Judge Rejects Agreement to Pay Noriega’s Legal Fees : Law: The decision may force the U.S. government to unfreeze some of the former dictator’s assets.

A three-day-old agreement under which the federal government would temporarily advance millions of dollars to cover the legal fees of Manuel A. Noriega’s defense lawyers fell apart Thursday when a federal judge said that he had determined the plan is not permitted under the law.

Instead, U.S. District Judge William M. Hoeveler said, the deposed Panamanian dictator himself must find a way to pay lawyers defending him on drug-trafficking charges, even though all of Noriega’s known assets have been frozen by the U.S. government.

As a result of the judge’s new decision, prosecutors may have to reveal publicly, as they have in sealed papers filed with Hoeveler, how many millions of dollars U.S. intelligence agencies paid to Noriega in past years for his assistance in intelligence-gathering in Central America, according to some lawyers in the case.

It was to avoid such a disclosure that prosecutors had agreed to put up money for Noriega’s legal bills.

Under the now-defunct agreement, the government would have paid the defense fees, then recovered the money at the end of the trial through a legally binding agreement with Noriega.

The judge said he would order a court hearing at which prosecutors would have to demonstrate that the Justice Department had a “perfectly legal right” to freeze a total of $20 million in Noriega’s bank accounts, most of it held in foreign countries.

“We’re back to square one,” Hoeveler said in striking down the payment plan which he had endorsed last Monday. “Frankly, I would rather Gen. Noriega pay his own legal bills than U.S. taxpayers.”

Hoeveler expressed agreement with defense attorney Frank A. Rubino, who said it is “not common sense” that all $20 million of Noriega’s assets frozen by the government were the illicit proceeds of narcotics deals. Rubino said that Noriega had received a salary for years as Panama’s leader before he was toppled by the U.S. invasion last December. He also earned money from “legitimate business dealings,” Rubino said.

“This man is only indigent and unable to pay his lawyers because of action by the U.S. Justice Department in seizing his property,” Rubino said, his voice rising.

“This is manifestly unfair. He is a guest in our country, albeit an unwilling and unwelcome one. He deserves a fair shot at defending himself with help from the attorneys of his choosing. Some of us have been working on his case for nearly 2 1/2 years (since his indictment in February, 1988.)

“If the court were suddenly to give him court-appointed attorneys at the usual rate ($40 to $60 an hour), it would take the new team six months just to get up to speed in this complex case. And our American system of justice will be on trial for the whole world to see.”

On Monday, U.S. Atty. Dexter Lehtinen had proposed to Hoeveler, with Rubino’s agreement, a plan to pay Noriega’s lawyers their usual fees--amounting to $200 to $350 an hour--under a provision of the federal Criminal Justice Act that allows above-average compensation in exceptional criminal cases where a defendant cannot afford it himself.

Rubino had argued earlier this month that neither he nor four associates had received any fees from Noriega since Jan. 1 because the general’s funds had been frozen by the government, an increasingly common occurrence in drug prosecutions where a defendant’s funds are deemed to be illicit profits. Rubino said that without pay he and his colleagues would have to withdraw from the case, further delaying the trial beyond its scheduled starting date next January.

Hoeveler, while approving the plan Monday, declared Thursday that consultation with Chief Appellate Judge Gerald B. Tjoflat of Atlanta had convinced him that no fees higher than $75 an hour, or no total compensation above $10,000, are permitted under the Criminal Justice Act.

Rubino had said that legal fees and expenses could top $3 million, but that Noriega would sign a binding commitment to reimburse the government whenever his funds were “unfrozen.”