Delaval is a freelance writer and filmmaker and was a production assistant for "Drug Wars." This article was edited by Lowell Bergman, series reporter for "Drug Wars."

In 1996 the agency was accused of being a crack dealer.

A series of expose articles in the San Jose Mercury-News by reporter Gary Webb told tales of a drug triangle during the 1980s that linked CIA officials in Central America, a San Francisco drug ring and a Los Angeles drug dealer. According to the stories, the CIA and its operatives used crack cocaine--sold via the Los Angeles African-American community--to raise millions to support the agency's clandestine operations in Central America.

The CIA's suspect past made the sensational articles an easy sell. Talk radio switchboards lit up, as did African-American leaders like U.S. Rep. Maxine Waters, D-Los Angeles, who pointed to Webb's articles as proof of a mastermind plot to destroy inner-city black America.

One of the people who was accused in the San Jose Mercury-News of being in the midst of the CIA cocaine conspiracy is one of the most respected, now retired, veteran D.E.A. agents, Robert "Bobby" Nieves.

"You have to understand Central America at that time was a haven for the conspiracy theorists. Christic Institute, people like Gary Webb, others down there, looking to dig up some story for political advantage," Nieves said. "No sexier story than to create the notion in people's minds that these people are drug traffickers."

But in the weeks following publication, Webb's peers doubted the merit of the articles. Fellow journalists at the Washington Post, New York Times and Webb's own editor accused him of blowing a few truths up into a massive conspiracy.

Amongst Webb's fundamental problems was his implication that the CIA lit the crack cocaine fuse. It was conspiracy theory: a neat presentation of reality that simply didn't jibe with real life. Webb later agreed in an interview that there is no hard evidence that the CIA as an institution or any of its agent-employees carried out or profited from drug trafficking.

Still, the fantastic story of the CIA injecting crack into ghettos had taken hold. In response to the public outcry following Webb's allegations--which were ultimately published in book form under the title Dark Alliance--the CIA conducted an internal investigation of its role in Central America related to the drug trade. Frederick Hitz, as the CIA Inspector General-- an independent watchdog approved by Congress--conducted the investigation. In October 1998, the CIA released a declassified version of Hitz's two-volume report.

The IG's report cleared the CIA of complicity with the inner-city crack cocaine trade. It refuted charges that CIA officials knew that their Nicaraguan allies were dealing drugs. But, the report said that the CIA, in a number of cases, didn't bother to look into allegations about narcotics And the Hitz report describes how there was little or no direction for CIA operatives when confronted by the rampant traffic in drugs in Central American during the 1980s.

What follows is a closer look at the Hitz report, drawing on interviews with Frederick Hitz and others interviewed for FRONTLINE's "Drug Wars" series.

When the Marxist Sandinistas overthrew the government of longtime dictator Anastasio Somoza in 1979, U.S. approval soured when it became clear that the new regime saw itself as a satellite of Cuba, if not the Soviet Union. When Ronald Reagan became president soon after, he quietly began sending aid to those fighting the Marxist government. They were known as the Nicaraguan Resistance, or more simply, the Contras.

	Contra soldiers

In what would prove common during the Contra war, the CIA never followed up on the allegations, or bothered to verify whether the "initial run" had taken place, according to the Hitz report. ADREN disbanded in 1982. But some members joined the Nicaraguan Democratic Force (FDN), which worked with the CIA.

In another instance, the CIA received allegations that five members of the Democratic Revolutionary Alliance (ADREN) -- those fighting along the border of Nicaragua and Costa Rica - were involved in drug trafficking. The five were allegedly working with known drug trafficker Jorge Morales.

Although the CIA broke off contact with the ARDE in 1984, it continued to have contact with four of the five members who associated with Sr. Morales until 1987.

"In the context of this struggle between the Contras and the Sandinistas, there were accusations flying left and right, some of which were probably meritorious, and a good many of which were part of the battle they were involved in," Hitz said. The question for the CIA officer in the field was, how do you deal with those accusations?

"And what they did was, for the most part, attempt to track them down," Hitz said. "But on several cases, no action appears to have been taken. And that's the part that we find in our report."

Around the same time--the early 1980s--a letter between Attorney General Smith and CIA Director Casey was made official, creating what some considered a convenient loophole for the CIA

In the winter of 1982, as the United States was plotting how to overthrow the Sandinista government that came to power in Nicaragua, a letter - a "Memorandum of Understanding" [MOU] was being drafted in Washington, D.C. The presumptive author was the U.S. Attorney General, the late William French Smith. The recipient was the Central Intelligence Agency Director William Casey.

The subject was a list of offenses that CIA field officers in the field were required to report if they witnessed or became aware of a crime -- particularly if it involved an informant or someone the CIA officer wanted to recruit as an "agent". The letter of understanding listed all kinds of crimes from murder to passport fraud. But it omitted narcotics violations.

The oversight was too glaring, apparently, to leave without comment. Weeks later a follow up letter based on some internal discussion in the Justice Department was sent to the CIA

"I have been advised that a question arose regarding the need to add all narcotics violations to the list of "non-employee" crimes," Smith wrote to Casey in his February 11, 1982 letter. But instead of adding drugs to the list, Smith cited existing federal policy on narcotics enforcement, and wrote:

"In light of these provisions and in view of the fine cooperation the Drug Enforcement Administration has received from CIA, no formal requirement regarding the reporting of narcotics violations has been included in these procedures." In effect, the agreement meant that CIA officers were not required to report narcotics violations back to headquarters. As the CIA's Inspector General Fred Hitz told us, it was at best a "mixed message."

Was the omission of a requirement to report narcotics violations a conscious decision designed to provide cover for CIA agents caught in the midst of the thriving drug business in Central America? Fred Hitz refuses to speculate. Hitz insists he finds it hard to believe that any CIA agent in the field would be involved, especially since " it was well known during this period that if the CIA was linked to any drug shipment, the political damage [to the Contra cause] would be irreparable."

"It was fairly clear, and all of the officers whom we questioned on it, and some whom we didn't but whom the House questioned, realized that if drugs were intermixed with this program, it would fail, it would kill it," Hitz said. "They knew perfectly well because of past accusations in previous theaters that that would be the kiss of death."

Yet there was a lack of narcotics-related direction from CIA headquarters during the Contra war, as indicated when the issue of reporting suspected narcotics violations arose again in 1987. Acting CIA director Robert Gates sent a 1987 memorandum to CIA Deputy Director for Operations Clair George stating that it was imperative that CIA officers cease relations with Contras who were "even suspected of involvement in narcotics trafficking," according to the Hitz report.

Gates' memorandum instructed George to vet names of air crews, air services companies and subcontractors with the DEA, U.S. Customs and the FBI to ensure that none of the contractors used by the CIA were involved in narcotics. For some reason, this memorandum "was not issued in any form that would advise Agency employees generally of this policy," Hitz stated in his report. It never got to the field agents who were supposed to use it as a guide.

Hitz interprets both the omission of narcotics from the MOU and the fact that Gates' memo did not ever make it to the agents who needed it as the failings of a vast bureaucracy. These events, however, as well as others documented in the report, have provided fodder to those interpreting the agency's behavior less sympathetically.

Jonathan Winer was a staffer on a Senate Committee Investigation led by Senator Kerry of Massachusetts, and is a former deputy assistant Secretary of State for International Narcotics Matters. "If you're focused on winning an ideological war, you're probably not focused at the same time on the law enforcement consequences of what you're doing," Winer said. "And certainly, our government in the 1980s was not focused on that problem. It actively resisted being focused on that problem."

Others believe that the U.S. espionage agency was simply covering its tracks.

The story of Ilopango air base in San Salvador has become a favorite anecdote among those backing the claim that the CIA protected Contras neck-deep in the drug trade. The Hitz report states that by 1985, the DEA was watching Carlos Albert Amador. He was a former pilot for the Southern Front Contras, a group that operated along the northern border of Costa Rica and in the southern regions of Nicaragua. Carlos Alberto Amador had previously flown secret Contra missions out of the airfield. But, in 1985 , he came under suspicion for transporting drugs from Costa Rica to Miami. The CIA cable noted that Amador "had access to Hanger 4 at Ilopango air base."

The cable quoted a DEA source who "stated that Amador was probably picking up cocaine in San Salvador to fly to Grand Caymen [sic] and then to south Florida," adding that the DEA was going to ask San Salvadorian police to investigate Amador and anyone associated with Hanger 4.

But Hanger 4 -- as the author of the cable would later tell CIA investigators -- was also thought to be associated with Oliver North, who was under commission from the White House to secretly carry out aid to the Contras.

When CIA headquarters responded to the cable, it told its local station that it "would appreciate Station advising DEA not to make any inquiries to anyone re Hanger [sic] no. 4 at Ilopango since only legitimate....supported operations were conducted from this facility."

Former DEA field agent Nieves denied the suggestion that CIA objectives overrode DEA drug enforcement during the Contra War.

"I was given carte blanche to do my job," Nieves said. "Never once did anybody ever say anything to me about anything I was doing that was nothing but supportive. There was no interference. There was no overriding priority, there was no competition, there was no anything except for support of the DEA's mission. And that's a fact."

But others say the CIA's loose grip on its contacts certainly didn't help the DEA's cause.

"I believe that elements working for the CIA were involved in bringing drugs into the country," said Hector Berrellez, DEA field agent.

"I know specifically that some of the CIA contract workers, meaning some of the pilots, in fact were bringing drugs into the U.S. and landing some of these drugs in government air bases. And I know so because I was told by some of these pilots that in fact they had done that."

While most D.E.A. veterans we interviewed dismiss allegations of any conscious CIA activity or involvement in drug trafficking, a number are suspicious, and a handful like Berrellez claim they had hard evidence of "CIA contract employees" being involved. With the exception of the Venezuela National Guard case we were unable to find any evidence that any CIA agent was ever considered a potential target of a grand jury investigating drug trafficking.

"If it's your job to check out food at the supermarket counter ... you're not worrying about the person who's supposed to be stocking the shelves. It's not your job," said Jonathan Winer, explaining the CIA's minimal attention to drug trafficking in Central America.

It is clear from interviews with former D.E.A. agents, CIA officials and former Colonel Oliver North that the CIA did not ignore narcotics in Central America. Injecting the United States into a Nicaraguan civil war was hardly an easy sell to Capitol Hill, with nightmares of Vietnam still fresh from the 1970s. Any hint of collusion with the drug trade would be like handing a loaded gun to opponents aiming to kill the effort.

But the degree to which that point was communicated to CIA agents in the field, according to the Hitz investigation, does not inspire confidence.

"There was no directorate of operations instruction about how to deal with drug allegations during the whole period of the Contra effort," Hitz said. "They were in process. They were working on some kind of guidance. But they never published it in black letter and sent it to the field." In Nicaragua, the Smith-Casey letter basically excused CIA officers from reporting drug trafficking among their contacts. Even when it became clear that narcotics could cast a pall on the effort, the CIA appeared unwilling to react.

As early as 1980, a handbook had been developed with a section instructing CIA officers how to deal with contacts suspected of trafficking drugs. But those regulations were ruled inapplicable to the Contra affair, because they were meant for CIA personnel who were specifically collecting narcotics intelligence -- not the case in Central America. Inexplicably, the handbook wasn't formally published until 15 years later.

In addition, in the mid-1980s, any effort to keep the CIA out of the world of drug trafficking was made more difficult by the decision of its boss, Director Casey, to activate what became known as the "off-the books" operation of Oliver North.

		North at Iran-Contra Hearings

When the Kerry Commission released its report in 1988, the company Frigorificos De Puntarenas was listed as receiving $261,000 in funds from the Nicaraguan Humanitarian Assistance Office, an organization established in 1985 to spend $27 million in congressional humanitarian aid to the Nicaraguan resistance.

Frigorificos' owner, Luis Rodriguez, also operated Ocean Hunter/Mr. Shrimp out of Miami, Florida.

In 1986 the DEA seized 400 pounds of cocaine hidden in yucca addressed to Ocean Hunter. Rodriguez later testified that both companies were used to launder drug money between Costa Rica and Miami.

North has categorically denied that anybody in his operation was trafficking drugs. But in 1987, a co-owner of the shrimp companies pointed the finger at the National Security Council. Moises Nunez told the CIA that he had had a clandestine relationship with the National Security Council since 1985.

"If we have a foreign policy that says we're going to oppose the spread of Communism, that's not inconsistent with the (drug) policy,' North said in an interview with FRONTLINE. "We're not going to tolerate the flow of drugs into this country. Unfortunately you've got members of Congress up there who want to beat the drum and blame the problem of narcotics in America on the Nicaraguan resistance. And that's just not the case."

"He is either misinformed or lying," Winer says. "Oliver North's diaries are filled with references to drug trafficking and people associated with his enterprise drug trafficking--filled with it. Oliver North can say, 'I never hired or worked with any drug traffickers.' His organization did."

While the Kerry report listed several companies used by the Nicaraguan Humanitarian Assistance Office that had drug ties, it failed to pass definitive judgement on how much government agencies knew about those ties.

"At best, these incidents represent negligence on the part of U.S. government officials responsible for providing support to the Contras," the Hitz report stated. 'At worst, it was a matter of turning a blind eye to the activities of companies who use legitimate activities as a cover for their narcotics trafficking."

That statement sums up the debate remaining over the CIA's involvement in the Contra War. The Hitz report gives an abundance of anecdotal evidence showing that drugs were low on the list of intelligence priorities in the Contra war. It shows that allegation after allegation were either partially investigated or not investigated at all.

To this day, Fred Hitz denies that the CIA had any intentional ties to drug trafficking. But he also admits that the Agency in many cases took a rain check on specifically addressing narcotics activity within its allies' ranks.

Some say that's expected when fighting ideological wars in countries where drugs have historically fueled not only conflict, but entire economies as well.

"You're always going to be having drug traffickers, gun runners, people who are alien smugglers ... as some of the kinds of people that you're going to be relying on to carry out a covert war," Winer observes. "And that's true of any government anywhere--whether you're talking Afghanistan, Colombia, Southeast Asia, Burma. Your operatives tend to be people who are involved in other illicit activities. These things tend to go together."

If you put aside conspiracy theories of crack peddling, that still leaves the question of why the Agency has repeatedly found itself associated with drug traffickers.

To add to the list of theories and speculations, Fred Hitz has his own.

"I would call them bureaucratically challenged," Hitz said. "(The CIA) didn't get it done. Having studied the agency over a period of eight years and the bureaucracy that is involved, it grieves me but doesn't surprise me that nobody grasped the nettle and got the right information to the field."

"No conspiracy," he said. "That's ineptitude. Yes, there are lots of things going on. There is congressional testimony. There are crises in other parts of the world. There are things that are keeping the individuals who write these regulations busy; but that's no excuse. You've got to get to it."