2 Bush Aides Termed Privy to Contra Aid : Evidence Reflects Many Contacts While Assistance Was Illegal

Despite continuing denials by Vice President George Bush and his staff, there is increasing evidence that two of Bush’s most senior foreign policy aides knew at the time about Oliver L. North’s secret operations in Central America in 1985 and 1986--operations designed to circumvent a legal ban on U.S. military aid to the Nicaraguan rebels.

The two members of the vice president’s staff--Donald P. Gregg, head of a four-man foreign policy staff, and Col. Samuel J. Watson, Bush’s deputy for both Soviet and Latin American affairs--acknowledge having had dozens of contacts with individuals who were playing key roles in the operation. But both emphatically deny any knowledge of what was going on during the 12-month period when guns and munitions were being secretly airlifted to the Contras.

Bush Aides’ Accounts

Investigators say, however, that the Bush aides’ accounts of their actions in connection with the Contra airlift are difficult to square with the documentary record. At least one of the aides, for example, knew more about North’s secret airlift of guns to the Contras than he has previously acknowledged, according to other officials and the aide’s own testimony in a lawsuit.

And North himself, while he was running the secret Contra resupply operation as a member of the National Security Council staff, repeatedly complained about Bush aides’ “coming into his turf” in the Nicaraguan project, two associates said.

If, as some investigators believe, senior aides to the vice president did in fact know more about North’s covert activities than they have admitted, that could create a potentially serious problem for Bush as he prepares his campaign for the presidency. The vice president could face a two-edged question much like the one that proved so damaging to President Reagan in the Iran-Contra affair:

Has Bush been less than candid about his own knowledge of what was going on, or was he unaware of what his staff was up to?

None of the new evidence directly implicates the vice president in the secret resupply operation. But interviews with dozens of sources and newly available testimony reveal a long pattern of close contact between some of the most senior members of the vice president’s staff--individuals who could hold high posts in any future Bush Administration--and some of those running the Contra supply operation.

So close were the ties between these aides and leaders of the Contra arms operation that, when the airlift was exposed by the crash of one of its airplanes, Contra leader Adolfo Calero instructed aides to claim responsibility for the flight “to protect George Bush.”

Clearly, the issue will remain alive during the presidential campaign this summer and fall. Already, aides to Massachusetts Gov. Michael S. Dukakis, the probable Democratic nominee, have announced that they intend to make a major issue of Bush’s role in the Reagan Administration’s secret arms sales to Iran and the clandestine Contra operation.

Bush Welcomes Debate

Last week, Bush indicated that he would welcome such a debate. “Fire away,” he said during a television interview.

However, the vice president’s office did not respond to several requests to interview his aides for this article. “We’re not making them available,” Press Secretary Stephen Hart said in response to an earlier request. “We’ve made the decision not to go back into it.”

Gregg is a 28-year CIA operations officer and Asian expert who ran counterinsurgency operations in Vietnam in 1970-72. “Don’s problem has been that his role as the vice president’s assistant for national security affairs is to be an observer, not a decision-maker,” a former White House colleague said. “But he has had a lingering desire for action. . . . He has always wanted to be a player.”

Gregg has sometimes proposed foreign policy initiatives directly to Bush, but the vice president insists that the ideas go through proper channels, the former official added.

Daredevil in Combat

Watson is an Army officer whose scholarly manner belies a record of daredevil helicopter-borne combat in the 101st Airborne Division in Vietnam. Watson is also well-connected among conservative Republicans; he was chief of staff of the Reagan Administration’s transition team at the CIA in 1980, and later served as a member of the U.S. delegation to strategic arms reduction talks with the Soviet Union.

Friends describe him as smart, methodical, careful--and a true believer in the Reagan Administration’s commitment, as Watson has described it, to “liberating Nicaragua.”

The link between Bush’s aides and the Contra war came primarily in the form of Felix Rodriguez, a Cuban-American veteran of the 1961 Bay of Pigs invasion of Cuba, who spent a decade as a clandestine operations officer for the CIA. Rodriguez, a burly, ebullient counterinsurgency expert, wears a watch he says was given to him by Cuban revolutionary Che Guevara, whom Rodriguez helped capture in 1967--and a tie clasp with the signature of George Bush.

Rodriguez and Donald Gregg have been friends since they served in Vietnam, and Rodriguez has counted himself as a Bush man ever since he met the future vice president at the CIA. The two stayed in contact after Rodriguez retired from the CIA in 1976.

In 1983, Gregg wrote a memorandum to then-National Security Adviser Robert C. McFarlane outlining a proposal from Rodriguez for a multinational “elite strike force” to run air operations against leftist rebels in Central America. The plan never got off the ground, Rodriguez said in an interview.

Instead, Rodriguez went to work for Contra leader Calero, organizing shipments of medicine to the Nicaraguan rebels after Congress cut off their CIA funding in 1984, and even accompanied the Contras on a medical mission inside Nicaragua, he said.

But Rodriguez was dissatisfied with his role in the Contra war and decided to help El Salvador’s government fight leftist guerrillas instead. He flew to Washington to explain his plans to Gregg, and the vice president’s aide wrote a letter of recommendation which helped Rodriguez win the confidence of El Salvador’s air force commander. Although they had several conversations about Rodriguez’s plans, Gregg has testified that he did not know his friend had been working for the Contras. Rodriguez says: “I don’t remember whether I told him or not.”

Airlift Organized

In September, 1985, then-White House aide Oliver North and retired Air Force Maj. Gen. Richard V. Secord were organizing the secret airlift operation to drop supplies to Contra units inside Nicaragua. On Sept. 10, North’s notebook--in a page released by the congressional Iran-Contra committees--notes a meeting between North, Gregg and the chief of the U.S. military advisory group in El Salvador. North’s notes list one of the topics as setting up “log(istical) support” for the Contras at Ilopango, El Salvador’s main air base.

Yet Gregg says he remembers no such meeting. “I don’t think that meeting ever took place,” he testified last week in a deposition taken by the Christic Institute, a liberal legal and public policy organization that is pressing a civil suit against Secord and other Iran-Contra figures.

Two weeks after the purported meeting about the air base described in North’s notebook, North recruited Rodriguez to oversee the base at Ilopango. Throughout the following year, Rodriguez was a key operative in North’s secret air operation, which was financed through contributions from Saudi Arabia and, later, the profits from arms sales to Iran. And during that period, Rodriguez spoke frequently by telephone with Gregg and Watson in the vice president’s office, and met with one or both of the Bush aides at least six times.

Once more, all three men insist Gregg and Watson did not know what Rodriguez was doing for the Contras until almost 15 months later, in December, 1986.

North Praised Bush

Strangely, however, North apparently was convinced that Gregg and Watson knew about his operation--for he told several friends that Bush’s office was involved. At first, one associate said, he praised the vice president as “the minister for democracy in Central America.”

And Bush admired the young NSC aide as well; on Nov. 27, 1985, Thanksgiving Day, the vice president sent North a handwritten letter: “One of the many things I have to be thankful for is the way in which you have performed under fire in tough situations. Your dedication and tireless work with the hostage thing and with Central America really gives me cause for great pride in you.” (Bush spokesmen say the letter’s reference to Central America has nothing to do with the Contras, but may refer to a vice presidential trip North helped to organize in 1983, almost two years before Bush wrote the note.)

Later, after North’s relationship with Rodriguez turned sour, he complained about Bush’s office to several friends. “Ollie came and complained bitterly that Gregg forced Rodriguez on him to help the Contras,” a colleague at the NSC said.

Other officials warn, however, that North sometimes exaggerated his relationship with Bush. “He was always saying he was just back from a meeting with the vice president,” one former NSC aide said. “We checked one day, and he hadn’t been in to see the vice president at all.”

Watson Took Trip

In January, 1986, Watson took an eight-day trip to Central America, visiting Guatemala, Honduras and El Salvador. Watson testified in a Christic Institute deposition last week that the issue of aid to the Contras came up in both Honduras and El Salvador. In Honduras, Watson said he visited three Contra camps, toured warehouses with supplies rigged with parachutes for airdrops, and even addressed the rebel troops.

“I told them that they were fighting for democracy in their country, Nicaragua, and that the Sandinistas were communists and supported by the Soviet Union,” Watson recalled. “I told them they had friends in Washington, that we would get them military aid, legal military aid. . . . I’d say there were a thousand (troops).”

Two days later, Watson flew to El Salvador with Rodriguez. Did he tell his friend about the stirring experience of addressing a thousand rebel guerrillas? “I don’t recall doing that,” he said last week. “I may have . . . I don’t recall a specific conversation.”

Nor did Rodriguez tell him that he was involved in the same airlift operation he had observed in Honduras, Watson said.

Instead, Rodriguez took Watson on a helicopter raid against Salvadoran guerrillas. “It was similar to Vietnam,” Watson said. He said he watched from a distance in an observation helicopter as Rodriguez flew a small Hughes 500 helicopter into a rebel stronghold at treetop level.

“I saw them fire an anti-aircraft missile at him and it missed by about three feet,” Watson said. “You could see it go blazing by him and hit a tree.”

Perplexing Phenomenon

In April, 1986, perhaps the most perplexing phenomenon in the Bush-Rodriguez relationship occurred: the episode of the phantom memorandum. Rodriguez had requested a meeting with the vice president to discuss his activities in Central America.

To prepare for the session, Watson drafted two memos: a schedule proposal to arrange the meeting, and a “briefing memorandum” for Bush to explain what the event was about. Both documents said Rodriguez would give Bush a briefing “on the status of the war in El Salvador and resupply of the Contras” (emphasis added).

Those five words could imply that someone in Bush’s office knew that Rodriguez was involved in North’s secret Contra resupply operation--but no one has admitted putting them there. Watson, who drafted the memos, has insisted under oath that he did not; in one deposition, he suggested that a secretary might have invented the entry. (The secretary testified under oath that she could not have written those words: “It (resupply) was a word I didn’t even know,” she said.)

“It baffles me to this day,” Gregg said last week. “I’m baffled as to how that agenda item appears.”

And during the meeting with Bush, Gregg and Watson said, Rodriguez never brought up the Contra operation, although the Nicaraguan issue was critical to the Administration at the time--and although Rodriguez boasted to crewmen in the airlift that he reported to Bush, and displayed a photograph of himself with the vice president at his office at Ilopango.

Dispute Erupts

In July, 1986, a dispute erupted between Rodriguez and others in the Contra resupply operation. Rodriguez flew one of Secord’s cargo planes to El Salvador without formal authorization, and then persuaded the commander of El Salvador’s air force to block the other pilots’ access to the planes.

North was furious. At a staff meeting in the White House he turned to Watson. “Max shut down (the) resupply,” North said, according to Watson’s own notes. (Max was Rodriguez’s nom de guerre. )

Watson has acknowledged that he knew who Max was, and assumed that “resupply” referred to the Contras, but has insisted that he had no real idea what North was talking about. “I am not quite sure what that means,” he said last week, looking at his own notebook entry.

Later that day, Watson talked with Rodriguez on the telephone.

“I believe--although I am not sure--that I asked him if there was some reason Col. North would be asking me about something to do with Felix and resupply,” Watson testified. Did he mention the Contras? “I don’t know that I did. It’s possible.”

That testimony last week appeared to conflict with Watson’s earlier statements to the Iran-Contra committees. In testimony to congressional investigators last year, Watson was asked whether he asked Rodriguez what North was talking about. “No, I did not,” he said firmly. “I believe I decided not to ask him about that.”

‘A Bunch of Crooks’

In August, Rodriguez came to Washington to tell Gregg and Watson about problems in North’s resupply operation. “He wanted to tell us that there were a bunch of crooks involved,” Watson said. “He mentioned Edwin Wilson as one.” Wilson, a former CIA officer, was convicted of selling explosives to Libyan leader Moammar Kadafi.

Both Gregg and Watson took notes of the Aug. 8 meeting. Curiously, the notes seem to begin in the middle of the story--with the words “Using Ed Wilson group for supplies”--instead of beginning with an explanation of the airlift operation, as might have been expected if Gregg and Watson were hearing about it for the first time.

At the meeting, Rodriguez also mentioned that there had been “a swap of weapons for dollars.” The Iran-Contra committees investigated that reference in an attempt to learn whether Rodriguez--and thus, possibly, Bush--had been aware of the diversion of money from the Iranian arms sales to help the Contras.

But Rodriguez explained the entry otherwise in an interview: He said he had been told that Saudi Arabia was aiding the Contras in exchange for supplies of U.S. weapons. Saudi Arabia did contribute $32 million to the rebels, but U.S. officials have denied that the Saudis received any American weaponry in return.

Gregg and Watson testified that they did not tell Bush about what Rodriguez had said--even though he was warning that a group of criminals was involved in an operation run by North, an NSC aide. Gregg said the matter was not “vice presidential.”

North’s Involvement

Beginning with the August meeting, Gregg and Watson clearly knew that North was involved in an airlift of guns for the Contras--during a period when U.S. military aid to the rebels was still prohibited. Watson said he understood that North was “chairman of the board” of the operation, and Secord was “chief operating officer.” Gregg said North showed him a videotape of airdrops over Nicaragua, and said he knew North was “coordinating” the operation, but said he assumed it included only “humanitarian aid.”

Neither man brought any of that information to the attention of North’s superiors in the NSC, they said.

On Oct. 5, 1986, a Contra cargo plane carrying a crew of four was shot down by the Sandinistas over southern Nicaragua. Three of the crewmen were killed; one, Eugene Hasenfus of Marinette, Wis., survived.

The first official in the Reagan Administration to learn of the crash was not Oliver North, but Bush aide Sam Watson. Rodriguez, in El Salvador, telephoned the vice president’s office with the word that one of the planes had gone down. Again, Gregg and Watson said they did not alert Bush.

The crash set off a panic in North’s secret operation: Who would claim responsibility for the plane? Finally, the Contras’ leader, Calero, agreed to claim the plane was his. According to a Contra official, Calero told his aides that he was willing to assume responsibility--”to protect George Bush.” (Calero denied the account.)

Helped to Deliver C-123

Shortly later, a U.S. official said, he was surprised to hear Watson, in a conversation about Nicaragua, refer casually to the fact that he had helped with “the delivery of a C-123,” the type of airplane used by the Contra airlift. The official said he did not understand the reference, and Watson never explained it.

Despite those fragments of evidence, Gregg and Watson insist that they played no role whatever in North’s airlift--and did not even learn that Rodriguez was directly involved in the operation until December, 1986. Only then, Gregg has said, did Rodriguez come to him, confess tearfully that he had been concealing his true role for 15 months, and let his old friend in on the secret of the Contra airlift.

“Neither the vice president nor anyone on his staff is directly or indirectly coordinating an operation in Central America,” Bush’s then-spokesman, Marlin Fitzwater, said in 1986.

The congressional investigators who probed the Iran-Contra affair said they were willing to believe that statement about Bush himself; there is little evidence to link the vice president himself to the operation.

“But Gregg and Watson?” one investigator asked. “There’s an awful lot there that just doesn’t add up.”

Staff writer Eric Lichtblau contributed to this story.