OLLIE NORTH'S SECRET NETWORK

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000100380002-1
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: December 14, 2011
• Sequence Number: 2
• Publication Date: March 9, 1987
• Content Type: OPEN SOURCE

I I I I_. I I I _~Il LI I u 111~ 11J1ll1ll11111 I- I I.. I L .
Declassified in Part - Sanitized Copy Approved for Release 2011/12/14: CIA-RDP90-00965R000100380002-1
A1TICLE AP EARED
ON PAGE
NF.WSWVEEK
9 March 1987
Oflie North's
Secret_Network
The Tower commission and exclusive reporting
by a team of Newsweek correspondents shed light
on the shadow government of North and his field
marshal, Richard Secord. They spent millions and
undermined the policies of the United States
There were five passengers on the Lock-
heed JetStar as it took off from Wash-
ington's National Airport on the long
flight to Central America. One was John
Piowaty, 51, a veteran fighter jock from
Destin, Fla. Piowaty and one of his fellow
passengers, a cargo handler named Jim
Steveson, had just been hired to fly hush-
hush missions over Nicaragua by a retired
Air Force colonel named Richard Gadd;
Gadd was on the plane too. "Gadd told me
there would be some people on board and if
I recognized them, I didn't recognize
them," Piowaty recalls. But Piowaty quick-
ly saw a man he knew sitting across the
aisle: Richard Seco a former Air Force
gener w om Piowaty had met-and in-
stantly disliked-at a banquet years be-
fore. Secord gave Piowaty a curt nod and
looked away. Secord and Gadd then began a
lengthy conference with the other man on
the plane. Thinking back to the flight,
Piowaty is all but certain the fifth passen-
ger was Oliver North,
Nortandtt- Secord, Secord and North: the
two musketeers of Ronald Reagan's secret
foreign policy. If it was sometimes hard to
tell which partner was running the show, it
is now entirely clear that together North
and Secord conceived, organized and man-
aged the astonishingly complex scheme
that lies behind the Iran-Nicaragua scan-
dal. They created a network of Swiss bank
accounts, shell corporations and covert-
operations teams that spent tens of mil-
lions of dollars, provided hundreds of tons
of weapons for the contra insurgency and
left a web of shadowy transactions that
may never be fully explained. They did
business behind the Iron Curtain, in the
Middle East, in Central America and Eu-
rope, conducted their own diplomacy and
pushed the U.S. government into actions
that undermined its own policies and credi-
bility. They were, in effect, their own Cen-
tral Intelligence Agency. "We are now un-
der way with getting [an Iranian contact]
aboard a chartered jet out of Istanbul,"
North reported to his boss, national-securi-
ty adviser John Poindexter, in September
1986. "CIA could not produce an aircraft on
such 'short notice,' so Dick has chartered
the [plane] through one of [the network's]
overseas companies. Why Dick can do
something in 5 min. that the CIA cannot do
in two days is beyond me-but he does."
North's role emerges vividly in the Tow-
er commission report. He was passionate,
dedicated and frenetically active in the
contra cause; he was also, it seems, enrap-
tured by the naive hope that the Beirut
hostages would soon be freed. The commis.
sion report reprints his projected schedule
for a climactic series of events that would
begin, in January 1986, with an air ship-
ment of U.S. weapons to Iran, proceed with
the release of the hostages in Lebanon and
lead to the Ayatollah Ruhollah Khomeini's
stepping down as spiritual leader of the
Islamic Republic of Iran. The plan was vi-
sionary, almost delusional, but its globe-
straddling logistics were laid out in pains-
taking detail-and Secord, designated by
the pseudonym "Copp," was to be a key
player at every step. "A man of many tal-
ents, 'ol Secord is," North wrote former
national-security adviser Robert McFar-
lane-and at another juncture he half seri-
ously proposed giving Secord a medal.
Caatra caaitry: North seemed heedless of
diplomatic niceties. According to the Tow-
er commission report, he told his Iranian
contacts that President Reagan wanted to
oust the president of Iraq, Saddam Hus-
sein, from office-a statement with explo-
sive implications for U.S. neutrality in the
Iran-Iraq war, and one that Reagan him-
self later claimed was "absolute fiction." In
May 1986 North told Poindexter the con-
tras were launching an offensive aimed at
capturing a major population center in
Nicaragua and declaring independence
from the Sandinista government. He sug-
gested the United States should come to
the contras' aid and hinted that it should
recognize the new "territory." Elliott
Abrams, assistant secretary of state for in-
ter-American affairs, admitted to the Tow-
er commission that he may have supported
North at the time. But Abrams said North's
idea was "totally implausible."
Another of North's intrusions into U.S.
foreign policy came closer to fruition. That
was his attempt to prevent the president of
Costa Rica, Oscar Arias Sanchez, from pub-
licizing a secret contra-resupply airstrip at
Santa Elena, near the Nicaraguan border.
According to the Tower commission report,
North said he had pushed for a tough Line-
a threat to withhold U.S. aid to Costa Rica
-in discussing tactics with other U.S. offi-
cials. "I recognize that I was well beyond my
chatter in dealing w/a head of state this
way and in making threats/offers that may
be impossible to deliver," he told Poin-
dexter through the NSC computer system.
"You did the right thing, but let's try to keep
it quiet." Poindexter wrote back. The Arias
government subsequently announced the
discovery and closure of the airstrip. Last
week an embarrassed Arias denied that he
or his government had ever received such a
threat from U.S. officials.
As the Tower commission reports, Proj-
ect Democracy was North's code name for
the covert network he and Secord built to
supply arms to the contras after Congress
cut off U.S. military aid in 1984. Project
Recovery was the code name for the Iran-
ian arms negotiations; the name implied its
real objective, which was to rescue Ameri-
can hostages being held by Shiite terrorists
in Lebanon. In practice, the two projects
merged after North, who was the contra
"case officer" within the National Security
Council staff, also took on primary respon-
sibility for the Iranian arms deal in the fall
of 1985. Project Democracy, or PRODEM,
was conducted in deepest secrecy to evade
STAT
Go 0 Ilk a
Declassified in Part - Sanitized Copy Approved for Release 2011/12/14: CIA-RDP90-00965R000100380002-1
 L 1~I J I .III lll ll!~1III~ L~ll11 llLlLl 1Vll kll iLVI~~I~~ VIWIL IJl1!i IIll LJILLL 11 L.I_ _UUI1L I L 1
Declassified in Part - Sanitized Copy Approved for Release 2011/12/14: CIA-RDP90-00965R000100380002-1
ALI
sheep, Edwin Wilson. Wilson
is the renegade officer who
amassed a fortune after his
ouster from the agency by,
among other things, selling
munitions and paramilitary
eex rttise to Muammar Kad-
dati. he is now serving a 52-year
sentence in a federal prison in
Marion, Ill. "If I wasn't in jail,"
he told NEWSWEEK, "I'd have
headed up this operation."
In the CIA Wilson was a spe-
cialist iin setting up corporate
covers or covert Purposes-
and once in private life he
turned his special skill to mak-
h rlv '70s
iamone 15 -
he had acquired Mount Airy
Farms, a lavish estate in the
RRY WN jj~ Alum y nnf far
W
WEEK
ARTHUR URACE-NEWSWEEK
congressional restrictions on U.S. govern-
ment support for the contras; as the Tower
commission concludes, "Congress may
have been actively misled." Project Recov-
ery was equally secret because of the in-
flammatory nature of what North and Se-
cord were doing-bartering for hostages
with a government that the United States
and its allies had every reason to believe
was deeply involved in supporting terror-
ism. And the nexus between the two was
the biggest secret of all-the still unproved
allegation, first made by Attorney General
Edwin Meese III, that up to $30 million in
Iranian arms-sale proceeds were diverted
to support the contras in their time of need.
How all that was done is the stuff of a
real-world spy thriller-even if, as the Tow-
er commission was forced to conclude, the
truth about the Iran-contra "money trail"
is still unknown. North and Secord declined
to testify before the commission, and
neither has told his story to the public. But
LA - MG-NE
S
On of a world: Mr. Outside, General from Washington where _ he
used to entertain his govern-
Secord; Mr. Inside, the NSC's North; Fawn Hall, men nen o was a reg-
secretary with immunity - ular visitor. So were Theodore
the Tower report provides a stunning inside
view of their operation. NEWSWEEH'S own
reporting, conducted by a team of more
than a dozen correspondents over the past
three months, tells the rest of the story. It
suggests that the roots of the North-Secord
network can be traced back 25 years, to the
L CIA's plots against Fidel Castro and its se-
cret war in Laos (chart, page 34). It demon-
strates that North relied on a cabal ofcovert
-operators whose bona fides were open to
_qgC1tig -a former CIt1 agent known for
his womanizing and dubious business deal-
ings, agun-happy Cuban exile, a mysteri ous
Iranian-American with a knack for hiding
_money. Even Secord, who as a private citi-
zen was entrusted with extraordinary au-
thority by North and his superiors, had a
shadow over his past: by his own account,
his Air Force career had been ruined by
suspicions that he had held an undisclosed
1 interest in a company fined for overcharg-
ingonPentagoncontracts.
GERTJENSEN
TM Erria: Months of mysterious cargoes
and even more mysterious voyages
Indeed, the network's check-
ered past is one aspect of the
Iran-contra affair that con-
founds even the most.sympa-
thetic observers-and the fear
that some participants were
mixing patriotism with a yen
for outsize profits is a theme
that crops up in the Tower com-
mission's report. Secord and
North's reliance on compart-
mentalized organization an
layers of corporate fronts is
drawn from the methodology of
CIA covert ops-and the net-
work's genealogy, if that is the
word, leads directly to one of
the CIA's most notorious black
Shackley and Thomas Clines,
two veteran CIA men who
would later be shut @d_9gt of the agency
during the. Carter administration. Clines
had worked for Shackley in Miami and
Laos. rd. another veteran of the war
in 57o-s, cemented his friendship with
Ines during eir days at the Naval War
College in Newport, R.I. They came out to
Mount Airy and, while their kids played
with the horses, the men sat around drink-
ing beer and enioving Wilson's lifestyle.
Wilson says his guests were probably
thinking, "Look, here's this stupid Wilson
and he's got this big farm. If he can do it,
we can do it, too."
. TM party EATSCO-the Egyptian
American Transport & Services Corp.-
came next. EATSCO was a freight com-
pany set up by Clines and an Egyptian
partner to ferry U.S. weapons to Egypt in
the wake of the Camp David accords. In
1982, its billing practices led to a federal
investigation; the company and its presi-
dent paid $3 million in civil claims and
fines to the U.S. government. Wilson says
Clines, who was never charged in the case,
started EATSCO with some of his money.
He also says Shackley, Secord and Erich
von Marbod, Secord's superior at the Pen-
tagon, were silent partners in the firm.
All of them have denied Wilson's alle-
gation. But Secord realized the scandal
meant the end of his hopes of winning an-
other promotion, and in 1983 he retired
from the Air Force. .
It must have been. traumatic-for Se.
cord, who by then had risen to become a
deputy assistant secretary of defense, had
always been a ferociously ambitious man.
"Not a personality kid," says retired Gen.
Harry (Heine) Aderholt, Secord's com-
mander in Southeast Asia. "But he's a
Declassified in Part - Sanitized Copy Approved for Release 2011/12/14: CIA-RDP90-00965R000100380002-1
 [111--1 LL ~1I1L1ll f I I . I II III 1II II Illll IIIIJIL)ILLJULU1JL1JI ll ~L _ JJI I _ _ L_ .. I t
Declassified in Part - Sanitized Copy Approved for Release 2011/12/14: CIA-RDP90-00965R000100380002-1
smart son of a bitch [and] the best goddam
officer I ever had. The people who worked
for him loved him. The people he dealt
with hated him." Secord gf dnated from
West Point in 1955 and chose an Air Force
commission: his career path took him to
the war in Laos, Thailand and to prerevo-
lutionary Iran, where he headed a U.S.
Air Force military assistance group to the
shah. It was in Teheran, during the 1970s,
that he met Albert Hakim, an Iranian
emigre whose California company, Stan-
ford Technology Corp., was trying to sell
security equipment to the Iranian armed
forces.' In 1983 Secord and Hakim be-
came partners in a Virginia-based affili-
ate called Stanford Technology Trading
Group International-and the key players
of what became the Project Democracy
network were in place.
Two documents published in the Tower
commission report suggest the complexity
of the North-Secord network. Discovered
by investigators in North's White House
safe, they are crudely drawn charts listing
'The Tower commission report contains a startling
allegation about Hakim from Manucher Ghorbanifar,
the middleman for most of the Reagan administra-
tion's dealings with Iran. Hakim, Ghorbanifar said.
"works, is operating for CIA. He was operating
against [Iran) in 1980 and 1981 ... in the form of
companies ... making trouble for [Iran) in the
Turkish border [region)." The commission did
not confirm Ghorbanifar's claim-but also did not
rebut it.
-3
more than 20 different corporations and ments, balances and deficits. "Re L-100
organizations. Some, like Lake Resources, drop to Blackies troops," one such message
Inc., are depicted as financial conduits; says, "emphasize we ought to drop some-
U.S. Justice Department investigators thing besides 7.62 [ammunition]; e.g., gre-
have been trying for months to get informa- nades, medical supplies, etc."
tion on a Lake Resources Swiss bank ac- Other network members performed sub-
count controlled by Secord. Others, like ordinate roles. Richard Gadd and Robert
Udall Research, are shown as operating Dutton, who retired from the Air Force last
companies: Udall Research built the secret , year, managed many of the operational
Costa Rican landing strip for use in the details, including the creation of the con-
contra-resupply operation. One chart di- tra-resupply airline that flew out of Ito-
vides the countries by region-South pango air base in El Salvador. (Congres-
America, Middle East and Africa. The oth- sional investigators last week conferred
er divides them by function: "Resource De- immunity on Dutton in order to get him to
velopment," "Financial Management," testify. Another figure in the scandal, Ed-
and "OP Arms" (operations and arms). ward de Garay, got immunity as well; de
The operation was actually simpler than Garay owns an air-charter company that,
the charts would suggest. To judge by the on paper at least, employed Piowaty and
Tower commission's evidence, Secord and the other members of the resupply opera-
North jointly oversaw the whole thing. tion's flight crews.) Albert Hakim, working
Among other details, the commission re- through a Geneva-based financial-services
vealed that in early 1986 North obtained 15 corporation, handled the money. And
"encryption devices"-probably a type of Clines, a flamboyant free-lance who seems
lap-top computer known as a Grid Com- oddly out of place among this buttoned-up
pass- rom t he ational Security Agency collection of former military men, was ap-
for use as a secret communications system. parently in charge of buying the weapons.
Secord got one, and so did a CIA officer in Roll nlumm, WilsondescribedClinesas
Costa Ricaj the commission reso rt does-not "a playboy" and . ` a pain in the ass," but
say who got the others.-Accord ' .the. -there is little question that the ex-CIA
report, Secord sent messages to North_ask agent was an expert in the twilight world of
inp1where and when ma ke airdrom to covert ops. One woman friend Clines
the contras, informing him of the contras' seems to have had many-told a South Car-
armament needs and informing fiimof ay- olina court that Clines was working with
Family Ties: How the North Operatives Came to Know One Another
1961.1963
Operation Mongoose
In Miami
1965
CIA Companies
in Washington
1967-1%9
The secret war
In Southeast Asia
1974-1979
Iran Connection
In Teheran
U-IM
I Shackle% l I lt,I.. ,i
Clines Quintero Horlriyue:
Following the Bay of Pigs fiasco. Theodore Shackley.
as Miami station chief, and Thomas Clines, reporting to
him, are ordered to carry out covert CIA operations
against Fidel Castro, including a plan to assassinate him
with an exploding cigar. Field men include Cuban exiles
Rafael Quintero and Felix Rodriguez, later known as Max
Gomez. Edwin Wilson, a junior CIA officer, reportedly
meets Shackley here.
tbilsu' I
Under Clines's supervi-.
sion, Wilson is authorized
by the CIA to set up dum-
my companies that provide
logistical support for the
secret U.S. involvement in
the war in Laos.
Clines 1 Kinnguv_ I
Shackley becomes the
CIA station chief in Laos and
runs the secret war there.
Clines and Rodriguez work
for him. In Thailand, Air
Force officer Richard Se-
cord schedules covert
flights using pilots who will
later fly for him in Central
America.
0
flukim
Dutton, a U.S. Air Force
officer, are appointed offi-
cial U.S. advisers to the
Iranian Air Force. Wilson
(gone from the CIA) and
Albert Hakim privately com-
pete to supply Iran arms. It
is in Teheran that they be-
come well acquainted.
Continued
l,_,_ Declassified in Part - Sanitized Copy Approved for Release 2011/12/14: CIA-RDP90-00965R000100380002-1
 I_ I
Liii I 11# ;; jllt.LLIIIIII III IIIIII II IIIIM1111_VII!LL.1ll11111J_IIII JL_ L__ -
Declassified in Part - Sanitized Copy Approved for Release 2011/12/14: CIA-RDP90-00965R000100380002-1
the National Security Council in 1985. An-
other, Shirley Brill, told NEWSWEEK that
she and Clines and a longtime CIA side-
kick Rafael (Chi-Chi) Quintero, were an
inseparable threesome during mysterious
trips to Europe. Brill, interviewed in the
presence of her lawyer, Greta van Sus-
teren, recounted experiences that seemed
to antedate the active phase of the North-
Secord network but that still revealed
1980
After Desert I
In Washington
After the mission to res-
cue the Iran hostages fails,
Secord and North help.
plan a second effort that was
never implemented.
1981
Mystery men~
Secord's pal Clines (left)
and his Iranian business
partner Hakim
pango air base in 1986, where he coordinat-
ed flight plans for the contra-resupply
operation. Another Cuban with a long his-
tory of working or the Felix odri-
guez, went by the nom de guerre o-f7Wax
Gomez and handled liaison with the Salva-
doran military. (Rodriguez was invited to
,the White House for a meeting with Vice
Presi ent George Bus -a fact that Brill
seemed to regard as ironic.) The pilots re-
garded both men as tough hombres; Brill
said she accompanied Clines, Quintero and
Rodriguez on wild hijinks around Miami in
the late '70s. Rodriguez "always carried a
concealed weapon," she said, and liked to
shoot out street lights for fun. "Then he'd
call the police," she said, "and tell them ...
'I'll pay for it tomorrow'."
This is Shirley': She and Clines met Ollie
North at least once, Brill said. The encoun-
ter occurred in a Washington-area night-
spot several years ago. Clines told her to "go
to the ladies' room and stay there for half
much about three key players. On one trip an hour" while he and North talked. On
to Geneva in 1979, Brill said, Clines and other occasions, she said, Clines had her
Quintero brought.a suitcase full of money place phone calls to North. "Tom would
back from a bank. "They took it back to the dial the number and say [to me],'Ask for so-
hotel and spread it out on the bed," Brill and-so' because he didn't want anyone to
said. Then they "got up on it, lay down and recognize his voice," Brill said. "When I
counted it, played with it. It was more mon- said [this is] Shirley, that automatically
ey than I've ever seen in my life." put [the call] through." On one occasion,
Quintero, a Cuban exile and veteran con- she said, she placed a call for Clines to
tract agent with the CIA, wound up at Ito- Defense Secretary Caspar Weinberger
AWACS We
In Washington
~orlh
Secord and North go
public to win congressional
approval of a sale of ad-
vanced planes to Sau-
di Arabia.
Egypt Arnim Deal
In Washington and Cairo
Clines becomes partner in EATSCO, a company later
found to have overcharged the United States for shipping
arms to Egypt. Wilson, a silent partner, alleges that
Secord and Shackley were also involved. The Justice
Department investigates: neither is ever charged. In
1982 Wilson is jailed for shipping arms to Kaddafi.
1982 - 1984
Old Boy Network
In the United States
Secord retires from the Air Force and
forms a partnership with Hakim. At first
their company unsuccessfully seeks U.S.
government engineering contracts, then
fails to land construction contracts from
Abu Dhabi, Egypt and Saudi Arabia.
Private &NAIN"
Richard Gadd retires from the Air Force,
sets up several companies that work with
firms owned by Secord and Hakim, Clines
works with Secord and a Portuguese arms
company gathering weapons for contras.
1985-1986
Iranrcontra Affair
Worldwide
Rodriguez Quintero
North, Secord and Hakim set up a pro.
gram to help the contras and are suspected
of diverting profits from the Iran arms
sales. Clines, Gadd, Dutton, Quintero and
Rodriguez set up logistics to get weapons
to contras.
All
rdl~lllld
Declassified in Part - Sanitized Copy Approved for Release 2011/12/14: CIA-RDP90-00965R000100380002-1
 I'lII- I 1J _ 11 I1L [lii II II l l I I II I1 V III II II III MUJII IIILL]-1 I ll I1. _ i _ 'JILL L ._ .
i 1
Declassified in Part - Sanitized Copy Approved for Release 2011/12/14: CIA-RDP90-00965R000100380002-1
"and the same thing happened with him."
(Weinberger said: "Who is Tom Clines? I've
never heard of him. It's absolute non.
sense.") Brill said she had no idea what any
of the phone calls were about
Project Democracy's main goal was get-
ting weapons to the contras despite the
congressional ban on military aid. NEWS-
WEEK correspondents traced 17 munitions
shipments worth $6.5 million through
North and Secord's network, and there may
have been more. As a rule, the network
supplied the contras with Soviet weapons
like the AK-47 assault rifle and the RPG
rocket grenade; it channeled its shipments
through Portugal. Portuguese military au-
thorities approved the shipments on the
basis of end-user certificates that indicated
the weapons were bound for Guatemala.
The buyers were listed as Trans World
Arms of Montreal, which appears on the
chart from North's safe, and Energy Re-
sources International, a firm that listed the
same address as Secord's office in suburban
Washington. The seller was listed as Defex-
Portugal, a Lisbon arms broker; according
to published reports, Clines was a familiar
figure around the Defex office.
Fifteen of the shipments were made by
air, and at least three went out of Lisbon
aboard Southern Air Transport planes, ac-
cording to airport sources. SAT, an air-
freight carrier based in Miami, is a former
CIA proprietary company and carried sev-
eral loads of .weapons to Iran when
North and Secord launched Operation Re-
covery; it, too, appears on the network chart
from North's safe.
The other two shipments of arms for the
contras went out by ship-and therein
hangsa tale. Sometime in thespringof 1985
the network chartered a small Danish
freighter called the Erria. The ship sailed
from Setubal, Portugal, for Gdansk, Po-
land, where it picked up a partial load of
East-bloc automatic weapons. It then re-
turned to Setubal, picked up 14,000 crates of
ammunition and departed for Puerto Bar-
rios, Guatemala. It actually docked in Puer-
to.Cortes, Honduras; presumably, the wea-
pons were then transshipped to the contra
base camps along the Nicaraguan border. A
year later, however, North and Secord de-
cided to buy the Erria for the network's
exclusive use. Hakim was sent to Denmark,
where he bought the ship. The Erria was
registered as the property of Dolmy Busi-
ness, S. A., a Panamanian corporation and a
North-Secord network front.
More strange turns followed. On May 11
the Erria sailed to Larnaca, Cyprus, where
North and Texas computer magnate H.
Ross Perot were trying to ransom the U.S.
hostages in Lebanon; the ransom attempt
failed. In July the ship left Setubal with
another load of munitions destined for Cen-
tral America-then turned back to Europe.
In early September the Erria transferred its
load to another Danish freighter, the Ice-
land Saga, which ultimately delivered most
of the load toa U.S. Army terminal in Sunny
Point, N.C. The Erria, meanwhile, was
headed for Cyprus again-and in October
she appeared in Haifa, Israel. According to
some reports, the Erria picked up a load of
U.S.-made machine guns in Haifa, then set
sail for the Persian Gulf in what was report-
edly an attempt to trade the machine guns
-.1u~Ti ~
(us. ? ' /s)
Global 0411WOrk? Diagram found in North's safe suggests a flow chart
to the Iranians for a captured Soviet T-72
tank. NEWSWEEK sources said, however,
that the T-72 was actually being offered by
Iraq-but in any event the swap never took
place. Other news reports say North also
offered the Erria to the CIA as a floating
radio station to broadcast ro aganda
against Colonel Kaddafi; the agency turned
own is o er. e N hip, sitting idle in the
Danish f Korsor, is now embroiled in a
lawsuit between a Danish charter outfit run
by an old friend of Clines and Compagnie de
Services fiduciaires (CSF), yet another com-
pany that appears on the network organ iza-
tional chart.
North himselfdescribed the network best
in a computer message to Poindexter inJuly
1986-at a time when Congress was moving
toward approval of the resumption of mili-
tary aid to the contras. "We are rapidly
approaching the point where the PROJECT
DEMOCRACY assets in CentAm need to be
turned over to CIA for use in the new pro-
gram," he wrote. "The [total] value of
the assets (six aircraft, warehouses, sup-
plies, maintenance facilities, ships, boats,
leased houses, vehicles, ord-
nance, munitions, communica.
tions equipment, and a 6.520
[foot] runway on property
owned by a PRODEM propri-
etary) is over $4.5M [million].
All of the assets-and the
personnel-are owned/paid by
overseas companies with no
U.S. connections."
The big bang: It was, as North
noted in another context, "one
hell of an operation"-but
where did all the money come
from, and where did it go? In-
vestigators assume there must
have been a diversion from the
Iran arms sales, and there are
many rumors about so-called
third-country donations to Pro-
ject Democracy. One is that the
Saudi royal family kicked in
something like $31 million to
North and Secord's secret kitty.
Saudi Arabia's ambassador to
the United States, Prince Ban-
dar bin Sultan, denies the
charge. But NEWSWEEK has
learned the Saudis are them-
selves trying to trace the
network money trail. North.
Secord and Hakim are at
ground zero in an ongoing in-
vestigation with enormous ex-
plosive potential-and there is
every reason to believe the big
bang is yet to come.
MORGANTHAUlvith
Tom I
SA DZA, JOHN BARRY
and DAVID NEWELLin Washington,
FRED COLEMAN in Lisbon.
ERIK CALONIUSin.Wiami
and bureau reports
Declassified in Part - Sanitized Copy Approved for Release 2011/12/14: CIA-RDP90-00965R000100380002-1