During the course of the past several weeks, I've been engaging a series of town meetings around my state, Pennsylvania, and I note an extraordinarily high level of distrust of the government in so many, many lines. We see the militia movement. We see what had happened in a small township, Bradford, Pennsylvania; interest in a 20-year-old shooting of a man named Leonard Peltier. And yesterday we noted the filing of an information in the events relating to Ruby Ridge.

We intend to move through these oversight hearings very much as the Subcommittee of Judiciary did just a year ago this time on the hearings of Ruby Ridge.

We heard some 62 witnesses over 14 days of hearings, and I came out with findings right down the middle and found general satisfaction of what the Oversight Committee did in that situation. And this is a matter particularly suited for oversight. I am not saying how many hearings we're going to have or precisely what we are going to do because we're going to have to see how the matter unfolds. But it is a matter of some considerable interest, and it has achieved quite a high level of recognition around the country. I am going to take a little longer than usual today to set the stage with a summary of the matters as they have appeared in the public media.

Beginning August 18th of this year, the San Jose Mercury News ran a three-day series purporting to trace the origins of a crack cocaine epidemic to a pair of Nicaraguan drug traffickers with connections to the U.S.-backed Contras. And the series was entitled "Dark Alliance: The Story Behind the Crack Explosion." In stating what the San Jose Mercury found, we do not accept them, and we do not endorse them but merely outline these allegations to set the stage for the testimony, which we are going to hear today. The series focused on the activities of two Nicaraguans, Oscar Danilo Blandon Reyes (sp) and Juan Norvin Meneses Cantorero (sp) and a Los Angeles drug dealer named Ricky Ross. Blandon had served as a minor official in the government of former Nicaraguan dictator Anastasio Somoza. Blandon fled Nicaragua before the Sandanistas came to power and ended up in California. He entered a guilty plea in 1992 to conspiracy to distribute cocaine and served 28 months. Upon release, he became a DEA informant and in March 1995 testified against Rick Ross. Meneses is currently serving time in a Nicaraguan jail for a 1992 conviction on cocaine trafficking.

Meneses comes from a prominent Nicaraguan family, long-time supporters of the Somoza regime. His older brother was a general in Somoza's national guard and chief of the national police. Meneses has a long history of involvement in drug trafficking. As early as 1976, the DIA identified him as a cocaine supplier in Managua. He fled to the United States when the Somoza regime collapsed, was indicted by a grand jury in the United States in 1989. Ross, also known as "Freeway Rick," is a 36-year-old African American from south central Los Angeles. In the 1980s, he became a major cocaine dealer in Los Angeles, rising to such prominence that local authorities formed a "Freeway Rick Task Force," so called, in 1986. And according to the Mercury News series -- and what I'm reciting now comes from that series, and as I say, we don't accept it or endorse it, but are repeating it -- in 1987, Ross moved to Cincinnati for a cooling-off period, and in 1991 was arrested, convicted, and sentenced to 10 years for establishing a cocaine distribution ring in Cincinnati. That sentence was cut in half after he agreed to testify against Los Angeles narcotic agents accused of corruption. In 1995, he was arrested in a DEA sting involving Blandon and was convicted in March '96 of conspiracy to distribute cocaine and is awaiting sentence.

 The Mercury News series further alleges that in 1981, Blandon became involved with efforts to help the Nicaraguan contras through largely unsuccessful fund-raising rallies and parties. Blandon met Meneses, who encouraged him to sell cocaine to raise money. So says the Mercury series. Meneses took Blandon to Honduras to meet a contra military leaner, Colonel Enrique Bermudez. Blandon has testified that Bermudez told him that the, quote, "ends justify the means," close quote. And although Bermudez never mentioned drug trafficking, Blandon began selling cocaine supplied by Meneses to raise money for the contras. Sometime between 1982 and 1983, according to the Mercury News series, Blandon began supplying cocaine to Ross, who marketed it in the predominantly African American neighborhoods in south central Los Angeles.

 Again according to the Mercury News series, Ross turned the powdered cocaine into crack and became a major dealer in Los Angeles. According to that series, Meneses supplied Blandon -- he supplied Ross with a seemingly -- quote, "seemingly inexhaustible supply of high- grain cocaine," closed quote. The Nicaraguans supposedly laundered their profits, through a bank in Florida, back to the contra organization, the FDN, run by Adolfo Calero. The series refers to this as the FDN's drug operation.

 The series also makes what could be characterized as veiled references to possible CIA interference in the investigation and prosecution of Blandon and Meneses. In discussing Meneses's long history of drug trafficking and the unsuccessful investigation conducted against him, the series says, quote, "Records and interviews reveal that a number of these probes were stymied not by the elusive Meneses, but by agencies of the U.S. government." The article continues, quote, "Agents from four organizations -- DEA, U.S. Customs, the Los Angeles County Sheriff's Department, and the California Bureau of Narcotics Enforcement -- have complained that investigations were hampered by the CIA or unnamed national security interests," closed quote. And we will do whatever is possible to get to the bottom of that allegation.

 Since the series ran in late August, several members of Congress have called for an investigation. And the director of the Office of National Drug Control Policy, General McCaffrey, has also called for a review of the matter. Director of Central Intelligence Deutch testified before this committee of the CIA's intent to investigate, and he outlined that a preliminary review found no signs of CIA involvement in any such activity.

 The San Jose Mercury News series caused considerable national concern because of the question as to whether the U.S. government bears responsibility for the crack cocaine epidemic. Several major newspapers have independently examined the allegations of the Mercury News and reached different conclusions. The following is a very brief summary of some of those newspaper findings and, as the case with the San Jose Mercury, the committee does not accept or endorse any of those findings, but will repeat them to provide some balance as we begin this hearing.

 The other newspapers noted that the link in establishing an alleged connection between the rise of crack cocaine and the CIA- supported contras is the role of Blandon and Meneses.

 The Mercury News series characterizes Blandon and Meneses as contra leaders, saying that Blandon was one of the founders of the FDN in California. According to the other analysis, the Mercury News offers little support for this claim beyond a photograph of Meneses and the FDN leader, Adolfo Calero, and Blandon's assertion that he was selling drugs out of his sense of patriotism. The New York Times says, quote, "Neither of the two ever held an official position in any of the Nicaraguan groups." Close quote. The Los Angeles Times concluded that Meneses gave less than $50,000 to the contra effort, and Blandon's participation was even more limited. Other press reports have questioned the linkage between Blandon's dealings with Ross and the contra effort. Blandon's testimony indicates that at the time he started selling to Ross, he had stopped using Meneses as his principal supplier and was dealing directly with the Colombians. Blandon also testified that after his break with Meneses in 1982 or '83, he was not sending money to the contras but was in business for himself. It was only in late 1983 that he began his association with Ross. And according to these other news series, (if ?) Blandon was buying from the Colombians, then selling to Ross and pocketing the profits, there is no connection -- so say these other analysts -- between the CIA-backed contras and the crack that Ross was peddling on the streets of Los Angeles. All sources acknowledge that Meneses and Blandon trafficked in cocaine, but most have questioned the characterization that they fostered the crack epidemic. The Washington Post reported that Blandon, based on law enforcement estimates and his own accounts, handled about five tons of cocaine over his 10-year career. That is obviously a significant amount, but it is two-tenths of one percent of the nation-wide cocaine trade, and raises a question as to whether the Mercury News accurately characterized him as the, quote, "Johnny Appleseed of crack in California." Close quote.

 According to the other analyses, law enforcement and academic experts discount the hypothesis that any one individual or organization was responsible for the growth of crack. The epidemic was driven, so they say, by a combination of factors that began appearing across the country nearly simultaneously. These other news analyses concluded that Ross was a major Los Angeles crack dealer, but one of many, and Blandon and Meneses were mid-level traffickers who sympathized with the contras and probably donated a small (amount) of money to the cause in the early 1980s.

 And the other news analyses say the trio was not directly connected to the Nicaraguan contras or the CIA, and the rise of crack cocaine would have occurred regardless of their participation. That I say is a very brief setting as to what has appeared in the public media.

 And this is obviously a matter of very, very substantial importance. The news stories directly implicate the Central Intelligence Agency. This committee has direct oversight responsibilities for the Central Intelligence Agency. And we intend to see to it that all the facts are laid before the American public so that we can follow those facts and draw whatever conclusions are warranted. And as I say, today's hearing is just a beginning, where we will hear from a former investigation by a Senate subcommittee, the Committee on Foreign Relations, not the Intelligence Committee, and what investigations are now planned by the CIA itself and the Department of Justice. And this committee itself will be (dealing ?) considerably further.

 I know yield to my distinguished colleague, the vice chairman, Senator Kennedy -- Senator Kerrey.

 SEN. ROBERT KERREY (D-NE): Thank you very much, Mr. Chairman. And first of all, I do support strongly your decision to convene this hearing on these very important allegations that have been made against the CIA for its actions during the Reagan administration. Until we have the data, however, which the inspectors general before us today will uncover, our hearing must be tentative and inconclusive. But it can serve at least one very important purpose; it can signal the seriousness and determination of this committee to learn the truth and to act upon it.

 This is a very inflammatory subject to say the least. Either the CIA, a U.S. government agency, approved or condoned the introduction and sale of crack cocaine to Americans in order to finance the Nicaraguan contras during the Reagan administration, or the people who served in the CIA at the time, many of whom are still serving, have been erroneously accused. We have a duty to get to the bottom of these allegations. And as we do so, I am confident we'll be guided by the evidence and the evidence only.

 Speaking of confidence, I know Mr. Hitz, the CIA inspector general, very well. And I know the statute which makes him completely independent from CIA management. So I have confidence in his ability to get to the facts and to report them. (Cross talk.) Now the audience --

 SEN. SPECTER: We're going to ask that the proceedings be conducted in accordance with our regular rules. And we'll hear the witnesses, and we'll ask them questions. We'd ask for no response from the audience, please.

 SEN. KERREY: And I'd say to the audience, who shows understandable cynicism about my statement, that Mr. Hitz has been on many occasions -- many occasions -- under a great deal of pressure from the CIA as a consequence of his honest and direct evaluation of their performance. And on many occasions former directors have actually come before our committee and asked that he be removed, because he's done such a thorough job of evaluating.

 So I do not praise Mr. Hitz and say that I believe that his IG report will provide -- and we will make, to the extent possible, that information public so it can be examined -- I do not make a complimentary remark about Mr. Hitz in order to cover for the CIA; I do it because I believe the IG's report, which was initiated as a consequence of the CIA's concern for what is going on -- I believe that report is going to be enormously constructive, and I look forward to the work product.

 I do not know Mr. Bromwich, but I have the same very high expectation that we have had on Mr. Hitz when he has examined many of these things in the past. I would say parenthetically as well that one of the difficulties that we have is that when we recruit men and women who work -- whether it's for the Central Intelligence Agency or the FBI, whoever they're working for, we ask them to do many things and we ask them to do -- above all, to keep what they do in secret. It's a very difficult environment. These men and women have families. These men and women love their country. They're trying, to the best of their ability, to do their job. I believe that they should be afforded the same presumption of "innocent until proven guilty" that every other American is given. Regardless of the truth of the specific allegations in the Mercury News, I believe we must also step -- ask -- step back and ask how America was affected when the Reagan administration made the policy decision that communism in Nicaragua and not drug trafficking was America's top priority in Latin America. This policy choice may have made it easier for the cocaine cartels to build their business in this country, and it may have placed CIA personnel in contact they otherwise would not have had with drug traffickers. If the worlds of covert action and drug trafficking bumped into each other, we need to know how CIA people reacted and whether those reactions would be any different under today's rules. Mr. Chairman, emotion can be the enemy of evidence. But the emotional reaction to these allegations sends a powerful message. It is our duty, as elected officials, to listen to the message, learn from it, and act on what we learn. The message I am hearing is a deep-seated cynicism and hostility towards government and its motives on the part of many in the African American community. They contrast -- (murmurings of "That's right" from spectators) --they contrast the government's military and scientific prowess with its failure -- a long-running bipartisan failure, Mr. Chairman -- to keep drugs from ruining their families and their neighborhoods, and they conclude their government is, at best, indifferent to them.

 From their perspective, the war on drugs is war against the people of our own inner cities, not against those who mastermind and profit from this trade. And when you look at the great majority of those in prison for drug offenses, you can hardly argue with this point of view.

 If we are to bring something positive out of these allegations, Mr. Chairman, we must hear this message and we must work across party lines with the administration and with state and local government to put in place counter-drug programs which everyone in the country, including those in the inner city, can see our effective and are for the benefit for all Americans. A democratic government can't last very long if many of its own people view it as an enemy.

 SEN. SPECTER: Thank you very much, Senator Kerrey. (Applause.) I would underscore what you have said in one respect about the cynicism, and it is not only the African-American community which is cynical about what goes on in the government.

 And I would refer again to the hearings at Ruby Ridge where there was great cynicism as to what the FBI did and the Alcohol, Tobacco and Firearms unit. And a subcommittee in this very room, just a year ago at this time, as I had said earlier, conducted 14 hearings and heard 62 witnesses and produced a 155-page report. And while it has taken the Justice Department some time -- and I suggest too long -- they did file a criminal charge yesterday against a very high-ranking FBI official. And the responsibility really is lodged on oversight with the Congress. We have that responsibility. We'll hear today from executive officials, but the buck comes to the Congress of the United States and this committee will discharge its responsibilities fairly and fully. We'd like now to have Mr. Hitz and Mr. Bromwich step forward. And I would yield now to Senator Robb, who has joined us.

 SEN. CHUCK ROBB (D-VA): Mr. Chairman, I thank you. I have no opening statement. The allegations are serious and deserve a thorough inquiry and evaluation. I look forward to hearing the testimony of our opening witness and subsequently to the investigations that the inspector general will conduct. And I will suspend any conclusions until that time. I thank you.

 SEN. SPECTER: We'd like to proceed now to hear all three witnesses seriatim and then we will have questions. So if we could have, as I say, Mr. Hitz and Mr. Bromwich step forward and be seated at the witness table. And we turn to you first, Mr. Blum.

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