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A Sordid History, The CIA and the War on Drugs

From Tom Burghardt <>
Date Wed, 10 Jun 1998 08:40:53 -0700 (PDT) 

      A - I N F O S  N E W S  S E R V I C E
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        |||  * News * Analysis * Research * Action *  |||
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|| * --  SPECIAL  -- *   June 10, 1998    * --  EDITION  -- * ||
                       * SPECIAL EDITION *
                              * * *
                         A SORDID HISTORY:
                 THE CIA & THE `WAR AGAINST DRUGS'
                 Colombia's Blowback - Former CIA-Backed
                 Paramilitaries Are Major Drug Traffickers Now,
                 by Frank Smyth
     2. (ITT)    IN THESE TIMES: US - Don't Ask, Don't Tell, by
                 Martha Honey [1982 `Memorandum of Understanding]
     3. (PNS)    PINK NOISE STUDIOS: 1982 Correspondence Between
                 US Attorney General William Franch Smith & CIA
                 Director William Casey
     4. (IPS)    INSTITUTE FOR POLICY STUDIES: A Tangled Web - A
                 History of CIA Complicity in Drug International
                              * * *
     AFIB EDITOR'S NOTE: The article below by investigative
     journalist Frank Smyth was published last Fall by the
     Transnational Institute (Amsterdam) and Accion Andina
     (Cochabomba, Bolivia) as a chapter titled, "La Mano Blanca
     en Colombia," in the book _Crimen Uniformado [Crime in
     Uniform]: entre la corrupcion y la impunidad_, 1997. It
     appears in Antifa Info-Bulletin with the author's
                       COLOMBIA'S BLOWBACK:
                          By Frank Smyth
     The CIA has long backed anti-communist allies who, either
during their relationship with the agency or later, ran drugs.
This comes as no surprise. As early as 1960, U.S. military
manuals encouraged intelligence operatives to ally themselves
with "smugglers" and "black market operators to defeat communist
insurgents, as reported by Michael McClintock in his seminal book
_Instruments of Statecraft_. In fact, the CIA did just that. Take
Southeast Asia. Later in the that same decade the agency allied
itself with, among others, the Hmong in Laos, who, according to
historian Alfred W. McCoy in his book _The Politics of Heroin:
CIA Complicity in the Global Drug Trade_, were trafficking opium.
Or Afghanistan. There in the 1980s the CIA backed the Mujahedeen
against the Soviet Union. In the 1990s, according to Tim Weiner
of the New York Times, the same Mujahedeen have controlled up to
one third of the opium (used to make heroin) reaching the United
     Colombia is an even better example today.
     In addition to suffering from rampant common crime, Colombia
is a country crippled by two ongoing political campaigns. One is
a three-decade war pitching the CIA-backed Colombian military and
allied rightist paramilitaries against formerly pro-Moscow and
pro-Havana, leftist guerrilla groups. The other campaign is the
drug war, where the battle lines are far less clear. Elements of
all these sides are involved in Colombia's drug trade, which
includes the processing of about 80 percent of the world's
cocaine, the base substance of crack.
     The CIA is no exception. Since 1995, an elite CIA counter-
drug team commanded by, progressively enough, a woman, and
staffed mainly by young, competent technocrats, has been
instrumental in apprehending all top seven leaders of Colombia's
Cali cartel. But back in 1991, another CIA team played a
different role. More interested in supporting Colombia's dirty
counter-insurgency than its counter-drug efforts, this team
helped forge and finance a secret anti-communist alliance between
the Colombian military and illegal paramilitary groups, many of
whom are running drugs today.
     Why was this alliance made secret? Colombia had outlawed all
such paramilitary groups two years before in 1989. Why did
Colombia do that? A Colombian government investigation had found
that these same paramilitaries had been taken over by the
Medellin drug cartel led by the late Pablo Escobar. At the time,
Escobar and his associates were fiercely resisting U.S.-backed
pressure for Colombia to pass extradition laws intended to make
them stand trial in the United States on drug trafficking
charges. So they took control of Colombia's strongest
paramilitaries, using them to wage a terrorist campaign against
the state. These same paramilitaries, based in the Middle
Magdalena valley, were behind a wave of violent crimes, including
the 1989 bombing of Avianca flight HK-1803, which killed 111
passengers. Investigators concluded that the bomb was detonated
by an altimeter, and that the perpetrators had been trained in
such techniques by Israeli, British and other mercenaries led by
an Israeli Reserved Army Lieutenant Colonel, Yair Klein. The
Colombian military had helped protect this training, to the point
of even being in radio contact with the paramilitaries' training
base, while Escobar had paid the mercenaries' fees.
     The CIA, however, ignored these facts when it decided two
years later to help renew -- in secret -- the alliance between
the Colombian military and paramilitary groups. By then, even
though the cold war was over and Eastern bloc aid had long since
dried up, Colombia's leftist insurgents were still relatively
strong. And many trade union, student and peasant groups, among
others, provided them with political and sometimes even
logistical forms of support. CIA officers knew that
paramilitaries -- civilians usually led by retired military
officers -- could provide the Colombian military with plausible
deniability for assassinations of suspected leftists and similar
crimes. "A vast network of armed civilians began to replace, at
least in part, soldiers and policemen who could be easily
identified," writes Javier Giraldo, a Jesuit priest and founder
of Colombia's Inter-Congregational Commission for Justice and
Peace. "They also started to employ methods that had been
carefully designed to ensure secrecy and generate confusion."
     But neither the CIA nor any other U.S. agency admitted that
it was still backing Colombia's counter-insurgency campaign.
Instead U.S. officials claim that all U.S. support to Colombia,
since 1989, has been designed to further the drug war. "There was
a very big debate going on [about how to best allocate] money for
counter-narcotics operations in Colombia," said retired U.S. Army
Colonel James S. Roach, Jr., who was then the top U.S. military
attache in Bogota as well as the Pentagon's ranking Defense
Intelligence Agency (DIA) liaison there. "The U.S. was looking
for a way to try to help. But if you're not going to be
combatants [yourselves], you have to find something to do."
     Do, they did. First an inter-agency team including
representatives of the U.S. embassy's Military Advisory Group in
Bogota, the U.S. Southern Command in Panama, the DIA in
Washington and the CIA in Langley made recommendations to
completely overhaul Colombia's military intelligence networks.
Then The CIA independently provided funds to incorporate
paramilitary forces into them. It didn't matter that these
paramilitary forces were illegal in Colombia at the time. Nor did
it matter that they had been outlawed explicitly over the growing
influence of the late Pablo Escobar and his Medellin drug cartel
in directing them.
     In addition to drug trafficking, Colombia's nefarious
paramilitaries had already been implicated in widespread human
rights abuses. This led the Defense Department, for one, to
discourage the Colombian military from incorporating them into
these new intelligence networks. "The intent was not to be
associated with paramilitaries," said Colonel Roach, who was also
in regular contact with CIA officers in Bogota. He says they had
another approach. "The CIA set up clandestine nets of their own.
They had a lot of money. It was kind of like Santa Claus had
arrived." CIA spokesman Mike Mansfield declined to comment.
     News of these clandestine intelligence networks was first
brought to light by Human Rights Watch, in November 1996 released
U.S. and Colombian military documents, as well as oral testimony,
to show that both the Defense Department and the CIA, in late
1990, encouraged Colombia to reorganize its entire military
intelligence system. In may 1991, Colombia formed 41 new
intelligence networks nationwide "based on the recommendations
made by the commission of U.S. military advisors," according to
the original Colombian order which established them. Later, four
former Colombian operatives from one of network in central
Colombia's Magdalena valley testified that it incorporated
illegal paramilitary groups, paying them to both gather
intelligence and assassinate suspected leftists. Though U.S.
officials still maintain that they supported this intelligence
reorganization as part of their drug war efforts, the same
Colombian order quoted above instructs these new intelligence
networks to fight only "the armed subversion" or leftist
     Indeed most of Colombia's leftist guerrillas, especially
among the formerly pro-Moscow FARC, are also involved with drugs.
But a U.S. interagency study recently ordered by the Clinton
administration's former ambassador in Bogota, Myles Frechette,
found the guerrillas' role to be limited to mostly protecting
drug crops, and, to a lesser degree, processing operations.
Meanwhile, rightist paramilitaries allied with the military
protect far more drug laboratories and internal transit routes,
according to both U.S. intelligence and Colombian law enforcement
authorities. In fact, according to one Colombian law enforcement
report, drug trafficking today is -- again -- the paramilitaries'
"central axis" of funding.
     Similarly, according to another report from a different law
enforcement entity, this one about the Magdalena valley in 1995
by top detectives from Colombia's Judicial and Investigative
Police, the military and paramilitaries there are allied "not
only for the anti-subversive struggle, but also to profit and
open the way for drug traffickers." One paramilitary suspect it
names is "the well-known narco-trafficker Victor Carranza." A
contemporary of Medellin's Escobar, Carranza first established
himself by rising to the top of Colombia's lucrative emerald
trade among the Bo-yaca mountains, and by wiping out a large
guerrilla front there at the same time. Soon Carranza also became
a major landowner, buying large swaths of it in the eastern
plains of Meta, a province choked with drug crops as well as
laboratories. Today Colombian police identify Carranza as both a
multi-ton level drug trafficker, and one of the key leaders of
Colombia's many illegal paramilitary groups like, in Meta, the
infamous "Black Snake." Human rights groups have accused Carranza
of engineering assassinations as well as massacres.
     There is no evidence that Carranza has ever been either a
CIA asset or informant. But his anti-communist credentials are
unquestionable. And he runs frequently in military crowds.
Military eyewitnesses say that military officers in
Villavicencio, Meta have even met him inside the Los Llanos hotel
there which he owns. U.S. officials too know a lot about him.
"Carranza comes up constantly in intelligence reporting," one
such expert says. An old-fashioned gangster, "Don Victor," as he
is respectfully called by his men, still frequents the emerald
mines and likes to be the first to pick out the largest stones
from the best veins uncovered. Yet, Carranza remains untouchable,
even though one of his purported lieutenants, Arnulfo Castillo
Agudelo, also known as "Scratch," was arrested in 1995 implicated
Carranza in circumstances involving over 40 corpses which had
been exhumed -- six years before -- on one of Carranza's Meta
ranches. "Scratch" declined to be interviewed in Modelo prison in
Bogota. Carranza, who avoids publicity, was also unavailable for
     In recent years, Carranza has been expanding his operations
in central Colombia throughout the Magdalena valley. The above
police report notes: "Carranza is planning to acquire Hacienda
Bella Cruz [there] to use as a base for his activities, [and]
bring in 200 paramilitary operatives from Meta." Witnesses say
that it is now teeming with armed men, who have displaced
hundreds of local peasants. In total, Carranza and other drug
suspects have bought about 45,000 acres of land throughout the
Magdalena valley, according to Jamie Prieto Amaya, the Catholic
bishop there, quoted in the Bogota news-weekly Cambio 16.
     Still another suspect is Henry Loaiza, also known as "The
Scorpion." Demonstrating the importance of paramilitaries to the
overall drug trade, he was one of the top seven Cali cartel
suspects arrested with CIA help since 1995. Like Carranza, "The
Scorpion" is also implicated in several specific civilian
massacres of suspected leftists carried out jointly by military
and paramilitary forces, including the 1989 Trujillo massacres
(involving chainsaws) near Cali. Other drug suspects identified
by the Colombian police include military officers like Major
Jorge Alberto Lazaro, a former Army commander also accused of
ordering paramilitaries to commit massacres in the Magdalena
valley. Today this same central Colombian valley, which runs
about 400 miles north toward Caribbean ports, is a major corridor
for both processed drugs and precursor chemicals.
     The CIA helped enable Colombia's military and paramilitaries
to collaborate in the dark -- more than a year after the Berlin
Wall fell. By doing so, the CIA has facilitated crimes involving
both human rights and drug trafficking. Such behavior was
reprehensible during the cold war. It is completely indefensible
     Frank Smyth is a freelance journalist who has written about
     drug trafficking in The Village Voice, The New Republic, The
     Washington Post and The Wall Street Journal. He is co-author
     with Winifred Tate of "Colombia's Gringo Invasion," _Covert
     Action Quarterly_, Number 60, Spring 1997. The article above
     was reprinted in _Colombia Bulletin: A Human Rights
     For more information on U.S. intervention in Colombia, or to
     subscribe to _Colombia Bulletin_, please contact:
                  * COLOMBIA SUPPORT NETWORK *
                         P.O. Box 1505
                       Madison, WI 53701
                      Tel: (608) 257-8753
                      Fax: (608) 255-6621
           Subscriptions - 1 year $25; low income $12.50
                              * * *
                       * IN THESE TIMES *
                          - May 1998 -
                    US: DON'T ASK, DON'T TELL
                         By Martha Honey
     In testimony before the House Select Committee on
Intelligence on March 16, the Central Intelligence Agency once
again suffered a blow to its reputation. This time the injury was
self-inflicted. The CIA's own top watchdog, Inspector General
Frederick P. Hitz, admitted that although "dozens of individuals
and a number of companies" involved in the agency's covert war
against Nicaragua during the '80s were suspected drug
traffickers, the CIA had legal authority to ignore their crimes
as long as they were helping contra rebels fight the left-wing
Sandinista government.
     Hitz revealed that between 1982 and 1995 the spy agency had
an agreement with the Justice Department, allowing it to ignore
drug trafficking by its "agents, assets and non-staff employees."
The directive, known as a "Memorandum of Understanding" (MOU),
did not exempt the agency's full-time, career employees, who are
known as CIA "officials." However, the agency did not have to
tell the Justice Department about the criminal activities of
"agents" or "assets" -- terms used interchangeably to refer to
its paid and unpaid spies. Also exempt were CIA contractors, such
as pilots, accountants and military trainers, who supplied the
agency with specific goods and services rather than intelligence.
"There was no official requirement to report on allegations of
drug trafficking with respect to non-employees of the agency,"
Hitz told the committee.
     Hitz said this agreement, which he termed "a rather odd
history," has since been changed. But it was not until 1995 --
five years after the end of the war in Nicaragua and three years
into Clinton's first term -- that the agreement was revised to
include agents, assets and contractors as "employees" whose
suspected criminal activities, such as drug trafficking, must be
reported to the Justice Department.
     Disclosure of this agreement is another black eye for the
CIA at a time when the agency is trying to distance itself from
persistent allegations of drug trafficking, including the
provocative August 1996 "Dark Alliance" series in the San Jose
Mercury News. Veteran journalists, investigators, policy analysts
and members of Congress interviewed by In These Times all say
they were unaware of the directive. "This previously unknown
agreement enabled the CIA to keep known drug smugglers out of
jail and on the payroll of the American taxpayer," says Peter
Kornbluh, a senior analyst with the National Security Archive,
who has written extensively on the CIA and the war in Nicaragua.
"CIA officials realized collaborating with pro-contra drug
smugglers was important to the goal of overthrowing the
Sandinistas and it sought protection from the Justice
     In 1982, when the MOU was implemented, the United States was
gearing up for a covert war in Central America aimed at toppling
the Sandinistas. Over the next eight years, the CIA hired scores
of Latin American, Cuban and American spies, as well as dozens of
aviation, fishing and real estate companies, to support the
contras. Simultaneously, cocaine began flooding into the United
States, fueling the crack epidemic that has devastated Los
Angeles, Baltimore and other cities.
     David MacMichael, who was a senior CIA officer in the early
'80s, says that while he was not aware of this MOU, he does
recall that "in 1981, [CIA Director William] Casey went to
attorney general [William French] Smith looking for a blanket
exemption from prosecution for CIA officers for crimes committed
in the line of duty." Smith demurred, he says.
     Since the mid-'80s, a spate of media reports, congressional
inquiries, and court cases in the United States and Central
America have linked contra officials and collaborators with
cocaine traffickers, money launderers and various front
companies. Many of those implicated also claimed or were alleged
to be working for the CIA. In 1996, the accusations erupted anew
with the publication of Gary Webb's Mercury News series, which
detailed how a Nicaraguan drug ring used black street gangs to
sell crack cocaine in Los Angeles. Over the years, the CIA has
repeatedly denied allegations that it dealt with drug dealers.
     Those denials have been championed by Washington Post
reporter Walter Pincus, a specialist in national security affairs
and a leading critic of the Mercury News series. Pincus, who has
yet to report on Hitz's testimony, says he had not been
previously aware the directive. "I am still trying to get a
clarification of it," he says, adding that it may not be very
significant. "All it admits is that what they were doing was
legal. On occasion they were dealing with people who may or may
not have been dealing in drugs."
     In December 1985, reporters Robert Parry and Brian Barger
wrote the first story tying the CIA's contra operation to cocaine
smuggling. The piece for The Associated Press angered Reagan
administration officials, who tried unsuccessfully to block its
publication. During the contra war, most of the media either
ignored or discredited the drug trafficking reports. Parry
maintains that his pursuit of this story helped cost him jobs at
AP and Newsweek. "Historically we were correct," Parry says. "We
pointed to a serious problem in a timely fashion, and we were all
punished and ridiculed. The reporters who put this story down
have gone on to fame and fortune."
     Parry calls Hitz's disclosure "extremely significant." "It
amounts to a blank check for dealing with drug traffickers," he
says. "The agency is admitting that it engaged in covering up
drug crimes by the contras and that this was legal."
     Major media also ignored the 1989 findings of Sen. John
Kerry's (D-Mass.) Subcommittee on Terrorism, Narcotics and
International Operations. The Kerry committee's two-year
investigation turned up substantial evidence of cocaine smuggling
and money laundering by persons connected to the contras and the
CIA. Among the conclusions of its 1,166-page report:
  * "Drug traffickers used the contra war and their ties to the
     contras as a cover for their criminal enterprises in
     Honduras and Costa Rica. Assistance from the drug lords was
     crucial to the contras, and the traffickers in turn promoted
     and protected their operations by associating with the
     contra movement."
  * "Drug traffickers provided support to the contras and used
     the supply network of the contras. Contras knowingly
     received both financial and material assistance from the
     drug traffickers."
  * "Drug traffickers contributed cash, weapons, planes, pilots,
     air supply services and other materials to the contras."
  * "In each case, one or another U.S. government agency had
     information regarding these matters either while they were
     occurring, or immediately thereafter."
     The report was all but ignored by the three major networks
and buried in the back pages of the major newspapers. Combined,
the stories in the Washington Post, New York Times and Los
Angeles Times totalled less than 2,000 words.
     At the March congressional hearing, Hitz explained that the
MOU between the agency and the Justice Department was modified
slightly in 1986, prohibiting the CIA from paying those suspected
of involvement in drug trafficking. The CIA, however, could
legally continue to use suspected drug smugglers and not report
their activities, as long as they received no money from the
     But for major drug traffickers, being allowed to operate
under the CIA's umbrella was payment enough. The Kerry
committee's report, along with most press accounts of the
CIA-cocaine connection, alleges that the contras accepted money
and supplies from drug smugglers and money launderers -- not the
other way around.
     John Mattes, a young public defender in Miami in the
mid-80s, stumbled upon the allegations of drug trafficking by
Cuban-Americans working with the contras. Mattes, who represented
several cocaine traffickers and soldiers-of-fortune who testified
before the Kerry committee, says traffickers were seeking
protection, not money, from the CIA. "There was a marriage of
convenience between the contras and the coke smugglers," he says.
The smugglers had cash, planes and pilots, while the Contras had
intelligence, airstrips and, most importantly, unimpeded access
to the United States. "And that, to a drug smuggler," he says,
"is worth all the tea in China."
     During the '80s, the CIA conducted several internal
inquiries and announced it found no substantial evidence that
contra leaders and other persons working for the CIA had
connections to cocaine traffickers. Then, the "Dark Alliance"
series touched off a volatile, nationwide controversy over the
agency's role in introducing crack to Southern California street
gangs. To help quell public and congressional anger, both the CIA
and Justice Department launched separate internal investigations.
Both reports were scheduled to be released last December, but
were withheld at the last minute without explanation.
     Attorney General Janet Reno subsequently announced that she
had blocked the release of the Justice Department report (rumored
to be the more substantial and significant of the two) for
unspecified "law enforcement reasons." Justice Department sources
told in These Times that one of the people named in the report is
a government witness in an ongoing criminal case, whose identity
must be protected. However, Jack Blum, a Washington attorney and
investigator for the Kerry committee, doubts that the Justice
Department will ever release its report. Blum says law
enforcement officials often claim disclosures will jeopardize
ongoing cases, and he wonders why the report was not simply
edited to protect the informant's identity.
     In late January, the CIA released a declassified version of
volume one of its two-part report. Entitled "The California
Story," this 149-page report focuses on the cocaine network
described in the "Dark Alliance" series, which detailed the
activities of two Nicaraguan drug smugglers, Danilo Blandon and
Juan Norwin Meneses. In the early '80s, Meneses and Blandon
supplied large quantities of powder cocaine to Ricky Ross, an
African-American drug dealer, who then turned it into crack for
sale to two Los Angeles gangs. Webb alleges that the Nicaraguans
gave some of their drug profits to top contra officials who were
working with the CIA.
     Hitz called the CIA's 18-month investigation "the most
comprehensive and exhaustive ever conducted" by the agency. He
told the congressional committee: "We found absolutely no
evidence to indicate that the CIA as an organization or its
employees were involved in any conspiracy to bring drugs into the
United States," But, taken in conjunction with what Hitz said
about the MOU, "employees" here may pertain only to CIA career
officials -- not agents, assets or contractors.
     Webb, whose reporting touched off the controversy, describes
the report as "schizophrenic." "The Executive Summary says
there's no CIA involvement," says Webb. "The actual report shows
there are CIA fingerprints all over this drug operation."
     For example, upon the release of volume one, CIA Director
George Tenet proclaimed that the Agency "left no stone unturned"
in reaching its conclusion that the CIA had "no direct or
indirect" ties to Blandon and Meneses. Yet, the report contains a
compendium of indirect links between the CIA's contra army and
drug traffickers. The most obvious admissions contained in the
report include:
   * An October 22, 1982, cable from the CIA's Directorate of
     Operations that reports, "There are indications of links
     between (a U.S. religious organization) and two Nicaraguan
     counter-revolutionary groups...These links involve an
     exchange in (the United States) of narcotics for arms." The
     report goes on to say that there was to be a meeting in
     Costa Rica of contras, several U.S. citizens and Renato
     Pena, a convicted drug dealer who was part of Meneses'
     operation. Astonishingly, a November 3, 1982, cable from CIA
     headquarters says that the agency decided "not to pursue the
     matter further" because of "the apparent participation of
     U.S. persons throughout."
   * The CIA directly intervened in the 1983 "Frogman Case," in
     which San Francisco police seized 430 pounds of cocaine and
     arrested 50 individuals, including a number of Nicaraguans.
     Because the CIA feared the agency's connections to some of
     the contras involved had "potential for disaster," an
     unidentified CIA lawyer convinced the U.S. Attorney in San
     Francisco and Justice Department officials to cancel plans
     to take depositions from contra leaders in Costa Rica and to
     return $36,800 seized in the drug raid to one of the contra
     factions. "There are sufficient factual details which would
     cause certain damage to our image and program in Central
     America," CIA assistant general counsel Lee Strickland wrote
     in a August 22, 1984, memo quoted in the report.
   * Blandon and Meneses met on various occasions with the
     contras' military commander, Enrique Bermudez, who worked
     for the CIA. At one meeting in Honduras in 1982, Bermudez,
     arguing that "the ends justify the means," asked the pair
     for help "in raising funds and obtaining equipment" and arms
     for the contras. After the meeting, a group of contras
     escorted Blandon and Meneses to the Tegucigalpa airport,
     where the pair was arrested by Honduran authorities because
     they were carrying $100,000 in cash, profits from a Bolivian
     drug deal. The contras intervened and the money was returned
     to Blandon and Meneses. The report inexplicably concludes
     that there is no evidence that Bermudez knew the duo were
     drug traffickers, even though CIA cables show the agency was
     aware that Meneses had been a "drug king-pin" since the
     At the congressional hearings, lawmakers cited these and
other portions of the report, questioning the agency's capacity
to investigate itself. Among the most vocal critics were Los
Angeles Democratic Reps. Maxine Waters and Juanita Millender-
McDonald, whose districts have been the epicenter of the crack
epidemic. Waters charged that the report was "fraught with
contradictions and illogical conclusions," saying that the CIA's
cleverly worded denials of links to drug traffickers in Southern
California "defies the evidence."
     Volume two of the report, which covers the entire Nicaraguan
war, was scheduled to be turned over to the House and Senate
intelligence committees in late March. But, as of mid-April, CIA
officials told In These Times, the report had not been released
to Congress. In his congressional testimony, Hitz said that
volume two will contain "a detailed treatment of what was known
to CIA regarding dozens of people and a number of companies
connected in some fashion to the contra program or the contra
movement, that were the subject of any sort of drug trafficking
     Previewing the report, Hitz admitted: "There are instances
where the CIA did not, in an expeditious or consistent fashion,
cut off relationships with individuals supporting the contra
program, who are alleged to have engaged in drug trafficking
activity or take action to resolve the allegation." Several
congressional sources say that they suspect the report will never
be released. While the precise wording of the MOU has not been
made public, some say the directive may be considerably broader
than implied at the hearing. At one point in his testimony, Hitz
said the MOU applied to "intelligence agencies," indicating that
it also may include the dozen or so U.S. agencies involved in
intelligence work, not just the CIA. Hitz declined requests for
an interview.
     But the CIA may not be able to get away without further
disclosures. The National Security Archive and other public
interest groups, as well as Reps. John Conyers (D-Mich.) and
Waters, are mounting a campaign for the declassification and
release of the text of the MOU, the Justice Department report,
volume two of the CIA report, tens of thousands of pages of
documents and hundreds of interviews compiled by the two agencies
in the course of their internal investigations. Attorney Blum
warns that CIA officials who testified before the Kerry committee
may have perjured themselves in denying they knew of any links
between the CIA, the contras and cocaine traffickers. And
investigative journalists Parry and Webb, among others, say
Hitz's admission may be the smoking gun that conclusively proves
that the CIA colluded with and then concealed its involvement
with cocaine traffickers.
     Martha Honey is director of the Peace and Security program
     at the Institute for Policy Studies in Washington, D.C.
     During the '80s, she covered the war in Nicaragua as a
     journalist in Costa Rica.
     Article Courtesy of Paul Wolf,
                              * * *
     AFIB EDITOR'S NOTE: The 1982 correspondence below from US
     Attorney General William French Smith and CIA Director
     William Casey is a section from a large file posted on the
     Pink Noise Studios web page: "Intelligence Authorization Act
     1999, House of Representatives, May 7, 1998." Portions of
     those hearings, including the complete 1982 and 1995 CIA/DoJ
     Memorandum of Understanding, comments by Reps. Millender-
     McDonald, John Conyers and Maxine Waters and a chronological
     history of CIA complicity with global narco-trafficking
     compiled by the Institute for Policy Studies [see below],
     has been catalogued by Pink Noise Studios Research Director
     Bob Gonsalves.
                      * PINK NOISE STUDIOS *
                    Art - Technology - Politics
                     - Wednesday, 3 June 1998 -
Office of the Attorney General,
Washington, DC, February 11, 1982.
Hon. William J. Casey,
Director, Central Intelligence Agency, Washington, DC.
     Dear Bill: Thank you for your letter regarding the
procedures governing the reporting and use of information
concerning federal crimes. I have reviewed the draft of the
procedures that accompanied your letter and, in particular, the
minor changes made in the draft that I had previously sent to
you. These proposed changes are acceptable and, therefore, I have
signed the procedures.
     I have been advised that a question arose regarding the need
to add narcotics violations to the list of reportable
non-employee crimes (Section IV). 21 U.S.C. 874(h) provides that
`[w]hen requested by the Attorney General, it shall be the duty
of any agency or instrumentality of the Federal Government to
furnish assistance to him for carrying out his functions under
[the Controlled Substances Act] . . .' Section 1.8(b) of
Executive Order 12333 tasks the Central Intelligence Agency to
`collect, produce and disseminate intelligence on foreign aspects
of narcotics production and trafficking.' Moreover, authorization
for the dissemination of information concerning narcotics
violations to law enforcement agencies, including the Department
of Justice, is provided by sections 2.3(c) and (i) and 2.6(b) of
the Order. In light of these provisions, and in view of the fine
cooperation the Drug Enforcement Administration has received from
CIA, no formal requirement regarding the reporting of narcotics
violations has been included in these procedures. We look forward
to the CIA's continuing cooperation with the Department of
Justice in this area.
     In view of our agreement regarding the procedure, I have
instructed my Counsel for Intelligence Policy to circulate a copy
which I have executed to each of the other agencies covered by
the procedures in order that they may be signed by the head of
each such agency.
William French Smith,
Attorney General
                              * * *
The Director of Central Intelligence,
Washington, DC, March 2, 1982.
Hon. William French Smith,
Attorney General, Department of Justice, Washington, DC.
     Dear Bill: Thank you for your letter of 11 February
regarding the procedures on reporting of crimes to the Department
of Justice, which are being adopted under Section 1-7(a) of
Executive Order 12333. I have signed the procedures, and am
returning the original to you for retention at the Department.
     I am pleased that these procedures, which I believe strike
the proper balance between enforcement of the law and protection
of intelligence sources and methods, will now be forwarded to
other agencies covered by them for signing by the heads of those
With best regards,
William J. Casey.
                              * * *
                         A TANGLED WEB:
  Prepared by the Institute for Policy Studies, Washington, D.C.
                              * * *
     The Office of Strategic Services (OSS) and the Office of
Naval Intelligence (ONI), the CIA's parent and sister
organizations, cultivate relations with the leaders of the
Italian Mafia, recruiting heavily from the New York and Chicago
underworlds, whose members, including Charles `Lucky' Luciano,
Meyer Lansky, Joe Adonis, and Frank Costello, help the agencies
keep in touch with Sicilian Mafia leaders exiled by Italian
dictator Benito Mussolini. Domestically, the aim is to prevent
sabotage on East Coast ports, while in Italy the goal is to gain
intelligence on Sicily prior to the allied invasions and to
suppress the burgeoning Italian Communist Party. Imprisoned in
New York, Luciano earns a pardon for his wartime service and is
deported to Italy, where he proceeds to build his heroin empire,
first by diverting supplies from the legal market, before
developing connections in Lebanon and Turkey that supply morphine
base to labs in Sicily. The OSS and ONI also work closely with
Chinese gangsters who control vast supplies of opium, morphine
and heroin, helping to establish the third pillar of the
post-world War II heroin trade in the Golden Triangle, the border
region of Thailand, Burma, Laos and China's Yunnan Province.
     In its first year of existence, the CIA continues U.S.
intelligence community's anti-communist drive. Agency operatives
help the Mafia seize total power in Sicily and it sends money to
heroin-smuggling Corsican mobsters in Marseille to assist in
their battle with Communist unions for control of the city's
docks. By 1951, Luciano and the Corsicans have pooled their
resources, giving rise to the notorious `French Connection' which
would dominate the world heroin trade until the early 1970s. The
CIA also recruits members of organized crime gangs in Japan to
help ensure that the country stays in the non-communist world.
Several years later, the Japanese Yakuza emerges as a major
source of methamphetamine in Hawaii.
     Chinese Communist revolution causes collapse of drug empire
allied with U.S. intelligence community, but a new one quickly
emerges under the command of Nationalist (KMT) General Li Mi, who
flees Yunnan into eastern Burma. Seeking to rekindle
anticommunist resistance in China, the CIA provides arms,
ammunition and other supplies to the KMT. After being repelled
from China with heavy losses, the KMT settles down with local
population and organizes and expands the opium trade from Burma
and Northern Thailand. By 1972, the KMT controls 80 percent of
the Golden Triangle's opium trade.
     The CIA launches Project Bluebird to determine whether
certain drugs might improve its interrogation methods. This
eventually leads CIA head Allen Dulles, in April 1953, to
institute a program for `covert use of biological and chemical
materials' as part of the agency's continuing efforts to control
behavior. With benign names such as Project Artichoke and Project
Chatter, these projects continue through the 1960s, with hundreds
of unwitting test subjects given various drugs, including LSD.
     In support of the U.S. war in Vietnam, the CIA renews old
and cultivates new relations with Laotian, Burmese and Thai drug
merchants, as well as corrupt military and political leaders in
Southeast Asia. Despite the dramatic rise of heroin production,
the agency's relations with these figures attracts little
attention until the early 1970s.
     Manuel Antonio Noriega goes on the CIA payroll. First
recruited by the U.S. Defense Intelligence Agency in 1959,
Noriega becomes an invaluable asset for the CIA when he takes
charge of Panama's intelligence service after the 1968 military
coup, providing services for U.S. covert operations and
facilitating the use of Panama as the center of U.S. intelligence
gathering in Latin America. In 1976, CIA Director George Bush
pays Noriega $110,000 for his services, even though as early as
1971 U.S. officials agents had evidence that he was deeply
involved in drug trafficking. Although the Carter administration
suspends payments to Noriega, he returns to the U.S. payroll when
President Reagan takes office in 1981. The general is rewarded
handsomely for his services in support of Contras forces in
Nicaragua during the 1980s, collecting $200,000 from the CIA in
1986 alone.
MAY 1970
     A Christian Science Monitor correspondent reports that the
CIA `is cognizant of, if not party to, the extensive movement of
opium out of Laos,' quoting one charter pilot who claims that
`opium shipments get special CIA clearance and monitoring on
their flights southward out of the country.' At the time, some
30,000 U.S. service men in Vietnam are addicted to heroin.
     The full story of how Cold War politics and U.S. covert
operations fueled a heroin boom in the Golden Triangle breaks
when Yale University doctoral student Alfred McCoy publishes his
ground-breaking study, The Politics of Heroin in Southeast Asia.
The CIA attempts to quash the book.
     Thai national Puttapron Khramkhruan is arrested in
connection with the seizure of 59 pounds of opium in Chicago. A
CIA informant on narcotics trafficking in northern Thailand, he
claims that agency had full knowledge of his actions. According
to the U.S. Justice Department, the CIA quashed the case because
it may `prove embarrassing because of Mr. Khramkhruans's
involvement with CIA activities in Thailand, Burma, and
JUNE 1975
     Mexican police, assisted by U.S. drug agents, arrest Alberto
Sicilia Falcon, whose Tijuana-based operation was reportedly
generating $3.6 million a week from the sale of cocaine and
marijuana in the United States. The Cuban exile claims he was a
CIA protege, trained as part of the agency's anti-Castro efforts,
and in exchange for his help in moving weapons to certain groups
in Central America, the CIA facilitated his movement of drugs. In
1974, Sicilia's top aide, Jose Egozi, a CIA-trained intelligence
officer and Bay of Pigs veteran, reportedly lined up agency
support for a right-wing plot to overthrow the Portuguese
government. Among the top Mexican politicians, law enforcement
and intelligence officials from whom Sicilia enjoyed support was
Miguel Nazar Haro, head of the Direccion Federal de Seguridad
(DFS), who the CIA admits was its `most important source in
Mexico and Central America.' When Nazar was linked to a multi-
million-dollar stolen car ring several years later, the CIA
intervenes to prevent his indictment in the United States.
APRIL 1978
     Soviet-backed coup in Afghanistan sets stage for explosive
growth in Southwest Asian heroin trade. New Marxist regime
undertakes vigorous anti-narcotics campaign aimed at suppressing
poppy production, triggering a revolt by semi-autonomous tribal
groups that traditionally raised opium for export. The CIA-
supported rebel Mujahedeen begins expanding production to finance
their insurgency. Between 1982 and 1989, during which time the
CIA ships billions of dollars in weapons and other aid to
guerrilla forces, annual opium production in Afghanistan
increases to about 800 tons from 250 tons. By 1986, the State
Department admits that Afghanistan is `probably the world's
largest producer of opium for export' and `the poppy source for a
majority of the Southwest Asian heroin found in the United
States.' U.S. officials, however, fail to take action to curb
production. Their silence not only serves to maintain public
support for the Mujahedeen, it also smooths relations with
Pakistan, whose leaders, deeply implicated in the heroin trade,
help channel CIA support to the Afghan rebels.
JUNE 1980
     Despite advance knowledge, the CIA fails to halt members of
the Bolivian militaries, aide by the Argentine counterparts, from
staging the so-called `Cocaine Coup,' according to former DEA
agent Michael Levine. In fact, the 25-year DEA veteran maintains
the agency actively abetted cocaine trafficking in Bolivia, where
government official who sought to combat traffickers faced
`torture and death at the hands of CIA-sponsored paramilitary
terrorists under the command of fugitive Nazi war criminal (also
protected by the CIA) Klaus Barbie.
     DEA agent Enrique `Kiki' Camerena is kidnapped and murder in
Mexico. DEA, FBI and U.S. Customs Service investigators accuse
the CIA of stonewalling during their investigation. U.S.
authorities claim the CIA is more interested in protecting its
assets, including top drug trafficker and kidnapping principal
Miguel Angel Felix Gallardo. (In 1982, the DEA learned that Felix
Gallardo was moving $20 million a month through a single Bank of
America account, but it could not get the CIA to cooperate with
its investigation.) Felix Gallardo's main partner is Honduran
drug lord Juan Ramon Matta Ballesteros, who began amassing his
$2-billion fortune as a cocaine supplier to Alberto Sicilia
Falcon. (see June 1985) Matta's air transport firm, SETCO,
receives $186,000 from the U.S. State Department to fly
`humanitarian supplies' to the Nicaraguan Contras from 1983 to
1985. Accusations that the CIA protected some of Mexico's leading
drug traffickers in exchange for their financial support of the
Contras are leveled by government witnesses at the trials of
Camarena's accused killers.
     Deciding that he has outlived his usefulness to the Contra
cause, the Reagan Administration approves an indictment of
Noriega on drug charges. By this time, U.S. Senate investigators
had found that `the United States had received substantial
information about criminal involvement of top Panamanian
officials for nearly twenty years and done little to respond.'
APRIL 1989
     The Senate Subcommittee on Terrorism, Narcotics and
International Communications, headed by Sen. John Kerry of
Massachusetts, issues its 1,166-page report on drug corruption in
Central America and the Caribbean. The subcommittee found that
`there was substantial evidence of drug smuggling through the war
zone on the part of individuals Contras, Contra suppliers, Contra
pilots, mercenaries who worked with the Contras supporters
throughout the region.' U.S. officials, the subcommittee said,
`failed to address the drug issue for fear of jeopardizing the
war efforts against Nicaragua.' The investigation also reveals
that some `senior policy makers' believed that the use of drug
money was `a perfect solution to the Contras' funding problems.'
     Honduran businessman Eugenio Molina Osorio is arrested in
Lubbock Texas for supplying $90,000 worth of cocaine to DEA
agents. Molina told judge he is working for CIA to whom he
provides political intelligence. Shortly after, a letter from CIA
headquarters is sent to the judge, and the case is dismissed. `I
guess we're all aware that they [the CIA] do business in a
different way than everybody else,' the judge notes. Molina later
admits his drug involvement was not a CIA operation, explaining
that the agency protected him because of his value as a source
for political intelligence in Honduras.
     Former head of the Venezuelan National Guard and CIA
operative Gen. Ramon Gullien Davila is indicted in Miami on
charges of smuggling as much as 22 tons of cocaine into the
United States. More than a ton of cocaine was shipped into the
country with the CIA's approval as part of an undercover program
aimed at catching drug smugglers, an operation kept secret from
other U.S. agencies.
                              * * *
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