C.I.A. WORKED WITH SUSPECTED DRUG TRAFFICKERS, REPORT ADMITS

WASHINGTON -- The Central Intelligence Agency continued to work with
about two dozen Nicaraguan rebels and their supporters during the
1980s despite allegations that they were trafficking in drugs,
according to a classified study by the CIA.

The new study has found that the CIA's decision to keep these paid
agents, or to continue dealing with them in some less-formal
relationship, was made by top officials at the agency's headquarters
in Langley, Va., in the midst of the war waged by the CIA-backed
Contras against Nicaragua's leftist Sandinista government.

The new report by the CIA's inspector general criticizes agency
officials' actions at the time for the inconsistent and sometimes
sloppy manner in which they investigated -- or chose not to
investigate -- the allegations, which were never substantiated by the
CIA.

The inspector general's report, which has not yet been publicly
released, also concludes that there is no evidence that any CIA
officials were involved in drug trafficking with Contra figures.

"The fundamental finding of the report is that there is no information
that the CIA or CIA employees ever conspired with any Contra
organizations or individuals involved with the Contras for purposes of drug
trafficking," one U.S. intelligence official said.

The new report is the long-delayed second volume of the CIA's internal
investigation into possible connections between the Contras and Central
American drug traffickers. The investigation was originally prompted by a
controversial 1996 series in The San Jose Mercury-News, which asserted that
a "dark alliance" among the CIA, the Contras and drug traffickers had
helped finance the Contra war with millions of dollars in profits from drug
smuggling.

The second volume of the report dismisses those specific charges, as
did the first volume.

The Mercury-News series alleged that this alliance created a drug
trafficking network that was the first to introduce crack cocaine into
South Central Los Angeles. The series prompted an enormous outcry,
especially among blacks, many of whom said they saw it as confirmation of a
government-backed conspiracy to keep blacks dependent and impoverished.

The Mercury-News subsequently admitted that the series was flawed and
reassigned the reporter.

In the declassified version of the CIA's first volume, the agency said the
Mercury-News charges were baseless and mentioned drug dealers who had
nothing to do with the CIA.

But John Deutch, the director of central intelligence at the time, had also
asked the inspector general to conduct a broader inquiry to
answer unresolved questions about the Contra program and drug
trafficking that had not been raised in the Mercury-News series.
Frederick Hitz, then the CIA's inspector general, decided to issue a
second, much larger report to deal with those broader issues.

Many of the allegations in the second volume parallel charges that
first surfaced in a 1987 Senate investigation. The CIA is much more
reluctant to publicly release the complete text of the approximately
500-page second volume than it was of the first, because it deals
directly with Contras the CIA did work with.

According to the report, CIA officials involved in the Contra program
were so focused on the fight against the leftist Sandinista regime
that they gave relatively low priority to collecting information about the
possible drug involvement of individuals in the Contra army. The report
concluded that CIA officers did report on drug trafficking by the Contras,
but that there were no clear guidelines given to CIA officers in the field
about how intensively they should investigate or act upon the allegations.

In all, the CIA received allegations of drug involvement against about 50
figures in the Contra movement over the course of the war against the
Sandinistas, according to the report. Those allegations were leveled
against members of the Contra army as well as its air

transport and support networks. Some of the allegations may have been
specious, the result of Sandinista propaganda, while other charges may have
been more substantive, U.S. intelligence officials said.

It could not be determined from the CIA's records how many of those 50
cases were fully investigated by the agency. But of those, the CIA
continued to work with about two dozen figures alleged to be involved
in the drug trade, according to U.S. intelligence officials familiar
with the report. They said the report found that the agency was unable to
either prove or disprove the charges, or did not conduct adequate
investigations into the allegations.

U.S. intelligence officials, who provided information about the
report, declined to identify the individual Contras who were the
targets of the drug allegations. But they did say that while most of
the charges were leveled against individuals, the report found that
drug allegations had been made against one Contra organization, a
group known as 15th of September. That group was formed in 1980 and
was disbanded in January 1982, in the early stages of the Contra war.

The CIA's decision to classify this second volume has already been met with
criticism on Capitol Hill. Sen. John Kerry, D-Mass., who led a 1987
congressional inquiry into allegations of Contra drug
connections, wrote a letter Thursday to CIA Director George Tenet
asking that the report be immediately declassified.

Kerry, who has reviewed the second volume of the inspector general's
report, added that he believes CIA officials involved in the Contra
program did not make a serious effort to fully investigate the
allegations of drug involvement by the Contras.

"Some of us in Congress at the time, in 1985, 1986, were calling for a
serious investigation of the charges, and CIA officials did not join in
that effort," Kerry said. "There was a significant amount of
stonewalling. I'm afraid that what I read in the report documents the
degree to which there was a lack of interest in making sure the laws
were being upheld."

CIA officials notified Congress at the time of most of the
"significant" cases in which the agency decided to continue doing
business with those Contras accused of dealing in drugs, the report
states, but it does not detail the exact nature of the Congressional
notification.

One former CIA official familiar with the Contra program disputed the
notion that agency officials did not take the drug charges seriously
at the time.

"You investigate all of them, and when they were credible, and when we
could substantiate them, we would certainly take action," the former
official said. "But wild or unproven allegations would not by
themselves be enough to displace someone from the organization.
Otherwise, we would have had no discipline or morale in these
organizations."

Allegations of drug involvement on the part of the Contras was hardly
the only time that a group connected to the CIA has been accused of
dealing in narcotics. The agency's local allies in Southeast Asia
during the Vietnam War, and in Afghanistan after the Soviet invasion
of 1979, also were accused of drug trafficking.

Checked-by: "Rich O'Grady"