CIA Auditing Contras’ Spending of Secret Aid : Rebel Chieftain Calero and Travel Funds Are Reportedly Targeted by Agency’s Investigation

Times Staff Writer

The CIA, investigating allegations of financial improprieties by Nicaraguan rebel leaders, has begun an audit of the Contras’ use of secret CIA political funds, U.S. and Contra officials said Friday.

Among the main targets of the inquiry is Contra chieftain Adolfo Calero, who has been a major beneficiary of the agency’s covert funding programs since 1981, the officials said. Calero’s rivals within the rebel movement have charged privately that he has diverted official funds to accounts under his personal control, but no evidence of such actions has been made public.

Calero denied those charges Friday, as he has in the past. “I don’t manage the political fund,” he said.

However, the audit is directed at the Contra movement as a whole, not only at Calero, the officials said.


Extensive Probe

The CIA investigation, which officials said will be more extensive than previous audits of the Contras’ accounts, could become an issue in the continuing debate over U.S. policy in Nicaragua.

Secretary of State James A. Baker III has told members of Congress that he is reviewing the policy and may propose a new U.S. diplomatic initiative before seeking any additional military funding for the Contras.

The rebels currently receive two kinds of aid from the United States: covert political funding from the CIA, which a Contra leader said amounts to $4.8 million per year, and a separate “humanitarian aid” program administered by the Agency for International Development. Congress halted military aid to the Contras in 1987.

The CIA audit covers only the secret political fund, which supports the rebels’ organizational and political work throughout Central America, officials said. The Contras also maintain offices in Miami and Washington, but the CIA is prohibited from funding their operations in the United States.

The audit focuses principally on the Contras’ use of funds provided for their leaders’ travel, one source said.

A CIA spokesman, Bill Baker, refused to confirm or deny reports of the audit.

“We just don’t discuss intelligence activities,” he said.

But a spokesman for the Contras, Bosco Matamoros, confirmed that the audit is under way. He said that the rebels fear that the agency might use it to seek additional control over the Contras’ activities.

“The U.S. government has a right to ask questions about how we have managed funds and to have the questions answered,” Matamoros said. “But we hope that this is not being used (to look for) a way to change your policies.

“We have a good accounting system, with a good mechanism of verification,” he added.

Aristides Sanchez, another rebel leader, said that the Contras have nine accountants to monitor every expenditure of U.S. aid. He said that U.S. government auditors inspect the books at rebel headquarters in Miami at the end of each month.

Sanchez and Calero said that they knew of no extraordinary audit under way.

Other rebel leaders said that the routine audits are done by congressional investigators, not the CIA. Asked who is looking at the Contras’ records now, Calero said, “I don’t ask if he is from the CIA.”

The Contras have been bitterly divided for several months over issues of both power and strategy. The most moderate of the Contra leaders, Alfredo Cesar, has been urging the rebels to be more aggressive in seeking peace negotiations with the Marxist-led Sandinista regime in Managua. Calero, who is one of the most conservative Contras, has been more skeptical of such negotiations.

In recent months, U.S. and Contra officials said, that dispute has spilled over into internal arguments over who controls the CIA-provided political funding.

“In every organization, there are people who are dissatisfied and complain about the way things are run,” Sanchez said in denying any financial mismanagement. “This is normal in politics.”

Feuding among the Contras has prompted some friction between the State Department, which has largely supported Cesar, and the CIA, which has tended to back Calero, according to U.S. and rebel officials.

“I don’t think the agency intended to target Calero when this audit began but that’s where the problems are to be found,” a well-informed congressional aide said.

Cesar said that he was not aware of the audit and has no reason to be investigated because, in the division of Contra labor, he is in charge of negotiations. Calero is in charge of international relations.

“Calero was the only one who managed the Iran-Contra funds, but that was a long time ago,” in 1985-86, Cesar said. “As far as I’m concerned, nothing was ever clarified” about Calero’s use of those funds, but Cesar said that he never has pressed for an audit since joining the rebel movement’s leadership board in May, 1987.

Internal Discussion

Last October, Cesar drew up a detailed proposal for peace talks with the Sandinistas. After a good deal of internal discussion, the rest of the leadership board is still opposed to two key provisions of Cesar’s plan: for reconstruction aid to the Nicaragua regime, if it complies with a peace agreement, and a flexible timetable for elections in that country.

One sign of the split is that Cesar said he is traveling on his own to the Feb. 2 inauguration of Venezuelan President-elect Carlos Andres Perez. He says that he is the only Contra leader invited.

“Some of the others may be there, too, but not as an official delegation,” he said.

Times staff writer Richard Boudreaux contributed to this story from Miami.