TWO NEWSPAPER ARTICLES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90M00005R001100160023-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 27, 2016
• Document Release Date: September 5, 2013
• Sequence Number: 23
• Publication Date: February 8, 1988
• Content Type: MEMO

STAT
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Declassified in Part - Sanitized Copy Approved for Release 2013/09/05: CIA-RDP90M00005R0011001.60023-3 1.....
-I The WaShingtoti TIMM
. i . A U.S. Frame-Up of The Christian Selena Monitor '
, Theo Wan Streatikoumal .
New York Daily News
USA Today
The Chicago Tribune
Nicaragua Charged!
By STEPHEN ENGELBERG
with ELAINE SCIOLINO
Special to The New Vat The,.
WASHINGTON, Feb. 3 ? A former senior Panama-
nian official said today that the White House set up a se-
/ cret operation in 1986 that called for Panama to arrange
an East bloc arms shipment that Could then be captured
t in El Salvador and falsely linked to the Nicaraguan Gov-
ernment.
' The Panamanian, Jose I. Blandon, is a former close
adviser to Panama's military leader, Gen. Manuel Anto-
nio Noriega. General Noriega is.expected to be indicted on
drug charges by a grand jury in Miami on Friday, Justice
Department officials said.
Mr. Blandon said in a telephone interview that the
deal was put together by Lieut. Col. Oliver L. North, the
White House aide responsible for funneling aid to the con-
tras during the period when the Administration was
barred from providing military help to the rebels.
Dismissed as Consul General
Mr. Blandon was recently dismissed by General
Noriega as consul general in New York, and in an inter-
view with a Panamanian radio station he called on the
general and his military associates to resign.
Government officials said Mr. Blandon had told in-
vestigators that General Noriega struck a deal with Colo-
nel North to train the contras in Panama in exchange for
American support for international bank loans. Mr.
Blandon said the arrangement "could be possible," but in-
dicated he had no direct knowledge of it.
Mr. Blandon added, "North and Poindexter handled
the contra operation like a dictatorship," referring to
Rear Adm. John M. Poindexter, the former national se-
curity adviser. "If you supported the U.S. contras, you
could do anything," he said.
Lawyers for Colonel North have said for the past year
that they would not comment on any matters. One of them
said tonight that there would be no comment on this or
any other aspect of the case.
A Relationship With Casey
. An operation aimed at making it appear that Nicara-
gua was shipping arms to the Salvadoran guerillas would
have fulfilled the Reagan Administration's longstanding
goal of proving the Sandinista Government was exporting
its revolution. The effort collapsed in June 1986 when The
New York Times published an article reporting illegal ac-
tivities by General Noriega, Mr. Blandon said.
It was disclosed last year that General Noriega had
told Colonel North that he was willing to mount sabotage
and assassination operations against Nicaragua and that
Colonel North had endorsed the idea of a sabotage plan.
But Mr. Blandon's assertions suggest a deeper White
House and Administration link to General Noriega.
Mr. Blandon also told investigators that General
Noriega, who took power in 1981, had a close relationship
Data 49,0C44.23 /4901.
with William J. Casey, who was Di-
rector of Central Intelligence, and once
flew in the plane of a drug smuggler to
Washington in 1983 to confer with him.
It was not known if Mr. Casey knew of
the plan to embarrass the Nicaraguan
Government.
The new details about General Node-
ga's cooperation with one of the most
sensitive foreign policy operations are
significant because they could help ex-
plain why senior American officials
were willing to cultivate a relationship
with the military strongman, even as
American intelligence was document-
ing charges of unsavory arms dealing
and sales of banned technology to
Cuba. Investigators from the Congres-
sional Iran-contra committees exam-
ined in detail the arms shipment that
Mr. Blandon. said was to be falsely
linked to the Nicaraguans and found no
hint, in American Government docu-
ments, of such a plan.
it was unclear whether General
Noriega, who has repeatedly accused
the United States of trying to over-
throw him to retain control of the
Panama Canal, told Mr. Blandon of the
reported operation in an attempt to dis-
credit Colonel North or the Reagan Ad-
ministration. A senior Latin American
diplomat who believes the account said
he understood that General Noriega
seized the ship carrying the weapons
because he felt "betrayed" by Reagan
Administration officials, who he
thought had provided derogatory infor-
mation on him to The New York Times.
State Department officials declined
to comment when asked about the rela-
tionship between Panama and the con-
tras.
Another reason for American Gov-
ernment support for General Noriega
is that he has provided a "platform"
for the National Security Agency's
eavesdropping operations in the re-
gion, according to intelligence officials.
Mr. Blandon, who served as chief
political adviser to General Noriega
when he was head of military intelli-
gence, has provided details of these
and other reported illegal operations
before the Federal grand jury in
Miami that is expected to indict the
general on drug charges.
Mr. Blanden is scheduled to testify
1 next week before the Senate Foreign
Relations Committee.
COntirtueri
/ ?
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Sealed Indictments
Government officials said Mr.
Blandon had provided a wealth of infor-
mation about corruption under General
Noriega and his close military and
'civilian associates. While General I
Nbriega's indictment will be made pub-
lic, the indictment of his associates will
remain sealed in the hope that some of
them can be arrested and brought to
Mr. Blandim's secret testimony to
the grand jury and to Senate investiga-
tors, as described by the former consul 1
general and Government officials, in-
cludes these disclosures:
9General Noriega maintained a
close personal relationship with Mr.
Casey, who died last year. "Noriega
? definitely said he had the support of
Casey," Mr. Blandon said. He said that
? on one occasion, General Noriega flew
to Washington on the private jet owned
by a convicted drug dealer, Stephen M.
Kalish, for a secret meeting with Mr.
Casey. Mr. Kalish testified before Con-.
gress?last week that General Noriega
borrowed the jet in November 1983. .
9A former intelligence official said
that after Admiral Poindexter sternly
told General Noriega to change his
ways in 1986, Mr. Casey followed up
with a more conciliatory approach that
undercut the admiral's message.
The Salvadoran rebels asked Gen-
eral Noriega in late 1987 to help them
buy sophisticated weapons, including
American-made Stinger antiaircraft
missiles. General Noriega agreed to
help and later contacted Ricardo
Wheelock, a Sandinista intelligence of-
ficial. Mr. Blandon said he was later
told the weapons had been delivered,
although he said he did not know for
certain whether the shipment included
Stingers or some lesser weapons.
One Veiled Reference
The Congressional Iran-contra com-
mittees looked into the relationship be-
tween General Noriega and Colonel
North, but their report contained only
one veiled reference to the general. It
said that an unidentified Latin Amer-
ican leader had offered to help with
operations aimed at the contras.
Congressional and Administration
officials disclosed that in fact General
Noriega had told Colonel North that he
was willing to undertake sabotage
operations and possibly assassinations
against Nicaragua. Admiral Poindex-
ter warned Colonel NOrth to stay away
from any assassinations, but he ap-
proved the sabotage idea. The plan
never went forward because the Iran-
contra affair became public and Colo-
nel North was dismissed.
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illie.iNeWtYorkt,liinevarticle, abut
GeneraKNOrielitSivapublished ..on
.June .12.1986; and the ship carrying the
't weaporiswas..;seized- by Panamanian
officials tWcidays later.
, .According to Congressional officials,
? the shipment was arranged by a Swiss
,? arms broker who has ties to the Oe
: French foreign security service. Co-
nel North's notebooks do not contain a
( direct reference to the plan. .
The cargo ship passed through Pgru
,- on June 6. 1986, remained there for a
few hours, then steamed northward.to
i 'Panama. When the ship was seized, the
, bill of lading instructions were for the
weapons to be delivered to Gen. Adolfo
4 Blandon, Chief of Staff of EI Salvador's
- armed forces". The general is no reia-
? Aiwa to Jose 1..Blandon.- - .. ? -
: ? List for Grand Jury .
Mr. Blandon said in the telephone in-
terview that he had revealed to the
grand jury the names of General
Noriega's top military and civilian As-
sociates. Like the Panamanian leader,
he said, the associates were involved-in
drug trafficking, money-laundering
and other illegal activities. He said he
did not know if the grand jury intended
to indict any or all of them. The list of
names was published in Panama today
in the newly reopened daily, La Prensa.
The associates include Marcos A.
Justines, chief of the General Staff IA
the Panamanian Defense Forces and
second in command to General Node-
ga ; Mayor Nivaldo Madrinan, head of
the investigative police and one of Ole
officials closest to General Noriega;
Luis C6rdoba, head of the traffic police
1
and former chief of Chiriqui Province.
who opposition leaders believe was re-
sponsible for the beheading of the oppo-
sition leader Dr. Hugo Spadafora in
1985; Alberto Purcell, executive secre-
tary of the General Command of die
Defense Forces, and Lorenzo Purcell,
head of the Panamanian Air Force.
Business Fronts Are Named
Mr. Blandon also listed a number of
civilians who he said were involved in
illegal activities, including the late
Cesar Rodriguez, who was murdered in
Colombia. and Enrique Prete!. a well-
known jeweler in Panama City.
Under a 1904 extradition treaty be-
tween the United States and Panama,
neither country is required to hand
over its citizens for extradition, so the
indictments against General Noriega
and his associates could result in ar-
rests only if they are out of the country.
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A I
the House and Senate Iran-contra Tb. Wall Aflame M
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a ? A.A *AI, IIva 1V54oerween North and Noriega on pos-
1 sible Panamanian assistance to the New York Dairy News
USA Today
The Chicago Tribune
?
In Contra Deal
Secret Training Tied
To Assistance on Debt
By Bob Woodward
and Joe Pichirallo
Washington Post WWI Writats
Panamanian leader Gen. Manuel
Antonio Noriega and Lt. Col. Oliver
L. North planned secretly in 1985
to train Nicaraguan rebels in Pan-
ama, according to Jose I. Blandon, a
former top Noriega aide who is now
under 24-hour guard by the U.S.
Marshals Service as a witness in
federal drug and corruption inves-
tigations of Noriega.
Blandon alleged that the training'
of between 200 and 250 contras
took place from July 1985 to May
1986. Several knowledgeable mil-
itary and other U.S. officials ex-
pressed skepticism this week that
the plan was ever carried out, but a
well-placed government official said
yesterday there is intelligence in-
formation to support Blandon's re-
port that Panama trained contra
fighters.
Blandon alleged in interviews
over the last week that in return for
the secret contra training. North
agreed that he would try to get the
U.S. government to assist Panama
with its debt crisis in late 1985. Pri-
vate and international development
bank loans of more than $200 mil-
lion were made to Panama over the
next year, according to records and
other officials, though a number of
banking and Treasury Department
officials said that neither North nor
the White House played any role in
the arrangements. The loans helped
avert economic collapse in Panama,
which had a $3.8 billion debt in late
1985.
Congressional and other sources
said that the Blandon contra train-
ing allegation is the latest evidence
suggesting that North, the National
Security Council aide fired for his
role in the Iran-contra affair, turned
to Noriega for critical assistance in
1984-86, when Congress had re-
stricted US. aid to the contras.
r? _ _I rt
contras.
For example, in one previously
unpublished September 1986 inter-
nal White House computer mes-
sage. North reported that Noriega
had pledged to WO the contras if in
turn North or the White House
would help the Panamanian leader
improve his image, sources said.
Blandon, 44, a former top civilian
political adviser to Noriega, was
fired by Noriega as Panama's consul
general in New York last month.
For several months last year, Blan-
don had been Noriega's secret em-
issary to the Reagan administration
in an unsuccessful effort to work
out an arrangement to allow No-
riega to step down and permit a
move toward civilian government
and democracy in Panama.
Noriega is the target of a Miami
federal grand jury investigation ex-
amining his ties to the multibillion-
dollar Latin American narcotics
trade. Federal prosecutors are ex-
pected to seek an indictment this
week, sources said.
Through a spokesman, Noriega
has denied Blandon's corruption al-
legations and said that Blandon was
not a close adviser or associate.
In the course of hours of inter-
views with The Washington Post,
Blandon said he was present at a
90-minute Noriega-North meeting
on a yacht in Panama in which the
contra training proposal was first
discussed. Blandon said he believes
the meeting occurred in June 1985.
North requested arms, training and
intelligence assistance for the con-
tras, according to Blandon's recol-
lection. Blandon said that he pre-
pared for Noriega at the time a two-
page memo summarizing North's
requests at the meeting.
After Panama's secret contra
training began in July 1985; Blan-
don said, he visited the training site
known as the Jose Domingo Espinar
Training Center. The center is at
the former U.S. Fort Gulick, which
housed the U.S. Army's School of
the Americas until it was given to
Panama in 1984 under provisions of
the Panama Canal treaties.
A Panamanian- officer, identified
by Blandon as a Col. Elias Castillo,
who was in charge of the base,
pointed out 45 to 50 contras under-
going training at that time, accord-
ing to Blandon.
Date */ 7,4 /917
Blandon said he was told that the
contras were instructed in mortars,
(surface-to-air missiles and intelli-
gence. He said he was told that the
training was being carried out both
by Panamanian officers and off-duty
U.S. military personnel attached to
the Southern Command base in
Panama.
Blandon said that he did not see
any U.S. military officers during his
visit, but that an aide to Castillo told
him about the U.S. personnel.
"The training was being done by
the Panamanians and by certain of-
ficers of the United States that
came late in the afternoon," Blan-
don said.
ASked about this allegation yes-
terday, the Pentagon said: !Neither
we at DOD [Department of De-
fense) nor (the Southern Command)
have any record or knowledge of
such activity."
At a second North-Noriega meet-
ing that Blandon said he attended in
Panama in October 1985, Noriega
said Panama was in serious financial
condition. "The only thing we need
help with is money," Blandon
quoted Noriega as saying. Accord-
ing to Blandon, North said: "I will
try to do the best I can."
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? During the 15 months following
the Noriega-North meeting. Panama
received an infusion of additional
loans and 'economic assistance, some
of it from the U.S. government Eco-
nomic assistance to Panama from the
Agency for International Develop-
ment, which had been running at a
maximum of $13 million in previous
years, jumped to $74.5 million in
1985, according to AID records pro-
vided by a spokesman.
According to well-placed banking
officials, Panama's commercial
creditors refinanced Panama's debt
payments and provided other cred-
its and loans totaling $148 million.
Blandon said that the basic finan-
cial situation had stabilized for Pan-
ama by March 1986. He said that
both Noriega and he credited North
with assisting Panama. He solved
all our problems with the U.S.,"
Blandon said.
North or his attorney could liot
be reached for comment.
The record of the congressional
Iran-contra committees shows Mat
North and Noriega worked topper
at times, and a military source said
that North visited Panama a num-
ber of times each year during the
period he managed private sutiply
channels to the contras in 198446.
The 1ran-contra report said that
"North received an offer (in 1986j
from a third party to engage in sab-
otage and other activities inside
Nicaragua." Then-Vice Mm. John
M. Poindexter, who was national
security adviser, "approved the sab-
otage plan, but instructed North not
to become involved in conspiracy or
assassination.* That plan was never
carried out, the report said.
Staff writer George C. Wilson and
staff researcher Melissa Mathis
contributed to this report.
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