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APPROVED FOR 
RELEASEnDATE: 

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OGC-95-51574 ( 3 > 

9 June 1995 


MEMORANDUM FOR: ^ J 

Deputy Director 

Office of Congressional Affairs 


FROM: I 

i'araj.egaJL special is t 
DCI/OGC/LD 

SUBJECT: Confirmation of Records Search * 

Adler Barriman “Barry” Seal 


1. This memorandum is confirming the records search on 
an Adler Barriman “Barry” Seal. The records search was in 
response to a question posed by Chairman James Leach and 
forwarded through HPSCI, whether CIA was ever in contact 
with this individual. The search request is in order to 
disprove or verify certain allegations of illegal financial 
activity related to the so-called “Whitewater” 
investigation. 


2 . 

OS /OPS /| 
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O n 7 June 1995, I tasked 

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3. If you have any questions regarding the above 
information, please cont act m e on secure] H or the 
attorney on the case. 








OGC-95-51546 
7 June 1995 




MEMORANDUM FOR:- 


FROM: 


.DA/IRO " 

OS/OPS/f 

OP/XMO 


Paralegal Specialist 
Office of General Counsel 


SUBJECT: 


Records Search on - 
Adler Barrirnan “Barry” Seal 


1- Background . The Office of Congressional Affairs 
(OCA) has received information from Chairman James Leach 
regarding a search request on the late Adler Barrirnan 
“Barry” Seal. The search request is in order to disprove or 
verify certain allegations of illegal financial activity 
related to the so-called “Whitewater" investigation. (See 
attachment) 


2. Please conduct an immediate records search from 
your office concerning whether the CIA has any information 
on Adler Barrirnan “Barry” Seal. Please determine whether 
CIA or other government agencies performed any covert 
activity in or near Mena, Arkansas, including whether the 
CIA or any other government agency had any contractual or 
other relationship for work performed in or near the same 
Arkansas location. 


3 . Your expeditious handling of this matter would be 
greatly appreciated. Please contact me on j as 

soon as your office has any information regarding ~the above 
request or if you have any questions regarding this matter. 
Please follow-up by sending your resp onse to this name trace 
request to me at OGC/LD, I ____ ~H 


The attorney handling this case is 
can be contacted oni 


and he 


Attachment as Stated 





sjssat&r 


SUBJECT: Records Search on Adler Barriman “Barry” Seal 


OGC-95-51546 

OGC/LD/ \/7 June. 95 

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CASE NAME: SEAL, ADLER BARRIMAN "BARRY" HPSCI REQUEST FOR NA 


SUPERVISOR: I 
CASE SUMMARY: 

HPSCI STAFFER STEVE NELSON REQUESTED OCA TO CONDUCT A NAME TRACE ON WHETHER CIA 
HAD A CONTRACTUAL OR OTHER RELATIONSHIP WITH THE LATE ADLER BARRIMAN "BARRY" SEAL. 
HPSCI IS ASSISTING THE HOUSE BANKING COMMITTEE INVESTIGATE ALLEGATIONS OF ILLEGAL 
FINANCIAL ACTIVITIES RELATED TO THE "WHITEWATER* INVESTIGATION. 


ASSIGNED BEGIN END 










Received: 07/20/95 
08:50:09 


OGC - DOCUMENT RECORD 


OGC-NUMBER: 

OGC-95-03081 

CONTROL NO: 


DOCUMENT DATE: 

05/30/95 

DATE RECEIVED: 

05/31/95 

AUTHOR: 

AUTHORS ORG: 

OCA 

ADDRESSEE: 

ADDRESSEE S ORG: 

OGC 

FIRST ROUTED TO: 

LDj | 

COPIES TO: 

•(NONE)* 


DOCUMENT DESCRIPTION 


FILE NUMBER: L9500207 

CASE NAME: SEAL, ADLER BARRIMAN "BARRY" HPSCI REQUEST FOR N A 


NOTE REQUESTING REVIEW OF ATTACHED LETTER FROM JAMES A. 
LEACH, CHAIRMAN OF THE HOUSE BANKING COMMITTEE, TO HPSCI 
REQUESTING THAT JAMES W. MCCORMICK BE ALLOWED TO REVIEW 
CERTAIN CLASSIFIED FILES OF THE IRAN-CONTRA HEARINGS, THE 
UNCLASSIFED VERSION OF WHICH WAS PUBLISHED NOVEMBER 1987 




> UNgLASSl^TED 

FILE NUMBER: L9500207 

CASE NAME: SEAL, ADLER BARR1MAN "BARRY" HPSCI REQUEST FORNA 


Received: 07/20/95 
08:50:25 



J 



FILE NUMBER: L9500207 



CASE NAME: SEAL, ADLER BARRIMAN "BARRY” HPSCI REQUEST FOR NA 


Received: 07/20/95 
08:50:41 


OGC - DOCUMENT RECORD 


OGC-NUMBER: OGC-95-03614 

CONTROL NO: 

DOCUMENT DATE: 06/12/95 

DATE RECEIVED: 06/29/95 


AUTHOR: 
AUTHORS ORG: 

qz 

OFL 


ADDRESSEE: 

r 


j 


ADDRESSEE'S ORG: OGC 

FIRST ROUTED TO: LDJ 

COPIES TO: *(NONE)* 

DOCUMENT DESCRIPTION 

RESPONSE TO OGC REQUEST OGC-95-5 1546 RE RECORDS SEARCH 
REQUEST ON ADLER BARRIMAN "BARRY" SEAL 





(MU) 


APPROVED FOR 
RELEASE; I DATE: | 
28-Sep -2009 


COJ^p^ifnAL 


13 July 1995 


A,o.c/ 


Note to: 
From: 

Sub j ect : 


Acting DC I 

Acting Director of Public Affairs 
Mena 


The August issue of The American Spectator takes up the Mena 
story in a way that is likely to resonate on the Hill (see 
attached article) . 

It alleges, explicitly and implicitly, that an aircraft 
operated by a CIA front company in 1984 used the airfield at 
Mena, Arkansas, as a staging point for weapons supply flights 
to the Contras in Nicaragua; on the return flights from 
Honduras, the aircraft allegedly carried illegal narcotics to 
Mena. The narcotics runner, Barry Seal, allegedly paid off 
then-Governor Clinton’s protege, L. D. Brown, and one Dan 
Laseter, a Clinton contributor. 

This is the latest repackaging of allegations previously made 
by the Wall Street Journal. 

I understand that Fred Hitz or someone from his staff, along 
with other CIA officers will brief Congressman Leach on * 
Friday 21 July in an attempt to address his concerns about 
these and other allegations. 

In the mean time, we are receiving media queries on Mena, 
most recently from Michael Isikoff of Newsweek on 18 July. 
With the publication of The American Spectator article, we 
expect more. 

At present, although there is no reason to believe any of the 
allegations, we are declining to comment publicly, pending 
exhaustive searches of DO files, as tasked by OCA. As soon 
as those searches are complete, we hope to have a crisp 
public statement that distances us from the allegations-~if 
the Agency lG*s look into them does not c ons tra in u s from 
doing so. I 





R. Emmett Tyrrell, Jr. 


Ak <"41/ i 
U'Vt U' 


The Arkansas Drug Shuttle 


What L.D. Brozvn, Clinton's fair-haired boy, has told me. 


A rkansas State Trooper L D. 

Brown was 28 years old in 
1984. He was not only 
Gov. Bill Clinton’s favorite body- 
guard, but also a close friend. The 
other troopers called him Clinton’s 
“fair-haired boy." They shared an 
interest in books, ideas, and night 
life. Brown still has books that 
Clinton gave him, one being a bar 
exam study book in which the politi- 
cian had made some ironic underlin- 
ings. One passage discusses the 
deductibility of charitable donations, 
and another the length of residency 
required in Washington before tax 
liability is incurred. Like Clinton, 

Brown passed through a radical 
stage when he attended the 
University of Arkansas in Fayetteville. Indeed, when Clinton 
was a law professor in Fayetteville, Brown was working on an 
off-campus magazine, the radical Grapevine. 

In the autumn of 1984, Brown found himself seated on a 
bench inside a cavernous C-123K cargo plane roaring over a 
Central American jungle. The pilot of the plane was Barry Seal, 
a legendary drug trafficker. Two years later, he would be shot 
dead in Louisiana. Three Colombians eventually w :re arrested 
and convicted of the murder. The Louisiana attorney general 
would tell the Justice Department that Seal had ‘smuggled 
between S3 billion and 55 billion in drugs into the U.S." 

The C-123K also had a history. It was originally an Air 
Force transport plane. Seal dubbed it "the Fat Lady." It 
would later be serviced and financed by Sot them Air 

R. Emmett Tyrrell, Jr. is editor-in-chief of The American 
Spectator. 



Transport, a CIA front company, 
and it was eventually shot down 
over Nicaragua in a doomed sup- 
ply effort to the Contras that left 
an American, Eugene Hasenfus, a 
prisoner of the Sandinistas and the 
CIA link to the Contras revealed. 

Brown recalls that on the morn- 
ing of this (articular flight. Seal had 
told him to drive to Mena 
Intermountain Regional Airport, a 
remote air strip near the Oklahoma 
border. He had expected to find, he 
says, a Baron or King Air, the kind 
of plane in which he had sometimes 
accompanied the Governor, and in 
which he had some training as a 
pilot. Instead, he says, he found this 
“huge militaiy plane” that was not 
actually a military plane. It was dark almost black, and had 
only the minimal tail markings necessary for civilian operation. 

Inside the plane, according to Brown, were another pilot 
and two “beaners” — common laborers who looked like Central 
American Indians. Later Brown would come to know them as 
"kickers." All were wearing jeans, T-shirts, and sneakers. Seal. 
Brown says, had also prescribed the dress code, and insisted 
that no one carry identification, not even keys or jewelry. Then, 
he started the engines, and Brown remembers, "This ... I 
mean just thunderous noise. Scared the s — out of me just tak- 
ing off.” Brown says that when the plane took off, he was sit- 
ting on a bench behind the two pilots. At the rear of the plane, 
by the bearers, he says, were palettes on casters. 

After it left Mena, the plane made a refueling stop — 
“Nobody got off," Brown says — and then resumed flight. 
Eventually, Brown recalls. Seal startled him by yelling, 
"Well, you all hang on." Then the plane dropped to what 


The American Spectator 


August 1995 


$ 3-3 





Brown calls “an altitude a hell of a lot lower than what you’d | 
think you'd fly.” He suspected Seal was trying to evade 
radar. Then, he says, they regained altitude, but then they 
descended again, and “that’s when these two crazy bastards 
get these palettes and roll them out on casters." Parachutes 
opened from the palettes. Later Seal confirmed Brown's sus- i 
picions: the palettes contained M-16s for the Contras. i 

Approximately 30 minutes later. Brown says, the C- 
123K landed in what he later learned was Tegucigalpa, 
Honduras. Then it was refueled while Seal and the kickers 
got off. Brown and the co-pilot, who never exchanged any 
more than a few words, remained on board. Then, Brown 
says. Seal and the kickers returned, carrying four duffel 
bags. Brown says he never saw the bags again. 

Back at Mena, Brown says, he told Seal he had thought they 
were going to fly in a plane similar to the ones he had been on 
with the Governor. Seal, he says, laughed, and told Brown that 
all he had wanted him to do was "sit back for the ride.” Then 
he gave Brown an envelope with $2,500 in cash— “not marked i 
money, not banded money, just twenties, fifties, mostly twen- , 
ties, used money, like you just went out and spent” 

When Brown returned to the Governor’s mansion, he 
recalls, Clinton greeted him jovially, “You having any fun 1 
yet T he asked, Clinton had been asking turn a similar ques- j 
tion for months, ever since, with Clinton’s encouragement, he j 
had applied for a job with die CIA. Indeed. Clinton had taken j 
an active role in helping Brown. As part of the application ] 
process. Brown had written an essay: “Marxist Influence in j 
Central America.” Three early drafts of the essay contain \ 
interpolations in Clinton's handwriting. Clinton also suggest- j 
ed that Brown study Russian, a suggestion Brown took sen- j 
ously enough to begin making entries in his daybook in cyril- 
lic. Clinton, Brown believed, was familiar with the CIA 

“When I got back from that first trip he knew I had been j 
out doing something,” Brown insists. “I mean I didn’t have j 
a chance to tell him anything about it That’s when he said, j 
‘You having any fun yet.”' | 


T he CIA does not talk about these things, and so Brown's 
exact relationship with the agency may never be known. 
It may also never be known whether CIA officials 
approved or knew of Seal’s activities, or whether he was operat- 
ing on his own. Some facts, however, are indisputable. An entry 
in Brown’s daybook indicates that the flight with Seal took 
place on October 23, 1984. A month before that, the Southwest 
personnel representative for the CLA. Ken Cargile, in a letter to 
Brown, wrote that “I am pleased to nominate you for employ- 
ment with the Central Intelligence Agency.” Another entry in 
Brown’s daybook indicates that he had met with another CIA 
representative only a few days before that. Brown has identified 
him as Dan Magiuder, and says that he spoke admiringly of 
Clinton. Magruder, Brown says, asked him if he would be inter- 
ested in "paramilitary, counterintelligence and narcotics." 
Brown, who had worked in narcotics enforcement as a police 
officer, said he was interested. He then, he says, signed a secre- 
cy agreement, and was told he would be contacted further. 
Subsequently, Brown says. Seal called him at home, and 


l 

t 

i 


I 


set up a meeting at Cajun’s Wharf, a popular Little Rock 
watering hole. Seal, according to Brown, was familiar with 
the biographical information he had given the agency. Seal. 
Brown says, talked knowledgeably about airplanes, and 
spoke of an “operation” he was planning. He also referred 
to Clinton, familiarly, as “the guv.” 

Brown’s break with Clinton came after Brown made 
what he says was his second flight from Mena to Central 
America. Two duffel bags were put on board the plane at 
Tegucigalpa. Back at Mena, Brown says, he and Seal 
walked to Brown's car, a Datsun hatchback, and Seal put 
one of the duffel bags under the hatchback. Then both men 
got into the front seat of the car. and Seal reached back into 
the duffel bag, and pulled out a manila envelope with 
$2,500 in it. He said the money had been brought back from 
Tegucigalpa. Then. Brown says, Seal reached again into the 
duffel bag and pulled out a kilogram of cocaine. 

Brown, a narcotics cop, got upset. He says he feared he 
was being set up — made a conspirator in an operation he 
despised. He also says he told Seal he wanted no part of was 
happening; then he left. When he returned to Little Rock, he 
called his brother Dwayne. Dwayne Brown says his bother 
seemed “terribly upset.” and that he immediately drove over 
to the Governor’s Mansion to meet him, Dwayne Brown says 
he knew his brother had made some unexplained trips out of 
the country. He suspected a CIA involvement, although his 
brother did not confirm it. But when he asked his brother, 
“Who's pushing this?" his brother, Dwayne Brown says, 
“nodded over towards the Governor’s Mansion.” From then 
on, until he left Clinton’s security detail in June, Dwayne 
Brown says, his brother was at “a high level of despair.” He 
says he had feared he might be suicidaL 

Meanwhile, Brown says, he confronted Clinton, asking 
him if he knew that Seal was dealing in > drugs and unreport- 
ed currency. Brown says Clinton told him not to worry. He 
said, according to Brown, “That's Lasater's deal, that’s 
Lasater’s deal." 

Dan Lasater, of course, was the celebrated Little Rock 
“bond daddy.” As early as 1982, his firm had been censured 
by the Arkansas’ security commissioner for cheating cus- 
tomers. In 1986, he was convicted of drug distribution, and 
lost his state securities license. At the time Seal’s (lights 
took place, Lasater was contributing to Clinton’s political 
campaigns. He was also providing Clinton with the use of a 
private airplane, and entertaining him at various places, 
including his New Mexico resort, Angel Fire. 

In the years that followed his split from Clinton, Brown 
investigated white-collar crime for the Arkansas State Police. 
He says that he wanted to go public with his revelations about 
Mena, but that he did not know whom to tell. He also says he 
was mindful of the secrecy agreement he had signed with the 
CIA. Whatever the case, of all the Arkansas troopers who 
would later admit to knowledge of Clinton's high life, Brown 
was the most hesitant to talk. Though the Clinton machine 
seemed to fear him the most, he showed no intention of break- 
ing his silence until a chain of random events made it inevitable. 

In 1994, Brown told Daniel Wattenberg of The American 


The American Spectator 


August 1995 


17 



Spectator that Jim Guy Tucker, then the Arkansas governor, 
had asked him and trooper Lany Patterson for compromising ! 
information on Clinton's private life in 1990, when Tucker was | 
contemplating a race for governor. When Wattenberg repotted ■ 
this, an angry Tucker retaliated against Brown by demoting , 
him from white-collar investigations to highway patrol. "I ! 
don’t want to be getting any more reports from Brown" is the j 
statement by Tucker that Colonel Tommy Goodwin, the 
recently retired head of the Arkansas state police, quoted in 
explaining the demotion to me in an interview. j 

Owing to a case that Brown was then working on that j 
could have implicated Tucker, Brown believes the demotion I 
was illegal. An indignant Brown began toying with the idea ! 
of exposing the corruption of Arkansas politics. i 

Subsequently, the special prosecutor investigating j 
Whitewater subpoenaed Brown to disclose what he knew i 
about Clinton’s connections to David L. Hale. Clinton j 
appeared to have pressured Hale, the head of an Arkansas 
lending agency, into making loans to Susan McDougal, the 
Clintons’ Whitewater real estate partner. 

Brown says he realized then that “everything is going to 
come out.” Nonetheless, he still seemed reluctant to dis- j 
close all he knew. The irony is that he might have remained j 
reluctant, but then the White House itself intervened. i 

W hen ABC News interviewed Brown ‘in the fall of j 
1994, the White House cried to malign him. White • 
House officials, as well as Clinton's lawyer, David 
Kendall, approached ABC. As Time reported, Kendall was 
“working very, very hard to keep Whitewater out of the head- 
lines.” Meanwhile, Betsey Wright, a Clinton political fixer, 
told ABC that Brown was a "pathological liar,” even though 
his personnel file in Arkansas abounded with recommenda- : 
tions — some from Clinton, and even one from Dr. Joycelyn j 
Elders. ABC was also told that Brown had failed a psycholog- 
ical test. Goodwin told me and ABC that Brown had passed it. 

But of the charges levelled at Brown by the White i 
House, the most unintentionally revealing was that Brown 
had flunked a CIA examination in the mid-1980's. That j 
charge could only have come from the man — then Governor ' 
Clinton — who knew that his former bodyguard had dealings ; 
with the CIA ten years ago. Seemingly panicked, the White | 
House mistakenly presumed that Brown was talking to i 
ABC News about his involvement with Mena when he was 
actually discussing Whitewater. (Brown maintains that he ; 
never flunked the test; in fact, he was nominated four ! 
months after taking it for employment with the agency.) 

An ABC producer told me at the time that “Brown is 
telling the truth. You can trust him,” but the network appar- j 
ently yielded to White House pressure. The interview with 
Brown, in which he had spoken only about Hale and not 
about Mena, was killed. Brown's patience had been strained • 
beyond endurance. He decided to talk about Mena. 

It must be noted now that Clinton’s efforts to distance 
himself from Mena have persisted for yean. At a press con- 
ference in October 1994. for instance, he was asked a ram- 
bling question about the remote air strip, and gave an equally 


13 


rambling answer. He concluded by saying that Mena was ; 
federal, not a state, matter. "The state really had next to noth 
ing to do with it. We had nothing — zero— to do with it, anc 
everybody who’s ever looked into it knows that-” 

But Brown says he is lying. His daybook records one visit tc 
Mena by Clinton on May 21, 1984, and he says that he accom- 
panied Clinton to Mena on several other occasions. Meanwhile, 
others are now coming forward to confirm a Clinton connection 
to Mena. Trooper Bobby Walker has told me that “sometime in 
the mid-1980s” he was at Mena with Clinton. Walker said a 
“huge dark-green military plane" was parked there, and that 
when he expressed surprise at seeing a military plane at Mena, 
Clinton said it was not military; it served another purpose. 

Last March, in a legally binding deposition, trooper 
Larry Patterson also said that Clinton knew about Mena. 
Patterson said he had overheard conversations about “large 
quantities of drugs being flown into Mena airport, large 
quantities of guns, that there was an ongoing operation 
training foreign people in the area.” When asked, “Were 
any of these conversations in the presence of Gov. Bill 
Clinton?" he replied; “Yes, sir.” . 

Patterson was being deposed in a legal suit filed against 
Buddy Young, the former head of Clinton’s security detail, 
and another man by Terry Reed, who says he trained Contra 
pilots, under Seal’s supervision, at Nella, Arkansas. In 
another deposition in the case, John Bender, a mechanic, 
says he saw Clinton at Mena three times in the summer of 
1985. There were no local dignitaries present. Bender says, 
and Ginton did not seem to be taking part in any official 
function. He says that Ginton arrived in a Beech aircraft, 
and was still there when he left for the day. 

When he was deposed. Bender was shown a photograph 
of Buddy Young. He identified him as “Capt. Buddy 
Young — that little beady-faced fellow,” and said he was with 
Clinton at Mena. Young has since been made head of the 
Federal Emergency Management Administration in Denton, •. 
Texas. In another deposition in the Reed case, Russell Welch, 
an Arkansas state police investigator who has looked exten- 
sively at Mena, says that Young asked him in 1992 if 
Ginton’s name had ever come up in connection with Mena. 
Welch said it had not. but Young’s concern was intriguing. 

At this juncture, no one, including Brown, can say pre- 
cisely what Clinton was doing at Mena. Brown’s role, after 
all, was quite limited. After Brown told Seal — and 
Clinton — that he would no longer take part in the drug 
flights. Seal contacted Brown again. Brown says Seal told 
him “there’s good money to be had." But Brown, says he 
was out of that game for good. It does seem, however, that 
Clinton was far less cautious. The Mena operation reveals 
the essential recklessness of our present president. 

How much did Clinton know about what he called 
“Lasaster’s deal" in that conversation with L.D. Brown? ; 
Ultimately we may find out, as Brown tells us that he has j> 
been repeatedly questioned by lawyers working for the k 
Whitewater independent counsel about Clinton’s associa- S 
tion with Lasater at a time when illicit drugs allegedly were 
flowing into Mena airpon. □ ; 

The American Specular August 1995 )■ 



ADMINISTRAT. 


[AL USE ONLY 


ana 

0l)(31 



IG 96-0302 
26 February 1996 


MEMORANDUM FOR: Deputy Director for Administration 

Deputy Director for Intelligence 

Deputy Director for Operations 

Deputy Director for Science and Technology 

Comptroller 

Director of Congressional Affairs 
General Counsel 
Director of Public Affairs 
Executive Secretariat 

FROM: Frederick P. Hitz 

Inspector General 

SUBJECT: Request for Documents Relating to Possible 

Agency Knowledge of Certain Activities in 
or Around Mena, Arkansas 


1. In response to a request from the Chairman of the 
House Committee on Banking and Financial Services, and with 
the concurrence of the Director of Central Intelligence, the 
Office of Inspector General (OIG) has initiated an inquiry 
relating to the following core issues: 


• Whether CIA, or anyone acting on CIA's behalf, has 
carried out any activities in Mena, Arkansas, or the 
area north of Mena, known as Nella, Arkansas, and if 
so, did CIA brief, or otherwise communicate this 
information to Arkansas state officials in the 
1980s; 


What was the nature and extent of CIA's contact or 
relationship with Adler Berriman Seal (AKA Barry 
Seal, A. B. Seal, FNU Billings, Berry Seal, Eric 
Arthur, Ellis McKenzie. "El Gord o, " Jo seph Warren 
Church; DOB: SSN: 

and his activities; 


Did CIA try to influence or request, directly or 
indirectly, that the Department of Justice terminate 
or alter any investigations or prosecutions of money 
laundering in or around Mena, Arkansas; 



73 ? 


ADMINISTRA 


fAL USE ONLY 




ADMINIS' 


'ERNAL USE ONLY 


SUBJECT: Request for Documents Relating to Possible Agency 

Knowledge of Certain Activities in or Around 
Mena , Arkansas 


• What, if any, information does CIA have that 
indicates it had any contact with certain 
individuals or businesses, subsequently identified, 
or of illegal activities (including illicit aircraft 
modifications) based at, or operating through, the 
airport at Mena, Arkansas, from 1980 to the present. 

2. In connection with the above areas of interest, the 

Committee has asked if the CIA had any direct or indirect 
contact or relationship with any of tjhe following persons or 
entities located in or around Mena, Arkansas, including, but 
not limited to: Freddie Lee "Fred" Htampton, Joe Evans, Rich 

Mountain Aviation, Charles Roulet, Call Edwards, Global 
Associates, Fokker Air, Michael Eigleston, Eagle Aviation, 
Robert Maddem, Glen Conrad, Multitrade International, 

Junior Goodner, Goodner Aircraft Painting, Southern Cross 
Aviation, J. V. Brotherton, Brodix, Terry Capehart, Blue 
Diamond, George Reeb, Reebaire, Rose Upholstery and Earl 
Covel. 

3 . The Committee also inquired as to whethe r Larry 

Do ug lass (L. D.) Brown (DOB: I j \ SSN: j | 

j i ever applied for CIA employment* and, if so, the result 
of that application. 

4. The Committee further inquired whether CIA 
customarily communicates with state officials when CIA has 
activities in that state. Finally, the Committee asked 
whether CIA briefed or otherwise comrminicated with Arkansas 
state government officials or law enforcement authorities 
about any CIA activities in Arkansas in the late 1980s. 

5. In furtherance of OIG's efforts, I request that you 
provide this Office with all information relating to these 
questions, as further described below, as soon as possible, 
but no later than close of business ^riday, 15 March 1996. 
Also, I ask that each addressee establish a directorate 
focal point for this action and provide the name and contact 
number of that individual to OIG no later than close of 
business Friday, 1 March 1996. That individual should be 
responsible for certifying to this Office that searches 
conducted pursuant to this request have been complete and 
all pertinent information has been provided. Please provide 
this info rmati on to OIG's admin ist rative focal point on this 
matter, 




SUBJECT: Request for Documents Relating to Possible Agency- 

Knowledge of Certain Activities in or Around 
Mena , Arkansas 


6. Included in this request are: 

a. Copies of all relevant internal and external 
documents and information concerning any activities by 
CIA, or anyone acting on CIA's behalf, in Mena, 
Arkansas, or the area north of Mena, known as Nella, 
Arkansas . 

b. Copies of all relevant internal and external 
documents and information concerning Agency 
participation in, or knowledge of, activities in or 
around the Intermountain Municipal Airport in Mena, 
Arkansas, or the area north of Mena, known as Nella, 
Arkansas, from 1980 through the present. This 
information is to include CIA knowledge of any 
individuals or businesses that may have been engaged in 
money laundering, narcotics trafficking, arras 
smuggling, or other illegal activities (including 
illicit aircraft modifications) . 

c. Copies of all relevant internal and external 

documents and information relating to Adler Berriman 
Seal (AKA Barry Seal, A. B. Seal, FNU Billings, Berry 
Seal, Eric Arthur, Ellis Mc Kenzie, "El Gordo, " Josep h 
.Warren Church; DOB: J SSN: ! 

I j. Of particular interest is information, if any, 

that indicates any relationship between CIA and Seal; 
any information that Seal provided to CIA regarding 
Central America, Colombian drug cartels, transshipment 
points or refining facilities for U.S. -bound drugs, 
drug smuggling generally, or any other subject; any 
information indicating whether CIA either directly or 
indirectly provided or facilitated the provision of 
money, services, or equipment to Seal or any other 
person or entity in connection with Seal's activities; 
any information regarding the use of proceeds from 
Seal's activities; and information concerning any 
contact or communication between CIA and other federal 
agencies about Seal's activities. 

d. Copies of all relevant internal and external 
documents and information regarding CIA's knowledge of 
a Fairchild C-123K military transport aircraft 
reportedly used by Seal. Information sought regarding 
this aircraft includes that relating to procurement, 
servicing, retrofitting, etc. 


3 



ADMINISTRATI 


[AL USE ONLY 



ADMTNTSTR^T33IS»^BWTSkI^lL use only 


SUBJECT: Request for Documents Relating to Possible Agency 

Knowledge of Certain Activities in or Around 
Mena , Arkansas 


e. Copies of all relevant internal and external 
documents and information regarding CIA's knowledge of 
a Convair C-131A military transport aircraft with U.S. 
registration number N5575A. 

f. Copies of all relevant internal and external 
documents and information regarding Agency efforts, if 
any, to influence the Department of Justice or any 
other federal agency directly or indirectly in the 
course of any investigations or prosecutions in or 
around Mena , Arkansas . 

g. Copies or all relevant internal and external 
documents and information relating to the following 
persons or entities located in or around Mena, 

Arkansas : 




administrat: 


[AL USE ONLY 


SUBJECT: Request for Documents Relating to Possible Agency 

Knowledge of Certain Activities in or Around 
Mena , Arkansas 



h. Copies of all relevant internal and external 
documents and information relating to Larry Douglass 
(L. D.) Brown, DOB: ! ! SSN: 


i. Copies of all relevant internal and external 
documents and information relating to whether CIA 
briefed, or otherwise communicated with, Arkansas state 
government officials or law enforcement authorities 
about any CIA activities in Arkansas from 1980 to 
present. 


7. This request encompasses all relevant official and 
soft files, 201 files, memoranda, taskings,. notes, letters, 
correspondence, communications, Lotus Notes and other 
computer mail messages; cable traffic (including "ops 
traffic"), briefing books, calendars, and personal notes. 

It also extends to all categories or material, including all 
"Rybat, 


" and ^thef^Limited distribution materials. 


"bigoted," "codeword," "SI," r 


8. Documents and other materials responsive to this 
request should be produced in their entirety as they appear 
in the relevant files without redaction or deletions of any 
kind and de livere d to O IG/ Investigations Staff, j | 

Attention: | as soon as possible, but no 

later than close of business T5 March 1996. Marginalia and 
associated notes, comments, etc., should remain as they 
appear on the original documents and materials. If there is 
any doubt in regard to the relevance of particular documents 


ADMINISTRATI 


5 




ADMINIS 1 


USE ONLY 


SUBJECT: Request for Documents Relating to Possible Agency 

Knowledge of Certain Activities in or Around 
Mena, Arkansas 


or information, components should err on the side of 
advising OIG and allowing it an opportunity to determine 
relevance. 

9. I am aware that this tasking may duplicate similar 
information requests within the last several months by other 
components. Nonetheless, this is an independent inquiry 
that requires a full and timely response. If the requisite 
searches are not completed by the time specified, OIG should 
be contacted to arrange for delivery of the results as of 
that date while the searches continue. 

10 . The IG investigation team may find it necessary to 
interview Agency officers and others. Please ensure that 
those called upon to be interviewed are made available on a 
timely basis. 

11. The requirements identified in this memorandum are 
continuing. Please ensure that OIG is advised immediately 
of any new information that nay be relevant to this 
investigation . 

12. Finally, individuals who have personal knowledge 
of the events or activities described above should contact 
OIG immediately. OIG' s principal points jDf contact for this 
investigation are f 

and ^ 1 . " — " 

13. Thank you for your cooperation regarding this 
matter. 


FreaeriCKF . mtz — 


cc: DC I 

DDCI 
EXDIR 



ADMINISTRATI 


FAL USE ONLY 


ADMINIS 


'ERNAL USE ONLY 


SUBJECT: Request for Documents Relating to Possible Agency 

Knowledge of Certain Activities in or Around 
Mena, Arkansas 


OIG/INV/T - ! (23 Feb 96) 

Distribution: 

Original - 1 ea addressee 
1 - IG Chrono 
1 - INV Chrono 

1 - INV Subject File: 96-0036-IG 



SGGWgT** 


3 


% 


20 July 1995 

MEMORANDUM FOR: 

FROM: 

SUBJECT: Mena Arkansas 

REFERENCE: You were inadvertantly left off this lisr. PLease advise. Thanks 

[Him 

(Dim 

[SI 


NOTE FOR: 


FROM: 

DATE: 

SUBJECT: 


07/19/95 12:42:23 
Mena Arkansas 


As some of you are painfully aware we have had an inquiry from the House Committee on Banking 
and Financial Services regarding what CIA knows about drug smuggling and money laundering in 
Arkansas. I realize that this is a domestic issue, that said that the committee will not back off and 
has demanded that NSA and CIA’s tG brief them on Friday on this matter. We have been 
unsuccessful in reasoning with the committee despite our best efforts. OCA has asked that the DO 
to check all records and ensure that we have no information before we go downtown and tell the 
commitee that on the record. The specific issues are as follow: 

Does the CIA 

know of any secret bank accounts held by US citizens domiciled in Arkansas at any times 
between 1988 and now? 

is aware, directly or indirectly, of any efforts by computer hackers, US government related 
or otherwise, to penetrate banks for the purpose of monitoring accounts and transactions; 

knows or has participated, directly or indirectly, in efforts to sell software-notably 
versions of a program in use at the Justice Department called PROMIS-or clandestinely produced 
devices to foreign banks for the purpose of collecting economic intelligence and information of illicit 

money transfers, 

is congnizant of any attempts by [ 


Jcompany) that is now a division of | [ to monitor or engage in the laundering of drug 

notably those conducted through Mena, Ark. 

~la businessman in Nancy Kentucky who claims 


money or proceeds of other illegal activities, 
can provide information aboutf 


to have been a CIA operative (sic) in Latin and Central America, among other places. 

knew of or was involved in directly or indirectly, any covert activities by the US government 
or any private parties (the so-called private benefactors") in or around Mena, Arkansas in thelate 

1980’s 

had any contractual or other relationship with the latej 
1980's or knew about his activities in connection with MENA 
had any relationship with Arkansas State trooper j - 


Bn the 


who allegedly applied for CIA 



APPROVED FOR RELEASE 
DATE: 1UL 2112 







V 


> 


% 


employment 




Action taken thus far: 


Checked with Dl for information re banking irregularites in Arkansas (OCA action) 


Action requested: please confirm that your component as no information concerning the above 
drug smuggling, money laundering, software sales/production allegations. 

please confirm that your component has made no previous investigation ie intell 
gathering re Mena Arkansas 

please confirm that your component has no information concerning covert activity in 
or around Mena. 


I am forwarding to each of you copies of the original letter from the Committee. 

Please respond by COB Thursday, 20 July, if this is not possible let me know. Thanks in advance. 


CC: 


CC: 


.SBCRTr"' 



SECRET 


00(3) 

OdfO 

0 l AUG 


MEMORANDUM FOR: 

FROM: 

SUBJECT: Request for Information in Connection with 

Whitewater Investigation 




iAPPROVED FOR 
RELEASE- DATE: ! 
|23-Sep-2009 


REFERENCE: 


Lotus Note dated 27 July 1995 


On 27 July] received a 

request from OEMs to respond to the following two questions posed 
by the House Banking and Financial Services Committee in 
connection with their Whitewater investigation.. 

Question: Was Barry Seal's C-123K aircraft (serial number 54- 

0679) sold to him by CIA? Was this plane later shot down over 
Nicaragua with a load of arms destined for the Contras? 


Barry Seal's C-123K aircraft was not sold to him by CIA. We 
do not know if this plane was shot down over Nicaragua with a 
load of arms destined for the Contras. 


CIA Jias never owned any C-123K aircraft. 


Question: Was the Arkansas based firm, Park-o-Meter (POM) ever 

used by CIA? Did the CIA have any relationship with POM? 





SECRET 


SUBJECT: House Banking and Financial Services Committee RFX 


Distribution: 

1 - Addressee 
1 - 

1 - Chrono 


28 July 1995 


SECHET 




Approved for Release: 2014/07/29 C00621341 


TITLE: How the Iran-Contra Story Leaked 

AUTHOR: \ (b)(3)(c) j 


VOLUME: 33 ISSUE: Summer YEAR: 


1989 


Approved for Release: 20 14/0 7 /29 C0Q62134 1 


proved for Release: 2014/07/29 C00621341 


STUDIES IN 


INTELLIGENCE 

A collection of articles on the historical, operational, doctrinal, and theoretical aspects of intelligence. 


All statements of fact, opinion or analysis expressed in Studies in Intelligence are those of 
the authors. They do not necessarily reflect official positions or views of the Central 
Intelligence Agency or any other US Government entity, past or present. Nothing in the 
contents should be construed as asserting or implying US Government endorsement of an 
article’s factual statements and interpretations. 


I for Rosass: 2014/07/29 C00621341 



Approved for Release: 2014/07/29 C00621341 

_£EGRrT' 


A Syrian success story 


HOW THE IRAN-CONTRA STORY LEAKED 


(b)(3)(c) 


With all the publicity surrounding the Iran-Contra affair, there was little focus on who 
leaked the initial story to the Lebanese newspaper Al Shiraa on 1-2 November 1986, or why. 
It was not until June 1987 that re port ing was receiv ed on the origin of t he m yst erio us press 

pi ec e. Ac cording to I 


(Damascus leaked the US-Iranian arms-for-hostages deal for its own purposes, 
thus setting in motion events that would temporarily undermine US prestige in the Middle East, 
expose the diversion of funds to the Nicaraguan Contras, and create a major controversy in US 
politics. 


(b)(1) 

(b)(3)(H) 


the Syrian Government first learned of the arms-for-hostages deal from its charg6 in Tehran, 
Iyad Mahmud, who probably got the information through his contacts in the Iranian 
Government. For Mahmud, who was in fact a Syrian military intelligence officer, this 
knowledge quickly became a dangerous thing. 

In early October 1986, a group of Iranian officials kidnaped Mahmud and beat him badly 
before letting him go. Iranian press reports at the time claimed that Mahmud had been arrested 
by the Iranian antivice squad for drunkenness in the company of women and then released 24 
hours later. This story covered up the real reason for the arrest — to intimidate Mahmud from 
passsing on his knowledge of the deal. 

Immediately after Mahmud’s release, Damascus withdrew him, and he apparently then 
told his colleagues what he knew.j claims that Syria, now angry at both the US 

and Iran, chose the Syrian-financed Al Shiraa to print the story- Although Syrian intelligence 
officials tried to take credit for disrupting US relations throughout the region, they evidently 
never anticipated how far-reaching the political reaction would be in the US. 


(b)(1) 

(b)(3)(H) 


(b)(1) 

(b)(3)(H) 


Why Syria Did It 

Syria was the only Arab state to consistently back Iran in the Persian Gulf War from 1980 
to 1988, and, in return, Iran provided Syria with low-priced oil. In this context, Damascus had 
no reason to stop the US sale of weapons to Tehran. While Damascus may have feared further 
US-Iranian cooper ati on on the Lebanese civil war and other issues, such cooperation is difficul(b)( 1 ) 

to imagine. Yet plaims that Syria exposed the deal out of its anger at botl(b)(3)(n) 

the US and Iran. One possible explanation is that Mahmud found out about the role Israel 
played in facilitating the deal and that Damascus feared Israeli-Iranian ties would return to the 
relationship of the 1970s, when Israel provide a steady flow of weapons to the Shah of Iran. But 
Syrian knowledge of the Israeli angle was unlikely, considering that the Al-Shiraa piece made 
no mention of it. A less unlikely explanation is that Syria had the story printed to punish Iran 
for its treatment of Mahmud. 


(however, may have been misled by his Syrian sources on Syrian 
motivatlonsTor releasing the story. He did not account for the four-week lapse between early 


(b)(1) 

(b)(3)(H) 


_ SECBgP- 


11 


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EenrT 


October, when Syria apparently learned of the story, and 1-2 november, when the story 
appeared in the press. This lapse suggests that Syrian leaders had more in mind then retaliation 
against Iran. 

The Terrorist Trials 

The fall of 1986 was a troubled time for the Syrian Government. On 24 October, eight 
days before the publication of the Al-Shiraa story, a jury in London convicted Nizar Hindawi, 
a Palestinian terrorist who, under orders from high-level Syrian intelligence officials, had tried 
to blow up an El Al airliner in April 1986 by using his unwitting pregnant Irish girlfriend to 
smuggle a bomb on board. Hindawi was sentenced to 45 years in prison, the longest sentence 
in modern British history. What followed that afternoon caught the Syrians, and most of the 
international community, completely by surprise. Within three hours of the court decision, 
British Foreign Secretary Sir Geoffrey Howe appeared as expected before the House of 
Commons to denounce the “monstrous and inhumane” terrorist operation. He then did the 
unexpected by announcing that the UK had decided to break diplomatic relations with Syria. 

That same afternoon, both the US and Canada announced that they too were withdrawing their 
ambassadors from Damascus 

To make matters worst for the Syrians, a second terrorist trial, this one in West Berlin, was 
about to begin. It was clear that Syrian intelligence would be implicated in the March 1986 
bombing of a German-Arab cultural center. Syrian President Assad probably worried that the 
economic sanctions imposed by the UK and the US following the Hindawi trail would be taken 
up by the rest of Europe, following the West Berlin trial. This would put an added strain on 
the shaky Syrian economy. 

Assad also was concerned from a public-relations standpoint. Unlike Iran and Libya, the 
other large-scale sponsors of terrorism, Syria has sought to protect its international image, 
particularly in the West. Syrian intelligence officials carefully hid their involvement in 
terrorism, often by using surrogate groups. Circumstantial evidence linked Damascus to dozens 
of attacks, including the bombing of the US Embassy in Beirut in April 1983 and the Rome and 
Vienna airport attacks on 27 December 1985, but none produced the “smoking gun.” The trials 
in London and West Berlin were changing all this. For the first time, the West had clear-cut 
evidence of Syrian involvement in terrorism, and Assad was embarrassed by the highly 
publicized trials. 

Exploiting a Mouthpiece 

It was at this moment that Syria, hoping to deflect Western attention, decided to leak the 
arms-for-hostages story to Al-Shiraa. For years, the Syrian Ministry of Information had 
maintained close ties to the publishers of the weekly tabloid newspaper, providing them with 
a steady flow of stories, some true and some false, that served Syrian interests. In return, 
Al-Shiraa became increasingly pro-Syrian, reaching the point where it frequently ran editorials 
supporting the presence of Syrian occupation troops in Lebanon and predicting that only Syria 
could end the fighting. As a result, the magazine had become known as a one-sided, unreliable 
source of news. 

The Al-Shiraa arms-for-hostages article on the weekend of 1-2 November claimed that the 
US secretly had sent Iran spare parts and ammunition for American-built fighter planes and 
tanks that the latter had purchased from the US before the Shah’s fall in 1979. Furthermore, 
it described a secret trip made by former US National Security Adviser Robert McFarlane to 
Tehran in early September 1986. On 4 November, The New York Times picked up the 

12 — ' 


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Approved for Release; 2014/07/29 C00621341 


Al-Shiraa story and put it on the front page. That same day, Iranian Speaker of the Parliament 
Rafsanjani, in a speech marking the seventh anniversary of US Embassy takeover in Tehran, 
described in some detail a secret mission made by McFarlane and four other US officials to 
Tehran. Rafsanjani boasted that Iran had held them hostage for five days, before expelling 
them. 

The fact that Rafsanjani immediately confirmed at least part of the Al-Shiraa story rather 
than ignoring it or even denying it suggests that Iran may have been ready to end the 
arms-for-hostages arrangement. If so, the situation in Tehran had changed since the kidnaping 
and beating of Mahmud. By November 1986, Rafsanjani and other more pragmatic Iranian 
leaders probably were under a lot of pressure from radicals in the regime to terminate contacts 
with US officials. When the story broke in Lebanon, Rafsanjani moved quickly to make it 
appear as though Iran had duped “the Great Satan.” 

A Rich Harvest 

For Syria, the Al-Shiraa story was a sizable success. By the time the West Berlin terrorist 
trial ended in mid-November with another guilty verdict and more economic sanctions against 
Syria, the arms-for-hostages controversy was dominating the headlines, and the issue of 
Syrian-supported terrorism had moved to the back pages. Syrian leaders almost certainly 
watched with amazement as the controversy unfolded, revealing the diversion of funds to the 
Contras and creating a major political scandal in the US. By damaging the credibility of the US 
counterterrorist effort, Damascus made it unlikely that Western diplomatic and economic 
sanctions against Syria would last for long. Within a year, the US Ambassador was back in 
Damascus and the European economic sanctions were nearly rescinded. Only Britain had 
decided not to resume normal relations with Syria. 

Other Results 

The impact of the Al-Shiraa story also was felt in Iran. On 28 September 1987, Tehran 
announced the execution of extremist leader Mehdi Hashemi after his conviction on several 
charges, including murder, kidnaping, and attemping to overthrow the Iranian Government. 
Hashemi had been identified as one of the more radical Iranian leaders, and there is speculation 
that he helped leak the secret US-Iranian arrangement to discredit the more moderate 
Rafsanjani. If so, Hashemi or one of his associates probably was responsible for giving the 
information to the Syrian diplomat in Tehran. The fact that the arrest of Hashemi, along with 
60 of his comrades, took place in November 1986 is hardly a coincidence. 

For Al-Shiraa, the story caused a tremendous boost in the newspaper’s popularity in 
Lebanon and throughout the Middle East. It also earned Al-Shiraa some credibility for its 
revelation of the dealings between the US and Iran. , 

This article is classifiedJpaFHn^ 


13 



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V *>•*« of 


EB No. 1472 


• pv W.Px'r 

* «y v^«:> ' 


SlI'JO 


EMPLOYEE;- 

BULLETIN 


APPROVED FOR 
(RELEASE □ DATE: 
23-Mar-2009 


0001 


8 January 1987 


CIA'S ROLE IN THE IRANIAN INITIATIVE 

AN ADDRESS TO CIA EMPLOYEES BY 
ACTING DIRECTOR OF CENTRAL INTELLIGENCE 
ROBERT M. GATES 
8 January 1987 


Following Is the text of the address entitled "CIA's Role in the Iranian 
Initiative" given by the Acting Director of Central Intelligence in the 
Headquarters Auditorium on 8 January 1987. 

| "I want to speak to you coday on two developments of intense Interest and 
concern to all of us at CIA — the Agency's role in the Iran affair and the 
illness of Director Casey. Both of these involve the Agency family and you 
deserve a detailed report." 

THE DC I 



SC***"' "y y ,\v-:< •V&'.sJwSr: 

JrVlLL' ' PORT I ONS ; CLAS£LU£D Vi., 

I 1 I I III I Hi . ■ 



I 

1 

i 


T 



9 

.1 


i- 

1- 

... . i 

"CIA obtained quotes for the costs of the TOW missiles and HAWK 
equipment through the Department of Defense. We then added estimates for 
other associated expenses. To date, we have only paid CIA's costs for 
preparing and transporting the equipment and acquiring the medical supplies 
(which total around $50,000) and a single billing from Department of Defense 
for $5.6 million. All other billing from Department of Defense is still 
pending. If our estimates are accurate, some $350,000 of the Iranian funds 
will be left over after all bills associated with the operation are paid. 


"Now let me turn to our money-handling role. We were not — I repeat ( 
not — involved in middle-man financing or any of the financial arrangements i 
between the Iranian side and the intermediaries, or between intermediaries 
and the NSC. My understanding, based on what we have learned over the last 
several weeks through our own investigation and from other information 
surfacing in the media, is that money raised by private Investors would flow 
through intermediaries to an Israeli-controlled account. From there, money 
would flow to Swiss accounts apparently controlled by one of the 
intermediaries. It was from these latter accounts that our CIA account would 
receive electronic transfers in an amount equal to what we needed to cover 
Department of Defense costs. We never knew, and still do not know, how much 
money flowed through the accounts controlled by the intermediaries. 


"The total of $12.2 million connected with the Iranian operation 
deposited into our accounts in Switzerland has been fully accounted for. 

"In addition to the logistics and finance activities described above, 

CIA also provided other support to the NSC effort. Through the NIO for 
Counterterrorism, we continued to task collection assets for coverage of ^ran 
'and Lebanon. Moreover, elements in the Directorate of Intelligence were 
asked to provide tactical support and prepare materials to help implement the 
NSC initiatives; the Office of Communications provided secure communlcatlopa 
and two comroo officers for the McFarlane mission in May; and our Office of 
Technical Service prepared documentation for the mission members and provided 
recording equipment. Finally, a handful of our personnel were involved In a 
total of 12 meetings between the U.S. representatives on the one hand and the! 
intermediaries and the Iranians on the other. A Farsi-speaking CIA annuitant j ; 
was made available to assist in the NSC project. In providing the support 
described above, we expended a total of $87,478 in appropriated CIA funds. 


I 


- 


"I believe our activities under the Finding were carried out properly 
and competently. We can account for every penny that came into our hands and 
for all equipment that was used." 

PHASE III: ALLECED DIVERSIONS r 'j 


7' -■ ”We now come to the third phase:- the speculation that some of the 
-. Iranian money provided to intermediaries may have been used for other 
;- : purpdses. .- 


> T> 


'r S&. .4 ‘ 





V 9v ^ 




V 


V v; - 
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iV 

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II 3 


"We learned In lace June and July 1986 chat officials In Tehran were 
complaining to /chorbanifar. ) the Iranian expatriate intermediary, about the 
price charged for the HAWK spare part's,^; Tehran was complaining that it had 
been charged six times the going rate&££The, details of this running argument 
were well known to the key CIA officials involved, but they assumed that the'?/ 
problem resulted either from middle— man fees or were part of other arms deals 
Chorbanifar had arranged on the side.. 

"By late August-early September 1986, our NIO was becoming worried about 
the operational security of the HSC project and was beginning to wonder also 
about a possible diversion of funds. These reservations were shared by the 
1 CIA annuitant Involved. They knew about tlie' running argument over the price 
Chorbanifar charged Tehran for the HAWK spare- parts, as well as the fact that 
some of those private citizens involved in the Iran project were also active 
in efforts to get private benefactors to aid the Contras. 

"On 1 October, the NIO met with me to report on the "new channel" being 
opened to Tehran (which would cut out Chorbanifar); he also expressed deep 
concern about the operational security of the project. In reviewing the 
situation, he pointed out that the investors involved with Ghorbanifar had 
not been repaid for putting up the front money for the HAWK spare parts deal 
and that there were many confusing reports relating to claims by Tehran that 
it was overcharged for the spare parts. 

"The NIO also speculated that some of the funds from the Iranian arms 
sales may have gone to support the Contras. He told me that he had no 
evidence to support this speculation. I was nonetheless disturbed by this 
development and directed the NIO to brief the DCI. 

"The NIO met with the DCI on 7 October 1986, repeated his suspicions 
about the diversion of funds as well as his worries about the Iran project's 
operational security... The' DCI told him to draft a memorandum outlining his 
concerns. 1 ' '*•?*' •* *..j : *■' 

• '-*4 ' . ; 

“The same day, '7 October, the DCI received a telephone call from a New 
York businessman. In 1976-79, Mr. Casey had done some legal work fof.the 
company the businessman worked for and the Director, had not seen him since 
then. The businessman said on the phone that he had something important that 
he wanted to inform the DCI about and came down to Washington the same day. 

As the DCI has testified, It quickly emerged that the businessman knew more 
about the financial aspects of the NSC project with Iran than CIA or the DCI 
did. His role was that of an advisor to Adrian Khashoggl. He had worked with 
Chorbanifar, the Iranian Intermediary, almost from the inception of his 
effort to develop an American-Iranian relationship. He told the DCI that, 
during 1986, he and Khashoggl had gotten a group of Canadian investors to put 
up something on the order of $15 million to finance arms sales by the U'. S’, to 
Iran. He told the DCI that the Canadian investors were still owed something 
like $10 million and were aroused by their inability to collect the money 













w 



they had advanced. He said they intended to bring formal legal action to 
recover their money. He was concerned that this would destroy prospects of 
getting additional hostages out, as well as ruin what he saw and sought as an 
emerging if embryonic relationship between the United States and Iran. It 
was not until two weeks later that the businessman first mentioned 
speculation about funds going to the ContraB, 

"That same afternoon of 7 October, the DCI called Admiral Poindexter and 
reported this information to him. He seemed surprised and clearly 
concerned. It was obvious that this information represented a major risk to 
the operational security of the Iranian initiative. The DCI advised 
Poindexter to prepare a comprehensive statement for possible release fully 
covering all aspects of the Iranian initiative and to consult with the White 
House Counsel. 

"On 9 October, the DCI and I met with North to receive a briefing on his 
recent meeting in Europe with Iranians representing a new channel to senior 
officials in Tehran (i.e., a channel separate from the one Involving 
Ghorbanifar) . The DCI expressed worries about the loose ends from the 
earlier channel and his concerns about operational security. 

"The conversation then turned to Central America and the downing of a 
Contra supply plane and capture of Eugene Hasenfus. I directly asked North 
If there was any CIA involvement, direct or indirect, in the private funding 
effort on behalf of the Contras. We accepted fully DO assurances that our 
officers had kept their distance, but regarded this as an opportunity to 
reassure ourselves that there had been no slip ups unknown to our own 
managers. North told the DCI and me that, based on his knowledge of the 
private funding efforts on behalf of the Contras, 'CIA is completely clean' 
of any contact with those organizing and funding the operation. -Because of 
questions- and publicity that week surrounding the downing of the- supply plane 
and the arrest of Hasenfus, I made a record , of North's response. It was in 
the context of this discussion I recallNorth making a cryptic reference to 
Swiss accounts and the Contras. I assumed at the time it had to do\»nly with 
the private effort on behalf of the Contras and therefore neither^ I nor the 
DCI pursued it.-' ' ’’ • 

"The DCI and I furth'er pursued problems in the Iranian . operation- with 
Poindexter on 15 October. At this meeting, we gave him the memorandum the 
‘.DCI had asked the NIO to prepare, laying out all his concerns and we sat with 
him while he read It. We reiterated our concern that the NSC pro Ject :: was 
about to spin out of control. The DCI suggested again that he consult White 
House Counsel. 

I , In subsequent conversations. with the New York businessman, on 16 : and 22 
^October, the NIO obtained further details on the?unhappiness of the' - • . • • • 
investors. .On 22 October, the NIO was told - that*'the Iranian middleman ‘ 
?ChorJjanifar .had said, he believed that. a significant- share of the $15. million 

- ■ 

• s-r-fi-p- y T ~ ' f - V- : . ■s&'i-i -'K 



* <y- V : ^ 




raised by the investors vas 'earmarked for Central America.' This latter 
Information from the businessman was passed to Colonel North by the NIO. 

fe 

"In deciding what action to take on the serious threats to the security 
of the operation and speculation reaching us in October, we had to balance a 
number of factors. First of all, the information, while deeply disturbing, 
was extremely difficult for CIA to Interpret and weigh -- especially since we 
had little knowledge of the financial mechanics of the NSC operation. 

"Throughout the late spring and summer of 1986, our officers familiar 
with the operation had seen fragmentary references to "overcharging" and had 
picked up other reflections of dissatisfaction with the financial 
arrangements on the part of both the Iranians and the intermediaries . But 
again, this was very difficult for our people to interpret since it was never 
clear if these references related to the NSC deal or to other deals the 
intermediaries were involved in. For that matter, such allusions did not 
seem all that unusual given the nature of haggling that goes on in the black 
arms market and in the context of the tens of billions of dollars in arms 
being sold to Iran by others. 

"A great deal of attention has been devoted to the NIO's memorandum of 
14 October and its one reference to Chorbanlfar poaalbly alleging diversion . 
-Of some 'Iranian funds to other U.S. Government projects.. Even more attention 
has been given to the businessman’s remarks later to the effect that 
Chorbanlfar believed some of the money may have been used for Central • 
America. It is essential that you appreciate that in none of this were there 
any allegations of CIA involvement, or NSC or White House involvement. 

What's more, the central figure in the speculation was Chorbanlfar, about 
whose reliability there were serious misgivings inside the Agency from the..; 
outset.' We simply did not , — could not — • put much weight _on speculation X.;:'.'. 
from Chorbanlfar. ' .. . . ' 


,"We believejl .in* October and ^continue f o' 'believe;' that'based on ’the ' : r . 
vague inf orinaVion and> speculation we had' at the time’, we leaned forward with 
respect to concern for propriety. Taking all together the NIO’s speculation 
ronvl. October, North’s abbreviated and cryptic remark. on 9 October. and^ ' I 
subsequent comments from the businessman in late October and early November, 
we had no evidence or any indication that CIA, NSC, or ; any other U.S. ^ - 
Government institution was involved in a ‘diversion- of funds; that anyfunds-*- 
had In fact been divertedj'ior that any "laws had been broken."- In fact , • we .. 
-.{received no ■additional'- information along' .these lines. '.until the Attorney y 
-General ' s .statement on 25 November 1986. . ./ j’f~- •' . : ..f C. 

concluded tha t’-none of the - operational 'security . aspects or - the 
^speculation concerning; the funding .related to the part ;• of, the transaction -in 
which^CIA; was -involved. '-'•^..Security' concerns; posed by t unha ppyy investor s/'t and ?*§ 

{ the {vague.; epeculation’-sourced to Chorbanlfar .about the’. fundingv involved.^^i- 

•if il 1 - r T 1 J-t... " . U. nr-— . j : O i L*' 



..... - - 






(b)(1) 

(b)(3) 


Page 


1 


Memorandum for the Record 


EVENT: MEMBER BRIEFING DATE: 07/21/95 TIME: 1000 STATUS: COMPLETE 

PLACE: 2186 RHOB 
FOR: REP LEACH 
SUBJ: MONEY LAUNDERING 


ASSOC 

NAME 

— { PARTICIPANTS ) 

ROLE 

REP . 

LEACH f 

JAMES A. (R-IA) 


CIA 

TBD 


BRPR 

CIA 

! 

| (DC I /OCA) 

SPRT 


{ EXECUTIVE SUMMARY ) 


1. On 21 July 1995, at 1000 hours, in room 2186 Rayburn House Office Building, Chairman James Leach (R-IA), 
Committee on Banking and Financial Services, and staffer Jamie McCormick, received a briefing, at Leach's written request to 

the DCI, on allegations of H 1 > — . 

in Arkansas in the late 1980s, Agency participants were: j Investigative Staff, Office of inspector General; 

Chief, Legislation Group, Office of Congressional AffairsTand the undersigned. NSA participants were: Frank 

Newton, inspector General, and Congressional Affairs] 


— ( ADDITIONAL INFORMATION ) — 


2. Representative Leach began the briefing by saying that he was not interested in opening a new probe of U.S. 
Contra-policy or suggesting wrongdoing by either Agency, especially since he served on the October Surprise Task Force, 
where he was convinced that the Marcos’ walked away with billion of dollars. Leach, however, did say he based his request for 
the briefing on rep orts t hat hav e appeared in the pr ess tha t refer to secret foreign bank accounts held by prominent people in 
Mena, Arkansas, j and an Arkansas-centered network of banks formed tcj , 

(see attached incoming letter). Leach also said that over a period of time he had talked to a lot of people regarding this 

issue. He said that most of the allegations contained within the articles were probably false, but he felt an obligation to look 
into Whitewater related allegations on behalf of the Banking Committee. That said, some allegations may be credible, some 
totally unbelievable, but as information goes out to the American public in non-trad'itional ways, it becomes more believable. 


3. 


along with Frank Newton, responded to Leach's questions regarding each Agency's current 

to all of 


knowledge on involvement with any of the alleged allegations contained in his letter. Newton respondedj 
the questions posed in the incomi ng lett er, bu t did, howev er, pro vide a brief broadbrush background briefing on now NSA 
conducts it normal daily activities | ]said that the 

capability of the IG to conduct its function depe nds in part on cooperation by others with CIA and thus far the IG had not look 

into any of these allegations. However, j said as he understood the current issue, a thorough search had been 

conducted by CIA regarding PROMIS/lnslaw issues relating to Systematics, Inc., Mena, and Hadron, during a much earlier 
timeframe. Also, he understood that thus far very little information had been found to be responsive to the exact allegations 


APPROVED FOR 

RELEASECDATE: 

28-Sep-2009 










Page 


2 


SECRET 



1 * 


emorandum for the Record 


contained in the current letter) ______ however, did say that the Agency had perhaps made some connections within 

the larger picture of thin gs. T he A g ency was aware of Barry Seal, bu t had no re l ationship with him nor any records regard ing 
his activities in Mena. I 


As for PROMIS, that issue had been looked at in-depth by the Senate Select 
Committee on Intelligence (SSCi) and the House Judiciary Committee in 1991 and 1993. The conclusion then and still is that 
the Agency never purchased any INSLAW/PROMIS software. ~ ~ 


Chairman Leach was also informed that we 


had not found any records related to Systematics of Arkansas, a bankina software firm. 

\ 

i 



6. Leach, after listening to the responses to his earlier questions, proceeded to ask approximately 45 other questions 
regarding the issue, basically repeating many of the issues already addressed. For those questions and responses, please see 
attached pages from a draft memorandum provided by staffer Jamie McCormick and checked against the personal notes of 
the undersigned. The responses in the draft memorandum correspond correctly to the personal notes of the undersigned. I 

7. Leach concluded by once again saying he has an obligation to look into the matter on behalf of the Committee, and 
asked us to inform the DCI and DIRNSA that he may hold hearings on these allegations in the fall. (U) 


8. The briefing lasted approximately 90 minutes. Leach was informed that the Agency would continue to check its 
records, especially on questions relating to: 1) Park-o-Meter; 2) CIA’s relationship, if any, with Terry Reed; and 3) whether the 
CIA had any connection to Seal’s cargo plane (serial number 54-0679). T 



CIA Liaison Group 

Office of Congressional Affairs 


j 


| 


SECR 





CxA "Sa 


APPROVED FOR 
RELEASED DATE: 
28-Sep-2009 


_S^RET 


OCA 95-2274 
16 August 1995 


MEMORANDUM FOR THE RECORD 

SUBJECT: Briefing for Rep res entati ve James Leach (R-IA) 

Regarding; ' in Arkansas in the 


Late 1980s With NS A - 21 July 1995 


(b)(1) 

(b)(3) 

(b)(6) 


1. On 21 July 1995, at 1000 hours, in room 2186 
Rayburn House Office Building, Chairman James Leach (R-IA) , 
Committee on Banking and Financial Services, and staffer 
Jamie McCormick, received a briefing, at LeanhLs — w ri tt-on 
request to the DCI, on allegations of j 

in Ar kansa s in the late 1980s. Agency" participants were: 

I Investigative Staff, Office of Inspector General; 

_ jChief, Legislation Group, Office of 
Congressional Affairs; and the undersigned. NSA partici pants 
were: Frank Newton, Inspector General, and 

Congressional Affairs. 


2. Representative Leach began the briefing by saying 
that he was not interested in opening a new probe of U.S. 
Contra-policy or suggesting wrongdoing by either Agency, 
especially since he served on the October Surprise Task 
Force, where he was convinced that the Marcos' walked away 
with billion of dollars. Leach, however, did say he based 
his request for the briefing on reports that have appeared 
in the press that refer to secret foreig n ban k a c counts he ld 

b y prominent people in Mena, Arkansas, \ _ _ __ ] 

j and an Arkansas^cehtered network of 

banks ~ formed to j(see attached incoming letter) . 

Leach also said 1 mat over a period of time he had talked to 
a lot of people regarding this issue. He said that most of 
the allegations contained within the articles were probably 
false, but he felt an obligation to look into Whitewater 
related allegations on behalf of the Banking Committee. 

That said, some allegations may be credible, some totally 
unbelievable, but as information goes out to the American 
blj-C in non-traditional ways, it becomes more believable. 


|EU. 




along with Frank Newton, 



responded co Leacn’s questions ^regarding each Agency 1 s 
current knowledge on involvement with any of the alleged 
alleg a t i ons contained in his letter. Newton responded 

to all of the questions posed in the incoming 
e tber , But did, however, provide a brief broadbrush . 



X- JODJ 
FI Leach 









SECRET 


SUBJECT: Briefing for Representative James Leach 

(R-IA) Regarding! in 

Arkansas in the Laie xjous - zx c ruiy 1995 


background briefing on how NSA conducts it nor mal daily- 
activities said that the 

capability ot the IG to conduct its function depends in part 
on cooperation by others with CIA and thus far th e IG had 
not look into any of these allegations. However, 
said as he understood the current issue, a thorough search 
had been conducted by CIA regarding PROMIS/Inslaw issues 
relating to Systematics, Inc., Mena, and Hadron, during a 
much earlier timeframe. Also, he understood that thus far 
very little information had been found to be responsive to 
the exact allegations contained in the current letter. [ _ 

however, did say that the Agency had perhaps made 
some connections within the larger picture of things. The 
Agency was aware of Barry Seal, but had no relationship with 
him nor any records regarding his activities in Mena. Seal's 
association with the Drug Enforcement Aaencv (PEA) was widely 
publicized, 


As for PROMIS, that issue had been 
looked at in-depth by the Senate Select Committee on 
Intelligence (SSCI) and the House Judiciary Committee in 1991 
and 1993. The conclusion then and still is that the Agency 
never purchased any INSLAW/ PROMIS software. [ 1 


Chairman Leach was also informed that we 

lad not found any record s related to Svstematlcs of Arkam 



SL 

SECRET 







SUBJECT: Briefing for Repr esentative James Leach 

(R-IA) Regarding; jin 

Arkansas in the Late liJBTTs 3 21 July 19 95 



6. Leach, after listening to the responses to his 
earlier questions, proceeded to ask approximately 45 other 
questions regarding the issue, basically repeating many 
of the issues already addressed. For those questions and 
responses, please see attached pages from a draft memorandum 
provided by staffer Jamie McCormick and checked against the 
personal notes of the undersigned. The responses in the 
draft memorandum cor respond correctly to the personal notes 
of the undersigned, j 


7. Leach concluded by once again saying he has an 
obligation to look into the matter on behalf of the 
Committee, and asked us to inform the DCI and DIRNSA that 
he may hold hearings on these allegations in the fall. (U) 

8. The briefing lasted approximately 90 minutes. 
Leach was informed that the Agency would continue to 
check its records, especially on questions relating to: 

1) Park-o-Meter ; 2) CIA's relationship, "if any, with Terry 
Reed; and 3) whether the CIA had any connection to Seal's 
cargo plane (serial number 54-0679) . j" j 


Office of Congressional Affairs 


Attachments 




SUBJECT ; 


Briefing for 
(R-IA) Regarding! 

Arkansas in the Late T 981)3 


Leach 
! in 

“21 July 1995 


DCI/oca/CI AL iai s o nGm l 
OCA 95-2274 


(22 Aug 95) 


Distribution: 

Original - OCA Records (w/atts) 

1 ~ D /OC A (w /o atts) 

1 -j J(w/o atts ) 

1 -i rdhrono (w/atts! 



CONFIDENTIAL 


'// 




A i o 


19 July 1995 


Note to: 
From: 
Subj ect : 


Acting DC I 

Acting Director of Public Affairs 
Mena 


The August issue of The American Spectator takes up the Mena 
story in a way that is likely to resonate on the Hill {see 
attached article) . 

It alleges, explicitly and implicitly, that an aircraft 
operated by a CIA front company in 1984 used the airfield at 
Mena, Arkansas, as a staging point for weapons supply flights 
to the Contras in Nicaragua; on the return flights from 
Honduras, the aircraft allegedly carried illegal narcotics to 
Mena. The narcotics runner, Barry Seal, allegedly paid off 
then-Governor Clinton's protege, L. D. Brown, and one Dan 
Laseter, a Clinton contributor. 

This is the latest repackaging of allegations previously made 
by the Wall Street Journal. 

I understand that Fred Hitz or someone from his staff, along 
with other CIA officers will brief Congressman Leach on * 
Friday 21 July in an attempt to address his concerns about 
these and other allegations. 

In the mean time, we are receiving media queries on Mena, 
most recently from Michael Isikoff of Newsweek on 18 July. 
With the publication of The American Spectator article, we- 
expect more. 

At present, although there is no reason to believe any of the 
allegations, we are declining to comment publicly, pending 
exhaustive searches of DO files, as tasked by OCA. As soon 
as those searches are complete, we hope to have a crisp 
public statement that distances us from the allegations--if 

the Agency IG's look into them does n ot constrain us fr om 

doing so . j j - 


CC: EXDIR, GC , D/OCA, ADDO, ADDI, DDA, D/AIS 


T 



Central Intelligence Agency 


(H)(3) 



V\&shington. D. C. 20505 


APPROVED FOR 
RELEASED DATE: 

23-Sep-2009 

OCA 98-1195 
20 April 1998 


The Honorable James A. Leach 
Chairman 

Committee on Banking and 
Financial Services 
House of Representatives 
Washington, D.C. 20515 

Dear Mr. Chairman: 

The Director of Central Intelligence (DCI) asked me to 
reply to your April 2 and April 20, 1998 letters to him 
requesting further information regarding Barry Seal and 
associated matters. 

The Inspector General (IG! has been working on those 
portions of your request that involve information the IG 
dealt with in preparing its previous report on these 
matters. Also, the Office of Congressional Affairs is 
working with the appropriate CIA components to respond to 
those aspects of your request that involve further records 
searches and additional information. Please understand that 
given the breadth of your questions, we will be unable to 
respond by the requested deadlines. 

I regret any confusion that may have arisen during your 
recent dealings with the IG, with respect to that Office's 
role and the allocation of responsibility within CIA for 
answering Congressional inquiries. By way of clarification, 
this Office is the primary point of contact for responding 
to requests by Congress for CIA data or other support. I 
also note in this regard that section 17(b) (2) of the CIA 
Act places the IG under the general supervision of, and 
states that the IG shall report directly to, the DCI. For 
these reasons, as the IG's letter suggests, directing new 
requests for Agency information to the DCI or to this Office 
is generally the most appropriate avenue for addressing such 
requests . 



The Honorable James A. Leach 


Finally, please be assured the DCI and I take seriously 
all Congressional requests for information or other support. 
The Agency will do its best to respond to your current 
inquiry and to future requests or interests that you may 
have. 

If we may be of further assistance, please call me at 


Sincerely, 


John/H. ftosefoan 

Director of Congressional Affairs 




APPROVED FOR 
RELEASED DATE. 
23-Sep-2009 



WtshKgttm, D.C. 20505 



3 April 1998 


Inspector General 
703 - 874-2565 


The Honorable James A. Leach 
Chairman 

Committee on Banking and 
Financial Services 
House of Representatives 
Washington, D.C. 20515 

Dear Mr. Chairman: 

Thank you and your staff for taking the time to meet 
with me on 30 March and for your 1 April 1998 letter 
clarifying and adding priorities to the categories of 
information you originally requested in your letter of 
26 March. We have provided your requests to the Agency's 
Office of Congressional Affairs (OCA) , which will provide 
them to the responsible Agency components for appropriate 
responses and monitor their progress on your behalf. 

As was explained during our meeting, most of the 
questions that are raised in your letters are outside the 
scope of the investigation we completed in November 1996 
into several issues relating to events at Mena, Arkansas. 
They also, with few exceptions, are outside the scope of the 
investigation that is nearing completion into allegations 
that the CIA was complicit in narcotics trafficking by the 
Nicaraguan Resistance Movement, i.e., the Contras. Since we 
are not reopening or expanding those investigations, these 
additional requests for information will be managed by 
Agency officials through OCA, as are all congressional 
requests for information from Agency files on any subject. 

This is the distinction between this Office and the 
Agency that I attempted to draw in our discussion. Any 
information in the possession of CIA that is responsive to 
your questions and relates to issues this Office has not 
specifically investigated will be located in Agency files, 
not the files of this Office. An Agency review of its files 
and response to you regarding those issues is the most 
expeditious and efficient means of providing answers to your 
questions . 




The Honorable James A. Leach 


As I explained in our meeting, all the information that 
we developed in our earlier investigation into specific 
issues relating to Mena, Arkansas and Barry Seal is set 
forth in our November 1996 Report of Investigation. A copy 
of that Report has been made available to your staff and we 
are preparing a written version of the oral responses we 
provided at our meeting to the questions you have asked that 
relate to that Report. The broader questions and additional 
information provided in your letters may lead the Agency and 
OCA to additional information in Agency files, but this 
Office has no additional information in its files concerning 
these matters at this time. 

As also mentioned in our meeting, the second volume of 
our Report of Investigation into the CIA/Contra/Cocaine 
allegations is nearing completion and should be released in 
classified form within the next three weeks. Information 
from that Report regarding a few of the subjects identified 
in question II-3 of your 26 March letter will then be 
available to you and your staff through the House Permanent 
Select Committee on Intelligence. 

Finally, you may rest assured that this Office is fully 
committed to fulfilling its statutory obligations under 
50 U.S.C. §403q(d) (3) (c) to report "immediately" to the 
intelligence committees any instance where this Office is 
u n a b le to obtain information and to pursue administrative 
action under 50 U.S.C. §403q(e) (2) regarding .any failure of 
an employee to cooperate with this Office. I will undertake 
to advise you also if any difficulties of this nature are 
encountered in regard to your requests for information. 


Sincerelv: 



The Honorable James A. Leach 


DIG/INV : ' " ^ | ^ (2 Apr 98) 


Distribution: 
Original 
1 
1 
1 
1 
1 


Addressee (via PAX and courier) 
bcc : OCA 

bcc : i "IDO 


IG Chrono 
INV Chrono 
INV Subject 



APPROVED FOR 
RELEASED DATE. 
|28-Sep-2009 


SECRET 


Joanne I sham 


Status Report on Inquiry from Chairman Leach 
House Banking and Finance Committee 


(b)(1) 

(b)(3) 

(b)(6) 


Briefing Request 

• Chairman Leach (R-IA) wrote you on 11 July 95 
seeking your help in "verifying or laying to rest 
various allegations of money laundering in Arkansas 
in the late 1980s." (Copy of letter attached as Tab 
A) . 

• He asked for a briefing from the CIA's Inspector 
Gener al to address 7 topics ranging from efforts to 

1 _ : to whether the Agency was aware of 

certain companies and individuals who allegedly 
operated in or around Mena, Arkansas. 

• The worst of these allegations, faxed to xrs before 
the briefing, credited to a CIA source in a magazine 
called Media Bypass . is that the CIA discovered that 
Vince Foster was a spy for the Israelis, and used a 
Cray supercomputer at. CIA ‘Headquarters to 
surreptitiously drain $2.73 million from Foster's 
secret Swiss account. The article goes on to 
speculate that Foster committed suicide because he 
discovered his account had been drained. (Copy of 
article attached as Tab B.) 


• A similar briefing request was sent to NSA. 


Briefing by CIA and NSA 

• On 21 July 95, Congressional Affairs and Inspector 
General representatives from CIA and NSA met with 
Chairman Leach and his assistant staff director, 
James McCormick. 

• Chairman Leach was very cordial at the briefing, but 
his first question was whether anyone at either 
agency had discussed his inquiry with anyone at the 
White House, the Department of Justice, or any other 
governmental organization and he was told we had not 
discussed this outside the agency. 



The CIA's IG had not conducted investigations into 
these allegations and had a limited role in the 
hriefing. The Agency's OCA representative advised 
that we had not finished our records review, but we 
were aware of one of the individuals identified in 


V 







SEdRET 


the Chairman's 11 July letter, Barry Seal (now 
deceased) . We knew of Seal because of previous 
inquiries (in connection with criminal prosecutions 
of other individuals), but advised we had no 
relationship to Seal nor any records regarding his 
activities in Mena, Arkansas. 

• We also advised him that both the SSCI and the House 
Judiciary Committee conducted in-depth reviews in 
1991 and 1993, respectively, about another subject 
of his 11 July letter inquiry, INSLAW's PROMIS 
software. The conclusion then and now, is that the 



• During the briefing. Chairman Leach read'fpom a list 
of additional questions provided to us after the 
briefing. The briefers indicated that we could not 
answer all of these questions conclusively, and 
Chairman Leach asked for some limited follow-up 
searches. (Copy of additional questions attached as 
Tab C.) 


• NSA's IG had no information about the questions 

posed in the 11 July letter, but did provide a brief 
broadbrush background on how NS A condu cts its normal 
daily activities! ] 




We are continuing to search our records for 
responsive information and once the review of these 
materials is completed, we will brief the findings 
to our oversight committees, the NSC and Chairman 
Leach . 



& EC R ' B T~“ 







' jAMta A. LT>CH. low A. CHAIRMAN 

. WU. MCCOLLUM, FLORIDA 
UARQE ftOUMMA. NFW JERSEY 
tX>U(3 BCRlLTnjH, NEBRASKA 
TO *1 ROTH, WABCON41N 
R I CHAW) K B*CER. lOUI6».a«a 
R»CK LAZIO, NSW YORK 
»FfcNC£J» BACHU3. W. ALABAMA 
MICHAEL CASTlt. DELAWARE 
MTfR KIN*, W*W YORK 
tOWAAO ROYCF . CAUrORNlA 
PRANK D, LUCAS. OKLAHOMA 
JERRY VnUER BiJWOH 

' J.CL HAYWORTH ARCONA 
JACK WtTCALF WASNHMTOM 
SONNY frO NO, CALIFORNIA 
HllhTkttY.OHU 
ROM NT L 4HRUCH, JK MaAYVANO 
ftOA HARR. Q6OR0M 
CHCK CHRYSLER MKHKAN 
FRANK C*f MtAWg. OHIO 

jon fox Pennsylvania 
PRCOCRJCX HSINSMAN. NORTH CAROLINA 
«nvs IT OCX MAN, rtXAS 
FRANK lOWONOO, NIW JERSEY , 

J.C WATTS, OKLAHOMA 

*U« W. JOTtiX NtW VO«*. / 


U.S. HOUSE OF REPRESENTATIVES 

COMMITTEE ON BANKING AND FINANCIAL SERVICES 
ONE HUNDRED FOURTH CONGRESS 


2129 RAYBURN HOUSE OFFICE BUILDING f , i-v 
ft *0 WASHINGTON, DC 20515-6450 ~<A 

Uujt Lhf ( ' 


y 11, *995 

IV : 



Hon. John M. Deutsch 
Director > 

Central Intelligence Agency 
Washington, D.C. ,20505 

Dear Director Deutsch : 



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HfiNHY 1. dQMZALC, TEXAS ( 

JOHN ± UFAirt mvvyrmt 
UUCt F.VtNTO, MAINE aOTA 

ouflua t aotuMiR. new von* 

IAANIY PRAM* MASSACHUSETTS 

PAUL t KANJORSlU. rtNr«Yt,VANVA 
JO0CPH r. KWNWT B. MAlAACHUarm 
FVQYOknAXi NIWYORX 
KWEJSI MTUMS. MARYLAND 
M JJONC WATVM, CAUPORNU 
HU ORTON, UTAH 
Carolyn bl maloky. yora 
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LOCHJJ ROYIaL-aUAAO, CMI*3*»U 
THOhU« U, BaRMT?. WISCONSIN 
NYCU fci VaAZOUEX Ntw YORK 
ALBERT A. WtNN. MANYIaNq 
CttO RtLOa, LOUtPANA 
M El YIN WATT. NORTH CAROLINA 
MAURICE HtNCMEY, NSW YORK 
OAJtY ACKIRMAN, NCW YORK 

UN lINTtia TEXAS 
BERNARD SAWOBRa, VERMONT 
Oflll Jtt.7M3 


t/r. 



I am writing to seek your agency's help in verifying or laying to 
rest various allegations of money laundering in Arkansas in the 
late 1900s. For that purpose, 1 would request a briefing from 
the CIA's Inspector General on Friday, July 14' before 1:00 p.m.; 
if that is not possible, Monday,' July 17, would also be a conve- 
nient day. 


The reports I have in mind have appeared in the general press 
and, sometimes in sensational form, in more narrow-gauged out- 
lets, including the Internet. They speak of secret foreign bank 
accounts held by prominent people in Arkansas, special software 
to monitor bank transfers, an Arkansas-centered network of banks 
formed to launder money, and similar tales. I would like to 
determine whether there is any substance at all to these stories. 


Specifically, I would like your Inspector General to tell me 
whether the Agency: 

(1) knows of any secret bank accounts held by U.S. citizens 
domiciled in Arkansas at any time between 1988 and now; 

(2) is aware, directly or indirectly, of any efforts by computer 
hackers, U.S . -government related or otherwise, to penetrate banks 
for the purpose of monitoring accounts and transactions; 

{3} knows of or has participated, directly or indirectly, in \ I 
effortB to sell software- -notably versions of a program in use at\ / 
the Justice Department called PROMIS--or clandestinely produced \</ 
devices to foreign banks for the purpose of collecting economic 
intelligence and information of illici t monev transfers ; 






page two 


(4) is cognizant of any attempts by Systematica Inc, an Arkansas - 
based electronic data processor that is now a division of All- 
tell, to monitor or engage in the laundering of drug money or 
proceeds of other illegal activities, notably those conducted 
through Mena, Ark.; 

•v 

(5) can provide information about Charles Hayes, a businessman in 
Nancy, Kentucky, who claims to have been a CIA operative in Latin 
and Central America, among other places; 


(6) knew of or was involved in, directly or indirectly, any 
covert activities by the U.S.. government or any private parties 
(the so-called "private benefactors") in or around Mena, Arkan- 


sas, in the late 1980s; 


(7) had any contractual or other relationship with the late Adler 
Barriman "Barry" Seal in the 1980s or knew about his activities 

in connection with MENA. O r -• „ ' 

— 

I would appreciate your help in shedding light oh these matters/ 



2 



ll-W v> 




Investigate Mena 


' For more than a year we have been 
reporting on the mysteries of tiny 
Mena airfield in western Arkansas, 
The clouded tale of drug smugglers 
and spy operations in the 1980s is a po- 
tential embarrassment to the Democ- 
ratic governor who ran the state and 
the Republicans who ran the White 
House. But the big story here is not 
primarily about who did what ID yean 
ago. It’s about a very 1930s concern: 
drugs. How has our system broken 
down so that Illegal drugs can be 
moved into this country on such a 
large scale? 

; This week, the American Spectator 
magazine adds another piece to the 
Mena puzzle with a story about 
Arkansas State Trooper L.D. Brown 
written by Spectator editor R. Emmett 
Tyrrell. Row, the account’s weakness 
and strength are one and the same— 
L.D. Brown himself. Its weakness is 
that it is a single-source account; its 
strength is that L.D. Brown Is an im- 
portant source. A potentially key 
player In the Whitewater saga, Mr. 
Brown corroborates part of David 
Hale’s claim that Mr. Clin tan put 
pressure on him for financial help. 

Mr. Brown now says that while 
working on then-Gcv. Clinton's secu- 
rity detail, he applied to the Central 
Intelligence Agency, with the gover- 
nor’s support Following CIA testing 
arid an exchange of letters- supplied 
Lo.Sfr. Tyrrell by Mr. Brown-the state 
trooper claims he was contacted by 
Mena drug smuggler Barry Seal. Soon 
after, he was on two Central American 
flights from Mena airport aboard Mr. 
Seal’s C-123K, running guns fb the 
Contras. Mr. Brown, a former nar- 
cotics officer, says that when Mr. Seal 
showed him cash and cocaine ship- 
ments, he quit When be confronted 
Gov. Clinton about , the drugs and 
money, Mr. Brown allegedly was told 
qot to worry about iL “That's 
Lasater's deal,” Mr. Brown claims 
Gov. Clinton told him. 

. To be sure, Dan Lasater is a color- 
ful figure. He ran a free-wheeling 
bond house in Little Rock, and was 
friend and campaign supporter to Bill 
CUntan. In 198fi, in a case that also In- 
volved Mr. Clinton's brother, Roger, 
Mr. Lasater pleaded guilty to a co- 
caine distribution charge and went off 
to prison for a brief stay. The federal 
prosecutor who handled the case was 
George Proctor, a Carter-era ap- 
pointee who now heads the Justice De- 
partment’s Office of International Af- 
fairs; Mr. Proctor’s office has author- 
ity over aspects of another of our long- 
standing concerns, BCCL One of Mr. 
Proctor's predecessors at ' OIA, 
Michael Abbdl, was in the news re- 
cently when he was Indicted on racke- 
teering charges in connection with the 
Call drug carte!. 

Our own reporting about Mena 
points mere toward Washington than 
Arkansas. We want to know what the 
federal government knew about drugs 
and money flowing through.the area. 
Our Micah Morrison has painstak- 
ingly separated tact from fiction re- 
garding Mata and Barry Seal's in- 
volvement with the CLA, the Contras 


and cocaine traffic. Mr. Seal, a some- 
lime informant for Ihe Drug Enforce- 
ment Agency,' smuggled several bil- 
lion dollars’ worth of drugs into the 
country. In our October 18 story The 
Mena Covenip," we detailed the short- 
circuiting of nine separate state and 
federal probes into Mena. Reliable 
sources in the intelligence community 
now tell us that in the years after Mr. 
Seal’s death, some activities contin- 
ued around Mena: an AWACs-Patriot 
system was tested, CIA contract 
planes were repainted, and the area 
was included in a counterterror exer- 
cise run out of nearby Fort Chaffee. 

But the heart of Mena, we suspect, 
is narcotics, and on this aspect an- 
swers are lacking. Drugs? Arkansas 
officials wave off the question, saying 
Mena was a federal responsibility. 
The CIA blames a “rogue DBA opera- 
tion;’ the DEA isn't talking; the FBI 
says “nocommenL” 

The betting around here is that LD. 
Brown and others In the Arkansas 
State Police know a lot more about the 
matter- including what the feds were 
up to- than they are letting cm. State 
police officers are starting to show up 
all over the Mena story. While we dis- 
count the extreme speculation in self- 
proclaimed CIA operative Terry 
Reed's book about Mena, ■Compro- 
mised," it’s interesting to note that Mr. 
Reed is making headway in Little Rock 
with his lawsuit against former state 
troopers Tommy Baker- and Buddy 
Young; Mr. Young also served for a 
time as Gov. Clinton’s security chief. 
Mr. Reed’s lawyers have deposed sev- 
eral Mate troopers In connection with 
the case. M7. Tyrrell say?. Last year 
“CBS Evening News* reported that a 
top Arkansas State Police official 
played a role in derailing an early ef- 
fort to advance the Mena probe. 

Some reports to the contrary, we 
see no indication that Independent 
Counsel Kenneth Starr is investigat- 
ing Mena or Mr. Lasater. Mr. Starr 
appears to be sticking dose to- his 
mandate to examine matters arising 
from Madison, the Whitewater Devel- 
opment Co., or Mr. Hale’s Capital 
Management Services. 

Yet Mena cries out for investiga- 
tion. A congressional committee with 
resources, subpoena power, and the 
perseverance displayed by some past 
chairmen should look into this. If some 
chips fall on the Republican side, so be 
it Important questions need to be an- 
swered. 

Was Mena simply a remote outpost 
of the Cold Wax? Or was it a major 
trans-shipment point for drugs and 
money laundering? To what degree 
were government o/fidals Involved? 
Where did all the cocaine and cash in- 
volved in the Barry Seal operation go? 
Were Arkansas financial Institutions 
Involved in laundering drug money? 

Again, how Mena worked is of 
some present moment as the U.S. con- 
tinues to wrestle with illegal drugs - 
their use apparently on the Increase 
again among tccnagers-and the at- 
tendant corruption. Mena may pro- 
vide a window into one of the big 
sources of this problem. 


Big Temptation 

Philanthropic and productive are Bank a hit from the i-»<* *»■» •«■«*•>- 


l He H light 


By Christina Hoff Sommers 

New Jersey sponsors the "New Jersey 
Project": IIS goal Is to "transform" the 
curriculum in higher education to make it 
more multicultural and "Inclusive." The 
project circulates a “guideline" cautioning 
that "much previous scholarship has ot- 
tered a white, male, Eurocentric, hetero- 
sex 1st. and elite view ot 'reality.'" Citing 
the words of feminist historian of science 
Elizabeth Fee, the guideline explains how 
male scientists exploit nature the way a vi- 
olent man exploits a helpless woman: "Na- 
ture was female, and knowledge was cre- 
ated as an act of aggression— a passive na- 
ture had to be interrogated, unclothed, 
penetrated, and compelled by man to re- 
veal her secrets."' 

The document is striking because il em- 
anates from an official government 
agency. But it is the kind of attack that has 
teen routinely leveled at science by raid 11 - 
culturallsts, radical environmentalists, 
feminist theorists and others on the cul- 
tural left' for the past several yean. One 
example hum academia Is a 1986 convoca- 
tion address delivered by Donald Har- 
vard, then vice president of academic af- 
fairs at the College of Wooster in Ohio. Mr. 
Harvard informed the students that 
"there lx no objectivity even In science.” 
and put them In the know by letting them 
that 'teaming and teaching have less to do 
with truth, reality and objectivity than we 
had assumed." He has since gone on to be- 
come president of Bates College In Maine. 
Ao Active Defense 

Until quite recently, professional scien- 
tists studiously avoided reacting to these 
sort of "criOqtes." Fortunately, some are 
beginning to realize that "anU-scknce" Is 
a serious threat that calls for an active de- 
fense. Last month, under the auspices of 
the New York Academy ot Sciences. Uni- 
versity of Virginia blotogist Paul Gross 
and Rutgers mathematician Norman 
Levitt helped organize "The Flight Iron 
Science and Reason,* a high-level confer- 
ence of more than 200 scientists, physi- 
cians and humanists who met to consider 
the contemporary (light from reason and 
Us associated anti-science.’ 

The distinguished panelists, who in- 
cluded Harvard economist Henry 
Rosovsky and Nobel Laureate Dudley Her- 
.schbach, explored “fashionable Irra- 
tionalisms," and examined “the threats, 
or the damage already dote, to public un- 
derstanding ... and considered practical 
possibilities for effective responses." 

In one damage report Prof. Gerald 


Holton, physicist 
at Harvard Unjvr 
Smithsonian Ins 
American Chemii 
a more telling e.\ 
politics at the Sm 
notorious Enola G 
In 1989, the . 
Smithsonian Muse 
to design a permar 
In American Life.” 
uraDy expected an 
triumphs ot 20th cc 
and did not imago, 
spelled out in the i 
and S5 million later 
was an exhibition 
can science as a j. 
and environment 


A cons 
scientists, p 
up against 


roshifflaandNagas 
Canal, Three Mile 
slon of the space sh 
opposed to showing 
science and techno 
tng faOures and ho 
exhibit took an ovr 
view of American s< 
Head curator At 
moved by Uw ACS's 
Mbit lacked balanr 
magazine, "The p 
something about the 
The curators detent 
as If theirs wax the > 
"We know It Is Imp 
Integrity of the Smit 
American pre-em 
high technology is o 
the 20th will go do- 
Amerkan century. £ 
well as dismaying, ti 
dlans fed morally 
American science ar. 
how it has dramatic 
Ufe. Negotiations b< 
and the Smllhsimlar 
but a happy ending i 
Martin Lewis, a i 
roomentaltst at D> 
formed the autferon 
science, coupled wi 
reason. Is the norm 
influential group of ; 
the study of . . . en 


Actions Spi 


The greatest illusion In business Is that 
1 employees wort for managers; this, ot 
course. Is exactly the Inverse ot reality. As 
the onions learned In the U2Bs, the day 
that a significant group of employees, 
chooses to stop working, managers are 
helpless to cany out (he tasks of business. 

H you are a manager, the work force ar- 
rives at your doorstep everyday primed to 
observe how you teach and implement the 
corporate culture and to measure how you 
exercise Ihe standards your organization 
purports to honor. If the employees believe 
In you, they reward you with superior ef- 
forts. If you tall to meet their expectations, 
they punish you with substandard quality 
and efficiency. Work force productivity Is 
a fair measure of how employees rate a 
manager’s performance. 

If you accept this premise, then you also 
will recognize that managers are primar- 
ily tn Ihe teaching business. Every philos- 
ophy, attitude and business practice used 
by a manager tn dealing with his employ- 
ees ultimately will be re-expressed by the 
employees through the quality of their 
work. Show me an organization with a 
■ high absentee rate, problems with expense • 
accounts, or a coveryour-butt mentality, 
and I'll show you a manager who Is se- 


end or the nature of l 
tallied. Managers rt 
sweet and sour. 

Some years back, 
with Jay Cbiat, foun 
tea's mast honored a 
“You know," Jay sa 
continuously contact 
stats and seduce the 
salaries and lots of I 
press. Yet. a year m 
these young stats jusl 


Managei 
By J, 


face of Ihe earth." Whi 
hired his hotshots, 
couldn't buy were Chi 
Ytronment and the sup 
of talented colleagues 
atlve person's work so 
Jay's point applies 
Great work doesn't ji 
minds of one or two c 
produced by an entir 
understands and enct 





COMMITTEE on BANKING and FINANCIAL SERVICES 
Subcommittee on Domestic and International Monetary Policy 

B-303 Rayburn House Office Building 
Washington* D.C 20515 

Phone (202) 226-0473 

Fax (202) 2264)537 



FAX# (-?#) */fZ - 880 ?> 


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“Fostergate” 

By James R. Norman 


Was White House Deputy Counsel 
Vince Foster Selling U.S . Secrets to 
Israel? The CIA Suspects He Was. 

« i»kt jambs r. moksian 

■SMtOfTBC WITH HSWUtUWN 




T wo w&eks before his death 
on July 20. 199S, Whttc 
Hods* Deputy Counsel 
Vincent W. Foster wsnt 
Into a deep htnk. Tha oUioial cause of 
death, given by Independent Counsel 
Hebert Ftska Jr., eves suioid* driven 
by depression over, among other 
thing*, some newspaper editorials. 
But Vince Foster had a much bigger 
and darks- reason to be seriously 
bummed out. He had 
just learned be was 
under investigation Cor 
espionage. 

Outrageous? lb say 
the least. Out a fangthy 
investigation has locat- 
ed more than a doion 
sour cm with connec- 
tions to iho ImoRlgenoo 
community who con- 
firm a shocking story of 
mutiny laundering and 
espionage connected to 
the highest levels of the 
White House. Without 
grants of immunity, the 
sources risk, going to 
prison for violation of 
the National Security 
Act. Virtually all have 
damandod anonymity. 

According to S veter- 
an Central Intelligence 


Agency operative dose to the Potter 
Investigation, Foster’s first indication 
of trouble mm« when he inquired 
about his ended bank aocount at 
Etenca Delia Svizzera Italians in 
Odauo, Switzerland, and found the 
account empty. Poster was shocked 
to leant (bom the hank that someone 
using- hit tecxai authorization code 
had withdrawn afl $2.73 million he 
had stashed there and had moved it 


to. of all places, the U.S. Treasury. 

Then, according to credit card 
records rwiowed by a private investi- 
gator who Km revealed them, Poster 
canceled die two-day round-trip TWA 
and Swiss Air plane ticket* to Geneva 
he bad purchased on hie American 
Express card through the White 
House travel office on July 1 . 

Discretely he began asking what 
was afoot, says the CIA source, con- 
firming that someone In 
tha White House tipped 
him off. It was bad nowa. 
Tha CIA had Poster under 
serious in vos ligation for 
baking high-level eocrota 
to the State of larsol. 

Pot months, a era*)! 
cadre of CIA computer 
hackors known as lbs 
Fifth Column. irroed with 
a Cray supercomputer, 
had been monitoring 
Poster’s Swiss account. 
They had located it by 
tracking money flows 
from various hrasli gov- 
ernment accounts after 
finding Poster’s name 
while aocrotiy snooping 
through Iho electronic 
Has cf Israels Mossed. 
Then by snooping through 
the bank files, they 


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filtered all iho information needed 
Ki withdraw the money. 

Foswr was Just on* of the fim of 
score* of high level U.5. political 
figure* la thus have ih*ir secret Swiss 
account# looted of Midi fundi, 
according to both this veteran ClA 
source and a separate source in 
anolhar intelligence agency Over 
ihs pact two yean, they say. more 
than S2 billion has boon swept out 
of offshore bank account! belonging 
to figure! connected to the U.S, gov- 
ernment with nary a peep from the 
victim* or their hank*. Tha claim that 
Foster and other U-$. figures have 
had offshore account* has bean 
confirmed by a aoparata high-ranking 
CIA source and another In the 
Department of Justice. 

Various sourcoa. some of them 
controversial, have contributed other 
fdeees to this puzzle. Whatever ibelr 
moiivatloni, these source* hive 
proven remarkably consistent. ‘Their 
Stories jibe wo] I with known Cuts and 
offer a most plausible explanation for 
Fooler’s mysterious depression, it 
would also explain Washington's 
determined effort to dismiss the 
Poster affair aa a tragic but simple 
suicide. 

Vince Poster a spy? Actually, ft It 
much worse that. that. If the CIA's 
suspicions are eonflnnad by tha 
ongoing foreign counterintelligence 
probe. He would have been an 
invaluable double agent with poten- 
tial aeaeea to not only high-level 
political information, bat also to 
sensitive, code, encryption and data 
IranamiMion secrets, the stuff by 
which modern war Is won or lost. 
Thai ia because for many years, 
according to nine separate current 
end former US. law enforce meet or 
intelligence officials, Heater had been 
a behind-the-scenes manager of a key 
support company in one of the 
biggest, most secretive spy efforts on 
record, Ota silent surveillance of 
banking transactions bosh bore and 
abroad. 

Thla bank snooping effort began 
in carom soon after Ronald Reagan 
became president Id 1981 Its prima- 
ry aim was to track the money behind 
International terrorists groups and 
goon earno to bo dubbed. *PoBow the 


money”, according to the origins tor 
of the program Norman A, Baity. 
Now a private Washington consultant 
on International banking. Bailey was 
an economist and Reagan advisor on 
tha National Security Counsel. It was 
Bailey s idea to begin using powerful 
now computer and electronic eaves- 
dropping technologies then emerging 
to let the Intelligence community 
monitor the previously confidential 
flow of bank wire transfers. This was 
no until task; more than SI trillion a 
day moves through New York alone. 
Bailey himaeif constrained by (he 

Various sources, some 
of them controversial 
have contributed other 
pieces to this puzzle. 
Whatever their 
motivations, these 
sources have proven 
remarkably consistent 
Their stories jibe well 
with known facts and 
offer a most plausible 
explanation for 
Poster's mysterious 
depression. 

National Security Act, claims be does- 
n’t know exactly how the data was 
collected. But ha eonJDrma that whh- 
to %. few years the National Security 

Agency, the Signal* inleCifetie* arm 
of the government, had begun vacu- 
uming up mountains tf data by Ba- 
toning in on bank wire traffic. It 
became a joint effort of tavaral 
Western governments with die 
Uraali* playing a loading role, since 
they were (ha main tazget of 
terrorism. 

Other intoU (fence expert* say the 
flow of hits and bytes was captured 
by various moans; from simply tap- 
ping phone Knee to implanting 
customized chips in bank comp u ton 
to store up and periodically burri- 
tranamtt data to a passing van, or 


low-flying "sig-lnt* or signals Intel!. 
gsbto satellite Another part of the 
problem was to got tho world’s banks 
to standardize their data eo that It 
could be easily analyzed. And that 
brings us to PR0M1S, a powerful 
tracking software developed for the 
U,S. Government and than further 
enhanced by a little company called 
Inilaw Inc. 

PR0M1S Hands tor Prosecutor '» 
Management Information Systems 
and was designed to manage legal 
cates. In 1982. just as Bailey’s 
folio** -the- money effort was gaining 
steam, the Reagan Justice Depart- 
ment eagerly snapped up Inst&w's 
newest version of P ft 0M1S. But Iho 
govarronant raftseed to pay the U 
million owed (dr ft, d aiming part of 
the eeotraet was not fulfilled. In slaw, 
forced into Chapter 11 reorganiza- 
tion. and nearly driven to quick 
liquidation by the government and ft* 
former partner AT&T hotly denied 
that states. Ultimately. * bankruptcy 
judge ruled the govern meat stole tha 
PROMS software by “trickery, fraud 
and deceit*. 

Why PR0M1ST Becaueo it was 
adaptable. Beeldoa tracking legal 
oases, ft could fas easily customized to 
track anything frotp computer chip 
detlfpi to com pi esc monetary transac- 
tions. ft was especially useful for 
tracking criminal* or hat plain politi- 
cal diesidenu. tosiaw claims the soft- 
wan was eventually Illegally sold to 
as many as 50 coiuririaa tor use by 
their polica, znUtory or intoQigaooe 
agenda*. Including such Moody 
ragjroas as Guate m ala. South Africa 
and Iraq (bator* tbs 1 WO Invulea of 
Kuwaiti- Proflu on tbeaa anloa, 
Inslaw claims, wont mainly Into ih* 
private pocket* of Republican political 
crania* In the 19*0s, In chiding 
Reagaa confident Bari Brain, former 
part-owner of UP] and PNNI, 

Among >ho blggeai profiteer* an 
PR0M1S, according to the 1992 book 
by former Israeli anti-terrorism 
staffer Ari Ben-Menasobe, was for- 
mer British publisher Bob Maxwell. 
Or behalf of tha Israeli., Maxwell 
aggressively marketed a doctored 
version of PBOMIS equipped with ono 
or more "back doors* to allow an oat- 
rider to top Into (he user’s data base 


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without leaving an audlurtfl. In fact, 
li may have boon *uoh rigged pro- 
grsnu that alkwod noted Isnoll spy 
Jonilhan Poll art. from hi» computer 
Urmmal at the Office of Naval 
Intelligence tn Washington. to down- 
load vast amount# of iop secret U.S. 
nuclear weapons and cod* daU In tha 
raid- 1980a. 

According to a haxvily-redaoted 
Now Mexico FBI cooniarintelllgenee 
report, Maxwell was apparently 
allowed to tail two aoploe of PROMIS 
bock to the U S, weapon* labs at 
Sandie and Lo# AJamoA, for what 
JnaUw claim# waa a hugely inflated 
pri ee of S37 million. That would have 
allowed Pollard, If ha waa using tha 
rigged program, to obtain US. mioail* 
targeting data long before laraa) had 
!u own satellite capability, thus mak- 
ing it a real nudotr threat to the 
Soviet Union. Pollard waa convicted 
of espionage and sentenced in 1986 
to afo bnpriMnmem. US. officials 
have vehemently opposed eltorts lo 
gain hi# early release. 

Maxwell according ta Ban- 
Manaseha and nine other sources, 
■waa alao sailing pirated v*r#icne at 
PROMIS ta major world banka for 
uso in their wire tranafar rooms to 
trade the blixztrd of number*. audio- 
rilftUon codes and confirmations 
required on each win transaction. 
Don’t oxpect any banka to admit run- 
ning PROMIS. They probably now 
know It waa ptl/erod. But they readi- 
ly look k both beoaueo it waa the beat 
tracking » oft ware available at the 
time and bocauao the US. govern- 
ment was tacitly leaning oa thorn to 
go along with the surveillance effort 
cr face rogatalory repdaaia or prose- 
cution on money laundering chargee. 
With the widespread adoption of 
PROMIS, the data became standard- 
ized and much easier to analyze by 
the NSA. 

It took tome effort lo install and 
support PROMIS in the banking 
industry. That's where Vinca Poster 
tame la. Sources say that since at 
least the lato 1970a, Poe tor bad been 
a silent behlnd-ths-seenes ovetaoor 
on behalf of tha NSA for a small little 
Rock, Ark., bank data prooesaing 
company. Its name was Systematic* 
launched in 1967 and funded 
** and control lad for meat of lie Ufa 


i i * i *i v v i * 

PHGNE NO. : 3124776677 


. ___ J * * ** a iX) \i ** i s# 

Jul. 14 1995 lltlwn t-s 


by Arkansaa billionaire Jackson 
Stephans, a 1946 NmJ Acadamy 
graduate along with Jimmy Carter. 
Poster waa on« of Stephens' muted 
deal m&ltars at the Rose Lew Pirn, 
where he was partner with Hillary 
Rodham Clinton, Webster Hubbell 
and WUBetn Kennedy (whose father 
waa a Systematica director). Hubbelt 
also played an orsraeer role at 
Systematic* for the NSA for some 
year* according to intelligence 
sources. 

Systematic* has had cloaa tie# to 
the NSA and CIA aver since its fo und- 


one nun who uncovered the link 
between Systematica, Poster and 
coven money movements from arms 
and drugs was Bob Bickol. who wu 

tn undercover Custom* inveiUgawr 

In the IMOs. "We found Systematic* 
was eflao a conduit for tha (kinds' 
In arms and drug transactions, 
says BlcksL now living in Texas: 
They were the money changers." 
Hia story it corroborated by a former 
ClA employs* who says it wu wall 
known within tha agency in the 
lata 1970s that Foster wu involved 
with SyriamaLles in covert money 


Sources say that since 
at least the late 
1970s. Foster had 
been a silent behind - 
the-scenes overseer on 
behalf of the NSA for a 
smalt Little Hock, Ark., 
bank data processing 
company, its name 
mas Systematics Inc., 
launched in 1967 and 
funded and controlled 
for most of its life by 
Arkansas billionaire 
Jackson Stephens , a 
1946 Nanai Academy 
graduate. 


tog, sauroea my. as a money-shuffler 
for covert operation#, it I* no aeorel 
that there were billions of dollars 
moving around in "black" accounts — - 
Orem buying and selling anna to the 
Contras, Iran, Iraq, Angola and other 
court trie* to paying OA operatives 
and laundering money from clandes- 
tine OA drug dealing Having taken 
over the com plate computer room# in 
scores of amah U.S. banks as an “out- 
sourced" supplier or data procuring. 
Systematic* was In a imfoua position 
to manage that covers money flow. 
Source! say the money was moved S! 
the end of every day disguised aa a 
routine bank'to-bank balancing 
transaction, out of view of bank 
regulators and even the bonks them- 
selves. In short. It became cyber- 
money. 


management. 

Another eource is Michael 
Rioonoariuto, former rosoareh direc- 
tor of the covert arms operation at 
California's tiny Cabeton Indian 
Reservation in the early 1960s. 
Rieonoedute claim# his crew of aua- 
puier prof ammers helped amtondze 
PROMIS there for banking and other 
use. He k now serving SO yean in a 
South Carolina federal prison ostensi- 
bly on drug ehargas. Though maybe 
not a credible so ora? on his own. his 
story Ota well with other sources, 

Systematics' money-laundering 
role for the Iniellgance community 
might help explain why Jackson 
Stephen* tried lo taka over Washing- 
ton-based Financial General Bank* 
shares in 1976 on behalf of Arab 
backer* of the Bank of Credit and 
Commerce International. BCCTs links 
lo global corruption and Incafflgenet 
operations has boon weR documented, 
though many mysteries remain . 

Aoocrdtng lo a lawsuit (Had by the 
Securities and Exchange Commis- 
sion. Stephens insisted on having 
then-tiny Systematic# brought In to 
take snr aU of FOB'S data prSdotitnf. 
Representing Systematica in that 
1978 SEC oaso: HlUary Rodham 
Clinton and Wabster Hubbell, 
Stephana was blocked In that 
takeover. But RGB, lator ronamod 
Pint American, ultimately f«M under 
tha alleged domination of BCC1 
through Robert Altman and former 
Defense Secretary Clark Clifford. 
Aocordlng w a technician who 
worked to Pint American in Atlanta, 
Systematica became a key computer 
contractor there anyway. 

In the I960*. Systematic*’ busi- 
ness boomed, When Jt first soWeitwk 


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i_ _ JUL 2 1 1995 

' V'»i v \ 

COMMITTtE on BANKING and FINANCIAL SERVICES ~~ 


One Hondred Fourth Congress 
Republican Staff 


Subcommittee on Domoatic and Intarnatlonal Monetary Policy 


Washington, D.C 20515 

Phone 

Fax 

(202) 226-0473 
(202) 2264537 

TO 


fax# ( 

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from >, 


date 



PAGES 


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As you know, there have been many published 
reports and allegations that the airport in 
Mena, Arkansas, was the base for a signifi- 
cant operation, allegedly in support of con- 
tra operations in Central America. 


Planes reportedly flew arms to the Contras in 
Nicaragua and returned from Central America 
with drugs, and the proceeds from the sale of 
these drugs was then supposedly ; in 

Arkansas, possibly with the knowledge of 
ptate authorities and the involvement of 
companies called Park-o-Meter.ahd flyatema- 
tics. There are tales that. «nm#» ■ — 


Please understand that I am not interested in 
launching a new probe of our Contra policy 
with the intent of suggeating wrongdoing by 
your agencies. What I am obligated to do is 
probe Whitewater- related allegations so that 
they can be proven true or false, as well as 
certain other issues that fall under the 
jurisdiction of the Banking and International 
Relations committees on which I serve. There 
is a lot of smoke here and possibly very 
little fire. Nevertheless, it is important 
that I be able to affirm that all allegations 
have bean thoroughly reviewed. 






General Questions 

Have any of you or anyone alee at 
either the CIA or the NSA discussed this 
inquiry from us with anyone at the white 
House, the Department of Justice or any other 
government organization? 

Does the CIA or NSA have knowledge 
of or any involvement in clandestine activity 
by the U.S. Government or any private parties 
in or near Mena, Arkansas, in the 1980a? 

Have any reports on activities in 
and around Mena been prepared for the DCI, 
specifically, for former Director Wooleey? 

A. Gun Smuggling 

-- Did the CIA or NSA hava any 
involvement in, or knowledge of, any opera- 
tion by the U.S. government or the eo-callad 
■private benefactors" (led by retired Gen. 
Richard Secord) to train pilots and/or ship 
arms from the Rich inter-mountain regional 
airport at Mena to the Nicaraguan Contras? 

-- If so, did any such activities 
take place with the knowledge or approval of 
other Federal officials? 

Did any such activities take 
place with the knowledge or approval of Ar- 
kansas state govsrnment officials? 


/ 


i 



2 


Did the CIA contract with any 
Arkansas manfacturers to build automatic 
weapons for the Nicaraguan Contras? 

■ t * 

Does the CIA or NSA have any 

contractual relationship with, or knowledge 
of, an Arkansas company called Park-o-Meter, 
also known as POM? Do you have any reason to 
believe that POM produced disposable fuel 
tanks for use by Barry Seal and possibly 
others in connection with supplying arms to 
the Contras? 


B. Barry Saal and Associates 

Did the CIA or NSA have any 
contractual or other relationship with the 
late Adler Barriman "Barry" Seal {Seal Waa 
murdered, allegedly at the direction of Co- 
lumbian drug lords, in Feb. 1986)? 

-- To your knowledge, did any 
other government agency (such as the DEA or 
D1A) have any contractual or other relation- 
ship with Barry Seal? 

Is the CIA or NSA aware of any 
IRS determination that money earned by Seal 
between 1984 and 1986 was not illegal because 
of his alleged CIA -DEA employment? 

Did the CIA have any involve- 
ment in, or knowledge of, the installation of 
cameras on Seal's C-123K transport plane for 


3 


use in a 1984 "sting" operation against the 
Sandinieta official Federico Vaughan? 

-- ! Was Seal's C-123K cargo plane, 
christened Fat Lady (serial number 54-0679), 
sold by Seal to the CIA or any other U.S.- 
government related entity? Was this plane 
later shot down over Nicaragua with a load of 
arms destined for the Contras? 

Did the CIA have any contrac- 
tual or other relationship with Terry Reed, a 
former Air Force intelligence officer (who 
claims he had a relationship with the CIA in 
the 1980s) and author of Compromised; Clin- 
ton. Bu sh and the CIA ? 

Did the CIA ever have dealings 
with former Arkansas State Trooper L-D. 

Brown? 

Is the CIA or NSA aware of any 
attempts by federal or state officials to 
interfere with or terminate any investigation 
the IRS, Justice Department, Arkansas State 
Police or any other law-enforcement authori- 
ties into Mena-related criminal conduct? 

C . Narcotics Smuggling 

Did the CIA or NSA have any 
knowledge of or involvement in illicit nar- 
cotics trafficking, possibly by rogue opera- 
tives, in or near Mena, Arkansas? As you 
know, there have been allegations that on 


4 


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i 


their return flights from Central America, 

pilots smuggled more than 20 tone of cocaine 
into Mena. 



Ind ic a t ion tha t 


Did the CIA or NSA have 


anv 


Ooee the CIA or NSA have any 



Does the CIA or NSA know of any 

j j 

— — j _ or more 

ever held by O.S. citizens domiciled in Ar- 
kansas at anytime between 1988 and now? 


Ia th * CIA or NSA aware, di- 
rectly or indirectly, of f or* a 1 


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Jtldi U»*«CIUA IliikiiviCI lUm,* i * ■» t y ^ » 4 ' • vi »> • 


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-- 'Does the CIA have the cap^hili- 

ty of ^ ~ 21 in 


-- Does the NSA have the capabili- 
ty of i 


does CIA and/or NSA have the capability, 
dir ectly or through another party, of f~ 


*- Does CIA or NSA have the 



Doee the CIA maintain a team of 
skilled computer hackers who routinely break 
into the electronic data systems of foreign 
banka? According to one source, this group 


6 






•JL.lV t U I 'All v A I C I CLl>^<iCi * v 4 I * • i-» J 1 L • t UT Hi 


ie Informally known as the Fifth Column. 
Correct? 



Does the NSA 


Does the CIA or NSA know of or 
has either agency participated in, directly 
or indirectly, efforts to sell software- - 
notably versions of a program in use at the 
Justice Department called PROMIS 
--or other devices to foreign banks for the 
purpose of facilitating 

of their electronic data systems. 


-- Does the CIA or NSA know of 
customers to whom this software has bee n 
sold? | 


-- Is the CIA or NSA aware of any 
attempts byj 



- Does CIA or NSA know of any 


efforts by 







7 







O C i w D 1 * A £ T U A iCtClu^iCi' I u L 


t I l I’OJ » 1 * I M'iit 


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Has the CIA or NSA received any 
indication that proceeds from the sale of 
PROMIS or similar software were used to fi- 
nance arms shipments to the Contrae? , 

-- Are there any indic ations of 


Is the CIA or NSA aware of any 
unauthorized efforts, possibly in the margin 
of legitimate intelligence n neratlnna . tn 


-- Does CIA or NSA know of a 
Charles Hayes, who was born on 4/27/35, whose 
social security ‘number is and 

who now resides in Nancy, Kentucky? 

-- If so, has Hayes ever had any 
ties to the CIA or NSA or any other U.S. 
government agency? Have these ties been sev- 
ered? 

Hayes claims to be able to 
break into the electronic data systems of 


foreign banks. Has CIA I 

| 

i 



Is NSA or CIA aware of an ac- 
count, number b-142AB2, at the Banca Della 
Svizzera Italiana in Chiasso, said to have 
belonged to Vincent Foster? 


8 




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.j®**”" l4 a® MS 

Joanne Isham 


[mm 

IM * 1 Status Report on Inquiry from Chairman Leach 

181 House Banking and Finance Committee 


Briefing Request 


• Chairman Leach (R-IA) wrote you on 11 July 95 

seeking your help in "verifying or laying to rest 
various allegations of money laundering in Arkansas 
in the late 1980s." (Copy of letter attached as Tab 
A. ) 


He asked for a briefing from the CIA's Inspector 
General to addres s 7 topics ranging from efforts to 

to whether the Agency was aware of 


e i uu.ii cuiupanj.es and individuals who allegedly 
operated in or around Mena, Arkansas. 


• The worst of these allegations, faxed to us before 
the briefing, credited to a CIA source in a magazine 
called Media Bypass , is that the CIA discovered that 
Vince Foster was a spy for the Israelis, and used a 
Cray supercomputer at CIA Headquarters to 
surreptitiously drain $2.73 million from Foster's 
secret Swiss account. The article goes on to 
speculate that Foster committed suicide because he 
discovered his account had been drained. (Copy of 
article attached as Tab B.) 

• A similar briefing request was sent to NSA. 

Briefing by CIA and NSA 

• On 21 July 95, Congressional Affairs and Inspector 
General representatives from CIA and NSA met with 
Chairman Leach and his assistant staff director, 
James McCormick. 

• Chairman Leach was very cordial at the briefing, but 
his first question was whether anyone at either 
agency had discussed his inquiry with anyone at the 
White House, the Department of Justice, or any other 
governmental organization and he was told we had not 
discussed this outside the agency. 

• The CIA's IG had not conducted investigations into 
these allegations and had a limited role in the 
briefing. The Agency's OCA representative advised 
that we had not finished our records review, but we 
were aware of one of the individuals identified in 

APPROVED FOR RELEASE 
DATE: I UL 2002 





^S g CBfi g 


the Chairman's 11 July letter, Barry Seal (now 
deceased) . We knew of Seal because of previous 
inquiries (in connection with criminal prosecutions 
of other individuals), but advised we had no 
relationship to Seal nor any records regarding his 
activities in Mena, Arkansas. 

• We also advised him that both the SSCI and the House 
Judiciary Committee conducted in-depth reviews in 
1991 and 1993, respectively, ab out anoth er subject 


of his 11 July letter inqu: 
software. The conclusion 1 
Agency never purchased any 

Lry, 
:hen . 

L 

n 

nuw, 

IPROMIS 

Ipromis 

is that the 
1 software. 


i 

1 

r 


• During the briefing, Chairman Leach read from a list 
of additional questions provided to us after the 
briefing. The briefers indicated that we could not 
answer all of these questions conclusively, and 
Chairman Leach asked for some limited follow-up 
searches. (Copy of additional questions attached as 
Tab C.) 

• NSA's IG had no information about the questions 
posed in the 11 July letter, but did provide a brief 
broadbrush backgr ound on how NSA conducts i ts normal 
daily activities [ 


• We are continuing to search our records for 

responsive information and once the review of these 
materials is completed, we will brief the findings 
to our oversight committees, the NSC and Chairman 
Leach . 


j3Ij£Ri 




4 




OCA 95-2274 
16 August 1995 


MEMORANDUM FOR THE RECORD 

SUBJECT: Briefing for Representative James Leach (R-IA) 

Regarding in Arkansas in the 

[h)[11 Late 1980s wicn NS A - 21 July 1995 


1. On 21 July 1995, at 1000 hours, in room 2186 
Rayburn House Office Building, Chairman James Leach (R-IA) , 
Committee on Banking and Financial Services, and staffer 
Jamie McCormick, received a briefing, at Leach's written 
request to the DCI, on allegations of 

in Arkansas in the late 1980s. Agency parcTcrpants were: 

Invest igative Staff, Office of Inspector General; 

Chief, Legislation Group, Office of 
congressional" Ar fairs ; and the undersigned. NSA participan ts 
were: Frank Newton, Inspector General, and 

Congressional Affairs. j | 

2. Representative Leach began the briefing by saying 

that he was not interested in opening a new probe of U.S. 
Contra-policy or suggesting wrongdoing by either Agency, 
especially since he served on the October Surprise Task 
Force, where he was convinced that the Marcos' walked away 
with billion of dollars. Leach, however, did say he based 
his request for the briefing on reports that have appeared 
in the press that refer to secret foreign bank accounts held 
by prominent people in M ena, Arkansas, [” “ “ 

Hand an Arkansas-centered network or 

nan jcsto rmea (see attached incoming letter) . 

Leach also said that over a period of time he had talked to 
a lot of people regarding this issue. He said that most of 
the allegations contained within the articles were probably 
false, but he felt an obligation to look into Whitewater 
related allegations on behalf of the Banking Committee. 

That said, some allegations may be credible, some totally 
unbelievable, but as information goes out to the American 
public in non-traditional ways, it becomes more believable. 


3 . J along with Frank Newton, 

responded crrueacn ’ s questions regarding each Agency's 
current knowledge on involvement with any of the alleged 
allegations contained in his letter. Newton responded 

to all of the questions posed in the incoming 
Stetter, but did, however, provide a brief broadbrush 


~H Leach 


APPROVED FOR RELEASE 
DATE: I0L 2002 










SUBJECT: Briefing for Rep resentative James Leach 

(R-IA) Regarding | (in 

Arkansas in the Late iyaus - 21 July 1995 


background brief ing on how NSA conducts it nor mal daily- 


activities 

capability 


said that the 
r unct lorfdepends in part 


or one XG to conduct its 
on cooperation by others with CIA and thus far th e IG had 
not look into any of these allegations. However,^ - 
said as he understood the current issue, a thorougn search 
had been conducted by CIA regarding PROMIS/Inslaw issues 
relating to Systematics, Inc., Mena, and Hadron, during a 
much earlier timeframe. Also, he understood that thus far 
very little information had been found to be responsive J:o 
the exact allegations contained in the current letter. 


however, did say that the Agency had perhaps made 
some connections within the larger picture of things. The 
Agency was aware of Barry Seal, but had no relationship with 
him nor any records regarding his activities in Mena. Seal's 
association with the Drug Enforcement Agency (DEA) was widely 
publicized. 


As tor PROMlS, that issue had been 
looked ac m-aepui py the Senate Select Committee on 
Intelligence (SSCI) and the House Judiciary Committee in 1991 
and 1993 . The conclusion then and still is that the Agency 
never purchased any INSLAW/PROMIS software. I 


Chairman Leach was also informed that we 


had not found any records related to Systematics of Arkansas, 


a banking software firm, "] 

^ i 

mmum 






2 









6. Leach, after listening to the responses to his 
earlier questions, proceeded to ask approximately 45 other 
questions regarding the issue, basically repeating many 

of the issues already addressed. For those questions and 
responses, please see attached pages from a draft memorandum 
provided by staffer Jamie McCormick and checked against the 
personal notes of the undersigned. The responses in the 
draft memorandum correspond correctly to the personal notes 
of the undersigned. j J 

7 . Leach concluded by once again saying he has an 
obligation to look into the matter on behalf of the 
Committee, and asked us to inform the DCI and DIRNSA that 
he may hold hearings on these allegations in the fall. (U) 

8. The briefing lasted approximately 90 minutes. 

Leach was informed that the Agency would continue to 
check its records, especially on questions relating to: 

1) Park-o-Meter ; 2) CIA's relationship, if any, with Terry 
Reed; and 3) whether the CIA had any c onne ction to Seal's 
cargo plane (serial number 54-0679) . j J 


/ Cl A Liaison Group 
Office of Congressional Affairs 


Attachments 


SpGK&r 




SUBJECT : 


Briefing for Rep resentative James Leach 
(R-IA) Regarding —— I in 

Arkansas in the Lace iy tf US - ZL July 1995 


DCI/OCA/CIALiaisonGrp/ 
OCA 95-2274 ^ 


(22 Aug 95] 


Distribution: 


Original 

1 

1 

1 


- OCA Records (w/atts) 

- D/OCA (w/o atts) 

(w/o 


atts) 

phrono (w/atts) 



07/25/95 


Briefing for Representative Leach fR-IAJ on Allegations of 
the Late 1980s 



On 21 July, Chairman James Leach, Committee on Banking and Financial Services, and staffer 
Jamie McCormick, received a briefing, at Leach's written request to the DCI, on allegations of 
n Arkansas in the late 1980s. Leach based his request for the briefing on 


reports tnat have appeared in the press that refer to secret foreign bank accounts h eld by 

""land an 


prominent people in Mena, Arkansas, 
Arkansas-centered network of banks formed to 
Inspector General, and£ 


:iA's Office of 


Office of Congressional Arraus, along with Frank Newton, 


NSA's Inspector General, responded to Leach's questions regarding each Agency's current 
knowledge on involvement with any of the alleged allegations contained in his letter. Newton 
responded i 


to all of the questions posed in the incoming letter, but did, however. 


f 


provide a brief broadb rush background on how NS A conducts it normal daily activities 

j ~jsaid that a thorough search had been conducted by CIA, and thus tar very 

idoeen : 


little information trad ' 


found to be responsive to the exact allegations contained in the letter, 
jhowever, did say that the Agency was aware of Barry Seal, but had no 
relationship with him nor any records regarding his activities in Mena. As for PROMIS, that issue 
had been look at in-depth by both SSCI and the House Judiciary Committee in 1991 and 1993. 
The conclusion then and still is that the Agency never purchased any INSLAW/PROMIS 
software. Chairman Leach was informed that we had not found any records related to 


Systematics of Arkansas, a banking software firm f 


Leach, after listening to the responses to his earlier questions, proceeded to ask approximately 
45 other questions regarding the issue, basically repeating many of the issues already addressed. 
Leach said he had talked to a lot of people regarding this issue, but he emphasized that he was 
aware that most of the allegations were false. Leach also said that he has concluded that some 
allegations may be credible, some totally unbelievable, but as information goes out to the 
American public in non-traditional ways, it becomes more believable. He has an obligation to 
look into the matter on behalf of the Committee, and asked us to inform the DCI and DIRNSA 
that he may hold hearing on these allegations in the fall. (U) 




SEprtfr 


Follow Up Actions: Provide McCormick with a copy of SSCI letter regarding PROMIS. 

! OCA/LiaisonGrp f 



sEpaef 



Responses to Chairman Leach's Prepared Questions of 7/21 

Q: Have any of you or anyone else at either the CIA or NSA 
discussed this inquiry from us with anyone at the White House, the 
Department of Justice, or any other governmental organization? 

A: No, not in response to Chairman Leach's letters 
requesting a briefing. 

Q: Does the CIA or NSA have knowledge of or any involvement 
in clandestine activity by the U.S. Government or any private 
parties in or near Mena, Arkansas, in the 1980s? 


A: 

ci; 

^'s knowledge 



NSA 




Q: Have any reports on activities in and around Mena been 

prepared for the DCI, specifically, for former Director Woolsey? 

A: No. The only reports the CIA has were prepared in 

conjunction with the Chairman's requested briefing. 


A. Gun Smuggling ' 

Q: Did the CIA or NSA have any involvement in, or knowledge 
of, any operation by the U.S. government or the so-called "private 
benefactors" (led by retired Gen. Richard Secord) to train pilots 
and/or ship arms from the Rich ihter-mountain regional airport at 
Mena to the Nicaraguan Contras? 

A: NSA, | CIA representatives replied that they "did 
not think so." CIA noted that .the IG had checked back records 
on this issue in 1994 and had discovered no responsive 
information. CIA noted parenthetically that, the operational 
activities of the private benefactors were mainly conducted 
from southern Florida. 


Q: (Skipped) If so, did any such activities take place with 
the knowledge or approval of other Federal officials? 

Q: (Skipped) Did any such activities take place with the 
knowledge or approval of Arkansas state government officials? 

Q: (Skipped) Did the CIA contract with any Arkansas 
manufacturers to build automatic weapons for the Nicaraguan 
Contras? 

Q: Does the CIA or NSA have any contractual or other 
relationship with, or knowledge of, an Arkansas company called 
Park-o-Meter , also known as POM? Do you have any reason to believe 
that POM produced disposable fuel tanks for use by Barry Seal and 
possibly others in connection with supplying arms to the Contras? 




A: NS A I 

get back to the 


CIA had no knowledge, but would check and 


lairman . 


B. Barry Seal and Associates 

Q: (Skipped) Did the CIA or NSA have any contractual or 
other relationship with the late Adler Barriman "Barry” 'Seal (Seal 
was murdered, allegedly at the direction of Columbian drug lords, 
in Feb. 1986)? 

Q: To your knowledge, did any other government agency (such 
as the DEA or DIA) have any contractual or other relationship with 
Barry Seal? 


A: NSA, [ 

agency, includi 


CIA had no confirmation from any other USG 
EA, that Seal had any government contracts/' 


Q: Is the CIA or NSA aware of any IRS determination that^ 
money earned by Seal between 1984 and 1986 was not illegal because 
of his alleged CIA-DEA employment? 


NSA, 




CIA, no. 


Q: Did the CIA have any involvement in, or knowledge of, the 

installation of cameras on Seal's C-123K transport plane for use in 
a 1984 "sting" operation against the Sandinista official Federico 
Vaughan? 

A: CIA, no. 

Q: Was Seal's C-123K cargo plane, christened Fat Lady 

(serial number 54-0679) , sold by Seal to the CIA or any other U.S.- 
government related entity? Was this the plane later shot’ down over 
Nicaragua with a load of arms destined for the Contras? 

A: CIA, no records suggested it was. 

Q: Did the CIA have any contractual or other relationship 

with Terry Reed, a former Air Force intelligence officer (who 
claims he had a relationship with the CIA in the 1980s) and author 
of Compromised: Clinton. Bush and the CIA ? 

A: CIA had no knowledge, but would check further. 

Q: Did the CIA ever have dealings with former Arkansas State 

Trooper L.D. Brown? 

A: CIA no, not beyond as stated earlier in their 

presentation. 


Q: Is the CIA or NS A aware of any attempts by federal or 
state officials to interfere with or terminate any investigation 
[by] the IRS , Justice Department, Arkansas State Police or any 
other law-enforcement authorities into Mena-related criminal 
conduct? 


A: CIA, no. NSA, 


C. Narcotics Smuggling 


Q: Did the CIA or NSA have any knowledge of or involvement 
in illicit narcotics trafficking, possibly by rogue operatives, in 
or near Mena, Arkansas? As you know, there have been allegations 
that on their return flights from Central America, pilots smuggled 
more than 20 tons of cocaine into Mena. 


A: 

checked 


NSA, 

with its~ 


Tie 

xrun 


IA no. [ 
nter-narcotics 


zt 


oted that CIA had also 
ter, which reported no 


responsive information available, 


D. Money Laundering 

Q: Did the CIA or NSA have any indication that 

local businesses an cT A r k a n s a s ! / 


A: NSA, 


CIA, no. 

NSA have any indication that Barry Seal 

Q: Does the CIA or 

or his associates attempted to J 

1 j 

A: NSA, 

Q: Does the C 

from illicit narco - 
through the Arkansas 

A: NSA, 

- 

1 

CIA, no. 

NSA have any indication that the proceeds 
trafficking might have been laundered 
lopment Finance Authority (ADFA)? 

"IA, no. 

IA c 
tics 
; De 

Dr 

3 

!Ve 


E. 


Q: Does the CIA or NSA know of any secret 

~ * ]or more ever held by U.S. citizens dcnuTcITea~lTT 

Arjcansas at anytime between 1988 and now? 

A: NSA 1 


Cl A representatives stated 






that, to the best of their knowledge, CIA maintained the same 
policy. CIA also stated that any records it might have had 
would have been f~ “ *~ — 1 — , 


Q: (Not directly asked, referenced indirectly in the eighth 
question in this section) Is the CIA or NSA aware, directly or 
indirectly, of any efforts by | * ' ' ' 


Q: Does the CIA or NSA have the capability of 



Q: Does the CIA maintain a team of skilled computer hackers 
who routinely break into the electronic data systems of foreign 
banks? According to one source, this group is informally known as 
the Fifth Column. Correct? 







Q: (Skipped) Does NSAJ^ 

o: Does the CIA or NSA know of or has either agency 

participated in, directly or indirectly, efforts to sell software 
— notably versions of a program in use at the J us ti^ e 
called PROMIS — or other devices to forel 9 n b* nl f |° ectron P ic data 
of facilitating 
systems? 

A: NSA £ 1 CIA, 

q: (Skipped) Does the CIA or NSA know of customer s_ to_ whom 

this software has been sold? 


Is the CIA or NSA aware of any attempts by 


A: NSA, I CIA, no. 

q : Does CIA or NSA know of any efforts by 


A: NSA, CIA, no. 

q: Has the CIA or NSA received any indication that proceeds 

from the sale of PROMIS or similar software were used to 
arms shipments to the Contras? 

A: CIA, no. NSA, 

Skipped) Are there any indications of cooperation by 




Q: (Skipped) Is the CIA or NSA aware of any unauthorized 
efforts, possibly in the margin of legitimate intelligence 
operatio ns, 


Q: Does CIA or NSA know of a Charles Hayes , who was born on 

4/27/35, whose social security number is 
resides in Nancy, Kentucky? 


and now 


A: CIA, no. NSA, 


Q: If so, has Hayes ever had any ties to the CIA or NSA or 

any other U.S. government agency? Have these ties been severed? 


A: CIA, no. NSA, 


Q: 


Hayes claims to be able to break into the electronic data 


systems of for 

eign banks. Has CIAj 

A: 



Q: Is NSA or CIA aware of . an account, number b-142AB2, at 
the Banca Della Svizzera Italiano in Chiasso, said to have belonged 
to [the late] Vincent Foster? 



Q: Does the CIA of NSA know of any secret Swiss bank account 
that used to belong jointly to Vincent Foster and others that 
supposedly contained contributions to the Clinton presidential 
campaign? 


A: CIA, no. NSA, 


Q: Is the CIA or NSA aware of a fund known variously as the 
Medders or Meeders or Meadows or Meadors or Meaders Trust or 
Estate? The fund was allegedly first deposited at Pittsburgh's 
Mellon Bank some 50 years ago and is now reportedly worth billions. 
The allegation is that a legally ungoverned trust is under de facto 
control of a bank or group of banks under prospective legal 
challenges from alleged heirs and that income is so large that it 
is used as a secret source of funds by banks and high-ranking 
officials for sensitive political and economic purposes. The money 
and its movements, it is alleged, are hidden in a complex web of 
electronic transactions among the banks in the group. 







A: CIA, no. NSA, 

Q: Is it possible, and does CIA have any information that 
might suggest, that alleged Mena-related activities stemmed from 
private Nicaraguan assistance groups, perhaps under the 
supervision, or at least knowledge of, Colonel North? * 


A: NSA, 

or around Mena 


CIA was not aware of any such activity in 


Q: Did either NSA or CIA ever request that any government 
organization cooperate or not interfere with aircraft operating out 
[Of] Mena? 


A: CIA, no. NSA, 


Q: Is either the NSA or the CIA aware of any foreign 
governments who might have provided arms, money or any assistance 
to any group operating out of Mena? 


A: 


NSA, 


CIA, no. 




APPROVED FOR RELEASE 
DATE: JUL 2912 






l_l-iiM.il Intdkn.!* t \*'HV 



Vtntmgar.QC J0505 


OCA 1584-93/1 

2 AUG 1393 


Mr. Norman K. Bradley 
Staff Director 

Select Committee, on Intelligence 
United States Senate 
Washington, D.C. 20510 

Dear Mr. Bradley: 

This is in further response to your March 1, 1993 
letter raising new questions regarding Inslaw, Inc.'s 
PROMIS software and possible Agency involvement in its 
misappropriation. (U) 

As our initial response to your letter made clear, a 
thorough search of Agency files and interviews of Agency 
employees in 1991 identified no information indicating that 

the Agency ever purchased or otherwise ob tained Inslaw* s 

PROMIS software or any derivative of it. 

m 


Additional searches were conducted in response to your 
request, with negative results. The primary computer- 
databases of the Director of Central Intelligence Area (DCI 
Area), the Office of General Counsel, the Offices of 
Logistics, Security, Personnel, and Information Technology 
in the Directorate of Administration, and the Directorates 
of Intelligence and Operations were searched, using search 
terms derived from your request and the letter from William 
Hamilton attached to it. Manual searches of hard-copy files 
were not conducted except in the DCI Area, where "soft 
files" concerning former DCI Casey were searched, including 
records of the participants in his meetings with individuals 
from both the public and private sectors. (U) 

These Agency components located no records about 
Inslaw's PROMIS software, its misappropriation or 
modification, or its distribution to any foreign 



lunf; 


affix l 


Mr. Norman K. Bradley 


governments . 


| No records were located 

relating m any .way to a joint venture between the Wackenhut 
Corporation and the Cabazon Band of Mission Indians of 
Indio, California, .for arms or ammunition production. No 
records were identified indicating that former DCI Casey 
served as outside counsel to the Wackenhut Corporation, prior 
to becoming DCI. Finally, no records were located 
concerning Michael Riconoscuito or Peter Videnieks. (pK 

As you may know, former Attorney General William Barr 
appointed Judge Nicholas J. Bua as Special Counsel to 
investigate the Inslaw matter. Judge Bua's report was 
forwarded by the Department of Justice to the Senate and 
House Judiciary Committees on 17 June 1993, and may be of 
interest to you as you review the allegations underlying 
your request to us. (U) 

If you have any f urther questio ns concerning this 
matter, please c ontactf*"^ ~bf my staff at • 

~1 (u) - — 

An original of this letter is also being sent to 
Mr. David Addington, Minority Staff Director. (U) 

Sincerely, 


IsJ Stanley M. Mwtowlt! 

Stanley M. Moskowitz 
Director of Congressional Affairs 


CONE 


IAL 



OGC-95-51546 
7 June 1995 


SpSZS&T 


APPROVED FOR 
RELEASEGDATE: 
lg8-Sep-2009 


unm 


MEMORANDUM FOR; -DO I 

. DA/IRO ; 

OS /OPS j 
...OP/IMO 

FROM; ■ ' ~ ] 

paralegal Specialist 
Office of General Counsel 

SUBJECT: Records Search on - 

Adler Barriman “Barry” Seal 


1. Background . The Office of Congressional Affairs 
(OCA) has received information from Chairman James Leach 
regarding a search request on the late Adler Barriman 
“Barry” Seal. The search request is in order to disprove or 
verify certain allegations of illegal financial activity 
related to the so-called “Whitewater” investigation. (See 
attachment) 

2. Please conduct an immediate records search from 
your office concerning whether the CIA has any information 
on Adler Barriman “Barry” Seal. Please determine whether 
CIA or other government agencies performed any covert 
activity in or near Mena, Arkansas, including whether the 
CIA or any other government agency had any contractual or 
other relationship for work performed in or near the same 
Arkansas location. 

3. Your expeditious handling of this matter would be 

greatly appreciated. Please contact me on!””" as 

soon as your office has any information regarding the above 
request or if you have any questions regarding this matter. 
Please follow-up by sending your response this name trace 
request to me at OGC/LD, “1 

The attorney handling this case is j and he 

can be contacted on i j 


Attachment as Stated 



SE£*£t 




s 


IG 95-1482 
11 August 1995 

(blI31 


MEMORANDUM FOR: Director of Congressional Affairs 

FROM: Frederick P. Hitz 

Inspector General 

SUBJECT: Meeting with Congressman Leach 

REFERENCE: Ltr for DCI Deutch fr Leach, dtd 

11 Jul 95 


1. On 21 July 1995, , Associate 

Deputy Insp ector General . L ~ut nc e_lot inspector G eneral (OIG) , 
accompanied f~ |and| |of the Office 

of Congressional Affairs to a meeting with congressman 
James A. Leach, Chairman of the U.S. House of 
Representatives Committee on Banking and Financial Services. 
Also attending were two representatives from the National 
Security Agency, OIG, and Chairman' Leach's Chief of Staff. 
Chairman Leach had written to the Director of Central 
Intelligence to request a briefing from this Office relating 
to media allegations of money laundering in Mena, Arkansas; 
the use of PROMIS software in computers to monitor bank 
accounts; account transactions and to collect economic • 
intelligence; and other related issues. 

2 . According to Chairman Leach appeared 

satisfied with the answers ne received from the attendees 
and did not ask this Office to conduct any inquiries or 
provide additional information on the matters discussed. 
Consequently, OIG does not plan to take any further action 
on the questions raised by Chairman Leach. This information 
may be communicated to Chairman Leach, but I request that 
any such communication be coordinated with this office. 



DATE: JUL 2112 






SEpMfT 


OCA 95-2160 
31 July 1995 


MEMORANDUM FOR: 


VIA: 


FROM: 


Executive Director J"* 1 ' 

DCI Chief of Staff ,S1 

Director of Congressional Affairs 


Deputy Director for Legislation 
Office of Congressional Affairs 


SUBJECT: 


Update on Chairman Leach Inquiries 


1. Attached is a memo on last week's briefing of 
Chairman Jim Leach, House Banking Committee, by CIA and NSA 
IG and Congressional Affairs officers. As Chairman Leach's 
letters to the DCI reflect, the Committee is looking at 
numerous allegations of illegal activities at and around 
Mena, Arkansas. Chairman Leach was very cordial at the 
briefing and indicated that he’ knew most of the allegations 
were outrageous, but that he wanted to say that the 
Committee has looked into these allegations and found them 
to be baseless. (The worst of these allegations, credited 
to a CIA source in a magazine called Media Bypass , is- that 
the CIA discovered that Vince Foster was a spy for the 
Israelis, and used a Cray supercomputer at CIA Headquarters 
to surreptitiously drain $2.73 million from Foster's Secret 
Swiss account. The article goes on to speculate that Foster 
committed suicide because he discovered his account had been 
drained.) He stated that his major concern is the impact 
these types of allegations have on public confidence in the 
international and domestic financial systems. 

2. Chairman Leach read from a list of questions that 
his assistant staff director, James McCormick, provided to 
us after the briefing (attached) . The briefers indicated 
that we could not answer all of these questions 

conclusively, and C hairman Leach asked for some limited 

follow-up searches. I — ~ I 


> 7C ^ 


LOGGED 1 


OciJ 


All Portiions Clas 


SECp^T 



APPROVED FOR RELEASE 
DATE: IUL 2002 


SUBJECT : 


Update on Chairman Leach Inquiries 


3 . Traces that we could complete before the briefing 
f ound no record of contact with Svstematics of Arkansas, 
Inc . [ 


4. Chairman Leach indicated great interest in current 



Chairman Leach. I have spoken twice with James McCormick, 
Assistant Staff Director for Chairman Leach, about our 
continuing efforts to answer the Chairman's questions and 
told him we will have more information shortly. He 
expressed appreciation for the briefing and follow up, and 
indicated the Chairman will soon forward McCormick's MFR of 
the briefing with a request for concurrence and any 
additional information. 


Attachments 



07/25/95 


Briefing for Representative Leach (R-IA) on Allecati 


On 21 July, Chairman James Leach, Committee on Banking and Financial Services, and staffer 
Jamie McCormick, received a briefing, at Leach's written request to the DC1, on allegations of 
“ — In Arkansas in the late 1980s. Leach based his request for the briefing on 

icpons mat nave appeared in the pres s that refer to secret foreign bank accounts h eld by 
prominent people in Mena, Arkansas, and an 

Arkansas-centered net work of hanks flii mtxr roj COvs Office of 

Inspector General, and Dffice of Congressional Affairs, along with Frank Newton, 

NSA's Inspector General, responded to Leach's questions regarding each Agency's current 
knowledge on involvement with any of the alleged allegations contained in his letter. Newton 
responded! :o all of the questions posed in the incoming letter, but did, howe ver, 

provide a ferter broadbr ush background on how NSA conducts it normal daily activities 

said that a thorough search had been conducted by CIA, and thus iar very 
little information hadpeen found to be responsive, to the exact allegations contained in the letter. 

however, did say that the Agency was aware of Barry Seal, but had no 
relationship with him nor any records regarding his activities in Mena. As for PROMIS, that issue 
had been looked at in-depth by both SSQ and the House Judiciary Committee in 1991 and 1 993. 
The conclusion then and still is that the Agency never purchased any INSLAW/FRQMJS 

software. Chairman Leach was informed that we had not found any records related to 

Systematics of Arkansas, a banking software firm 



y 


Leach, after listening to the responses to his earlier questions, proceeded to ask approximately 
45 other questions regarding the issue, basically repeating many of the issues already addressed. 
Leach said he had talked to a lot of people regarding this issue, but he emphasized that he was 
aware that most of the allegations were false. Leach also said that he has concluded that some 
allegations may be credible, some totally unbelievable, but as information goes out to the 
American public in non-traditional ways, it becomes more believable. He has an obligation to 
look into the matter on behalf of the Committee, and asked us to inform the DCI and DERNSA 
that he may hold hearing on these allegations in the fall. (U) 


SEGffET 




SE 


Follow Up Actions: Provide McCormick with a copy of SSCI letter regarding PROM1S. 


OCA/LiaisonGrp | 





1 Gmail - -5500.00 payment - Square Payment #i8a50JUK8lxomLnis8lGXwMF 12/4/15, 9:50 AM 

i * 

011(31 



SUBJECT: VIDEO TAPE REVIEW: NATIONAL EMPOWERMENT NETWORK, 
AMERICAN INVESTIGATOR, “MENA, ARKANSAS UNDER 
INVESTIGATION,” AIRED FEB 8, 1996 

FROM: j j 


DATE: FEB 22, 1996 COMMENTS: (Please DATE Comments) 


rn* 





ADMINIS' 


IAL USE ONLY 


February 22, 1996 


MEMORANDUM FOR THE RECORD 

SUBJECT: Video Tape Review: National Empowerment 

Network, American Investigator, "Mena, Arkansas 
Under Investigation," aired February 8, 1996. 


1. On February 21, 1996, the undersigned reviewed the above video tape. 
The main thrust of the video related to suspicious activities at the Mena, 
Arkansas airport in the 1980s time frame. Allegations included drug activities, 
arms smuggling and money laundering. Possible connections to CIA and 
government officials were explored. Particular emphasis was placed on the 
activities of deceased drug smuggler Barry Seal. Additional focus was placed on 
the activities of wealthy Arkansas businessman Don Lasater and his possible ties 
with Seal and high ranking government officials. The role of Rich Mountain 
Aviation also received significant attention. 

2. Interviewees for the program included Congressman Leach, Fred 
Hampton of Rich Mountain Aviation, and former Arkansas law enforcement 
officers L.D. Brown and Russell Welch. References were made to a book by 
Terry Reed, entitled "Compromised," which reportedly relates to the topic at 
hand. The credibility of this book was questioned somewhat, however, it may 
be useful in terms of background information and leads. Accordingly, an 
attempt will be made to obtain this book through the library. 

3. Overall, the video provided useful background information on the 
Mena allegations and featured some of the key participants. 






SECRET 


Aic { cf 


6/V F.U 




% 


APPROVED FOR | 
RELEASED DATE: I 
28-Sep-2009 ] 


(b) (1) 

OGC-95-51574 (*>) ( 3 > 

9 June 1995 


MEMORANDUM FOR: 


FROM; 




J 


uepucy Director 

Office of Congressional Affairs 


t'd.raregax specialist 
DCI/OGC/LD 


SUBJECT: 


Confirmation of Records Search - 
Adler Barriman “Barry” Seal 


1. This memorandum is confirming the records search on 
an Adler Barriman “Barry” Seal . The records search was in 
response to a question posed by Chairman James Leach and 
forwarded through HPSCI, whether CIA was ever in contact 
with this individual. The search request is in order to 
disprove or verify certain allegations of illegal financial 
activity related to the so-called “Whitewater” 
investigation. 


2 . 


On 7 June 1995, I tasked 

and informed DA/lRCh 


OS /OPS/ 
also tasked 
no records icspaizser 


OP/IMO, 


nuieu un./ iku . ; 

All components contacted UGCT with 


3 . If you have any questions regard ing t he above 
information, please conta ct m e on secure or the 

attorney on the case, [ 









S^T 


A^c ( cf 


Li-h Fj ^ 



OGC-95-51574 
9 June 1995‘ 


MEMORANDUM FOR: 


oeputy Director 

Office of Congressional Affairs 


FROM: 



DCI/OGC/LD 


SUBJECT: Confirmation of Records Search - 

Adler Barriman “Barry” Seal 


1. This memorandum is confirming the records search on 
an Adler Barriman “Barry”: Seal , The records search was in 
response to a question posed by Chairman Jaimes beach and 

f orvarded^thrbugh HPSCT, whether CIA was ever in contact 
with this individual. The search request is in order to 
disprove ior^verify certain -al li^ationsvof illegal financial 

“Whitewater* 

investigation . 

2. On -7£Juhe' 19915 , I tasked! -OP /IMP, 

OS/OBS> Lan d informed -DA/UKT." i 

alscf' tisjced j AX l :r ' components contacted OGC with ,a A 

no records r response . 

3. If you have any questions regarding ...the above 
information, please conta ct m e on .secure i , I or the 
attorney on the case, f 



L 








ADMINiSTRATI 


From the Desk of 


ITCATB iWWfl^ALU! 


NAL USE ONLY 


=M 


NOTE FOR: 
FROM: 
DATE: 
SUBJECT: 


06/07/95 03:35:30 PM 
Adler Barriman “Barry* |gea] 


jWe tasked OP, OS, and the 00 to search for records indicated a contractual or other relationship between CIA and jSeaj Ail have 
responded with a no records. The DO response came from We'll send you a short memo confirming this note and identifying 

the components that searched. 


AOMINISTB 


. USE ONLY 


D)l^-3 





OGC-95-51546 
7 June 1995 






MEMORANDUM FOR:-j j 

UA/ 1RO " 

os / ops r I 

jOP/IMO 1 — 


FROM: [ * J 

Paralegal Specialist 
Office of General Counsel 

SUBJECT: Records Search on - 

Adler Barriman “Barry” Seal 


»- 1. Background . The Office of Congressional Affairs 

(OCA) has received information from Chairman James Leach 
regarding a search request on the late Adler Barriman 
“Barry” Seal. The search request is in order to disprove or 
verify certain allegations of illegal financial activity 
related to the so-called “Whitewater” investigation. (See 
attachment) 

2. Please conduct an immediate records search from 
your office concerning whether the CIA has any information 
on Adler Barriman “Barry* Seal. Please determine whether 
CIA or other government agencies performed any covert 
activity in or near Mena, Arkansas, including whether the 
CIA or any other government agency had any contractual or 
other relationship for work performed in or near the same 
Arkansas location. 

3. Your expeditious handling of this matter would be 

greatly appreciated. Please contact me on as 

soon as your office has any information regarding the above 
request or if you have any questions regarding this matter. 
Please follow-up by sending your response to this name trace 
request to me at OGC/LD, L \ 

The attorney handling this case is : , and he 

can be contacted on ~ ’ ~ ~ - ■ - ' j 


Attachment as Stated 









SUBJECT: Records Search on Adler Barriuian “Barry” Seal 


OGC-95-51546 

OGC/LD/j '/ 7 June. 95 

Distribution: 

Original - Addressee 
l - Lit File 
1 - OGC Reg. 

1 - 
1 - 
1 - 


Soft 

Soft 

FYI 


SEpt^T 


t> ) 





General Counsel 


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U.S. HOUSE OF REPRESENTATIVES 

COMMITTEE ON BANKING AND FINANCIAL SERVICES 

ONE HUNDRED FOURTH CONGRESS 

2129 RAYBURN HOUSE OFFICE BUILDING 
WASHINGTON. DC 20515-6050 


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(EANAAD SAMO0O. VERMONT 

12071 ES-TSOI 


May 9, 1995 


The Honorable Larry Combest 
Chairman 

Permanent Select Committee on Intelligence 
H405 Capitol 
Washington D.C. 20515 


Dear Chairman Combest: 

I sun writing to request that a staff member of the House 
Banking Committee, James W. McCormick, be allowed to review certain 
classified files of the Iran-Contra hearings, the unclassified 
version of which was published November 1987. In order to help 
disprove or verify certain allegations of illegal financial 
activity related to the so-called "Whitewater" investigation, I 
have requested Mr. McCormick to determine whether the CIA or other 
government agencies performed any covert activity in or near Mena, 
Arkansas, including whether the CIA or any other government agency 
had any contractual or other relationship with the late Adler 
Barriman "Barry" Seal, for work performed in or near the same 
Arkansas location. 


I recognize that these files may be partially or wholly 
archived, and appreciate the cooperation of your staff in 
facilitating this request. 


Sincerely, 



u uwcd n % 

Chairman 


JL: jwm 


pn*)-'? 



v*' - v£\ ■ : V - r ^ , UNGlJ«sittED^ '>;'.$ -W^--- ■ ‘ ■•••"■■■ 

status: ip I' ■“ •'••'•* : r ASSIGNMENT RECORD ; v file-numb: L 9500267 ? W 


STATUS: IP 
FILE: X 
'UEST: 


. Printed: 07/20/95 


RESP-DIV: LD ' 
CLOSED: / / 


CASE NAME: SEAL, ADLER BARRIMAN "BARRY" HPSCI REQUEST FOR NA 

SUPERVISOR: 

CASE SUMMARY: 

HPSCI STAFFER STEVE NELSON REQUESTED OCA TO CONDUCT A NAME TRACE ON WHETHER CIA 
HAD A CONTRACTUAL OR OTHER RELATIONSHIP WITH THE LATE ADLER BARRIMAN "BARRY* SEAL. 
HPSCI IS ASSISTING THE HOUSE BANKING COMMITTEE INVESTIGATE ALLEGATIONS OF ILLEGAL 
FINANCIAL ACTIVITIES RELATED TO THE "WHITEWATER" INVESTIGATION. 


ASSIGNED 



BEGIN 

06/06/95 / / 

06/06/95 : / / 


♦(NONE)* 


-(CASE NOTES ) 




fgiS gfti® 


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JSIFIEDi 








FILE NUMBER: L9500207 



CASE NAME: SEAL, ADLER BARRIMAN "BARRY" HPSCI REQUEST FORNA 


Received; 07/20/95 
08:50:09 


■ 


i 

f 


OGC - DOCUMENT RECORD 

i 

OGC-NUMBER: 

f 

OGG-95-03081 

CONTROL NO: 


DOCUMENT DATE: 

05/30/95 

DATE RECEIVED: 

05/31/95 

AUTHOR: 

j 

1 

AUTHORS ORG: 

OCA 

ADDRESSEE: 

i f 

i > 

! | 

ADDRESSEE'S ORG: 

OGC 

FIRST ROUTED TO: 

LDi ] 

COPIES TO: 

♦(NONE)* 


DOCUMENT DESCRIPTION 


NOTE REQUESTING REVIEW OF ATTACHED LETTER FROM JAMES A. 
LEACH, CHAIRMAN OF THE HOUSE BANKING COMMITTEE, TO HPSCI 
REQUESTING THAT JAMES W. MCCORMICK BE ALLOWED TO REVIEW 
CERTAIN CLASSIFIED FILES OF THE IRAN-CONTRA HEARINGS, THE 
UNCLASSIFED VERSION OF WHICH WAS PUBLISHED NOVEMBER 1987 









IJNgUVSSlfTED Received: 07/20/95 

08:50:25 

FILE NUMBER: L9500207 

CASE NAME: SEAL, ADLER B ARRIMAN "BARRY" HPSCI REQUEST FOR NA . __ 

OGC - DOCUMENT RECORD 


0 GC-NUMBER: 
CONTROL NO: 

OGC-95-03314 

DOCUMENT DATE: 

06/12/95 

DATE RECEIVED: 

06/13/95 

AUTHOR: 

' 

AUTHORS ORG: 

G pPS 

ADDRESSEE: 


ADDRESSEE'S ORG: 

OGC 

FIRST ROUTED TO: 

LDj 

1 

COPIES TO: 

♦(NONE)* 


DOCUMENT DESCRIPTION 

MEMORANDUM RE ADLER B ARRIMAN "BARRY" SEAL IN RESPONSE TO 
OGC-95-51546 DATED 7 JUNE 1995 REQUEST FOR A DATABSE SEARCH 
IN THE NAMES OF ADLER B ARRIMAN SEAL AND BARRY SEAL 





Received: 07/20/95 
08:50:41 


SJEetfET 

FILE NUMBER: L9500207 

CASE NAME: SEAL, ADLER BARRIMAN "BARRY" HPSCI REQUEST FOR NA 

OGC - DOCUMENT RECORD 


O GC-NUMBER: OGC-95-03614 

CONTROL NO: 

DOCUMENT DATE: 06/12/95 

DATE RECEIVED: 06/29/95 

AUTHOR: j 

AUTHORS ORG: C\~ [OEL 

ADDRESSEE: [ 

ADDRESSEE’S ORG: OGC 

FIRST ROUTED TO: LDi 

COPIES TO: ‘(NONE)* 

DOCUMENT DESCRIPTION 

RESPONSE TO OGC REQUEST OGC-95-51546 RE RECORDS SEARCH 
REQUEST ON ADLER BARRIMAN "BARRY" SEAL 






SEJSRET 


APPROVED FOR ! 

RELEASE3DATE: 

23-Se p-2009 

Odin 

8 September 1995 mini 


MEMORANDUM FOR: 


FROM: 


DI Information Review Officer 


-ana Narcotics center 


SUBJECT: Records Searches: Mena, Arkansas and 

Related Topics 

REFERENCE: DI/IRO memo, dated 31 August 1995, 

w/attached EXDIR memo, dated 
31 August 1995 


1. Referenced memo requested that CNC search for 
records responsive to referenced Tab A and that CNC review 
and comment on referenced Tab B. On 6 September 1995 CNC 
sent you a memo stating we had located no responsive records 
to the subjects identified in Tab A. 

2. This memorandum addresses the request for comments 
to Tab B, the 21 July 1995 draft memorandum of record 
prepared by Chairman Leach's staff concerning questions and 
agency responses on Mena/Systematics. CNC has reviewed Tab B 
and offers the following comments. 

3. While CNC h as no docu me nts or records pertaining 
to "Barry Seal’ll 







SUBJECT: Records Searches: Mena, Arkansas and 

Related Topics 


4 A 


. During 1984, there was high policymaker interes 
m assessing the role of the Cuban and Nicaraguan governm 
in the drug tra de .j * 


«> fT 






SUBJECT: Records Searches: Mena, Arkansas and 

Related Topics 


# 


6. In 1988, the Foreign Relations Committee was 
examining drug trafficking in Central America, especially 
the role of Panama, and requested all finished intelligence 
related to these issues. Attached is a list of the 
documents provided to the SSCI for Senators Pell and Kerry 
and cleared staff on 29 March 1988. The two papers 
discussed above were included among the documents provided 
to the SSCI on that date. 

7. CNC has no documents or written records pertaining 
to the installation of cameras on Seal's C-123 aircraft. 
However, to the best of our understanding, CIA’s OTS may 
have installed cameras on the aircraft used in the 1984 
operation. Therefore, we suggest that you recommend to the 
DO that it check with OTS or other components regarding the 
following inquiry in the draft memorandum: 

• ‘Did the CIA have any involvement in, or knowledge 
of, the installation of cameras on Seal's C-123K 
transport plane for use in a 1984 * sting" operation 
against the Sandinista official Frederico Vaughan? 

8. While CNC does not have any documents or written 

records that pertain to ‘Barry Seal", : 


3 



D 


6*3 





SUBJECT: Records Searches: Mena, Arkansas and 

Related Topics 


9. If you have any questions please call me at 


Attachments: a/s 











SUBJECT: Records Searches: Mena, Arkansas and 

Related Topics 


CNC/ODIR 


(8 Sept 95) 


Distribution: 

Original - Addressee 

OCA 
OGC 


1 - D/CNC 
1 - DD/CNC 
1 - SA/CNC 
1 - CNC/LGL 
1 - Pile 


1 - 
1 - 


'^tSBgT 


D 









?• •• 




IFIEDjg* 


ASSIGNMENT RECORD 


FILE-NUMB: L9500207 
RESP-DIV: LD ' : * <;v 
CLOSED: / / 


STATUS: IP 
FILE : X 
REST: 


Printed: 07/20/95 


CASE NAME: SEAL, ADLER BARRIMAN "BARRY" HPSCI REQUEST FOR NA 


SUPERVISOR: ! 


CASE SUMMARY: 


HPSCI STAFFER STEVE NELSON REQUESTED OCA TO CONDUCT A NAME TRACE ON WHETHER CIA 
HAD A CONTRACTUAL OR OTHER RELATIONSHIP WITH THE LATE ADLER BARRIMAN "BARRY" SEAL, 
HPSCI IS ASSISTING THE HOUSE BANKING COMMITTEE INVESTIGATE ALLEGATIONS OF ILLEGAL 
FINANCIAL ACTIVITIES RELATED TO THE "WHITEWATER" INVESTIGATION. ; ;; • : 


06/06/95 

06/06/95 


(CASE NOTES ) 


(NONE)* 


APPROVED FOR 
RELEASED DATE 


msm 




















FIED 


Received: 07/20/95 
08:50:09 


FILE NUMBER: L9500207 


CASE NAME: SEAL, ADLER BARRIMAN "BARRY" HPSCI REQUEST FORNA 


OGC - DOCUMENT RECORD 


OGC-NUMBER 
CONTROL NO 
DOCUMENT DATE 
DATE RECEIVED 
AUTHOR 
AUTHORS ORG 
ADDRESSEE 
ADDRESSEE'S ORG 
FIRST ROUTED TO: 
COPIES TO: 


OGC-95-03081 


05/30/95 

05/31/95 


"(NONE)’' 


DOCUMENT DESCRIPTION 

NOTE REQUESTING REVIEW OF ATTACHED LETTER FROM JAMES A. 
LEACH, CHAIRMAN OF THE HOUSE BANKING COMMITTEE, TO HPSCI 
REQUESTING THAT JAMES W. MCCORMICK BE ALLOWED TO REVIEW 
CERTAIN CLASSIFIED FILES OF THE IRAN-CONTRA HEARINGS, THE 
UNCLASSIFED VERSION OF WHICH WAS PUBLISHED NOVEMBER 1987 


•- . ••• •*■*•* •. - *•< 
'O.C ■. X { 


V. v; -ht?/ 






a.. y w .*■ 




mime 










! 


'■ * UNCLASSIFIED 

HLE NUMBER: L9500207 

CASE NAME: SEAL, ADLER BARRIMAN "BARRY” HPSCI REQUEST FOR NA 


Received: 07/20/95 
08:50:25 


OGC - DOCUMENT RECORD 


OGC-NUMBER: 

OGC-95-03314 

CONTROL NO: 

DOCUMENT DATE: 

06/12/95 

DATE RECEIVED: 

06/13/95 

AUTHOR: 


AUTHORS ORG: 

C/| DPS 

ADDRESSEE: 


ADDRESSEE'S ORG: 

OGC 

FIRST ROUTED TO: 

LDjj 

COPIES TO: 

♦(NONE)* 


DOCUMENT DESCRIPTION 

MEMORANDUM RE ADLER BARRIMAN "BARRY" SEAL IN RESPONSE TO 
OGC-95-51546 DATED 7 JUNE 1995 REQUEST FOR A DATABSE SEARCH 
IN THE NAMES OF ADLER BARRIMAN SEAL AND BARRY SEAL 










FILE NUMBER: L9500207 

CASE NAME: SEAL, ADLERBARRIMAN "BARRY" HPSCI REQUEST FORNA 


Received: 07/20/95 
08:50:41 


OGC - DOCUMENT RECORD 


OGC-NUMBER 
CONTROL NO 
DOCUMENT DATE 
DATE RECEIVED 
AUTHOR 
AUTHORS ORG 
ADDRESSEE 
ADDRESSEE’S ORG 
FIRST ROUTED TO: 
COPIES TO: 


OGC-95-03614 


06/12/95 


06/29/95 


♦(NONE)* 


DOCUMENT DESCRIPTION 

RESPONSE TO OGC REQUEST OGC-95-5 1546 RERECORDS SEARCH 
REQUEST ON ADLER BARRJMAN "BARRY" SEAL 


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Twl 


ROUTING AND RECORD SHEET 


SUBJECT: (Optional) 

Response and House Banking and Financial Services Committee Investigatioi 



RECEIVED FORWARDED 


OFFICER’S COMMENTS (Number eoch comment to »how from whom 
INITIALS to wHom. Draw a line soon column after each comment.) 


APPROVED FOR 
[RELEASED DATE: 
28-Sep-2009 



form Ain 

I _ 7<t 0 I U editions 



















r° Dggl — 


FOIA-0908 
8 September 1995 


MEMORANDUM FOR: 


urnce or congressional Affairs 


VIA: 


FROM: 


urnce or General Counsel 



DI Information Review Officer 


SUBJECT: 


House Banking and Financial Services 
Committee Investigation - Addendum 


REFERENCE: 


A. DI/IRO Memorandum, 7 September 1995 

B. OCA 95-2244, 31 August 1995 


1. Reference A advised that the DI would forward 
comments re Tab B (reference B) under separate cover. 
Attached is a memorandum and accompanying background 
information which was forwarded by the DCI Crime and 
Narcotics Center in response to Tab B. 

2 . Although the CNC memorandum addresses the request 
for comments to Tab B, it may have implications for the 
Agency's response to the request for record searches in Tab 


SBffRBgi 





■ ftB cwea 


SUBJECT: House Banking and Financial Services Committee 

Investigation - Addendum 


4. Your attention is also drawn to CNC's comments and 
clarification regarding an earlier response provided to 
ORM's July search request. 



Attachments 



2 








8 September 1995 


MEMORANDUM FOR: DI Information Review Officer 


FROM: 

Dei crime " ancT Narcotics Center 

SUBJECT: Records Searches: Mena, Arkansas and 

Related Topics 

REFERENCE: DI/IRO memo, dated 31 August 1995, 

w/ attached EXDIR memo, dated 
31 August 1995 


1. Referenced memo requested that CNC search for 
records responsive to referenced Tab A and that CNC review 
and comment on referenced Tab B. On 6 September 1995 CNC 
sent you a memo stating we had located no responsive records 
to the subjects identified in Tab A. 

2. This memorandum addresses the request for comments 
to Tab B, the 21 July 1995 draft memorandum of record 
prepared by Chairman Leach's staff concerning questions and 
agency responses on Mena/Systematics . CNC has reviewed Tab B 
and offers the following comments. 

3 . While CNC ha s no document s or reco r ds pert a ining 

to "Barry Seal", 


ggffBET 





SUBJECT: 


Records Searches: Mena, Arkansas and 

Related Topics 



5. During 1984, there was high policymaker interest 
in assessing the role of t he Cub an and Nica ragua n governme nt 
in the drug trade . _ 


2 


■ SECRET . 




CECRB » 


SUBJECT: Records Searches: Mena, Arkansas and 

Related Topics 


6. In 1988, the Foreign Relations Committee was 
examining drug trafficking in Central America, especially 
the role of Panama, and requested all finished intelligence 
related to these issues. Attached is a list of the 
documents provided to the SSCI for Senators Pell and Kerry 
and cleared staff on 29 March 1988. The two papers 
discussed above were included among the documents provided 
to the SSCI on that date. 

7. CNC has no documents or written records pertaining 
to the installation of cameras on Seal's C-123 aircraft. 
However, to the best of our understanding, CIA's OTS may 
have installed cameras on the aircraft used in the 1984 
operation. Therefore, we suggest that you recommend to the 
DO that it check with OTS or other components regarding the 
following inquiry in the draft memorandum: 

• "Did the CIA have any involvement in, or knowledge 
of, the installation of cameras on Seal’s C-123K 
transport plane for use in a 1984 "sting" operation 
against the Sandinista official Frederico Vaughan? 



3 


cpr-ppni 



SUBJECT: Records Searches: Mena, Arkansas and 

Related Topics 



Attachments: a/s 


4 






SUBJECT: Records Searches: Mena, Arkansas and 

Related Topics 

CNC/ODIRj (8 Sept 95) 


Distribution: 

Original - Addressee 



1 - D/CNC 
1 - DD/CNC 
1 ~ SA/CNC 
1 - CNC/LGL 
1 - File 


5 






APPROVED FOR 
RELEASED DATE: 
28-Sep-2009 


l* \+.JL. 


Briefing for Chairman Leach, House Banking Committee 


What we found from our searches 


(b) (2) 
(b) (3) 
(b) (6) 


3) PROMIS - We have searched our files extensively in 
response to previous congressional inquiries on ISLAW's 
PROMIS (Prosecutor's Management Information System). As 
noted in the DDCI's response to Chairman Brooks on 18 Nov 
91, and a similar letter from D/OCA to the SSCI on 2 Aug 93, 
we have found no records about INSLAW's PROMIS software, or 
the allegations that it had been misappropriated, 
distributed or used in the manner alleged in these articles. 


As noted in the letter to the SSCI, the Department of 
Justice appointed a special counsel to investigate the 
INSLAW matter and a report was submitted to the House 
Judiciary Committee on 17 June 1993 that may be of 
assistance to your review. 

4) We have no found no record of any CIA contact or 
contracts with Systematics, Inc. of Arkansas, nor any 
information about the allegations that Systematics, Inc. 
monitored or engaged in illegal activities. 



5) We have found no record of a Charles Hayes who was a CIA 
operative in Latin America or Central America. - 

6) We have found no records of CIA activities at the Mena 
airfield during the 1980's. CIA's Iran-Contra files were 
searched and found no reference to Mena or its use by the 
'private benefactors', a term used to refer to the 
unauthorized Contra support operation run by Oliver North. 



7) Adler Berriman "Barry" Seal has been the subject of 
several CIA records searches over the past decade, most 
recently in June 1995 at the request of HPSCI . No records 
of any contact with Seal or information about his alleged 
activities has ever been discovered during these searches. 


t>M 






Our searches did determine that a person named Lawrence D. 
Brown, DOB 2 Oct 1958, applied for CIA employment in 1988. 
Following routine processing his application was rejected in 
November 1988. Without further biographic information, we 
cannot determine if this is the same L.D. Brown mentioned in 
the articles. 




from the Office of Inspector General will 
her issues mentioned in your letter. 







610 (EF) 










SECRET 


MEMORANDUM FOR: 


vj k o m ^ 

Executive Assistant 

Director of Central Intelligence 


VIA: 


Deputy Director for Operations 


FROM: 


SUBJECT: 


Wall Street Journal Allegations of Possible CIA 
Operations in Arkansas 


1. Background : The Wall Street Journal of 29 June 1994 

contains an article entitled "Mysterious Mena" by Micah Morrison 
which claims possible CIA activities/operations in the mid-80s at 
Arkansas' Mena Intermountain Regional Airport. The article 
states in the early to mid-80s Rich Mountain Aviation at Mena 
was used as a base of operations by a cocaine smuggler, Adler 
Seal, who traveled to Nicaragua in 1984 with a CIA equipped 
aircraft to photograph Sandanista involvement in drug running. 

The article also suggests mid-80s training of Contras at a site 
near Mena Airport on land owned by the head of Rich Mountain 
Aviation. The author of the article suggests that Seal was 
flying drugs into the U.S. and Contras and weapons out. A new 
book, according to the article, claims Gov. Clinton, and his 
inner circle, along with Oliver North and CIA were involved in a 
conspiracy which included training Contras, sending weapons to 
Central America, smuggling cocaine into the U.S. and laundering 
funds through Arkansas banks. 


2. While it is not possible for us in the short period of 
time to research the files related to the period of this article, 
we can say with certainty that the DO has never had a proprietary 


Aviation. 



when 2 

[ 


Mena Airport racxiicv was 

used 

i S — | 




WARNING NOTICE 


cl by; j 

INTELLIGENCE SOURCES 


DECL OADR 

OR METHODS 

INVOLVED 

/ 

DRV ; 



SECRET 








SECRET 


SUBJECT: Wall Street Journal Allegations of Possible CIA 

Operations in Arkansas 


3. 


4. 

Our 

records also show 

support in terms of 


to a 

training operation at Mena Airfield. The exercise 

ran from 





We have canvassed officers 

' and there is 


no indication Contra 


training of any kind was undertaken by CIA at Mena or anywhere in 
Arkansas. Because we are dealing with a period ten years ago, a 
review of the! [files would be necessary for 

possible documentary connrmation the Mena area was never used by 
the Agency for training. 


6. It is believed Mr. Seal had an aircraft equipped by CIA 
to photograph Nicaraguan drug lords. Seal was at the time a DEA 
asset and the camera was installed at the request of DEA. 
Research will be required if additional information on this 
operation is required. 

7. The book mentioned in the article "Compromised: 

Clinton, Bush and The CIA" claims a conspiracy which exists only 
in the minds of the authors. 


2 


SEC 









SUBJECT: Wall Street Journal Allegations of Possible CIA 

Operations in Arkansas 


(30 June 94) 


Distribution: 

Orig & 1 - Addressee 

1 - Executive Registry 
1 - EX/DIR 
1 - DO Registry 
1 - SA/DDO 
1 - ADDO 
1 - DDO 



* 






Mysterious Mena 


By Micah Morrison 

, MENA, Ark. -Reporters now trolling 
Arkansas are pulling up many stories that 
may have only fleeting relation to White- 
water or the Clintons, but are worth telling 
simply for their baroque charm. And none 
is more baroque than the tale or the Mena 
Intermountlan Regional Airport, a site 
connected with aircraft renovatio n, annnr- 
ent CIA oners tlons a nd a self-confessed 
drug runner. 

There is even one public plea that Spe- 
cial Counsel Robert Flske should Inveitl* 
gate possible links between Mena and the 
savings-nnd-ioan association Involved In 
Whltewnter. The plea was sounded by the 
Arkansas Committee, a lert-lenning group 
of former University of Arkansas students 
who have cacefully tracked the Mena af- 
fair for years. 

While a Whitewater connection is 
purely speculative. Mena certainly does 
seem a fruitful opportunity for thorough 
investigation, by Mr, Fiske or any other 
competent authority. It's clear that at 
Mena Airport unusual things took place. 
Outlaw’s Paradise 


© o 

41 


Whnt the Arkansas Committee calls the 
“complex of events" surrounding Mena Is 
the stuff of spy novels and thrillers, poten- 
tially including smuggling. CIA and Drug 
Enforcement Agency covert operations, 
money laundering and murder. There Is 
no reliable evidence linking any of these 
events to Hill 
Clinton, ex- 
cept that he 
was governor 
of Arkansas 
when stale 
and federal 
investigations 
of Mena were 
frustraled. 

Mena Is a 
good setting for a mystery. The pine and 
hardwood forests of the Ouachita Moun- 
tains surrounding it have long been an 
outlaw’s paradise, home to generations of 
moonshiners and red-dirt mnrljuana 
farmers. In 1981, cocaine smuggler Adler 
Berrlman ("Barry”) Seal arrived on the 



scene, establishing n base of operations 
at Mena Airport. Mr, Seal’s record is 
well-known to law-enforcement officials; 
he often claimed to have made more than 
$50 million from his Illegal activities. 

Working out of a hangar at Rich Moun- 
tain Aviation, one of Ihe local businesses 
that w.-u turning Mena Into n center for 
nlrcrnft refurbishment. Mr, Seal Imported 
os much os 1.000 pounds of cocaine a 
month from Colombia In the early 1980s, 
according to Arkansas State Police Inves- 
tigator Russell Welch, who pursued the 
Seal case for over a decade. In 1984, Mr. 
Seal "rolled over” for the DEA, becoming 


twin-engine airplane traffic, things like 
that,” says former Interna! Revenue Ser- 
vice Investigator William Duncan, who 
began Investigating Mena In 1383. Resi- 
dents of the countryside around Nella con- 
firm reports of planes dropping loads In 
the mid-1980s. “But people don’t talk 
much about that around here,” said one 
local restdenl, "If you do, you might wake 
up one morning to find a bunch of your 
cattle dead,” 

Mr. Duncan and Mr. Welch, the 
Arkansas State Police investigator, 
pressed forward with their probes of Mr. 
Seal and Rich Mountain Aviation. They 


While a Whitewater connection is purely speculative, 
it's clear that at Mena Airport unusual things took place. 
Mena’s “complex of events ” is the stuff of spy novels . 


one of Its most Important Informants. He 
flew to Colombia and gathered Informa- 
tion about leaders of the Medellin cartel. 
Including drug kingpin Carlos Lehder, 
and testified In other high-profile cases. 

He also flew at least two drug runs to 
Nicaragua, one of them entangling him In 
the Reagan administration’s antl-Sandin- 
isla effort. On a mission In mld-1984, Mr. 
Seal later testified, the CIA tigged a hid- 
den camera In his C-123K cargo plane, en- 
abling him to snap photos of several men 
loading cocaine aboard the aircraft- one 
of them allegedly an aide to Sandlnista In- 
terior Minister Tomas Borge. 

Back at Mena, meanwhile, Mr, Seal’s 
business associate, Fred Hampton, the 
owner of Rich Mountain Aviation, pur- 
chased a land tract near the tiny back- 
woods community of Nella, 10 miles north 
of Mena, and cut a runway Into It. Local 
law enforcement officials believe the land 
was purchased at the behest of Mr. Seal. 

By 1984, reports were filtering In about 
odd military-type activity around Nella. 
"We had numerous reports of automatic 
weapons fire, men of Latin American ap- 
pearance In the area, people' In camou- 
flage moving quietly through streams 
with automatic weapons, aircraft drops. 


suspected that Mr. Seal, despite his deal 
with the DEA, was continuing to Import 
drugs and launder the money through lo- 
cal businesses and banks, possibly using 
the Nella airstrip as a base for drug drops. 

In 1986, Mr. Seal’s wild ride came to an 
end. Three Colombian hitmen armed with 
machine guns caught up with him as he sat 
behind the wheel of his while Cadillac in 
Baton Rouge, La„ and blasted him to his 
eternal reward. Eight months after the 
murder, Mr. Seal’s cargo plane was shot 
down over Nicaragua. Aboard was a load 
of ammunition and supplies for the Con- 
tras. One crew member, Eugene Hasen- 
fus, survived. With the crash, and the 
Irim-Contra affair surfacing, investigators 
started looking at the Nella airstrip In a 
new light. Maybe Barry Seal was not just 
flying drugs into the U.S. Maybe he also 
was flying newly trained Contras and 
weapons out. 

But If Mr. Seat’s odyssey was over, the 
long and frustrating journey for Mena in- 
vestigators was just beginning. Messrs. 
Duncan and Welch believed they had 
pieced together Information on a signifi- 
cant drug smuggling operation, perhaps 
cloaked In the guise of a covert CIA opera- 
tion, or perhaps In some way connected to 



the intelligence community. Yet repeated 
attempts to bring the Mena affair before 
grand juries In Arkansas. Gov. Bill Clinton, 
and federal authorities all failed, meeting 
a wail of obfuscation and obstruction. 

The "CBS Evening News." one of the 
few national news organisations to take a 
serious and discriminating look nt Mena, 
recently broadcast an Interview with 
Charles Black, a prosecutor for Folk 
County, in which Mena Is located. He said 
he met with Gov. Clinton in 1988 and re- 
quested assistance for a state probe. "His 
resportse," Mr. Black said, “was that he 
would get a man on it and get back to me. 
1 never heard back." 

Asked for comment, White House 
spokesman John Podesta cites a state gov- 
ernment offer of $25,000 to aid a Polk 
County Investigation, an olfer long under 
dispute In Arkansas. "The governor took 
whatever action was available to him," 
Mr. Podesta says. "The falling in this case 
rests with the Republican Justice Depart- 
ment," 

Following pressure from thervArkansas 
Rep, Bill Alexander, the General Account- 
ing Office opened a probe in April 1988; 
within four months, the Inquiry was shut 
down by the National Security Council. 
Several congressional subcommittee in- 
quiries sputtered into dead ends. 

In 1991, Arkansas Attorney General 
Winston Bryant presented Iran-Contra 
prosecutor Lawrence Walsh with what 
Mr. Bryant called “credible evidence of 
gunrunning, illegal drug smuggling, 
money laundering and the governmental 
coverup and possibly a criminal conspir- 
acy In connection with the Mena Air- 
port,” Seventeen months later, Mh 
Walsh sent Mr. Bryant a letter saying 
without explanation that he had closed 
his Investigation. 

Mr, Duncan resigned from the IRS af- 
ter repeatedly clashing with his superiors 
over the Mena affair. Mr. Welch was 
given a number of strong hints that he 
should devote his energies elsewhere. ”1 
believe there was a coverup of events at 
Mena," Mr. Duncan says, "We don't re- 
ally know what happened out there. 
Every time I tried to follow the money 

Irni! U#* * * 


But what, if anything, does Mena have 
to do with Whitewater? A small conspir- 
acy-theory industry has grown up around 
the mysteries of Mena. In a new book, 
•'Compromised: Clinton. Bush and the 
CIA," authors Terry Reed and John Cum- 
mings claim that Gov. Clinton and his in- 
ner circle, along with U. Col. Oliver North 
and the CIA, were involved in a conspiracy 
that included training Contras at Nella, . 
sending weapons to Central Americi, 
smuggling cocaine into the U.S. and laun- 
dering funds through Arkansas banks. Lit- 
tle hard evidence is presented to back up 
these startling claims, yet the book should 
not be dismissed out of hand. Certainly, 
something was going on at Mena and 
Nella. And the authors raise the interest- 
ing question: What happened to all of 
Barry Seal's cocaine money? 

Intriguing Coincidence 

In an intriguing coincidence, while run- 
ning Barry Seal as an agent, the DEA also 
was conducting an investigation into the 
drug-related activities of Little Rock bond 
dealer and Clinton supporter Dan Lasater. 
In October 1986, as Mr. Lasater was being 
charged in Little Rock with conspiracy to 
distribute cocaine, the DEA confirmed 
that he was the target of a drug-trafficking 
probe involving his private plane and a 
small airfield at the New Mexico ski resort 
Angel Fire, which Mr. Lasater purchased 
in 1984. 

Mr. Lasater's bopd shop also executed 
a mysterious series of trades on behalf of 
Kentucky resident Dennis Patrick, who 
says he had no knowledge of the millions 
in trades reflected in his account in 1985 
and 1986. It's unclear what these trades 
represent, since Mr. Patrick’s confirma- 
tion slips show only paper transactions, 
with little money in or out Yet it's inter- 
esting to note that the hectic activity in 
the account came to an abrupt halt in Feb- 
ruary 1986— the month Barry Seal was 
killed. 

Of course, it all may be just a coinci- 
dence. and perhaps Gov. Clinton did not 
even know that drug smugglers, the CIA 
and the DEA were operating in his back- 
yard. Perhaps he did not want to know. Af- 
ter all, as we have come to learn. Bill Clin- 
ton’s Arkansas was a very strange place. 


Mr. Morrison is a Wall Street Journal ed- 
itorial page icriter. 



APPROVED FOR 
RELEASE C DATE: 
23-Sep-2009 


OCA 96-1151 


!.i> 


i 



INSPECTOR GENERAL 


C - 03 \% l J 



13 March 1996 


MEMORANDUM FOR: 
FROM: 

SUBJECT : 


Inspector General 

Director of Central Intelligence 

Allegations of Money Laundering and 
Other Activities in Mena, Arkansas 


1 . Chairman Leach of the House Banking Committee wrote 
and requested that the Inspector General investigate various 
allegations of money laundering in connection with 
activities in and around Mena, Arkansas. I have told the 
Chairman your office would investigate the issues raised in 
his letter. I request that you issue a report, including an 
unclassified version, if possible, which will address the 
following core issues: 

• What, if any, information does CIA have that 

indicates it had any contact with the individuals 
or businesses identified in the Chairman's letter 
of 5 February, or of money laundering, narcotics 
trafficking, arms smuggling, or other illegal 
activities (including illicit c.ircraft 
modifications) based at, or operating through, the 
airport at Mena, Arkansas, from 1980 to the 
present; 


• What was the extent of CIA's contact or 
relationship with Adler Berriman "Barry* Seal; 

• Whether CIA tried to directly or indirectly 
influence or request that the Department of Justice 
or other Federal agencies alter any investigations 
or prosecutions of money- laundering in or around 
Mena, Arkansas; 


• Whether CIA, or anyone acting on CIA's behalf, has 
carried out any activities in Mena, Arkansas, or the 
area north of Mena, known as Nella, Arkansas, and if 
so, did CIA brief, or otherwise communicate this 
information to Arkansas state officials in the 
1980s. 


2. The Chairman has also requested that all related 
documents be made available to appropriate Committee staff. 

I will wait until your inquiry is completed before acting on 
this request since traditionally classified documents 







SUBJECT: Allegations of Money Laundering and 

Other Activities in Mena, Arkansas 


involving operational matters are provided only to our 
oversight committees, and I have shared this view with 
Chairman Leach. 


4 . Once you have an opportunity to review the Banking 
Committee request, please provide me with an estimate of 
when you will be able to produce a report, and I will 
provide that estimate to Chairman Leach. 



John Deutch 


QUID) 

mu 3) 
mmi 


TOP^SCRET 

APPROVED FOR 
RELEASE fl DATE: 

23-Sep-2009^ 


OGC-96-50787 
29 March 1996 


MEMORANDUM FOR: Office of Inspector General 


ATTENTION: 


FROM: 

paralegal "Special 1st 
Litigation Division, OGC 


SUBJECT: 
REFERENCE : 


Transmittal of Documents 


(/) 


Memorandum From IG dtd 26 Feb 1996, 

Subj : Request for Documents Relating to\ 

Possible Agency Knowledge of Certain 
Activities in or Around Mena, Arkansas (I 


i 


1. This responds to the IG's request for documents in 
connection with the IG's inqiry of possible Agency knowledge 
of certain activities in or around Mena, Arkansas. 
Transmitted herewith are copies of the following listed 
records . 



to: 


:ret 






2. Please note that the review of the U.S. v. Noriega 
pleadings file, 11 volumes, has been completed. These 
pleading files were searched information on Barry Seal. 
Please note that these pleading files also contain 
information on I and 


If the OIG would like the information on these rnaxvxuu^xs, 
please contact the undersigned. {&) 


3 . This completes OGC record searches in connection 
with Mena, Arkansas. If you have any questions, please 
contact me on x76108. { 7 ) 


Attachments 









' SEBtttH — 


(D)(3) 

Qura 

APPROVED FOR 
RELEASED DATE: 
j23-Sep-2009 


MEMORANDUM FOR THE RECORD 

SUBJECT: Interview of Dewey Clarridge by House Judiciary Committee 
Staff 


OCA 88-1404 
3 May 1988 


1. On 22 April 1908, Jim Dahl and Haydon Gregory, staffers 
from the Subcommittee on Crime of the House Judiciary Committee, 
interviewed Dewey Clarridge regarding his knowledge of drug 
trafficking by the Nicaraguan government or the Contras. The 
focus of the briefing concerned a Drug Enforcement Agency (DEA) 
operation in June 1984 to photograph Nicaraguan government 
officials in Nicaragua loading cocaine onto a plane bound for the 
United States. The plane was piloted by a DEA informant, Barry 
Seal, and the hidden cameras were installed by the Agency on the 
plane in Miami. 

i _ ■ . . 

2. During the briefing Dewey recalled being asked by DEA to 
install a hidden camera on the plane piloted by Barry Seal. Dewey 
stated that it was his understanding that the photographs would be 
given to DEA to use in a possible trial. The Agency's role in theP 
entire operation was merely to support a law enforcement under- 
taking. Dewey recalls that one of the individuals photographed 
loading cocaine onto the plane was Federico Vaughan, an aide to 
the Nicaraguan Interior Minister. 



4. Dewey recalls that not long after obtaining the 
photographs of Nicaraguan government officials loading cocaine 
into the plane, a briefing was arranged by DEA in North's office. 
Dewey was present at the briefing, but cannot recall why he was 
present for the briefing; he did not know whether the DEA 
operation was over at the time of the briefing. 




6. Mr. Gregory noted that a few weeks after the briefing in 
North's office, the pictures were leaked to the Washington Times . 
Dewey stated that he did not know whether North or anyone on his 
staff leaked the pictures tb the newspaper. Dewey' did remember 
that Paula Hawkins used the pictures in her re-election effort. 

7. Mr. Gregory also asked Dewey a series of questions dealing 
with allegations of Contra involvement with drug smuggling. Dewey 
responded that these allegations arose after he left the Latin 0 
American Division, and therefore he was not in a position to 
comment on the allegations. 



L eglsiacrou uxvxsxbn 
Office of Congressional Affairs 


Distribution: 

Original - OCA/Legislatiott Subject File 
1 - f ^Signer 
1 - OCAJRegistry 
1 - D/ OCA 

OC A/Leg/ “[ (3 May 1988) 


t 


APPROVED FOR 
RELEASED DATE: 
|03-Sep-2008 


(b)(2) 

(b)(3) 

(b)(6) 


STATEMENT FOR THE RECORD 
SUBJECT: CIA DRUG POLICY 


This signed statement serves to acknowledge that I have been informed that 
the CIA cannot condone involvement by an employee or assignee with illegal drugs 
I understand that if an employee or assignee is determined to be involved in the 
illegal possession, use, transport, transfer, sale, cultivation, processing or 
manufacturing of hallucinogens, narcotics, drugs or other materials and chemical 
compounds identified and listed in the Controlled Substance Act of 1970, as 
amended, appropriate administrative action will be taken. Such action may 
result in suspension and, in certain cases, including but not limited to the 
above- described involvement with "hard" drugs, dismissal from the CIA. 

I have been informed, moreover, that the Agency is obligated to report to 
the Department of Justice, for possible prosecution, certain drug-related in- 
fractions by an employee. 

I have also been informed that further employee security processing and 
procedures may be required if incidents of illegal drug involvement later come 
to the attention of the CIA. 

I, further, have been informed that any such illegal drug involvement 
during any later period of nonemployment or disassociation with the CIA may 
have a significant effect at the time of any consideration of my re-employment 
or association with the Agency. 


WITNESS' PRINTED NAME 

| 1 

1 

j . _ _ ■ 

PRINTED NAME 

J OHM Hr. Pea-zul/ S 

(witness' SIGNATURE ... 


SIGNATURE _ . 



L 


1 \ - 


i • 

j 


PRIVACY ACT NOTIFICATION: The Privacy Act, Public Law 93-579, requires 

that Federal agencies inform individuals when they are asked to provide their 
Social Security Number (SSN) whether the disclosure is mandatory or voluntary, 
by what authority such number is solicited, and what uses will be made of the 
SSN. Disclosure by you of your SSN is voluntary. The authority for this 
solicitation is Executive Order 9397. The SSN is used as a positive identifier. 


iOtiTt purvioua 
T f ON 5 


( 4 * 26 ) 






DATE: NOV 2007 





States ^Btstrtci Court 


UNITED STATES OF AMERICA 


DISTRICT OF 


DISTRICT o» comwcTicm 


V. SUBPOENA 

ARIF DURRANI 

CASE NUMBER: CiUil * 3 - 36-59 (TFGD) 


TYPE OF CASS 

□ CIVIL 

Ef CRIMINAL 

SUBPOENA FOR 

"t3 PERSON □ DOCUMENT(S) or OBJECT(S) 

TO: 



George Cave 



14112 Burning 

Bush La. 



V.hea.tci . , 1-iD 


YOU ARE HEREBY COMMANDED to appear in the United States District Court at the place, date, and time 
specified below to testily in the above case. 


PLACE 

COURTROOM 

915 LniaydLte Blvd. 

Fturth floor 

Bixacuport, CT 

Courtroom r.i Judge Dai; 


DATE AND TIME 


July 29 , 1991 


10:00 a.nt. 


YOU ARE ALSO COMMANDED to bring with you the following documents) or objects):* 


□ Sm additional Information on worse 


This subpoena shall remain in effect until you are granted leave to depart by the court or by an officer acting on 
behalf of the court. 


^:&H**amWATg-OR CLEBK OF COURT 

KEVIN r. BOWE 

->■ ■>. \ , 1 

DATE 

6/25/91 


MWIH— 

This subpoena Is issued upon application ‘of that - 

□ Plaintiff -E3 Defendant CT LL&b^throay- 

’ : ' v. a ‘V-- 

OUESTJONS MAY BE ADDRESSED TO; 

AliTlifiin K. Bless, Esq. 

JACOBS, GRUDBLiiG, BELT S. COW, P.C. 
r dSu Grange St. 

New Haver., CT 06511 , .. 

ATTORNEY'S NAME. ADDRESS AND (WNE NUMBER t - JAUU 


*!f not applicable, enter "none." 


To be used in iicu of AO£9 


FORM OBD-22* 
JAN WS 











Chapter 23 


“Ops.” 110 Each project received a code name in the 
sequence TH-1, TH-2, and so 'on. ..North told the 
Committees '-“that 7 the" projects " had -not -progressed 
beyond the planning stage and, therefore," "he did not 
seek ; a Presidential . Finding, authorizing any of these 

oP^Ho^A^aV rou -iSa*" s;" nn:: ac ti 

■""North testified that he discussed the Enterprise’s 
role in these projects with.Poindexter, but Poindexter 
said he did not recall such a conversation. 1 ] 2 _The 
only evidence that the President knew of these sensi- 
tive projects appears in a September '15, ‘1986, memo- 
randum from North to Poindexter. North asked Poin- 
dexter to Jarief the President on certain initiatives, 
including one of the proposed joint U.S.-Israeli covert 
operations. An attachment to the memorandum which 
North 'suggested .should be briefed to .Casey stated 
that' “covert' funds could be made available” for this 
operation, ' but the source of the funds was not dis- 
closed. 113 Poindexter noted on the memorandum that 
he approved North’s .recommendation to brief the 
President on these operations and that it was “done." 
Poindexter testified that he did not know or tell the 
President that the jco vert funds referred to by North 

were coming from the Enterprise. 11 *; ” .. 

‘ *■ ’ * ; -* " • " **’ 

The Lebanese Operation ;- 

Another initiative undertaken by North involved 
the use of DEA and Israeli contacts to fond and equip 
a force in -Lebanon. North described .the . proposed 
force as part -of a “long term operation” to give the 
United States some future military leverage on the 
ground in Lebanon. 11 . 5 . . ; 

-North sent Poindexter a PROF note in June 1986 
about Secord’s progress in working with a Lebanese 
group on a hostage rescue operation: “After the CIA 
took so long to organize and then batched the Kil- 
burn effort, Copp [Secard] undertook to see what 
could be done through one of the earlier DEA devel- 
oped [Lebanese] contacts. Dick [Secord] has been 
working with Nir on this, and now has three people 
in Beirut and a 40-man .• .' force working for us. 
Dick rates the possibility of success on thi* operation 
as 30% but that’s better than nothing.” 118 In dosed 
testimony before the Co mmi ttees, North indicated 
that the project was never carried out even though 
“we spent . a fairly significant amount of money 
on . \ [this additional] DEA operation.” 11T 

Peter Kilbum, a 60-year-old librarian at the Ameri- 
can University in Beirut, was kidnapped on Novem- 
ber 30, 1984. U.S. sources believed that, unlike the 
other hostages, Kilbum was being held by a criminal 
faction in Lebanon. At one point in the fall of 1985, 
North had contemplated allocating Enterprise funds 
to support an operation intended to free him. 11 * The 
plan was terminated when Kilbum was murdered al- 
legedly by agents of Mu’ammar Qaddafi shortly after 
the American air raid on Libya in April 1986. 


Other Countries .. .. . ' ’ 

^Other- projects - contemplated by --North /involved 
aiding ^anticommunist- resistance "groups around J the 
world.-"North'told the Committees that tieand^irec- ' 
tor. Casey “had several 'discussions about making what 
he. "called off-the-shelf, "self-generating activities~ : that 
would be able to do a number of these things.' He" had 
mentioned specifically an ongoing operation.” In" addi- 
tion, North testL5ed, .'“I concluded within my" -own 
tnind the . fact. , that it might -require [other ongoing] 

. operations [as -well]." l . ls . In testimony before the 
Committees,' North explained .his motivation for assist- 
ing resistance groups. “We cannot be seen Tt .' in. "the 
world today as walking away and leaving failure in 
our wake. rWe must be able to demonstrate, not only 
in (-Nicaragua, .but elsewhere - where freedom 
fighters have been told, we will support you, we must 
be able- to continue to do so.” 120 •: ■••tV-tv -- «« - » 

In April 1986, North asked Secord and his partner 
Albert Hakim to use 3100,000 from the Lake Re- 
sources -"Swiss accounts to ’ purchase • ‘conventional 
radio phone equipment for donation' "to a political 
party in a .foreign country. On April 29, two repre- 
sentatives of- a U.S. manufacturer met in Miami with 
Secord "and one of Secord’s associates', and the pur- 
chasing agent for the political party. At the meeting, 
the purchasing agent agreed to buy 3100,000 of the 
radio equipment, and Secord— upon North’s request — 
arranged for the Enterprise to wire this amount to the 
manufacturer." _ .. .. J4 .. ~ 

The Erria 

Another of North’s projects involved the purchase 
by the Enterprise of the M/V Erria , a small coastal 
freighter of Danish registry used to transport goods 
between Europe and the Middle East. .The Erria, built 
in 1973, was small, only. 163 -feet long, and weighed 
710. tons. 121 , Before its purchase,: the Erria. .was owned 
by its captain. Ante Herup. 122 .— . - . ti.: : ■•:. - .c; 

In 1984 and 1985, the Erria was used to run weap- 
ons .to the Persian Gulf and then to Nigeria and 
Central America. .Because of its Danish registry, the 
Erria , was able to escape the scrutiny of customs 
officials. 1 1 3 * ‘‘When we ended trp needing a ship to 
perform a certain task.” recalled North, “there was 
nowhere to get one on short notice, and so this orga- 
nization [the Enterprise] produced it practically over- 
night.” Poindexter testified that Secord offered the 
ship because the Department of Defense could not 
provide a ship suitable for the covert operation. 123 
According to North, Casey said “we can’t find one 
anywhere else, get a ship. It didn’t cost the taxpayers 
of the United States a cent” 12 * The money came 
from the Iran arms sales and other Enterprise funds. 

The Erria first came to the attention of the Enter- 
prise in April 1985, when it carried arms purchased 
through Secord to the Contras. En route to Central 


APPROVED FOR RELEASE 
DATE: NOV 2007 


Chapter 23 


America, the Erria came under surveillance by an 
unidentified “fishing boat” which Captain Herup as- 
sumed was Cuban . 125 Herup took evasive action and 
brought the cargo successfully to a Central American 
country. 12 * Hemp’s actions impressed Second’s asso- 
ciate, Thomas, Clines, and. when North needed a ship 
in April 1986, for covert operations, Clines suggested 
to Hakim that the Enterprise purchase the Erria from 
Hemp, and keep him as Captain. 

- Hakim bought the ship for 5312,000 through 
Dolmy Business, Inc., one of the Panamanian compa- 
nies owned by the Enterprise, on April 28, 1986. 127 
Hemp was asked to r emain as captain for at least six 
months, with Danish agent Tom Parlow of SA Char- 
tering ■* continuing as the ship’s agent Hakim and 
Clines told Hemp that -they were working for the 
CIA and that at some future date they might ask him 
to transport, technical equipment for covert oper- 
ations. They promised that when the project was fin- 
ished, the ship would be returned to Hemp at no cost 


The Proposed Charter to the CIA for a _ 
Covert Operation ; - 


J-.The first mission North contemplated for the Erria 
was for an extended covert operation. On April 28, 
1986, Secord sent a KL-43 message to North propos- 
ing that the CIA charter the vessel for that purpose: 
Abe. [Hakim] still in 'Copenhagen with our 
lawyer finalizing purchase of ship. Deal has been 
made after three days of negotiation. The Danish cap- 
tain is up and eager for the mission — he now works 
for us. We are asking ... [of the CIA] for firm fixed 
price contract of SO million for six months. He will 
probably balk at this price . . .” 127 * - 

- As Secord predicted, the Agency felt_the rate was 
excessive (several times the prevailing rate for similar 
assets), and it balked at chartering the ship. In addi- 
tion, .the CIA' informed North that it was not interest- 
ed on tec hnical grounds and that it did not feel that 
security. could be maintained because of the ship’s 
previous use by North’s associates to ferry arms to 
Central America. The Agency indicated that Tom 
Clines’-. involvement was a negative factor of major 
proportions. — ■ 

7 :. North persisted in his efforts to have the CIA lease 
. the ship.: He then enlisted Poindexter's help. In a May 
14. memorandum, -Vincent M. Cannistraro of the SC 
staff urged. Poindexter’ to take the : matter up with 
CaseytinSiJ t-..?..' iw .-&■ -. 


* * * — " --jj. p - 

.. Status of OUie’s Ship. Ollie his^ offered the use of T 
Sat . 2 Da«i&i*vesid for [a covert operation]. He^first _ V 
offered’ OA a six month lease." CIA told mejthat~ ni 
they'thought’ it was* too expensive, and the’cost 
T^and tmeinvoivedin refitting the "vessel for [the] ... 
miss ion . m a d e the alternative option . . . more 
. attractive. Ollie then offered to [perform the mis- 
• ; _sion] using his own resources. [C/NE] has told 


me that because of the alleged involvement of 

one Tom Clines (who was involved with Wilson . 

and Terpil), CIA will have nothing to do with 

the ship . 129 

In the end, Casey supported Clair George's deci- 
sion that the ship was not suitable for Agency use. 

The Odyssey of the Erria 

On May 9, 1986, the Erria commenced its oper- 
ations under its new owners, the Enterprise. The ship 
was to travel to pick up technical equipment , for a 
covert operation. 

‘ On May 16 Herup was ordered to abort the mission 
and return to Larnaca, Cyprus. The new plan for the 
ship was to pick up any American hostages released 
as a result of the DEA initiat ive. En route to Lar- 
naca, Herup received instructions to take up a posi- 
tion off the coast of Lebanon and to await further 
directions. 130 . ... . ... 

As described earlier in this Chapter, the DEA hos- 
tage ransom plan faded. Accordingly, after a 48-hour 
wait, Hakim ordered the ship to sail "on to Larnaca. 
On June 5, Herup received instructions to head for 
Gibraltar, but at the last moment the ship* was divert- 
ed to Cagliari, Sardinia. From there, he was told to 
take the ship to Setubal, Portugal, to await an arms 
cargo from Defex. The cargo at Setubal was not 
ready for loading, and Herup was instructed to return 
to Copenhagen, where he arrived on July 4 . 131 
: The Erria then was ordered to Szczecin, Poland, 
where it arrived on July 10. The cargo it picked up 
was mar ked “machine parts,” but actually consisted of 
158 tons of Communist-bloc weapons, including AK- 
47 assault rifles, hand grenades, mortars, and a variety 
of ammunition . 132 The shipment was consigned to 
Energy Resources International, an Enterprise compa- 
ny. " ' • 

- The Erria 1 s next stop was Setubal; Portugal, where 
on July 19, it loaded an additional 222 tons of arms 
from Defex Portugal in the presence of Pariow and 
dines . 133 Herup was told to set his course for a 
Central American port According to Hakim, the total 
cargo, which he called the “stranded shipment,” cost 
51.7 million ; 134 Secord placed the cost, at about 52.4 
million. 13 ? En route to Central- America, Pariow 
called Herup and told him to stop the ship:. Congress 
was in the process of repealing the Boland Amend- 
ment The vessel sat in the water for 4 days. Captain 
Herup then was ordered to return to Portugal, : where 
he" was met by Clines . 138 ..._ ??? 

' j x The Enterprise decided to find a buyer, for the 380- 
ton cargo of arms now on board the Erria. Defex sold 
tV arms to an intermediary for 51.2 million. The 
intermediary,* in turn, sold the cargo for 52,156,000 
(including transportation ), 137 to the CIA, which did 
not want to deal with the Enterprise because of 
Clines’ involvement The arms were transferred from 


368 


Chapter 23 


the Erria to another ship on September 20 for deliv- 
ery to the CIA. 138 

Hakim and Secord continued their efforts. Herup 
was ordered to take the now-empty Erria to Haifa, 
Israel, where it was to receive a new shipment ‘of 
arms. So as not to run afoul of the Arab boycott, the 
name of the ship was altered to read, hRia," and false 
entries were placed in the Captain’s log. On October 
13, at Haifa, Herup loaded a crate containing eight 
tons of Eastern Bloc arms that Nir had promised for 
the Contras. The captain also had been told he was to 
pick up pharmaceuticals for Iran. No pharmaceuticals 
were loaded. ... 3 .. .’ " ‘*'. 7 ''.' • 7 . - 3 - 

Herup was then ordered to go to Fujairah in the 
Gulf of Oman. Tlie Iranians had promised North two 
Soviet T-72 tanks, but after the Erria waited 6 weeks 
in the Gulf, the plan failed to materialize. On Decem- 
ber 9, Herup was ordered to open the Israeli crate. 
He found only 600 well-used AK-47 assault rifles and 
15 cases of ammunition— valued at approximately 
5100,000 — a cargo not worth transporting to Central 
America. 1311 


After the revelations of the Iran-Contra covert op- 
erations in November 1986, Clines or Hakim ordered 
the Erria on December 14 to return to .Eilat, Israel, 
where the crate of weapons that had been received in 
Haifa were unloaded- 

- - The Erria returned to Denmark later in December. 
Its missions on behalf of the Enterprise were at an 
end. -I:—*— ~ » • * 

Conclusion . .. tr 

The Erria was in a sense a metaphor for the other 
operations of the Enterprise — ventures ; that began 
with ambitious expectations but accomplished noth- 
ing. -But the fate of these ventures' cannot obscure the 
danger of privatization of covert operations" or the 
fact that the participants in the Enterprise had auda- 
cious plans for covert operations. Had the architects 
of the other , operations been emboldened by success, 
and not frustrated by failure, the Committees can only 
conjecture, with apprehension, what other uncon- 
trolled covert activities on behalf of the United States 
lay in store. - y : «v a/v :: 



369 


77-026 o 


o7 


13 



Chapter 23 


126. The commercial Bill of Lading shows the destination 
as a Central American port; however, the true destination 
of the cargo was a different Central American port. The 
ship arrived at that port on June 2, 1985. ER0001-02. 

127. Dolmy Business, Inc., was organized as a corpora- 
tion under the laws of Panama, on September 1 1, 1985. 
ER03-09; ER10-I2. See also: the Memorandum of Agree- 
ment and Bill of Sale covering the Erria. ER13-17; ER1S- 
19. 

127a. OLN Ex--2S6. 

128. C9605. Items for discussion at DCI meeting with 
Poindexter on 5/15/86. 

129. N43472 (Memo from Cannistraro to Poindexter 
“Agenda for weekly meeting with DCI,” 5/14/86.) 

130. See summary log of the Erria, at ERC021; Erria log 
book, at ER0023-30; and ship’s position May 23-29, as re- 
flected on page 14 of the Erria log book, at ER0031. 

131. At this point, Albert Hakim and Dolmy Corporation 
owed SA Chartering 532,000 for fuel and wages, and it was 
for the purpose of collecting this debt that Tom Parlow 
directed Captain Herup to return to Copenhagen. Parlow 
sent a telex to CSF, stating falsely that SA Chartering had 
the vessel impounded for non-payment of account. CSF 


then promptly wired money to SA Chartering which was 
drawn against Dolmy’s Credit Suisse account. 

132. Herup, Int., 4/29/87 at 68; Staff memo on Coastal 
Freighter Erria, 3/4/87, at 5; “National Syrian tied to 
North." B. Sun, 4/20/87, at 1A, 9A. 

133. Staff memo on Coastal Freighter Erria, 3/4/87, at 5. 

134. See Chapter 22. 

135. SC4104, Secord letter to Liman and Nields, “Arms 
Sales Profit Analysis.” at 2. 

136. Herup Int., 4/29/87, at 6-7. 

137. Staff memo on Hakim/Secord ownership of Erria 
arms cargo, 4/30/87, at 2; C4S03-C4807, H87. The CIA did 
not get the whole cargo for that price. Some of the muni- 
tions were diverted by the intermediary, for use by North 
for other covert activities. ' 

138. The transfer of the Erria’s cargo took place in Cher- 
bourg, France. Five of the ship’s containers were destined 
for one U.S. port, and 22 containers were destined for 
another U.S. port. See loading diagram at ER34. The rele- 
vant shipping documents, including cargo declaration, mani- 
fest, identification of crew, etc. at ER35-42, ER43-4. 

139. ER32. See also Herup Int. 4/29/87, at 10. 


372 









Chapter 1.4 , jV 

“Taken to the Cleaners”: — 

The Iran Initiative Continues* 


The United States had taken a firm position in 
Tehran. Although offered two hostages, McFarlane 
had refused to deliver the remaining HAWK parts 
unless all the hostages were released first But this 
was to be the last show of toughness by the United 
States: just 2 months later, the United States delivered 
the same HAWK parts after obtaining the release of 
only one hostage. 

The Iran initiative continued until public reaction 
following its exposure in November 1986 forced its 
cancellation. rJBcfore then, some of the players had 
changed: a new channel to Iran (the "Second Chan- 
nel”) 1 with a new Iranian emissary was found; NIr 
was cut out of the negotiations; and Secord and 
Hakim - took, his place. More missiles were sent to 
Iran, where they went to the radical Revolutionary 
Guard. But fundamental problems remained, and the 
Second Channel turned out to represent the same 
Iranian leaders as did the First Channel. In the end, 
the United States secured the release of another hos- 
tage but three more were seized, at least one allegedly 
at the instigation of one of the Iranians with whom 
the U-S. negotiators had dealt earlier. Despite this, 
however, the U.S. negotiators agreed not only to se- 
quential release of the hostages but also to seeking the 
freedom -of the • convicted Da'wa terrorists from 
prison in Kuwait. 

The Bartering Continues *_ 

The deadlock in Tehran did not end Manucher Ghor- 
banifar’s role as an intermediary. A strange interde- 
pendence had developed among the parties: Iran still 
wanted the remaining HAWK parts and other high 
technology weapons from the United States; the 
United States wanted the hostages; Israel wanted 
direct or indirect relations with Iran; and Ghorbanifar 
wanted to be paid. 

Ghorbanifar had borrowed 515 million from Saudi 
entrepreneur Adnan Khashoggi to finance the 
HAWK parts shipment and Khashoggi, in turn, had 
borrowed the money from his financiers. But only 
one pallet of HAWK parts had been delivered in 


’“Our guys . . . they got taken to the cleaners.'' Secretary of 
State, George P. Shultz, testifying at the public hearings, 7/23/87, at 
184. 


Tehran and Iran refused to pay. Ghorbanifar could 
repay his debt to Khashoggi only by inducing the 
United States to ship the rest of the parts. 

Only days after the Tehran mission ended, Ghor- 
banifar was on the phone with an Israeli official seek- 
ing a meeting. Ghorbanifar blamed the failure of the 
Tehran trip on internal rivalries within the Iranian 
Government and complained about Robert McFar- 
lane’s refusal to accept the offer to release two hos- 
tages for .the HAWK parts. The Israeli official restat- 
ed the U.S. position: there could be no further discus- 
sions unless all. the hostages were released first* . 

Shortly afterward, CIA consultant George Cave 
was in communication with the Second Iranian, who 
also wanted the remaining HAWK parts delivered. 
The Second Iranian claimed that Iran controlled the 
hostages and that if all the parts were delivered, two 
hostages would be released. When the HAWK radars 
were delivered,. the two remaining hostages would be 
freed.® The parts^-however, would have to be deliv- 
ered first and the hostages would follow— the mirror 
image of the U.S. position. Cave rejected this proposi- 
tion — all the hostages would have to be released 
before any of the parts could be delivered. * The par- 
ties remained far apart 

Iran Discovers the Overcharge 

By the end of June, Iran had raised another reason for 
refusing to pay ■ Ghorbanifar and release the hostages: 
The Iranians iad obtained a "[mjicrofiche of factory 
prices” that “docs not compare w/ prices charged.” 8 

On June 30, “Cave spoke by telephone to the 
Second Iranian who complained that the Iranians had 
a microfiche price list showing the trae price of the 
HAWK parts and that they had been overcharged by 
600 percent 8 The same day, Ghorbanifar called CIA 
official Charles Allen and told him that while he was 
being blamed for the overcharge, his markup was 
only 41 percent 7 

The sensitivity of the Iranians to overcharging had 
been known to the Americans for some time. In a 
December 4, 1985 PROF note to John Poindexter, 
Oliver North warned that the Iranians were unlikely 
to release the hostages in a “single transaction” be- 
cause they had been “’scammed’ so many times in the 


I 


245 





■ mmsm 


1815 




RSOAV7 -■ ' 

6-flICHT. IT MUST HAVE ARRIVED. 1 

^•IB THAT THE SAME MICE LIST THAT ME CAVE US 1M WHICH THE PRICES HERE 

tit tikes higher? •*•'■• 

S-MO. THIS IS THE SASIC PRICE POR THE 340 ITEMS. IT COES HOT INCLUDE * 
TRANSPORTATION COSTS. INSURANCE. AHO A FEW OTHER THINGS. JUST THE SALE 
PRICE. 

J-HE DIDN'T CIVE US THIS. 

8 -PERHAPS IT HASN'T REACHED HIM. IUT HE SENT IT LAST THURSDAY". 

U CAVE HIM PRICES'* ( t INAUDIBLE 1 » 

’ S-YES. ; ' V 

CAVE US A PRICE LIST. IUT IT WAS NOT LAST THURSDAY. IT WAS BEFORE TH* 
WHEN HE FIGURED OUT THE PRICES. THEY WERE ABOUT SEVEN TIKES HI OCR. 

MOW. I DON'T KNOW WHETHER YOU'RE TALKING ABOUT THAT LIST OR SOMETHING ELSE. 

S— SOMETH I M3 R.W THE EE PRICES THAT HE CAVE YOU INCLUDED EVERYTHING— 
TRANSPORTATION ETC. WHAT I'M TALKING ABOUT IS THE PRICE FOR WHICH THE 
340 WERE BOUJS^ 

SO IF YOU SENT IT THURSDAY# SHOULDN'T IT HAVE ARRIVED *Y NOW? 

, . - l 

S-IT SHOULD HAVE. 


I'LL CET IN TOUCH WITH HIM TPNJCHT. ??IF I CAN, LOCATE HIM?? 
8-LOOK. MR. GOODE AND I- ARE IhT A BAD SI-tUATIOfi 'HERE. 



A 


6-BECAUSE THE HEAD OF OUR COrPANY 18 VERY TIRED OF THIS DEALi HE WANTS TO 
BREAK IT OFF. 


IjfvHE " ,T ' C S*" 5 F0f > HERE 


. umi tmm 

VtVvui hvVU ILL 






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V'8-tOC»(. s ..TT , IBIS UPTO CUR FA I END IN EUROPE. jCTV.iiS?^ 

haJ CA ' 4 T 00 ® Ive ic'TW/fiiiccs your eElf ?* - ;•>■•:. y.i~a'js5j 

V S-I DON'T HA« THE* ■” ..•-I ... . - •.wu'S^WR* 

'.•' m : ~ ... *5^an 


HJuHO HAS THEN? '.' : ''l% "• 

• ir^ V ”* B *‘ L0YEEa W. eOOBE SENT TECn. 
J^TTWCN WILL THEY OCT TO US< IINAUDMUII .**?•’ ^ 


“ • w ~* * w 


I have MOT SEENVnSS 

., ,\i: 7.. 

. -fog f, 



_ w . . rJt . v.- 

S-+C-HAS THEIt YOU.UILLHAV* TO CONSULT WITH HIM. 
If “FEW WORDS)) HE TALA WITH YOU? \ 3 y; 



.riEs^sssj^ysajjs', ss'.™ 

gjj HI’mittwtt transportation and insurance? ; v"'/ : '^y^ 

Jl *”* N0 ADMINISTRATIVE COSTS. AND FOR CLEAN INC OFF ALL THE CRATES." 

= jSTi C ooldn' T *• '-j^T 

Sg.J [ *“£ B * '*£“« ^"^WATION. IN^|i& 

Bkl^C. YOU TF 1 i him in Atixr ne ...... - 


CJ» ' ~ •« can' see ^ 

t _ E PRICES AA£ ACCEPT A8LC« 1 CAN PRESENJ YOUR PROP 

ANO^mkT^niE^OF O^p'l 31 HaTH,K5 TQ M W,TH THIS. THIS IS BETWEEN. V«^| 

a444/§S-««feu words,,* bworethathe didn'^ac* m anyth, no and to** 

/ ■■■- #£Ek 




.1317 


HERE TV* PRICES YOU CAVE HIN. ', 


[ . C , 202 


B-FII* YOU-NH4. HAVE >TO SETTLE THIS WITH IX* FRIEND AS SO«M AS POSSTStE. 
TALK UITHHIM.'' U'g COT NOTHIN® TO -00 WITH US. I JUST WANTED TO TELL YOU 
THAT THE HEAD OFOUR C CMP ANY HERE IS posr UNHAPPY. AND WANTS TO CUT IT OFF. 


WANTS TO CUT IT OFF? 


y/ 

5 HE BAYS. *IF TH 
THEY 8H0ULD OCT 


C.TVK oft CUM COHFANY.yME BAYS. "IF THEY WANT TVCM. THEY SHCM.D SVY THEtll 

IF THEY DON'T WANT THEN. TV*Y SHOULD OCT THEN SOMEPLACE ELSE. * „. 

g^WTHE SAME PRICE?. ' .(".L.'--' _ ’ . ’ r ~~ ‘ ."''ll.' 

B-THAT'S BETWEEN YOU and OUR FRIEND. . . Wr'Y'TV* IIIWIBWI 

^ (itNAUDiBUcn" *; T v ' , ■ r ••■■,■• ■■■■ ■ :■■■ '■ - '■• 

S-THIS LIST WHICH WE S£KT CONTAINS TV* PRICE EOS mini IS . U RN B CB .D- TO TV* 
HtOOLETIAN. 'THIS FRIEND OF OCRS DOUOHT IT FROM THE MIDDLEMAN. . , 

SSj.i i inaudible) » . ....... 

B^vieu..' unfortunately, in this instance, there. is no otv«r solution., ue mus 

THIVOL ABOUT TV* FUTURE..;., . . ... V , :..•. , •• •• ■ 

t^SlIPEM WORDS HISSEDD YOU WERE SUPPOSED TO CIVE US THE FACTORY 
RICES. IF YOU CIVE US THIS PRICE. DON'T YOU KNOW THAT.. .THIS 
FELLOW SAYS THAT HE IS NOT TACK I NO ON ANYTH I NO. HE IS NOT US I NO 
ANY CIWORD MISSED >>. HCW MUCH IS TV* TOTAL PRICE? 

s- THEY SAID THAT IT UAS ABOUT 43. IS THAT RIOHT? 


S-RICHT. HONE WORD) I IV* 340 AND THE TWO CVWTIS. 
SwiTHOUT THE LOAD I NO AND INSTANCE. 


S-I DON'T KNOW. I'M JUST, I MEAN. I MEAN TV* TOTAL PRICE. I MEAN Tt« 
TRANSPORTATION. AND THE TWO 0HUTI9 AND IK 240, AND THE INSURANCE. AND. 
ABOUT 49. I'M REALLY NOT INVOLVED IN THIS. IT'S ABOUT 49. RIOHT? 

gg UAS 49 TWMPUCE YOU CAVE TO HIM? f. . .. . ..... 

B-NO.NCI. ME tt»NOT WW TV* PRICE. WE OJST AUTHORIZED TV* COMPANIES TO 
BELL TV«n TOTSvERAL MIDDLEMEN. OUR FRIEND BOUOHT THEM FROM MIDDLEMEN. 


VK- C (FEW WORDS) )TV* PRICE AS IT NOW IS. DID CXm FRIEND ADD TO IT OR DID YOU 

*T( FEW WORDS))? . ' ~ - J-. i. 

r . ‘ * ; * ‘ * • •• »'• • ■ n • 

6- No ' WE WERE NOT OURSELVES INVOLVED IN THIS DEAL. THIS 18 HOW THE 
TRANSACTION UAS. UE AUTHORIZED TV* COMPANIES TO SELL TO SEVERAL MIDDLEMEN. 
THEBE MIDDLEMEZUSOLD TO DUE FRIEND. THIS PRICE THAT’ W* SENT TO OUR FRIEND 
IS IT* PRICE THAT TT*"COWAMES SOLD TO THCT1ID0LEMEN. ,- Ki . r- .O 

raflCFEU WORDSVVDID THEY SELL IT TO OUR FRIEND?" ^(V\V\V\j 


end) 


S-fO.NQ. QUVT FRIEND EO'JOHT IT FROrt THC RTTOLMN. i 

. • . * Ft V 


; OUR FRIEND IOUOKT IT FROM THE MIDDLEMEM. ' , . 


1318 


■0-Y«S. AMD THE MIBBtSMEN BOUGHT IT FROM THE CWMUK WE MERELY AUTHODf^^K 
THE BALE OF THEBE 3*0. AMO THE MICE L1*T WHICH UK DENT. IB THE F«I« £»al* 

■ WHICH WAfr, SOLO- TEL »€. HtDOLEMIN. ,,,. yJ ,.- r ' •-• -e 

glHE PROBLEM » I I'fB* WORDS!!. % DON 'T-THINK THAT.', 

6-TWAT'B UfV WC HAVE ALWAYS SAID THAT 1M THE FUTURE WE BUST BE I N DIRECTwKS 
CONTACT FDR THINGS 1,1 FE THIS. IT *6 EASIER AND CHEAPER. - " 3 

■••■-“'“"feSV : : •:••'•' K‘ %r-- /:*■ 

• •THIS TIHC. IT HAS TO BE THIS WAY. THE t*AO OF OUR COMPANY IS VERY TIPia mgl 
OF THIS. HE'S ANGRY, HE SAID. *IF THEY DON'T WANT TO DEAL. BREAK -IT OFF<!.,?^' 

^LOtHL THE PROBLEM^ IS THE* PRICE." l' HAVE HOT YET BROUGHT UP* THE BATTCT CpfSigf 
■«ftiuR PROPOSAL. TIE PRICE IS AN IMPORTANT MATTER FOR US. ABOUT THE PRICeSSSSK 
BAY THAT YOU CAVE PERMISSION TO TT« MIDDLEMEN TO SO THERE AMO HAKE .JHg a^ggg 
PURCHASE,. .. ■ .... .... .... • Jt y'jftTgBBfe] 


JftWE DIDN'T MAKE THE REOUEST OF (1FEIT WBWrtr US MADE THE BESUCCT'CFiTOU«S 
, . » ..... • •. 

-B-WELL.-WE had M DT»*R mCOUBSEI IT HAD TO BE THAT .WAY— FDR TTC - PRESENT.-*-'-?! 
IN THE FUTURirWE MIGHT IE ABLE TO ARRANGE SOMETHING. BUT MOW, THE IMPORTAnI 
THING IS. 18 THERE WING TO BE A DEAL OR NUT. ... ■■■■, 


F?THE IMPORTANT THING. -FOR US HOW IS. TMAS.TtC«£ PRICES YOU SAVE ARE SIX (TIME} 
^ OR IQ INAL PBjpa. » TF « e IH'IRWU HJOB . rrURSSN EFFECT ON THEaS 
OUTCOME. TWflW. "THIS IS ACT BOOT RELATIONS To BELL BOHETHINO FCR Stljftg 
TlnBS THE PRICE. „ R r ,, v . x . 

B-I CAN'T DO ANYTH IMS ABOUT THAT. WHAT CAN I CO ABOUT ITT , ■•. 

ESvea. LOOK. YOU ARE ,Tt« one IC RMineaWtATINC WITH, you toon 'perstm^m 
TT is YOU HE AAE TALK I HO TO. A. *•»»*»& 

. ... • 

B— BUT MY HANDS ARE TIED. THESE 3*0 HAVE BEEN SOLD TO SOMEQPfc HE BOUOHTSStB 
AMD RESOLD IT TO OuR FRIEND. . WHAT CAN t DOT IT'S BEET THAT YOU .BUY ..THESE* 
BOOBS SOpCVaERE, ELS t • THEBE UPlE'VERY DIFFICULT “vipT rj*<3Sy BSS! 


IF WE BUY TWBE..,' 


B-CAM YOU 


THEM SanEWFERE ELSE? * 






8 -M3. MO, . IT WAB A VERY DIFFICULT THIN? TO BUY ALL OF THESE 3*0, ~ BECAUSE PtSoBB 
ARE VERY SCARCE- AS YOU KNOW. BOrC OF TWD1 ACRE OUT OF STOCK. 

CStFIAC I ACCEPT T>« FACT THAT IT 'HAS DIFFICULT. BUT SIX DR SEVEN TlHES^K8g| 

HSe COStT this IB HOT RIDKT. THIS .IB HAVIHO am effect on the deal— on .Y tMjaK, 

■BOOB HILL THAT YOU WISH TO ESTABLISH- AM ADVERSE EFFECT- THEY ARE SAYIN«i§g»? 
; ’IF THEY WANT US TO DO THIS SERVICE.' WHY ARE THEY CHARGING SIX TIMES 
PRICE? (C have NO PROBLEM WITH OUR FRIEND THAT W IS ASKIHO THIS- 'UK'HMCVSra 
MO PROBLEM WITH Hill ME SEE THIS AS YOUR FAULT. ((FEW WORDS. 1 ): TELL'Hl tfjfaSgS 
. WHAT THE PRICE IB. UiATEVER IT IS. HE HAVE HO OUARREL WITH A S OR 
PERCCHT MARKUP. BUI *X> PERCENT— HO. . ., A , • ''•ySSSsSf- 


6— TUT IT IWT AL'j f CKCCKY, 


*.«’-■ .* &wu*au>U ktli ^ wt&aMsi 




1319 


204 

TIMES HIGHER. 


t-.'rOU SAID THAT YOU HAVE A M1CB0FICHE. HAVE' YOU SENT 7 , IT JO ML 


mj cjm tefoc n* mise yourself, i 'll send it .to you. i*ll bend it 

RES «mSiR0W ^PORTION MISSED, II WE AREN'T 0CTTIN0 THESE 00003 

FROM HIM. «'R*^9£TT IMG THE* FROM YOU. .... . .... ... 

E-W1 IN THIS INSTANCE. YOU ARE IVY IMS FROM CAM FRIEND, MOT FROM US. 
?7m«WT mTtHt“uaYIH THE FUTURE. BUT NOT MOW. IF THIS DEAL IS TO COME a 
IT WILL HAVE TO BE THROUGH OUR FRIEND. AMO IF J™*®***- 16 TD SE B0CC£SSF ' 
IT HAS TO BE TWIOUOH OA* FRIBffl. TTCRE IB . N0 “"“i-Vl' '‘~t 

IIJV DON'T THIUA T*«Y WILL AGREE IF T* PRICES ARE SIXlTIrSB HIOHER. 

, V you r ARE IN THE SAMI TPCMCHl YOU HAVE A PROBLEM, I HAVE %pROILEM. 

oS C^ANY li^CPY DIBPLEA8ED WITH ML OOOOC AND *d^TICUL 

with the deleoation that went to dubai, the head df our E£T*«''4 s 
displeased with the treatment TTCRE. AMD «IS ready to 
WHOLE DEAL. I HAVE MY ttW CP INION OM THE MATTER* I WCXU) LIKE TO BEE #1 
RELATIONS BETWEEN OUR CIPFAMIEB IN Ttt FUTURE. • * 

©-SPEAK UP. SO X CAN WAR YOU. ' ' ‘ ; 


S— I WANT TO EBE 0033* RELATIONS BETWEEN (XR! TWO C0W1TRIE8. BUT THIS HEAD 
OF OUR COMPANY 18 EXTRB«LY UPSET. ' • 

t FINE. IF YOU WANT UFEW WORDS! I HOU'CAM WC DO ANYTH I NO FOR YOU WITH 1>eS 
ICEST HE SENSE THAT THIS IS HO* UORDll. * 

B-IT IB MOT SIX TIMES HIGHER. TT IS rxCH LESS THAN THAT. . 

g|-Na.' BELIEVE nr THAT'S WHAT IT IB. I 'M WILLING TO .BET WITH YOU ON THAT. 

6-FINE.' BET WITH ME, BUT YOU HAVE TO BEND THIS MICROFICHE FOR US SO THAT 
UFEW WORDS! I IT. 

©I*U. SEND IT. BUT I1FEW MORDStl. •' l: 


«HJNQ PREPARED THIB wi DROP I OC? I 

uifflftfifutr ryuT HAVE NGUa I H THE NMKC 1 . » • ( (STARTS CfVERI JTltSf 

PRICES. .ON T»C BLACK MARKET THEY 

PRY PRI CES ARE SEVERAL TIMEB HIGHER. AMD IP WE BOUGHT THESE THINGS C 

UO^DN'T HAVE TO PERFORM AMY SERVICES, SO I* WILL BUY 
’ FROM TUB B^^MARKET JUST AS « HAVE UP TO HOW. 

s— ( t FEU WORDS >1 BUY FOR LESS ON TTC' BLACK* MARKET? * ■'*' 

EShO. THESE PRICES THAT. Y OU W HK - SIW SN ARE BLACK MARKET PRIMS. NOT F A!R 
^^ICCB. J WANT TO PROVE !«RS THAT IE 1* DO THIS • e * vtce ' ^ 1 
TOO WILL DIVE A POSITIVE ANSWER TO CAR UFEW WORDS*!. MY REFUTATION IS 
J^V^ RUI^D BY "“b THInTTwOH'T HAVE ANY POWER TO DO ANYTHING FOR YOU 

AMY MORE. 

S-SOfK Of THIS IS MOT IN MY HANDS. WE t*J5T UNDER 6T AND THAT. ., 

«!Lue are willing to buy this, but roR a realistic price, not f<* several 

“ E ' a • - • — — ■" " PRICE. 


MES HIGHER. WE EXPECT YOU TO * 



T 


TVC rmet... THAT'S RIGHT. Ilff IH THIS DEAL. honey is not Ztej 
TU 0 °ciS‘J«Sl NC m u *' -thins, is tm relations bctwSP- 

ri c-'ii m> - - '"v «•-■*■•?••• r?‘- •: ' V 

FS^iHFEVI msi I .TOO. INCREASE ITT.v.,-. ; .i. . 

*-WU NAVE TALA** WITH OUR FRIEND ABOUT THIs’ WAT DIP HE SAY? - 

E^'miq'/tthis iilnc rftrcc they save he.-u sentence niasean i s 5 
... „ .AToa.1 NO T« TROTH. Oft NOT? ... ft • ■ 7 ^ *« HE 

S-TNAT'B RIGHT.'' I M*&' ME 'fiOfT HIH ? the PStCE OF 1HE 040. NOT ‘iNCLiltlTkin 
^ riC ; w TAL * AS 

■-iiN/r'ESl '•MEM 010 YOU SEND IT for: hint' Thursday? . ..’ ,'V .\ c ". v . , ,'l\: .? 


8- RIGHT. 


dio 'you' send it it hail, 


•> k- 1 - r»- ; v. 

'* *;? i-L\-u -. *■ 



TWO^DAYB^ 1 ,T ** *** W . TKESE COURIER SERVICES MICH DELIVERS IN ONE -Oft 
r ^rt^H^ t el«H A HI« C * Y * 'LLCAU. HIM TONIGHT AND SEE WHAT THE FRICcffi 

• r | • .. . » , . * w . * wr , i * 

b- fine’ i don*t have the list non, r > 7' , , * ‘*-4 

I^CALL HE TttOfillOU NICKT. AND I'LL DIVE YOU AN MBUUt *-,« 

* ,|J - find our mi end tcwicht. LOOK. TRY TO KEEP THINQS OQIfM T>oe 
NE'VE DROUGHT -THIS THING TO THE FINAL STAGES AND ARE ON T 

SOLUTION. DON'T LET THE ISSUE OF PRICE DESTROY UH4T UE'VC DONE. uE DfW 
-HAUE ANY FROILEH WITH ANYONE, NOT WITH OUR F«IE^ « 

e~ AND I Art IN TVC SANE SIND FERE. SECAUSe I'VE WORKED A LOT tW THIS? 

. WW IT HAS GOTTEN WWHERE- WE HAVEN'T ATTAINED OUR^OaL ." “ 

HOST TRY TO TflRElE THE RIGHT COURSE? HERE- -MOW Twrc pcrrt n-i T ' 

TO GIVE, WE EIPECT YOU W ai TO I««5 kTt «V THA T; *um 

" bomb^rcVS ” c * £A * f:D ,T - ** "** »een '« increase, it mas seen 

^if YCWHA^toT ire pleased the price.’ send us t* real frice. .’•* 

S- WE'VE SENT it TO the FRIEND. ■- n .. .. -w .,. . ’ ...... , .. f 

S’ VERY GOOD. I'LL CONTACT HIM TONIGHT^, . , , . . . .. 

- c\- . \\ wsj ••;• ■' - ., .... . H'? - : 

S_F,MC - *« r * J5r hot LOSE THIS ■ OPPORTUNITY, BECAUSE THE TINE IS UERYJI 
•-•! - ■ ■■ • , . • „ • , 

gJ-FI»«- I'LL GET THIS PRICE TONIGHT. TVCH I WILL- BRING UP rUL* PROPOSAL? 


e-VEHY.COQD. 


£n'J oa~i V 


©RKSSS 




l> o 


>. . , « ' 2399 

C-Vty+er 

V \ ‘>L^c_ —] 


■ ^ CckK 



i4-oc>3 


^ T~ riU. rKL^r L. JL . 

-> r 

^ ilj 4 ^ f •. ' ■ p 


«>a ne-f ■■ / .. . ■* r 

So y“ W P 

haf. c^GI n ii- Iy 1 ^ ^ 1 "t_ g ~ ^ . / 

l ^ £ c c. « C™. Y 

t* , / . . 


•' «.^ . /..b„ £ r L U 5..1 Ca ‘7 

. uiivjL.tJy-« . 


UWvl". 






Chapter 22 




of 19E6, after a Hakim visit to Forways for a demon- 
stration of the laser sight, the Enterprise wired 
$50,000 as "seed money" to Forways for the manufac- 
ture of the sights. But the money was not used by 
Forways. Instead, it was immediately sent to Stanford 
Technology Trading Group. 203 

E. Forways 

Throughout 1986, Zucker experienced problems 
with one of his Forways partners, Jacob Farber. 104 
According to Hakim, in the fall of 1986, he and 
Secord made plans to purchase most of Father's inter- 
est in Forways so that they would obtain a one-third 
interest in the company. At the same time, as negotia- 
tions were ongoing with the Second Channel, Hakim 
gave a set of Forways catalogues to the Second 
Channel negotiators and told them “once things get 
going, then we will be able to sell directly from 
Forways.” 205 Hakim denied that he mentioned any 
specific product. 20 * The records of Forways show 
that from the fall of 1985 through the fall of 1986, the 
company attempted to buy — and apparently succeed- 
ed in some cases — quantities of HAWK spares parts 
in Europe. 20T 

In early October, Farber sold his shares to Zucker 
for $750,000. Shortly thereafter, Zucker wrote a 
memorandum to the officers of Forways stating that 
Secord and Hakim would probably buy the bulk of 
the Farber shares, thereby obtaining a one-third inter- 
est in Forways. Zucker also stated in the memoran- 
dum that he expected Forways to have record-break- 
ing sales and profits in the coming year — at levels 
inconceivable to the new officers of Forways. 108 

In early November, $760,000 of Enterprise money 
was apparently transferred to CSF: on November 5, 
1986, $500,000 moved out of Hakim’s fiduciary fund 
to an unknown location and, on November 10, 1986, 
$260,000 moved out of one of the operational compa- 
nies to an unknown location. The $500,000 block of 
funds had been previously earmarked for a joint 
Hakim/Secord investment. The $260,000 transfer was 
recorded in the ledgers with the notation “CSF In 
vest. — Forways.” 20 * 

Hakim denied that the Secord -Hakim purchase of 
the Farber shares was ever completed, and in March 
of 1987, Zucker wrote a note to an officer and direc- 
tor of Forways indicating that after the Iran/Contra 
story broke, he stopped the Hakim-Secord part of the 
transaction. 310 However, there is no record of the 
$760,0X3 ever being returned to the Enterprise or any 
of the fiduciary funds. 

F. The Iranian Market 

The amounts distributed to Hakim and Secord do 
not tell the full story of their ambitions, which Hakim 
made no effort to hide. Hakim saw the Iranian market 
as providing spectacular opportunities for wealth. He 
testified that he hoped to obtain for Secord and him- 


self at least a 3 percent share of the annual $15 billion 
Iranian market if commercial relations with the 
United States could be renewed. By using money 
from the Enterprise, including the reserves to 
“grease” the way with the Second Channel, and by 
proposing compromises to North and Iran, Hakim 
was not only promoting a solution to the impasse 
over the hostages, but also pursuing his and Secord’s 
own commercial interests. The ultimate goal, as 
Hakim admitted, was not the millions be actually took 
from the Enterprise during 1985 and 1986, but the $15 
billion-a-year Iranian market. 211 

The Reserves 

The Enterprise transferred $4.2 million to CSF to 
be held in three fiduciary accounts referred to as the 
"Reserves.” 212 A large part of the Reserve monies 
appear to have come from the proceeds of the Iranian 
arms sales. 

According to the CSF fiduciary agreements, Hakim 
was the owner of the Reserves; Secord testified, how- 
ever, that the Enterprise was the beneficial owner of 
the Reserves and Hakim acknowledged that the Re- 
serves were treated as the Enterprise’s money. 113 
Table 22-6, Distributions to Reserves, shows the 
amount of each Reserve, the operational company 
from which the monies were taken, and the date each 
Reserve was established. 


Table 22-6. — 'Distributions to Reserves 2 14 


Reserve 

Date 

Amount 

Source 

Reserve 1 

3/05/86 

52,000,000 

Gulf Marketing 

Reserve 2 

6/18/86 — 

2.000,000 

Hyde Park 

Reserve 3 

6/18/86 

200,000 

Hyde Park 


Based Upon CSF JuxipseL. 


Hakim testified that Reserve 2, containing 
S2,000,000, was to be used to pay money to persons 
associated with the Second Channel. According to 
Hakim, if the Second Channel initiative was success- 
ful, the money was to be invested for those persons in 
the joint Iranian-U.S. venture which was being 
planned; if the Second Channel was unsuccessful, it 
would be used as baksheesh. 218 Reserve 1, containing 
an additional $2,000,000, was to be used for any pur- 
pose, including “operational purposes.” 218 
The CSF fiduciary agreement governing Reserve 
1 — the one for covert operations — provided that 
should Hakim die, Secord would have direct control 
over it and should Secord die, North would have 
direct control. Should North die, the remaining por- 
tion of the Reserve would be divided equally among 
the estates of all three men. The instructions to CSF 
were irrrevocable without the consent of all the bene- 
ficiaries. 211 Hakim said that in setting up Reserve I, 
he simply followed the structure of the Enterprise 


350 


Chapter 22 


173. Although Secord did not provide an estimate as to 
the commissions distributed for the stranded shipment, 
Hakim did do so. Secord Letter, SC0408 1-105; Hakim Dep., 
5/23/87, at 19. The profit estimated by the Committees for 
these shipments is S300,000 higher than that estimated by 
Secord/Hakim. 

174. Secord Test., Hearings, 100-1, 5/5/87, at 53. 

175. See Table 22-4, Markup on Arms Purchased for 
Contras According to CSF Ledgers. 

176. Hakim Dep., 5/22/87, at 88. See Table 22-5, Com- 
missions on Arms Sales to the Contras. 

177. Secord Test, Hearings, 100-1, 5/7/87, at 171. 

178. See Table 22-5, Commissions on Arms Sales to the 
Contras; Hakim Dep., 5/22/87, at 88-89. Exactly whom 
Hakim was trying to confuse and what he was trying to 
accomplish is not clear. On the CSF books, payments to 
Defex SA (the fake arms account) would appear to depress 
profits that the Enterprise actually made on the arms sales 
and thus mislead an uninformed reader. 

179. Hakim Test., Hearings, 100-5, 6/5/87, at 20-21. 
Secord claimed that the cost of the weapons was about S2.4 
million. Secord letter, SC04184. Committee accountants 
could only identify S22 million in weapons costs for the 
stranded shipment in the CSF ledgers. 

180. Secord Test, Hearings, 100-1, 5/7/87, at 191; Hakim 
Dep, 5/22/87, at 156-62; Id at 161. 

181. Hakim Dep, 5/23/87, at 19-20; Hakim, 6/5/87, at 
52-56. 

182. See Table 22-4, Mark-Up on Arms Purchased For 
the Contras According to CSF Ledgers. Secord testified 
that commissions were distributed in a 40/40/20 ratio 
(Secord, Hakim, Clines) and Hakim indicated that on the 
later arms shipments the ratio was 30/30/30/10 (Secord, 
Hakim, C line s, and Scitech); Secord Test, Hearings, 100-1, 
at 53; Hakim Dep, 5/22/87, at 147-48. 

The ledgers show that the total sum of money distributed 
to Korel, Hakim, and C. Tea during February 1985 to mid- 
December 1985 equaled a 32/33/21/14 ratio among Korel, 
Hakim, C. Tea and Scitech/STTGI, which is equivalent to 
a 39/40/21 ratio when one splits the STl'GI/Scitech distri- 
bution among Korel and Hakim. While most of the relevant 
ledger entries describing the distributions simply stated 
“transfer,” the last distribution in the period con tain ed a 
notation “BaL of Act. for Phases I-13-IIL” 

On December 17, 1985, there was a simultaneous distribu- 
tion, marked in the ledgers as “Profit Distribution Phase 
IV,” to Korel, Hakim, and Clines, in a 40/40/20 ratio; in 
addition, there were four other simultaneous 1986 distribu- 
tions: May 20, June 3, June 20, and August 27, all of which 
fell in the 30/30/30/10 pattern described by Hakim. A Feb- 
ruary 7, 1986, distribution was made in basically a 50/50 
ratio between Korel and Hakim. Hakim indicated that this 
was a commission payment. 

The balance of the distributions shown in the ledgers 
from De cem ber 17, 1985, to the end of the active days of 
the Enterprise — 52. 1 million — did not fall into any pattern, 
and, except for some very minor amounts, did not include 
Clines. 

Secord told the Committees the total amount of profit the 
Enterprise made on each arms shipment and roughly the 
date of each arms transaction. Using this information, the 
Committees correlated the commission distribution to each 
arms shipment. 


183. The financial data in this Section are based upon the 
CSF ledgers and supporting bank documents. 

184. Summary of distributions to Secord, Hakim, and 
Clines, excluding commissions, H6372A-77. The Commit- 
tees traced S328.885 of this money to Hakim and 542,275 to 
Clines. Secord received S50,000 which he, in turn, loaned to 
his attorney, Tom Green. Id. 

185. See Secord Test, Hearings, 100-1, 5/8/87, at 307, 
Secord Ex. 76. 

186. See Staff Memorandum, The Tri-American Arms 
Venture, 10/5/87. 

187. Secord Test, Hearings, 100-1, 5/8/87, at 193-94, 331; 
Ex. RVS-75, Hearings, 100-1, at 594; Hakim Test, Hearings, 
100-5, 6/5/87, at 14-16. 

188. Marostica Dep, 5/20/87, at 24-26, 29-30; Royer 
Dep, 5/21/87, at 79-83. 

189. Ex. RVS-76, Hearings, 100-1, at 598; Hakim Dep, 5/ 
23/87, at 80; Secord Test, Hearings, 100-1, 5/8/87, at 331- 
36. 

190. Hakim Dep, 5/31/87, at 178-80. 

191. Marostica Dep, 5/20/87, at 13-20; Royer Dep, 5/ 
21/87, at 28-32. 

192. Secord Test, Hearings, 100-1, 5/7/87, at 193. 

193. Royer Dep, 5/21/87, at 45-53. 

194. Hakim Test, Hearing. f, 100-5, 6/5/87, at 16; Royer 
Dep, 5/21/87, at 58. 

195. Summary of CSF ledger entries showing transfers to 
STTGL H637-I. 

196. Summary of STTGI Bank Records, STG134507-09; 
Secord Test, Hearings, 5/7/87, 100-1, at 168. 

197. Scitech ledger entries, H02959-60. 

198. Secord Test, Hearings, 100-1, 5/7/87, at 166-67. 

199. Hakim Dep, 5/23/87, at 143. 

200. Hakim Test, Hearings, 100-5, 6/3/87, at 217. 

201. Scitech ledgers, H02959-60; Summary of CSF Ledg- 
ers and Bank Records, prepared by Committee staff ac- 
countants, H6372B. 

202. Hakim 6/3/87, at 38; Royer Dep, 5/25/87, at 49-50. 
The payment was wired to the bank which held the proper- 
ty on October 24, 1986. At the same time, an additional 

530.000, also drawn from the Scitech fund, was wired to the 
trust account of a law firm involved in the transaction; wire 
transfers, H1520-A, B and C. 

203. Farber Dep, 6/1/87, at 4 (Zucker bought his 25% 
interest personally). Clarke and Zink Dep, 7/6/87, at 14 
(CSF held Zucker’s 25% interest); at 29-31 (Secord’s June 
visit to Forways); at 26-28 (laser sight); at 37-40 (550,000 
wire through Forways). ' 

204. Oarke-Zink Dep, 7/6/87, at 26, 36, 54. 

205. Hakim Dep, 5/31/87, at 254. 

206. Id at 255. 

207. Forways Records, EN 0199-358. 

208. Clarke and Zink Dep, 7/6/87, at 9-10, 62; Ex. 2. 

209. Ledger entry re 5500,000, H02862; ledger entry re 

5260.000, H1084; Hakim Dep, 5/24/87, at 144-58 (5500,000 
earmarked for joint Secord/Hakim investment). H a kim 
stated that the S260.000 was for a line of credit extended to 
Forways and that the money should have been returned to 
the Enterprise. Hakim Dep, 5/23/87, at 171-74. 

210. Hakim Dep, 5/31/87, at 255-56; Clarke and Zink 
Dep, 7/6/87, at 73-76; Ex. 3. 

211. Hakim Dep, 5/23/87, at 256, 263-64. 

212. Hakim could not identify the purpose of the third 
fund which totaled S200.000. Since Hakim created it in a 


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