CIA PAID MILLIONS TO MONTESINOS

The Central Intelligence Agency paid the Peruvian intelligence organization
run by fallen spymaster Vladimiro Montesinos $1 million a year for 10 years
to fight drug trafficking, despite evidence that Montesinos was also in
business with Colombian narcotraffickers, The Herald has learned.

Montesinos, 56 and in jail near Lima on corruption charges, is now dragging
the CIA into his legal battles, asking Peruvian court officials to
interrogate two CIA officers as part of his defense against charges that he
helped smuggle guns to guerrillas who provide protection to Colombian
narcotraffickers.

Despite attempts by the U.S. government to distance itself from the
powerful Peruvian intelligence chief, years of cooperation with Montesinos
dating to the mid-1970s may be coming back to haunt the United States.

New documents obtained by The Herald show how the CIA and State Department
first cultivated Montesinos decades ago, and how the U.S. government
maintained a relationship with him for a quarter-century despite warnings
that he was working for both sides in the drug war.

In a document dated July 27, 1991, the U.S. Army Intelligence and Threat
Policy Center reported that Peruvian Gen. Luis Palomino Rodriguez had
showed up at a U.S. defense attache's home wearing a bulletproof vest and
warned that Montesinos was trying to "frustrate joint U.S.-Peruvian
counter-drug efforts."

By then Montesinos was already receiving large sums of CIA cash. Officials
speaking on condition of anonymity said that the CIA has told Peruvian
investigators that the agency gave Montesinos' National Intelligence
Service $1 million annually from 1990 to 2000. The CIA declined to comment.

Now Montesinos is looking for CIA help again to defend himself against
charges of selling arms to narcotrafficking guerrillas in Colombia. Judge
Jimena Cayo Rivera-Schreiber, one of six judges on a special Peruvian
anti-corruption court that's probing alleged illicit activity by
Montesinos, said the former intelligence chief has given court officials
the names of two CIA officers who can provide him with an alibi.

Cayo would not name the officers, but said Montesinos claims they can vouch
that he had nothing to do with a ring that smuggled arms from Jordan
through Peru to guerrillas in the Revolutionary Armed Forces of Colombia.

"He says it's the CIA that told him about this," Cayo said, adding that
court officials are trying to get sworn statements from the CIA officials.

Investigators are trying to determine whether Montesinos diverted any of
the money the CIA provided for anti-drug efforts into his own pockets. At
least $270 million allegedly belonging to Montesinos has been found in
secret bank accounts around the globe.

The judges who are investigating Montesinos, and are able to provide some
of the first public glimpses of this highly secretive man, describe him as
compulsive, orderly and accustomed to stature.

In prison, he has insisted on dining on Gerber baby food -- to soothe his
gastritis -- with fancy cutlery brought by his family. Appearing to forget
that he is in prison, he sought unsuccessfully to persuade his keepers to
allow him a different menu each day, and to be served separate courses.

Once a key ally of former Peruvian President Alberto Fujimori and the
architect of Peru's successful war against leftist rebels, Montesinos now
faces 57 cases against him and at least 168 criminal investigations,
divided among the six anti-corruption judges.

The probes cover 24 crimes from money laundering, illicit enrichment and
corruption to organizing death squads, protecting drug lords and illegal
arms trafficking.

Since his capture, speculation has been intense that Montesinos would try
to link the United States to his illicit activities. The CIA and U.S. Drug
Enforcement Administration have privately defended him against detractors
in the past.

A declassified DEA document written on Aug. 27, 1996, shows U.S.
authorities were aware of allegations that Montesinos and the chairman of
Peru's joint chiefs of staff, Gen. Nicolas Hermoza Rios, also in jail now,
were taking protection money from drug traffickers.

Newly declassified U.S. government documents provided to The Herald show
that the State Department and the CIA cultivated Montesinos as early as 1974.

State Department documents obtained under the Freedom of Information Act by
the National Security Archive, a Washington foreign policy research center,
indicate that the U.S. Embassy in Lima identified Montesinos as a potential
ally and took him to Washington in 1976 when he was an obscure army captain.

Documents show Montesinos was a political operative in the dictatorship of
Juan Velasco when the U.S. government first sought him out. When the
left-wing general was toppled in 1975, Montesinos managed to remain in the
government led by Gen. Francisco Morales Bermudez and other conservative
generals.

Despite Montesinos' low rank, he was brought to the United States from
Sept. 5 to Sept. 21, 1976, and met with Robert Hawkins in the CIA's Office
of Current Intelligence along with military officials and the State
Department's longtime Latin America policy-planning chief, Luigi Einaudi,
now the assistant secretary general of the Organization of American States.

"In those days, it was a big deal to get one of these paid trips to
Washington. It had to be someone identified by the agency or embassy as a
potential recruit for U.S. interests. You didn't nominate yourself," said
Riordan Roett, director of the Western Hemisphere Program at the Johns
Hopkins University School of Advanced International Studies in Washington.

Roett appears in a declassified State Department document on a list of
people said to have been visited by Montesinos during his first trip. Roett
said he has no recollection of meeting the then-obscure army captain.

Also on the list was Abraham Lowenthal, a well-known Latin America expert
who now teaches at the University of Southern California. Lowenthal also
said he did not remember meeting Montesinos.

Montesinos was jailed in 1976, not long after his return. He was tried by
the military on charges of selling secrets to the CIA and cashiered from
the army in 1977. Then-U.S. Ambassador to Peru Robert W. Dean intervened on
Montesinos' behalf with Peru's foreign minister, and Montesinos asked his
lawyer to contact the State Department's Einaudi, according to declassified
State Department documents.

Einaudi was vacationing in Europe this week and could not be reached for
comment, an OAS spokesman said.

Declassified State Department documents suggest why the CIA may have sought
out Montesinos. At the time, Peru was the only left-wing regime in a
continent largely run by right-wing governments, and the United States was
locked in the Cold War with the Soviet Union. Montesinos had information
about a potential attack by the Peruvian generals against Chile, which was
then run by Gen. Augusto Pinochet, an archconservative U.S. ally.

Reached by telephone in Dallas, Dean said he is 81 and no longer remembers
Montesinos or much of anything else about his days as a diplomat. But his
recollections of the Velasco government, which was hostile to the United
States, point to why Montesinos would have been a valuable asset.

"One day my CIA chief came in and said, 'Mr. Ambassador, I have some bad
news. Velasco wants everything the American ambassador does to fail.' If
you get that message you get a chill up your spine," Dean recalls about his
efforts to promote democracy. "He didn't like that kind of breeze blowing
in on his frozen system."

Lucien Chauvin in Lima contributed to this report.