GAO Unable to Track $17 Million in Contra Aid

More than half the $27 million in non-lethal aid given to Nicaraguan contras “could not be fully tracked” and at least $80,000 was spent on false receipts, with some money diverted to buy ammunition, congressional investigators said Friday.

The General Accounting Office, Congress’ investigative arm, criticized limited State Department control over use of the funds, which were earmarked by Congress only for the purchase of “humanitarian” items, such as food, medicine and clothing.

In a formal report summing up a yearlong investigation of the non-lethal aid program, the GAO said $17 million was paid for items purchased in Central America and that the State Department lacked safeguards to ensure that those funds were spent only for non-lethal goods.

“As far as we could determine, most transactions could not be fully tracked or verified,” the GAO report concluded.

In response, Robert W. Duemling, director of the State Department’s Nicaraguan Humanitarian Assistance Office, said his office “established adequate procedures as required by law, and that there was in fact no significant diversion of U.S. assistance.”

Rep. Michael D. Barnes (D-Md.), chairman of the House Foreign Affairs subcommittee on Latin America, who requested the investigation, said the final report “confirms . . . that we don’t know what happened to half the humanitarian assistance for the contras . “

Although many of GAO’s criticisms were aired earlier in congressional testimony, the formal report comes at a time of growing attacks on the Administration’s secret efforts to aid the contras.

Connections also have emerged between the non-lethal aid program and clandestine resupply efforts that delivered weapons to the contras.

The GAO report said that about $6 million of the money for Central American purchases went through U.S. bank accounts, mostly in Miami, and little of that money went to identifiable suppliers of “humanitarian” supplies.

According to congressional sources, who declined to be identified, some money from the Miami accounts went to Cayman Island or other U.S. banks or to the Honduran military, which apparently was responsible for selling food and uniforms to the Contras.

The GAO said the owner of one account exchanged about $3 million for Honduran currency at higher than the official exchange rate.