CONTRA AID NETWORK: BIG AND NOT SO SECRET

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000504880003-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: February 23, 2012
• Sequence Number: 3
• Publication Date: May 4, 1987
• Content Type: OPEN SOURCE

Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP90-00965R000504880003-7
ARTICLE APPEA D
ON PAGE
CHICAGO TRIBUNE
4 May 1987
Contra aid network:
igand
ary in Mlot.
not so sj'et Secord, a onetime
retired from the military in Mai.
1983 after a lengthy Justice De
1 By Michael Tackett
rand James O'Shea
Chicago Tribune
WASHINGTON-Michael
Toliv a drug-smu ing pi o
w o to Is about the time he flew
a Planeload of guns from south
Florida to Central America for
the U.S.-backed rebels fighting
in Nicaragua, then returned with
a planeload of marijuana, land-
ing in the cover of darkness at
Homestead Air Force Base near
Miami.
From a room at the Metropol-
itan Correctional Center in
Miami, Toliver has told his story
to reporters, congressional inves-
tigators and a special prosecutor.
He said he was working for a
secret network of former mili-
tary and intelligence operatives
organized to supply the rebels
with weapons during a time that
Congress had cut off funding.
Others at the Miami prison
have similar stories.
They make some sense. Drug-
smuggling pilots are thought to
be among the more skilled and
reliable in flying missions in
dangerous areas. And the con-
tras, the Nicaraguan rebels
trying to overthrow the Sandinis-
ta government, clearly needed
the guns and money that drugs
sales could bring.
The stories fall short in one
critical area, however. Toliver
and the others have not provid-
ed clear evidence that U.S. offi-
cials authorized the guns-for-
drugs flights.
But the fact that investigators
are treating these stories serious-
ly, traveling to south Florida for
interviews with convicted felons,
shows vividly the pitfalls of
privatizing foreign policy and
just how far the Reagan ad-
ministration's effort to prop up
the contras veered out of con-
trot.
Over the next several months,
extraordinary congressional
hearings will review the stories of
Toliver and other pilots in the
same room where Cabinet secre-
taries, military officials and lower-
level civil servants will describe
their own roles in the effort.
The committees will examine
how Reagan administration offi-
cials worked to skirt congressional
restrictions on military aid to the
contras by using a private network
of CIA operatives, former military
officials, arms dealers, soldiers of
fortune, lawyers, financiers and
political fundraisers.
Faced with a congressional ban
on contra funding in 1984. admin-
istration officials continued to as-
sure rebel leaders that they would
not be abandoned.
One White House official mak-
ing such assurances, according to
former contra leader Edgar
Chamorro. was Marine Lt. Col.
Oliver North, then director of po-
litical and militar} affairs for the
National Security Council-the
panel chosen by the administra-
tion to shepherd rebel support on
the theory that the NSC was not
an "agency;' and thus not covered
by the congressional restrictions.
North, taking a cue from
Reagan's public passion for the
contras. helped to assemble a not-
so-secret army with private and
public money to carry out a plan
that Congress had forbidden.
But the sheer breadth of the net-
work indicates that North could
not have done it alone and that
much of it had to be in place be-
fore he became involved.
To fill the financial void, the ad-
ministration assembled a team to
raise funds privately for the con-
tras. The first major figure North
recruited in early 1984 was retired
Army Gen. John Singlaub. Later,
another former Pentagon official,
retired Air Force Maj. Gen. Rich-
ard Secord, joined the team
formed to help raise money and
procure weapons.
Singlaub, known by his crew-cut
hair and outspoken Americanism,
has acknowledged he tried to soli-
. cit money from South Korea and
Taiwan and to purchase weapons
for the rebels.
partment investigation into his
business ties to Edwin Wilson. a
renegade CIA agent now serving a
federal prison term for selling ex-
plosives to Libya. There were no
criminal charges, but Secord said
it destroyed his military career-a
career that included several intelli-
gence assignments with the CIA
and long experience in the Middle
East.
Two congressional sources said
they think Secord also will provide
hearsay testimony suggesting that
North' told him that President
Reagan knew about the diversion
of Iranian arms sales profits to the
contras. But Reagan has said he
did not know of the diversion-an
action that Atty. Gen. Edwin
Meese said could be illegal-and
the sources said that Secord has
no first-hand knowledge that the
President knew of it.
By April. 1984, the administra-
tion had appointed Secord to head
in antiterrorism task force that re-
ported directly to the NSC. With-
in a year, he had helped set up a
private resupply operation for the
contras. often using former CIA
pilots and the former CIA airline,
Southern Air Transport. He also
played a crucial role in North's ef-
forts to sell U.S. arms to Iran and
divert the profits to the contras.
Secord has agreed to testify be-
fore the congressional committees.
He has told friends and associates
that he thinks he did nothing
wrong and that he can prove that
high U.S. government officials had
authorized his actions.
Sen. Daniel Inouye (D., Hawaii),
chairman of the Senate commit-
tee, said Secord knows details of'
the Iran arms sales and the contra
resupply operation as well as any-
one in the case.
But anything Secord says at the
hearings can be used against him
by Independent Counsel Lawrence
Walsh, who is assembling evidence
for further prosecutions in the
Iran-contra affair.
Another Secord associate who
helped North also was investigated
for his ties to Wilson. He is
Thomas Clines, a retired CIA offi-
cer and targe of a criminal inves-
tigation into massive overbilling to
the U.S. in connection with De-
fense Department arms shipments
cen ,lwd
STAT
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to Egypt in the early I980s. A
company he controlled pleaded
guilty and paid a criminal fine.
Clines is an expert in obtaining
Eastern bloc weapons and in other
aspects of arms trafficking. Ac-
cording to the sworn testimony of
a close friend, Clines said he was
working for the NSC in 1984 and
1985 on a contract basis.
A senior administration official
said North reached out to Secord
and Clines because they were al-
ready selling weapons in Central
America. Walsh identified Clines
as a "principal" target of his crim-
inal investigation, and implored
Congress not to give him immuni-
ty in exchange for testimony.
Also working with the network
was Albert Hakim, Secord's
Iranian-born business partner, who
was well-versed in the secretive
world of Swiss bank accounts.
Hakim, who has been granted lim-
ited immunity, provided congres-
sional investigators with records of
some of those bank accounts, es-
tablishing that profits from the
Iran arms sales were diverted to
the contras and that some money
remained in accounts set up for
the rebels.
At first, the network functioned
smoothly. Secord associates Rich-
ard Gadd and Robert Dutton
helped oversee weapons-resupply
flights and distribution. Felix Ro
iie~ aid Rafael uintero, two
well-known CI. operatives, coor-
dinated air and field operations.
Mercenaries trained in the Unit-
ed States by a group called Civil-
ian Material Assistance also went
to Nicaragua to help the contras.
To raise funds, North used Carl
"Spitz" Channell, a consultant
with an uncanny knack for extrac-
ting thousands of dollars from
well-heeled conservatives to
wheedling $40 contributions from
widows. North used Channell to
set up tax-exempt corporations,
adding the incentive of income-tax
deductions for potential donors.
The President wrote Channel! a
letter on Oct. 10, 1985, praising
his efforts. Some of the money
Channell raised was_ routed
through bank accounts in Switzer-
land and the Cayman Islands to
spur resupply of the rebels.
A company Channell controlled
deposited $1.7 million to the ac-
count of Lake Resources. a Swiss
''paper" corporation that North
and Secord had used to funnel
money to the contras.
Last Wednesday, Channell
pleaded guilty to conspiring to de-
fraud the Internal Revenue Service
in connection with his fundraising
activities for the contras.
North called his secret effort
Project Democracy, establishing a
covert arm for a program Reagan
earlier had authorized to "toster
the infrastructure of democracy."
Project Democracy chartered
corporations in Panama and Swit-
zerland, bought a ship to ferry
arms across the Atlantic, built an
airstrip in Costa Rica and bought
at least one plane for the contras.
Lewis Tambs, the former ambassa-
dor to Costa Rica, told the Tower
Board, a special review panel ap-
pointed by Reagan to investigate
the Iran-contra affair, that the air-
strip was built at the behest of
North and the CIA.
The congressional committee
hearings also will investigate the
extent to which the CIA and its
director, William Casey, remained
deeply involved in the effort de-
spite congressional prohibitions.
Inouye said Casey played a "sig-
nificant" role in the secret net-
work.
The historical record of the con-
tra war effort from 1984 through
1986, pieced together through
public testimony, congressional
hearings and interviews with intel-
ligence, foreign relations and na-
tional security sources, provides a
broad outline of a program that
had at the very least the implicit
blessing of the President and his
key advisers.
"If North were doing a lot of
things during that time period that
were unwise or illegal, there had to
have been people aware of that,"
said a former NSC staff member.
Clearly. Casey was one of them.
The CIA directed contra troops,
selected their leaders and planned
their strategy well into 1984. The
agency also helped the contras
write and publish a manual in-
structing the rebels on how to
carry out political assassinations.
And the CIA knew about the gun-
running operations.
Casey even knew, as early as
Oct. 7, 1986, that funds from the
U.S. arms sale to Iran might have
been illegally diverted to the con-
tras.
The CIA director was as un-
yielding as the President in his
support for the contras.
But it was Reagan himself who
set the tone for private support for
the contras. Fearing that aid to the
contras would be cut off by Con-
gress in 1984, the President ap-
proved the solicitation of funds
from private sources and foreign
governments to keep the contras
functional as a fighting force.
He continued his drive to pro-
mote the contras, including a
major speech in April, 1985, at a
Nicaraguan fund-raising dinner in
Washington, despite the concern
of his NSC staff that critics would
question the propriety of being so
overtly involved in helping the
contras get money.
The program, following a maxim
of covert action, was conaucted so
that administration officials could
plausibly deny government in-
volvement because of the congres-
sional prohibitions.
Nonetheless, the chronology of
events leads to the conclusion that
the CIA, the armed services and
other government agencies re-
mained involved deeply in the
contra effort.
North, for example, had no ex-
perience in finance or tax law. Yet
he allegedly set up a series of tax-
exempt corporations for contra
funding and multinational cor-
porations through which contribu-
tions could be laundered. North
also used an account set up by the
Pentagon under the heading Pro-
ject Yellow Fruit to fund secret
military operations.
Overall, congressional investiga-
tors estimate that the network
raised nearly $100 million in con-
tributions from private individuals
and U.S. allies. The agency that
had the skills and the experience
to organize such a vast network
was the CIA.
CIA Director Casey made.his
mark as a lawyer by publishing a
series of tax manuals and is con-
sidered a tax expert. He also
headed Reagan's presidential cam-
paign in 1980, making him well-
versed in national fund-raising.
Moreover, Casey favored the
CIA getting back into the business
of covert action. During the Car-
ter administration, CIA covert ac-
tion almost disappeared, and the
agency reverted to being essential-
ly an intelligence-gathering opera-
tion.
That changed under Reagan,
who reportedly has signed at least
50 "findings," presidential orders
permitting covert action. Walsh
said his investigators have re-
%iewed 200,000 pages of agency
documents relating to the Iran-
contra affair. tar more than from
any other government agency, in-
cluding the NSC.
But the C1 4L and Casey have
consistently denied involvement in
the fund-raising network. Reagan
has said he was aware that private
citizens were donating money to
the contras. but he said he thought
it was to pa'., for TV ads urging
Congress to resume funding for
the contras.
As the network expanded,
North, the CIA and others at the
NSC took a more active role in
running the contra war. But by
mid-1986, the network had grown
well beyond North's ability to con-
trol the operation. By August, for-
mer National Security Adviser
Robert McFarlane, fearing that
North was mentally and physically
exhausted, suggested he be sent to
Bethesda Naval Medical Center
for an evaluation.
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Troubles surfaced on other
fronts, too. Some, such as
Singlaub, said they joined the net-
work for reasons of patriotism.
But for others, the profit motive
clearly was at work.
Evidence is abundant that some
of the contributions were, paid as
bribes to military officials in Hon-
duras, according to U.S. govern-
ment sources and a Honduran
military official. Investigators also
believe that those who bought and
transported weapons, such as. Se-
cord and Clines. took exorbitant
commissions standard in black
market deals and that contra lead-
ers maintained a high standard of
living at a time when troops were
scrounging for clean bandages.
Rodriguez complained to Don-
ald Gregg, Vice President George
Bush's national security adviser,
that the contras were being
charged inflated prices for shoddy
equipment and that the airplanes
used in the resupply operation
were barely functional, a senior
administration official said.
The longer this back-channel op-
eration existed, the more splin-
tered it became. Freelancers,
fueled only by the opportunity to
make money, thrust themselves
into the existing network.
"The gun-running was right
there in the open," said John
Mattes, a federal public defender
in Miami, a key clearing point for
many weapons shipments.
"In that period from 1984 to
1986, anything was possible and
anything could be done," said
Mattes, whose clients include a
man convicted on a charge of run-
ning guns for the contras.
On Oct. 5. 1986, the fragile na-
ture of the operation became star-
kly apparent. A cargo plane, fi-
nanced originally by Southern Air
Transport, was shot down over the
jungles of Nicaragua and Eugene
Hasenfus, a cargo handler from
Marinette, Wis., was captured by
Sandinista troops. Hasenfus said
he had been told the mission was
sponsored by the CIA.
The crash laid bare the private
arms supply operation that North
and the administration had refused
to acknowledge.
The congressional oversight
committees knew "damn little"
about North's activities, said a for-
mer staff member of the Senate
Foreign Relations Committee.
"Several times we sensed some-
thing and we tried to get in touch
with North, and he never of back
to us," the former staffer said.
"The upshot was he was never
willing to send anyone to talk to
the Republican staff on the com-
mittee.
"Around the time the Hasenfus
plane crashed, we had a meeting
with Elliott Abrams [an assistant
can affairs] and people from the
agency [the CIA]. Without going
into details, the meeting raised as
many questions as it asked.
"I called Fawn Hall [North's
secretary], and she promised
I called back and she said He
can't talk to }ou now because he
is on a mission of the greatest na-
tional importance.' "
North was in Iran trying to
trade U.S. arms for hostages. And
From private contributors to Nicaraguan rebels
Carl Channel)
Organized and ran
National Endowment
for the Preservation
of Liberty, a tax-empt
foundation that
solicited wealthy
Americans to donate
to Nicaraguan contra
causes.
Lt. Col. Oliver North
National Security
Council aide, helped
Channell raise money
and directed how
funds should be
routed to contras.
International Business Communications
Public relations firm headed by Richard Miller, hired by Channel) to
disburse money from contributors to contras. Funds are allegedly
directed by North to foreign bank accounts.
Richard Secord
Lake Resources
Swiss bank account controlled by Ret. Maj. Gen.
Richard Secord and his business partner, Albert
Hakim, who carried out North's sale and shipment
of arms to Iran. Funds from contributors allegedly
commingled with profits from Iran arms sale.
Contras
Nicaraguans in armed opposition to their government received
benefits from money in Lake Resources account, according to a
chart investigators found in North's office safe.
J?
Declassified in Part - Sanitized Copy Approved for Release 2012/02/23: CIA-RDP90-00965R000504880003-7