Oliver L. North and other Reagan Administration aides deliberately used a 1986 program of "humanitarian aid" for Nicaraguan rebels to help support the secret effort to deliver military aid to the contras , U.S. officials said Monday.
Under the congressionally approved humanitarian program, which spent $27 million on non-military aid for the rebels, the State Department hired a consultant who was secretly working for North, then a National Security Council official, and paid for airplanes that later delivered secret military aid.
"The humanitarian aid program saved (North's network) hundreds of thousands of dollars," said an official who has reviewed records of the State Department effort. "It was a piggyback operation . . . . North and the CIA used the program wherever they could get away with it."
Another official noted, however, that North was sometimes blocked in those attempts by the diplomat who administered the aid program, former ambassador Robert W. Duemling. "Duemling didn't let Ollie get away with everything he tried," the official said. "There was a fair amount of friction between them."
House and Senate committees and an independent counsel investigating the Iran-contra scandal are all taking a second look at the humanitarian aid program, focusing especially on who influenced its decisions. Between 1984 and 1986, U.S. military aid to the contras was banned by an act of Congress.
The aid was administered by the State Department's Nicaraguan Humanitarian Assistance Office, but officials said that all significant decisions were made by a "Restricted Inter-Agency Group," consisting of North, Assistant Secretary of State Elliott Abrams and Alan D. Fiers, chief of the CIA's Central America Task Force.
Conservative activist Robert W. Owen, who worked simultaneously as a paid consultant for the State Department program and as a clandestine courier for North, is scheduled to resume testimony before the committees today, and he will be questioned on the connection between the public and private aid programs, congressional aides said.
"NHAO tried very hard to stay clear of any involvement with military supplies," one official said. "But, obviously, they didn't succeed."
Investigators are looking at several key issues:
--Owen reportedly has acknowledged that he was acting as North's deputy in the secret program to obtain weapons for the contras while he was being paid by the State Department. But Owen's contract with the humanitarian assistance office specifically prohibited him from "performing any service which is related to the acquisition, transportation, repair, storage or use of weapons."
Paid $4,350 a Month
The office paid Owen $4,350 a month for his services and expenses from November, 1985, until June, 1986. Before that contract, Owen's salary and expenses had been paid by contra leader Adolfo Calero, Owen testified last week. "The State Department picked up the cost," an official said.
NHAO's Duemling initially had refused to hire Owen, but North, Abrams and Fiers ordered him to reverse that decision, officials said. An official close to Abrams said that the assistant secretary of state did not know at the time that Owen had been working for North for more than a year. Duemling has refused to comment on the issue.
--NHAO paid $457,000 to Airmach Inc., an air freight company that also delivered weapons to the contras. Airmach is owned by retired Air Force Lt. Col. Richard B. Gadd, who helped North and retired Air Force Maj. Gen. Richard V. Secord set up the secret contra airlift that was financed with profits from the Reagan Administration's arms sales to Iran.
The humanitarian aid office did not pay directly for the delivery of weapons, which would have clearly been illegal, officials said. Instead, the agency subsidized the arms network indirectly by paying for Airmach's planes to fly from the United States to Central America, where they were then loaded with arms for short flights into Nicaragua. The State Department paid for the long flights; North and Secord paid for the short ones.
One Flight Detailed
On one such flight, the State Department paid Airmach to fly non-military goods from New Orleans to a contra camp in Honduras aboard a Southern Air Transport cargo plane last April. The plane then flew to El Salvador, picked up seven tons of weapons and airdropped them into southern Nicaragua at Secord's expense. The return trip from Honduras to Miami was again paid for by NHAO, officials said.
Some of the NHAO flights were actually scheduled by North and Fiers to fit the needs of the secret arms-supply program--not the "humanitarian" program that was paying the bills, according to one knowledgeable source.
On at least two occasions, Airmach flew "mixed cargoes" of weapons and humanitarian aid, officials said. Duemling objected to the practice, and it was eventually halted, they said.
How did the State Department happen to choose Airmach to deliver the non-military aid? The firm was recommended by Mario Calero, Adolfo Calero's brother and the contras' chief procurement officer. "But Ollie North had something to do with it, too," an official said.
--The humanitarian aid office was not allowed to station auditors in Central America to oversee its own operations and ensure that money for "humanitarian aid" did not go astray. State Department officials have said that the plan to send auditors was blocked by the government of Honduras, which did not want to acknowledge that the contras' supplies were flowing through its territory.
'Auditing Was Spotty'
But some officials charge that Abrams, Fiers and North never seriously attempted to change the Hondurans' minds--that they were just as happy to leave the aid program unexamined. "The auditing was spotty all along," one official acknowledged.
--Some of the $27 million in humanitarian aid was never fully audited or verified, in part, because of those restrictions. A study last year by the General Accounting Office, Congress' investigative arm, found that most of NHAO's purchases were made outside the United States and could not be fully verified. In addition, GAO said, millions of dollars of funds were changed into Central American currencies at black-market rates--generating more than $1 million in profits for the contras and their business associates. The contras provided documents to NHAO to show that the excess funds were used for humanitarian aid, but those records could not be verified, GAO said.