August 2, 1998

Contra-Cocaine -- Justice Denied

By Robert Parry

New evidence, contained in a Justice Department report, establishes that the Reagan administration knew from almost the outset that cocaine traffickers permeated the Nicaraguan contra army, yet did little to expose or to stop the contra-connected criminals.

The report by the Justice Department's inspector general reveals example after example of leads not followed, corroborated witnesses disparaged, official law-enforcement investigations sabotaged, and even the CIA facilitating the work of drug traffickers.

Ironically, Inspector General Michael Bromwich then joined a long parade of government investigators who shied away from obvious conclusions presented by the evidence. In his report's release on July 23, he stressed that "the Department of Justice's investigative efforts [in the 1980s] were not affected by anyone's suspected ties to the contras."

The next day, The Washington Post heralded the findings with the headline, "Justice Dept. IG Rebuts CIA-Crack Allegations." [WP, July 24, 1998]

Still, a close reading of Bromwich's investigation shows that it uncovered powerful new evidence revealing how consistently the Reagan administration made the contras' image and need for money a priority over stopping the smuggling of cocaine into the United States.

Bromwich's report focused on the West Coast contra-drug operations, in response to Gary Webb's 1996 "Dark Alliance" series in the San Jose Mercury News. But even from Bromwich's limited review, the evidence indicates that the contras and their supporters ran several parallel drug smuggling operations during the 1980s.

The report also found that the CIA shared little of its information about contra drugs with law-enforcement agencies and on three occasions disrupted cocaine-trafficking investigations that threatened the contras.

The new report dates the first contra-drug links back to the start of the war against Nicaragua's leftist Sandinista government in the early 1980s. The record then documents Washington's tolerance of drug-implicated contras and their allies through at least the middle of the decade.

As late as 1989, U.S. agents were still frustrating contra-cocaine investigations as they spirited drug-indicted contra backer John Hull out of Costa Rica so he could avoid trial there on narcotics and other charges. [See "John Hull's Great Escape."]

The Meneses Network

According to the report, one early contra-drug network centered around longtime Nicaraguan drug smuggler Norwin Meneses, who was a focus of Webb's series.

A confidential informant, identified only as "DEA CI-1," said that at the start of the contra war, Meneses taught "American agents" how to penetrate Nicaragua. The informant added that Meneses and his cohorts, Oscar Danilo Blandon and Ivan Torres, also contributed drug profits to the contras.

But DEA CI-1 said the trio distinguished between selling drugs for the contras (which they denied) and donating money "to help some of their contra friends and acquaintances, such as [contra leaders Eden] Pastora and [Adolfo] Calero," (which they acknowledged). In Bromwich's report, the informant's statement received multiple corroboration.

Renato Pena, a money-and-drug courier for Meneses, said that in the early 1980s, the CIA was allowing the contras to fly drugs into the United States, sell them and keep the proceeds. Pena, who also was the northern California representative for the CIA-backed FDN contra army, said the drug trafficking was forced on the contras by the inadequate CIA assistance provided in the war's early years. That money, ranging from $19 million to $24 million annually, was "peanuts" and pushed the contras into the arms of cocaine traffickers, said Pena.

Pena indicated that the sums transferred by Meneses to the contras were large, far more than the thousands of dollars which some other witnesses said they observed. Pena said that a Colombian contact known as "Carlos" once told him that "We're helping your cause with this drug thing. ... We are helping your organization a lot."

Meneses also had a military supply role. Pena said he was present when Meneses called FDN commander Enrique Bermudez and took orders for contra military equipment. According to Pena, Meneses stayed close to Bermudez from 1981-82 through the middle of the decade, while Bermudez was an important CIA asset leading the largest contra army, the FDN.

Pena asserted that Bermudez knew about the drug dealing -- and Bermudez clearly had reason to know. Meneses had been a notorious drug trafficker in Nicaragua prior to the Sandinista revolution in 1979.

But other witnesses were less certain about Bermudez's precise knowledge. Meneses's cohort, Blandon, has claimed that Bermudez might not have known the source of their money. However, Blandon described a 1982 meeting in Honduras during which Bermudez instructed Meneses to raise money for the contra cause, with the advice that "the ends justify the means."

In the new report, Bromwich finessed the question of Bermudez's knowledge. "Meneses's reputation had preceded him in the small Nicaraguan exile community and ... people who dealt with Meneses knew or should have known that money coming from him was likely from an illicit source," the inspector general wrote.

Much of the Meneses information from DEA CI-1 and Pena was corroborated by Meneses's nephew, Jairo. After his arrest in 1984, Jairo Meneses told the Drug Enforcement Administration that he had asked Pena to help transport drug money to the contras. Jairo Meneses added that both Norwin Meneses and Blandon told him they were raising money for the contras. Jairo Meneses added that his uncle dealt directly with Bermudez.

Wicker Baskets

Running parallel to the Meneses's operation was another contra drug network headed by Julio Zavala and Carlos Cabezas. Cabezas said he joined this "contra cocaine" enterprise in December 1981 when he traveled to Costa Rica for meetings with Zavala and two other drug figures closely linked to the contra operations, Horacio Pereira and Troilo Sanchez. Troilo Sanchez was the brother of Aristedes Sanchez, one of the FDN's directors.

Cabezas said Horacio Pereira and Troilo Sanchez described themselves as contra operatives who were raising money through drug sales. According to the scheme, Cabezas said, cocaine from Peru was packed into hollow reeds which were woven into tourist baskets and then transported to Costa Rica or Honduras. From there, smugglers carried the baskets to the United States. Cabezas claimed that Fernando Sanchez, another of Troilo's brothers and the FDN representative in Guatemala, assisted in the deliveries.

Once the baskets arrived in San Francisco, they went to Zavala for sale of the cocaine, Cabezas said. But Zavala proved incompetent, and by spring 1982, Pereira had turned to Cabezas to manage the drug money. Cabezas estimated that between December 1981 and December 1982, he made more than 20 trips to Central America as he carried between $1 million and $1.5 million to Pereira and Troilo Sanchez.

Cabezas said he personally witnessed some money paid to buy food for contra troops and their families near Danli, Honduras. Cabezas claimed that on two other occasions, he took $40,000 to $50,000 to Miami where he gave the money to Aristedes Sanchez.

Another U.S. informant, designated "FBI Source 1," backed up much of Cabezas's story. Source 1 said Cabezas and Zavala were helping the contras with proceeds from two drug-trafficking operations, one smuggling Colombian cocaine and the other shipping cocaine through Honduras.

To secure the cocaine franchise, Cabezas and Zavala had to agree to give 50 percent of their profits to the contras, said Source 1. He added that revenues from the cocaine sales then were taken to Honduras by Horacio Pereira and Fernando Sanchez to support the contras. The source also asserted that some of the cocaine was smuggled into the United States in the reeds of rattan chairs.

Seeking to discredit this batch of contra cocaine allegations, Bromwich cited Source 1's reference to "rattan chairs" as a contradiction to Cabezas's claim about cocaine in "wicker baskets." Both rattan chairs and wicker baskets, however, use hollow reeds in their construction.

Frogman Case

In 1983, the West Coast drug networks began to run afoul of the law. Fifty drug traffickers, many Nicaraguan exiles, including Cabezas and Zavala, were arrested in the so-called Frogman case, so named because some smugglers were caught in wet suits carrying cocaine ashore near San Francisco. But the DEA avoided giving attention to the conspirators' political affiliations.

By summer 1984, however, the CIA had grown nervous that the Frogman case might expose connections to the contras in Central America. Contras in Costa Rica had claimed in a letter to the federal court that $36,020 seized from drug defendant Zavala actually belonged to them.

As word spread inside the Reagan administration, CIA headquarters protested planned depositions of contra figures in Costa Rica. Assistant U.S. attorney Mark Zanides said that in mid-1984, he was approached by CIA counsel Lee Strickland. In an "opaque conversation," Zanides recalled, Strickland said the CIA would be "immensely grateful" if the depositions were dropped -- and they were.

The trip to Costa Rica was cancelled, the money was returned to Zavala and the government explained the move publicly as a simple budgetary decision. But the secret of the CIA's intervention soon reached Central America.

On Aug. 17, 1984, the CIA's station in Costa Rica messaged CIA headquarters with news that the U.S. consul was saying that the trip was "cancelled by 'the funny farm,'" which the consul meant as "a reference to CIA."

On Aug. 22, CIA counsel Strickland wrote internally that "I believe the station must be made aware of the potential for disaster. While the [contra-drug] allegations might be entirely false, there are sufficient factual details which would cause certain damage to our image and program in Central America."

Two days later, CIA headquarters sent a cable to the Costa Rica station acknowledging the CIA's role in derailing the depositions. "We can only guess as to what other testimony may have been forthcoming," the cable explained.

Recalling those maneuvers, a retired CIA official, identified as "Ms. Jones," told Bromwich's investigators that in 1984, the "burning issue" in the Zavala case was the "explosive" potential for bad publicity if the drug case implicated the contras. "What would make better headlines?" she asked.

Though the evidence of CIA obstruction was clear, Bromwich only mildly objected. He expressed "concern" that "the CIA considered the potential press coverage of a contra-drug link to be sufficient reason to attempt to influence the decision to return the money to Zavala."

The Morales Network

In fall 1984, CIA was finding other slithery problems when it turned over contra rocks. On Oct. 25, 1984, CIA reported that Southern Front contra leader Adolfo "Popo" Chamorro was discussing a cooperation agreement with a major drug trafficker in Miami.

Under the deal, the FRS, a contra army run by Eden Pastora, would provide "operational facilities," meaning airstrips, in Costa Rica and Nicaragua. The FRS also would get documentation from the Costa Rican government to "facilitate the transportation of narcotics."

The CIA, which had stormy relations with Pastora, did pass this intelligence to the Justice Department. On Nov. 9, the CIA identified the trafficker as Jorge Morales, a Colombian drug smuggler linked to the Medellin cartel.

According to the CIA: "On Oct. 16, 1984, Morales reportedly turned over to FRS two helicopters and a DC-3 aircraft. The agreement between Morales and FRS also includes training for two FRS pilots in Miami, who in addition to their FRS military duties, will fly narcotics from Colombia to FRS-provided landing fields in Costa Rica and Nicaragua and then on to the United States."

On Nov. 5, CIA reported FRS pilot Gerardo Duran was to make a flight for Morales from Miami to the Bahamas. Later that month, the CIA apparently learned Pastora was set to meet with Adolfo "Popo" Chamorro and Roberto "Tito" Chamorro -- and Morales -- on Nov. 29 in Miami.

The CIA added that the "presence of Duran in Miami indicates that a narcotics flight is scheduled and plans for the flight will probably be made during the meetings between the FRS officers and Morales."

However, the CIA supplied the information on Dec. 5, a week after the scheduled meeting. As Bromwich noted, if the tip was received by Nov. 28, "the CIA should have notified the DEA immediately [so authorities] could have tried to coordinate the interception of that flight."

Whether the CIA was tardy or not, the DEA did not appear eager to pursue contra drug leads anyway. DEA later complained that the CIA's source inside the Morales operation "had not furnished actionable information sufficient to predicate initiation of a criminal investigation." An internal CIA cable explained that the source was "frightened for his life and refused to cooperate with" the DEA.

Years later in prison, Morales agreed to cooperate with the DEA and told how his contra-drug conduit had developed. He said he first "associated with individuals alleged to have contra affiliations" in June 1983. Then, members of the Medellin cartel met at Opa Locka Airport in Florida with a contra group flown in by contra pilots Marcos Aguado and Gerardo Duran. Morales said CIA-connected rancher John Hull flew to Opa Locka with the group but did not participate in the meeting.

The next year, in May 1984, Morales said he was contacted by Marta Healy, ex-wife of Adolfo "Popo" Chamorro and the widow of a Morales pilot. She wanted money, pilots and aircraft for the contras and, in exchange, offered to help Morales with his then-pending drug indictment. Morales said she promised intervention from her "high-level CIA contacts, Octaviano Cesar and Popo Chamorro."

Subsequently, Morales said Cesar, another prominent contra with CIA ties, made the request more specific: move weapons for the contras through Hull's ranch in northern Costa Rica, give specialized training to contra pilots and donate $100,000 to Chamorro's contra group.

Morales said he countered with an offer of money, a safehouse in Miami, a boat, a helicopter, two airplanes and 10,000 gallons of fuel. In return for that help, Cesar was to supply pilots for marijuana smuggling and to "clear up" Morales's indictment.

With a supposed deal in place, Morales said he arranged for weapons to be airlifted to Hull's ranch, with the first shipments in the summer of 1984. Cesar and Chamorro also let Morales transport cocaine from Hull's ranch to Colombians in Florida, Morales declared. Morales said the flights continued into 1986, when he was arrested.

(Cesar and Chamorro have denied knowledge about Morales's drug business.)

Founding Fathers

In the meantime, the CIA's contra war was running into other troubles. Reports filtered back from Central America of contras killing civilians, raping women and torturing captives. Yet, the contras failed to occupy any Nicaraguan territory and the CIA mounted its own operations to create the appearance of contra competence. When the CIA mined Nicaragua's harbors in 1984, an international furor erupted and Congress cut off all U.S. military support.

Still, President Reagan pushed ahead. He hailed the contras as "the moral equals of our Founding Fathers," secretly sought out third-country support and arranged for White House aide Oliver North to funnel supplies to the contras. Reagan stepped up pressure, too, on Congress to restore CIA aid.

On the public relations front, however, news kept slipping out about contra misdeeds. In December 1985, Brian Barger and I wrote the first story about contra drugs for The Associated Press. At the time, State Department spokesman Charles Redman told other reporters that "we are not aware of any evidence to support those charges."

The story, however, prompted an inquiry by Sen. John Kerry, D-Mass. The DEA began asking informants about contra-drug connections. Soon, more corroboration was pouring in, as reflected in Bromwich's report.

In 1986, DEA developed evidence against Gerardo Duran, a contra pilot working with Morales. DEA reported that "intelligence information received by the Costa Rica Country Office over the past several years indicates that [Duran] has been involved in facilitating the transshipment of hundred-kilogram quantities of cocaine from South America to the United States through Costa Rica.

"Evidence gathered [by the Miami Field Division] shows that during the month of January, 1986, [Duran] was in charge of a crew which loaded over 400 kilos of cocaine into an aircraft in Costa Rica piloted by a DEA [confidential informant]. This cocaine was flown to the Bahamas and part of the load was subsequently smuggled into the United States."

The DEA, however, did not pursue the case very aggressively. It chose not to indict Duran in Miami "because he is Costa Rican and cannot be extradited from Costa Rica to the U.S." (Duran was arrested in Costa Rica in 1987 and convicted in 1992.)

The DEA also heard more corroboration of the West Coast allegations about Meneses and his contra links. One informant, "LA CI-1," told the DEA that after the Sandinistas took power, Meneses hosted early meetings of the contras and cultivated a relationship with Bermudez as a way to re-establish the drug network that Meneses had lost with the change in governments.

In April 1986, another "reliable" informant, designated "SR3," told the DEA that Meneses was an FDN member who had trafficked in drugs both for his own profit and to raise money for the contras.

SR3 himself had worked in the drug organization until Meneses fled to Costa Rica in 1985. SR3 confirmed, too, that Pena was a major contra fund-raiser in San Francisco and was responsible for sending drug money to the contras.

According to SR3, Meneses used family members to smuggle drugs proceeds from San Francisco through New Orleans and into Central America for the contras. SR3 added that some of the money went to buy weapons for the contras in Colombia.

(The contras did maintain a major logistical base in New Orleans, which was the focus of corruption complaints by contra backers, including allegations of drug smuggling. The base was run by Mario Calero, the brother of FDN political chief Adolfo Calero.)

CIA Evidence

The DEA also learned about other cocaine pipelines that directly implicated the CIA.

On March 20, 1986, DEA's Costa Rica office quoted a source as saying that contra pilot Carlos Amador was planning a cocaine flight from Costa Rica through El Salvador to Miami. The source said Amador possibly was picking up the cocaine in Hangar No. 4 at Ilopango Airport in El Salvador.

The cable requested that the DEA's Guatemala office, which covered El Salvador, should "ask Salvadoran police to investigate Amador, and any person(s) and/or companies associated with Hangar No. 4." The problem for the CIA, however, was that it controlled Hangar No. 4. The CIA had allocated space there to North's contra resupply effort.

The DEA cable was followed by a cable, dated April 23, 1986, from the CIA station in Costa Rica to the station in El Salvador, asking about Amador and the drug-trafficking allegations. Two days later, the CIA's station in El Salvador urged that the DEA halt any inquiries about Hangar No. 4.

The CIA cable stated that Amador had stopped flying for the contras in early 1985, though he had worked for the FDN afterwards in Honduras. While sharing the suspicions about Amador's drug trafficking, the cable asserted that Amador only transported military supplies to Hangar No. 4.

"Based on that information, [El Salvador] Station would appreciate [Costa Rica] Station advising [DEA] not to make any inquiries to anyone re: hangar no. 4 at Ilopango since only legitimate [CIA] supported operations were conducted from this facility. FYI," the cable continued. "Station air operations moved from hangar no. 4 into hangar no. 5 which Station still occupies."

The CIA's request apparently did slow the investigation. But on June 10, 1986, the CIA's El Salvador station cabled the Costa Rica station with news that a U.S. embassy officer in San Salvador had requested more information about Amador.

"The embassy officer said that if Amador is connected to [the CIA], [the DEA] will leave him alone, but if not they [the DEA] intend to go after him," the cable read. A week later, CIA headquarters denied any "association" with Amador. But the DEA's pursuit of drug-trafficking in El Salvador would not prove easy.

Celerino Castillo was the DEA officer responsible for El Salvador. On June 23, 1986, Castillo reported debriefing an informant known as "STG6," who knew Amador and other alleged traffickers.

STG6 said Amador used Salvadoran military credentials to land at Ilopango without the normal Customs search. STG6 added that Amador smuggled arms to the contras and cocaine from El Salvador to Miami. By fall, Castillo learned that a U.S. government agency, later identified as the CIA, had "obtained a U.S. visa" for Amador.

While the DEA slowly pieced together the contra-drug puzzle, the Reagan administration kept the lid on the new evidence and even planted stories in major newspapers dismissing the contra-drug allegations as fiction. By containing the contra-drug scandal in mid-1986, President Reagan did win congressional approval for renewed CIA contra funding, the $100 million annual amount that contra backers had always claimed was needed to fund the war properly. [For details, see The Consortium, July 23, 1998, or iF Magazine, July-August 1997.]

Drug-Sniffing Dogs

During this time period, the chief of the Salvadoran Air Force responded to DEA's growing suspicions about Ilopango drug trafficking by asking U.S. Ambassador Edwin Corr to place drug-sniffing dogs at the airfield. Corr rebuffed the request on the grounds that the evidence did not justify the expense. But the allegations continued.

In 1986, DEA agent Castillo began looking into the mysterious activities of a former U.S. military official, named Walter Grasheim, who operated out of San Salvador. Informant STG6 had identified Grasheim as "head of smuggling operations" at Ilopango.

"Grasheim owns and operates Hangar #4," alleged the informant who worked at the airport. "Said hangar is utilized by international cocaine and arms traffickers. Hangar #4 is also utilized by the Contra Movement in El Salvador."

On Oct. 27, Castillo opened a file on Grasheim, as part of a larger investigation of drug trafficking at hangars four and five. Castillo's investigative report identified 13 other "documented narcotics traffickers" who used the hangars.

The suspicions led to a search of Grasheim's house, which uncovered plastic explosives, grenades, sniper equipment, silencers, anti-tank rockets, automatic rifles and night-vision gear, but only small amounts of marijuana. Grasheim denied any drug role and explained that he had been hired by Salvadoran authorities as a military adviser.

On Oct. 30, Castillo briefed Corr, who knew Grasheim when he worked with the embassy's Military Group. Officially, Corr "welcomed any investigation on Grasheim but ... asked ... that the investigation be conducted in a very discreet manner," Castillo reported.

Unknown to Castillo, however, Corr went behind the agent's back. The ambassador sent a "back-channel" cable to the State Department asking DEA headquarters to review Castillo's investigation. DEA headquarters responded by judging the evidence inadequate and closing down the Grasheim file only days after the inquiry had started.

Suddenly, Castillo was under the embassy's watchful eye. In an interview with Bromwich's investigators, Corr said Castillo resisted the orders to drop the case and continued "to snoop around the airport and make allegations." Corr warned Castillo that unless he had more evidence, he should stop this "witch hunt."

Missing Briefing

The fall of 1986 brought more bad news for the contra operations. The Iran-contra scandal broke wide open, after one of North's supply planes was shot down inside Nicaragua and a Beirut magazine disclosed secret U.S. arms sales to Iran, a project which generated profits that North diverted into contra accounts.

Despite this evidence of other illicit contra fund-raising, the major Iran-contra investigations steered clear of any comprehensive examination of contra-drug trafficking.

According to an internal CIA memo, the agency's Central American Task Force chief Alan Fiers told congressional intelligence committees that the CIA would brief the DEA on the CIA's information about contra-drug trafficking. But that meeting apparently never happened.

Bromwich's report stated that "neither the DEA nor the CIA [Office of the Inspector General] could locate any record of any such discussions. Alan Fiers refused to be interviewed by the [Justice inspector general]. In response to our letter to him, he called us and said in a short conversation that he recalled only one instance when the CIA passed contra and narcotics-related information to the DEA" -- regarding Jorge Morales.

Sen. Kerry's investigation confronted similar stonewalls in 1987-88. It also suffered from Republican hostility and the mockery of the mainstream news outlets. But still Kerry determined that a number of cocaine smuggling operations had meshed with the contra war. [For details, see the Senate Foreign Relations Committee report, "Drugs, Law Enforcement and Foreign Policy," Dec. 1988, or Cocaine Politics by Peter Dale Scott and Jonathan Marshall.]

In 1989, with the Iran-contra scandal provoking more congressional restrictions on contra aid, the DEA soon got wind of more alleged contra-cocaine shipments.

In an interview with Bromwich's investigators, DEA supervisor Thomas deTriquet recalled that a reliable informant had passed on information about drug dealers using contra pilots to transport cocaine through Hangar No. 5, the one controlled by the CIA.

When Castillo and deTriquet went to Ilopango to investigate, however, a CIA officer turned them away, the report said. The DEA agents then went to the U.S. embassy where the CIA chief of station assured them that there was no drug activity at Hangar No. 5.

Robert Stia, DEA country attache in Guatemala, complained to headquarters that "DEA cannot develop the most important information, that relating to those allegations and intelligence in regards to Ilopango Air Force Base."

Stia also reported that in March 1989 a confidential source relayed information from a Salvadoran Air Force officer that the Salvadoran government and the CIA were running large shipments of cocaine through air bases at La Union and San Miguel in El Salvador. The goal again was to raise money for the contras, the source claimed.

Stia noted, too, that the U.S. Embassy objected to Castillo's involvement because of his reputation for always "digging up things." Stia said the deputy ambassador had put "stringent controls" on handling Castillo's "country clearance" for entering El Salvador. Castillo was soon hounded out of the DEA.

Summing up this recurring contra-drug defensiveness, Bromwich grasped the obvious: "We have no doubt that the CIA and the U.S. Embassy were not anxious for the DEA to pursue its investigation at the airport. The DEA's [first] investigation of drug trafficking activities at Ilopango was closed in 1986, perhaps with the intervention of the U.S. Embassy.

"Moreover, as reflected in the CIA's cables in the Amador case, the CIA requested that the DEA not investigate its operations at Ilopango, and the CIA vouched that they were legitimate CIA-supported operations. It is also clear that there was intelligence, although not hard evidence, that some contra resupply pilots were trafficking in drugs."

At the end of the 1980s, the contras still were failing militarily. But the Sandinistas lost at the polls in 1990 and the war ended. Some contra-connected drug traffickers, such as Norwin Meneses, returned to Nicaragua where they reestablished their drug networks but finally got caught. In prison, Meneses continued to profess his innocence.

Some witnesses, such as Jorge Morales, were deemed credible in later DEA investigations of non-contra drug trafficking, though dismissed as not credible when they implicated the contras. Morales's non-contra DEA cooperation won him early release from prison. He returned to Colombia, where he died in a car crash in 1991.

No official from the Reagan administration was ever held legally accountable for contra-drug trafficking. Most Washington journalists were content to file the contra-cocaine allegations away in the category of baseless "conspiracy theories."

Copyright (c) 1998

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