Whiteout
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Now back to the cocky Colonel.
It was the end of October 1994, the race was down to the wire, and North was thought to have a pretty good shot at taking out incumbent Chuck Robb. Then, on Saturday, October 22, the Post ran a story of around 3,700 words under the headline “North Didn’t Relay Drug Tips.” The Post’s reporter, Lorraine Adams, described entries from North’s diaries in the year 1985, when he had been working at the National Security Council in Ronald Reagan’s White House. Some of the diaries had become public during his trial, and other important sections had been disinterred by the National Security Archive through the Freedom of Information Act. The Post also used memos to North from Robert Owen, North’s contact in Central America with the Contras. On April 15, 1985, for example, Owen wrote a lengthy memo to North expressing his concern that several of the men Adolfo Calero, the lead the main Contra organization, the FDN, had tapped to head up a new Contra division in Costa Rica were “involved with drug running.” Of José Robelo, Owen wrote: “Potential involvement with drug running and the sale of goods provided by the USG [US government].” Of the other, Sebastian González, Owen warned: “Now involved in drug running out of Panama.” “These are just some of the people Sparkplug [Owen’s code name for Adolfo Calero] and others should be worried about.” González was an associate of Norwin Meneses.
On July 12, 1985, North’s notebook records a conversation with Richard Secord, who had been recruited by North to run the Contra weapons supply operation (recall that Secord was a veteran of the CIA’s Southeast Asia operation run by Ted Shackley). The conversation was about an arms warehouse in Honduras from which the Contras were buying weapons. Secord tells North that “14 Million to finance [the arms] came from drugs.”
On August 9, 1985, North notes a conversation with Robert Owen about an airplane being used by Mario Calero, brother of Adolfo, and also chief of logistics for the Contras. Owen had told North that Calero was using a plane based in New Orleans to ship supplies to Contra camps in Honduras. North’s diary entry says, “Honduran DC-6 which is being used for runs out of New Orleans is probably being used for drug runs into US.”
On February 10, 1986, Robert Owen sends North a memo stating that a plane being used for humanitarian aid to the Contras had also been used to run drugs. The plane was owned by a company called Vortex, controlled by Michael Palmer, one of the largest marijuana smugglers in the United States.
Having cited these passages, the Post story recounted North’s testimony before Congress during the Iran/Contra investigation, in which he claimed that he had turned over to the DEA all evidence about Contra drug running. The Post’s Adams described how she contacted the DEA and had been told that there was absolutely no record that North had ever made any such contacts: “There’s no evidence he talked to anyone,” the DEA stated in an unusual response to the Post. “We can’t find the person he talked to, if he did talk to them. There’s no record of the person he talked to.”
The Post also contacted Jack Lawn, head of the DEA at the time, who said that, yes, he had talked to North several times in 1985 and 1986, but “Ollie did not provide any intelligence to me” about Contra drug running. Similar statements came from the new DEA chief, Robert Bryden; and from North’s former boss at the NSC, Robert McFarlane. Robert Duemling, an old State Department hand who had been put in charge of the Nicaraguan Humanitarian Assistance Organization contracting with airlines and pilots to deliver aid to the Contras, said that North urged him to do business with people who known to be involved with drugs. “He wanted me to work with Mario [Calero],” Duemling said.
The Post also quoted former head of US Customs William Von Robb, who claimed that he was “absolutely stunned” by the revelations in North’s diaries. CIA man Robert Gates spoke to the Post in like terms. Gates said North should have turned over his information to the DEA. “A normal person would have reacted strongly,” Gates said. To round out these somewhat theatrical expressions of astonishment, the Post wheeled on former State Department official Elliott Abrams, who had been indicted for perjury by Iran/Contra prosecutor Lawrence Walsh. Abrams said carefully that “legally speaking that [drug running by Contras and their suppliers] was none of our business.”
Of course, all these expostulations at North’s supposed deceptiveness were as self-serving as the Post’s sudden eagerness to publish allegations of Contra drug running. Gates, for example, said that he would have expected that North, on coming across evidence of drug running by the Contras, would immediately go ballistic and pass on the evidence to Von Robb or the DEA. But as a senior CIA officer, Gates had headed a 1988 investigation into charges of Contra drug running in the wake of the Kerry hearings. Back then he had as much information on the Contras and their contractors as North did. So did Von Robb. But neither said anything at the time.
Now the game was to pin everything on North, and the Post, eager to trash him as a senatorial candidate, played along. The story probably did contribute to North’s narrow defeat in the Virginia Senate race a couple of weeks later. But though North was most certainly culpable – indeed far more that the Post alleged – the CIA had been years ahead of the cocky young colonel in conniving at Contra drug running.
Take the case of SETCO, a Honduran airline company that from 1983 to 1985 was the principal firm used to transport supplies and weapons from the US to Contra camps in Honduras. In those years SETCO planes alone carried more than a million rounds of ammunition. The company was controlled by Juan Matta Ballesteros, one of the largest drug dealers in Latin America and a man with useful contacts in the CIA and the Pentagon. Ballesteros had been arrested in 1970 for bringing 26 kilos of cocaine into Dulles International Airport, outside Washington, D.C. This misfortune did not earn a life sentence in the US for the friend of the CIA, but merely deportation to Honduras, where in 1975 he formed a partnership with the Mexican drug kingpin Félix Gallardo. In 1978 Matta used his drug profits to finance the overthrow of Honduran president Juan Alberto Melgar Castro, thus ushering into power General Policarpo Paz García. The CIA took a close and friendly interest in this transfer of power because, unlike the man he ousted, Paz was a keen supporter of Nicaragua’s Somoza.
Under the Paz regime the Honduran army and intelligence service began to get a cut of Matta’s drug trafficking in exchange for protecting his burgeoning operations. Honduras was now becoming a major point of transit for cocaine and marijuana coming north from Colombia.
At the nexus between the Contras and their mutual patron, the CIA, was a man named Leonides Torres Arias, the head of Honduran military intelligence. Since the 1978 coup by Paz García, Torres, according to a US Senate investigation, had been getting cocaine money kickbacks from Matta. When the Argentinian military officers training the Contras pulled out at the onset of the Falklands/Malvinas War, the CIA’s top man in Latin America, Dewey Clarridge, began to depend more and more on Torres and Juan Matta Ballesteros’s company to prop up the Contras until money appropriated by Congress began to flow south.
In 1983 SETCO got one of the first supply contracts to haul arms from the US to the Contras. The contract was awarded even though US law enforcement and the CIA knew the firm was owned by the notorious drug smuggler Matta and that his airline company had been flagged in DEA and US Customs records for its history of drug running. A 1983 Customs Service report declared that “SETCO stands for Services Ejectutizox Touristas Comander [sic] and is headed by Juan Ramon Matta Ballesteros, a Class I DEA violator.”
The Customs Service also made reference to a DEA profile of the company, noting that SETCO was being used by Matta to smuggle cocaine into the US. One of Matta’s partners in SETCO was an American pilot named Frank Moss. Moss flew more than a dozen Contra supply missions for SETCO, and in 1985 set up his own Contra supply company called Hondu-Caribe. Moss himself had been tagged as a drug smuggler by the DEA as far back as 1979. Under the terms of the Boland amendment, passed in the fall of 1984, the only aid allowed to the Contras was so-called “humanitar
ian” supplies. SETCO got one of the contracts to haul these supplies, and Moss got his cut of the action, all under the CIA’s protective umbrella.
The Hondu-Caribe planes were used to carry weapons bought from a US firm called R&M Equipment, which maintained a large warehouse in Tegucigalpa, Honduras filled with weapons. Oliver North called it “the supermarket.” R&M was partly owned by Ron Martin, a former CIA operative. His partner was James McCoy, who had served as the US military attaché to the Somoza regime. R&M became an arms vending rival to Richard Secord’s Enterprise venture. It was R&M’s warehouse that Secord was discussing with North in that July 1985 notebook entry recording that $14 million worth of weapons was paid for with drug money. Martin claims that the allegation of drug money was a smear planted by rivals.
Moss’s firm owned two DC-4 cargo planes, one of which was known to the DEA as a drug plane. A Customs officer spotted another Hondu-Caribe DC-4 dumping its cargo in the waters off the west coast of Florida. When the plane finally landed at Port Charlotte airport, the Customs Service impounded it. On board agents discovered an address book containing telephone numbers for Contra leaders and for Oliver North’s man Robert Owen. Among other documents retrieved by US Customs was evidence of Mario Calero’s partial ownership of Hondu-Caribe.
Alan Fiers, the CIA man picked to replace Dewey Clarridge as head of the CIA’s Latin America task force in 1983, testified to Congress the following year that “[e]veryone around Pastora was involved in cocaine.” Eden Pastora was a wild card in the Contra alliance, and by this time the CIA, wearying of his intractability, was eager to discredit him (at the very least). Fiers was implying in his testimony that its creature, the FDN, was not similarly encumbered with cocaine smugglers. Yet here was a drug-smuggling airline part-owned by the brother of the FDN’s civilian leader, Adolfo Calero, and Mario himself was in charge of the FDN’s logistical operations.
Nor could the DEA claim ignorance of what was going on. In 1981 the DEA set up its first office in Tegucigalpa, the Honduran capital, and assigned Thomas Zepeda as the resident agent. Zepeda rapidly came to the accurate conclusion that the entire Honduran government was deeply involved in the drug trade. His attempts to investigate top Honduran officials whom he believed were on Matta’s drug payroll were thwarted by the CIA. We know this because Zepeda was quoted as saying as much in a good story in the Los Angeles Times on February 13, 1988, apparently overlooked by the authors of the newspaper’s later attacks on Gary Webb. In May 1983 Zepeda opened an investigation into SETCO. A month later the probe was cut off, Zepeda was pulled out of Honduras, and the DEA’s Honduran station was shut down. The man responsible for this retreat was Ed Heath, the DEA’s head of Latin American operations, resident in Mexico City and suspected by many DEA agents of being too cozy with the CIA. Former DEA agent Michael Levine described Heath as being “a man so mistrusted by the street agents working for him in Mexico that they conducted enforcement operations without informing him.”
In 1985 the GAO was requested to explore the reasons why the DEA shut down the Honduran office. This investigation was also quashed by the NSC and CIA.
The Subcontractors
In 1985, Congress authorized the creation of the Nicaraguan Humanitarian Assistance Organization, known as NHAO, to provide $27 million worth of “humanitarian assistance to the Contras.” Oliver North and Elliott Abrams secured the appointment of Robert Duemling, a career State Department officer the two deemed capable of handling the delicate business of furnishing military assistance under the flag of humanitarian aid. NHAO operated under the aegis of the State Department, and was overseen by the triumvirs North, Abrams and the CIA’s Alan Fiers. In addition, North placed Robert Owen inside the NHAO.
At least four of the companies that received State Department grants to transport “humanitarian aid” had been, or were, involved in drug trafficking: DIACSA, a Miami-based airline that pulled in $41,120 in these State Department contracts; SETCO/Hondu-Caribe; Frigorificos de Puntarenas/Ocean Hunter, a Costa Rican seafood company; and Vortex Air International, a Miami-based airline that received $317,425 from NHAO.
Leslie Cockburn interviewed Duemling when she was preparing her ground-breaking CBS documentary about drug running by companies given contracts by NHAO. He told her that he was unaware of the backgrounds of these companies and that they had all been selected by the CIA. Duemling’s contention is backed up by a memo written by Robert Owen to Oliver North on February 10, 1986: “No doubt you know the DC-4 Foley got was used at one time to run drugs, and part of the crew had criminal records. Nice group THE BOYS chose. The company is also one that Mario [Calero] has been involved in using in the past, only they had a quick name change. Incompetence reigns.” Foley was later identified as Pat Foley of Summit Aviation from Middletown, Delaware. “THE BOYS” was Robert Owen’s code name for the CIA.
Foley’s company, Summit Aviation, was believed by congressional investigators to be a CIA proprietary. The DC-4 acquired by Foley for his contract work for NHAO was provided by Vortex, run by Michael Palmer. At the time Vortex received its NHAO contract the DEA reckoned Palmer to be one of the largest marijuana smugglers in the US. Throughout the 1980s Palmer received extraordinarily forgiving treatment at the hands of US law enforcement. For example, one of Palmer’s planes on an NHAO flight developed engine trouble and was forced to land on San Andreas Island off the coast of Colombia, a favored transfer point for drug shipments. Colombian police detained the plane and soon discovered that it was identified in their files as having been involved in drug-running operations. They also discovered that the flight crew had criminal records. But the crew complained that they were on a US government mission and demanded to be released, together with their plane. The Colombian police called the US State Department to ask what should be done about the situation. Frank McNeil, who worked in the State Department’s intelligence section, called the CIA, whose officials told him that the Vortex plane was indeed on a government mission and to release it along with its crew. A CIA official told McNeil, “It’s unfortunate, but it’s pretty hard to find folks to do this kind of work.”
Palmer had been flying marijuana from Colombia since 1977. His associate, Leigh Ritch, testified before Congress that their business “grossed billions.” Palmer himself had been arrested in Colombia in the early 1980s but was released under mysterious circumstances. A Boston Globe story in February 1988 reported that one of the Vortex planes was stopped in Miami for a Customs inspection. When Palmer arrived at the airport to get his plane released, Customs ran his name through its computers, and records came up showing that he was currently under indictment for smuggling marijuana. Palmer maintained that both he and his planes were working for the CIA. Customs officials called the CIA and once again was told that Palmer was correct. The plane was duly released and arrangements made for future Vortex flights. According to the Customs record, “Normal Customs procedures for incoming flights are expedited.”
The friendly treatment of Palmer extended into the late 1980s. He was indicted in Detroit in 1986 for marijuana smuggling, and again in 1989 in Louisiana on charges of bringing 150 tons of marijuana into the US. Palmer used his CIA ties as a defense. Both cases were dropped. In Detroit the prosecutor said his office was acting “in the interest of justice.” In Louisiana, federal prosecutor Howard Parker said he declined to prosecute Palmer because he wanted “to avoid a sideshow.” The treatment of Palmer, a major marijuana shipper, contrasts vividly with the treatment of Rick Ross, the Los Angeles crack dealer put away for life. Looking back on Palmer’s inviolability, US State Department man McNeil remarked sourly to the Washington Post in 1994, “The whole thing is too sleazy for words. It’s not a happy chapter in US history.”
In May and September 1986 the State Department gave more than $40,000 in NHAO contracts to an outfit called DIACSA operating in Costa Rica. Later, it was one of the companies that Oliver North used to launder money for the Contras. DIACSA was an interesting choice for this type of opera
tion because six months before it had gained its State Department contract two of its principals, Alfredo Caballero and Floyd Carlton Casceres, had been indicted on charges of smuggling 900 pounds of cocaine into the US and laundering $2.6 million in drug profits. Caballero, president of DIACSA, was a veteran of the Bay of Pigs and a close friend of Mario Calero. He had been identified in January 1995 by DEA agent Daniel Moritz as using DIACSA as a front for his cocaine business. The firm, Moritz wrote, served “as a location for planning smuggling ventures, for assembling and distributing large cash proceeds from narcotics transactions and for placing telephone calls in furtherance of the smuggling ventures.”
Caballero’s partner in this cocaine enterprise, Floyd Carlton, was General Manuel Noriega’s favorite drug pilot and became a star witness for the prosecution in Noriega’s 1991 trial in Miami. According to Noriega’s aide José Blandón, Carlton was also working for the Calí cartel flying numerous cocaine shipments for it in 1985 and 1986, the same period he was also flying Contra resupply missions.
In 1987 Carlton, hiding out in Costa Rica, phoned the DEA to offer to help bring Noriega to book in return for leniency for himself and protection for his family. Carlton said he gave the DEA details of Noriega’s “money laundering, drugs, weapons, corruption, assassination.” A few months later Carlton gave himself up. He faced nine counts of cocaine trafficking and money laundering charges that could have landed him a life sentence plus 145 years. Instead, he was given a 9-year prison sentence and was released after serving only 4.5 years. He was paid $211,000 for his testimony, as was his partner Caballero.