Huge Drug Base Operating in Nicaragua, Senate Inquiry Is Told

A convicted drug smuggler, describing influential Central American drug contacts that he said included Panamanian strongman Manuel A. Noriega as a “full-scale co-conspirator,” told a Senate investigative panel Thursday that he has learned of a huge drug base operating out of Nicaragua.

Steven Kalish, a 35-year-old high school dropout who said that he built a drug empire so vast that his 180 workers could not keep track of all the money, testified that he was told by a business associate in the Colombian drug cartel that the cartel “had set up the largest cocaine manufacturing plant in the world” in Nicaragua.

Kalish, who has been in jail for the last 43 months, suggested that some officials of Nicaragua’s Sandinista government were aware of the cartel’s operation--thus raising anew charges of drug involvement by the leftist regime.

Focus on Noriega

The alleged Sandinista drug connection “would be very significant if it could be documented,” said Sen. William V. Roth Jr. (R-Del.), who presided over much of Thursday’s hearing. But the permanent subcommittee on investigations of the Governmental Affairs Committee is not expected to probe the Nicaraguan connection but rather to concentrate on Noriega’s alleged role as a key facilitator--and moneymaker--in the Central American drug trade.

Kalish’s allegations on Sandinista involvement in drug trafficking, while second-hand, jibe generally with accounts from other Central American drug peddlers who have told investigators “approximately the same thing” from direct knowledge, a source said.

A drug dealer operating out of Nicaragua also has told Senate investigators about a large cocaine plant in Nicaragua that processed “paste” supplied from Bolivia, the source disclosed.

In addition, a pilot who flew drug cargoes told investigators that he was given a special frequency to use in flying over Nicaraguan airspace to avoid detection. If true, the source said, this suggests that “some (Nicaraguan) government officials had to be involved.”

A Nicaraguan government spokesman discounted the allegations.

“It’s almost laughable--with the surveillance the U.S. has in Nicaragua (that) they wouldn’t be able to detect the largest cocaine plant in the world,” said Sarali Porta, an official at the Nicaraguan Embassy here. “This is just one more effort to try and discredit the government of Nicaragua precisely when a vote on Contra aid is coming up.”

Kalish said that tight surveillance by the United States in Nicaragua, along with the tumultuous state of the country itself, sparked a breaking of the ranks within Colombia’s so-called Medellin Cartel. Some members believed that it was “a terrible idea” to manufacture cocaine “in a country in such turmoil,” he said.

Kalish was questioned briefly on the Sandinista connection by Sen. Jim Sasser (D-Tenn.) as he discussed drug contacts in virtually every Central American nation, contacts that he said allowed him to move drug supplies--and launder the proceeds--virtually at will. He said that he has no knowledge of any drug connections to the Contras in Nicaragua.

Kalish said that he moved his operating base from Florida to Panama because the banking laws in that “haven” made it easy for him to hide the money trail left by his dealings. Previously, he had kept the proceeds in cash in Tampa, Fla.,--at one point more than $35 million--but sought another way of handling the cash because, he said, the rooms were overflowing with bills and “we couldn’t keep up with the volume.”

Kalish ticked off payments he said he made to Noriega--whom he called “Tony”--for giving him military protection, favorable treatment and a free hand to ply his drug trade.

“I spent millions of dollars in Panama trying to bring myself closer to Noriega,” said Kalish, who was arrested in Tampa in 1984 and had been a fugitive for several years before that.

Sen. Sam Nunn (D-Ga.), chairman of the panel, said that Kalish’s testimony, while unproven, threatens the credibility and reputation of Panama’s military ruler, who is under grand jury investigation in Miami and has come under increasing pressure from the Reagan Administration in recent weeks. Roth said that Kalish’s allegations offer “evidence of drug-related corruption extending to the highest levels in Panama.”