CIA ADMITS IT OVERLOOKED CONTRAS' LINKS TO DRUGS

WASHINGTON (CNN) -- The CIA overlooked or ignored reports that the
Nicaragua Contra rebels financed their fight to oust the communist
Sandinistas through the sale of drugs in the United States, according
to an internal CIA report.

Fredrick Hitz, the now-retired CIA inspector-general who supervised
the report, admitted that monitoring of the Contras was lax.

"We fell down on accountability.... There was a great deal of
sloppiness and poor guidance in those days out of Washington," Hitz
said.

Field offices described criminal activities

The 450-page report, issued by the CIA last month, for the first time
reveals information sent to the CIA by its field operatives about the
activities of the Contra groups during the 1980s.

One cable sent to the CIA from a field office described a "trial run"
of a drug route from Honduras to Miami in July 1981 to benefit the
Nicaraguan Revolutionary Democratic Alliance (ADREN).

An earlier cable cited in the report said the rebel group felt it was
being "forced to stoop to criminal activities in order to feed and
clothe their cadre."

The report also cited the use of a Honduran businessman, Alan Hyde,
for logistical support to the Contras, despite Hyde's identification
in a 1984 U.S. Defense Department report as "a businessman making much
money dealing in 'white gold,' i.e., cocaine."

DEA discouraged from investigating

The report details cases where the CIA dissuaded other federal
agencies, notably the Drug Enforcement Administration (DEA), from
probing the activities of Contra groups and their contractors. In one
instance, the CIA discouraged the DEA from examining Oliver North's
efforts to evade legal restrictions on Contra aid through a secret
supply operation in El Salvador, according to the report.

The report is the second released by the agency in response to a
series of articles that appeared in the San Jose Mercury News in the
summer of 1996. Those articles accused the CIA of forming an alliance
with drug dealers and Contra groups to introduce crack cocaine into
south-central Los Angeles during the 1980s.

While the inspector-general's report contradicts the CIA's previous
claims that it had little information on the Contras and drug-running
activities, it offers no evidence supporting the newspaper's
allegations.

Checked-by: Rich O'Grady