OFFICE OF INSPECTOR GENERAL INVESTIGATIONS STAFF REPORT OF I

Your relationship with government is simple: government knows everything about you, and you know nothing about government. In practice this means government can do whatever it wants to you before you know it's going to happen. Government policy makers think this is a good way of ensuring citizen compliance. Thus, all of these investigations are retrospective -- they look back at the squirrely shit that government has pulled, and occasionally wring their hands about trying to avoid it happening in the future. Not inspiring reading, but necessary if you are to face the cold reality that Big Brother is more than watching.

Re: OFFICE OF INSPECTOR GENERAL INVESTIGATIONS STAFF REPORT

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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

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
[deleted]
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 -- 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?
Appendix D -- Potential Disinformation and CIA-Contra Drug Allegations
Appendix E -- Allegations by Tony Avirgan and Martha Honey of CIA and Contra Involvement in Drug Smuggling

EXHIBITS

March 2, 1982 DoJ-CIA Memorandum of Understanding regarding "Reporting and Use of Information Concerning Federal Crimes"
February 11, 1982 Letter to DCI William Casey from Attorney General William French Smith regarding DoJ-CIA Memorandum of Understanding
February 8, 1985 DoJ Memorandum to Mark Richard from A. R. Cinquegrana, "CIA Reporting of Drug Offenses"
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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 Attaché 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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Re: OFFICE OF INSPECTOR GENERAL INVESTIGATIONS STAFF REPORT

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INTRODUCTION

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.

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.

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. (2)

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.

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.

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.

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.

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.

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.

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.

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?

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?

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.

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.

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.)

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.

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.

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.

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.

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.

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?

Statutory Guidance. The Department of Defense and Military Construction Appropriations Act for Fiscal Year 1987(3), 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 . . . ."

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.(4)

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.(5)

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.

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.

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.

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.

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.

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.

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.

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?

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.

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.

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 cases, CIA pursued confirmation of allegations or information of drug allegations. In other cases, CIA knowledge of allegations or information indicating that organizations or individuals had been involved in drug trafficking did not deter their use by CIA. In other 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.

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?

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.

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.

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.

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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Re: OFFICE OF INSPECTOR GENERAL INVESTIGATIONS STAFF REPORT

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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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Re: OFFICE OF INSPECTOR GENERAL INVESTIGATIONS STAFF REPORT

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PART 1 OF 2

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

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.

In the mid-1970s, this arrangement became more widely known and was subject to criticism by the Congress(6) 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."

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.

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.

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.

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.

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.

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. . . . .

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.

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."

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.

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.

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).

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.

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.

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.

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.

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. §874(h) [sic](7) 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.

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.

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.

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.

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.

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.

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.)

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.(8)

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.

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.

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.

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.

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.

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.(9)

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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(10) participated in some of the MOU discussions.

Richard says he probably had some input into the MOU, but that it was negotiated by Cinquegrana, as Lawton's deputy.

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.

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.

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.

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."

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.
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Re: OFFICE OF INSPECTOR GENERAL INVESTIGATIONS STAFF REPORT

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PART 2 OF 2

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.

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.

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.

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.

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.

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.

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?

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.

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."

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.

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.

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.

. . . .

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.

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.

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?

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.

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.

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.

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.

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.(11) Gates believes that the policy from his office concerning narcotics trafficking was clear and consistent.

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.

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.

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."

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.

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.

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.

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.

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.

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.

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.

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."

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."

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.

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.

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.

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.

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."

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."

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.

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.

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.

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.

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."

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.

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.

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.

A Central American Station DCOS recalls that he "did not know anyone with drug connections."

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."

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."

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."

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.

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.

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.

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."

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.

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.

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."

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.

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.

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.

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.

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.

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.

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.

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.

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."

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.

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.

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.

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.

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."

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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Re: OFFICE OF INSPECTOR GENERAL INVESTIGATIONS STAFF REPORT

Postby admin » Sun Jun 14, 2015 8:16 pm

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

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.

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.

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.

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.

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.

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.

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.

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.

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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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."

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.

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."

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.

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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Re: OFFICE OF INSPECTOR GENERAL INVESTIGATIONS STAFF REPORT

Postby admin » Sun Jun 14, 2015 8:25 pm

PART 1 OF 4

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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

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.

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."

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."

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. . . .

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.

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.

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.

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.

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.

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].

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.(12) 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.

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.

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.

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.

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.

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.

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] is 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

. . . .

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.

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]

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.

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.

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."

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. . . .

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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."

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.

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.

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.

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.

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.

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."

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.

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

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.

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.

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.
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Re: OFFICE OF INSPECTOR GENERAL INVESTIGATIONS STAFF REPORT

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PART 2 OF 4

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.

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.

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.

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.

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.

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.

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

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.

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."

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."


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.

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.

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."

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."

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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."

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."

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."

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.

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.

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.

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.

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."

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.

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.

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.(13)

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.

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.

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."

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.

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.

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.

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.

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.

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."

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

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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."

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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."

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.

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.

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.

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.
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PART 3 OF 4

Fernando Jose Chamorro

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.

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.

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.

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."

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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. . . ."

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.

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 . . . .

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.(14) 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.

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.

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.

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.

In September 1984, authorization was provided to furnish information to the Government of Costa Rica regarding Gonzalez' whereabouts.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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."

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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

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.

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.

A June 1986 Headquarters cable stated that Cesar had advised in June 1986 that he had signed the unity agreement with UNO.

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.

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.

In August 1988, Cesar was selected as the chief Contra negotiator for talks with the Sandinistas. In June 1989, Cesar returned to Nicaragua.

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.

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.

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

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.

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.

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.

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.

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.

No information has been found to indicate that CIA took any further action to attempt to resolve the drug trafficking issues relating to Davila.

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.

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.

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.

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.

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."

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.

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.

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.

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

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.

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.

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.

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.

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

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.

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.

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.

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."(15) 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.

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.

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.

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."

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.
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