A shadowy and scandal-plagued Army intelligence unit--code-named Yellow Fruit--secretly opened a numbered Swiss bank account that may have been used as a conduit for funds to aid Nicaragua’s rebels, a Pentagon official said Tuesday.
The official said the bank account at Credit Suisse in Geneva was unauthorized by the Defense Department and the Army command, which did not even know that it existed until last month, when CBS News supplied the Pentagon with the account number.
“People who were in any position of responsibility or authority knew nothing at all about this,” the official said.
CBS reported Monday that $75,000 from the account was used by Marine Lt. Col. Oliver L. North and an associate, retired Air Force Maj. Gen. Richard V. Secord, to charter a Danish freighter to deliver a load of Soviet Bloc rifles and other weapons to the contras in the spring of 1985, at a time when Congress had prohibited U.S. military aid to the rebels.
The network said the money was part of $2.5 million that has been withdrawn from the account.
The Pentagon official, who asked not to be identified by name, declined to say how much money had passed through the account or to say whether the funds originated with the Army unit or had come from some other source.
But the official said the Defense Department “has information that would lead us to suspect” that the account was used by North, the fired National Security Council aide who was instrumental in the sale of arms to Iran and clandestine financial support for the contras, and Secord, who became an arms merchant after his retirement from the Air Force.
The official said the bank account has been frozen so that funds no longer can be withdrawn. Nevertheless, the account apparently survived for more than three years after the demise of the Army unit that opened it.
The official said Iran-contra independent counsel Lawrence E. Walsh has taken over the investigation of the bank account. He added that, to avoid inadvertent interference with Walsh’s inquiry, the Army decided not to conduct an investigation of its own.
“It will be done better if it is handled by one agency,” the official said.
The Yellow Fruit unit was established in the fall of 1982 as part of a super-secret effort to improve the Army’s ability to deal with situations such as Iran’s seizure of the U.S. Embassy in Tehran on Nov. 4, 1979.
But the organization, wracked by charges of impropriety from the first, was abolished in December, 1983.
Three of Yellow Fruit’s top officers were convicted by courts-martial of misconduct involving the handling of funds. In addition, the commanding officer, Lt. Col. Dale E. Duncan, was convicted in a civilian court of fraudulently claiming expense money, but that conviction was overturned last week by the U.S. 4th Circuit Court of Appeals.
Account Not Discovered
The Pentagon official said the Army, FBI, federal prosecutors and other organizations investigated the unit before and after it was abolished. But he said none of these inquiries discovered the Swiss bank account.
However, he said, CBS informed the Pentagon of the account number last month. Armed with that additional information, the official said, the Defense Department was able to verify its existence.
The official said the Pentagon does not know how many individuals were authorized to draw funds from the account. But he said that William T. Golden, a retired Army warrant officer now employed as a civilian by the Army Department at Ft. Huachuca, Ariz., was one of the account’s signatories.
Golden, who was assigned to the Yellow Fruit unit while on active duty, was the chief accuser of Duncan and other officers of the unit. The Pentagon official said he did not know why Golden did not report the bank account earlier.
“He may have put his name on the signature card without knowing what he had done,” the official said.
The Yellow Fruit unit was headquartered in suburban Annandale, Va. It established a cover organization called Business Security International that apparently remained in existence, at least as a corporate shell, after the Army unit was disbanded.