Tag Archives: Narcotics

Hyde’s Blind Spot

Hyde’s Blind Eye: Contras & Cocaine

By Dennis Bernstein & Leslie Kean, ConsortiumNews.com, December 14, 1999

Henry Hyde, who starred as chief House manager in President Clinton’s impeachment, played a very different role a decade earlier.

In 1987, instead of the grim prosecutor set on punishing Clinton for his sex-and-lies offenses, Hyde was the glib defense attorney searching for reasons to spare President Reagan from possible impeachment over the Iran-contra scandal and related drug crimes implicating the Nicaraguan contra army.

As a member of the congressional Iran-contra committee, Hyde vigorously defended Reagan’s Iran-contra activities and steered the panel away from any serious investigation of the contra-cocaine connection.

The suppression of that contra-cocaine probe, in particular, proved crucial in shielding Reagan and his vice president, George Bush, from blame for a policy that fueled America’s cocaine pandemic and wreaked havoc on cities across the nation.

While it is not clear exactly what Hyde knew about the contra-cocaine corruption in 1987, government investigators already had collected strong evidence of widespread criminality.

The contra-cocaine issue had surfaced publicly in 1985 and had become the subject of a Senate inquiry in 1986. Even earlier, the CIA and the Drug Enforcement Administration were aware of the contra-cocaine problem.

Those early suspicions have now been proved out. Last year, CIA inspector general Frederick Hitz issued a lengthy report admitting that drug traffickers permeated the contra movement from its inception in the early 1980s and that contra-cocaine smuggling continued throughout the decade. [For details on Hitz’s report, see Robert Parry’s Lost History.]

According to the CIA inspector general’s report, the evidence showed that from the start, the CIA knew the contras were involved in “criminal activities,” including terrorist bombings, hijackings and narcotics trafficking.

By 1981, contra operatives had delivered their first shipment of cocaine to the United States, the report revealed. The inspector general also confirmed that drug traffickers from the Medellin cartel secretly collaborated with contra operatives to pump money into the contra war.

We now know, too, that in 1982, Reagan’s first attorney general, William French Smith, gave the CIA legal clearance to work with drug traffickers without a requirement to report on their criminal activities.

This so-called “memorandum of understanding” was effectively a carte blanche for the CIA to ignore drug operatives working in the contra movement as well as other CIA-backed projects.

Though now confirmed by the CIA’s inspector general and other investigators, the contra-cocaine charges were a matter of heated denials in the mid-1980s — when the drug smuggling actually was taking place.

“The government made a secret decision to sacrifice a part of the American population for the contra effort,” testified Washington attorney Jack Blum before the Senate Intelligence Committee in 1996. Blum had been special counsel to Sen. John Kerry’s Senate Foreign Relations subcommittee on terrorism and narcotics.

Reagan administration officials also were “quietly undercutting law enforcement and human-rights agencies that might have caused them difficulty,” Blum stated. “Policy makers absolutely closed their eyes to the criminal behavior of the contras.”

From his twin perch on the House Intelligence Committee and the congressional Iran-contra panel, Henry Hyde was especially well positioned to stop potential threats to the contras from law-enforcement officials and congressional investigators who were compiling the evidence.

Hyde’s spot at the nexus of information made him one of President Reagan’s most important defenders.

One of the Illinois Republican’s principal contributions to the contra-cocaine cover-up was his championing of a bogus 1987 investigative report largely clearing the contras of drug-trafficking suspicion.

The 900-word memo, drafted by Iran-contra committee staff member Robert A. Bermingham, claimed that a thorough investigation into the drug-trafficking charges had found no evidence that the contra leadership was implicated in narco-trafficking. Bermingham submitted the memo to Iran-contra committee chairman, Rep. Lee Hamilton, on July 23, 1987.

During the course of our investigation, the role of U.S. government officials who supported the contras and the private resupply effort, as well as the role of private individuals in resupply, were exhaustively examined,” Bermingham wrote.

“Hundreds of persons, including U.S. government employees, contra leaders, representatives of foreign governments, U.S. and foreign law enforcement officials, military personnel, private pilots and crews involved in actual operations were questioned and their files and records examined. …

“There was no information developed indicating any U.S. government agency or organization condoned drug trafficking by the contras or anyone else.”

More broadly, Bermingham disparaged the contra-cocaine allegations as self-serving claims coming from disreputable individuals.

“During the course of our investigation, we examined files of State, DOD, NSC, CIA, DEA, Justice, Customs and FBI, especially those reportedly involving newspaper allegations of contra drug trafficking,” he said. “We have discovered that almost all of these allegations originate from persons indicted or convicted of drug smuggling.”

Bermingham also reported that “contra leaders have been interviewed and their bank records examined. They denied any connection with or knowledge of drug trafficking. Examination of contra financial records, private enterprise business records, and income tax returns of several individuals failed to find any indication of drug trafficking.”

Bermingham then concluded, “additional investigation of these allegations is unwarranted in view of the negative results to date.”

While Bermingham’s description of his investigation sounded impressive, the memo offered virtually no documentation from — or even identification of — the “hundreds” of witnesses supposedly questioned.

There were no excerpts from depositions, no quotes from the files, no references to specific records examined, no citation of which foreign governments had cooperated or how, no detailing of the witness accounts alleging contra-drug trafficking and how those stories were debunked.

Though the Democrats soon realized that Bermingham’s sweeping claims were not supported by the evidence, Hyde signed off on it and used the memo to disparage anti-contra evidence coming from other investigators.

Hyde cited the memo as proof that the Democrats had “left no stone unturned” in efforts to hurt the contras, but still had come up empty.

With Hyde’s backing, the Bermingham memo galvanized a Washington conventional wisdom that the contra-cocaine charges had been thoroughly investigated and discredited.

What is now even more troubling about the memo — and Hyde’s endorsement — is that recent internal investigations by the CIA and the Justice Department have revealed that the agencies and the groups cited by Bermingham actually possessed significant proof of contra-connected drug trafficking in their files.

The agencies also knew that criminal investigations had been sidetracked for political reasons. For example, the CIA and Justice Department acknowledged that investigative leads into a 1983 drug-smuggling case in San Francisco were dropped after CIA officials expressed concerns that contra leaders in Costa Rica could be implicated.

Consider also what was going on at the NSC and the State Department in 1985-86: NSC aide Oliver North had teamed up with four companies owned and operated by drug traffickers — and North helped arrange State Department contracts to pay all four for shipping non-lethal supplies to the contras.

According to government documents, the companies were:

•  SETCO Air, owned and operated by the notorious Honduran drug trafficker Ramon Matta Ballesteros.

• DIACSA, the Miami-based headquarters for major traffickers, Floyd Carlton and Alfredo Caballero.

• Vortex, an air service partly owned by drug trafficker Michael Palmer, descibed in court records as “working for the largest marijuana cartel in the history of the country.”

• Frigorificos de Puntarenas, a Costa Rican seafood exporter established by the Medellin cartel and operated by Cuban-American traffickers.

Months before the Bermingham memo — on March 25, 1987 — the CIA also had interviewed Cuban-American Moises “Dagoberto” Nunez about his role in Frigorificos, according to the CIA inspector general’s report.

Nunez “revealed that since 1985 he had engaged in a clandestine relationship with the National Security Council,” the CIA report stated, adding: “Nunez … indicated that it was difficult to answer questions relating to his involvement in narcotics trafficking because of the specific tasks he performed at the direction of the NSC.”

The Reagan administration also knew that Felipe Vidal, another Cuban-American working for the CIA and Frigorificos, had a criminal record as a drug trafficker, according to the inspector general’s report.

Defenders of Hyde and the Bermingham memo could argue that the CIA withheld much of this evidence from Congress, that Hyde and Bermingham were more dupes than conscious participants in a cover-up.

But there still was a significant body of incriminating evidence before the Iran-contra committees in 1987. Senior CIA officials, Alan Fiers and Joe Fernandez, had told the Iran-contra investigators that drugs were a significant problem on the so-called Southern Front in Costa Rica.

Also, by the time of Bermingham’s memo, Robert Owen, a North intermediary and an early congressional witness, had turned over contra files that referred to drug trafficking.

When one of Palmer’s planes crash-landed in 1986, Owen had written to North, “no doubt you know that the DC4 … was used at one time to run drugs and part of the crew had criminal records. Nice group the boys chose.”

Contrary to Bermingham’s “exhaustively” researched memo, too, some contra leaders were acknowledging financial and material support from drug traffickers.

One leader, Octaviano Cesar, admitted receiving help from notorious drug trafficker George Morales. Cesar justified the arrangements as necessary for “the security of my country.”

Bermingham’s tarring of “almost all” the witnesses as convicted or charged criminals did not turn out to true, either. Indeed, many of the witnesses who described contra-drug activity worked for the DEA or the FBI.

Throughout 1986, the Kerry investigation was forwarding contra-drug evidence to the Justice Department, including the testimony of one FBI informant named Wanda Palacio.

Palacio gave an eyewitness account of Colombian drug traffickers loading cocaine onto planes belonging to the CIA-connected airline, Southern Air Transport, in 1983 and 1985.

She identified one of the SAT pilots as contra fly-boy Wallace “Buzz” Sawyer and placed him at the airport in Barranquilla, Colombia, in early October 1985.

Sawyer died when his contra plane was shot down in Nicaragua on Oct. 5, 1986, but his flight logs were recovered and revealed that he had flown SAT planes into Barranquilla on several days in early October 1985.

Palacio was one of the many corroborated witnesses who was not a convicted criminal, but whose information was nonetheless rejected by Reagan’s Justice Department and, presumably, by Bermingham’s study.

Indeed, from a review of the evidence available just in 1987, it seems like Bermingham must have been interviewing a different set of government officials and contra leaders than those who had caught the attention of Kerry and other investigators.

As Kerry’s final report summarized: “It is clear that individuals who provided support for the contras were involved in drug trafficking. It is also clear that the supply network of the contras was used by drug trafficking organizations, and elements of the contras themselves knowingly received financial and material assistance from drug traffickers.

“In each case, one or another agency of the U.S. government had information regarding the involvement either while it was occurring or immediately thereafter.”

Though Bermingham’s memo now appears to have been a sham report based on a selective reading of the record, it dealt a powerful blow to those who favored a broader Iran-contra investigation in 1987.

In particular, Hyde seized on the document as proof that critics were falsely maligning the contras. Hyde also scolded the Democrats for not highlighting the exculpatory memo in their final Iran-contra report when it was released in November 1987.

“The fact is that the committees’ staff left no stone unturned in its efforts to obtain information that might be politically damaging to the Resistance,” the contras, declared Hyde and other committee Republicans in a footnote to the final report.

“The committees’ investigators reviewed major portions, if not all, of the contras’ financial records; met with witnesses who alleged the Resistance was involved in terrorism or drug-running; investigated the financial conduct of the [State Department’s non-lethal contra aid program, and] received no credible evidence of misconduct by the Resistance.

“It came as little surprise, of course, that the committees’ majority does not explicitly acknowledge this. … For this reason, suggestions that the committees have not investigated such matters, and other committees of Congress should, ought to be seen for what they are: political harassment by congressional opponents of the Resistance.”

In the years that followed, some of those most troubled by Hyde’s protection of the drug-tainted contra operation have been agents of the Drug Enforcement Administration.

Michael Levine, a former undercover DEA agent, has reviewed the evidence of the Reagan administration’s complicity in the contra-cocaine operations and asserted that he has put corrupt police officers in prison for much less.

“Imagine this, here you have Oliver North, a high-level official in the National Security Council running a covert action in collaboration with a drug cartel,” Levine said.

“That’s what I call treason [and] we’ll never know how many kids died because these so-called patriots were so hot to support the contras that they risked several generations of our young people to do it.”

Levine still fumes when he reviews the incriminating entries in North’s notebooks that were turned over to the congressional committees. On July 12, 1985, for instance, North wrote about one contra arms warehouse in Honduras: “Fourteen million to finance came from drugs.”

“What the hell does that mean, and where does Congressman Hyde think the drugs went that paid for the contras’ weapons? Into kids’ bodies,” Levine said.

Levine viewed Hyde as a protector of the dirty secrets, even if he did not participate directly in the contra-cocaine operations. “As a key member of the joint committees, he certainly played a major role in keeping the American people blindfolded about this story,” Levine said. “There was plenty of hard evidence. … The totality of the whole picture is very compelling. This is very damning evidence. …

“In my book, Big White Lie, I [wrote] that the CIA stopped us from indicting the Bolivian government at the same time contra assets were going down there to pick up drugs. When you put it all together, you have much more evidence to convict Ollie North, [former senior CIA official] Dewey Clarridge and all the way up the line, than they had in any John Gotti [Mafia] case.”

Celerino Castillo III was a top DEA agent in El Salvador who encountered obstructions in the mid-1980s when his undercover work turned up links between the contra-supply operation and cocaine trafficking.

“They were running narcotics and weapons out of Ilopango to support the contras,” Castillo said in an interview. “We’re talking about very large quantities of cocaine and millions of dollars. … There’s no doubt about it; we saw the cocaine and the boxes full of money.”

Castillo said the operation was run out of “Hangars 4 and 5 controlled by North and the CIA with [former CIA officer] Felix Rodriguez. The cocaine was transshipped from Costa Rica through El Salvador and into the United States.”

The DEA agent detailed how known traffickers with multiple DEA files used the two hangars and how they had obtained U.S. visas with the help of the U.S. government.

Castillo said his reports were very thorough and included “not only the names of traffickers, but their destinations, flight paths, tail numbers and the date and time of each flight.” According to Castillo, the drug planes flown by contra pilots came from Costa Rica and sometimes the drugs came on military aircraft from Panama.

The top drug pilot flying for the contra network then was Francisco Guirola Beeche, Castillo said. Guirola’s name was all over DEA databases, according to Castillo, and the aircraft was on a watch list for drug trafficking.

Guirola, an associate of Salvadoran death squad leader Roberto D’Aubuisson, ran afoul of U.S. law on Feb. 6, 1985, when his plane landed in Texas with nearly $6 million in suspected drug money on board.

Authorities seized the money — which Guirola said was going to finance political operations of D’Aubuisson’s right-wing ARENA party. But Reagan administration prosecutors soon released the plane and offered to free Guirola on probation.

The plea bargain was so lenient that it mystified U.S. District Judge Hayden Head Jr., who complained that “the punishment doesn’t fit the crime.” But prosecutors persuaded the judge to approve the deal. [AP, June 13, 1985]

By letting Guirola go free, the plea bargain prevented a thorough examination of the source of Guirola’s money.

The drug-trafficking evidence at Hangars 4 and 5 might have raised suspicions, too, about Cuban-American Felix Rodriguez who oversaw the contra-supply operations for Oliver North. Rodriguez had been placed in El Salvador by Vice President Bush’s office.

During the Iran-contra hearings, the former CIA paramilitary expert received laudatory treatment from Hyde and other committee Republicans. When Rodriguez testified, Hyde showered the former CIA officer with praise for battling communism, but Hyde avoided questions about the shadowy operations at Hangars 4 and 5.

Hyde also shifted the blame to Congress for the contras’ need for money. “I know there is a zeal among some to confine this inquiry to who did what, and ignore why,” Hyde declared.

“And I just want to make the point that I think why some of these things were done contributes to a fuller understanding of who and what [was done], and that the nonfeasance of Congress may well turn out to be every bit as important as the misfeasance or malfeasance of certain individuals.”

A mountain of evidence now exists to back up the fact that the contras were connected to major cartel trafficking operations.

Yet, because of the aggressive defense played by Hyde and other Republicans — not to mention the timidity of senior Democrats — North and other key officials escaped serious investigation on drug charges.

Indeed, North nearly won a U.S. Senate seat in 1994 and has emerged since as a national television personality on NBC’s cable news networks.

For Hyde, there have been honors, too. On March 4, 1991, then-CIA director William Webster awarded Hyde a CIA Seal Medallion for his “tremendous service” and his “sustained outstanding support” for the CIA.

Without doubt, Hyde performed a “tremendous service” for the spy agency and its public reputation. At a pivotal moment in the 1980s, Hyde helped keep the lid on some of the CIA’s dirtiest secrets.

Hyde’s performance was in marked contrast to his moral zeal in the 1990s when confronting President Clinton’s dissembling about sexual peccadillos.

Moral Universe: Where More Than Space and Time Are Warped, published by Common Courage Press. The book can be ordered from www.commoncouragepress.com or by calling 1-800-497-3207

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“Big Al” Carone

Married to the Mob and the CIA

Was “Big Al” Carone a prominent Mafioso, CIA operative, NYPD detective, bagman for George Bush and Oliver North, drug dealer, assassin and a “man of honor?”

by Michael C. Ruppert, High Times, September 11, 2002

“The plaintiffs would have this court believe that Mr. Carone has played the role of Forrest Gump, popping up as a key player in virtually every government conspiracy theory promulgated over the last 50 years. This court simply cannot view any of the plaintiffs’ claims as plausible, especially in light of the complete lack of even a scintilla of evidence except for one patently forged document and self-serving declarations. Accordingly, the court dismisses the case pursuant to Rule 12(b)(1).” — Ricardo M. Urbina, United States District Judge, February 27, 2001

I first walked into this case in late 1983 when I got a call from former CIA case officer David MacMichael. As a matter of conscience, Dave had for many years been speaking out about illegal and inhumane operations being conducted by the CIA.

“Mike, there’s a woman in New Mexico named Dee Ferdinand. She says that her father, a guy named Albert Carone, was a high-level agency operative. He was also NYPD. She says that he was also in the Mafia. He’s been dead since ’90 and every record about him has apparently been sanitized. The family’s been denied benefits and had bank accounts stolen even though the daughter has records. She says her father knew Ollie North and George Bush personally. I think it’s something you might want to look into.”

It bit me like a pit bull. I had just started writing about CIA operations again after a disastrous and painful experience as the Los Angeles County press spokesman for the Ross Perot presidential campaign of 1992. That had proven to be yet another case of unmet expectations in my quest to find an honorable man. I had also just spent months putting together a conference in Indiana for the families of what was to ultimately become 109 US servicemen who had been “suicided” or died under suspicious circumstances. In almost every case where I could get information, I had discovered that there was a connection between the deaths and covert operations. Quite often there were links, reported by the dead serviceman to his family, of drug smuggling or criminal activity on or around military bases where they served.

My then fiancée, Mary, and I had brought many of these families together in a small town in Indiana in the fall of 1993. The ultimate pain for all of them was the discovery that there was no honor in their own government. The deaths of all of their sons, husbands and brothers had been dismissed as suicides or accidents. The cover-ups had been sloppy, arrogant and brutal in their apparent contempt for evidence. All of the families had vowed to do whatever it took to break the cases. None of them understood that they all would ultimately fail.

Now I was presented with a case where it had happened to someone on the inside–a bad guy. Would it be any different?

Mary and I packed our bags and flew to Albuquerque. My “cop instincts” had always served me well, and there was something about the demeanor of Desiree (Dee) Ferdinand, with her disarming Brooklyn accent reminiscent of Michelle Pfeiffer in Married to the Mob, that allowed me to instantly trust her. Her husband, Tommy Ferdinand, had struck me the same way. No b.s. and a sense of humor that I wish he still had today. I had told Dee up front where I was coming from. I didn’t like bad guys. She had been just as up-front that she knew that her father was a crook, a drug dealer, a CIA operative, a bagman, a killer and an all-around not-very-nice person. But for her it was a matter of honor.

That, I understood.

The Ferdinands rented a large ranch house in Corrales, just north of the city. On two acres Dee boarded and cared for six horses. She had a son, Vinnie, who was in his early twenties and going to college. Vinnie would soon become a Bernalillo County sheriff’s deputy. She had a younger daughter, Nikki, who was still living at home. Also living at the house was Tommy’s mother, Irene, and a not-too-friendly Rotweiler named Mikie which Mary instantly named “Cujo.”

The hospitality was genuine New York Italian and the food was just as authentic. Over two and a half days we talked. I asked questions and looked at documents and papers retained by Dee Carone Ferdinand after the death of her father, Albert Vincent Carone, in January 1990.


In a videotaped deposition made in September 1998 as she and a former Green Beret named Bill Tyree brought suit against the CIA, Dee Ferdinand was asked to describe what kind of a man her father was. “He was known as man of great respect, a man of honor. That is not to say that he was honest. He wasn’t. He did many bad things. But he lived by a code of honor. If he said something was so, you could take it to the bank.”

Over the years I have talked to almost every family member who knew Big Al, including Dee’s sister Carla and her husband John. Dee, Tommy, Carla, John, Irene and Vinnie had all seen Big Al in his Army uniform. Tommy and John told me how they had driven him at times to secure areas at LaGuardia or JFK airports, in full uniform, often with a briefcase handcuffed to his wrist. On other occasions he had been chauffeured in military vehicles. On one occasion Tommy had dropped him off at JFK inside a secure area, only to see the figure of Richard Nixon waiting for Carone in the open doorway of a nearby helicopter.

Over the course of two days I “debriefed” the family. Carone knew a great many people. He had served as an NYPD detective and bagman for the Genovese and Colombo families. He frequently took military leaves of absence to travel all over the world. The names of people he would later talk about, knowing of his imminent death, included Bill Casey, George Bush, Oliver North, Elliot Abrams, Richard Armitage (now deputy secretary of state to Colin Powell), Richard Secord, John Singlaub, Rafael “Chi Chi” Quintero, drug smuggler Barry Seal, Arkansas billionaire Jackson Stephens, Special Forces Colonel James “Bo” Gritz, General Richard Stillwell, Edwin Wilson, Robert Vesco and many more.

The paper exhibits were compelling and convincing. But I retained a healthy skepticism until I put Dee through a final test. I prepared list of names, some fake, some authentic. I asked Dee if her father had mentioned any of the names over the years. Without a single misstep she picked out almost every member of the board of directors of the Nugan Hand Bank, a legendary CIA drug bank that operated in Australia during the late 1970s and early ’80s. She didn’t fall for any of the falsified names. The real names included Edwin Black, General Leroy Manor and legendary CIA drug banker Paul Helliwell. [For an excellent history of the Nugan Hand affair, I recommend The Crime of Patriots by the late Wall Street Journal reporter Jonathan Kwitny.]

I had been thoroughly convinced that Al Carone was everything his daughter said he was. I told her that in my opinion, there was only one man who could help her. He had served as the CIA’s chief of station in Laos during the Vietnam War. He had risen to oversee the agency’s Western Hemisphere operations and the 1973 overthrow of Chilean President Salvador Allende. He had been the most powerful operations executive at the CIA before Jimmy Carter took office in January 1977. He had stayed with CIA until about 1980, and had retired under a cloud caused by the escapades of Edwin Wilson, one of his protégés who had been convicted of selling plastic explosives to Libya’s Muammar Qaddafi.

Throughout his career, especially from the days in Southeast Asia when he ran the largest CIA operation in history, his name had been linked to heroin. His name also turned up during the Iran-Contra investigations of the 1980s, which saw an explosion in cocaine use from which America has not yet recovered. From the moment that I had learned that CIA was dealing drugs and had begun the investigations that would nearly cost me my life, I had been obsessed with this man. He was the man who had been in charge of CIA’s covert operations when they had tried to recruit me in 1976.

“Dee, “I said. “As far as I know there is only one man who can help you. His name is Ted Shackley.


Al Carone, or “Big Al” as he was known, had been a de facto orphan in Brooklyn in the late ‘20s and early ‘30s. A street kid, left to roam while his mother “entertained” gentlemen at night, he had slept under stoops and in stairwells. He had been adopted by the legendary mobster Vito Genovese, who operated out of a nearby bar. Genovese fed the young street kid, sometimes let him sleep in the bar, and gave him quarters and dimes for running errands. It was here that Al Carone learned about loyalty and honor. There was no end to his love for “Don” Vito.

By the time World War II came around, little Al had become “Big Al,” a lifelong bodybuilder and a “made” member of the family. He entered the Army and was quickly assigned to the Counter Intelligence Corps. Dee said that all of the paperwork she possessed covered the fact that her father really had spent the entire war working for the Office of Strategic Services (OSS), the forerunner of the CIA. This made immediate sense to me, because I had seen US government reports that Vito Genovese and his boss, Charlie “Lucky” Luciano, had been used by the OSS and the Office of Naval Intelligence throughout World War II, first to protect New York docks from sabotage, then to assist in the invasion of Italy and later to prevent Communists and Socialists from winning elections in postwar Italy. The latter activities, funded by Corsican heroin, were the genesis of the famed French Connection, which smuggled tons of heroin into New York City until the 1970s.

After the war in 1946, “Big Al” had joined the New York City police. Dee had photos of her father as a patrolman and later as a detective. Throughout his NYPD career, Carone had made the payoffs to make sure that the CIA’s dope hit the streets safely. She had cancelled pay stubs, copies of pension records, a copy of his graduation roster from the police academy. Big Al had retired as a detective first grade in 1966. Yet, after her father’s death, when she went to ask for death benefits, the NYPD had told her that Al Carone has never been a policeman.

I remember holding one of his passports in my hands and seeing the visa stamps for London, the Bahamas and New York City. I remember the travel records of one of his partners named James Strauss, showing massive expenditures for dozens of flights to all of the world’s financial capitals, sometimes every other day, that a former FBI agent once told me, “could only have come from a GTR government travel account, because an airline would never allow a private business to run up that kind of a tab.”

Most of all I remember holding his personal phone book, separated at the spine from years of use and finding entries for maybe a dozen known Mafia figures including “Boss of Bosses” Paul Castellano, Joe Perscillia, Matty “the Horse” Ianniello and many others. Also in the phone book, on a separate sheet of paper but in the same handwriting, was the Locust Valley, Long Island address and phone number for CIA Director William Casey.

Casey, said the entire Carone family, had been at the Ferdinand home for Vinnie’s christening in the early ‘70s. When Dee was growing up, Casey and his wife had been frequent guests for dinner and social events. So had, on different occasions, Santo Trafficante, mob boss of South Florida, known as Uncle Sonny; Sam Giancana, known as Uncle Momo; and the short-lived boss of bosses Aniello Delacroce had been known as “Uncle Neal.” Both Delacroce and Castellano died in New York mob hits.

There were photographs of Carone in Army uniforms: one as a major, one as a full colonel. There were telegrams and letters referring to him by his military rank. And yet, after his death–which, as I read from the death certificate, was caused by “chemical toxicity of unknown etiology”–the US Army had insisted that he had never served in the military after 1946 and had never attained a rank higher than staff sergeant. He had been buried in a New Mexico military cemetery with that rank on his tombstone. This, said Dee, was not honorable.

But what had been done to Al Carone and his family had been more ruthless, systematic and well executed than anything I have seen before or since. Immediately after his death, both his personal and joint bank accounts held with Dee had disappeared. Even though Dee held passbooks and cancelled checks, the banks had insisted that the accounts never existed. Life-insurance policies which Dee and Tommy had given to a local attorney named Robert Fuentes–later discovered to have intelligence connections–disappeared. Carone’s NYPD pension vanished. The state of New Mexico said that Al Carone had never had a driver’s license. He lived there for 10 years. Coin collections and the contents of several storage facilities evaporated. Even the registration on his personal vehicle, which had always been registered in his name, was altered in state computers. When Dee went to check about having it transferred to her daughter, she found that the New Mexico DMV records showed that Dee had originally purchased the car in the early ‘80s.

Carone’s death had been long, painful and expensive. He knew he was going to die after his own collision with a question of honor, yet he had said repeatedly to the entire family that when he died they all would be taken care of. For the Mafia there was no more important code of honor than taking care of the family. It was apparently different for the CIA, and Big Al Carone had planted his feet in too many worlds before his own death. And it seems, to this day, that the world of the CIA was the one that eliminated his life, and in them, and the interests they worked for, there was no honor at all.

Nobody ever doubted where Al Carone was coming from. “Civilians” were not to be hurt. People who got killed were players, and they knew that was part of the game. Although Carone taught torture and interrogation techniques and guerrilla warfare, he served mostly as a “paymaster,” especially for assassinations and executions in the dark world of clandestine warfare. One assassination that Dee and Tommy would later discuss in their videotaped depositions was John F. Kennedy. Carone had revealed, before his death, that he had been in Dallas on November 22, 1963, that he had been positioned on a rooftop at the Love Field airport but could not get a clean shot. He was grateful for that. He had also delivered a cash payoff to Jack Ruby before the assassination.

Throughout the ‘70s and ‘80s, when there were drug missions to be financed, Al Carone delivered both the money and the orders. When someone needed to be killed, it was the same thing. Before his death, he talked openly of working with Oliver North, Richard Secord, Richard Armitage, Barry Seal and Elliot Abrams. He told his family that North, Secord, Abrams and Armitage were “assholes.


Throughout the years Carone had also shown signs of compassion and his own code of honor. He often lamented the fate of the POWs and MIAs in Vietnam and, in the years before his death, spoke openly about how “the boys” had been sold out. He spoke on several occasions of a Green Beret named “Sandy” whom he had worked with. He said Sandy had been sold out, betrayed and framed for a murder he didn’t commit because he had learned too much. Carone became obsessed with helping Sandy, and had spoken of delivering diaries to CIA headquarters that had been kept by his murdered wife that could have “brought down the government.” Both Dee and Tommy had seen the diaries in Carone’s briefcase before he had taken them to Langley, Virginia.

Carone was a good soldier. He did his job for years and kept his grumblings close to his vest. But things were falling apart. They had gotten out of hand. There were too many drugs, too much killing; too much corruption in Al Carone’s scheme of things. It no longer served any greater purpose. There was no compass except greed.

In the summer of 1985 Al Carone and his buddy Jim Strauss—whose company had the voluminous airline bills—went on a mission to Mexico. That mission, as were many of the other activities of Al Carone, fell under the umbrella code name of Amadeus. Dee and Tommy had heard the name many times before, when answering phones or taking messages for Big Al. It was name that always made him jump. It was a name that they said connected directly to George Herbert Walker Bush.

Carone was gone for weeks. And when he returned from Mexico he was never the same. His heart was broken. He said that he and Strauss and the men who were with them had wiped out entire village which Dee and Tommy can only remember as Chiapatulla or Tapachulla. “We killed everything there,” said Big Al, “men, women children, everything.” It was wrong. He also spoke of how a narc and a pilot had been tortured and buried alive. He was referring to DEA Agent Kiki Camarena. It was shortly after that he started to get violently ill. Within 18 months or so, he had kidney failure. The doctors, and there were many, could not pinpoint the cause. He would tell Dee and Tommy, “I’m not long for this world. The suits are coming to get me.”

He talked more openly in his last years. He voiced his concerns and became obsessed with the POWs, with Sandy and the “assholes” who had taken over the government. Before he died in 1990, he made his daughter promise not to bury him in his Army uniform. He was ashamed. “Burn it,” he said.


Shortly after I left New Mexico, Dee Ferdinand went to a luncheon of former intelligence officers. There she met former Howard Hughes aide and lifelong CIA operative Robert Maheu. Maheu gave her Shackley’s phone number.

Dee’s first conversation with Shackley was not thrilling. Keeping his standard noncommittal posture, he denied knowing Al Carone. This was a position he changed in subsequent conversations with Dee over the years. He asked her what she wanted. The first thing she wanted was her father’s headstone changed to reflect his rank of colonel.

It was changed within 10 days, and Dee took photographs of the new marker. She also “appropriated” a copy of the change order. The Army still—to this day—denies the rank.

After returning to Los Angeles, I wrote up a report of what I had learned. I sent it to a good friend, a retired Army Criminal Investigation Division warrant officer named Bill McCoy who lived in Alexandria, Virginia. McCoy was impressed and got Dee’s phone number from me. That was the beginning of a tightly woven friendship that involved phone calls, sometimes five times a week, until McCoy’s death in October 1997. “Mac,” as we all called him, was a loveable giant, prone to wearing berets, who had his investigative fingers in almost every covert operation I had ever heard of.

There were many mysteries about McCoy that remain unsolved to this day. Not the least of which was why he spent two years keeping Dee from learning the identity of Bill Tyree, the former Green Beret who had been framed for his own wife’s murder. Tyree, on the other hand, had only been told Dee’s married name rather than her maiden name. In the meantime I, familiar with both cases, never knew what Mac was doing.

Mac was a father-like figure, a great cook and raconteur. I visited his home in Virginia many times in 1994 and 1995. While coordinating information on a number of investigations, he managed to keep Bill and Dee from connecting. In the meantime, as the Carone family were threatened, intimidated and plagued by all manner of terrifying events, Dee’s resolve only deepened. She told me, with a conviction I still remember, “This is about honor. This is becoming a vendetta. All I want is what rightfully belonged to my father, nothing more.”

Her brother-in-law was shot at. Her son Vinnie narrowly escaped death in what appeared to be a staged traffic accident. Her fences were cut a half-dozen times and her horses scattered over the New Mexico countryside. Tommy, who held a civilian job at Kirtland Air Force Base, was shuffled to lower-paying assignments and eventually laid off. In 1997 Vinnie, then a sheriff’s deputy working extradition cases, was sent on dangerous and solitary assignments. He was photographed in secure areas of government facilities.

Dee would talk to McCoy four or five times a week. I would talk to McCoy or Dee at least twice a week. Still, none of us knew that Sandy and Tyree were one and the same, even though McCoy was doing investigations on Tyree’s case and he held all the pieces.


Things were complicated further in April 1995, when the Murrah Building was destroyed by a bomb blast in Oklahoma City. I was living near DC at the time, and Dee had called me within hours of the blast. She had called Shackley almost immediately. Then she called me. I gave her my word that I would not repeat what Shackley had said. According to Dee, Shackley said the act would be placed squarely at the feet of domestic terrorists. This, even as news reports were reporting only that Islamic terrorists were suspects.

Shortly thereafter, a journalist named David Hoffman, whom I had put in touch with Dee, got the same story from her on the strict condition that the conversation was off the record and confidential. Less than a year later he published a book in which he reported all of Dee’s conversation with Shackley, and even embellished to the point of placing himself in Shackley’s living room and describing him smoking a pipe, sitting in an overstuffed chair and “chortling” in satisfaction.

Dee, as a matter of honor, called Shackley as soon as she heard about the book. Because of that action or responsibility her relationship with him continued and, in fact, deepened.


Bill McCoy died suddenly in October 1997. He was found sitting in his favorite easy chair, the victim of an apparent heart attack. Questions still linger among those of us who knew him.

It was around the time of Mac’s death that Dee and Tyree connected. Dee learned that Billy was “Sandy” and Billy learned that Dee was the daughter of Big Al. Facilitated by Massachusetts attorney Ray Kohlman, who came to represent both of them, first Billy and then Dee filed suits against the government. Over the years, Billy placed collect calls from the Walpole state prison in Massachusetts that sometimes added between $500-800 a month to the Ferdinands’ phone bills. This wore heavily on Tommy and his temper frequently got the better of him, especially as his hours were being cut back.

Dee was obsessed, and now she had a court case and searing documents that helped both her and Tyree. Affidavits long buried came to the surface, including one purportedly written by Bill Casey. Though filled with grammatical errors and misspellings, I was inclined to believe the document’s authenticity. My reasons were simple and based upon my years of experience, I knew that intelligence agencies often wrote completely accurate documents and deliberately salted them with errors to later discredit them. The 1986 document had more credibility because, while completely vindicating Dee’s assertions, it carefully laid all the blame in the CIA at the feet of people who were then or would soon be dead. It never once mentioned George Bush, and the document followed the long-cultivated CIA fallback position that drug dealing was all done to fight communism, and never once mentioned the billions of dollars that had flowed into American financial markets.

From 1998 until her case was finally dismissed, there were endless, draining, expensive, time-consuming legal moves, the kind I have witnessed in dozens of cases over the years. As time progressed, first Tyree’s suit and then Dee’s were dismissed. All of this happened and Dee and Bill Tyree spent more time talking to each other than any other living souls. They have never seen each other in person. For Tyree, locked up on a life sentence, this was not an issue. For Dee’s family, especially Tommy, who was paying the phone bills, it was; especially as the family teetered from month to month, on the edge of eviction.

I have both and seen and lived this hellish existence in the search for justice and the redemption of honor. It eats everything.

Dee and Tommy were divorced last year, as the suit was finally thrown out by a court system that seemingly wouldn’t know the rule of law, or honor, if it smacked it in the face. Dee now lives in a modest Albuquerque apartment and Tommy spends a lot of time riding his motorcycle. Tommy’s mother will no longer speak to Dee. Vinnie, still a sheriff, has at times estranged himself from his mother in recent years. All of Dee’s horses are gone and she holds down a job to pay the rent.

“It’s over,” she says with the same conviction I heard in 1993. “I will have nothing more to do with my father’s case. They won. I have nothing more to give.”


Dee has had a number of conversations with Ted Shackley over the years and refuses to discuss details of any of them except to say that he was always helpful, always sympathetic and that he gave her advice that helped as she prepared and fought her case. “Of all the people I have spoken to who had something to do with this case, he’s the only one who never lied to me.”

When I asked how she could trust Shackley, she refused to discuss the matter any further. The conversations were private. It was a matter of honor.

One time, in tears, she recounted how Shackley had told her how proud he was of her as Big Al’s daughter, and that she had fought as hard as possible to honor her father. He had told her that she had behaved as he would have wanted his own daughter to behave, and maybe that is what this story is all about.

Having lost all of her material possessions and her marriage, and having suffered for years in a losing and futile battle—the way all of these battles always end—Dee Carone Ferdinand has no doubt in her heart that she gave all she had to give. She sleeps soundly at night and there is something in her still that remains defiantly unbroken, as Al Carone’s visions of total, unprincipled corruption come to full flower in the American government.

It was, after all, a matter of honor.

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How John Kerry exposed the Contra-cocaine scandal

Derided by the mainstream press and taking on Reagan at the height of his popularity, the freshman senator battled to reveal one of America’s ugliest foreign policy secrets.

By Robert Parry, Salon, October 25, 2004

In December 1985, when Brian Barger and I wrote a groundbreaking story for the Associated Press about Nicaraguan Contra rebels smuggling cocaine into the United States, one U.S. senator put his political career on the line to follow up on our disturbing findings. His name was John Kerry.

Yet, over the past year, even as Kerry’s heroism as a young Navy officer in Vietnam has become a point of controversy, this act of political courage by a freshman senator has gone virtually unmentioned, even though — or perhaps because — it marked Kerry’s first challenge to the Bush family.

In early 1986, the 42-year-old Massachusetts Democrat stood almost alone in the U.S. Senate demanding answers about the emerging evidence that CIA-backed Contras were filling their coffers by collaborating with drug traffickers then flooding U.S. borders with cocaine from South America.

Kerry assigned members of his personal Senate staff to pursue the allegations. He also persuaded the Republican majority on the Senate Foreign Relations Committee to request information from the Reagan-Bush administration about the alleged Contra drug traffickers.

In taking on the inquiry, Kerry challenged President Ronald Reagan at the height of his power, at a time he was calling the Contras the “moral equals of the Founding Fathers.” Kerry’s questions represented a particular embarrassment to Vice President George H.W. Bush, whose responsibilities included overseeing U.S. drug-interdiction policies.

Kerry took on the investigation though he didn’t have much support within his own party. By 1986, congressional Democrats had little stomach left for challenging the Reagan-Bush Contra war. Not only had Reagan won a historic landslide in 1984, amassing a record 54 million votes, but his conservative allies were targeting individual Democrats viewed as critical of the Contras fighting to oust Nicaragua’s leftist Sandinista government. Most Washington journalists were backing off, too, for fear of getting labeled “Sandinista apologists” or worse.

Kerry’s probe infuriated Reagan’s White House, which was pushing Congress to restore military funding for the Contras. Some in the administration also saw Kerry’s investigation as a threat to the secrecy surrounding the Contra supply operation, which was being run illegally by White House aide Oliver North and members of Bush’s vice presidential staff.

Through most of 1986, Kerry’s staff inquiry advanced against withering political fire. His investigators interviewed witnesses in Washington, contacted Contra sources in Miami and Costa Rica, and tried to make sense of sometimes convoluted stories of intrigue from the shadowy worlds of covert warfare and the drug trade.

Kerry’s chief Senate staff investigators were Ron Rosenblith, Jonathan Winer and Dick McCall. Rosenblith, a Massachusetts political strategist from Kerry’s victorious 1984 campaign, braved both political and personal risks as he traveled to Central America for face-to-face meetings with witnesses. Winer, a lawyer also from Massachusetts, charted the inquiry’s legal framework and mastered its complex details. McCall, an experienced congressional staffer, brought Capitol Hill savvy to the investigation.

Behind it all was Kerry, who combined a prosecutor’s sense for sniffing out criminality and a politician’s instinct for pushing the limits. The Kerry whom I met during this period was a complex man who balanced a rebellious idealism with a determination not to burn his bridges to the political establishment.

The Reagan administration did everything it could to thwart Kerry’s investigation, including attempting to discredit witnesses, stonewalling the Senate when it requested evidence and assigning the CIA to monitor Kerry’s probe. But it couldn’t stop Kerry and his investigators from discovering the explosive truth: that the Contra war was permeated with drug traffickers who gave the Contras money, weapons and equipment in exchange for help in smuggling cocaine into the United States. Even more damningly, Kerry found that U.S. government agencies knew about the Contra-drug connection, but turned a blind eye to the evidence in order to avoid undermining a top Reagan-Bush foreign policy initiative.

The Reagan administration’s tolerance and protection of this dark underbelly of the Contra war represented one of the most sordid scandals in the history of U.S. foreign policy. Yet when Kerry’s bombshell findings were released in 1989, they were greeted by the mainstream press with disdain and disinterest. The New York Times, which had long denigrated the Contra-drug allegations, buried the story of Kerry’s report on its inside pages, as did the Washington Post and the Los Angeles Times. For his tireless efforts, Kerry earned a reputation as a reckless investigator. Newsweek’s Conventional Wisdom Watch dubbed Kerry a “randy conspiracy buff.”

But almost a decade later, in 1998, Kerry’s trailblazing investigation was vindicated by the CIA’s own inspector general, who found that scores of Contra operatives were implicated in the cocaine trade and that U.S. agencies had looked the other way rather than reveal information that could have embarrassed the Reagan-Bush administration.

Even after the CIA’s admissions, the national press corps never fully corrected its earlier dismissive treatment. That would have meant the New York Times and other leading publications admitting they had bungled their coverage of one of the worst scandals of the Reagan-Bush era.

Oct 25, 2004 | The warm and fuzzy glow that surrounded Ronald Reagan after he left office also discouraged clarification of the historical record. Taking a clear-eyed look at crimes inside Reagan’s Central American policies would have required a tough reassessment of the 40th president, which to this day the media has been unwilling to do. So this formative period of Kerry’s political evolution has remained nearly unknown to the American electorate.

Two decades later, it’s hard to recall the intensity of the administration’s support for the Contras. They were hailed as courageous front-line fighters, like the Mujahedin in Afghanistan, defending the free world from the Soviet empire. Reagan famously warned that Nicaragua was only “two days’ driving time from Harlingen, Texas.”

Yet, for years, Contra units had gone on bloody rampages through Nicaraguan border towns, raping women, torturing captives and executing civilian officials of the Sandinista government. In private, Reagan referred to the Contras as “vandals,” according to Duane Clarridge, the CIA officer in charge of the operation, in his memoir, “A Spy for All Seasons.” But in public, the Reagan administration attacked anyone who pointed out the Contras’ corruption and brutality.

The Contras also proved militarily inept, causing the CIA to intervene directly and engage in warlike acts, such as mining Nicaragua’s harbors. In 1984, these controversies caused the Congress to forbid U.S. military assistance to the Contras — the Boland Amendment — forcing the rebels to search for new funding sources.

Drug money became the easiest way to fill the depleted Contra coffers. The documentary evidence is now irrefutable that a number of Contra units both in Costa Rica and Honduras opened or deepened ties to Colombian cartels and other regional drug traffickers. The White House also scrambled to find other ways to keep the Contras afloat, turning to third countries, such as Saudi Arabia, and eventually to profits from clandestine arms sales to Iran.

The secrets began to seep out in the mid-1980s. In June 1985, as a reporter for the Associated Press, I wrote the first story mentioning Oliver North’s secret Contra supply operation. By that fall, my AP colleague Brian Barger and I stumbled onto evidence that some of the Contras were supplementing their income by helping traffickers transship cocaine through Central America. As we dug deeper, it became clear that the drug connection implicated nearly all the major Contra organizations.

The AP published our story about the Contra-cocaine evidence on Dec. 20, 1985, describing Contra units “engaged in cocaine smuggling, using some of the profits to finance their war against Nicaragua’s leftist government.” The story provoked little coverage elsewhere in the U.S. national press corps. But it pricked the interest of a newly elected U.S. senator, John Kerry. A former prosecutor, Kerry also heard about Contra law violations from a Miami-based federal public defender named John Mattes, who had been assigned a case that touched on Contra gunrunning. Mattes’ sister had worked for Kerry in Massachusetts.

By spring 1986, Kerry had begun a limited investigation deploying some of his personal staff in Washington. As a member of the Senate Foreign Relations Committee, Kerry managed to gain some cooperation from the panel’s Republican leadership, partly because the “war on drugs” was then a major political issue. Besides looking into Contra drug trafficking, Kerry launched the first investigation into the allegations of weapons smuggling and misappropriation of U.S. government funds that were later exposed as part of North’s illegal operation to supply the Contras.

Kerry’s staff soon took an interest in a federal probe in Miami headed by assistant U.S. Attorney Jeffrey Feldman. Talking to some of the same Contra supporters whom we had interviewed for the AP’s Contra-cocaine story, Feldman had pieced together the outlines of North’s secret network.

In a panicked memo dated April 7, 1986, one of North’s Costa Rican-based private operatives, Robert Owen, warned North that prosecutor Feldman had shown Ambassador Lewis Tambs “a diagram with your name underneath and John [Hull]’s underneath mine, then a line connecting the various resistance groups in C.R. [Costa Rica]. Feldman stated they were looking at the ‘big picture’ and not only looking at possible violations of the Neutrality Act, but a possible unauthorized use of government funds.” (For details, see my “Lost History: Contras, Cocaine, the Press and ‘Project Truth.'”)

John Hull was an American farmer with a ranch in Costa Rica near the Nicaraguan border. According to witnesses, Contras had used Hull’s property for cocaine transshipments. (Hull was later accused of drug trafficking by Costa Rican authorities, but fled the country before facing trial. He returned to the United States.)

On April 10, 1986, Barger and I reported on the AP wire that the U.S. Attorney’s office in Miami was examining allegations of Contra gunrunning and drug trafficking. The AP story rattled nerves inside the Reagan administration. On an unrelated trip to Miami, Attorney General Edwin Meese pulled U.S. Attorney Leon Kellner aside and asked about the existence of this Contra probe.

Back in Washington, other major news organizations began to sniff around the Contra-cocaine story but mostly went off in wrong directions. On May 6, 1986, the New York Times relied for a story on information from Meese’s spokesman Patrick Korten, who claimed “various bits of information got referred to us. We ran them all down and didn’t find anything. It comes to nothing.”

But that wasn’t the truth. In Miami, Feldman and FBI agents were corroborating many of the allegations. On May 14, 1986, Feldman recommended to his superiors that the evidence of Contra crimes was strong enough to justify taking the case to a grand jury. U.S. Attorney Kellner agreed, scribbling on Feldman’s memo, “I concur that we have sufficient evidence to ask for a grand jury investigation.”

But on May 20, less than a week later, Kellner reversed that recommendation. Without telling Feldman, Kellner rewrote the memo to state that “a grand jury investigation at this point would represent a fishing expedition with little prospect that it would bear fruit.” Kellner signed Feldman’s name to the mixed-metaphor memo and sent it to Washington on June 3.

The revised “Feldman” memo was then circulated to congressional Republicans and leaked to conservative media, which used it to discredit Kerry’s investigation. The right-wing Washington Times denounced the probe as a wasteful political “witch hunt” in a June 12, 1986, article. “Kerry’s anti-Contra efforts extensive, expensive, in vain,” screamed the headline of a Washington Times article on Aug. 13, 1986.

Back in Miami, Kellner reassigned Feldman to unrelated far-flung investigations, including one to Thailand.

The altered memo was instrumental in steering Senate Foreign Relations Committee Chairman Richard Lugar, R-Ind., away from holding hearings, Kerry’s later Contra-drug report, “Law Enforcement and Foreign Policy,” stated. “Material provided to the Committee by the Justice Department and distributed to members following an Executive Session June 26, 1986, wrongly suggested that the allegations that had been made were false,” the Kerry report said.

Feldman later testified to the Senate that he was told in 1986 that representatives of the Justice Department, the Drug Enforcement Administration and the FBI had met “to discuss how Senator Kerry’s efforts to get Lugar to hold hearings on the case could be undermined.”

Mattes, the federal public defender in Miami, watched as the administration ratcheted up pressure on Kerry’s investigation. “From a political point of view in May of ’86, Kerry had every reason to shut down his staff investigation,” Mattes said. “There was no upside for him doing it. We all felt under the gun to back off.”

The Kerry that Mattes witnessed at the time was the ex-prosecutor determined to get to the bottom of serious criminal allegations even if they implicated senior government officials. “As an investigator, he had a sense it was there,” said Mattes, who is now an investigative reporter for Fox News in San Diego. “Kerry was a crusader. He was the consummate outsider, doing what you expect people to do. … At no point did he flinch.”

Years later, in the National Archives, I discovered a document showing that the Central Intelligence Agency also was keeping tabs on Kerry’s investigation. Alan Fiers Jr., who served as the CIA’s Central American Task Force chief, told independent counsel Lawrence Walsh’s Iran-Contra investigators that the AP and Feldman’s investigations had attracted the hostility of the Reagan-Bush administration. Fiers said he “was also getting a dump on the Senator Kerry investigation about mercenary activity in Central America from the CIA’s legislative affairs people who were monitoring it.”

Negative publicity about the Contras was particularly unwelcome to the Reagan-Bush administration throughout the spring and summer 1986 as the White House battled to restore U.S. government funding to the Contras. In the politically heated atmosphere, the administration sought to smear anti-Contra witnesses cooperating with Kerry’s investigation.

In a July 28 memo, initialed as read by President Reagan, North labeled onetime Contra mercenary Jack Terrell as a “terrorist threat” because of his “anti-Contra and anti-U.S. activities.” North said Terrell had been cooperating “with various congressional staffs in preparing for hearings and inquiries regarding the role of U.S. government officials in illegally supporting the Nicaraguan resistance.”

In August 1986, FBI and Secret Service agents hauled Terrell in for two days of polygraph examinations on suspicion that Terrell intended to assassinate President Reagan, an allegation that proved baseless. But Terrell told me later that the investigation had chilled his readiness to testify about the Contras. “It burned me up,” he said. “The pressure was always there.”

Beyond intimidating some witnesses, the Reagan administration systematically worked to frustrate Kerry’s investigation. Years later, one of Kerry’s investigators, Jack Blum, complained publicly that the Justice Department had actively obstructed the congressional probe. Blum said William Weld, who took over as assistant attorney general in charge of the criminal division in September 1986, was an “absolute stonewall” blocking the Senate’s access to evidence on Contra-cocaine smuggling. “Weld put a very serious block on any effort we made to get information,” Blum told the Senate Intelligence Committee a decade after the events. “There were stalls. There were refusals to talk to us, refusals to turn over data.”

Weld, who later became Massachusetts governor and lost to Kerry in the 1996 Senate race, denied that he had obstructed Kerry’s Contra probe. But it was clear that the Senate Foreign Relations Committee was encountering delays in getting information that had been requested by Chairman Lugar, a Republican, and Rhode Island Sen. Claiborne Pell, the ranking Democrat. At Kerry’s suggestion, they had sought files on more than two dozen people linked to the Contra operations and suspected of drug trafficking.

Inside the Justice Department, senior career investigators grew concerned about the administration’s failure to turn over the requested information. “I was concerned that we were not responding to what was obviously a legitimate congressional request,” Mark Richard, one of Weld’s top deputies, testified in a deposition. “We were not refusing to respond in giving explanations or justifications for it. We were seemingly just stonewalling what was a continuing barrage of requests for information. That concerned me no end.”

On Sept. 26, 1986, Kerry tried to spur action by presenting Weld with an 11-page “proffer” statement from a 31-year-old FBI informant who had worked with the Medellin cartel and had become a witness on cartel activities. The woman, Wanda Palacio, had approached Kerry with an account about Colombian cocaine kingpin Jorge Ochoa bragging about payments he had made to the Nicaraguan Contras.

As part of this Contra connection, Palacio said pilots for a CIA-connected airline, Southern Air Transport, were flying cocaine out of Barranquilla, Colombia. She said she had witnessed two such flights, one in 1983 and the other in October 1985, and quoted Ochoa saying the flights were part of an arrangement to exchange “drugs for guns.”

According to contemporaneous notes of this “proffer” meeting between Weld and Kerry, Weld chuckled that he was not surprised at allegations about corrupt dealings by “bum agents, former and current CIA agents.” He promised to give serious consideration to Palacio’s allegations.

After Kerry left Weld’s office, however, the Justice Department seemed to concentrate on poking holes in Palacio’s account, not trying to corroborate it. Though Palacio had been considered credible in her earlier testimony to the FBI, she was judged to lack credibility when she made accusations about the Contras and the CIA.

On Oct. 3, 1986, Weld’s office told Kerry that it was rejecting Palacio as a witness on the grounds that there were some contradictions in her testimony. The discrepancies apparently related to such minor points as which month she had first talked with the FBI.

Two days after Weld rejected Palacio’s Contra-cocaine testimony, other secrets about the White House’s covert Contra support operations suddenly crashed –literally — into view.

On Oct. 5, a quiet Sunday morning, an aging C-123 cargo plane rumbled over the skies of Nicaragua preparing to drop AK-47 rifles and other equipment to Contra units in the jungle below. Since the Reagan administration had recently won congressional approval for renewed CIA military aid to the Contras, the flight was to be one of the last by Oliver North’s ragtag air force.

The plane, however, attracted the attention of a teenage Sandinista soldier armed with a shoulder-fired surface-to-air missile. He aimed, pulled the trigger and watched as the Soviet-made missile made a direct hit on the aircraft. Inside, cargo handler Eugene Hasenfus, an American mercenary working with the Contras, was knocked to the floor, but managed to crawl to an open door, push himself through, and parachute to the ground, where he was captured by Sandinista forces. The pilot and other crew members died in the crash.

As word spread about the plane crash, Barger — who had left the AP and was working for a CBS News show — persuaded me to join him on a trip to Nicaragua with the goal of getting an interview with Hasenfus, who turned out to be an unemployed Wisconsin construction worker and onetime CIA cargo handler. Hasenfus told a press conference in Managua that the Contra supply operation was run by CIA officers working with the office of Vice President George Bush. Administration officials, including Bush, denied any involvement with the downed plane.

Our hopes for an interview with Hasenfus didn’t work out, but Sandinista officials did let us examine the flight records and other documents they had recovered from the plane. As Barger talked with a senior Nicaraguan officer, I hastily copied down the entries from copilot Wallace “Buzz” Sawyer’s flight logs. The logs listed hundreds of flights with the airports identified only by their four-letter international codes and the planes designated by tail numbers.

Upon returning to Washington, I began deciphering Wallace’s travels and matching the tail numbers with their registered owners. Though Wallace’s flights included trips to Africa and landings at U.S. military bases in the West, most of his entries were for flights in Central and South America.

Meanwhile, in Kerry’s Senate office, witness Wanda Palacio was waiting for a meeting when she noticed Sawyer’s photo flashing on a TV screen. Palacio began insisting that Sawyer was one of the pilots whom she had witnessed loading cocaine onto a Southern Air Transport plane in Barranquilla, Colombia, in early October 1985. Her identification of Sawyer struck some of Kerry’s aides as a bit too convenient, causing them to have their own doubts about her credibility.

Though I was unaware of Palacio’s claims at the time, I pressed ahead with the AP story on Sawyer’s travels. In the last paragraph of the article, I noted that Sawyer’s logs revealed that he had piloted a Southern Air Transport plane on three flights to Barranquilla on Oct. 2, 4, and 6, 1985. The story ran on Oct. 17, 1986.

Shortly after the article moved on the AP wires, I received a phone call from Rosenblith at Kerry’s office. Sounding shocked, the Kerry investigator asked for more details about the last paragraph of the story, but he wouldn’t say why he wanted to know. Only months later did I discover that the AP story on Sawyer’s logs had provided unintentional corroboration for Palacio’s Contra-drug allegations.

Palacio also passed a polygraph exam on her statements. But Weld and the Justice Department still refused to accept her testimony as credible. (Even a decade later, when I asked the then-Massachusetts governor about Palacio, Weld likened her credibility to “a wagon load of diseased blankets.”)

In fall 1986, Weld’s criminal division continued to withhold Contra-drug information requested by the Senate Foreign Relations Committee. According to Justice Department records, Lugar and Pell — two of the Senate’s most gentlemanly members — wrote on Oct. 14 that they had been waiting more than two months for information that the Justice Department had promised “in an expeditious manner.”

“To date, no information has been received and the investigation of allegations by the committee, therefore, has not moved very far,” Lugar and Pell wrote in a joint letter. “We’re disappointed that the Department has not responded in a timely fashion and indeed has not provided any materials.”

On Nov. 25, 1986, the Iran-Contra scandal was officially born when Attorney General Edwin Meese announced that profits from secret U.S. arms sales to Iran had been diverted to help fund the Nicaraguan Contras.

The Washington press corps scrambled to get a handle on the dramatic story of clandestine operations, but still resisted the allegations that the administration’s zeal had spilled over into sanctioning or tolerating Contra-connected drug trafficking.

Though John Kerry’s early warnings about White House-aided Contra gunrunning had proved out, his accusations about Contra drug smuggling would continue to be rejected by much of the press corps as going too far.

On Jan. 21, 1987, the conservative Washington Times attacked Kerry’s Contra-drug investigation again; his alleged offense this time was obstructing justice because his probe was supposedly interfering with the Reagan administration’s determination to get at the truth. “Kerry’s staffers damaged FBI probe,” the Times headline read.

“Congressional investigators for Sen. John Kerry severely damaged a federal drug investigation last summer by interfering with a witness while pursuing allegations of drug smuggling by the Nicaraguan resistance, federal law enforcement officials said,” according to the Times article.

The mainstream press continued to publish stories that denigrated Kerry’s investigation. On Feb. 24, 1987, a New York Times article by reporter Keith Schneider quoted “law enforcement officials” saying that the Contra allegations “have come from a small group of convicted drug traffickers in South Florida who never mentioned Contras or the White House until the Iran-Contra affair broke in November.”

The drift of the article made Kerry out to be something of a dupe. His Contra-cocaine witnesses were depicted as simply convicts trying to get lighter prison sentences by embroidering false allegations onto the Iran-Contra scandal. But the information in the Times story was patently untrue. The AP Contra-cocaine story had run in December 1985, almost a year before the Iran-Contra story broke.

When New York Times reporters conducted their own interview with Palacio, she immediately sensed their hostility. In her Senate deposition, Palacio described her experience at the Times office in Miami. She said Schneider and a “Cuban man” rudely questioned her story and bullied her about specific evidence for each of her statements. The Cuban man “was talking to me kind of nasty,” Palacio recalled. “I got up and left, and this man got all pissed off, Keith Schneider.”

The parameters for a “responsible” Iran-Contra investigation were being set. On July 16, 1987, the New York Times published another story that seemed to discredit the Contra-drug charges. It reported that except for a few convicted drug smugglers from Miami, the Contra-cocaine “charges have not been verified by any other people and have been vigorously denied by several government agencies.”

Four days later, the Times added that “investigators, including reporters from major news outlets, have tried without success to find proof of … allegations that military supplies may have been paid for with profits from drug smuggling.” (The Times was inaccurate again. The original AP story had cited a CIA report describing the Contras buying a helicopter with drug money.)

The joint Senate-House Iran-Contra committee averted its eyes from the Contra-cocaine allegations. The only time the issue was raised publicly was when a demonstrator interrupted one hearing by shouting, “Ask about the cocaine.” Kerry was excluded from the investigation.

On July 27, 1987, behind the scenes, committee staff investigator Robert A. Bermingham echoed the New York Times. “Hundreds of persons” had been questioned, he said, and vast numbers of government files reviewed, but no “corroboration of media-exploited allegations of U.S. government-condoned drug trafficking by Contra leaders or Contra organizations” was found. The report, however, listed no names of any interview subjects nor any details about the files examined.

Bermingham’s conclusions conflicted with closed-door Iran-Contra testimony from administration insiders. In a classified deposition to the congressional Iran-Contra committees, senior CIA officer Alan Fiers said, “with respect to [drug trafficking by] the Resistance Forces [the Contras] it is not a couple of people. It is a lot of people.”

Despite official denials and press hostility, Kerry and his investigators pressed ahead. In 1987, with the arrival of a Democratic majority in the Senate, Kerry also became chairman of the Senate subcommittee on terrorism, narcotics and international operations. He used that position to pry loose the facts proving that the official denials were wrong and that Contra units were involved in the drug trade.

Kerry’s report was issued two years later, on April 13, 1989. Its stunning conclusion: “On the basis of the evidence, it is clear that individuals who provided support for the Contras were involved in drug trafficking, the supply network of the Contras was used by drug trafficking organizations, and elements of the Contras themselves knowingly received financial and material assistance from drug traffickers. In each case, one or another agency of the U.S. government had information regarding the involvement either while it was occurring, or immediately thereafter.”

The report discovered that drug traffickers gave the Contras “cash, weapons, planes, pilots, air supply services and other materials.” Moreover, the U.S. State Department had paid some drug traffickers as part of a program to fly non-lethal assistance to the Contras. Some payments occurred “after the traffickers had been indicted by federal law enforcement agencies on drug charges, in others while traffickers were under active investigation by these same agencies.”

Although Kerry’s findings represented the first time a congressional report explicitly accused federal agencies of willful collaboration with drug traffickers, the major news organizations chose to bury the startling findings. Instead of front-page treatment, the New York Times, the Washington Post and the Los Angeles Times all wrote brief accounts and stuck them deep inside their papers. The New York Times article, only 850 words long, landed on Page 8. The Post placed its story on A20. The Los Angeles Times found space on Page 11.

One of the best-read political reference books, the Almanac of American Politics, gave this account of Kerry’s investigation in its 1992 edition: “In search of right-wing villains and complicit Americans, [Kerry] tried to link Nicaraguan Contras to the drug trade, without turning up much credible evidence.”

Thus, Kerry’s reward for his strenuous and successful efforts to get to the bottom of a difficult case of high-level government corruption was to be largely ignored by the mainstream press and even have his reputation besmirched.

But the Contra-cocaine story didn’t entirely go away. In 1991, in the trial of former Panamanian dictator Manuel Noriega for drug trafficking, federal prosecutors called as a witness Medellin cartel kingpin Carlos Lehder, who testified that the Medellin cartel had given $10 million to the Contras, a claim that one of Kerry’s witnesses had made years earlier. “The Kerry hearings didn’t get the attention they deserved at the time,” a Washington Post editorial on Nov. 27, 1991 acknowledged. “The Noriega trial brings this sordid aspect of the Nicaraguan engagement to fresh public attention.”

Kerry’s vindication in the Contra drug case did not come until 1998, when inspectors general at the CIA and Justice Department reviewed their files in connection with allegations published by the San Jose Mercury News that the Contra-cocaine pipeline had contributed to the crack epidemic that ravaged inner-city neighborhoods in the 1980s. (Ironically, the major national newspapers only saw fit to put the Contra-cocaine story on their front pages in criticizing the Mercury News and its reporter Gary Webb for taking the allegations too far.)

On Oct. 4, 1996, the Washington Post published a front-page story, with two more pages inside, that was critical of the Mercury News. But while accusing the Mercury News of exaggerating, the Post noted that Contra-connected drug smugglers had brought tons of cocaine into the United States. “Even CIA personnel testified to Congress they knew that those covert operations involved drug traffickers,” the Post reported.

A Post editorial on Oct. 9, 1996, reprised the newspaper’s assessment that the Mercury News had overreached, but added that for “CIA-connected characters to have played even a trivial role in introducing Americans to crack would indicate an unconscionable breach by the CIA.”

In the months that followed, the major newspapers — including the New York Times and the Los Angeles Times — joined the Post in criticizing the Mercury News while downplaying their own inattention to the crimes that Kerry had illuminated a decade earlier. The Los Angeles Times actually used Kerry’s report to dismiss the Mercury News series as old news because the Contra cocaine trafficking “has been well documented for years.”

While the major newspapers gloated when reporter Gary Webb was forced to resign from the Mercury News, the internal government investigations, which Webb’s series had sparked, moved forward. The government’s decade-long Contra cocaine cover-up began to crumble when CIA inspector general Frederick Hitz published the first of two volumes of his Contra cocaine investigation on Jan. 29, 1998, followed by a Justice Department report and Hitz’s second volume in October 1998.

The CIA inspector general and Justice Department reports confirmed that the Reagan administration knew from almost the outset of the Contra war that cocaine traffickers permeated the CIA-backed army but the administration did next to nothing to expose or stop these criminals. The reports revealed example after example of leads not followed, witnesses disparaged and official law-enforcement investigations sabotaged. The evidence indicated that Contra-connected smugglers included the Medellin cartel, the Panamanian government of Manuel Noriega, the Honduran military, the Honduran-Mexican smuggling ring of Ramon Matta Ballesteros, and Miami-based anti-Castro Cubans.

Reviewing evidence that existed in the 1980s, CIA inspector general Hitz found that some Contra-connected drug traffickers worked directly for Reagan’s National Security Council staff and the CIA. In 1987, Cuban-American Bay of Pigs veteran Moises Nunez told CIA investigators that “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.”

CIA task force chief Fiers said the Nunez-NSC drug lead was not pursued then “because of the NSC connection and the possibility that this could be somehow connected to the Private Benefactor program [Oliver North’s fundraising]. A decision was made not to pursue this matter.”

Another Cuban-American who had attracted Kerry’s interest was Felipe Vidal, who had a criminal record as a narcotics trafficker in the 1970s. But the CIA still hired him to serve as a logistics officer for the Contras and covered up for him when the agency learned that he was collaborating with known traffickers to raise money for the Contras, the Hitz report showed. Fiers had briefed Kerry about Vidal on Oct. 15, 1986, without mentioning Vidal’s drug arrests and conviction in the 1970s.

Hitz found that a chief reason for the CIA’s protective handling of Contra-drug evidence was Langley’s “one overriding priority: to oust the Sandinista government … [CIA officers] were determined that the various difficulties they encountered not be allowed to prevent effective implementation of the Contra program.”

According to Hitz’s report, one CIA field officer explained, “The focus was to get the job done, get the support and win the war.”

This pattern of obstruction occurred while Vice President Bush was in charge of stanching the flow of drugs to the United States. Kerry made himself a pest by demanding answers to troubling questions.

“He wanted to get to the bottom of something so dark,” former public defender Mattes told me. “Nobody could imagine it was so dark.”

In the end, investigations by government inspectors general corroborated Kerry’s 1989 findings and vindicated his effort. But the muted conclusion of the Contra-cocaine controversy 12 years after Kerry began his investigation explains why this chapter is an overlooked — though important — episode in Kerry’s Senate career. It’s a classic case of why, in Washington, there’s little honor in being right too soon. Yet it’s also a story about a senator who had the personal honor to do the right thing.

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CIA’s 1980s Dope Peddling

CIA Admits Tolerating Contra-Cocaine Trafficking in 1980s

by Robert Parry, The Consortium online magazine, June 8, 2000

In secret congressional testimony, senior CIA officials admitted that the spy agency turned a blind eye to evidence of cocaine trafficking by U.S.-backed Nicaraguan contra rebels in the 1980s and generally did not treat drug smuggling through Central America as a high priority during the Reagan administration.

“In the end the objective of unseating the Sandinistas appears to have taken precedence over dealing properly with potentially serious allegations against those with whom the agency was working,” CIA Inspector General Britt Snider said in classified testimony on May 25, 1999. He conceded that the CIA did not treat the drug allegations in “a consistent, reasoned or justifiable manner.”

Still, Snider and other officials sought to minimize the seriousness of the CIA’s misconduct ­ a position echoed by a House Intelligence Committee report released in May and by press coverage it received. In particular, CIA officials insisted that CIA personnel did not order the contras to engage in drug trafficking and did not directly join in the smuggling.

But the CIA testimony to the House Intelligence Committee and the body of the House report confirmed long-standing allegations ­ dating back to the mid-1980s ­ that drug traffickers pervaded the contra operation and used it as a cover for smuggling substantial volumes of cocaine into the United States.

Deep in the report, the House committee noted that in some cases, “CIA employees did nothing to verify or disprove drug trafficking information, even when they had the opportunity to do so. In some of these, receipt of a drug allegation appeared to provoke no specific response, and business went on as usual.”

Former CIA officer Duane Clarridge, who oversaw covert CIA support for the contras in the early years of their war against Nicaragua’s leftist Sandinista government, said “counter-narcotics programs in Central America were not a priority of CIA personnel in the early 1980s,” according to the House report.

The House committee also reported new details about how a major Nicaraguan drug lord, Norwin Meneses, recruited one of his principal lieutenants, Oscar Danilo Blandon, with promises that much of their drug money would go to the contras. Meneses and Blandon were key figures in a controversial 1996 series in the San Jose Mercury News that alleged a “dark alliance” between the CIA and contra traffickers.

That series touched off renewed interest in contra-drug trafficking and its connection to the flood of cocaine that swept through U.S. cities in the 1980s, devastating many communities with addiction and violence. In reaction to the articles by reporter Gary Webb, U.S. government agencies and leading American newspapers rallied to the CIA’s defense.

Like those responses, the House Intelligence Committee report attacked Webb’s series. It highlighted exculpatory information about the CIA and buried admissions of wrongdoing deep in the text where only a careful reading would find them. The report’s seven “findings” ­ accepted by the majority Republicans as well as the minority Democrats ­ absolved the CIA of any serious offenses, sometimes using convoluted phrasing that obscured the facts.

For instance, one key finding stated that “the CIA as an institution did not approve of connections between contras and drug traffickers, and, indeed, contras were discouraged from involvement with traffickers.” The phrasing is tricky, however. The use of the phrase “as an institution” obscures the report’s clear evidence that many CIA officials ignored the contra-cocaine smuggling and continued doing business with suspected drug traffickers.

The finding’s second sentence said, “CIA officials, on occasion, notified law enforcement entities when they became aware of allegations concerning the identities or activities of drug traffickers.” Stressing that CIA officials “on occasion” alerted law enforcement about contra drug traffickers glossed over the reality that many CIA officials withheld evidence of illegal drug smuggling and undermined investigations of those crimes.

Normally in investigations, it is the wrongdoing that is noteworthy, not the fact that some did not participate in the wrongdoing.

A close reading of the House report reveals a different story from the “findings.” On page 38, for instance, the House committee observed that the second volume of the CIA’s inspector general’s study of the contra-drug controversy disclosed numerous instances of contra-drug operations and CIA knowledge of the problem.

“The first question is what CIA knew,” the House report said. “Volume II of the CIA IG report explains in detail the knowledge the CIA had that some contras had been, were alleged to be or were in fact involved or somehow associated with drug trafficking or drug traffickers. The reporting of possible connections between drug trafficking and the Southern Front contra organizations is particularly extensive.

“The second question is what the CIA reported to DOJ [Department of Justice]. The Committee was concerned about the CIA’s record in reporting and following up on allegations of drug activity during this period. In many cases, it is clear the information was reported from the field, but it is less clear what happened to the information after it arrived at CIA headquarters.”

In other words, the internal government investigations found that CIA officers in Central America were informing CIA headquarters at Langley, Va., about the contra-drug problem, but the evidence went no farther. It was kept from law enforcement agencies, from Congress and from the American public. Beyond withholding the evidence, the Reagan administration mounted public relations attacks on members of Congress, journalists and witnesses who were exposing the crimes in the 1980s.

In a sense, those attacks continue to this day, with reporter Gary Webb excoriated for alleged overstatements in the Mercury News stories. As a result of those attacks, Webb was forced to resign from the Mercury News and leave daily journalism. No member of the Reagan administration has received any punishment or even public rebuke for concealing evidence of contra-cocaine trafficking. [For details on the CIA’s internal report, see Robert Parry’s Lost History.]

Besides confirming the CIA’s internal admissions about contra-drug trafficking and the CIA’s spotty record of taking action to stop it, the House committee included in its report the Reagan administration’s rationale for blacking out the contra-cocaine evidence in the 1980s.

“The committee interviewed several individuals who served in Latin America as [CIA] chiefs of station during the 1980s,” the report said. “They all personally deplored the use and trafficking of drugs, but indicated that in the 1980s the counter-narcotics mission did not have as high a priority as the missions of reporting on and fighting against communist insurrections and supporting struggling democratic movements.

“Indeed, most of those interviewed indicated that they were, effectively speaking, operating in a war zone and were totally engaged in keeping U.S. allies from being overwhelmed. In this environment, what reporting the CIA did do on narcotics was often based on one of two considerations: either a general understanding that the CIA should report on criminal activities so that law enforcement agencies could follow up on them, or, in case of the contras, an effort to monitor allegations of trafficking that, if true, could undermine the legitimacy of the contras cause.”

In other words, the CIA station chiefs admitted to the House committee that they gave the contras a walk on drug trafficking. “In case of the contras,” only monitoring was in order, as the CIA worried that disclosure of contra-drug smuggling would be a public relations problem that “could undermine the legitimacy of the contra cause.”

The House report followed this CIA admission with a jarring ­ and seemingly contradictory ­ conclusion. “The committee found no evidence of an attempt to ‘cover up’ such information,” the report said.

Yet, that “no cover-up” conclusion flew in the face of both the CIA inspector general’s report and the report by the Justice Department’s inspector general. Both detailed case after case in which CIA and senior Reagan administration officials intervened to frustrate investigations on contra-connected drug trafficking, either by blocking the work of investigators or by withholding timely evidence.

In one case, a CIA lawyer persuaded a federal prosecutor in San Francisco to forego a 1984 trip to Costa Rica because the CIA feared the investigation might expose a contra-cocaine tie-in. In others, Drug Enforcement Administration investigators in Central America complained about obstacles put in their path by CIA officers and U.S. embassy officials. [For more details, see Lost History.]

In classified testimony to the House committee, CIA Inspector General Snider acknowledged that the CIA’s handling of the contra-cocaine evidence was “mixed” and “inconsistent.” He said, “While we found no evidence that any CIA employees involved in the contra program had participated in drug-related activities or had conspired with others in such activities, we found that the agency did not deal with contra-related drug trafficking allegations and information in a consistent, reasoned or justifiable manner.”

Even in this limited admission, Snider’s words conflicted with evidence published in the CIA inspector general’s report in October 1998. That report, prepared by Snider’s predecessor Frederick Hitz, showed that some CIA personnel working with the contras indeed were implicated in drug trafficking. The tricky word in Snider’s testimony was “employees,” that is, regular full-time CIA officers.

Both the CIA report and the House report acknowledged that a CIA “contractor” known by the pseudonym Ivan Gomez was involved in drug trafficking. In the early 1980s, the CIA sent Gomez to Costa Rica to oversee the contra operation. Later, Gomez admitted in a CIA polygraph that he participated in his brother’s drug business in Florida.

In separate testimony, Nicaraguan drug smuggler Carlos Cabezas fingered Gomez as the CIA’s man in Costa Rica who made sure that drug money went into the contra coffers.

Despite the seeming corroboration of Cabezas’s allegation about Ivan Gomez’s role in drug smuggling, the House committee split hairs again. It attacked Cabezas’s credibility and argued that the Gomez drug money could not be connected definitively to the contras. “No evidence suggests that the drug trafficking and money laundering operations in which Gomez claimed involvement were in any way related to CIA or the contra movement,” the House report said.

What the report leaves out is that one reason for this lack of proof was that the CIA prevented a thorough investigation of Ivan Gomez’s drug activities by withholding the polygraph admission from the Justice Department and the U.S. Congress in the late 1980s. In effect, the House committee now is rewarding the CIA for torpedoing those investigations.

In one surprise disclosure, the House committee uncovered new details about the involvement of Nicaraguan drug smuggler Oscar Danilo Blandon in trafficking intended to support the contras financially. Blandon, a central figure in the Mercury News series, said he was drawn into the drug business because he understood profits were going to the contra war.

In a deposition to the House committee, Blandon described a meeting with Nicaraguan drug kingpin Norwin Meneses at the Los Angeles airport in 1981. “It was during this encounter, according to Blandon, that Meneses encouraged Blandon to become involved with the drug business in order to assist the contras,” the House report stated.

“We spoke a lot of things about the contra revolution, about the movement, because then he took me to the drug business, speaking to me about the drug business that we had to raise money with drugs,” said Blandon. “And he explained to me, you don’t know, but I am going to teach you. And, you know, I am going to tell you how you will do it. You see, you keep some of the profit for you, and some of the profit we will help the contra revolution, you see. Meneses was trying to convince me with the contra revolution to get me involved in drugs. Give a piece of the apple to the contras and a piece of the apple to him.”

Blandon accepted Meneses’s proposal and “assumed the money he had given Meneses was being sent by Meneses to the contra movement. However, Blandon stated that he had no firsthand knowledge that this was actually occurring,” the House report said.

Though Blandon claimed ignorance about the regular delivery of cocaine cash to the contras, other witnesses confirmed that substantial sums went from Meneses and other drug rings to the contras. A Justice Department investigation discovered several informants who corroborated the flow of money.

One confidential informant, identified in the Justice report only as “DEA CI-1,” said Meneses, Blandon and another cohort, Ivan Torres, contributed drug profits to the contras.

Renato Pena, a money-and-drug courier for Meneses, also described sharing drug profits with the contras, while acting as their northern California representative. Pena quoted a Colombian contact called “Carlos” as saying “We’re helping youbecause with this drug thing. We’re helping your organization a lot.”

The Justice report noted, too, that Meneses’s nephew, Jairo, told the DEA in the 1980s that he had asked Pena to help transport drug money to the contras and that his uncle, Norwin Meneses, dealt directly with contra military commander Enrique Bermudez.

The Justice report found that Julio Zavala and Carlos Cabezas ran a parallel contra-drug network. Cabezas said cocaine from Peru was packed into hollow reeds which were woven into tourist baskets and smuggled to the United States. After arriving in San Francisco, the baskets went to Zavala who arranged sale of the cocaine for contra operatives, Horacio Pereira and Troilo Sanchez. Cabezas estimated that he gave them between $1 million and $1.5 million between December 1981 and December 1982.

Another U.S. informant, designated “FBI Source 1,” backed up much of Cabezas’s story. Source 1 said Cabezas and Zavala were helping the contras with proceeds from two drug-trafficking operations, one smuggling Colombian cocaine and the other shipping cocaine through Honduras. Source 1 said the traffickers had to agree to give 50 percent of their profits to the contras.

The House report made no note of this corroborating evidence published in the DOJ report.

The broader contra-cocaine picture was ignored, too. The evidence now available from government investigations over the past 15 years makes clear that many major cocaine smuggling networks used the contra operation, either relying on direct contra assistance or exploiting the relationship to gain protection from U.S. law enforcement.

Sworn testimony before an investigation by Sen. John Kerry, D-Mass, in the late 1980s disclosed that the contra-drug link dated back to the origins of the movement in 1980. Then, Bolivian drug lord Roberto Suarez invested $30 million in several Argentine-run paramilitary operations, according to Argentine intelligence officer Leonardo Sanchez-Reisse.

The Suarez money financed the so-called Cocaine Coup that ousted Bolivia’s elected government in 1980 and then was used by Argentine intelligence to start the contra war against Nicaragua’s leftist government. In 1981, President Reagan ordered the CIA to work with the Argentines in building up the contra army.

According to Volume Two of the CIA report, the spy agency learned about the contra-cocaine connection almost immediately, secretly reporting that contra operatives were smuggling cocaine into South Florida.

By the early 1980s, the Bolivian connection had drawn in the fledgling Colombian Medellin cartel. Top cartel figures picked up on the value of interlocking their operations with the contras. Miami-based anti-Castro Cubans played a key matchmaker role, especially by working with contras based in Costa Rica.

U.S. agencies secretly reported on the work of Frank Castro and other Cuban-American contra supporters who were seen as Medellin operatives. With the Reagan administration battling Congress to keep CIA money flowing to the contras, there were no high-profile crackdowns that might embarrass the contras and undermine public support for their war.

No evidence was deigned good enough to justify sullying the contras’ reputation. In 1986, for example, Reagan’s Justice Department rejected the eyewitness account of an FBI informant named Wanda Palacio. She testified that she saw Jorge Ochoa’s Colombian organization loading cocaine onto planes belonging to Southern Air Transport, a former CIA-owned airline that secretly was flying supplies to the contras. Despite documentary corroboration, her account was dismissed as not believable.

Another contra-cocaine connection ran through Panamanian Gen. Manuel Noriega, who was recruited by the Reagan administration to assist the contras despite Noriega’s drug-trafficking reputation. The CIA worked closely, too, with corrupt military officers in Honduras and El Salvador who were known to moonlight as cocaine traffickers and money-launderers.

In Honduras, the contra operation tied into the huge cocaine-smuggling network of Juan Ramon Matta Ballesteros. His airline, SETCO, was hired by the Reagan administration to ferry supplies to the contras. U.S. government reports also disclosed that contra spokesman Frank Arana worked closely with lieutenants in the Matta Ballesteros network.

Though based in Honduras, the Matta Ballesteros network was regarded as a leading Mexican smuggling ring and was implicated in the torture-murder of DEA agent Enrique Camarena.

The CIA knew, too, that the contra-cocaine taint had spread into President Reagan’s National Security Council and into the CIA through Cuban-American anti-communists who were working for two drug-connected seafood companies, Ocean Hunter of Miami and Frigorificos de Puntarenas in Costa Rica. One of these Cuban-Americans, Moises Nunez, worked directly for the NSC.

In 1987, the CIA asked Nunez about allegations tying him to the drug trade. “Nunez revealed that since 1985, he had engaged in a clandestine relationship with the National Security Council,” the CIA contra-drug report said. “Nunez refused to elaborate on the nature of these actions, but 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.”

The CIA had its own link to the Frigorificos/Ocean Hunter operation through Felipe Vidal, a Cuban-American with a criminal record as a narcotics trafficker. Despite that record, the CIA hired Vidal as a logistics coordinator for the contras, the CIA report said. When Sen. Kerry sought the CIA’s file on Vidal, the CIA withheld the data about Vidal’s drug arrest and kept him on the payroll until 1990.
These specific cases were not mentioned in the House report. They also have gone unreported in the major news media of the United States.

Now, with the Democrats on the House Intelligence Committees joining with their Republican counterparts, the official verdict on the sordid contra-drug history has been delivered ­ a near full acquittal of the Reagan administration and the CIA. The verdict is justified as long as no one reads what’s in the government’s own reports.

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Deadly “Octopus”

The Mysterious Death of Danny Casolaro

by David MacMichael, CovertAction, Winter 1991

The following article appeared in the Winter 1991 issue of “Covert Action Information Bulletin,” #39, pps. 53-57. The author can be reached through the Association of National Security Alumni at +1-202-483-9325. In a recent telephone conversation the author identified the other FBI agent who was to have met with Casolaro the day he died as one Ted Gunderson. We discussed the possible relationship between the Casolaro case and the death threats received by Judge Col. Hamilton Gayden and attorney Albro Lundy III shortly after they were contacted by Casolaro with regard to the POW/MIA issue in the weeks prior to Casolaro’s death. MacMichael speculated that the connection was, “drugs” i.e. southeast asian heroin used in support of the Company’s black operations. –seraphim@ais.org

David MacMicheal is a former CIA estimates officer. He is the Washington representative of the Association of National Security Alumni, and editor of its monthly newsletter, “Unclassified.”

Joseph Daniel Casolaro was one of many freelance investigative reporters stirring the witches brew of scandal simmering in the nation’s capitol. He was also an aspiring novelist, newsletter publisher, and freelance writer for publications running the gamut from the now defunct Washington Star to the National Enquirer. From a well-to-do family (his father, a doctor, had invested well in Northern Virginia real estate), he was 44 years old, divorced, and living comfortably on a five-acre estate in Fairfax County, Virginia — home to the CIA.

Casolaro was working on a book aimed at exposing what he called “The Octopus,” a group of less than a dozen shadowy figures whose machinations figured heavily, he claimed, in the Inslaw case, Iran-Contra, BCCI, and the October Surprise.


In the first week of August, Casolaro told friends and acquaintances that he was going to West Virginia too meet a source who would provide a key piece of evidence he needed to complete his investigation. He drove toMartinsburg, West Virginia, on Thursday, August 8, and checked into room 517 of the Sheraton Hotel. Two days later, at 12:51 p.m., hotel employees found his naked body in a bathtub full of bloody water. Time of death has been estimated at about 9:00 a.m. [1]

Both arms and wrists had been slashed a total of at least 12 times; one of the cuts went so deep that it severed a tendon. [2] Press accounts differ on minor details of the scene, but there was apparently no evidence of struggle. There was a four sentence suicide note in the bedroom.

Hotel management called the Martinsburg police who brought along the local coroner, Sandra Brining, a registered nurse. Ms. Brining ruled the death a suicide, took small blood and urine samples, and released the body to the Brown Funeral Home. Without authorization from officials or Casolaro’s next of kin, the funeral home embalmed the body as a “courtesy to the family,” according to Brining’s statement at an August 15 press conference in Martinsburg.

Martinsburg police notified the next of kin, Dr. Anthony Casolaro, also of Fairfax, of his brother’s death on Monday, August 12. Casolaro says that police explanations for the delay, like the hasty, unauthorized and illegal embalming, seemed either extraordinarily inefficient or highly suspicious. West Virginia state law requires that next of kin be notified before a body can be embalmed. [3] Casolaro requested a second  examination, which was performed by West Virginia state medical examiner Jack Frost, who stated at the same August 15 press conference that the evidence was “not inconsistent” with suicide. At the same time, he declared that he “could not rule out foul play” and admitted that performing a conclusive autopsy on an embalmed body is almost impossible. [4]

Anthony Casolaro publicly stated his disbelief that his gregarious and high-spirited brother could have committed suicide. Danny was so afraid of blood, he said, that he refused to allow samples to be drawn for medical purposes, and would never have chosen, in any case to slash his veins a dozen times. Other relatives and friends offered that same assessment: Danny Casolaro was not the suicidal type. Moreover, added a former girlfriend, he hated being seen in the nude. [5]

Brining’s blood samples showed traces of an anti-depressant drug and the non-prescription painkiller Tylenol 3. Casolaro stated that his brother was not depressed and his medical record showed no prescription for anti-depressants. On the other hand, as Ridgeway and Vaughn reported after examination of Casolaro’s medical records and conversations with his personal physician (his brother’s professional partner), there was clear evidence that the reporter was in the early stages of multiple schlerosis (MS). He had experienced incidents of loss of vision, a couple of severe falls, numbness in one leg, and persistent headaches. His resistance to blood tests could conceivably be attributed to fear that a diagnosis of MS might be confirmed.

Some press reports hint at an alcohol problem. [6] Most accounts, however, suggest that he enjoyed the company in bars more than alcohol; according to friends, he would nurse a few beers all afternoon or take four hours to finish a bottle of wine. [7] Other accounts speculated that his inability to interest publishers in the book he planned to write had made him despondent. [8] He was also alleged to have been worried about his financial situation. He had borrowed heavily to finance his research and publisher’s rejections were a blow. In a letter to his agent he referred to his debts “In September I’ll be looking into the face of an oncoming train.” Friends, however, dismissed the allegations — debt was Casolaro’s usual situation and he was given to overstatement. Said one friend, “Danny would not off himself over money problems.” [9] Also, he was negotiating the subdivision of his five acres, a deal that should have netted him several hundred thousand dollars. His employment of a full time housekeeper suggests that he was not severely strapped.

Casolaro had spoken to family and friends of the danger of his  investigations, warning them not to believe it if he died of an “accident.” But one of Casolaro’s sources claims that despite being cautioned, the reporter was cavalier about taking safety measures. [10]

In April 1991, Casolaro told longtime friend and former business associate, Pat Clawson that he had uncovered a “web of corruption” while investigating the Inslaw case. The “web” involved top-ranking Justice  Department officials, New York organized crime figures, and Medellin Cartel drug trafficers, jointly bankrolling “off-the-books” intelligence projects, including Iran-Contra. Their fund-raising schemes, Casolaro said, included: software exports restricted under the Export Control Act, gunrunning, illegal arms sales, bogus mineral and oil investment scams, and drug smuggling through Canada. Monies generated were so immense, Casolaro said, that government officials regularly skimmed off a hefty percentage. None of this has thus far been documented.


Casolaro’s death was promptly linked to that of other journalists in Guatemala and Chile. On January 29, 1991, Lawrence Ng, a stringer for the London Financial Times, was found shot dead in the bathtub of his Guatemala City apartment. Ng had been probing BCCI connections to arms sales in Guatemala. [11] [See Colhoun, p. 45.] Jack Anderson and Dale Van Atta have attempted to link Casolaro’s death to that of British aviation writer Jonathan Moyle — also ruled a suicide when he was found in March 1990 hanging in the closet of his hotel room in Santiago, Chile. [12] Moyle was looking into the activities of Chilean arms dealer Carlos Cardoen, who figures prominently in the Inslaw case.

Anderson and Van Atta take seriously the possibility that both reporters were murdered and that both had been tracking the same “octopus.” [13] Both were investigating the activities of Cardoen, a suspected conduit for arms sold to Iraq. According to an affidavit filed in the Inslaw case, Cardoen also played a role in the sale of Inslaw’s purloined software to Iraq. [14]

Both Casolaro and Moyle had communicated with Anderson, who believed they were “no further along in the story” than others. “On the surface,” Anderson and Van Atta wrote, “Neither man had evidence worth killing for.”

British journalist David Akerman disagrees, arguing that Moyle had uncovered information on connections between leading British arms makers and Cardoen, who used British licenses to manufacture high-technology weaponry for illegal delivery to Iraq. [15] Because the illegal weapons transfers were generally known among arms dealers, public disclosure would have been sufficiently embarrassing and financially damaging to have placed Moyle’s life in jeopardy. There are those who feel just as strongly about the facts surrounding the death of Danny Casolaro.


The most politically volatile side of this story is Casolaro’s extensive investigation into the Inslaw case. Elliot Richardson is legal counsel to the Washington, D. C.-based computer software company, Inslaw. Widely respected for his ethics and legal expertise, Richardson quit as Nixon’s Attorney General in 1973 rather than carry out the order to fire Watergate Special Prosecutor Archbald Cox. In a recent radio interview, Richardson was asked if he believed Casolaro killed himself. He answered:

<blockquote>I don’t. I think everything we know makes it much more likely that he was eliminated by a person or persons unknown who feared that he was about to disclose information that would be severely damaging… he told [friends] separately that he had in hand or ready, significant hard evidence pointing to the connections betweenInslaw and these other events [Iran-Contra, BCCI, October Surprise]. He said he was going to West Virginia to get additional evidence that would really lock this whole picture into place. Now, that I think is the most significant piece of information we have. There’s no reason to suppose that he was lying to his friends. Why should he? And there’s no reason to suppose that they lied in saying that this is what he told them. [16]</blockquote>

The Inslaw case involves charges that the Justice Department, under Attorney General Edwin Meese, stole the powerful database software PROMIS (Prosecutor’s Management Information System) from Inslaw. When a federal bankruptcy court ruled in Inslaw’s favor in 1987, presiding Judge George Francis Bason concluded that the Justice Department “took, converted, and stole” the software “through trickery, fraud, and deceit.” [17]

Allegations about the theft of PROMIS have suggested three possible motives: To fund off-the-shelf covert operations; to market a “trojan horse” database which could then be easily monitored by the National Security Agency; [18] and to pay off Reagan attorney General Edwin Meese’s political crony, Dr. Earl Brian. Now president of the floundering United Press International, Earl Brian has longstanding ties to Reagan and served in his cabinet when Reagan was governor of California.

Whatever its motivations, the Justice Department has twice been found guilty of theft and was ordered to pay Inslaw $6.8 million, plus legal fees. In 1989, the decision was upheld by federal judge William Bryant who said, “the government acted willfully and fraudulently…” [19] Under both Edwin Meese and Richard Thornburgh, the Justice Department stonewalled efforts to investigate, refusing to release documents either to Senator Sam Nunn’s Government Affairs Investigations Subcommittee or to Congressman Jack Brooks’ House Judiciary Committee.

In June, after eight years of litigation, the Federal Appeals Court of the District of Columbia voided the two previous decisions. October Surprise figure Judge Lawrence J. Silberman [20] cast the deciding vote, declaring that the case had been wrongly heard in a bankruptcy court in the first place, and must be retried in a federal district court. Inslaw has appealed to the Supreme Court.

The Washington, D. C. bankruptcy court judge who had heard the case and decided in Inslaw’s favor was removed from the bench one month after his decision. [21] He was replaced by S. Martin Teel, Jr., one of the Department of Justice lawyers who had unsuccessfully argued the case. According to a writer for Barron’s, “Even jaded, case hardened Washington attorneys called the decision ‘shocking’ and ‘eerie.'” [22]


October Surprise is the as-yet unproven theory that members of the 1980 Reagan presidential campaign arranged a deal with the government of Iran to continue holding 52 U. S. hostages in Tehran until after the election in order to prevent President Carter from benefiting politically from their release.

The Inslaw case is tied to the October Surprise by the sworn affidavit of Michael Riconosciuto, a West Coast computer and weapons technician with self-proclaimed ties to the intelligence community. He testified last March that he had modified the PROMIS software for sale to the Royal Canadian Mounted Police (RCMP) and Canadian Security Intelligence Service (CSIS) at the request of a Justice department contracting officer named Peter Videnieks and Reagan/Meese crony Earl Brian. [23] In an unsworn statement to Inslaw’s president William A. Hamilton, Riconosciuto says he met Brian in 1980 when he helped him deliver $40 million to Tehran to consummate the October Surprise weapons-for-hostages deal. [24]

After Riconosciuto first contacted Inslaw, Casolaro traveled several times to California and Washington in 1990 and 1991 to talk to him. Riconosciuto claims knowledge of many covert activities in the U.S., Latin America, and Australia, and doubtless influenced Casolaro’s concept of the Octopus. [25] In his affidavit in the Inslaw case, Riconosciuto declared that Videnieks told him “not to cooperate with an independent investigation… by the Committee on the Judiciary of the United States House of Representatives.” [26]Riconosciuto also stated that Videnieks also threatened him with specific punishments he “could expect to receive from the U.S. Department of Justice… ” if he cooperated with that investigation. [27] Within eight days of swearing the affidavit, he was in fact arrested on charges of distributing methamphetamines and has been held without bail in Washington state since March. [28] My appointment to speak to Casolaro on his return concerned Riconosciuto, in whose wide-ranging, not entirely believable allegations we shared a keen interest.

Viedenieks has denied in a sworn affidavit any knowledge of or contact with Riconosciuto. Earl Brian has done the same. Although Videnieks identifies himself as an employee of the U.S. Customs in his affidavit, the customs personnel office has denied any knowledge of him. An independent check with regional Customs officials also produced no evidence of Videnieks. Casolaro, however, told Hamilton that he had contacted Videnieks at Customs shortly before his fatal trip. [29]


What is known about Danny Casolaro’s trip to Martinsburg is that he met on Thursday, August 8, at about 5:30 p.m. in the Sheraton bar with a man described by a waitress as possibly Arab or Iranian. [30] This may have been an Egyptian named Hassan Ali Ibrahim Ali. According to documents provided to Casolaro by former Customs informant Bob Bickel, Ali headed an Iraqi front company in the U.S. called Sitico.

According to Ridgeway and Vaughn, Casolaro had shown a photo of Ali to a friend shortly before leaving for Martinsburg. Middle East expert Mary Barrett has asserted that Hassan Ali — known as “Ali Ali” — had close ties to the late Gerald Bull, the American ballistics engineer working on super long-range artillery for Iraq and South Africa. [31] Bull was murdered in Brussels in March, apparently by Israeli agents. [32]

After meeting with Ali, Casolaro waited in the same bar to meet another source, who never arrived. In a conversation with Tom Looney, a fellow hotel guest he met there, Casolaro spoke of the source he was waiting for, explaining that the man had the information to solve the Octopus riddle, something which Casolaro explained in detail to his skeptical listener. Looney told Ridgeway and Vaughn that he had a hard time believing that just seven or eight men were responsible for 40 years of scandals.


On the following day, Friday, August 9, Casolaro met with a former Hughes Aircraft employee, William Turner, in the Sheraton parking lot at about 2:00 p.m. Turner gave him some papers relating to alleged corruption at Hughes and at the Pentagon.

To further complicate matters, Turner was arrested on September 26, on charges of holding up a rural bank near his home in Winchester, Virginia. In an interview with Ridgeway and Vaughn in mid-August, Turner professed to being “scared shitless” because of the evidence Casolaro had  shown him connecting “the Octopus” to Oliver North, BCCI, the Keating Five, and the Silverado Savings and Loan scandal. [33]

Finally, there is the ubiquitous Ari Ben-Menashe, the former Israeli military intelligence officer who claims to have been involved in organizing the October Surprise affair in 1980 and to have been a key element in the subsequent supply of U.S.-provided military equipment to Iran. [34]

On news of Casolaro’s death, Ben-Menashe called Inslaw’s William Hamilton to say that the two FBI agents from Lexington, Kentucky (where the Israeli lived in the late 1990 and early 1991), had been en route to Martinsburg to talk to Casolaro about their own investigation of the Inslaw case. Ben-Menashe said the agents were prepared to give him proof that the FBI was illegally using PROMIS software, Hamilton reports.

Ben-Menashe further told Hamilton that one of the agents, E. B. Cartinhour, was angry that the Justice Department was not pursuing Reagan administration officials for their role in the October Surprise.Cartinhour refused to talk to Ridgeway and Vaughn, but recently a retired agent who had worked with Cartinhour told Ridgeway that he knew of Ben-Menashe and “that involves classified information.” [35] The ex-agent also claimed knowledge of an investigation about the Hamiltons’, computers, the Justice Department, and a coverup. He told Ridgeway that if any FBI agents had been going to talk to b, it would have been to get information, not to give it. [36]

The Inslaw investigation has extended into Kentucky for very concrete reasons. One of Inslaw’s major sources is Charles Hayes, who runs a computer reconditioning business in Kentucky. Hayes, who claims to have been a former CIA asset, has found evidence of the PROMIS software in former Justice Department computers he acquired for his business. [37]

According to Ben-Menashe, Ridgeway and Hamilton had botched what he told them, and had ruined Cartinhour’s FBI career by alleging that he was going against Justice Department policy. [38] Ridgeway, for his part, says his reporting is accurate.


Casolaro’s housekeeper reported receiving several telephone calls on Friday, August 9, at Casolaro’s house. At 9:00 a.m., a male caller announced, “I will cut his body and throw it to the sharks.” An hour of so later another caller said simply, “Drop dead.” Between then and 10:00 p.m., when she left for the night, there were three more calls in which there was only silence or the sound of music in the background. The following day, Saturday, August 10, she got a final call at 8:30 p.m. –approximately twelve hours after Casolaro’s death. A man’s voice said, “You son of a bitch. You’re dead.”  [39]

On the previous day, around 6:00 p.m., as widely reported in the press, Casolaro called his mother’s home in McLean, Virginia, to say he was on the way home but would be too late for a family celebration.

Whether Casolaro was murdered or killed himself, his death has brought the Inslaw case back into the public spotlight. Elliot Richardson, calling the situation “far worse than Watergate,” has written to the Justice Department to request appointment of an independent counsel to investigate Casolaro’s death.

If Casolaro was murdered because of what he knew, Inslaw is the most probable cause. There is no evidence that his Octopus theory, or his investigations into BCCI and the October surprise, are likely to have uncovered information worth killing for. Inslaw is a different matter. Here is a real crime, with real people who, if found guilty, would face real jail terms and stand to lose millions. It is possible that Casolaro, who was in close touch with Inslaw owners Bill and Nancy Hamilton, might have been too close to something conclusive which sealed his death warrant.

The possibility of murder remains the subject of serious inquiry, [40] but the suicide theory is gaining rapidly. Ron Rosenbaum, an investigative  reporter and longtime acquaintance of Danny’s, elaborately staged his own death. Reviewing Casolaro’s history as a journalist, Rosenbaum frames a good case showing that the dead man had neither the investigative track record, nor an adequate understanding of covert operations to make his extraordinary claims credible. [41] He also offers evidence that some of Casolaro’s death threats may have been imaginary. Rosenbaum concedes, however, that Casolaro was dealing with dangerous individuals, and that his investigations had uncovered serious new material.

Unanswered questions surrounding Casolaro’s death, including the disappearance of his briefcase and a rash of anonymous calls [42] after he died, have generated significant public pressure. Newly confirmed Attorney General William Barr has ordered a retired federal judge, Nicholas J. Bua, to conduct a 120-day “top to bottom” review of the Inslaw matter. [43] This is a welcome change from the stonewalling of Meese and Thornburgh. It remains to be seen whether Bua will conduct a thorough investigation or simply preside over yet another government whitewash.


[1] “Source May Have Disappointed Casolaro,” Washington Post, August 25, 1991, p. A20.

[2] David Corn refers to “an X-acto blade…not sold locally.” (“End of Story: The Dark World of Danny Casolaro,” Nation, October 28, 1991, p. 511.) James Ridgeway and Doug Vaughn refer to “a single-edge razor blade — the kind used to scrape windows or slice open packages…” (“The Last Days of Danny Casolaro,” Village Voice, October 15, 1991, p. 32.) Some accounts mention a  broken beer bottle, other a broken motel tumbler.

[3] Ridgeway and Vaughn, op. cit., p. 38.

[4] Author’s conversation with freelance reporter Steve Badrich, who attended the press conference.

[5] Kim Masters, “The Unlikely Suicide,” Washington Post, August 31, 1991, p. D1.

[6]Robert O’Harrow, Jr. and Gary Lee, “Frequent drinking marked writer Casolaro’s final days,” Washington Post, August 25, 1991, p. A19.

[7] Masters, op. cit.

[8] R. Drummond Ayres, Jr., “As U.S. Battles Computer Company, Writer Takes Vision of Evil to Grave,” New York Times, September 3, 1991, p. D12.

[9] Masters, op. cit.

[10] Raymond Lavas, one of Casolaro’s sources in the California electronics industry, telephone conversation with the author.

[11] Rocco Parascandola, “Who killed investigative reporters?” New York Post, August 15, 1991, p. 4; Dan Bischoff, “One more dead man,” Village Voice, August 27, 1991, p. 22.

[12] Jack Anderson and Dale van Atta, “Another Casualty in the ‘Octopus’ case,” Washington Post, August 28, 1991, p. D16.

[13] Ibid. Also, ABC-TV, Nightline, September 13, 1991.

[14] Affidavit of Ari Ben-Menashe, “Inslaw v. United States of America, and the United States Department of Justice, Adversary Proceeding No. 86-0069,” United States Bankruptcy court, Washington, D. C.

[15] David Akerman, “The disquieting death of Jonathan Moyle,” Image, London, Jult 28, 1991.

[16] Diane Rehm Show, WAMU-FM, Washington, D.C., October 28, 1991.

[17] Inslaw v. United States of America, et. al., p. 9.

[18] Elliot Richardson, “A High-Tech Watergate,” New York Times, October 21, 1991, p. A17.

[19] Ibid.

[20] Silberman is accused by Abolhassan Bani-Sadr, the first elected president of Iran following the 1979 revolution, and later deposed by Khomeini, of being one of the four Reagan campaign staffers who consummated the October Surprise deal. Christopher Hitchens, “Minority Report,” The Nation, October 21, 1987,  p. 440.

[21] Maggie Mahar, “Beneath Contempt: Did the Justice Department Deliberately Bankrupt INSLAW?” Barron’s Business Weekly, March 21, 1988.

[22] Ibid.

[23] See: Eric Reguly, “Questions grow as ‘Big Daddy’ watches his empire crumble,” Financial Post (Toronto), August 19, 1991, pp. 8- 11, for background on Brian.

[24] Inslaw memorandum to The Record, June 28, 1990, “An Assessment of Michael Riconosciuto…,” p. 1.

[25] Riconosciuto, personal communication with the author.

[26] Affidavit of Michael Riconosciuto, “Inslaw v. United States of America, and the United States Department of Justice, Adversary Proceeding No. 86-0069,” United States Bankruptcy Court, Washington, D.C.

[27] Ibid.

[28] Carlton Smith, “Worldwide conspiracy or fantasy? Felon’s story checks out — in part,” Seattle Times, August 29, 1991, p. A1.

[29] William Hamilton, personal communication with the author.

[30] Ridgeway and Vaughn, op. cit. p. 39.

[31] Barrett, personal conversations with the author.

[32] Suspicion of Mossad involvement in Bull’s death has been widely reported in the mainstream press. See also: Mary Barrett, “Gerald Bull, the Canadian Ballistics Genius Who Armed Iraq,” Washington Report on Middle East Affairs, November 1990. Bull’s family, according to Barrett, is bitter that the U.S.  government is doing nothing to investigate his death.

[33] Ridgeway and Vaughn, op. cit., p. 40.

[34] As with Riconosciuto, some reporters have avoided Ben-Menashe, because  they consider his information impossible to confirm. One exception is Seymour Hersh. The Pulitzer Prize-winning Hersh relied heavily on Ben-Menashe in his recent book on the Israeli nuclear program, “The Samson Option.”

[35] Ridgeway and Vaughn, op. cit., p. 42.

[36] Ibid.

[37] The FBI appears to have had recent contact with Ben-Menashe in Kentucky. In early 1991, FBI officers investigated a dispute between Ben-Menashe and former CIA officer Allan Bruce Hemmings. Ben-Menashe may have the protection of Kentucky Governor Wallace G. Wilkerson. (Hemmings, conversations with the author.)

[38] Ben-Menashe, conversations with the author.

[39] Ridgeway and Vaughn, op. cit., p. 38.

[40] See for example: Lisa Featherstone and Peter Rothberg, “Suicide or Murder?” Lies of our Times, November, 1991. Featherstone and Rothberg analyze the gaps in mainstream reporting of Casolaro’s death.

[41] Ron Rosenbaum, “The Strange Death of Danny Casolaro,” Vanity Fair, December, 1991.

[42] Following his death, a number of anonymous calls were placed to Casolaro’s house, and to at least two journalists, Dan Bischoff, editor of the Village Voice, and Pat Clawson of Metrowest Broadcasting in Washington, D. C. Clawson was a friend of Casolaro’s for ten years, and a business associate when Casolaro was publishing a computer newsletter.

[43] David Johnson, “Bank Inquiry Widened, Justice Dept. Nominee Says,” New York Times, November 14, 1991, p. B13.

Tagged , , , , , , , , , ,

the gruesome reality of governments

State-Organized Crime

by William R. Chambliss
American Society of Criminology, 1988 Presidential Address
From Criminology, 27:183-208 (1989)

There is a form of crime that has heretofore escaped criminological inquiry, yet its persistence and omnipresence raise theoretical and methodological issues crucial to the development of criminology as a science. I am referring to what I call “state-organized crime.


Twenty-five years ago I began researching the relationship among organized crime, politics, and law enforcement in Seattle, Washington (Chambliss, 1968, 1971, 1975a, 1975b, 1977, 1980, 1988a). At the outset I concentrated on understanding the political, economic, and social relations of those immediately involved in organizing and financing vice in the local area. It became clear to me, however, that to understand the larger picture I had to extend my research to the United States and, eventually, to international connections between organized criminal activities and political and economic forces. This quest led me to research in Sweden (Block and Chambliss, 1981), Nigeria (Chambliss, 1975b), Thailand (Chambliss, 1977), and of course, the Americas.

My methods were adapted to meet the demands of the various situations I encountered. Interviews with people at all levels of criminal, political, and law enforcement agencies provided the primary data base, but they were supplemented always with data from official records, government reports, congressional hearings, newspaper accounts (when they could be checked for accuracy), archives, and special reports.

While continuing to research organized crime, I began a historical study of piracy and smuggling. In the process of analyzing and beginning to write on these subjects, I came to realize that I was, in essence, studying the same thing in different time periods: Some of the piracy of the sixteenth and seventeenth centuries was sociologically the same as some of the organized criminal relations of today – both are examples of state-organized crime.

At the root of the inquiry is the question of the relationship among criminality, social structure, and political economy (Petras, 1977; Schwendinger and Schwendinger, 1975; Tilly, 1985). In what follows, I (1) describe the characteristics of state-organized crime that bind acts that are unconnected by time and space but are connected sociologically, (2) suggest a theoretical framework for understanding those relationships, and (3) give specific examples of state-organized crime.


The most important type of criminality organized by the state consists of acts defined by law as criminal and committed by state officials in the pursuit of their jobs as representatives of the state. Examples include a state’s complicity in piracy, smuggling, assassinations, criminal conspiracies, acting as an accessory before or after the fact, and violating laws that limit their activities. In the latter category would be included the use of illegal methods of spying on citizens, diverting funds in ways prohibited by law (e.g., illegal campaign contributions, selling arms to countries prohibited by law, and supporting terrorist activities).

State-organized crime does not include criminal acts that benefit only individual officeholders, such as the acceptance of bribes or the illegal use of violence by the police against individuals, unless such acts violate existing criminal law and are official policy. For example the current policies of torture and random violence by the police in South Africa are incorporated under the category of state-organized crime because, apparently, those practices are both state policy and in violation of existing South African law. On the other hand, the excessive use of violence by the police in urban ghettoes is not state-organized crime for it lacks the necessary institutionalized policy of the state.


In the history of criminality, the state-supported piracy that occurred between the sixteenth and nineteenth centuries is an outstanding example of state-organized crime (Andrews, 1959, 1971).When Christopher Columbus came to the Americas in search of wealth and spices in 1492, he sailed under the flag of Spain although he himself was from Genoa. Vasco de Gama followed Columbus 6 years later, sailing under the Portuguese flag. Between Spain and Portugal, a vast new world was conquered and quickly colonized. The wealth of silver and gold was beyond their wildest dreams. A large, poorly armed native American population made the creation of a slave labor force for mining and transporting the precious metals an easy task for the better armed Spanish and Portuguese settlers willing to sacrifice human life for wealth. Buttressed by their unflagging belief that they were not only enriching their motherland and themselves but also converting the heathens to Christianity, Spanish and Portuguese colonists seized the opportunity to denude the newly found lands of their wealth and their people (Lane-Poole, 1890). Portugal, as a result of Vasco de Gama’s voyages, also established trade routes with India that gave it a franchise on spices and tea. Portuguese kings thus became the “royal grocers of Europe” (Howes, 1615; Collins, 1955).

In Europe during the sixteenth and seventeenth centuries, nation-states were embroiled in intense competition for control of territory and resources. Then, as now, military power was the basis for expansion and the means by which nation-states protected their borders. Military might, in turn, depended on labor and mineral resources, especially gold and silver. The wealthier nations could afford to invest in more powerful military weapons, especially larger and faster ships, and to hire mercenaries for the army and navy. Explorations cost money as well. When Spain and Portugal laid claim to the Americas, they also refused other nations the right to trade with their colonies (Mainwaring, 1616). Almost immediately, conflict developed between Spain and Portugal, but the pope intervened and drew a line dividing the New World into Spanish and Portuguese sectors, thereby ameliorating the conflict. But the British, French, and Dutch were not included in the pope’s peace. They were forced to settle for less desirable lands or areas not yet claimed by the Spanish and Portuguese.

Although they lacked the vision to finance explorers such as Christopher Columbus and Vasco de Gama, France, England, and Holland nonetheless possessed powerful navies. They were also the home of some of the world’s more adventurous pirates, who heretofore had limited their escapades to the European and African coasts. With the advent of Spain and Portugal’s discovery of vast new sources of wealth, other European nations were faced with a dilemma: They could sit idly by and watch the center of power tip inexorably toward the Iberian Peninsula, or they could seek ways to interfere with the growing wealth of their neighbors to the south. One alternative, of course, was to go to war. Another, less risky for the moment but promising some of the same results, was to enter into an alliance with pirates. France, England, and Holland chose the less risky course.

To transport the gold and silver from the Spanish Main (the Caribbean coast of South America) to Bilbao and from Brazil to Lisbon required masterful navigational feats. A ship laden with gold and silver could not travel fast and was easy prey for marauders (Exquemling, 1670). To complicate matters, ships were forced by prevailing winds and currents to travel in a predictable direction. These conditions provided an open invitation for pirates to exploit the weaknesses of the transporting ships to their advantage. Poverty and a lack of alternatives drove many young men to sea in search of a better life. Some came to the New World as convicts or indentured slaves. The lure of the pirate’s life was an alternative that for all its hardships was more appealing than the conditions of serfdom and indentured servitude.

The French government was the first to seize the opportunity offered by engaging in piracy (Ritchie, 1986). It saw in piracy a source of wealth and a way of neutralizing the some of the power of Spain and Portugal. Although piracy was an act second to none in seriousness in French law (summary execution was the punishment), the French government nonetheless instructed the governors of its islands to allow pirate ships safe portage in exchange for a share of the stolen merchandise. Thus, the state became complicitous in the most horrific sprees of criminality in history.

The pirate culture condoned violence on a scale seldom seen. There was no mercy for the victims of the pirates’ attacks. Borgnefesse, a French pirate who wrote his memoirs after retiring to a gentleman’s life in rural France, was an articulate chronicler of these traits. He wrote, for example, of how he once saved a young girl “not yet into puberty” from being raped by two “beastly filibusters” who were chasing her out of a house in a village that he and his men had attacked (LeGolif, 1680). Borgnefesse wrote of being embarrassed that on that occasion he felt “pity” for the young girl and violated one of the ironclad laws of the pirate’s world: that women were prizes for whoever found them in the course of a raid. The would-be rapists resisted his effort to save the girl and “told me I was interfering in a matter which was none of my business, that pillage was permitted in the forcing of the women as well as the coffers.

“It was commonplace among pirates to “take no prisoners” unless, of course, they could be useful to the victors. Borgnefesse described how he cut off the heads of everyone on board a Spanish “prize” because the enemy angered him by injuring his arm during the battle. Another time he and his men took all the people on a captured ship, tied them up in the mainsail, threw them in the water, and then drank rum while listening to the screams of the slowly drowning men. For all his criminal exploits, however, Borgnefesse was well protected by French ships and French colonies.England and Holland were quick to join the French. Sir Richard Hawkins and his apprentice, Sir Francis Drake, were issued “letters of marque” from the admiralty directing governors of British colonies and captains of British warships to give safe passage and every possible assistance to Hawkins and Drake as they were acting “under orders of the Crown” (British Museum, 1977). Their “orders” were to engage in piracy against Spanish and Portuguese ships. Thus, the state specifically instructed selected individuals to engage in criminal acts. The law, it must be emphasized, did not change. Piracy remained a crime punishable by death, but some pirates were given license to murder, rape, plunder, destroy, and steal.

The state’s complicity in piracy was more successful, one suspects, than even the most avaricious monarchs expected. On one voyage (between 1572 and 1573), Drake returned to England with enough gold and silver to support the government and all its expenses for a period of 7 years (Corbett, 1898a, 1898b). Most of this wealth came from Drake’s attack on the town of Nombre de Dios, which was a storage depot for Spanish gold and silver. In this venture Drake joined forces with some French pirates and ambushed a treasure train.

Drake was knighted for his efforts, but the Spanish were not silent. They formally challenged Britain’s policies, but the queen of England denied that Drake was operating with her blessing (after, of course, taking the gold and silver that he brought home) and Drake was tried as a criminal. He was publicly exiled, but privately he was sent to Ireland, where he reemerged several years later (in 1575) serving under the first Earl of Essex in Ireland.

Borgnefesse and Sir Francis Drake are only two of hundreds of pirates who plied their trade between 1400 and 1800 (Senior, 1976), Their crimes were supported by, and their proceeds shared with, whatever nation-state offered them protection and supplies. In theory, each nation-state only protected its own pirates, but in practice, they all protected and pirates willing to share their gains.

To rationalize the fundamental contradiction between the law and the interests of the state, European nations created a legal fiction. Issued either directly from the monarch or the Admiralty, the letters of marque gave pirates a sort of license, but with specific limitations on the kinds of acts that were permissible. One restriction was that the pirates were not to (a) attack ships of the country issuing the letter, (b) plunder villages or towns, or (c) open the captured cargo until they returned to port.

The reality of piracy was quite at odds with all of these limitations. Much of the success of piracy depended on attacking towns and villages, during which raping, plundering, and razing the town were accepted practices. Pirates sometimes kept one or more officers from captured ships along with their letters of marque and identifying flags in order to show them in case of attack by a ship from another country. This also enabled a pirate ship from France, say, to raise an English flag and attack a French ship. For the pirates loyalty to the nation came second to the search for gold.

At one time or another virtually every European nation, and the United States as well, between 1500 and 1800 was complicitous in piracy. In the United States, Charleston, South Carolina, several New England towns, and New York were safe harbors for pirates. In return for sharing in the prize, these towns provided safety from capture by foreign authorities and a safe place for pirates to celebrate their victories.

John Paul Jones became an American hero through his success as a pirate and was even given a commission in the navy (de la Croix, 1962; MacIntyre, 1975). Jean and Pierre Lafitte were the toast of New Orleans society while they enriched themselves by organizing and aiding pirates and smugglers at the mouth of the Mississippi River. Their status was considerably enhanced when the federal government enlisted their aid in the war against England and made Jean an officer of the U.S. Navy in return for helping to defeat the British Navy that was gathering its forces for an attack on New Orleans (Verrill, 1924). In time of war, nations enlisted pirates to serve in their navy. In time of peace, they shared in the profits.

During the period from 1600 to 1900, capitalism was becoming firmly established as the dominant economic system of the world. The essential determinant of a nation’s ability to industrialize and to protect its borders was the accumulation of capital. Not only was another nation’s wealth a threat to the autonomy of neighboring states, one nation’s gain was invariably another’s loss. Piracy helped to equalize the balance and reduce the tendency toward the monopolization of capital accumulation. The need for capital accumulation does not end with the emergence of capitalism; it continues so long as the economy and a nation’s military and economic strength depend on it. When piracy ceased to be a viable method for accumulating capital, other forms of illegality were employed. In today’s world, there is evidence that some small city-states in the Far East (especially in Indonesia) still pursue a policy of supporting pirates and sharing in their profits. But piracy no longer plays a major role in state-organized crime; today, the role is filled by smuggling.


Smuggling occurs when a government has successfully cornered the market on some commodity or when it seeks to keep a commodity of another nation from crossing its borders. In the annals of crime, everything from sheep to people, wool to wine, gold to drugs, and even ideas, has been prohibited for either export or import. Paradoxically, whatever is prohibited, it is at the expense of one group of people for the benefit of another. Thus, the laws that prohibit the import or export of a commodity inevitably face a built-in resistance. Some part of the population will always want to either possess or to distribute the prohibited goods. At times, the state finds itself in the position of having its own interests served by violating precisely the same laws passed to prohibit the export or import of the goods it has defined as illegal.

Narcotics and the Vietnam War

Sometime around the eighth century, Turkish traders discovered a market for opium in Southeast Asia (Chambliss 1977; McCoy, 1973). Portuguese traders several centuries later found a thriving business in opium trafficking conducted by small ships sailing between trading ports in the area. One of the prizes of Portuguese piracy was the opium that was taken from local traders and exchanged for tea, spices, and pottery. Several centuries later, when the French colonized Indochina, the traffic in opium was a thriving business. The French joined the drug traffickers and licensed opium dens throughout Indochina. With the profits from these licenses, the French supported 50% of the cost of their colonial government.When the Communists began threatening French rule in Indochina, the French government used the opium profits to finance the war. It also used cooperation with the hill tribes who controlled opium production as a means of ensuring the allegiance of the hill tribes in the war against the Communists (McCoy, 1973).

The French were defeated in Vietnam and withdrew, only to be replaced by the United States. The United States inherited the dependence on opium profits and the cooperation of the hill tribes, who in turn depended on being allowed to continue growing and shipping opium. The CIA went a step further than the French and provided the opium-growing feudal lords in the mountains of Vietnam, Laos, Cambodia, and Thailand with transportation for their opium via Air America, the CIA airline in Vietnam.Air America regularly transported bundles of opium from airstrips in Laos, Cambodia, and Burma to Saigon and Hong Kong (Chambliss, 1977: 56). An American stationed at Long Cheng, the secret CIA military base in northern Laos during the war, observed:

“. . . so long as the Meo leadership could keep their wards in the boondocks fighting and dying in the name of, for those unfortunates anyway, some nebulous cause . . .the Meo leadership [was paid off] in the form of a carte-blanche to exploit U.S.-supplied airplanes and communication gear to the end of greatly strengthening the opium operations . . . . (Chambliss, 1977: 56)

This report was confirmed by Laotian Army General Ouane Rattikone, who told me in an interview in 1974 that he was the principal overseer of the shipment of opium out of the Golden Triangle via Air America. U.S. law did not permit the CIA or any of its agents to engage in the smuggling of opium. After France withdrew from Vietnam and left the protection of democracy to the United States, the French intelligence service that preceded the CIA in managing the opium smuggling in Asia continued to support part of its clandestine operations through drug trafficking (Kruger, 1980).

Although those operations are shrouded in secrecy, the evidence is very strong that the French intelligence agencies helped to organize the movement of opium through the Middle East (especially Morocco) after their revenue from opium from Southeast Asia was cut off.In 1969 Michael Hand, a former Green Beret and one of the CIA agents stationed at Long Cheng when Air America was shipping opium, moved to Australia, ostensibly as a private citizen. On arriving in Australia, Hand entered into a business partnership with an Australian national, Frank Nugan. In 1976 they established the Nugan Hand Bank in Sydney (Commonwealth of New South Wales, 1982a, 1982b). The Nugan Hand Bank began as a storefront operation with minimal capital investment, but almost immediately it boasted deposits of over $25 million. The rapid growth of the bank resulted from large deposits of secret funds made by narcotics and arms smugglers and large deposits from the CIA (Nihill, 1982).In addition to the records from the bank that suggest the CIA was using the bank as a conduit for its funds, the bank’s connection to the CIA and other U.S. intelligence agencies is evidenced by the people who formed the directors and principal officers of the bank, including the following:

Admiral Earl F. Yates, president of the Nugan Hand Bank was, during the Vietnam War, chief of staff for strategic planning of U.S. forces in Asia and the Pacific.

General Edwin F. Black, president of Nugan Hand’s Hawaii branch, was commander of U.S. troops in Thailand during the Vietnam War and, after the war, assistant army chief of staff for the Pacific.

General Erle Cocke, Jr., head of the Nugan Hand Washington, D.C. office.

George Farris worked in the Nugan Hand Hong Kong and Washington, D.C. offices. Farris was a military intelligence specialist who worked in a special forces training base in the Pacific.

Bernie Houghton, Nugan Hand’s representative in Saudi Arabia. Houghton was also a U.S. naval intelligence undercover agent.

Thomas Clines, director of training in the CIA’s clandestine service, was a London operative for Nugan Hand who helped in the takeover of a London-based bank and was stationed at Long Cheng with Michael Hand and Theodore S. Shackley during the Vietnam War.

Dale Holmgreen, former flight service manager in Vietnam for Civil Air Transport, which became Air America. He was on the board of directors of Nugan Hand and ran the bank’s Taiwan office.

Walter McDonald, an economist and former deputy director of CIA for economic research, was a specialist in petroleum. He became a consultant to Nugan Hand and served as head of its Anapolis, Maryland branch.

General Leroy Manor, who ran the Nugan Hand Philippine office, was a Vietnam veteran who helped coordinate the aborted attempt to rescue the Iranian hostages, chief of staff for the U.S. Pacific command, and the U.S. government’s liaison officer to Philippine President Ferdinand Marcos.

On the board of directors of the parent company formed by Michael Hand that preceded the Nugan Hand Bank were Grant Walters, Robert Peterson, David M. Houton, and Spencer Smith, all of whom listed their address as c/o Air America, Army Post Office, San Francisco, California.

Also working through the Nugan Hand Bank was Edwin F. Wilson, a CIA agent involved in smuggling arms to the Middle East and later sentenced to prison by a U.S. court for smuggling illegal arms to Libya. Edwin Wilson’s associate in Mideast arms shipments was Theodore Shackley, head of the Miami, Florida, CIA station. In 1973, when William Colby was made director of Central Intelligence, Shackley replaced him as head of covert operations for the Far East; on his retirement from the CIA William Colby became Nugan Hand’s lawyer.

In the late 1970s the bank experienced financial difficulties, which led to the death of Frank Nugan. He was found dead of a shotgun blast in his Mercedes Benz on a remote road outside Sydney. The official explanation was suicide, but some investigators speculated that he might have been murdered. In any event, Nugan’s death created a major banking scandal and culminated in a government investigation. The investigation revealed that millions of dollars were unaccounted for in the bank’s records and that the bank was serving as a money-laundering operation for narcotics smugglers and as a conduit through which the CIA was financing gun smuggling and other illegal operations throughout the world. These operations included illegally smuggling arms to South Africa and the Middle East. There was also evidence that the CIA used the Nugan Hand Bank to pay for political campaigns that slandered politicians, including Australia’s Prime Minister Gough Whitlam (Kwitny, 1987).

Michael Hand tried desperately to cover up the operations of the bank. Hundreds of documents were destroyed before investigators could get into the bank. Despite Hand’s efforts, the scandal mushroomed and eventually Hand was forced to flee Australia. He managed this, while under indictment for a rash of felonies, with the aid of a CIA official who flew to Australia with a false passport and accompanied him out of the country. Hand’s father, who lives in New York, denies knowing anything about his son’s whereabouts.

Thus, the evidence uncovered by the government investigation in Australia linked high-level CIA officials to a bank in Sydney that was responsible for financing and laundering money for a significant part of the narcotics trafficking originating in Southeast Asia (Commonwealth of New South Wales, 1982b; 1983). It also linked the CIA to arms smuggling and illegal involvement in the democratic processes of a friendly nation. Other investigations reveal that the events in Australia were but part of a worldwide involvement in narcotics and arms smuggling by the CIA and French intelligence (Hougan, 1978; Kruger, 1980; Owen, 1983).

Arms Smuggling

One of the most important forms of state-organized crime today is arms smuggling. To a significant extent, U.S. involvement in narcotics smuggling after the Vietnam War can be understood as a means of funding the purchase of military weapons for nations and insurgent groups that could not be funded legally through Congressional allocations or for which U.S. law prohibited support (NARMIC, 1984).

In violation of U.S. law, members of the National Security Council (NSC), the Department of Defense, and the CIA carried out a plan to sell millions of dollars worth of arms to Iran and use profits from those sales to support the contras in Nicaragua (Senate Hearings, 1986). The Boland amendment, effective in 1985, prohibited any U.S. official from directly or indirectly assisting the Contras. To circumvent the law, a group of intelligence and military officials established a “secret team” of U.S. operatives, including Lt. Colonel Oliver North, Theodore Shackley, Thomas Clines, and Maj. General Richard Secord, among others (testimony before U.S. Senate, 1986). Shackley and Clines, as noted, were CIA agents in Long Cheng; along with Michael Hand they ran the secret war in Laos, which was financed in part from profits from opium smuggling. Shackley and Clines had also been involved in the 1961 invasion of Cuba and were instrumental in hiring organized-crime figures in an attempt to assassinate Fidel Castro.

Senator Daniel Inouye of Hawaii claims that this “secret government within our government” waging war in Third World countries was part of the Reagan doctrine (the Guardian, July 29, 1987). Whether President Reagan or then Vice President Bush was aware of the operations is yet to be established. What cannot be doubted in the face of overwhelming evidence in testimony before the Senate and from court documents is that this group of officials of the state oversaw and coordinated the distribution and sale of weapons to Iran and to the Contras in Nicaragua. These acts were in direct violation of the Illegal Arms Export Control Act, which made the sale of arms to Iran unlawful, and the Boland amendment, which made it a criminal act to supply the Contras with arms or funds.The weapons that were sold to Iran were obtained by the CIA through the Pentagon. Secretary if Defense Caspar Weinberger ordered the transfer of weapons from Army stocks to the CIA without the knowledge of Congress four times in 1986. The arms were then transferred to middlemen, such as Iranian arms dealer Yaacov Nimrodi, exiled Iranian arms dealer Manucher Gorbanifar, and Saudi Arabian businessman Adnan Khashoggi. Weapons were also flown directly to the Contras, and funds from the sale of weapons were diverted to support Contra warfare. There is also considerable evidence that his “secret team,” along with other military and CIA officials, cooperated with narcotics smuggling in Latin America in order to fund the Contras in Nicaragua.

In 1986, the Reagan administration admitted that Adolfo Chamorro’s Contra group, which was supported by the CIA, was helping a Colombian drug trafficker transport drugs into the United States. Chamorro was arrested in 1986 for his involvement (Potter and Bullington, 1987: 54). Testimony in several trials of major drug traffickers in the past 5 years has revealed innumerable instances in which drugs were flown from Central America into the United States with the cooperation of military and CIA personnel. These reports have also been confirmed by military personnel and private citizens who testified that they saw drugs being loaded on planes in Central America and unloaded at military bases in the United States. Pilots who flew planes with arms to the Contras report returning with planes carrying drugs.

At the same time that the United States was illegally supplying the Nicaraguan Contras with arms purchased, at least in part, with profits from the sale of illegal drugs, the administration launched a campaign against the Sandinistas for their alleged involvement in drug trafficking. Twice during his weekly radio shows in 1986, President Reagan accused the Sandinistas of smuggling drugs. Barry Seal, an informant and pilot for the Drug Enforcement Administration (DEA), was ordered by members of the CIA and DEA to photograph the Sandinistas loading a plane. During a televised speech on March 1986, Reagan showed the picture that Seal took and said that it showed Sandinista officials loading a plane with drugs for shipment to the United States. After the photo was displayed, Congress approved $100 million in aid for the Contras. Seal later admitted to reporters that the photograph he took was a plane being loaded with crates that did not contain drugs. He also told reporters that he was aware of the drug smuggling activities of the Contra network and a Colombian cocaine syndicate. For his candor, Seal was murdered in February 1987.

Shortly after his murder, the DEA issued a “low key clarification” regarding the validity of the photograph., admitting there was no evidence that the plane was being loaded with drugs.

Other testimony linking the CIA and U.S. military officials to complicity in drug trafficking included the testimony of John Stockwell, a former high-ranking CIA official, who claims that drug smuggling and the CIA were essential components in the private campaign for the Contras. Corroboration for these assertions comes also from George Morales, one of the largest drug traffickers in South America, who testified that he was approached by the CIA in 1984 to fly weapons to Nicaragua. Morales claims that the CIA opened up an airstrip in Costa Rica and gave the pilots information on how to avoid radar traps. According to Morales, he flew 20 shipments of weapons into Costa Rica in 1984 and 1985. In return, the CIA helped him to smuggle thousands of kilos of cocaine into the United States. Morales alone channeled $250,000 quarterly to Contra leader Adolfo Chamorro from his trafficking activity. A pilot for Morales, Gary Betzner, substantiated Morales’ claims and admitted flying 4,000 pounds of arms into Costa Rica and 500 kilos of cocaine to Lakeland, Florida, on his return trips. From 1985 to 1987, the CIA arranged 50 to 100 flights using U.S. airports that did not undergo inspection.The destination of the flights by Morales and Betzner was a hidden airstrip on the ranch of John Hull. Hull, an admitted CIA agent, was a primary player in Oliver North’s plan to aid the Contras. Hull’s activities were closely monitored by Robert Owen, a key player in the Contra supply network. Owen established the Institute for Democracy, Education, and Assistance, which raised money to buy arms for the Contras and which, in October 1985, was asked by Congress to distribute $50,000 in “humanitarian aid” to the Contras. Owen worked for Oliver North in coordinating illegal aid to the Contras and setting up the airstrip on the ranch of John Hull.

According to an article in the Nation, Oliver North’s network of operatives and mercenaries had been linked to the largest drug cartel in South America since 1983. The DEA estimates that Colombian Jorge Ochoa Vasquez, the “kingpin” of the Medellin drug empire, is responsible for supplying 70% to 80% of the cocaine that enters the United States every year. Ochoa was taken into custody by Spanish police in October 1984 when a verbal order was sent by the U.S. Embassy in Madrid for his arrest. The embassy specified that Officer Cos-Gayon, who had undergone training with the DEA, should make the arrest. Other members of the Madrid Judicial Police were connected to the DEA and North’s smuggling network. Ochoa’s lawyers informed him that the United States would alter his extradition if he agreed to implicate the Sandinista government in drug trafficking. Ochoa refused and spent 20 months in jail before returning to Colombia. The Spanish courts ruled that the United States was trying to use Ochoa to discredit Nicaragua and released him (the Nation, September 5, 1987).

There are other links between the U.S. government and the Medellin cartel. Jose Blandon, General Noriega’s former chief advisor, claims that DEA operations have protected the drug empire in the past and that the DEA paid Noriega $4.7 million for his silence. Blandon also testified in the Senate committee hearings that Panama’s bases were used as training camps for the Contras in exchange for “economic” support from the United States. Finally, Blandon contends that the CIA gave Panamanian leaders intelligence documents about U.S. senators and aides; the CIA denies these charges (the Christian Science Monitor, February 11, 1988: 3).

Other evidence of the interrelationship among drug trafficking, the CIA, the NSC, and aid to the Contras includes the following:

In January 1983, two Contra leaders in Costa Rica persuaded the Justice Department to return over $36,000 in drug profits to drug dealers Julio Zavala and Carlos Cabezas for aid to the Contras (Potter and Bullington, 1987: 22).

Michael Palmer, a drug dealer in Miami, testified that the State Department’s Nicaraguan humanitarian office contracted with his company, Vortex Sales and Leasing, to take humanitarian aid to the Contras. Palmer claims that he smuggled $40 million in marijuana to the United States between 1977 and 1985 (the Guardian, March 20, 1988: 3).

During House and Senate hearings in 1986, it was revealed that a major DEA investigation of the Medellin drug cartel of Colombia, which was expected to culminate in the arrest of several leaders of the cartel, was compromised when someone in the White House leaked the story of the investigation to the Washington Times (a conservative newspaper in Washington, D.C.), which published the story on July 17, 1984. According to DEA Administrator John Lawn, the leak destroyed what was “probably one of the most significant operations in DEA history” (Sharkley, 1988: 24).

When Honduran General Jose Buseo, who was described by the Justice Department as an “international terrorist,” was indicted for conspiring to murder the president of Honduras in a plot financed by profits from cocaine smuggling, Oliver North and officials from the Department of Defense and the CIA pressured the Justice Department to be lenient with General Buseo. In a memo disclosed by the Iran-Contra committee, North stated that if Buseo was not protected “he will break his long-standing silence about the Nic[araguan] resistance and other sensitive operations” (Sharkley 1988: 27).

On first blush, it seems odd that government agencies and officials would engage in such wholesale disregard of the law. As a first step in building an explanation for these and other forms of state-organized crime, let us try to understand why officials of the CIA, the NSC, and the Department of Defense would be willing to commit criminal acts in the pursuit of other goals.


Why would government officials from the NSC, the Defense Department, the State Department, and the CIA become involved in smuggling arms and narcotics, money laundering, assassinations, and other criminal activities? The answer lies in the structural contradictions that inhere in nation-states (Chambliss, 1980).

As Weber, Marx, and Gramsci pointed out, no state can survive without establishing legitimacy. The law is a fundamental cornerstone in creating legitimacy and an illusion (at least) of social order. It claims universal principles that demand some behaviors and prohibit others. The protection of property and personal security are obligations assumed by states everywhere both as a means of legitimizing the state’s franchise on violence and as a means of protecting commercial interests (Chambliss and Seidman, 1982).

The threat posed by smuggling to both personal security and property interests makes laws prohibiting smuggling essential. Under some circumstances, however, such laws contradict other interests of the state. This contradiction prepares the ground for state-organized crime as a solution to the conflicts and dilemmas posed by the simultaneous existence of contradictory “legitimate” goals.

The military-intelligence establishment in the United States is resolutely committed to fighting the spread of “communism” throughout the world. This mission is not new but has prevailed since the 1800s. Congress and the presidency are not consistent in their support for the money and policies thought by the front-line warriors to be necessary to accomplish their lofty goals. As a result, programs under way are sometimes undermined by a lack of funding and even by laws that prohibit their continuation (such as the passage of laws prohibiting support for the Contras). Officials of government agencies adversely affected by political changes are thus placed squarely in a dilemma: If they comply with the legal limitations on their activities they sacrifice their mission. The dilemma is heightened by the fact that they can anticipate future policy changes that will reinstate their sources and their freedom. When that time comes, however, programs adversely affected will be difficult if not impossible to re-create.

A number of events that occurred between 1960 and 1980 left the military and the CIA with badly tarnished images. Those events and political changes underscored their vulnerability. The CIA lost considerable political clout with elected officials when its planned invasion of Cuba (the infamous Bay of Pigs invasion) was a complete disaster. Perhaps as never before in its history, the United States showed itself vulnerable to the resistance of a small nation. The CIA was blamed for this fiasco even though it was President Kennedy’s decision to go ahead with the plans that he inherited from the previous administration. To add to the agency’s problems, the complicity between it and ITT to invade Chile and overthrow the Allende government was yet another scar (see below), as was the involvement of the CIA in narcotics smuggling in Vietnam.

These and other political realities led to a serious breach between Presidents Kennedy, Johnson, Nixon, and Carter and the CIA. During President Nixon’s tenure in the White House, one of CIA’s top men, James Angleton, referred to Nixon’s national security advisor, Henry Kissinger (who became secretary of state), as “objectively, a Soviet Agent” (Hougan, 1984: 75). Another top agent of the CIA, James McCord (later implicated in the Watergate burglary), wrote a secret letter to his superior, General Paul Gaynor, in January 1973 in which he said:

When the hundreds of dedicated fine men and women of the CIA no longer write intelligence summaries and reports with integrity, without fear of political recrimination – when their fine Director [Richard Helms] is being summarily discharged in order to make way for a politician who will write or rewrite intelligence the way the politicians want them written, instead of the way that truth and best judgement dictates, our nation is in the deepest of trouble and freedom itself was never so imperiled. Nazi Germany rose and fell under exactly the same philosophy of governmental operation. (Hougan, 1984: 26-27)

McCord (1974: 60) spoke for many of the top military and intelligence officers in the United States when he wrote in his autobiography: “I believed that the whole future of the nation was at stake.” These views show the depth of feeling toward the dangers of political “interference” with that which is generally accepted in the military-intelligence establishment as their mission (Goulden, 1984).

When Jimmy Carter was elected president, he appointed Admiral Stansfield Turner as director of Central Intelligence. At the outset, Turner made it clear that he and the president did not share the agency’s view that they were conducting their mission properly (Goulden, 1984; Turner, 1985). Turner insisted on centralizing power in the director’s office and on overseeing clandestine and covert operations. He met with a great deal of resistance. Against considerable opposition from within the agency, he reduced the size of the covert operation section from 1,200 to 400 agents. Agency people still refer to this as the “Halloween massacre.”Old hands at the CIA do not think their work is dispensible. They believe zealously, protectively, and one is tempted to say, with religious fervor, that the work they are doing is essential for the salvation of humankind. With threats from both Republican and Democratic administrations, the agency sought alternative sources of revenue to carry out its mission. The alternative was already in place with the connections to the international narcotics traffic, arms smuggling, the existence of secret corporations incorporated in foreign countries (such as Panama), and the established links to banks for the laundering of money for covert operations.


Assassination plots and political murders are usually associated in people’s minds with military dictatorships and European monarchies. The practice of assassination, however, is not limited to unique historical events but has become a tool of international politics that involves modern nation-states of many different types.In the 1960s a French intelligence agency hired Christian David to assassinate the Moroccan leader Ben Barka (Hougan, 1978: 204-207). Christian David was one of those international “spooks” with connections to the DEA, the CIA, and international arms smugglers, such as Robert Vesco.

In 1953, the CIA organized and supervised a coup d’etat in Iran that overthrew the democratically elected government of Mohammed Mossadegh, who had become unpopular with the United States when he nationalized foreign-owned oil companies. The CIA’s coup replaced Mossadegh with Reza Shah Pahlevi, who denationalized the oil companies and with CIA guidance established one of the most vicious secret intelligence organizations in the world: SAVAK. In the years to follow, the shah and CIA-trained agents of SAVAK murdered thousands of Iranian citizens. They arrested almost 1,500 people monthly, most of whom were subjected to inhuman torture and punishments without trial. Not only were SAVAK agents trained by the CIA, but there is evidence that they were instructed in techniques of torture (Hersh, 1979: 13).

In 1970 the CIA repeated the practice of overthrowing democratically elected governments that were not completely favorable to U.S. investments. When Salvador Allende was elected president of Chile, the CIA organized a coup that overthrew Allende, during which he was murdered, along with the head of the military, General Rene Schneider. Following Allende’s overthrow, the CIA trained agents for the Chilean secret service (DINA). DINA set up a team of assassins who could “travel anywhere in the world . . . to carry out sanctions including assassinations” (Dinges and Landau, 1980: 239). One of the assassinations carried out by DINA was the murder of Orlando Letellier, Allende’s ambassador to the United States and hi former minister of defense. Letellier was killed when a car bomb blew up his car on Embassy Row in Washington, D.C. (Dinges and Landau, 1982).Other bloody coups known to have been planned, organized, and executed by U.S. agents include coups in Guatemala, Nicaragua, the Dominican Republic, and Vietnam. American involvement in those coups was never legally authorized. The murders, assassinations, and terrorist acts that accompany coups are criminal acts by law, both in the United States and in the country in which they take place.

More recent examples of murder and assassination for which government officials are responsible include the death of 80 people in Beirut, Lebanon, when a car bomb exploded on May 8, 1985. The bomb was set by a Lebanese counterterrorist unit working with the CIA. Senator Daniel Moynihan has said that when he was vice president of the Senate Intelligence Committee, President Reagan ordered the CIA to form a small antiterrorist effort in the Mideast. Two sources said that the CIA was working with the group that planted the bomb to kill Shiite leader Hussein Fadallah (the New York Times, May 13, 1985).

A host of terrorist plans and activities connected with the attempt to overthrow the Nicaraguan government, including several murders and assassinations, were exposed in an affidavit filed by free-lance reporters Tony Avirgan and Martha Honey. They began investigating Contra activities after Avirgan was injured in an attempt on the life of Contra leader Eden Pastora. In 1986, Honey and Avirgan filed a complaint with the U.S. District Court in Miami charging John Hull, Robert Owen, Theodore Shackley, Thomas Clines, Chi Chi Quintero, Maj. General Richard Secord, and others working for the CIA in Central America with criminal conspiracy and the smuggling of cocaine to aid the Nicaraguan rebels.

A criminal conspiracy in which the CIA admits participating is the publication of a manual, Psychological Operation in Guerilla Warfare, which was distributed to the people in Nicaragua. The manual describes how the people should proceed to commit murder, sabotage, vandalism, and violent acts in order to undermine the government. Encouraging or instigating such crimes is not only a violation of U.S. law, it was also prohibited by Reagan’s executive order of 1981, which forbade any U.S. participation in foreign assassinations.

The CIA is not alone in hatching criminal conspiracies. The DEA organized a “Special Operations Group,” which was responsible for working out plans to assassinate political and business leaders in foreign countries who were involved in drug trafficking. The head of this group was a former CIA agent, Lou Conein (also known as “Black Luigi”). George Crile wrote in the Washington Post (June 13, 1976): “When you get down to it, Conein was organizing an assassination program. He was frustrated by the big-time operators who were just too insulated to get to. . . . Meetings were held to decide whom to target and what method of assassination to employ.”

Crile’s findings were also supported by the investigative journalist Jim Hougan (1978: 32).

It is a crime to conspire to commit murder. The official record, including testimony by three participants in three conspiracies before the U.S. Congress and in court, make it abundantly clear that the crime of conspiring to commit murder is not infrequent in the intelligence agencies of the United States and other countries.

It is also a crime to cover up criminal acts, but there are innumerable examples of instances in which the CIA and the FBI conspired to interfere with the criminal prosecution of drug dealers, murderers, and assassins. In the death of Letellier, mentioned earlier, the FBI and the CIA refused to cooperate with the prosecution of the DINA agents who murdered Letellier (Dinges and Landau, 1980: 208-209). Those agencies were also involved in the cover-up of the criminal activities of a Cuban exile, Ricardo (Monkey) Morales. While an employee of the FBI and the CIA, Morales planted a bomb on an Air Cubana flight from Venezuela, which killed 73 people. The Miami police confirmed Morales’ claim that he was acting under orders from the CIA (Lernoux, 1984: 188). In fact, Morales, who was arrested for overseeing the shipment of 10 tons of marijuana, admitted to being a CIA contract agent who conducted murders, bombings, and assassinations. He was himself killed in a bar after he made public his work with the CIA and the FBI.Colonel Muammar Qaddafi, like Fidel Castro, has been the target of a number of assassination attempts and conspiracies by the U.S. government. One plot, the Washington Post reported, included an effort to “lure [Qaddafi] into some foreign adventure or terrorist exploit that would give a growing number of Qaddafi opponents in the Libyan military a chance to seize power, or such a foreign adventure might give one of Qaddafi’s neighbors, such as Algeria or Egypt, a justification for responding to Qadaffi militarily” (the Washington Post, April 14, 1986). The CIA recommended “stimulating” Qaddafi’s fall “by encouraging disaffected elements in the Libyan army who could be spurred to assassination attempts” (the Guardian, November 20, 1985: 6).

Opposition to government policies can be a very risky business, as the ecology group Greenpeace discovered when it opposed French nuclear testing in the Pacific. In the fall of 1985 the French government planned a series of atomic tests in the South Pacific. Greenpeace sent its flagship to New Zealand with instructions to sail into the area where the atomic testing was scheduled to occur. Before the ship could arrive at the scene, however, the French secret service located the ship and blew it up. The blast from the bomb killed one of the crew.


Every agency of government in restricted by law in certain fundamental ways. Yet structural pressures exist that can push agencies to go beyond their legal limits. The CIA, for example, is not permitted to engage in domestic intelligence. Despite this, the CIA has opened and photographed the mail of over 1 million private citizens (Rockefeller Report, 1975: 101-115), illegally entered people’s homes, and conducted domestic surveillance through electronic devices (Parenti, 1983: 170-171).

Agencies of the government also cannot legally conduct experiments on human subjects that violate the civil rights or endanger the lives of the subjects. But the CIA conducted experiments on unknowing subjects by hiring prostitutes to administer drugs to their clients. CIA-trained medical doctors and psychologists observed the effects of the drugs through a two-way mirror in expensive apartments furnished to the prostitutes by the CIA. At least one of the victims of these experiments died and suffered considerable trauma (Anderson and Whitten, 1976; Crewsdon and Thomas, 1977; Jacobs, 1977a, 1977b).

The most flagrant violation of civil rights by federal agencies is the FBI’s counterintelligence program, known as COINTELPRO. This program was designed to disrupt, harass, and discredit groups that the FBI decided were in some way “un-American.” Such groups included the American Civil Liberties Union, antiwar movements, civil rights organizations, and a host of other legally constituted political groups whose views opposed some of the policies of the United States (Church Committee, 1976). With the exposure of COINTELPRO, the group was disbanded. There is evidence, however, that illegal surveillance of U.S. citizens did not stop with the abolition of COINTELPRO but continues today (Klein, 1988).


Elsewhere I have suggested a general theory to account for variations in types and frequency of crime (Chambliss, 1988a). The starting point for that theory is the assumption that in every era political, economic, and social relations contain certain inherent contradictions, which produce conflicts and dilemmas that people struggle to resolve. The study of state-organized crime brings into sharp relief the necessity of understanding the role of contradictions in the formation and implementation of the law.

Contradictions inherent in the formation of states create conditions under which there will be a tendency for state officials to violate the criminal law. State officials inherit from the past laws that were not of their making and that were the result of earlier efforts to resolve conflicts wrought by structural contradictions (Chambliss, 1980; Chambliss and Seidman, 1982). The inherited laws nonetheless represent the foundation on which the legitimacy of the state’s authority depends. These laws also provide a basis for attempts by the state to control the acts of others and to justify the use of violence to that end.For England in the sixteenth century, passing laws to legitimize piracy for English pirates while condemning as criminal the piracy of others against England would have been an untenable solution, just as it would undermine the legitimacy of America’s ideological and political position to pass legislation allowing for terrorist acts on the part of U.S. officials while condemning and punishing the terrorism of others.

Law is a two-edged sword; it creates one set of conflicts while it attempts to resolve another. The passage of a particular law or set of laws may resolve conflicts and enhance state control, but it also limits the legal activities of the state. State officials are thus often caught between conflicting demands as they find themselves constrained by laws that interfere with other goals demanded of them by their roles or their perception of what is in the interests of the state. There is a contradiction, then, between the legal prescriptions and the agreed goals of state agencies. Not everyone caught in this dilemma will opt for violating the law, but some will. Those who do are the perpetrators, but not the cause, of the persistence of state-organized crime.

When Spain and Portugal began exploiting the labor and natural resources of the Americas and Asia, other European nations were quick to realize the implications for their own power and sovereignty. France, England, and Holland were powerful nations, but not powerful enough at the time to challenge Spain and Portugal directly. The dilemma for those nations was how to share in the wealth and curtail the power of Spain and Portugal without going to war. A resolution to the dilemma was forged through cooperation with pirates. Cooperating with pirates, however, required violating their own laws as well as the laws of other countries. In this way, the states organized criminality for their own needs without undermining their claim to legitimacy or their ability to condemn and punish piracy committed against them.

It should be noted that some monarchs in the sixteenth and seventeenth centuries (James I of England, for example) refused to cooperate with pirates no matter how profitable it would have been for the Crown. So, too, not all CIA or NSC personnel organize criminal activities in pursuit of state goals.

The impetus for the criminality of European states that engaged in piracy was the need to accumulate capital in the early stages of capitalist formation. State-organized criminality did not disappear, however, with the emergence of capitalism as the dominant economic system of the world. Rather, contemporary state-organized crime also has its roots in the ongoing need for capital accumulation of modern nation-states, whether the states be socialist, capitalist, or mixed economies.Sociologically, then, the most important characteristics of state-organized crime in the modern world are at one with characteristics of state-organized crime in the early stages of capitalist development. Today, states organize smuggling, assassinations, covert operations, and conspiracies to criminally assault citizens, political activists, and political leaders perceived to be a threat. These acts are a criminal in the laws of the nations perpetrating them as were the acts of piracy in which European nations were complicitous.

At the most general level, the contradictions that are the force behind state-organized crime today are the same as those that were the impetus for piracy in sixteenth-century Europe. The accumulation of capital determines a nation’s power, wealth, and survival today, as it did 300 years ago. The state must provide a climate and a set of international relations that facilitate this accumulation if it is to succeed. State officials will be judged in accordance with their ability to create these conditions.

But contradictory ideologies and demands are the very essence of state formations. The laws of every nation-state inhibit officials from maximizing conditions conducive to capital accumulation at the same time that they facilitate the process. Laws prohibiting assassination and arms smuggling enable a government to control such acts when they are inimical to their interests. When such acts serve the interests of the state, however, then there are pressures that lead some officials to behave criminally. Speaking of the relationship among the NSC, the CIA, and drug trafficking, Senator John Kerry, Chairman of the Senate Foreign Relations Subcommittee on Terrorism, Narcotics, and International Operations, pinpointed the dilemma when he said “stopping drug trafficking to the United States has been a secondary U.S. foreign policy objective. It has been sacrificed repeatedly for other political goals” (Senate Hearings, 1986). He might have added that engaging in drug trafficking and arms smuggling has been a price government agencies have been willing to pay “for other political goals.”

These contradictions create conflicts between nation-states as well as internally among the branches of government. Today, we see nations such as Turkey, Bolivia, Colombia, Peru, Panama, and the Bahamas encouraging the export of illegal drugs while condemning them publicly. At the same time, other government agencies cooperate in the export and import of illegal arms and drugs to finance subversive and terrorist activities. Governments plot and carry out assassinations and illegal acts against their own citizens in order to “preserve democracy” while supporting the most undemocratic institutions imaginable. In the process, the contradictions that create the conflicts and dilemmas remain untouched and the process goes on indefinitely.

A U.S. State Department report (1985) illustrates, perhaps, the logical outcome of the institutionalization of state-organized crime in the modern world. In this report the State Department offered to stop criminal acts against the Nicaraguan government in return for concessions from Nicaragua. Three hundred years earlier England, France, and Spain signed a treaty by which each agreed to suppress its piracy against the others in return for certain guarantees of economic and political sovereignty.


My concern here is to point out the importance of studying state-organized crime. Although I have suggested some theoretical notions that appear to me to be promising, the more important goal is to raise the issue for further study. The theoretical and empirical problems raised by advocating the study of state-organized crime are, however, formidable.Data on contemporary examples of state-organized crime are difficult to obtain. The data I have been able to gather depend on sources that must be used cautiously. Government hearings, court trials, interviews, newspaper accounts, and historical documents are replete with problems of validity and reliability. In my view they are no more so than conventional research methods in the social sciences, but that does not alter the fact that there is room for error in interpreting the findings. It will require considerable imagination and diligence for others to pursue research on this topic and add to the empirical base from which theoretical propositions can be tested and elaborated.We need to explore different political, economic, and social systems in varying historical periods to discover why some forms of social organization are more likely to produce state-organized crimes than others. We need to explore the possibility that some types of state agencies are more prone to engaging in criminality than others. It seems likely, for example, that state agencies whose activities can be hidden from scrutiny are more likely to engage in criminal acts than those whose record is public. This principle may also apply to whole nation-states: the more open the society, the less likely it is that state-organized crime will become institutionalized.

There are also important parallels between state-organized criminality and the criminality of police and law-enforcement agencies generally. Local police departments that find it more useful to cooperate with criminal syndicates than to combat them are responding to their own particular contradictions, conflicts, and dilemmas (Chambliss, 1988).

An exploration of the theoretical implications of these similarities could yield some important findings.The issue of state-organized crime raises again the question of how crime should be defined to be scientifically useful. For the purposes of this analysis, I have accepted the conventional criminological definition of crime as acts that are in violation of the criminal law. This definition has obvious limitations (see Schwendinger and Schwendinger, 1975), and the study of state-organized crime may facilitate the development of a more useful definition by underlying the interrelationship between crime and the legal process. At the very least, the study of state-organized crime serves as a reminder that crime is a political phenomenon and must be analyzed accordingly.


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an oldie but goodie (2001)

The Bush-Cheney Drug Empire

The Bush family’s involvement in drug-running is an open secret, but Dick Cheney’s direct link to a global drug pipeline through a US construction company is less well known.

Extracted from Nexus Magazine, Volume 8, Number 2
PO Box 30, Mapleton Qld 4560 Australia. editor@nexusmagazine.com
Telephone: +61 (0)7 5442 9280; Fax: +61 (0)7 5442 9381
From our web page at: www.nexusmagazine.com
© 2000-2001 by Michael C. Ruppert
Publisher/Editor of “From The Wilderness”, PO Box 6061-350, Sherman Oaks, CA 91413, USA.  E-mail: mruppert@copvcia.com
Website: www.copvcia.com


Halliburton Corporation’s Brown & Root is one of the major components of the Bush-Cheney Drug Empire. The success of Bush Vice-Presidential running mate Richard Cheney at leading Halliburton, Inc. to a five-year, US$3.8 billion “pig-out” on federal contracts and taxpayer-insured loans is only a partial indicator of what may happen, now that the Bush ticket has won the US presidential election.

A closer look at available research, including an August 2, 2000 report by the Center for Public Integrity (CPI) (www.public-i.org), suggests that drug money has played a role in the successes achieved by Halliburton under Cheney’s tenure as CEO from 1995 to 2000. This is especially true for Halliburton’s most famous subsidiary, heavy construction and oil giant Brown & Root. A deeper look into history reveals that Brown & Root’s past – as well as the past of Dick Cheney himself – connects to the international drug trade on more than one occasion and in more than one way.

Last June, the lead Washington, DC, attorney for a major Russian oil company connected in law enforcement reports to heroin smuggling, and also a beneficiary of US-backed loans to pay for Brown & Root contracts in Russia, held a $2.2 million fundraiser to fill the already bulging coffers of presidential candidate George W. Bush. This is not the first time that Brown & Root has been connected to illegal drugs, and the fact is that this “poster child” of American industry may also be a key player in Wall Street’s efforts to maintain domination of the half-trillion-dollar-a-year global drug trade and its profits. And Dick Cheney, who has also come closer to illegal drugs than most suspect and who is also Halliburton’s largest individual shareholder ($45.5 million), has a vested interest in seeing to it that Brown & Root’s successes continue.

Of all the American companies dealing directly with the US military and providing cover for CIA operations, few firms can match the global presence of this giant construction powerhouse which employs 20,000 people in more than 100 countries. Through its sister companies or joint ventures, Brown & Root can build offshore oil rigs, drill wells and construct and operate everything from harbours and pipelines to highways and nuclear reactors. It can train and arm security forces and it can now also feed, supply and house armies. One key beacon of Brown & Root’s overwhelming appeal to agencies like the CIA is that, as it proudly announces from its own corporate web page, it has received the contract to dismantle ageing Russian nuclear-tipped ICBMs in their silos. Furthermore, the relationships between key institutions, players and the Bushes themselves suggest that under a George “W” Administration the Bush family and its allies, using Brown & Root as the operational interface, may well be able to control the drug trade all the way from Medellín to Moscow.

Originally formed as a heavy construction company to build dams, Brown & Root grew its operations via shrewd political contributions to Senate candidate Lyndon Johnson in 1948. Expanding into the building of oil platforms, military bases, ports, nuclear facilities, harbours and tunnels, Brown & Root virtually underwrote LBJ’s political career. It prospered as a result, making billions on US Government contracts during the Vietnam War. The Austin Chronicle, in an August 28, 2000 Op-Ed piece entitled “The Candidate from Brown & Root”, labels Republican Cheney as the political dispenser of Brown & Root’s largesse. According to political campaign records, during Cheney’s five-year tenure at Halliburton the company’s political contributions more than doubled to $1.2 million. Not surprisingly, most of that money went to Republican candidates.

Independent news service Newsmakingnews also describes how in 1998, with Cheney as Chairman, Halliburton spent $8.1 billion to purchase oil industry equipment and drilling supplier Dresser Industries. This made Halliburton a corporation that will have a presence in almost any future oil drilling operation anywhere in the world. And it also brought back into the family fold the company which had once (also in 1948) sent a plane to fetch the new Yale graduate George H.W. Bush to begin his career in the Texas oil business. Bush the elder’s father, Prescott, served as a managing director for the firm that once owned Dresser: Brown Brothers Harriman.


It is clear that everywhere there is oil there is Brown & Root. But increasingly, everywhere there is war or insurrection there is Brown & Root also. From Bosnia and Kosovo to Chechnya, Rwanda, Burma, Pakistan, Laos, Vietnam, Indonesia, Iran, Libya, Mexico and Colombia, Brown & Root’s traditional operations have expanded from heavy construction to include the provision of logistical support for the US military. Now, instead of US Army quartermasters, the world is likely to see Brown & Root warehouses storing and managing everything from uniforms and rations to vehicles.

Dramatic expansion of Brown & Root’s operations in Colombia also suggests Bush preparations for a war-inspired feeding frenzy as a part of “Plan Colombia”. This is consistent with moves by former Bush Treasury Secretary Nicholas Brady to open a joint Colombian&endash;American investment partnership called Corfinsura for the financing of major construction projects with the Colombian Antioquia Syndicate, headquartered in Medellín (see FTW, June 2000).

And expectations of a ground war in Colombia may explain why Brown & Root, in a 2000 Securities Exchange Commission (SEC) filing, reported that in addition to owning more than 800,000 square feet of warehouse space in Colombia, it also leases another 122,000 square feet. According to the Brown & Root Energy Services Group filing, the only other places where the company maintains warehouse space are in Mexico (525,000 square feet) and the United States (38,000 square feet).

According to the website of Colombia’s Foreign Investment Promotion Agency, Brown & Root had no presence in the country until 1997. What does Brown & Root – which according to Associated Press (AP) has made more than $2 billion supporting and supplying US troops – know about Colombia that the United States public does not? Why the need for almost a million square feet of warehouse space which can be transferred from one Brown & Root operation (energy services) to another (military support) with the stroke of a pen?

As described by AP, during the “Iran-Contra” era Congressman Dick Cheney of the House Intelligence Committee was a rabid supporter of Marine Lt Col. Oliver North. This was in spite of the fact that North had lied to Cheney in a private 1986 White House briefing. Oliver North’s own diaries and subsequent investigations by the CIA Inspector-General have irrevocably tied him directly to cocaine smuggling during the 1980s and the opening of bank accounts for one firm moving four tons of cocaine a month. This, however, did not stop Cheney from actively supporting North’s (unsuccessful) 1994 run for the US Senate from Virginia – just a year before he took over the reins at Brown & Root’s parent company, Dallas-based Halliburton, Inc., in 1995.

As the Bush Secretary of Defense during Desert Shield/Desert Storm (1990-91), Cheney also directed special operations involving Kurdish rebels in northern Iran. The Kurds’ primary source of income for more than 50 years has been heroin smuggling from Afghanistan and Pakistan through Iran, Iraq and Turkey.

Having had some personal experience with Brown & Root, I noted carefully when the Los Angeles Times observed that on March 22, 1991 a group of gunmen burst into the Ankara, Turkey, offices of joint venture Vinnell, Brown & Root and assassinated retired Air Force Chief Master Sergeant John Gandy.

In March 1991, tens of thousands of Kurdish refugees, long-time assets of the CIA, were being massacred by Saddam Hussein in the wake of the Gulf War. Saddam, seeking to destroy any hopes of a successful Kurdish revolt, found it easy to kill thousands of the unwanted Kurds who had fled to the Turkish border seeking sanctuary. There, Turkish security forces – trained in part by the Vinnell, Brown & Root partnership – turned thousands of Kurds back into certain death.

Today, the Vinnell Corporation (a TRW company) is one of the three pre-eminent private mercenary corporations in the world, along with the firms MPRI and DynCorp (see FTW, June 2000). It is also the dominant entity for the training of security forces throughout the Middle East.

Not surprisingly, the Turkish border regions in question were the primary transshipment points for heroin produced in Afghanistan and Pakistan, destined for the markets of Europe.

A confidential source with intelligence experience in the region subsequently told me that the Kurds “got some payback against the folks that used to help them move their drugs”. He openly acknowledged that Brown & Root and the Vinnell Corporation both routinely provided NOC (non-official cover) for CIA officers. But I already knew that.

From 1994 to 1999, during US military intervention in the Balkans – where, according to The Christian Science Monitor and Jane’s Intelligence Review, the Kosovo Liberation Army (KLA) controls 70 per cent of the heroin entering Western Europe – Cheney’s Brown & Root made billions of dollars supplying US troops from vast facilities in the region. Brown & Root support operations continue in Bosnia, Kosovo and Macedonia to this day.

Dick Cheney’s footprints have come closer to drugs than one might suspect. The Center for Public Integrity’s August 2000 report brought them even closer. It would be correct to say that there is a direct linkage of Brown & Root facilities – often set up in remote, hazardous regions – with every drug-producing region and every drug-consuming region in the world. These coincidences, in and of themselves, do not prove complicity in the trade. Other facts, however, lead inescapably in that direction.


The CPI report entitled “Cheney Led Halliburton to Feast at Federal Trough”, written by veteran journalists Knut Royce and Nathaniel Heller, describes how, under five years of Cheney’s leadership, Halliburton, largely through subsidiary Brown & Root, enjoyed $3.8 billion in federal contracts and taxpayer- insured loans. The loans had been granted by the Export&endash;Import Bank (EXIM) and the Overseas Private Investment Corporation (OPIC). According to Ralph McGehee’s CIA Base, both institutions are heavily infiltrated by the CIA and routinely provide NOC to its officers.

One of those loans, to Russian financial/banking conglomerate The Alfa Group of Companies, contained $292 million to pay for Brown & Root’s contract to refurbish a Siberian oil field owned by the Russian Tyumen Oil Company. The Alfa Group completed its 51 per cent acquisition of Tyumen Oil in what was allegedly a rigged bidding process in 1998. An official Russian Government report claims that The Alfa Group’s top executives, oligarchs Mikhail Fridman and Pyotr Aven, “allegedly participated in the transit of drugs from Southeast Asia through Russia and into Europe”. These same executives, Fridman and Aven, who reportedly smuggled the heroin in connection with Russia’s Solntsevo mob family, were the same ones who applied for the EXIM loans that Halliburton’s lobbying later safely secured. As a result, Brown & Root’s work in Alfa Tyumen oil fields could continue – and expand.

After describing how organised criminal interests in The Alfa Group had allegedly stolen the oil field by fraud, the CPI story – using official reports from the FSB (the Russian equivalent of the FBI), oil companies such as BP&endash;Amoco, former CIA and KGB officers and press accounts – then established a solid link to Alfa Tyumen and the transportation of heroin. In 1995, sacks of heroin disguised as sugar had been stolen from a rail container leased by Alfa Eko and sold in the Siberian town of Khabarovsk. A problem arose when many residents of the town became “intoxicated” or “poisoned”.

The CPI story also stated: “The FSB report said that within days of the incident, Ministry of Internal Affairs (MVD) agents conducted raids of Alfa Eko buildings and found ‘drugs and other compromising documentation’.

“Both reports claim that Alfa Bank has laundered drug funds from Russian and Colombian drug cartels.

“The FSB document claims that at the end of 1993, a top Alfa official met with Gilberto Rodriguez Orejuela, the now imprisoned financial mastermind of Colombia’s notorious Cali cartel, ‘to conclude an agreement about the transfer of money into the Alfa Bank from offshore zones such as the Bahamas, Gibraltar and others’. The plan was to insert it back into the Russian economy through the purchase of stock in Russian companies.

“…He [the former KGB agent] reported that there was evidence ‘regarding [Alfa Bank’s] involvement with the money laundering of…Latin American drug cartels’.”

It then becomes harder for Cheney and Halliburton to assert mere coincidence in all of this, as CPI reported that Tyumen’s lead Washington attorney, James C. Langdon, Jr, at the firm of Aikin Gump, “…helped coordinate a $2.2 million fundraiser for Bush this June. He then agreed to help recruit 100 lawyers and lobbyists in the capital to raise $25,000 each for W’s campaign.”

The heroin mentioned in the CPI story originated in Laos, where longtime Bush allies and covert warriors Richard Armitage and retired CIA ADDO (Associate Deputy Director of Operations) Ted Shackley have been repeatedly linked to the drug trade. It then made its way across Southeast Asia to Vietnam, probably the port of Haiphong. Then the heroin was shipped to Russia’s Pacific port of Vladivostok, from where it was subsequently bounced across Siberia by rail and then by truck or rail to Europe, passing through the hands of Russian Mafia leaders in Chechnya and Azerbaijan. Chechnya and Azerbaijan are hotbeds of both armed conflict and oil exploration, and Brown & Root has operations all along this route.

As described in previous issues of FTW, this long, expensive and tortuous path was hastily established after President George Bush’s personal envoy Richard Armitage, holding the rank of Ambassador, had travelled to the former Soviet Union to assist it with its “economic development” in 1989. The obstacles, then, to a more direct, profitable and efficient route from Afghanistan and Pakistan through Turkey into Europe were a cohesive Yugoslavian/Serbian Government controlling the Balkans and continuing instability in the Golden Crescent of Pakistan/ Afghanistan. Also, there was no other way, using heroin from the Golden Triangle (Burma, Laos and Thailand), to deal with China and India but to go around them.

It is perhaps not by coincidence again that Cheney and Armitage share membership in the prestigious Aspen Institute, an exclusive bi-partisan research think-tank, and also in the US-Azerbaijan Chamber of Commerce. In November 1999, in what may be a portent of things to come, Armitage played the role of Secretary of Defense in a practical exercise at the Council on Foreign Relations, of which he and Cheney are both members.

Many of the longest-serving and best Bush apparatchiks like Richard Armitage and CIA veteran Ted Shackley have heavy political baggage. Since governmental power is so evenly split after the long election as to appear contrived, it is unlikely that controversial nominees for cabinet positions like Armitage or Shackley will be placed before a 50-50 Senate which is unlikely to confirm them. Armitage is more likely to appear as a quasi-official adviser in troubled European regions. This is similar to the roles he performed for George Bush in 1989 in Russia and in 1992 in Albania. Armitage’s travels presaged both the Chechen and Kosovar conflicts and the rampant expansion of the drug trade through those regions.


The Clinton Administration took care of all that wasted travel for heroin with the 1999 destruction of Serbia and Kosovo and the installation of the KLA as a regional power. That opened a direct line from Afghanistan to Western Europe – and Brown & Root was right in the middle of that, too.

The Clinton skill at streamlining drug operations was described in detail in the April 2000 issue of FTW in a story entitled “The Democratic Party’s Presidential Drug Money Pipeline”. That article has since been reprinted in three countries. The essence of the drug economic lesson was that by growing opium in Colombia and by smuggling both cocaine and heroin from Colombia to New York City through the Dominican Republic and Puerto Rico (a virtual straight line), traditional smuggling routes could be shortened or even eliminated. This reduced both risk and cost, increased profits and eliminated competition.

FTW suspects the hand of Medellín cartel co-founder Carlos Lehder in this process, and it is interesting to note that Lehder, released from prison under Clinton in 1995, is now active in both the Bahamas and South America. Lehder was known during the 1980s as “the genius of transportation”. I can well imagine Dick Cheney, having witnessed the complete restructuring of the global drug trade in the last eight years, going to George W. and saying, “Look, I know how we can make it even better”.

One thing is for certain. As quoted in the CPI article, one Halliburton vice-president noted that if the Bush-Cheney ticket were elected, “the company’s government contracts would obviously go through the roof”.


In July 1977, this writer, then a Los Angeles Police officer, struggled to make sense of a world gone haywire. In a last-ditch effort to salvage a relationship with my fiancée, Nordica Theodora D’Orsay (Teddy), a CIA contract agent, I had travelled to New Orleans to find her. On a hastily arranged vacation, secured with the blessing of my commanding officer, Captain Jesse Brewer of LAPD, I had gone on my own, unofficially, to avoid the scrutiny of LAPD’s Organized Crime Intelligence Division (OCID).

Teddy had wanted me to join her operations from within the ranks of LAPD, starting in the late spring of 1976. I had refused to get involved with drugs in any way, and everything she mentioned seemed to involve either heroin or cocaine, along with the guns which she was always moving out of the country. The Director of the CIA then was George Herbert Walker Bush.

Although officially on staff at the LAPD Academy at the time, I had been unofficially lent to OCID since January when Teddy, announcing the start of a new operation planned in the fall of 1976, suddenly disappeared. She left many people, including me, baffled and twisting in the breeze. The OCID detectives had been pressuring me hard for information about her and what I knew of her activities. It was information I could not give them. Hoping against hope that I would find some way to understand her involvement with CIA, LAPD, the royal family of Iran, the Mafia and drugs, I set out alone into eight days of Dantean revelations which have determined the course of my life from that day to this.

Arriving in New Orleans in early July 1977, I found Teddy living in an apartment across the river in Gretna. Equipped with scrambler phones and night vision devices, and working from sealed communiqués delivered by navy and air force personnel from nearby Belle Chasse Naval Air Station, she was involved in something truly ugly. Teddy was arranging for large quantities of weapons to be loaded onto ships leaving for Iran. At the same time, she was working with Mafia associates of New Orleans Mafia boss Carlos Marcello to coordinate the movement of service boats which were bringing large quantities of heroin into the city. The boats arrived at Marcello-controlled docks, unmolested by even the New Orleans police she introduced me to, along with divers, military men, former Green Berets and CIA personnel. The service boats were retrieving the heroin from oil rigs in the Gulf of Mexico, in international waters – oil rigs built and serviced by Brown & Root.

The guns which Teddy monitored, apparently Vietnam-era surplus AK47s and M16s, were being loaded onto ships also owned or leased by Brown & Root. And more than once during the eight days I spent in New Orleans, I met and ate at restaurants with Brown & Root employees who were boarding those ships and leaving for Iran within days. Once, while leaving a bar and apparently having asked the wrong question, I was shot at in an attempt to scare me off.

Disgusted and heartbroken at witnessing my fiancée and my government smuggling drugs, I ended the relationship. Returning home to LA, I made a clean breast and reported all the activity I had seen, including the connections to Brown & Root, to LAPD intelligence officers. They promptly told me that I was crazy.

Forced out of LAPD under threat of death at the end of 1978, I made complaints to LAPD’s Internal Affairs Division and to the LA office of the FBI under the command of FBI SAC Ted Gunderson. I and my attorney wrote to the politicians, the Department of Justice and the CIA, and contacted the Los Angeles Times. The FBI and the LAPD said that I was crazy.

A 1981 two-part news story in the Los Angeles Herald Examiner revealed that the FBI had taken Teddy into custody and then released her before classifying their investigation without further action. Former New Orleans Crime Commissioner Aaron Cohen told reporter Randall Sullivan that he found my description of events perfectly plausible after his 30 years of studying Louisiana’s organised crime operations.

To this day, a CIA report prepared as a result of my complaint remains classified and exempt from release, pursuant to executive order of the President, in the interests of national security and because it would reveal the identities of CIA agents.

On October 26, 1981, in the basement of the West Wing of the White House, I reported on what I had seen in New Orleans to my friend and UCLA classmate, Craig Fuller. Fuller went on to become Chief of Staff to Vice- President Bush from 1981 to 1985.

In 1982, then UCLA political science professor Paul Jabber filled in many of the pieces in my quest to understand what I had seen in New Orleans. He was qualified to do so because he had served as a CIA and State Department consultant to the Carter Administration.

Paul explained that, after a 1975 treaty between the Shah of Iran and Saddam Hussein of Iraq, the Shah had cut off all overt military support for Kurdish rebels fighting Saddam from the north of Iraq. In exchange, the Shah had gained access to the Shatt al’Arab waterway so that he could multiply his oil exports and income. Not wanting to lose a valuable long-term asset in the Kurds, the CIA had then used Brown & Root – which operated in both countries and maintained port facilities in the Persian Gulf and near Shatt al’Arab – to rearm the Kurds. The whole operation had been financed with heroin. Paul was matter-of-fact about it.

In 1983, Paul Jabber left UCLA to become a Vice-President of Banker’s Trust and Chairman of the Middle East Department of the Council on Foreign Relations.


If one is courageous enough to seek an “operating system” which theoretically explains what FTW has just described for you, one need look no further than a fabulous two-part article published in Le Monde Diplomatique in April 2000. The stories, focusing heavily on drug capital, are titled “Crime, The World’s Biggest Free Enterprise”. The brilliant and penetrating words of authors Christian de Brie and Jean de Maillard do a better job of explaining the actual world economic and political situation than anything I have ever read.

De Brie writes: “By allowing capital to flow unchecked from one end of the world to the other, globalisation and abandonment of sovereignty have together fostered the explosive growth of an outlaw financial market…

“It is a coherent system closely linked to the expansion of modern capitalism and based on an association of three partners: governments, transnational corporations and mafias. Business is business: financial crime is first and foremost a market, thriving and structured, ruled by supply and demand.

“Big business complicity and political laissez faire is the only way that large-scale organised crime can launder and recycle the fabulous proceeds of its activities. And the transnationals need the support of governments and the neutrality of regulatory authorities in order to consolidate their positions, increase their profits, withstand and crush the competition, pull off the ‘deal of the century’ and finance their illicit operations. Politicians are directly involved and their ability to intervene depends on the backing and the funding that keep them in power. This collusion of interests is an essential part of the world economy, the oil that keeps the wheels of capitalism turning.”

After confronting CIA Director John Deutch on world television on November 15, 1996, I was interviewed by the staff of both the Senate and House Intelligence Committees. I prepared written testimony for Senate Intelligence which I submitted, although I was never called to testify. In every one of those interviews and in my written testimony and every lecture since that time, I have told the story of Brown & Root.


Make no mistake about it. The United States is preparing for war. Events immediately following the 2000 US election debacle are ominous predictors for the Bush-Cheney Administration. While not all of the cabinet posts are yet filled, the key posts of Treasury, Defense, Justice and National Security Advisor point to the most militarised oil-and-big-business-friendly administration in 35 years.

So thorough is the plan for control of the government that the son of Secretary of State (Designate) Colin Powell, in an appointment which has yet to receive much notice, has been appointed the new Commissioner of the Federal Communications Commission. This is the body which monitors and polices all commercial broadcasting in the United States.

With Colin Powell as Secretary of State, Donald Rumsfeld as Secretary of Defense and Dick Cheney as Vice-President, the highest levels of the US Government now house two former Secretaries of Defense and the former Chairman of the Joint Chiefs of Staff. The new National Security Advisor, Condoleeza Rice, while African-American, has a long track record of service to Republican administrations and also sits on the board of directors of Chevron Oil, which has recently named an oil tanker after her. Her lackluster operational credentials indicate that she will probably serve as the designated messenger between Bush, Powell, Rumsfeld and Cheney and as the African-American poster girl for coming military adventurism.

Of special interest as this story goes to press is the strongest rumour among my sources that current CIA Director George Tenet, appointed to the post by President Clinton in 1997, will remain in the new Bush Administration. Based upon this writer’s study of CIA operations and history, this strongly suggests two things. Firstly, it implies that the CIA, as a non-partisan servant of Wall Street, feels that its interests have been – and will continue to be – well served by Tenet, who is well liked at Langley. Most importantly, however, it suggests that there are operations, both covert and otherwise, in motion under CIA control which are moving at a speed and with a force that will not accept a break in rhythm for a change in directors. Most critical among these would be the start of the planned conflict in Colombia.

Since the advent of the atomic bomb, the United States has always needed two kinds of enemies. On one level, it has needed a tactical enemy that it can go out and fight in the field in a shooting war. Since 1945, these enemies have been created and appeared as North Korea, North Vietnam, Grenada, El Salvador, Panama, Iraq and now Colombia. On another level, however, the US needs a strategic enemy that will justify outrageous expenditures of capital for strategic weapon systems like ICBMs, Trident submarines and “Star Wars” missile defence systems.

With the new Bush Administration already contemplating a policy change that would make Colombian rebels (as opposed to drug traffickers) the targets of US military aid, as has been reported by AP, there is no doubt where the next shooting war is going to be. And with the militarised Bush cabinet making a missile defence shield a priority, it looks as though either China or Russia will become the next big enemy of choice. In the end, profitability will decide. For the moment, the less-than-credible paper threat is from unspecified “rogue nations”. We can be certain, however, that the shifting economic pressure plates around the world will reveal our next demon soon enough. Halliburton is uniquely placed to profit from either eventuality.

As it was in Vietnam, Central America and Kosovo, drugs continue to be a huge part of the financial plan for prolonged ground wars. As one cynic put it, “GOD” stands for “Gold, Oil and Drugs”. We can be assured that an empire (as opposed to a republic) is emerging in the United States more quickly than many have expected. And the Bush Administration is already acting in a “godlike” manner. It is an empire that may have little need of even the pretence of democracy as American corporate fascism removes its mask in the wake of our election circus, the prostitution of our Supreme Court and the virtual destruction of American government as a servant of anything other than money, greed and power.


* Aspen Institute, www.aspeninst.org.
* Associated Press, “Study: US Could Save Cost in Balkans”, October 10, 2000.
* Associated Press, “Cheney, North Relationship Probed”, August 11, 2000.
Austin Chronicle, August 28, 2000.
* “CIA Base” © 1992, Ralph McGehee.
* CIA Inspector-General, “Report of Investigation: Allegations of Connections Between CIA and the Contras in Cocaine Trafficking to the United States. Volume II: The Contra Story”, Report 96-0143-IG.
* Christian Science Monitor, October 20, 1994.
* Council on Foreign Relations, www.cfr.org.
* De Brie, Christian and Jean de Maillard, “Crime, The World’s Biggest Free Enterprise”, Le Monde Diplomatique, April 2000.
* Halliburton/Brown & Root, www.Halliburton.com/brs.
Jane’s Intelligence Review, February 1, 1995.
Los Angeles Herald Examiner, October 11 & 18, 1981.
Los Angeles Times, March 23, 1991.
* Newsmakingnews, “The Dick Cheney Data Dump”, August 27, 2000, www.newsmakingnews.com.
* New York Press, January 8, 2000.
New York Times Index, www.nytimes.com.
* Royce, Knut and Nathaniel Heller, “Cheney Led Halliburton to Feast at Federal Trough”, Center for Public Integrity, August 2, 2000, www.public-i.org/story_01_080200.htm.
* Ruppert, Michael C., written testimony for the Senate Select Committee on Intelligence, dated October 1, 1997; see www.copvcia.com/ssci.htm, and From The Wilderness 4/99, 4/00, 6/00.
* Securities and Exchange Commission, “Edgar” Database, www.sec.gov.
* Tarpley, Webster Griffin and Anton Chaitkin, George Bush: The Unauthorized Biography, Executive Intelligence Review, Washington, DC, 1992.
* US&endash;Azerbaijan Chamber of Commerce, www.usacc.com.
* Vinnell Corporation, www.Vinnell.com.

Editor’s Note:

This article is reprinted with permission from author Mike Ruppert, Editor/Publisher of From The Wilderness newsletter. It first appeared in the October 2000 issue (vol. III, no. 8).

From The Wilderness describes itself as “a nonpartisan, non-sectarian map from the here that is, into the tomorrow of our own making”. Its website postings (www.copvcia.com) are at least 30 days old.

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