NSC PAPERS SHOW DEEP NETWORK TO CONTRAS IN '85

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000707060026-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: February 10, 2012
• Sequence Number: 26
• Publication Date: January 26, 1987
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2012/02/10 :CIA-RDP90-009658000707060026-7
WALL STREET JOURNAL
nY P~~~ ~ 16 January 1987
NSC Papers Show Dee 11 network to Contras in '85
P
lively supplying arms to Nicaraguan insur?
gene when President Reagan decided last
year to begin direct U.S. weapon sales to
Iran.
The documents show that the network-
overseen by Marine Lt. Col. Oliver North,
the former NSC staff member-was larger
and more complex than previously known.
At least as early as November 1985, it was
involved in shipping arms to the Nicara?
guan Contra forces. And, as a continuing
operation, it clearly was receiving signifi?
cant sums of money and had a use for any
profits that coWd be skimmed from the se-
cret arms sales that President Reagan ap-
proved for Iran less than two months
later.
mo a back and forth to laund a
for their ex nses and to bu su lies or
the Contras," sa one Inte tgence source.
'Tm no sure any v evei e6'a6Tto
unravel it all."
LWt to Portugal in Memo
A November 1985 memo by Col. North
directly links Lake Resources to a plane
carrying arms for the Contras from Portu-
gal, according to sources. The document is
the earliest evidence yet of the existence of
the network's supply line for the Contras.
Int~~elli~~enc__e sources said Central Intelli?
pLence~ieencv (rector I am asev and
Au1er top administration officials hewn
seeking aid for the Contras in Saudi Ara-
"It was a going concern, a whole mach- y big and of .
anism in place." said one intenipence . rabic a_nd Lrael bosh have denied
???~-? ??-p ??.-?.??. va rvl aalVll NIO~ 16tG1 !1'
gured in the diversion of funds from the
Iranian arms purchases, remains the most
prominent player in the network. Bat a
new set of names has begun to emerge, re?
Electing that the network overlapped with
the Reagan administration's Iranian arms
sales.
AmOn? these Is ~ cnrnnratinn irlantiHeii
by intelligence so irres ac Ilemnrrarv in-
ternational. or Democracy Inc. Itt report-
edly served ac ~n account to fund th n t-
work's operation. and to pay for travel by
key fieures. A memo written by Col. No h
links the company to his associate re fired
Ir Force Ma .Gen. Richard Secord. Inte!-
ce sour
v~transportation last summer for Iran?
ions wit w om t e .. w~eafine inTe
rms sales.
Linked to Perot Ransom Effort
According to intelligence sources, funds
from the same Democracy Inc. account
were used in obtaining a ship used last
May in a vain attempt to exchange Ameri-
can hostages off Cyprus for a S2 million
ransom put up by Texas billionaire H.
,Ross Perot.
Thomas Clines, a former Central Intelli-
Qence eencv o ~ i I nd loo ecncia e
of Gen. Secord. was in trumenta '
n the shf a ransom of e
d1+s be ore a secret trie to Iran on Mav 28
by Col. Noe an form r Na innal, C~pc~a-
rit Adviser Robert McFarlane.
le ocuments, w ich include
memos written by Col. North, have a dual
importance to continuing efforts to unravel
the Iran-Contra affair. Since Coi. North
has refused to testify, his memos provide
the closest thing available to a first-hand
account of his approach to the secret oper-
ation. Also, in casting new light on the cor?
prirate network, the documents may help
By D~vm Raa^If investigators track the diversion of funds
And Josrr WAtcarr from the Iran arms sales to the Contras.
SlafjRevortsrsoJTMSWwL~S~rassrlousrw~ That diversion remains the least under~
WASHINGTON - National Security stood aspect of the entire affair.
Council documents demonstrate that an in- "They nut together an incredibly com?
tricate corporate network already was ac? placated operation. which they used to Hass
nations were made through private individ-
u s wtT in' at lease tacit anorov i irom b th
governments.
Under a 1985 law, it was illegal for the
U.S. to provide aid to foreign countries
with the understanding that the countries
would then give the money to the Contras.
At the time, direct U.S military aid to the
insurgents was barred. But Reagan admin?
istration officials insist that the law didn't
prohibit them from soliciting help for the
Nicaraguans rebels if it wasn't used for
arms. Officials have confirmed that they
obtained a E10 million donation from the
Sultan of Brunei, a small southeast Asian
nation.
()atolls on Pricing of Arms
A preliminary report by the U.S. Army
Inspector General provides more details on
how the U.S. may have generated money
for the Contras from Iranian arms sales.
The report said that the 512.2 m Ilion the
CIA paid the Pentagon for TOW anti-tank
missiles. which the U.S. then sold m trap
last year. was S2 million to S5 minion leec
than the~wea nsns _were worth a ~
~a semor~-aeon of ' '
The report, which was presented yester-
day to Defense Secretary Caspar Wein-
berger, suggests the underpricing probably
was an error, but it doesn't rule out the
possibility it was part of a larger plan to
finance the Contras, Pentagon sources
said.
Coi. North's memos are among NSC
documents turned over by the White House
to congressional committees investigating
the Iran-Contra affair. At about the time of
the November 1985 memo mentioning Lake
Resources, another Panamanian?regis?
tered concern, Amalgamated Commercial
Enterprises, surfaced in the Contra?supply
network.
All of ACE's officers appear to be em?
ployees of a Panamanian firm with past
ties to Steven Samos, a Panamanian busi?
nessman who has testified in a U.S. court
to laundering millions of dollars for the
head of a drug?smuggling ring in the late
19TOs. But in a statement issued this week
through his Miami attorney, Mr. Samos de?
Hied any knowledge of ACE.
Sources say that ACE, a shell company
incorporated in November 1984, was pur?
chased a year later by So Air Trans-
~~ort a Miami?based ght ca er n cede
o~tile arms shipments from Portugal to
Central America.
Maintenance for Supply Planes
Southern Air also provided maintenance
through ACE for planes used to ferry sup?
plies into Nicaragua for the Contras. Ac-
cording to one source, funds from Swiss
accounts were paid to ACE for this
work.
Defex?Portugal, a Lisbon trading firm,
facilitated many of the Contra arms ship-
ments from Europe. Expresso, the influen?
tial Portuguese weekly, has estimated that
Portuguese arms makers supplied more
than 38 million in weapons and ammuni?
lion to the Contras in 1984 and 1985.
Clines. the former CIA official. is a a?
miliar fi?ure at Defex's Lisbon offices.
Defex?Portugal's founders are identified
by European sources as including Jose
Garnel and Marcelino Brito. A U.S. Intelli?
Bence source confirmed that Mr. Brito
played an important role in facilitating
shipments through Portugal. But when
contacted yesterday in Lisbon, the busi-
nessman refused to discuss his dealings
with Defex. or those on behalf of Gen. Se?
cord.
Describing himself as a director and
part-owner of Defex, Mr. Brito said all of
the shipments had been given legal export
licences and denied any improprieties-in?
eluding false end-user certificates used to
indicate the arms were going to Guate-
mala, which have been mentioned in news
reports.
Mr. Garnel couldn't be reached for
comment.
ALSO CONTRIBUTING TO THIS ARTICLE WAS
SCOT J. PALTROW IN LISBON
Declassified and Approved For Release 2012/02/10 :CIA-RDP90-009658000707060026-7