The Second Of Two Parts On The U.S. Intelligence Community'sDrug-Dealing Treason.

EX-LT. COL. OLIVER North likes to boast on his talk show that he's "the most investigated man on earth." North complains the government spent tens of millions of dollars to investigate him on various Iran-contra charges and came up empty handed.

North is half right. Tens of millions were spent on at least a half-dozen congressional and Justice Department investigations into various illegal contra activities. But the unfortunate fact is that a motherlode of evidence was discovered and then dutifully covered up by Reagan Administration officials, sympathetic pro-contra members of congress, and CIA infiltrators.

The techniques of cover-up are old and familiar. For the CIA-contra-cocaine connection they include the narrowly phrased question, the blind inspector, "national security," selective prosecution, and sympathetic officials and media "assets." As multiple hearings and investigations gear up to answer charges raised most recently by the San Jose Mercury News, it may be useful to examine how public officials and covert operators collaborate to suppress such serious information.

Exactly a decade ago, after months of revelations about secret arms deals with the Iranians to support the contras, congressional leaders announced an investigation into North's National Security Council network by the newly formed Iran-Contra Select Committee. But from its inception, it was clear this investigation would be limited and sanitized.

For starters, the Democratic chairs of both committees--Sen. Daniel Inoue and Rep. Lee Hamilton--were falling over one another to assure the public this would not be "another Watergate." As Inoue told reporters, the country "isn't ready" for that. Having thus declared their limits, they turned to an investigator who could limit their vision.

ENTER THOMAS POLGAR, whom the Democrats hired as senior investigator. As the former CIA station chief in Vietnam during the fall of Saigon, Polgar personally witnessed the bitter fruit of 20 years of covert foreign policy, which he had faithfully chronicled with rosy CIA cover stories for Congress and millions of skeptical Americans.

From "The Company's" point of view, Polgar was perfect to guide the Senate panel. He'd already served as a consultant to George Bush's task force on terrorism, which included several figures in the Iran-contra scandal, including Oliver North. And as Saigon station chief, Polgar worked for Theodore Shackley, a former top CIA official who facilitated North's arms sales to Iran.

Of the six investigators and 13 lawyers hired by the original Iran-contra committee, Polgar was the only one with a CIA background, and it was Polgar who was sent to Costa Rica to investigate CIA involvement in illegal contra operations. According to our own investigation, interviewing a number of people with whom Polgar spoke on his visit, it was clear that key evidence was being ignored.

Polgar neglected to interview key suspects and sources, and would even talk to journalists to find out their "spin" before announcing his findings. One of the more extraordinary omissions is his failure to interview CIA and North operative John Hull, who had been identified by numerous U.S. and Costa Rican officials, as well as contra and drug operatives, as being involved in drug trafficking.

Back in Washington, Polgar met with former CIA colleague Donald Gregg, then Vice President George Bush's national security advisor. As Gregg himself acknowledged in the February 23, 1987, Legal Times, "He wanted to assure me that the hearings would not be a repeat of the Pike and Church investigation," a mid-1970s investigation that exposed the CIA's role in assassination plots and led to huge cuts in the covert operations budget.

"Polgar felt it proper for an intelligence officer to be an activist," said Frank Snepp, a former Agency colleague of Polgar's. "Polgar would filter out information in our reports to cover up massive corruption and low troop morale," Snepp said. "He would 'Polgarize' it. That's what we called it when Polgar would edit a report into oblivion."

Even before joining the Select Committee, he had "Polgarized" the world-famous crash of the CIA plane shot down over Nicaragua in October 1986 on a contra supply mission, an incident known as Hasenfus, after the plane's pilot, Eugene Hasenfus. "I think the CIA is telling the truth," Polgar wrote in the Miami Herald, "that it was not involved in the flight on which the Hasenfus plane was shot down."

Polgar was not the only committee staffer with glaring conflicts of interest. Alabama Senator Jeremiah Denton's staff aide Joel S. Lisker had previously made efforts to work directly with Oliver North in support of the contras. A senate aide who requested anonymity confided to us his astonishment at Lisker's appointment: "How can you get someone who was actively involved in events and put him in charge of the investigation? We were told a year ago that this guy was in the middle of it and is a buddy of North's."

WHILE BOTH POLGAR and Lisker clearly proved effective in helping suppress the dirtier aspects of the Iran contra affair, a key actor in the cover-up was the House Select Committee chair Lee Hamilton.

It was Hamilton who drafted a letter to Costa Rican President Oscar Arias threatening a chill in relations if the Costa Rican attorney general proceeded to indict and prosecute long-time CIA asset and North operative John Hull, point man of the contra "southern front." Hull had been identified by at least four eye-witnesses as being present on land he controlled in Costa Rica when large quantities of cocaine were loaded onto planes bound for the U.S. But Oliver North invoked national security, writing in his NSC notebooks of a "need to protect Hull."

On behalf of Congress, Hamilton wrote to Arias that he hoped Costa Rica would be handling Hull's case "in a manner that will not complicate U.S.-Costa Rican relations."

Hull was ultimately indicted, but a DEA agent smuggled him out of Costa Rica. Hull, North and every U.S. official working with them were deemed "persona non grata" by Costa Rican authorities. Hull never appeared before the Iran-contra committee, and to this day, has never been indicted in this country.

EVEN BEFORE THE joint Iran-Contra committees were formed, three other committees were already examining charges that Lt. Col. Oliver North's secret contra arms network was funded by illegal drug sales with the knowledge of the Central Intelligence Agency.

The House Select Committee on Narcotics Abuse and Control, chaired by Rep. Charles Rangel, D-N.Y., had already conducted important preliminary research on contra supporters suspected of drug activities. Rangel had asked Customs to do a background check on 38 individuals or companies associated with the contras to see if any had ever been suspected or investigated for drug trafficking. On June 23, 1986, Customs Commissioner William Rosenblatt responded, confirming in a letter to Rangel that "for 24 of the 38 individuals or companies we asked them to check, there is 'positive' information on the Customs computer indicating previous (drug-related) interest in these people or companies. This initial check provides information that warrants further investigation about possible tie-ins between the contras, the individuals carrying out the contra supply mission and drug smuggling activities."

The Narcotics Committee requested further information from the Justice Department and the DEA, but neither cooperated, prompting a frustrated Rangel to declare, "I am shocked and dismayed that Attorney General Meese would have the DEA gagged."

THE HOUSE JUDICIARY Subcommittee on Crime had also discovered what chairman William Hughes, D-N.J., called "a whole host of issues with regard to potential official involvement in certain aspects of gun-running and narcotics trafficking between Florida and Central and South America." But like Rangel, Hughes was also stonewalled by the Justice Department. "There would appear to be substance to the allegations," Hughes said during a 1987 press conference, "that the Justice Department either attempted to slow down or abort one of the ongoing criminal investigations."

By far the most aggressive of the three congressional committees was John Kerry's Subcommittee on Narcotics, Terrorism and International Operations. His aggressiveness paid off, as Kerry was finding significant evidence of contra-connected drug smuggling. Among the scores of witnesses called to testify was convicted drug smuggler George Morales.

Morales, who had passed a lie detector test, gave detailed testimony that four contras and "southern front" coordinator Hull were involved in an arms and drugs operation between 1984 and 1985--during which time Congress had refused to fund the contras. Morales said contra leaders Adolfo (Popo) Chamorro, Gerardo Duran, Marcos Aguado and Octaviano Cesar participated in the operation. He said Cesar and Aguado, claiming to represent the CIA, approached him after a 1983 drug indictment and promised "they would take care of the legal problems" in exchange for his help in arming the contras, who used his fleet of planes for the transshipment of weapons and cocaine.

BEFORE KERRY WENT public with his findings, he had attempted to get the Justice Department to act on what he considered compelling evidence of U.S. involvement in illegal activities including contra drug trafficking. On September 26, 1986, Kerry met with Assistant U.S. Attorney William Weld, the head of the Justice Department's criminal division.

According to minutes of the meeting prepared by Kerry aide Jonathan Winer, Kerry described his committee's findings "that we had learned a lot about neutrality violations, gun running, and drug smuggling involving the contras and the infrastructure which supports them."

Kerry handed Weld an 11-page "proffer," a sworn statement from FBI informant Wanda Palacio that directly implicated the CIA in drug trafficking. According to the minutes, Kerry asked Weld to read the statement and left the room. According to Winer, who stayed in the room with Weld, he "read about a half page and chuckled. I asked him why. He said, 'This isn't the first time today I've seen allegations about CIA agents' involvement in drugs.'

"Concerned that he was shrugging off the statement, I said that Wanda had been told this by the Miami FBI. Weld said he didn't doubt that; it happened all the time. There were bum agents, former and current CIA agents; it didn't surprise him." But Weld never acted on the Palacio statement or any other evidence gathered by Kerry.

According to former Kerry committee counsel Jack Blum's recent testimony before the Senate Intelligence Committee (hearings prompted by the Mercury News series), Weld not only did not investigate but put up an "absolute stone wall" between the Justice Department and the Kerry investigation. "There were stalls, there were refusals to talk to us, refusals to turn over data...Weld put a very serious block on any effort to get information."

Miami-based attorney John Mattes, a former federal public defender, supplied some of the information discussed at the 1986 meeting with Weld. To this day, Mattes is confounded that Weld chose not to act, noting that "Weld claims he followed up with an investigation. But there is, however, no record that while Weld was the chief prosecutor for the U.S., that so much as one contra-related narcotics trafficker was brought to justice."

DESPITE THE REAGAN-Bush Justice Department's strategic inaction in prosecuting contra-connected drug operations, legal actions were taken against some disillusioned contra supporters who spoke out against the drugs and corruption. On June 28, 1988, a federal grand jury in Fort Lauderdale, Florida, handed down two separate indictments against 13 pro-contra mercenaries for conspiring to violate the Neutrality Act.

A key target of the indictment was former contra-trainer Jack Terrell. Months before the Iran-contra scandal erupted, Terrell voluntarily provided the Miami U.S. Attorney, the FBI, Congress, and journalists with information about the grittier parts of the illegal contra network. As an investigator for the International Center for Development Policy, Terrell prepared an exhaustive "Index of Participants," which listed the major and minor players in the contra secret war.

His June 1986 appearance on the now-defunct CBS news-magazine show West 57th Street prompted National Security Advisor John Poindexter to deem Terrell a "terrorist threat." In a memo to the President, Poindexter noted that "Terrell has appeared on various television documentaries, alleging corruption, human-rights abuses, drug-running, arms smuggling, and assassination attempts by the resistance and their supporters.

"Terrell's accusations have formed the basis of a civil law suit in the U.S. District Court in Miami and his charges are at the center of Senator (John) Kerry's investigation in the Senate Foreign Relations Committee," Poindexter wrote in his extraordinary claim that Terrell might be a foreign agent for the Nicaraguan government, threatening to assassinate the President.

"This is the ultimate reward you get for talking," Terrell said after he was indicted. "When you blow the whistle, when you talk against the policy and start exposing corruption, fraud, gun deals, murder, conversion of aid for private use, drug dealing, secret illegal networks, and then the Administration's policy starts falling apart and people start falling off the wall like Humpty Dumpty, then they go after you with everything they got."

Oliver North also went after Terrell, writing in a July 25, 1986, memo to Poindexter that "one of the security officers for Project Democracy met several times with Terrell and evaluated him as extremely dangerous."

That security officer, former CIA operative Glen Robinette, wrote in a July 17, 1986, memo to North that "Terrell may actually possess enough information--either from first-hand personal knowledge or from other sources--to be dangerous to our objectives...He is certainly going to quote names and organizations--known or not known--to show his great and intimate knowledge of (the) 'secret operation.' "

Eighteen months earlier, Robert Owen, a former aide to then-Senator Dan Quayle, wrote North a memo dated January 31, 1985, stating, "Right now Flako (Terrell) knows too much and it would do no one any good if he went to the press. He has to be finessed out."

At his recent testimony, Jack Blum described just how common it was to selectively prosecute those who alleged contra or CIA involvement in the drug trade.

"There was a flip side to this drug problem as well. One of the favorite techniques of various people in this operation was, whenever there was someone they didn't like, they would label him a 'drug trafficker'...So this became a matter of affirmative and negative use."

Committee chair Arlen Spector declined to probe this line of testimony, and instead continually questioned Blum on his opinion regarding the "narrow question" of "whether there are some situations which may be sufficiently serious to warrant covert activities?"

OTHER "NARROW QUESTIONS" are being applied to discredit the Mercury News series, with assertions that the contras didn't target "blacks only" for crack distribution; that there may have been "rogue agents," but the intelligence community as a whole did not condone converting drug sales for contra support; and the publication of paeans to CIA integrity based solely on CIA interviews.

But the broader evidence of a pattern of contra-cocaine operations presented in Part One, along with the cover-up methods detailed here, may be useful to the reader in taking a second look at the syndrome which, during the 1980s, resulted in a secretly sanctioned contra-related cocaine invasion of the United States. TW

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