CIA KEPT WORKING WITH CONTRAS LINKED TO DRUGS, REPORT SAYS

WASHINGTON - A second volume of a CIA study into agency connections to
Nicaraguan contras in the 1980s supports earlier conclusions that the agency
continued to work with individual rebels suspected of drug trafficking.

Growing out of a hotly disputed newspaper account about the spread of crack
cocaine in American cities, the CIA inspector general's report also
confirmed earlier conclusions that there was no evidence that any CIA
officials engaged in actual drug trafficking with contra rebels, a U.S.
intelligence official said today.

Both findings were contained in the first volume of the report released in
January and stemming from a 1996 series in The San Jose Mercury-News that
alleged a "dark alliance" between the CIA and contra-connected drug dealers.
The series created an uproar, particularly in black communities, over the
suggestion that the CIA allowed its contacts to engineer the spread of crack
cocaine in poor urban neighborhoods.

The newspaper later stated that the series was flawed.

The 500-page second volume of the CIA inspector's report remains classified
because it contains detailed information about CIA contacts and sources who
helped the agency through much of the civil war against the communist
Sandinista government in Nicaragua. It has been reviewed by the House and
Senate Intelligence committees.

A U.S. intelligence official said today that while the first volume focused
on - and debunked - the so-called California connection, the second volume
goes into greater detail on the agency's contacts in Nicaragua.

The study found that the CIA occasionally received reports and allegations,
some of them originating in newspapers, of drug trafficking by contra rebels
or supporters.

The inspector general's report criticizes the CIA for poor record-keeping;
the report was unable to determine how many of the 50 individuals were
further investigated by the CIA after allegations surfaced. The report also
notes that more recent CIA regulations governing dealings with potentially
unsavory sources would require such inquiries and better record-keeping.

The intelligence official said no one should be surprised that some of the
guerrilla operators with whom the CIA had to deal in Central America in the
early 1980s were unsavory.

Checked-by: "Rolf Ernst"