AFTERMATH OF THE TOWER REPORT : Excerpts: NSC Staff and Nicaraguan Rebels

Following are excerpts from the Tower Commission report relating to the staff of the National Security Council and the Nicaraguan rebels:

In October, 1984, Congress cut off all U.S. funding for the contras (using the Boland Amendment, which said):

“During fiscal year 1985, no funds available to the Central Intelligence Agency, the Department of Defense, or any other agency or entity of the United States involved in intelligence activities may be obligated or expended for the purpose or which would have the effect of supporting, directly or indirectly, military or paramilitary operations in Nicaragua by any nation, group, organization, movement, or individual.”

. . . As soon as the congressional restrictions were put into effect, CIA headquarters sent instructions to its field stations to cease all contacts with resistance groups except for intelligence collection activities . . .

(But the National Security Council was advised in a classified legal memorandum from the President’s Intelligence Oversight Board sometime in 1985 that) “the NSC is not covered by the prohibition” and “none of Lt. Col. (Oliver L.) North’s activities during the past year constitutes a violation of the Boland Amendment.”

Staff Steps Into Void

North’s involvement in contra support is evident as early as September, 1984, before the October, 1984, ban was in effect. He directed his attention to two areas: operations and fund raising.

In a memorandum on Sept. 2, 1984, North informed Mr. (Robert C.) McFarlane (then President Reagan’s national security adviser) of a recent air attack launched into Nicaraguan territory by the Federated Democratic Resistance (FDN), a major contra faction. North said that at a meeting the previous day he and a CIA official involved in Central American affairs had urged contra leader Adolpho Calero to postpone the attack. Despite Calero’s agreement, the plan was carried out and, in the course of the attack, the contras lost “the only operating FDN helicopter on the Northern Front.”

North regarded this loss as “a serious blow.” He told McFarlane, “It may therefore be necessary to ask a private donor to donate a helicopter to the FDN for use in any upcoming operation against an arms delivery.” Outside help was necessary since “FDN resources are not adequate to purchase a helicopter at this time.” He recommended that McFarlane grant him approval to approach a private donor for “the provision of a replacement civilian helicopter.”

At the bottom of the memorandum McFarlane initialed, “Disapprove,” and wrote, “Let’s wait a week or two.” After further thought, McFarlane apparently changed his mind. He crossed out the above sentence and wrote, “I think this is legal. . . .”

Private Funding

As the March, 1985, congressional vote on contra aid approached, elements of the NSC staff focused their efforts on strategies for repackaging the contra program to increase support on Capitol Hill.

In a memorandum to McFarlane on March 16, 1985, North outlined a fallback plan for supporting the contras should the Congress not endorse resumption of U.S. government support. North recommended that the President make a public request to the American people for private funds “to support liberty and democracy in the Americas.” McFarlane wrote in the margin, “Not yet.” Nevertheless, he indicated his agreement to some of the accompanying elements of the proposal:

--”The Nicaraguan Freedom Fund Inc., a 501(c)3 tax exempt corporation, must be established . . . (This process is already under way).” McFarlane wrote next to this point, “Yes.”

--”The name of one of several existing nonprofit foundations we have established in the course of the last year will be changed to Nicaraguan Freedom Fund Inc. Several reliable American citizens must be contacted to serve as its corporate leadership on its board of directors along with (Arturo) Cruz, Calero, and (Alfonso) Robelo.” (emphasis added). McFarlane wrote, “OK.”

Next to the proposal that “current donors” be apprised of the plan and convinced to provide “an additional $25-30M to the resistance for the purchase of arms and munitions,” McFarlane wrote, “Doubt.” North recommended that McFarlane consult Secretary (of State George P.) Shultz on the proposals, but we have no information as to whether this was done.

. . . The board asked McFarlane whether he was aware of funds received by the FDN during (1984-1985). He provided the following written response:

“In May or June of 1984, without any solicitation on my part, a foreign official offered to make a contribution from what he described as ‘personal funds’ in the amount of $1 million per month for support of the FDN. He asked my help in determining how to proceed. I asked North to find out where the contribution should be sent. He subsequently obtained the necessary information from the FDN leadership, and I provided it to the donor.”

I was told it was an FDN bank account in Miami. In early 1985, the same individual advised me that he intended to continue support in that year at approximately double the former rate. I was separately informed by the secretary of defense and General (John W.) Vessey (Jr. then chairman of the Joint Chiefs of Staff) that the total amount of the contribution during 1985 was $25 million.”

Involvement in Resupply

By fall, 1985, North was actively engaged in private efforts to resupply the contras with lethal equipment. . . .

From January to March, 1986, North received 15 encryption devices from the National Security Agency for use in transmitting classified messages in support of his counterterrorist activities. These devices enabled Lt. Col. North to establish a private communications network. He used them to communicate, outside of the purview of other government agencies, with members of the private contra support effort. At least one device was sent to Mr. (Richard V.) Secord (a retired general involved in private re-supply efforts) . . .

We counted some 36 messages to North from members of this contra re-supply network--not including North’s replies or additional documents not in our possession. Some of the messages to North from Mr. Secord, and others: (a) asked him to direct where and when to make contra munitions drops; (b) informed him of arms requirements; and (c) apprised him of payments, balances and deficits. At least nine lethal “drops” were coordinated through this channel from March to June, 1986; two of these were delivered through (country deleted) ports. . . .

Project Democracy

In summer 1986, North informed Rodney McDaniel, NSC executive secretary, of his role in a “new contra management structure.” North told McDaniel that Vincent Cannestraro, NSC director of intelligence programs, . . . he was “not witting of Project Democracy,” a term North used to describe a network of secret bank accounts and individuals deeply involved in contra re-supply activities--including the building of a secret air strip for use by the contras in northern Costa Rica. . . .

The construction of a secret airstrip in northern Costa Rica in summer, 1985, was apparently one of the operations undertaken by “Project Democracy.” In a Sept. 30, 1986, memorandum to Vice Adm. Poindexter, North described Project Democracy’s role:

“The airfield at Santa Elena has been a vital element in supporting the resistance. Built by a Project Democracy proprietary, (Udall Corporation S.A.--a Panamanian company), the field was initially used for direct re-supply efforts (to the contras) (July 1985-February 1986) . . . the field has served as the primary abort base for aircraft damaged by Sandinista anti-aircraft fire.”

According to North, press reports on the existence of this airfield in September, 1986, “caused Project Democracy to permanently close Udall Corp., and dispose of its capital assets.” (A CIA field officer based in Costa Rica told the board that Udall Corp. was closely associated with Mr. Secord.)

Two diagrams found in North’s safe link Udall Corp. with Lake Resources, the account that emerged often in the context of the Iranian operation. Lake Resources may have been used to transfer funds--probably private--for Mr. Secord’s use in Central American operations. In a note on his appointment card for April 3, 1986, Lt. Col. North scribbled himself a reminder: “call Copp (Secord alias), 650k to LAKE.” In a secure message to North on April 16, Secord reported: “650k received today as reported by the banker.”

The CIA field officer told the board that construction of the Santa Elena airfield was a pet project of U.S. Ambassador Louis Tambs. . . .

When interviewed by the board’s staff on this issue, the ambassador said that prior to reporting to Costa Rica, he received instructions from the members of the Restricted Interagency Group (RIG) to aid the Nicaraguan Resistance Forces in setting up a “Southern Front.” The members of the RIG were (Assistant Secretary of State Elliott) Abrams, North and the director of the CIA CATF (Central American Task Force). Ambassador Tambs recounted the instructions he received in July, 1985:

“Before I went (to Costa Rica), Ollie said when you get down there you should open the southern front. In the subsequent meetings and conversations (of the RIG) that was confirmed by Abrams and (name deleted--CIA official). That was sort of our mission.”

Danish-Registered Ship

Another aspect of North’s activities in 1986 involved control of a Danish-registered ship which appears to have been used to carry out a series of weapons deliveries to the contras through two Central American countries. In April, Secord informed North of the status of efforts to purchase the ship:

“Abe (Albert A. Hakim) still in Copenhagen with our lawyer finalizing purchase of ship. Deal has been made after three days of negotiations. The Danish captain is up and eager for the mission--he now works for us. We are asking . . . for firm fixed price contract of $1.2M for six months . . . Our rough guess is that our monthly operating costs will be 50K.”

In September, 1986, Israeli Defense Minister (Yitzhak) Rabin, North, Amiram Nir (an Israeli aide) and a General Gahai Regev met in Washington and discussed plans for the Israelis to provide Soviet Bloc weapons and ammunition to the United States. North’s communication said the Israelis made the offer. Defense Minister Rabin recently told the State Department that North made the solicitation and that Israel would give the weapons to the U.S., but not directly to the contras. According to an internal message from North to Poindexter, Defense Minister Rabin suggested that North send a ship in his control to Israel to pick up the weapons. North asked Poindexter for advice:

“Don’t quite no (sic) what to do. Did not want to turn down offer. . . . Can go ahead and move the whole shipment to (countries deleted)--but still won’t have any money to pay off rapidly growing debts. Hate to turn away offers like this--it will really help in the long run. Any advice?”

Poindexter responded later that day, “I think you should go ahead and make it happen. It can be a private deal between Dick (Secord) and Rabin that we bless.”

On Sept. 15, North reported that:

“Orders were passed to the ship this morning to proceed to Haifa to pick up the arms. Loading will be accomplished during one night and the ship will be back at sea before dawn. Loading will be accomplished by Israeli military personnel.”

Poindexter’s response an hour later emphasized the need for absolute secrecy:

“Absolutely nobody else should know about this. Defense Minister Rabin should not say anything to anybody else except you or me. In fact I hope Nir doesn’t even know about it.”

Defense Minister Rabin reported to the State Department that the ship left Israel, but was recalled when it appeared the Iran arms story would become public.

Who Knew What?

The director of the CIA CATF recalls that by 1985, the CIA knew the contras were receiving significant arms deliveries, some running in value in excess of $6 million, and were spending at a rate in excess of $1 million a month. CIA officials sought to locate the source of the funding. The director of the CIA CATF told us:

“What we found out was really only one or two people. . . . No one knew the ultimate source of the money, and very, very few people even know how much there was coming in and out. . . .”

Richard Armitage, assistant secretary of defense, recalls, “Several of us in those groups said, Ollie . . . you’re not involved in all this, are you? And he said . . . I have broken no laws.”

North and Poindexter do not seem to have sought the President’s approval. In his response to a May 16, 1986, message from Poindexter on the status of the contra project, North went on to discuss White House knowledge of his activities. North speculated that the President must know, indirectly, of his contra activities:

“I have no idea what Don Regan does or does not know re my private U.S. operation but the President obviously knows why he has been meeting with several select people to thank them for their ‘support for Democracy’ in CentAm.”

Later that day Poindexter replied to North: “Don Regan knows very little of your operation and that is just as well.”