CONTRA CORRUPTION SAID TO WORRY NORTH

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000605070006-1
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: May 4, 2012
• Sequence Number: 6
• Publication Date: May 7, 1987
• Content Type: OPEN SOURCE

STAT,
Declassified in Part -Sanitized Copy Approved for Release 2012/05/04 :CIA-RDP90-009658000605070006-1
AD~`n~LE APPEARED
~ May ~9s~
Contra Corru tion Said to Worn North
t' Y
Rebel Leader Confronted in Miami Meeting, Second Testifies
" ~t
H
~~ ~>~By Joe`Pichirallo~`
Wa`shmgtmi Puvt Staff'Wiitci
tras under North's auspices were.
deposited in a Swiss bank account
that was also used for X30 million in
funds diverted from the secret Iran-
ian arms sales. Between July 1984
and March 1985, about $32 million
allegedly from Saudi. Arabia had -.:
been turned over directly to
account. ,
Calero, in a _ telephone interview, ,
denied this week that funds were
misspent and said the Nicaraguan
rebels will be able. to provide Con-
gress with; complete accounting.
Calero-confirmed that he attended
the. Miami meeting, -but said he
does not recall North raising the
issue of possible misuse of funds.
Another U.S. government official
involved in the contra program yes-
terday confirmed that North had
serious. concerns about how Calero
and his organization were handling
the funds. The official suggested
that North's concern may have
been a factor in the decision in the
latter half of 1985 to have Second
play a greater rote in disbursing
private contributions to the contras.
Second testified that after No-
vember 1985 nearly $2 million in
private donations raised for the con-
eg'l`ati~ons~~ according to Secoe~d's
While President Reagan and his
administration publicly embraced
the contras as the modern-day
equivalent of the "founding fathers,"
Lt. Col. Oliver L. North fretted
over reports .of possible waste and
corruptidn , within the movement,.
retired E1ir Force major general
Richard .V. Second testified this
week.
"He was afraid that if anything
like this was going on ...the image
of the resistance could. be badly,
damaged, it could be ruinous, in
fact;' Sword>toltf the congressional
Iran-cot~tix committees.
At slate-night meeting in July_
1985 a1 a `1Vliami airport hotel,
North coriftonted contra -leader
Adolfo -Cal~,e,.~lirectly with the al-.
` ADOGI'0 CALE[IO
...does not recall North's question
Calero's group, the Nicaraguan
Democratic Force (FDN).
Second's testimony, as well as
documents released by the select
Senate and House Iran-contra com-
mittees, also renewed questions
about the role U.S. officials in Cen-
tral America played with the Sal-
vadoran-based contra air resupply
operation Second set up at North's
request.
Second testified at yesterday's
hearing that on a trip to El Salvador
in April 1986 he discussed the re-
supply operation with Edwin Corr,
the U.S, ambassador to El Salvador.
"I know .that he was sympathetic
with our operation, and I know that
he kept track of it," 8ecord said.
But, he said, Corr simply provided
"moral support."
A senior embassy official in EI
Salvador said yesterday that Corr
has previously stated that "he would
not be doing his job if he did not
know about" the operation, but the
official added that Corr did not-play
any active role.
Army Col. James Steele, then the
senior U.S. military adviser in El
Salvador, provided the air resupply
operation "a lot of good guidance
and information," particularly in
dealing with Salvadoran military
officials, Second said, but refused to
pass on intelligence information.
is rules simply would not perm
it;'Second said.
Second said the Central Intelli-
gence Agency's senior official in
Costa Rica at that time, who has
been identified under the pseudo-
nym "Tomas Castillo," was the most
coo ra ive icial and provid-
ed intelligence. to the operation,
including where troops were de-
ployed inside Nicaragua. Second
said that Castillo "worked very
hard" to try to "keep us as informed
as possible and to forward as much
information to us as~ he could." Cas-
tillo, who was given a special gov-
ernment encryption device that he
used to communicate directly with
North about contra air drops, was
recalled and disciplined by the CIA
after his role was revealed.
At the time the air resupply was
-under way, Congress had banned
U.S. military. assistance to the con-
tras. But beginning in January
1986, the CIA was permitted to
exchange intelligence with the reb-
els. Aformer congressional intel-
ligence committee staffer said the
CIA was allowed to provide general
intelligence, including information
regarding the deployment of troops,
but it could not advise the contras
on how to carry out a specific mil-
itary action.
Throughout 1984 and 1985, Rea-
gan sought to contrast the Ni-
caraguan Sandinista government-
which he called a "communist dic-
tatorship"-with the contras, whom
he called the "moral equal of our
founding fathers."
In a radio address on June 8,
1985, Reagan, singled out contra
leader Calero by name and quoted
him as saying "true peace can only
come with democracy."
Less than a month later in the
~,~nt~n~
Declassified in Part -Sanitized Copy Approved for Release 2012/05/04 :CIA-RDP90-009658000605070006-1
 Declassified in Part -Sanitized Copy Approved for Release 2012/05/04 :CIA-RDP90-009658000605070006-1
'~.
4
a.
Miami meeting, North confronted
Calero with reports that the rebels`
dwindling funds "might be getting
wasted, squandered or even worse,
some people might be lining. their
pockets," according to Secord, who
was present.
Secord said that North -specific-
ally expressed concern about the
fact that Calero's brother, Mario, a
businessman based, in New Orleans,
was purchasing and shipping clothes
and other nonlethal items to the
contras in Central America.
North said this was a "potential
sore point" because "unless this was
carefully handled ... it could turn
into a real mess- for .[Adolfo]
Calero," Secord said.
Mario Calero, in a telephone in-
terview, said he was unaware of any
concerns North.may have had about
his role, but said he can document
.that there were no improprieties.
"If retired general Secord is imply-
ing anything," Mario Calero said, "I
.believe he is .. ,talking through his
hat."
Declassified in Part -Sanitized Copy Approved for Release 2012/05/04 :CIA-RDP90-009658000605070006-1