[BACK]

800. Background. In early 1986, Senator John Kerry began an investigation of allegations that elements of the supply network supporting the Contras were linked to drug traffickers. In April 1986, Senator Kerry took the information he had developed to the Chairman of the Senate Foreign Relations Committee (SFRC), Richard Lugar, who agreed to conduct a staff inquiry into these allegations. In February 1987, the SFRC expanded the focus of the inquiry to include the impact of drug trafficking from the Caribbean and Central and South America on U.S. foreign policy interests. In April, the responsibility for this broader investigation was given to the Subcommittee on Terrorism, Narcotics and International Operations, chaired by Senator Kerry.
801. The Subcommittee's report, "Drugs, Law Enforcement and Foreign Policy" ("the Kerry Report"), was published in December 1988 and identified six companies that had been owned and operated by convicted or suspected drug traffickers and were linked to the Contras. The companies were:
• Frigorificos De Puntarenas


• Ocean Hunter


• SETCO


• DIACSA


• Vortex


• Hondu Carib
802. In August 1985, Congress had appropriated $27 million for humanitarian support to the Contras and designated the DoS as the executive agent for the purchase and distribution of all aid. As a result, the Nicaraguan Humanitarian Assistance Office (NHAO) was created in DoS under the direction of Ambassador Robert Duemling. The program reached its peak in March 1986 when it delivered over 500,000 pounds of material to Aguacate, Honduras, on 11 chartered flights from the United States. The last NHAO flights were in June 1986 and the program officially ended in October 1986. All of the companies, except for Ocean Hunter, that had been identified by the Kerry Report as being owned and operated by known or suspected drug traffickers were included among the organizations selected by DoS to supply humanitarian aid to the Contras through NHAO.

803. CIA Vetting of Companies for NHAO. In July 1987, the Central Intelligence Agency's Office of Inspector General (CIA/OIG) published a Report of Inspection that noted that the NHAO--not the Agency--was responsible for administering the humanitarian aid program. The only Agency roles recognized in the "legislative history" of the statutorily-established program were to provide advice on the delivery of the aid and to monitor and verify its receipt by the Contras

804. According to the 1987 CIA/OIG Report of Inspection, "Agency support was always at the behest of NHAO and appears to have been both legal and proper." Among the types of assistance the Agency provided the NHAO, according to the Report, was advice on contractors. Alan Fiers was interviewed by the CIA/OIG inspection team on April 27, 1987. The CIA interview report stated that Fiers said he and Ambassador Duemling "had frequent meetings regarding possible contract cargo carriers." Fiers also reportedly said he had "checked out" some of these carriers for Duemling.

805. Fiers' written response to OIG questions during this current investigation stated that he "specifically recalls discussions with Ambassador Duemling" on the subject of vetting air carriers for the NHAO. "More specifically," Fiers writes:

     I personally steered them [NHAO] away from the Private Benefactors, I believe we guided them toward carriers they ultimately used, although I cannot recall the details exactly [sic] how the names of the carriers were initially brought to my attention.

     With the possible exception of Vortex, no information has been found to indicate that this CIA vetting assistance for the NHAO included information regarding the six companies identified in the Kerry Report as having ties to drug trafficking.

     Frigorificos De Puntarenas/Ocean Hunter

806. Background. Frigorificos De Puntarenas ("Frigorificos") was a Costa Rican seafood company that was created as a cover for laundering drug money, according to grand jury testimony by one of its owners that is cited in the Kerry Report and testimony by Ramon Milian Rodriguez, the convicted money launderer who established the company. Frigorificos was owned and operated by Luis Rodriguez of Miami, Carlos Soto and Ubaldo Fernandez. Milian Rodriguez told Federal authorities about Luis Rodriguez' drug trafficking prior to Milian's arrest in May 1983. Moises Nunez was the General Manager of Frigorificos.
807. The December 1988 Kerry Report indicated that the DoS used Frigorificos to deliver more than $261,000 in humanitarian assistance funds to the Contras in 1986. These funds were controlled by Rodriguez, who signed most of the orders to transfer the funds to the Contras.
808. The Kerry Report further indicated that Luis Rodriguez owned another company--Ocean Hunter--that was linked to drug trafficking and money laundering. Ocean Hunter was a Miami-based seafood company that Milian Rodriguez had also established to enable Luis Rodriguez to launder drug money. Ocean Hunter imported seafood from Frigorificos and, according to testimony by Soto and Milian Rodriguez, intra-fund transfers were used to launder drug profits. Luis Rodriguez was indicted on drug trafficking charges by the U.S. Government in September 1987 and on tax evasion charges in April 1988 in connection with money laundering through Ocean Hunter.
809. Allegations of Drug Trafficking. According to the December 1988 Kerry Report, Senator Kerry informed the Department of Justice, DEA, CIA, and NHAO in May 1986 of allegations he had received involving Luis Rodriguez and his companies--Frigorificos and Ocean Hunter--in drug trafficking and money laundering. No information has been found to indicate that CIA ever received this information from Senator Kerry.
810. On January 29, 1986, a cable reported to Headquarters that DEA had seized over 400 pounds of cocaine concealed in a container of yucca on January 23. The container was leased to David Mayorg--a close advisor to Eden Pastora. In September, it was reported that the container in question had been destined for Ocean Hunter.
811. Ramon Milian Rodriguez. According to an undated, unsigned Headquarters memorandum, Milian was arrested by United States Customs in May 1983 as he was preparing to leave the United States with $5.6 million aboard his Lear jet.
812. Information Sharing with Other U.S. Government Entities. CIA records indicate that the Agency provided some information to the SSCI between December 1986 and June 1988 regarding its contacts with Milian. A MFR dated December 10, 1986 to the SSCI stated that CIA had no relationship with Milian but had received unsolicited information regarding Sandinista drug trafficking from Milian in 1984. During a joint briefing of the SSCI and HPSCI staffs on July 31, 1987, Alan Fiers stated that the CIA had no relationship with Milian but had received unsolicited information. An MFR dated June 23, 1988 from John Buckman answered questions originating from Senator John Kerry about Agency contacts with Milian. This MFR also stated that the Agency had no relationship with Milian. CIA records do not indicate whether any of the information originating from Milian was passed to law enforcement agencies.
813. CIA Vetting Role. No information has been found to indicate that CIA played any role in NHAO's selection of Frigorificos as a conduit for the delivery of humanitarian assistance to the Contras.⁽³⁰⁾
814. No information has been found to indicate that CIA played any role in NHAO's selection of Ocean Hunter as a conduit for the delivery of humanitarian assistance to the Contras.

     SETCO

815. Background. A 1983 Customs Investigative Report stated that "SETCO Aviation is a corporation formed by American businessmen who are dealing with Juan Matta Ballesteros and are smuggling narcotics into the United States." Beginning in 1984, SETCO was the principal company used by the Contras in Honduras to transport supplies and personnel for the FDN.
816. SETCO was chosen by NHAO to transport goods on behalf of the Contras from late 1985 through mid-1986. According to testimony by FDN leader Adolfo Calero before the Iran-Contra committees, SETCO received funds for Contra supply operations from the bank accounts that were established by Oliver North.
817. According to U.S. law enforcement records cited in the Kerry Report, SETCO was established by Juan Matta Ballesteros, "a class I DEA violator." The Kerry Report also states that those records indicate that Matta was a major figure in the Colombian cartel and was involved in the murder of DEA agent Enrique Camarena. Matta was extradited to the United States in 1988 and convicted on drug trafficking charges.
818. The FDN, and later ERN/North, also used SETCO for airdrops of military supplies to Contra forces inside Nicaragua.
819. Allegations of Drug Trafficking. In a July 10, 1987 memorandum to the LA Division Chief, Assistant Secretary of State for Inter-American Affairs Elliott Abrams requested, among other things, that CIA share as part of a U.S. Government effort to "bring Matta to the United States to face charges" any information it had on Matta's activities in Honduras. Abrams noted that Matta had reportedly been considering "a number of business schemes for laundering his drug money." On July 24, 1987, CATF responded to the request from Abrams by sending a cable asking for information regarding Matta's activities in Honduras. An August 4 cable informed CATF that Matta had purchased "a small air cargo service," but did not provide the name of the company. No information has been found to indicate that Headquarters provided this information to Abrams or requested any follow-up reporting regarding Matta's purchase of the cargo service.
820. On April 28, 1989, the Department of Justice (DoJ) requested that the Agency provide information regarding Matta and six codefendants for use in prosecution. DoJ also requested information concerning SETCO, described as "a Honduran corporation set up by Juan Matta Ballesteros." The May 2 CIA memorandum to DoJ containing the results of Agency traces on Matta, his codefendants and SETCO stated that following an "extensive search of the files and indices of the Directorate of Operations. . . . There are no records of a SETCO Air."
821. The CIA officer who was responsible for handling the 1989 DoJ request says that she followed the usual procedures for tracing names. She says that the fact that no record was found indicates that LA Division had not entered SETCO into the name trace database. She also states that the officer who reviewed the draft when her proposed response to DoJ was sent to the Honduran desk in CATF for coordination should have informed her that the Agency did have information concerning SETCO, and should have provided that information to her. She notes, however, that most managers would not focus on a "no record" response.
822. The draft response to DoJ indicated that a CATF officer coordinated on the draft. He says that he does not recall SETCO, never visited its facilities and does not recall coordinating on the response to DoJ.
823. A former CATF Nicaraguan Operations Group Chief says that the officer who coordinated on the cable should have known about SETCO because it was common knowledge in CATF that the company was used to support the Contra program and he had probably been at SETCO's facilities at one time or another. He cautions, however, that there can be no certainty that the officer actually coordinated on the response. Although his name was entered as the coordinating officer, the former NOG Chief states that this does not necessarily indicate that the officer saw it. Someone else could have coordinated for him if he had not been available at the time. The former NOG Chief says that the only way to ascertain that the officer reviewed the document is to examine the routing slip with the actual signature. No routing slip has been found, however.
824. A June 15, 1989 cable reported to Headquarters that DEA had "uncovered . . . information of possible drug trafficking" involving Manuel and Jose Perez, owners of SETCO Aviation. A June 15, 1988 Headquarters memorandum regarding a May 1988 DO trace request concerning Matta indicated that Matta "normally put . . . businesses in the name of third persons" for his holdings in Colombia.
825. Matta, who is incarcerated in the federal penitentiary in Florence, Colorado, says that he did not own or have any financial interest in SETCO, and claims he does not recognize the name.
826. No information has been found to indicate that CIA received allegations that any SETCO aircraft were involved in drug trafficking during the Contra era. In late 1992, however, a Defense Department counternarcotics cable indicated that SETCO was being used in the Honduran Bay Islands by drug traffickers who concealed narcotics under dried fish in transport through Honduras. The cable did not indicate whether SETCO was aware of this transshipment operation.
827. Information Sharing with Other U.S. Government Entities. No records have been found of information shared with law enforcement agencies.
828. CIA Vetting Role. No information has been found to indicate that CIA played any role in NHAO's selection of SETCO as a conduit for the delivery of humanitarian assistance to the Contras.

DIACSA

829. Background. According to the December 1988 Kerry Report, DIACSA was an aircraft dealership and parts company whose president was Alfredo Caballero. During 1984 and 1985, the FDN chose DIACSA for "intra-account" transfers to conceal that some funds for the Contras were sent through deposits arranged by Oliver North. A February 8, 1985 cable to Headquarters described DIACSA as the "ARDE cover company" and indicated that DIACSA was used to purchase aircraft for ARDE. According to the Kerry Report, on January 23, 1986, Caballero, Floyd Carlton--a cocaine trafficker associated with Manuel Noriega--and five others were indicted and later convicted for bringing 900 pounds of cocaine into the United States and laundering $2.6 million. No information has been found to indicate that the Agency had any relationship with DIACSA or Caballero.
830. Allegations of Drug Trafficking. A May 4, 1985 cable to Headquarters provided a summary of reporting concerning FRS personnel who may have been involved in drug trafficking. According to the cable, Caballero in February 1985 had offered to transport FRS supplies to Ilopango or Costa Rica in one of his aircraft if he could make the landing arrangements. The cable also reported that Caballero was the Miami representative of a company based in San Jose that was owned by David Mayorga. The cable noted that there were those who believed that Mayorga, Caballero and others were transporting drugs from San Jose to Miami.
831. No other information has been found to indicate that Caballero or DIACSA were connected with drug trafficking or traffickers.
832. Information Sharing with Other U.S. Government Entities. No information has been found to indicate that the Agency provided any information concerning alleged drug trafficking by Caballero or DIACSA to other U.S. Government intelligence or law enforcement agencies or the Congress.
833. CIA Vetting Role. No information has been found to indicate that CIA played any role in NHAO's selection of DIACSA as a conduit for the delivery of humanitarian assistance to the Contras.

Vortex/Universal

834. Background. According to the December 1988 Kerry Report, the NHAO had a contract in 1985-1986 with Vortex, an air transport company based in Miami, Florida, to move supplies for the Contras. Michael Palmer, the Company's executive Vice President, signed the contract for Vortex in November 1985. At the time the contract was signed, Palmer was under investigation by the FBI for drug smuggling, and a federal grand jury was preparing to indict him in Detroit.
835. According to an April 6, 1988 memorandum to DCI Webster and DDCI Gates from David Pearline in OCA, Palmer testified that day to the SFRC Subcommittee on Terrorism, Narcotics and International Operations that he had gone to work for Vortex in 1985 or early 1986. Vortex later changed its name to Universal Air Leasing. Palmer also testified that Vortex/Universal entered into a contract in late 1986 to service planes and deliver materiel to the Contras. Palmer denied that he was ever an Agency asset or employee.
836. The April 6, 1988 memorandum also reported that Palmer had testified that he smuggled 120,000 pounds of marijuana into the United States in 1977. Palmer testified further that aircraft he used to smuggle drugs were later used to supply humanitarian assistance to the Contras. He asserted, however, that he was not involved in illegal drug smuggling while involved in supplying the Contras for the NHAO.
837. Relationship with CIA. An October 3, 1986 MFR indicated that Fiers chaired a "final meeting" on October 2, 1986 concerning preparations to implement the $100 million support program that Congress was about to approve for the Contras. According to that memorandum, Vortex/Universal would be used under subcontract for logistical flights. An April 7, 1987 memorandum described Palmer as the focal point for obtaining crews, mechanics and spare parts.
838. According to a March 25, 1988 memorandum to the Assistant General Counsel from the SAS legal advisor, the subcontract with Vortex/Universal included provisions for aircraft maintenance, as well as recruitment and training of air crews. An attachment to SAS legal advisor's memorandum indicated that Agency officers met with or spoke to Vortex/Universal personnel on several occasions and visited Vortex/Universal sites once and possibly twice between October 1986 and March 1987.
839. According to an April 7, 1987 Agency MFR, Palmer said that Al Herreros, President of Vortex/Universal, was a law enforcement source of information. Palmer also reportedly said that both he and Herreros were doing "sting/scam" operations for DEA in April 1986. According to the March 25, 1988 SAS legal advisor's memorandum to the Assistant General Counsel, the Agency's relationship with Palmer and Vortex/Universal was terminated on April 16, 1987.
840. The former CATF contractor who oversaw support for the Contras at the time does not recall asking for traces concerning Palmer or Vortex/Universal. No information has been found to indicate that the Agency requested traces from other agencies regarding Palmer or Vortex/Universal before or during the period when Vortex was working for the NHAO.
841. Allegations of Drug Trafficking. According to an April 21, 1987 MFR by the LA Division Security Chief, a meeting was held on April 13, 1987 between CIA officers and DEA officials regarding Michael Palmer's relationship with DEA. The MFR stated that then-Deputy CATF Chief had said that individuals at Vortex/Universal Air, though probably "suspicious," were never made witting that they were actually working for CIA through the Vortex/Universal subcontract.
842. According to a March 26, 1987 memorandum to the Chief of the Policy and Coordination Staff, one of the Nicaragua program's DC-6s was searched on March 21, 1987 by U.S. Customs agents after it landed at the Miami airport. Palmer arrived to assist in obtaining clearance for the aircraft. A misunderstanding developed between Palmer and Customs officials with the result that Customs took the identification papers of Palmer and all the crew members. The March 26 memorandum indicated that the plane was given clearance by Customs only after discussions in Washington between Agency and Customs officials. Subsequently, according to an undated memorandum to DCI Webster from DDO Stolz, Customs ran traces on Palmer and the plane's crew and discovered that Palmer had been indicted in Detroit on drug trafficking charges. The March 26 memorandum also stated that the difficulties with Customs arose because Customs did not receive proper notification of the aircraft's arrival and the crew was not able to answer questions about the aircraft's ownership because it had not been properly briefed. Further, the plane was configured for airdrops and a weapon was found aboard.
843. According to an undated Stolz memorandum to DCI Webster, "a CIA officer subsequently learned through a DEA official" that Palmer was a law enforcement source of information and a meeting was arranged between DEA and CIA officers. Although the memorandum indicates that a meeting between DEA and CIA officials regarding Palmer took place on April 21, 1987, it cannot be entirely ruled out that this was the same meeting as that which was described earlier in LA Security Chief April 21, 1987 MFR that indicates that a meeting between CIA and DEA officials took place on April 13, 1987.
844. In any event, the DEA officials reportedly told Agency officers in this meeting that Palmer was an "operative in a sensitive drug investigation/sting operation" and that his cooperation with DEA could be a determining factor as to whether the indictment would be prosecuted.⁽³¹⁾ When told that the Agency was considering terminating its relationship with Palmer, "DEA expressed concern regarding the possible impact that would have on their own 'big operation.'" Nevertheless, the Agency "informed DEA that we would direct the prime contractor to terminate all ties to Vortex/Universal Air Leasing and the prime contractor did so promptly, at least with respect to Agency operations."
845. According to Palmer's testimony to the Kerry committee and a March 31, 1988 memorandum from the SAS legal advisor to the OGC Assistant General Counsel, Palmer contacted the Agency through the prime contractor's security officer and secretary. However, the March 26, 1987 memorandum indicated that Palmer contacted CIA officers as well as the prime contractor, in an effort to have the DC-6 released by Customs.
846. The SAS Contracts Branch Chief at the time of the Miami incident, says that she called Air Branch after receiving a call from the prime contractor's secretary. She says that she then called Palmer who was waiting at a pay phone and told him that "we're working on it via Customs, and sit tight."
847. The drafter of the March 26 memorandum says that it was standard procedure for subcontractors to have the telephone number of the an air operations officer in case there were maintenance problems with the aircraft. He states that the problem CIA faced with contractor and proprietary aircraft was that they looked like drug planes going back and forth regularly from Latin America to Key West or Miami. He says Customs assumed that anyone flying from Latin America was a possible drug trafficker. The aircraft and crews were suspect because they came from Miami and fit the Customs profile. He asserts that being branded a "druggie" by DEA or Customs did not mean much in the 1980s. The Agency, he asserts, thought that Customs often overreacted.
848. According to an April 8, 1987 MFR by an OGC attorney, CIA officers met with senior Customs officials on April 7, 1987 concerning the Miami DC-6 incident. According to the MFR, "Customs . . . was concerned that, because of the crews' records on this flight, some Agency flights could be used to smuggle drugs." In addressing this concern, the MFR indicated that CIA reaffirmed to Customs that CIA was not seeking any preferential treatment for Agency-sponsored flights and that "CIA expect[ed] that these flights will be treated the same as any other flights." This would include, according to the MFR, the right of Customs agents to search the plane and its contents and to seize any contraband.
849. According to the OGC attorney's MFR, the Customs officials were satisfied that CIA's and Customs' understanding of the procedures were the same. However, Customs "was still concerned that some crew members may have previous involvement in drug trafficking." Customs officials then asked about CIA procedures to "check the crews hired for the Central American flights." The MFR indicated that an Air Branch Chief officer, explained that:

. . . we have several contracts with different aviation companies and that while we trace the principal individuals with whom we are in contact, it is possible that these principals sub-contract for others who are not necessarily traced by us. In addition, the traces we do have been through Agency records and do not necessarily include criminal records available to DEA and Customs.

850. According to the OGC attorney's MFR, Customs requested that CIA henceforth supply Customs with not only the name of the pilot and tail number of the aircraft, but also the names, dates and places of birth of all crew members and passengers on Agency-sponsored flights so that Customs records could be checked. Customs also asked CIA to supply this information for the crews and passengers of all Agency sponsored flights dating back to August 1984. The Air Branch officer "indicated that CIA had no problem in furnishing this data and that he would forward it as soon as possible." The last paragraph of the MFR indicated that:

     One issue that was not fully addressed at the meeting is the Agency policy on the use of pilots and crews who surface in Customs records with suspected or known involvement in drug trafficking. It may be that Customs will pay more attention to those flights whose crews are listed in their records. This is an issue that needs to be addressed further. It was mentioned in a preliminary fashion that we may wish to [question] suspected crew members as to their activities during their employment with us.

851. The Air Branch Chief also recorded the meeting with Customs in an April 7 memorandum to the Chief of Special Activities Staff. That memorandum indicated that he pointed out to the Customs officials that "It is virtually impossible to check on every individual who becomes involved in sub-contract situations with [CIA]."

852. Following the Miami DC-6 incident and the April 7, 1987 meeting with Customs, ADCI Gates sent a memorandum to DDO Clair George on April 9, 1987 entitled "Customs and Agency-Sponsored Flights to Central America." That memorandum established more stringent vetting procedures for contractors and prohibited CATF from using known or suspected drug traffickers:

     It is absolutely imperative that this Agency and our operations in Central America avoid any kind of involvement with individuals or companies that are even suspected of involvement in narcotics trafficking. This must be true not only of those with whom we contract, but also their subcontractors. I believe it is essential that we obtain the names of all aircrew personnel who have any association with Agency contractors or subcontractors and vet those names through DEA, Customs and the FBI--even though this is likely to be an onerous and occasionally inconvenient undertaking--and perhaps even hamper operations at times.

     OGC and the DO should work together with Customs to develop procedures to ensure that these instructions are carried out on a continuing basis. Furthermore, per my conversation with the Commissioner of Customs, it should be clear that CIA seeks no preferential treatment with respect to facilitating clearances and that Agency-sponsored flights are to be treated the same as any other flights. In those rare instances where sensitive cargo is involved, such Agency-sponsored flights will also be subject to Customs search . . . .

853. In response to the Gates memorandum, CATF requested traces from DEA, Customs and the FBI in April, May and June 1987 concerning Vortex/Universal, the prime contractor and the officers and employees of those companies. DEA responded in an April 28, 1987 memorandum from the DEA Deputy Assistant Administrator for Intelligence indicating that Palmer had been arrested in Colombia in 1985 in connection with the seizure of an aircraft and 1,000 pounds of marijuana. He was also, according to the DEA response, "criminally associated with aircraft N22VX (formerly N3434F), which is suspected of off-loading 19,000 pounds of marijuana" in Northern Mexico destined for the United States in September 1986.

854. The April 28, 1987 DEA memorandum stated that Herreros was "criminally associated" with aircraft N3434F--the same aircraft that had been implicated in the suspected drug smuggling incident involving Palmer in Mexico. DEA's El Paso Intelligence Center had reported that Herreros had purchased this aircraft for $125,000 in cash for the purpose of marijuana smuggling. DEA also reported that Herreros was identified as being "criminally associated" with various aircraft in FAA "lookouts" in the late 1970s, and as an alleged part-owner of an aircraft that had been used to smuggle cocaine into Miami.

855. The April 28 DEA memorandum also stated that Universal Air of Miami had been incorporated by three individuals. These individuals were reportedly investigated by DEA/Tucson for their association with a fourth individual in the distribution of multi-kilograms of cocaine during 1984-1985.

856. Further, according to the DEA memorandum, an aircraft of the prime contractor had been seized at a Colombian airstrip in January 1978 along with "165 tons of marijuana." The prime contractor was also linked to the seizure of another aircraft in Colombia in January 1978, but the DEA memorandum did not indicate whether the seizure was drug related.

857. The April 28, 1987 DEA memorandum also reported that an aircraft of the prime contractor had been modified in 1981 in a manner that led the source to believe the aircraft was to have been used for narcotics-related activity. A December 12, 1988 memorandum to the LA Division Deputy Chief from a CATF officer noted that " . . . these modifications are consistent with those needed for [Contra] airdrop activity." An unsigned, handwritten note in the margin of the CATF memorandum noted that there was "no activity [by the prime contractor] for [CIA] during this period."

858. On May 13, 1987, Customs responded to the CIA trace request. The Customs response indicated that Al Herreros, Vortex/Universal's president, was a suspected drug trafficker. Customs' records reportedly indicated that Herreros "[was] believed [in 1985] to be engaged in smuggling narcotics via aircraft" and was doing business as Vortex Sales and Leasing. He was also reported to be associated with "documented smuggler" John Lett. In a June 24, 1987 cable to CIA, Customs described the source of this information as "highly reliable" and noted that the source had acquired the information from Herreros himself.

859. An August 18, 1987 FBI cable to Headquarters--in response to a May 1, 1987 CIA cable--and the April 28, 1987 memorandum from the DEA Deputy Assistant Administrator for Intelligence provided no derogatory information on the president of the prime contractor. A May 13, 1987 cable from Customs to Headquarters provided information that he had been involved in possible neutrality and munitions control violations in 1977. The FBI, DEA and Customs responses to the CIA trace request reported no links between him and drug trafficking. The DEA and Customs trace responses also indicated that other employees of Vortex/Universal and the prime contractor--Michael Palmer, Joseph Haas, Alberto Prado Herreros, Maurico Letona, Martin Gomez, Donaldo Frixone, and two pilots for the prime contractor--all of whom were affiliated with the CIA Contra support program, may have been involved in narcotics trafficking prior to their relationship with the Agency.⁽³²⁾

860. On February 25, 1988, the Assistant General Counsel and an OGC attorney met with a representative from DEA's Office of General Counsel regarding the prosecution of Frank Correa--a Colombian drug kingpin. According to a March 8, 1988 Assistant General Counsel MFR regarding that meeting, the Agency became aware of federal criminal prosecution against Correa who was indicted in Detroit for drug trafficking. Palmer reportedly participated as a law enforcement informant in the September 1987 sting operation that resulted in Correa's arrest. The MFR stated that DEA provided funds for Palmer to lease a plane, hire a crew and pick up a load of drugs in Colombia. Correa flew back to the United States with Palmer and the drugs and was arrested when the plane landed in Michigan. As a result of Palmer's cooperation in this case, DEA reportedly was able to have Palmer's earlier indictment for drug trafficking dismissed.

861. The Assistant General Counsel's MFR also noted that Correa's attorneys were alleging that Palmer was a CIA asset and that Vortex/Universal was an Agency proprietary. The claims were based on an April 4, 1987 CBS news story that alleged the Agency was protecting known drug dealers in order to carry out secret operations in Central America and focused on the Miami DC-6 incident involving Palmer.

862. The Assistant General Counsel was the OGC attorney responsible for any Agency involvement in the Correa case. She recalls that Correa's lawyers sought information concerning Palmer's relationship with the U.S. Government and the Agency undertook a file search in response to a "discovery request" from them.

863. As part of the file search that was initiated on April 6, 1988, for information in response to the discovery request by Correa's lawyers, the SAS legal advisor sent a cable to the former CATF contractor who had overseen support for the Contras at the time and was now serving overseas. The SAS legal advisor's cable requested, among other things, "any information you may have regarding [CIA] suspicion or knowledge, or your suspicion or knowledge that Palmer and/or his associates at Vortex/Universal Air Leasing were involved in narcotics trafficking." The CATF contractor's April 8, 1988 reply stated that he "had no suspicion or knowledge of Palmer/Vortex narcotics trafficking

864. On May 6, 1988, Agency officers--David Pearline, OCA; OGC's Assistant General Counsel; the OGC attorney serving as CATF compliance officer; and three other CATF officers--met with the president of the prime contractor to inform him that the "Hughes Subcommittee on Crime" intended to subpoena him as part of its investigation into alleged ties between CIA, the Contras and drug trafficking. According to a May 9, 1988 OGC MFR regarding the meeting, the president of the prime contractor stated that his company's relationship with Palmer and Vortex/Universal began in late 1985 when CIA's SAS Air Branch asked him to meet with Ambassador Duemling, Director of the NHAO. NHAO needed to find a replacement for the company it was then using for humanitarian aid flights. The president reportedly recommended Vortex/Universal and, after speaking with Herreros, put Palmer in touch with the NHAO. The MFR noted that he said he had only sporadic contact with Palmer during the time that NHAO contracted with Vortex/Universal.

865. He also added at the May 6 meeting, according to the OGC MFR, that the CATF contractor had checked Vortex/Universal and Palmer with U.S. Customs and DEA at the time the NHAO was considering using Vortex/Universal as a carrier. Both agencies, he said, gave glowing reports concerning Palmer and indicated that he had worked with them on sting operations. The OGC MFR also indicated that he said he had told the CATF contractor who oversaw support for the Contras at the time in April 1986 that Palmer had been arrested by the FBI in Miami on drug trafficking charges. He also said that a decision had been made at that time that the president should have no further contact with Palmer. The president of the prime contractor stated that Palmer's subsequent indictment--in June 1986--was discussed in November 1986.

866. Agency records that describe the NHAO-Vortex/Universal relationship differ in one respect from the statements of the president of the prime contractor. A March 31, 1988 memorandum from the SAS legal advisor to the OGC Assistant General Counsel stated that the president of the prime contractor had recommended Palmer and Vortex/Universal to the NHAO, but made no mention of an Air Branch request that the president of the prime contractor meet with Ambassador Duemling. The former CATF contractor who oversaw support for the Contras at the time of the NHAO's contract with Vortex/Universal also stated in his April 8, 1988 cable that responded to the SAS legal advisor's request for information that the president of the prime contractor had recommended Vortex to NHAO on his own initiative, and that either the former CATF contractor or Fiers had concurred in the recommendation. The former CATF contractor's cable ended by pointing out that the "NHAO was in a position to accept or reject any carrier." According to the April 4, 1988 OCA MFR of a March 31 Agency briefing to the HPSCI, HPSCI Staff member Dick Giza stated that Fiers had said in a February 2, 1987 briefing to HPSCI that he had referred NHAO to Vortex/Universal.

867. The president of the prime contractor says that he believes he learned of Palmer's arrest from someone in the Agency, but he cannot be sure because it was such a long time ago. Further, he recalls a lot of discussion with Agency personnel in the fall of 1986 about Palmer's drug arrest. He recalls that the attitude among the participants in these discussions was that the Agency needed a plane that was "clean" and the fact that Palmer had been indicted for drug trafficking was "irrelevant."

868. One of the air operations officers identified by the president of the prime contractor says that he was told by an Air Branch officer, whose name he cannot recall, at a meeting in late 1986 that Palmer had been under investigation, but that everything was fine and Palmer was now in the clear. The officer says he does not recall being told that Palmer had been indicted for drug trafficking, but says the implication was that there were allegations that Palmer was a drug trafficker.

869. A June 7, 1988 cable responded to a CIA/OIG request for information as part of an investigation into the Agency's connection with Palmer. The cable stated that the president of the prime contracting company had discussed Palmer at a November 1986 meeting with FDN representatives. The president, according to the cable, mentioned that Palmer had been "questioned for a possible connection with drugs." Furthermore, the cable stated that Palmer had "volunteered" information at a meeting at Vortex/Universal, that he had been questioned about drug trafficking and that he had taken the issue "very seriously and had legally cleared the issue." The officer also stated in the cable:

     I have no knowledge or information that would make me suspicious that Palmer or Vortex [/Universal] were involved or connected with narcotic trafficking. The up front attitude and explanation from Palmer about the subject further dispelled suspicion.

870. Dupart states that he has no recollection of a May 1988 meeting at which, as claimed by the president of the prime contractor, Palmer's indictment was discussed, nor can he recall any other discussion of that subject with the president. Dupart notes that, in the aftermath of the Iran-Contra affair, matters like the Palmer case would not have been overlooked. The president, Dupart observes, is "loose with the facts."

871. The OGC Assistant General Counsel recalls that the statement of the president of the prime contractor at the May 1988 meeting that he had discussed Palmer's arrest with a CIA official in 1986--prior to the March 21, 1987 Customs incident--caused quite a stir at the meeting because Agency personnel realized this meant that erroneous information had been given to Congress in the March 14, 1988 briefing. At that briefing, Agency personnel had stated that CIA was not aware of Palmer's arrest until after the Customs incident. Once they realized this, she says they went back to Congress and corrected the error.

872. The OGC attorney who served as CATF compliance officer at the time, recalls the May 1988 meeting. However, she says she has no recollection of a discussion about drug trafficking. She says that, in general, drug trafficking was not a priority at the time in CATF--"it would not hit a register." She also has no recollection that any action was taken after the meeting. Two of the other officers the MFR indicated had attended the May 1988 meeting with the president of the prime contractor do not recall participating.

873. CIA's OIG opened an investigation regarding CIA's involvement with Palmer in May 1988. The CIA/OIG Investigator says that she was assigned the investigation on an "urgent basis." A May 16, 1988 memorandum from her to Inspector General William Donnelly reporting the results of her investigation stated that OIG opened the investigation as a result of "Congressional concern" regarding allegations that "CIA had knowledge of and assisted Vortex Aviation pilot Michael B. Palmer's drug activities."

874. A May 7, 1988 CIA/OIG cable to the former CATF contractor who oversaw support for the Contras at the time informed him that the president of the prime contracting company had said at the May 6 meeting that he had told the contractor about Palmer's arrest in April 1986. The cable noted that the contractor had asserted earlier in his April 1988 response to the SAS legal advisor's cable that he was not aware of Palmer's involvement in narcotics trafficking and requested that he "clarify the facts." The former CATF contractor responded in a May 23 cable that he recalled being informed by the president of the prime contractor of Palmer's arrest. While he said he could not recall the exact date, it was after the NHAO flights ended.⁽³³⁾ He also said he recalled that he "immediately" informed Fiers of the information about Palmer's arrest. The former CATF contractor's cable also said that he did not recall any other CATF personnel being present when he advised Fiers of Palmer's arrest.

875. The former CATF contractor says he does not recall Fiers' response when told about Palmer's arrest in April 1986, but he assumes Fiers told Ambassador Duemling about it. The contractor states that he does not know much else about the Agency's handling of the Palmer incident because he was transferred in August 1986.

876. The former CATF contractor also states that he cannot explain why--after being told of Palmer's arrest by the president of the prime contractor in April 1986--he replied to the SAS legal advisor's cable in April 1988 that he had no knowledge of it. He speculates that the SAS cable reached him when he was in the field, and those were "long days with many things happening." The Palmer issue, he says, was "probably not the most important thing that happened that day." However, he says that the OIG cable noting the comments of the president of the prime contractor jogged his memory when he received it in May 1988.

877. Dupart asserts that, contrary to the former CATF contractor's account that he reported Palmer's arrest to Fiers sometime in early-1986, CATF was not aware of Palmer's arrest and indictment for drug trafficking until March 1987. He says he does not believe the former CATF contractor told Fiers about Palmer's arrest prior to March 1987 because the contractor would have had to go through Dupart on a matter like this and he has no recollection of ever discussing Palmer with the contractor. Moreover, Dupart states that "this was the kind of thing Fiers would have discussed with me, and no such discussion ever took place."

878. Fiers, in his written response to CIA/OIG questions, states that he does not recall being told by the former CATF contractor about Palmer's arrest in April 1986. Further, Fiers says that he has spoken "on the record" about Vortex/Universal and Palmer--"perhaps with the Independent Counsel [for Iran-Contra], perhaps with members of Congress." Fiers' written response notes that he "certainly became aware" that Palmer was "a problem" in the "late spring or early summer of 1987" and that "he had to be distanced from Central America operations." Fiers' written response states that "without going into extensive review of the records to refresh my memory . . . I cannot comment further, other than to say that I had no information that Palmer was using our operation for drug smuggling." Fiers' written response asserts that he was unaware of any rumors or conversations concerning Palmer and drug trafficking.

879. According to handwritten notes compiled by the OIG inspector in the course of the May 1988 CIA/OIG investigation, a detailee to CATF ran traces on Palmer in late December 1986 or early January 1987. The detailee reportedly stated that there were "whisperings" about Palmer and the detailee "remembers explicitly" that the traces showed Palmer was "under investigation" for drug trafficking. The notes also stated that the detailee passed the derogatory information about Palmer from the traces to Fiers, who passed the information "on up the line and [a] decision [was] made at a higher level to go ahead and use [Palmer]."

880. The OIG inspector's notes also stated that she discussed the information provided by the detailee regarding the Palmer traces with the SOG CATF Deputy Chief, who was the military detailee's supervisor beginning in May 1987. According to the notes, the Deputy Chief "reluctantly" said that she thought that the detailee was confused and that he was a "major stumbling block" concerning traces and that the detailee was "unable to distinguish between Agency and external traces" and that he believed there was "no need to trace people." The OIG notes indicated that the Deputy Chief said that she had to relieve the detailee of his duties "for cause," because he was causing unspecified problems.

881. The Deputy Chief says that she did not verify whether the detailee had conducted traces on Palmer. She also says she does not recall learning that a trace had been done regarding Palmer in December 1986 or January 1987, prior to the April/May 1987 traces. The March 21, 1987 Miami DC-6 incident was when Palmer first "burst on people," the Deputy Chief states.

882. The May 16, 1988 inspector's memorandum to IG Donnelly providing the results of her investigation regarding the Agency's involvement with Palmer stated her conclusion that allegations that CIA had knowledge of and assisted Palmer's drug trafficking activities were "without foundation." Further, the memorandum concluded that:

     . . . there is no basis for the allegation that an Agency employee was aware of Mr. Palmer's drug activities when that employee concurred in a recommendation of Palmer/Vortex, made by . . . [the president of the prime contracting company] circa December 1985-January 1986 to the . . . Nicaraguan Humanitarian Assistance Office.

     The memorandum did not mention any allegation or information indicating that CATF may have decided to use Vortex/Universal and Palmer after CATF reportedly became aware of Palmer's arrest and later indictment on drug trafficking charges. No information has been found to indicate that CIA/OIG produced a formal report concerning this investigation, or that the OIG inspector's May 1988 memorandum was made available to CIA management by IG Donnelly.

883. The OIG inspector says that she did not address the question of CATF's relationship with Vortex/Universal in her memorandum because she did not have enough facts at the time to reach a conclusion. She states that no one she interviewed could recall much about Palmer's drug arrest. Moreover, she says that she received little cooperation from CATF or the DO in response to her requests for documents. She recalls that CATF records "were unavailable, unobtainable and undiscoverable."

884. She states that she tried to interview Dupart at the time regarding the Palmer issue, but he refused to discuss the matter because he had moved to one of the Intelligence Oversight Committee Staffs--HPSCI--and he believed commenting on the matter would be inappropriate. She says she never got around to interviewing Fiers because she was assigned another urgent investigation into Agency activities in Honduras. Dupart says he has never refused a request to be interviewed by OIG.
885. She does not know why there is no record of a final CIA/OIG report concerning the Palmer investigation, but speculates that it may have been because she was told to drop everything she was working on in June 1988 to focus on the investigation involving Honduras. She says the Palmer issue may have "fallen through the cracks" as a result. No information has been found to indicate that the Palmer matter was examined subsequently by any CIA component other than CIA/OIG.

886. Information Sharing with Other U.S. Government Entities. On March 14, 1988, according to a March 29 MFR prepared by OCA's David Pearline, he and OGC's Assistant General Counsel described the circumstances surrounding the Miami DC-6 incident and the Agency's relationship with Palmer to the Judiciary Subcommittee on Crime Staff members. The Staff members reportedly asked whether the Agency had realized that Palmer was a DEA informant who had been indicted for drug trafficking. OGC's Assistant General Counsel responded, according to the MFR, that the Agency was not aware of Palmer's indictment or his DEA connection until the Miami DC-6 incident. On learning of his indictment, she said, the Agency terminated the relationship with Palmer and Vortex/Universal Air. This information was also conveyed to the SSCI and HPSCI Staffs on March 31, according to the MFR.
887. According to an April 4, 1988 MFR regarding the March 31 briefing to HPSCI Staff members, OCA expressed concern that Palmer would reveal the Agency's ties to the prime contractor at his upcoming testimony before the House Judiciary Committee Subcommittee on Crime. Further, OCA informed the HPSCI Staff members that the Agency anticipated that the Crime Subcommittee would press for operational information in its investigation into drug smuggling by the Contras. OCA requested the HPSCI's assistance in handling these inquiries. The MFR indicated that Michael O'Neil of the HPSCI Staff responded that the Judiciary Committee's inquiry had the full support of HPSCI members and that the HPSCI was not in a position to provide any assistance to CIA in limiting the Judiciary Committee's probe into intelligence activities that related to its investigation.
888. Following the May 6, 1988 meeting, the president of the prime contractor, OGC's Assistant General Counsel, Pearline, and two CATF officers met on May 11 with two House Judiciary Subcommittee on Crime Staff members. A May 16 OCA MFR concerning that meeting reported that OCA had corrected the information given earlier to the Subcommittee Staff regarding when the Agency first learned that Palmer had been arrested for drug trafficking. OCA reportedly said that:

     . . . at least two Agency officers (Fiers and the [former CATF contractor]) knew about Palmer's drug dealing before the Agency agreed to buy an aircraft from [Vortex/] Universal Air Leasing and approved the subcontracting ... to [Vortex/] Universal Air Leasing of the servicing of aircraft flying resupply flights for the Contras.

     OCA reportedly also informed the Staff members that the Agency was "still looking into this matter." The Subcommittee Staff requested that the Agency inform it of the results of any investigation. The same information, according to the MFR, was shared with David Holliday of the SSCI Staff and O'Neil of the HPSCI Staff on May 13 and May 16, respectively.

889. No information has been found to indicate that the results of the 1988 CIA/OIG investigation or any other CIA inquiry into this matter were communicated to the SSCI, HPSCI, or the House Judiciary Subcommittee on Crime.
890. CIA Vetting Role. As noted earlier, Agency records indicate that the president of the prime contracting company claimed in 1988 that he had met with Ambassador Duemling of NHAO in 1985 and, during the course of the meeting, had recommended that NHAO utilize Vortex/Universal. However, Agency records differ in whether he says he contacted Ambassador Duemling on his own initiative or if he was responding to a request from CIA officials that he meet with the Ambassador. In any event, an April 4, 1988 OCA MFR indicated that HPSCI Staff member Dick Giza said that Alan Fiers had said in a February 2, 1987 briefing to HPSCI that he had referred NHAO to Vortex/Universal. Fiers' written response to OIG questions also indicates CIA played some role in steering NHAO to Vortex/Universal since Fiers states that he "specifically recalls discussions with Ambassador Duemling" pertaining to the vetting of air carriers for NHAO.

     Hondu Carib

891. Background. According to the December 1988 Kerry Report, one of the pilots who flew Contra resupply missions for SETCO was Frank Moss. The Kerry Report also noted that Moss had been under investigation since 1979 for drug trafficking but reportedly was never indicted. In 1985, Moss formed his own company, Hondu Carib, which flew supplies to the FDN. The Kerry Report indicated that the FDN's arrangement with Moss and Hondu Carib was based on a commercial agreement between Moss and Mario Calero, the FDN's chief supply officer. Under that agreement, Calero was to receive an ownership interest in Moss' company.
892. Also according to the December 1988 Kerry Report, one of the Moss planes that was used to ferry supplies to the Contras was chased off the west coast of Florida by the Customs Service while it was dumping what appeared to be a load of drugs. When the plane landed in Port Charlotte, Florida, an inspection revealed significant marijuana residue on board. The plane reportedly was seized by the DEA in March 1987.
893. Allegations of Drug Trafficking. On March 31, 1984, Headquarters was informed by cable that Moss was among a group suspected of using a DC-4 owned by Hondu Carib in drug and arms trafficking through the Merida, Mexico International Airport. The aircraft reportedly flew from the United States to Honduras or Guatemala and then to Merida, ostensibly to pick up fish for export to Tampa. The aircraft had reportedly been searched by Mexican authorities and DEA agents with negative results. However, DEA agents were suspicious because of the aircraft's circuitous route and the fact that all of the individuals connected with the plane had previous drug trafficking records. This information reportedly had been brought to the CIA's attention by DEA because Moss and the others had claimed at the time of the search that they were connected with or worked for the Agency. No information has been found to indicate that Headquarters responded to the March 1984 cable.
894. A July 9, 1984 cable to Headquarters described Moss' company, Atlas Aviation, as a "shoestring cargo operation and hungry for business," that was "normally employed in transporting fresh fish and fruits from Central America and Mexico to the United States." The cable noted, however, that Atlas' "business profile fits the U.S. Customs narcotic trafficking profile," and the company was in the Customs computer as a "suspicious operation." Consequently, Atlas was "closely watched and thoroughly checked at all U.S. airports of entry and in Mexico, but not in other countries." Nonetheless, according to the cable, Atlas had a "clean record" with Customs and "will not become involved in drug trafficking or any other illegal activity which could damage their record."
895. The July 1984 cable also pointed out, however, that Atlas is "hungry enough to walk a thin line in other countries," and that the company was aware of all international traffic regulations and procedures and "how to circumvent them if necessary." The Station added that Atlas had accomplished "very confidential modifications on [sic] low profile customers and aircraft for sensitive use."
896. As mentioned earlier, the Kerry Report indicated that one of the planes Moss used to carry Contra supplies had been seized in March 1987 by DEA after dumping what appeared to be drugs off the Florida coast and that significant marijuana residue was found on board at the time. According to an April 28, 1987 cable, the names of two CIA officers and their telephone numbers were included in Moss' notes that were seized by DEA when the aircraft was confiscated.
897. At an April 7, 1987 meeting between CIA and Customs officials in connection with the March 1987 Miami incident involving Michael Palmer and a DC-6 Vortex/Universal aircraft, Customs officials also raised issues relating to the March 1987 seizure of Moss' DC-4. According to the April 7 memorandum summarizing that meeting that was prepared by the Air Branch Chief, Customs was informed that "there is no linkage of this aircraft or Mr. Moss to [CIA]."
898. A May 12, 1989 FBI report concerning Moss indicated that DEA's search of Moss' aircraft in March 1987 had resulted in no narcotics evidence being discovered and that the aircraft had subsequently been released to Moss. Further, the FBI report noted that Customs had an open case on Moss as of November 1988, but there was no evidence to substantiate the drug trafficking allegations against him.
899. On May 26, 1987, a cable reported to Headquarters that Moss was trying to generate business with the FDN by offering to fly air resupply drops inside Nicaragua. CATF responded on June 3 that it was concerned about Moss' possible ties to "druggers and the FDN." Headquarters also requested that the field "look into the ties with Moss and the FDN further and keep us advised." No information has been found to indicate that any further action was taken or that any additional information was generated in response to this request.
900. A former CATF NOG Chief's initial recollection was that Moss may have been involved briefly with the Contra program, but that the Agency's relationship with him was terminated on the basis of something that happened with respect to keeping files on an aircraft. However, based upon further reflection and review of relevant records, he stated that Moss may have actually flown "stuff" for the Private Benefactors, not the Agency. No other Agency officers could recall any relationship between the Agency and Moss or his company. No information has been found to indicate any relationship between CIA and Moss or his company at any time.
901. Information Sharing with Other U.S. Government Entities. Apart from the meeting with Customs officials on April 7, 1987, no information has been found to indicate that the Agency provided information concerning Moss or his company to other U.S. Government intelligence or law enforcement agencies or the Congress.
902. CIA Vetting Role. A February 25, 1986 Headquarters cable noted that Moss had approached the NHAO in early 1986 with a proposal for Hondu Carib to provide air services for the NHAO. The cable requested information on the company's suitability for flying NHAO cargo missions. No information has been found to indicate there was a reply to this request. No information has been found to indicate that Agency personnel retrieved and considered the March and July 1984 cables regarding Moss and his companies or that the Agency requested further information from U.S. law enforcement agencies concerning Moss or Hondu Carib at this time. No information has been found to indicate whether CIA provided any information regarding Hondu Carib to the NHAO.
903. A February 26, 1986 Headquarters cable indicated that the Agency received an inquiry from NHAO in February 1986 regarding the use of Hondu Carib as a conduit for the delivery of humanitarian assistance to the Contras.

Allegations Involving Other Companies Associated With the Contras

904. Allegations were made regarding two companies, Southern Air Transport and Markair--that were involved in supporting the Contras.

     Southern Air Transport

905. Background. Southern Air Transport (SAT) carried a variety of equipment, supplies and humanitarian aid for the FDN during the 1980s.
906. Allegations of Drug Trafficking. A January 21, 1987 memorandum from ADCI Robert Gates to Morton Abramowitz, Assistant Secretary of State for Intelligence and Research, stated that the U.S. Customs Service had advised CIA that the Customs office in New Orleans was investigating an allegation of drug trafficking by SAT crew members. The Gates memorandum noted that the source of the allegation was a senior FDN official. The memorandum indicated that the FDN official was concerned that "scandal emanating from Southern Air Transport could redound badly on FDN interests, including humanitarian aid from the United States."
907. A February 23, 1991 DEA cable to CIA linked SAT to drug trafficking. The cable reported that SAT was "of record" in DEA's database from January 1985-September 1990 for alleged involvement in cocaine trafficking. An August 1990 entry in DEA's database reportedly alleged that $2 million was delivered to the firm's business sites, and several of the firm's pilots and executives were suspected of smuggling "narcotics currency."
908. Information Sharing with Other U.S. Government Entities. As previously noted, a January 21, 1987 memorandum from ADCI Robert Gates to Morton Abramowitz, Assistant Secretary of State for Intelligence and Research, reported that U.S. Customs had informed CIA that the Customs office in New Orleans was investigating an allegation of drug trafficking by SAT crew members.

Markair

909. Background. A June 24, 1986 Headquarters cable indicated that Markair flew the last three support flights for NHAO in late June 1986.
910. Allegations of Drug Trafficking. On October 14, 1987, CIA requested traces concerning Markair from U.S. law enforcement agencies. The October 21 Customs Service response reported that the company was "strongly suspected" of owning an aircraft that had been used in 1984 to smuggle cocaine into the United States from South America. Further, according to Customs, the aircraft was sold that same year by Markair to "a large scale . . . [unnamed] drug trafficking organization recently convicted in federal court." Customs reported also that it was investigating the financial activities of Markair and its officers because of "large cash movements to and from Mexico and other foreign countries."
911. An October 26, 1987 MFR by the CATF Deputy Chief indicated that he had contacted the Intelligence Section of the Customs Service that same day to determine whether the information in the Customs response to the CIA trace request was "sufficiently well-sourced to exclude Markair from contracting with the U.S. Government." According to the MFR, the Customs Intelligence Section indicated that the drug trafficking information was "only speculation." The MFR stated that Customs reportedly had confirmed that Markair had sold the aircraft to a major narcotics smuggling ring, but "the sale to this group may have been a legitimate business deal and not drug related." According to the MFR, Customs indicated that the information concerning Markair officers carrying large quantities of cash was "certain," but the Intelligence Section reported that "such behavior is common in the air charter business and thus is not by itself suspicious. Customs advises there is no current investigation open involving Markair." The MFR concluded by noting that the Customs Intelligence Section "would not exclude" the use [by the U.S. Government] of Markair "solely on the basis of information in Customs' files."
912. Information Sharing with Other U.S. Government Entities. As noted earlier, an October 26, 1987 MFR indicates that the CATF Deputy Chief contacted the Intelligence Section of U.S. Customs on October 26 to discuss information provided by Customs regarding suspected drug trafficking activities by Markair.

Alan Hyde

913. Background. Alan Hyde is a Honduran citizen and businessman whose company, Mariscos Hybur, provided logistical support to the Contras from mid-1987 to late 1988 or early 1989.
914. Allegations Of Drug Trafficking. A September 1984 report from the U.S. Defense Attaché Office (USDAO) in Tegucigalpa stated that a "Mr. Hyde," who "purportedly owns some 15 boats and a fish processing plant in French Harbor [Roatan]," said that "he is making much money dealing in 'white gold,' i.e., cocaine." A USDAO comment in the report stated that the description "fits that of Alan Hyde of Mariscos Hybur S.A." A February 27, 1985 Headquarters cable summarized traces received concerning possible maritime narcotics trafficking in the Caribbean and cited the September 1984 USDAO report that "Hyde claims to be making a lot of money selling cocaine."
915. On October 30, 1985, a cable to Headquarters reported that Hyde had boasted in mid-October that Hyde had two U.S. Customs Service agents "in his pocket." Hyde had reportedly also said that he had friends in the "Cosa Nostra."
916. A December 1986 report from the U.S. Coast Guard's Miami office stated that organized criminal activity on Roatan Island had been increasing for the prior two years, according to two reliable sources. The Coast Guard report cited "rumors" that cocaine was warehoused on Roatan for shipment on coastal cargo and fishing vessels bound for south Florida. Named among the associates of the "organized criminal organization" were Hyde, owner of Hyde Shipping of Miami, and members of his family. The Coast Guard report also cited sources who named Hyde as the master of the vessel F/V Bobby in 1985 as a favor to Pablo Escobar, a major Colombian cocaine trafficker. Hyde was also rumored to be involved in loading cocaine into containerized cargo at Puerto Cortez, Honduras.
917. On December 31, 1986, the U. S. Coast Guard/Miami issued a report to CIA indicating that Hyde's brother-in-law had sold up to six kilograms of cocaine in February-October 1986. The report also cited sources who claimed that Hyde Shipping purchased fishing vessels in Brownsville, Texas, in 1986 that were to have transited the Panama Canal, but instead sailed directly to Cartegena, Colombia, to be outfitted for drug smuggling.
918. An April 22, 1987, Headquarters cable stated that U.S. Government law enforcement agencies were "very familiar" with Hyde and others on Roatan Island. These individuals, according to the cable, were believed to be involved in international drug trafficking.
919. An unsigned, undated memorandum marked with a handwritten notation that stated "FM: USG C. July 1987" described Hyde as a "big time drug trafficker" who "probably runs cocaine to U.S. using the Hybur Clipper or Hybur Transport." It is "strongly believed," the memorandum stated, that the Hybur Clipper, a vessel operated by Hyde Shipping, "is or has been used to transport cocaine to Miami." Hybur Transport, it was noted, "is believed to have been used for cocaine transport as early as 1976." The memorandum cited three unsuccessful Coast Guard attempts--one in 1976 and two in 1985--to capture Hybur vessels believed to be running drugs, and noted that a "Luis Hyde" of Roatan had been arrested in January 1985 by the U.S. Coast Guard aboard a freighter carrying 200 pounds of cocaine. Business cards for Hyde Shipping were reportedly found on board. The memorandum did not indicate whether Luis Hyde was a relative of Alan Hyde.
920. A July 11, 1987 Headquarters cable stated that the U.S. Coast Guard had placed three Hyde vessels on its watch list for suspected drug smuggling. A July 20, 1987 cable to Headquarters reported that, according to Honduran military officers, there was a widespread belief that Hyde had been using his fishing fleet and personal plane for "at least the last five years for transporting illegal substances," including drugs. The cable added that Hyde was well connected to "highly placed Honduran officials" and that, while the allegations against him cannot be confirmed," the popular belief is that Hyde has insulated himself from prosecution by judicious use of his money."
921. On September 23, 1987, the U.S. Coast Guard reported to CIA and other agencies concerning a smuggling network based in the Bay Islands located off the coast of Honduras. According to reliable sources cited in the Coast Guard report, Hyde was the "'godfather' for all criminal activities originating in the Bay Islands and the [Honduran] mainland." He had, the Coast Guard reported, allegedly maintained numerous bank accounts in Grand Cayman and in Panama, pressed the Government of Honduras to refrain from establishing a greater presence in the Bay Islands, and diverted weapons destined for the Contras. On October 9, 1987, a cable to Headquarters indicated receipt of a Honduran report that named Hyde and several others on Roatan as suspected narcotics traffickers.
922. On March 17, 1988, the Agency's Directorate of Intelligence issued an intelligence assessment entitled "Honduras: Emerging Player in the Drug Trade." That assessment stated that a U.S. Coast Guard source had identified Hyde and another family in the Bay Islands as using their legitimate businesses to transport cocaine refining chemicals and guns from the United States to Honduras on commercial fishing vessels. The source reportedly alleged that the chemicals were destined for two cocaine processing labs on Roatan or for processing operations in Colombia. Another Coast Guard source cited in the assessment claimed Hyde had laundered $4-5 million through shell companies in Panama in 1986.
923. A March 9, 1988 memorandum from the Acting LA Division Chief to DDO Richard Stolz pertained to the use of Hyde and Mariscos Hybur. That memorandum cited February 1988 U.S. Coast Guard reporting that Hyde headed an air smuggling ring that operated out of Honduras with contacts in the Tampa/St. Petersburg area.
924. CIA Response to Allegations of Drug Trafficking. A CIA officer recalls that Hyde "offered his help" to the Agency in 1986. However, CIA decided to reject this offer, he says, because a records check with U.S. law enforcement agencies produced derogatory information.
925. Another CIA officer recalls that there was a lot of radio communication between the field and Headquarters regarding Hyde. The first cable communication regarding these arrangements that has been found is a July 8, 1987 cable to Headquarters that included a summary of discussions with Hyde and indicated that using Hyde's vessels to ferry supplies would be more economical, secure and time efficient than using aircraft. The following day, July 9, CATF replied that information available at Headquarters indicated that Hyde might have ties to drug traffickers and directed CIA personnel "make no new commitments with Hyde until this information can be explored." The Headquarters cable, however, authorized a continuation of ongoing work.
926. Headquarters requested on July 10, 1987 that DEA, FBI and the U.S. Customs Service provide traces regarding Hyde. A July 11, cable summarized the derogatory information that was available to Headquarters at the time, but added that none of this information was "firm proof that [Hyde] is involved in [drug] smuggling or nefarious activities." Nonetheless, the cable stressed that:

We cannot . . . authorize [CIA] entering a relationship with [Hyde] until we are satisfied, through traces and the use of other [Security resources], that he is not a threat to the security of our operations.

A copy of this cable included a handwritten notation to: "Press this very hard it is not a good thing." CATF Chief Fiers says in his written response to OIG questions that the notation is his. CATF Nicaraguan Operations Group (NOG) Chief states that Fiers remained knowledgeable of the Hyde issue and made sure it was taken care of properly.

927. A CIA officer recalls that it was not standard practice at the time to conduct traces concerning individuals or companies that were overtly supplying commercial services to CIA. He remembers receiving "mixed signals" from Headquarters in regard to the relationship with Hyde There was a lot of pressure from Fiers and DCI Casey to get the "job done," as he recalls, but there were also low level Agency "functionaries" who were mainly concerned with following procedures. These people "were playing to an audience," the officer adds, wanting to make sure the Agency would be protected in case the congressional intelligence oversight committees "came calling." A former senior logistics officer recalls that it was not unusual at that time for Headquarters to tell the field to do something and then act surprised when it was done.
928. A CIA officer, whose component coordinated logistical support to the Contra program in the 1980s, says that it was Agency policy to run traces with other agencies regarding foreign contractors. She says Hyde was involved in an operation, there was derogatory information about him, and there was a need to make sure that everything was done right. She recalls that Fiers was constantly saying that "we need to know everything about this guy and getting [sic] proper approvals."
929. A July 11, 1987 reply to the July 9 cable from Headquarters ordering no expansion of the arrangements with Hyde warned that to:

     . . . pursue other alternatives at this time . . . could have an obvious backlash from Mariscos Hybur . . . . A literal interpretation [of the Headquarters order] will bring the . . . effort to a halt

930. A July 14, 1987 Headquarters cable advised that--even if the allegations against Hyde were to be favorably resolved--questioning of him still would be required concerning issues related to illegal drugs and arms trafficking. Headquarters concluded this cable by pointing out that "there is a very real risk that news of our relationship with subject, whose reputation as an alleged drug smuggler is widely known to various agencies, will hit the public domain--something that could bring our program to a full stop."
931. On July 22, 1987, a Headquarters cable stated that:

     . . . the DDO [George] received the following directive from DDCI Gates in April of this year. "It is absolutely imperative that this Agency and our operations in Central America avoid any kind of involvement with individuals or companies that are even suspected of involvement in narcotics trafficking. This must be true not only of those with whom we contract but also their subcontractors." This directive and our consistent policy of avoiding use of individuals who have links to drug smuggling has served CIA well. We have been able to deny involvement with individuals and organizations accused of drug smuggling. We have initiated priority traces with several other U.S. Government agencies and departments to get the full story on Hyde and Mariscos Hybur. At this point, preliminary information . . . is not encouraging.

     CIA personnel in the field were again directed in the July 22 cable to look for alternative logistical means.

932. A CIA officer in the field says that there was never any misunderstanding on the drug issue. No one wanted to become involved with narcotics traffickers, and everyone was keenly aware that Congress would end the Contra program were the Agency so involved. At the same time, he asserts that there was nothing solid concerning Hyde, nothing that could be regarded as hard evidence. "If these allegations were true, DEA and the Coast Guard would have got him," the officer notes.
933. The former senior logistics officer states that he never believed the drug allegations against Hyde, whom he came to regard as a close friend. However, he allows that Hyde had 35 vessels at sea and it might have been possible for an employee of Hyde to use one of the boats for smuggling. He speculates that there were a lot of people in Honduras, including Honduran Government officials, who were jealous of Hyde and may have been the source of the drug trafficking allegations. The officer says that he was totally focused on getting the job done. After hearing the rumors, he discussed them and considered them with his supervisor, with the two of them taking "due care given the circumstances."
934. A July 18, 1987, cable to Headquarters opposed the questioning of Hyde by CIA Security that had been suggested in the July 14 Headquarters cable. The relationship with Hyde, the cable asserted, was "an overt, commercial transaction of short duration" similar to other commercial dealings CIA had, and it would be inappropriate to conduct an in-depth security questioning. The cable proposed to use Mariscos Hybur until the estimated project completion in less than two months because there was no alternative. Should Mariscos Hybur turn out to be the only viable long-term option, the Base added, it would then "reconsider" approaching Hyde to submit to questioning.
935. On July 20, 1987, DEA responded to the July 10 CIA trace request and reported no derogatory information other than an October 1983 report alleging Hyde's involvement in cocaine smuggling. On August 20, Customs reported no derogatory information on Hyde. A July 20 cable to Headquarters reported that Honduran Government files reportedly contained no derogatory information on Hyde, but noted that the Hondurans suspected Hyde of drug trafficking and of bribing Honduran officials to escape prosecution.
936. On July 27, 1987, OGC attorney W. George Jameson, then-Counsel to the DO, provided Fiers with a legal opinion regarding the use of Hyde:

     I see no legal impediment to proceeding as planned. Neither the firm, nor its owner, Alan Hyde, is under indictment or investigation to your knowledge, and the allegations of drug trafficking are not substantiated. Moreover, you have no independent basis to believe the accusations are true, and intend to take steps to ensure no possibility of trafficking occurs in the course of carrying out the terms of the contract . . . . Obviously, CIA use of a known drug smuggler would raise significant legal and policy implications. When Congress authorized a Nicaraguan paramilitary program, it prohibited the assistance it authorized from being provided to "any group that retains in its ranks any individual who has been found to engage in . . . drug smuggling. " Although not directly applicable to the situation at hand, I think the analogy is instructive and sets a reasonable standard on which to determine how to proceed. It does not appear to me from the information you have provided that this standard has been met.

     (Emphasis added.)

937. Jameson says that he was unaware in July 1987 when he authored the legal opinion to Fiers of the April 9, 1987 ADCI Gates memorandum prohibiting Agency use of known or suspected narcotics traffickers unless the allegations were cleared up. He states that his memorandum addressed only the legal issues, not operational or policy considerations. The Gates directive, he asserts, was a policy statement. Had he been aware of the Gates memorandum, Jameson says he would not have interpreted it to mean that Hyde could not be used, but that the Agency should do its best to obtain more information. In this regard, he says his own memorandum made clear that CATF needed to dig further into the allegations by checking with law enforcement agencies or with assets to determine whether these were reasonable allegations or unfounded. He was warning CATF to be careful. Jameson also says it should not be assumed or implied that he was aware of all that the Agency knew about Hyde at the time.
938. On August 5, 1987, Fiers sent a memorandum to DDO Clair George recommending that George approve the use of Hyde. The memorandum summarized all of the available derogatory information and acknowledged that Hyde was "not attractive and is the type of activity [sic] we wish to avoid." Fiers added, however, that the Agency had no choice but to use Hyde on the grounds of "operational necessity." The Fiers memorandum explained that there would be controls on Hyde that "should minimize the risks." The contract would not require him to do business in or enter the United States. Fiers concluded the memorandum by noting that the Agency had shared the derogatory information regarding Hyde with the FBI, U.S. Customs Service, DEA, and staff members of both congressional oversight committees and had informed them of CIA's intent to use Hyde for a limited commercial contract. The congressional staff members, Fiers reported to DDO George, had posed no objections to the limited use of Hyde.
939. Headquarters, in a cable dated August 8, 1987, stated that DDO George had approved the use of Hyde and Mariscos Hybur to provide logistical services to complete a project, after which all contacts must cease. A March 31, 1988 CATF memorandum to DDCI Gates also indicated that the decision to use Hyde and Mariscos Hybur was "made at the DDCI level." A CIA officer stated in a February 2, 1988 memorandum to the Chief of SAS that "The decision was made at the DDCI level to go ahead and use [Mariscos Hybur]."
940. Then-DDCI Gates says that he has no recollection of approving the use of Hyde and does not recall the matter being brought to his attention.
941. Gates recalls that he started "putting everything in writing--especially if it had to do with the Contras" because he had been "savaged" several months earlier in DCI confirmation hearings for not being aggressive enough in looking into the Contra program. He also says he almost certainly would have discussed any such approval with DCI Webster since the congressional Iran-Contra hearings were underway and Webster was conducting his own inquiry into CIA's role.
942. Then-CATF Compliance Officer Louis Dupart asserts that Gates did in fact approve the use of Hyde. As he recalls, DDO George went to Gates saying, "We need to use him, but we also need to figure out how to get rid of him." Gates, according to Dupart, gave the approval, with the caveat that CATF end the relationship with Hyde as soon as possible. This was all done verbally, nothing was in writing, Dupart says, since "Gates would not put something like that in writing." The approval may have been attributed to DDO George in the August 8 cable, says Dupart, but it was run through Gates. The DDO did not do it on his own, Dupart says.
943. Fiers states in his written response to OIG questions that:

     My belief is that Acting DCI [Gates] approved [Hyde's] use in a conversation with me. (I do not specifically recall a conversation in this regard, but I do believe one took place.) I also recall that the subject was highly controversial. I specifically recall that Headquarters--me included--did not want to use Alan Hyde. . . . After much discussion, I recall that we agreed that he could be used on a highly restricted basis, which essentially eliminated the possibility that he could use the . . . . operation in connection with any illicit activities.

944. In a September 29, 1987 cable, CATF requested a determination as to whether there was any substance to recent allegations that the "criminal families" on Roatan, including Alan Hyde, were stealing arms and ammunition destined for the Contras. Further, CATF directed that an appropriate person should travel to Roatan to attempt to buy weapons if there were substance to the charges. When asked why CATF did not take similar actions to verify the narcotics trafficking allegations against Hyde, the former Chief of NOG says "It was an issue of relative order of priorities . . . . [T]he issue of stealing our guns had a higher priority than verifying whether Hyde was smuggling cocaine into the U.S." Fiers states in his written response to OIG questions that he has "no recollection of Hyde being involved in gun smuggling. No information has been found to indicate that the instructions regarding the alleged arms thefts were executed.
945. A November 9, 1987 cable informed Headquarters that Hyde had consented to being questioned by CIA Security. A CIA officer speculates that Hyde may have thought the request to take the test had something to do with the weapons that were showing up on Roatan. He notes that Hyde was concerned that this contraband would hurt the local community, and he did not want to be associated with this.
946. No information has been found to indicate that CATF responded to the November 9 cable indicating that Hyde was prepared to be questioned by CIA Security or that any interview was ever conducted with Hyde. A former CATF officer does not recall why Hyde was never questioned, but notes that no interview was "required" since Hyde was used in a limited capacity as a contractor.
947. On February 2, 1988, a CIA officer sent a memorandum expressing his misgivings about CIA's involvement with Hyde. He concluded the memorandum by stating his belief that "consideration should be given to [not] having any further involvement with the HYBUR [sic] organization." No information has been found to indicate that any action was taken in response to the memorandum.
948. On February 19, 1988, the Defense Attaché in Tegucigalpa reported in a cable received by CIA that the Honduran military would be increasing coastal patrols in the Bay Islands because of concerns about drugs and arms smuggling. On February 24, 1988, a CIA officer sent a handwritten note to the CATF SOG Chief informing him of a conversation she had on that day with Dupart regarding the need to obtain additional approvals to use Hyde's facilities. The note stated that she also informed Dupart of the planned Honduran Government "drug-busting effort" against the Bay Islands. The note went on to say that "Because Hyde is reported . . . as the 'godfather of all criminal activities'--[especially] drug smuggling--in the Islands, it is likely he will be a target of this effort."
949. CIA records indicate that the Agency continued to believe that Hyde's docking and storage facilities on Roatan would be needed to comply with the congressional mandate to keep in mothball status all equipment, aircraft, vessels, and supplies that had been used to support the Contras, pending authorization to continue the Nicaragua program. With these requirements in mind, the Acting LA Division Chief informed DDO Stolz in a March 9, 1988 memorandum that the Agency would have to lease additional storage facilities from Hyde. The memorandum also provided Stolz with the most recent derogatory information concerning Hyde, citing the allegations that a Hyde vessel was being used for drug smuggling and that Hyde was the head of an air smuggling ring with contacts in the Tampa/St. Petersburg area. The memorandum pointed out, however, that there was still no "hard evidence" against Hyde.
950. On March 12, 1988 an extension of the Agency's contract with Hyde was approved by DDO Stolz. The extended contract was modified to allow use of Hyde's storage facilities on Roatan as long as the mothballing of Contra support assets was required. Other arrangements with Hyde would require prior Headquarters approval, according to the cable.
951. Despite this March 1988 extension of the contractual relationship with Hyde, Agency records indicate that CATF was determined to terminate the relationship by June 1988 because of the receipt of continuing allegations of Hyde's involvement in cocaine trafficking and the pending expiration of the so-called mothball authorities on September 30. A June 29, 1988, CATF cable noted Headquarters "wishes" to limit any further contact with Hyde and directed CIA officers in the field to find another commercial firm. The field again objected to severing ties to Hyde in a July 11, 1988 cable to Headquarters describing Hyde as being the only Honduran "delivery mechanism" for aviation gas. Field officers also reportedly believed that Honduran authorities would not allow another company to do business at the site.
952. CATF replied in a July 29 cable that an alternative to Hyde "must" be found and informed the field that there would be no further Agency contact with Hyde even if the mothball authorities were extended. On September 22, however, the field requested permission to use Hyde's facility until the end of the hurricane season. In an October 27 memorandum, LA Division Chief requested Stolz' approval to continue the use of the Hyde facility until December 1998. CIA records indicate that Stolz approved the continued use on October 28, 1988 and that the Agency's relationship with Hyde apparently ended at the beginning of 1989.
953. A March 11, 1993 cable discouraged counternarcotics efforts against Alan Hyde because "his connection to [CIA] is well documented and could prove difficult in the prosecution stage."
954. Information Sharing with Other U.S. Government Entities. According to the October 9, 1987 cable that cited a Honduran report linking Hyde to drug trafficking, that information was shared with the DEA office in Honduras and the U.S. Consul General there "in his capacity as mission narcotics referent."
955. Fiers' August 5, 1987 memorandum to DDO George indicated that the Agency had informed the FBI, DEA and Customs of its intention to use Hyde for a limited commercial contract. No information has been found to confirm the statement that the Agency actually informed these law enforcement agencies of its intention to use Hyde.
956. An undated memorandum from Fiers to the ADDO and the LA Division Chief appears to have been written following a CATF briefing to the SSCI and HPSCI Staffs concerning Contra drug trafficking allegations in late July 1987. The memorandum indicated that Fiers had included information about Hyde in his briefing to several SSCI and HPSCI Staff members. According to the memorandum, David Holliday of the SSCI Staff had seen "no problems in using Hyde in the manner outlined [i.e., contracting with him to haul cargo]." The memorandum recorded, however, that Holliday said he wanted to discuss the matter with SSCI Chairman Boren before giving "final concurrence." The Fiers memorandum also noted that Thomas Latimer of the HPSCI Staff "was more forward leaning. He saw no problems and indicated we should proceed." Fiers indicated in the memorandum that he would contact Holliday during the following week to determine whether he had talked to Senator Boren. No information has been found to indicate a follow-up conversation between Fiers and Holliday concerning Senator Boren's views.
957. An August 3, 1987 OCA MFR by Robert Buckman recorded a meeting of SSCI and OCA officers that day. Attending for the SSCI were Staff Director Sven Holmes, Jim Dykstra, Dave Holliday, Keith Hall, and Britt Snider. David Gries, Al Dorn, and Robert Buckman represented OCA. According to the MFR, Holmes questioned CIA's use of Alan Hyde in the Contra supply program in light of allegations of drug-related activities by Hyde. The MFR indicated that Fiers was contacted by telephone during the meeting and reportedly stated that Agency policy was that persons such as Hyde could be used in the Contra program if there were no ongoing investigations of wrongdoing or no outstanding indictments.
958. On August 7, 1987, a memorandum from Alvin Dorn, the then-Deputy Director for Senate Affairs in OCA indicated that SSCI Staff Director Sven Holmes had been provided background information concerning Hyde, but wanted more. Holmes was reportedly also requesting information regarding Agency policies that governed operational use by CIA of persons with criminal backgrounds. A draft response to Holmes was completed by August 13 that stated, in part:

     . . . should the need . . . arise an assessment is made to determine whether the specifics of the criminal history or notoriety of the person is compatible with contemplated use; if there is an unacceptable degree of incompatibility, the individual is not used . . . . It [is] generally inadvisable to involve anyone in operational activities who is known to currently be pursuing a criminal activity that is subject to U.S. process.

     No information has been found to indicate whether this draft response was ever made final or sent to the SSCI.

959. An unsigned August 19, 1987 memorandum virtually restated verbatim the information in the memorandum Fiers had forwarded to DDO George on August 5. This memorandum contained a full exposition of the derogatory information concerning Hyde. No information has been found to indicate whether this document was provided to Holmes or anyone else.
960. The Acting LA Division Chief's March 8, 1988 memorandum to DDO Stolz indicated that the SSCI and HPSCI would be briefed concerning the Agency's plans to extend the Hyde contract. No information has been found to indicate that these briefings took place.
961. The Acting LA Division Chief requested guidance from DDO Stolz in a March 9, 1988 memorandum regarding whether to inform law enforcement agencies of the extension of the Hyde contract. No information has been found to indicate any response or decision regarding this request.

     Allegations Involving Air Crew Members of Companies that Provided Services to the Contras Under Contract or Subcontract with CIA

962. Background. Following the March 21, 1987 incident at the Miami airport involving U.S. Customs and an Agency DC-6 operated by Michael Palmer of Vortex/Universal Air Leasing, ADCI Gates sent a memorandum to DDO Clair George on April 9, 1987 directing that all contractor and subcontractor air crew personnel be vetted with DEA and the U.S. Customs Service as well as with the FBI. This was necessary, wrote Gates, to protect the Agency against even indirect involvement with drug trafficking.
963. Thereafter, CATF requested traces during April, May and June 1987 from DEA, U.S. Customs and the FBI concerning employees of Vortex/Universal and the prime contracting company. In addition to linking Michael Palmer and Al Herreros of Vortex/Universal to drug trafficking, information provided by DEA and Customs in response to these CIA trace requests also indicated that two employees of the prime contractor and seven employees of Vortex/Universal were suspected of having drug trafficking connections.
964. Moreover, CIA, through the use of a trusted resource, developed information to indicate that three other individuals—all of whom were employed by the prime contractor—might have some connection to drug trafficking.
965. A Prime Contractor Pilot. According to DEA information provided to CIA on April 28, 1987 a contractor pilot was:

     . . . listed as the pilot of [aircraft registration number] . In 1981, the aircraft was placed on lookout because [he] was suspected of smuggling drugs into the United States from the Bahamas. The lookout was later canceled.

966. According to Customs information provided to CIA on May 13, 1987 from the Treasury database, the pilot was the subject of a 1982 report of alleged drug smuggling. According to the Customs report, he was alleged to have used an aircraft with the same registration number that was cited in the April 28, 1987 DEA information.
967. A June 1, 1987 CIA cable to Customs requested further information on the pilot and three other individuals in an attempt to determine the validity of the information that Customs had provided to CIA in its May 13, 1987 cable. According to the June 1 cable, CIA:

     . . . . would appreciate details on the sources of information, including any available assessments on the reliability of the sources and their access to the information (for example, whether through direct involvement in the alleged activity or via hearsay). . . .

     In its June 24, 1987 response, Customs referred the CIA to the U.S. Coast Guard for further information pertaining to the pilot. However, no information has been found to indicate CIA contacted the U.S. Coast Guard regarding the pilot.

968. On April 29, 1986, the pilot was questioned by CIA Security as part of the clearance process to work under the prime contractor. A May 1, 1986 report of that questioning indicated that the pilot admitted to extensive use of illegal drugs and to selling marijuana to friends on several occasions in the late 1960s and early 1970s. He claimed that these sales occurred at social functions and that he did not make a profit from this activity. The report noted that although he was questioned intensively on these matters, CIA concluded that his answers were probably credible. According to the report, the pilot was advised of CIA's policy regarding the illegal use of drugs and he agreed to abide by that policy.
969. A December 22, 1988 CIA memorandum indicated that an aircraft that Customs identified as belonging to the prime contractor and suspected of drug smuggling in 1981-82 had been sold by the prime contractor in November 1979, but subsequently had been stored at the prime contractor's facility. It was unclear, the MFR noted, whether the pilot had been flying this aircraft as an employee of the prime contractor or as a charter pilot for the new owners. The December 1988 MFR indicated that more information would be needed from Customs in order to determine whether the aircraft and the pilot had actually been involved in drug trafficking. No information has been found to indicate that CIA sought additional information from Customs or any other source to follow-up or verify this information.
970. No information has been found to indicate that the results of questioning regarding drug use by the pilot were provided to U.S. law enforcement agencies. No information has been found to indicate that information regarding allegations of drug trafficking by the pilot was provided to Congress.
971. A Second Prime Contractor Pilot. According to a June 8, 1987 DEA cable, a second pilot was suspected of being "the pilot of an aircraft that was placed on lookout [sic] for suspected drug smuggling."
972. He was hired on June 25, 1987 as a pilot for the Contra program with temporary approvals.
973. An October 21, 1987 Headquarters cable indicated that the pilot had resigned from the Contra program. An October 23 cable to Headquarters urged that a strong effort be made "to try and turn him around," because he was "unquestionably the premier DC-6 captain." On December 3, Headquarters cabled that the pilot had agreed to continue in the Contra program. A December 10 Headquarters cable indicated that "investigative efforts" were underway to "clarify" the drug trafficking allegations. The cable stated that questioning by CIA Security "will be scheduled as soon as possible."
974. No information has been found to indicate any further investigative efforts were pursued by CIA. No information has been found to indicate when CIA's relationship with the pilot was actually terminated.
975. No information has been found to indicate that information regarding allegations of drug trafficking by the pilot was provided to Congress.
976. An Aircraft Mechanic. CIA Security questioned this mechanic was conducted on December 2, 1986. According to the report cabled to Headquarters on April 3, 1987, the information provided by the mechanic led CIA to conclude that he was probably involved in drug trafficking. Further, the report indicated CIA's view that, even under intense questioning, he was also withholding information regarding people he knew who were involved in the Contra program and drug trafficking. According to the report, the mechanic refused to identify any of these individuals, although he claimed that one of them had recommended him for the Contra program.
977. An April 20, 1987 Headquarters cable provided instructions that the mechanic was to be removed from his job pending the results of a second round of questioning by CIA Security. An April 24, 1987 memorandum from the LA Division Chief to DDO Clair George and the Director of Security indicated that the mechanic had been advised that he would have to undergo a third round of questioning to resolve the drug trafficking questions.
978. The mechanic was questioned again on May 10, 1987. According to the Security report of June 22, the mechanic admitted to smuggling a small amount of marijuana for his personal use into the United States in 1968. He also admitted that he "fostered drug transactions on a few occasions" while with the U.S. military in Vietnam. He reportedly asserted, however, that he never personally dealt illegally in drugs. Based on the information he provided, CIA concluded that his answers were probably credible. The report, however, did not indicate whether he was questioned regarding the other individuals in the Contra program who might be involved in drug trafficking and to whom he had referred in December 1986.
979. No information has been found to indicate that the Agency took any further action to pursue or verify the information regarding the mechanic or to determine the identities of the other individuals.
980. No information has been found to indicate that information regarding allegations of drug trafficking by the mechanic was provided to Congress or to other U.S. Government agencies.
981. A Third Pilot. This pilot was hired by the prime contractor in November 1986 in support of the Contra program and was questioned by CIA Security on December 2 and December 4, 1986. As a result of the information the pilot provided on both dates, CIA concluded that this pilot was probably involved in drug trafficking. The pilot was questioned further on December 11 and December 12, 1986 without the issues being clarified.
982. No information has been found to indicate that the Agency took any further action to pursue or verify the information developed during questioning by CIA Security.
983. No information has been found to indicate that information regarding drug trafficking by the pilot was provided to Congress or to other U.S. Government agencies.
984. A Fourth Pilot. This pilot was hired by the prime contractor for the Contra program in late 1986. He was questioned by CIA Security on December 2 and December 3, 1986. Based on the information he provided, CIA concluded that the questioning was not productive.
985. No record has been found to indicate any further action by CIA to follow-up or verify this information. No information has been found to indicate to what extent or for how long he was employed by the prime contractor to support CIA's Contra program.
986. No information has been found to indicate that information regarding drug trafficking by the pilot was provided to Congress or to other U.S. Government agencies.
987. Vortex/Universal employees. The seven individuals identified through DEA and Customs trace responses as suspected drug traffickers who were employed by Vortex/Universal were:
     • Joseph Haas
     • Donaldo Frixone
     • Martin H. Gomez
     • Martin Alberto Gomez
     • Irving Silva
     • Mauricio Letona
     • Stephen Herreros.

988. According to information DEA provided to CIA on April 28, 1987, Haas, Frixone, Silva, and Stephen Herreros had been implicated with Michael Palmer in a September 1986 drug smuggling incident in northern Mexico involving 19,000 pounds of marijuana destined for the United States. The DEA response also reported that Haas, Frixone and Martin Alberto Gomez had been crew members on the DC-6 that was involved in the March 1987 incident at Miami International Airport.
989. Joseph Haas. Haas was reportedly a long-time informant for a U.S. law enforcement agency.
990. Haas had been hired by Vortex/Universal in December 1986 to assist in providing crew support for air drops in support of the Contras. The April 28, 1987 DEA memorandum appears to have been the first indication to the Agency that Haas was suspected of involvement in drug trafficking and had been a suspected marijuana trafficker since 1984. According to an April 7, 1987 MFR prepared by a CIA Contracts Branch Chief regarding a conversation she had with the president of the prime contractor on that date, Haas had been "taken off" CIA's payroll as of April 1 because he had gone to work for a U.S. law enforcement agency in the United States. No information has been found to indicate that the Agency had any further contact or relationship with Haas.
991. DoJ and DEA requested information from CIA concerning Haas in 1985, 1987 and 1991. A December 16, 1987 OGC memorandum indicated that the Assistant U.S. Attorney for the Eastern District of New York requested CIA information concerning Haas in May 1985 because he was likely to be a witness in an arms smuggling case--U.S. v. Schwartz and Berg, et al.
992. A December 7, 1987 letter from the U.S. Attorney for the Eastern District of New York again requested information from CIA regarding its relationship with Haas in connection with the "Berg" prosecution because of "inquiries from the press, and from defense counsel, asking if Haas is involved in any type of covert operations to aid the Nicaraguan contras [sic]." These inquiries, according to the letter, also involved questions concerning the "Vortex Affair." The letter indicated that Haas' involvement with CIA might be used by the defense to "impeach Haas' testimony" as a witness for the prosecution.
993. An undated internal CIA memorandum in response to the U.S. Attorney's December 1987 request indicated that Haas had been "a contractor of Vortex/Universal which was a subcontractor of an Agency prime contractor." The memorandum noted that Haas had been employed by Vortex/Universal from "approximately December 1986 to April 1987." In answering the U.S. Attorney's request regarding any relationship between CIA and Haas, the memorandum made no mention of the April 1987 DEA and Customs trace responses that linked Haas to drug trafficking.
994. On September 9, 1988, CIA received a request for information from the DEA Administrator concerning Haas and Michael Palmer. ADCI Gates responded to the request in an October 1988 memorandum that briefly outlined the CIA's relationship with Haas, and indicated that the "Agency has had no contact, direct or indirect, with Haas since April 1, 1987." ADCI Gates' memorandum also noted that the Agency had directed that the prime contractor sever its ties with Vortex/Universal following the March 21, 1987 Miami airport incident involving U.S. Customs and the subsequent discovery of drug trafficking information relating to Haas.
995. An October 4, 1988 memorandum to the Director of Congressional Affairs from David Pearline of OCA's Legislative Division indicates that CIA may have informed the House Judiciary Committee of information pertaining to Haas. According to the memorandum, which discussed an October 3, 1988 meeting between Pearline and Congressional staff employees Haydon Gregory and Jim Dahl of the House Judiciary's Subcommittee on Crime:

     . . . .
     3. The Committee staff also made two additional inquiries while I was present. The first inquiry concerned the relationship we had with Joseph Haus [sic], a pilot who flew resupply flights for the Contras. The staff felt we may have provided some information on Mr. Haus [sic]. (FYI: I checked my memos for the record on our earlier briefings and could not locate a reference to Mr. Haus [sic], but the CATF compliance officer believes we may have provided some information during a briefing of the staff in May.)
     . . . .

996. Donaldo Frixone. Frixone was, according to information DEA provided to CIA on April 28, 1987, implicated along with Michael Palmer and others in the September 1986 drug smuggling incident in northern Mexico involving 19,000 pounds of marijuana destined for the United States. Frixone was hired by CIA for Contra aerial missions from early 1983 to June 1985. Frixone's relationship with CIA was terminated in June 1985 for Frixone's refusal to follow his supervisor's instructions.
997. Following the termination of his relationship with CIA, Frixone was hired by Vortex/Universal in late 1986 or early 1987 as a pilot in support of Contra logistics operations. Frixone was killed on January 23, 1988 when his aircraft was shot down during an air drop over Nicaragua.
998. On July 13, 1983, CATF cabled a Station and requested that it verify allegations made in May 1981 that Frixone had been arrested on a drug trafficking charge. The Station replied on July 22 that it had received confirmation that Frixone had been arrested for drug trafficking in the Dominican Republic in August 1980.
999. Frixone was questioned by CIA Security on July 19, 1983. According to the report, Frixone said that he had been arrested for trying to steal an airplane in the Dominican Republic, but was exonerated by a jury. The report did not mention the drug charge, but noted that "upon instruction by [a CIA] representative, [the Security Officer] did not [follow up on] the subject's story" of the arrest incident. No information has been found to indicate that CIA undertook any further action to follow up or verify the information about Frixone's arrest for drug trafficking before the termination of the initial Agency relationship with him in June 1985.
1000. A May 20, 1987 cable indicated that Frixone had admitted to Dominican police that he and his accomplices were planning to go to Colombia to pick up marijuana and that he was to be the pilot. The cable added that Frixone and the others had been released by the judge in November 1980 because of "insufficient evidence."
1001. A June 30, 1987 Headquarters cable indicated that the allegations against Frixone and several others would have to be "clarified" before approval to use them could be initiated. Further, the cable stated that investigative efforts were underway and that all the individuals would be questioned by Security "as soon as possible."
1002. No information has been found to indicate that Frixone was questioned again or that further investigative efforts were made in this regard by CIA or other U.S. Government entities.
1003. No information has been found to indicate that information regarding allegations of drug trafficking by Frixone was provided to the Congress or to other U.S. Government agencies.
1004. Martin Horatio Gomez. Gomez, a native of Medellin, Colombia, was an aircraft mechanic for Vortex/Universal. After about nine months, his contractual relationship with the Agency was terminated on March 8, 1989 for "lack of interest."
1005. The Agency was informed by DEA and Customs in April and May 1987 that Gomez was "criminally associated" with aircraft N50314. According to the April 28, 1987 DEA memorandum, the aircraft was owned by a Miami company and was suspected of being used to transport marijuana or cocaine from Colombia to the United States. On May 13, 1987, Customs provided information to CIA that indicated that Gomez had been suspected of involvement in currency and narcotics smuggling as of 1984 and that he was associated with "numerous alleged narcotics traffickers. . . ."
1006. A June 1, 1987 CIA cable to Customs requested further information on Gomez and three other individuals in an attempt to determine the validity of the allegations. According to the June 1 cable, CIA:

      . . . . would appreciate details on the sources of information, including any available assessments on the reliability of the sources and their access to the information (for example, whether through direct involvement in the alleged activity or via hearsay). . . .

      In its June 24, 1987 response to CIA, Customs reported it had no additional information regarding Gomez.

1007. No information has been found to indicate that Gomez was questioned by CIA Security. No information has been found to indicate that information regarding allegations of drug trafficking by Gomez was provided to the Congress.
1008. Martin Alberto Gomez. Gomez, an aircraft mechanic, became a naturalized U.S. citizen in July 1986. CIA was informed by DEA on April 28, 1987 that Gomez allegedly had been involved in a drug smuggling organization as of 1981. Another alleged member of that organization was Martin Horatio Gomez, whom the DEA response indicated might have been his father.
1009. Martin Alberto Gomez was questioned by Security on August 29, September 1, and November 3, 1988. The totality of the information he provided led CIA to conclude that he probably was involved in drug trafficking.
1010. In an October 5, 1988 memorandum, an officer in the Office of Security wrote that Gomez "has not cooperated during [two attempts to question him] and it is not likely his attitude will change with additional processing." The memorandum therefore recommended that "[the cognizant CIA office] be requested to cancel interest" in Gomez. A November 15, 1988 memorandum from an Operational Evaluation Section officer to the Chief of the Staff and Operations Branch indicated that SAS had refused to "cancel interest" in Gomez, and that he was given a third opportunity for clarification on November 3, 1988. According to the memorandum, major concerns remained concerning the use of illegal drugs." His relationship with CIA was terminated in "mid-March 1989."
1011. No information has been found to indicate that information regarding drug trafficking by Gomez was provided to the Congress or to other U.S. Government agencies.
1012. Irving Silva. Silva, as noted in the April 28, 1987 DEA report, was implicated with Palmer in the September 1986 drug smuggling incident in northern Mexico involving 19,000 pounds of marijuana destined for the United States.
1013. According to a February 29, 1988 memorandum to OGC's Assistant General Counsel regarding CIA contacts with Vortex/Universal Air Leasing, Silva was employed part-time by Vortex/Universal from December 1986 to January 1987 to provide navigational training to the ERN. The April 28, 1987 DEA trace response implicated Silva in the September 1986 Mexico marijuana smuggling incident.
1014. No information has been found to indicate that Silva was questioned by CIA Security or that the Agency took other action to follow-up or verify the information linking Silva to drug trafficking. No information has been found to indicate when CIA terminated its relationship with him.
1015. No information has been found to indicate that information regarding allegations of drug trafficking by Silva was provided to the Congress.
1016. Mauricio Letona. Letona apparently was hired by Vortex/Universal in late 1986/early 1987 along with Haas and others under the subcontract with the prime contractor in support of CIA assistance to the Contras.
1017. The Agency terminated its relationship with Letona on May 8, 1987. A May 13, 1987 Customs cable to CIA indicated that Letona had been suspected in 1980 of using his affiliation with an El Salvadoran airline to smuggle cocaine.
1018. No information has been found to indicate that information regarding allegations of drug trafficking by Letona was provided to the Congress.
1019. Stephen Herreros. The April 28, 1987 DEA response to a CIA trace request reported that Herreros was listed in the files of the El Paso Intelligence Center as having been involved in the September 1986 marijuana smuggling incident along with Palmer and other Vortex/Universal employees.
1020. No information has been found to indicate the nature of Herreros' relationship with Vortex/Universal or that he had any relationship with CIA. No information has been found to indicate that CIA took any action regarding the information relating to Herreros and drug trafficking.
1021. No information has been found to indicate that information regarding allegations of drug trafficking by Herreros was provided to the Congress.

      What was the nature and extent of CIA's knowledge of allegations of Contra drug trafficking at the Ilopango Air Base?

1022. Background. Between 1981 and the 1984 congressional funding cutoff, the Agency provided support services to the Contra program from the El Salvadoran air base at Ilopango--located a few miles to the east of San Salvador. Ilopango Air Base was controlled by the Salvadoran military but was used by CIA as a storage point and staging area for shipments of supplies to the Contras. In the course of these functions, CIA personnel had frequent contacts at Ilopango with Contra pilots and other personnel who came to Ilopango to pick up supplies. CIA personnel were frequently present at Ilopango and sometimes assisted when supplies were loaded onto aircraft operated by Contra pilots.
1023. To support CIA activities at Ilopango, CIA occupied a newly constructed warehouse and hangar in 1984--commonly referred to as Hangar 5--and relocated to it activities that had been conducted in a smaller nearby hangar-- commonly referred to as Hangar 4. After CIA had moved out of Hangar 4, it was used in 1985 and 1986 by NHAO and the Private Benefactors in support of their Contra-related operations. Hangars 4 and 5 shared a common aircraft parking area and were located on a restricted area of the Ilopango air base that was controlled by the Salvadoran military. Another area of Ilopango air base was devoted to civil aviation. Access to that area reportedly was not restricted.
1024. Following the 1984 congressional funding cutoff, supplies that remained at Ilopango were distributed to the Contras by CIA personnel. Thereafter, visits by CIA personnel to Ilopango occurred less frequently. Contra personnel, however, continued to visit Ilopango in connection with support being provided to the Contras by NHAO and the Private Benefactors.
1025. Following congressional approval of the $100 million Contra support program in October 1986, Ilopango Air Base had much less importance to the Contra program.
1026. There have been three main sources of allegations of drug trafficking at Ilopango—a U.S. citizen, Celerino Castillo⁽³⁴⁾ and a CIA/DEA source known as STG6. The allegations of each of these sources and what CIA knew about them are described below.
1027. Allegations of Contra drug trafficking at Ilopango—a U.S. citizen. According to an October 23, 1986 cable to Headquarters, the "narcotics coordinator" at the U.S. Embassy in Tegucigalpa had said there would be an arrest in San Salvador of a specifically named American citizen. According to the cable, the U.S. citizen was to be arrested:

. . . on narcotics trafficking charges. [The U.S. citizen] will be arrested today or tomorrow by regional [DEA] agent [Celerino Castillo] and charged with cocaine trafficking to the U.S. [U.S. Embassy/Tegucigalpa] alerted [CIA] because [the U.S. citizen] is allegedly some way involved [sic] with [Max Gomez] and also allegedly has [United Nicaraguan Resistance/FDN Directorate] contacts and operates his business out of [Hangar 4], supposedly using [Private Benefactor] pilots and aircraft as part of his drug network. [The U.S. citizen's] home in San Salvador was raided about one month ago and guns and a variety of drugs were discovered. [DEA] believes [the U.S. citizen] will attempt to use publicity of his alleged [U.S. Government] ties to defeat any prosecution on drug charges. We have no other details on this matter and are not likely to receive more since regional [DEA representative] operates from Guatemala City. . . .

(Emphasis added.)

1028. Allegations of Contra drug trafficking at Ilopango--former DEA Special Agent Celerino Castillo. In his book Powderburns: Cocaine, Contras & the Drug War (© Celerino Castillo III and Dave Harmon, 1994), former DEA Special Agent Celerino Castillo alleged that Ilopango was used by the Contras to support Contra drug trafficking activities. According to Powderburns, much of Castillo's information relating to alleged Contra drug trafficking at Ilopango was provided to him by DEA informants, one of whom reportedly worked at the civil air section of Ilopango air base. In Powderburns, Castillo referred to this informant at Ilopango as "Hugo Martinez."
1029. In Powderburns, Castillo said he arrived in Guatemala in October of 1985 and served until 1990 in the regional DEA office in Guatemala City. Castillo's responsibilities while assigned to the regional DEA office included El Salvador. Castillo said that, soon after his arrival in Guatemala City, his duties brought him into contact with CIA officials both in Guatemala and in El Salvador. Castillo alleged in Powderburns that, in at least two instances, he discussed the allegations relating to Contra drug trafficking with CIA officials.
1030. The first instance related to a discussion that Castillo said he had with the San Salvador COS in 1986. As related in Powderburns:

      . . . On August 15, I met with Jack McCavett , the mild-mannered CIA station chief in El Salvador. Again, I repeated my evidence against the Contras. McCavett denied any connection between the CIA and the Ilopango operation. As far as [William] Brasher was concerned, McCavett said "He doesn't work for me. He works for the Contras and Ollie North, and we have nothing to do with that operation."

      Three days later, McCavett called me into his office and pulled $45,000 in cash out of his desk drawer. "I've got money left over from my budget I need to spend," he said. "Take this for your anti-narcotics group. Go buy them some cars." McCavett didn't mention the Contras, but I suspected he was trying to buy me off. The CIA, to my knowledge, had never given the DEA this kind of gift. I wrote out a receipt and handed it to him, took the stack of bills, and gave it to Adame and Aparecio. They bought three much needed vehicles for [an El Salvadoran Police organization].

1031. In the second instance cited in Powderburns, Castillo claimed he discussed Contra drug trafficking activities with "Randy Kapasar, a CIA agent in Guatemala:"

      He knew I was investigating the Contras. I knew he was helping them. I expected him to deny my evidence of the Contras' narcotrafficking but he followed Sofi's reasoning: "Cele, how do you think the Contras are gonna make money? They've got to run dope, that's the only way we can finance this operation."

1032. Allegations of Contra Drug Trafficking at Ilopango—STG6. CIA records indicate that, from September 16, 1986 until August 7, 1989, STG6 was an Agency contact who provided information pertaining to drug trafficking and other subjects. He was turned over to DEA following the termination of his relationship with CIA on August 7, 1989.
1033. On at least two occasions, STG6 provided CIA with lead information that related to possible Contra drug trafficking activities at Ilopango. The first report of this nature was described in a September 23, 1986 cable to Headquarters. According to the cable, STG6 provided the names of two Colombians who were linked to Contra pilot Carlos Amador. Amador, the cable stated, was "suspected of involvement in narcotics trafficking."
1034. The second report from STG6 to CIA regarding possible Contra drug trafficking at Ilopango was described in a March 23, 1988 cable to Headquarters. According to that cable, STG6 had reported that a Guatemalan citizen and suspected drug trafficker named Reyner Veliz had recently been traveling with Contra pilot Marcos Aguado.
1035. CIA Records: A U.S. Citizen. Apart from the U.S. citizen's claims and an April 8, 1987 cable to Headquarters reporting an unsolicited telephone call from the U.S. citizen, no information has been found to indicate that CIA had any relationship with the U.S. citizen. Also, no information has been found to indicate that the U.S. citizen's activities in El Salvador were related to the Contras in any manner, other than the October 23, 1986 cable reporting and a reference to him and the Contras in an April 25, 1986 cable--described further below--pertaining to the arrest of suspected American mercenaries in Brazil.
1036. The April 25, 1986 cable --as mentioned earlier--also made a reference to the U.S. citizen and the Contras. This cable provided an update regarding the arrest of American citizens suspected of being mercenaries in Brazil. According to the cable, the detainees had been visited in prison by the U.S. citizen and another person, "both of whom are apparent friends of several of the detained mercenaries." Regarding the U.S. citizen, the cable stated that:

      . . . visiting U.S. Consul. . . .who previously served in San Salvador, told [Consul General] on 25 April he remembers [the U.S. citizen] as being associated with [CIA] in San Salvador as a military advisor to Contras operating on the Honduran border with El Salvador.⁽³⁵⁾

1037. In response to the October 23, 1986 cable regarding the U.S. citizen's pending arrest in El Salvador, an October 25, 1986 Headquarters cable requested any available information regarding whether ". . . there is any truth to [the U.S. citizen's] claims of contact" with the United Nicaraguan Resistance/FDN Directorate as well as "possible operations" conducted out of Hangar 4 at Ilopango. The Headquarters cable also provided a lengthy summary of earlier instances in which the U.S. citizen's name had appeared in CIA records:
      • A cable had reported on August 27, 1986 that the U.S. citizen had provided night vision equipment to the Salvadoran military as part of a contract that he had with the Salvadoran Government. He reportedly told Salvadoran and U.S. military officials in El Salvador that CIA had "paid his salary in the past and made some broad hints as to a current [CIA] relationship."
      • A May 14, 1986 cable stated that the U.S. citizen had become a subject of investigative interest to the U.S. Customs Service's Office of Special Investigations in New York for allegedly exporting equipment not licensed for export. The U.S. Customs Service said that it would remove his name from its watchlist if his activities were connected to the CIA or other U.S. intelligence organizations. CIA file reviews had found no information to indicate that the U.S. citizen was connected to CIA and, thus, the U.S. Customs Service "intended to continue their investigation with a goal of prosecuting him." Further,

      . . . the most recent incident which aroused [U.S. Customs Service] suspicions occurred on 3 May 1986 when [the U.S. citizen] was supposedly forced to make an emergency landing in his plane in the general area of Tamiami, Florida. [He] told fire department officials who responded to his landing that he was carrying two large cases of top secret material (whether equipment or documents unclear). He asked the fire department people to secure the material while he went to the nearest airport to clear customs. After having gone through a clearance procedure which made no mention of the "sensitive" material, [the U.S. citizen] returned to the fire department building, retrieved his two cases, and disappeared. As a result of this and other incidents, [he] was placed on an [U.S. Customs Service] watchlist which would ensure a very stringent search of him and his possessions/vehicles any time he surfaced at an [U.S. Customs Service] office or branch.

      • A May 15, 1986 cable reported that, following the May 3 crash, DEA personnel had asked if CIA had any connection with the U.S. citizen. According to the summary, DEA had reported that he told firemen responding to the crash that three Salvadoran passengers traveling with him were being transported to Fort Bragg, North Carolina "on behalf of [CIA]" The U.S. citizen, according to DEA, reportedly offered the firemen a $100 bribe if they "would not report his activity relative to the Salvadorans to authorities." The cable had also stated that DEA planned a "follow-up investigation" of the U.S. citizen on suspicion of narcotics trafficking.
      • July 1, 1986, cable reported that at a June 27, 1986 meeting with FBI and Metro Dade Police Department representatives that, when the U.S. citizen returned to retrieve two suitcases that he had left in the custody of fire officials following the crash, he was accompanied by a Metro Dade reserve police officer "who also claimed connection with [CIA] and vouched for [him]." According to the summary, further inquiry into the Metro Dade reserve police officer's involvement in the matter had been delayed by police officials "for fear of interfering with a [CIA] operation." The cable went on to state that a review of CIA files at that time had revealed no information concerning the reserve police officer or the names of the Salvadorans who allegedly were passengers on the U.S. citizen's airplane.

      According to an October 29, 1986 response to the October 25 Headquarters cable, "preliminary checks" with senior Contra officials regarding any contacts between the FDN and the U.S. citizen were "negative."

1038. A March 26, 1987 cable to Headquarters reported that the U.S. citizen and another individual had been arrested by Dominican Republic authorities upon landing an airplane in that country. The airplane contained various types of military-related equipment. According to the cable:

      [The U.S. citizen and his companion] also claim to be involved in military training in Central America and are reluctant to discuss what they are doing and for whom. Intentional or not, they are leaving the impression that they are working for [CIA].

1039. A March 27, 1987 cable to Headquarters reported that the U.S. citizen had recently sought to sell equipment to the Venezuelan Government and that a Venezuelan official said that the U.S. citizen "showed him 'State Department credentials' . . . and [he] claimed that he worked for [a Central American Station']."
1040. A March 27, 1987, cable in response to the March 26, 1987 report summarized what was known about the U.S. citizen's activities in El Salvador:

      [The U.S. citizen] has falsely represented himself on prior occasions as being associated with [CIA]. He has no relationship with [CIA] but he was in San Salvador until two or three months ago, trying to sell weapons and military gear of various kinds to the Salvadoran military. He left El Salvador in a hurry after a police search of his house here uncovered a large quantity of various unlicensed, unregistered military arms, including hand grenades. When last we heard he was under investigation by U.S. Customs in relation to this incident. He was also under investigation earlier by DEA for possible narcotics smuggling. He seems to have a history of inventing supposed contacts with the USG[overnment], particularly [CIA], which he then uses to pursue his various business interests.
      . . . .

1041. According to an April 8, 1987 cable to Headquarters and several Stations, a CIA officer serving abroad had received an unsolicited telephone call from the U.S. citizen. The cable reported that he told the officer during the call that he had been given the officer's name and telephone number from the commanding officer of the USMILGROUP. The cable, in noting that the commanding officer of the USMILGROUP was out of town, said the gist of the U.S. citizen's conversation with the officer was:

      "You don't know me, but I got your name from [commanding officer, USMILGROUP]. I was just down there and I sell night vision equipment. [Commanding officer, USMILGROUP] thought it might be a good idea to talk to you." [The U.S. citizen] said he planned another visit . . . . on/about 24/25 April and wondered if there would be an opportunity to talk with [the officer].

1042. In a follow-on cable on April 9, 1997 to Headquarters, it was confirmed that the commanding officer of the USMILGROUP had indeed passed the officer's name and phone number to the U.S. citizen after telling the COS that "there was DoD contractor in town selling the . . . military night vision equipment and wanted to know if the police would have any interest." According to the cable, the commanding officer of the USMILGROUP did not mention the name of the contractor, but had passed the officer's name to the U.S. citizen on the assumption that the COS would concur.
1043. In an April 10, 1987 cable, Headquarters provided guidance with respect to contacts with the U.S. citizen:

      [Headquarters] appreciates information provided . . . . regarding telephone conversation with [the U.S. citizen]. As Station is aware, [he] is notorious for falsely claiming [CIA] affiliation in addition to his involvement in other nefarious schemes. In light of this fact, Station is urged to politely but firmly refuse further contact with [the U.S. citizen]. Please advise any further attempts by [him] to contact other Station/Mission personnel.

1044. According to an April 13, 1987 cable to Headquarters, :

      . . . MILGROUP commander is in contact with [the U.S. citizen] and presumably will meet with [him] when latter arrives near end of month. We have no desire to give [him] another window into this mission and we will follow [the April 10 Headquarters] guidance accordingly, but wonder . . . whether it would be more in line with an embassy officer to hear him out and then turn off the contact? . . . .

      The cable also asked Headquarters "whether we should have [the U.S. citizen's] plane carefully searched. We think the Customs Police should do so."

1045. In its April 16, 1987 response, Headquarters provided explicit instructions: "Station to avoid contact with [the U.S. citizen]." Further, the Headquarters cable stated that:

      . . . .
      [The U.S. citizen] must be considered [a United States] person since he is evidently a resident and able to freely enter and exit the country. [CIA] should not become involved in making any decision whether or not to search his plane. We note that there is no indication in [his] file of any warrant outstanding against him.
      . . . .

1046. The U.S. citizen's name appears in other Agency cables. However, as stated earlier, no information has been found to indicate that he or his activities had any connection to CIA or the Contras.
1047. CIA Records: Castillo's contacts with CIA officials. CIA records indicate that in mid-1986, CIA planned an expenditure of $45,000 to purchase three vehicles for the Government of El Salvador. The money was accounted for in CIA records on August 18, 1986, the same date Castillo alleged in Powderburns that he received $45,000 from a person he refers to as COS McCavett. Although no information has been found to indicate the process by which the vehicles were purchased and given over to the Salvadorans, no information has been found to indicate that the transaction involved Castillo or DEA in any manner.
1048. CIA Records: Contacts with STG6. STG6 became a CIA contact in late 1986. CIA records indicate that DEA had an ongoing operational interest in STG6. According to a November 18, 1987 cable to Headquarters, a regional DEA office had indicated that this particular individual was a "source of information regarding illegal aircraft movements/narcotics trafficking" at Ilopango air base.
1049. A January 18, 1988, cable to Headquarters noted that the DEA representative had said that the DEA regional chief had been briefed regarding STG6 prior to DEA expressing interest in him:

      STG6 has access to valuable and unique information by virtue of his job and [he] said that [DEA] needs this data regarding movement of aircraft in the region. Station wished to pass this view so that appropriate STG6 information can be passed to [DEA] for action.

1050. Information provided by STG6, on occasion, was transmitted with a request that the information be passed to the regional DEA office or shared directly with a representative from the regional DEA office during meetings with CIA personnel. Of these reports, only one had any apparent Contra connection:
      • A March 23, 1988 cable indicating that Guatemalan citizen and suspected drug trafficker Reyner Veliz was traveling with Contra pilot Marcos Aguado. Included in this cable was a request that this information be passed to the regional DEA office with the following caveat: "Please omit specific locations of travel and location of source [i.e., STG6]"."

1051. According to a July 31, 1989 cable to Headquarters, CIA officers met with a representative from the DEA's regional office in Guatemala City on July 24-28, 1989. As a result of that meeting, an offer was made to the DEA representative to turnover STG6 to DEA.
1052. According to an August 1, 1989 cable, DEA "definitely agrees to take over STG6." Headquarters approved the turnover of him in an August 2, 1989 cable.
1053. Individual Statements: CIA personnel. A CIA officer who was closely aware of events at Ilopango during the 1981-1983 time frame and from May 1984 until May 1986 recalls that, until the 1984 congressional cutoff of funds, he had frequent contacts with Contra pilots. After the cutoff, these contacts diminished, although certain authorized contacts were permitted to continue.
1054. The officer says he has no knowledge of drug trafficking at Ilopango. He comments that he frequently observed and--prior to the 1984 funding cutoff--sometimes assisted with the loading of supplies onto Contra aircraft at Ilopango. He is very doubtful that illicit drugs could have been placed on board Contra aircraft during the times he was present. Moreover, he notes that the aircraft he observed being loaded with supplies were destined, not for the United States, but for Contras operating in Central America. Following the 1984 funding cutoff, he says he continued to observe and monitor the activities of Contra aircraft.
1055. According to the officer, the Salvadoran Air Force provided the Contra pilots with identification cards that allowed the pilots to bypass Salvadoran customs upon landing at Ilopango and also allowed them unrestricted access to the air base. He says the commanding officer of Ilopango, General Juan Bustillo, was a staunch supporter of the Contras and, because of this support, he authorized the pilots to be issued the identification cards to facilitate such access. The CIA, according to the officer, had nothing to do with the issuance or control of these identification cards.
1056. The officer says Contra pilots sometimes parked their aircraft at a location some distance away and in an area of the military side of Ilopango that was not easily observable from the base control tower or from the nearby civilian side of the airfield. Particularly after the 1984 funding cutoff, Contra planes could easily come and go from Ilopango without CIA knowledge, he says.
1057. A helicopter pilot who worked for a CIA contractor at Ilopango from 1984 until 1986 says he was instructed by CIA to keep Contra personnel at arms length following the 1984 funding cutoff. He says he has no knowledge of Contras using Ilopango for drug trafficking.
1058. A senior CIA officer who was aware of CIA activities at Ilopango does not recall learning of any specific allegation relating to Contra use of Ilopango to support any drug trafficking activities. He does, however, recall that there were unsubstantiated drug-related allegations against Contra pilot Marcos Aguado.
1059. Another senior officer recalls that he asked the officer who was closely aware of events at Ilopango to look into allegations of drug trafficking by the Contras or others and that the officer was never able to confirm any of the allegations.
1060. A third senior officer who had some awareness of activities at Ilopango says he has no knowledge of Ilopango being used by the Contras for drug trafficking.
1061. Another officer who possibly would have been aware of activities at Ilopango says he knows of no Contra drug trafficking activity at Ilopango and opines that the Salvadoran Ilopango base commander, General Bustillo, would not have tolerated such activity.
1062. Another retired CIA officer who frequently visited Ilopango says that he has no recollection of Contras coming through Ilopango during his tour in Ilopango. "I can be definite that [the Contras] never came to my attention," he says.
1063. An officer who says he met former DEA Special Agent Celerino Castillo in Guatemala and, on one occasion, worked with him and others on a project unrelated to the Contras, recalls Castillo discussing suspected narcotics trafficking at Ilopango, but recalls that Castillo made no specific reference to possible Contra involvement in those activities. Contrary to Castillo's claims, this officer emphatically denies that he had any knowledge of Contra drug trafficking activities at Ilopango or elsewhere. He also denies that he made any statement to Castillo relating to such knowledge. He also denies that he ever asked Castillo to back away from any narcotics investigation.
1064. Felix Rodriguez retired from CIA in 1976. He was an advisor to the Salvadoran military in a private capacity at Ilopango from February 1985 until the late 1980s.⁽³⁶⁾ Rodriguez also assisted the Private Benefactors at Ilopango in providing aid to the Contras. Rodriguez states that he has no knowledge of any alleged Contra drug trafficking activities being conducted from Ilopango or elsewhere. Rodriguez also says he personally knew the U.S. citizen in El Salvador, that he dealt with the Salvadoran military as a salesman of various military related equipment and that he had no apparent links to the Contras. Rodriguez denies having any knowledge of any alleged drug trafficking by the U.S. citizen, but says he understands that he was banned from making further sales to the Salvadoran military when Salvadoran officials determined that he was allegedly charging the Salvadoran military exorbitant prices for military equipment.
1065. Individual Statements: DEA Personnel. A DEA intelligence analyst recalls that he participated in DEA's review of Castillo's allegations regarding drug trafficking activities at Ilopango. The analyst also states that he participated in DEA's coordination of the January 21, 1987 Memorandum from Acting DCI Robert Gates regarding allegations of Contra drug trafficking that was requested by Assistant Secretary of State for INR Morton Abramowitz. He recalls that DEA found no information to support Castillo's allegations linking the Contras to drug trafficking. "It was [DEA's] experience that all of the Contra allegations lacked substance . . . ," he asserts.
1066. Individual Statements: A U.S. Citizen. The U.S. citizen denies any involvement in smuggling weapons or drugs. He says he never worked for CIA and was never recruited to work for CIA. He also says his only connection with the Contras was that he once met "one Contra pilot" briefly. He says he does not recall the pilot's name or the particular circumstance of the meeting. The U.S. citizen claims that Salvadoran authorities allowed him to utilize Hanger 3--not Hangars 4 or 5--at Ilopango to install equipment in Salvadoran military helicopters. According to the U.S. citizen, CIA controlled Hangars 4 and 5 and he never entered those hangars.
1067. Information Sharing with Other U.S. Government Entities. In addition to the instances described earlier wherein information relating to alleged drug trafficking at Ilopango was shared with DEA, allegations that Ilopango air base may have been used by the Contras for drug trafficking were discussed in the January 21, 1987 Memorandum from Gates to Abramowitz concerning alleged Contra drug trafficking connections that was coordinated with other Intelligence Community agencies and DEA prior to its dissemination. According to the Memorandum:

      In March 1986, DEA/Guatemala began receiving reports of suspicious activities at Ilopango Airfield in San Salvador, El Salvador. According to . . . DEA [information], a hangar at the airfield was being used by traffickers to store cocaine en route to the U.S. The hangar reportedly was being used in transporting arms to the Contras. DEA/Guatemala investigated these reports and decided there was insufficient evidence to warrant pursuing a drug investigation. DEA did, however, inform the U.S. Customs Service of other information discovered in the course of the investigation that related to possible weapons smuggling activity.

1068. In a January 21, 1987 letter to Abramowitz that accompanied the Memorandum regarding alleged Contra drug connections, ADCI Gates discussed DEA plans regarding allegations of drug-related activity at Ilopango:

      We are told that DEA Headquarters plans to follow up on the matter of the adequacy of DEA/Guatemala's investigation of alleged drug trafficking at Ilopango Airfield in El Salvador . . . . DEA will report additional information as it becomes available. The Intelligence Community has no information independent of DEA regarding this matter.

1069. A March 31, 1988 Office of Congressional Affairs Memorandum for the Record indicates that SSCI Staff Director Sven Holmes was provided a copy of the Gates-Abramowitz Memorandum on March 29, 1988.

      To what extent did CIA disseminate "finished intelligence products" that included information about drug trafficking on the part of individuals, organizations, and independent contractors associated with the Contras?⁽³⁷⁾

1070. The Analytic Environment. Agency analysts who were responsible for counternarcotics issues during the 1980s indicate that three factors accounted for the small number of finished intelligence products during the 1980s that related at all to the Contras and narcotics trafficking. First, Central America in general was not a high priority counternarcotics target for the Agency before 1986. This reflected primarily the focus of U.S. Government policymakers on Latin American drug suppliers, in particular the Medellin Cartel in Colombia. According to a CIA officer, who was Assistant National Intelligence Officer (NIO) for Narcotics from 1984 to 1986 and Chief of a division in the DI's Office of Global Issues (OGI) dealing with international narcotics from 1986 to 1989, the counternarcotics effort was "consumed" with the Medellin Cartel because it was the main actor in the cocaine trade. The Agency concentrated on targets, such as the Cartel, as to which DEA had operations underway or in the planning stages that intelligence could support.
1071. The CIA officer recalls that Central America was on the screen occasionally because the Colombian cartels were setting up alternative transit routes there--particularly in Guatemala and Nicaragua--in an effort to circumvent the U.S. interdiction effort. Even so, the region was "just a blip on the scope" for the most part. This CIA officer and several other Agency analysts note that, with respect to Nicaragua, the U.S. policy focus was on the Sandinista Government's involvement in narcotics trafficking--not on that of the Contras. The policymakers, one analyst asserts, really wanted to "get" the Sandinistas on this subject.
1072. The second factor, which was a consequence of U.S. policymaker priorities, was that the DO assigned a low priority to collecting intelligence concerning the Contras alleged involvement in narcotics trafficking. As a result, Agency analysts had only a small number of reports on which to base their analysis. According to CIA records, only three DO reports regarding Contra drug trafficking were found to have been disseminated between October and December 1984. These were the reports describing the alleged agreement between Pastora's associates and a Miami-based drug trafficker involving material support for the Contras in return for the trafficker's access to the Southern Front's pilots and landing strips.
1073. Furthermore, the reports were disseminated as "Sensitive Memorandums," a format that required strict access control. The internal dissemination lists for the reports indicate that all three were shared with the Directorate of Intelligence's (DI's) Office of African and Latin American Analysis and with the National Intelligence Officer (NIO) for Latin America. The NIO for Narcotics received two of the three reports. However, the Office of Global Issues (OGI), which was responsible for counternarcotics analysis in the DI, did not receive copies of the reports. Further, the strict access controls made it difficult for analysts to incorporate information from the reports into finished intelligence products that would have a broader dissemination.
1074. The analyst who drafted a Memorandum for Vice President Bush in April 1986 that related to potential Contras' involvement in drug trafficking recalls that OGI analysts who worked on counternarcotics issues were not aware of those reports at the time--October to December 1984--that they were first disseminated inside and outside the Agency. However, she says that CATF Chief Fiers did make the reporting available to her in April 1986, stipulating that it could be used only for the Memorandum she was preparing for Vice President Bush.
1075. A CIA officer, who was a Division Chief in ALA from 1984 to 1986, says that he does not recall any significant reporting in autumn 1984 with respect to the alleged agreement between Pastora's associates and Miami drug trafficker Morales. Nor does he recall any credible narcotics reporting during his tenure that would have merited treatment in a finished intelligence product.
1076. The Assistant NIO and the then-NIO for Latin America say that the DI was largely unaware of the totality of DO reporting on the issue of Contras and narcotics trafficking. The former of the two officers notes that there was a sharp divide in those days between the DO and DI narcotics analysis and there was not a "free flow of information." He states that, although the DO would cooperate in providing information for certain high priority tasking such as the January 21, 1987 Memorandum from ADCI Gates to Assistant Secretary of State Abramowitz, the DO had to be pulled along on the counternarcotics effort for the most part. The former of the two officers adds that the DO became very engaged in Latin America after April 1986.
1077. The then-NIO for Latin America says that ALA's Division and the DO's LA Division had an agreement that the ALA analysts could review relevant operational cables. LA Division, however, determined what was relevant, and "so-called administrative traffic" involving DO assets was off limits. Further, he states that the DI and National Intelligence Council did not believe that the Contras were an effective insurgent force, thus causing problems for CATF. Consequently, he says, he always felt that Fiers was not showing the analysts any reporting that would cause problems for the Contra program. He cannot document what reporting might have been withheld from him "because . . . you don't know what you're not seeing."
1078. The former ALA Division Chief says that the relationship between his DI division and CATF was fairly collaborative even though Fiers would not be at the top of his list of good collaborators. He asserts that Fiers "played a lot of things close to his vest" as he should have. However, everything of substance was fully discussed among Assistant Secretary of State Elliott Abrams, Fiers and the NIO/Latin America. He recalls discussions of Contra stealing, smuggling and other wrongdoing, but no discussion of narcotics trafficking. Narcotics was not one of the topics of concern at the time.
1079. An officer, who served as LA Division Chief of Reports from 1979 to mid-1984 and then served as the ALA Division Chief's deputy in the DI until 1986, says that she is not aware that anyone associated with the Agency suppressed reporting concerning drug trafficking by the Contras. She avers that she would have been "in Fiers' face" were he to "fool with the information to make [CIA] look good." Concerning the lack of finished intelligence concerning the Contras and drug trafficking, she states that the issue would not become apparent without DO reporting, and the analysts would keep whatever information became available in a file until there was a reason to do something with it.
1080. The third factor explaining why very little finished intelligence was produced by the DI regarding Contra drug trafficking was that Agency analysts had limited access to reporting from federal law enforcement agencies at the time. The former ALA Division Deputy Chief points out that DEA, not the DO, was the primary collector of narcotics trafficking information in the early 1980s. Along these lines, one DI analyst recalls that DEA was even reluctant to provide this reporting, probably because it pertained to ongoing investigations.⁽³⁸⁾ A senior DI officer recalls that CIA analysts had routine access to strategic and tactical DEA intelligence reporting, but not to law enforcement investigative and operational information.
1081. CIA only disseminated three finished intelligence products during the 1980s that related at all to potential Contra involvement in narcotics trafficking. These were: (i) a 1985 National Intelligence Estimate (NIE) concerning the international narcotics trade; (ii) an April 1986 Memorandum for Vice President George Bush; and (iii) the January 1987 Memorandum from Acting DCI Robert Gates to Assistant Secretary of State for Intelligence and Research Morton Abramowitz.
1082. 1985 National Intelligence Estimate. National Intelligence Estimate (NIE) 1/8-85, "The International Narcotics Trade: Implications for US Security," was published in November 1985. One paragraph dealt with trends in the "narcotics industry" and noted that the "continued expansion of trafficking routes through Central America" was of "particular concern because of the number of antigovernment insurgent groups active there." The paragraph went on to note:

We have no confirmed reports that link Central American insurgent groups with drug trafficking, but we cannot rule out the possibility that individual contacts have already occurred.

The estimate made no explicit reference to the Contras or any other specific insurgent group in Central America.

1083. A senior DI officer says that the Contras were not dealt with in the NIE because the focus of the estimate was on the "bad guys"--individuals, groups, and governments, such as the Sandinistas, that were hostile to U.S. interests. The Contras, he states, were regarded as friends and were outside the scope of the Estimate. There was never any discussion about including them; "it just never came up." The then-NIO does not recall any discussion among Intelligence Community analysts who participated in the production of the NIE concerning the acquisition of more intelligence reporting concerning insurgent groups and their ties to narcotics traffickers.
1084. 1986 Memorandum for Vice President Bush. On April 6, 1986, a Memorandum entitled "Contra Involvement in Drug Trafficking" was prepared by CIA at the request of Vice President Bush. The Memorandum provided a summary of information that had been received in late 1984 regarding the alleged agreement between Southern Front Contra leader Eden Pastora's associates and Miami-based drug trafficker Jorge Morales. Morales reportedly had offered financial and aircraft support for the Contras in exchange for FRS pilots to "transship" Colombian cocaine to the United States. CIA disseminated this memorandum only to the Vice President.
1085. The DI/OGI analyst who drafted the Memorandum says that there was no follow-up. Furthermore, the analyst recalls no further DI discussion of the Contras' alleged involvement in drug trafficking until the Memorandum that was written for Assistant Secretary of State Abramowitz in 1987.
1086. 1987 Memorandum for Abramowitz. The most comprehensive discussion of alleged Contra narcotics trafficking was included in a January 21, 1987 Memorandum from Acting DCI Robert Gates to DoS Assistant Secretary for Intelligence and Research Morton Abramowitz. The genesis of this Memorandum, entitled "Assessment of Alleged Connections Between Drug Traffickers and Anti-Sandinista ('Contra') Groups," was a January 9, 1987 memorandum from Abramowitz to then-Deputy Director of Central Intelligence Gates indicating that Assistant Secretary of State Elliott Abrams had expressed concern about the possible involvement of Contras in narcotics trafficking and had requested an Intelligence Community study "on an urgent basis." The memorandum from Abramowitz indicated that Abrams wanted the study "to pull together all foreign and domestically-generated information that is available, rumors and all, and provide an assessment of the credibility of the charges." Further, the memorandum to Gates indicated:

      The Assistant Secretary believes that it is essential that we know before the rest of the world if any of those whom we have funded are engaged in this business so that they can be expelled from the ranks of the resistance.

1087. The Memorandum to Abramowitz was written under the auspices of the NIO/Narcotics and was drafted jointly by officers from the DO and the DI's Office of African and Latin American Analysis. In addition to DO reporting, the assessment relied heavily on DEA information. Six topics were addressed, including:
      • Allegations discussed in three disseminated DO reports of October, November and December, 1984 concerning Pastora, Adolfo Chamorro, Gerardo Duran, David Mayorga, and Jorge Morales;
      • Statements to FBI and DEA undercover agents by Orlando Bolanos, who claimed to be in command of an anti-communist movement in Nicaragua called the " Internal Front," that he planned to smuggle cocaine into the United States;
      • The Frogman Case, which involved Nicaraguan drug traffickers who had been apprehended in early 1983 while swimming ashore near San Francisco, including information indicating that an unnamed suspected drug trafficker had placed 51 calls to a telephone in the FDN office in San Francisco that was later learned to have been listed to one of the defendants in the case. The defendant's name was not given;
      • "Suspicious activities" at Ilopango air base in El Salvador;
      • An allegation that Roger Herman, political director for the Contra group, KISAN, was involved in cocaine smuggling into the United States; and
      • Allegations that the ranches of "two [unnamed] U.S. nationals" in Costa Rica, were used to smuggle weapons to the Contras and cocaine into the United States.

1088. The Memorandum prepared for Abramowitz concluded that there was "no indication that anti-Sandinista groups that have received or now are receiving support from the U.S. Government have engaged in drug trafficking to fund their operations." Moreover, according to the Memorandum, DEA and FBI officials, along with Intelligence Community leaders, said that "no credible information exists to support" allegations of Contra involvement in drug trafficking that "have surfaced over the past four years, particularly when renewed funding for the Nicaraguan insurgency was under consideration in the U.S. Congress."
1089. The Memorandum also concluded that, if Contra organizations had unwittingly received donations from sympathizers who derived the funds from drug trafficking:

      . . . our best judgment is that the donations probably reflected personal decisions on the part of the donor rather than an organizational effort on the part of an anti-Sandinista group.

      Further, the Memorandum stated that "we have no information suggesting Pastora's personal involvement" in the alleged agreement between his associates and Miami drug trafficker Morales, but "he may have been aware of them given his apparently close association with these individuals."

1090. A January 21, 1987 transmittal letter that ADCI Gates attached to the Memorandum when it was sent to Abramowitz indicated that the Memorandum was being released with two qualifications:
      • DEA Headquarters planned to follow up on the matter of the adequacy of a DEA investigation of alleged drug trafficking at Ilopango.
      • The U.S. Customs Service was investigating allegations by Mario Calero that crew members working for Southern Air Transport might have been involved in drug trafficking.

      The transmittal letter concluded with the observation that:

      . . . as future drug trafficking cases surface it is likely that we will see more assertions of Contra connections. Such assertions may take the form of self-serving stories by traffickers for use in their legal defenses as well as allegations by the Sandinistas to discredit the insurgents.

1091. According to a senior DI officer, Gates made it clear in commissioning the Memorandum that the issue raised by Abrams and Abramowitz must be addressed "head on and let the chips fall where they may." This officer recalls that the core judgment of the analysts involved in producing the Memorandum was that only a handful of Contras might have been involved in drug trafficking. No one believed, he recalls, that there was a major conspiracy or drug trafficking network at play. Concerning the Ilopango issues, the senior DI officer states that DEA had sent a DEA officer to El Salvador to investigate and the officer had concluded there was no substance to the allegations.
1092. A March 31 1988 MFR by OCA Director John Helgerson indicated that SSCI Staff Director Sven Holmes had been provided a copy of the January 21, 1987 Memorandum that had been prepared for Assistant Secretary of State Morton Abramowitz.

      To what extent did CIA share information with Congress regarding allegations of drug trafficking on the part of individuals, organizations, and independent contractors associated with the Contras? ⁽³⁹⁾

1093. CIA records indicate that CIA notification to Congress regarding allegations of drug trafficking occurred primarily in response to congressional inquiries until 1984 and did not focus on the Contras specifically. For example, on July 14, 1982, DDCI John McMahon testified before the SSCI concerning the issue of "United States Government Current and Projected Efforts on International Illicit Drug Trafficking." The questions posed to McMahon at that time by the SSCI Staff related to the overall Intelligence Community strategy and reporting responsibilities concerning the narcotics issue. The relevant portions of the SSCI transcript of this hearing contained no explicit references to any connection between the Contras and drug trafficking.
1094. DO "Nicaraguan Program Summary" Information. As mentioned earlier, three intelligence reports were disseminated by the DO to senior officials in the intelligence and law enforcement agencies between October and December 1984. These reports indicated that senior Southern Front leaders associated with Eden Pastora had concluded a mutual assistance agreement with Miami-based drug trafficker Jorge Morales. During the fall of 1984, the information provided was also reported in a CIA publication titled the "Nicaraguan Program Summary," a weekly report that was provided to the SSCI at its request. The weekly publication emphasized military activities, but also reported information about "funding, arms and other materiel assistance obtained by the Contras from (or promised by) third governments and private sources."
1095. The information first appeared in the DO "Nicaraguan Program Summary - Week Ending 21 October 1984," dated October 24, 1984. This edition included a special entry entitled "Private Support" that stated:

Adolpho [sic] Chamorro and Marco Antonio Aguado said that the FRS had obtained in early October 1984 two helicopters and one fixed wing aircraft. This support was reportedly the result of Chamorro's and Aguado's recent trip to Miami to secure funds and material support for the FRS.

1096. Another DO "Nicaraguan Program Summary - 14-28 October 1984," dated October 28, 1984, provided additional information to the SSCI:

      Unconfirmed reports have been received which tie Pastora and several command-level members of his organization with [sic] drug smuggling operations in the United States. According to these reports, the FRS reached an agreement with an unidentified Cuban narcotics trafficker in Miami to provide operational facilities in Costa Rica and Nicaragua plus assistance with Costa Rican Government officials in obtaining documentation. In exchange, the FRS would receive financial support, aircraft, and pilot training. We have relayed this information to appropriate law enforcement agencies and will apprise the Oversight Committees of additional developments.

1097. The DO "Nicaraguan Program Summary - Week Ending November 11, 1984," dated November 11, 1984, provided still additional detail:

      In late October 1984, negotiations were allegedly completed whereby a Colombian narcotics trafficker would support the FRS with funds and aircraft in exchange for the use of FRS pilots in the drug trafficker's narcotics activities. Under the terms of the agreement, the FRS would provide an unspecified number of pilots for use in narcotics transportation in exchange for the loan of a Cessna 404 aircraft for use in FRS military operations in Costa Rica and El Salvador as well as monthly payments of U.S. $200,000. Information at this time suggests that this drug operation is part of the activity previously described in the last Nicaragua Program Summary. We are in the process of acquiring additional details and are coordinating future actions with the Department of Justice.

1098. Other Information Sharing with Congress. On January 29, 1985, the Agency forwarded to Steven Berry, HPSCI Associate Counsel, a response to a question he had raised regarding Pastora's possible consummation of a working arrangement with Colombian drug dealers. The Agency response noted that "all relevant details have been reported in the Nicaraguan Program Summary." The response added that:

      To summarize . . . intelligence reporting indicates that members of Pastora's organization (FRS) have agreed--either with Pastora's direct knowledge or tacit approval--to provide pilots and landing strips inside Costa Rica and Nicaragua to a Miami-based Colombian drug dealer in exchange for financial and material support. Information pertaining to Pastora's involvement in drug trafficking has been forwarded to the appropriate Enforcement Agencies.

1099. On January 6, 1986, the SSCI requested Agency comments concerning a December 27, 1985, Washington Post article entitled "Nicaragua Rebels Linked to Drug Trafficking." A similar request was levied the next day by HPSCI Staff Director Tom Latimer. CIA's reply to both Committees was provided on January 22, 1986 in a letter signed by ADCI McMahon. The letter described the Agency's knowledge of Adolfo Chamorro's involvement with Morales, provided information about other contacts Chamorro had with suspected drug traffickers and offered a briefing concerning Chamorro's activities. In addition, the letter mentioned Gerardo Duran's arrest in Costa Rica and Duran's connection to Morales.
1100. According to a May 7, 1986 MFR prepared by Louis Dupart of CATF, CIA representatives met with Richard Messick, Chief Counsel of the Senate Foreign Relations Committee (SFRC), on May 7, 1986. Messick reportedly called the meeting to "permit members of Senator [John] Kerry's staff to outline in greater detail information which they had uncovered that pointed to violations of U.S. law"--primarily related to the activities of John Hull. According to this MFR, William Perry of the SFRC staff, Charles Andreae of Senator Richard Lugar's staff, and Ronald Rosenblith, Jonathan Winer and Dick McCall from Senator Kerry's staff represented the Congress. CIA was represented by John Rizzo, OCA Legislative Affairs Chief; George Jameson, Counsel to the DDO; and Louis Dupart, CATF Policy and Plans Chief. DoS was represented by William Walker, Deputy Assistant Secretary of State for Inter-American Affairs; Ambassador Duemling, Director/NHAO; and a representative from the DoS Office of the Legal Advisor. Representatives from Justice, FBI, and DEA also attended. The Dupart MFR concluded that:

      . . . Overall, the meeting was not fruitful. Kerry's Staffers were unwilling to provide details or identify their sources. Without this information it was impossible to meaningfully rebut the allegations that have been made of violations of U.S. law.

1101. According to a May 8, 1986 MFR written by a CATF officer, she, Rizzo, Dupart, and David Pearline, met with SFRC Chief Counsel Messick again that day to continue discussions about Senator Kerry's investigation:

      Messick feels that Kerry's staff sandbagged him by not providing all of the relevant correspondence. He noted that he had received a letter written by the U.S. Attorney in San Francisco that refuted the [drug] charges that members of the [Contras] had been involved in drug smuggling.

      The MFR also noted discussions in this meeting regarding the nature of the information that American journalists Tony Avirgan and Martha Honey had to support their allegations of murder, attempted murder and drug smuggling and the relationship of their witnesses to the Kerry investigation. According to the MFR, Messick said that:

      [Senator] Kerry called Senator Lugar on 7 May . . . to request a five day hearing on his allegations . . . . Lugar was apparently not sympathetic and told Kerry that he will have time to air his information but will not have five days of hearings on his allegations alone. Messick said the hearing will be in early June and will probably be two morning sessions.

1102. Additionally, the May 8, 1986 MFR stated that Messick was told that the FBI had "extensive information on the people who had been interviewed by Kerry's staff . . . . " Dupart reportedly told Messick that "[Dupart] could not discuss in detail the information provided by the Bureau" and that Messick "would have to go to the Bureau for the details." The MFR stated that the meeting lasted one hour and a half and "at the end it was agreed that we would keep in touch."
1103. An August 1, 1986 MFR from Dupart to CATF Chief Fiers and the LA Division Chief recorded a July 9, 1986 meeting with HPSCI Staff member Mike O'Neil on John Hull. According to the MFR, the meeting was held in CATF Chief Fiers' office. Dupart wrote in his MFR that Fiers noted that:

      We have no information of Hull having been involved in violations of U.S. law. Further, since we are not a law enforcement agency, we have not collected or sought any information on this. Consequently, while it is possible that Hull had in fact violated the law, we have no knowledge of any violations. We would have reported them to the Department of Justice per standard Agency procedures.

      The MFR further stated that, in response to other questions from O'Neil, Fiers said that Pastora had voluntarily renounced his role as a resistance leader.

1104. A March 5, 1987 MFR written by OCA's Robert Buckman indicated that Fiers and the ALA Deputy Director briefed SSCI members and staff concerning Nicaragua that same day. The MFR noted that those attending the briefing had been informed that "the BOS risked losing its U.S. aid if it did not fully sever its ties with Adolfo "Popo" Chamorro" because of his possible involvement in drug dealing.
1105. An April 30, 1987 CATF MFR indicated that CATF Chief Fiers briefed the SSCI concerning the Nicaraguan program on the same date. According to the MFR, Fiers explained the allegations regarding Southern Front involvement with drug trafficking dating back to late 1984. Fiers stated that, on learning of the arrangement that was made between Jorge Morales and senior ARDE leaders, CIA had "turned [the matter] over [to] DEA." The MFR also stated that Fiers had added that Octaviano Cesar--brother of BOS leader Alfredo Cesar--had a close relationship with Morales and that Cesar was questioned when this connection became known and Cesar's answers caused CIA to conclude that Cesar was probably involved in drug trafficking. Further, Fiers told the SSCI that the DO had learned that one of its air crew subcontractors was under indictment in Detroit and that CIA was now asking the FBI and DEA to run traces on all subcontractors involved in the Contra program.
1106. CIA received a letter from Representative Charles B. Rangel, Chairman of the U.S. House of Representatives Select Committee on Narcotics Abuse and Control, dated May 14, 1987, requesting information concerning Contra drug trafficking as a result of media allegations. A May 28, 1987 response by the CIA Director of Congressional Affairs, David Gries, denied "any allegation that the Agency was involved in drug trafficking in support of the Contras."
1107. A July 15, 1987 memorandum from OCA Officer Robert Buckman to OCA Director Gries, stated that convicted narcotics trafficker Jorge Morales had testified that same day before the SFRC Subcommittee on Terrorism, Narcotics, and International Operations regarding Contra drug trafficking and gun running. The memorandum stated that Morales had implicated the Agency in drug trafficking, but the memorandum did not describe any specific allegations by Morales.
1108. After Morales' appearance before the SFRC Subcommittee on Terrorism, Narcotics and International Operations, Fiers was called to testify before the SSCI on July 31, 1987. According to the SSCI transcript of that testimony, Fiers summarized CIA information concerning possible Contra involvement in drug trafficking. In his opening remarks, Fiers stated:

      What we have found to date is that none of the people currently involved in the resistance leadership, armed or political, have any--we have uncovered no indications that any of these individuals are involved or have been involved in narcotics trafficking.

      Fiers noted, however, that there was one resistance leader--unnamed by Fiers--who might be involved in trafficking and that he was under "active investigation."⁽⁴⁰⁾

1109. Fiers added in his testimony that:

      We have a significant body of evidence with regard to involvement of the former members of ARDE in the Southern Front--Pastora's people--being directly involved in cocaine trafficking to the United States and as part of an effort to maintain and fund their organization during the period of cutoff after May of 1984.

      Conversely, we have never found any evidence indicating that the FDN or those around the Northern Front, as it is known today, have been involved in cocaine or any drug dealings, and we have looked very closely at that . . . .

      I believe personally, based on the evidence that I have seen, that there is a basis in fact for the claims that Jorge Morales has made in his testimony and in his public statements, that he was involved with members of ARDE in cocaine smuggling.

      We first began to develop information on that involvement in October of 1984. There were some vague indicators of problems prior to that in the 1983 time frame, but nothing specific.

      Also during his July 31, 1987 SSCI testimony, Fiers described what was known to CIA about narcotics allegations concerning the unnamed resistance leader and Contra-related personnel Marcos Aguado, Octaviano Cesar, David Mayorga, Adolfo and Roberto Chamorro, and Gerardo Duran.

1110. An August 3, 1987 OCA MFR by Buckman recorded a meeting of SSCI and OCA officers that day. Attending for the SSCI were Staff Director Sven Holmes, Jim Dykstra, Dave Holliday, Keith Hall, and Britt Snider. David Gries, Al Dorn, and Robert Buckman represented OCA. According to the MFR, Holmes questioned CIA's use of Alan Hyde in the Contra supply program in light of allegations of drug-related activities by Hyde. The MFR indicated that Fiers was contacted by telephone during the meeting and reportedly stated that Agency policy was that persons such as Hyde could be used in the Contra program if there were no ongoing investigations of wrongdoing or no outstanding indictments.
1111. An October 14, 1987 OCA MFR indicated that in a briefing to the SSCI Staff on that same day, Fiers provided SSCI Staff members additional information about a Contra leader who might be involved in drug trafficking and to whom Fiers had referred in his July 31 testimony. He told Staff members that regarding the Contra leader--Jose Davila--as a result of questioning by CIA Security, there were major concerns regarding narcotics-related issues.
1112. A December 22, 1987 letter from DCI Webster to Senator Kerry of the SFRC stated that Webster:

      . . . welcomed the opportunity to meet with you and discuss your concerns about John Hull and your request for assistance in the Subcommittee's narcotics investigation. This is the kind of open and unencumbered exchange that I believe we must have between the Agency and Congress.

      The Webster letter also stated that:

      Concerning John Hull, I can assure you that he is not receiving any support from the Agency, and we have no reason to believe that any other element of the United States Government is supplying such support. As you will recall, you were briefed on John Hull on 15 October 1986 following the Hasenfus crash. My staff is prepared to provide you with an update if you wish.

      The Webster letter also stated that Webster wanted to assure Senator Kerry "once again that you will enjoy this Agency's fullest possible cooperation during the course of the Subcommittee's investigation."

1113. John Helgerson, Director of the Office of Congressional Affairs from January 1988 to March 1989, says that CIA attempted to comply with requests for information from committees of Congress--such as the SFRC--other than the intelligence oversight committees by coordinating the requests and Agency responses. He says:

      We in OCA worked over an extended period of time with the SSCI staff to identify what they thought to be information appropriate to the needs of the non-intelligence committees. To the extent of my knowledge, we provided that without reservation [and] considered that "full disclosure" as it fully met the requests of those committees legitimately engaged in the oversight of the CIA.

1114. A January 4, 1988 OCA MFR by Buckman indicated that CATF provided a summary briefing for SSCI concerning the Nicaraguan program on the same date. At the briefing, Senator Bill Bradley inquired about allegations of drug trafficking, and Fiers responded that "Pastora had been involved with Colombian trafficking but that the FDN was clean."
1115. A February 2, 1988 OCA MFR, regarding a January 27, 1988 meeting, indicated that Senator Pete Wilson of California was briefed by CATF regarding allegations of human rights abuses and drug trafficking by the Contras. According to the OCA MFR, Senator Wilson was informed by a CATF officer that:

      . . . we look into the allegations periodically and are assured that there is no drug running going on among groups the US supports. We have had some evidence that two people close to Pastora were implicated in drug trafficking in 1984.

1116. A March 31, 1988 MFR by OCA Director John Helgerson indicated that SSCI Staff Director Sven Holmes had been provided a copy of the January 21, 1987 memorandum that had been sent by ADCI Robert Gates to Assistant Secretary of State Morton Abramowitz. The memorandum, entitled "Assessment of Alleged Connections Between Drug Traffickers and Anti-Sandinista ('Contra') Groups," was reportedly coordinated through the Intelligence Community and DEA and contained an assessment of alleged Contra-related narcotics trafficking. It concluded that "no credible information exists to support" allegations of Contra involvement in drug trafficking that had been made over the previous four years.
1117. A February 23, 1988 OCA MFR documented one of a series of weekly meetings between OCA representatives and SSCI Staff members. These meetings resulted from a request for information by Senators Kerry and Pell of the SFRC, via the SSCI, for documents relating to the Contras and drug trafficking. The MFR stated:

      A meeting has been held between Senator Kerry with [sic] Senator Boren . . . to arrange for SSCI to acquire Agency records on allegations that profits from drug trafficking were channeled to the Contras. Senator Kerry claimed that there were CIA cables which had not been released to the Iran/Contra Congressional investigation.

1118. A March 14, 1988 letter from Senator Pell to Senator Boren referred to discussions between SFRC and SSCI Staff members. The letter stated that "the CIA has a number of documents in its files relating to narcotics and the contras. Specifically, these documents consist of cables to and from Central America which originated with the CIA." The letter made a SFRC formal request to the SSCI for assistance in gaining access to "the above mentioned documents."
1119. A March 15, 1988 OCA memorandum from OCA to a DO Legal officer and LA Division asked for a status report regarding a request from Senator Kerry for Agency information concerning Contra financial support from drug trafficking. The memorandum stated that LA Division was supposed to be reviewing cables Kerry claimed had not been released to the Iran-Contra congressional investigation.
1120. A March 22, 1988 MFR by OCA officer Buckman described a meeting with SSCI Staff members who again asked about the status of Senator Kerry's request for documents relating to the Contras and narcotics. According to the MFR, the SSCI interpreted the request to include "all cable traffic relating to narcotics and Panama, Costa Rica, Nicaragua, Cuba, the Contras, and [John] Hull."
1121. A March 24, 1988 memorandum from OCA Director Helgerson to DDO Richard Stolz, DDI Richard Kerr, the LA Division Chief , and three other component officers noted that Senators Kerry and Pell and the SSCI Staff were seeking information concerning narcotics reporting--specifically "CIA cable traffic [operational traffic and DO intelligence reports] on . . . the Contras and drugs." The memorandum commented that "realistically, we are likely to have to respond somehow--fairly quickly--to the Kerry and Pell requests regarding when we knew what, without passing raw reporting or operational traffic to the SSCI." The memorandum then outlined a strategy of providing DI finished intelligence products, rather than raw reporting, to the SSCI.
1122. A March 31, 1988 MFR by OCA Director Helgerson summarized a meeting with SSCI Staff members on March 29, 1988. The MFR stated that Helgerson provided the SSCI with a collection of materials that responded to the Kerry and Pell requests. According to the MFR, Helgerson pointed out to the Staff members that the collection did not include relevant material that had already been passed to the SSCI and consisted of, for the most part, finished intelligence products that reflected "all significant, substantive information available to the Agency on the questions raised by the Senators." The MFR said that the Helgerson noted that the package:

      . . . did not include, and we have been unable to identify, any significant new body of CIA information not previously passed to the Congress, such as is alleged to exist by Senators Kerry and Pell . . . . We at CIA are committed to no further action at this point, but I have no confidence that the subject will not come up again fairly soon.

1123. "Talking Points," dated April 14, 1988, were prepared for DCI Webster's use with Senators David Boren and William Cohen regarding Senator Kerry's request to see all CIA cable traffic concerning the Contras and drug trafficking. Attached to the talking points was an April 1, 1988 MFR that summarized CIA's efforts to satisfy Kerry's request by providing him with finished intelligence products. Also contained in the Talking Points were two options to resolve the issue. One was to "ask the I[nspector] G[eneral] to review all relevant materials, including operational cable traffic. The DCI could offer to report on the IG's findings to the Intelligence Committee." The other was to assist the SSCI Staff in conducting its own in-depth review by providing "the detailed information on the Central American and other narcotics problems" to a member of the Staff. The Staff would have to obtain additional information from the other relevant agencies, such as DEA, to accomplish its review, according to the Talking Points.
1124. A March 28, 1988 memorandum from DDCI Gates to DDI Kerr and DDO Stolz asked that a briefing concerning Contra involvement in narcotics-related activities be given to the HPSCI and SSCI on April 1, 1988. The material prepared for that briefing as a result of this request included: (1) a narrative entitled "Allegations of Resistance Activities in Narcotics Trafficking," which stated that, "All allegations implying that the CIA condoned, abetted or participated in narcotics trafficking are false;" (2) a copy of a March 31, 1988 memorandum entitled "Pilots, Airlines and Shipping Companies Used in Resupply Efforts That May Have Had Past or Current Ties to Narcotics Related Activities;" (3) a July 31, 1987 MFR prepared by a DO officer that recorded Alan Fiers' July 31, 1987 testimony to the SSCI/HPSCI Staff regarding Contra Narcotics Trafficking Allegations; and (4) seven documents that provided information concerning the following Contra-related individuals and organizations--Mike Palmer, Octaviano Cesar, Aldofo Chamorro, Barry Seal, Marco Aguado, Markair, Sebastian Gonzalez, and David Mayorga. No information has been found to indicate whether this specific briefing was provided to the SSCI or HPSCI by Gates or any other Agency official.
1125. A May 3, 1988 OCA MFR summarized a meeting on April 22, 1988 between Dewey Clarridge and two Staff members of the House Judiciary Committee's Subcommittee on Crime. The MFR stated that Clarridge was interviewed regarding his knowledge of drug trafficking by the Nicaraguan Government or the Contras. According to the MFR, Clarridge discussed CIA's assistance to a 1984 DEA sting operation that resulted in the indictment of Federico Vaughn, an aide to Nicaraguan Interior Minister Tomas Borge, as a co-conspirator in a scheme to smuggle drugs into the United States. Clarridge reportedly was also asked a series of questions regarding alleged Contra involvement with drug smuggling. The MFR stated that Clarridge responded that these allegations arose after he left DO/Latin America Division--he was Chief of that Division from 1981 to 1984--and he was not in a position to comment on them.
1126. A May 18, 1988 letter from the Chairman and Vice Chairman of the SSCI to DCI Webster informed Webster that the SSCI was initiating an inquiry into "those aspects of the narcotics trafficking problem in Latin America that fall within the Committee's jurisdiction." The letter also conveyed a set of questions regarding Agency policy and procedure in general. One question focused specifically on Contra linkage to drug trafficking:

      When intelligence indicated drug involvement on the part of a Contra or Contra-[sic] supply personality or of a high-ranking military officer (e.g., in Honduras, Haiti or Panama), was this information highlighted for policy-makers in DEA, State and DoD, or brought to the attention of the National Drug Enforcement Policy Board (NDEPB) or an appropriate committee thereof? Did the handling of information pointing to US allies differ from that regarding our adversaries?

      (Underlining in original.)

1127. A June 9, 1988 DO MFR documented a June 8, 1988 meeting between SSCI Staff members and CIA personnel to review the questions the SSCI inquiry was going to address. The MFR indicated that the specific question regarding Contra linkage to drug trafficking "refers only to specific persons whom [CIA] can identify." The CIA's answer to this SSCI question was provided in a July 6, 1988 memorandum that stated:

      There were a few raw intelligence reports from DO field stations which indicated Contras or contra-supporters may have been involved in illegal narcotics trafficking. These reports were disseminated through regular intelligence channels to senior policymakers, including those at State, DIA, NSA and other appropriate agencies.

1128. On February 22, 1989, shortly after November 1988 allegations of drug trafficking by Juan Ramon Rivas Romero--a Northern Front Contra leader who had been jailed for drug trafficking prior to his association with the Contras--Deputy General Counsel for Operations John Rizzo advised DDO Stolz that:

      I agree that it would be prudent to advise HPSCI and SSCI of this matter, although I should note that when I mentioned this to John Helgerson last week his initial reaction was that the whole thing was too dated and trivial to warrant telling the committees . . . .

      My only suggestion is that if and when we notify we do it low-key and on the staff level, since I don't think we have anything to be defensive about.

1129. A March 10, 1989 MFR from OCA Deputy Director for Legislation John Golden advised OCA Director Helgerson that:

      . . . the incident involving [Rivas] some 10 years ago may be viewed by some as being more than trivial. I noted that Norm Gardner [the Deputy Director, House Affairs, OCA] indicated [Rivas] had not been [questioned by CIA Security] on this issue and his current whereabouts are unknown. I recommended to John Helgerson that the Committees be informed of the fact that we recently learned of this matter and wish to bring it to their attention. It is understood that we have no reason to believe [Rivas] was involved in narcotics beyond the mentioned incident . . . . John Helgerson . . . . subsequently told me that he would have the committee staff so informed.

1130. A March 15, 1989 CATF memorandum provided "Talking Points" for OCA use to brief the HPSCI and SSCI regarding Rivas. The memorandum outlined Rivas' involvement in drug activities in Colombia in 1979; his arrest, incarceration and escape; and briefly described his record as "the ERN/N[orth]'s most capable commander." It also noted that:

      Rivas is not on the Drug Enforcement Administration (DEA) "watchlist," and, according to DEA, there is no indication that Rivas is currently involved in illicit drug activity. Further, DEA considers the information on Rivas "historical" . . . .

1131. According to a March 15, 1989 MFR by OCA Deputy Director for Senate Affairs Buckman, SSCI Staff member David Holliday had been briefed that day concerning Rivas. Holliday reportedly had been informed that the Department of State had determined that Rivas "should be removed from his post and that Resistance leaders agreed." The same memorandum noted that Holliday stated "that he would inform the Committee. He did not regard this as a serious matter." According to a March 16, 1989 MFR drafted by OCA, HPSCI Staff member Mike O'Neil was briefed telephonically on the same date regarding Rivas. The MFR noted that O'Neil "appreciated the briefing but had no real comments or remarks to make."
1132. A March 16, 1989 briefing paper entitled "Outline for HPSCI Political Action Briefing on 17 March 1989" stated that CATF would brief HPSCI Staff members on March 17 regarding a list of topics. A March 28, 1989 CATF MFR reported that this briefing was accomplished on March 17, 1989 by the CATF Chief of Operations to HPSCI Staff members Dick Giza, Mike O'Neil, Duane Andrews, and Steve Nelson. The MFR also reported that the Chief of Operations briefed the HPSCI Staff members about allegations of drug trafficking concerning Rivas. He reportedly informed the Staff that the Department of State had decided that Rivas would be "separated from the Resistance" and that State had informed Contra leader Enrique Bermudez of this decision on March 14. In response to a question concerning U.S. Government support for Rivas, the Chief of Operations reportedly said that CIA was not planning to assist in resettling Rivas, that Rivas may have received family assistance funds from the Agency for International Development and that Rivas had never received a salary from the CIA.
1133. Individual Statements. John Stein, DDO from July 1981 to July 1984, says that he was not involved in the Contra program as DDO. DCI Casey and LA Division Chief "Dewey" Clarridge ran the Contra program but would keep him informed. Stein says he knew enough to brief Congress since Casey "was not welcome" in Congress to discuss this matter.
1134. The CATF Deputy Chief and Chief from 1982 to 1984, states that the HPSCI was kept fully informed of significant events in the Contra program on a weekly or biweekly basis. He does not recall allegations of drug trafficking by the Contras during his tenure, but notes that such allegations would have triggered "alarm bells" because of the politically charged atmosphere at the time.
1135. John McMahon, DDCI from June 1982 to March 1986, says that he did most of the briefings to Congress regarding "unsavory" issues, but does not recall briefing Congress regarding allegations of Contra drug trafficking. If there were a need to discuss issues in confidence, he would have done so with the Chairman and the Vice Chairman or Ranking Minority Member only. McMahon says that he would not let CATF do something that should not be done and that the ground rules were to be honest with Congress.
1136. An officer who was CATF Chief from 1982-1983 and LA Division Chief from 1986-1989, responded to written questions from OIG and wrote:

      . . . No . . . programs ever conducted by the Agency during my tenure was [sic] ever run as transparently as the Central American and Nicaraguan programs. Congressional members and staffers traveled frequently throughout the area and received extensive and detailed briefings on virtually every aspect of the program. Over a period of years the staffers became intimately familiar with the Contra program, and they would have been the first to call our attention to any problems in reporting on allegations of drug trafficking by Contras or Contra-related individuals.
      . . . .
      I do not remember participating in any briefing of Congressional members or staffers in regard to drug-related activities by the Contras or Contra-related individuals.

1137. Robert Gates, DDCI from April 1986 to January 1987 and May 1987 to March 1989 and ADCI from January to May 1987, says the Agency had an obligation to terminate its relationship with any asset suspected by law enforcement agencies to be engaged in drug trafficking. Gates says that he would not have made an exception and allowed the use of an asset who had past or present involvement in drug trafficking without getting it cleared through Congress and DoJ. Gates notes that, with the Agency's involvement in the Iran-Contra affair, it "needed to be purer than Caesar's wife."
1138. After the $100 million congressional funding authorization in 1986, Gates says there were many legislative enactments that affected the Contra program--what could or could not be done--and constant discussions with congressional staff members who were closer to the issues than individual Committee members. Gates says he went directly to the Chairman or Vice Chairman of the intelligence oversight committees when something was particularly sensitive. As ADCI, Gates says he met with the Chairmen or Vice Chairmen every two to four weeks, discussing a long list of items. According to Gates, representatives of the Agency's Office of Congressional Affairs accompanied him and wrote extensive memoranda of these meetings.
1139. Richard Stolz, DDO from January 1988 to December 1990, says he recalls no drug trafficking connection to the Contras. According to Stolz, the Agency's Counternarcotics Center took the lead in briefing Congress on counternarcotics matters.
1140. Current DCI George Tenet recalls that the SSCI held quarterly hearings on certain CIA activities while he was serving as an SSCI Staff member and Staff Director. Additionally, Tenet recalls that Senator Bill Bradley was personally interested in Nicaragua, received weekly or biweekly briefings on Nicaraguan covert action matters and regularly met with CATF Chief Alan Fiers and other U.S. Government policy officials regarding Nicaragua. Tenet does not, however, recall any briefings of the SSCI by Fiers concerning allegations of Contra involvement in narcotics trafficking.
1141. James Dykstra, former Minority Staff Director for the SSCI, says that biweekly briefings regarding the Contras were held at the request of Senator Bill Bradley who was the only Senator who regularly attended these briefings. Dykstra recalls that the Agency initially resisted the biweekly briefings and recorded transcripts, but ultimately agreed. Dykstra says that, in retrospect, it was good that Senator Bradley insisted on transcripts so issues were placed on the record. Dykstra recalls that Fiers also regularly briefed the SSCI Staff.
1142. Dykstra says that 1986-1987 was a "time of tension" due to the controversy over an Intelligence Oversight Bill. Dykstra says that former DCI William Casey also had strained relationships with Senator David Durenberger--then Chairman of the SSCI--and others in that time period. Dykstra says that, with all this tension, however, Fiers had developed an informal, friendly relationship with all the Senators and SSCI Staff members.
1143. Then-OCA Director John Helgerson states:

      . . . I did not undertake to provide all raw reporting of the DO to non-intelligence committees. I did work with the SSCI [Staff Director Sven Holmes] to provide other committees [sic] members with the material we and the SSCI judged met their needs within the limits of the guideline set by the DCI & [sic] DDO.
      . . .

      The general DCI & DDO policy was to provide no raw traffic to non-cleared people on non-intell[igence] Committees. I recall that perfectly. [Concerning the Kerry SFRC subcommittee request for CIA documents] we (CIA) and the SSCI negotiated some exceptions designed to meet the legitimate needs of the Congress. Most of the limited raw traffic shown was shown to the SSCI; less to non-SSCI staff.
      . . .

      The DCI's policy, and mine, was to give the SSCI & HPSCI everything appropriate to their inquiries. When requests came from those (oversight) committees for cable traffic and/or raw reports, we (DCI, DDO & me) negotiated with the Committees regarding what, exactly, they needed, & to my memory met their needs. When requests came from non-oversight committees, we negotiated with the SSCI and/or HPSCI on how best to respond.

      Helgerson says that his role as Director/OCA was to make sure that the appropriate DO and DI officers "hooked up" with Committee and Staff members to provide substantive briefings regarding the Contras as required. He states that OCA, however, relied on Agency components to provide full and accurate information to Congress. Helgerson does not recall briefings regarding Contras and narcotics trafficking." Helgerson notes:

      I do recall more general questions about Noriega, Contras, and drugs. Very few of these questions originated with the oversight committees--they were primarily passing on the questions of others, as I recall.

1144. Helgerson says that Senators John Kerry and Claiborne Pell, who were not on the SSCI, were driving SSCI Staff Director Sven Holmes and the other SSCI Staff members on the issue of Contras and narcotics. He says that the SSCI Members and Staff were not "taken" with the topic and were very frustrated by the tasking from Senators Kerry and Pell. Helgerson says that he recalls there were two problems from an Agency perspective. First, there was virtually no guidance from Senators Kerry or Pell in terms of the specific information they wanted regarding drugs and Contras --that is, Kerry and Pell were on a "fishing expedition" and would ask "Give us everything you've got" which was too broad. Second, he does not recall how much "raw traffic" could be provided in summary and how much could be provided to the non-cleared people working on the Kerry subcommittee. He says that he recalls that Agency officers sometimes showed documents to the Kerry Staff members in the SSCI secure office space.
1145. Helgerson says that he does not recall a concerted effort by the Agency to get to the bottom of the allegations of narcotics trafficking. The Agency, as he puts it, was in the intelligence business, not law enforcement.
1146. Helgerson says that he was never comfortable that he was providing the intelligence oversight committees with everything the Agency had on a particular issue because the Agency's information on any subject was held in multiple files and data bases and OCA had to rely on the DI and DO to conduct thorough searches and provide complete responses. He says he was less comfortable with DDO Clair George than with Richard Stolz who succeeded George as DDO in January 1988. Stolz, he recalls, encouraged a "much more cooperative attitude" in the DO's dealings with the Congress. However, he says he is not aware of any decision to withhold cable traffic from SSCI or HPSCI Staff members.
1147. Helgerson says that OCA representatives were not always present at all briefings of the committees, particularly CATF matters in which Fiers enjoyed great autonomy. Fiers, according to Helgerson, often dealt directly with the DDO and even the DCI. As to whether SSCI and HPSCI Staff members could make decisions or provide advice to Agency briefers on sensitive issues without consulting the Chairmen or Ranking Minority Members, Helgerson says that he was amazed at the level of sensitive issues on which Staff members rendered judgments.
1148. An officer who was a Central American COS from 1987 to 1989 and LA Division Chief 1989 to 1992, states in a written response to OIG questions that there was "constant" communication with the oversight committees during the time he was involved in Central American matters. He recalls that Staff members came to CIA Headquarters regularly for briefings and frequently visited field stations.

      Richard B. Still

      CONCUR:
      L. Britt Snider
      Inspector General
      
      Date 10/8/98

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