SECRET TASK LED TO WEB OF FIRMS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000504550022-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: February 27, 2012
• Sequence Number: 22
• Publication Date: March 22, 1987
• Content Type: OPEN SOURCE

Declassified in Part - Sanitized Copy Approved for Release 2012/02/28: CIA-RDP90-0
4
sI
Secret Task
Lech to Web
Of Firms
Virginian Ran
Covert Missions
By Dan Morgan
rand Charles R. Babcock
Wa4Mngtat Part staff Writer,.
The mission that appar-
ently launched the network
of private companies now
embroiled in the Iran-contra
affair took place in October
1983, when an obscure U.S.
Army unit asked a retired
lieutenant colonel to under-
take a secret job in the
Caribbean, according to in-
formed sources.
The man was Richard B.
Gadd, a recently retired Air
Force officer, who would
later become deeply in-
volved in another project:
the White House-directed
effort to resupply the Ni-
caraguan rebels when U.S.
military aid was cut off.
Last Wednesday, Gadd
and two employes of his Vi-
enna, Va., company were
voted limited immunity by
two congressional select
committees in an effort to
elicit testimony about the
Reagan administration's use
of the private network to
resupply the contras.
Well before Congress
voted to stop the aid as of
Oct. 1, 1984, military and
intelligence sources say,
Gadd had established a
thriving commercial busi-
ness as a contractor able to
provide an unusual service
to the Pentagon: transport-
ing intelligence agents and
crack counterterrorist units
such as the Army's Delta
Force by using planes and
flight plans intended to
elude detection.
Gadd's abilities as a prac-
titioner of what one so e
called the "black arts of co-
vert delivery" were first put
to the test just before , the
WASHINGTON POST
22 Plarch 1987
U.S. invasion of Grenada in October
19 when the Army's special
erations division asked him to ar
range for the transport of helicop-
ters and pdots from a secret Army-
CIA-aviation unit at Fort Eustis,
va., to the Uri an island of Bar-
- a os.
The Central Intelligence Agency,
which wanted an a ent_on Grenada
to glean intelligence on Cuban de-
fenses, had turned to the Army.
Memories of the mechanical fail-
ures and pilot error that caused the
April 1980 American hostage res-
cn mission to end disastrously in
Iran were fresh in everyone's mind,
awinformed military source said, so
the,.Army's special operations ex-
perts decided to take no chances.
The helicopters were specially
equipped to fly low over water un-
der blackout conditions, and the
pilots were specially trained for
such operations. A Gadd company
arranged for cover by chartering a
civilian L100 cargo plane in Califor-
nia to pick up the men and helicop-
ters for the trip to Barbados.
The agent never was dropped off.
If Was a case of his getting cold
feet," said a source familiar with the
operation. But the stealth on short
notice demonstrated by Gadd's out-
fit won high-level praise at the Pen-
tagon, and the mission established
Card as the favored private con-
tactor for the mysterious yet mun-
cin4 work of "covert delivery," ac-
cbrciing to knowledgeable sources.
fit 1983-84, according to sources
and :public records, Gadd's compa-
res. received more than $1 million
worth of business, classified and
di'nclhssified; from the small, secre-
tive . office of Army special opera-
tions in the basement of the Pen-
tagaln. The first classified contract
was, issued in 1983 for $750,000
and called for Gadd to have on call
two 1100 transport planes and pi-
lots,;sources said.
Pbblic records for fiscal 1984
show the Army unit contracted with
gadd's main company, American
National Management Corp., for
afferent types of "air passenger
service." Sources said several of
these contracts were for covert
tianaportation for the Delta Force,
the ,Army's elite counterterrorist
unit; both on training exercises and
When it was deployed to Long
beach, Calif., to respond to possible
incidents at the 1984 Summer
dlympic Games.
Asked why no other companies
Hlerd considered for unclassified
contracts valued at $659,000 in.
fibcat 1984, an Army spokesman
said: "This company had been in-
volved in other programs of this
type in the past."
Some military officers knowl-
edgeable about the contracts de-
fend the decision to field the work
out to a private company. They ar-
gue that the Army turned to Gadd
in 1983 and 1984 for the same rea-
son that former White House aide
dliver L. North Jr. in 1985 and
1986 turned to private contractors
spch; as Gadd's associate, retired
4r Force major general Richard V.
SecoFd, for logistical help in the sale
of UhS. arms to Iran: The Central
Intelligence Agency and Pentagon
couldn't do it quickly, efficiently or
secretly enough.
Senior officers say that Gadd's
chartered civilian company provid-
ed better cover on shorter notice
than could be procured anywhere in
the Pentagon, with its annual bud-
get of several hundred billion dol-
lars.
'Dick Gadd was smart enough to
sge a market opportunity." said an
acquaintance. "What he did was in
the true tradition of American free
enterprise. No one else could have
done the damn things-not the' Air
Force an not t CIA. Tf someone
u eAiic-Force were o to vo
they -could do what Dick Gadd could
do,1'dsay no way.
Beginning fn 1984, informed
sources say, Gadd worked with Se.
cord, who has emerged as North's
chief contact in the private network
of sdnding arms to Iran and the con-
tras. Starting in the fall of 1985,
sources say, Gadd became involved
in setting up the private air resup-
ply for the contras, hiring pilots and
crews and helping to find planes.
One of his companies, Airmach, also
received a $182,000 classified
State Department contract to de-
liver humanitarian relief to the con-
tras.
No' evidence has been advanced
suggesting that Gadd or any of his
companies broke the law. William J.
Bethune and James J. Bierbower,
attorneys representing Gadd's com-
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 Declassified in Part - Sanitized Copy Approved for Release 2012/02/28: CIA-RDP90-00965R000504550022-2
ppmes, aecuneo comment yesLeL' vaUU M...,IC, v& u1C n 1111' S prao- Is uSLea as -Lt. CAL M. Foster,
d y except to say that all requested lem during his stint in Air Force DAMO-ODSO," a designation re.
fills have been delivered to the in. special operations in the Pentagon, (erring to the Army's special oper.
vestigatory authorities. Gadd's law- which had begun in 1977. He had ations division.
yer, Kenneth A. Lazarus, .has de- been an Air Force pilot since 1962 A It. Col. Michael Foster, begin.
d Ined to comment or make his cli- and had flown C123 and C130 cargo ning in 1982, worked for the Army
eat available. planes. While assigned to the air special operations office-"the
Yet some veterans of the mils- commandos' 834th Tactical Com- Zoo"-where private contracting
t.Vy's special warfare ranks say posite Wing at Fort Hurlburt, Fla., for such missions was established,
that the story of Gadd's business he had become familiar with a va- according to informed sources. Fos-
growth contains a cautionary lesson riety of "low and slow aircraft." ter, who recently retired, declined
about the risks to national security In 1980, Gadd moved into the to comment.
when commercial operators are same office as Col. Robert C. Dut- Sole source contracting with pri-
aaowed-or perhaps in his case, ton, who had returned from work- vate companies apparently stopped
encouraged-to wander into a gray ing under Secord in the Air Force some time in 1984, following an
zgne outside firm government con- military assistance mission in Iran investigation into mishandling of
treMnd accountability. to serve as assistant director for covert funds by some Army offi-
The U.S. government's use
of
private companies to provide spe-
cialized air services dates at least to
the 1970s. when the U.S. was with-
drawing from Southeast Asia and
the CIA decided to sell its "propri-
etary" trans rtation companies.
With the seizure of the U.S. Embas-
sy hostages in Tehran in 1979-
and the subsequent failure of the
rescue attempt inthe
desert-the for elite special
forces units and e icient, covert air
h me urgent.
79Fer--ffW- rescue debacle, the
Pentagon's special warfare units
were reorganized. A Joint Special
Operations Command (JSOC) was
established at Fort Bragg, N.C., to
supervise widely dispersed Army,
Air Force and Navy units, including
the Army's Delta Force.
With the blessing of then-Army
Chief of Staff Gen. Edward C. (Shy)
Meyer, the Army moved to take the
lead in counterterrorism.
The Army's special operations
unit in the basement of the enta-_
gon, which provided the CIA with
occasional paramilitary muscle, was
strengthened. was given a s a o
aZII nd a budget of $100 million,
and it developed an esprit to match
its new status. Members jokingly
referred to their unit as "the Zoo,"
reflecting a pride that "special ops"
was different from the rest of the
Army, according to informed mil-
itary sources.
In some respects, it was. In the
early 1980s, the special operations
division quietly began to build its
own clandestine air force with a few
small planes purchased out of its
budget. In addition, military sources
say, there was a need for somewhat
larger planes that could ferry elite
units without relying on Air Force
cargo planes or civilian planes con-
tracted through the less secure
channels of the Military Airlift
Command.
special plans. Dutton, who went to cials. Although there is no indica.
work for Secord in 1986 in the clan- tion that Gadd's companies were
destine contra resupply operation, involved, government records list
also is receiving immunity from the no more Army contracts with
congressional committees and is ANMC after fiscal 1984.
expected to testify publicly later In 1986, ANMC received eight
this spring. Air Force contracts worth
Gadd later moved to the office of $1,530,000 for maintenance and
the Joint Chiefs of Staff, as the Pen- housekeeping services at bases
tagon's liaison with the Joint Special from coast to coast. Officials on
Operations Command at Fort those bases say the bidding for the
Bragg. It was a job that provided
him a bird's-eye view of the entire contracts was extremely compet-
U.S. unconventional warfare com- itive, and competitors of ANMC munity. said profit
margins were slim.
On that assignment, he shared a Otherwise, the activities of
secure office with members of the ANMC and other Gadd companies
J3 Special Operations Division, become shrouded - in mystery after
headed by Army Col. C.L. Stearns. 1984..
Gadd and J3 SOD also were in close According to two sources, Second
contact with "The Zoo," and used an office at ANMC's complex
through this network, Gadd appar- in Vienna, Va., in 1984, during
ently became aware of concerns which time Gadd told associates
about the Army's lack of planes to that he and Second worked togeth-
launch realistic training exercises er.
for Delta Force, and to perform A former associate described
other "black," or secret, missions in Gadd as a good marketer who
the Caribbean and Central America, "could make government people
feel very confident that he was in
several military sources said. control."
In September 1982, Gadd passed Secord seemed the world-trav-
up a chance for promotion to full eler and "instigator," while Gadd
colonel to enter private business, was the implementer, according to
acquaintances said. He retired and this source. Secord, he said, "acted
went to work briefly for Vinnell Co., like a general; and would ask Gadd
a large defense contractor with of- to take care of his business details
fices in Fairfax. when he was traveling.
In 1983, according to corporate A 1984 ANMC brochure an-
records, he set up ANMC, Eagle nounced that the company was pro-
Aviation Services and Technology viding "logistics support and remote
(EAST), and Airmach, naming him- site operations," and was involved
self president and his wife, Sharon, as a subcontractor on a $2.3 million
secretary. Stearns, by then retired classified contract. It said the cony
from his post as director of the J3 pany could provide "discreet and
SOD, served as a director of ANMC expedited services which transcend
until 1984, according to records, military disciplines."
Stearns declined to return a report- In a separate item, the brochure
er's phone calls. also said that ANMC provided con-
The relationship between ANMC sulting services for Southern Air
and the Army unit in the Pentagon Transport of Miami. A Southern Air
basement is recorded in a partially spokesman said last week that a
unclassified contract for $362,603 Gadd company acted as a broker
issued to ANMC in July 1984.The
contracting officer's representative
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 Declassified in Part - Sanitized Copy Approved for Release 2012/02/28: CIA-RDP90-00965R000504550022-2
and occasionally was paid a commis-
sion for finding charter business for
Southern.
Southern Air officials have said
that the company performed some
maintenance work on the aircraft
that was shot down Oct. 5 in Nic-
aragua, which led to public disclo-
sure of the contra resupply oper-
ation.
According to a former official of
Executive Air Fleet at New Jersey's
Teterboro Airport, Gadd's compa-
nies contracted for 100 to 150
hours of domestic air charter ser-
vice a year, at a rate of $3,400 an
hour for such small, fast, lodg-range
passenger planes as Gulfstreams II.
By 1985, ANMC assets had in-
creased to $680,466, up 10-fold
from the-previous year, and Gadd's
EAST had assets of $386,308, ac-
cording to Delaware franchise tax
records.
Employes of ANMC were mostly
former military men with security
clearances, trained not to ask too
many questions, according to some
of those employes. But by early
1986, it was evident even to them
that Gadd was involved in some
highly sensitive projects.
According to a report in Knight-
Ridder newspapers, persons re-
sponding to an ANMC recruiting ad
in the Dec. 2, 1985 Air Force
Times were told. by Gadd that they
would be given a stateside job with
the company only after working for
six months in Honduras.
One former ANMC employe also
remembers Gadd making a trip to
the Montreal area in early 1986 to
look into buying a used cargo plane.
Luis Pronovost, vice-president of
a Rouyn, Quebec, company called
PropAir, said in an interview that
he did not remember meeting
Gadd. But he confirmed that Prop-
Air sold two DHC4 Caribous in Jan-
uary and April 1986 through a con-
sultant whom he identified as Wil-
liam G. Langton, president of
Southern Air Transport.
Informed sources say that funds
for the transaction came through a
Panamanian company called Amal-
gamated Commercial Enterprises
(ACE). ACE is one of the entities
included in a sketch drawn up by
North to show the organizational
structure of the private network
used to help the contras, according
to the Tower board report.
There is no indication that Gadd
knew North personally, but Secord
worked closely with North as a pri-
vate contractor throughout 1985
and 1986.
Luis Pronovost said Langton
called him several days after selling
the first Caribou in January 1986
and reported that one engine had
failed over mountainous terrain en
route to El Salvador and the crew
had been forced to jettison spare
parts and a spare engine while aloft.
Pronovost said Langton told him
that the. plane made a "controlled
landing" in a field some miles dis-
tant from Ilopango Airport.
Company employes also say that
they heard discussions about a met-
al building for storing supplies that
was going up in a remote part of an
unidentified Central Amerccani
country. f
In the spring of 1986, Dutton,
who had been Gadd's former chief
in the Air Force office of special
plans, went to work for Secord's
Stanford Technology Trading;
Group International as staff direc-
tor. In that job, sources say, Dutton,
directed the day-to-day operational
of the contra resupply effort out of
El Salvador.
Stanford Technology's offices,,
into which Secord moved after leav-
ing the ANMC complex in late
1984, was close by in Vienna, and
during 1986 Dutton often came to
Gadd's office at ANMC for closed
door meetings, one source said.
By the summer of 1986, accord-
ing to coworkers, Gadd was tense,
edgy and seemingly overworked.
The cover of the private contra!
aid network was blown after the
C123 cargo plane was shot down
last October, causing the death of
two Americans and. the capture of
cargo handler Eugene Hassenfus br
Sandinista forces.
According to a report in The Mi,
ami Herald last November, a via..
itor's logbook at ANMC showed,
that an "Ed Garay" signed in three,
days before the plane was downed.
Edward T. de Garay is president of
the Pennsylvania air charter com-,'
pany for which Hasenfus said he`
was working; he also has been of-
fered immunity in exchange for his
testimony to Congress.
Declassified in Part - Sanitized Copy Approved for Release 2012/02/28: CIA-RDP90-00965R000504550022-2