ARMY'S COVERT ROLE SCRUTINIZED

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000504650029-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: February 24, 2012
• Sequence Number: 29
• Publication Date: November 29, 1985
• Content Type: OPEN SOURCE

Declassified in Part - Sanitized Copy Approved for Release 2012/02/27: CIA-RDP90-00965R000504650029-4
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WASHINGTON POST
29 November 1985
Army's Covert Role Scrutinized
Financial Probe Raises Fear That Special Units `Got Carried Away'
By Caryle Murphy
and Charles R. Babcock
Washington Post Staff Writers
A wide-ranging investigation into
how secret Army units spent more
than $300 million over the past five
years has stirred a debate in the
Defense Department about the mil-
itary's covert operations.
Some senior Army officers be-
lieve the secret units-given new
attention and resources after the
humiliating attempt to rescue
American hostages in Iranr"got
carried away," in the words of one
four-star general, and failed to
properly account for money used in
clandestine missions.
A split has developed among ac-
tive and retired Army leaders over
the service's venture into "this
James Bond stuff," as one two-star
general put it.
The network of secret units was
built up by the Army after the failed
Iranian operation in April 1980 to
strengthen its ability to conduct
"special operations" and work with
the Central Intelligence Agency,
according to military officials.
But two years ago, Army inves-
tigators began checking allegations
that members of the secret units
were more zealous in carrying out
their missions than they were pru-
dent in keeping track of the cash
they spent.
As a result of the continuing in-
vestigation, one Army officer has
been indicted for fraud in civilian
proceedings; three others face
courts-martial and a fourth was ac-
quitted on all charges last weekend.
A parallel investigation has led to
disciplinary action against more
than 80 members of the Army's
elite hostage rescue team, known
as the Delta force, according to
Army sources. Among the other
units under investigation is a secret
Army- IA aviation outfit known as
easpray whose missions included
White House-ordered surveillance
flights over Central America with
U.S. soldiers posing as civilian pi-
'ots, according to military sources.
Investigators also are scrutiniz-
ing expenses incurred by soldiers
on electronic bugging missions,
which included such targets as So-
viet cars in Europe, visiting Soviet
officials in the United States and
the conference room of a head of
state in Central America, the mil-
itary sources said.
The Army's clandestine work
was a small part of the renewed
emphasis by the Reagan adminis-
tration on special operations
forces-which include Army Green
Berets and Rangers, Navy Seal
commandos and a special Air Force
wing. The annual budget for these
forces has doubled to about $1.2
billion in recent years, according to
public testimony by administration
officials.
The Army missions, however,
occasions y spawn rivalries with
other covert military its and the
CIA, now a gea a military
sources said.
Furthermore, the financial inves-
tigation has damaged morale in the
secret units and scared away poten-
tial recruits, according to some sol-
diers. Others contend that those
under investigation are being
judged by conventional accounting
rules that ignore the fact that their
covert undertakings required them
to disguise their movements and
activities, which meant hiding the
ways they spent money and where
it came from.
Retired Gen. Edward C. (Shy)
Meyer, who was Army chief of staff
when the units were created, said in
a telephone interview from Florida
last week that the investigation is
being conducted by "traditional in-
vestigators who operate with a
clear-cut set of regulations and
rules and now are in a world where
there's a different set of rules."
Last Saturday, in the first case to
come to trial, an Army court-mar-
tial acquitted Master Sgt. Ramon
Barron of larceny and dereliction of
duty. At his trial, Col. James E. No-
ble, the military judge, also touched
on that point.
"The Army chose this extraor-
dinary means to circumvent ac-
countability for money," Noble told
the prosecutor, adding that the gov-
ernment was "hard-pressed ... to
show that a mechanism for a claim
exists . . . . "
Some officials say they believe
the current Army leadership-dis-
turbed at the units' deviation from
an orthodox military role-is using
the investigation to undermine the
service's clandestine capability.
However, many officials inter-
viewed for this article say the cur-
rent Army leaders, who inherited
the covert units, support the em-
phasis on special operations forces
but believe they must be controlled
with more vigorous oversight. One
senior general, who requested an-
onymity, said the Army recently
tightened control over special op-
erations and intelligence forces in
response to the investigation.
Army Secretary John 0. Marsh,
CIA officials and Gen. Max R. Thur-
man, the vice chief of staff who is
personally irectin the financial
investi ation, declined to be inter-
viewed about the inquiry or the role
of special operations forces.
vend 4
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The legality of the missions has
not been questioned, but the inves-
tigation resurrects issues that have
been controversial or years: the
role of t fie milita 's special oper-
ations forees and their relationship
wit t e . the du lication and
competition among the services
engaged in covert operations, and
the adequacy of oversight of the
secret funds involved.
Noel C. Koch, the Defense De-
partment's top civilian overseeing
special operations forces, said, "If
there's been wrong done, the Army
should be commended for trying to
root it out and correct it ... [but I it
still seems a little bit unusual for
the investigation to run over two
years and only produce one low-lev-
el indictment.
"Now there may be a truckload
[of indictments] coming along be-
hind that," Koch said. "But after this
whole process, for the mountain to
have labored so assiduously and to
have brought forth a mouse,'obvi-
ously that's going to feed the sus-
picions of those people who ques-
tion the motives of this whole
thing."
Historically, the Pentagon lead-
ership has cast a skeptical eye on
special operations forces because of
concern about morale-sapping elit-
ism, according to several military
experts. When the Iran hostage res-
cue operation was assigned, inter-
service rivalries and improvisational
planning marred the Defense De-
partment's response.
Soon after the debacle in the
desert, President Carter ordered
the Pentagon to begin planning a
second rescue mission, code-named
"Honey Badger." This time, senior
military officials promised that the
problems would not be repeated,
according to military officials famil-
iar with the mission.
Lt. Gen. James Vaught was
placed in charge of planning Honey
Badger. The mission was to include
Ranger battalions and much heavier
firepower than the first attempt. "It
would have been World War III,"
joked one general who helped plan
it.
The mission eventually was
called off, partly because the hos-
tages could not be located with cer-
tainty. But the Army, under the
leadership of Meyer and Vice Chief
of Staff John W. Vessey Jr., who
later became chairman of the Joint
Chiefs of Staff, wanted to keep the
skills they had developed for the
next crisis, Meyer said.
Consequently, early in the Rea-
gan administration the Intelligence
Support Activity (ISA) was formed
from the "Foreign Operating
Group," or FOG, which had infil-
trated soldiers posing as civilians
into Tehran before the failed rescue
mission. FOG's mission had been to
collect information about what kind
of locks were on the gates of the
American embassy. compound
where the hostages were held and
other critical data that CIA's sat-
ellites couldn't provide.
At the same time, the Army's
Special Operations Division was
created with a staff of about 20 peo-
ple and underwritten with a budget
of about $100 million a year, ac-
cording to sources familiar with the
organization. The source of some of
the money was "laundered," or dis-
guised, so it could be used for sen-
sitive operations without being
traced to the Army, according to
sources and court testimony.
This division also worked with
the Army's Intelligence and Secu-
rity Command (INSCOM), an um-
brella organization for Army intel-
ligence gathering.
One goal of the rebuilding effort
was to create a closer working re-
lationship with the CIA, Meyer said.
With this in mind, the Army in the
summer of 1981 created a special
aviation unit at Fort Eustis, Va.,
sources said. It was officially known
as the First Rotary Wing Test Ac-
tivity.
The unit bought several small
Hughes 500MD helicopters, and
several commercial planes on the
open market, without going through
usual military procurement chan-
nels, according to Army sources.
The aircraft were kept at Civilian
airports in Virginia, Florida and
Georgia, the sources said.
Whether such units spent their
money legitimately on such pur-
chases and whether the cash used
to underwrite their missions was,
properly accounted for has preoc-
cupied Army investigators for near-
Iv two years.
Among the secret aviation unit's
missions, for example, was a covert
operation in August 1981 ordered
by President Reagan. In it, the unit
flew Lebanese Christian leader Ba-
sher Gemayel back to Lebanon after
a trip to the United States, accord-
ing to sources familiar with the mis-
sion. Gemayel, his wife and a body-
guard, who had traveled to Cairo in
an Army jet, were then flown in
American helicopters to Lebanon,
with Israeli pilots providing search-
and-rescue support, the sources
said.
This followed a low-profile trip by Ge-
mayel to Washington, wherelhe reportedly
visited senior Reagan administration offi-
cials. Gemayel announced his candidacy for
the presidency of Lebanon three months
later and was elected the following August;
he was killed by an assassin's bomb before
taking office.
The Army also developed an extensive
wiretapping expertise, according to knowl-
edgeable sources. And investigators are
examining travel expenses claimed by some
personnel from INSCOM and special oper
ations units who supported them in a series
of electronic buggings in the United States
and overseas, sources said.
The proposed targets of the eavesdrop-
ping included Soviet military attaches, an.
Arab airline office in West Germany sus-
pected of providing refuge for terrorists
and Soviet trading companies in the Third
World, sources said.
The buggings in the United States includ-
ed a cooperative effort with the FBI, au-
thorized under the Foreign Intelligence
Surveillance Act, of eavesdropping on hotel
rooms on the West Coast occupied by vis-
iting Soviet officials two years ago.
As the Army widened its special opera-
tions capabilities, there was occasional
both deliberate and unwitting, wi
other military units and the CIA.
- For example. for several years, retired
general Richard G. Stilwell, who was deputy
under secretary of defense, lobbied n-
gress for funds to start what, was in effect a
mini-CIA at the Pentagon. Stilwell argued
that the military needed soldiers ca able of
acting covertly, similar to those in Tehran
during the Iranian hostage rescue mission,
to provide the Defense Intelligence Agency
with information the CIA wouldn't or
couldn't collect, according to congressional
and military sources.
Stilwell, in an interview Wednesday, con-
firmed that "I was interested in improving
the human intelligence capability in the
Pentagon" but he declined to discuss spe-
cifics.
Cei' balled
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The proposal was killed by members of
Congress who feared that duplicate forces
would trip over each other trying to recruit
the same operatives overseas, the sources
said.
Even so, different military units found
themselves competing in the spring of 1981
when the Defense Department planned a.
secret operation in Laos to verify reports
that Americans missing in action since the
Vietnam war were still alive. At the same
time, but without knowledge of the Army
brass, the ISA had made contact with re-
tired Special Forces lieutenant colonel
James (Bo) Gritz to aid his unofficial mission
into. Laos for the same purpose, according
to eyer and others.
In 1982, after Gritz publicly disclosed the
help he had received from what he called
"the activity," the Army investigated ISA-
which at the time was financed with $10
million in Special Operations Division funds,.
according to one military source. The inves-
tigation concluded, according to several
Pentagon sources, that ISA had been oper-
ating without proper oversight, foreshadow-
ing the current debate; it also found that the
unit's unorthodox leaders had acquired a
Rolls-Royce and hot air balloon from the
Drug Enforcement Administration for pos-
sible future missions.
There was occasional competition be-
tween the Army and the CIA as well. In the
spring of 1982, when President Reagan
wanted a surveillance plane to monitor reb-
el movements durini_z_tFe__5a_1va_dora_n_ elec-
tions, the secret aviation unit was selected
because it had a capability the CIA lacked,
sources familiar with the mission said.
The unit bought a King Air plane through
a front company, Shenandoah Aerolease, in
the kind of discreet financial transaction
that Army investigators have found so dif-
ficult to reconstruct. The plane was fitted
with electronic gear bought from a New
Hampshire company and flown from a Hon-
duran airfield at San Pedro Sula while pos-
ing as a civilian aircraft taking aerial pho-
tographs, the sources said.
The real mission was to pinpoint rebel ra-
dio transmissions and relay the information
to the National Security Agency in the Unit-
ed States; the data was then passed back to
El Salvador for use by government troops
there, sources said.
The Army mission was considered so
successful, the sources added, that the
plane was overhauled in the United States,
given a new tail number and assigned to
surveillance from La Ceiba in Honduras,
using a cover company.
About the same time, the CIA's air
branch outfitted its own Merlin aircraft for
a semi ar mission, but the plane was nose-
heavy and cras a during a test flight, one
knowledgeable source said.
The financial investigation into how these
and other missions were financed began
almost by accident. In September 1983,
subordinates of Lt. Col. Dale C. Duncan
alleged that he was diverting secret funds
to his personal use while running an Army
Special Operations Division front company,
Business Security International, which had
an office in Annandale and was known by
the code name "Yellow Fruit."
The subsequent investigation of Duncan
triggered a review in early 1984 of the Spe-
cial Operations Division by Brig. Gen. Ger-
ald G. Watson, of the Army inspector gen-
eral's office. According to some sources
who have seen Watson's final report, it ap-
plied conventional Army accounting stan-
dards to what was intended to be a "black,"
or secret, unit.
"If you saw it," said one source who had,
you would have said, 'Holy cooly, have I got
a problem with those guys'
uys in the base-
ment!'
One former Army official said Watson
"didn't appreciate the need to do things co-
vertly." He said, for instance, that Watson
recommended that the Army get copies of
each presidential "finding" authorizing co-
vert missions so the Army's files would be
complete. Presidential findings are closely
held to maintain secrecy.
Watson, now commander of Fort McClel-
lan, in Anniston, Ala., declined to discuss
the matter last week.
At the Army's request, the Justice De-
partment and. the FBI began a criminal in-
vestigation in early 1984 that resulted in an
indictment last week against Duncan on
charges of filing false claims in accounting
for $65,000 in secret funds.
Also, the Army's Criminal Investigative
Division began an investigation code-named
"Task Force Catalyst Maker," that has led
to courts-martial proceedings against four
soldiers, including the sergeant acquitted
last weekend. of larceny charges. Several
other members of special operations units
and INSCOM were reprimanded and their
security clearances were suspended.
Finally, a financial review of special op-
erations expenditures since 1981 was un-
dertaken by an Army team that has ques-
tioned scores of people about travel vouch-
ers and other expenditures, ordering reim-
bursements to the government of at least
$50,000.
Among the questions being asked by in-
vestigators now are why soldiers on covert
missions overspent the Army's per diem
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allowance on travel expenses or failed to
follow standard procurement procedures,
such as soliciting competitive bids on large-
contracts, according to some military
sources.
A former senior Army civilian said last
week that the soldiers under investigation,.
ran into trouble largely because "the special,:
operations capabilities developed far in ad-
vance of the procedural guidelines
needed to guide them in the more mundane
aspects," such as expense accounts and pro.
curement rules.
"How can you follow Army travel regu-
lations when you're under cover as, for ex-
ample, a tourist in Botswana?" one soldier
under investigation asked.
Former chief of staff Meyer agreed, add-
ing, "I don't think there were rules to cover
that."
One individual questioned by investiga-
tors added, "What makes me - mad is that n
there is no one senior person who would;
stand up and say, 'Let's make sure tbese,s
guys have a fair shake. It's just these 'bums-`
and thieves,' these 'Algerian colonels.'. It'd-_
prejudgment."
The probe led in early October to Fort-%
Bragg, N.C., where dozens of Delta forcer,
members already were under internal in4
vestigation for allegedly overcharging or.I
double billing the government for expenses
incurred during assignments as bodyguards,
for American ambassadors. One officer said
some soldiers would incur $500 hotel bills-
but convince a clerk to provide a receipt for'
twice that amount, which then would be
submitted to the government for reim-'
bursement.
The whole ordeal appears to be discom
forting to the Army. An internal Army,
memo dated March 19, 1985, by a member
of the staff judge advocate, warned that the'
public disclosure of the investigation
"would, at a minimum, be embarrassing to
the United States Army and the United:"
States."
Staff writer George C., Wilson contributed to
this report.
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