U.S. ALLIES IN DRUG WAR IN DISGRACE

Arrests Of Peruvian Officials Expose Corruption, Deceit

LIMA, Peru -- Inside a dilapidated downtown prison, a gaggle of former
president Alberto Fujimori's top generals sulked around a green cement jail
yard on a hot afternoon. The recently arrested generals whittled away their
recreation time halfheartedly, playing soccer and reminiscing about the
days when Fujimori's finest could count on at least one steadfast friend:
Uncle Sam.

Gen. Juan Miguel del Aguila, head of Peru's National Anti-terrorism Bureau
until last year and, later, security chief of the National Police, recalled
frequent meetings with U.S. intelligence agents right up to the moment when
Fujimori abandoned the presidency and fled to Japan in November.

"The U.S. was our partner in every respect, giving us intelligence,
training, equipment and working closely with us in the field," said del
Aguila, who is now charged with conspiracy in the state-sponsored bombing
last year of a bank in downtown Lima, an act meant to look like the
handiwork of Fujimori opponents to portray them as radicals. "The United
States was our best ally."

Less chatty, Gen. Nicolas Hermoza Rios, an honors graduate from the U.S.
Army's School of the Americas at Fort Benning, Ga., shooed away a foreign
journalist. The former head of Fujimori's joint chiefs during most of the
1990s -- a decade when Peru vied with Colombia as the largest recipient of
U.S. military aid in South America -- Hermoza had just pleaded guilty to
taking $14 million in illicit gains from arms deals. He was still fighting
more potent charges of taking protection money from the same drug lords the
United States was paying Peru to fight.

The arrests of 18 generals in the six months since Fujimori's fall -- among
more than 70 of his government's high ranking military and intelligence
officials against whom criminal charges have been brought -- have lifted a
curtain on the dark side of Washington's strategic partnership with Peru
during the 1990s. Hailed as a model for U.S. military cooperation with
Latin America, the tight alliance was part of a quest to crush leftist
guerrillas and drug traffickers. To that end, the United States provided
Peru not only cash, but also training, equipment, intelligence and manpower
from the CIA, DEA and U.S. armed forces.

But a purge underway here since Fujimori's disgrace has shown that many of
the people the United States worked with most closely to accomplish its
goals -- especially in the drug war -- appear to have been working both
sides of the street, forming a network of corruption right under the noses
of their U.S. partners. For many Peruvians, this has raised the question
whether U.S. officials working here were duped or just averted their gaze.

"The United States was working with people involved in massive criminal
activity in Peru," said Anel Townsend, head of a Peruvian congressional
subcommittee probing government links to drug trafficking in the 1990s. "If
U.S. intelligence did not know what was going on, it certainly should have.
You can't just offer that kind of assistance to a government like
Fujimori's and then take no responsibility for the consequences."

The underside of cooperation in Peru underscores the difficulties and
compromises of U.S. military partnerships in Latin America. Echoes of
Peru's problems can already be seen in Washington's $1.3 billion
contribution to "Plan Colombia." Critics warn that U.S. officials may be
repeating the mistake of cooperating with a corrupt military establishment
to meet their ends in the drug war.

Vladimiro Montesinos, for instance, was for years Peru's top liaison with
Washington and Fujimori's intelligence chief. He is now a fugitive with a
$5 million price on his head. Continuously defended by U.S. officials and
the CIA as a staunch ally in the drug war, Montesinos is now facing 31
criminal counts, including charges that he ordered civilian massacres in
1991 and 1992 and that he protected drug smugglers while aiding the United
States in capturing others.

Peruvian investigators and Fujimori's longtime political opponents are now
demanding answers from Washington and requesting release of CIA documents
on Peru. Many officials here insist it is inconceivable that U.S.
intelligence -- and particularly the CIA, which enjoyed a close
relationship with Montesinos -- was unaware of at least some of his alleged
crimes. And if the United States was unaware, its critics here insist that
it was lax.

Current and former U.S. officials working in Peru respond that critics
forget the bright side of the partnership with Fujimori: the crusades that
stamped out the powerful Shining Path and Tupac Amaru guerrilla movements
and an aggressive anti-drug program that led to a 70 percent reduction in
cultivation of the coca leaf used to make cocaine .

"We have had a very focused mission in Peru, first zooming in on the
guerrillas and then on narco-traffickers," said a State Department official
involved in U.S.-Peru policy. "We were busy dealing with the bad guys
outside the government, so perhaps we weren't pointing all our sensors
toward the bad guys within the government."

The U.S. officials also insist that until recently, evidence indicating
high level corruption was largely hearsay, and they point out that, for a
while, Fujimori was one of the most popular presidents in Peruvian history.
Unlike the corrupt, repressive Latin American governments Washington
supported out of strategic interest during the Cold War, Fujimori was
democratically elected in 1990 and re-elected in 1995. And when Fujimori
appeared to be robbing a new term through fraudulent elections last year,
these officials say, the United States began distancing itself from his
government.

"While everyone is now trying hard to forget it, Fujimori did have a
reputation for being relatively honest, and it remains to be proven to what
extent he was corrupt," said a former State Department official who worked
for years in Peru. "For instance, in the privatization of some $17 billion
worth of state-run enterprises, I never heard that the process was corrupt.
Many businessmen compared it very favorably in that regard to Argentina."

The authoritarian-style former president sought asylum in his parents'
native Japan last November amid allegations of corruption and signs that
congress would move to impeach him. Fujimori, who briefly closed congress
in 1992 and seized almost total control of the judiciary and media, is now
being probed for theft of gold bars from the Central Bank and ordering
assassinations of leftist guerrillas. But he has yet to be brought up on
formal charges.

Some U.S. officials concede that they lapsed in not taking a stronger line
on dominant figures in Fujimori's government, especially Montesinos. An
Army deserter who sold state secrets to the CIA in the 1970s, Montesinos at
one time was a lawyer for drug traffickers. In the early 1980s, he signed a
legal documents on behalf of a Colombian client for the purchase of
buildings in Lima that were later discovered to harbor cocaine processing
equipment.

His background, as well as continuing allegations of misdeeds throughout
the 1990s, did raise concerns at the U.S. Embassy in Lima as well as in
Washington. But the CIA argued that rumors of his corruption were
exaggerated and called him a vital asset. He continued to be Washington's
chief liaison, holding repeated meetings with top U.S. figures, including
the former White House drug policy coordinator, Barry R. McCaffery, and
Gen. General Charles Wilhelm, former head of the U.S. Southern Command.

Critics here say the relationship flourished desite evidence available
since the early 1990s that painted a broad, if incomplete picture of high
level official corruption. That evidence included testimony taken during
congressional hearings on corruption in 1993, when a government witness who
had worked with Peru's most notorious drug trafficker, Demetrio "El
Vaticano" Chavez, testified that Gen. Hermoza had been receiving between
$50,000 and $100,000 a month in protection money. The witness also said
that Montesinos "is the one who is making the most from 'El Vaticano,' "
according to transcripts of her testimony.

Chavez was finally arrested in Colombia and extradited to Peru. During his
trial in 1996, he testified that he had paid Montesinos $50,000 a month.
Several days after Chavez's testimony, he recanted his story. But Chavez
now says he was tortured and ordered to recant.

Other captured drug traffickers also say they provided information and
testimony to U.S. officials about money being paid to Montesinos, but that
their stories were ignored. A U.S. official said, "The problem with the
so-called proof about Montesinos and the generals is that they always seem
to come from drug traffickers."

But other evidence surfaced as well. In May 1996, police seized 383 pounds
of cocaine -- with a U.S. street value of roughly $17 million -- on a
Peruvian air force DC-8 transport plane en route to Russia through Miami.
Thirteen air force personnel were arrested. That July, 280 pounds were
found on two Peruvian navy ships, one in Vancouver, Canada, and the other
in the main Peruvian port of Callao. Also, dozens of officers were
investigated, and many arrested, on drug trafficking charges throughout the
decade.

But Fujimori's former anti-drug officials say U.S. drug enforcement and CIA
officials were reassured by promises of efforts to root out the corruption.

"I'm not going to defend an administration that we now know was rotten, but
I can tell you that most of us working in counter-narcotics were honest
people who didn't know what was going on," said Gen. Dennis del Castillo,
who headed the National Police Counter Narcotics Bureau until earlier last
year.

Special correspondent Lucien Chauvin contributed to this report.