Cocaine Import Agency?

by, Tracy R. Twyman

In August of 1996, after a year of research sparked by a tip from an informant on a tangentially related story, San Jose Mercury News reporter Gary Webb wrote a series of articles stating that one of Los Angeles' most prolific crack dealers from the early eighties had gotten his business started through a supplier who was selling cocaine to raise money for the Contras, the CIA-backed Nicaraguan anti-Communist revolutionaries who sought to bring down the ruling Sandinista government, which had ousted the dictatorship of Anastasio Somoza in the late seventies. He also implied that this had created the first mass market for crack and had kicked off the epidemic that has cost so many young lives, especially in the Black community. Soon major newspapers picked up the story across the US, sparking short, dismissive mentions in the main stream media and furious anger among Black activists and others who have been suspicious about such things. It caused many others to question whether this government was really doing all it could in this expensive and often futile War on Drugs.

One of the central figures in this story is Danilo Blandon, the son of a rich slumlord with a Master's degree in marketing who worked as the director of wholesale markets in the government of U.S. backed Dictator Anastasio Somoza. In the summer of 1979 the government began to be overrun by revolutionary guerrillas known as the Sandinistas, and Blandon ran to Los Angeles seeking political asylum. In 1981, he and some other exiled friends were trying to figure out a way to rebuild Somoza's Nicaraguan National Guard when, according to his testimony at his own drug trial, he received a call from an old college friend of his named Donald Barrios, who insisted that he meet another refugee named Juan Norwin Meneses Cantarero, who had ideas about how to raise money for the operation. Cantarero flew Blandon out to see an old friend of his, Col. Enrique Bermudez, Somoza's former liaison to the American military. He'd been hired by the CIA in 1980 to rebuild the Nicaraguan national guard out of the loose group of about 5000 counter-revolutionaries into the Fuerza Democratica Nicaraguanse (FDN), the largest and best of the famous "Contras", according to congressional records cited by Gary Webb. Reagan had, despite congressional objection, secretly given the CIA $19.9 million taxpayers dollars to thwart the Sandinsita government, which, of course, was not nearly enough. Bermudez intended on subsidizing the revolution with drug money, according to Blandon and Meneses' testimony. He put Meneses in charge of intelligence for the FDN and recruited Blandon's marketing skills to swing cocaine deals in Los Angeles, particularly in the poor Black neighborhood of South Central. Back then, Webb says, cocaine was not a common thing in this neighborhood because it was so expensive back then, mainly an upper class White thing. But Blandon was selling his at "cut rate" prices, and his biggest customer, a man named "Freeway" Rick Ross, to whom he sometimes sold up to a hundred kilos a week, cooked it up into the relatively new and scarcely available (Webb says) form known as crack, which is much more addictive and since you only need a little bit to get high, even ghetto kids could afford to make it a habit. He then turned it out to major LA street gangs, mainly the Crips and the Bloods, who then distributed it among the urban populace, where the usage was growing rapidly. Because he was willing to sell it at such low prices, "Freeway" Rick became the biggest crack dealer in the city. According to Blandon, all his profits were funneled back to the FDN in Honduras. By 1984, business was in full swing, and Blandon began selling "Freeway" Rick and other clients spy gear such as hidden microphone detectors to identify undercover police and assault weapons to defend their turf with. The source for these items, Blandon testified, was an ex- Laguna Beach police detective who owned a business calls the Mundy security Group, and who on several occasions told business partners that he was raising funds for the Contras and that he was "protected by Th. CIA".

"Protected" seems to be the right word for it. Since the early eighties, agents from the DEA, US Customs, the LA County Sheriff's Department and the California Bureau of Narcotics enforcement have all claimed that their investigations into Lister's Contra connections were stifled by the CIA, the Justice Department, and others under the claim of National Security interests.

For example, the October 23, 1986 search warrant affidavit of Thomas Gordon, then-L.A. County Sheriff' s narcotics detective, shows that the DEA and the FBI had infiltrated for several years and had amassed substantial evidence that the FDN was selling cocaine to LA street gangs. When the search warrant was implemented on October 27, something very weird happened. According to a legal motion filed in 1990 in regards to Deputy Daniel Garner, who was involved in executing it, one of the suspects arrested claimed to be a CIA agent. At the raid they confiscated "numerous documents purportedly linking the US government to cocaine trafficking and money laundering efforts on behalf of the Contras". Within 48 hours, CIA agents arrived at the Sheriff's office and carted them off. Harland Brown, the LA defense attorney who filed the motion, says that detectives managed to copy ten pages of them before they were taken, but when he tried to use them in a 1990 criminal trial, he was issued a gag order and convicted of corruption charges while the documents were sealed. Most of the Sheriff's Department's internal records regarding the case diapered around the same time also. Although, drugs, scales weapons, sales ledgers, and manufacturing equipment were seized in the raid, charges were never filed. Indeed, within days all of the evidence had been returned to the suspects, including, according to a property release form, a "cocaine preparation kit". In contradiction to at least three deputies who had been involved in the raid (six out of seven have been indicted on corruption charges. Current LA County Sheriff Sheerman Block said at a recent press conference that the documents had been destroyed in 1987, for no apparent reason.

According to Blandon, when Congress approved $100 million worth of Contra aid in 1986, the CIA no longer needed his help, and members became solely concerned with covering their own hides with regard to the case. When he was charged with cocaine conspiracy in San Diego in 1992, federal prosecutors obtained a court order to prevent the defense from touching on his links to the CIA. After serving two years for crimes that have brought others a life sentence Blandon was released on unsupervised probation in 1994 and began to work as a DEA informant, for which he has so far been paid $166,000, according to court records.

Blandon's boss, Norwin Meneses has also magically weaseled his way out of drug sentences. In 1989, after the Contra war ended, he was charged by the federal government in San Francisco with having conspired to distribute a kilo of cocaine in 1984. But Meneses was never arrested, and the indictment has been locked away in San Francisco Federal Courthouse for the last seven years. A copy of the indictment was found later by reporters in Nicaragua, but it appears that it was never entered into NCIC, Th. national law enforcement data base used to track down fugitives.

Public Outcry

The articles have inspired Congresswoman Maxine Waters, whose district is South Central Los Angeles, the scene of the crime, to ask Congress for an investigation by an independent council, free from politics. The Congressional Black Caucus has also started looking into it, as have the Justice Department and, until a few weeks ago, the CIA itself. On November 6 the Washington Post reported that the CIA had conducted an "extensive search" of their records and found no evidence of "any relationship to the Nicaraguan drug dealers Danilo Blandon and Norwin Meneses".

This has also inspired a rash of Black activism. The Washington AFRO reported in September that civil rights activist Dick Gregory and chairman of the NAACP National Awards Committee Joe Madison have been arrested for trespassing on DEA headquarters, where they were demanding to see documents that would confirm or deny claims made by former DEA agent Celerino Castillo, who spoke to their followers on September 27 about being witness to CIA drug transactions and trying to tell vice-president George Bush about it, who "just smiled and walked away". Meanwhile, a delegation of Howard University students have protested on Capitol Hill, and Nation of Islam lawyer Arif Muhammad announced recently at a National African American Leadership Summit that he's planning to file a class-action suit against the CIA charging that they knowingly delivered crack cocaine into Black communities.

Historical Precedent

Allegations of the CIA's involvement with known criminals and rug traffickers is nothing new. In his book The Politics of Heroin: CIA Complicity in the Global Drug Trade, author Alfred C. McCoy says that on of the first major operations that the CIA performed, between 1947 and 1950, involved hiring leaders of Corsican drug syndicates to infiltrate France's socialist party, which was the most right-wing party France had back then, and hired thugs from these gangs to physically break up labor strikes organized by the Communists, then France's most popular party. Because the Communists had been getting in the way of the gangsters' business prospects, this tremendously strengthened their political power, and they went on to become America's number one heroin supplier.

McCoy also asserts that during the 1960s the CIA used Laos' most powerful drug lords, the Hmoung gang, to help raise revenue and move weapons about for their secret war in that country. In exchange the agency helped them transport the drugs and allowed them to be sold to US troops stationed in Vietnam. The book Kiss the Boys Goodbye allegedly documents military officials stifling investigations into American prisoners of war left in Vietnam because the soldiers had been involved in this activity, specifically flying the CIA's Air America planes loaded with opium out of the "Golden Triangle", Laos, Burma and Thailand, over to Corsican and Mafia gangs in Marseilles and Sicily. One of these investigators, as it says in 50 Greatest Conspiracies of All Time, was H. Ross Perot, who was assigned by President Reagan to search for POWs, but and conducting an investigation, came back and reported to vice-president Bush that "I go looking for prisoners, but I spend all my time discovering that the government has been moving drugs around the world".

In his book The Big White Lie, former DEA agent Michael Levine claims first-hand knowledge that the CIA protected paramilitary terrorists under the command of Nazi war criminal Klaus Barbie, who purportedly ran "La Corporation", known as South America's "General Motors of Cocaine". This claim can be backed up by Jonathan Marshall and Peter Dale Scott in Cocaine Politics, where they say that the CIA escorted him to Bolivia to escape the charges and that he later became part of a group of Argentine Neo-fascist revolutionaries finances by drug money, who were also protected by the CIA. In 1970, a military junta of organized criminals led by General Carlos Suarez Mason, manipulated what's called the Bolivian Cocaine Coup with the help of Klaus Barbie and the CIA, who protected favorite cocaine barons and assisted them in transporting their drugs to the border. Both of these men were involved in an Italian Masonic lodge called "Propaganda Due" or P2, who supported fascist takeovers by drug lords in nations throughout the world. Suarez later put P2 brother Lopez Rega, soon to flee amid major drug charges, in command of the Argentine Anti-Communist Alliance (who met often with Oliver North). All of these people also had tremendous influence in the Latin American Anti-Communist Federation, and through this they contributed Argentine support to the Contra movements in Guatemala and Honduras in 1981. An aide to Sen. Jesse Helms, Nat Hamrick, who was a former business partner of ousted Anastazio Somoza's family, took Enrique Bermudez over to Argentina in April to rally support for the revolution. There Hamrick got $50,000 and a promise for more if he'd allow Contra training operations to be put under Argentine authority. Bermudez became commander of the FDN, 50 Contras were sent to Argentina for training, and the Army Intelligence Chief for Argentina was dispatched to Panama to coordinate their part in the mission.

The Panamanian Contra support, by the way, was major. When the CIA needed alternative ways of funding their mission after the passage of the Boland Amendment, they already had some friends in the business, and one of them was drug trafficker and revolutionary Gen. Manuel Noriega, who had been on the company payroll since 1969. According to an article published in The Christic Institute's Convergence, by May of 1971 The Bureau of Narcotics and Dangerous Drugs had heard "serious allegations" of Noriega's involvement with drug traffickers. The former Chief of Staff to Panama's military ruler Gen. Omar Torrijos told them that Noriega had "overall operational control" of the Panamanian narcotics trade. He would have been indicted on a major marijuana trafficking charge it weren't for "practical objections" from the U.S. Attorney's office in Miami. In 1976, then-CIA Director George Bush arranged for Noriega to receive $110,000 a year salary for his services, and had his Deputy CIA Director put him up as a house guest for a while. The Christic Institute says that in the eighties Noriega began supplying pilots who smuggled weapons to Contra leader Eden Pastora of the Southern Front, and that he also allowed members of Oliver North's "Enterprise" to set up corporate fronts in Panama that would disguise the Contra financing, such as Amalgamated Commercial Enterprises. In 1989 the Costa Rican legislature concluded that Noriega had helped to install at least seven pilots in Costa Rica who ran guns to the Contras and cocaine to the United States, and that this had been initiated by a request from Oliver North. North and his aide, Robert Owen were banned from the country.

In August of 1986 after the American press had widely reported Noriega's involvement with drugs, North recorded in his diary that he and the CIA's chief of Latin American operations, Duane Clarridge had discussed "5 clean up image" in order to repay him for his help in assassinating some Sandinista leadership. In a book by James Mills from that year, The Underground Empire, it says that a DEA agent in Panama City who was trying to set up a Special Field Intelligence Program to investigate, the trails of Panamanian drug money asked for approval from the local CIA station chief, who agreed to it provided he didn't pursue any links to Panamanian government officials.

The CIA also had old friends acquired way back when they were training Cuban revolutionaries for the Bay of Pigs invasion. According to Cocaine Politics, one of them was Frank Castro, who fled Cuba after the failed mission and became in the Southern Front Contra movement in Costa Rica. By this time he had been indicted for smuggling more than a million pounds of marijuana into the US, having worked for what his federal prosecutors called "the biggest cocaine smuggling ring of the mid-seventies". The book says he became involved with the Contras with the approval of CIA Station Chief Joseph Fernandez. Robert Owen reported to Oliver North in a memo made available to the Iran-Contra Committee that "several sources are now saying Pastora is going to be bankrolled by former Bay of Pigs veteran Frank Castro, who is heavily into drugs". :Later that year he also told North that Fernandez thought Castro could be "helpful". Castro was arrested in 1983 in Texas for drugs, but the charges were dropped in June 1984 after he opened a Contra training camp in Florida.

Other Bay of Pig vets included Luis Rodriguez, who had his federal drug indictment held up for four years while in the mid-eighties while he was receiving State Dept. contracts to help the contra resistance, and Miguel Felix Gallardo, said by the authors of Cocaine Politics to be "Mexico's single biggest smuggler" at the time, responsible for sending about four tons of cocaine to the US every month, who's pilot Werner Lotz said he was protected by the CIA because of his contributions to the Contras.

But these were by no means the only Contra supporters who were into the white powder. When Senator John Kerry's Subcommittee on Drugs, Law Enforcement and Foreign Policy investigated the subject, they found lots of evidence that the US State Department had paid companies owned by drug traffickers out of funds authorized by Congress for humanitarian aid to the Contras, in some cases after had been indicted or were under active investigation by federal law enforcement agencies for drug charges. although the National Humanitarian Assistance Organization was to have screened all hired supply contractors, they chose SETCO Air, a company established by Honduran drug trafficker Ramon Ballestros. It had a long-standing relationship with the largest of the Contra groups, Honduran-based FDN (Nicaraguan Democratic Force), which will become integral in our story. Starting in 1984, SETCO was the principal company used by the FDN to transport supplies and personnel. A 1983 Customs Investigative Report says that " SETCO stands for Services Ejectutivos Turistas Commander and is headed by Juan Ramon Matta Ballestros, a Class I DEA violator", and that "SETCO aviation is a corporation formed by American businessmen who are dealing with Matta and are smuggling narcotics into the United States". One of the pilots selected to fly supply missions for the FDN with SETCO was Frank Moss, under investigation as an alleged drug trafficker since 1979.

Frigorificos de Puntarenas, a Costa Rican seafood company, was used by the State Department to deliver humanitarian assistance funds to the Contras in late 1985, and continued to do so until mid 1986. According to testimony by one of its founding partners, Ramon Milian Rodriguez, it had, been created as a cover for laundering money. It was owned and operated by Luis Rodriguez, Carlos Soto and Ubaldo Fernandez, all convicted rug traffickers. Luis Rodriguez was also the president of Ocean Hunter, an American seafood company that bought shrimp from Frigorificos and used the inter-company transactions to launder drug money, according to his own testimony before a federal grand jury. In September of 1984, Miami police officials told the FBI of information they'd received indicating that Ocean Hunter was funding Contra operations through "narcotics transactions". However, nothing was done about this and Luis Rodriguez continued to receive NHAO funds into an account he controlled in the name of Frigorificos. In May 1986, Sen. Kerry told the Justice Dept., DEA, State Dept., NHAO and the CIA of information he'd received regarding these allegations and after nothing was done in August his Foreign Relations Committee asked the Justice Dept. for documents that could determine the truth or falsehood of the allegations, but Justice refused to even answer.

DIACSA, an aircraft dealership and parts supply company was chosen by the FDN during 1984 and 1985 for "Intra-account transfers". According to the Committee report, "the laundering of money through DIACSA concealed the fact that some funds for the Contras were through deposits arranged by Lt. Col. Oliver North". DIACSA president Alfredo Caballero was under DEA investigation for cocaine trafficking when his company was chosen by the State Dept. as an NHAO supplier. He was also a business associate of Floyd Carlton, "the pilot who flew cocaine for Panama's General Noriega". Accruing to DEA Special Agent Daniel E. Moritz, who worked undercover at DIACSA prior to 1985, Caballero was "the man in charge of operations for Floyd Carlton Caceres' cocaine transportation organization". Carlton, Caballero, and five others were indicted on Jan. 23, 1986 for bringing 900 pounds of cocaine into the US on Sept. 23 1985. However, this did not stop the State Dept. from paying DIACSA $41,120.90 on May 14, 1986 and Sept. 3, 1986.

VORTEX was contracted to "receive goods for the Contras, store, pack and inventory them". At the time the contract was signed, the VORTEX signature was Executive vice-president Michael B. Palmer, who was under active investigation by the FBI in three jurisdictions for drug smuggling, and the companies primary assets with which he would conduct his business for the Contras were two airplanes regularly used by Palmer for this purpose.

Before Senator Kerry went public with the report, he tried to get the Justice Department to act on the information. According to Eugene Weekly, on September 26, 1986 he met with Assistant US Attorney William Weld and gave him an eleven-page sworn statement from Wanda Pallacio, an FBI informant, that talked about CIA involvement in drug trafficking. Kerry left the room so that Weld could read it. Jonathan Winer Kerry's aide who took minutes on the meeting, said Weld "read about a half a page and chuckled". He never did anything about it.

The Kerry report also cited and American rancher named John Hull as "a central figure in Contra operations on the Southern Front", a man whose name is sprinkled throughout Oliver North's diaries and daily schedules from 1984 through late 1986. In a memo from Robert Owen to North on April 1, 1985 that was admitted as evidence in the Iran-Contra hearings, he pleasantly recounts the first time in 1983 when he first introduced Hull to Lt. North. The Kerry report says Hull was receiving $10,000 a month from Adolfo Callero of the FDN under Oliver North's direction. Five witnesses, Floyd Carlton, Werner Lotz, Jose Blandon, George Morales, and Gary Betzner, have testified that Hull was involved in cocaine trafficking. Betzner said he actually saw cocaine being loaded onto planes headed for the US on Hull' ranch with his consent. Others said they knew Hull's ranch had airstrips that were a popular spot for Contra supply planes carrying drugs, guns, or a combination to stop for refueling without fear of law enforcement because they knew Hull was protected by the CIA. In January 1989, Hull was arrested by Costa Rican police and charged with drug trafficking.

One of Hull's most infamous contacts was George Morales. According to a DEA agent named Gene Francar, who is written about in a book called The Cocaine Wars, he first met Morales in 1982 while arresting him for conspiracy to import marijuana, but the case was dropped by federal prosecutors "for reasons Francar could never understand". However, it wasn't long before he was arrested again, this time in 1984 for 21 counts of smuggling marijuana and Quaaludes and for operating "a continuing criminal enterprise". The latter charge should have gotten him, if convicted, a mandatory sentence of at least fifteen years, but Morales got out on a $2 million bond, "his trial was endlessly delayed", according to the book, and he was allowed to travel to the Bahamas, Cuba, the Dominican Republic, Panama and Mexico while waiting to be tried. During this time he seems to have continued smuggling. In January of 1986 (while he was still awaiting trial), one of the DEA's confidential informants, a pilot, told them that Morales had offered him $375,000 to fly three loads of cocaine from Costa Rica to Great Harbour Cay in the Bahamas. Finally, he was arrested in Miami in June that year for conspiracy to import cocaine, allowed no bond an sent directly to jail. This is when, as Morales claimed, he was approached by three Contra revolutionaries who purported to be CIA agents and said they would "take care" of his "legal problems" if he would let his planes be used to fly weapons down to the Contras and fly drugs back up, at which point he would sell them and donate much of the profits to the cause.

According to journalist Leslie Cockburn, "no less than eight separate sources (senior Contras and Reagan administration officials) have verified that these two men were indeed CIA operatives. They had not just picked Morales' name out of a hat. In his book Out of Control Cockburn says that when the CIA cut Southern Front leader Eden Pastora off the payroll after he refused to consolidate his Contra faction under the FDN, the official reason they gave was that Pastora had been involved with George Morales, who had been financing him and letting the Southern Front use his boats and planes to smuggle dope and arms. But when it became politically expedient they decided to use Morales to supply the Contra factions they approved of. Morales said the weapons were loaded onto planes at either the Executive Airport in Ft. Lauderdale or Opa-Locka Airport in Miami, in broad daylight, and flown to wither El Salvador, Honduras, or Costa Rica, where they would often be met by either John Hull or Felix Rodriguez (a.k.a. CIA agent Max Gomez), who was "a key figure", as The Cocaine Wars puts it, in Oliver North's Contra supply mission at Ilopango Air Force Base in El Salvador. Morales claims that Rodriguez was one of his drug connections and had arranged for one of Morales' pilots to fly twelve tons of marijuana HomeStead Air Force Base in Homestead, Florida. Two of Morales' pilots, also in jail for drug smuggling, back up his claims. According to the book, when Morales' trial finally came around, the defense subpoenaed CIA Director William Casey, Secretary of State George Schultz, and vice-president George Bush to corroborate his story.

One of the most infamous and currently relevant Contra training/ coke smuggling operations seems to have taken place through the Rich Mountain Aviation and Nella airports in Mena, Arkansas, then under the governorship of Bill Clinton. This story has been pretty much ignored in the mainstream media and obsessed upon in the right-wing underground. The center of all the publicity is Barry Seal, who became a DEA informant in 1984 to reduce his ten-year sentence on a Quaaludes trafficking charge to six months' probation. They conveniently had him set up the Medellin Cartel, looking for links to members of the Sandinista government, because, according to the book Desperados by Elaine Shannon, Oliver North and gang had their eyes on the case from the beginning, hoping to get some dirt on Nicaraguan officials that would justify getting more money out of Congress to fund the Contra war. The CIA equipped Seal's C-130 plane with video cameras, and he went off to shoot some blurry figures loading cocaine into the back, one of which, he claimed, was a "high-level" Nicaraguan aide named Federico Vaughn. He also presented some other shoddy evidence, according to the Wall Street Journal, such as a boarding pass and receipt for payment of a Managua airport tax which bore no date of proof of identification and appeared to have been forged. It also turned out that a "military airfield" he'd claimed Vaughn took him turned out to be a civilian field used mainly for crop dusting. But Oliver North immediately leaked the story to the Washington Post, where it appeared on July 17, 1984, complete with pictures. The Reagan administration rode the politics of the story for a couple of years, even though the DEA by then denied it, and thanks to North's leak Barry Seal was killed in April by the Medellin Cartel. According to Jack Anderson of the San Francisco Chronicle, two Louisiana state police investigators wrote a letter to the DEA blaming them for not protecting Seal , and accusing them of allowing him to smuggle drugs for his own profit while he was working under cover. In February of 1989, Rep. Bill Alexander (D., Ark) suggested convening a state grand jury to decide on these allegations, as the State Attorney General's office had been looking into them for a long time but, according to Arkansas state law, could not instigate a criminal prosecution. So the House Subcommittee on Crime sent an investigator to Mena to work with that office, whose investigation was being led by IRS Treasury investigator William Duncan, which turned out to be a great disaster.

What Duncan had dug up, as reported by freelancers Sally Denton and Roger Morris, were thousands of documents, ranging from Barry Seal's personal notes to to federal investigative and surveillance reports and court proceedings indicating that Seal had been employed with the government long before he became a DEA informant. He also interviewed friends and relatives who claimed he'd been employed with the CIA since the early 1970s. According to Customs agents, Seal's work fort them included the exportation of guns to the Contras and the importation of drugs to Colombia.

Duncan also ground a man named Richard Brenneke, a self-described "independent contractor with the Central Intelligence Agency". Brenneke said he made ten to twelve flights out of Rich Mountain, for which he kept flight logs that he released to investigators, flying guns to the Panamanian Defense Force and bringing back "four to six hundred pounds" of cocaine, and that he personally saw Mafioso John Gatti and other members of his New York crime syndicate come down to pick it up. (There is a whole in Brenneke's credibility, though. Cocaine Politics says that Sen. John Kerry's Subcommittee interviewed him and could find no evidence linking him to any intelligence work.)

Duncan found that employees at the Mena airport were laundering the profits by obtaining $10,000 cashiers checks that do not require a Currency Transaction Report. He also traced a large money trail to the Arkansas Development Finance Authority, a state agency invented by Governor Bill Clinton and his friends, convicted cocaine dealer Dan Lasater and attorney Webb Hubbell, now in jail for white collar crimes. It was supposedly there to arrange low-interest loans for schools and to business ventures that were in the interest of the state. But what Mr. Duncan found out through ADFA's Director f Marketing, Larry Nichols, was that instead, Lasater was, through the use of various company names, few of which belonged to legitimate business, buying bonds with drug money from Mena to raise capitol for loans to CIA proprietaries and other companies he controlled, or sometimes to people he needed to make payments to, effectively exchanging dirty money for a clean loan which wouldn't be repaid. Since ADFA was the issuer, the default would be covered with tax dollars. Bill Clinton signed off on every loan, for which he would, according to what Nichols told me in an interview, receive a $50,000 campaign contribution. This scheme is described in full in Compromised: Clinton Bush and the CIA, by Terry Reed, himself a former agent and Contra pilot trainer who claims to have set up drug money front companies for them and to have been present at meetings with Oliver North and Governor Clinton where the scheme was discussed.

However, Duncan's investigation ran into a lot of road blocks. He been working on it since April 1983, and in 1985 he sent his evidence to the US Attorney's office in Fort Smith, along with a recommendation that people at Rich Mountain be prosecuted for perjury, conspiracy, and violation of money laundering statutes. Attached was a list of about 20 prospective witnesses to be called. But as he stated in his deposition before the Joint Investigation in 1991, US Attorney Asa Hutchinson only subpoenaed three of them, and even they weren't allowed to testify before the grand jury to anything other than their names and addresses. No indictments resulted from this. Later, the deputy foreman for the grand jury, P.J. Pitts, called Duncan and told him that the jury had specifically asked to see certain evidence and to have Mr. Duncan subpoenaed. They were told by the judge that they could not see evidence that had not been admitted, and US Attorney Fitzhugh told them Duncan was in Washington and was not available at the time, which, according to him, was not true.

When it came time for Duncan to testify before Congress for the Iran-Contra investigations, there was more trouble. In December of 1987, the IRS assigned him some disclosure litigation attorneys, who, as he said, "gave me instructions which would have caused me to withhold information from Congress and also to perjure myself". Specifically they had asked him to deny he had any knowledge that Attorney General Edwin Meese had received a multi-thousand-dollar bribe from directly from Barry Seal, even if asked by the Committee. He said he felt "absolutely" that he was being asked to cover up the investigation.

Government in It's Own Defense

What's the official position on this story? On November 9, 1996, the Arkansas Democrat-Gazette reported that the CIA had told Congress they'd reviewed 40,000 pages of materials and interviewed forty people but found no evidence that their agency had been involved in "money laundering, narcotics trafficking, arms smuggling, or other illegal activities at or around Mena". They did, however, admit to a "two-week operation" at the Rich Mountain airport, throughout which the companies and enplanes involved did not know who they were working for, and to "limited contact" with Barry Seal during his work as an informant, where they provided "technical support" by mounting cameras inside his plane. However, they insist they did not know his "true identity" at the time.

As for Bill Clinton, he stated at a press conference on October 7, 1994, which was reported by Michah Morrison of the Wall Street Journal, that he hadn't known anything about the drug ring. However, as Morrison points out, when Winston Bryant was running for Attorney General of Arkansas in 1990, he tried to make Mena a campaign issue, and was warned by Clinton's aide Betsy Wright to "stay away from it", and later she wrote a similar note to Bill Duncan, expressing fear that "the A.G. might be investigating the governor's connection".

How about Lt. Col. Oliver North? An October 1994 article in the Washington Post said he had written in his diaries that a "trusted aide" had tipped him off about a Contra supply plane that was being used to smuggle narcotics. He wrote down the type of aircraft and the time it would be stopping in New Orleans. This same aid also told him there was another aircraft and crew who were listed in law enforcement records as being suspected of drug trafficking. In 1987 he testified before Congress that at the time he'd given this information to the DEA. But in October 1994, when asked by the Washington Post, the DEA issued a statement saying "there's no evidence he talked to anyone. We can't find the person he talked to if he did talk to them".

This is certainly not the only such reference made in North's personal papers, which were available to the Iran-Contra Committee. For example, on April 18, 1985, Robert Owen wrote him a memo saying that many members of "El Negro" Chamorro's UNO Contra faction were "questionable due to past indiscretions", such as Jose Robelo, whom he said had "potential involvement in drug running", and Sebastian Gonzales, whom he stated with certainty was "Now involved in drug running out of Panama". However, it if apparent from later notes and memos that this did not stop them from doing business with these people.

As the authors of Cocaine Politics pointed out, this was not the only indication of Contra drug running that the Iran-Contra Committee saw. They interviewed Jack Terrel in 1986, who had been in an American mercenary unit sent to aid the Contras and had knowledge that they had been allied with some Miami Cubans who hoped to use the arrangement to cover for drug activity. However, when they issues their report, they made no mention of it, and pretended as though it had only been a gun running investigation.

Also, this was not the only investigation going on that at that time about the same subject. Rep. Paul Rangel of New York, then chair of the House Select Committee on Narcotics Abuse and Control, had the US Customs agency conduct 38 separate investigations into the Contras and on June 23, 1986, Customs Commissioner William Rosenblatt gave them a letter confirming that 24 of them "indicated that individuals and organizations showed drug-related connections or activities, and recommended further investigations be done. But the Washington Post ran a headline which read, "Hill Panel Finds no Evidence Linking Contras to Drug Smuggling", and refused to print Charles Rangel's letter to the editor stating this was not the case.

Around the same time in the fall of 1987, Time assigned a staff writer, whose name is not mentioned, to look for evidence that the Contra supply network set up by Lt. Col. Oliver North was bringing drugs into the US. She found plenty, and wrote an article which, after having her write several revisions to make it more palatable to the administration, her editor finally canned. The reporter told Extra! that her boss' explanation to her was verbatim: "Time is institutionally behind the Contras. If this story were about the Sandinistas and drugs, you'd have no trouble getting it into the magazine".


There is no doubt that drugs have had a terrible effect on society, and especially in the last decade. Between 1986 and 1989, annual cocaine-related deaths in the US have risen from about 700 in 1986 (around the time crack was becoming widely available, to 2000 in 1989. At the same time, the average sentence length for drug offenses had, thanks to mandatory minimum laws, risen sharply in US District Courts, inversely proportionate to those for violent offenses. In 1980 the average sentence for a drug offense was 50 months, and climbed to 75 within ten years. This has meant an increase in prison populations. On June 30, 1995, 25 percent of 1,550,000 adults in federal prison were incarcerated for drug violations, equal to 388,000 people. One-third of the increase in prison population from 1980 to 1995 was sue to drug violations. Now it costs more than $9 billion a year to incarcerate these people. Blacks have been hit at a disproportionate rate. Between that time drug violations accounted for 91 percent of the 420 percent increase in their prison population.

So when people hear that the US government or members of it may have had a hand in this and gotten away with it, they are understandably angry. Michael Levine, former DEA agent has stated his view in his books that the CIA that most of the drug flow into the US to this day has the approval if not the assistance of the CIA and other government authorities, and in many circles this is a widely held view. Whether it is true or not, this country expends so much money and effort trying to fight drugs that we have a responsibility to look into charges that those efforts are being compromised by the people who are supposed to be helping. We also must do what we can to assure the public that the government has not been poisoning their children. If we don't take these concerns seriously, we're liable to foster more apathy and distrust in government, or perhaps full-scale rioting.

Although the current investigations by the Congressional Black Caucus and the Justice Department are a step in the right direction, but they're being done by Congressmen and Senators, who obviously have their own political biases, because they need them in order to get reelected. Besides, so many politicians still in office are implicated, if only tangentially, that it might not be in those people's best interests to do a further investigation. Clearly, we need an Independent Council and hearings that are broadcast live and reported often on television news, because a lot of concerned citizens out there want to know.

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