DON'T ASK, DON'T TELL

In testimony before the House Select Committee on Intelligence on March 16,
the Central Intelligence Agency once again suffered a blow to its
reputation. This time the injury was self-inflicted. The CIA's own top
watchdog, Inspector General Frederick P. Hitz, admitted that although
"dozens of individuals and a number of companies" involved in the agency's
covert war against Nicaragua during the '80s were suspected drug
traffickers, the CIA had legal authority to ignore their crimes as long as
they were helping contra rebels fight the left-wing Sandinista government.

Hitz revealed that between 1982 and 1995 the spy agency had an agreement
with the Justice Department, allowing it to ignore drug trafficking by its
"agents, assets and non-staff employees." The directive, known as a
"Memorandum of Understanding" (MOU), did not exempt the agency's full-time,
career employees, who are known as CIA "officials." However, the agency did
not have to tell the Justice Department about the criminal activities of
"agents" or "assets" -- terms used interchangeably to refer to its paid and
unpaid spies. Also exempt were CIA contractors, such as pilots, accountants
and military trainers, who supplied the agency with specific goods and
services rather than intelligence. "There was no official requirement to
report on allegations of drug trafficking with respect to non-employees of
the agency," Hitz told the committee.

Hitz said this agreement, which he termed "a rather odd history," has since
been changed. But it was not until 1995 -- five years after the end of the
war in Nicaragua and three years into Clinton's first term -- that the
agreement was revised to include agents, assets and contractors as
"employees" whose suspected criminal activities, such as drug trafficking,
must be reported to the Justice Department.

Disclosure of this agreement is another black eye for the CIA at a time
when the agency is trying to distance itself from persistent allegations of
drug trafficking, including the provocative August 1996 "Dark Alliance"
series in the San Jose Mercury News. Veteran journalists, investigators,
policy analysts and members of Congress interviewed by In These Times all
say they were unaware of the directive. "This previously unknown agreement
enabled the CIA to keep known drug smugglers out of jail and on the payroll
of the American taxpayer," says Peter Kornbluh, a senior analyst with the
National Security Archive, who has written extensively on the CIA and the
war in Nicaragua. "CIA officials realized collaborating with pro-contra
drug smugglers was important to the goal of overthrowing the Sandinistas
and it sought protection from the Justice Department."

In 1982, when the MOU was implemented, the United States was gearing up for
a covert war in Central America aimed at toppling the Sandinistas. Over the
next eight years, the CIA hired scores of Latin American, Cuban and
American spies, as well as dozens of aviation, fishing and real estate
companies, to support the contras. Simultaneously, cocaine began flooding
into the United States, fueling the crack epidemic that has devastated Los
Angeles, Baltimore and other cities.

David MacMichael, who was a senior CIA officer in the early '80s, says that
while he was not aware of this MOU, he does recall that "in 1981, [CIA
Director William] Casey went to attorney general [William French] Smith
looking for a blanket exemption from prosecution for CIA officers for
crimes committed in the line of duty." Smith demurred, he says.

Since the mid-'80s, a spate of media reports, congressional inquiries, and
court cases in the United States and Central America have linked contra
officials and collaborators with cocaine traffickers, money launderers and
various front companies. Many of those implicated also claimed or were
alleged to be working for the CIA. In 1996, the accusations erupted anew
with the publication of Gary Webb's Mercury News series, which detailed how
a Nicaraguan drug ring used black street gangs to sell crack cocaine in Los
Angeles. Over the years, the CIA has repeatedly denied allegations that it
dealt with drug dealers.

Those denials have been championed by Washington Post reporter Walter
Pincus, a specialist in national security affairs and a leading critic of
the Mercury News series. Pincus, who has yet to report on Hitz's testimony,
says he had not been previously aware the directive. "I am still trying to
get a clarification of it," he says, adding that it may not be very
significant. "All it admits is that what they were doing was legal. On
occasion they were dealing with people who may or may not have been dealing
in drugs."

In December 1985, reporters Robert Parry and Brian Barger wrote the first
story tying the CIA's contra operation to cocaine smuggling. The piece for
The Associated Press angered Reagan administration officials, who tried
unsuccessfully to block its publication. During the contra war, most of the
media either ignored or discredited the drug trafficking reports. Parry
maintains that his pursuit of this story helped cost him jobs at AP and
Newsweek. "Historically we were correct," Parry says. "We pointed to a
serious problem in a timely fashion, and we were all punished and
ridiculed. The reporters who put this story down have gone on to fame and
fortune."

Parry calls Hitz's disclosure "extremely significant." "It amounts to a
blank check for dealing with drug traffickers," he says. "The agency is
admitting that it engaged in covering up drug crimes by the contras and
that this was legal."

Major media also ignored the 1989 findings of Sen. John Kerry's (D-Mass.)
Subcommittee on Terrorism, Narcotics and International Operations. The
Kerry committee's two-year investigation turned up substantial evidence of
cocaine smuggling and money laundering by persons connected to the contras
and the CIA. Among the conclusions of its 1,166-page report:

*"Drug traffickers used the contra war and their ties to the contras as a
cover for their criminal enterprises in Honduras and Costa Rica. Assistance
from the drug lords was crucial to the contras, and the traffickers in turn
promoted and protected their operations by associating with the contra
movement."

*"Drug traffickers provided support to the contras and used the supply
network of the contras. Contras knowingly received both financial and
material assistance from the drug traffickers."

*"Drug traffickers contributed cash, weapons, planes, pilots, air supply
services and other materials to the contras."

*"In each case, one or another U.S. government agency had information
regarding these matters either while they were occurring, or immediately
thereafter."

The report was all but ignored by the three major networks and buried in
the back pages of the major newspapers. Combined, the stories in the
Washington Post, New York Times and Los Angeles Times totalled less than
2,000 words.

At the March congressional hearing, Hitz explained that the MOU between the
agency and the Justice Department was modified slightly in 1986,
prohibiting the CIA from paying those suspected of involvement in drug
trafficking. The CIA, however, could legally continue to use suspected drug
smugglers and not report their activities, as long as they received no
money from the agency.

But for major drug traffickers, being allowed to operate under the CIA's
umbrella was payment enough. The Kerry committee's report, along with most
press accounts of the CIA-cocaine connection, alleges that the contras
accepted money and supplies from drug smugglers and money launderers -- not
the other way around.

John Mattes, a young public defender in Miami in the mid-80s, stumbled upon
the allegations of drug trafficking by Cuban-Americans working with the
contras. Mattes, who represented several cocaine traffickers and
soldiers-of-fortune who testified before the Kerry committee, says
traffickers were seeking protection, not money, from the CIA. "There was a
marriage of convenience between the contras and the coke smugglers," he
says. The smugglers had cash, planes and pilots, while the Contras had
intelligence, airstrips and, most importantly, unimpeded access to the
United States. "And that, to a drug smuggler," he says, "is worth all the
tea in China."

During the '80s, the CIA conducted several internal inquiries and announced
it found no substantial evidence that contra leaders and other persons
working for the CIA had connections to cocaine traffickers. Then, the "Dark
Alliance" series touched off a volatile, nationwide controversy over the
agency's role in introducing crack to Southern California street gangs. To
help quell public and congressional anger, both the CIA and Justice
Department launched separate internal investigations. Both reports were
scheduled to be released last December, but were withheld at the last
minute without explanation.

Attorney General Janet Reno subsequently announced that she had blocked the
release of the Justice Department report (rumored to be the more
substantial and significant of the two) for unspecified "law enforcement
reasons." Justice Department sources told in These Times that one of the
people named in the report is a government witness in an ongoing criminal
case, whose identity must be protected. However, Jack Blum, a Washington
attorney and investigator for the Kerry committee, doubts that the Justice
Department will ever release its report. Blum says law enforcement
officials often claim disclosures will jeopardize ongoing cases, and he
wonders why the report was not simply edited to protect the informant's
identity.

In late January, the CIA released a declassified version of volume one of
its two-part report. Entitled "The California Story," this 149-page report
focuses on the cocaine network described in the "Dark Alliance" series,
which detailed the activities of two Nicaraguan drug smugglers, Danilo
Blandon and Juan Norwin Meneses. In the early '80s, Meneses and Blandon
supplied large quantities of powder cocaine to Ricky Ross, an
African-American drug dealer, who then turned it into crack for sale to two
Los Angeles gangs. Webb alleges that the Nicaraguans gave some of their
drug profits to top contra officials who were working with the CIA.

Hitz called the CIA's 18-month investigation "the most comprehensive and
exhaustive ever conducted" by the agency. He told the congressional
committee: "We found absolutely no evidence to indicate that the CIA as an
organization or its employees were involved in any conspiracy to bring
drugs into the United States," But, taken in conjunction with what Hitz
said about the MOU, "employees" here may pertain only to CIA career
officials -- not agents, assets or contractors.

Webb, whose reporting touched off the controversy, describes the report as
"schizophrenic." "The Executive Summary says there's no CIA involvement,"
says Webb. "The actual report shows there are CIA fingerprints all over
this drug operation."

For example, upon the release of volume one, CIA Director George Tenet
proclaimed that the Agency "left no stone unturned" in reaching its
conclusion that the CIA had "no direct or indirect" ties to Blandon and
Meneses. Yet, the report contains a compendium of indirect links between
the CIA's contra army and drug traffickers. The most obvious admissions
contained in the report include:

- --An October 22, 1982, cable from the CIA's Directorate of Operations that
reports, "There are indications of links between (a U.S. religious
organization) and two Nicaraguan counter-revolutionary groups...These links
involve an exchange in (the United States) of narcotics for arms." The
report goes on to say that there was to be a meeting in Costa Rica of
contras, several U.S. citizens and Renato Pena, a convicted drug dealer who
was part of Meneses' operation. Astonishingly, a November 3, 1982, cable
from CIA headquarters says that the agency decided "not to pursue the
matter further" because of "the apparent participation of U.S. persons
throughout."

- --The CIA directly intervened in the 1983 "Frogman Case," in which San
Francisco police seized 430 pounds of cocaine and arrested 50 individuals,
including a number of Nicaraguans. Because the CIA feared the agency's
connections to some of the contras involved had "potential for disaster,"
an unidentified CIA lawyer convinced the U.S. Attorney in San Francisco and
Justice Department officials to cancel plans to take depositions from
contra leaders in Costa Rica and to return $36,800 seized in the drug raid
to one of the contra factions. "There are sufficient factual details which
would cause certain damage to our image and program in Central America,"
CIA assistant general counsel Lee Strickland wrote in a August 22, 1984,
memo quoted in the report.

- --Blandon and Meneses met on various occasions with the contras' military
commander, Enrique Bermudez, who worked for the CIA. At one meeting in
Honduras in 1982, Bermudez, arguing that "the ends justify the means,"
asked the pair for help "in raising funds and obtaining equipment" and arms
for the contras. After the meeting, a group of contras escorted Blandon and
Meneses to the Tegucigalpa airport, where the pair was arrested by Honduran
authorities because they were carrying $100,000 in cash, profits from a
Bolivian drug deal. The contras intervened and the money was returned to
Blandon and Meneses. The report inexplicably concludes that there is no
evidence that Bermudez knew the duo were drug traffickers, even though CIA
cables show the agency was aware that Meneses had been a "drug king-pin"
since the '70s.

At the congressional hearings, lawmakers cited these and other portions of
the report, questioning the agency's capacity to investigate itself. Among
the most vocal critics were Los Angeles Democratic Reps. Maxine Waters and
Juanita Millender-McDonald, whose districts have been the epicenter of the
crack epidemic. Waters charged that the report was "fraught with
contradictions and illogical conclusions," saying that the CIA's cleverly
worded denials of links to drug traffickers in Southern California "defies
the evidence."

Volume two of the report, which covers the entire Nicaraguan war, was
scheduled to be turned over to the House and Senate intelligence committees
in late March. But, as of mid-April, CIA officials told In These Times, the
report had not been released to Congress. In his congressional testimony,
Hitz said that volume two will contain "a detailed treatment of what was
known to CIA regarding dozens of people and a number of companies connected
in some fashion to the contra program or the contra movement, that were the
subject of any sort of drug trafficking allegations."

Previewing the report, Hitz admitted: "There are instances where the CIA
did not, in an expeditious or consistent fashion, cut off relationships
with individuals supporting the contra program, who are alleged to have
engaged in drug trafficking activity or take action to resolve the
allegation." Several congressional sources say that they suspect the report
will never be released.While the precise wording of the MOU has not been
made public, some say the directive may be considerably broader than
implied at the hearing. At one point in his testimony, Hitz said the MOU
applied to "intelligence agencies," indicating that it also may include the
dozen or so U.S. agencies involved in intelligence work, not just the CIA.
Hitz declined requests for an interview.

But the CIA may not be able to get away without further disclosures. The
National Security Archive and other public interest groups, as well as
Reps. John Conyers (D-Mich.) and Waters, are mounting a campaign for the
declassification and release of the text of the MOU, the Justice Department
report, volume two of the CIA report, tens of thousands of pages of
documents and hundreds of interviews compiled by the two agencies in the
course of their internal investigations. Attorney Blum warns that CIA
officials who testified before the Kerry committee may have perjured
themselves in denying they knew of any links between the CIA, the contras
and cocaine traffickers. And investigative journalists Parry and Webb,
among others, say Hitz's admission may be the smoking gun that conclusively
proves that the CIA colluded with and then concealed its involvement with
cocaine traffickers.

Martha Honey is director of the Peace and Security program at the Institute
for Policy Studies in Washington, D.C. During the '80s, she covered the war
in Nicaragua as a journalist in Costa Rica.