U.S. Denies Fraud in Contra Food Aid

The State Department issued a statement Friday denying assertions that U.S. funds for food and other non-combat aid to Nicaraguan rebels are being improperly spent or diverted in Honduras.

Supplies bought by the contras, as the rebels are called, and ultimately paid for by the State Department’s Nicaraguan Humanitarian Assistance Office, “have been arriving in the field and are being put to good use,” the statement said.

“We are not aware of any irregularities in either the price of supplies or the delivery of the goods,” the statement added.

Members of Congress have charged that there has been no adequate accounting for the expenditure of part of $27 million in support aid to the contras approved by Congress last year.

The Times reported from Honduras in its Friday editions that the business arrangement there for the purchase of food for the contras is a murky one and that, according to some sources, Honduran officers share profits from overpriced goods as a trade-off for allowing the contras to remain at Honduran bases.

On Thursday, a House Foreign Affairs subcommittee on the Western Hemisphere voted to subpoena the records of bank accounts into which contra aid money has been deposited to pay for supplies procured by the rebels.

California Rep. Leon E. Panetta (D-Monterey) believes that accounting for the money has been incomplete, according to Barry Toiv, an aide.

Panetta earlier this year sponsored a resolution of inquiry to determine how the money was spent, and he and other members of the House subcommittee “believe that the Administration has provided all the information it has but (that) there’s a lot missing because the accounting was just not adequate,” Toiv added.