 14, 1987, requesting

       information concerning Contra drug trafficking as a result of

       media allegations. A May 28, 1987 response by the CIA Director of

       Congressional Affairs, David Gries, denied "any allegation that

       the Agency was involved in drug trafficking in support of the

       Contras."

   1107. A July 15, 1987 memorandum from OCA Officer Robert Buckman to

       OCA Director Gries, stated that convicted narcotics trafficker

       Jorge Morales had testified that same day before the SFRC

       Subcommittee on Terrorism, Narcotics, and International Operations

       regarding Contra drug trafficking and gun running. The memorandum

       stated that Morales had implicated the Agency in drug trafficking,

       but the memorandum did not describe any specific allegations by

       Morales.

   1108. After Morales' appearance before the SFRC Subcommittee on

       Terrorism, Narcotics and International Operations, Fiers was

       called to testify before the SSCI on July 31, 1987. According to

       the SSCI transcript of that testimony, Fiers summarized CIA

       information concerning possible Contra involvement in drug

       trafficking. In his opening remarks, Fiers stated:

       What we have found to date is that none of the people currently

       involved in the resistance leadership, armed or political, have

       any--we have uncovered no indications that any of these

       individuals are involved or have been involved in narcotics

       trafficking.

       Fiers noted, however, that there was one resistance

       leader--unnamed by Fiers--who might be involved in trafficking and

       that he was under "active investigation."

   1109. Fiers added in his testimony that:

       We have a significant body of evidence with regard to involvement

       of the former members of ARDE in the Southern Front--Pastora's

       people--being directly involved in cocaine trafficking to the

       United States and as part of an effort to maintain and fund their

       organization during the period of cutoff after May of 1984.

       Conversely, we have never found any evidence indicating that the

       FDN or those around the Northern Front, as it is known today, have

       been involved in cocaine or any drug dealings, and we have looked

       very closely at that . . . .

       I believe personally, based on the evidence that I have seen, that

       there is a basis in fact for the claims that Jorge Morales has

       made in his testimony and in his public statements, that he was

       involved with members of ARDE in cocaine smuggling.

       We first began to develop information on that involvement in

       October of 1984. There were some vague indicators of problems

       prior to that in the 1983 time frame, but nothing specific. 

       Also during his July 31, 1987 SSCI testimony, Fiers described what

       was known to CIA about narcotics allegations concerning the

       unnamed resistance leader and Contra-related personnel Marcos

       Aguado, Octaviano Cesar, David Mayorga, Adolfo and Roberto

       Chamorro, and Gerardo Duran.

   1110. An August 3, 1987 OCA MFR by Buckman recorded a meeting of SSCI

       and OCA officers that day. Attending for the SSCI were Staff

       Director Sven Holmes, Jim Dykstra, Dave Holliday, Keith Hall, and

       Britt Snider. David Gries, Al Dorn, and Robert Buckman represented

       OCA. According to the MFR, Holmes questioned CIA's use of Alan

       Hyde in the Contra supply program in light of allegations of

       drug-related activities by Hyde. The MFR indicated that Fiers was

       contacted by telephone during the meeting and reportedly stated

       that Agency policy was that persons such as Hyde could be used in

       the Contra program if there were no ongoing investigations of

       wrongdoing or no outstanding indictments.

   1111. An October 14, 1987 OCA MFR indicated that in a briefing to the

       SSCI Staff on that same day, Fiers provided SSCI Staff members

       additional information about a Contra leader who might be involved

       in drug trafficking and to whom Fiers had referred in his July 31

       testimony. He told Staff members that regarding the Contra

       leader--Jose Davila--as a result of questioning by CIA Security,

       there were major concerns regarding narcotics-related issues.

   1112. A December 22, 1987 letter from DCI Webster to Senator Kerry of

       the SFRC stated that Webster:

       . . . welcomed the opportunity to meet with you and discuss your

       concerns about John Hull and your request for assistance in the

       Subcommittee's narcotics investigation. This is the kind of open

       and unencumbered exchange that I believe we must have between the

       Agency and Congress.

       The Webster letter also stated that:

       Concerning John Hull, I can assure you that he is not receiving

       any support from the Agency, and we have no reason to believe that

       any other element of the United States Government is supplying

       such support. As you will recall, you were briefed on John Hull on

       15 October 1986 following the Hasenfus crash. My staff is prepared

       to provide you with an update if you wish.

       The Webster letter also stated that Webster wanted to assure

       Senator Kerry "once again that you will enjoy this Agency's

       fullest possible cooperation during the course of the

       Subcommittee's investigation."

   1113. John Helgerson, Director of the Office of Congressional Affairs

       from January 1988 to March 1989, says that CIA attempted to comply

       with requests for information from committees of Congress--such as

       the SFRC--other than the intelligence oversight committees by

       coordinating the requests and Agency responses. He says:

       We in OCA worked over an extended period of time with the SSCI

       staff to identify what they thought to be information appropriate

       to the needs of the non-intelligence committees. To the extent of

       my knowledge, we provided that without reservation [and]

       considered that "full disclosure" as it fully met the requests of

       those committees legitimately engaged in the oversight of the CIA.

   1114. A January 4, 1988 OCA MFR by Buckman indicated that CATF

       provided a summary briefing for SSCI concerning the Nicaraguan

       program on the same date. At the briefing, Senator Bill Bradley

       inquired about allegations of drug trafficking, and Fiers

       responded that "Pastora had been involved with Colombian

       trafficking but that the FDN was clean."

   1115. A February 2, 1988 OCA MFR, regarding a January 27, 1988

       meeting, indicated that Senator Pete Wilson of California was

       briefed by CATF regarding allegations of human rights abuses and

       drug trafficking by the Contras. According to the OCA MFR, Senator

       Wilson was informed by a CATF officer that:

       . . . we look into the allegations periodically and are assured

       that there is no drug running going on among groups the US

       supports. We have had some evidence that two people close to

       Pastora were implicated in drug trafficking in 1984. 

   1116. A March 31, 1988 MFR by OCA Director John Helgerson indicated

       that SSCI Staff Director Sven Holmes had been provided a copy of

       the January 21, 1987 memorandum that had been sent by ADCI Robert

       Gates to Assistant Secretary of State Morton Abramowitz. The

       memorandum, entitled "Assessment of Alleged Connections Between

       Drug Traffickers and Anti-Sandinista ('Contra') Groups," was

       reportedly coordinated through the Intelligence Community and DEA

       and contained an assessment of alleged Contra-related narcotics

       trafficking. It concluded that "no credible information exists to

       support" allegations of Contra involvement in drug trafficking

       that had been made over the previous four years.

   1117. A February 23, 1988 OCA MFR documented one of a series of weekly

       meetings between OCA representatives and SSCI Staff members. These

       meetings resulted from a request for information by Senators Kerry

       and Pell of the SFRC, via the SSCI, for documents relating to the

       Contras and drug trafficking. The MFR stated:

       A meeting has been held between Senator Kerry with [sic] Senator

       Boren . . . to arrange for SSCI to acquire Agency records on

       allegations that profits from drug trafficking were channeled to

       the Contras. Senator Kerry claimed that there were CIA cables

       which had not been released to the Iran/Contra Congressional

       investigation. 

   1118. A March 14, 1988 letter from Senator Pell to Senator Boren

       referred to discussions between SFRC and SSCI Staff members. The

       letter stated that "the CIA has a number of documents in its files

       relating to narcotics and the contras. Specifically, these

       documents consist of cables to and from Central America which

       originated with the CIA." The letter made a SFRC formal request to

       the SSCI for assistance in gaining access to "the above mentioned

       documents."

   1119. A March 15, 1988 OCA memorandum from OCA to a DO Legal officer

       and LA Division asked for a status report regarding a request from

       Senator Kerry for Agency information concerning Contra financial

       support from drug trafficking. The memorandum stated that LA

       Division was supposed to be reviewing cables Kerry claimed had not

       been released to the Iran-Contra congressional investigation.

   1120. A March 22, 1988 MFR by OCA officer Buckman described a meeting

       with SSCI Staff members who again asked about the status of

       Senator Kerry's request for documents relating to the Contras and

       narcotics. According to the MFR, the SSCI interpreted the request

       to include "all cable traffic relating to narcotics and Panama,

       Costa Rica, Nicaragua, Cuba, the Contras, and [John] Hull."

   1121. A March 24, 1988 memorandum from OCA Director Helgerson to DDO

       Richard Stolz, DDI Richard Kerr, the LA Division Chief , and three

       other component officers noted that Senators Kerry and Pell and

       the SSCI Staff were seeking information concerning narcotics

       reporting--specifically "CIA cable traffic [operational traffic

       and DO intelligence reports] on . . . the Contras and drugs." The

       memorandum commented that "realistically, we are likely to have to

       respond somehow--fairly quickly--to the Kerry and Pell requests

       regarding when we knew what, without passing raw reporting or

       operational traffic to the SSCI." The memorandum then outlined a

       strategy of providing DI finished intelligence products, rather

       than raw reporting, to the SSCI.

   1122. A March 31, 1988 MFR by OCA Director Helgerson summarized a

       meeting with SSCI Staff members on March 29, 1988. The MFR stated

       that Helgerson provided the SSCI with a collection of materials

       that responded to the Kerry and Pell requests. According to the

       MFR, Helgerson pointed out to the Staff members that the

       collection did not include relevant material that had already been

       passed to the SSCI and consisted of, for the most part, finished

       intelligence products that reflected "all significant, substantive

       information available to the Agency on the questions raised by the

       Senators." The MFR said that the Helgerson noted that the package:

       . . . did not include, and we have been unable to identify, any

       significant new body of CIA information not previously passed to

       the Congress, such as is alleged to exist by Senators Kerry and

       Pell . . . . We at CIA are committed to no further action at this

       point, but I have no confidence that the subject will not come up

       again fairly soon. 

   1123. "Talking Points," dated April 14, 1988, were prepared for DCI

       Webster's use with Senators David Boren and William Cohen

       regarding Senator Kerry's request to see all CIA cable traffic

       concerning the Contras and drug trafficking. Attached to the

       talking points was an April 1, 1988 MFR that summarized CIA's

       efforts to satisfy Kerry's request by providing him with finished

       intelligence products. Also contained in the Talking Points were

       two options to resolve the issue. One was to "ask the I[nspector]

       G[eneral] to review all relevant materials, including operational

       cable traffic. The DCI could offer to report on the IG's findings

       to the Intelligence Committee." The other was to assist the SSCI

       Staff in conducting its own in-depth review by providing "the

       detailed information on the Central American and other narcotics

       problems" to a member of the Staff. The Staff would have to obtain

       additional information from the other relevant agencies, such as

       DEA, to accomplish its review, according to the Talking Points.

   1124. A March 28, 1988 memorandum from DDCI Gates to DDI Kerr and DDO

       Stolz asked that a briefing concerning Contra involvement in

       narcotics-related activities be given to the HPSCI and SSCI on

       April 1, 1988. The material prepared for that briefing as a result

       of this request included: (1) a narrative entitled "Allegations of

       Resistance Activities in Narcotics Trafficking," which stated

       that, "All allegations implying that the CIA condoned, abetted or

       participated in narcotics trafficking are false;" (2) a copy of a

       March 31, 1988 memorandum entitled "Pilots, Airlines and Shipping

       Companies Used in Resupply Efforts That May Have Had Past or

       Current Ties to Narcotics Related Activities;" (3) a July 31, 1987

       MFR prepared by a DO officer that recorded Alan Fiers' July 31,

       1987 testimony to the SSCI/HPSCI Staff regarding Contra Narcotics

       Trafficking Allegations; and (4) seven documents that provided

       information concerning the following Contra-related individuals

       and organizations--Mike Palmer, Octaviano Cesar, Aldofo Chamorro,

       Barry Seal, Marco Aguado, Markair, Sebastian Gonzalez, and David

       Mayorga. No information has been found to indicate whether this

       specific briefing was provided to the SSCI or HPSCI by Gates or

       any other Agency official.

   1125. A May 3, 1988 OCA MFR summarized a meeting on April 22, 1988

       between Dewey Clarridge and two Staff members of the House

       Judiciary Committee's Subcommittee on Crime. The MFR stated that

       Clarridge was interviewed regarding his knowledge of drug

       trafficking by the Nicaraguan Government or the Contras. According

       to the MFR, Clarridge discussed CIA's assistance to a 1984 DEA

       sting operation that resulted in the indictment of Federico

       Vaughn, an aide to Nicaraguan Interior Minister Tomas Borge, as a

       co-conspirator in a scheme to smuggle drugs into the United

       States. Clarridge reportedly was also asked a series of questions

       regarding alleged Contra involvement with drug smuggling. The MFR

       stated that Clarridge responded that these allegations arose after

       he left DO/Latin America Division--he was Chief of that Division

       from 1981 to 1984--and he was not in a position to comment on

       them.

   1126. A May 18, 1988 letter from the Chairman and Vice Chairman of the

       SSCI to DCI Webster informed Webster that the SSCI was initiating

       an inquiry into "those aspects of the narcotics trafficking

       problem in Latin America that fall within the Committee's

       jurisdiction." The letter also conveyed a set of questions

       regarding Agency policy and procedure in general. One question

       focused specifically on Contra linkage to drug trafficking:

       When intelligence indicated drug involvement on the part of a

       Contra or Contra-[sic] supply personality or of a high-ranking

       military officer (e.g., in Honduras, Haiti or Panama), was this

       information highlighted for policy-makers in DEA, State and DoD,

       or brought to the attention of the National Drug Enforcement

       Policy Board (NDEPB) or an appropriate committee thereof? Did the

       handling of information pointing to US allies differ from that

       regarding our adversaries? 

       (Underlining in original.)

   1127. A June 9, 1988 DO MFR documented a June 8, 1988 meeting between

       SSCI Staff members and CIA personnel to review the questions the

       SSCI inquiry was going to address. The MFR indicated that the

       specific question regarding Contra linkage to drug trafficking

       "refers only to specific persons whom [CIA] can identify." The

       CIA's answer to this SSCI question was provided in a July 6, 1988

       memorandum that stated:

       There were a few raw intelligence reports from DO field stations

       which indicated Contras or contra-supporters may have been

       involved in illegal narcotics trafficking. These reports were

       disseminated through regular intelligence channels to senior

       policymakers, including those at State, DIA, NSA and other

       appropriate agencies. 

   1128. On February 22, 1989, shortly after November 1988 allegations of

       drug trafficking by Juan Ramon Rivas Romero--a Northern Front

       Contra leader who had been jailed for drug trafficking prior to

       his association with the Contras--Deputy General Counsel for

       Operations John Rizzo advised DDO Stolz that:

       I agree that it would be prudent to advise HPSCI and SSCI of this

       matter, although I should note that when I mentioned this to John

       Helgerson last week his initial reaction was that the whole thing

       was too dated and trivial to warrant telling the committees . . .

       . 

       My only suggestion is that if and when we notify we do it low-key

       and on the staff level, since I don't think we have anything to be

       defensive about. 

   1129. A March 10, 1989 MFR from OCA Deputy Director for Legislation

       John Golden advised OCA Director Helgerson that:

       . . . the incident involving [Rivas] some 10 years ago may be

       viewed by some as being more than trivial. I noted that Norm

       Gardner [the Deputy Director, House Affairs, OCA] indicated

       [Rivas] had not been [questioned by CIA Security] on this issue

       and his current whereabouts are unknown. I recommended to John

       Helgerson that the Committees be informed of the fact that we

       recently learned of this matter and wish to bring it to their

       attention. It is understood that we have no reason to believe

       [Rivas] was involved in narcotics beyond the mentioned incident .

       . . . John Helgerson . . . . subsequently told me that he would

       have the committee staff so informed.

   1130. A March 15, 1989 CATF memorandum provided "Talking Points" for

       OCA use to brief the HPSCI and SSCI regarding Rivas. The

       memorandum outlined Rivas' involvement in drug activities in

       Colombia in 1979; his arrest, incarceration and escape; and

       briefly described his record as "the ERN/N[orth]'s most capable

       commander." It also noted that:

       Rivas is not on the Drug Enforcement Administration (DEA)

       "watchlist," and, according to DEA, there is no indication that

       Rivas is currently involved in illicit drug activity. Further, DEA

       considers the information on Rivas "historical" . . . .

   1131. According to a March 15, 1989 MFR by OCA Deputy Director for

       Senate Affairs Buckman, SSCI Staff member David Holliday had been

       briefed that day concerning Rivas. Holliday reportedly had been

       informed that the Department of State had determined that Rivas

       "should be removed from his post and that Resistance leaders

       agreed." The same memorandum noted that Holliday stated "that he

       would inform the Committee. He did not regard this as a serious

       matter." According to a March 16, 1989 MFR drafted by OCA, HPSCI

       Staff member Mike O'Neil was briefed telephonically on the same

       date regarding Rivas. The MFR noted that O'Neil "appreciated the

       briefing but had no real comments or remarks to make."

   1132. A March 16, 1989 briefing paper entitled "Outline for HPSCI

       Political Action Briefing on 17 March 1989" stated that CATF would

       brief HPSCI Staff members on March 17 regarding a list of topics.

       A March 28, 1989 CATF MFR reported that this briefing was

       accomplished on March 17, 1989 by the CATF Chief of Operations to

       HPSCI Staff members Dick Giza, Mike O'Neil, Duane Andrews, and

       Steve Nelson. The MFR also reported that the Chief of Operations

       briefed the HPSCI Staff members about allegations of drug

       trafficking concerning Rivas. He reportedly informed the Staff

       that the Department of State had decided that Rivas would be

       "separated from the Resistance" and that State had informed Contra

       leader Enrique Bermudez of this decision on March 14. In response

       to a question concerning U.S. Government support for Rivas, the

       Chief of Operations reportedly said that CIA was not planning to

       assist in resettling Rivas, that Rivas may have received family

       assistance funds from the Agency for International Development and

       that Rivas had never received a salary from the CIA.

   1133. Individual Statements. John Stein, DDO from July 1981 to July

       1984, says that he was not involved in the Contra program as DDO.

       DCI Casey and LA Division Chief "Dewey" Clarridge ran the Contra

       program but would keep him informed. Stein says he knew enough to

       brief Congress since Casey "was not welcome" in Congress to

       discuss this matter.

   1134. The CATF Deputy Chief and Chief from 1982 to 1984, states that

       the HPSCI was kept fully informed of significant events in the

       Contra program on a weekly or biweekly basis. He does not recall

       allegations of drug trafficking by the Contras during his tenure,

       but notes that such allegations would have triggered "alarm bells"

       because of the politically charged atmosphere at the time.

   1135. John McMahon, DDCI from June 1982 to March 1986, says that he

       did most of the briefings to Congress regarding "unsavory" issues,

       but does not recall briefing Congress regarding allegations of

       Contra drug trafficking. If there were a need to discuss issues in

       confidence, he would have done so with the Chairman and the Vice

       Chairman or Ranking Minority Member only. McMahon says that he

       would not let CATF do something that should not be done and that

       the ground rules were to be honest with Congress.

   1136. An officer who was CATF Chief from 1982-1983 and LA Division

       Chief from 1986-1989, responded to written questions from OIG and

       wrote:

       . . . No . . . programs ever conducted by the Agency during my

       tenure was [sic] ever run as transparently as the Central American

       and Nicaraguan programs. Congressional members and staffers

       traveled frequently throughout the area and received extensive and

       detailed briefings on virtually every aspect of the program. Over

       a period of years the staffers became intimately familiar with the

       Contra program, and they would have been the first to call our

       attention to any problems in reporting on allegations of drug

       trafficking by Contras or Contra-related individuals.

       . . . .

       I do not remember participating in any briefing of Congressional

       members or staffers in regard to drug-related activities by the

       Contras or Contra-related individuals.

   1137. Robert Gates, DDCI from April 1986 to January 1987 and May 1987

       to March 1989 and ADCI from January to May 1987, says the Agency

       had an obligation to terminate its relationship with any asset

       suspected by law enforcement agencies to be engaged in drug

       trafficking. Gates says that he would not have made an exception

       and allowed the use of an asset who had past or present

       involvement in drug trafficking without getting it cleared through

       Congress and DoJ. Gates notes that, with the Agency's involvement

       in the Iran-Contra affair, it "needed to be purer than Caesar's

       wife."

   1138. After the $100 million congressional funding authorization in

       1986, Gates says there were many legislative enactments that

       affected the Contra program--what could or could not be done--and

       constant discussions with congressional staff members who were

       closer to the issues than individual Committee members. Gates says

       he went directly to the Chairman or Vice Chairman of the

       intelligence oversight committees when something was particularly

       sensitive. As ADCI, Gates says he met with the Chairmen or Vice

       Chairmen every two to four weeks, discussing a long list of items.

       According to Gates, representatives of the Agency's Office of

       Congressional Affairs accompanied him and wrote extensive

       memoranda of these meetings.

   1139. Richard Stolz, DDO from January 1988 to December 1990, says he

       recalls no drug trafficking connection to the Contras. According

       to Stolz, the Agency's Counternarcotics Center took the lead in

       briefing Congress on counternarcotics matters.

   1140. Current DCI George Tenet recalls that the SSCI held quarterly

       hearings on certain CIA activities while he was serving as an SSCI

       Staff member and Staff Director. Additionally, Tenet recalls that

       Senator Bill Bradley was personally interested in Nicaragua,

       received weekly or biweekly briefings on Nicaraguan covert action

       matters and regularly met with CATF Chief Alan Fiers and other

       U.S. Government policy officials regarding Nicaragua. Tenet does

       not, however, recall any briefings of the SSCI by Fiers concerning

       allegations of Contra involvement in narcotics trafficking.

   1141. James Dykstra, former Minority Staff Director for the SSCI, says

       that biweekly briefings regarding the Contras were held at the

       request of Senator Bill Bradley who was the only Senator who

       regularly attended these briefings. Dykstra recalls that the

       Agency initially resisted the biweekly briefings and recorded

       transcripts, but ultimately agreed. Dykstra says that, in

       retrospect, it was good that Senator Bradley insisted on

       transcripts so issues were placed on the record. Dykstra recalls

       that Fiers also regularly briefed the SSCI Staff.

   1142. Dykstra says that 1986-1987 was a "time of tension" due to the

       controversy over an Intelligence Oversight Bill. Dykstra says that

       former DCI William Casey also had strained relationships with

       Senator David Durenberger--then Chairman of the SSCI--and others

       in that time period. Dykstra says that, with all this tension,

       however, Fiers had developed an informal, friendly relationship

       with all the Senators and SSCI Staff members.

   1143. Then-OCA Director John Helgerson states:

       . . . I did not undertake to provide all raw reporting of the DO

       to non-intelligence committees. I did work with the SSCI [Staff

       Director Sven Holmes] to provide other committees [sic] members

       with the material we and the SSCI judged met their needs within

       the limits of the guideline set by the DCI & [sic] DDO.

       . . . .

       The general DCI & DDO policy was to provide no raw traffic to

       non-cleared people on non-intell[igence] Committees. I recall that

       perfectly. [Concerning the Kerry SFRC subcommittee request for CIA

       documents] we (CIA) and the SSCI negotiated some exceptions

       designed to meet the legitimate needs of the Congress. Most of the

       limited raw traffic shown was shown to the SSCI; less to non-SSCI

       staff.

       . . . .

       The DCI's policy, and mine, was to give the SSCI & HPSCI

       everything appropriate to their inquiries. When requests came from

       those (oversight) committees for cable traffic and/or raw reports,

       we (DCI, DDO & me) negotiated with the Committees regarding what,

       exactly, they needed, & to my memory met their needs. When

       requests came from non-oversight committees, we negotiated with

       the SSCI and/or HPSCI on how best to respond.

       Helgerson says that his role as Director/OCA was to make sure that

       the appropriate DO and DI officers "hooked up" with Committee and

       Staff members to provide substantive briefings regarding the

       Contras as required. He states that OCA, however, relied on Agency

       components to provide full and accurate information to Congress.

       Helgerson does not recall briefings regarding Contras and

       narcotics trafficking." Helgerson notes:

       I do recall more general questions about Noriega, Contras, and

       drugs. Very few of these questions originated with the oversight

       committees--they were primarily passing on the questions of

       others, as I recall.

   1144. Helgerson says that Senators John Kerry and Claiborne Pell, who

       were not on the SSCI, were driving SSCI Staff Director Sven Holmes

       and the other SSCI Staff members on the issue of Contras and

       narcotics. He says that the SSCI Members and Staff were not

       "taken" with the topic and were very frustrated by the tasking

       from Senators Kerry and Pell. Helgerson says that he recalls there

       were two problems from an Agency perspective. First, there was

       virtually no guidance from Senators Kerry or Pell in terms of the

       specific information they wanted regarding drugs and Contras

       --that is, Kerry and Pell were on a "fishing expedition" and would

       ask "Give us everything you've got" which was too broad. Second,

       he does not recall how much "raw traffic" could be provided in

       summary and how much could be provided to the non-cleared people

       working on the Kerry subcommittee. He says that he recalls that

       Agency officers sometimes showed documents to the Kerry Staff

       members in the SSCI secure office space.

   1145. Helgerson says that he does not recall a concerted effort by the

       Agency to get to the bottom of the allegations of narcotics

       trafficking. The Agency, as he puts it, was in the intelligence

       business, not law enforcement.

   1146. Helgerson says that he was never comfortable that he was

       providing the intelligence oversight committees with everything

       the Agency had on a particular issue because the Agency's

       information on any subject was held in multiple files and data

       bases and OCA had to rely on the DI and DO to conduct thorough

       searches and provide complete responses. He says he was less

       comfortable with DDO Clair George than with Richard Stolz who

       succeeded George as DDO in January 1988. Stolz, he recalls,

       encouraged a "much more cooperative attitude" in the DO's dealings

       with the Congress. However, he says he is not aware of any

       decision to withhold cable traffic from SSCI or HPSCI Staff

       members.

   1147. Helgerson says that OCA representatives were not always present

       at all briefings of the committees, particularly CATF matters in

       which Fiers enjoyed great autonomy. Fiers, according to Helgerson,

       often dealt directly with the DDO and even the DCI. As to whether

       SSCI and HPSCI Staff members could make decisions or provide

       advice to Agency briefers on sensitive issues without consulting

       the Chairmen or Ranking Minority Members, Helgerson says that he

       was amazed at the level of sensitive issues on which Staff members

       rendered judgments.

   1148. An officer who was a Central American COS from 1987 to 1989 and

       LA Division Chief 1989 to 1992, states in a written response to

       OIG questions that there was "constant" communication with the

       oversight committees during the time he was involved in Central

       American matters. He recalls that Staff members came to CIA

       Headquarters regularly for briefings and frequently visited field

       stations.

       Richard B. Still

       CONCUR:

       L. Britt Snider Date

       Inspector General

         _____________________________________________________________

       

       [BACK]

       

   [BACK]

   

                                 APPENDICES

     _________________________________________________________________

   

                                 Appendix A

                                      

                                Jack Terrell

                                      

    1. Background. Jack Terrell alleged that John Hull and the Contras

       were involved in drug trafficking. He also alleged that there was

       a plot involving Contra supporters to assassinate a U.S.

       Ambassador on behalf of Colombian drug traffickers. No information

       has been found to indicate that Jack Terrell had any contact with

       CIA or that CIA had any information indicating Terrell was

       involved in drug trafficking with the Contras.

    2. CIA Records A January 28, 1986 cable to Headquarters requested

       traces concerning Terrell and stated:

       . . . according to the local [FBI, Terrell] claims to have contact

       with [CIA] by virtue of his service with the Nicaraguan Democratic

       Force in Honduras and Nicaragua from 1984-85. . . . [Terrell] said

       he is known . . . by his nom de guerre of "Flaco." . . . [Terrell]

       has identified his [CIA] contact as one "Rob Owens."

    3. A January 28, 1986 response to the trace request stated that

       Terrell was believed to be identical with a Civilian Military

       Assistance (CMA) member who used the alias "Flaco" while in

       Honduras. The cable noted that:

       . . . In March 85 he and 13 other [American citizens] associated

       with CMA were asked by [the American] Embassy to return to [the

       continental United States] from the Mosquito [sic] where they

       allegedly were planning to enter Nicaragua to blow up a bridge.

       The group including "Flaco" were [sic] repatriated to [continental

       United States] two days later. [Terrell] was not in contact with

       [CIA]. . . . 

    4. A March 24, 1986 FBI telex to CIA provided information from an FBI

       New Orleans office March 17, 1986 interview of Terrell.

       Reportedly, Terrell told the FBI that there had been several

       meetings in the Miami area between December 9 and December 23,

       1984 involving CMA members--including Terrell--and Contras Stedman

       Fagoth and Wycliff Diego. According to Terrell, he was discussing

       tactics to be used by the Contras when he was called out of the

       meeting by the leader of the CMA, Tom Posey, to meet a person

       called "Corbo," who could provide the CMA with money, weapons,

       transportation, and "everything we've been looking for." Those who

       had been discussing tactics with Terrell allegedly became angry

       and told Terrell, "You don't want to meet with [Corbo] because he

       is into drugs and arms and he works directly for Francisco

       Chanes." Terrell also reportedly told the FBI that Posey had

       arranged for him to meet with Francisco Chanes who offered a

       million dollars if the CMA would assist in the sale of frozen

       lobster imported from Costa Rica. According to Terrell, a U.S.

       citizen associate of John Hull, was also present at this meeting.

    5. An April 4, 1986 Headquarters cable to the FBI provided traces

       regarding Terrell and persons mentioned by him in his FBI

       debriefing:

       Results of this Agency's traces on Jack (Terrell) were passed

       telephonically to the FBI. In addition... Terrell's February trip

       to Costa Rica was arranged by [U.S. journalist] Avirgan. Besides

       falsely claiming employment by the . . . CIA, Terrell claimed arms

       for the . . . FDN come from Miami, Houston, New Orleans, Panama

       and El Salvador. Further he stated that the CIA buys arms in the

       Dominican Republic and ships them via Fort Lauderdale to Honduras.

       While in Costa Rica Terrell also revealed the names of alleged CIA

       and Department of Defense personnel who he says are involved in

       Anti-Sandinista activity. Sources who encountered Terrell

       described him as an extreme rightist and mentally unstable. 

    6. On April 11, 1986, an article in The Washington Post stated that:

       Jack Terrell, who was a leader of the American paramilitary group

       . . . CMA, said FBI agents and prosecutors from the U.S.

       attorney's office in Miami have met with him several times with at

       least two of those sessions becoming full-day meetings. Terrell

       said the investigators asked him about alleged weapons shipments

       from the United States to contra base camps in Central America,

       contra involvement in drug smuggling, and a reported conspiracy to

       assassinate the U.S. ambassador to Costa Rica, Lewis Tambs.

    7. An April 15, 1986 cable to Headquarters commented that Terrell had

       made "scurrilous attacks on [CIA]".

    8. A May 8, 1986 FBI telex to CIA and other U.S. Government agencies

       reported that the FBI had attempted "to locate Jack Terrill [sic]

       at his residence" in New Orleans. The owner of the apartment

       building where Terrell lived and where he served as building

       manager and handyman had reportedly said that:

       . . . on or about April 20, 1986, she received a call from another

       of the tenants in the building, stating that a strange woman of

       oriental appearance was taking the bed from the apartment

       previously occupied by Terrell. [The owner] went to the apartments

       [sic] and discovered that the bed and the . . . oriental woman

       were both gone. Terrell had apparently left, taking all of his

       possessions. Upon further checking, she determined that

       approximately $2000 was missing from the petty cash fund, as was

       about $2100 from the receipts from the soft drink machine. [The

       owner] stated that she had gone to the police and filed a

       complaint against Terrell. . . . [The owner] stated that she

       understood that Terrell did some very mysterious things and that

       it was possible that he had been forced to run and hide owing to

       his peculiar situation vis-a-vis international affairs.

       An unsigned memorandum, dated "summer '86" and entitled "FBI

       Background on Jack Terrell, stated that:

       . . . [his a]rrest record begins in 1957 with an arrest for auto

       theft. Thereafter the record indicates numerous arrests for

       robbery, larceny, grand larceny, and burglary.

    9. An unsigned memorandum, with a handwritten date of July 18, 1986

       and entitled "Traces on Jack Terrell, a.k.a. Colonel Flaco,"

       stated that information was provided that there was:

       a call from Terrell who called from Senator Kerry's office. . . .

       Because of FBI interest in the whereabouts of Terrell, we informed

       the Bureau's Counterterrorism Planning and Special Investigations

       Office at a 2 May meeting that Terrell was in the Washington area

       and had met with Senator Kerry's Staff. . . . 

   10. A July 31, 1986 cable requested traces concerning Terrell on

       behalf of the FBI. According to the cable, the local FBI office

       had provided a copy of a report from an FBI office indicating that

       Terrell had contacted the FBI in Houston, Texas,:

       . . . offering to provide information on Central American groups,

       Iranians and African National Congress (ANC) principals. [FBI]

       interviewed [Terrell] in August 1985 and again in February 1986.

       Terrell provided in-depth details on the "La Tronquera" training

       camp along the Nicaraguan border with Honduras.

   11. A September 29, 1986 cable to Headquarters reported that a FBI

       Washington Field Office Special Agent had advised that the FBI

       interrogated Terrell in the course of an investigation concerning

       a threat to the President. According to the cable, Terrell told

       the FBI that:

       . . . he had recently returned from Manila where had had been

       offered one million USD[ollars] to establish a radio station for

       the New Peoples' Army by the head of the Communist Party [sic].

       [Terrell] asked the case agent to put him in touch with [CIA] so

       that he might relate the story directly to those involved. . . .

       [Terrell] works for the Center for Developmental Policies . . .

       [in] Washington DC.

   12. A March 29, 1988 Headquarters cable provided a draft of a

       memorandum that Headquarters proposed to distribute to the FBI and

       several U.S. military organizations as "a summary of all the

       information [CIA] has received on . . . Terrell since January

       1988. . . ." The cable detailed Terrell's involvement with an

       insurgent leader of the Kachin Independence Organization based in

       Northern Kachin State, Burma. The cable also noted that "in Burma

       and Thailand Terrell is advertising himself as a former [CIA]

       officer." Finally, the cable stated that Terrell has recently

       arrived in Manila and rented an apartment.

   13. An April 6, 1988 memorandum from the DDO to the Director of the

       FBI and several U.S. military organizations included the

       information that was reported in the March 29 cable. The first

       paragraph of the memorandum stated that "The CIA has no

       involvement in Terrell's activities nor do we want any type of

       relationship with him." The memorandum also included the statement

       that "Terrell has never been employed by CIA." Most of the

       memorandum recounted a briefing provided by a U.S. Marine who was

       an intelligence officer serving at the Marine Barracks at Subic

       Bay. The Marine officer recounted that Terrell had offered his

       services to an insurgent group in Burma and claimed to be a former

       CIA officer. The Marine officer reportedly had received his

       information from a former Marine who was associated with Terrell

       and also directly from Terrell.

   14. An August 23, 1988 Washington Post article mentioned that Terrell

       had been indicted along with Mario Calero and other Contra

       supporters for violations of the U.S. Neutrality Act. A July 14,

       1989 Washington Post article reported that a federal judge had

       dismissed the Neutrality Act charges.

   15. On June 12, 1991, U.S. Embassy Manila reported a plot to

       assassinate a rebel military leader involving the Philippine

       Foreign Secretary, Raul Manglapus, and an American. Key evidence

       of the plot was reportedly a tape recording of a purported

       discussion of the assassination plot between the Foreign Secretary

       and the American. An October 8, 1991 cable identified the American

       as Jack Terrell.

   16. An October 9, 1991 draft DoS cable stated that DoS officers had

       met with the FBI on October 8 and were told that the American

       involved in the plot:

       . . . has been an asset of the FBI in a number of cases. When

       polygraphed in connection with this case and asked whether the

       other voice on the tape was that of foreign secretary Manglapus,

       his response was described as indicating deception (this tends to

       confirm our initial judgment that this affair is a hoax of some

       kind.)

   17. An October 17, 1991 Foreign Broadcast Information Service

       translation of a Manila Broadcasting Company report stated that

       Foreign Secretary Manglapus:

       . . . strongly denied the television news report implicating him

       in an attempt to assassinate [the] rebel leader. ["]The charge is

       categorically false, and I have not plotted to kill anyone, and I

       have not paid money to anyone to undertake matters on my

       behalf.["] According to Manglapus the source of the story came

       from [sic] Jack Terrell, an ex-convict with questionable

       credibility. Manglapus admitted that he got to know Terrell during

       an occasion at the International Center in Washington, where

       Terrell said that he was working. . . . Terrell went to Manila to

       meet him but he was not aware that he was already terminated from

       the International Center.

   18. An October 17, 1991 U.S. Embassy Manila telegram to the DoS

       described a meeting between Manglapus and the American Ambassador.

       According to the telegram:

       While Manglapus was in exile in the United States, he was

       associated with the Center for Development Policy. . . . The

       American behind this present story, Terrell, came to Manila about

       two years ago purporting to represent the Center for Development

       Policy. He informed Manglapus that he was a shrimp trader.

       Manglapus admits that he unwisely took Terrell into his home and

       confidence. He failed to check out Terrell's credentials. He has

       done so since through an American lawyer and understands that

       Terrell has a prison record, having served eight to ten years "in

       Alabama" for armed robbery. Manglapus also notes that Terrell

       perjured himself in some matter related to Contra affairs.

   19. A column in the October 25, 1991 edition of the Manila Inquirer

       reported an interview of Terrell's Manila neighbor who had said:

       . . . Jack [Terrell] was by his own account a colonel in the US

       Army who served in Vietnam and in Guatemala. He knew more about

       the Iran-Contra affair than did Col. Oliver North who was accused

       of selling military equipment to Iran to raise funds for the

       Contra rebels. Jack was forbidden to testify because he knew too

       much, and was liable to spill the beans on the American high

       officials. And he was in the Philippines to be out of the reach of

       US investigators.

       He claimed to be a scion of a wealthy Southern family with

       interest in the railroad line. Disowned when he refused to enter

       the family business, he joined the US Army which became his second

       family, and was due to retire in two years. . . .

       He left [the Philippines] to join the war in Iraq, fearful on not

       surviving it, saying that he had to go because he did not want to

       lose his retirement pay. . . .

       In 1992 Terrell wrote:

       I've lived this life and it didn't count.

       . . . . My sister said to me: "You have lived a lie."

       

                                 Appendix B

                                      

                                Frank Castro

                                      

    1. Background. No evidence has been found to indicate that Frank

       Castro was a member of the Contras . However, information has been

       found connecting Frank Castro to the Contras and cocaine

       trafficking. An April 20, 1990 memorandum provided background

       information on Castro. The memorandum noted that a biographic

       questionnaire, in Spanish, asked Castro "in what military service,

       including the 2506 Brigade (Bay of Pigs) have you participated?"

       According to the memorandum, Castro answered that he had

       participated in U.S. Army training at Forts Knox, Jackson and

       Carson and that:

    . . . .

       21. . . . because of this question being answered, a misconception

       took place and it was reported in Castro's file, that he was part

       of the 2506 Brigade. According to the files of this Directorate,

       [Frank Castro] did not work for the CIA during the Bay of Pigs

       Invasion, nor has he ever been an employee of the CIA in any

       capacity . . .

    2. Eulalio Francisco Castro Paz was born in Cuba on June 4, 1942 and

       came to the United States, probably in 1961, seeking political

       asylum. He served in the U.S. Army from November 5, 1962 through

       December 6, 1963. He changed his name to "Frank Castro" and became

       a naturalized U.S. citizen sometime during 1971. In the early

       1970s, Frank Castro was involved in anti-Fidel Castro activities

       that included bombings and attempted bombings of Cuban and Soviet

       facilities.

    3. During the 1970s and 1980s, CIA cooperated with the FBI and other

       U.S. law enforcement entities in monitoring and reporting on Frank

       Castro's movements and activities. By 1983, Castro's name began to

       appear in regard to Contra-related activities.

    4. Allegations of Drug Trafficking. According to an October 12, 1983

       cable:

       On October 8, Frank Castro . . . revealed FDN interest in opening

       FDN front in Costa Rica, separate from ARDE. Castro . . . . [said]

       the FDN would be willing to provide info[rmation] on where they

       might establish bases, individuals they can trust, how they can

       operate without interference from [the Government of Costa Rica],

       etc.

    5. In November 1983, according to a document captured by U.S.

       military forces in Panama City in December 1989:

       Frank Castro, a Cuban, is Pastora's assistant in his drug

       trafficking business. This Cuban has a group of combatants who

       pretend to be "Contras," but in reality work for the FSLN in

       Nicaragua (and Pastora knows it).

       According to a November 22, 1983 DO memorandum, OGC had asked for

       a search of DO records for information concerning Castro. The

       memorandum noted that Castro was being prosecuted in Texas for

       drug trafficking, and DoJ had asked CIA about Castro's claims of

       affiliation with CIA. A handwritten, unsigned, undated note filed

       with the DO memorandum stated, ". . . DoJ is willing to drop [sic]

       if he was in fact associated [with] Agency."

    6. On July 12, 1984 Headquarters responded to a cable that requested

       information concerning Castro. With regard to drug trafficking,

       the Headquarters cable stated:

       In 1979, Frank Castro was local drug trafficker and no longer

       involved in the anti-Castro movement. In 1981 [Castro] was

       arrested by Miami police on narcotics charges and in October 1982

       was out on bond awaiting trial. Also in 1982 [Castro] was under

       court order not to leave Dade County, Florida.

       Also on July 12, 1984, a cable noted that:

       Popo Chamorro had picked up a considerable amount of money in

       Santo Domingo that has been contributed to [Pastora's] movement.

       He did not say how much or from whom the money originated.

       A handwritten note on the cable indicated "Frank Castro?"

    7. On October 12, 1984, a cable reported that:

       When queried ... about who controls "Rene," (a Cuban-American who

       has approximately 30-40 armed Nicaraguan combatants deployed in

       northern Guanacaste [Province], Costa Rica) [it was] acknowledged

       that Frank Castro of Miami controlled "Rene". . . . All available

       information indicates that the group under Rene's command is not

       presently associated with either the FRS or MDN/ARDE. Previous

       reporting indicated that approximately seven Cuban Americans were

       deployed with this unit which previously (early June) was located

       at "Monico," [Hull's] [landing zone].

    8. According to an October 25, 1984 cable, John Hull said that Frank

       Castro had donated two helicopters, two light aircraft and one

       C-47 to the FRS. The cable suggested that the C-47, then located

       in El Salvador, might be the one that Marcos Aguado had at

       Ilopango and might be under Dominican Republic registration.

       According to the cable, Castro had moved from Miami to the

       Dominican Republic and recently provided an unspecified amount of

       money to the FRS. John Hull says that, according to

       Cuban-Americans, Castro gave a lot of money to the Contras and was

       rumored to be involved in the drug business.

    9. On October 31, 1984, a cable reported that:

       . . . personnel from the FRS, recently in Miami, had contacted

       Frank Castro and [another non-U.S. individual], the latter

       reportedly is closely associated with Sarkis G. Soghanalian.

       Castro was reported as having "connections" in Colombia and the

       Dominican Republic, and was presently located in the [Dominican

       Republic].

   10. According to a cable on December 10, 1984 it has been

       commented that Frank Castro of Miami . . . continues to support

       Rene Corvo and his 40-60 man unit. Although no details were

       available, [it was] commented that Corvo may be involved in drug

       trafficking operations, supported by Castro.

   11. A December 12, 1984, cable reported that:

    . . . .

       2. . . . Frank Castro, a Miami-based Cuban American with ties to

       anti-Sandinista guerrillas, is installing or attempting to install

       a cocaine processing laboratory in northern Costa Rica. Castro is

       exploiting widespread paramilitary activities in northernmost

       Costa Rica as a cover for drug trafficking. [Reportedly] . . .

       Castro sent [an individual], Castro's middleman, to Costa Rica to

       purchase a ranch (finca) with landing strip near the Nicaraguan

       border. Reportedly involved with Castro and [this individual] is

       Rene Corvo, whose independently led anti-Sandinista paramilitary

       activities in northern Costa Rica and southern Nicaragua were

       subject of [a previous report]. [It is] said Corvo reportedly

       traveled briefly to Colombia following Corvo's return to Costa

       Rica [on or about] 29-30 Nov from Miami. [It was] inferred that

       travel to Colombia might be drug-related.

       3. Request [Headquarters provide information concerning] Castro,

       [the individual cited above] and Corvo. There are no [local]

       traces on [this individual] or Corvo. Castro appears [in files] as

       anti-Communist Cuban American well-known in the exile community in

       Miami and also known to be involved with the anti-Sandinista

       struggle. . . . We would be particularly interested in knowing

       latest info[rmation] linking Castro to drug trafficking.

   12. A December 15, 1984 draft intelligence report to Headquarters

       included a "source comment" that:

       There are also fears that Corvo, who has received support from

       Frank Castro, may be exploiting the military infrastructure in

       northern Costa Rica as cover for engaging in drug trafficking.

       Castro, a Cuban-American based in Miami and well-known as an

       anti-Communist, may be involved in drug trafficking as well.

   13. A February 8, 1985, cable reported that an FBI Special Agent had

       questioned Moises Ruiz Nunez:

       . . . about ties between [John Hull] and Frank Castro, who has a

       reputation among Cuban-Americans as an anti-Communist, a

       right-wing terrorist, and a drug trafficker. [Nunez] told [the FBI

       Special Agent] that [Hull] knows that Castro should be avoided.

       This was followed by a February 27, 1985 cable in which John Hull

       was discussed. In part, the cable said that a CIA officer "does

       not believe that [Hull] is involved with Frank Castro in any

       narcotics trafficking activities."

   14. A June 1, 1985 cable referred to Frank Castro as a known narcotics

       dealer and requested details linking Pastora to Castro, Jorge

       Morales and a third individual. A June 17, 1985 response to the

       request provided information about Castro's involvement in drug

       trafficking in 1979, the "considerable" amount of money that

       possibly came from Castro in July 1984 and the FRS' receipt of a

       number of aircraft from Castro in October 1984.

   15. A January 2, 1986 cable responding to an FBI request for

       information concerning Frank Castro reported that Castro was a

       pilot and gave Castro's most recent address as the Bonnet Travel

       Agency in Hialeah, Florida. The cable also provided a

       recapitulation of CIA information concerning Castro's anti-Fidel

       Castro activities.

   16. On March 7, 1986, an FBI cable reported to CIA allegations by Jack

       Terrell that, some time before February 1985, Frank Castro had

       presented himself as the representative of Colombian drug

       trafficker Ochoa who wanted a U.S. Ambassador assassinated and who

       offered to pay one million dollars to have it done. The cable

       noted also that Castro was the main liaison between Colombian drug

       dealers and the Cubans.

   17. On April 15, 1986, a cable suggested that a review of certain

       reporting would show that some:

       . . . consider Rene Corvo and Frank Castro as dangerous and

       counterproductive in the anti-Sandinista endeavor, however

       anti-Communist both may be. . . . [There have been] reported

       allegations that Castro may engage in drug trafficking. [Certain

       people] shun [Pastora], while Corvo and Castro have continued to

       support him. 

   18. In a November 5, 1986 cable, a specifically named individual was

       referred to as "a Cuban narcotics dealer . . . [known] to have

       frequent contacts with Rene Corvo and with one Frank Castro, a

       narcotics kingpin with alleged Sandinista connections."

   19. In a February 10, 1987 cable to CIA regarding information about

       Carlos Lehder-Rivas, the FBI reported that Frank Castro was

       considered to be a narcotics trafficker, mercenary and a person

       who would do anything for money. The cable also noted that Castro

       was the subject of a Miami narcotics case and that Castro's break

       from the anti-Fidel Castro movement was consistent with the

       ideology of Lehder-Rivas who was pro-Fidel Castro.

   20. A February 13, 1987 FBI cable to CIA Headquarters provided

       background information on Frank Castro, his father, brothers and

       other associates. With regard to Castro, the cable said that:

       . . . In 1981 he was arrested on four counts of [sale, delivery]

       and importation of narcotics (case was dismissed); . . . Castro

       pled guilty to carrying a concealed weapon, [adjudication

       withheld] fined [$]500.00. In 1983, Castro was [subject] in DEA

       case [involving conspiracy], importation of 425,000 lbs. of

       marijuana . . . Beaumont, Texas. Castro was also the main subject

       in the Miami Police Department Tick-Tock case in 1981.

       Frank Castro is a potential subject in the Rene Corvo; et al;

       neutrality matter . . . where allegations have been made by

       several individuals that Frank Castro, along with Francisco Chanes

       . . . plotted to assassinate U.S. Ambassador Lewis Tambs in early

       1985. . . . The allegations are that Frank Castro, as drug king

       Jorge Luis Ochoas [sic] representative, offered several

       individuals who are subjects in the above investigation, one

       million dollars, if they killed Ambassador Tambs.

       . . . In 1983 he was the leader and main supporter of another

       paramilitary training group operating in Naples, Florida. The

       group trained dozens of Nicaraguans and anti-Communist Cubans who

       later travelled to Central America to combat the Sandinista

       Nicaraguan government.

       Frank Castro was also one of the founders and main supporters of

       the Miami Cuban and Nicaraguan group named the Saturnino Beltran

       Commandos operating near the Costa Rica/Nicaragua border area.

       Unsubstantiated allegations have been made that Castro and others

       have used this Contra camp as a front to traffic drugs between

       Colombia and the United States.

       . . . Castro has very good connections with [the] Medellin Cartel

       Ochoa brothers. Castro is also known to travel [frequently]

       between Miami, Costa Rica and the Dominican Republic. Castro has

       [opened] a food processing [plant] in Costa Rica. Miami Police

       Department detectives believe Castro may be currently addicted to

       cocaine.

       [Another individual], a.k.a. "El Nino," . . . former subject in

       the MPD Tick-Tock drug investigation and current part owner of [a]

       Travel Agency . . . is a close associate and partner of Castros

       [sic]. [He] . . . is a pilot and resides [in] Hialeah, Florida.

   21. A November 25, 1987 cable noted:

       . . . that DEA/Miami requested a meeting . . . . to discuss the

       development of case involving Frank Castro and [a specifically

       named] Cuban exile. . . . These individuals also figured in a

       narcotics case involving Cuba. Both men claimed to be working

       under the direction of [CIA]. Station assured DEA that we were not

       in any way involved with these persons.

   22. Information Sharing with Other U.S. Government Entities. As

       explained above, CIA collected and shared information concerning

       Frank Castro with various U.S. law enforcement entities before,

       during and after the 1980s. No records have been found to indicate

       that CIA shared the information it collected concerning Castro

       with Congress.

       

                                 Appendix C

                                      

   To what extent did CIA have information indicating that the Government

   of Nicaragua, the Government of Cuba, or Nicaraguan- or

   Cuban-sponsored individuals were involved in alleged drug trafficking

   activities of individuals associated with the Contras?

    1. No information has been found to indicate that either the

       Government of National Reconstruction (GRN) or the Government of

       Cuba (GOC) was involved in drug trafficking activities with

       individuals associated with the Contras. CIA reporting concerning

       drug trafficking by the GRN and the GOC during the 1980s concerned

       the use of Nicaragua and Cuba for the transshipment of drugs to

       the United States. None of the reporting linked any Contra

       organization or Contra member with such activities.

    2. Allegations of Drug Trafficking. A September 23, 1982 cable

       reported that Interior Minister Tomas Borge Martinez was

       interested in making some sort of arrangement with a bank in

       Panama. Interior Ministry official Federico Vaughan took $350,000

       with him to Panama for deposit in the Bank Continental. It was

       suspected the money and the arrangement with a bank in Panama were

       both related to drug trafficking.

    3. An October 8, 1982 cable to Headquarters reported that U.S.

       fugitive Robert Vesco and Interior Ministry official Paul Atha had

       said in early October 1982 that the GRN was planning a drug

       smuggling operation to earn cash for the GRN Ministry of the

       Interior (MINT).

    4. An October 9, 1982 cable to Headquarters reported information that

       the nine member GRN Junta had approved a plan for narcotics

       operations in July or August 1982. Reportedly Interior Minister

       Tomas Borge Martinez would organize and direct the operation with

       U. S. fugitive Robert Vesco acting as his advisor. According to

       this report, the GRN was laying the groundwork through trusted

       collaborators in Colombia, Panama and Costa Rica.

    5. A December 4, 1982 cable to Headquarters reported that the GOC was

       involved in planning possible narcotics shipments from Colombia to

       Corn Island in the Caribbean. This report identified Interior

       Ministry officials Paul Atha and Federico Vaughan as involved in

       the drug smuggling scheme. A December 9, 1982 cable to

       Headquarters indicated that Atha had said that Corn Island

       airstrip and El Bluff, Nicaragua would be used for drug air

       shipments. Managua airfields, would be used for emergencies and

       "decoy flights."

    6. A February 1, 1983 cable to Headquarters reported that Atha and

       Vaughan went to Panama with $380,000 to deposit in a specifically

       identified bank. The deposit was reportedly the product of drug

       operations by Borge, Atha and Vaughan. The cable said that it was

       surmised that "higher GRN officials know about Borge's drug

       activities."

    7. A May 26, 1983 cable to Headquarters reported rumors concerning

       cultivation of marijuana on the Nicaraguan Atlantic Coast and

       shipment to the United States. The cable stated the idea was

       credible and consistent with the GRN's desire to damage the United

       States in any way possible through drug trafficking.

    8. A June 30, 1983 cable to Headquarters reported that GRN Vice

       Minister of Aviation Marco Salinas Pasos, FSLN Party official Jose

       Talavera, Cuban Ambassador Carlos Diaz, and a Cuban Intelligence

       Officer were involved in a drug trafficking conspiracy with

       Colombian drug trafficker Jorge Morales and a Haitian exile. It

       was reported that Salinas had agreed to arrange the purchase of a

       DC-6 in Managua for use in transporting a drug shipment from

       Colombia to the United States.

    9. A December 30, 1983 cable to Headquarters reported that Federico

       Vaughan and Paul Atha intended to come to San Jose to introduce a

       person to cocaine dealers so that person could be the go-between

       for buyers and sellers. Reportedly Vaughan said "The idea is to

       flood the U.S. with cocaine to the detriment of the imperialist

       youth while proceeds will help the Nicaraguan revolution." Vaughan

       also reportedly indicated that the GRN wanted to buy a ranch in

       Costa Rica with a landing strip to receive shipments of cocaine.

       Vaughan, Borge, Atha, and the Cubans reportedly used a codebook to

       encode messages regarding cocaine trafficking.

   10. An April 3, 1984 cable to Headquarters reported information that

       Paul Atha and Tomas Borge were still involved in delivering drugs

       to Corn Island as of April 1984.

   11. Cables dated April 28 and May 3, 1984 to Headquarters reported

       that the drug operation described in June 1983 involving Salinas

       and the purchase of a DC-6 apparently never occurred. The cable

       further indicated that there had been reporting beginning in April

       1984 that a Salvadoran Farabundo Marti National Liberation

       representative in Managua, Jacinto Bustillos, and GOC Ambassador

       Diaz were involved in a drug trafficking conspiracy with Jorge

       Morales and the GRN leadership.

   12. On December 11, 1984, a cable to Headquarters reported that a

       Nicaraguan defector who had worked for the GRN Front company H&M

       believed that Atha and Vaughan were involved in drug trafficking

       because of the large amounts of dollars they handled without any

       apparent source. Atha was the Managing Director of H&M and Vaughan

       worked directly for him.

   13. A July 19, 1985 cable to Headquarters identified a Cuban-American

       as the General Counsel for COPA airline in Managua and a long-time

       friend and attorney for Atha. According to the cable, the

       Cuban-American had commented that Atha "has gone very far into

       highly dangerous activities that include the smuggling of drugs."

   14. A September 27, 1985 CIA "Narcotics Report" stated that there was

       confirmation that Minister of Interior Tomas Borge was involved in

       smuggling cocaine from Colombia to the United States via

       Nicaragua. Reportedly this was a secret known only to Borge, his

       assistant Franco Montealegre, the Chiefs of Police and State

       Security, and members of the National Directorate. Reportedly the

       Ministry of the Interior (MINT) became involved in drug

       trafficking in order to obtain money for clandestine operations by

       Intelligence and State Security Departments outside Nicaragua.

   15. A typewritten Note for File, dated November 4, 1985, indicated

       that a former MINT officer had stated that H&M officials were

       former State Security officials or Sandinista policemen whose

       loyalty was unquestionable and that both Borge and Atha were

       extremely corrupt individuals.

   16. In a February 27, 1986 cable to a number of Latin America

       Stations, Headquarters reported the former MINT officer's

       statement that Tomas Borge was directly involved with Colombian

       narcotics traffickers who used Nicaragua as a transit point for

       distributing drugs throughout the world. The Headquarters cable

       indicated that the officer claimed that Borge made arrangements

       with GRN Customs officials to ensure that selected aircraft coming

       from Colombia were not subjected to searches. The officer believed

       the income from narcotics operations was used to finance espionage

       operations. He testified to Congress in 1986 that Sandinista

       officials supported drug trafficking to earn foreign currency for

       espionage operations.

   17. An August 8, 1986 cable to Headquarters reported that, in a 1982

       meeting of MINT personnel, Borge commented that drugs seized in

       Nicaragua would be used as a "strategic arm" against the United

       States. According to Borge, this use of cocaine seized in

       Nicaragua would bring foreign currency to the Government and it

       would cause chaos within the United States. Further, Borge

       reportedly stated that the United States would be too occupied

       attempting to stop the drug traffic to be able to meddle in

       Nicaragua's affairs.

   18. A November 8, 1988 cable to Headquarters forwarded a FBI Miami

       Field Office request for comment concerning information provided

       by the FBI relating to a 1984 agreement between Colombian Medelin

       Cartel drug traffickers Carlos Lehder Rivas, Pablo Escobar

       Gaviria, Jose Gonzalo Rodriguez Gacha, and the GRN by which they

       would be allowed to stay in Managua, establish a base of

       operations, and be secure from Colombian and U.S. authorities.

       According to the cable, the FBI information indicated that $3

       million had been turned over to Tomas Borge by the cartel leaders

       as consideration for the agreement. The cable also reported that a

       number of drug smuggling operations took place at Los Brasiles

       airport.

   19. The November 8, 1988 cable further reported to Headquarters that

       the cartel used the services of Robert Vesco in October or

       November 1984 to gain GOC approval to overfly Cuba with drug

       shipments. Raul Castro reportedly was involved in the agreement.

       The cartel established a scheme to transship drugs through Corn

       Island and Cuba to San Andros Island, Bahamas with all

       communications concerning impending drug shipments made by secure

       means between the GRN and the GOC to prevent any disclosure of

       their association with the Colombian traffickers. The operation

       came to a halt sometime in early 1985.

   20. An April 20, 1989 cable to Headquarters reported statements

       attributed to a former assistant to Paul Atha in H&M. The former

       assistant reportedly stated that the MINT was involved in early

       1989 in supporting Borge's front company in transshipping drugs

       from Colombia through Corn Island, Nicaragua to the Bahamas.

   21. A July 7, 1989 cable to Headquarters reported information provided

       by a GRN defector. According to him, a GRN officer stated in

       mid-1984 that the MINT had accommodated international drug

       traffickers from the Medelin cartel in a MINT safehouse in

       Managua. He also reportedly had stated that the GRN contact point

       for the drug traffickers was Paul Atha and that the GRN was

       involved in international drug trafficking targeted at the United

       States. The report also indicated that "drug trafficking would

       support revolutionary goals and was a means to an end," i.e., to

       improve the dire economic situation in Nicaragua and weaken the

       United States.

   22. CIA Response to Allegations of Drug Trafficking. Information

       received by CIA throughout the 1980s alleging that individuals

       associated with the Cuban and Nicaraguan Governments were involved

       in drug trafficking appears to have been broadly shared with other

       U.S. Government entities. This was accomplished through

       intelligence reports that were disseminated by CIA to Intelligence

       Community agencies and in finished intelligence publications that

       were disseminated more broadly. For example:

          + On April 15, 1983, LA Division disseminated an Intelligence

            Report to all Intelligence Community agencies reporting that

            the GRN, as of late September 1982, planned to purchase drugs

            in Colombia for eventual resale in the United States. The

            report stated that Tomas Borge, Nicaraguan Interior Minister,

            would organize and direct the drug smuggling operation and

            American fugitive Robert Vesco would act as his advisor. The

            report was disseminated to the FBI, DEA, Treasury, Customs,

            DIA, DoS, and NSA.

          + On March 8, 1984, a DI analysis reported that drugs were to

            be shipped from Cuba to Nicaragua for onward transport in a

            Nicaraguan ship and delivery to the United States. The

            article conjectured that the GOC and GRN might be motivated

            to facilitate drug trafficking in order to obtain hard

            currency.

          + An October 9, 1984 CIA DI analysis, titled "Nicaragua:

            Involvement in Drug Trafficking," reported that:

       There is a growing body of evidence that high-level officials of

       the Sandinista government have been conspiring with Colombian drug

       traffickers to smuggle cocaine from Nicaragua into the US. . . .

       Despite recent publicity on Nicaragua's role in the drug trade and

       indictments issued in the US against [Federico] Vaughan and some

       of the other key participants, the prospect of hard currency

       earnings probably will keep the Sandinistas involved. This could

       result in a serious setback for US law enforcement and drug

       interdiction efforts.

          + An October 1984 DI Intelligence Assessment summarized CIA and

            DEA reporting that supported a conclusion that high level

            Nicaraguan Government officials had conspired with Colombian

            drug traffickers to smuggle cocaine from Nicaragua into the

            United States. The Assessment specifically cited Tomas Borge

            as probably directing the operation, with at least the tacit

            approval of the Sandinista National Directorate and the

            Junta. The report was disseminated to the DoJ, DEA, Treasury,

            Customs, DoS, and NSA.

          + A December 1984 National Intelligence Council Interagency

            Intelligence Memorandum titled, "Cuban Government Involvement

            in Drug Trafficking," stated that the GRN and GOC were

            working together in facilitating the shipment of drugs from

            Colombia to the United States.

   23. Information Sharing with Other U.S. Government Entities. As

       explained above, much of the intelligence regarding alleged drug

       trafficking by the Sandinista Government was shared with other

       U.S. Government intelligence and law enforcement agencies. This

       was accomplished by dissemination of intelligence reports and

       finished intelligence products.

   24. On April 6, 1984, CIA provided a response to questions posed by

       the SSCI concerning Nicaraguan involvement in drug trafficking.

       The response indicated that, although uncorroborated reports

       indicating Nicaraguan involvement in shipping cocaine to the

       United States had been received, CIA was unable to confirm reports

       implicating high-level Sandinista leaders in drug trafficking at

       that time.

   25. On August 9, 1984, the National Intelligence Officer for Narcotics

       provided the DCI with summaries used to brief Congress concerning

       narcotics activity in Cuba and Nicaragua. The summaries described

       field reporting that indicated Nicaragua had been used as a

       transit point for the shipment of drugs into the United States,

       possibly for the purpose of obtaining hard currency for the GRN.

       The summaries also provided information regarding cooperation

       between Cuba and Nicaragua in plans for the processing and

       shipment of narcotics purchased from Colombian drug dealers.

   26. On March 16, 1988, CIA Deputy Director for Intelligence Richard J.

       Kerr testified before the House Select Committee on Narcotics

       Abuse and Control that the Nicaraguan Government may have been

       involved in narcotics activity to obtain hard currency. He cited

       the 1984 DEA sting operation that resulted in the indictment of

       Federico Vaughan, an aide to Interior Minister Tomas Borge, as a

       co-conspirator in a scheme to smuggle drugs into the United

       States.

   27. According to a May 3, 1988 Memorandum for the Record prepared by

       OCA, Dewey Clarridge--who served as Chief of DO/Latin America

       Division from 1981 to 1984--was interviewed by two Staff members

       of the House Judiciary Committee's Subcommittee on Crime regarding

       his knowledge of drug trafficking by the Nicaraguan Government or

       the Contras. Clarridge, the MFR reported, discussed CIA's

       assistance to the 1984 DEA sting operation.

       

                                 Appendix D

                                      

   Potential Disinformation and CIA-Contra Drug Allegations

   

   Were there indications of foreign government efforts in the 1980s to

   promote allegations that Contras were engaged in drug trafficking?

    1. In 1985 and 1986, the Sandinista Government made a variety of

       claims that CIA or the Contras were connected to drug trafficking:

          + In 1985 Nicaraguan Foreign Minister D'Escoto had complained

            to the Costa Rican Foreign Minister that Eden Pastora was

            building airfields which were to be used for narcotics

            trafficking to support his group.

          + In October 29, 1985 discussing the First Ladies Drug

            Conference, the Nicaraguan newspaper El Nuevo Diario had said

            that "if Mrs. Reagan, in reality, with honesty, attempted to

            combat the distribution of drugs," she should prevent the CIA

            from providing drugs to the Contras, drugs that "unleash [the

            Contra's] bestial actions" against indefensible citizens and

            children.

          + On November 8, 1986, the Foreign Broadcast Information

            Service reported translated excerpts from a speech by

            Sandinista leader Daniel Ortega that included allegations of

            CIA involvement in drug-related airstrips at Ilopango, El

            Salvador; Aguacate, Honduras; and Nicoya, Costa Rica.

          + The Nicaraguan Ministry of the Interior (MINT) announced on

            November 23, 1986 that their investigations had uncovered a

            "vast net of drug traffickers' backed by the FDN, MISURA and

            'the mafia'".

          + A December 3, 1986 review of Sandinista media stories stated

            that El Nuevo Diario on November 28 carried an article titled

            "Contras Drowning in Drug Trade." The article reported that

            La Nacion of San Jose had "revealed" that the Secretary of

            the Conservative Party of Nicaragua, currently residing in

            Costa Rica, was connected with the shipment of "100 million

            dollars worth of cocaine" to the United States.

    2. In the mid-1980s, Contra drug allegations were also featured in

       foreign publications outside Nicaragua. The U.S. Government

       agencies that reported these allegations, in many cases,

       attributed them to various Communist Parties, the Soviet Union and

       Cuba and mentioned a planned propaganda campaign involving the

       CIA-Contra drug theme.

          + In a February 4, 1986 cable titled "Possible Disinformation

            re Contras," a cable informed Headquarters of an article in

            the January 9, 1986 issue of the West German illustrated

            magazine Der Stern asserting that the Contras, while being

            supported by the U.S. Government, were also financing their

            efforts through drug trafficking. The article reportedly

            commented on the apparent irony of President Reagan accusing

            the Nicaraguans of drug trafficking in 1985 if it were true

            that the United States was supporting drug-financed Contra

            activities in 1986.

          + A February 5, 1987 cable describing a pro-Soviet political

            action campaign by the French General Confederation of Labor

            (CGT) notified Headquarters that the French Communist Party

            had instructed the CGT to begin a pro-Soviet political action

            campaign that included among its themes U.S. support for drug

            trafficking by the Contras.

          + A story in the February 15, 1987 issue of a Tanzanian

            newspaper that was attributed to the Cuban newspaper agency,

            Granma, reportedly alleged that U.S. Government officials and

            CIA had diverted funds from the sale of narcotics to help

            fund the Nicaraguan Contra forces.

          + In a May 4, 1987 program summary of Radio Moscow Spanish

            language transmissions to Chile, the Foreign Broadcast

            Information Service Station included an item that cited the

            U.S. Congress as reporting that the "war against the

            Sandinist[a] regime is . . . paid with drugs."

          + An August 6, 1987 cable notified Headquarters of an

            "anti-[U.S. Government]" article in the Athens-based PASOK

            Party weekly Exormisi on August 2, 1987 titled "Drug

            Smuggling as a Method for Exercising Foreign Policy," and

            including quotations from an Italian publication L'Unita that

            alleged drug smuggling to be the source of funds for the

            Contras. In response, Headquarters noted that "L'Unita is a

            mouthpiece of the Italian Communist Party."

          + A October 31, 1987, Headquarters cable noted a report on

            Soviet trade union activities in the international labor

            movement that noted that the Soviets were making a major

            effort to influence and control labor organizations worldwide

            "in order to use them to support Soviet foreign policy

            objectives and to further the aims of World Communism."

            Headquarters also stated that the French CGT had rejoined the

            World Federation of Trade Unions and had begun its new

            propaganda campaign including Contra-drug trafficking, at

            Soviet and French Communist Party direction.

          + A September 15, 1988, cable mentioned articles in Bolivian

            newspapers were alleging that drug traffickers in Huanchaca,

            Bolivia were receiving protection from the U.S. Government

            and that the drug profits were being used to finance the

            Contras. Another cable on September 17, 1988 stated that a

            press service that was distributing the same articles in Rome

            was thought to have "long-standing Cuban links." In a

            September 29, 1988 telegram, the U.S. Embassy in La Paz

            reported to the Department of State (DoS) that the son of

            Bolivian drug trafficker Roberto Suarez was also spreading

            the Huanchaca allegations. An October 7 cable mentioned

            "[the] likely Cuban-sourced disinformation that [the U.S.

            Government] is narco-trafficking in Bolivia to fund the

            Contras."

       

                                 Appendix E

                                      

   Allegations by Tony Avirgan and Martha Honey of CIA and Contra

   Involvement in Drug Smuggling

    1. Allegations of Drug Trafficking by CIA and the Contras. Anthony

       Avirgan and Martha Honey were husband and wife journalists and

       U.S. citizens. Avirgan was present at the press conference of Eden

       Pastora at La Penca, Nicaragua on May 30, 1984 where a bomb

       exploded. Avirgan and Honey asserted in the media that the

       perpetrator of the La Penca bombing was a right-wing,

       Libyan-origin terrorist who they said was named Amac Galil or

       Ahmed Khalil, and who used the identify of the Danish journalist,

       Per Anker Hansen. According to Avirgan and Honey, the terrorist

       was tied to the drug-financed "Secret Team" of FDN Contras and CIA

       agents. A June 5, 1984 cable to Headquarters reported that Martha

       Honey had "verified" that an individual at La Penca named Per

       Anker Hansen was there using false identification papers.

    2. An August 27, 1985 cable notified Headquarters that Hansen, a

       Danish citizen whose passport had been used as identification by

       the attempted assassin, had been affiliated with organizations

       sympathetic to "South America" for several years.

    3. According to media articles, between August 1985 and April 1987,

       Avirgan and Honey publicized their version of the La Penca

       incident and of a drug-financed CIA-Contra "Secret Team" in press

       articles and appearances in Norway, Denmark, The Netherlands,

       Spain, the United Kingdom, India, Uruguay, Nicaragua, and the

       United States, as well as in Costa Rica. In an article entitled

       "The Carlos File," published in the October 5, 1985 edition of The

       Nation, Avirgan and Honey cited a specific individual--Carlos

       Rojas Chinchilla--as the source of allegations linking the

       CIA-Contra "Secret Team" with drug trafficking. The article stated

       that Rojas said he was in contact with an individual named

       "David," who allegedly was a driver who had been killed by John

       Hull and buried on Hull's ranch. Rojas was later arrested by Costa

       Rican authorities in August 1987 and at that time made a statement

       that "he made-up the 'David' story. . . . in return for a payment

       of $10,000." Avirgan and Honey also published their allegations in

       1985 as a book titled La Penca: Report of Investigation.

    4. Legal Actions Resulting From Drug Trafficking Allegations. Between

       1985 and 1994, Avirgan and Honey were involved in several U.S. and

       Costa Rican legal actions as a result of their allegations of a

       CIA-Contra team of drug-financed secret operators with John Hull

       as their common focal point. The earliest was a libel suit that

       John Hull filed against the couple in Costa Rica in response to

       their 1985-86 press allegations. On April 11, 1986, Headquarters

       was informed of the Christic Institute's interest in this case.

       The suit was scheduled for final arguments on May 23, 1986.

    5. In May 1986, Daniel Sheehan filed a civil action, Tony Avirgan and

       Martha Honey, Plaintiffs vs. John Hull, et al., Defendants, in the

       U.S. District Court for Southern Florida, under the sponsorship of

       the Christic Institute. The May 29, 1986 complaint in what became

       known as the "La Penca Case" charged 30 individuals--including

       John Hull, Rene Corbo, Felipe Vidal, Moises Nunez, and Adolfo

       Calero--with conspiracy, injuries, battery, assault, intentional

       infliction of mental distress, and intentional interference with

       the business of the plaintiffs. The suit charged the defendants

       used six criminal means to "effectuate the unlawful objective of

       this Federal Neutrality Act Conspiracy."

    6. Included among these alleged "criminal means" was a violation of

       Title 18, United States Code, Sections 1401, et seq., and 1952

       [sic], to fund the equipping, arming, training, and supplying of

       members of a "foreign military expeditionary force" by smuggling

       cocaine from the Republic of Colombia through Costa Rica into the

       United States. The suit also alleged "one-dozen criminal overt

       acts committed by the Defendants. . . ." Three of these alleged

       "criminal overt acts" involved drug trafficking or dealing with

       drug traffickers:

    . . . .

       4. The transportation and sale of thousands of kilograms of

       cocaine from the Republic of Colombia, through Costa Rica on the

       land owned or managed by Defendant John Hull in Northern Costa

       Rica into the United States, where it was sold and distributed

       inside and beyond the State of Florida; 

       5. The purchase of . . . lethal military equipment . . . the money

       for which purchases being obtained from the sale of said cocaine

       inside the United States and said money being delivered for such

       sales of military equipment inside the United States; and 

       . . . .

       10. The conspiracy to bomb the United States Embassy in San Jose,

       Costa Rica, and to assassinate Lewis Tambs, the United States

       Ambassador . . . for the purpose of obtaining a $1 million

       "bounty" offered for the death of Lewis Tambs by Defendant PABLO

       ESCOBAR, a portion of which monies would be used to fund the

       Defendants' criminal enterprise.

       . . . .

    7. In a June 6, 1986 cable, Headquarters characterized the

       proceedings:

       On 29 May 1986 Daniel Sheehan filed a lawsuit captioned Tony

       Avirgan and Martha Honey v. John Hull et al in the United States

       District Court of Southern Florida in which they asked for $24

       Million in damages. This suit tracks the allegations contained in

       [an earlier cable] and was not unexpected. The complaint is

       essentially a artfully [sic] woven story about alleged excesses of

       the Nicaraguan resistance and its supporters in Central America

       with the La Penca bombing at its center.

    8. The May 29, 1986 complaint was amended twice. On December 12,

       1986, Sheehan filed an affidavit that represented his recounting

       of the "Secret Team theory" as a supplemental filing to the

       amended complaint.

    9. On June 23, 1988, the presiding judge in the civil action signed

       an order granting summary judgments to the defendants. On February

       2, 1989, the Judge signed an order that granted the defendant's

       motions for costs and attorney's fees for the defendants and

       stated:

       After two years of protracted and extensive discovery of scores of

       witnesses across the United States, Costa Rica, and elsewhere, the

       plaintiffs were unable to produce a single witness who could state

       that the defendants exploded the bomb or were responsible for the

       assassination attempt. . . . The attorneys for the plaintiffs, The

       Christic Institute, must have known prior to suing that they had

       no competent evidence to substantiate the theories alleged in

       their complaint. . . . Based upon the affidavit of plaintiffs'

       counsel, the plaintiffs were permitted to conduct two years of

       discovery. This discovery failed to produce any admissible

       evidence regarding causation. . . . This abuse of the judicial

       process requires that the plaintiffs make the defendants whole by

       paying the fees the defendants have been forced to expend for

       attorneys in this action. 

       The Judge awarded the defendants a total of $1,034,381.36.

     _________________________________________________________________

   

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