Background: The California Story
- The efforts of the Nicaraguan Contra organizations to unseat the Sandinista Government in Nicaragua spanned much of the 1980s but had their roots in earlier events. A 1911 treaty between the United States and Nicaragua gave the United States the right to intervene in Nicaraguan affairs, and U.S. Marines were dispatched to Nicaragua in 1912 to protect U.S. economic interests. The two-decade military occupation that followed helped foster the development of a guerrilla opposition, led by Augusto Cesar Sandino, that sought to rid Nicaragua of U.S. influence. The U.S. Marines left Nicaragua in 1933, but opposition to Nicaraguan National Guard Commander Anastasio Somoza Garcia, who had then assumed power, continued thereafter.
- In 1961, the Frente Sandinista de Liberacion Nacional (FSLN) was founded in Havana when Carlos Fonseca's Nicaraguan Patriotic Youth organization merged with Tomas Borge's Cuban-supported insurgent group. From its inception through the early 1970s, the FSLN was a marginal group that failed to marshal popular support or succeed in its low-level guerrilla war. The 1972 earthquake that devastated the capital city of Managua, however, changed the nature of the conflict. Support for the rebels increased because of the Somoza Government's profiteering from international relief efforts. Thereafter, fighting between FSLN elements and the National Guard steadily increased. The 1978 assassination of Pedro Joaquin Chamorro, editor of the opposition newspaper La Prensa, brought new protests that swept the country and swelled the ranks of the FSLN with new recruits. Additionally, non-Marxist resistance groups began to join with the FSLN, leading ultimately to the creation of a Broad Opposition Front. The Front sought to draw people from all economic classes, ages and professions into the anti-Somoza opposition.
- In February 1979, the U.S. Department of State (DoS) announced that the United States would suspend all new economic and military aid to Nicaragua because of Somoza's unwillingness to accept a negotiated settlement. The suspension of U.S. aid pulled the last support from under Somoza, and he fled the country in July. After Somoza's departure, Sandinista forces moved into Managua and assumed power. The United States quickly extended diplomatic recognition and offered aid. Despite the American actions, the new Sandinista Government turned increasingly against the United States and moved closer to Cuba and the Soviet Bloc. The Cubans were particularly active in educational programs that featured a strong pro-Marxist, anti-U.S. bias.
- The leadership of the post-Somoza Government, known as the Government of National Reconstruction (GRN), was initially a five-person directorate led by Daniel Ortega. It was composed of two FSLN members, a leftist intellectual and two moderate business representatives from the Broad Opposition Front. Before the inaugural session of a new national assembly, known as the Council of State, the FSLN unilaterally increased the total number of seats. This ensured FSLN control of the assembly and led the moderate business members of the directorate, Alfonso Robelo and Violetta Chamorro, Pedro's widow, to resign in April 1980.
- Despite promising free elections, free enterprise, an independent judiciary, and an end to political oppression, the Sandinistas seized television and radio stations, censored La Prensa, and established a Cuban-modeled internal security apparatus. In 1980, the Sandinista Government announced that it would not hold national elections until 1985. This convinced many Nicaraguans that the prospects for a true democracy were growing dimmer under FSLN dominance. In published statements, Sandinista officials expressed their desire for better relations with the United States and insisted that they had no intention of supporting insurgencies aimed at subverting their neighbors. Their actions, however, began to raise additional doubts. Weapons and equipment sent by Cuba through Nicaragua began making their way to rebels in El Salvador.
- During the Carter Administration, the United States was in "competition" with Cuba for the allegiance of the Nicaraguan Government and hoped that friendly relations could be maintained. Although President Carter authorized aid to the GRN, he also authorized support to the democratic elements in Nicaragua in the fall of 1979 because of the direction of the Sandinista's policies. In January 1981, Carter suspended financial aid to the GRN. The incoming administration of President Reagan continued this policy. Concern about the Sandinista's internal repression, their growing military force, their ties to the Soviet Bloc, and their support for the Salvadoran insurgency led Washington to consider ways to increase assistance to the regime's opponents. These opponents came to be called the Contras.
- Several groups of Contras began to emerge in the early 1980s. The Democratic Revolutionary Alliance (ARDE) and the Sandino Revolutionary Front (FRS) operated out of bases along Nicaragua's southern border with Costa Rica, while the Nicaraguan Democratic Force (FDN) operated out of camps in southern Honduras along Nicaragua's northern border. Initially, the FDN in the north was primarily composed of former National Guardsmen, although its membership and leadership diversified as the war progressed. ARDE and the FRS in the south were composed primarily of former Sandinistas. Following a merger of ARDE and FRS, both the FDN and ARDE/FRS relied on the U.S. Government for military and monetary aid. Both suffered significantly from the cessation by Congress of official U.S. aid between 1984 and 1986. During this time, these groups appealed to other governments and private sources for funds to continue their political and military efforts against the Sandinistas.
- Although the Sandinista military was larger and better equipped, the FDN and ARDE posed a serious threat to the Sandinista Government because of the economic damage they caused to the Nicaraguan infrastructure. The FDN emerged by 1987 as an effective force, and it actually controlled areas of northern Nicaragua for a time.
- In 1985, the United Nicaraguan Opposition (UNO) was formed to represent a coalition of Northern and Southern Front Contra groups. However, UNO was fraught with personality and ideological conflicts and made little progress in developing a political program that enhanced the Contra's appeal. As a result, UNO dissolved in early 1987 and was replaced by the Nicaraguan Resistance (RN) in May 1987. The RN expanded the resistance assembly, incorporated previously unrepresented blocs to broaden its appeal, and directed military operations along the Northern and Southern Fronts.
- In March 1988, both the Contras and Sandinistas, exhausted by the conflict and encouraged by the United States and Central American governments, signed a cease fire agreement. A series of agreements reached at Tesoro Beach, El Salvador in February 1989 and Tela, Honduras in August 1989 defined the framework that ended the conflict. The Contras were permitted to return to Nicaragua and compete in open elections monitored by international observers. On February 25, 1990, Violetta Chamorro, leader of the National Opposition Union political alliance, defeated Daniel Ortega in the Nicaraguan presidential election. On April 25, 1990 she took office, and the remaining Contra forces began demobilization.
- As the Sandinistas assumed control of the Nicaraguan Government (GRN), suppressing political opposition and deferring elections, many early supporters broke with the regime and left Nicaragua. Exiled mostly in Costa Rica, Honduras and the United States, many formed groups seeking the overthrow of the Sandinista Government. By 1981, groups of resistance fighters in Honduras, in particular, had sought military assistance from the Honduran Government.
- In 1981, DCI William Casey created the Central America Task Force (CATF) at CIA. A Presidential Finding, signed by President Reagan in December 1981, authorized Agency covert and paramilitary operations, facilitated through friendly governments, against Cuban and Sandinista targets involved in arms trafficking to insurgents in Central America. The Agency was initially allocated $19 million to support and conduct political and paramilitary operations in Nicaragua and elsewhere in Central America. Substantial numbers of Agency officers and amounts of equipment began arriving in Honduras in January 1982.
- CIA personnel became involved in building and maintaining the Contra forces. The Agency established a primary base of operations in Honduras. This base supported the FDN, led by Enrique Bermudez and Adolfo Calero. Airfields throughout the region were used to support Contra forces, and CIA personnel also trained Contra fighters and served as advisors to the leadership.
- In 1982, CIA also began to provide support to Creole and Indian groups operating in Eastern Nicaragua and to the group of former Sandinistas under the leadership of Eden Pastora that was based in Costa Rica. The Agency provided support to Pastora and the allied Sandino Revolutionary Front/Democratic Revolutionary Alliance groups (FRS/ARDE) from 1982 to 1984.
- To ensure CIA's program did not go beyond arms interdiction, Congress enacted an Intelligence Authorization Act in December 1982 that prohibited CIA from supplying money, arms, training, or support to any individual or organization seeking to overthrow the GRN or involved in provoking military confrontations between Nicaragua and Honduras. Despite this restriction, in 1983 the pace of Contra operations increased along both the Northern and Southern Fronts as newly trained fighters were deployed. With the quickening pace of military action, the Agency struggled to keep up with Contra demands for additional material.
- In September 1983, the Agency was given greater latitude in its relationship with the Contra forces by a new Presidential Finding that changed the objective of Contra support from interdicting arms trafficking to bringing the Sandinistas into peace negotiations. Congress, however, capped CIA spending on the Contra effort in December 1983 at $24 million. After CIA mining of Nicaraguan seaports became public knowledge, Congress denied a supplemental request by CIA for $21 million.
- By August 1984, the funding allotted for CIA support to the Contras had been expended. Additional legislation was enacted in October 1984 that precluded the Agency from providing paramilitary assistance to the Contra forces over the next two years. During this period, the combat effectiveness of the Contra forces declined.
- In the absence of U.S. support, Contra organizations successfully appealed to other governments and private sources for funds to continue their war effort. Under National Security Council (NSC) official Oliver North's direction, a network of companies and facilities was established in an effort to supply the Contras. The level of support, however, did not meet the overall needs of the Contras, and the Reagan Administration sought from Congress a resumption of direct aid to be managed by CIA.
- In October 1986, after considerable debate in Congress, the Agency was authorized to provide paramilitary support to the resistance forces and $100 million was allocated to this purpose for Fiscal Year 1987, beginning in October 1986. The legislation that authorized this assistance contained a provision that barred aid to any group whose members were found to have engaged in "gross violations of internationally recognized human rights . . . or drug smuggling, or significant misuse of public or private funds." By January 1987, CIA was providing large quantities of supplies and new weaponry. Extensive training was also provided to Contra fighters. The peak of military activity for the Contras came in 1987 when 10,000 to 12,000 personnel were infiltrated into Nicaragua to conduct guerrilla operations.
- In November 1986, U.S. Attorney General Edwin Meese announced that proceeds from the sale of arms to Iran had been "diverted" to the Contras at a time when U.S. military aid to the Contras was prohibited. Congressional support for the Contras waned dramatically as a result of investigations into the Iran-Contra affair in 1987. No additional funding for paramilitary support was appropriated by Congress after the expiration of the $100 million program in 1987. By December 1988, only humanitarian aid was being provided by the United States to Contra forces, although the Agency was still permitted to share intelligence with the Contras. As the Agency withdrew, the U.S. Agency for International Development took over responsibility for administration of the humanitarian aid program. Lacking continued access to military supplies, Contra forces began returning to their base camps outside Nicaragua, effectively ending offensive military operations.
- Building on a March 1988 cease fire agreement, the incoming Bush Administration sought to complete a negotiated settlement to end the fighting. Both the Contras and Sandinistas, exhausted by the war, supported a series of agreements in February 1989 and August 1989 that defined the framework to end the conflict.
Broad Opposition Front formed. Backed by Cuba, Venezuela, Costa Rica.
February -- U.S. Government suspends all new economic and military aid to Nicaragua.
July -- Somoza flees. Provisional Government of National Reconstruction (GRN) formed. Sandinistas turn government leftward.
September -- Sandinistas suspend elections, take control of media.
March -- DCI Casey establishes Central America Task Force.
August -- Opposition groups form on northern and southern borders of Nicaragua.
- Presidential Finding authorizes CIA to support and conduct political and paramilitary operations in Nicaragua, elsewhere in Central America.
- Congress votes $19 million Contra military assistance.
September -- Contra combat action begins.
December -- Boland Amendment, enacted as part of the Defense Appropriations Act of 1983, prohibits CIA and Department of Defense (DoD) from spending money to support activities designed to overthrow the Sandinista Government.
July -- Boland-Zablocki legislation bars aid to Contras, but allows arms interdiction.
September -- Presidential Finding authorized CIA to support, equip, train paramilitary resistance groups.
December -- Defense Appropriations Act includes $24 million Contra assistance program, but sets cut off for September 30, 1984.
February -- Mining of Nicaraguan harbors begins.
April -- Mining operations become public knowledge.
May -- La Penca Bombing. Pastora injured, several killed prior to press conference where Pastora planned to denounce CIA pressure for him to align with the FDN.
September -- Authorized appropriations for DoD and CIA support to the Contra program end. Prohibition in effect until December 1985.
Late 1984 -- NSC fund-raising efforts channel cash, goods to Contras until May 1986.
April -- President Reagan declares economic embargo on Nicaragua.
June -- Pastora's military forces driven out of Nicaragua Contra coalition, United Nicaraguan Opposition (UNO) formed.
August -- Humanitarian assistance bill leads to creation of Nicaraguan Humanitarian Assistance Office (NHAO) at Department of State.
December -- Intelligence Authorization Act authorizes CIA to provide communications equipment, intelligence to the Contras.
January -- Presidential Finding discontinues lethal assistance to Contras.
April -- Senate Subcommittee on Terrorism, Narcotics and International Operations (Kerry Committee) opens an investigation into alleged illegal gun running and narcotics trafficking associated with the Contra War.
June -- Miami Herald reports NSC violation of Boland restrictions.
- Legislation provides $100 million in FY87 for renewed military and nonmilitary assistance to the Contras; contains provision barring aid to any group whose members are found to have engaged in drug trafficking; clears way for restoration of CIA involvement in Contra War.
- C-123 cargo plane shot down over Nicaragua. Eugene Hasenfus captured.
December -- Independent Counsel (Walsh) named to investigate Iran-Contra affair.
May -- Nicaraguan Resistance (RN) unites Contra groups. Start of joint Congressional hearings on Iran-Contra.
November -- Sandinistas announce readiness for indirect talks with Contras. Joint Congressional investigation report released on Iran-Contra.
December -- $100 million appropriated funds expended, CIA support reduced to intelligence sharing.
January -- Sandinista President Daniel Ortega agrees to direct talks with Contras.
February -- House of Representatives rejects Contra funding request.
March -- Tentative cease-fire signed.
December -- Senate Subcommittee on Terrorism, Narcotics and International Operations (Kerry Committee) report published.
February -- Tesoro Beach Agreement calls for supervised elections and Contra disarmament.
August -- Tela agreement sets timetable for Contra disarmament, elections.
February -- Sandinistas defeated in national election.
April -- Violetta Chamorro assumes office; Contras begin demobilization.
- Movement of Cocaine through Central America. Throughout the 1980s and thus far in the 1990s, South American traffickers have used the Central American isthmus as an important secondary route for cocaine and marijuana transshipment operations, for importing drug refining chemicals and for laundering large sums of narcotics revenues. Traditional maritime drug smuggling routes throughout the Caribbean (the Yucatan, Windward and Mona Passages) continued to be important trafficking routes to the United States throughout the period. The Central American countries became more important staging areas and transshipment points for South American narcotics during the 1980s as Mexican traffickers began to handle a larger share of cocaine trafficking.
- Central America and some Caribbean islands offer favorable locations for drug trafficking. Their geographic proximity to major narcotics producing countries in South America and to the United States make this area a natural route for transporting illicit drugs northward. The thousands of remote islands, unpatrolled waterways, extensive coastlines, clandestine airstrips, and generally unguarded borders all facilitate drug trafficking. By the early 1980s almost all countries in the area were serving as transshipment, staging, or refueling points for boats and planes that carried cocaine to the United States. By refueling their aircraft and boats in Central America and the Caribbean, the traffickers greatly enhanced their chances of entering the United States undetected. They could bypass such choke points as the Yucatan Channel and Windward and Mona Passages and avoid Florida, where interdiction efforts were beginning to be concentrated. During the late 1970s and early 1980s, cocaine transiting Central America went to such diverse areas as Louisiana, Texas, Colorado, Georgia, West Virginia, and New York.
- In the 1980s, large cocaine trafficking organizations frequently controlled fleets of small aircraft--many with sophisticated communications gear and reconfigured with extra fuel tanks--that were used to carry drugs, people and money between Latin America and the United States. These operations were supported by a network of airfields, some of which were fairly large with concrete runways, others of which were small dirt strips. The organizations also had sizable numbers of trucks, small and large boats, helicopters, and other forms of transport needed to move the drugs from remote growing areas to clandestine processing sites and eventually to the U.S. market. By the end of the decade, major trafficking organizations were showing a greater preference for shipping larger loads via maritime routes and commercial conveyances and containers as well as utilization of various free trade zones.
- There are no authoritative estimates of the quantities of cocaine moved through Central America in the 1980s. However, the major routes were known to U.S. authorities and air and maritime transport were thought to be the primary trafficking modes. By 1996, however, it was estimated that the commercial and noncommercial maritime smugglers were shipping three times more cocaine than was being moved by air.
- While comprehensive cocaine movement figures are not available for the mid-1980s, a reasonable conclusion is that they would be roughly similar in relative magnitude to what was measured in the late 1990s. Noncommercial vessels--usually "go-fast" boats--most likely provide the primary means by which traffickers currently move cocaine into the Central America-Caribbean transit zone. Roughly 60 percent of the total amount of cocaine that is annually destined for the United States traverses the Eastern Pacific and the Western Caribbean up the Central America-Mexico corridor including about 10 percent that moves directly through Central America. Another 10 percent passes through the Caribbean directly to the United States. The remaining 30 percent enters the Caribbean and is then transshipped to the United States.
- Production and Export of Cocaine from South America. Within South America, cocaine is moved over a number of major routes. From the Peruvian growing areas, most cocaine base is moved by air, rivers and roads to Peru-Bolivia-Brazil border areas and is then flown to Colombia for processing into finished powder cocaine. Cocaine base from Bolivian growing areas is increasingly being processed into finished powder within Bolivia. Some Peruvian cocaine base is also moved by land to the Pan American Highway and transported from Peru through Ecuador to Colombia.
- Cocaine is a stimulant drug produced from the leaf of the coca bush, which grows almost exclusively in South America. Approximately 85 percent of the world's coca supply is grown in Peru and Bolivia, while the remaining 15 percent is grown in such areas as the rain forests of Colombia. Since the late 1960s, Colombia has dominated the processing and trafficking of cocaine manufactured from coca grown in Bolivia and Peru. However, until the late 1980s, Colombia produced relatively little coca.
- Extraction of cocaine is a process that usually requires three separate steps. After the coca leaf is harvested, it is first processed into coca paste and then turned into cocaine base. Coca paste and cocaine base are produced, in most cases, to ease transport by reducing the size of the product. In recent years, the paste manufacture stage is being bypassed, with coca being processed directly into cocaine base. Cocaine base is then processed into finished powder cocaine.
- Crack cocaine that is consumed in the United States is generally made from cocaine that has been imported into the United States. Crack cocaine is a form of smokeable, or "freebase," cocaine that was developed in the mid-1970s. Crack appeared in the early 1980s as an alternative to chewing, drinking, injecting, or inhaling the drug. In smokeable form, the drug is delivered to the brain more quickly and has a more intense effect. Crack is made by dissolving the drug in water, adding a material such as baking soda, and heating the mixture until "rocks" of crack are formed. This is a very simple process that can be performed near the final point of sale. Since crack is sold in smaller units than cocaine that is inhaled, the cost per dose is lower to the user. The dealer pays the same amount to a wholesaler for cocaine, alters it into the crack form, and makes up to four times higher profit than from the powdered form of the drug.
- With the intersection of political, economic, geographic, and military factors in Central America affecting the Contra movement, allegations of arms smuggling, profiteering, corruption, drug trafficking, etc., developed early and were propagated during the period under review. Several previous investigations have explored allegations that the Contra effort was funded with the proceeds of drug trafficking. The relevant findings of these and other relevant investigations are summarized below.
- Iran-Contra Investigations. Between August 1985 and October 1986, the U.S. Government facilitated the sale of missiles and spare parts to the Government of Iran. In November 1986, the existence of these sales became publicly known. Moreover, there appeared to be a link between these sales and efforts to obtain the release of American hostages held in Lebanon by terrorists. On November 21, 1986, President Reagan instructed Attorney General Meese to conduct an inquiry for the purpose of compiling a "complete factual record" with respect to the Iran arms sale.
- On November 25, 1986, the Attorney General publicly announced that his inquiry had produced evidence that some of the funds obtained from the Iran arms sales had been diverted to the Contras to support their war against the Sandinista Government of Nicaragua. This had occurred at a time when restrictions on U.S. Government assistance to the Contras had been imposed by Congress under legislation commonly referred to as the Boland Amendments.
- As a result of these revelations, several official investigations were initiated. These included inquiries by the President's Special Review Board (the "Tower Commission"),te Select Committee on Intelligence, the House Select Committee to Investigate Covert Arms Transactions with Iran, the Senate Select Committee on Secret Military Assistance to Iran and the Nicaraguan Opposition , and an Independent Counsel appointed pursuant to the Ethics in Government Act--the Independent Counsel for Iran/Contra Matters, Lawrence Walsh. In addition to these inquiries, CIA's Inspector General conducted a series of investigations focusing on the role of the Agency and the Agency's employees in the sale of arms to Iran and the provision of assistance to the Contras. On September 1, 1987, DCI William Webster appointed a Special Counsel to review the results of these inquiries and make recommendations for administrative action.
- CIA Investigations. The CIA OIG conducted four examinations of Iran-Contra activities, but none included the issue of drug trafficking allegations involving the Contras. A July 1987 review focused on Agency compliance with congressional restrictions regarding support to the Contras from 1984-87. A second investigation reviewed the Agency's role in the sale of missiles to Iran and the diversion of profits from those sales to the Contras. A third review was a "Special Investigation into Certain Activities of the Chief of Station San Jose." In addition to these CIA/IG reviews, DCI Webster's Special Counsel issued a "Report of the Special Counsel to the Director of Central Intelligence Concerning the CIA's Role in the Iran-Contra Matter" on December 15, 1987.
- Report of the Joint Congressional Committees Investigating the Iran-Contra Affair. A November 1987 "Report of the Congressional Committees Investigating the Iran-Contra Affair" was issued jointly by the House Select Committee to Investigate Covert Arms Transactions with Iran and the Senate Select Committee on Secret Military Assistance to Iran and the Nicaraguan Opposition. In the course of this investigation, the Committees obtained and reviewed a large volume of documents from CIA and other sources and conducted interviews with CIA personnel. An appendix to this report contained a July 23, 1987 memorandum, titled "Allegations Re: Contra Involvement with Drug Smuggling" that was written by an investigator for the House Committee. It discussed allegations of Contra involvement in drug smuggling and stated: Our investigation has not developed any corroboration of media-exploited allegations that U.S. government-condoned drug trafficking by Contra leaders or Contra organizations or that Contra leaders or organizations did in fact take part in such activity.
The July 1987 memorandum noted that, during the investigation,
. . . hundreds of individuals, including U.S. Government employees, Contra leaders, representative of officials of foreign governments, U.S. and foreign law enforcement officials, military personnel, private pilots and crews involved in actual operations were questioned and their files and records examined.
Nonetheless, the appendix reported:
There was no information developed indicating any U.S. government agency or organization condoned drug trafficking by the Contras or anyone else.
- The Joint Congressional Committee report also contained another appendix titled, "Organization and Conduct of the Committees' Investigation." Among other things, this appendix discussed the investigation of the Contra's sources of funds and stated: Contra leaders have been interviewed and their bank records examined. . . . Examination of Contra financial records, private enterprise business records and income tax returns of several individuals failed to locate any indication of drug trafficking.
An investigator involved in this examination, a retired FBI Special Agent, reiterates this point and says that "the [Certified Public Accountants] who were charged with auditing the Contra bank accounts found no evidence of influxes of cash attributed to drugs." He says that bank accounts examined included Contra organizations bank accounts in the Bank of Commerce and Credit International and personal bank accounts. According to the investigator, the sources of all the money in these accounts were accounted for and much came from third country contributors.
The Joint Congressional Committee report also explained in detail the procedures used to track the Contra funds in another appendix.
Following the "money trail"--the sources, movements, and locations of funds involved in the investigation--necessitated the establishment of separate specialized data bases. Two closely related files were created. The first identified all relevant bank accounts; the second contained the detailed transactions. Data were first entered into the bank account file to be used to verify transactions. Each account was verified to flow from a known account to another known account. After the bank account file was prepared, specific transactions were entered into the second file. All monetary amounts were typed twice; the program monitored the entry to ensure that the two entries were identical. The accounting firm of Price Waterhouse provided professional accounting services to the House Committee, and the General Accounting Office provided similar services to the Senate Committee.
- Report of the Senate Subcommittee on Terrorism, Narcotics and International Operations. The principal investigation that focused on allegations that drug money was being used to fund Contra operations was conducted by the Senate Subcommittee on Terrorism, Narcotics and International Operations of the Committee on Foreign Relations. In April 1986, the Subcommittee opened an investigation into allegations of illegal gunrunning and narcotics trafficking associated with the Contra war. As the investigation proceeded, according to the Subcommittee's report, information began to develop concerning the operations of international narcotics traffickers, particularly the Colombian cocaine cartels. As a result, the Contra-related allegations became part of a broader investigation into the relationship between U.S. foreign policy, narcotics trafficking and law enforcement.
- The Subcommittee's report, "Drugs, Law Enforcement and Foreign Policy," published in December 1988, concluded that the drug traffickers used the Contra war and their ties to the Contras as a cover for their criminal enterprises in Honduras and Costa Rica. While the assistance provided by the drug traffickers was "a matter of survival [for the Contras], for the traffickers it was just another business deal to promote and protect their own operations."
- The Subcommittee report included findings indicating:
- Individuals who provided support for the Contras were involved in drug trafficking, the supply network of the Contras was used by drug trafficking organizations, and elements of the Contras knowingly received financial and material assistance from drug traffickers. In each case, one or another U.S. Government agency had information regarding these matters either while they were occurring, or immediately thereafter;
- Involvement in narcotics trafficking by individuals associated with the Contra movement;
- Participation of narcotics traffickers in Contra supply operations through business relationships with Contra organizations;
- Provision of voluntary assistance to the Contras by narcotics traffickers, including cash, weapons, planes, pilots, air supply services, and other materials; and
- Payments to drug traffickers by the U.S. Department of State of funds authorized by the Congress for humanitarian assistance to the Contras, in some cases after the traffickers had been indicted by federal law enforcement agencies on drug charges, in others while the traffickers were under investigation by those agencies.
- The Subcommittee did not find evidence that the Contra leadership "participated directly in narcotics smuggling in support of their war, although the largest Contra organization, the FDN, did move Contra funds through a narcotics trafficking enterprise and money laundering operation." The Subcommittee concluded that there was substantial evidence of drug smuggling on the part of individual Contras, pilots who flew supplies, mercenaries who worked for the Contras, and Contra supporters throughout the region.
- The Subcommittee also found that U.S. intelligence reporting regarding narcotics issues had been "marginal and woefully inadequate." The Subcommittee noted that: . . . despite widespread trafficking through the war zones of northern Costa Rica, [the Subcommittee was] unable to find a single case which was made on the basis of a tip or report by an official of a U.S. intelligence agency. This despite an executive order requiring intelligence agencies to report trafficking to law enforcement officials and despite direct testimony that trafficking on the Southern Front was reported to CIA officials.
- Further, the Subcommittee concluded that U.S. officials involved in assisting the Contras "knew that drug smugglers were exploiting the clandestine infrastructure established to support the war and that Contras were receiving assistance derived from drug trafficking," yet did not report these individuals to the appropriate law enforcement agencies. Instead, the Subcommittee found that "some [of these] officials may have turned a blind eye to these activities." Moreover, the Subcommittee believed there were "serious questions as to whether or not U.S. officials involved in Central America failed to address the drug issue for fear of jeopardizing the war effort against Nicaragua."
- The Subcommittee made only one legislative recommendation in its report that directly pertained to the Intelligence Community: "No U.S. intelligence agency should be permitted to make any payments to any person convicted of narcotics related offenses, except as authorized in writing by the Attorney General in connection with the investigation or prosecution of criminal activity." The Subcommittee also concluded in a section on "National Security Issues" that better cooperation between law enforcement and intelligence agencies should be established so that "a useful intelligence product can assist law enforcement efforts in the war on drugs," and that individuals who misrepresent themselves as working for CIA or other national security agencies should be promptly prosecuted to the full extent of the law. The Subcommittee also found that some individuals involved in "supporting narcotics trafficking did so because they were told that their actions were either on behalf of, or sanctioned by, the U.S. Government."
Final Report of the Independent Counsel for Iran/Contra Matters. "The Final Report of the Independent Counsel for Iran/Contra Matters" was issued on August 4, 1993. It did not state any conclusions regarding the Contras and drug trafficking, but did indicate that the sources of Contra funds had been closely examined. Among other things, the investigation had:
. . . obtained the Swiss financial records of the Enterprise,uments from other foreign countries, extensive domestic financial records, and also the immunized testimony of Enterprise and [National Endowment for the Preservation of Liberty] officers and employees. Willard I. Zucker, the Enterprise's Swiss financial manager, was given immunity to illuminate the financial structure of the Iran and Contra operations.
- One of the lawyers who was appointed to the OIC says that narcotics trafficking allegations comprised "only about one percent" of his and other investigators' interest. The issue of drug trafficking, he states, was reviewed because the OIC hoped it might find issues to use as "leverage" against targets of the investigation. For the most part, he says, any drug trafficking activity would have been "stumbled on" in the course of the investigation of other issues, especially money laundering. This former OIC staff member recalls that no funds with unexplained sources were found in the OIC investigation. However, he adds that the focus of the OIC's investigation was the expenditure, rather than the source, of funds.
- Walsh Memoirs. Independent Counsel Walsh published his memoirs of the Iran-Contra investigation--Firewall: The Iran-Contra Conspiracy and Cover-up--in 1997. The book focuses on how Walsh and his staff developed prosecutions for conspiracy to defraud the U.S. Government, spending U.S. Government funds without proper appropriations, theft of U.S. Government property, mail fraud, obstruction of justice, and obstruction of congressional investigations through giving or preparing false testimony or destroying records. The book makes no reference to allegations of drug trafficking, the 1987 Report of the Joint Congressional Committee or the December 1988 final report of the Senate Subcommittee on Terrorism, Narcotics, and International Operations.
Los Angeles County Sheriff's Department Investigation. On October 3, 1996, Los Angeles County Sheriff Sherman Block ordered an inquiry into the allegations in the San Jose Mercury News articles. The inquiry was meant to determine in part what the Los Angeles County Sheriff's Department (LASD) knew about:
. . . alleged CIA/Contra (FDN) involvement in cocaine sales in the south central area of Los Angeles . . . . and whether or not any such knowledge or belief caused members of the Sheriff's Department to ignore or not properly investigate drug cases.
Much of the LASD investigation centered on allegations made in a postscript article to the newspaper's "Dark Alliance" series. This article, titled, "Affidavit: Cops Knew of Drug Ring," was based in large part on information from a 1986 affidavit of a former Los Angeles County Sheriff's narcotics detective and a defense lawyer's motion in a 1990 corruption case against a number of former Sheriff's Department members.
The December 1996 LASD summary of the 3,600-page report that resulted from the investigation states that Ronald Lister and Danilo Blandon were Contra sympathizers, but that:
. . . information obtained during this inquiry does not support the assertion the FDN obtained money and arms through the sales of cocaine. It does appear some supporters of the "Southern Front" of the Contra army (ARDE) were possibly involved in the sales of cocaine.
- According to the LASD summary, the 1990 motion filed by a defense lawyer on behalf of LASD deputies who had been accused of corruption contained allegations of improper procedures during and after the 1986 execution of search warrants in the LASD's investigation of drug trafficking by Blandon. These included allegations regarding improper confiscation of evidence by agents of the federal government. Some LASD officers who had been involved in the 1986 searches indicated that they believed Lister had mentioned a CIA affiliation or that he had phoned a CIA contact, Mr. Weekly, during the search of his residence.
- The 1996 LASD summary of its investigation concluded that, after the warrant was served on Lister, the FBI attempted to confirm the alleged CIA relationships of Lister and several other individuals. The LASD summary indicated that CIA had responded in a teletype to the FBI with background information regarding Norwin Meneses and Orlando Murillo, but indicated that CIA had no information regarding any of the other individuals.
The LASD summary of its investigation also addressed the allegations of confiscation of evidence by federal agents:
. . . a full review of all the reports, evidence entries, and evidence disposition forms was conducted and [it was] determined that for each item seized in the searches there is a consistent "paper trail."
The LASD summary also stated, " . . . all evidence was seized, documented, and disposed of per Department policy. No property was taken by any 'federal agents.'" The LASD summary concluded that "investigators have determined this allegation was apparently spread through secondhand rumor and innuendo among some members of the narcotics team personnel."
- Los Angeles Police Department Inspector General Report. An October 24, 1996 letter to the Los Angeles City Council updated the status of an inquiry into the San Jose Mercury News allegations by Los Angeles Police Department (LAPD) Inspector General Katherine Mader. According to the letter, the LAPD IG inquiry had not substantiated any allegations that the LAPD was aware of any CIA involvement in narcotics trafficking.
- Volume I of this Report addresses the following questions relating directly to the allegations contained in the San Jose Mercury News series and in claims that CIA interfered with law enforcement investigations into narcotics trafficking in California:
- Was CIA involved in the California-based drug trafficking of Ricky Donnell Ross, Danilo Blandon or Juan Norwin Meneses Cantarero?
- Did CIA have any relationship or dealings with Ross, Blandon or Meneses?
- Was the drug trafficking of Ross, Blandon or Meneses linked to CIA or Contra activities?
- Did CIA intervene or otherwise play a role in any investigative or judicial processes involving the drug trafficking activities of Ross, Blandon or Meneses?
- Did any of the individuals who were arrested in "The Frogman Case" have any relationship with CIA? Was their drug trafficking linked to the Contras?
- Were those arrested connected with CIA?
- Were those arrested connected with the Contras?
- Was CIA involved in the investigation of The Frogman Case?
- To what extent, and why, did CIA become involved in the prosecution of The Frogman Case? What was the effect of CIA involvement in the prosecution?
- To what extent did CIA respond to Congressional inquiries regarding The Frogman Case?
- Volume II of this Report will review broader issues of Agency knowledge and handling of drug trafficking allegations regarding Contra personnel and organizations and others involved in supporting the Contras on behalf of CIA.