Salvador Reportedly Resold U.S.-Donated Aid

The air force of El Salvador, in violation of U.S. military aid regulations, has resold at least $801,000-worth of U.S.-donated aviation fuel for cash, the General Accounting Office reported Thursday.

Much of the fuel was sold to U.S. government agencies--meaning that the United States paid for the fuel twice, Democratic senators charged in a stormy congressional hearing.

The Salvadorans also sold $109,335 worth of fuel to the secret airlift operation run by White House aide Oliver L. North to resupply the Nicaraguan Contras, the GAO found.

Those sales appeared to constitute “a substantial violation” of American aid regulations because they occurred during the period when Congress had outlawed U.S. military aid to the Contras, GAO official Frank C. Conahan told a Senate appropriations subcommittee.

Conahan said the GAO, Congress’ investigative arm, believes the Salvadorans sold more fuel to other third parties, but confessed, “We have no track whatever on the third parties, and we don’t know who those parties might be.”

Most of the cash from the sales appears to have gone into accounts under the personal control of El Salvador’s powerful air force commander, Gen. Juan Rafael Bustillo, the GAO said. Bustillo has since assured U.S. officials that all the money was used for legitimate air force expenditures, but the Pentagon has nonetheless stopped paying the Salvadorans in cash in an effort to tighten accounting practices when it buys fuel at their air base, officials said.

“These transfers violated agreements between the United States and El Salvador stipulating that title or possession of U.S.-supplied defense items or services cannot be transferred without prior U.S. government consent,” Conahan said.

State and Defense Department officials acknowledged that the Salvadoran fuel sales appeared to violate aid regulations and said that, in the wake of the congressional investigation, they had tightened their procedures to stop the practice.

But they insisted that they did not consider the sales a serious infraction because of Bustillo’s assurances that the money was used for air force expenses.

The attempt to minimize the problem came under heavy fire from two incredulous Democratic senators, Patrick Leahy of Vermont and Tom Harkin of Iowa.

“We’re paying for (the fuel) twice!” exclaimed Leahy, his voice rising in volume. “And we don’t know where the money went!”

“We know where it went,” replied H. Diehl McKalip, who is formally director of operations for the Defense Security Assistance Agency but whose real role in the hearing was as the Pentagon’s sacrificial lamb. “. . . It went to needed operational requirements.”

“Name one!” demanded Leahy.

McKalip stopped short.

“Name one!” Leahy roared again, slamming the bench with his palm. “Don’t tell me all of the above if you don’t know where it went!”

“I am trying to suggest to you that it is not as black and white as it may at first seem,” McKalip finally responded.