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CHAPTER 5

CHAPTER 5

THE CIA: "COCAINE IMPORTING AGENCY"

 

CONTENTS

Opium Finds Its Way to Asia

Nugan Hand Bank: The CIA-Drug Connection in Australia

The Pegasus Saga

The CIA-Contra Cocaine Train

Eugene Hasenfus

United States Government Fronts

Oliver North

The White House Connection

The United States Invaded by the Contras

The Clinton Connection: Drug Trafficking in Mena, Arkansas

"Un-investigating" the CIA's Role in Drug Trafficking

Results of the Kerry Report

OPIUM FINDS ITS WAY TO ASIA

The origin of opium can be traced back to the Middle East region of Mesopotamia circa 3100 B.C. Centuries later Alexander the Great exported the narcotic eastward to India in 330 B.C. By 400 A.D. it became a large market in China where it was introduced by Arab traders.

Southeast Asia got its first dose of opium in 1500 when Portuguese, while trading along the East China Sea, initiated the smoking of opium. Within two centuries the Dutch were exporting shipments of Indian opium to China and the islands of Southeast Asia. In 1729, Chinese emperor Yung Cheng issued an edict which prohibited the smoking of opium and its domestic sale, except under license for use as medicine. Nevertheless, the use of opium increased, and by 1750 the British East India Company assumed control of Bengal and Bihar, the opium-growing districts of India. British shipping dominated the opium trade out of Calcutta to China. By 1767, opium exports by the British East India Company to China reached a staggering two thousand chests of opium per year. In 1793, the British East India Company established a monopoly on the opium trade. All poppy growers in India were forbidden to sell opium to competitor trading companies.

In 1799, Chinese emperor Kia King banned opium completely, making trade and poppy cultivation illegal. Foreign merchants then turned to smuggling. Charles Cabot, a smuggler from Boston, Massachusetts, attempted to purchase opium from the British and then smuggle it into China under the auspices of British smugglers. Another American, John Cushing, acquired his wealth from smuggling Turkish opium to Canton. For example, John Jacob Astor of New York City and owner of the American Fur Company purchased ten tons of Turkish opium which he shipped on to Canton.

In 1839, the first Opium War broke out, and the Chinese ordered all foreign traders to surrender their opium. The British responded by sending warships to China. Two years later, the Chinese were defeated by the British which demanded heavy reparations, including the cession of Hong Kong to Great Britain The Second Opium War erupted in 1856, and the British again demanded indemnities from China, forcing the emperor to legalize opium. By the turn of the century and after 150 years of failed attempts to rid the country of opium, the Chinese finally convinced the British to dismantle the India-China opium trade.

In the 1850s, British merchants began importing Indian opium to Burma and selling it through a government-controlled monopoly. In 1886, the British acquired Burma's northeast region, Shan state. Production and smuggling of opium along the lower region of Burma thrived despite British efforts to maintain a strict monopoly on the opium trade.

By the turn of the century, the French joined the British in monopolizing opium in Southeast Asia. In the 1940s, the 'Golden Triangle' -- Burma, Laos, and Thailand -- became a major player in the profitable opium trade. During the early years of World War II, opium trade routes were blocked and the flow of opium from India and Persia was cut off. Fearful of losing their opium monopoly, the French encouraged Hmong farmers to expand their opium production. After Burma gained its independence from Britain in the 1940s, opium cultivation and trade flourished in the Shan states.

EARLY COMPLICITY IN DRUG TRAFFICKING

THE OSS: FORERUNNER TO THE CIA. The "multinational" business of drug trafficking can be traced back to the 1940s, even before the CIA was created following World War II. Before the creation of the CIA in 1947, Allen Dulles assembled the Flying Tigers, an inner clique within the Office of Strategic Services (OSS). Dulles had close ties with Eastern billionaire families, and he was able to run clandestine operations out of the White House.

The OSS-mafia alliance emerged soon after the agency was formed. The OSS was first headed by Earl Brennan who helped plan the Allied invasion of Sicily and Italy in World War II. During the war, He had close ties with the head of the Vatican's Vessel Operation, Monsignor Giovanni Batista Montini who was also an aid to Pope Pius XII. Montini suggested that Brennan recruit Italian exiles such as Masons business leaders, and mafia members to corroborate with the Allies in their invasion. In 1963, Montini become Pope Paul VI.

Colonel Paul Hellwell of the OSS began to smuggle heroin from Burma and sold it in ghettos in the United States. Grown in Burma and processed in Shanghai, OSS agents ran across this bonanza while attempting to bolster the right wing regime of Chiang Kai-shek and to prevent Mao Tse Tung from ascending to power. Flying Tigers were OSS mercenaries who were financed with secret funds. Hellwell observed how Chiang sold opium to Chinese addicts and used the revenue to purchase weapons for his troops. Hellwell created Sea Supply, an OSS proprietary company, out of Miami and used it to carry guns across the ocean to China. The opium was grown in Burma, so Hellwell moved on to Southeast Asia in order to consolidate his operation.

In the late 1940s, Hellwell was named the Burmese consulate in Miami and was able to secure a monopoly on opium in Burma. From there, opium was processed in Shanghai, and then it was exported to the United States on Sea Supply boats. In return, Hellwell shipped guns back to China.

The OSS used the mob to distribute heroin in big cities throughout the United States.

Another OSS connection was the German Gestapo. Dozens of leading Gestapo figures and SS spies were used. Their spy networks and personal war records could be used to survey and control the Soviet Union. After these Nazis arrived in Georgetown, they were used by the newly created CIA in a drug running role. They were educated at Fort Benning and then used extensively in Latin America by local militaries. They were partially funded by the revenue generated from Burmese heroin exported to China for refining, and then exported to ghettos in the United States. After Mao solidified his power in 1949 revolution, drug trafficking in China began to diminish, partially because the death penalty was carried out against convicted dealers.

The OSS did not confine itself only to the Far East. While the bulk of American heroin originated in Asia, smaller amounts were produced in Marseille by the Corsican syndicates in the 1940s. Drug trafficking was certainly not at a premium during World War II. Transoceanic shipping was disrupted during the war years as a result of submarine warfare. Consequently, the power of Marseilles' Corsican syndicates was weakened. In addition, Sicily's mafia was smashed by two decades of Mussolini's repressive regime.

THE CIA'S DRUG CONNECTION. After World War II, the OSS created a situation which helped revive the Sicilian-American mafia and the Corsican underworld. The alliance with the mafia was maintained by the CIA in order to check the growing strength of the Italian Communist Party. For example, the Corsicans in Marseilles smuggled raw opium from Turkey and refined it into high grade heroin for export to the United States. Marseilles relied on a handful of expert chemists who were able to produce high grade number four heroin. After the transformation of the OSS into the CIA, Marseille's Corsicans fell under the protection of the French intelligence service which allowed heroin trafficking to operate for another 20 years. By 1965, Marseilles syndicates were able to double their production and operated between 20 and 25 laboratories which produced 50 to 150 kilograms of heroin each month. It was estimated that 4.8 tons of pure heroin was exported to the United States in 1965 alone.

The American government was concerned that both the French and Italian communist parties would rise to power in free elections in their respective countries. On the homefront, the government was concerned of the rising strength of the New York longshoremen's union and a series of strikes which threatening to erupt a year after World War II ended. To counter the communist parties' influence in France and Italy as well as to stamp out the longshoremen's power in New York, the newly formed CIA turned to the mafia's drug traffickers. The mafia connection assured the CIA the resources which they critically needed: hit-men to help carry out their illicit operations and additional funds to help finance their activities.

After spending 10 years of a 30-to-50 year sentence in prison for drug trafficking, New York's mafia leader Lucky Luciano given clemency and released from Albany's Great Meadows Prison in 1946. In exchange, he promised to cooperate with American authorities. He returned to Italy and was able to build a black market which had been abandoned by the Genovese family. He then expanded his operations by forging close ties with the Marseilles syndicate. He imported raw opium from the Middle East and processed it in laboratories in Italy. Luciano's top deputy was Meyer Lansky who had first contacted Cuban dictator Fulgencio Batista. Luciano initially purchased 200 kilos of heroin and shipped it on to Cuba. Lansky was given a monopoly on Cuba's gambling operations plus assurances that Sicilian heroin could be shipped from Marseilles to Havana and on to the United States. In return Batista and his assistants received half the profits from the casinos. Lansky and Luciano chose Sicilian-born Santos Trafficante of Florida to run the Cuban gambling and drug business. Luciano made sure that Havana's prostitutes were addicted to heroin and paid them with diluted forms of the drugs as well.

The CIA armed and funded the Corsican syndicates to break up longshoremen's strikes in 1947 and 1950. Harry Bridges had been known for his leadership in general strikes in San Francisco in 1934, and he moved on to New York City where he worked to unionize dock workers. The CIA paid the mafia to assault and harass union leaders and workers. Some were even murdered. The CIA also used psychological warfare against the unions. Anti-union pamphlets, radio broadcasts, and posters discouraged workers from continuing the strike.

Meanwhile in Europe, the CIA continued to work with drug traffickers in its war to thwart the election of communists in democratic elections. By the late 1940s, Marseilles had become the postwar heroin capital of the Western world. And Italy's mafia still maintained its strength as the most powerful component in Europe.

The CIA's protection of the Corsican syndicate continued into the 1970s. Frank Matthews, one of the East Coast's prime heroin dealers, brought in $130 million annually. In 1973, he was finally arrested for drug trafficking in Las Vegas. Matthews was released on $325,000 bail and returned to New York with $20 million in cash. According to the Justice Department charges against nine of his suppliers were dropped at the insistence of the CIA which contended that prosecutions would jeopardize national security interests.

CIA OPERATIVES MOVE FROM FLORIDA TO ASIA

The Italian mafia continued to maintain a stronghold in the United States. In the 1950s, the CIA once again turned to the mafia to foil communism -- this time in Cuba. The very year that the right wing Batista government was overthrown, Operation 40 was organized as an assassination unit to kill Fidel Castro. Organized crime leaders Santo Trafficante and John Roselli, with the knowledge of Vice President Nixon, were heavily involved in importing drugs from Laos. After the failure at the Bay of Pigs two years later, Operation 40 was replaced by Operation Mongoose, a larger scale paramilitary organization. Its purpose was also to overthrow the Castro regime. The CIA officials who directed Operation Mongoose were Theodore Shackley and Thomas Clines. Felix Rodriguez, a Cuban refugee, was hired to be a member of a special assassination team. Rodriguez worked under Shackley in Miami, Florida. After the Bay of Pigs fiasco, dozens of anti-Castro sympathizers were indicted for drug trafficking.

After the defeat of the French at Dienbienphu in 1954, the United States quickly moved to fill the void. In that decade, over a thousand tons of opium was being cultivated in the Golden Triangle -- Laos, Burma, and Thailand. This amounted to 70 percent of the entire world's illicit opium supply. In addition, this marked the first time that number three heroin (three to six percent pure) was being refined. As a result, the Thai government launched an opium suppression campaign which compelled most of the planters to switch to heroin. In the 1960s large quantities of number three heroin were being refined in Bangkok and northern Thailand. It was during this decade that both Shackley and Clines were transferred from Florida to run CIA operations in the heart of Southeast Asia as well as in the heart of the world's largest heroin region.

During the Vietnam War, the White House drug team was headed by Lucien Conein who once had ties to Corsican drug dealers in Southeast Asia and Marseilles. The CIA urged Conein and the White House to accept a plan to carry out a series of assassinations against drug kingpins. According to a White House memo, "With 150 key assassinations the entire heroin-refining industry can be thrown into chaos."

However, the CIA's list included a hand-full of names of drug dealers in Southeast Asia, and none of them were the principal players. Additionally, the White House decided to concentrate in Turkey where less than 5 percent of the world's opium supply was grown.

KHUN SA AND THE GOLDEN TRIANGLE. During the heated cold war in Southeast Asia in the 1950s, large scale decisions were made by the CIA in its Langley, Virginia headquarters. The agency's operants were given a large scale of autonomy in the field. The agency did not ask questions as long as those on the payroll produced results. One of the major objectives of these factions was to gain control of opium trade in their regions. A large amount of duplicity, which included tortures and murders, occurred among various groups: CIA headquarters, its operants in the field, and drug lords.

After World War II the French returned to Indo-China and became directly involved in drug trade with the Hmong tribesmen in the highlands of Laos. At first, the French attempted to eliminate opium addiction in 1946. However, desperately short on funds, French intelligence and paramilitary organizations became involved in opium trafficking in order to finance their covert operations against Ho Chi Minh in the north. By 1951, French intelligence controlled most of the opium trade in the region. The French started top secret Operation X which resulted in a steady supply of Hmong opium into the dens of cities such as Saigon and Danang.

In 1950 President Truman implemented the Office of Policy Coordination (OPC) which approved a CIA invasion into southern China. This meant that CIA operants need to infiltrate various local tribal units particularly in the Golden Triangle -- Burma, Laos, and Thailand. The CIA recruited agents

such as William Colby who years later was elevated to CIA director. When CIA operants moved into the Shan states in the Golden Triangle region of northern Burma, opium growers operated only randomly. However, the region soon was transformed into one of the largest growing opium regions in the world. The CIA needed an alliance with the KMT, which had just been driven out of China by Mao Tse-tung a year before, and the Thai police in order to bolster its position in the region.

The KMT exported their opium harvests usually by mule train across the mountains or by unmarked American C-47 transportation planes to Thailand for processing. Some was flown on to Taiwan. In 1950 the CIA purchased bankrupt Civil Air Transport (CAT) for $950,000 and used their fleet of planes to run weapons to KMT General Li Mi in Shan province, and the planes returned to Bangkok filled with opium. Shortly afterwards, CAT was renamed Air America. General Phao Siyanan, head of the Thai police since a CIA orchestrated coup overthrew General Phin Choohannan in 1948, purchased most of this opium. Thus, the KMT became a pivotal force in opium trade in Southeast Asia. With CIA support, the KMT remained in northern Burma until 1961 when the Burmese army finally drove the right wing army into Laos and Thailand.

In 1951, Operation Paperclip, a joint CIA-KMT effort to reconquer China's Yunnan province, was approved. The CIA's first objective was to accomplish an intelligence-gathering mission inside China. In addition, the CIA trained and funded 10,000 KMT forces. Unmarked C-46 and C-47 transport planes began making supply drops into northern Burma. The next year KMT troops and some CIA operants crossed 60 miles into China but were forced to turn back after facing fierce resistance. The CIA also realized the importance of funding other smaller factions in the Shan states, so that no one element could consolidate absolute power in that region. Maintaining instability in the Golden Triangle prevented any one group from controlling and regulating opium trade.

However, American aid to the KMT soon dropped off significantly when drug lord Khun Sa began to extend his influence in the mountainous region of the Shan states just south of China. Khun Sa began his military career with the KMT when he was 18 years old and was trained in both arms and opium by the CIA-supported army. As Khun Sa extended his influence into the Shan states, the CIA was slowly edged out along the Burma-China border, and were no longer able to use that area too stage subsequent attacks into Yunnan province.

In the 1960s, thousands of KMT mercenaries made their way across the mountains of the Golden Triangle to eastern Burma. Khun Sa's army was defeated by KMT General Ouane Rattikone in the 1967 Opium War, and his troops fled into central Laos. Khun Sa was arrested and released at a later date, but by that time the size of his army had dwindled to about one thousand. Khun Sa not only lost major casualties among his troops, but he also lost his monopoly on opium trade in the Shan states.

The Opium War left Rattikone and the KMT in control of 80 percent of the opium trade in Burma.

During the duration of the KMT's dominance in northern Burma -- from the end of World War II to 1960s -- his CIA subsidized army increased opium production by nearly 500 percent from 80 tons to 500 tons annually. The Golden Triangle provided approximately 33 percent of the world's illicit opium trade.

The severe drought of 1978-80 took a heavy toll on illicit drug trafficking in the Golden Triangle. However, by the 1980s, opium trade became the most prosperous ever in that region. Even though Thai and Burmese military operations increased, heroin laboratories in the mountains in the two countries managed to operate without serious incidents. The Shan leaders became more splintered, and the Burmese Communist Party (BCP) collapsed. This opened the door for Khun Sa to return to the Shan states.

By the early 1970s, he recovered his lost territory in the central Shan states, but the BCP quickly moved into the mountain areas just south of the China border, posing a large threat to Khun Sa expansionist policy. Three factions began to position themselves: Khun Sa, Chinese warlord Lo Hsing-han, and the Shan State Army (SSA). Like Khun Sa, Lo Hsing-han began his army career in the KMT and emerged as one of the principle opium dealers in Shan province. In 1972, the Nixon administration branded him the "kingpin of the heroin traffic in Southeast Asia." After Khun Sa was defeated in the 1967 Opium War, Lo Hsing-han became the largest single opium merchant in the province.

The SSA was founded in 1958 and was political in nature. Its chief concern was to regain Ragoon and to abolish Shan authority in that region. It was not directly involved in opium trade. The size of its army was 2,700 and the troops were armed with American weapons which were purchased on the black market.

In 1973, the Burmese government disbanded its militia groups in Shan province. In an effort to consolidate his power in the region, Lo Hsing-han turned to moderate elements in the SSA for support in controlling. The two groups proposed that officials at the American embassy in Bangkok be informed that they intended to sell 400 tons of Shan opium for $20 million. The two groups also requested American support for the purchase of all opium controlled by smaller Shan factions in the Golden Triangle at a fixed price. They insisted that this would eliminate all heroin trade in the area.

However, Lo Hsing-han was arrested in 1973 by Burmese officials and charged him with -- not drug trafficking -- but high treason and rebellion. The following year, the Burmese government released Khun Sa, who had spent five years in solitary confinement, and returned him to his troops in Shan province. Now Khun Sa easily replaced Lo Hsing-han as the drug kingpin in the Golden Triangle.

Khun Sa forged ahead by forming an alliance with the conservative factions of the SSA and was involved in skirmishes with the revitalized KKT. Khun Sa once again he proposed that he purchase the entire Shan province opium crop. This request was rejected by the State Department after Congressional hearings took place in 1975.

In 1975, the SSA broke into two factions. The larger and more moderate group broke away from the conservative faction and joined the BCP. The other faction joined forces with fragments of the KMT and formed the Tai-Land Revolutionary Council. Furthermore, to complicate issues, several rightist independent armies combined to form the National Democratic Front (NDF), an anti-communist coalition which was made up of 13 groups.

In 1977, an agreement regarding the division of opium trade in the Golden Triangle was reached between Khun Sa and the leader of the revitalized KMT. Khun Sa was allowed to maintain a base inside Thailand, and this served as his headquarters for control of 40 percent of Burma's opium exports and the annual collection of $850,000 in transit fees from others who crossed through the region.

Between 1976 and 1978, the Burmese government, using American helicopters, began a series of military operations aimed at destroying the Shan armies and their opium operations. Government forces were able to destroy some poppy fields, but they did not enter BCP-controlled regions. The BCP controlled one-third of the area, and even though they were not involved in opium trade, they did allow private dealers to cultivate opium.

Opium production plummeted after 1975. After the United States withdrew from Vietnam, black market operations dwindled, making it difficult for Shan rebels to purchase weapons. In addition, between 1978 and 1980 the Golden Triangle was hit with two droughts. This was followed by two seasons of intense monsoon rains, reducing the region's opium production to a record low. The usual 600 ton opium harvests were cut to 160 tons in 1978 and 240 tons in 1979. Recovering from this two year failure, the region began to produce a bumper crop in the 1980s.

Khun Sa stated that Richard Armitage, at that time an envoy in the American embassy, financed drug smuggling in Vietnam and Bangkok from 1975 to 1979. CIA agents Daniel Arnold and Jerry Daniel trafficked weapons and drugs with Khun Sa. The operation was believed to be at its peak in 1975 and 1976 under George Bush. In a letter to George Bush, Gritz maintained that Khun Sa claimed that he had once engaged in narcotics transactions with Richard Armitage, who later became the Assistant Secretary of Defense, Shackley, as well as other American officials. Bush was head of the CIA in 1976 when Khun Sa said that he was selling drugs to top CIA officials. Gritz says that, strangely, nobody in the American government was interested in an investigation. Gritz later testified before the House Foreign Affairs Committee's International Narcotics Control Task Force.

By 1983, Khun Sa strengthened his forces, and opium production was on the rebound. With Hong Kong chemists and over ten refineries, Khun Sa increased his holdings, controlling 75 percent of Golden Triangle opium production. Khun Sa was able to defeat KMT forces, and he destroyed numerous heroin facilities. With a virtual monopoly on opium trade in the Golden Triangle, Khun Sa was only briefly attacked by Thai and Burmese government forces which were able to secure a small area. Khun Sa was forced to evacuate some of his heroin laboratories, but he merely moved them into Laos.

Khun Sa had eliminated all his rebel rivals, and by 1986 he was refining 80 percent of the opium harvest in the Golden Triangle. The king of opium trade, Khun Sa had risen to become the world's largest single heroin trafficker by controlling 60 percent of the world's illicit opium supply.

In 1986, Bo Gritz went to Burma with White House approval to meet with Khun Sa who supposedly had information on American MIAs. Khun Sa said that he wanted to end the opium and heroin traffic in his territory and to expose American officials involved in the drug smuggling. Gritz claimed that he took this message to the United States government and was told by Tom Harvey of the National Security Council that "there is no interest here" in the Khun Sa overture. Gritz had in his possession 40 hours of video tape of Khun Sa who "charged American officials, both past and present, with being the chief buyers of drugs produced in that part of the world." He also claimed that he wanted to stop drug trafficking, but that the United States government would not let him. Khun Sa said that the CIA were some of his best customers. He offered support to the DEA to alert them of drug movements, but this was rejected at the headquarters level.

In 1988, the government of Burma fell into the hands of the State Law and Order Restoration Council (SLORC). Its goal was to bolster the nation's economy by doubling opium exports, and within two years 60 percent of the world's heroin -- valued at $40 billion a year -- was exported from Burma.

Also in 1988, the single largest heroin seizure was made in Bangkok. The 2,400-pound shipment of heroin, en route to New York City, originated from Khun Sa in the Golden Triangle. Two years later in a meaningless gesture an American court indicted Khun Sa in absentia on heroin trafficking. He was charged with importing 3,500 pounds of heroin into New York City over the course of 18 months, as well as holding him responsible for the source of the heroin seized in Bangkok. Specifically, he was charged with being the owner of a 2,400 pound shipment which was intercepted in Bangkok en route to New York City in 1988. This was the largest single heroin seizure ever.

In 1990, Lo Hsing-han was released from prison and was welcomed back by the same factions which had driven him out. He met with Burmese government officials and soon thereafter opened 17 new heroin factories in the Golden Triangle.

By 1995, the Golden Triangle region of Southeast Asia remained the leader in opium production, yielding 2,500 tons annually. According to American drug experts, new drug trafficking routes from Burma through Laos, to southern China, Cambodia and Vietnam were drawn up.

In 1996, the SLORC cut a deal with Khun Sa. He had been indicted by the United States Justice Department six years before, but SLORC refused to extradite him. Instead, he was given the Burma-to-Thailand taxi concession and a 44 acre ranch where his son plans to build a gambling and shopping complex. The agreement also reportedly included a deal allowing him to retain control of his opium trade in exchange for ending his 30 year old war against the government. Underground activist groups, operating along the Indo-Burma border, have continued to purchase arms and ammunition from Khun Sa's soldiers.

VANG PAO AND LAOS. In Laos the CIA's complicity in drug trafficking resulted from its alliance with the Hmong tribes who, since the 1950s, had been used by the French to fight Vietnamese leftists. As early as 1959, CIA operative Lucien Conein stated that eight teams were training Hmong tribesmen on the Plain of Jars. In 1960 the CIA began recruiting units to patrol the border with China and even to send Yao and Lahu tribesmen into Yunnan province to monitor traffic and to tap telephone lines. Operating out of Vientiane, the CIA also sent recruits to the patrol the Vietnam border as well as to send Green Beret commando units into North Vietnam to sabotage the Ho Chi Minh Trail.

By far the largest goal of the CIA was to wage its secret war against the Pathet Lao in northern Laos. From 1960 to 1974, the CIA maintained a secret army of approximately 30,000 tribesmen in the mountains of northern Laos. This originated with Vientiane CIA station chief Shackley and his Clines, his assistant.

The first mission of the CIA was to place a puppet in power. The CIA needed to forge alliances with tribes and warlords inhabiting the northern Laos. In order to maintain its relationship with the warlords while continuing to fund the struggle against nationalistic Marxist movements in Laos and North Vietnam, the CIA first had to choose a career military official. The agency decided upon a career military leader, Lieutenant Vang Pao. Next, the CIA used several tactics to gain respect and support among the Hmong. Immediately elevated to a general, Vang Pao's power had to be solidified in order for him to gain political support among the tribesmen in Laos' scattered villages. First, the agency found a way for Vang Pao's son and daughter to marry the children of Touby Lyfoung, a prominent and popular Hmong cabinet member. Second, the CIA usually chose a popular Hmong leader, with whom the agency could work, for every tribal area as its commander.

To gain support from the Hmong, the CIA supplied the tribesmen with rice. This enabled them to concentrate on growing the cash crop of opium. The Hmong relied on support from Air America for their rice supplies. Thus, the air power became the essential factor which allowed the CIA to keep Vang Pao in power. After Vang Pao was able to consolidate his power, the CIA helped him to sustain an army of 30,000 men from a tribe of only 250,000 people. The CIA relied on the villagers to supply the manpower to continue to replace the wounded and killed. By the early 1970s 30 percent of the Hmong recruits were 14 years old; another 30 percent were 15 and 16; and the remaining 40 percent were over 45.

In return for providing recruits, the Hmong opium growers received CIA support and their economy flourished. Also, Vang Pao's control over the opium industry gave him more authority, especially when he needed to recruit young soldiers. Thus, the CIA relied on Vang Pao to supply soldiers in its secret war, and the CIA supplied his tribesmen with rice while opium was grown and frequently flown on CIA planes.

CIA operant Tony Poe was assigned as the chief adviser to Vang Pao and to supervise his secret army's operations. Poe promised Hmong soldiers one dollar for a Pathet Lao's ear and ten dollars for a severed head. On the one hand, Poe frequently refused to allow opium to be transported on Air American planes. On the other hand, he ignored the prospering heroin factories and never stopped any of Vang Pao's officers from using American facilities to manage illicit drugs.

Another CIA operant, Edgar Buell, was assigned to the Plain of Jars where a large portion of the secret army was trained. Buell became in charge of dispatching Air America planes to drop rice and other necessities to the Hmong. In addition Buell used his expertise in agriculture to improve the Hmongs' skills in the cultivation and production of opium.

While the United States was at its peak involvement in the Vietnam War, morphine base was being processed in the Golden Triangle and then exported to Hong Kong and Europe. In 1968 Shackley met in Saigon with Trafficante, Clines, and warlord Vang Pao, setting up a heroin smuggling ring to the United States. A Green Beret official speaking to Green Beret officers stated that "Shackley had been responsible for 250 political killings in Laos."

None of the opium refineries mastered the technique to produce high-grade number four heroin which is 90 to 99 percent pure. By 1969 expert chemists from Hong Kong were imported into the Golden Triangle region, and they produced limited amounts of high grade heroin for tens of thousands of American GIs in South Vietnam. By 1970 the amount of heroin available to Americans was unlimited. The opium harvests were transported by Vang Pao's officers and then flown on Air America UH-1H helicopters to processing plants in Vientiane and Long Tieng.

However, with the beginning of Nixon's Vietnamization policy in the months to follow, the market for heroin drastically dropped. Then Chinese, Corsican, and American syndicates began sending large shipments of number four heroin directly to the United States. As a result of these massive exports to the United States, the wholesale price for a kilogram of number four heroin in the processing plants in the Golden Triangle actually increased by 44 percent -- from $1,240 to $1,780 -- in less than one year. At the same time, the price of raw opium in the villages jumped from $24 to $45 per kilogram. In 1970 the number of heroin addicts in the United States reached 750,000. More than a thousand tons of opium was being raised in the Golden Triangle.

By 1973, the United States was losing in Vietnam and in Laos as well. The CIA was forced to import approximately 20,000 Thai mercenaries in order to replenish the exhausted Hmong troops who could not provide additional recruits. That yea,r the Laotian government signed a truce with the Pathet Lao, ostensibly ending the CIA's secret war. Slowly, the CIA abandoned over 300 landing strips and turned over its aircraft to the Laotian government. In 1974 on orders from the Laotian government, Air America abandoned its facilities. As Pathet Lao soldiers increased their presence in Laos, Vang Pao's military and dwindled to 6,000 troops. Usually, Vang Pao retreated rather than to fight, and eventually the Pathet Lao marched into Vientiane. Vang Pao finally agreed to flee to Thailand, and the CIA provided transportation for him and his top officers.

THE MUJAHEDDIN AND THEIR CONNECTION WITH PAKISTAN. After World War II, very little opium was being produced in Afghanistan. However, right wing dictatorships in neighboring countries thrived on opium production. In neighboring Iran, the powerful American and Anglo oil companies and drug dealers shared many of the country's resources. Intelligence agencies estimated that Iran was producing 600 tons of opium a year and had 1.3 million opium addicts. When Mohammed Mossadegh was elected prime minister and the shah was forced to flee, the new populist government moved to suppress opium trade. However, after a CIA coup placed the shah back on the throne, drug trafficking once again prospered until 1979 when an Islamic revolution brought Ayatollah Khomeini into power.

In Pakistan under King Mohammed Zahir, feudal estates scattered throughout the country maintained small opium fields. However, after a 1978 coup Mohammed Daoud seized power, and opium traffic began to expand rapidly. He was followed by Noor Mohammed Taraki, a reformer who worked to phase out the poppy fields and replace them with consumption crops. Opium production began to plummet, but Taraki was killed in a military coup in 1979. General Zia ul-Haq ascended to power, and he created the Inter-Service Intelligence (ISI) to oversee intelligence on the Afghan-Pakistani border.

The ISI pressured the CIA into accepting Zia's policies with the Mujaheddin across his border in Afghanistan. The ISI brokered a deal which brought about an alliance between the CIA and Gulbuddin Hekmatyar, the leader of a small guerrilla unit in Afghanistan with close ties to the Pakistani government. In the next ten years half of American aid to Afghanistan went to this group. Hekmatyar eventually proved himself brutal and corrupt, becoming one of the premier drug dealers in that region.

Islamabad CIA station chief John Reagan met with Hekmatyar in May 1979, seven months before the Soviets moved into Kabul, and agreed to make the first of many shipments of arms to the rebel army. Over the next two years, CIA covert aid increased tremendously. Islamabad soon became the largest foreign CIA station to run a covert war. Within ten years the United States had funneled in $3 billion in aid to the Mujaheddin, and the CIA had provided the rebels with $2 billion in covert aid. Sixty percent of those funds were given directly to Hekmatyar who purchased weapons in order to protect his opium fields. Pakistani General Fazle Huq was assigned to overlook military operations near the Afghan border. Huq ensured that Hekmatyar received the bulk of CIA arms shipments, and he also protected his 200 heroin laboratories. In 1982 Interpol identified Huq as a principal catalyst in Afghan-Pakistani opium trade.

Very little heroin was refined in Pakistan before the rise of the Mujaheddin emerged in 1979. Then the guerrillas began to expand their opium production and shipped the raw drug to Pakistan border refineries for processing into heroin. They sold it to Pakistani refiners who operated under the protection of General Fazle Hug, the governor of the province near the Khyber Pass and adjacent to Afghanistan. Trucks from the Pakistan arm's National Logistics Cell (NLC) arrived with CIA arms from Karachi and returned loaded with heroin. They were protected by the ISI and therefore protected from vehicle searches.

The Reagan and Bush administrations frequently placed the blame for opium trade on the Soviets. However, it was the Mujaheddin and Pakistanis who were directly involved in trafficking drugs. Zia's personal physician, Dr. Hisayoshi Maruyama, was arrested in Holland with 17.5 kilos of high grade heroin. Haji Ayub Afridi, one of Zia's associates who had served in the Pakistani General Assembly, purchased large quantities of opium from the Mujaheddin. Another Zia ally, Hamid Hasnain, vice president of one of Pakistan's largest banks, also ran a drug ring.

By the 1980s, American aid to Afghan rebels declined, so their leaders expanded opium production in order to maintain their armies. In southern Afghanistan, Nasim Akhundzada controlled the most fertile and irrigated areas. He became known as the "King of Heroin" and controlled most of the 250 tons of opium in his province. Meanwhile, Pakistan became one of the world's largest addict populations in the 1980s.

When the Mujaheddin first emerged in Afghanistan in 1979, there were about 200,000 drug addicts in the United States. As poppy fields quickly expanded in the areas which they controlled, that number had jumped to 450,000 by 1981. In 1989 Afghanistan and Pakistan produced and shipped 50 percent of all the heroin in the world. Between one-third and one-half of the heroin used by addicts in the United States was imported from heroin growers in Mujaheddin controlled areas. The annual consumption of these Afghan narcotics amounted to roughly three tons, and it was valued in the billions of dollars.

Hekmatyar's chief rival in the opium business was a fellow Mujaheddin, Mullah Nassim. In 1989, Hekmatyar successfully plotted his assassination and consolidated his position as the principal Afghan drug lord.

In 1990 Time magazine ran a story claiming that the United States "was embarrassed by the widely bruited connections between the drug trade and the elements of the insurgents, including such fundamentalist Islamic groups as Gulbuddin Hekmatyar Hezbi-I Islami." Then the Washington Post printed a story charging that American officials had refused to investigate charges against Hekmatyar and Pakistan's ISI. Yet the CIA ignored the allegations since it would have diminished their effectiveness in running covert operations in the region.

Civil war has raged since the 1989 withdrawal of Soviet forces. Although the United States government withdrew military support for the Mujaheddin, various Afghan ethnic and political factions have competed for power. In 1994 the extreme fundamentalist Sunni sect known as Taliban emigrated from Pakistan and settled in Afghanistan's outlying mountains around Kabul. Supported by the United States, Taliban captured the capitol and declared Afghanistan an Islamic state in September 1996. The Taliban sect under Mullah Omar immediately imposed a campaign of tyranny in the areas under its control. The Taliban continued to thrive on the opium business which amounted to twice the size of the government's budget.

In addition to Taliban's influence in Afghanistan, large areas of the north were controlled by another warlord, Abdurashid Dostum. In May 1997, a coup within Dostum's forces led by General Abdul Malik led to Dostum fleeing the country. They immediately announced a peace agreement had been reached to reunify Afghanistan under Taliban control, and a delegation of 60 Taliban leaders arrived to sign a peace treaty. The Taliban victory was celebrated by Pakistan. In addition, corrupt factions within Pakistan's security forces benefitted by the opium trade which increased under Taliban rule.

Taliban has been hostile to Russia, Shiite Muslim Iran, the moderate Sunni Islamic republics of Turkmenistan, Uzbekistan, and Tajikistan, and Turkey.

NUGAN HAND BANK: THE CIA-DRUG CONNECTION IN AUSTRALIA

In the 1970,s drug profits from the secret war in Laos were funneled into the Nugan Hand Bank. Shackley denied that he maintained a secret account in this Australia-based bank, which was founded Michael John Hand and four officials from CIA-owned Air America. In Chiang Mai Thailand's branch office, the director of the bank claimed that he handled $2.6 million in drug revenues in less than six months. He maintained that the money was laundered for Laotian Meo tribesman and other heroin dealers. According to the Australian Royal Commission, Nugan Hand was the principle conduit for laundering the money for major narcotics transactions from the Golden Triangle and importing heroin into Australia in the 1970s. The Nugan Hand bank also moved money globally for the CIA. In 1980 the Nugan Hand Bank collapsed, $5 billion in debt.

The Nugan Hand Bank had several branches in Saudi Arabia, Europe, Thailand, and South America. Several of the bank's officials had CIA connections. The larger Bangkok office was run by the former CIA chief of that city. In Sydney it was a CIA bank in all but name. Among its officers were a network of United States generals, admirals and CIA employees, including former CIA Director William Colby, who served as one of its attorneys. Some of its branch managers included Air Force General LeRoy Manor, who later corroborated with Air Force General Richard Secord and Colonel Oliver North on covert actions to liberate the 52 American hostages taken in Iran in 1979. In addition Patry Loomis, a CIA operative who worked under CIA station chief Shackley in Saigon, was a close associate of Nugan Hand's representative to Saudi Arabia, Bernie Houghton. Loomis also helped Ed Wilson, later to be implicated in Iran-Contra, recruit Green Berets to train Libyans. Wilson was also an associate of Houghton. In the mid-1970s Wilson used the Nugan Hand Bank and worked with Houghton to supply 3,000 weapons and 10 million rounds of ammunition to the CIA-backed rebels in Angola.

In 1975, Wilson went to work for Task Force 157 was set up to attempt to topple the left-leaning Labour government of Gough Whitlam. Task Force 157 was set up by Henry Kissinger as a mini-CIA. It was actually separate from the CIA and probably was set up by Kissinger so he could deny any connection between what the Task Force 157 was doing and the CIA. The personnel of Task Force 157 included Wilson with his numerous connections to Nugan Hand Bank officials and Shackley. Michael Hand, an ex-American Green Beret, went on from the Green Berets to work in intelligence work for the United States government.

The concept of Task Force 157 were two-fold: first, to set up operations against the Whitlam government. Second, to go ahead with using Australia as a base for certain clandestine United States operations such as arms dealing and smuggling of contraband goods and using the Nugan Hand Bank as the cover.

On two occasions Admiral Bobby Inman, former deputy director of the National Security Agency and deputy director of the CIA, said on that he expressed deep concern that investigations of Nugan-Hand would lead to disclosure of a range of dirty tricks played against the Whitlam government. CIA operant Christopher Boyce said: "If you think what the agency did in Chile was bad, in which they spent 80 million dollars overturning the government of Chile there, the Allende government, you should see what they are doing in Australia."

In April 1982, Bush met with Australian Labor leader Hayden to discuss the CIA's role in the Nugan Hand Bank. Many Australians could not understand why the CIA wanted to bring down the government of a loyal ally, whose Labour party was striving to make social reforms, especially since it was the war-time Labour administrations which had built up the special relationship with America.

THE PEGASUS SAGA

The Pegasus program, initiated by President Harry Truman to spy on other CIA units, revealed numerous illegal activities within the agency. Since the time of its inception, the role of Pegasus substantially changed. Pegasus became an integral part of a drug trafficking operation.

Gene "Chip" Tatum was initially recruited as a member of the top secret Pegasus unit during the Vietnam War. He and 13 others were assigned to Operation Rock, a covert action to secretly enter Phnom Penh, Cambodia in January 1971. The unit received its briefings from various CIA operatives as well as from General Alexander Haig and CIA Saigon Chief William Colby. The objective of Pegasus was to destabilize the Cambodian government by sabotaging the city's airport. They captured and murdered some unarmed North Vietnamese military personnel.

Tatum claimed that he and the other 13 members of Operation Red Rock were also to be killed by Montagnard tribesmen under orders of the CIA. Then their bodies were to be "disappeared." Thus, American involvement in Cambodia could be denied. However, this CIA plot was not carried out, and the members of Operation Red Rock survived.

A copy of the "Pegasus files" was given to Congressman Larry McDonald, a member of the Joint Armed Services Committee between 1976 and 1982. McDonald stated that he would reveal startling evidence about the CIA, but ironically, he was killed when KAL 007 was shot down over the Sakhalin Islands.

Tatum continued to serve as a CIA operative for the next 20 years. He continued as a member of Pegasus, becoming a deep-cover CIA pilot involved in covert operations, trafficking cocaine during the contra war. Between the early 1980s and 1990 Tatum became directly involved in the drugs-for-arms scam. He claimed that the marked-up arms, which were sold to Iran, were traded for cocaine which was flown back to American bases, especially to Arkansas, Ohio and Colorado.

As a CIA pilot, he was told that he would be contacted by "a man called North." North, who covertly helped to arm the Contras as well as being one of the principle conduits for drug trafficking. Tatum claimed that North's operation not only involved the Colombian cartels, but it also involved the shipments of cocaine into the United States. In 1985 Tatum flew out of Palmerola Air Base in

Honduras. On one flight in February, he was instructed to contact Felix Rodriguez who was a pivotal player in Iran-Contra. Rodriguez informed Tatum that he was to support covert Pegasus missions.

When Tatum returned to his home base, he contacted North to advise him of the cocaine. North replied that it was "a trophy of war" and that it was not the Contras -- but the "Sandinistas ... selling it to fund the military." North added by stating that "the cocaine was bound for the world courts as evidence" against the Sandinistas. Two years earlier, Tatum had flown similar containers, which were labeled "Medical Supplies," into Little Rock Air Force Base, and the crates were picked up by Dan Lasater, a close friend of the Governor Clinton. Tatum admitted that he flew several missions out of the American base in Honduras and picked up cocaine containers regularly, sometimes violating Nicaraguan airspace. At this time Tatum began to document all Pegasus trips on the back of his flight logs.

Not long after his association with North, Tatum was transferred to New York to set up a money-laundering operation for funds from the Iran-Contra cocaine pipeline. He was named president of three proprietary construction companies: American National Home Builders, American Constructors, and American Homes.

In addition to North and Rodriguez, Tatum was to take orders from Amiram Nir, a former Mossad agent and advisor to Vice President Bush. Tatum was ordered to fly a 200 pound sealed cooler, marked "Vaccine," to a Contra camp on the Honduran border. When the cooler was being transferred to an Air Force C-130 transport plane, it accidentally broke and 100 bags of cocaine were exposed. Not surprised by this discovery, Tatum stated that he had suspected that the CIA was involved in trafficking cocaine two years earlier.

Pegasus also involved the "neutralizing" of pivotal government leaders during the Contra war. For example, a struggle for power emerged among some Contra leaders. The United States supported Adolfo Calero, while Enrique Bermudez also sought a prominent position in the Contra hierarchy. When Bermudez threatened to expose the role of Vice President Bush in drug trafficking, Tatum claimed that Bush ordered Bermudez assassinated.

Another assassination was carried out by Pegasus against Honduran General Gustavo Alvarez Martinez, the commander-in-chief of the armed forces. When Alvarez demanded a bigger split of the cocaine profits, he was murdered in 1989. Tatum also admitted his involvement in the assassination of Amiram Nir, a former Israeli Mossad agent. After Nir was called to testify before a Senate subcommittee, his plane was shot down by missiles from Tatum's helicopter.

Another Pegasus operation occurred soon after the 1990 Nicaraguan elections. President Bush hand-picked Violetta Chamorro to be the new "president," and it took a 15 party coalition and $12 million from the Bush administration to defeat Sandinista president Daniel Ortega. After Chamorro's victory, Tatum stated that another Contra leader, whom he would not name, requested that Bush give him a key position in the new government. By refusing to place him in the Chamorro government, Bush put himself in a vulnerable position. This Contra leader could expose Bush's involvement in drug trafficking. Thus, a Pegasus unit was assigned to disgrace him in early 1990. Pegasus used the odorless and tasteless drug scopolaphine, which would prevents one from recalling anything which occurred while under its spell. Tatum stated that the former Contra leader was invited to a luxury hotel as a guest of Bush. After the CIA administered the drug, the Contra leader was introduced to an attractive "blonde," and the two went into a bedroom where a hidden video camera recorded their sexual activity. It turned out that the "blonde" was a male prostitute from New York, and he was later killed that evening. According to Tatum, the scopolaphine worked. Weeks later, the Contra leader was given a copy of the video tape which revealed his homosexual acts.

Tatum claimed that in 1992 Bush instructed him to "neutralize," presidential contender Ross Perot, but he refused to do so. Tatum turned over a copy of an incriminating tape to Bush, explaining that it would not be publicized as long as the plot was not carried out.

As recently as 1994, Tatum was contacted by North, Felix Rodriquez, and CIA director William Colby and was told to surrender all documents and tapes. Tatum refused to do so. Tatum had turned whistle blower. The next year, he was charged with treason. At his trial his attorney refused to call even one of the 80 witnesses Tatum had requested. Later, the attorney admitted that he had been pressured by the Department of Defense. The charge of treason was subsequently changed to that of fraud. Tatum was found guilty and was sentenced to serve a 15 month sentence. In March 1996, an additional charge - conspiring to embezzle - was brought against him. Found guilty once again, Tatum was sentenced to a 27 month concurrent sentence.

THE CIA-CONTRA COCAINE TRAIN

After George Bush succeeded William Colby as the head of the CIA under President Ford, Bush appointed Shackley to be his "Chief of Covert Operations Worldwide." As the Vietnam War was ending Shackley left Southeast Asia in 1972 to head CIA activities in the Western Hemisphere. One of Shackley's first assignments was to sent Ed Wilson and Manuel Artime to meet with right-wing dictator Anastasio Somoza of Nicaragua. However, Somoza's totalitarian regime lasted only another seven years before being overthrown by the Sandinistas.

In the 1980s, 150 tons of cocaine a year were flowing through Latin America. That generated a business of $29 billion a year and was 12 to 13 times more than America's largest corporations. Prior to the creation of the Contra drug pipeline, the first to profit from drug trafficking were Bolivia's "cocaine coup" government of 1980-82. They werte followed by the Medellin cartel, the Panamanian government, the Honduran military and Miami-based anti-Castro Cubans.

Two months after Reagan's inauguration in 1981 the CIA launched its secret war in an attempt to overthrow the Sandinista government. Soon thereafter, the arms-drug caper began. The drug of choice in the 1960s and 1970s was heroin -- imported from Southeast Asia. Then in the 1980s, the primary addicting drug became cocaine, and its source was Latin America, the new hub of CIA activities.

In December 1981, Vice President Bush met with the National Security Planning Group in the White House. They discussed and approved a $19 million expenditure to Argentina for the creation of a 500 man anti-Sandinista Contra force. In April 1982, Bush met with Australian Labor leader Hayden to discuss the CIA's involvement with the Nugan Hand Bank in Australia. Nugan Hand was a money-laundering machine for the Southeast Asia heroin operation that began during the Vietnam War. Defense Department spokesman Richard Armitage acted as bagman, carrying cash from Bangkok, Thailand, to Australia.

The first publicly known case of contra cocaine shipments appeared in government files in an October 22, 1982 cable from the CIA's Directorate of Operations. The cable passed on word that American law enforcement agencies were aware of "links between (a United States religious organization) and two Nicaraguan counter-revolutionary groups (which) involve an exchange in (the United States) of narcotics for arms." The material in parentheses was inserted by the CIA as part of its declassification of the cable. The name of the religious group remained secret.

Over the next several years of the Reagan administration, the CIA learned of other suspected links between the Contras and drug trafficking. Ironically, "the war on drugs" became an important part of Reagan's domestic agenda. While the United States sent military aid southward to its surrogates fighting the Sandinista government, the rate of cocaine being transported northward into the states quickly escalated. The CIA was involved in a variety of ways -- by air, land, and sea -- in bringing cocaine into the United States.

CIA operative Gunther Russbacher, who was highly opposed to drug capers, stated that he was at high level meetings which involved drug dealers in Colombia. Russbacher stated that drug kingpins divided their territory into two large groups, the Cali and Medellin cartels. Operation Snow Cone was the CIA's primary trafficking operation in Latin America. Under this umbrella, Operation Watch Tower was formed. This consisted of low frequency radio beacons which allowed aircraft, loaded with cocaine, to navigate undetected at low altitudes between Colombia and Panama. The CIA used both Boeing 727s and C-130s which were flown by CIA or commercial pilots. According to Russbacher, two captains from United Airlines and one Pan American pilot supplemented their base salaries by flying drugs into the United States.

In 1984, CIA Inspector General Richard Hitz reported that the CIA even intervened with the Justice Department to block a criminal investigation into a suspected Contra role in a San Francisco-based drug ring. In December 1985, Robert Parry and Brian Barger wrote the first news article disclosing that virtually every Nicaraguan contra group had links to drug trafficking. In that Associated Press dispatch they noted that the CIA knew of at least one case of cocaine profits filtering into the Contra war effort, but that DEA officials in Washington claimed they had never been told of any Contra tie-in.

After the AP story was released, the Reagan administration attacked it as unfounded and the article was largely ignored by the rest of the Washington press corps. However, it did help spark an investigation by Kerry. Years later in 1995 the Clinton administration quietly rescinded Casey's

narcotics exemption.

THE CONGRESSIONAL SELECT COMMITTEES. In 1987, a year after the Iran-Contra scandal broke, two committees convened on Capitol Hill. In February John Kerry of Massachusetts persuaded the Senate Foreign Relations Committee, of which he was a member, to launch an official investigation under the auspices of the Subcommittee on Terrorism, Narcotics, and International Operations which came to be known as the Kerry committee. Kerry also was able to expand the probe to include the possible role of foreign governments in drug trafficking.

In addition the Senate Select Committee, chaired by Senator Daniel Inouye of Hawaii, also investigated alleged illegalities during the Contra War. The committee called very few witnesses, and those who were called were usually asked superficial questions.

American military personnel, business people, and mercenaries kept the Contras supplied while the Boland Amendment forbade military assistance after 1984. However, many of these important players never testified before the Iran-Contra committee.

According to Florida federal public defender John Mattes, who investigated the resupply network, the Iran-Contra committee made a mistake in questioning only the high officials and did not talk to the lower echelon personnel who aided in the resupply effort. Mattes said that the Congressional committees went to the conspirators North and Poindexter and merely asked if they did anything wrong or if they were guilty of a crime. They never interviewed any mercenaries to question them whom they worked for.

THE COSTA RICA CONNECTION. The arms-for-drugs operation also thrived in Costa Rica. When the Southern Front against the Sandinista government was established in 1983, Costa Rica was ill equipped to deal with the threat posed by the Colombian drug cartels. Costa Rica had no military and its law enforcement remained limited. Its radar system was so poor that contra planes could fly in and out undetected. The government of Costa Rica only employed civil guards who were underpaid and easily bought.

By 1985, Associated Press was running stories which stated that the CIA and contras were involved in drug trafficking. Two years later in 1987, CIA chief for Central America, Alan Fiers, testified that numerous people were involved in drug trafficking. Fiers was largely responsible for cutting off CIA aid to Eden Pastora in 1984 when it appeared impossible that he would fall in with the rest of the contras. Fiers testified before a Congressional committee in 1991 that other higher up military and White House personnel were well aware of drug trafficking by the Contras. Fiers testified: "With respect to (drug trafficking) by the Resistance Forces. ... It is not a couple of people. It is a lot of people."

The 144-page report included a litany of drug operations out of various Latin American countries. Most of the narcotic traffic was directed by Contra and CIA officials. Morales testified before the Kerry committee that Gary Betzner, his best pilot, flew arms to the Contras from the Fort Lauderdale Airport to Costa Rica. Morales stated that his planes returned frequently loaded with "about 400 or so kilograms of cocaine." Morales rewarded the Contras with $400,000 in cash and checks in October 1984. By the end of 1985, he swore that cash contributions to the Contras were $4 million to $5 million. When Kerry asked about the origin of the cash, Morales said that "about 100 percent" was drug money. The Kerry report concluded: "There was substantial evidence of drug smuggling through war zones on the part of the Contras, Contra suppliers, Contra pilots, mercenaries who worked for the Contras, and Contra supporters throughout the region."

A number of Costa Ricans also became drug traffickers for the Contras. Jaime "Pillique" Guerra owned a crop dusting service as well as an aircraft business in northern Costa Rica. He refueled and repaired planes which originated in Panama and were carrying weapons to the El Salvador regime in its civil war against the FMLN. These planes carried narcotics as well as weapons. Werner Lotz, one of the pilots, was subsequently convicted of drug smuggling. He explained that the drug traffickers were competing over their share of the profits. He stated that the government guards could be easily bought off.

Another Costa Rican pilot was Gerardo Duran, who flew a number of missions for the Contras' Southern Front. However, the United States eventually severed ties with him after he was indicted for narcotics trafficking. In 1987 he was convicted and imprisoned in Costa Rica.

At a 1986 Costa Rican drug trial, CBS News reported that the United States government presented wiretapped telephone conversations with contra leader Huachen Gonzalez. He discussed the large amounts of cocaine which the contras were sending from Costa Rica to the United States. Also in 1986 the Costa Rican government arrested a Cuban exile carrying 204 kilograms of cocaine from an airstrip. He denied any role in these operations but stated that the Contras had asked him to smuggle in arms.

THE JOHN HULL CONNECTION. Hull's 8,000 acre ranch, located in northern Costa Rica and just south of the Nicaraguan border, was a refueling and storing place for cocaine which originated from the Medellin and Cali cartels in Colombia. Hull was given a $375,000 "loan" to a build a lumber mill on his ranch. He owned six airstrips which served as a base for the shipment of narcotics. He kept the Contras fed and housed. He also claimed that he could account for the Contra money which was handed down by Contra leader Adolfo Calero.

In July 1983, Hull traveled to Washington, D.C. to convince members of Congress that Pastora could not be trusted since he was a front for the FDN. One of the offices which he visited was that of Senator Dan Quayle of Indiana He was introduced to Quayle's assistant, Robert Owen, and to North. Subsequently, Owen resigned from his position with Quayle and started the United Nicaraguan Opposition (UNO).

One of Pastora's former pilots, Geraldo Duran, told the Kerry committee that he had been arrested in 1986 in Costa Rica for flying drugs to the United States. When the CIA dropped Pastora in 1984, it had to find another source through which to work. That turned out to be Jorge Morales who conspired with an American, John Hull, who owned a multi-acre farm in northern Costa Rica.

A leadership struggle within the FDN developed early in the Contra war. Eventually Pastora, leader of the southern front operating out of Costa Rica, broke ranks with Adolfo Calero who was the White House's choice to run the Contras. As a result of a leadership struggle in the FDN, Pastora soon fell out of good grace with the umbrella Contra organization which operated out of Honduras.

Hull was also aided by two Americans, William Crone and Ian Kniloch, the chief of the Contra's air logistics. Both worked with a paramilitary group known as Huerta Norte. Another Hull neighbor was Bruce Jones who owned a 55-acre ranch next door. Jones testified that Hull received 5,000 rifles, 5 million rounds of ammunition, hand grenades, mines, and mortars from the contras. Jones was a liaison between the CIA and Contras for whom he was supplying millions of dollars in arms. He testified that between May 1982 and May 1984 approximately 100 deliveries of arms and supplies were coordinated by him and Hull. These supplies were kept on Hull's ranch. Jones maintained that when the planes arrived, he would help unload the drugs and arms in five or ten minutes.

In the 1960s, Ronald Martin worked for the CIA in Miami along with James McCoy, another ex-attaché to Nicaragua. When Contra aid was legally cut by the Boland Amendment in 1984, Martin began organizing North's role in raising arms for the Contras. However, Martin was shut off when North began to use Richard Secord as the arms broker. According to Calero, Martin and McCoy received $2,095,000 for arms from North. Martin's attorney stated that the amount was closer to $15 million or $20 million.

At least five witnesses testified to the Kerry committee that cocaine was loaded onto planes at John Hull's ranch. The committee also was told that Hull received $10,000 a month as a courtesy from Oliver North. Yet the Justice Department took no action against Hull for either obstruction of justice or for drug trafficking. In 1989 Hull was arrested in Costa Rica, but the charges against him for trafficking 2,500 kilograms of cocaine were dropped. He was declared a persona non grata and moved to Miami. After 1988 the Justice Department reluctantly indicted some people working for Hull, but soon afterwards these too were dropped.

Felipe Vidal and Rene Corvo were Cuban-Americans involved in transporting arms to Hull's ranch in return for drugs. Revenue from the cocaine was used to purchase military equipment, ammunition, and explosives for the Contras. Corvo testified to the Justice Department that paramilitary supplies were stored in the home of Frank Chanes in Miami and in the garage of Corvo. However, no charges were ever brought against Corvo. Witnesses testified that Corvo stored loaded guns on his premises and that he told friends that he flew clothing and medical supplies to refugees in El Salvador.

Ex-CIA agent Jose Fernandez testified to the Kerry committee that Vidal and Corvo were agency operants. He stated that both were involved in the illicit drug business and that the CIA's duty was to protect them. Vidal was called a CIA contract agent who had been arrested numerous times in Miami on narcotics and weapons charges. All this evidence gave the Kerry committee adequate evidence to implicate Vidal, Corvo, North, and others as being part of an arms-for-drugs conspiracy.

Between 1983 and 1986, numerous pilots made flights out of Hull's ranch and returned to the United States with millions of dollars in drugs. Many flights landed at Ilopango Air base in El Salvador and at Hull's ranch. A convicted drug smuggler admitted flying 500 kilograms of cocaine from Hull's ranch to the United States. "It was arms down, cocaine back . . . with full knowledge of the CIA and DEA."

According to the Kerry report, the main front set up by the CIA that operated out of Florida was SETCO Air. This was a CIA-operated company which ran arms down to Honduras and returned with cocaine. The Kerry report stated that SETCO was the principal company used by the contras to transport supplies and personnel to the FDN, carrying at least a million rounds of ammunition, food, supplies, uniforms, and other military supplies for the Contras from 1983 through 1985.

Peter Glibbery, a mercenary hired by Hull to train contras on his ranch, told a Costa Rican court that he was arrested after Hull asked him to set up a Contra training camp on his ranch. He was convicted and imprisoned for violating Costa Rican neutrality laws and illegal possession of explosives.

Glibbery said that Hull informed him of a proposed bombing plot at the American embassy in San Jose. According to Glibbery, Hull claimed that mines were needed to do the job. However, Glibbery's account of his experience on the Hull ranch changed. During a trial in a suit brought by Hull against the two American journalists Avirgan and Honey, Glibbery refused to discuss Hull's involvement in the assassination plot.

Glibbery told a Costa Rican court that he had met Hull and Posey in March 1985. The next day, Glibbery said that he flew to Costa Rica with Hull and the mercenaries. He said Hull identified himself as the liaison officer between the CIA and the FDN. Glibbery told Honey and Avirgan that in April 1987 that Hull had threatened to kill him if he did not repudiate the evidence which he had given to the United States federal investigators.

In May 1987, an Iran-Contra select committee team went to San Jose, Costa Rica but failed to interview Hull. It turned out that they merely called him on the telephone from San Jose, just 30 miles from his ranch. Hull never testified to either congressional committee. However, he could have told the congressional committee who ran the operation and who authorized it. Hull could also have responded to allegations that those running the supply lines through his ranch were engaged in drug trafficking. Hull received $10,000 a month from Contra leader Calero, according to public testimony by Owen. Hull also received $800 a month from the CIA to pay for bodyguards during a time the agency was prohibited from using funds to supply the Contras. Thus, no legitimate congressional investigation was ever launched.

CELERINO CASTILLO. In 1979, Castillo was hired by the DEA, and after a successful conviction, he was transferred to Central America. After Reagan launched his war against the Sandinistas two years later, Castillo immediately became involved with numerous drug dealers, most of whom were also hired to run arms to the Contras.

Castillo's first encounter was with Socrates Amaury Sofi-Perez, a former Bay of Pigs veteran, who operated a shrimp business in Guatemala City. He smuggled drugs packed in frozen shrimp into Florida and laundered the profits for the Contras. Castillo also had ties to Gerard Latchinian, an international arms dealer. In 1984 Latchinian was arrested for using proceeds from a $10 million cocaine deal to help finance the assassination of Honduran President Roberto Suarez Cordoba. Latchinian's partner was General Jose Bueso Rosa who helped train Contra soldiers in Honduras.

Another associate was Luis Posada Carriles who was arrested in the 1970s for carrying out murders while he was an agent for Venezuela's DISIP or secret police. After bribing himself out of prison in 1985, Posada was flown by the CIA to El Salvador and paid $3,000 a month by the agency. Posada arranged for pilots to fly weapons to Contra bases in El Salvador and Costa Rica as well to bring drugs on their return trips into the United States. Posada also worked with Luis Rodriquez who operated Costa Rica's Frigoficos de Puntarenas, a shrimp business which was used as a front to provide $260,000 in aid to the Contras.

Hugo Martinez was yet another one of Castillo's friends who helped to develop flight plans for contra resupply missions. He informed Castillo that most of the pilots bringing weapons into Ilopango as well as to Contra camps in Honduras and Costa Rica were involved in smuggling drugs back to the United States. One such pilot was Carlos Alberto Amador who had a long record of drug trafficking. Another was Carlos Cabezas whose drug runs had been published in the CIA Inspector General's report which was published in January 1998. At a December 1981 meeting with members of the inspector general's staff in San Jose, Costa Rica, Cabeza explained how he raised cocaine money for the contras. Present at that meeting was Julio Zavala, involved in the San Francisco "frogman" case where 430 pounds of cocaine were seized near the Golden Gate Bridge. Zavala asked Castillo to be a middle man in collwecting money from San Francisco drug dealers and flying it back to Central America. Cabezas also set up a network of Contra "mules," such as airline stewardesses, to bring small quantities of cocaine into the United States. Another drug dealer attendung the December 1981 meeting in San Jose, was Troilo Sanchez who instructed Cabezas to deliver drug money to help feed Contra troops and to support their families.

Castillo met with Vice President Bush at a Guatemalan embassy reception in January 1986. Bush asked what his business was in Central America, and he replied that he was investigating cocaine trafficking. He informed Bush that drug trafficking was occurring at Ilopango in El Salvador. Bush responded by smiling as he shook his hand, and then he walked away.

In a February 1989 memo to his DEA superior in Guatemala, Castillo detailed how known traffickers with DEA files used two hangars at the American military installation and how they obtained United States visas despite their backgrounds. According to Castillo, the CIA owned one hangar and the NSC ran the other.

In 1994 Castillo said that large quantities of cocaine were being brought into the United States to support the Contras. We claimed that he witnessed cocaine shipments and boxes full of money. Castillo maintained that he knew the names of traffickers as well as their destinations, flight paths, tail numbers, and the date and time of each flight.

According to the Kerry report a March 1987 memorandum stated that a number of people, who supported the Contras and who participated in contra activity in Texas, Louisiana, California, and Florida, as well as in Honduras, Nicaragua, and Costa Rica, claimed that cocaine was being smuggled into the United States. They stated that it was part of the same infrastructure which procurred and transported weapons for the Contras.

THE GEORGE MORALES CONNECTION. In the early 1980s, Morales was a well known contra drug trafficking, transporting cocaine and marijuana from Latin America northward into the United States. In May 1986, Morales was to meet with Vice President Bush to discuss a secret operation. However, the appointment was canceled when the Iran-Contra scandal was about to leak to the public. Morales was dismissed from the CIA and was later was indicted.

Morales testified before the Kerry committee that he was well known to Colombian drug traffickers and that his ranch was the key base of an operation which sent cocaine to Miami in exchange for contras arms. Morales also testified that he had delivered 40 M-79 grenade launchers which were flown from Miami to Ilopango Air Base in El Salvador.

Morales also told the Kerry committee that he sent approximately $4 million in drug money to the contras. Morales' story is corroborated by his pilots such as Gary Betzner who made several runs in 1984 from Florida to airstrips in Costa Rica. On one occasion, Betzner unloaded weapons for Pastora's Contras and proceeded to load his plane with "seventeen duffle bags and five or six two-foot-square boxes filled with cocaine." Additionally, pilots Geraldo Duran and Marcos Aquado flew arms missions into Costa Rica between 1982 and 1985 and both cited examples of Morales' drug connections. In 1986 Duran was arrested in Costa Rica for exporting drugs to the United States. Another pilot who was recruited by Morales was Fabio Ernesto Carrasco who was subpoenaed to testify in a drug trial in Oklahoma City in 1990. Carrasco said that between 1984 and 1985, he flew over five drug missions for Morales and that he carried between 300 and 400 kilos of cocaine into the United States on each flight. Carrasco also testified that he and Betzner flew down weapons for the Contras from Florida and that they returned from Costa Rica loaded with cocaine which had been purchased by Contra leaders Octaviano Cesar and Mario Calero. Many of these missions from the United States ended at the Costa Rican ranch of Hull who Morales said was heavily involved in drug smuggling. Carrasco also said that Morales gave millions of dollars in drug money on 30 to 40 different occasions to Contra leader Adolfo "Popo" Chamorro, the nephew of Violetta Chamorro who was later elected president of Nicaragua.

Morales also testified that he gave airplanes and cash to the Contras because Popo Chamorro promised to help him with his legal bills in the United States. Morales offered Popo Chamorro an old DC-3 to carry food, arms, boots, and uniforms to Pastora's Contra soldiers who were isolated in Costa Rica and needed air support to receive supplies. Pastora was desperate, since Calero and White House had severed relations with him in his struggle for power within the FDN.

In 1986, Morales was convicted in prison and died five years later.

THE FELIX RODRIQUEZ CONNECTION. Rodriquez began his CIA career in the late 1950s in Florida. After the aborted Bay of Pigs invasion, he was moved to Vietnam where he worked for Gregg and Shackley. Rodriquez returned to the Western Hemisphere in the early 1980s when Reagan launched his covert war in Nicaragua. He was assigned to oversee the Contra supply effort in El Salvador from 1982 to 1986.

In November 1982, Ramon Milan Rodriquez, involved with the Colombian cocaine cartels, made a $3,690,000 payment to the Contras at the request of Felix Rodriguez, in exchange for protection from prosecution. The next year, Gustave Villolda received a letter of recommendation from Gregg as "combat advisor" to the Contras. Villolda worked along side Rodriguez during the Bay of Pigs invasion and the CIA track down and execution of Che Guevara in Bolivia. In 1984 Gerald Latchinian, co-director with Rodriguez of Giro Aviation, a CIA proprietary airline, was arrested for smuggling $10.3 million in cocaine to finance the assassination of Honduran President Roberto Suazo Cordova. Latchinian contended that this was a CIA operation.

RAMON MILIAN RODRIQUEZ. Rodriquez was a Cuban exile and was the principal accountant for the Medellin cartel, handling $200 million a month in drug profits. His business took him from Colombia to Panama and Florida. He claimed that in the 1972 he carried $200,000 in cash from CIA operant Manuel Artime to some of the burglars arrested at the Watergate Hotel. In 1982 he was recruited by Felix Rodriquez to join the contra network for which he contributed approximately $10 million between 1982 and 1985. When Milian Rodriquez was arrested in 1985, his financial papers were seized. In a column under the heading of "CIA," Rodriquez had recorded $3.69 million in expenditures. Rodriquez used his Ocean Hunter frozen shrimp company, based in Florida, but owned exclusively by his Costa Rican Frigorificos de Puntanenas firm, to move around about $200,000 in this time frame.

THE SANCHEZ FAMILY CONNECTION AND THE SAN FRANCISCO "FROGMAN"

CASE. The Sanchez family first involvement in drug trafficking dated back to the San Francisco "frogman" case in 1983. This operation netted 430 pounds of cocaine from a freighter outside of San Francisco Bay. Its crew admitted that it was running drugs from the Contras in Costa Rica. One was an ex-Somoza air force officer who stated that the profits belonged to the Contras. Another stated that he had given thousands of dollars from the drug smuggling to Costa Rican Contra groups and helped to arrange for the shipment of arms to a small Contra group headed by Fernando Chamorro. The United States returned $36,020, which was seized as drug money, after one of the defendants, Zavala, submitted letters from Contra leaders claiming that the funds were really their property.

The Kerry committee found that two of those arrested had ties to the Contras and had received the cocaine from Colombian sources. The committee report implicated higher up Contra leaders who were involved in narcotics traffic. Several members of the Sanchez family were indicted. Court records showed that the cocaine ring's source of supply included one of the family members, Troilo Sanchez. He was a relative of Aristides, a member of the FDN directorate who earlier had been caught trafficking cocaine. The "frogman" case resulted in the demise of the Sanchez family.

THE HONDURAS CONNECTION. Honduras had been the classic example of a banana republic. Most of its economy was controlled by United Fruit and Standard Fruit. New Orleans ran its economy, and soon banana trade routes became drug routes. In 1975, Honduran president General Oswaldo Lopez Arellano received $1.5 million in bribes from the American multinational companies, and in return never paid export taxes amounting to $7.5 million.

In the 1980s, Honduras accounted for approximately 20 percent of the cocaine imported by the United States. Costa Rica supplied about 10 percent of America's cocaine. Between 1982 and 1987, the Reagan administration pumped in $335 million in military aid and $836 million in "economic" aid to Honduras. A Christian Democrat in Honduras' congress stated that Washington would merely ignore any questions about drug trafficking.

Reagan administration officials interceded on behalf of Jos Bueso Rosa, a Honduran general who was heavily involved with the CIA's Contra operations and faced trial for his role in a massive drug shipment to the United States. In 1984, Bueso and co-conspirators plotted to assassinate Honduran President Roberto Suazo Cordoba This was to be financed with a $40 million cocaine shipment to the United States, which the FBI intercepted in Florida.

According to declassified e-mail messages North led an effort to seek leniency for Bueso. The messages indicated the efforts of American officials to "cabal quietly" to get Bueso a "pardon, clemency, deportation, (or) reduced sentence." Eventually they succeeded in getting Bueso a short sentence in "Club Fed," a white collar prison in Florida.

The Kerry committee report reviewed the case and noted that Bueso was involved in a conspiracy that the Justice Department deemed the most significant case of narco-terrorism ever discovered.

THE MATTA-SETCO-CALERO CONNECTION. This arms for drugs caper emerged in 1983 when Calero was placed in charge of the contras operating out of Honduras. It was at this time that Eden Pastora in Costa Rica was cut off the CIA payroll.

Juan Ramon Matta Ballesteros was a well-known drug dealer who spent part of the 1970s in a Colombian prison. He returned to Honduras in 1986 after bribing his way out of jail with $2 million. The DEA knew about Matta by 1978 when he was arrested at Dulles airport with 54 pounds of cocaine. However, by 1983 SETCO Matta's air freight company was used by the Contras to run arms to the Contras in Honduras. According to the Kerry report SETCO was being used as the Contras' main supplier of weapons in 1984. For these services, Matta was paid by North. The Kerry report also stated: "One of the pilots selected to fly Contra mission for the FDN (Contras) for SETCO was Frank Moss, who was under investigation as an alleged drug trafficker since 1979." Two years after Iran-Contra broke in the United States the Justice Department extradited Matta who was a suspect in the murder of DEA agent Enrique Camarena in Mexico.

In July 1985, Michael Tolliver, a convicted American drug smuggler who was at a Georgia halfway house, was contacted by Barry Seal. Seal had contacts with the CIA and was released from prison early. He was told that he would receive $75,000 a trip if he were to fly arms from Miami's airport into Honduras. According to Tolliver, Seal had 28,000 pounds of marijuana when he arrived at Homestead Air Base in Florida. Upon returning from Central America, Seal met "Hernandez" at the Fountainbleau Hotel and was paid $75,000.

In October, FBI agents seized 763 pounds of cocaine with a wholesale value of $10 million in southern Florida. Among those arrested was Honduras' former chief of staff of the army, General Bueso Rosa. In 1987, United States officials confiscated two shipments of cocaine weighing 6.7 tons. United States government investigators stated that it went directly to the doorstep of the Honduran military. The cocaine originated from the Cali cartel with whom Matta dealt directly.

In 1987, the DEA had information which linked five top Honduran military officers with drug trafficking but was persuaded not to act since it may have endangered Honduran cooperation in the Contra war. By 1987, it was estimated that Honduras accounted for 20 to 50 percent of all cocaine which entered the United States from Latin America.

THE CUBAN-AMERICAN CONNECTION. Several groups of Miami-based Cuban-Americans provided direct or indirect support to the Contras when it was prohibited by the Boland Amendment. Rene Corbo was one who provided supplies and training with funds in part from drug money. Two other Cuban exiles, Mario Rejas Lavas and Ubaldo Hernandez Perez, were captured by Sandinistas in 1986. They were reportedly members of UNO/FARN which was headed by Fernando "El Nego" Chamorro. When the Kerry committee requested information on these Cuban-Americans, the Justice Department refused to provide any information on the grounds that the committee was merely carelessly rambling through its open investigations. The Justice Department advised this committee that the matter had been fully investigated and that the committee's allegations were untrue.

In May 1986, members of the Kerry committee met with CIA officials who categorically denied that weapons had been shipped to the Contras on planes involving Corvo. Yet the FBI had learned that

Cuban-American supporters had shipped weapons from south Florida to Ilopango Air Base in Honduras as well as to John Hull's ranch in Costa Rica.

THE DAN QUAYLE-ROBERT OWEN CONNECTION. Hull came to the United States in 1983 to convince Congress that Pastora should not be supported since he had allied himself with the Sandinista government. Hull met with Senator Quayle and Owen, his legislative aide. A year later Owen switched jobs and began to work for the Washington D.C. lobbying firm of Gray and Company. He was approached by Contra leader Calero who asked him to take on the task of raising money in the United States through non-profit organizations and companies for the Contras.

Owen researched the financial and military needs of the Contras and passed the information on to North. Owen reported that between $1 million and $1.5 million was required on a monthly basis to keep the Contras equipped. In July 1984 purchased weapons from South Africa and returned to the United States where he met with Hull and Calero. Owen promised to provide Calero with $2,500 a month and Hull with $10,000 a month.

Owen also worked primarily with Neil Livingstone, who was responsible to Ed Wilson of the CIA. Additionally, he was North's liaison, delivering Swiss bank account numbers to Taiwanese government officials who in turn made contributions to the Contras. In April 1985 Owen warned North that Costa Rican-based Contra leader Jose Robelo had the "potential involvement in drug running" and that another Contra, Sebastian Gonzalez, was "involved in drug running out of Panama." In August 1985 North told Owen that the "DC-6 which is being used for runs out of New Orleans is probably being used for drug runs into the United States." In February 1986 Owen informed North that another Contra DC-4 was "used at one time to run drugs, and part of the crew had criminal records. Nice group the Boys (the CIA) chose."

Frank Castro, an ex-Cuban and Bay of Pigs veteran, was indicted in the 1970s for smuggling more than a million pounds of marijuana to the United States. Owen stated that Castro was heavily into drugs and that he had furnished Pastora with a DC-3 plane. Castro also hade visited Hull's ranch in Costa Rica. The Kerry report also corroborated the allegations linking together North and Castro as part of a conspiracy to both gunrunning and drug trafficking.

THE EL SALVADOR CONNECTION. Colonel James Steele was the chief American military adviser in El Salvador and senior officer in charge of United States military operations which provided the Contras with weapons out of Ilopango airport. In December 1984, National Security adviser Gregg met with Felix Rodriguez and was given a position in El Salvador as a contra military advisor. The next month Rodriguez met with Bush to discuss the Contra job. In the summer of 1985 Rodriguez flew to Washington D.C. to meet with Gregg and Steele. According to Rodriquez's testimony before the Kerry committee in 1987, Steele was in contact with Rodriguez from September 1985 through summer 1986. A North memorandum stated that Steele made Rodriguez his deputy and allowed him to use a military car as well as a KL-43 encrption device for secure telephone conversations.

In March 1986, Steele met in Honduras with Rob Owen, North's associate directing the Contra resupply operation from bases in Costa Rica. In a memo to North after the meeting, Owen suggested stockpiling weapons for the contras in Costa Rica at "Cincinnati," a code word for the United States air base at Ilopango, El Salvador, where Steele was the American commander.

According to a crew member aboard a flight dropping supplies to the Contras in April 1986, Steele helped guide the mission. Nine days later after approximately 10 flights dropped arms and equipment to the southern front, Steele met with North, Secord and retired Colonel Richard Gadd in El Salvador. Gadd stated that Steele's role suggested that higher officials in the Pentagon may have known and participated in the resupply effort.

Mattes claimed that Steele could have testified as to whose authority that he operated in assisting the Contras during a time when the Boland Amendment was in place. Attorneys for the select committees deposed Steele in April 1987, but he was not called to the witness table.

THE PANAMA CONNECTION. Before he seized power as head of state, Manuel Noriega was first recruited by the United States Defense Intelligence Agency in 1959 while studying in Peru. By 1967 he was placed on the CIA payroll. At this time, he worked in conjunction with the United States military, which used Panama as a listening post in Latin America. After a failed coup in 1971 General Omar Torillos, who later became dictator, fled to Miami where he stated that Noriega had "operational control" of the narcotics trade through Panama.

The Justice Department dropped the idea to attempt to indict Noriega. In 1976 Noriega was placed on the CIA payroll again, this time at $110,000 a year. When Carter was elected, Noriega was again dropped from the CIA. Carter's major objective was to pass the Panama Canal Treaty, so all allegations against Noriega were suppressed. However, once the treaty was ratified by the Senate, the Panamanians got the word that America was open for drug trade. In 1980 Noriega was given full control over a special Panamanian intelligence unit. Noriega supplied at least seven pilots to run arms down from Florida. The pilots returned with cocaine.

When Reagan took office in 1981, Noriega was immediately brought back by the CIA. His salary was increased, and his salary jumped to $185,000 a year, and by 1985 it reached $200,000. The CIA deposited Noriega's illegal payoffs in the Bank of Credit and Commerce International (BCCI), whose name made front page news in the summer of 1991 for laundering money.

CIA Director Casey began meeting with Noriega in 1981. Noriega was paid $100,000 for the use of Panama as a middle country to run drugs from Colombia to the United States. His personal pilot, Floyd Carlton, stated that he received $400 per kilogram to run cocaine from Colombia into Panama. However, things turned sour for Carlton in 1985 when $3 million in cocaine was missing on flights into Costa Rica.

Noriega supplied pilots and urged Pastora to unite with the Contra organization in Honduras. By 1985, Noriega promised to train Contras in Panama. Noriega met with North in London to discuss plans to set up training for booby trapping, night operations, and sabotage activities against Nicaraguan targets. Noriega stated that he would try to obtain Israeli commandos to work with the Contras.

The Kerry report stated: "Noriega put his pilots to work flying weapons from Panama to Costa Rica for the Contras. ...Many of the pilots moved mixed cargoes of guns and drugs to bases in Costa Rica, dropped off the guns and flew on to the United States with drugs."

In 1986 the Iran-Contra scandal broke, now making Noriega expendable. The next year his personal pilot, Carlton, was extradited to the United States. In 1988 Noriega himself was indicted by the Justice Department and was linked to drug trafficking for the first time. The following year the United States invaded Panama, and Noriega was kidnapped and taken to Miami for his trial. The CIA never turned his files over to the Justice Department.

After Noriega was brought to the United States, the Bush administration placed Guillermo Endara in power. Endara was director and secretary of Banco Interoceanico which had been targeted by the DEA and FBI, and he named Carlton as a major person who laundered money through that bank from the Medellin and Cali cartels. The CIA also used Banco de Ibereoamerica as a front through which to launder money in Panama. Through this dummy company, North purchased arms from a Syrian drug and arms dealer, Manzer al-Kasser, who had ties to the Medellin cartel.

THE VENEZUELA CONNECTION. In 1988, the CIA hired General Ramon Guillen Davila to investigate Venezuela's drug enterprises, primarily the Cali cartel. With the help of the CIA, Guillen set up a drug smuggling operation which involved Venezuelan National Guardsmen. They purchased cocaine from the Cali cartel in Colombia, imported it to Venezuela, and stored it in warehouses which were run by Guillen and funded by the CIA. One CIA agent said "let the dope walk;" that is, to ship it northward into the United States. Another agent, Mark McFarlin, testified in Miami federal court in 1989 that he had informed the Caracas CIA agent chief that 3,000 pounds of cocaine had just been shipped to the United States. When the agent chief was informed that the DEA was unaware of the operation, he responded by telling McFarlane, "Let's keep it that way."

Between 1989 and 1992, 22 tons of cocaine flowed from the Guillen network into the Miami. In 1990, DEA agents in Caracas were informed of the illicit activity and made no attempt to intervene. Finally in 1992, United States Customs in Miami terminated the operation when they seized an 800 pound cocaine shipment. One of Guillen's dealers, Adolfo Romero, was arrested and convicted on drug conspiracy charges. No action was taken against Guillen's organization, and he simply dropped out of contact with the CIA.

In November 1996, the Justice Department indicted Guillen on charges of importing cocaine into the United States. Guillen headed Venezuela's anti-drug unit while smuggling over 22 tons of Cali and Bogata cartel cocaine into the United States and Europe. After he learned of his indictment, he went into seclusion in Caracas where he received a federal pardon. Guillen contended that Venezuelan cocaine shipments to the United States were authorized by the CIA. He said, "Some drugs were lost and neither the CIA nor the DEA want to accept any responsibility for it."

EUGENE HASENFUS

CIA operant Hasenfus was a "kicker" on a C-123 cargo plane which ran shipments to the Contras over Nicaragua. He would "kick out" the cargo which then parachuted down to the Contras in the field. When the plane was shot down by a hand-held surface-to-air missile, Hasenfus was able to parachute out. The plane's crew also consisted of a Contra radio operator, American pilot Bill Cooper, and copilot Wallace "Buzz" Sawyer. Sawyer had in his possession the White House phone number of Vice President Bush. Telephone logs from the phone company in El Salvador for the "safe houses" used by the plane crew showed many calls to North's White House office. Bush's office was the first place notified after the C-123 crashed. Hasenfus claimed that this was done with the knowledge and approval of Bush. Telephone logs from the phone company in El Salvador used by the plane crew showed many calls to North's White House office.

It was discovered that the plane was the same C-123 which had been used by Seal to run drugs into the United States. Earlier in 1983, Harry Doan had sold the C-123 to Seal who flew it to Rickenbacker Air Force Base in Ohio. It was there that it was outfitted with hidden cameras by the CIA. Seal then piloted the aircraft to Nicaragua and returned with 1,472 pounds of cocaine. The cameras filmed Federico Vaughan, who was an employee of the Nicaraguan Interior Ministry, helping load cocaine into the plane. Also, the plane's logs indicated it had flown out of Colombia, home to the Medellin and Cali drug cartels. Flight logs in the plane indicated that it had made trips between Barranquilla, Colombia and Florida in 1985.

Only days after the downing of the aircraft Hasenfus told Nicaraguan authorities that "there were two Cuban nationalized Americans that worked for the CIA that did most of the coordination of the flights and overseeing all operation projects, transportation... also refueling and...flight plans." Hasenfus identified the two as Felix Rodriguez and Ramon Medina. After Hasenfus was released by the Sandinistas several weeks later, he returned to the United States and testified that he worked for the CIA and that he reported to Gomez (alias Felix Rodriguez) and Medina (alias Luis Posada Carriles) with the knowledge and approval of Bush.

A Reagan administration official, who was familiar with contra activities, claimed that the crew of the C-123 was flying supply missions for the State Department's Nicaraguan Humanitarian Assistance Office, which was responsible for providing $27 million in nonlethal aid to the Contras earlier in 1985.

The Kerry committee learned that Southern Air Transport of Miami had provided the plane. Southern Air denied any knowledge, and no charges were brought against this front.

The CIA denied any knowledge of Hasenfus and also stated that he was working outside the jurisdiction of the federal government. After several weeks, Hasenfus was released and returned to the United States where he subsequently received no aid or support by the government.

UNITED STATES GOVERNMENT FRONTS

Illegal money and weapons flowed in from North's backroom cowboys in the White House basement as well as from four fronts which were set up by the State Department. They were operated by narcotics traffickers who provided weapons for the Contras. And in return, large shipments of narcotics flowed northward into the United States.

SETCO (Services Ejectutivos Turistas Commander) Air was established by Honduran drug dealer Ramon Matta Ballesteros. Between January and August 1986, the State Department paid his "front" $186,924.25. One of SETCO's pilots, Frank Moss, was investigated but was never charged with drug trafficking. Later in 1985, Moss formed his own company, Hondu Carib, which also flew missions to the contras. On the basis that Moss was presumably bringing back cocaine into the United States, the Customs Service concealed a transponder on his DC-4 airplane. On one occasion his DC-4 was chased off the west coast of Florida while it was dumping what appeared to be drugs. When it landed in Charlotte, no drugs were found aboard. However, the plane's registration was not in order, and the previous owners were known drug traffickers. Law enforcement authorities also found an address book

with telephone numbers of Contra officials and also the Virginia telephone number of Owen, North's assistant. A search of the place also revealed marijuana residue.

DIASCA was a Miami-based air company which manufactured airplane parts. It was owned by the Guerra family of Costa Rica and served as the headquarters of a drug trafficker enterprise for convicted dealers Floyd Carlton and Alfredo Caballero. The State Department paid them $3.8 million between March 1985 and January 1986 and then $41,120.90 in the first eight months of 1986. Caballero gave Carlton DIASCA offices as a place for planning his smuggling activities. The State Department continued to do business with DIASCA six months after some of its officials had been indicted. The defendants were allowed to plea bargain. Carlton received nine years and Caballero received five years probation for smuggling cocaine into the United States.

Frigorificos de Puntarenas was also owned by Cuban-American drug traffickers and served as a broker and supplier for various services to the Contras on the Southern Front. This Atlantic-based Costa Rican "shrimp" company received State Department payments in the amount of $261,937. In May 1983 Ramon Milian Rodriguez testified that cocaine would be sent to shrimp boats and eventually shipped to the United States. Rodriguez was a Cuban arrested for money laundering. Owen stated in his memo to Oliver North that if he could obtain two shrimp boats that the business's owner was willing to front a shrimping operation on the Atlantic coast. He contended that those boats could be used as mother ships to bring cocaine shipments into the United States. Owen also contended that North had given him the name of a DEA agent who could help provide security in the drug running operations.

Jack Terrell was also involved in the shrimp case. He was a volunteer for a private Contra organization, Civilian Military Assistance (CMA) which operated out of Pastora's Contra group in Costa Rica. By 1984 he had moved up the ranks to a "colonel" and was given authority to travel to Honduras to meet with the mainstream Contra group under Calero. Terrell testified that the Contras acted as a conduit in their "seafood" front operation and that the business could net a million dollars. Terrell further explained that he the cocaine operation was disguised by imports of frozen fish from Costa Rica. Needless to say, Terrell's testimony to the Kerry committee alarmed North who failed in an effort to prevent the FBI from investigating him. Terrell also charged that Hull was involved in cocaine trafficking.

Vortex was an air service which was partially owned by admitted drug trafficker Michael Palmer. This "front" was paid $317,425.17 by the State Department in 1986 to store, pack, and inventory goods for the Contras. At the time the State Department and Palmer signed a contract, it was a known fact that he owned two airplanes which he had used for drug trafficking. In addition he had been under investigation for 10 years for running drugs. Eventually Palmer was indicted and convicted.

After the Boland Amendment terminated legal funding for the Contras, between January and August 1986 alone, the State Department payments to these CIA fronts operating in drug trafficking totaled $806,401.20.

OLIVER NORTH

Oliver North lied to Congress, lied to Congress, and lied to his colleagues in the White House. He swore that he did not run covert operations in Central America. He lied when he said he did not defy the law in running guns and money shipments to the Iranians. He lied when he said that he had no knowledge of drug trafficking within the Contra network.

It was North who directed NSC operations from the basement of the Executive Office Building. After the Boland Amendment cut off Congressional funding of the Contras, it was North who illegally raised as much as $30 million to continue to funnel in money to the Enterprise. He brought in this revenue through covert means, primarily by the sale of weapons to Iran and profits generated from the sale of Latin American cocaine which was flown into the United States on the very same planes which flew weapons south to the Contras.

A September 26, 1984 Miami police report stated that money supporting the illegal contra training effort in Florida came from narcotics transactions. At the time, the chief state prosecutor in Florida was Janet Reno. She had every page stamped "record furnished to George Kosinsky, FBI."

In March 1987, United States customs seized a plane from a narcotics trafficker who was involved with the Contras. An address book of Owen was found on the plane. On numerous occasions, Owen met with both North and Hull.

In 1987 the two Iran-Contra investigatory committees determined what evidence would be made available for the hearings. The National Security Archive obtained the hand-written notebooks of Oliver North, the National Security Council aide who helped run the contra war and other Reagan administration covert operations, through a Freedom of Information Act lawsuit filed in 1989. The notebooks, as well as declassified memos sent to North, recorded that North was repeatedly informed of Contra ties to drug trafficking.

As a member of the NSC North had compiled 2,848 pages of notes in spiral notebooks between 1984 and 1986. North kept records of correspondence, meetings, and activities involving the NSC. However, after his diary was subpoenaed by the Iran-Contra committees, he was allowed to censor his notes. North and his attorneys either totally or partially censored over 1,269 pages -- nearly half of his diary. 155 pages were totally "blacked out." Potentially damaging to North were 500 pages of notes which presumably referenced drug trafficking activities, and these were never received by Iran-Contra investigators. A White House committee scrutinized his censored diary and determined that 104 pages were "not relevant to the investigation." North did not delete a significant amount of evidence which linked him to drug trafficking during the Contra war. Numerous entries in North's diaries linked him to drug trafficking.

North was given limited immunity when he testified before the Iran-Contra committee. Walsh presumably did his best to prevent this, and therefore his convictions were overturned upon appeal. Since North denied in his public testimony that he had any direct or indirect involvement in drug trafficking, his immunity should not have covered such improprities. He may have told members of Congress in executive session, but that should not have tainted any witnesses.

--May 12, 1984. ". . .contract indicates that Gustavo is involved w/drugs"

--June 26, 1984. "DEA" - (followed by two blocks of text deleted by North)

--June 27, 1984. "Drug Case - DEA program on controlling cocaine - Either cutoff - Colombians readjusting - possible negotiations to move refining effort to Nicaragua - Pablo Escobar - Colombian drug czar - Informant (Pilot) is indicted criminal - Carlos Ledher - Freddy Vaughn."

-- July 9, 1984. "Call from Clarridge - Call Michael re Narco Issue - RIG at 1000 Tomorrow - DEA Miami - Pilot went talked to Vaughn - wanted A/C to go to Bolivia to p/u paste - want A/C to p/u 1500 kilos - Bud to meet w/Group."

-- July 12, 1984. "Gen Gorman - Include Drug Case Call from Johnstone - (White House deletion) leak on Drug." July 17, 1984. "Call to Frank M - Bud Mullins Re - leak on DEA piece - Carlton Turner Call from Johnstone - McManus, LA Times-says/NSC source claims W.H. has pictures of Borge loading cocaine in Nic."

--July 20, 1984. "Call from Clarridge - Alfredo Cesar Re Drugs-Borge/Owen leave Hull alone (Deletions)/Los Brasiles Air Field- Owen off Hull."

--July 27, 1984. "Clarridge: - (Block of White House deleted text follows) - Arturo Cruz, Jr. - Get Alfredo Cesar on Drugs."

--July 31, 1984. "Finance: Libya - Cuba/Bloc Countries - Drugs ... Pablo Escobar/Frederic

Vaughn."

--July 31, 1984. "Staff queries re (White House deletion) role in DEA operations in Nicaragua."

-- Dec. 21, 1984. "Call from Clarridge: Ferch (White House deletion) - Tambs-Costa Rica - Felix Rodriguez close to (White House deletion) - not assoc. W/Villoldo - Bay of Pigs - No drugs."

--Jan. 14, 1985. "Rob Owen - John Hull - no drug connection - Believes."

--July 9, 1985. "Went and talked to (Contra leader) Vaughn, (who) wanted to go to Bolivia to pick up paste, wanted aircraft to pick up 1500 kilos."

--July 12, 1985. "$14 million to finance (arms) came from drugs." In this memo, North noted a call from retired Air Force general Richard Secord in which the two discussed a Honduran arms warehouse from which the Contras planned to purchase weapons. According to the notebook, Secord told North that $14 million to finance the Contras came from drugs."

-- July 21, 1985. "HO (Honduras) plans to seize all mat'l when supermarket comes to bad end."

--April 1, 1985. North (code-name: "The Hammer") received a memo from Robert Owen (code-name: "T.C." for "The Courier"), describing Contra operations on the Southern Front. Owen tells North that FDN leader Adolfo Calero (code-name: "Sparkplug") has picked a new Southern Front commander, one of the former captains to Eden Pastora who has been paid to defect to the FDN. Owen reports that the officials in the new Southern Front FDN units include "people who are questionable because of past indiscretions," such as José Robelo, who is believed to have "potential involvement with drug running" and Sebastian Gonzalez, who is "now involved in drug running out of Panama."

--August 9, 1985. "Honduran DC-6 which is being used for runs out of New Orleans is probably being used for drug runs into U.S." North summarized a meeting with Owen ("Rob"), his liaison with the Contras. They discussed a plane used by Mario Calero, brother of Adolfo Calero, head of the FDN, to transport supplies from New Orleans to Contras in Honduras.

--Aug. 10, 1985. "Mtg. w/A.C. - name of DEA person in New Orleans re Bust on Mario/DC-6."

--February 10, 1986. Robert Owen ("TC") wrote North (this time as "BG," for "Blood and Guts") regarding a plane being used to carry "humanitarian aid" to the Contras that was previously used to transport drugs. The plane belonged to the Miami-based company Vortex, which was run by Michael Palmer, one of the largest marijuana traffickers in the United States. Despite Palmer's long history of drug smuggling, which led to a Michigan indictment on drug charges, Palmer received over $300,000 from the Nicaraguan Humanitarian Aid Office (NHAO) which helped to supply the Contras and was overseen by North, Assistant Secretary of State for Inter-American Affairs Elliott Abrams, and CIA officer Alan Fiers.

--Feb. 27, 1986. "Mtg. w/Lew Tamb- DEA Auction A/C seized as drug runners. - $250-260K fee."

--Undated. "Necessary to give Mr. Hull protection."

THE WHITE HOUSE CONNECTION

PRESIDENT REAGAN. In March 1985, Reagan stated on national television that "top Nicaraguan government officials are deeply involved in drug trafficking." Ironically, on the same day as the speech, the United States government returned funds seized in a 430-pound cocaine bust after a defendant stated that Contra leaders claimed they were theirs.

In 1995, press accounts of illegal drug trafficking led to an investigation in Congress the following year. Within the executive branch State Department officials told Congress in 1986 that it had evidence of a limited number of incidents in which known drug traffickers tried to establish relations with Nicaraguan resistance groups. According to the State Department drug traffickers were attempting to exploit the desperate conditions in which the Contras found themselves. The department even conceded that there were some members of the Contras who were running drugs.

Months later the Foreign Relations Committee reported that there was evidence to link various elements of the FDN to drug trafficking. In 1986 the Justice Department and other federal agencies failed to respond to any of these allegations. In May 1986 members of the Kerry committee met with officials of the Justice Department, State Department, FBI, CIA, and DEA. The official DOJ report stated that the FBI had conducted an inquiry into all these charges and none of them had any substance or accuracy.

In 1987 the CIA's Central American Task Force chief conceded that the Contras on the southern front in Costa Rica had links to drug trafficking and that it was much broader than what had been reported by the State Department. He told the Kerry committee that many people were involved in illicit drugs including higher leaders like Pastora.

In June 1998, new evidence surfaced, suggesting that the Reagan administration's tolerance of drug trafficking by the Nicaraguan Contras and other clients in the 1980s was premeditated. The corporate media ignored a 1982 letter which was introduced into the Congressional Record revealing how CIA Director Casey secretly engineered an exemption which spared the CIA from a legal requirement to report on drug smuggling by agency assets.

The exemption was granted by Attorney General William French Smith in February 1982, only two months after Reagan authorized covert CIA support for the Nicaraguan Contra army and some eight months before the first known documentary evidence revealing that the Contras had started collaborating with drug traffickers. The exemption suggested that the CIA's tolerance of illicit drug smuggling by its clients during the 1980s was official policy anticipated from the very beginning, not just an isolated series of illicit activities. If this is true, Casey foresaw the legal dilemma which the CIA would encounter should federal law require it to report on illicit narcotics smuggling by its agents. DOJ regulations state that "reportable offenses" included assault, homicide, kidnapping, Neutrality Act violations, communication of classified data, illegal immigration, bribery, obstruction of justice, possession of explosives, election contributions, possession of firearms, illegal wiretapping, visa violations, and perjury.

In 1982 Casey attempted to exempt the CIA from the need to add narcotics violations to the list of reportable non-employee crimes. In March, Smith granted Casey his wish, and drug trafficking offenses were dropped from the list.

This Casey-Smith exchange of letters stands as important historical evidence bolstering the long-denied allegations of CIA complicity in drug trafficking. Worse yet, the documents are evidence of premeditation.

In May 1998, California Congresswoman Maxine Waters introduced the damaging evidence from the Casey-Smith letters into the Congressional Record. Waters stated that the Casey-Smith arrangement "allowed some of the biggest drug lords in the world to operate without fear that the CIA would be required to report their activities to the DEA and other law enforcement agencies. ... These damning memorandums ... are further evidence of a shocking official policy that allowed the drug cartels to operate through the CIA-led Contra covert operations in Central America."

PRESIDENT BUSH. George Bush always claimed that he knew nothing of the CIA involvement in drug trafficking. In 1988 Bush's top drug aide, Admiral Daniel Murphy, stated that he never saw any intelligence reports that associated Noriega with drug trade. He said that Noriega was always upheld as a "model" in terms cooperation with the United States in the war on drugs.

Iran-Contra became more than a George Bush affair. It became a Bush family affair. Bush's older brother, Prescott, was also linked to covert actions. He appeared to have aided the Reagan administration's clandestine support of the Contras. In the 1980s he served on the advisory board of Americares, the United States-based relief organization with ties to prominent right-wing Republicans and the intelligence community. In 1985 and 1986 after Congress cut off American aid to the contras, Americares donated more than $100,000 worth of newsprint to the pro-Contra newspaper La Prensa in Managua. Americares supplied $291,383 in food and medicine and $5,750 in cash to Mario Calero, who was a New Orleans-based quartermaster and arms purchaser for the Contras, and to the brother of Contra leader Calero.

George Bush's second oldest son, Jeb, acted as a liaison to the anti-Castro right and to clandestine schemes in support of the Contras. Soon after congressional prohibition of aid to the contras in late 1984, Jeb became linked to Leonel Martinez, a Miami-based right wing Cuban-American drug trafficker. Martinez, who was linked to the southern front's Contra leader Eden Pastora, was involved in efforts to smuggle more than 3,000 pounds of cocaine into Miami in 1985 and 1986. He was arrested in 1989 and later convicted for bringing 300 kilos of cocaine into the United States. He also reportedly arranged for the delivery of two helicopters, arms, ammunition, and clothing to Pastora's Costa Rica-based Contras.

Federal prosecutors in Miami had a photograph of Jeb Bush and Martinez shaking hands but would not release the photo to the public. Martinez made a $2,200 contribution to the Dade County Republican Party four months after Jeb became the chair of Florida's GOP. It was also known that Martinez wrote $5,000 checks to then-Vice President Bush's Fund for America's Future in both December 1985 and July 1986 and made a $2,000 contribution to the Bush for President campaign in October 1987. Martinez's construction company gave $6,000 in October 1986 to Bob Martinez, the GOP candidate for governor in Florida.Before that time, he was governor from 1987 to 1991.

The war on drugs may have been successful had the United States government made an effort to get Asian and Latin American countries to be equally tough on drug traffickers as it was on the peasants and workers in their countries. American policy is less concerned with fighting a war against drugs than it is in using drug traffickers. For the CIA to target international drug networks, it would have to dismantle prime sources of intelligence, political leverage, and indirect financing for its Third World operations. During Reagan's presidency, one-third of federal law enforcement funds for fighting organized crime were cut. DEA funds were reduced by 12 percent, resulting in the dismissal of 434 DEA employees.

THE CHAMORRO GOVERNMENT. Drug trafficking resumed in Nicaragua under the Chamorro regime after the defeat of the Sandinistas in 1990. Colombian drug dealers established connections with various government officials, the most notorious being Roger Ramirez, a Nicaraguan policeman turned arms dealer. After leaving the police in 1993, Ramirez opened a law practice and successfully defended several drug trafficking suspects.

Ramirez was arrested and charged with possession of narcotics and illegal weapons in October 1999 after authorities saw suspicious Guatemalans and Colombians visiting the ranch belonging to his father. Officers discovered the illegal arms, including rocket launchers, at the ranch, and then they searched the home of his former wife and found 275 pounds of cocaine. Ramirez testified that he decided to sell the weapons to the Colombian self-defense forces because "their current struggle is similar to that of other military forces in the past decade that struggled against a dictatorial government." According to court documents, Ramirez told the judge, "I sold them for a nominal price to the commanders of Colombia's self-defense forces, and I had planned to join their struggle." Ramirez testified that he had obtained the weapons in 1990, during the transition from the Sandinista government to the Chamorro regime when he was the Sandinista Interior Ministry delegate in the eastern port city of Bluefields where drug trafficking flourished after the defeat of the FSLN.

The CIA acknowledged drugs in a statement by Central American Task Force Chief Alan Fiers who testified: "With respect to (drug trafficking) by the Resistance Forces. ... It is not a couple of people. It is a lot of people."

THE UNITED STATES INVADED BY THE CONTRAS

DARK ALLIANCE

The sale of rock cocaine in American ghettos can be traced back to Juan Norwin Meneses Cantarero and Oscar Danilo Blandon, both active drug traffickers in Central America. Meneses was one of the top drug dealers in Nicaragua where he was known as "El Rey del Drogas" ("the king of the drugs"). In the 1970s Meneses ran drugs in Nicaragua with the permission of the right wing Somoza government which received a cut of the profits. The Blandon-Meneses connection began in the early 1980s when they met with Contra leader Bermudez who recruited them to raise money and supplies for the Contras. Blandon left the meeting with $100,000 to buy drugs. The profits from the sale of these drugs were used to buy supplies for the contras. Blandon told how he ran into trouble at the airport in Honduras when he was caught with the $100,000, but intervention by Contra leaders secured his release.

In a June 11, 1986 CIA cable from the Los Angeles division station, contra leader Fernando Chamorro was asked by Meneses in 1984 to help "move drugs to the United States." A second June 1986 CIA cable reported that "Meneses was involved in the transporting of drugs." A CIA cable dated October 31, 1986 contained two admissions. First, it detailed a CIA cable dated December 5, 1984 reporting that "Norwin Meneses was apparently well known as the Nicaraguan mafia, dealing in drugs, weapons and smuggling and laundering of counterfeit money." Second, it quoted a CIA cable, dated March 25, 1985, which "described a Norwin (Meneses) Cantatero as the kingpin of narcotics traffickers in Nicaragua prior to the fall of Somoza."

Meneses drug operations also included Tuto Munkel and Sebastian Gonzalez Medieta. Sebastian Gonzalez was a key CIA operant who was in charge of logistics for the supply of arms supplied by Noriega. The CIA knew that Gonzalez also was involved in drug trafficking with Meneses in 1984.

"Dark Alliance," described the role of Blandon and Meneses in the circulating crack cocaine in the neighborhoods of Los Angeles and New York City. In August 1996 Gary Webb of the San Jose Mercury News ran a series of stories which alleged that the Contras provided millions of dollars in crack cocaine to the Crips and Bloods street gangs of Los Angeles. In turn millions of dollars in drug profits were funneled back to the Contra army in Central America.

Webb showed how Contra leaders and CIA operants allegedly sold drugs in Los Angeles, delivering cut-rate cocaine to the gangs through a young South-Central crack dealer named "Freeway" Ricky Ross. Unaware of the origin of the shipments, Ross turned the powder into crack and wholesaled it to gangs across the country. Court records indicated that the cash, which Ross paid for the cocaine, was used to buy weapons and equipment for the FDN. The stories alleged that Ross moved about $100 million worth of crack a year in the 1980s. He bragged that he sometimes moved $2 million worth in a single day. Ross worked his business along the Harbor Freeway or he used to strip stolen cars beside the Harbor Freeway. He had been arrested here in an FBI sting after getting out of prison in Texas, one of the places where he did business.

Ross purchased crack cocaine from Blandon who was the conduit for thousands of kilos of coke which flowed through Ross and other big middlemen to Los Angeles street gangs such as the Crips and Bloods from 1982 to 1986. Ross had maintained a monopoly in the Los Angeles market, paying Blandon approximately $50,000 per kilo which was about $10,000 below market value. Ross was selling over 100 kilos of crack cocaine a week and at times sold as much as $3 million a day.

A search warrant affidavit revealed that local drug agents knew plenty about Blandon's involvement with cocaine and the CIA's army nearly 10 years ago. The Los Angeles County Sheriffs Department spokesperson said: "Danilo Blandon is in charge of a sophisticated cocaine smuggling and distribution organization operating in Southern California. The monies gained from the sales of cocaine are transported to Florida and laundered through Orlando Murillo, a relative of Blandon and a high-ranking officer of a chain of banks in Florida, named Government Securities Corporation. From this bank the monies are filtered to the Contra rebels to buy arms in the war in Nicaragua." Corporate records showed that Murillo was a vice-president of Government Securities Corporation in Coral Gables, a large brokerage firm that collapsed in 1987 amid allegations of fraud. Murillo did not respond to an interview request.

On October 27, warrants were issued by the FBI, IRS, and Los Angeles Sheriff's office for Blandon and his wife. Authorities searched 12 warehouses which were believed used by Blandon. They did not find Blandon, his wife, or any evidence of narcotics and money. Apparently already having been tipped off, Blandon had sent his money on to Florida where it was laundered through Orlando Murillo, a high ranking officer in the Government Securities Corporation. From there the money was used to purchase weapons for the Contras.

On the same day which the Blandon warrant was served, authorities also searched the home of former Laguna Beach police detective Ronald Lister who had been an arms supplier for Blandon. Even though no cocaine was found, police seized videotapes of military operations in Central America, information on military hardware and communications, and documents which indicated that drug money was used to purchase military equipment for the Contras. In addition there were pictures of Lister with Contras in El Salvador as well as the names of CIA officers and CIA contractors in Central America. Lister was never arrested.

Eight year later, Blandon appeared before a grand jury. In 1994, he told a San Francisco grand jury that his cocaine sales were approved by the CIA. He said that once the contras began receiving American taxpayer dollars, the CIA no longer needed him. Blandon said that "when Mr. Reagan got in the power, we start receiving a lot of money. And the people that were in charge, it was the CIA, so they didn't want to raise any (drug) money because they have, they had the money that they wanted." Despite the fact that Blandon admitted to crimes, he was not prosecuted.

Blandon pleaded guilty to cocaine trafficking charges and in a plea bargain became an informant for the federal government. At Ross' San Diego trial DEA records showed that the agency paid Blandon $166,000 for nailing Ross and others. At Ross' trial, Blandon testified: "There is a saying that the ends justify the means. And that's what Mr. Bermudez (the CIA agent who commanded the FDN) told us in Honduras, OK? So we started raising money for the Contra revolution." In the mid-1990s, declassified reports along with the federal court testimony, undercover tapes, and court records -- and hundreds of hours of interviews over the past 12 months -- indicated that Blandon was no ordinary drug dealer.

During the early 1980s, Meneses operated a massive cocaine operation in Los Angeles. In October 1986, agents from the FBI, IRS, Los Angeles Police Department, and the Los Angeles County sheriff fanned out across Southern California and raided more than a dozen locations connected to Blandon's cocaine operation. Blandon and his wife, along with numerous Nicaraguan associates, were arrested on drug and weapons charges and were investigated in regard to 45 other charges. Meneses was indicted for conspiracy to distribute one kilo of cocaine in 1984 when he was working with the FDN. However, the indictment was quickly dropped and Meneses was never arrested.

A San Diego prosecutor stated that Meneses' organization had been investigated several times over the course of many years. These probes were allegedly stymied by agencies of the United States government: the DEA, United States Customs, the Los Angeles County Sheriff's Department, and the California Bureau of Narcotic Enforcement. These agencies complained that investigations were hampered by the CIA or unnamed "national security"' interests.

In 1991, Nicaraguan police arrested Meneses on cocaine charges in Managua -- not in the United States where he had been heavily involved in trafficking. He was charged with possession of a 750-kilo shipment. Nicaraguan authorities were outraged that the United States ignored Meneses' drug trafficking operations for 15 years and never arrested him. At his Nicaraguan trial Carlos Cabezas testified that some profits from his cocaine smuggling operation were diverted to the contras. He said that the cocaine which he brought into the United States came from Meneses' ranch in neighboring Costa Rica. Two of Cabezas' partners were brothers Troilo and Ferdinand Sanchez, close relatives tro contra leader Aristides Sanchez. Aristides Sanchez was a member of the FDN directorate, the umbrella organization of the Contras.

Another witness against Meneses was Enrique Miranda, a relative and former Somoza National Guard military intelligence officer who had worked with Meneses in conjunction with the Bogota cocaine cartel. Miranda pleaded guilty to drug charges and agreed to cooperate in exchange for a seven-year sentence. Meneses was sentenced to 30 years. While out on a routine weekend furlough, Miranda failed to return to the Nicaraguan jail.

The Kerry committee's report exposed Norwin Meneses as one of the biggest drug dealers in the United States. Meneses supported and was involved with the contras. He admitted giving money to the California chapter of the FDN/Contras and that he was involved in the 1985 attempted to obtain "material support, medical and general supplies" for the Contra movement. Meneses supplied Danilo Blandon with drugs and Blandon, in turn, was the source who supplied Ricky Ross. The CIA and DEA knew of their operations as early as 1984. Meneses was never arrested after he was permitted free entrance into the United States.

THE CIA INVESTIGATION. Justice Department officials had never addressed the claims that the CIA was involved in the conspiracy to bring cocaine into the United States and to help fund the contra war from sales in the inner cities. In October 1996 CIA director William Deutch stated that the inspector general of the CIA would look into such allegations. Deutch attended a town meeting in South-central Los Angeles to confront a community outraged by charges that the agency had been complicit in the importing of cocaine into their neighborhood. Deutch publicly pledged an internal investigation by Fred Hitz, the CIA's inspector general. Los Angeles City Councilman Nate Holden, Congresswoman Maxine Waters, and Jesse Jackson attended the town meeting, and they along with hundreds of others demanded to know the CIA's role in bringing crack cocaine into their community.

The CIA claimed that 365 interviews with former CIA officials and Contra leaders were conducted. Over 250,000 pages of documents were assembled. Hitz reported that the agents responded that the charges were unfounded. In addition, other agents refused to cooperate in the investigation.

One retired CIA operant, Duane Claridge, said that the agency "sent me questions that were a bunch of (nonsense)" and that I wrote back that they were a bunch of "nonsense." Another agent, Donald Winters, said that he did answer questions but the interrogators were just going "through the motions of touching bases" and never asked and never asked substantive questions. Other outside government officials were never contacted by the CIA. Cresencio Arcos, who monitored the Contras from the State Department, and Robert Owen, North's lead man, were never contacted. Hitz did concede that cocaine traffickers in California had donated between $6,000 and $80,000 to the Contra cause but he considered that sum of money to be minuscule.

In January 1998, Hitz released his first report which addressed charges made by Webb in the Mercury News. In October Hitz published a second report which about drug running by Nicaraguan Contras. That first report was filled with damaging admissions.

First, Hitz released an October 22, 1982 cable from the CIA's directorate of operations, describing a prospective meeting between Contra leaders in Costa Rica for "an exchange in (the United States) of narcotics for arms." However, the CIA's director of operations instructed the agency's field office not to look into this imminent arms-for-drugs transaction "in light of the apparent involvement of U.S. persons throughout." This meant that the CIA knew that Contra leaders were scheduling a drugs-for-arms exchange and the agency was prepared to let the deal proceed.

Second, Hitz also released information which indicated that in 1984 the CIA acted with the Justice Department to seek the return from police of $36,800 in cash that had been confiscated from a San Francisco Bay Area Nicaraguan drug-smuggling gang whose leader was a prominent Contra fund-raiser. The money had been taken during what was at the time the largest seizure of cocaine in the history of California. Hitz said that the agency took action to have the money returned "to protect an operational equity; that is, a Contra support group in which it (the CIA) had an operational interest." Hitz released cables which showed that as early as the summer of 1981, the agency knew that the Contra leadership "had decided to engage in drug trafficking to the United States to raise funds for its activities." This Contra leader was Enrique Bermudez who told Contra fund-raisers and drug traffickers Meneses and Blandon that they should raise revenue in this manner.

The CIA remained silent on the issue of narcotics, since the agency knew that it could not expose drug traffickers. Hitz pointed out that the CIA should have reported Contra plans to run drugs to the Justice Department and other agencies. Nonetheless, the CIA kept quiet, and in 1982 got a waiver from the Justice Department giving a legal basis for its inaction. Hitz said that "several dozen" Contra leaders were involved in drug trafficking, along with another two dozen involved in Contra supply missions and fund-raising. He confirmed that the CIA knew that Ilopongo Air Force Base in El Salvador was an arms-for drugs Contra transshipment point, and he disclosed a memo in which a CIA officer orders the DEA "not to make any inquiries to anyone re: Hanger (sic) No. 4 at Ilopongo."

In March 1998, Hitz conceded that the CIA had maintained relationships with companies and individuals that the agency knew to be involved in the drug business. Even more astonishingly, Hitz revealed that back in 1982 the CIA had requested and received clearance from Reagan's Justice Department not to report any knowledge it might have of drug-dealing by CIA assets. These two admissions by Hitz contradicted many years' worth of CIA denials, much of it under oath to Congress.

In July 1998, the CIA inspector general did acknowledge that the Contras did have ties to drug trafficking and that he did cover it up. The agency indicated that approximately 50 members of the Contras were involved in narcotics and that the agency continued to work with about two dozen of them. However, the CIA stated that none of the suspected drug traffickers were in the top leadership of the FDN and that no CIA agents aided or abetted narcotics trade.

While Hitz did acknowledge that from the very beginning of the contra war that the CIA knew that their mercenaries planned to traffic in cocaine into the United States, the CIA stood by and did nothing to stop the movement. Then when other government agencies began to probe, the CIA impeded their investigations. When Contra money-raisers were arrested, the agency came to their aid and retrieved their drug money from the police. Still Hitz failed to address the question as to whether the CIA was complicit in bringing crack cocaine into Los Angeles and other cities in the United States. Congresswoman Waters, who demanded the inquest, said that she was not satisfied. "There are undeniable connections between the drug dealers and the Contras that raise questions still."

THE CLINTON CONNECTION: DRUG TRAFFICKING IN MENA, ARKANSAS

BARRY SEAL. One of the most infamous CIA drug traffickers from Latin America to the United States was Barry Seal, a five-foot-six 300 pound Vietnam veteran. Once he acquired links with the Medellin cartel in the 1970s, Seal acquired a small fleet of planes and hired pilots and mechanics and opened up shop in New Orleans. Seal boasted that he was the cartel's principal link to the cocaine markets in Arkansas and the southeastern United States. By the time he was killed in 1986, Seal had netted between $3 billion to $5 billion in drug money.

At the same time Bill Clinton was governor of Arkansas, Seal moved his operations to Mena where he was hired by the CIA to fly weapons south to the Contras. The area around Mena was also used to train CIA pilots and troops to fight the Sandinista government in Nicaragua. This activity continued from the beginning of the Contra war in 1981 to 1986 when the Iran-Contra scandal was exposed. According to the DEA, Mena was one of the international centers for drug trafficking. DEA spokespeople stated that the traffic amounted to thousands of kilos of cocaine and hundreds of thousands of dollars in profits. According to a 1986 letter from the Louisiana attorney general to Attorney General Ed Meese, Seal "smuggled between $3 billion and $5 billion of drugs into the U.S."

The millions in profits generated by the Seal trafficking in Mena and other resulted in an elaborate practice to launder or disperse the vast amounts of illicit money in Arkansas and elsewhere. Seal's financial records showed instances of daily deposits of $50,000 or more, and extensive use of an offshore foreign bank in the Caribbean, as well as financial institutions in Arkansas and Florida. According to IRS investigator Duncan, secretaries at the Mena Airport told him that when Seal flew into Mena, "there would be stacks of cash to be taken to the bank and laundered." One secretary told him that she was ordered to obtain numerous cashier's checks, each in an amount just under $10,000, at various banks in Mena and surrounding communities, to avoid filing the federal Currency Transaction Reports required for all bank transactions that exceed that limit. In November 1982, a Mena airport employee carried a suitcase containing more than $70,000 into a bank. "The bank officer went down the teller lines handing out the stacks of $1,000 bills and got the cashier's checks.""

Hundreds of thousands of dollars were laundered from 1981 to 1983 just in a few small banks near Mena, and that millions more from Seal's operation were laundered elsewhere in Arkansas and the nation. Documents in Seal's possession at the time of his murder also indicated that he had accounts throughout Central America and was planning to set up his own bank in the Caribbean.

Additionally, Seal's files suggested a scheme for building an empire. Papers in his office at the time of his death include references to dozens of companies, all of which had names that began with Royale. Among them: Royale Sports, Royale Television Network, Royale Liquors, Royale Casino, S.A., Royale Pharmaceuticals, Royale Arabians, Royale Seafood, Royale Security, and Royale Resorts.

An Arkansas gun manufacturer testified in 1993 in federal court in Fayetteville that the CIA contracted with him to build 250 automatic pistols for the Mena operation. William Holmes testified that he had been introduced to Seal in Mena by a CIA operative, and that he then sold weapons to Seal. Even though he was given a Department of Defense purchase order for guns fitted with silencers, Holmes testified that he was never paid the $140,000 the government owed him. Holmes said, "After the Hasenfus plane was shot down, you couldn't find a soul around Mena."

Seal frequently flew into cartel landing strips in the mountains of Venezuela and Colombia; he onloaded cocaine; and returned to Homestead Air Force Base in Florida or to the small Mena airport. From there, the 200 to 500 kilos from each flight were sold to drug dealers who moved them on to the streets of Miami, New Orleans, and New York City.

When Seal was suspected of returning to the United States loaded with cocaine, the DEA backed off. However, in 1983 he was arrested for bringing in 200,000 quaaludes to a Fort Lauderedale airport as a part of Operation Screamer. Seal was indicted and awaiting trial when he offered his services to the DEA. The agency turned him down, and he was sentenced to 10 years in a federal penintentiary. In 1984, Seal called the office of Vice President Bush's drug task force, and they immediately brought him onboard as an informant for the DEA. Seal's 10 year sentenced was commuted to six months' probation.

Upon being released, Seal helped set up a sting operation for the DEA. He called two Medellin cartel operatives in Miami and told them that he was back in the business of importing cocaine. Felix Bates and Carlos "Lito" Bustamante oversaw the distribution of the cartel's cocaine in the United States. Seal and Bates flew to Colombia where they met with drug lord Jorge Ochoa and planned a series of drug flights to the United States. Seal informed DEA agent Ernst Jacobsen of the plan and was sanctioned for his first sanctioned flight.After leaving Colombia loaded with cocaine, Seal claimed that he was forced to refuel in Nicaragua where he met Pablo Escobar and Fredrico Vaughn. Upon taking off, Seal said that he was hit by Sandinista gun fire and was forced to land at which time the cocaine was seized by Nicaraguan authorities.

The DEA and Seal agreed that they could set up Escobar and Vaughn in order to implicate the Sandinista government in drug trafficking. After other drug flights from Colombia to Homestead Air Force Base, the DEA sent Seal back to Nicaragua with $1.5 million in government money. North hoped that Seal could arrange a drug transaction with Escobar and Vaughn outside Nicaragua so that they could be arrested. The DEA thought that this scenario would persuade government officials to reconsider funding the Contras, but the plan was discarded. By now the CIA and NSC were leaking reports that Seal was a DEA informant, but his arms-for-drugs flights continued for a short time until he finally stopped his undercover work. Seal dropped out of the DEA program and went back to run drugs for his personal profit. However, he still continued to fly weapons for North southward to the Contras. While in Mena, Seal hooked up with Terry Reed in who once had flown for Air America in Southeast Asia.

In December 1984, Seal was arrested while smuggling marijuana into Louisiana. He once again attempted to bargain with federal authorities in order to shorten his sentence. Released on $250,000 bail, he testified in three major drug cases which brought convictions. For his part Seal was sentenced to six months in a halfway house in Baton Rouge. In July 1985, Seal met Michael Tolliver, a convicted American drug smuggler who was also at the halfway house. Tolliver said that Seal received $75,000 a trip for flying Contra weapons from Miami's airport into Honduras. According to Tolliver, on one occasion Seal had 28,000 pounds of marijuana when he arrived at Homestead Air Base in Florida. Upon returning from Central America, he was paid $75,000.

Seal also flew the same C-123 cargo plane which was later flown on a contra mission over Nicaragua in a CIA operation when it was shot down, and Eugene Hasenfus parachuted to safety. FAA records show that Fat Lady, serial number 54-0679, was sold by Seal months before his death. According to other files, the plane was sold to CIA operant Harold Doan. In October 1986, it was shot down over Nicaraguan air space, and CIA operant Eugene Hasenfus survived by parachuting to safety, but the pilot, William Cooper, was killed. In his possession was a diary which included the private telephone number of Vice President Bush. Other aircraft in Seal's smuggling fleet included a Lear jet, helicopters, and former American military transports which were also outfitted with avionics and other equipment by yet another company in turn linked to Air America.

WHAT DID GOVERNOR CLINTON KNOW? Cooper worked with Reed they both flew for Air America in Southeast Asia. In Reed's book, Compromised: Clinton, Bush, and the C.I.A., he described a number of covert activities around Mena, including a CIA operation to train pilots and troops for the Nicaraguan Contras, and the collusion of local officials. Reed brought a lawsuit against United States senators who allegedly attempted to block investigations into money laundering at Mena. Witnesses, such as Russell Welch, Arkansas State Police investigator, and they were harassed and intimidated. In addition Reed was supported by Internal Revenue Service agent Bill Duncan, Arkansas Attorney General J. Winston Bryant, Congressman Bill Alexander, and various other local law-enforcement officials and citizens. They were all convinced that there was "credible evidence" which linked Mena to drug trafficking between 1981 and 1986. They also believed that the crimes were committed with the acquiescence of the American government.

During the 1992 campaign, outside advisers and aides urged former California Governor Jerry Brown to raise the Mena issue against Clinton -- to ask why he had not done more about such serious international crime in his home state. Yet Brown also backed away from the subject.

The evidence was not pursued by United States attorney J. Michael Fitzhugh, the IRS, Arkansas State Police, and other agencies. Duncan testified before the joint investigation by the Arkansas state attorney general's office and the United States Congress in June 1991 and said that 29 federal indictments drafted in a Mena-based money-laundering scheme had gone unexplored. Fitzhugh, responding at the time to Duncan's charges, said, "This office has not slowed up any investigation and has never been under any pressure in any investigation." Duncan said the IRS "withdrew support for the operations" and further directed him to "withhold information from Congress and perjure myself." Duncan later testified that he had never before experienced "anything remotely akin to this type of interference. Alarms were going off and as soon as Mr. Fitzhugh got involved, he was more aggressive in not allowing the subpoenas and in interfering in the investigative process."

State policeman Russell Welch felt he was the most knowledgeable person regarding the activities at Mena. Yet he was not initially subpoenaed to testify before the grand jury. Welch testified later that the only reason he was ultimately subpoenaed at all was because one of the grand jurors was from Mena and "told the others that if they wanted to know something about the Mena airport, they ought to ask Welch."

In March 199,5 Arkansas state trooper Larry Patterson testified under oath that he and other officers "discussed repeatedly in Clinton's presence" the "large quantities of drugs being flown into the Mena airport, large quantities of money, large quantities of guns," indicating that Clinton may have known much more about Seal's activities than he has admitted. In addition state trooper Bobby Walker and several CIA employees have stated that they saw Governor Clinton at the Mena airport on various occasions.

Officials repeatedly invoked national security to quash most of the investigations. Court documents showed that the CIA and DEA employed Seal during 1984 and 1985 during Reagan's attempt to implicate the Nicaraguan Sandinista regime in cocaine trafficking. According to a December 1988 Senate Foreign Relations Committee report, the cases were dropped. The apparent reason was that the prosecution might have revealed national-security information, even though all of the crimes which were the focus of the investigation occurred before Seal became a federal informant.

With hundreds of millions of dollars in drug money flowing into Arkansas, it would be difficult to imagine that Governor Clinton knew nothing about the Mena operations. Eyewitnesses have attested that Clinton was aware of drug trafficking. State trooper L. D. Brown wanted to work for the CIA as part of the Mena operations. However, after he heard of the drug trafficking, he approached Clinton and said "that's Lasater's deal; that's Lasater's deal." Dan Lasater was an Arkansas millionaire who contributed large amounts of money to Clinton's gubernatorial campaigns, and he was also a convicted drug dealer.

In 1985, Clinton created Arkansas' Development Finance Authority, and the agency made its first industrial loan to Park on Meter, Incorporated (POM). Convicted drug dealer Michael Risconosciuto, a former contract employee for the CIA, claimed that POM was under a secret contract to manufacture chemical and biological weapons as well as components for C-130 transport planes for use by the Contras. Risconosciuto supervised the shipment of high tech equipment such as infrared gun scopes and vision goggles in Mena between 1980 and 1989. He said that Mena was the main drop-off point for cocaine shipments which he witnessed on numerous occasions. He maintained that bags of drugs would be thrown to the grown from low flying planes and that helicopters or trucks would then transport them to loading areas and then transported distribution points.

In the fall of 1995, several committees in the House of Representatives considered holding hearings on Mena and started interviewing witnesses and asking if they would be willing to testify in public hearings. Even special prosecutor Kenneth Starr expanded his Whitewater investigation from Little Rock to Mena. However, neither the House nor Starr followed up on their inquiries into Mena.

"UN-INVESTIGATING" THE CIA'S ROLE IN DRUG TRAFFICKING

UNITED STATES V. MACHAIN. In the 1992 Supreme Court ruling in United States v. Machain, American law enforcement officers were allowed to enter the countries of sovereign nations without their permission. They may abduct violators of United States drug laws against their will and return them to the United States to stand trial. Iran immediately claimed that they had the right to do the same in the United States.

As a result of an investigation by the Costa Rican Congressional Committee on Narcotics, numerous Americans supported Contra factions which were involved in drug trafficking on Costa Rican territory. This included North, Secord, Tambs, and Poindexter. The irony is that thousands of tons of cocaine were destined for the United States.

North testified under oath that he lobbied to obtain the release of Honduran army General Jose Bueso-Rosa from prison after he was arrested for smuggling 763 pounds of cocaine as well as for murder. Bueso-Rosa's partner was international arms dealer Felix Latchinian who was also a business partner of CIA agent Felix Rodriquez, in charge of the Contra supply network in El Salvador. North lied to Congress when he claimed that Bueso-Rosa had been arrested for "political reasons."

THE DRUG ENFORCEMENT AGENCY (DEA). Senior DEA agent Celerino Castillo reported drug trafficking out of Ilopango airbase in San Salvador between 1985 and 1991. He testified that he saw several packages of narcotics which were about to be flown from Ilopango to Panama. In addition, he asserted that several boxes of American currency was flown into the airbase. Castillo reported that hanger four was owned and operated by the CIA. He also contended that North's people and the CIA were at the two hangars at all times.

In a 1989 memo to North's aide Robert Owen, Castillo wrote that the El Salvador embassy was giving visas to these people even though they were documented in government computers as being narcotics traffickers.

Rodriguez maintained close ties with Bush and upper level CIA officials. In December 1985, Rodriguez attended the Christmas party at Bush's White House office, and was introduced to the staff as old friend of Gregg and Bush. Weeks later Rodriguez met in Bush's office with Colonel Sam Watson, Gregg's deputy in El Salvador, and Steele to discuss counter-insurgency. Four months later Rodriguez again met with Gregg and Bush as well as with North in Bush's office. In August 1986 Rodriguez met with Bush and Gregg to complain about the quality of arms shipments from Secord's arms supply operation. Later that same month Gregg met with Fiers, the Central American Task Force chief, to support the purchase of military equipment from Rodriguez rather than Secord. Gregg advised Fiers not to purchase any planes from Secord.

Wally Grasheim was also tagged by Castillo as being involved in drug trafficking. In seven DEA files Castillo wrote that he was "documented" cocaine and arms smuggler who transported illicit material from South America to the United States via Ilopango airport. In his layovers at Ilopango, he utilized hangars four and five. Grasheim was also known to carry DEA, FBI, and CIA credentials so that he would not be suspected of carrying cocaine. Castillo stated that Grasheim worked "hand-in-hand with Colonel Oliver North." When the DEA raided Grasheim's house, they found explosives, weapons, and radio equipment.

In 1986, Castillo attempted to report what he had discovered, hoping to launch a full scale investigation and shut down the smuggling operation. On several occasions he met with Edwin Corr, the American ambassador to El Salvador, to tell him about the operation. Corr stated that Castillo ran a covert White House operation which was overseen by North and that he should stay out of that operation.

Castillo even managed to give the information he had gathered directly to Vice President Bush. In January 1986, Castillo met the Bush at a cocktail party at the ambassador's house in Guatemala City. After describing his job to Bush, Castillo stated that the vice president merely shook his hand and he walked away.

Castillo was then ordered by he Pentagon to terminate his investigation of Grasheim. When Castillo continued to pursue the North investigation, he was suspended for three days in 1990. In 1991, he was transferred to San Francisco where he worked undercover, investigating the Hell's Angels in Oakland. In June 1992, after further conflicts, Castillo resigned from the DEA. Before stepping down, Castillo attempted to give the government more information which he had gathered on North. He secretly met with FBI agent Mike Foster, who was assigned to special prosecutor Lawrence Walsh.

Chief of the CIA Central American Task Force, Fiers stated in a sworn deposition to the Iran-Contra committees that he knew that Pastora was involved in cocaine trafficking. He also said that many members of Fiers' staff and his friends were also involved in drug smuggling.

RESULTS OF THE KERRY REPORT

After the Iran-Contra scandal broke in 1986, the Senate's Kerry Committee convened in April 1986. Its primary focus was on the illegal transportation of weapons to the Contras. Yet mounting evidence began to surface that the CIA was also involved in narcotics trafficking, originating with Colombian cartels. An immense amount of evidence indicated that high level Contra leaders as well as CIA operatives were involved in drug trafficking. As it turned out, the United States government had information regarding the involvement either while it was occurring or immediately afterwards. Government attorneys attempted to prevent drug trafficker George Morales from testifying. The DOJ offered him a lighter sentence if he would not divulge his ties to the Contras.

In a 1,166 page report the Kerry committee concluded that Contra members, pilots, and business people were involved in drug trafficking. The report said that drug dealers contributed cash, weapons, planes, pilots, air supply services and other materials to the Contras. Also, the Contras moved their funds through a narcotics drug trafficking and money laundering operation. Many of the drug dealers were informed that their actions were either on behalf of, or sanctioned by, the United States government.

The committee also stated that "the (United States) military and intelligence agencies running the contra war turned a blind eye to the trafficking." United States officials involved in Central America failed to address the drug issue for fear of jeopardizing the war effort against Nicaragua. In addition, the report stated that the State Department paid over $806,000 to known traffickers to carry humanitarian supplies to the Contras. including pilots who flew supplies for the Contras, mercenaries who worked for the Contras and Contra supporters throughout Central America.

However, the Kerry committee refused to address the issue of widespread drug trafficking through the war zones of northern Costa Rica. They did not find a single case which was made on the basis of a tip or report by an official of an American intelligence agency . This was despite the fact that an executive order required intelligence agencies to report drug trafficking to law enforcement officials and despite direct testimony that drug trafficking on the Southern Front was reported to CIA officials. American officials involved with the Contras knew that drug traffickers were using the Contra infrastructure and that the Contras were receiving assistance from drug profits. None of this was reported to the appropriate law enforcement agencies.

THE FAILURE OF THE "WAR ON DRUGS." Cocaine shipments from Latin America into the United States increased during the Contra War in the 1980s. But American authorities badly underestimated the flow of cocaine out of drug-producing countries over the last two decades of the twentieth century. When a new variety of coca in Colombia was discovered in the 1990s, the American government tripled its estimate of cocaine production in Colombia alone. By the late 1990s, the United States was spending $17.8 billion annually for its "war on drugs."

These higher estimates conflicted with numbers which General Barry McCaffrey, head of the White House Office of National Drug Control Policy, had released to the public. McCaffery claimed that the flow of cocaine into the United States would drop by 25 percent in 2002 and by 50 percent in 2007. For years, American officials said that most of the coca grown in Colombia was of a variety, ipadu, whose leaves yield relatively small amounts of cocaine. A higher-yield variety, E. coca coca, has been grown in Peru and Bolivia and then shipped to Colombia for processing and export. Thus, when satellite photos in mid-1999 showed acre upon acre of new fields of coca in Colombia, American intelligence officials assumed that they were growing the same low-yield coca plants -- approximately 165 metric tons annually -- which they had always cultivated. By the end of 1999, American officials determined that a third of the new variety of coca which yielded higher amounts of cocaine took just one year -- rather than three years -- to cultivate.

This higher estimate of cocaine shipments into the United States, along with the increase of border confiscations of the designer drug Ecstasy, indicated that American laws and anti-drug strategies were failing. The confiscations of Ecstasy at the American border soared by 700 percent in 1999, according to Customs Service figures.

These higher figures of drug flow into the United States came at a time when federal authorities began using technological means of tracking the flow of drugs northward from Latin America. American authorities increased the use of satellite photos to track the shipment of illicit drugs. Yet it became obvious in October 1999 that law enforcement was failing when American and Colombian authorities broke up a major Latin American cocaine ring. It was discovered that "Juvenal" network was exporting approximately 30 metric tons of cocaine a month to the United States. That amounted to more cocaine than that of all other cartels combined. An American official said, "There was just amazement that one organization would have the ability to distribute that much cocaine a month. The whole Juvenal thing really just illustrates why we have to get our act together in terms of reconciling these numbers."

Some American government officials believed that the Latin American cartels were not only stepping up shipments to the United States but they were increasing their exports to Europe or stockpiling large supplies of the drug. Anti-government rebels gained access to an increasing amount of the narcotics trade by the end of the century, thus allowing for the cultivation and movement of higher quantities of cocaine. The rebels also made it more difficult for American authorities to access key drug-growing regions.

United States authorities continued to believe that the best way to fight drugs was to pour more money into law enforcement agencies. More funds were allocated to the DEA, the FBI, the CIA, the State Department, and other agencies. Not only did this not reduce the flow of illegal drugs into the United States, but at times it became counter-productive. In one case, border agents at Los Angeles International Airport in the late 1980s did not realize that suspected traffickers were actually undercover DEA agents. The federal officers ended up drawing their weapons on one another. In other instances, United States Customs Service officials said that overseas analysts failed to let their border agents know what they were hearing about traffickers using shipments of fruit from Mexico or trees from Peru as a front to bring cocaine across the border.