PANAMA STRONGMAN SAID TO TRADE IN DRUGS, ARMS AND ILLICIT MONEY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91B00874R000100180012-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: July 28, 2011
• Sequence Number: 12
• Publication Date: June 12, 1986
• Content Type: OPEN SOURCE

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The New York Times,, Thursday, 12 June 1986
Panama Strongman Said to Trade
In Drugs, Arms and Illicit Mqpey
-U.S. Aides Also Assert
Noriega Helps Leftist
Rebels in Colombia
By SEYMOUR M. HERSH
Special to The Now Yort Timer
WASHINGTON, June 11 -The army
commander of Panama, a country
vital to United States Interests in Latin
Afneriu, Is extensively involved In il-
liclt money laundering and drug activi-
ties and has provided a Latin American
guerrilla group with arms, according
to evidence collected by Amiell n i'n:
te-IIigence a en ,a
enlor State Department, White
House, Pentagon and Intelligence offi-
ciafsAaid the evidence also showed that
the commander, Gen. Manuel Antonio
Noriega, wh Is in effect the leader of
the country, had been tied t tt to tl ng
of political opponent. They also said
that for the last 15 years, he had been
providing intelligence information si-
multaneously to Cuba and the United
States.
In addition, they said, General
Noriega is a secret investor in Pana-
manian export companies that sell re-
stricted American technology to Cuba
and Eastern European countries.
Espionage Investigation In 70's
In the mid-1970's, according to for-
mer officials of the National Security
Agency, General Noriega was impli-
cated in a secret espionage investiga-
tion involving the transfer of highly
sensitive agency materials to Havana.
These officials said General Noriega
purchased the N.S.A. documents from
a United States Army sergeant on duty
in Panama.
A White House official, discussing
General Noriega's role in-what he de-
picted as the "Panamanian connec.
tion," said curtailing the general's ac-
tivities would play an enormous role in
stopping the international trafficking
of drugs by organized crime.
The head of the Panamanian mill.
tary, called the Panama Defense
Force, is widely viewed as the politi-
cally dominant force in the country.
General Norlega is on a visit to the
United States this week and presented
a Panamanian medal of honor today at
Gen. Manuel Antonio Noriega of
Panama at a reception yesterday
at Fort McNair near Washington.
a private cerembny at the Inter-Amer.
ican Defense Board. Requests to inter-
view the general' in Washington re-
ceived no response.
In Panama last weekend, General
Noriega could not be interviewed to dis-
cuss the Americans' assertions despite
three days of telephone calls to the
army press office and attempts to
reach him through other senior army
officers.
Spokesman Denies Assertions
The general, said Capt. Eduardo E.
Lim Yueng, the second in command of
the Panama Defense Force press of-
fice, was too busy with other important
business. Two days of telephone calls,
Including several written messages left
with secretaries, brought no reply from
the presidential press office.
Captain Lim Yueng, however, denied
the assertions as a spokesman for the
"institution of the armed forces and for
General Noriega." He said General
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Noriega and the military were the vic-
tims of a campaign of slander that had
no ba is;In fact.
"These, are political attacks," he
said. "General Noriega would answer
the same way. This campaign is trying
to damage our institution."
A White Rouse official said the Intel-
ligence information about General
Norlega's activities had been made
available to senior officials of the
White House. But this official and
others said they did not know whether
President Reagan was aware of the re-
ports.
A senior Reagan Administration offi-
cial would not discuss the assertions
against General Norlega, who was
pr'evlously head of military intelli.
gence and became army commander
when Brig. Gen. Omar Torrijos Her.
rera was killed in a helicopter crash in
1981. The Administration official ex.
piressed concern that the intelligence
Information would damage relations
with Panama If It was seen as reflect-
Ing the views of the White House.
Officials in the Reagan Administra-
tion and past Administrations said in
Interviews that they had overlooked
General Norlega's illegal activities be-
cause of his cooperation with American
intelligence and his willingness to per.
rpit the American military extensive
leeway to operate in Panama.
They said, for example, that General
Noriega had been a valuable asset to
Washington in countering insurgencies
In Central America and was now coop-
erating with the Central Intelligence
Agency in providing sensitive informa-
Lion from Nicaragua.
But many Reagan Administration of.
ficials made clear in interviews that
the extent of General Noriega's activi.
ties was seen as a potential national so-
t:t 1ty threat because of the strategic
Importance of Panama and the
Panama Canal. Under treaties negoti.
ated with General Torrijos in the
1970's, the United State: has agreed to
turn the canal over to Panama in the
year 2000.
"It's precisely because we have long-
term strategic Interests in Panama,
'with the canal, that it's Important to
have reliable people we can deal with,"
a senior American diplomat said. In
addition, Panama has become increas-
ingly important for the United States
and its monitoring of insurgencies in
Central America.
General's Activities:
'Legal and Illegal'
A recent classified report by the De-
fense Intelligence Agency Concludes
that General ' Nonage, operating
through a small band of top associates
In the military, maintains tight control
of drug and money-laundering activi-
ties by his associates In the Panama
Defense Force, according to one Amer.
ican official. The study said the general
was "deeply involved in legal and ille-
gal business."
"Nothing moves in Panama without
the instructions, order and consent of
Norlega, ":the official said.
According to the State Department,
White House, Pentagon and intelli-
gence sources, there has been long-
standing evidence among intelligence
officials of General Noriega's activi-
ties,, including his relations with the
Cuban Government and his willingness
to sell-arms to the M-19 rebel group in
Colombia.
The goal of M-19, which is pro-Cuban,
is to overthrow the democratically
elected Government. Over the years,
the guerrilla group has been responsi.
ble for violent attacks that have led to
hundreds of deaths.
Of the assertion on the M-19 guerril-
las, Captain Lim Yueng, the Panama.
nian Army spokesman, said: "We have
no information on M-19. We do all we
can to avoid Panama being used as a
trampoline for terrorism."
The captain also denied any Cuban
intelligence- efforts In Panama or that
General Norlega was Involved in any
shady activities with Cuba. He also
denied any export of embargoed goods
to Cuba. "Cuba has an embassy here
and normal relations with us like many
countries," the captain said.
He added, "We've captured drugs
here, and are doing our best to collabo-
rate with the United States to fight nar-
cotraffic In Panama."
'A Critical Misjudgment'
In Killing of a Critic
What has come to be seen within the
United States Government as the
Noriega problem was heightened by re-
cent intelligence directly tying the gen-
eral and the top leadership of the
Panama Defense Force to the slaying
last September of Dr. Hugo Spada fora,
one of the army's leading critics,
In his statement, Captain Lim Yueng
said: "There is absolutely nothing in
this case involving the army. Spada-
fore had many enemies. The institution
of the armed forces absolutely denies
any ties to the death of Spadafora. We
criticize this crime."
A classified Defense Intelligence
Agency report on General Noriega de.
Vice Advt. John M. Poindexter,
the national security adviser, re-
portedly warned Gen. Manuel An-
tonio Norlega against drug and
money-laundering activities.
scribed his Involvement In the killing
as "a critical misjudgment" on his
part. The D.I.A. Is also known to have
Intelligence demonstrating shut Gen.
eral Norlega ordered the killing, uc.
cording to an official with first-hand In-
formation,
Dr. Spadafora's decapitated body
was found stuffed in a United States
mailbag In Costa Rica just across the
Panamanian-Costa Rican border. The
killing occurred a few weeks before
General Norlega ousted the civilian
President, Nicolas Ardito Barletta,
who was about to name an Investigat-
ing commission.
Mr. Barletta was replaced by Eric
Arturo Delvalle, who is viewed by
American officials as another nominal
leader, with the army commander ac-
tually in control of the country.
Some senior White House officials
have privately been concerned about
General Noriega's activities. Late last
year Vice Adm. John M. Poindexter,
then the newly appointed national se-
curity adviser, visited the general and
privately told him to "cut it out" - al-
luding to the drug and money launder.
Ing activities and his close relations `
with Cuba, according to a Government
official.
Admiral Poindexter was later quoted
as having raised questions about an al.
ternative to the Panamanian general.
The issue is a chronic one for Amer.
ican policy makers: how far to over-
look corruption and a lack of demo-
cratic principles in allies in order to
protect secret Intelligence installa.
tions.
Senior civilian officials in the Penta.
gon, headed by Nestor D. Sanchez, a
former C.I.A. and White House aide for
Latin American Issues who is a Deputy
Assistant Secretary of Defense for
Inter-American Affairs, are known to
be concerned that any successor to
General Noriega might not be willing
to tolerate the American military ac-
tivities that now exist in Panama.
In Panama, a Web
Of U.S. Intelligence
Since the early 1980's the National
Security Agency, operating through Its
military components In the Army, the
Navy and the Air Force, has vastly in.
creased its intelligence-gathering ac-
tivities in Panama. It is now capable of
monitoring all of Central America and
most of South America from its Pana-
manian Installations.
The Central Intelligence Agency has
also used military bases In Panama,
especially Howard Air Base near
Panama City, as a jumping-off point
for Intelligence gathering and for
agents sent to Nicaragua, according to
Intelligence officials.
tion officials Interviews, the nature of
the evidence tying General Nortega
and the top leadership of the Panama
Defense Force to money-laundering
and drug tra(ficxing activities.
One official who said he had exten.
sively reviewed the most sensitive In-
telligence available to the Amerlctin
Government on General Noriega, in-
cluding reports from agents and inter.
cepts, described most of the specifics
as "having to do with gun and drug run-
ning."
He said General Noriega's name ap-
peared "over and over" In connection
with specific dates, places and contacts
In money-laundering' and drug activi.
lies.
Much of the information, the sources
acknowledged, has been gleaned from I
National Security Agency Intercepts,
among the most highly classified Infor-
mation in the Government.
In Interviews, intelligence officials
repeatedly described General Noriega
as brilliant In masking much of his di.
rect involvement, preferring to operate
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throt,gh cutouts or as a secret partner
In'sanamanian trading companies and
hanks.
An American official with long ex-
perience In Panamanian affairs noted
that the general seemed to have be-
come more circumspect in his pattern
of activity In the early 1980's, moderat-
Ing overt support for M-19 and direct
financial Involvement in drug activi.
ties.
Instead, the official said, the general
has Iftvested more heavily in legiti-
mate businfss. ventures and become .
more Involved in what were described
as safer and more lucrative activities
-.money laundering, much of It, ac.
Cording to American law enforcement
agencies, known to be drug-related. In
addition, the official said, he has also
become Involved in, the shipping of
high-technology American goods,
much of them on restricted lists, from
duty-free zones In Panama to Cuba and
countries In Eastern Europe,
Colombian Rebels
And the 'Panamanians
According to American intelligence
officials, there is evidence tying Gen-
eral Noriega to longstanding arms
dealing to M-19, the Colombian rebel
grbu
Such #hlpments dwindled In the last
few years, officials said, apparently in
response to pressure from the Reagan
Administration, but have begun to flow
again, General Noriega's M-19 traffick-
Ing "continues today," said an official
with access to the most current intelli.
gence.
The most specific details of General
Noriega's Involvement with M-19 were
provided by C.I.A. officials. In one In.
stance, carefully monitored by the
agency, General Norlega and mem.
bers of the. Panama Defense Force
were found to have armed a small M-19
band -- estimates range from 60 to
more than 100 - before an unsuccess.
ful attack on Colombia's west coast In
early 1982.
Members of the M-19 group, which
had been trained in Cuba, were tracked
by American intelligence as they left
Havana and new to Panama, accord-
Ing to intelligence officials. They said
the rebels were then armed by mem-
bers of the Panama Defense Force and
shipped by a boat, which had passed
through the canal, from Panama Bay
to two locations off the coast of Colom-
bi{r.
The guerrilla bands were eventuallyy
found and attacked by Colombian of fl-
clals, with heavy loss of life, according
to intelligence officals. Diaries were
seized In which thdrecrults told of their
training In Havana and their stay In
Panama, including an overnight stay in
a safehouse that was said to have been
provided by members of the Panama
Defense Force.
Other American intelligence officials
told of viewing reconnaissance film,
believed to have beeen taken by a high-
flyfn~ [1.9 dppr'ti^g M-'9 aircraft off.
loading drugs at a Panamanian Air De-
fense Force airstrip. Arms were said to
have been loaded into the craft for Its
return to Colombia.
Through his legal and illegal activi-
ties, American officials said, General
Noriega has amassed an enormous per.
sbrral fortune, much of which Is be.
lieved to be deposited in European
.banks: He is reported to own at least
two homes in Panama City and one in
,southern France. As army command.
er,! officials said, General Norlega
earns a salary of $1,200 a month.
General Norlega is also reported to,
'have a substantial' Interest In a bank in'
the Colon, Panama, Free Zone, which
American officials said is heavily In-
volved in laundering money for the
M-19 as well as for narcotics dealers.
Laundering Money
And Shipping Drugs
According o Is 1985 assessment of
"U.S. Narcclics Control Programs
Overseas," Iublished by the House
Foreign Affairs Committee, Panama is
regarded by American law enforce.
ment officials as a "drug and chemical
transshipment point and money-laun-
dering center for drug money."
Panama's tanking laws are among
the most strin;ient in the world, permit-
ting secret actnunts by Individuals and
corporations that are virtually free
from scrutiny by American law en-
forcement dficials. Additionally,
Panama's corporation laws allow com-
panies to be organized with no public
disclosure of principals. As a result,
Panama has become a world leader in
the depositing of illegal profits from
drug dealing and other activities.
Cash on deposit at a Panamanian
bank can simply be sent by wire to
banks in the United States or else-
where, part of the process known as
money laundering, in which the ulti-
mate source of the money Is disguised
through a series of transactions.
A White House official said the most
significant drug-running In Panama
was being directed by General Norie?
ga.
"Doing away with the Panamanian.
connection - in the sense that General
Norlega condoned and protects such
activity - would put one hell of a dent
in the movement of drugs In organized
crime," the White House official said.
"That's the bottom line."
In the recent interviews, Administra?
tion officials depicted General Norle-
go's current drug function as that of a
"facilitator." The officials cited intelli.
gence reppms showing that he Is a se-
cret Investor in companies controlled
by a Panamanian businessman and Is
financially Involved In a series of trad-
ing companies.
A former White House aide depicted
General Noriega's role as being to "fa-
cilitate the shipments and pay the pay-
offs."
The former aide added: "Noriega
doesn't carry the stuff around. They
pay him a percentage for protection of
the traffic."
General Norlega's involvement in
money laundering was similarly de-
scribed by American intelligence and
diplomatic officials as a behind-the-
scenes role, with private export com-
panies acting as his agent.
Officials said the United States had
intelligence showing that in the early
1980's General Noriega held a major
financial Interest In an opium-process..
Ing plant that was discovered, accord-
ing to a House Foreign Affairs Commit.
tee investigation In 1985, In operation
along the Panamanian-Colombian bor.
der.
The Congressional report noted that
the laboratory was apparently fi-
nanced by Colombians along with a
senior member of the Panama Defense
Force whom it identified as a Colonel
Melo.
The colonel and others were arrested
by the Panama Defense Force, the re-
port noted, but "none was prosecuted
:due to'lack of evidence.' " Administra-
tion officials said that despite the offi.
cer's arrest and dismissal from the
military by General Noriega, he was
still living openly in Panama City.
Customs officials have filed many
criminal Indictments in which the role
of members of the Panama Defense
Force was prominent. In one case, in-
volving a private Panamanian freight
carrier, Inair Cargo Airlines, a Fed-
eral grand jury returned an Indictment
charging conspiracy to move "multi.
million-dollar shipments" of cash to
Panama.
According to American officials,
there is evidence tying General
Noriega and members of the Defense
Force to a financial Involvement in a
small airline charter company that, op-
erating out of the main airport In
Panama City, flies weekly money-laun.
dering misiions in and out of the United
States. The.aircraft is met in Panama
by an armored truck.
Nariega Reported
Linked to a Killing
According to American Officials, the
Defense Intelligence Agency has un-
covered evidence linking General
Noriega to the slaying of Dr. Spadafo-
ra.
General Noriega has repeated mili.
tary denials of involvement in the kill-
Ing.
One White House official who has ac-
cess to the Government's intelligence
reports 'said "there Is no doubt" that
General Norlega was directly Impii.
"takes In Dr. Spadafora's death.
Another official said the intelligence
takes It up to him" - General
Norlega - "as the originator of the
Idea and the planning of it." There is no
evidence, the official added, that Gen-
eral Noriega was directly involved in
the actual torture and slaying of Dr.
Spadafora, who was beheaded.
General Noriega Is known, according
to highly sensitive American intelli.
gence information, to have told "sev.
eral aides In prior days that 'I want
that guy's head,' " the official said.
American Intelligence officials in
Panama are known to have reviewed
the Panamanian medical reports on
the slaying and confirmed, the official
added, that Dr. Spadafora was tortured
four to six hours while alive.
Another American official, who was
In Central America at the time of the
slaying, similarly declared that the
United States "knows" - he empha.
sized that word - "that the Panama.
nian Defense Force did him In; these
are people who were working under
Noriega."
This official also said, however, that
"who gave the order and why It was
done in the way It was, we don't know"
added, thatiso some of Gene raruled I Norl out, .e
associates may have killed him without
an express order In hopes of currying
favor with their leader.
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Noriega s
A Supplier of Data
To Cuba and U.S.
General Norlega's ties to Cuba have
touched off a longstanding debate
among Intelligence agencies.
The C.I.A. has viewed General
Noriega as an invaluable asset since
the 1970's because of his willingness to
provide Intelligence on the Cubans. He
later became a valuable source of In-
side information on the Sandinista
revolution in Nicaragua and, informed
officials said, has used the Panama.
nian Embassy In Managua to collect in-
telligence for the United States.
At the time, it was also known that
General Noriega was supplying intelli-
gence on the United States and Its ac-
tivities In Panama and elsewhere to the
Cubans.
"The station chiefs loved him," a for-
mer American Ambassador to
Panama recalled, referring to intelli-
gence agents. "As far as they were con-
cerned, the stuff that they were getting
was more Interesting than what'.ttie
Cubans were getting from Noriega on
us."
Another American official told of a
briefing In Washington at which he was
assured that General Noriega was "our
man." After the American was posted
to Panama City, one of the first Na.
tional Security Agency Intercepts that
crossed his desk said that the D.S.G.L.
the Cuban Intelligence agency, had as.
sured Its operatives In Panama that
General Noriega was "their man."
One former senior C.I.A. official who
served in Pamana when General
Noriega was chief of intelligence under
General Torrijos defended his agency's
reliance on General Noriega.
"To me, he was under continuous at-
tack by people who kept saying, 'Look
at this with Havana.' But he was G-2,"
or Intelligence. It was General Norie-
ga's job, the C.I.A. official explained,
to stay in close contact with Havana.
"
As to wh hdh
oa te upper hand - and
this was debated for years - the
United States or Cuba, I frankly think It
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A Bleach of Security:
`Singing Sergeants'
The most disturbing breach of se-
curity In General Noriega's relation.
ship with Cuba involved his recruit-
ment of an American Army intelli.
gence sergeant in the mld-1970's. The
Incident. briefly came Into public view
In the fail of 1977, in a critical period in
the Carter Administration's negotia.
tions with Panama on the future of the
canal
Among other details, the sergeant in.
formed General. Noriega of the clan.
destine monitoring of senior Panama.
nian officials, according to intelligence
officials. There were later allegations
from American critics of the Panama
Canal treaties that the United States
had eavesdropped on Panamanian ne-
gotiations, had been caught In the pro.
cess and was being threatened with ex-
posure unless last-minute concessions
were made. The Senate Intelligence
Committee, after Investigating the In-
cident, concluded that there was no evi.
dence that the Panamanians had made
any blackmail threats.
The Incident became known Inside
the Carter Administration as the case
of the "singing sergeants," and the
breach of security was widely consid.
ered to be limited to interceptions of
personal conversations, some of them
highly embarrassing, by General Tor.
ri jos.
Retired N.S.A. officials, In recent In-
terviews, depicted the breach as far
more troublesome and one that di.
rectly involved General Noriega. In the
officials' account, the sergeant began
dealing with General Noriega. Tran.
scripts of Intercepts of General Torri-
Jos were turned over, in return for cash
payments, as well as highly sensitive
technical materials, including manuals
that described how various N.S.A. sys.
tems worked. "Quite detailed N.S.A.
documents were given to Noriega" and
ended up in Cuba, a former N.S.A. offi-
cial recalled.
General Nortega enraged ? some
American officers in the late 1970's, ac-
cording to an Intelligence report, when
he purchased 10 new American-made
automobiles while on a visit to Wash.
Ington and then, upon his return,
turned over the vehicles to the Cuban
diplomatic delegation In Panama City.
Many American officials, despite
their hostility to General Noriega's in.
volvement in these activities, ex.
pressed admiration for his ability to
keep his various constituencies - such
as the United States and Cuba - at
bay. One key to his success, some offi.
cials said, was his lack of Ideology.
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