CIA SAID TO IGNORE CHARGES OF CONTRA DEALING IN '80S

WASHINGTON, Oct. 9, 1998 -- Despite requests for information from Congress,
the CIA repeatedly ignored or failed to investigate allegations of drug
trafficking by the anti-Sandinista rebels of Nicaragua in the 1980s,
according to a newly declassified internal report. In a blunt and often
critical report, the CIA's inspector general determined that the agency
"did not inform Congress of all allegations or information it received
indicating that contra-related organizations or individuals were involved
in drug trafficking.''

Beginning in 1986, the subject of contra drug trafficking became a focus
for critics of the Reagan administration's policy toward Nicaragua who
charged that the CIA was shielding drug smugglers to protect its
anti-Communist covert action program in Nicaragua.

That year Congress imposed a fund cutoff for any contra group that had
members involved in drug trafficking. Despite that ban, the CIA failed to
tell Congress about allegations it had received against at least eight
individuals with contra ties.

During the time the ban on funds was in effect, the CIA informed Congress
only about drug charges against two other contra-related people.

In addition, the agency failed to tell other executive branch agencies,
including the Justice Department, about drug allegations against 11
contra-related individuals or entities.

The report quotes many active and retired CIA officers who served in
Central America as saying they either did not hear or did not believe
allegations of drug trafficking involving the contra rebels, with whom they
worked closely. It also makes clear that the agency did little or nothing
to investigate most of the drug allegations that it heard about the contras
and their supporters.

In April 1987, the acting director of central intelligence, Robert Gates,
wrote in a memorandum that it was "absolutely imperative that this agency
and our operations in Central America avoid any kind of involvement with
individuals or companies that are even suspected of involvement in
narcotics trafficking.''

The CIA investigation that began almost a decade later, however, found no
evidence that the memorandum was distributed to anyone other than Gates'
deputy for operations, Clair George.

The new study is the second volume of the CIA's internal investigation
prompted by a 1996 series of articles in The San Jose Mercury-News, which
claimed that a "dark alliance'' between the CIA, the contras and drug
traffickers had helped finance the contra war with millions of dollars in
profits from drug smuggling. The series also alleged that this network was
the first to introduce crack cocaine into South Central Los Angeles. The
first volume of the CIA inspector general's report, issued in January,
dealt primarily with the specific allegations raised by the Mercury-News
series and dismissed the newspaper's central findings.

But the second volume is the result of a broader inquiry into long-
unresolved questions about the contra program and drug trafficking.

In all, the inspector general's report found that the CIA had received
allegations of drug involvement by 58 contras or others linked to the
contra program. These included 14 pilots and two others tied to the contra
program's CIA-backed air transportation operations.

The report indicates that information linking the contras to drugs began to
emerge almost as soon as the contras came into existence -- and before it
became publicly known that the CIA was supporting their effort to overthrow
the Marxist-led government in Managua.

In September 1981, as a small group of rebels was being formed from former
soldiers in the National Guard of the deposed Nicaraguan dictator,
Anastasio Somoza Debayle, a CIA informant reported that the leadership of
the fledgling group had decided to smuggle drugs to the United States to
support its operations.

Eight months later, another report indicated that one prominent leader of
the group, Justiniano Perez, was a close friend of a known trafficker.

The agency's response also set something of a pattern.

"No information has been found to indicate any action to follow up or
corroborate the allegations,'' the report said. "

Similarly, it said, it found no information that the CIA followed up on FBI
information about the Perez matter.

The omissions of information were often glaring.

In 1986, for example, Alan Fiers, then chief of the CIA's Central American
task force dealing with the contras, responded to questions raised by Sen.
John Kerry, D-Mass., about specific contra members and contra-related
companies. According to the report, Fiers responded to Kerry's questions
about a contra logistics coordinator named Felipe Vidal by providing a
sheet of information about his convictions for illegal possession of
firearms in the 1970s, but without any mention of Vidal's arrests and
conviction for drug trafficking.

The report said that in at least six instances, the CIA knew about
allegations regarding individuals or organizations but that knowledge did
not deter it from continuing to employ them. In some other cases, the
agency decided the allegations were not substantiated.

Checked-by: Richard Lake