THE IRAN--CONTRA HEARINGS : State Dept. Internal Study Cites Contract Violations

The State Department improperly awarded government contracts to a public relations firm founded by a conservative fund-raiser who was charged in the Iran- contra affair, a report by the department’s inspector general showed Friday.

The report states that State Department regulations were bypassed or violated in some of the contracts, which totaled $436,000 over 18 months and were awarded to the firm for work in support of the rebels in Nicaragua. No recommendation was made for any criminal prosecution.

The report also concludes that some of the methods of placing the contracts were mismanaged. In one case, a contract “was improperly classified secret, without legitimate justification, apparently to avoid competition and public disclosure of the contract,” the report said.

No Competitive Bidding

There was no competitive bidding on any of the contracts, another violation of U.S. regulations, it said.

Some contracts were improperly split into several separate deals so that they would fall below the threshold that required competitive bidding.

The inspector general found that some work of IBC, or International Business Communications, fell so short of what was contracted that it recommended that the government try to recover some of the funds.

The Washington firm, which once employed 14 full-time public relations staffers, is out of business.

The firm was founded by Frank Gomez, a retired U.S. Information Agency employee, and Richard R. Miller, a former public affairs director of the U.S. Agency for International Development.

Pleads Guilty to Conspiracy

Miller and a fellow fund-raiser, Carl R. (Spitz) Channell, have pleaded guilty in federal court to conspiracy to defraud the government of more than $3 million in an illegal tax exemption scheme in their efforts to raise money for the contras.

Miller and Channell both named former White House aide Lt. Col. Oliver North as a co-conspirator. North denied that he ever solicited funds for the contras, although he spoke to groups which were later asked for funds by Channell and Miller.

According to the State Department report, the Office of Public Diplomacy for Latin America was hastily set up in 1984 “to popularize” the contra cause in the United States.