Report of the Senate Subcommittee on Terrorism, Narcotics and International Operations.

Report of the Senate Subcommittee on Terrorism, Narcotics and International Operations. The principal investigation that focused on allegations that drug money was being used to fund Contra operations was conducted by the Senate Subcommittee on Terrorism, Narcotics and International Operations of the Committee on Foreign Relations. In April 1986, the Subcommittee opened an investigation into allegations of illegal gunrunning and narcotics trafficking associated with the Contra war. As the investigation proceeded, according to the Subcommittee's report, information began to develop concerning the operations of international narcotics traffickers, particularly the Colombian cocaine cartels. As a result, the Contra-related allegations became part of a broader investigation into the relationship between U.S. foreign policy, narcotics trafficking and law enforcement.

The Subcommittee's report, "Drugs, Law Enforcement and Foreign Policy," published in December 1988, concluded that the drug traffickers used the Contra war and their ties to the Contras as a cover for their criminal enterprises in Honduras and Costa Rica. While the assistance provided by the drug traffickers was "a matter of survival [for the Contras], for the traffickers it was just another business deal to promote and protect their own operations."

The Subcommittee report included findings indicating:

Individuals who provided support for the Contras were involved in drug trafficking, the supply network of the Contras was used by drug trafficking organizations, and elements of the Contras knowingly received financial and material assistance from drug traffickers. In each case, one or another U.S. Government agency had information regarding these matters either while they were occurring, or immediately thereafter;

Involvement in narcotics trafficking by individuals associated with the Contra movement;

Participation of narcotics traffickers in Contra supply operations through business relationships with Contra organizations;

Provision of voluntary assistance to the Contras by narcotics traffickers, including cash, weapons, planes, pilots, air supply services, and other materials; and Payments to drug traffickers by the U.S. Department of State of funds authorized by the Congress for humanitarian assistance to the Contras, in some cases after the traffickers had been indicted by federal law enforcement agencies on drug charges, in others while the traffickers were under investigation by those agencies.

The Subcommittee did not find evidence that the Contra leadership "participated directly in narcotics smuggling in support of their war, although the largest Contra organization, the FDN, did move Contra funds through a narcotics trafficking enterprise and money laundering operation." The Subcommittee concluded that there was substantial evidence of drug smuggling on the part of individual Contras, pilots who flew supplies, mercenaries who worked for the Contras, and Contra supporters throughout the region.

The Subcommittee also found that U.S. intelligence reporting regarding narcotics issues had been "marginal and woefully inadequate." The Subcommittee noted that:

. . . despite widespread trafficking through the war zones of northern Costa Rica, [the Subcommittee was] unable to find a single case which was made on the basis of a tip or report by an official of a U.S. intelligence agency. This despite an executive order requiring intelligence agencies to report trafficking to law enforcement officials and despite direct testimony that trafficking on the Southern Front was reported to CIA officials.

Further, the Subcommittee concluded that U.S. officials involved in assisting the Contras "knew that drug smugglers were exploiting the clandestine infrastructure established to support the war and that Contras were receiving assistance derived from drug trafficking," yet did not report these individuals to the appropriate law enforcement agencies. Instead, the Subcommittee found that "some [of these] officials may have turned a blind eye to these activities." Moreover, the Subcommittee believed there were "serious questions as to whether or not U.S. officials involved in Central America failed to address the drug issue for fear of jeopardizing the war effort against Nicaragua."

The Subcommittee made only one legislative recommendation in its report that directly pertained to the Intelligence Community: "No U.S. intelligence agency should be permitted to make any payments to any person convicted of narcotics related offenses, except as authorized in writing by the Attorney General in connection with the investigation or prosecution of criminal activity." The Subcommittee also concluded in a section on "National Security Issues" that better cooperation between law enforcement and intelligence agencies should be established so that "a useful intelligence product can assist law enforcement efforts in the war on drugs," and that individuals who misrepresent themselves as working for CIA or other national security agencies should be promptly prosecuted to the full extent of the law. The Subcommittee also found that some individuals involved in "supporting narcotics trafficking did so because they were told that their actions were either on behalf of, or sanctioned by, the U.S. Government."

"The Final Report of the Independent Counsel for Iran/Contra Matters" was issued on August 4, 1993. It did not state any conclusions regarding the Contras and drug trafficking, but did indicate that the sources of Contra funds had been closely examined. Among other things, the investigation had:
. . . obtained the Swiss financial records of the Enterprise,uments from other foreign countries, extensive domestic financial records, and also the immunized testimony of Enterprise and [National Endowment for the Preservation of Liberty] officers and employees. Willard I. Zucker, the Enterprise's Swiss financial manager, was given immunity to illuminate the financial structure of the Iran and Contra operations.

One of the lawyers who was appointed to the OIC says that narcotics trafficking allegations comprised "only about one percent" of his and other investigators' interest. The issue of drug trafficking, he states, was reviewed because the OIC hoped it might find issues to use as "leverage" against targets of the investigation. For the most part, he says, any drug trafficking activity would have been "stumbled on" in the course of the investigation of other issues, especially money laundering. This former OIC staff member recalls that no funds with unexplained sources were found in the OIC investigation. However, he adds that the focus of the OIC's investigation was the expenditure, rather than the source, of funds.