OUSTED PERUVIAN SPY CHIEF LINKED TO DRUGS

LIMA, Peru - A State Department cable from the U.S. Embassy once described
former Peruvian security chief Vladimiro Montesinos as a "valued ally in the
drug war, but no choir boy." Peruvian investigators now believe Montesinos
was a traitor in that war.

As Montesinos languishes in jail, at least nine accused or convicted drug
traffickers in Colombia, Panama and Peru have come forward to allege that he
collected money for assisting selected criminal drug enterprises, according
to reports compiled by prosecutors and congressional investigators who are
trying to uncover the extent of his criminal involvement.

Several of those traffickers say that by the mid-1990s - when Montesinos was
on the U.S. Central Intelligence Agency payroll coordinating many
counter-drug activities - he had actually moved from protecting a handful of
gangs to a direct role in setting up cocaine-processing operations that
smuggled loads of cocaine to Europe and to the Tijuana Cartel in Mexico.

The allegations come from traffickers with a vested interest in seeking
reduced prison terms for collaborating. But some of the testimony has been
corroborated by other means, criminal justice sources said.

The testimony links Montesinos directly to at least five major
cocaine-trafficking organizations, including a group called "Los Camellos" -
the camels - that sent tons of cocaine to Italy, Spain, Portugal, Bulgaria
and Russia from 1995 until 1999, and another group based in the Peruvian
port of Pisco that smuggled cocaine to Mexico.

During the past year, Peruvian prosecutors have traveled around the region
to question jailed traffickers with alleged links to Montesinos. At the same
time, two Peruvian congressional commissions interrogated several underworld
figures, sometimes in closed-door sessions in prisons.

The sessions sometimes exasperated the accused traffickers as they sought to
convey what they said was Montesinos' direct involvement in the smuggling of
cocaine.

"Mr. Montesinos is as much of a trafficker as I am!" Lucio Tijero Guzman
blurted at a closed-door prison hearing April 8. Tijero is serving a life
sentence for drug trafficking.

The Miami Herald obtained transcripts of several hearings, including
Tijero's.

It is hard to overestimate the power that Montesinos wielded under the
Fujimori government from 1990 to late 2000, when Fujimori fled to Japan. A
declassified 1999 U.S. cable called Montesinos the de facto head of the
powerful National Intelligence Service, the "go-to guy ... on any key issue,
particularly any major counter-narcotics issue."

With strong U.S. support, the Fujimori government obtained startlingly
positive results on the narcotics front in the 1990s. It adopted a policy of
shooting or forcing down aircraft suspected of carrying narcotics. From 1995
until 1990, 30 such aircraft were destroyed, curtailing the use of Amazon
skies for drug smuggling. In the same period, the government slashed
production of coca fields by nearly 60 percent.

Now, judicial and congressional investigators say that while Montesinos
supported U.S.-financed counter-narcotics efforts that reaped impressive
results, he also was playing for the other side. They say he helped some
traffickers use army helicopters to lift tons of semi-processed cocaine out
of the Amazon jungle, and he meddled in the court system to help accused
drug lords with whom he was friendly or to throw the book at those who
refused to pay him.

"Apparently, he had a two-pronged strategy," special prosecutor Luis Vargas
Valdivia said. "One was to collaborate with eradication of coca fields and
the destruction) of clandestine laboratories. The other was to support a few
criminal organizations,"

The new allegations raise troubling issues about the Clinton
administration's counterdrug strategy in Peru: It achieved good overall
results, but did it also give Montesinos a silent pass to profit from the
narcotics trade? Did the U.S. executive branch keep Congress informed of all
it knew?

Current Peruvian officials say they don't doubt that Washington was aware of
Montesinos' activities. At least five Peruvian witnesses appearing before
two panels of Peru's Congress in the past year have said they worked as
informants for the U.S. Drug Enforcement Administration and shared all they
knew about Montesinos.

During a closed congressional hearing on June 1, Oscar Benitez Linares, who
claimed to be a longtime DEA informant, was asked whether the DEA knew of
charges that Montesinos personally authorized illegal cocaine shipments in
the early 1990s.

"They knew everything," Benitez responded.

Other Peruvian officials noted, however, that the CIA backed Montesinos
openly and provided him with $1 million a year.

"Montesinos boasted all the time that he worked with the CIA," said one
senior criminal justice source, who spoke on condition of anonymity. "The
DEA never bought into the story that he was clean."

Montesinos, 57, is now imprisoned at a naval base inThe new allegations
raise troubling issues about the Clinton administration's counter-drug
strategy in Peru.

the port of Callao, near Lima. Some 60 criminal inquiries are pending
against him for corruption, human rights abuses and for narcotics and arms
trafficking.

A cashiered army captain, Montesinos parlayed a law degree earned while
serving time in a military prison into a ticket to the homes of some of the
region's biggest drug traffickers.

By the mid-1980s, Montesinos was defending Evaristo Porras Ardiles, a
Peruvian trafficker in cahoots with Pablo Escobar, the feared chief of
Colombia's Medellin Cartel, which was considered at the time to be the
world's most powerful criminal organization. Porras, now imprisoned in
Colombia, told prosecutors that Montesinos helped break him out of detention
in Lima and later destroyed the court file containing evidence against him
of drug trafficking.

Once free, Porras called Montesinos to his home along the Amazon River and
put him on the telephone directly with Pablo Escobar, a key witness said.

"A few days later, a Friday afternoon, ... a Learjet came from Medellin to
pick up Porras and Montesinos and they went to Medellin, to the Napoles
ranch that belongs to Pablo Escobar," Jose Maria Aguilar Ruiz, a former
Porras confidant, told a congressional commission last year.

Pablo Escobar was killed in 1993, but prosecutors say his brother, Roberto
"Osito" Escobar, now serving a prison sentence in Colombia, repeated the
story to them recently. He asserted that the Medellin Cartel gave Fujimori's
1990 presidential campaign $1 million.

Peru has been swept up by criminal probes of the Fujimori era - which only
partly touch on drug trafficking. Sprawling criminal investigations have led
to the imprisonment of a former attorney general, two Supreme Court
justices, four television station owners, a former president of Congress,
four other legislators, and 14 generals. The generals include four former
armed forces chiefs, including Gen. Nicolas Hermoza Rios, a key supporter of
Fujimori's who has been directly linked to protecting illicit drug
operations.

Montesinos took care to distance himself from direct contact with cocaine
gangs, the traffickers said. Traffickers often knew him by code names, such
as "Ruben" and "Fayed" as well as "Doc" and "the Man." But they said they
soon learned his real identity.

Evidence now indicates that Montesinos profited from or maintained direct
participation in at least five separate cocaine-trafficking organizations,
law enforcement and congressional sources said.

The three biggest groups are identified as follows:

El VATICANO: The trafficker known as El Vaticano - Demetrio Chavez
Penaherrera - came into the spotlight during a publicized five-month trial
in Lima in 1996.

Chavez, a major smuggler who operated out of Campanilla in the Upper
Huallaga area, said Montesinos offered him protection as long as he paid
$50,000 for every airplane loaded with cocaine that he moved from Peru.
Chavez said that when the fee was raised to $100,000 per flight he refused
to pay and was arrested.

When Chavez made his allegations against Montesinos on Aug. 16, 1996, he was
whisked out of court. In a later appearance, a dazed Chavez retracted the
accusation. Defenders said he had been tortured.

Still in prison, Chavez is expanding on his allegations. He told a
congressional panel that he met with Montesinos at least three times in 1991
and 1992, and that during that period he coordinated at least 280 smuggling
flights from Peru's north-central jungle. He said Montesinos alerted him to
pending counter-drug operations in the Upper Huallaga Valley, allowing him
to operate with virtual impunity.

LOS CAMELLOS: The organization got its name when police discovered 2.3 tons
of cocaine in Chincha in April 1999. Each packet of cocaine had a camel
stamped on it.

A Panamanian trafficker, Boris Foguel, imprisoned near Panama City, told
Peruvian prosecutors that Montesinos was a partner in the group, which began
operations in 1995. Foguel confessed that he was the group's accountant.

"More than an advisor, Mr. Vladimiro Montesinos was an integral part of the
Los Camellos organization," Foguel said in a still-secret court deposition
obtained by The Herald.

"Montesinos guaranteed for us the transport of coca paste to the laboratory
in helicopters as well as the movement of the cocaine aboard boats,
camouflaged in legal exports."

"According to Foguel, Montesinos was one of four partners in `Los Camellos.'
He earned 25 percent of profits," the criminal justice source said.

Also implicated in the group are Javier Corrochano, a lawyer and personal
friend of Montesinos', and police Maj. Eduardo Milla, who was detached to
the Montesinos intelligence apparatus.

PISCO: Law enforcement sources believe Montesinos made contact with Benjamin
and Ramon Arrellano Felix, leaders of Mexico's powerful Tijuana Cartel,
through a Colombian trafficker, Omar Penagos Rodriguez, known by the alias
"Larry."

A young Peruvian woman, Viviana Elizabeth Rosales, told congressional
investigators that Penagos, who was her boyfriend, worked with Montesinos to
set up a processing laboratory in a cave on a desolate Pacific island about
six miles off Pisco, a fishing port south of Lima, to provide Mexican
traffickers with cocaine.

"This is why we believe Montesinos had his own organization," the criminal
justice source said.

Peruvian and Mexican newspapers have reported that Rosales affirmed to
prosecutors that the group smuggled at least 18 tons of cocaine to Mexico,
which later was sent to the United States.

Criminal justice sources link Montesinos to two other organizations run by
Colombian traffickers - one managed by Waldo Vargas Arias, known by the
nickname "El Ministro," and a second one by Luis Pineda Menjura, whose
nickname is "Trompa de Buque," which might be translated as "Foghorn."

How much Montesinos may have pocketed from drug connections is unknown. Peru
has identified and frozen about $225 million of his assets overseas, but
officials say that money has been traced to bribes and kickbacks for arms
sales - but not narcotics proceeds.

Still unclear is whether an arms deal engineered by Montesinos in 1999 - in
which some 10,000 used automatic rifles were purchased in Jordan, then
airdropped in crates to the FARC rebels in Colombia - was an
"arms-for-drugs" deal or a straight cash transaction, law enforcement
officials say.

Peruvian prosecutors will travel in a few days to Germany, where one of the
alleged brokers of the transaction, Charles Acelor, is imprisoned.

Acelor was reportedly living in Miami at the time the deal went through.