Pentagon Account Linked to Contra Aid

Congressional investigators are probing allegations that a secret bank account, maintained by the Pentagon and linked to Marine Lt. Col. Oliver L. North, was used in 1985 to charter a ship that delivered weapons to Nicaraguan rebels, sources said Monday.

The use of the bank account, reported by CBS News on Monday, would appear to mark the first known instance in which Pentagon funds have been traced to contra aid during the two-year period from 1984 to 1986 in which military aid to the rebels was banned.

North’s apparent use of the bank account also is being investigated by Iran-contra independent counsel Lawrence E. Walsh, CBS said.

Used for Erria

The news report said the account, with Credit Suisse bank in Switzerland, was tapped for $75,000 in 1985 to charter the Danish freighter Erria for North and an associate in the Iran-contra affair, retired Air Force Maj. Gen. Richard V. Secord.

The CBS report indicated that the $75,000 was part of $2.5 million withdrawn from an account under the control of Business Security International, a private firm in suburban Washington that provided a cover for officers in the Army’s top-secret Intelligence and Security Command.

North and Secord were authorized to draw money from the Swiss account, as were two Army intelligence officers, both ostensibly employees of BSI, the CBS report said.

The $75,000 was reportedly used to charter the Erria from its Danish owner, Arne Herup, in the spring of 1985. The ship later ferried a load of Soviet Bloc rifles and other weapons from Poland and Portugal to Puerto Cortes, Honduras, where they were delivered to the contras that June.

North, Secord and a third associate in the Iran-contra scandal, Iranian-American businessman Albert A. Hakim, bought the Erria a year later for about $350,000. The three men used it for a long series of covert missions already under scrutiny by independent counsel Walsh.

Congressional sources confirmed Monday that they were investigating the allegations of Pentagon involvement in North’s contra-aid network, but one source said that the report has not been independently verified.

Neither North nor Secord, who had left the military by 1985, normally would have authorization to draw upon a Pentagon-controlled bank account, sources told The Times on Monday. It could not be independently confirmed that the bank account in question in fact was under Army intelligence control.

Under Scrutiny Before

Business Security International, based in Washington’s Virginia suburbs, has been the object of the Pentagon’s financial scrutiny before. The firm was a front for operatives in the Army’s Special Operations Division, an intelligence and counterterrorism unit set up after the ill-fated Desert One effort to rescue American hostages in Iran in 1980.

In 1985, one Army officer at the firm was indicted in connection with the alleged misappropriation of nearly $60,000 in top-secret Army funds by several BSI workers. That officer’s federal conviction on the charges later was overturned and his Army court-martial is on appeal, but allegations of impropriety continued to dog the operation.

North’s link to the Army unit, if any, was unclear. But while working at the National Security Council, his chief duty was to coordinate the Reagan Administration’s counterterrorism activities, a task that included regular meetings with experts from the Pentagon, CIA, State Department, FBI and other agencies.