CIA FINDS NO SIGNIFICANT DRUG-CONTRA TIE

Investigation: Report contradicts charges that agency was involved in
trafficking. Rep. Maxine Waters is not satisfied.

WASHINGTON--The Central Intelligence Agency said Thursday that a 17-month
internal investigation has found no evidence that the U.S.-supported
Nicaraguan rebels of the 1980s received significant financial support from
drug traffickers.

CIA Inspector General Frederick P. Hitz, releasing the first volume of a
two-part report on the drug issue, said his findings contradict widespread
charges that the agency was involved in drug trafficking as a means of
funding the Contras.

The investigation was touched off by allegations that three California drug
traffickers introduced crack cocaine to Los Angeles and funneled millions
of dollars to the Contras under protection from the CIA.

"No evidence has been found . . . that the CIA as an organization, or any
of its employees, engaged in drug trafficking in support of the Contras or
to raise funds for Contra-related programs," Hitz said.

He said the inquest found that cocaine traffickers in California had
donated between $6,000 and $80,000 to the Contra movement, adding that he
considered the smaller sum more likely.

Asked whether investigators had detected any significant flow of drug money
to the Contras from any source, in California or elsewhere, Hitz replied:
"No."

CIA Director George J. Tenet praised the investigation. "I am satisfied
that the IG has left no stone unturned in his efforts to uncover the
truth," he said in a written statement.

But Rep. Maxine Waters (D-Los Angeles), who demanded the inquest, said she
was not satisfied.

"There are undeniable connections between the drug dealers and the Contras
that raise questions still," she said. "Where there's this much smoke,
there must be some fire."

The allegations that led to the inquest were reported in the San Jose
Mercury News in 1996. Other newspapers, including The Times, investigated
the same allegations and found evidence that the traffickers had
contributed some money to the Contras, but no proof that the CIA knew of
the pipeline.

Hitz's report, based on 365 interviews with former CIA officials and Contra
leaders, as well as 250,000 pages of documents, said two traffickers had
contributed money to the rebels, but in amounts well short of millions.

"Based on figures they gave us . . . we believe they contributed in the
order of $3,000 to $4,000 each" from drug operations in California, Hitz
said.

One of the traffickers, Oscar Danilo Blandon, told CIA investigators he
donated about $40,000 to the main Contra organization, the FDN, through a
San Francisco-based support group. Blandon estimated that his partner in
drug trafficking, Juan Norvin Meneses, also contributed about $40,000 to
the organization.

But Hitz said his investigators concluded that Blandon was "exaggerating"
the amounts of aid.

The report quoted Blandon as saying he met with the Contras' military
commander, Enrique Bermudez, four times during his drug trafficking career.
At a 1982 meeting in Honduras, he said, Bermudez asked him and Meneses for
financial help, saying: "The end justifies the means." But he added that
Bermudez did not specifically ask him to raise money through drug
trafficking. Bermudez, who long denied any relationship with drug
traffickers, was assassinated in 1991.

Waters pointed to those meetings as a reason for continued suspicion.
"Bermudez was the CIA's man," she said. "It is difficult for me to believe
that with Bermudez looking for money, there was never a discussion between
Bermudez and his CIA contacts about his ongoing meetings with Blandon and
Meneses."

The first volume of the CIA report focused on Blandon and Meneses and their
operations in California. "The notion that we and [Los Angeles drug dealer]
Ricky Ross invented crack--we discard that entirely," Hitz said.

A second volume, to be released next month, will contain findings on
broader questions of CIA complicity in drug trafficking in Central America
during the Contra war.

But Hitz previewed its findings in an interview, saying the inquest found
evidence of several links between Contra leaders and drug traffickers, but
no CIA complicity and no major sums of drug money.

For example, Nicaraguan rebel leader Eden Pastora told CIA investigators
that he received $40,000 and the loan of two helicopters from one drug
trafficker, $40,000 and the use of two airplanes from another, $20,000 from
a third, $25,000 from Panamanian Gen. Manuel Antonio Noriega, and about
$6,000--plus two pickup trucks--from the ubiquitous Blandon.

In another case, the report said the CIA learned in 1982 of a possible deal
among Contra groups and an unnamed U.S. "religious organization" to
exchange narcotics for weapons. But CIA headquarters concluded that the
report "simply does not make sense," and did not pursue it vigorously.

The volume released Thursday did not include findings on many of the
apparent links between the Contras and drug traffickers that have been
reported before--in a 1987 U.S. Senate investigation led by Sen. John F.
Kerry (D-Mass.), for example. "Volume 2," Hitz promised.

The Senate and House committees on intelligence said they were studying the
report and planning to hold hearings on it, probably after the second
volume has been released.

No matter what their findings, Tenet said he doubts that the agency will
ever fully shake its drug-tainted image.

"I must admit that my colleagues and I are very concerned that the
allegations made have left an indelible impression in many Americans' minds
that the CIA was somehow responsible for the scourge of drugs in our inner
cities," he said. "Unfortunately, no investigation--no matter how
exhaustive--will completely erase that false impression or undo the damage
that has been done."

Copyright Los Angeles Times