PANELS TO PROBE AFGHAN ARMS FUND

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000605090039-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: May 3, 2012
• Sequence Number: 39
• Publication Date: January 13, 1987
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2012/05/03: CIA-RDP90-00965R000605090039-3
A-E Panels to Probe Afghan Arms Fund
CIA-Run Swiss Account Will Be Examined./or Possible Misuse or Diversion
By Walter Pincus
asliin{ldwi P6st Staff Writer
Senate and House committees are plan-
ning to investigate the possible misuse or
diversion of funds in a CIA-run Swiss bank
account that received more than $500 mil-
lion for the purchase of arms for the Afghan
rebels, according to congressional sources.
The inquiries have been sparked by the
current Iran-contra scandal, in which mil-
lions of dollars generated by U.S. arms
sales to Iran vanished after being disbursed
to arms dealers and other middlemen. At-
torney General Edwin Meese III said some
of that money went to aid the Nicaraguan
rebels, but congressional investigators have
had trouble tracking it.
The Swiss account for the Afghan rebels
was established two years ago with a prom-
ise of $250 million each from the United
States and Saudi Arabia. The money was to
be used to pay for Soviet, Chinese and other
arms and to ship them to the rebels over
circuitous routes.
Some members of Congress and key gov-
ernment officials responsible for monitoring
the program have been concerned for more
than a vear that "there may have been some
skimming,'one source involved in the pro-
gram said yesterday.
Others worry that the Central Intelli-
gence Agency does not have enough people
to monitor the funds once money goes to
intermediaries, according to a congressional
source. "This is a large operation and there
are only a few people running it," one ad-
ministration official said.
According to sources, some CIA officials
have argued that they don't need many peo-
ple monitoring the program because of their
experience with covert arms purchasing.
But other agency officials have argued
against undertaking management of big
paramilitary programs, such as Afghanistan
and the contras, on the grounds that the
agency does not have the personnel to con-
trol the ultimate use of funds and such op-
erations cannot be kept secret.
Last January, Lt. Col. Oliver L. North Jr.,
who was then a National Security Council
aide, told CIA officials to use the U.S.-Saudi
account for the Afghan rebels to handle the
first funds from the Iran arms sales when
the agency could not establish a new Swiss
account fast enough to meet North's needs,
according to the draft staff report of the
Senate Select Committee on Intelligence.
CIA Director William J. Casey has told
Congress that the funds were briefly com-
13 January 1987
mingled, and an agency spokesman said last
month that the money was passed on to the
Pentagon to pay for weapons sold to the
Iranians.
The investigating panels-the House
Permanent Select Committee on Intelli-
gence and the new Senate committee or-
ganizing to probe the Iran arms dealing-
wilt also look into use of the Swiss account
and other covert funds to pay for consul-
tants called in to train Afghan rebels and
other freedom fighters in the use of U.S.
and foreign weapons, sources said.
The rapid increase in the amount of clan-
destine funds voted for Afghan rebels fight-
ing against Soviet forces in their country
would be "reason enough" for the inquiry,
according to one member of the House in-
telligence committee.
From a level of $280 million in fiscal
1985, the CIA budget allocation for Afghan
freedom fighters grew to $470 million in
fiscal 1986 and $630 million in the current
fiscal year.
On Nov. 27, 1985, The New York Times
reported that former representative John
LeBoutillier (R-N.Y.) said Jonathan Jay Pol-
lard, who was convicted of spying for Israel,
told him that he had evidence that the CIA
was diverting Afghan funds to support the
contras. LeBoutillier went on to say that
such statements by Pollard made him re-
alize "I was dealing ... with a guy-who was
full of hot air, full of exaggeration."
When congressional investigators last
November traced those first Iranian arms
purchase funds to the U.S.-Saudi account,
they began making broader inquiries as to
how the money that passed through that
account was used, according to congres-
sional sources. One House member, aware
of the account, plans to request that it be
audited, a congressional source said.
State and Defense Department officials,
who have overseen the development of the
fast-expanding covert arms program, have
themselves questioned how the large sums
have been spent, since Afghan rebel leaders
until recently complained they were not
receiving enough equipment.
"We were concerned about the money
getting there," one administration source
said, adding that the Afghan rebels recently
have picked up the pace of fighting with the
arrival of more equipment.
The possibility that some weapons pur-
chased with covert money allocated for Af-
ghanistan were sent to the contras was
raised yesterday by Andrew Eiva, director
of the Federation for American-Afghanistan
Action.
Eiva said that in January 1985, $50 mil-
lion was taken from the CIA's Afghan ac-
count to purchase 40 Swiss-made Oerlikon
20-mm automatic weapons to be shipped to
the rebels inside Afghanistan. To date, he
said, only 11 have reached the Afghan
forces.
Eiva said congressional inquiries into the
Afghan :CIA account were "well overdue,"
adding that his analysis showed that given
the large appropriations of the past three
years, up to 50 percent of the money does
not appear to have reached Afghanistan in
the form of equipment.
The committees will also study whether
the Soviet-made and other foreign equip-
ment purchased was in workable condition
when it reached the rebels. "We had a lot of
problems last year with weapons that did
not work," a former Pentagon official said
recently.
The committees also want to look into
whether the middlemen and arms dealers in
the Iran and contra programs were also
used in the much larger Afghan operation.
Retired Air Force major general Richard
V. Secord, who once ran the Pentagon's
military assistance program, provided ser-
vices both in the contra resupply operation
and in handling funds and arranging deliv-
eries in the Iran arms sales, according to
the Senate draft report.
Two former CIA officials who have in the
past worked on arms purchases, Robert T.
Shackley and Thomas Clines, have also
been mentioned in recent news stories deal-
ing with the Iran-contra affair.
Clines was identified by The Wall Street
Journal as having helped North in a hostage
release effort. Shackley was reported by
The New York Times as having encouraged
1984-5 efforts to obtain the release of a
former colleague, CIA agent William Buck-
ley, who was taken hostage in Lebanon by
pro-Iranian extremists and is reported to be
dead.
Declassified and Approved For Release 2012/05/03: CIA-RDP90-00965R000605090039-3