Scope of IG Investigation. In August 1996, the San Jose
Mercury News published a three-part series of articles entitled "Dark
Alliance." The series discussed drug rings in California and their alleged
connections to the Central Intelligence Agency (CIA)-backed Nicaraguan Contra
resistance in the 1980s. On September 3, 1996, Director of Central Intelligence
(DCI) John Deutch asked the CIA Inspector General to investigate these
allegations of connections between CIA, the Contras and drug trafficking. A
17-person team was formed to conduct the investigation.
The CIA Inspector General (IG) investigation included an examination of
all information in CIA's possession concerning the individuals specifically
cited in the San Jose Mercury News articles, and CIA knowledge of any
drug trafficking allegations in regard to persons directly or indirectly
involved in Contra activities, CIA assets, other individuals associated with CIA
who dealt with the Contras, and companies and individuals involved in supporting
Contra activities in Central America in the 1980s on behalf of CIA. The Report
of Investigation consists of two volumes.
Volume I. Volume I, The "California Story," addresses
findings regarding whether CIA knew of narcotics trafficking by Ricky Ross,
Norwin Meneses and Danilo Blandon in Southern California. It also includes
findings related to whether CIA knew of the narcotics trafficking activities of
Julio Zavala and Carlos Cabezas in Northern California, their possible ties to
the Contras and CIA's contacts with the San Francisco U.S. Attorney's Office in
connection with their prosecution. Volume I was issued as a classified report on
December 17, 1997. An unclassified version and an unclassified overview were
made public on January 29, 1998. (2)
Volume I of the Report describes in detail the San Jose Mercury News
allegations; the Scope of the IG Investigation; the Procedures and Resources
used in the investigation; the Origin and Development of the Contra Conflict;
CIA's Involvement with the Contras; Cocaine Flows through Central America in the
1980s; and Results of Previous Investigations into Alleged Contra Drug
Volume II. Volume II, The "Contra Story," addresses
CIA's knowledge of any alleged drug trafficking by the Contras and persons or
organizations who supported the Contra program in the 1980s. Volume II was
issued as a classified report on April 27, 1998. The investigation included a
review of any information in CIA's possession relating to:
CIA's knowledge of drug trafficking allegations regarding Contra-related
individuals, organizations, independent contractors, and other individuals
supporting the Contra program.
CIA's handling of, and response to, such drug trafficking allegations; and
CIA's sharing with other U.S. Government entities, including law
enforcement agencies and the Congress, of such allegations.
The investigation on which Volume II is based was not intended to prove
or disprove the allegations or information received by the Agency concerning
possible drug trafficking by specific individuals or organizations. Further,
the description of such allegations or information in Volume II is not intended
as representing the judgment of the Office of Inspector General (OIG) regarding
the veracity of the allegations or information. The investigation also was not
intended to review or evaluate the effectiveness of any CIA programs in Central
America in the 1980s. Finally, factual information in Volume II regarding
whether particular allegations or information were or were not shared with other
U.S. Government agencies or the Congress does not represent a judgment as to
whether or not such information was required to be so shared.
Organization of Volume II. In the course of the investigation,
OIG reviewed CIA records regarding hundreds of Contra organizations, Contra
leaders, Contra supporters, and individuals and companies that were involved in
the Contra program. Based on this review, several dozen Contra-related
individuals and one Contra organization were found to have been the subject of
allegations or information concerning involvement in drug trafficking. All
information that was made available to the OIG from CIA records regarding these
Contra-related organizations and individuals was examined.
Volume II is divided into five separate sections pertaining to
Contra-related groups of organizations and individuals that were found to have
been the subject of drug trafficking allegations or information.
Contra Organizations--Any Contra group that was known to CIA
to have had an organizational policy of trafficking in drugs to raise money for
the organization. The OIG investigation found information about only one such
Southern Front Contras--Contra leaders, members and
supporters--including those associated with the FRS, BOS, UNO/South, and
ARDE--who were based primarily in Costa Rica.
Northern Front Contras--Contra leaders, members and
supporters--including those associated with the FDN, UNO, 15th of September
Legion, ERN, MISURA, MISURASATA, and YATAMA--who were based primarily in
Other Individuals Involved in the Contra Program--Individuals
operating on behalf of CIA in support of the Contras, including foreign
nationals used by CIA as intermediaries with various Contra organizations.
Pilots and Companies--Pilots and companies assisting in the
Contra supply effort.
Within each of these five categories, Volume II examines the
organization or individual's background; the Agency's knowledge of drug
trafficking allegations regarding the organization or individual; CIA's response
to the allegations; and CIA's sharing of such allegations with other U.S.
Government entities, including law enforcement agencies and Congress.
Volume II also discusses the guidance that was available by statute,
regulation, or CIA policy for dealing with known or suspected drug traffickers
and how CIA personnel understood this guidance. The extent to which CIA
disseminated intelligence relating to drug trafficking on the part of
organizations and individuals associated with the Contras is also explained.
This Volume also includes three exhibits and five appendices. The
appendices discuss information and issues related to Contra-drug trafficking
allegations and other matters that were deemed to be relevant to this
EXECUTIVE SUMMARY AND CONCLUSIONS
Did CIA conspire with or assist Contra organizations or
Contra-related individuals in narcotics trafficking to raise funds for the
Contras or for any other purpose?
CIA and CIA Employees. No information has been found to
indicate that CIA as an organization or its employees conspired with, or
assisted, Contra-related organizations or individuals in drug trafficking to
raise funds for the Contras or for any other purpose.
To what extent was CIA aware of allegations or information
indicating involvement by Contra organizations or Contra-related individuals in
drug trafficking? What did CIA do after becoming aware of such allegations or
Contra-Related Organizations. CIA received information that
one Contra-related organization--the ADREN "15th of September"
group--engaged in drug trafficking for fund raising purposes. This
anti-Sandinista group formed in 1980 and disbanded in January 1982. No
information has been found to indicate that other Contra organizations engaged
in drug trafficking for fundraising or any other purpose, although individual
members were alleged from time to time to be involved in drug trafficking.
Contra-Related Individuals--Southern Front. CIA received
allegations or information regarding drug trafficking by Contra-related
individuals in the Southern Front that operated from Costa Rica. In 1984, CIA
received allegations that five individuals associated with the Democratic
Revolutionary Alliance (ARDE)/Sandino Revolutionary Front (FRS) were engaged in
a drug trafficking conspiracy with a known narcotics trafficker, Jorge Morales.
CIA broke off contact with ARDE in October 1984, but continued to have contact
through 1986-87 with four of the individuals involved with Morales.
The Morales Connection. In December 1988, the Senate
Subcommittee on Terrorism, Narcotics and International Operations published a
report entitled "Drugs, Law Enforcement and Foreign Policy." One
section of that report summarized the involvement of ARDE/FRS members with drug
trafficker Jorge Morales based upon Department of State information:
Information developed by the intelligence community indicates that a senior
member of Eden Pastora's Sandino Revolutionary Front (FRS) agreed in late 1984
with (Morales) that FRS pilots would aid in transporting narcotics in exchange
for financial assistance . . . the FRS officials agreed to use FRS operational
facilities in Costa Rica and Nicaragua to facilitate transportation of
narcotics. (Morales) agreed to provide financial support to the FRS, in
addition to aircraft and training for FRS pilots. After undergoing flight
training, the FRS pilots were to continue to work for the FRS, but would also
fly narcotics shipments from South America to sites in Costa Rica and Nicaragua
for later transport to the United States. Shortly thereafter (Morales)
reportedly provided the FRS one C-47 aircraft and two crated helicopters. He is
reported to have paid the sum of $100,000 to the FRS, but there was no
information available on who actually received the money.
(Ellipses and parentheses are as they appear in the Subcommittee report.)
In addition to the five individuals associated with ARDE, CIA received
drug trafficking allegations or information concerning 16 other individuals who
supported Southern Front Contra operations based in Costa Rica.
Contra-Related Individuals--Northern Front. CIA also received
allegations or information concerning drug trafficking by nine Contra-related
individuals in the Northern Front, based in Honduras.
Other Individuals Involved in the Contra Program. CIA received
drug trafficking allegations or information concerning five individuals who were
used to support the Contra program.
Companies, Pilots and Other Individuals Working for Companies Used
in Support of the Contra Program. CIA received drug trafficking
allegations or information concerning 14 pilots and two other individuals who
were associated with companies that provided support for the Contra program.
CIA also learned of drug trafficking allegations or information concerning three
companies that were used to support Contra activities from 1984 until at least
CIA received drug trafficking allegations or information concerning an
individual who flew Contra support missions from Ilopango Air Base in El
Salvador in 1985 and 1986.
CIA also received other information in 1986 to 1989 regarding
additional suspicious activities, individuals and aircraft at Ilopango Air Base.
However, no information has been found to indicate that CIA was aware that this
information indicated that Contra-related organizations or individuals used
Ilopango Air Base for drug trafficking.
What was the nature and extent of any statutory, regulatory, or
policy guidance concerning CIA's handling of information about Contra-related
organizations or individuals that were subject to allegations or information
indicating they were involved in drug trafficking?
Statutory Guidance. The Department of Defense
and Military Construction Appropriations Act for Fiscal Year 1987(3),
which authorized $100 million for Agency support to the Contras, included a
prohibition on the provision of any assistance to any group that, among other
things, retained in its ranks any individual "who has been found to engage
in . . . drug smuggling . . . ."
Executive Branch Guidance:Reporting Potential
Crimes to Department of Justice.From August 15, 1979 to March
2, 1982, Attorney General Guidelines issued under Executive Order 12036 required
CIA to report to DoJ possible violations of "any" federal
laws--thereby including narcotics laws--by persons who were employed by,
assigned to, or acting for CIA. The definition of "employee" in the
Guidelines included assets, agents and independent contractors. Reporting of
possible violations of federal law by non-employees was limited to a specific
list of types of offenses that did not include narcotics violations.(4)
From March 2, 1982 to August 3, 1995, a Memorandum of Understanding
(MOU) between the Attorney General and the DCI under Executive Order 12333
governed reporting of potential crimes. That MOU continued to require CIA to
report to DoJ possible violations of "any" federal laws--again thereby
including narcotics laws--by CIA employees. However, because of a change in the
definition of "employee," agents, assets and independent contractors
were moved to the non-employee category and thereby subject to the list of
reportable offenses that did not include narcotics violations. The MOU provided
that CIA would continue to have the discretion to report any offense by a
non-employee to DoJ in addition to the potential crimes that were specified in
A February 11, 1982 letter from Attorney General William French Smith
to DCI William Casey that accompanied the MOU noted that the 1982 MOU contained
no formal requirement regarding the reporting of narcotics violations by
non-employees and urged CIA's continuing cooperation with DoJ and the Drug
Enforcement Administration. This letter did not, however, establish a legal
requirement that CIA report potential narcotics violations by non-employees
because no such requirement was included in the MOU. A February 8, 1985
internal DoJ memorandum stated explicitly that there was no requirement for CIA
to report non-employee narcotics violations and suggested that the MOU would
have to be renegotiated in order to include narcotics violations by
non-employees as reportable crimes.
In August 1995, the 1982 DoJ-CIA
Crimes Reporting MOU was revised. Under that revised MOU, assets and
independent contractors are again considered "employees" for crimes
reporting purposes. Further, narcotics violations are included among the list
of "non-employee" crimes that must be reported to DoJ.
CIA Guidance. There was no Agency-wide regulation
explaining the crime reporting responsibilities of CIA employees under E.O.
12333 and the DoJ-CIA MOU until December 23, 1987.
CIA's Directorate of Operations (DO) developed a draft DO Handbook in
December 1980 that included a section that focused on restrictions and
prohibitions regarding the use of narcotics intelligence collection agents who
might be involved in narcotics trafficking. The instructions were not
applicable to the Contra-related individuals or contractors discussed in Volume
II, however, since none of those individuals or contractors were involved in the
collection of narcotics intelligence. A summary of the 86-page draft DO
Handbook was sent to all DO field stations in July 1982 and stated that the
draft had been approved by the DCI and represented Agency policy. The DO
Handbook was not formally issued until January 1996, however, more than 15 years
On March 6, 1987, Headquarters sent a cable to CIA personnel in Central
America that, among other things, included a statement of the prohibition in the
FY 1987 Department of Defense and Military Construction Appropriations Act on
providing assistance to any group that retained in its ranks any individual who
has been found to engage in drug smuggling. A January 21, 1988 Headquarters
cable to CIA personnel in Central America that were directly involved in
supporting the Contra program also summarized that statutory restriction.
On April 9, 1987, Acting DCI Robert Gates sent a memorandum to the
Deputy Director for Operations (DDO) Clair George stating that it was imperative
that CIA avoid involvement with individuals tied to the Contra program who were
"even suspected of involvement in narcotics trafficking." The Gates
memorandum instructed the DDO to vet contract air crews, air services companies
and subcontractors with the Drug Enforcement Agency (DEA), U.S. Customs and the
Federal Bureau of Investigation (FBI) to ensure that the Agency would not be
involved in any way with individuals suspected of being involved in drug
Were relevant CIA regulations and policies
timely and adequate? Then-current CIA regulations and policies did not
address a number of drug trafficking issues that were repeatedly encountered by
Agency managers and personnel during the Contra program:
CIA had no published regulations or policies that addressed CIA employees'
contacts with individuals or companies that were known or suspected to have been
involved in drug trafficking, unless they were part of a counternarcotics
operation or program. The Contra program was not such an operation or program.
CIA had no regulations or policies regarding CIA's responsibilities to
identify and pursue allegations or information indicating that organizations or
individuals were involved in drug trafficking.
CIA had no regulations or policies that required that information be
requested from DEA, the Customs Service, or U.S. Government entities, other than
the FBI, regarding individuals or entities of whom CIA had knowledge of drug
allegations or information.
ADCI Gates' April 1987 memorandum stating that it was imperative that CIA
avoid involvement with individuals in Central America who were even suspected of
narcotics trafficking was not issued in any form that would advise Agency
employees generally of this policy.
Agency personnel involved in the Contra program were not generally
notified until January 1988 of the prohibition in the Department of Defense and
Military Construction Appropriations Act for FY 1987, which went into effect in
October 1986, on assistance to any group that retained in its ranks any
individual who was found to engage in drug smuggling. A number of CIA personnel
who were involved in the Contra program say they were aware of the statutory
proscription prior to 1988, but no written guidance was provided to Agency
personnel for determining that an individual had been "found to engage in
drug smuggling" under the FY 1987 provision.
Recollections of CIA Personnel Regarding Alleged Drug
Trafficking by the Contras. Notwithstanding the shortcomings in
applicable regulations and policy, many employees and former employees say today
that they understood the potential seriousness of information that linked
participants in the Contra program to drug trafficking. Indeed, many say they
believed that the Agency's policy was not to have relationships with such
Were CIA actions in dealing with Contra-related organizations or
individuals that were subject to allegations or information indicating they were
involved in drug trafficking consistent with relevant statutes, regulations and
Statutory Requirements. The provision in the
FY 1987 Department of Defense and Military Construction Appropriations Act
called for a cutoff of funding to any Contra group that retained a member who "has
been found" to engage in drug smuggling. During the period from October
1986 until December 1987 in which this prohibition was in effect, CIA was aware
of allegations or information of varying credibility suggesting that ten Contras
may have been involved in drug trafficking. Additional actions could have been
taken by CIA in each of these cases to determine the credibility of the
allegations and information in order to comply with the intent and spirit of the
Executive Branch Requirements.CIA crimes
referrals practices pertaining to potential federal narcotics violations were
consistent with the applicable provisions of Executive Orders 12036 and 12333,
the Attorney General Guidelines under E.O. 12036 and the 1982 MOU between the
Department of Justice and CIA under E.O. 12333. No information has been found
to indicate that the non-inclusion of narcotics violations by assets in the
crimes reporting requirements of the 1982 DoJ-CIA MOU was intended to protect
CIA Policies and Practices. CIA acted inconsistently in handling allegations or information indicating that Contra-related organizations and individuals were involved in drug trafficking. In some cases, CIA pursued confirmation of allegations or information of drug allegations. In other cases, CIA knowledge of allegations or information indicating that organizations or individuals had been involved in drug trafficking did not deter their use by CIA. In other cases, CIA did not act to verify drug trafficking allegations or information even when it had the opportunity to do so. In still other cases, CIA deemed the allegation or information to be unsubstantiated or not credible.
With respect to air services companies, contract air crew members and
other companies that were used to support the Contra program, CIA took prompt
action in responding to ADCI Gates' April 9, 1987 instructions by requesting
relevant information from U.S. law enforcement agencies in addition to the FBI.
However, CIA's actions in response to information received from law enforcement
agencies that indicated a possible drug trafficking connection by air services
companies and individual crew members were inconsistent. Despite such
information, several pilots and one mechanic continued to be associated with
their companies in support of the Contra program.
To what extent did CIA share allegations and information indicating
that Contra-related organizations or individuals were involved in drug
trafficking with other U.S. Government entities?
Congress. Although records of
congressional briefings in this regard were incomplete and often lacked specific
detail, CIA briefings of the congressional intelligence oversight committees on
Contra-related matters occasionally included allegations or information
indicating involvement by Contra-related organizations or individuals in drug
trafficking. CIA determined what was responsive to the requirement of keeping
the congressional intelligence oversight committees "fully and currently"
informed about Contra-related drug allegations.
CIA did inform the intelligence oversight committees in a timely manner
of the 1984 allegations of association by ARDE members with drug trafficker
Jorge Morales and their agreement for Morales to provide aircraft in exchange
for facilitation of drug transport. However, CIA did not inform Congress of all
allegations or information it received indicating that Contra-related
organizations or individuals were involved in drug trafficking. During the
period in which the FY 1987 statutory prohibition was in effect, for example, no
information has been found to indicate that CIA informed Congress of eight of
the ten Contra-related individuals concerning whom CIA had received drug
trafficking allegations or information.
Law Enforcement and Other Agencies.The March 1982 DoJ-CIA Crimes Reporting MOU did not require that CIA report
to DoJ narcotics trafficking violations by assets, or independent contractors
associated with the Contras because assets and independent contractors were not
defined as "employees" for crimes reporting purposes. However, the
1982 MOU gave CIA discretion to report offenses not included in the MOU. This
discretion was exercised in 1984 when information pertaining to association by
Southern Front Contra members with drug trafficker Jorge Morales was reported to
DoJ. It also was exercised in a 1988 referral to DoJ of allegations of drug
trafficking concerning another Contra official.
Allegations and information indicating drug trafficking by 25
Contra-related individuals was shared in a variety of ways with other Executive
branch agencies, including law enforcement agencies as formal intelligence
reports, cables and briefings in Washington, D.C., and the field. However, no
information has been found to indicate that any U.S. law enforcement entity or
Executive branch agency was informed by CIA of drug trafficking allegations or
information concerning 11 Contra-related individuals and assets. Beginning in
January 1988, CIA began providing a U.S. law enforcement agency's regional
office in Central America with information received by CIA regarding possible
drug-related or other suspicious activities at Ilopango Air Base.