Source: (2)Washington Post (DC)
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Copyright: 1998 The Washington Post Company
Author: Walter Pincus

REPORT CLAIMS CIA IGNORED TIPS CITING CONTRA DRUG DEALING IN '81

WASHINGTON -- In September 1981, as the Reagan administration was approving
a covert CIA program to finance anti-Sandinista exile organization attempts
to overthrow the Nicaraguan government, "an asset" told the agency that one
of the major Contra rebel groups intended to sell drugs in the United
States to pay its bills.

The cable described for CIA headquarters a July 1981 drug delivery from
Honduras to Miami, including the names of those involved, and called it "an
initial trial run" by members of the Nicaraguan Revolutionary Democratic
Alliance. An earlier cable said the rebels felt they were "being forced to
stoop to criminal activities in order to feed and clothe their cadre."

Although the cables were circulated to the departments of State, Justice,
Treasury and Defense and all U.S. intelligence agencies, the CIA neither
followed up nor attempted to corroborate the allegations, according to a
450-page declassified version of a report by the CIA's inspector general
released last month.

Nearly a decade after the end of the Nicaraguan war -- and after years of
suspicions and scattered evidence of Contra involvement in drug trafficking
- -- the CIA report discloses for the first time that the agency did little
or nothing to respond to hundreds of drug allegations about Contra
officials, their contractors and individual supporters contained in nearly
1,000 cables sent from the field to the agency's Langley, Va., headquarters.

In a few cases, officials instructed the Drug Enforcement Administration to
hold back inquiring about charges involving alleged drug dealers connected
with the Nicaraguan rebels, according to the report. It also indicated that
at times, wide suspicions or allegations of drug trafficking did not
disqualify individuals from being recruited for the CIA effort.

"There was a great deal of sloppiness and poor guidance in those days out
of Washington," said Frederick P. Hitz, the retired CIA inspector general
who supervised the report.

However, Hitz's report indicated that in 1982, after the CIA's covert
support of the Contras began, then-Reagan Attorney General William French
Smith and CIA Director William J. Casey agreed to drop a previous
requirement that agency personnel report information about alleged criminal
activities when undertaken by persons "acting for" the CIA.

The Smith-Casey agreement covered those associated with the Contra effort.
The provision remained unchanged until 1995, the report said.

The report also said the CIA gave Congress "incomplete" briefings that
"often lacked specific detail." Jack Blum, counsel for a Senate Foreign
Relations subcommittee that in the mid-1980s investigated Contra drug
activities, said after reading the report that many details were denied his
panel. Instead, he said, "they put out stories that spun the facts against
us," denying Contra connections to drug activity.

Although the report contradicts previous CIA claims that it had little
information about drug running and the Contras, it does not lend any new
support to charges of an alliance among the CIA, Contra fund-raisers and
dealers who introduced crack cocaine in the 1980s in south-central Los
Angeles.

The charges created a national sensation during the summer of 1996, when
they were published in a series of articles by the San Jose (Calif.)
Mercury News.

The allegations, which were not substantiated by subsequent reporting by
other newspapers, prompted a yearlong CIA inquiry that produced two
reports, including the one released last month.

The first report found that there was no evidence to indicate that the CIA
had any dealings with California drug traffickers. The classified version
of the second report, sent to Congress earlier this year, concluded that
there was no evidence that the CIA "conspired with or assisted
Contra-related organizations or individuals in drug trafficking to raise
funds for the Contras or for other purposes."

However, the unclassified report indicated that the CIA routinely received
allegations about drug trafficking links to the Contras, but suggests that
in many cases the charges were ignored or overlooked because of the
priority to keep the Contra effort going.

Hitz's report did not indicate who is to blame. It consisted of more than
1,000 items containing unattributed allegations about hundreds of
individuals and companies, with no conclusions.

Hitz said his aim in the report was "to try to find out what was on the
written record ... and not develop any cases to bring to closure. ... This
is grist for more work, if anyone wants to do it."

Checked-by: Pat Dolan