Contras Aid Not Accounted For, Democrats Say

Times Staff Writer

Democrats who oppose President Reagan’s policy in Central America charged Wednesday that the Administration has failed to account for at least $7.1 million of the money that was appropriated last year for the Nicaraguan rebels.

The charge was made as the House Foreign Affairs subcommittee on Latin American affairs voted to approve a resolution of inquiry authored by California Rep. Leon E. Panetta (D-Monterey) that would require the President to supply details of how the money was spent.

“Where is the money going and what is our aid being used for?” demanded Panetta, who cited a General Accounting Office report saying that there is no documentation to show that the $7.1 million was spent according to the rules laid down by Congress.

The disputed sum was part of $27 million approved by Congress last year for strictly non-lethal aid for the rebels, known as contras . Next Tuesday, the House will vote again on Reagan’s latest request for $100 million in military and humanitarian aid for the contras. The Senate approved the measure last month on a vote of 53-47 after the House defeated the bill by a slim margin.


Aid Deal ‘Smells’

“There is no way of knowing whether this money was commingled with funds from other sources, meaning that our aid money could have been used to buy guns and ammunition instead of medicine and clothing,” Panetta said. He later added, “It smells.”

Panetta and Democrats on the House subcommittee who approved his resolution by voice vote acknowledged that they have no evidence that the money was misused, as Sen. Tom Harkin (D-Iowa) charged recently in a speech on the Senate floor. Harkin asserted that the money had been “socked away” in a private bank account by Adolfo Calero, president of the Nicaraguan Democratic Force (FDN), and his relatives.

The money in question was paid to the Miami bank accounts of several people who act as agents for small suppliers--such as pharmacies and general stores--in Central America. The GAO said in a report last month that it was unable to “verify” expenditures made with this money or to ascertain that the money was not diverted.


According to State Department officials, the expenditures cannot be audited in the normal manner because auditors cannot be permitted in the field with the contras. Instead, officials said, the expenditures are being monitored by U.S. intelligence officials in the region and their classified reports cannot be made available to the GAO or to the full Congress.

Argument for Documents

Panetta argued that these classified documents should be made available to the full Congress because the program of humanitarian assistance approved last year was not labeled clandestine.

In a memo made available to The Times, Robert W. Duemling, head of the State Department’s Office of Nicaraguan Humanitarian Assistance, which oversees the funding, advised other department officials that “the political sensitivities of the governments in Central America” prevented his agency from stationing its own personnel in the region to control the funds or even from establishing bank accounts in Central America to make direct payments to suppliers.


“However,” Duemling added, “there is prima facie evidence that the suppliers are being paid from the Miami accounts: They say they have been paid, they have not complained of non-payment, and they continue to dispense supplies to the resistance forces.”