CIA FUNNELS 'POLITICAL' AID TO CONTRAS, SOURCES SAY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91-00587R000200880067-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: July 14, 2010
• Sequence Number: 67
• Publication Date: April 13, 1986
• Content Type: OPEN SOURCE

STAT
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ASSOCIATED PRESS
13 April 1986
CIA FUNNELS 'POLITICAL' AID TO CONTRAS, SOURCES SAY
BY ROBERT PARRY
WASHINGTON (AP) The Central Intelligence Agency, barred from
providing military aid to Nicaraguan rebels, secretly funneled several
million dollars to the Contras for political projects over the past
year, U.S. government officials say.
The officials said the money went to the rebels' political umbrella
group, the United Nicaraguan Opposition (UNO) to pay rebel officials
and supporters, open offices in Europe and Latin America, and take
trips to seek foreign support for their cause.
The money came out of the CIA's overall budget, over which
President
Reagan and CIA Director William J. Casey have wide discretion. The CIA
must inform the two congressional intelligence committees of such
covert spending, and officials said notification did take place.
The officials, who spoke only on condition of anonymity, said the
CIA described the spending as going for "political projects.'' While
not providing a precise spending figure, they said it came to several
million dollars.
The clandestine aid also allowed the CIA to maintain a strong
influence over the rebel movement, even though a congressional ban
existed from October 1984 through September 1985, prohibiting the
agency from spending money ''which would have the effect of supporting,
directly or indirectly, military or paramilitary operations in
Nicaragua,'' the officials said.
The CIA assistance was separate from $27 million in non-lethal aid
that Congress approved last year for the rebels fighting Nicaragua's
leftist government. That money is administered by a special State
Department office, and Congress included specific language in the law
barring involvement of the CIA in its distribution.
CIA spokeswoman thyPherson refused comment on the political aid,
but said the agency ' has complieddf with congressional restrictions' ' on
its activities.
While the intelligence committees were informed about the secret
Contra program, other members of Congress even those who closely
follow developments in Central America appeared unaware of the
current CIA role.
One knowledgeable U.S. official described the CIA effort as ''a
major program'' that was intended ''to strengthen the civilian
leadership (of the rebel movement) and create the aura that they are an
actual political entity among our allies in Europe.''
The official added that CIA money also went to Sandinista opponents
who remain inside the country.
Another official said a political operation had existed during the
period of CIA military aid to the Contras from 1981-84 and was revived
or expanded in mid-1985 when UNO was created.
While the CIA depicts the aid as political rather than military,
internal UNO documents obtained by The Associated Press show much of
UNO's political money going to military organizations allied with the
umbrella group.
According to the documents covering August 1985 through February,
the Nicaraguan Democratic Force, FDN, the largest rebel army, was
allocated $456,707 for costs including its office space, ''security''
and operation of the rebels' -15 of September'' radio station, which
broadcasts into Nicaragua from Honduras. The documents do not explain
what is meant by ''security'' but it consumed $165,250 of the total FDN
spending.
Continued
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One proposed FDN program, contained in the documents, would ~.
establish a ''Contra art project''
to improve the rebels'
international projection.'' The proposal sought $27,950 for paints,
art equipment and three months of art classes.
Bosco Matamoros, who serves as spokesman for both UNO and the FDN,
declined comment.
The Kisan Indian rebel group received $350,198, but the largest
share, $528,613, was devoted to UNO activities in Costa Rica, according
to the documents. The Costa Rican total included $160,001 for
security.''
Reagan has asked that restrictions on CIA participation be lifted
in
his proposal for giving the Contras $100 million in military aid, but
the agency's role has been a major sticking point in the House, which
is scheduled to vote on the plan Tuesday.
UNO's leadership consists of FDN leader Adolfo Calero and two
former
Sandinista officials, Arturo Cruz and Alfonso Robelo. They have been
sharply criticized recently by many Nicaraguan exiles as being
hand-picked by the United States and lacking popular support among
Nicaraguans.
In an interview with the AP, Leonardo Somarriba, recently named
UNO's secretary general, confirmed claims from Nicaraguan exiles that
some money was used as 'pay-offs'' to encourage support among exiles.
Some of that is necessary, but we hope to be minimizing it in the
future,'' Somarriba said. Another well-placed Nicaraguan exile said
pay-offs were also made to Honduran and Costa Rica officials to enable
the rebels to operate in those countries.
Some Nicaraguan exiles close to UNO also said money went to pay for
trips in which UNO officials traveled with friends and spouses to
Europe.
According to the UNO documents, the rebel group has established
offices in Geneva, Paris, Spain, Panama, Venezuela, Colombia,
Argentina, Honduras and Costa Rica. Payments were also made to a
variety of UNO commissions, though the exiles say the commissions have
been largely inactive.
The UNO papers show $2 million received to pay for the projects,
with $1.5 million arriving through Lloyds, a London-based bank with an
offshore branch in the Bahamas.
One document, dated Feb. 26, is a copy of a requested wire transfer
Df $70,000 from Corporacion Tuira's account at the Panamanian office of
Lloyds Bank International of the Bahamas to Comercial Tulin's account
3t the Anglo Costa Rican Bank of San Jose. The transfer order is signed
14 UNO's administrator Evenor Valdivia.
David Raylor, a Lloyds official in New York, refused to confirm or
deny the transaction or the account numbers in the document.
Nicaraguan sources close to the Contras said that several years
ago,
the CIA established a complex money-laundering system for moving U.S.
funds to rebel operations through a maze of holding companies,
corporations and offshore banks including one owned by Nicaraguans,
BAC International of Grand Cayman Island.
said One exiled businessman familiar with UNO's financial operations
the money-laundering system has changed somewhat since then, although
he said it still involves European and Grand Cayman Island banks and
Panamanian corporations.
From 1981 to 1984, the CIA spent at least $80 million to organize
and supply the Contras. Congress halted that aid in 1984 amid
disclosures that the CIA had directed the mining of Nicaraguan harbors
and prepared a manual counseling the Contras on 'neutralizing''
government officials.
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