(5:02) An accountant for the Medellin drug cartel explains how he was asked by the CIA to provide funding to the Nicaraguan Contra rebels.

Two of the most persistent offensives of the Reagan presidency have been the war against communism in Central America and the war on drugs here at home.

But investigations of America's secret war in Nicaragua have revealed mounting evidence that the Central Intelligence Agency has been fighting the Contra war with the help of international drug traffickers.

It is not a new story.

Tonight's FRONTLINE investigation traces the CIA's involvement with drug lords back to the agency's birth following World War II. It is a long history that asks this question: "In the war on drugs, which side is the CIA on?"

Our program was produced by Leslie and Andrew Cockburn. It is called Guns, Drugs, and the CIA and is reported by Leslie Cockburn.

Ronald Reagan:
Illegal drugs are one thing that no community in America can, should, or needs to tolerate. America's already started to take that message to heart. That's why I believe the tide of battle has turned and we're beginning to win the crusade for a drug-free America.

U.S. Senator John Kerry:
The subcommittee on narcotics, terrorism, international operations will come to order. From what we have learned these past months, our declaration on war against drugs seems to have produced a war of words and not action. Our drugs seem to have produced a war of words and not action. Our borders are inundated with more narcotics than in anytime ever before. It seems as though stopping drug trafficking in the United States has been a secondary U.S. foreign policy objective, sacrificed repeatedly for other political and institutional goals such as changing the government of Nicaragua, supporting the government of Panama, using drug-running organizations as intelligence assets, and protecting military and intelligence sources from possible compromise through involvement in drug trafficking.

RAMON MILIAN RODRIGUEZ, Government Witness
If we start with the premise that drug trafficking is morally reprehensible, our government agencies are not supposed to do anything like that, but they live in a practical world.

SUBCOMMITTEE HEARINGS

John Kerry:
Would you raise your right hand please.

NARRATOR
Ramon Milian Rodriguez saw that world as the chief accountant of the Colombian cocaine cartel responsible for managing eleven billion dollars in drug profits. Now serving a forty-three year sentence for money laundering, he has been a key witness for a senate investigation probing links between drugs and the CIA.

RAMON MILIAN RODRIGUEZ
Say for instance, the drug group was involved in a war with a terrorist group, a communist terrorist group, well, it would behove the CIA to give that drug group as much help and advice as possible so they could win their little war.

VICTOR MARCHETTI
The history of the CIA runs parallel to criminal and drug operations throughout the world, but it's coincidental.

NARRATOR
Victor Marchetti came to know the world of covert operations as a long time CIA officer. He is the highest ranking agency official ever to go public about what he learned.

VICTOR MARCHETTI, Central Intelligence Agency
It goes all the way back to the predecessor organization OSS and its involvement with the Italian mafia, the Cosa Nostra in Sicily and Southern Italy. Later on when they were fighting communists in France and--that they got in tight with the Corsican brotherhood. The Corsican brotherhood of course were big dope dealers. As things changed in the world the CIA got involved with the Kuomintang types in Burma who were drug runners because they were resisting the drift towards communism there. The same thing happened in Southeast Asia, later in Latin America. Some of the very people who are the best sources of information, who are capable of accomplishing things and the like happen to be the criminal element.

WILLIAM COLBY, Former Director, CIA
CIA has had a solid rule against being involved in drug trafficking. That's not to say that some of the people who CIA has used or been in touch with over the years may well have themselves been involved in drug traffic, but not the CIA.

RAMON MILIAN RODRIGUEZ
If the CIA is going to, if their job is to maintain the safety of our country and freedom by manipulating foreign powers to do what this country wants, and if the guy who's holding the power at that particular moment happens to be a drug lord, then you have to get involved with the drug lord.

VICTOR MARCHETTI
As a result, we kept getting involved with these kinds of people, not for drug purposes and not for personal gain but to achieve a higher ideological goal.

NARRATOR
In a refugee camp in Northeast Thailand, there live the remnants of one such involvement. They are the Hmong or Meo Tribe. While American troops were fighting in Vietnam, these people were the foot soldiers of a secret CIA army. They fought in undeclared war in Northern Laos, across the border from North Vietnam.

GENERAL RICHARD SECORD
They're hill people, they're little guys. Like most hill people they're pretty fierce. In Laos we were the guerrillas. The war in Laos was a textbook example of what can be done in unconventional warfare.

NARRATOR
General Richard Secord is one of the many veterans of the CIA secret war in Laos. Because Laos was officially neutral, American troops could not be used. The CIA relied on massive air power and a tribal army to fight the local communists and the North Vietnamese.

On the ground in Northern Laos, a handful of CIA officers directed as many as eighty-five thousand soldiers drawn from the mountain tribes. But American officials did more than just send their allies into battle.

RON RICKENBACH, Former Official, U.S. Agency for International Development
Early on, I think that we all believed that what we were doing was in the best interests of America, that we were in fact perhaps involved in some not so desirable aspects of the drug traffic, however we believed strongly in the beginning that we were there for a just cause.

NARRATOR
Ron Rickenbach served in Laos as an official for the U.S. Agency for International Development from 1962 to 1969. He was on the front lines.

RON RICKENBACH
These people were willing to take up arms. We needed to stop the Red threat and people believed that in that vein we made, you know, certain compromises or certain trade-offs for a larger good. Growing opium was a natural agricultural enterprise for these people and they had been doing it for many years before the Americans ever got there. When we got there they continued to do so.

RICHARD SECORD
When they would move from one place to another they would carry their little bags of opium, they smoked it in pipes. And opium could be bought in the streets of any village.

FRED PLATT, Former Pilot, Laos
When a farmer raised a crop of opium, what he got for his year's worth of work was the equivalent of thirty-five to forty U.S. dollars. That amount of opium, were it refined into morphine base, then into morphine, then into heroin and appeared on the streets of New York, that thirty-five dollar crop of opium would be worth fifty, sixty, a hundred thousand dollars in 1969 dollars--maybe a million dollars today.

NARRATOR
The war isolated the Meo tribespeople in their remote villages. CIA-owned Air America planes became their only life line to the outside world. While Meo children came to believe that rice fell from the sky, Meo farmer witnesses could count on Air America to move their cash crop.

RON RICKENBACH
It was then the presence of these air support services in and out of the areas in question where the product, where the opium was grown that greatly facilitated an increase in production and an ease of transhipment from the point of agriculture to the point of processing. So, when I say the Americans greased the wheels, essentially what I'm saying is we did not create opium production. We did not create a situation where drug trafficking was happening. But because of the nature of our presence, this very intense American means that was made available to the situation it accelerated in proportion dramatically.

NARRATOR
The possibility that Air America flew drugs is still hotly disputed by many former senior officers.

RICHARD SECORD
You can question any number of people who were there, who actually were there, not people who claim that they had some knowledge of rumors, you can question any number of people and I venture to say they will all support what I'm saying, and that is that there was no commercial trade in opium going on.

RON RICKENBACH
I was on the airstrip, that was my job, to move in and about and to go from place to place and my people were in charge of dispatching aircraft. I was in the areas where opium was transshipped, I personally was a witness to opium being placed on aircraft, American aircraft. I witnessed it being taken off smaller aircraft that were coming in from outlying sites.

NEIL HANSEN, Former Pilot, Air America
Yes I've seen the sticky bricks come on board and no one was challenging their right to carry it. It was their own property.

NARRATOR
Neil Hansen is a former senior Air America pilot, now serving a sentence for smuggling cocaine.

NEIL HANSEN
We were some sort of a freebie airline in some respects there, whoever the customer or the local representative put on the airplane we flew.

Primarily it was transported on our smaller aircraft, the Helios, the Porters and the things like that would visit the little outlying villages. They would send their opium to market.

NARRATOR
From the villages, the planes carried their cargo over the mountains to Long Chien, CIA headquarters for the war. It was a secret city. Unmarked on any map and carefully hidden from outsiders, Long Chien became one of the busiest airports in the world, with hundreds of landings and takeoffs a day.

ED DEARBORN, Former Pilot, Air America
At the height of the war when there were thousands of people in there, there were villages all over, there were landing pads up on what we called Skyline drive which was the ridge on the north side of Long Chien. T-28s were going in and out of there, C-130s were going in and out of there. It was an amazing place, just amazing.

NARRATOR
Ed Dearborn is a veteran of Long Chien and Air America. A key figure in the covert air operation.

ED DEARBORN
From a sleepy little valley and village you know, surrounded by the mountains and the karst, this great war machine actually was working up there.

It was the heart and pulse of Laos at that time, more commonly referred to as the CIA's secret base you now, heh heh heh.

NARRATOR
To lead their Meo army, the CIA selected Vang Pao, a former lieutenant in the French colonial army in Laos. The agency made very effort to boost his reputation.

CIA FILM

Speaker:
His name was Vang Pao, a charismatic, passionate and committed man. A patriot without a country.

NARRATOR
Vang Pao, however, did more than just lead his people in war. According to observers he and his officers dominated the trade in the Meo farmers' cash crop. In 1968, one visitor got a first-hand look at this trade in the village called Long Pot.

JOHN EVERINGHAM, Photographer
I was given the guest bed in the village, in fact the district headman's house, and I ended up sharing it with a guy in military uniform who I later found out was an officer of the Vang Pao army and one morning I was awoken very early by this great confusion of people and noise at the bottom of the bed, just, literally people brushing against my feet with the packets of black sticky substance in bamboo tubes and wrapped up in leaves and bits and things and the military officer who was there was weighing it out and paying off a considerable amount of money to these people and this went on for most of the morning and it went on for several mornings he brought up a great deal of this substance which I then started to think about and asked and had it confirmed that this was in fact raw opium.

NARRATOR
War photographer John Everingham has lived in Southeast Asia for over twenty years. He was one of the very few outsiders who dared to look for and photograph the secret army for himself.

John Everingham:
They all wore American supplied uniforms and the villagers very innocently and very openly told me, "oh they took it to Long Chien," and I asked them how they took it and they said, "oh well they took it on the helicopters as everything else that went to and from Long Chien went by helicopter and so did the opium."

Frontline:
And whose helicopters were they?

John Everingham:
Well they were the Air America helicopters which were on contract to the CIA.

NEIL HANSEN
We did not go down to the embassy and be privy to their secret briefings or anything else. We flew the airplanes. If they put something on the airplanes and told you not to look at it you didn't look at it, because you'd no longer be employed.

JOHN EVERINGHAM
I know as a fact soon after the army was formed the military officers soon got control of the opium trade. It helped not only them make a lot of money and become good loyal officers to the CIA but it helped the villagers. The villagers needed their opium carried out and carried over the land in a war situation that was much more dangerous and more difficult, and the officers were obviously paying a good price 'cos the villagers were very eager to sell to the military people.

HARRY ADERHOLT, U.S. General
That's hogwash. No way and as far as the agency ever, ever advocating that is do you think I would be in an organization where I've devoted my life to my country--involved in a operation like that without blowing the whistle?--absolutely not.

NARRATOR
For veterans like General Aderholt and General Secord the war in Laos is now commemorated at nostalgic reunions. Last fall they gathered at a Florida air base to talk over old times and current business.

While Vang Pao does not attend such functions, he is well remembered by his old comrades.

Frontline:
Was the agency responsible for people's salaries, were they paying Vang Pao?

Harry Aderholt:
Of course, they were a hundred percent responsible, because Vang Pao was responding to agency requirements, even though they may have come from the highest levels of the U.S. government, yes, of course.

Frontline:
He was in the chain of command.

Harry Aderholt:
Yes.

Frontline:
Did you work with Vang Pao?

Richard Secord:
Sure, all the time.

Frontline:
What was your relationship?

Richard Secord:
I was his supplier of air, therefore he stayed in close contact with me.

Frontline:
Were you in charge of supplying Air America planes?

Richard Secord:
For the tactical air operations, yes.

NARRATOR
The movement of Air America planes say witnesses were influenced by Vang Pao's business requirements.

Ron Rickenbach:
Vang Pao wanted control of the aircraft-- sure, he would do the work that needed to be done but it would give that much more freedom and that much more flexibility to use these aircraft to go out and pick up the opium that needed to be picked up at this site or that site and to bring it back to Long Chien, and there was quite a hassle and Vang Pao won. Not only did he get control of the aircraft, but there was also a question of the operational control of the airplanes that were leaving Long Chien to go south, even into Thailand, and there was an embarrassing situation where the Americans knew that this could be exposed and it would be a very compromising situation. The way they got around that was to concede, to create for Vang Pao his own local airline, and Xieng Kouang airlines came into reality as a direct result of this compromise that was worked out, and they brought in a C-47 from the states and they painted it up nice and put Xieng Kouang airlines on it and they gave it to Vang Pao, and that aircraft was largely used for the transshipment of opium from Long Chien to sites further south.

Frontline:
Air Opium?

Ron Rickenbach:
Air opium.

Harry Aderholt:
Those airlines didn't really belong to General Vang Pao.

Frontline:
They belonged to the agency.

Harry Aderholt:
They belonged to the agency. They were maintained by the United States government in the form of Air America or Continental, so they didn't really own anything. It wasn't something he could take away with him, it was something that we controlled every iota of that operation, lock, stock and barrel.

Frontline:
You know what the nickname for that airline was?

Richard Secord:
No.

Frontline:
Opium Air.

Richard Secord:
I've never heard that before.

NARRATOR
Back in the old days the men who flew for Air America and drank in the Purple Porpoise Bar in Vientiane were less discreet.

Most of them are long gone and far away from Laos now but one legendary CIA officer still lives across the Mekong River close to his old mountain battleground.

RON RICKENBACH
The man that was in charge of that local operation was a man by the name of Tony Poe, and he was notorious. He had been involved with the agency from the OSS days he was a World War II combat veteran and he had been with the agency from its inception and he was the prototype operations officer. They made a movie about him when they made Apocalypses Now. He was the caricature of Marlon Brando.

NARRATOR
Until now, Tony Poe has never talked publicly about the Laos operation. He saw it from beginning to end. one of Vang Pao's early case officers, Poe claims he was transferred from Long Chien because unlike his successors, he refused to tolerate the Meo leader's corruption.

TONY POE, Former CIA Officer
You don't let him run loose without a chain on him. You gotta control him just like any kind of an animal or a baby. You have to control him. Hey! He's the only guy that had a pair of shoes when I first met him--what are you talking about, why does he need Mercedes Benz, apartments and hotels and homes where he never had them in his life before. Why are you going to give it to him?

Frontline:
Plus he was making money on the side with his business?

Tony Poe:
Oh, he was making millions, 'cos he had his own source of, uh, avenue for his own, uh, heroin.

Frontline:
What did he do with the money?

Tony Poe:
What do you mean? U.S. bank accounts, Switzerland, wherever.

Frontline:
Didn't they know, when Vang Pao said 'I want some aircraft', didn't they know what he wanted that for?

Tony Poe:
I'm sure we all knew it, but we tried to monitor it, because we controlled most of the pilots you see. We're giving him freedom of navigation into Thailand, into the bases, and we don't want him to get involved in moving, you know, this illicit traffic--O.K., silver bars and gold, O.K., but not heroin. What they would do is, they weren't going into Thailand, they were flying it in a big wet wing airplane that could fly for thirteen hours, a DC-3, and all the wings were filled with gas. They fly down to Pakse, then they fly over to Da Nang, and then the number two guy to President Thieu would receive it.

NARRATOR
Nguyen Van Thieu was president of South Vietnam from 1967 to 1975. Reports at the time accused president Thieu of financing his election through the heroin trade. Like Vang Pao, he always denied it, remaining America's honored and indispensable ally.

Tony Poe:
They were all in a contractual relationship:Some of this goes to me, some of this goes to thee. And you know just the bookkeeping--we deliver you on a certain day; they had coded messages and di-di-di. That means so and so as this much comes back and goes into our Swiss bank account. Oh they had a wonderful relationship and every, maybe, six months they'd all come together, have a party somewhere and talk about their business:is it good or bad. It is like a mafia, yeah, a big organized mafia.

NARRATOR
By the end of 1970, there were thirty thousand Americans in Vietnam addicted to heroin. GI's were dying from overdoses at the rate of two a day.

WILLIAM COLBY
When the drug traffic became a real problem to the American troops in Vietnam, then the CIA was asked by President to get involved in the program to limit that traffic and stop it.

NARRATOR
But in 1972, a U.S. intelligence agent in Southeast Asia sent a secret field report to customs. It suggested a serious conflict of interest: quote--"It was ironic that the CIA should be given the responsibility of narcotics intelligence, particularly since they were supporting the prime movers. Even though the CIA was, in fact, facilitating the movement of opiates to the U.S., they steadfastly hid behind the shield of secrecy and said that all was done in the interest of national security." End quote.

VICTOR MARCHETTI
I doubt that they had any strong deep understanding of what they were allowing to happen by turning their head the other way and letting Vang Pao ship his dope out which was made into heroin which was going to our troops, which was corrupting people throughout Southeast Asia and back here, the effect it had on crime, I doubt that any one of them really thought in those terms at the time.

NARRATOR
While the heroin trade was flourishing by 1970, the war in Laos was going badly. As the communists steadily advanced, the civilian population faced a choice between evacuation to refugee camps or being bombed by the U.S. Air Force. These operations only added to the huge cost of feeding, training and supplying the secret army. For a war that did not officially exist, the CIA was spending heavily.

Harry Aderholt:
The money was always there. We had a program--In fact, that's the reason the agency supply system was so much better than the military supply system.

Frontline:
Cash?

Harry Aderholt:
Cash. They didn't have to go through a procurement system, a bureaucracy, that made everything cost three times as much.

Fred Platt:
On two different occasions I brought bags up that I knew was payroll. Wish I'd have crashed on those times, and been able to stick that somewhere in the jungle and go get it, 'cos it was unaccounted funds.

Frontline:
How much money would be in a bag?

Fred Platt:
Well I--you know, a bag would probably have a couple of hundred thousand dollars in it, depending on where you were going with it and who it was going to.

VICTOR MARCHETTI
I was sitting up there in the Director's--on the Director's staff, and that's where it all came together.

NARRATOR
The CIA Director's senior staff prepared the agency's official budget.

Victor Marchetti:
For Laos, I think it was around thirty million, perhaps forty million, but it was very small.

Frontline:
Was that enough to run this war?

Victor Marchetti:
Well, I don't think so. I would think the war was costing quite a big, probably--if all the costs were pulled together, I would imagine it would probably cost as much as the entire agency's budget.

Frontline:
How was the war in Laos financed?

Richard Secord:
U.S. appropriated funds.

Frontline:
Through which agency?

Richard Secord:
I think through the CIA and through the Defense Department both.

NARRATOR
A secret Pentagon report put the Defense Department contribution to the war in Laos at a hundred and forty-six million dollars in 1970. But the report also showed that the CIA was spending up to sixty million dollars more than they were getting from Congress.

Victor Marchetti:
Well, there may have been other funds generated by Vang Pao himself through his dope operations. After all I mean they were poppy growers and opium smugglers, so I imagine there was money being earned that way that was Vang Pao's contribution to the war.

Frontline:
Is it conceivable that the CIA would fight a war with dope money?

Victor Marchetti:
Well, yes, in the sense that they would not sell dope to earn money to support an operation. But they would look the other way if the people they were supporting were financing themselves by selling dope.

Harry Aderholt:
General Vang Pao was financed by U.S. government funds.

Frontline:
How much was he getting?

Harry Aderholt:
I don't know what General Vang Pao was getting, but the Meo program, I'm sure, ran several hundred million dollars. At the end, to fight a war like we were fighting, and to have an airline...I don't know what the funding was, but I'm sure the Congressional Committees have access to those records.

NARRATOR
As a former chief counsel for the House Select Committee on Narcotics, Joe Nellis did indeed have access to the records.

Joe Nellis:
Vang Pao had a heavy hand in the production of heroin in that area.

Frontline:
How much of the money that was going to pay these thousands and thousands of tribesmen to fight for us, for the CIA. Where was that money coming from?

Joe Nellis:
From the trade.

Frontline:
From the opium trade?

Joe Nellis:
Yes surely.

Frontline:
How would that work?

Joe Nellis:
Well, money would be paid for the transportation, and the safe arrival of the merchandise to its proper destination, and that money would be paid to the carrier, the person transporting the merchandise and that money would be used to pay off the farmers. But as I told you, they got so little of it that there was an enormous amount left over, and it was that money was used to feed to the peasants in order to get them to continue not only fighting for us but also continuing to give us very important intelligence about the movement of the North Vietnamese.

Richard Secord:
We wouldn't have permitted it, it would have been too dangerous.

Frontline:
Why?

Richard Secord:
Because the American system wouldn't put up with it.

Joe Nellis:
I have never revealed any classified information that I obtained when I was with the committee and I'm not going to start now, but I do know that that was verified.

Frontline:
That it was known here?

Joe Nellis:
Yes.

Frontline:
Well, without getting into classified information, was that at a high level or a low level?

Joe Nellis:
Well, I can't discuss the level. Let's put it this way; you're familiar with the Iran-Contra business.

Frontline:
Yes.

Joe Nellis:
That was known at a very high level, it was known at all sorts of levels really--it's amazing that they could keep it secret as long as they did, and I guess that was the situation with Air America. People in CIA certainly knew it, and at that time Dick Helms I think was the head of the office, and I'm sure he must have reported it to Nixon.

NARRATOR
Former CIA Director Richard Helms told us: "I knew nothing of this. It certainly was not policy."

RICHARD SECORD
It's patently impossible. There are thousands of people involved in the intelligence community in the United States who read the reports, who are intimately familiar with details of field activities, and no such operation could ever be kept secret from the authorities in Washington, and would never be tolerated, never, not for a minute.

Frontline:
How many people knew what was going on?

Joe Nellis:
Oh I don't think it was very many at all--

Frontline:
Five?

Joe Nellis:
--A handful--

Frontline:
Ten?

Joe Nellis:
--A handful, maybe a hundred.

RON RICKENBACH
I personally did not complain, not at the time. I certainly complained after the fact, but that came as a result of my own awakening as to the rather horrible implications of what we were doing and I left working for the government rather abortively because I just could not tolerate myself-what was going on.

NARRATOR
His disgust was not only at the drug trade, but at the human cost of a war in which the recruits were as young as eight years old.

RON RICKENBACH
These people were absolutely decimated. The war itself took its own toll. Thousands and thousands of these people were either maimed or killed or died of disease or malnutrition secondary to the effects of the war. Many were bombed, many were blown away by conflict and combat. What was left after the war was the exodus to the south or to the west.

These people have had their whole life destroyed for helping out in our war. For helping out in our war.

NARRATOR
By 1981, six years after leaving Laos, the CIA was fighting another secret war, this time in Central America. The secret army were the Contras, fighting to overthrow the leftist government of Nicaragua. Once again, they were trained and equipped by the CIA. It was time for the old hands to go to work again.

Richard Secord:
It's an irregular war in Central American, and there aren't a lot of people who have experience in irregular warfare, paramilitary warfare, so it would be natural to see people who are experienced in this kind of operation utilized again.

ED DEARBORN
It's the old boy network as somebody called it one time. The call goes out and who's got the experience? It's the same war, different place and different names. We're not speaking Laotian, we're speaking Spanish now, but it's the same darn war, I don't care what anybody says.

NARRATOR
Eugene Hasenfus was just one of a number of veterans from Laos who answered the call in Central America. When his plane was shot down over Nicaragua in October 1986, an Air America handbook turned up in the wreckage. Hasenfus had operated out of the Illopango Airbase in El Salvador, headquarters for the White House Contra resupply network. His commander there had been a veteran of another old CIA network. Felix Rodriguez, a Cuban American, had been sent down from Miami.

FELIX RODRIGUEZ
The feeling that I see now in the Nicaraguan freedom fighters, I know their experience, because I was left inside once, and I wanted to help them as much as I could.

NARRATOR
Like Rodriguez, the Miami Cubans of Brigade 2506 are still ready to support the anti-communist cause, thirty years after their failed invasion of Cuba. They were willing recruits for the CIA's war against Nicaragua. The Brigade supplied soldiers in the field, commanders and fundraisers for the Contra cause.

The Brigade had been created and trained by the CIA for the Bay of Pigs invasion in 1961. After their defeat the CIA continued to maintain and use this skilled force of covert operators, wherever they were needed. Their numbers grew into the thousands. They had their own navy, as well as other assets provided by the CIA, including businesses and banks.

Manuel Artime:
I was in charge...

NARRATOR
Manuel Artime was the agency's favorite Cuban, handpicked to command both the Bay of Pigs and the covert operations that followed. In 1972, he recruited and arranged CIA training for a brilliant young accountant called Ramon Milian Rodriguez.

Ramon Milian Rodriguez:
He ran covert operations out of Miami for the CIA.

Frontline:
So Artime had a whole group of people who were his people?

Milian Rodriguez:
Oh yes, Artime ran a very large operation, it was very large. It was very active, all over Central and South America.

Manuel Artime:
A lot of Cubans go to work with the Central Intelligence Agency in foreign operations.

Milian Rodriguez:
He was in charge of, among other things, the Watergate burglars and things like that.

Frontline:
Did you launder any money for the Watergate guys?

Milian Rodriguez:
I made payments for the Watergate burglars, yes. I start out in life in one scandal and I've ended it in another, it seems. After Watergate, the group that Manuel Artime was running in Miami was disbanded. The fact that the burglars were Cuban really hurt in Miami, so you had a situation where people were laid off. They were just given the assets. For instance, if you were running a print shop, you kept the print shop. If you had a boat, as there were many boats for surveillance and intelligence, you just kept the boat. That was really the starting off point where you got some well trained people into the drug business.

RICHARD SECORD
Many, many Cubans worked for a time in that time. Some of them have become very successful good American citizens. Others have become gangsters.

NARRATOR
But with a secret Contra was to fight, the agency was more interested in covert skills than good citizenship, particularly when it came to raising money. Ramon Milian Rodriguez was ideally placed. With access to the limitless resources of the Medellin cocaine cartel, he had no problem raising cash.

SUBCOMMITTEE HEARINGS

John Kerry:
You've been a supporter living in the Cuban community, passionately anti-communist and anti-Castro. You've also been a supporter of the Contras. Is that accurate?

Ramon Milian Rodriguez:
Yes sir.

John Kerry:
Are you aware whether or not narcotics proceeds at some time may or may not have supported Contra efforts?

Milian Rodriguez:
Yes sir. Narcotics proceeds were used to shore up the Contra effort.

John Kerry:
Did you personally play a role in some of the transfer of that money?

Milian Rodriguez:
Yes I did.

NARRATOR
In 1984, when Congress cut off Contra funding, the White House turned to other sources for support. According to documents, Ramon Milian Rodriguez had been laundering foreign payments for the CIA up through 1982, at the same time as he was laundering cash for the cocaine cartel. He says the CIA turned to him again.

MILIAN RODRIGUEZ
To have people like me in place that can be used, is marvelous for them. The agency, and quite rightly so, has things that they have to do which they can never admit to an oversight committee, all right, and the only way they can fund these things is through drug money or through illicit money that they can get their hands on in some way.

KERRY HEARINGS

John Kerry (in hearings):
Was any of the money traceable to drugs or to drug related transactions?

Milian Rodriguez:
The money that we--you're taIking about the money that we provided?

John Kerry:
That's right.

Milian Rodriguez:
No sir.

John Kerry:
And why was that?

Milian Rodriguez:
Because we're experts at what we do.

JOSE BLANDON

Frontline:
Who is Ramon Milian Rodriguez?

Jose Blandon:
He worked for the Cartel.

Frontline:
So he was laundering money for the cartel?

Jose Blandon:
Yes.

Frontline:
And he worked with Noriega?

Jose Blandon:
Yes.

NARRATOR
Until last year, Jose Blandon was General Manuel Noriega's head of political intelligence in Panama. He was a key U.S. government witness for the grand jury that indicted Noriega for drug trafficking.

General Noriega was more than ready to support the Reagan administration in the Contra war after Congress cut off funding.

Frontline:
How important was Noriega to the White House in the Contra resupply effort?

Jose Blandon:
He play a key role in the supply of arms to the Contras.

Frontline:
So when various administration officials like Oliver North met with General Noriega, did they know that he was involved in narcotics trafficking?

Jose Blandon:
I think that the United States had information that Noriega is involved in drugs since at least eight years.

Frontline:
Eight years?

Jose Blandon:
Yes, so they knew about that.

Frontline:
Were they just looking the other way on his drug trafficking?

Jose Blandon:
The problem is that for the white House, I mean for the administration, the Reagan administration, Nicaragua was so important. The focus of all the foreign policy of the United States in Central America was Nicaragua and the fight against the communists, so for them drugs was something in second place.

Frontline:
Drugs took second place?

Jose Blandon:
Yes.

NARRATOR
Noriega's Contra support earned him powerful friends in Washington, including the CIA Director William Casey. Noriega was on his payroll at a reported two hundred thousand dollars a year.

Jose Blandon:
That was a very special relationship.

Frontline:
What kind of special relationship?

Jose Blandon:
Well, Noriega talked with Casey and they had at least, that I know, more than three meetings. And he always received the support of Casey.

Frontline:
What kind of support from Casey?

Jose Blandon:
All kinds of support. Political support. So when somebody tried to investigate anything, Casey stopped it, look this is a very important person in this war

Frontline:
So Casey would actually stop investigations of Noriega?

Jose Blandon:
Yes, he was a man that helped Noriega very much.

NARRATOR
According to Blandon, Noriega was not the only drug trafficker to reap the rewards of Contra support. The cocaine cartel also saw the advantages of backing U.S. policy.

Jose Blandon:
That's the reason why the Cartel of Medellin decided in 1983 to cooperate with the Contras.

Frontline:
So you're saying that in 1983 the Cartel started supporting the Contras?

Jose Blandon:
Yes.

Frontline:
And the reason was because they knew that they could therefore get protection?

Jose Blandon:
Yes.

Frontline:
How did they help them out? Was it arms, plus cash, or was it jut arms? How did that work?

Jose Blandon:
They work in different ways. First, they established the network to supply arms, and also they pay in cash.

SUBCOMMITTEE HEARINGS

General Paul Gorman:
If one wants to organize an armed resistance or an armed undertaking for any purpose; the easy place to get the money, the easy places to get the guns are in the drug world.

NARRATOR
General Paul Gorman was the commander of the U.S. southern command, based in Panama, from 1982 to 1985.

PAUL GORMAN
The most ready source of money, big money, easy money, fast money, sure money, cash money is the narcotics racket.

NARRATOR
General Gorman was asked whether the Contras could have relied on drug cash.

SUBCOMMITTEE HEARINGS

John Kerry:
Based on your knowledge of how it works and what you understood from your experience down there, it wouldn't surprise you?

Paul Gorman:
Not at all, particularly if they'd been on somebody's payroll and had their funds cut off. It would be the natural recourse of those people.

Frontline:
How much money was actually contributed by you or through you for the Contras, total?

Ramon Milian Rodriguez:
It was a little under ten million dollars.

Frontline:
I presume it wasn't all sent in one suitcase.

Ramon Milian Rodriguez:
Oh no no. It was delivered on a per need basis. You know, they'd say we need so much at such a location and we'd take care of the logistics of it.

NARRATOR
Milian Rodriguez says he used a series of Cuban controlled front companies in Miami and Costa Rica to funnel the ten million dollars to the Contra cause. These fronts ranged from banks to obscure fish companies located in out of the way Miami shopping centers or in provincial port towns in Costa Rica. The route for the drug cash was carefully disguised.

SUBCOMMITTEE HEARINGS

John Kerry:
Are you familiar with the name of a company called Frigirificos de Puntarenas.

Ramon Milian Rodriguez:
Yes sir, I am.

John Kerry:
What is that company?

Ramon Milian Rodriguez:
Well it's a shrimp processing warehouse, but more importantly, was one of the fronts that we used.

John Kerry:
Did you set it up? What role did you play in it?

Ramon Milian Rodriguez:
I was the key person in setting up the interlocking chain of companies around Frigorificos de Puntarenas.

John Kerry:
Were payments or arrangements made by which the Contras could receive money through Frigorificos?

Ramon Milian Rodriguez:
Yes sir.

Ramon Milian Rodriguez:
If you add up what it cost to run the Contra operation and you get to a bottom line figure, and you deduct from that the known sources, you're going to have a tremendous deficit and I think the question has to be where...you know, how was the deficit taken care of?

Frontline:
There was a deficit?

Ramon Milian Rodriguez:
Yes.

Frontline:
they realized that.

Ramon Milian Rodriguez:
And we took care of it.

IRAN CONTRA HEARINGS

Congressman Les Aspin:
I've been spending some time looking at the numbers here of the amount of aid that the Contras were getting at various time and I come to the conclusion that we're missing something, that there's got to be another source of funding for the Contras other than those which this committee has so far identified.

NARRATOR
Last summer, the Iran Contra committees were aware that there had been an unacknowledged source of money from somewhere.

Congressman Aspin:
I think there's got to be some other source of funds that we, we meaning this committee has not yet uncovered.

Admiral Poindexter:
Well I don't think I can help you there, I don't know of anything else.

Frontline:
The war cost so much every day.

Richard Secord:
Uh-huh.

Frontline:
They were getting a certain amount, thanks to you, through Switzerland.

Richard Secord:
Any many others, yes.

Frontline:
And many others. But the war cost more than that.

Richard Secord:
Uh-huh.

Frontline:
Do you have any idea how much more it cost?

Richard Secord:
Well I think, uh--Director Casey asked me that, a similar question in the spring of '86 I think it was an I told him that I thought that the Contra effort would need a minimum of ten million dollars over the next three months over and above the monies that we could apply in order to hang in there through the summer months til the Congress would act. There was some expectation in the White House I guess, and in State, that the Congress would act much sooner than they acted. Things were going downhill rapidly.

SUBCOMMITTEE HEARINGS

Senator D'Amato:
Did the people who received this money, were they aware of the fact that this was drug money, the proceeds came from drug money?

Ramon Milian Rodriguez
I--let's put it like this, Senator D'Amato, the Contra peasant in the field did not but the men who made the contact with me did. At that time I was under indictment, I mean I was red hot.

NARRATOR
His arrest was well publicized. The five million dollars seized with him brought Vice President Bush to Miami to pose with what the money launderer termed his petty cash.

Frontline:
Did Ramon Milian Rodriguez have any friends who were working in the Contra resupply network?

Jose Blandon:
Yes.

Frontline:
Who would that have been?

Jose Blandon:
Felix Rodriguez.

Frontline:
Felix Rodriguez?

Jose Blandon:
Yes.

NARRATOR
A veteran of the Artime organization and the CIA, Felix Rodriguez was a key member of the White House resupply network. The Senate was told by the money launderer that it was Felix Rodriguez who solicited the drug cash.

RAMON MILIAN RODRIGUEZ
You have a fellow that's a tremendous patriot, like Felix Rodriguez, who has sacrificed his personal needs for the cause of fighting communism and all of a sudden he finds himself in a position where his troops are going to run out of money. They won't have money for bullets, for food, for medicine. I think in the case of Felix it might have been something done out of desperation, they had to get money and they were willing to get it from any source to continue their war.

Richard Secord:
When they go on the offense they burn up a lot of ammunition, weapons, they need a lot of air resupply, radios, uniforms, boots, food, and all this stuff. You know, the cost just goes up.

Frontline:
Well there were allegations that Felix Rodriguez was desperately trying to make up that deficit.

Richard Secord:
If he was it certainly didn't come to our attention.

Frontline:
So you have no knowledge of it?

Richard Secord:
No, not at all.

Frontline:
Well the allegations are that he tried to make up the deficit by soliciting money from drug traffickers.

Richard Secord:
Well I thought you were circling back to that but certainly we didn't hear anything like that at the time. As I said Felix is no friend of mine but I'd be astonished if he were involved with drug traffickers, I really would.

Frontline:
When General Noriega told you that Felix Rodriguez was friendly with Ramon Milian Rodriguez, were you surprised to hear that Felix Rodriguez would be involved with a drug traffickers?

Jose Blandon:
Surprised? Why?

NARRATOR
According to Blandon, while Felix Rodriguez was supplying the Contras from Illopango, he was receiving arms shipments with the help of this man: Mike Harare, a former Israeli intelligence agent and a key aide to General Noriega. Harare, says Blandon, was also in business for the cocaine cartel, using the same network to ship arms and drugs, all with the sanction of the CIA.

Frontline:
Did he get involved with narcotics trafficking in the course of helping to supply the Contras with weapons?

Jose Blandon:
Yes, that was part of the business.

Frontline:
So he was moving cocaine --

Jose Blandon:
--Yes--

Frontline:
--From Colombia to the United States?

Jose Blandon:
No. They moved the cocaine from Colombia to Panama, to the airstrips in Costa Rica or Honduras to the United States.

Frontline:
At the same time as he was gathering up arms for the Contras?

Jose Blandon:
Yes.

Frontline:
Where were the arms coming from?

Jose Blandon:
From Yugoslavia, and from the East bloc, the communist countries

NARRATOR
From 1983 to 1985, says Blandon, this network, supported by Israeli and U.S. intelligence was a major source of arms for the Contras.

Frontline:
Harare, the Israeli, who was working with Noriega, was working with Felix Rodriguez?

Jose Blandon:
Yes.

Frontline:
And Harare at the same time was involved with drug trafficking?

Jose Blandon:
Yes.

Frontline:
Who was Felix Rodriguez working for, or with, when he approached you?

Ramon Milian Rodriguez:
Well the only government mention he made was Vice President Bush.

Frontline:
And what was his relationship with Bush as you understood it?

Ramon Milian Rodriguez:
He was reporting directly to Bush. I was led to believe he was reporting regularly to the Vice President.

Richard Secord:
He was in touch with the VP's office on a number of occasions. I really don't know, I've never understood that relationship.

Ramon Milian Rodriguez:
The request for the contribution made a lot more sense because Felix was reporting to George Bush. If Felix had come to me and said I'm reporting to anyone else, let's say, you know, Oliver North, I might have been more skeptical, I didn't know who Oliver North was and I didn't know his background. But you know, if you have a...let's say we'll call him an ex-CIA operative, even though it's not true you know, he's a current operative...

Frontline:
Who is?

Ramon Milian Rodriguez:
Felix. You know, everyone says he's ex-CIA--

Frontline:
This is Felix Rodriguez--

Ramon Milian Rodriguez:
--Yeah, there's nothing ex about him. But if you have a CIA, what you consider to be a CIA man coming to you saying 'I want to fight this war, we're out of funds, can you help us out. I'm reporting directly to Bush on it', I mean it's very real, very believable, here you have a CIA guy reporting to his old boss.

NARRATOR
This February 1985 memo from General Paul Gorman confirms that Bush and the Cuban had known each other for years, and that Rodriguez' primary responsibility was Nicaragua and the Contra FDN forces.

Rodriguez quote "is operating as a private citizen, but his acquaintanceship with the Vice President is real enough, going back to the latter's days as Director of Central Intelligence. Rodriguez' primary commitment to the region is in Nicaragua, where he wants to assist the FDN."

IRAN CONTRA HEARINGS

Iran Contra investigator:
Did you say anything to Vice President Bush about your activities on behalf of this resupply operation?

Felix Rodriguez:
No sir, not to him or anyone on his staff.

NARRATOR
But when Hasenfus was shot down, the first call that Rodriguez made from Central America was to a staffer of Vice President Bush. Questions about that call forced the Bush office to put out a summary, listing seventeen meetings with Rodriguez, including three with Bush himself. Nevertheless the Vice President has insisted that these contacts with Rodriguez concerned only El Salvador, not the Contras.

Ramon Milian Rodriguez:
He wasn't selling drugs. We were, you know, he was just raising money, tainted money granted, but for a very good cause.

NARRATOR
Felix Rodriguez claims he met with the cartel's money launderer only once, and never solicited cash.

SUBCOMMITTEE HEARINGS

John Kerry:
We permitted narcotics we were complicitous as a country in narcotics traffic at the same time as we're spending countless dollars in this country to try to get rid of this problem. It's mind boggling.

Frontline:
Is the war on drugs a big priority in this country, really?

Joe Nellis:
Oh no, no, it's largely a joke. There is no war on drugs. No president who's ever announced one has ever fought one, and no President who's ever announced one has ever given the soldiers the ammunition with which to fight one.

Senator D'Amato:
The intelligence agencies of this country by God should be involved in this battle instead of working with the scum of the earth, which they've been doing. They should be involved in this battle as a crusade for the survival of this country and this hemisphere.

John Kerry:
I don't know if we've got the worst intelligence system in the world, I don't know if we've got the best and they knew it all and just overlooked it. But no matter how you look at it, something's wrong. Something is really wrong out there.

RAMON MILIAN RODRIGUEZ
Now, you can deny U.S. government involvement in drugs all you wanted, but the patterns are there and the players are there popping up again and, you know, eventually somebody's going to realize what the truth is.

JUDY WOODRUFF
This summer, both Ramon Milian Rodriguez and Felix Rodriguez are expected to testify publicly in front of Senator Kerry's committee about the drug cartel's alleged 10 million dollar contribution to the Contras.

Vice President Bush declined to be interviewed for this program or to reply to FRONTLINE's written questions about his relationship with Felix Rodriguez.

Thank you for joining us. I'm Judy Woodruff. Good night.