November 3, 1998
CIA admits it overlooked Contras' links to drugs

                  WASHINGTON (CNN) -- The CIA overlooked or ignored reports that
                  the Nicaragua Contra rebels financed their fight to oust the communist
                  Sandinistas through the sale of drugs in the United States, according to an
                  internal CIA report.

                  Fredrick Hitz, the now-retired CIA inspector-general who supervised the
                  report, admitted that monitoring of the Contras was lax.

                  "We fell down on accountability.... There was a great deal of sloppiness and
                  poor guidance in those days out of Washington," Hitz said.

                  Field offices described criminal activities

                  The 450-page report, issued by the CIA last month, for the first time reveals
                  information sent to the CIA by its field operatives about the activities of the
                  Contra groups during the 1980s.

                  One cable sent to the CIA from a field office described a "trial run" of a drug
                  route from Honduras to Miami in July 1981 to benefit the Nicaraguan
                  Revolutionary Democratic Alliance (ADREN).

                  An earlier cable cited in the report said the rebel group felt it was being
                  "forced to stoop to criminal activities in order to feed and clothe their cadre."

                  The report also cited the use of a Honduran businessman, Alan Hyde, for
                  logistical support to the Contras, despite Hyde's identification in a 1984 U.S.
                  Defense Department report as "a businessman making much money dealing
                  in 'white gold,' i.e., cocaine."

                  DEA discouraged from investigating

                  The report details cases where the CIA dissuaded other federal agencies,
                  notably the Drug Enforcement Administration (DEA), from probing the
                  activities of Contra groups and their contractors. In one instance, the CIA
                  discouraged the DEA from examining Oliver North's efforts to evade legal
                  restrictions on Contra aid through a secret supply operation in El Salvador,
                  according to the report.

                  The report is the second released by the agency in response to a series of
                  articles that appeared in the San Jose Mercury News in the summer of
                  1996. Those articles accused the CIA of forming an alliance with drug
                  dealers and Contra groups to introduce crack cocaine into south-central Los
                  Angeles during the 1980s.

                  While the inspector-general's report contradicts the CIA's previous claims
                  that it had little information on the Contras and drug-running activities, it
                  offers no evidence supporting the newspaper's allegations.

                          Reporter Jonathan Aiken contributed to this report.