The Crack-UP

In August 1996, a San Jose Mercury News reporter named Gary Webb broke the story of his life, a three-part series titled "Dark Alliance." Webb's story documented the exploits of a Nicaraguan drug ring that sold cocaine on the streets of the U.S. to finance a CIA-backed war against the Sandinista government.

At the time, Webb had no idea that "Dark Alliance" would also be the last story of his 20-year career. But in the months that followed, Webb found himself the target of a vilification campaign led by the mainstream press, especially The New York Times and Los Angeles Times. Those papers had suddenly found themselves in the awkward position of having been scooped on a well-documented story both had dismissed as rumor more than a decade earlier.

The anti-Webb campaign reached its zenith in May 1997, when Mercury News executive editor Jerry Ceppos published a mea culpa and backed away from Webb's story. Then he transferred Webb to the Mercury News' remote Cupertino bureau, forcing him to leave his wife and children hundreds of miles away. In Cupertino, the Mercury News ordered Webb to file copy on such pressing local concerns as a constipated police horse.

At first, Webb fought the transfer through the Mercury News' writers guild; he ultimately resigned from the newspaper and-after taking a job in Sacramento with the California legislature-wrote a book that could do justice to his story, which had been heavily condensed and edited in the original series.

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Part of the criticism facing Webb from the start was that he had never sought official CIA comment for his story. It was untrue: the agency had stonewalled Webb's repeated (and documented) attempts through the U.S. Freedom of Information Act (FOIA) to gain insight into the agency's side of the story. The CIA has also refused to comply with several FOIAs filed by the OC Weekly, one of the few publications to pursue local follow-ups to Webb's story.

New evidence suggests Webb was right from the start. As a result of the controversy over "Dark Alliance," the CIA was forced by the U.S. Senate Intelligence Oversight Committee to review its records on contra drug dealing. The agency's new report-which was released in two volumes over the course of this year and reviewed by Webb in the following story-contradicts every major point The New York Times and Los Angeles Times have asserted about Iran-contra drug running since the term entered America's public consciousness more than 10 years ago.

Among other things, the CIA now acknowledges that as early as 1981 it had information showing that the contras were planning to deal drugs in the U.S.-and did nothing to stop it. The reason, according to the CIA report, was technical: because the contras weren't considered agency "employees," the CIA didn't have to act on such information. The report also shows that the CIA deliberately misled Congress on what it knew about the problem-by giving "incomplete briefings" to Congress during a series of crucial Iran-contra hearings in 1987.

For Webb and anyone else who dared doubt the CIA's dismissal, this report, however belated, is a vindication that couldn't come from a more appropriate or powerful source.

 

In January 1987, a little item appeared in the gossipy "Washington Talk" column of The New York Times that probably left many readers scratching their heads. Under the small subhead "The Contras and Drugs," the paper quoted an unnamed U.S. senator saying the committees investigating the Iran-contra scandal were considering a probe into reports of drug trafficking by the CIA's Nicaraguan contra guerrillas.

Almost as an aside, the blurb noted that some senators were concerned that "any official inquiry on this topic and how much, if anything, American officials knew about it would create such an uproar that it could derail the main thrusts of the Senate inquiry: to sort out the Reagan administration's secret arms sales to Iran and diversion of profits to the contras."

Since The New York Times had printed nothing about drugs and the contras until then, a reader would have been justified in wondering why this strange new issue suddenly had the power to send the entire Iran-contra investigation careening off its narrow rails.

Now we know, thanks to a recently declassified CIA Inspector General's report. The sale of missiles to the Ayatollah Khomeni, it seems, wasn't the real scandal of the Iran-contra affair. It was the sale of cocaine to American citizens.

Though hacked and shredded to about half its original length for alleged national-security reasons, the 361-page CIA report paints such a damning picture of official malfeasance that it is now obvious why neither Congress nor the Reagan administration wanted the issue of contra drug dealing aired in 1987. Had these secret cables surfaced during the firestorm of controversy then raging over Iran-contra, it is likely neither the CIA nor the Reagan administration would have survived the conflagration.

 

By 1987, the CIA report shows, the agency was sitting on six years' worth of reports from field agents, station chiefs, informants, assets, private citizens and some of the contras themselves, all indicating that Ronald Reagan's "freedom fighters" were shipping planeloads of cocaine and marijuana into the U.S. The Justice Department's files likewise bulged with evidence of contra drug running, including eyewitness testimony from inside informants. Ditto for the State Department. The CIA had briefed Vice President George Bush personally.

"Allegations of drug trafficking continue to plague our operations," CIA headquarters grumbled in a July 1986 cable to its agents in Costa Rica.

In many cases, the allegations were far from vague. The CIA knew the tail numbers of the drug-running planes, the names of the pilots and their criminal histories, the hangars they were using, the airbases they were flying in and out of, the names of the distributors and wholesalers-in short, just about everything one needed to know. And it was little wonder, since many of the traffickers were working with the CIA or the Justice Department in some fashion.

A prime example was international drug kingpin Norwin Meneses, a California-based contra who supplied the South-Central crack market with tons of cocaine powder during the 1980s and early 1990s. A 1988 FBI cable shows that the Bureau knew Meneses was working for the DEA and believed he "was, and may still be, an informant for the Central Intelligence Agency." At the time, the FBI was unsuccessfully seeking his indictment on federal cocaine-trafficking charges.

According to the report, the CIA not only failed to act against the Contra traffickers but also, deliberately or otherwise, misled others who were investigating them. The agency repeatedly sent false reports to U.S. attorneys, U.S. Customs and other federal agencies, assuring them that the CIA had no record of men and companies who were plainly listed in CIA files as being involved with drugs.

Most important, the declassified cables show the CIA knew exactly what it was doing and was fully aware of how the American public would react if word of its shenanigans ever surfaced.

"There is a very real risk that news of our relationship with [Alan Hyde], whose reputation as an alleged drug trafficker is widely known to various agencies, will hit the public domain-something that could bring our program to a full stop," CIA headquarters nervously cabled its agents in Honduras in July 1987. Six years later, the CIA report says, the agency was still protecting Honduran trafficker Hyde in an effort to keep the CIA's relationship with drug dealers during the contra war under wraps.

"A March 11, 1993, cable discouraged counternarcotics efforts against Alan Hyde because 'his connection to the CIA is well-documented and could prove difficult in the prosecution stage,'" says the report, which was posted on the CIA's Web site in early October (www.odci.gov/CIA/publications/ cocaine2/contents.html).

Among other things, the declassified cables reveal:

*The CIA knew from the very beginning of the war that the men it had hired to run its main contra army were narco-terrorists, but it continued to finance and protect them. In September 1981, just as the CIA was becoming formally involved with the contras, the agency learned that a faction called the Legion of September 15 "had made a decision to engage in drug smuggling to the United States in order to finance its anti-Sandinista operations." One drug shipment to Miami had already taken place, the CIA was told. In addition to dope dealing, the CIA knew the Legion "to some extent engaged in kidnapping, extortion and robbery to fund its operations," as well as "the bombing of Nicaraguan civilian airliners and airline hijacking."

A few months after discovering the Legion's involvement with drugs, the CIA put the group's senior commanders in charge of the agency's newly formed contra organization, the Nicaraguan Democratic Force (FDN). "No information has been found to indicate any action to follow up or corroborate the allegations concerning 15th of September Legion drug smuggling into the United States," the CIA report states.

That would prove to be no small oversight. According to the testimony of former LA drug kingpin Danilo Blandon, the contra middleman who sold Norwin Meneses' cocaine to South-Central's crack dealers, it was the Legion's commander in chief, Enrique Bermudez, who recruited him and Meneses in late 1981 to raise money for the contras in California. As part of their fund-raising efforts, they began selling cocaine to the street gangs of South-Central and, in the process, helped touch off the crack-cocaine explosion there.

The head of the FDN's air force, Arnoldo (Frank) Arana, was suspected by both the FBI and DEA of being a drug trafficker. Arana had been under criminal investigation by a presidential anti-drug task force in 1983 and was suspected of smuggling a 100-kilo load of cocaine-worth about $5 million wholesale-into the U.S. that year. The FBI accused him in 1986 of being "the primary pilot in a drug-smuggling enterprise." A month after Arana was named to a senior leadership position with the contras, he showed up in Brownsville, Texas, with two brothers who were working for one of the biggest cocaine traffickers on the planet, the Honduran kingpin Juan Matta Ballesteros.

 

"If Arana is mixed up with the Perez brothers," the DEA warned the agency, "he is probably dirty." That may explain the worried notation the CIA Inspector General found scribbled on the cable reporting Arana's promotion: "Arana . . . still active and working. We may have a problem."

*The CIA received information as early as 1983 that Panama's intelligence boss, Manuel Noriega, a longtime CIA asset, was dealing dope through the contras. A CIA contractor told the Inspector General that he received information from contra commander Hugo Spadafora "that Noriega was smuggling drugs with the contras" and that Noriega's high school buddy, contra leader Sebastian "Guachan" Gonzalez, was deeply involved. "The independent contractor adds that he reported the Gonzalez drug allegation in October 1983 to his superior, who replied that CIA had heard some rumors of drug trafficking involving the contras."

Shortly after Spadafora went to the DEA with his allegations against Noriega and the contras, he was murdered by Noriega's security forces. The report reveals that the CIA and Noriega then plotted ways to "defuse an effort by family members of slain rebel Hugo Spadafora to implicate Manuel Antonio Noriega in drug trafficking."

*One of the CIA's key agents assigned to the Costa Rican contra armies, a Venezuelan who used the pseudonym "Ivan Gomez," was believed by CIA polygraph experts to have "directly participated in illegal drug transactions, concealed participation in illegal drug transactions, and concealed information about involvement in illegal drug activity." In an interview in late 1996, former San Francisco contra drug courier Carlos Cabezas named Gomez as the CIA agent to whom he had delivered money from contra cocaine sales. Gomez admitted during CIA-administered lie detector tests in 1987 that he was laundering drug money during the months Cabezas says he was delivering it to him, but Gomez claimed he was doing it for his brother, not the contras. The CIA believed the agent was "concealing . . . much more personal and direct involvement in drug smuggling than he can report" and fired him in 1988.

*CIA agent Felipe Vidal, a Cuban the CIA says "served as a logistics coordinator for the contras" in Costa Rica, was a convicted drug dealer and was working for a Miami company that was importing cocaine into the U.S. from Costa Rica. Top CIA officials knew of Vidal's drug-dealing associations and his "general thuggery," as former CIA chief Alan Fiers put it, but they kept him on the CIA payroll and continued to protect him. In the midst of the Iran-contra probe, the CIA shut down an internal investigation of Vidal because "narcotics trafficking relative to contra-related activities is exactly the sort of thing that the U.S. attorney's office will be investigating." The CIA's lawyers fretted that any information the internal probe turned up "could be exposed during any future litigation."

*Two of Norwin Meneses' drug-trafficking associates, New Orleans distributor Manuel Porro and LA distributor Sebastian Pinel, were identified in the CIA report as important figures behind the formation of the contras. Porro, who was arrested by the DEA in 1979 as part of a sweep called "Operation Alligator," became FDN political boss Adolfo Calero's personal assistant and "reportedly handled Calero's funding transactions between Miami and San Jose, Costa Rica, banks."

The Inspector General's report should put to rest the long-simmering historical debate over what the CIA as an institution knew about the contras' drug trafficking. The answer: it knew everything, despite its best efforts to remain ignorant.

A former station chief in Central America told CIA inspectors that he became aware of drug-trafficking allegations against the contras "fairly early" during his assignment.

"Early traces revealed these folks should be treated carefully. Some were scoundrels," he acknowledged. But the fact that the CIA did nothing about it "had to be considered in the context of [then-CIA director] William Casey's overriding political objectives," the station chief added. "Yes, there is derogatory stuff, and we would be careful in terms of counterintelligence and operational security, but we were going to play with these guys. That was made clear by Casey and by [Latin American division chief Dewey] Clarridge."

One of the most jarring examples of the agency's studied indifference to contra drug dealing came during an interview it conducted in 1987 with a particularly unsavory CIA asset working with the contras in Costa Rica. Moises Dagoberto (Dago) Nunez, a Bay of Pigs veteran, ran a shrimp fishery in Puntarenas, Costa Rica; the CIA report laconically describes the fishery as a "seafood company that was created as a cover for laundering drug money." The DEA's office in Costa Rica had been getting reports "for two or three years" that Nunez's company was shipping cocaine to the U.S., but because Nunez was one of the DEA's informants there, nothing was done. The drug loads definitely weren't shrimpy. In January 1986, DEA agents in Miami intercepted 400 pounds of coke concealed in a crate of yucca that was destined for Vidal's employer, Ocean Hunter.

 

Despite its fragrant background, Nunez's company was awarded a no-bid U.S. State Department contract in early 1987 to funnel "humanitarian aid" to the contras. Soon, Lieutenant Colonel Oliver North and the National Security Council (NSC) began laundering hundreds of thousands of dollars through the shrimp company's bank accounts, just as the Medellin Cartel had done.

In March 1987, as the Iran-contra scandal was convulsing the public, CIA agents "questioned Nunez about narcotics-trafficking allegations against him. Nunez revealed that since 1985, he had engaged in a clandestine relationship with the National Security Council. Nunez refused to elaborate on the nature of these actions, but he indicated it was difficult to answer questions relating to his involvement in narcotics trafficking because of the specific tasks he had performed at the direction of the NSC," according to the CIA's recently released report.

In other words, North-the man who would soon emerge as the hero of the Iran-contra hearings-and the Reagan White House had been in cahoots with drug traffickers.

After first instructing its Costa Rican agents to follow up on Nunez's heart-stopping revelations, CIA headquarters changed its mind and quickly slammed on the brakes. "The next day," the Inspector General wrote, "a Headquarters cable stated, 'Headquarters has decided against . . . debriefing Nunez.' The cable offered no explanation for the decision."

But Louis Dupart, the CIA's compliance officer for the contra project, had one. "The agency position was not to get involved in the matter," he told CIA inspectors. "It had nothing to do with the agency but with the National Security Council. It was someone else's problem."

That sentiment was echoed by the CIA's Central American Task Force chief Alan Fiers. "My recollection is that because of the NSC connection and the possibility that this could be somehow connected to [North's] Private Benefactor program . . . a decision was made not to pursue this matter, but rather to turn it over to Judge Lawrence Walsh, the Independent Counsel for Iran-contra," Fiers said.

The issue of drugs and the NSC never arose during the congressional Iran-contra hearings or during North's later trial for lying to Congress. Nor does it appear from Walsh's files that any great effort was made to settle the question. In an interview, Walsh recalled that his prosecutors spent little, if any, time investigating North's links to drug traffickers because it was outside the very narrow confines the courts had put on his probe.

The CIA report also makes it clear that the congressional committees charged with overseeing the CIA were "not taken" with the contra drug issue, either. In fact, some staffers helped the CIA keep the information bottled up. One of the most striking aspects of the CIA report is just how much drug-related information the CIA did reveal to Congress and how little of it leaked out to the public.

So where was the watchdog press while the Reagan administration, Congress and the CIA were scrambling to keep a lid on the contra drug connection? Dishing out the official story as fast as it could be manufactured. "For all the charges and countercharges," Los Angeles Times reporters Doyle McManus and Ronald Ostrow authoritatively reported on Feb. 18, 1987, "the DEA says it has yet to find a credible drug case against the contra organizations."

Only now-nearly 12 years later-can we fully appreciate what an astounding lie that was and how eagerly it was swallowed by a gullible Washington, D.C., press corps. At the time McManus was writing his story, dismissing the issue as the combined fantasies of dopers and contra-haters, the DEA was sitting on information from several reliable informants-eyewitnesses on the U.S. government's payroll-who reported that the contras were selling drugs in Los Angeles and San Francisco with the CIA's connivance.

In one case, a contra official who was part of Blandon's South-Central drug ring, Ivan Torres, told an undercover DEA operative that "CIA representatives are aware of his drug-related activities and that they don't mind. He said they have gone so far as to encourage cocaine trafficking by members of the contras because they know that it is a good source of income." Torres reported receiving "counterintelligence training from the CIA, and he had avowed that the CIA 'looks the other way' and in essence allows them [contras] to engage in narcotics trafficking as long as it is done outside the United States."

 

That 1987 DEA report corroborated information the drug agency had received two years earlier from another member of the Blandon/Meneses cocaine ring, Renato Pena, the FDN's military representative in San Francisco. In 1985, Pena told the DEA that "the CIA was allowing the contras to fly drugs into the United States, sell them, and keep the proceeds." Pena told CIA inspectors that "Norwin Meneses and Danilo Blandon told him they were raising money for the contras through drug dealing and that Blandon stated that the contras would not have been able to operate without drug proceeds. Meneses allegedly told Pena that contra leader Enrique Bermudez was aware of the drug dealing."

Ironically, these recently declassified reports are still secret to most Americans. The Los Angeles Times, for instance, has yet to write a word about the CIA report's release. In a recent Internet posting, McManus said the Times was thinking about writing something "in the not-too-distant future that puts all the newly available evidence into perspective."


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