CIA Involvement in Drug Smuggling Part 3


The arms-for-drugs operation also thrived in Costa Rica. When the Southern Front against the Sandinista government was established in 1983, Costa Rica was ill equipped to deal with the threat posed by the Colombian drug cartels. Costa Rica had no military and its law enforcement remained limited. Its radar system was so poor that contra planes could fly in and out undetected. The government of Costa Rica only employed civil guards who were underpaid and easily bought.

By 1985, Associated Press was running stories which stated that the CIA and contras were involved in drug trafficking. Two years later in 1987, CIA chief for Central America, Alan Fiers, testified that numerous people were involved in drug trafficking. Fiers was largely responsible for cutting off CIA aid to Eden Pastora in 1984 when it appeared impossible that he would fall in with the rest of the contras. Fiers testified before a Congressional committee in 1991 that other higher up military and White House personnel were well aware of drug trafficking by the Contras. Fiers testified: "With respect to (drug trafficking) by the Resistance Forces. ... It is not a couple of people. It is a lot of people."

The 144-page report included a litany of drug operations out of various Latin American countries. Most of the narcotic traffic was directed by Contra and CIA officials. Morales testified before the Kerry committee that Gary Betzner, his best pilot, flew arms to the Contras from the Fort Lauderdale Airport to Costa Rica. Morales stated that his planes returned frequently loaded with "about 400 or so kilograms of cocaine." Morales rewarded the Contras with $400,000 in cash and checks in October 1984. By the end of 1985, he swore that cash contributions to the Contras were $4 million to $5 million. When Kerry asked about the origin of the cash, Morales said that "about 100 percent" was drug money. The Kerry report concluded: "There was substantial evidence of drug smuggling through war zones on the part of the Contras, Contra suppliers, Contra pilots, mercenaries who worked for the Contras, and Contra supporters throughout the region."

A number of Costa Ricans also became drug traffickers for the Contras. Jaime "Pillique" Guerra owned a crop dusting service as well as an aircraft business in northern Costa Rica. He refueled and repaired planes which originated in Panama and were carrying weapons to the El Salvador regime in its civil war against the FMLN. These planes carried narcotics as well as weapons. Werner Lotz, one of the pilots, was subsequently convicted of drug smuggling. He explained that the drug traffickers were competing over their share of the profits. He stated that the government guards could be easily bought off.

Another Costa Rican pilot was Gerardo Duran, who flew a number of missions for the Contras' Southern Front. However, the United States eventually severed ties with him after he was indicted for narcotics trafficking. In 1987 he was convicted and imprisoned in Costa Rica.

At a 1986 Costa Rican drug trial, CBS News reported that the United States government presented wiretapped telephone conversations with contra leader Huachen Gonzalez. He discussed the large amounts of cocaine which the contras were sending from Costa Rica to the United States. Also in 1986 the Costa Rican government arrested a Cuban exile carrying 204 kilograms of cocaine from an airstrip. He denied any role in these operations but stated that the Contras had asked him to smuggle in arms.


Hull's 8,000 acre ranch, located in northern Costa Rica and just south of the Nicaraguan border, was a refueling and storing place for cocaine which originated from the Medellin and Cali cartels in Colombia. Hull was given a $375,000 "loan" to a build a lumber mill on his ranch. He owned six airstrips which served as a base for the shipment of narcotics. He kept the Contras fed and housed. He also claimed that he could account for the Contra money which was handed down by Contra leader Adolfo Calero.

In July 1983, Hull traveled to Washington, D.C. to convince members of Congress that Pastora could not be trusted since he was a front for the FDN. One of the offices which he visited was that of Senator Dan Quayle of Indiana He was introduced to Quayle's assistant, Robert Owen, and to North. Subsequently, Owen resigned from his position with Quayle and started the United Nicaraguan Opposition (UNO).

One of Pastora's former pilots, Geraldo Duran, told the Kerry committee that he had been arrested in 1986 in Costa Rica for flying drugs to the United States. When the CIA dropped Pastora in 1984, it had to find another source through which to work. That turned out to be Jorge Morales who conspired with an American, John Hull, who owned a multi-acre farm in northern Costa Rica.

A leadership struggle within the FDN developed early in the Contra war. Eventually Pastora, leader of the southern front operating out of Costa Rica, broke ranks with Adolfo Calero who was the White House's choice to run the Contras. As a result of a leadership struggle in the FDN, Pastora soon fell out of good grace with the umbrella Contra organization which operated out of Honduras.

Hull was also aided by two Americans, William Crone and Ian Kniloch, the chief of the Contra's air logistics. Both worked with a paramilitary group known as Huerta Norte. Another Hull neighbor was Bruce Jones who owned a 55-acre ranch next door. Jones testified that Hull received 5,000 rifles, 5 million rounds of ammunition, hand grenades, mines, and mortars from the contras. Jones was a liaison between the CIA and Contras for whom he was supplying millions of dollars in arms. He testified that between May 1982 and May 1984 approximately 100 deliveries of arms and supplies were coordinated by him and Hull. These supplies were kept on Hull's ranch. Jones maintained that when the planes arrived, he would help unload the drugs and arms in five or ten minutes.

In the 1960s, Ronald Martin worked for the CIA in Miami along with James McCoy, another ex-attaché to Nicaragua. When Contra aid was legally cut by the Boland Amendment in 1984, Martin began organizing North's role in raising arms for the Contras. However, Martin was shut off when North began to use Richard Secord as the arms broker. According to Calero, Martin and McCoy received $2,095,000 for arms from North. Martin's attorney stated that the amount was closer to $15 million or $20 million.

At least five witnesses testified to the Kerry committee that cocaine was loaded onto planes at John Hull's ranch. The committee also was told that Hull received $10,000 a month as a courtesy from Oliver North. Yet the Justice Department took no action against Hull for either obstruction of justice or for drug trafficking. In 1989 Hull was arrested in Costa Rica, but the charges against him for trafficking 2,500 kilograms of cocaine were dropped. He was declared a persona non grata and moved to Miami. After 1988 the Justice Department reluctantly indicted some people working for Hull, but soon afterwards these too were dropped.

Felipe Vidal and Rene Corvo were Cuban-Americans involved in transporting arms to Hull's ranch in return for drugs. Revenue from the cocaine was used to purchase military equipment, ammunition, and explosives for the Contras. Corvo testified to the Justice Department that paramilitary supplies were stored in the home of Frank Chanes in Miami and in the garage of Corvo. However, no charges were ever brought against Corvo. Witnesses testified that Corvo stored loaded guns on his premises and that he told friends that he flew clothing and medical supplies to refugees in El Salvador.

Ex-CIA agent Jose Fernandez testified to the Kerry committee that Vidal and Corvo were agency operants. He stated that both were involved in the illicit drug business and that the CIA's duty was to protect them. Vidal was called a CIA contract agent who had been arrested numerous times in Miami on narcotics and weapons charges. All this evidence gave the Kerry committee adequate evidence to implicate Vidal, Corvo, North, and others as being part of an arms-for-drugs conspiracy.

Between 1983 and 1986, numerous pilots made flights out of Hull's ranch and returned to the United States with millions of dollars in drugs. Many flights landed at Ilopango Air base in El Salvador and at Hull's ranch. A convicted drug smuggler admitted flying 500 kilograms of cocaine from Hull's ranch to the United States. "It was arms down, cocaine back . . . with full knowledge of the CIA and DEA."

According to the Kerry report, the main front set up by the CIA that operated out of Florida was SETCO Air. This was a CIA-operated company which ran arms down to Honduras and returned with cocaine. The Kerry report stated that SETCO was the principal company used by the contras to transport supplies and personnel to the FDN, carrying at least a million rounds of ammunition, food, supplies, uniforms, and other military supplies for the Contras from 1983 through 1985.

Peter Glibbery, a mercenary hired by Hull to train contras on his ranch, told a Costa Rican court that he was arrested after Hull asked him to set up a Contra training camp on his ranch. He was convicted and imprisoned for violating Costa Rican neutrality laws and illegal possession of explosives.

Glibbery said that Hull informed him of a proposed bombing plot at the American embassy in San Jose. According to Glibbery, Hull claimed that mines were needed to do the job. However, Glibbery's account of his experience on the Hull ranch changed. During a trial in a suit brought by Hull against the two American journalists Avirgan and Honey, Glibbery refused to discuss Hull's involvement in the assassination plot.

Glibbery told a Costa Rican court that he had met Hull and Posey in March 1985. The next day, Glibbery said that he flew to Costa Rica with Hull and the mercenaries. He said Hull identified himself as the liaison officer between the CIA and the FDN. Glibbery told Honey and Avirgan that in April 1987 that Hull had threatened to kill him if he did not repudiate the evidence which he had given to the United States federal investigators.

In May 1987, an Iran-Contra select committee team went to San Jose, Costa Rica but failed to interview Hull. It turned out that they merely called him on the telephone from San Jose, just 30 miles from his ranch. Hull never testified to either congressional committee. However, he could have told the congressional committee who ran the operation and who authorized it. Hull could also have responded to allegations that those running the supply lines through his ranch were engaged in drug trafficking. Hull received $10,000 a month from Contra leader Calero, according to public testimony by Owen. Hull also received $800 a month from the CIA to pay for bodyguards during a time the agency was prohibited from using funds to supply the Contras. Thus, no legitimate congressional investigation was ever launched.


In 1979, Castillo was hired by the DEA, and after a successful conviction, he was transferred to Central America. After Reagan launched his war against the Sandinistas two years later, Castillo immediately became involved with numerous drug dealers, most of whom were also hired to run arms to the Contras.

Castillo's first encounter was with Socrates Amaury Sofi-Perez, a former Bay of Pigs veteran, who operated a shrimp business in Guatemala City. He smuggled drugs packed in frozen shrimp into Florida and laundered the profits for the Contras. Castillo also had ties to Gerard Latchinian, an international arms dealer. In 1984 Latchinian was arrested for using proceeds from a $10 million cocaine deal to help finance the assassination of Honduran President Roberto Suarez Cordoba. Latchinian's partner was General Jose Bueso Rosa who helped train Contra soldiers in Honduras.

Another associate was Luis Posada Carriles who was arrested in the 1970s for carrying out murders while he was an agent for Venezuela's DISIP or secret police. After bribing himself out of prison in 1985, Posada was flown by the CIA to El Salvador and paid $3,000 a month by the agency. Posada arranged for pilots to fly weapons to Contra bases in El Salvador and Costa Rica as well to bring drugs on their return trips into the United States. Posada also worked with Luis Rodriquez who operated Costa Rica's Frigoficos de Puntarenas, a shrimp business which was used as a front to provide $260,000 in aid to the Contras.

Hugo Martinez was yet another one of Castillo's friends who helped to develop flight plans for contra resupply missions. He informed Castillo that most of the pilots bringing weapons into Ilopango as well as to Contra camps in Honduras and Costa Rica were involved in smuggling drugs back to the United States. One such pilot was Carlos Alberto Amador who had a long record of drug trafficking. Another was Carlos Cabezas whose drug runs had been published in the CIA Inspector General's report which was published in January 1998. At a December 1981 meeting with members of the inspector general's staff in San Jose, Costa Rica, Cabeza explained how he raised cocaine money for the contras. Present at that meeting was Julio Zavala, involved in the San Francisco "frogman" case where 430 pounds of cocaine were seized near the Golden Gate Bridge. Zavala asked Castillo to be a middle man in collwecting money from San Francisco drug dealers and flying it back to Central America. Cabezas also set up a network of Contra "mules," such as airline stewardesses, to bring small quantities of cocaine into the United States. Another drug dealer attendung the December 1981 meeting in San Jose, was Troilo Sanchez who instructed Cabezas to deliver drug money to help feed Contra troops and to support their families.

Castillo met with Vice President Bush at a Guatemalan embassy reception in January 1986. Bush asked what his business was in Central America, and he replied that he was investigating cocaine trafficking. He informed Bush that drug trafficking was occurring at Ilopango in El Salvador. Bush responded by smiling as he shook his hand, and then he walked away.

In a February 1989 memo to his DEA superior in Guatemala, Castillo detailed how known traffickers with DEA files used two hangars at the American military installation and how they obtained United States visas despite their backgrounds. According to Castillo, the CIA owned one hangar and the NSC ran the other.

In 1994 Castillo said that large quantities of cocaine were being brought into the United States to support the Contras. We claimed that he witnessed cocaine shipments and boxes full of money. Castillo maintained that he knew the names of traffickers as well as their destinations, flight paths, tail numbers, and the date and time of each flight.

According to the Kerry report a March 1987 memorandum stated that a number of people, who supported the Contras and who participated in contra activity in Texas, Louisiana, California, and Florida, as well as in Honduras, Nicaragua, and Costa Rica, claimed that cocaine was being smuggled into the United States. They stated that it was part of the same infrastructure which procurred and transported weapons for the Contras.


In the early 1980s, Morales was a well known contra drug trafficking, transporting cocaine and marijuana from Latin America northward into the United States. In May 1986, Morales was to meet with Vice President Bush to discuss a secret operation. However, the appointment was canceled when the Iran-Contra scandal was about to leak to the public. Morales was dismissed from the CIA and was later was indicted.

Morales testified before the Kerry committee that he was well known to Colombian drug traffickers and that his ranch was the key base of an operation which sent cocaine to Miami in exchange for contras arms. Morales also testified that he had delivered 40 M-79 grenade launchers which were flown from Miami to Ilopango Air Base in El Salvador.

Morales also told the Kerry committee that he sent approximately $4 million in drug money to the contras. Morales' story is corroborated by his pilots such as Gary Betzner who made several runs in 1984 from Florida to airstrips in Costa Rica. On one occasion, Betzner unloaded weapons for Pastora's Contras and proceeded to load his plane with "seventeen duffle bags and five or six two-foot-square boxes filled with cocaine." Additionally, pilots Geraldo Duran and Marcos Aquado flew arms missions into Costa Rica between 1982 and 1985 and both cited examples of Morales' drug connections. In 1986 Duran was arrested in Costa Rica for exporting drugs to the United States. Another pilot who was recruited by Morales was Fabio Ernesto Carrasco who was subpoenaed to testify in a drug trial in Oklahoma City in 1990. Carrasco said that between 1984 and 1985, he flew over five drug missions for Morales and that he carried between 300 and 400 kilos of cocaine into the United States on each flight. Carrasco also testified that he and Betzner flew down weapons for the Contras from Florida and that they returned from Costa Rica loaded with cocaine which had been purchased by Contra leaders Octaviano Cesar and Mario Calero. Many of these missions from the United States ended at the Costa Rican ranch of Hull who Morales said was heavily involved in drug smuggling. Carrasco also said that Morales gave millions of dollars in drug money on 30 to 40 different occasions to Contra leader Adolfo "Popo" Chamorro, the nephew of Violetta Chamorro who was later elected president of Nicaragua.

Morales also testified that he gave airplanes and cash to the Contras because Popo Chamorro promised to help him with his legal bills in the United States. Morales offered Popo Chamorro an old DC-3 to carry food, arms, boots, and uniforms to Pastora's Contra soldiers who were isolated in Costa Rica and needed air support to receive supplies. Pastora was desperate, since Calero and White House had severed relations with him in his struggle for power within the FDN.

In 1986, Morales was convicted in prison and died five years later.


Rodriquez began his CIA career in the late 1950s in Florida. After the aborted Bay of Pigs invasion, he was moved to Vietnam where he worked for Gregg and Shackley. Rodriquez returned to the Western Hemisphere in the early 1980s when Reagan launched his covert war in Nicaragua. He was assigned to oversee the Contra supply effort in El Salvador from 1982 to 1986.

In November 1982, Ramon Milan Rodriquez, involved with the Colombian cocaine cartels, made a $3,690,000 payment to the Contras at the request of Felix Rodriguez, in exchange for protection from prosecution. The next year, Gustave Villolda received a letter of recommendation from Gregg as "combat advisor" to the Contras. Villolda worked along side Rodriguez during the Bay of Pigs invasion and the CIA track down and execution of Che Guevara in Bolivia. In 1984 Gerald Latchinian, co-director with Rodriguez of Giro Aviation, a CIA proprietary airline, was arrested for smuggling $10.3 million in cocaine to finance the assassination of Honduran President Roberto Suazo Cordova. Latchinian contended that this was a CIA operation.


Rodriquez was a Cuban exile and was the principal accountant for the Medellin cartel, handling $200 million a month in drug profits. His business took him from Colombia to Panama and Florida. He claimed that in the 1972 he carried $200,000 in cash from CIA operant Manuel Artime to some of the burglars arrested at the Watergate Hotel. In 1982 he was recruited by Felix Rodriquez to join the contra network for which he contributed approximately $10 million between 1982 and 1985. When Milian Rodriquez was arrested in 1985, his financial papers were seized. In a column under the heading of "CIA," Rodriquez had recorded $3.69 million in expenditures. Rodriquez used his Ocean Hunter frozen shrimp company, based in Florida, but owned exclusively by his Costa Rican Frigorificos de Puntanenas firm, to move around about $200,000 in this time frame.


CASE. The Sanchez family first involvement in drug trafficking dated back to the San Francisco "frogman" case in 1983. This operation netted 430 pounds of cocaine from a freighter outside of San Francisco Bay. Its crew admitted that it was running drugs from the Contras in Costa Rica. One was an ex-Somoza air force officer who stated that the profits belonged to the Contras. Another stated that he had given thousands of dollars from the drug smuggling to Costa Rican Contra groups and helped to arrange for the shipment of arms to a small Contra group headed by Fernando Chamorro. The United States returned $36,020, which was seized as drug money, after one of the defendants, Zavala, submitted letters from Contra leaders claiming that the funds were really their property.

The Kerry committee found that two of those arrested had ties to the Contras and had received the cocaine from Colombian sources. The committee report implicated higher up Contra leaders who were involved in narcotics traffic. Several members of the Sanchez family were indicted. Court records showed that the cocaine ring's source of supply included one of the family members, Troilo Sanchez. He was a relative of Aristides, a member of the FDN directorate who earlier had been caught trafficking cocaine. The "frogman" case resulted in the demise of the Sanchez family.


Honduras had been the classic example of a banana republic. Most of its economy was controlled by United Fruit and Standard Fruit. New Orleans ran its economy, and soon banana trade routes became drug routes. In 1975, Honduran president General Oswaldo Lopez Arellano received $1.5 million in bribes from the American multinational companies, and in return never paid export taxes amounting to $7.5 million.

In the 1980s, Honduras accounted for approximately 20 percent of the cocaine imported by the United States. Costa Rica supplied about 10 percent of America's cocaine. Between 1982 and 1987, the Reagan administration pumped in $335 million in military aid and $836 million in "economic" aid to Honduras. A Christian Democrat in Honduras' congress stated that Washington would merely ignore any questions about drug trafficking.

Reagan administration officials interceded on behalf of Jos Bueso Rosa, a Honduran general who was heavily involved with the CIA's Contra operations and faced trial for his role in a massive drug shipment to the United States. In 1984, Bueso and co-conspirators plotted to assassinate Honduran President Roberto Suazo Cordoba This was to be financed with a $40 million cocaine shipment to the United States, which the FBI intercepted in Florida.

According to declassified e-mail messages North led an effort to seek leniency for Bueso. The messages indicated the efforts of American officials to "cabal quietly" to get Bueso a "pardon, clemency, deportation, (or) reduced sentence." Eventually they succeeded in getting Bueso a short sentence in "Club Fed," a white collar prison in Florida.

The Kerry committee report reviewed the case and noted that Bueso was involved in a conspiracy that the Justice Department deemed the most significant case of narco-terrorism ever discovered.


This arms for drugs caper emerged in 1983 when Calero was placed in charge of the contras operating out of Honduras. It was at this time that Eden Pastora in Costa Rica was cut off the CIA payroll.

Juan Ramon Matta Ballesteros was a well-known drug dealer who spent part of the 1970s in a Colombian prison. He returned to Honduras in 1986 after bribing his way out of jail with $2 million. The DEA knew about Matta by 1978 when he was arrested at Dulles airport with 54 pounds of cocaine. However, by 1983 SETCO Matta's air freight company was used by the Contras to run arms to the Contras in Honduras. According to the Kerry report SETCO was being used as the Contras' main supplier of weapons in 1984. For these services, Matta was paid by North. The Kerry report also stated: "One of the pilots selected to fly Contra mission for the FDN (Contras) for SETCO was Frank Moss, who was under investigation as an alleged drug trafficker since 1979." Two years after Iran-Contra broke in the United States the Justice Department extradited Matta who was a suspect in the murder of DEA agent Enrique Camarena in Mexico.

In July 1985, Michael Tolliver, a convicted American drug smuggler who was at a Georgia halfway house, was contacted by Barry Seal. Seal had contacts with the CIA and was released from prison early. He was told that he would receive $75,000 a trip if he were to fly arms from Miami's airport into Honduras. According to Tolliver, Seal had 28,000 pounds of marijuana when he arrived at Homestead Air Base in Florida. Upon returning from Central America, Seal met "Hernandez" at the Fountainbleau Hotel and was paid $75,000.

In October, FBI agents seized 763 pounds of cocaine with a wholesale value of $10 million in southern Florida. Among those arrested was Honduras' former chief of staff of the army, General Bueso Rosa. In 1987, United States officials confiscated two shipments of cocaine weighing 6.7 tons. United States government investigators stated that it went directly to the doorstep of the Honduran military. The cocaine originated from the Cali cartel with whom Matta dealt directly.

In 1987, the DEA had information which linked five top Honduran military officers with drug trafficking but was persuaded not to act since it may have endangered Honduran cooperation in the Contra war. By 1987, it was estimated that Honduras accounted for 20 to 50 percent of all cocaine which entered the United States from Latin America.


Several groups of Miami-based Cuban-Americans provided direct or indirect support to the Contras when it was prohibited by the Boland Amendment. Rene Corbo was one who provided supplies and training with funds in part from drug money. Two other Cuban exiles, Mario Rejas Lavas and Ubaldo Hernandez Perez, were captured by Sandinistas in 1986. They were reportedly members of UNO/FARN which was headed by Fernando "El Nego" Chamorro. When the Kerry committee requested information on these Cuban-Americans, the Justice Department refused to provide any information on the grounds that the committee was merely carelessly rambling through its open investigations. The Justice Department advised this committee that the matter had been fully investigated and that the committee's allegations were untrue.

In May 1986, members of the Kerry committee met with CIA officials who categorically denied that weapons had been shipped to the Contras on planes involving Corvo. Yet the FBI had learned that

Cuban-American supporters had shipped weapons from south Florida to Ilopango Air Base in Honduras as well as to John Hull's ranch in Costa Rica.


Hull came to the United States in 1983 to convince Congress that Pastora should not be supported since he had allied himself with the Sandinista government. Hull met with Senator Quayle and Owen, his legislative aide. A year later Owen switched jobs and began to work for the Washington D.C. lobbying firm of Gray and Company. He was approached by Contra leader Calero who asked him to take on the task of raising money in the United States through non-profit organizations and companies for the Contras.

Owen researched the financial and military needs of the Contras and passed the information on to North. Owen reported that between $1 million and $1.5 million was required on a monthly basis to keep the Contras equipped. In July 1984 purchased weapons from South Africa and returned to the United States where he met with Hull and Calero. Owen promised to provide Calero with $2,500 a month and Hull with $10,000 a month.

Owen also worked primarily with Neil Livingstone, who was responsible to Ed Wilson of the CIA. Additionally, he was North's liaison, delivering Swiss bank account numbers to Taiwanese government officials who in turn made contributions to the Contras. In April 1985 Owen warned North that Costa Rican-based Contra leader Jose Robelo had the "potential involvement in drug running" and that another Contra, Sebastian Gonzalez, was "involved in drug running out of Panama." In August 1985 North told Owen that the "DC-6 which is being used for runs out of New Orleans is probably being used for drug runs into the United States." In February 1986 Owen informed North that another Contra DC-4 was "used at one time to run drugs, and part of the crew had criminal records. Nice group the Boys (the CIA) chose."

Frank Castro, an ex-Cuban and Bay of Pigs veteran, was indicted in the 1970s for smuggling more than a million pounds of marijuana to the United States. Owen stated that Castro was heavily into drugs and that he had furnished Pastora with a DC-3 plane. Castro also hade visited Hull's ranch in Costa Rica. The Kerry report also corroborated the allegations linking together North and Castro as part of a conspiracy to both gunrunning and drug trafficking.


Colonel James Steele was the chief American military adviser in El Salvador and senior officer in charge of United States military operations which provided the Contras with weapons out of Ilopango airport. In December 1984, National Security adviser Gregg met with Felix Rodriguez and was given a position in El Salvador as a contra military advisor. The next month Rodriguez met with Bush to discuss the Contra job. In the summer of 1985 Rodriguez flew to Washington D.C. to meet with Gregg and Steele. According to Rodriquez's testimony before the Kerry committee in 1987, Steele was in contact with Rodriguez from September 1985 through summer 1986. A North memorandum stated that Steele made Rodriguez his deputy and allowed him to use a military car as well as a KL-43 encrption device for secure telephone conversations.

In March 1986, Steele met in Honduras with Rob Owen, North's associate directing the Contra resupply operation from bases in Costa Rica. In a memo to North after the meeting, Owen suggested stockpiling weapons for the contras in Costa Rica at "Cincinnati," a code word for the United States air base at Ilopango, El Salvador, where Steele was the American commander.

According to a crew member aboard a flight dropping supplies to the Contras in April 1986, Steele helped guide the mission. Nine days later after approximately 10 flights dropped arms and equipment to the southern front, Steele met with North, Secord and retired Colonel Richard Gadd in El Salvador. Gadd stated that Steele's role suggested that higher officials in the Pentagon may have known and participated in the resupply effort.

Mattes claimed that Steele could have testified as to whose authority that he operated in assisting the Contras during a time when the Boland Amendment was in place. Attorneys for the select committees deposed Steele in April 1987, but he was not called to the witness table.


Before he seized power as head of state, Manuel Noriega was first recruited by the United States Defense Intelligence Agency in 1959 while studying in Peru. By 1967 he was placed on the CIA payroll. At this time, he worked in conjunction with the United States military, which used Panama as a listening post in Latin America. After a failed coup in 1971 General Omar Torillos, who later became dictator, fled to Miami where he stated that Noriega had "operational control" of the narcotics trade through Panama.

The Justice Department dropped the idea to attempt to indict Noriega. In 1976 Noriega was placed on the CIA payroll again, this time at $110,000 a year. When Carter was elected, Noriega was again dropped from the CIA. Carter's major objective was to pass the Panama Canal Treaty, so all allegations against Noriega were suppressed. However, once the treaty was ratified by the Senate, the Panamanians got the word that America was open for drug trade. In 1980 Noriega was given full control over a special Panamanian intelligence unit. Noriega supplied at least seven pilots to run arms down from Florida. The pilots returned with cocaine.

When Reagan took office in 1981, Noriega was immediately brought back by the CIA. His salary was increased, and his salary jumped to $185,000 a year, and by 1985 it reached $200,000. The CIA deposited Noriega's illegal payoffs in the Bank of Credit and Commerce International (BCCI), whose name made front page news in the summer of 1991 for laundering money.

CIA Director Casey began meeting with Noriega in 1981. Noriega was paid $100,000 for the use of Panama as a middle country to run drugs from Colombia to the United States. His personal pilot, Floyd Carlton, stated that he received $400 per kilogram to run cocaine from Colombia into Panama. However, things turned sour for Carlton in 1985 when $3 million in cocaine was missing on flights into Costa Rica.

Noriega supplied pilots and urged Pastora to unite with the Contra organization in Honduras. By 1985, Noriega promised to train Contras in Panama. Noriega met with North in London to discuss plans to set up training for booby trapping, night operations, and sabotage activities against Nicaraguan targets. Noriega stated that he would try to obtain Israeli commandos to work with the Contras.

The Kerry report stated: "Noriega put his pilots to work flying weapons from Panama to Costa Rica for the Contras. ...Many of the pilots moved mixed cargoes of guns and drugs to bases in Costa Rica, dropped off the guns and flew on to the United States with drugs."

In 1986 the Iran-Contra scandal broke, now making Noriega expendable. The next year his personal pilot, Carlton, was extradited to the United States. In 1988 Noriega himself was indicted by the Justice Department and was linked to drug trafficking for the first time. The following year the United States invaded Panama, and Noriega was kidnapped and taken to Miami for his trial. The CIA never turned his files over to the Justice Department.

After Noriega was brought to the United States, the Bush administration placed Guillermo Endara in power. Endara was director and secretary of Banco Interoceanico which had been targeted by the DEA and FBI, and he named Carlton as a major person who laundered money through that bank from the Medellin and Cali cartels. The CIA also used Banco de Ibereoamerica as a front through which to launder money in Panama. Through this dummy company, North purchased arms from a Syrian drug and arms dealer, Manzer al-Kasser, who had ties to the Medellin cartel.


In 1988, the CIA hired General Ramon Guillen Davila to investigate Venezuela's drug enterprises, primarily the Cali cartel. With the help of the CIA, Guillen set up a drug smuggling operation which involved Venezuelan National Guardsmen. They purchased cocaine from the Cali cartel in Colombia, imported it to Venezuela, and stored it in warehouses which were run by Guillen and funded by the CIA. One CIA agent said "let the dope walk;" that is, to ship it northward into the United States. Another agent, Mark McFarlin, testified in Miami federal court in 1989 that he had informed the Caracas CIA agent chief that 3,000 pounds of cocaine had just been shipped to the United States. When the agent chief was informed that the DEA was unaware of the operation, he responded by telling McFarlane, "Let's keep it that way."

Between 1989 and 1992, 22 tons of cocaine flowed from the Guillen network into the Miami. In 1990, DEA agents in Caracas were informed of the illicit activity and made no attempt to intervene. Finally in 1992, United States Customs in Miami terminated the operation when they seized an 800 pound cocaine shipment. One of Guillen's dealers, Adolfo Romero, was arrested and convicted on drug conspiracy charges. No action was taken against Guillen's organization, and he simply dropped out of contact with the CIA.

In November 1996, the Justice Department indicted Guillen on charges of importing cocaine into the United States. Guillen headed Venezuela's anti-drug unit while smuggling over 22 tons of Cali and Bogata cartel cocaine into the United States and Europe. After he learned of his indictment, he went into seclusion in Caracas where he received a federal pardon. Guillen contended that Venezuelan cocaine shipments to the United States were authorized by the CIA. He said, "Some drugs were lost and neither the CIA nor the DEA want to accept any responsibility for it."


CIA operant Hasenfus was a "kicker" on a C-123 cargo plane which ran shipments to the Contras over Nicaragua. He would "kick out" the cargo which then parachuted down to the Contras in the field. When the plane was shot down by a hand-held surface-to-air missile, Hasenfus was able to parachute out. The plane's crew also consisted of a Contra radio operator, American pilot Bill Cooper, and copilot Wallace "Buzz" Sawyer. Sawyer had in his possession the White House phone number of Vice President Bush. Telephone logs from the phone company in El Salvador for the "safe houses" used by the plane crew showed many calls to North's White House office. Bush's office was the first place notified after the C-123 crashed. Hasenfus claimed that this was done with the knowledge and approval of Bush. Telephone logs from the phone company in El Salvador used by the plane crew showed many calls to North's White House office.

It was discovered that the plane was the same C-123 which had been used by Seal to run drugs into the United States. Earlier in 1983, Harry Doan had sold the C-123 to Seal who flew it to Rickenbacker Air Force Base in Ohio. It was there that it was outfitted with hidden cameras by the CIA. Seal then piloted the aircraft to Nicaragua and returned with 1,472 pounds of cocaine. The cameras filmed Federico Vaughan, who was an employee of the Nicaraguan Interior Ministry, helping load cocaine into the plane. Also, the plane's logs indicated it had flown out of Colombia, home to the Medellin and Cali drug cartels. Flight logs in the plane indicated that it had made trips between Barranquilla, Colombia and Florida in 1985.

Only days after the downing of the aircraft Hasenfus told Nicaraguan authorities that "there were two Cuban nationalized Americans that worked for the CIA that did most of the coordination of the flights and overseeing all operation projects, transportation... also refueling and...flight plans." Hasenfus identified the two as Felix Rodriguez and Ramon Medina. After Hasenfus was released by the Sandinistas several weeks later, he returned to the United States and testified that he worked for the CIA and that he reported to Gomez (alias Felix Rodriguez) and Medina (alias Luis Posada Carriles) with the knowledge and approval of Bush.

A Reagan administration official, who was familiar with contra activities, claimed that the crew of the C-123 was flying supply missions for the State Department's Nicaraguan Humanitarian Assistance Office, which was responsible for providing $27 million in nonlethal aid to the Contras earlier in 1985.

The Kerry committee learned that Southern Air Transport of Miami had provided the plane. Southern Air denied any knowledge, and no charges were brought against this front.

The CIA denied any knowledge of Hasenfus and also stated that he was working outside the jurisdiction of the federal government. After several weeks, Hasenfus was released and returned to the United States where he subsequently received no aid or support by the government.

Continue to part 4 of the history of CIA involvement in Drug Smuggling

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