SHOESTRING OPERATION WAS CONTRA LIFELINE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000605070012-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: December 23, 2016
• Document Release Date: February 20, 2013
• Sequence Number: 12
• Publication Date: December 7, 1986
• Content Type: OPEN SOURCE

Declassified in Part -Sanitized Copy Approved for Release 2013/02/20 :CIA-RDP90-009658000605070012-4
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6Vhen organizers of a clandestine air
operation that supplied weapons to the
Nicaraguan contras needed pilots and
other crew members, they turned to a
network of former U.S. mrlitarv and
intelligence officials that grew out of
shared experiences in t!:e Vietnam
.var.
When they needed an air support
system to keep [he planes running,
then turned ro a company once ou ned
by the Central Intelligence Agency and
now run by a lawyer who has been as-
sociated with the firm since its CIA
days.
bVhen they needed risen experienced
in covert operations to handle arrange-
. menu in Ei Salvador and Costa Rica,
they tapped into the close-knit circle of
Cuban exiles who worked for the CIA
as far back, as the 1961 f3ay of Pigs
invasion.
And in their bid to keep weapons
tlowmg to the Nicaraguan rebels after
Congress banned official U.S. aid, the
chronically underfinanced group some-
times asked U.S. officials to intercede
tcith the governments of El Salvador
and Costa Rica, according to officials in
the region and internal records from
t'ie secret flights.
ve~.vly acquired documents, obtained
independently by The Washington Post
outside of Nicaragua, provide a richly
detailed portrait of how 25 men from
all over the United States were re-
cruited in late 1985 and the first six
months of 1986, were taken to the [lo-
pango military base in El Salvador and
slowly put together a fleet of five de-
teriorating airplanes to make flights to
"DZs"-drop zones-in and around
Nicaragua.
This unlikely crew achieved one of
the Reagan administration's central
policy goals: It provided sustained lo-
gistical and weapons support to the
contras during part of the two-year
period when Congress either totally
banned or sharply restricted U.S. gov-
ernment assistance for their military
efforts.
Throughout the eight-month life of
the operation, crew members-mostly
former U.S. military or CIA men ac-
customed to the need for secrecy and
ambiguity in covert operations-never
learned key details of the operation:
How the weapons were purchased.
where the funds came from and who
controlled the operation. Neither the
sources who provided information for
this article nor the documents identify
the names of the ultimate sponsors of
the operation.
But some crew members-including
Eugene Hasenfus, the sole sucvivor of
a C123K cargo plane shot down Oct. 5
in an incident that exposed the resup-
ply operation to public view-had little
doubt from their vantage point that the
U.S, government was secretly running
it.
They also were well aware of the
stakes; the documents show. A flight
survival guide prepared for the crew
members said: "An emergency landing
in Nicaragua may well lead to capture,
embarrassment for the U.S. govern-
ment, even execution of the crew."
Some were in it out of nostalgia for
days of danger and camaraderie in ear-
lier wars. Some-but by no means
all-saw Central America as the
new front in a worldwide crusade
against communism. Others had
surprisingly commonplace goals like
saving money for peaceful retire-
ment with families used to the air-
men's long absences from home.
The chief U.S. military adviser in
EL Salvador, Army Col. James
Steele, kept in regular contact with
leaders of the resupply operation.
The operation's telephone records
show several calls to the White
House phone of Lt. Col. Oliver L.'
North, the National Security Coun-
cil official fired for his role in they
.diversion of funds from secret Iran-
ian arms sales to the contras.
Whatever happened to the $10
million to $30 million that U.S. of-?
ficials say was diverted to the con-~
tras, the bulk of it was not funneled'
to' the shoestring resupply opera-
tion at Ilopango. According to the
documents, some crew members
complained constantly of late pay-
checks, missing navigational equip-
meet and poorly maintained planes.
At one point, in August, crew mem-
bers were told that the operation
might have to shut down for lack of
funds, the documents show.
Although the operation survived,
it remained short of cash, in part
perhaps because those running it
did not want to attract attention by
leaving the United States with large
sums that would have to be de-
clared at U.S. Customs. According
to the documents, crew members
who traveled to the United States
on leave or on business were often
asked to pick up $10,000-the le-
gal limit allowed without declara-
tion-at Southern rlir Transport ;~
Inc., the of rmer'CIA company that
was hired to maintain the planes
and allowed its offices to be used as
a U.S. hub for the operation.
One of the retired Air Force of-
ficers involved in running the op-
eration warned crew members -to
be discreet about how they ex-
changed the money once they re-
turned to El Salvador, according to
one message dated Sept. 19. "We
don't want to get SAT [Southern
Air Transport] or ourselves burned
with a leak or get money hung up
where we would have to expose the
op to get it back."
The. documents do not reveal
who suaalied Southern Air with the
money, but one crew member said
he believed that Southern Air was
not involved other than as a place to
pick up the cash. Crew members
were paid through wire transfers to
their U.S. banks from a Pennsylva-
nia company, Corporate Air Ser-
vices Inc., apparently acting as a
conduit for the true source of the
funds. Records show that Corporate
Air's president is Edward de Garay,
who has not made any statements.
Some crew members were told that
the money for the operation came
from "foreign sources," according to
one participant.
Attorney General Edwin bfeese
[II has said that profits from secret
arms sales to [ran were diverted
through one or more Swiss bank
accounts to help the contras. Inves-
tigators are now looking into the
possibility that this is the money
that financed the contra resupply
operation.
Contra- leaders have said they did
not receive the Iranian arms sales
money. They also have said that
while the air resupply operation
ferried arms to rebel troops inside
Nicaragua, it was a separate organ-
ization not run by any contra group.
The decision to hire a former
CIA company such as Southern Air
fits into a pattern that emerges
from close examination of the re-
supply operation. At its heart are
three former U.S. Air Force offi-
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_-~ cers, Richard V. Secord, a retirea
major general; retired lieutenant
colonel Richard B. Gadd and Robert
C. Dutton, a retired colonel. All
three worked at various times in
special operations at the Penta-
gon-the covert arm of the mili-
tary.
-. Secord, who ran the covert air
war in Laos in the late 1960s and
headed the U.S. Air Force mission
in Iran from 1975 to 1978; has been
identified as a participant in secret
arms sales to Iran: Before leaving
government service in 1983, he
worked closely with North.
Participants in the contra resup-
ply effort made phone calls to Se-
cord's home and firm from San Sal-
vador, according to telephone
records, but Secord was quoted as
saying he never talked to anyone in
the operation. He has said he occa-
sionally gave advice to the contras
on "how they ought to design their
efforts .... But ['m not running
the contra air force." In another
interview, though, he said he sold
the contras a short takeoff plane
owned by a company he heads.
Some crew members believe.
however, that Secord is the key
man in the resupply operation and
note that Dutton-an employe in a
Secord company-began managing
the operation in April or Nlay.
sa es detailin air dro s,yfinancial Medina is thought to be Luis Po-
g g p ~`~ sada Carriles. another Bay~gs
needs and maintainance problems.
have worked in the same Pentagon
office in 1980-81, according to a
Pentagon phone directory.
During part of the time that Gadd
worked with the operation as it sup-
plied weapons to the contras, a firm
he headed received more than
$100,000 in State Department con-
tracts to ferry nonlethal aid to Cen-
tral America under the $27 million
humanitarian aid program approved
by Congress in August 1985.
The company, AIRMACH Inc.,
does not own any registered air-
planes, according to a Federal Avi-
ation Administration spokeswoman.
To deliver the nonlethal aid, Gadd
hired Southern .Air Transport, ac-
cording to lVtario Calero, a contra
official. Southern Air, like Gadd,
was working with the weapons re-
supply network. Its chairman is
James Bastian, an attorney associ-
ated with Southern Air and a similar
firm, Air America, since the days
both were proprietaries of the CIA.
[n Central America, according to
the internal documents, the key
managers included William J. Coop-
er, aformer chief pilot for the CIA-
ownedfirm Air America who died in
the Oct. 5 shoot down, and two
Cuban-Americans-Rafael Quin-
tero, allay of Pigs veteran who con-
tinued working for the CIA into the
1970s, and a man who went by the
was shot down Oct. 5, killing three
crew members and leading to Ha-
senfus' capture by the Sandinistas,
Dutton was alerted.
For several days, Dutton was in
frequent communication, apparent-
lyfrom the Northern Virginia office
building that houses Secord's firm,
Stanford Technology Trading
Group InternationaC Inc. For exam-
ple, the day after the downing of the killed 73 people. He escaped in Au-
plane, he sent a message in midaf- .gust 1985.
ternoon that began: "Have passed The documents indicate that Ra-
your info and wilt see what other mon Medina played a key financial
means of searching may be avail- role. It was Medina who handled
able." About the time the message the group's expenses, including
was sent, the Sandinista govern- $1,800 in monthly rent for crew
ment announced Hasenfus' capture, members' living quarters in houses
Before Dutton was involved, two in San Salvador, the capita! of El
crew members said, many of his Salvador. The documents show that
duties were performed by Gadd, Medina received large sums of cash
who owns several companies lo- to pay the expenses-sometimes as
cared in the building that once much as $12,000.
housed Secord's firm. Gadd and Se- Medina's role was disclosed by
cord know each other, according to Hasenfus after his capture. He said
sources. Gadd's role appears to that Medina and another Cuban
have begun last January; after Dut- American, Max Gomez, coordinated
ton took over, Gadd's role dimin- flights out of Ilopango. Gomez is an
fished, although the documents ~! alias for Felix I. Rodri uez another
show references to him through C[A and y_ o gs veteran who
July. Dutton and Gadd appear to was the operation's chief contact
from 1961 to 1967. The Sandinis-
tas identified Medina as Posada and
the resupply operation's telephone
records show several calls to the
home of Posada's wife in Miami.
Until just a few months before
the resupply operation started up,
Posada was in a Venezuelan jail on
charges stemming from the 1976
bombing of a Cuban airliner that
.with Salvadoran rut torte officials
responsible for the Ilopango base.
"If we needed gas on credit, we'd
get it if he [Rodriguez) signed for it
because he was trusted, particularly
by the [Salvadoran) air force," said
one crew member.
Rodriguez's good. relationship
with the Salvadoran military devel-
oped after he was recommended to
them by Donald P. Gregg, a former A
CIA officer who is national security
adviser to Vice President Bush.
Gregg worked with Rodriquez in
Southeast Asia during the Vietnam
war and, according to Bush aides,
Gregg recommended Rodriguez to
the Salvadorans as a counterinsur-
gency expert.
Bush has acknowledged meeting
Rodriguez through Gregg twice in
Washington and later ran into him
at a reception in Miami. The second
Washington meeting and the Miami
reception occurred last May when
the resupply operation was well
underway, but Bush said they con-
fined discussions to Ei Salvador and
did not discuss contra activity.
Quintero frequently went to Cos-
ta Rica to obtain information on
where supplies should dropped to
contra forces inside southern Nic-
aragua, according to the documents
and a crew member. He relayed
coordinates, usually to Rodriguez or
Medina, who in turn reported them
to crew members scheduled to
make the trip. ~ .
Rodriguez served mainly as a li-
aison with the Salvadoran air force
and was not formally a member of
the oceration.
At one point. after the plane was
shot down in Nicaragua, the docu-
ments indicate that Dutton believed
Rodriguez was exaggerating his ties
to the operation. In a message dat-
ed Oct. 6, the day after the plane
went down, Dutton said: "Advise
Ramon (btedinaJ that [Rodriguez) is
not part of this organization. He is
passing incorrect information di-
rectly to high-ranking officials,
wrong names oti crew members ..
and (Rodriguez] appears to be using
into provided him to make himself
look like central figure. Please stop
all further info to anyone other than
Ralph [Quintero or me, or [Col.]
Steele. Thanx Bob.''
The documents contain no infor-
mation about who the "high ranking
officials" ?,vere.
Dutton was kept apprised of the
schedule and often sent back sug-
gestions. ASept. 19 message said,
"Be sure we are getting the right
materials to troops. I understand
DZ 3 needs AK-47," a reference to
rifles made in the Soviet bloc. "Let
me know how we do today."
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,~ - The operation's fleet of five air-
craft consisted of two small cargo
planes (DHC-4A Caribous) that
could go 600 to 700 miles without
refueling and carry 4,000- to
5,000-pound loads, a smaller Maule~
plane used for takeoffs on short air-
strips, and two large C123K cargo
planes that could go 1,000 miles
and carry up to 10,000 pounds.
The Caribous and the Maule
were the first planes bought. In
March, the first C123K was pur-
chased with a check drawn on an ac-
count listed as Southern Air's, ac-
cording to one source familiar with
the transaction. The second C123K
was purchased in July in a transac-
tion handled by Cooper.
The aircraft were taken fre-
quently to Miami so that Southern
Air maintenance crews could do
major repairs, including replacing
an engine in one of the C123K
planes in August. Crew members
also complained about the lack of
survival equipment such as pafa-
chutes, compasses and other gear
that would allow them to live in the
jungle if downed.
Concerned about the operation's
continuing problems, several crew
members turned to Col. Steele, who
as the top U.S. military adviser in
El Salvador was asked by the U.S.
ambassador there, Edwin Corr, to
"keep track" of the operation, ac-
cording to a knowledgeable source
outside the resupply operation.-
. The source said Steele was care-
ful not to become actively involved
in the running of the operation. But
crew memoers said they thought
Steele had influence in the opera-
tion, and they consulted with him,
according to references in the doc-
uments.
In August, as Congress had given
tentative approval to lifting the ban
against military assistance to the
contras as part of a new $100 mil-
lion aid package to the contras, the
operation found itself in a serious
money pinch that threatened to
shut it down for good, according to
the documents.
On Aug. 8, Rodriguez and Me-
dina met with the crew members to
discuss the operation's fate. Ac-
cording to one account of Rodri-
guez's remarks, he praised the
group: "It was very brave for you to
get into these old airplanes. Not
many people would be so brave and
do what you did." He asked them to
try to ride out the financial prob-
lems, perhaps work for free for a
few weeks until more money could
be found, pointing out that the re-
supply was crucial until the $100
million could start flowing.
"As you know," he was quoted as
saying, "with the release of the
$100 million there will be some
changes. Maybe a new organization.
I hope they will let you continue be-
cause it will take at least a month,
even if they have all the money."
New funds were found, and
flights into Nicaragua resumed at
an even greater pace. Flight logs
show .19 fights between Aug. 25
and Oct. 5.
The last flight left from Ilopango
at 9:50 a.m. with a load of ?0
AKAMs rifles, 100,000 rounds of
ammunitions, seven RPGs grenade
launchers, bound for a drop into
southern Nicaragua. Cooper was
flying the plane, with a crew made
up of Hasenfus, an unidentified Ni-
caraguan and Wallace B. Sawyer, a
former Southern Air pilot.
At 9 p.m.-5'/z hours after the
plane was scheduled to return-a
coded message was sent to Dutton
in the United States.
"Bob, here is what we know so
far," it said. "The route was the
same as usual, down the coast, in-
bound at the Plantation [code name
for a Costa Rican airfield used by
the operationJ. The only thing dif-
ferent -was the point of border
crossing. The coordinates are ap-
prox. N 11.00 W84.30. Intended DZ
was 11.27N 84.32W.
"ETA Ilopango was 1530 local.
No show and no word.".
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.~+
.THE ADMINISTRATION'S SECRET ARMS DEAL: THE DETAfLS EMERGE
' n the nearly Nve weeks s/nce k was
/Irst disclosed that the United States
had secretly sh/pped arms to Iran, the
scandal has become the most serous
cr/s!s o/ the Reagan pres/dsncy"
The Wash/ngton Post has
reconstructed here, to the extent that
in/ormat/on !s known, a chronology o/
the secret sa/e and the subsequent
d/sc/osure that pro/Its were /unne/ed to
a/d the N/caraguan contras.
May 1985
The Central Intelligence Agency proposes in a
secret document routed through the National
Security Council that the U.S. government
consider easing its worldwide arms embargo
against Iran and encourage some allies to sell
military equipment to Tehran. Defense Secretary
Caspar W. Weinberger later writes on the
proposal, "This is absurd." The CIA reportedly is
desperate to find ways to free William Buckley,
its Beirut station chief, kidnaped by pro-Irarnan
extremists in Lebanon March 16, 1984.
June 14
TWA Flight 847 hijacked to Beirut. White House
comes to realize that Iran is key player in
hostage release.
July 8
In speech before American Bar Association,
President Reagan says Iran is part of
"confederation of terrorist states ...anew,
international version of Murder Incorporated."
JulyAugust '
Secret U.S.~Iranian contacts initiated through
fsraelis. National security adviser Robert C.
Mcfarlane meets in Washington with Israeli
foreign ministry official David Kimche, who
proposes that Israel send U.S.?made arms to Iran
to encourage Tehran's help in freeing U.S.
hostages held in Lebanon.
August-September
first two planeloads of Israeli-arranged arms to
Iran. The shipments are brokered by Israeli arms
merchants AI SChwimmer and Yaacov Nimrodi,
close friends of then?ISraeli Prime Minister
Shimon Peres. Also involved as a middleman in
the 1985 shipments is Iranian businessman
Manucher Ghorbanifar. Reagan tells Israel
through McFarlane that he will approve sales
and replace Israeli stocks.
Sept. 14
The Rev. Benjamin Weir, a hostage, is released,
White House delays announcement until Sept
18, hoping other hostages will be freed.
November
Shipment of missiles to Iran from Israel. The
arms are delivered on a plane fasciliated by CIA
officials at the urging of Lt. Col. Oliver L. North,
an NSC staff member. It is not yet clear whether
Director William J. Casey authorized the activity.
McMahon, says there will be no more such
authorizations without formal presidential
approval. The shipment of missiles was
eventually returned because Israeli middlemen
had substituted obsolete materiel. The White
House subsequently stopped using Israeli
middlemen.
Dec. 4
Reagan announces resignation of McFarlane and
names Vice Adm. John M. Poindexter as his
successor.
Dec. 6
First known full?scale White House discussion of
contacts with Iran and arms shipments, called at
the insistence of the State Department which
wanted to register its objection to the arms
transfers.
oec. 8
Mcfarlane meets in Landon with Kimche and
Ghabarnfar and says Washington no longer
needs their services as arms brokers.
Winter
Increased pressure on administration from
hostage families.
Jan. 7, 1986
White House policy review of Iranian role in
hostage situation. Secretary of State George P.
Shultz and Defense Secretary Weinberger oppose
sending arms to Iran to make contacts and help
gam release of hostages.
Jan. 17
White House says Reagan sigris secret
document, called a "finding," authorizirig arms
shipments to Iran. The president directs Casey in
writing not to tell members of congressional
committees that have oversight responsibility for
intelligence activities.
February
First shipment of weapons directly from U.S.
military stocks to Iran. Pentagon transfers 500
TOW antitank missiles to CIA, which flies them
to Israel. They are then flown to Tehran.
Although no direct link has-been established to
the TOW transfers, at this time two Boeing 7076
operated by Southern Air Transport Inc. carried
45 tons of cargo each from an Air Force base in
Texas to Tel Aviv. Procedes from the sale are
deposited in a Swiss bank account established by
the CIA.
Spring
In Central America, a secret air resupply
operation begins to funnel guns and other
supplies to the contras. Crews for the operation
consist largely of former CIA employes;
eventually, the network's payroll and logistics are
handfed largely by Robert C. Dutton, a retired Air
farce colonel. Dutton works for Stanford
Technology International Trading Group Inc., a
Northern Virginia?based company part awned
by retired major general Richard V. Secord, who
is a friend of North's and is linked to the Iran
arms trade. Contra leaders later suggest that this
resupply operation is financed with profits from
the Iran sales.
May
Two Southern Air 707s, again each carrying 45
tons of unknown cargo, make deliveries from Air
Farce base in Texas to Tel Aviv.
May 28
On a plane carrying spare parts for Hawk annair
missile batteries, McFarlane, North and Amiran
Nir, counterterrorism adviser to Israeli Prime
Minister Shimon Peres, secretly visits Tehran via
Israel.Mcfarlane has been told to expect that all
hostages will be released before he lands. Aker
several days of waiting in the Hilton hotel, and
fruitless talks with Iranians, McFarlane leaves
Iran. During the same week, North has arranged
to have $2 million in cash from Texas billionaire
H. Ross Perot flown to Cyprus in a futile attemot
to ransom the hostages.
July 26
The Rev. Lawrence Jenco is released. White
.House again disappointed that additional
hostages are not freed. At about the same time.
the third U.S. arms shipments via Israel to Iran.
September
Frank Reed abducted in West Beirut Sept. 9.
Joseph James Cicippjo abducted in West Beirut
Sept. 12. State Department specialists later
identify their abductors as an extemist group
with ties to a political faction in Iran.
October 26.27
fourth U.S.?arms Shipment via Israel to Iran.
Oct. 5
C 123K cargo aircraft ferrying guns and other
arms to the contras is shot down over Nicaragua.
Three crewmen are killed and a fourth, Eugene
Hasenfus, is captured and eventually toed on
terrorism charges in Managua.
Oct. 21
Edward Austin Tracy, last seen in a sidewalk
cafe in Moslem West Beirut, is abducted,
according to Revolutionary Justice Organization,
a group with pro?Iranian connections.
Nov. 2
Hostage David P. Jacobsen released. U.S. again
expects second and perhaps third hostage
releases.
Nov. 3
Pro?Syrian Lebanese magazine AI Shiraa
discloses that McFarlane had undertaken a
secret mission to Iran.
Nov. 4
Ali Akbar Hashemi Rafsanjani, speaker of Iranian
Parliament, confirms McFarlane's visit.
Nov. 13
Reagan defends administration's actions in
televised speech, says "we did not, repeat did
not, trade weapons or anything else for hostages,
nor will we."
~~
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Nov. 19
Reagan, in news conference, says "the
respons+b+lity for the decision and the operation
is mine and mine alone." He asserts that no
third country has been involved in the arms deal,
but 20 minutes after the news conference the
White House acknowledges that that is
inaccurate.
Nov. 20
Attorney General Edwin Meese III reviews
testimony prepared of key administration officials
who have been summoned to Congress to
explain the arms shipments to Iran. Meese says
subsequently he found troubling gaps.
Nov. 21
Casey tells Congress in the morning that Iran
bought 2,000 TOW missiles and paid more than
$12 million into Swiss bank account for
American weapons. Casey says he did not know
who had arranged the transaction or where the.
money was transferred. Meese meets with
Reagan and other senior aides at 11.30 a.m.
The president approves an investigation of the
operation.
Nov. 22
Meese and other Justice Department officials
find evidence in NSC documents that money
from the Iran sales was transferred to aid the
contras. North interviewed at Length.
Nov. 25
Reagan announces at noon that, his national
security adviser, Vice Adm. John M. Poindexter,
has requested reassignment, and that NoRh has
been fired from the NSC starf. Meese enhounces
that $10 million to $30 m+"ion of Iran's
payments for U.S. arms were diverted to Swiss
bank accounts financing the contras.
Nov. 26
Justice Department launches the FBI into a
full scale chminal investigation of Iran weapons
shipments. Reagan announces the appantment
of former senator John G. Tower (R?Tex.), former
secretary of state and senator Edmund S.
Muskie (D?Ma+ne) and former national security
adviser Brent Scowcroft to serve as members of
special review board to study the future role of
the National Security Council.
Nov. 27
North denied entry to his White House office.
Dec. 1 `
North invokes fifth Amendment right against
self?incnmmat+on and refuses to testify before a
Senate committee about arms shipments to Iran
and diversion of profits to aid the contras.
Dec. 2
In televised statement Reagan says he has urged
Meese to apply for the appointment of an
independent counsel, and announces Frank C.
Carlucci will be his new national secwity adviser
Dec. 3
Poindexter invokes Fifth Amendment before the
Senate committee.
Dec. 4
House and Senate leaders agree to form
separate Watergate?style select committees to
investigate the scandal, with work expected to
begin m January. .
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