U.S. SENATE SELECT COMMITTEE ON INTELLIGENCE HEARING
ON THE ALLEGATIONS OF CIA TIES TO NICARAGUAN CONTRA REBELS
AND CRACK COCAINE IN AMERICAN CITIES;
U.S. SENATOR ARLEN SPECTER (R-PA),CHAIRMAN

OCTOBER 23, 1996

SPECTER: Jack Blum is the former special counsel to the Senate Foreign Relations Subcommittee on Terrorism, Narcotics and International Operations.

And that subcommittee conducted an extensive inquiry and filed an extensive report back in 1989. And we're very interested in those findings at that time. And we now turn to you.

BLUM: Mr. Chairman, I very much appreciate the invitation to appear here this morning. I find it ironic in a way that I'm here in the same room where we began hearings on the same subject in 1998 -- in January of 1988.

We began the investigation in 1987. The questions you've put this morning are questions which are extraordinarily important.

The question of reform of the intelligence community really requires that these issues be debated publicly and discussed publicly.

BLUM: And I would hope that that inquiry goes beyond the narrow questions posed in the San Jose Mercury news story.

The answer you get to the question you ask depends totally on how you frame the question. If you ask the question, did the CIA sell drugs in the Black neighborhoods of Los Angeles to finance the Contra war, the answer will be a categorical no.

The fact of the matter is we found no evidence whatsoever to suggest that there was a targeting of the African-American community. Cocaine in the mid '80s and into the early '90s was a perfect equal opportunity destroyer.

We had addiction and problems in schoolyards across America. It didn't matter what color you were, where you were from, what you national origin was.

The problem became more acute in the African-American community because the definition of a problem addict in America is an addict who runs out of money.

And if you run out of money quickly, you become involved in the drug trade. You become a visible social problem. And you get on the screen.

In fact, the stockbrokers, the entertainers, the lawyers who used cocaine around America escaped that attention, but their lives were ruined, too. Perhaps not financially.

The second issue is, did the CIA do the selling of the cocaine? And did the Contras profit?

And as far as we were able to determine no member of the staff of the CIA, that is someone on the payroll, as opposed to people they work with was in the cocaine business.

And certainly no one on the staff of the CIA as far as we could determine was actively selling the drug.

And then finally the question of, was it used to support the Contras?

I will tell you of two meetings that I had with Contra veterans, one in 1986 and one in 1989 at the beginning and the end of my investigation. And they said, our problem was we never had any money.

Our leadership stole most of it. They had houses in Miami. They had opportunities to gamble. They had girlfriends. They travelled.

And we, who were in the field, and one of the groups that I talked to had men who lost their arms and their eyes and their legs fighting the Sandinistas -- we in the field had none of the benefit.

So I submit what went on led to the profit of people in the Contra movement, not to supporting a war that we were trying to advance.

Now having said that we have to go back to what is true. And what is true is the policy makers absolutely closed their eyes to the criminal behavior of our allies and supporters in that war.

The policy makers ignored their drug dealing, their stealing, and their human rights violations. The policy makers -- and I stress policy makers -- allowed them to compensate themselves for helping us in that war by remaining silent in the face of their impropriety and by quietly undercutting law enforcement and human rights agencies that might have caused them difficulty.

We knew about the connection between the West Coast cocaine trade and Contras. There was an astonishing case called the Frogman Case. In that case -- I believe it was in that case -- the United States Attorney from San Francisco, a man by the name of Russinello (ph) returned $35,000 of cocaine proceeds voluntarily to the Contras when it had been seized as proceeds of drug trafficking.

BLUM: We found that absolutely astonishing. I know of no other situation where the Justice Department was so forthcoming in returning seized property.

SPECTER: Was that the Justice Department or the district attorney of San Francisco locally?

BLUM: This was the Justice Department, United States attorney.

SPECTER: United States attorney?

BLUM: That's correct. We had a telephone conversation with Mr. Russionello (ph) asking him to provide us documents and access to the people involved in the case. And he shouted at us. He shouted at Senator John Kerry, who chaired the committee. He accused us of being subversive for wanting to go into it.

It should be stressed that the Blandon-Meneses ring was part of a very much larger picture. And to give you an idea of how large that picture was, there was a point where the wholesale price of cocaine on the street in Los Angeles reached $2,500 a kilo.

We were talking about cocaine that was available in such quantity they could not find buyers. Twenty-five-hundred dollars a kilo, according to all the experts, is below cost.

And that is a flood of cocaine. And our friend Freeway Ricky was touching only a tiny fraction of what was coming in. We had a definite cocaine epidemic.

Now, you might ask, why did the hearings we run in 1989 and the report we released in -- the hearings we ran in '88 and the report we released in 1989 not get more attention. And the answer is, we were subject to a systematic campaign to discredit everything we did.

Every night after there was a public hearing, Justice Department people, administration people would get on the phone call the press and say the witnesses were all liars, they were talking to us to get a better deal. That we were on a political vendetta, that none of it was to be believed, and please don't cover it.

The consequence of that was the hearing and the report were given very modest play in the press. I think the report and the hearing, as you go into this matter, and look at some of the transcripts, and I do hope you'll get the actual records and closed session and deposition hearings from the archives, where they all are. And I hope all of that is made public.

We'll find we did a rather thorough job. It was a systematic effort to discredit us that prevented the conclusions from receiving the attention I believe they warranted.

Now, I would argue that over a long period of years, covert operations were undertaken -- and it's not only the CIA, obviously, the decision in that area is at a political level, and the CIA would be an implementing agency -- were taken on an ideological basis that verged on religious belief, and with an eye to short-term results and not long-term consequences. Never again should that kind of ideological blindness and short-term vision infect intelligence assessments.

In the 1980s, all of us could count the number of people dead on the streets of America as a result of the drug problem.

BLUM: You couldn't find me a single person in America who had died as a result of an attack by a Sandinista inside our borders.

There should have been some ability to notice that distinction and understand the importance of the drug problem and understand that that had to be addressed and, at the very least, that anything you did to solve any other foreign policy problem not make the drug problem worse.

I think that among the other things you should be looking at is a review of the relationship in general between covert operations and criminal organizations. The two go together like love and marriage. And it's a problem which really has to be understood by this committee.

Criminal organizations are perfect allies in a covert operation. If you sent me out of the country to risk my life for the government, to do something as a spy in a foreign land, I would think criminals would be my best ally. They stay out of reach of the law. They know who the corrupt government officials are, and they have them on the payroll. They'll do anything I want for money. It's a terrific working partnership.

The problem is that they then get empowered by the fact that they work with us. So now they have stature and influence and impact on their country. And if they have influence with politicians and people who come to power, we now have a new powerful criminal enterprise, and we can't always control what they do once we stand down. And unfortunately, we have yet to figure out how to prevent criminal friends from becoming an albatross.

There's a second problem, and that is when you run covert operations, you train people in a lot of skills. Unfortunately, the story of Adam and Eve stays with us. Once you learn something, once you've bitten the apple of knowledge, you can't unlearn it, ever.

And when you teach people how to change their identity, how to hide from the law, how to build bombs, how to assassinate people, they don't forget how to do it. And you wind up, after the covert action is over, with a disposal problem.

We've never been very good at handling disposal. We had that problem in the Bay of Pigs. Bay of Pigs veterans have turned up in everything from Watergate to the Lettelier (ph) assassination. There's a list that's so long it's painful to recount.

Now the connection with the drug trade -- and I had to go into much of this in preparation for the hearing, and we heard it again and again from people we talked to -- goes way back. We were involved in assisting the Quo Man Tong (ph) armies against Mao Zedong in the 1950s.

During that period, we supported people who were in the heroine trade in the mountains of Burma. And those Quo Man Tong (ph) armies helped themselves and financed themselves out of the heroine business.

It turned up again in the Vietnam war, where our allies, the Hmong tribesmen, were in the heroine business. There were many accusations and all kinds of stories about was the CIA dealing heroine? And the answer was, we're not doing it. Probably true. It's our allies, and we have to work with whoever we have to work with.

In Afghanistan recently, we've had allies who went into the heroine business big time. It's the largest cash crop in Afghanistan. It's the most important export from the region.

BLUM: It's coming out by the ton. And we also have a disposal problem. We have all kinds of people who've been trained in bomb making. And, by God, they've been with us everywhere from the World Trade Center to Paris and all over the world, wherever there's somebody who doesn't suit their ideological tenor.

Now, to turn specifically to the Latin American story and where our investigation picks up on the drug trail. We had testimony from a man who was a civilian employee of Argentine military intelligence, Liandro Sanchez Ris (ph). He told us that the United States had encouraged the Argentine military to act as proxy for the United States during the Carter administration because we had a public policy of supporting human rights and another policy of really trying to sustain our anti-communist efforts.

And the Argentines, he said, sponsored the cocaine coup in Bolivia and then set up a money-laundering operation in Fort Lauderdale. And we later checked. And, indeed, he had set up that operation. He used the money-laundering operation in Fort Lauderdale to provide funds to the Argentines all over Latin America who were in the business of "fighting communism."

We should remember it was the Argentines who were the original trainers of the Contras. They were the ones who brought the original Contras to Honduras, Guatemala and began to teach them how to do what they had to do against the Sandinista government.

Sanchez Ris told us that he believed that the reason the Argentines were so willing to go to war with the British over the Falklands was that the Argentine generals seriously thought that the assistance they had given us, the covert assistance they had given us, was going to put them in our good graces to the point where we would side with them, a tragic mistake indeed if he was correct.

The second man who turned up on our screen very big time was General Noriega. And, as you'll recall -- press accounts have said it, the government has made this public; so I'm not saying anything that's classified -- Noriega was on our payroll. The accounts we heard were that he was getting paid some $200,000 a year by the United States government.

At the time that was going on, virtually everybody who dealt with him knew he was in the drug business. It was an open secret. In fact, it was so open it appeared on the front page of the New York Times in June of 1986. I testified about it in a closed session of the Foreign Relations Committee in 1986.

We have, as the absolute low point of the Contra War, Ollie North having a meeting with General Noriega. And he recorded that meeting in great detail in his notebooks in which he's bargaining with Noriega. Noriega says to him, I've got this terrible public relations problem over drugs. What can you do to help me?

Here's what I'll do to help you. I'll assassinate the entire Sandinista leadership. I'll blow up buildings in Managua.

BLUM: Ollie doesn't call the cops. What Ollie does is he goes back to Poindexter, and Poindexter says, "Gee, that's a little bit extreme. Can't you get 'em to tone it down? Go back and meet with 'em again." Which Ollie does.

When our committee asked the General Accounting Office to do a step-by-step analysis of just who in our government knew that General Noriega was dealing drugs, and when they knew it, and what they did to act on that knowledge, the administration told every agency of the government not to cooperate with GAO, labeled it a national security matter, and swept it into the White House and cloaked it in executive privilege.

That investigation never went forward, should have gone forward. I was very much dismayed.

Our committee subpoenaed Ollie North's notebooks. And the history of those notebooks is quite astonishing. Not many people realize this, but the Senate never got a clean copy of those notebooks. North's lawyers were permitted to expurgate sections of the notebooks based on "relevance." Our committee subpoenaed those notebooks. And we engaged in a ten-month battle to get them. And ultimately the investigation ended, the subcommittee's mandate ended, we never got them.

On top of the fact that clean copies...

SPECTER: Why wasn't it pursued at that time?

BLUM: The administration to begin with classified the notebooks-- and this is truly bizarre, because they remained in Ollie's possession -- at the codeword level. The expurgated copies were kept in your committee's office under codeword classification. When I read those diaries...

SPECTER: It wasn't exactly my committee's office. It was the Senate Committee's office.

BLUM: No, but I say "your" in the sense of the Intelligence Committee's office.

SPECTER: I was not the chairman at that time.

BLUM: Yes. And that was quite proper because those were the rules.

SPECTER: Well, the question that I raise, Mr. Blum, is: There are ways of dealing with claims of executive privilege, and they can be taken to the courts. And the courts have ruled that...

BLUM: Right.

SPECTER: the privilege is not well founded on some occasions. And there are remedies which the Senate can undertake to deal with the administration when the administration acts improperly.

BLUM: Well, we started down the track. The effort to get the subpoenas became mired in the presidential campaign, in the political debate surrounding it. The committee...

SPECTER: There's always one of those going on.

(LAUGHTER)

BLUM: The committee's mandate expired. And frankly I can't tell you why in the ensuing Congress it wasn't pursued. There was a later effort by the National Security Archive, under the Freedom of Information Act, to get further declassification and release of the notebooks. They succeeded to some degree. The notebooks in their entirety are still not public, and my belief is that your committee, the Intelligence Committee should undertake at the earliest opportunity a complete investigation of the notebook situation and do your best to make it public to restore some degree of confidence in the process.

(APPLAUSE)

Now, the problem of General Noriega and Ollie North's notebooks and what was in them is only of a number of problems related to this war and related to drug trafficking that we stumbled into.

BLUM: We had problems in Haiti, where friends of ours, that is, intelligence sources, in the Haitian military had turned their facilities, their ranches and their farms over to drug traffickers.

Instead of putting pressure on that rotten leadership of the Haitian military, we defended them. We held our noses. We looked the other way. And they and their criminal friends distributed, through a variety of networks, cocaine in the United States, in Miami, in Philadelphia, in New York, in parts of Pennsylvania.

Honduras was another country that was key for the Contras. Honduras was the base of Contra operations. Most of the Contra supplies came through Honduras. We wanted to do nothing to embarrass the Honduran military.

Ramon Matabalasteros (ph), a member of the gang that was involved in the Camarena murder, went to Honduras and found refuge there. He was walking in the streets of Tegucigalpa, openly and publicly.

The response of the United States government was to close the DEA office in Honduras and move the agents stationed there to Guatemala. We took testimony from that DEA agent. He said it made no sense. The drug trafficking was going on in Honduras. And the Honduran military were at the center of it.

When the war ended, almost the minute the war ended, to our credit, the administration arranged the midnight extradition of Mr. Matabalasteros (ph), who is currently serving a life term in American prisons. The response of the Honduran military was to allow a mob to burn down a portion of the U.S. facilities in Tegucigalpa. But we sat by as long as they were helping us and allowed them to carry on their illegal business.

We also became aware of deep connections between the law enforcement community and the intelligence community. I personally repeatedly heard from prosecutors and people in the law enforcement world that CIA agents were required to sit in on the debriefing of various people who were being questioned about the drug trade.

They were required to be present when witnesses were being prepped for certain drug trials. Various -- At various times the intelligence community inserted itself in that legal process. I believe that that was an impropriety, that that should not have occurred.

SPECTER: Well, when you say...

(APPLAUSE)

When you say, "inserted itself into that process," are you suggesting that the intelligence community thwarted or stopped prosecutions which should have...

BLUM: That too.

SPECTER: ... gone forward.

BLUM: That too; that too.

(APPLAUSE)

SPECTER: Well, could you be...

BLUM: Let me explain...

SPECTER: We're going to have to have this hearing conducted without interruptions from the audience. You are all here and you are all invited to stay. But if there are interruptions, we can clear the room.

Proceed, Mr. Blum.

BLUM: There were, first, participations in the investigative process, a process in procedure for clearing informants that were put on by DEA, a process of being there for debriefings of important witnesses.

BLUM: But, then, when there were criminal cases that threatened to expose various covert operations in the region, those criminal would be then put aside for one reason or another. And there was a procedure for doing that within the Department of Justice.

We attempted to probe that procedure. The Department of Justice rebuffed us rather systematically. We had some conversations with one of the Justice Department officials involved and took his deposition. But we were never able to get really satisfactory responses to the questions we asked.

We do know that Oli North directly intervened in a number of cases to help people who had helped the covert war.

SPECTER: Well, Mr. Blum, when you come to that subject, during my earlier tenure on this committee, I saw that done, much to my dissatisfaction. There is a statute which sets forth proceedings where the Department of Justice is authorized to drop prosecutions where they cannot make disclosures of confidential informants.

And I personally have questioned the wisdom of that kind of a procedure. But it is authorized by U.S. law. And this committee was frequently rebuffed by claims of that sort.

Let me ask you on a question relevant here, did you ever see any of that interference by U.S. intelligence, CIA or otherwise, of any prosecutions against cocaine in Los Angeles?

BLUM: We did not focus on Los Angeles and Los Angeles prosecutions. I can tell you there were cases in Miami. And there were other cases in other parts of the country.

SPECTER: But were they cases...

BLUM: And I think we refer to them -- and if you dig into the materials -- I can't remember them off the top of my head...

SPECTER: All right. You say they were not cases in Los Angeles. But were there...

BLUM: I -- We didn't find them.

SPECTER: ... that you saw.

BLUM: That doesn't mean there weren't any.

SPECTER: Well, I understand that. But I'm asking whether you found them. But you say you did find such cases in Miami. Now...

BLUM: Right.

SPECTER: ... did those cases permit cocaine dealers to continue to operate?

BLUM: One had the sense they did. But we could not get -- When we got into this area, we confronted an absolute stone wall. Bill Weld (ph), who was then the head of the criminal division put a very serious block on any effort we made to get information. There were stalls; there were refusals to talk to us, refusals to turn over data.

An assistant U.S. attorney who gave us some information was reprimanded and disciplined, even though it had nothing to do with the case in a confidential way, who simply told...

SPECTER: And who was he?

BLUM: ... about procedure.

SPECTER: And who was he?

BLUM: I don't recall his name. But it's in our hearing materials. And we can furnish that for the record.

We had a series of situations where Justice Department people were told that if they told us anything about what was going on they would be subject to very severe discipline. I got a lot of back door information and then I was told I could never use it because the careers of the people involved would be seriously compromised.

Now, we had another problem...

SPECTER: Now, wait, wait, wait a minute. When you were told that, did you make any efforts to use that information?

BLUM: Yes.

SPECTER: What did you do?

BLUM: We went back to the Justice Department. We talked to them. We said, we really want to talk to these people. And they simply stone-walled us.

SPECTER: Now, you're saying that you received information on a voluntary basis. But under an agreement not to use it because it would affect the careers of those individuals...

BLUM: Right.

SPECTER: And you honored those commitments.

BLUM: We honored the confidentiality. It's the only way -- I'm sure you understand that -- that you can ever get anyone to talk to you.

BLUM: But then we went back and tried to get the information on the cases. And as soon as we did, the answer was, "Sorry, we can't do that," and there were a thousand excuses.

We ran into another procedure which was extremely troubling. There was a system for stopping customs inspections of inbound and outbound aircraft from Miami and from other airports in Florida. People would call the customs office and say, stand down, flights are going out, flights are coming in.

We tried to find out more about that and were privately told, again by customs people who said, "Please don't say anything," but the whole thing was terribly informal and there was no real way of determining the legitimacy of the request to stand down or the legitimacy of what was on the plane and going out to people in the field. That I found to be terribly troubling, and it's a matter that you all should be looking at very carefully.

There was a flip side to this drug problem as well. One of the favored techniques of various people in this operation was, whenever there was someone they didn't like, they would label him a drug trafficker.

So we ran into the case of Ron Martin (ph) who had set up an arms warehouse in Teguchigulpa (ph), Honduras, and he did it at the request of various friends of his in the U.S. government and it was sort of a pre-positioning of weapons to help the Contras. And the idea was that when the ban on direct aid was lifted, his stuff could be sold.

Ron Martin (ph) was a potential competition of the Secord(ph)- North supply network. North started telling everyone that the Martin (ph) warehouse was financed by cocaine, not to deal with it. And the impact was to destroy Ron Martin (ph) financially. So this became a matter of affirmative and negative use.

I would say that based on my experience with this affair and my look at the long history of our covert operations dealing with criminals and drug dealers, that this entire affair needs a thorough review, a historical review as well as the narrow review of the issues posed by the article in the San Jose Mercury.

The problem as I see it is, if you go to bed with dogs, you get up with fleas.

(LAUGHTER)

If you empower criminals because empowering them happens to be helpful at the time, the criminals are sure to turn on you next. And the people who plan covert operations should know that and should be held accountable for not telling their bosses if in fact they're dealing with this kind of guy and they do come back and bite them.

The most important loss that we had as a result of the covert war in Central America was the loss of public trust in the honesty and integrity of the people who run America's clandestine operations. The measure of that is how ready everyone is to believe Freeway Ricky and his fable about being the arm of the CIA in selling crack in Los Angeles.

Ricky deserves life in prison for what he did to his people in his community.

BLUM: The CIA didn't make him do it. The profits from his deal certainly didn't go to help the Contras. But that does not mean that there is not a need for a very powerfully done investigation and a backwards look at the entire forty year history of this problem.

Thank you, Mr. Chairman.

(APPLAUSE)

SPECTER: We will proceed with ten minute rounds as to your testimony, Mr. Blum, because it will differ substantially in nature from Mr. Hitz and Mr. Bromwich.

Let me begin with the overall question as to whether you believe that the United States has now placed proper emphasis on counter narcotics as a foreign policy goal?

BLUM: Yes, I do. I think the priorities have changed very substantially. I'm very pleased to report that we have correctly now assessed narcotics and international organized crime as a significant threat.

SPECTER: Do you think the interdiction of the international flow of narcotics has been successful? Have we stopped drugs from coming in from Latin America, Mexico?

BLUM: We have not. We have terrible problems in Mexico. We have terrible problems still in Latin America. And we have problems coming at us in terms of heroine from Asia and from Latin America as well.

SPECTER: Should the United States being doing more to stop the flow of drugs into the United States?

BLUM: I think so, yes.

SPECTER: Mr. Blum, let me go back to the specifics of the Mercury News series because we are focused on that here. You have raised quite a number of other issues and they're all very important.

But did the principle participants in the current allegations -- that is Blandon and Meneses -- figure in any of the investigation which your subcommittee did?

BLUM: Yes. As I said, we knew about Meneses. I believe one of Senator Kerry's staff did interview Meneses at one point. We were aware of that cocaine ring. And as I said, when we tried to get information through government channels, we were blocked.

SPECTER: Was there any information that you did get that linked either Blandon or Meneses to the CIA?

BLUM: Not directly, no.

SPECTER: Well, indirectly?

BLUM: Indirectly, we would -- I would have to say yes. And I -- here, I'm relying on an eight year memory. When I say yes, let me explain what I mean. We had people in the Contra movement, southern front Contras, and indeed there is a television, a video deposition of one of them, who says look, I discussed the problem of the drug dealing among our number with my case officer.

And he told me...

SPECTER: Who was that -- who was that who was on the video?

BLUM: This is a Contra leader. He was a member of the Contra directorate. We took his deposition in video form, in San Jose, Costa Rica.

SPECTER: Do you recall his name?

BLUM: Not off the top of my head.

SPECTER: OK.

BLUM: I just at the moment can't recall who it was. He told us that he had discussed the drug problem and his case officer said look, there is nothing we can do about it.

BLUM: You do what you have to do. Just don't tell me any more about it.

SPECTER: He discussed the drug problem with his case officer...

BLUM: That's correct.

SPECTER: And what kind of a case officer was that?

BLUM: CIA.

And we had that just straightforward. The reaction of the people who were running the covert operation as best as we could determine was: Look, we've been sent here to Central America to do a job. Our job is to win this war against the Sandinistas and to change the political climate here. We're not in the law enforcement business. We can't be playing cops with the people who are working with us. If there's drug trafficking, let the DEA deal with it. But we have to do what we have to do, and please don't let that other mission interfere with what we have, because by God it's difficult enough.

SPECTER: So what you're saying is that the CIA individual did not stop them from dealing in drugs.

BLUM: Right.

SPECTER: But he did not encourage them to deal drugs.

BLUM: No.

SPECTER: Or did not use the...

BLUM: But he then also...

SPECTER: Excuse me. The question is not finished. Or did not use the proceeds or encourage the use of those proceeds to finance the Contras.

BLUM: Not at all. And as I said before, all of the people who played in this took the money and put it in their pockets.

Now, there's one other thing you have to understand about the situation in Central America at the time. And it's relevant to the question you asked. There were facilities that were needed for running the war. Clandestine airstrips. Cowboy pilots, who would fly Junker (ph) airplanes. People who would make arrangements for the clandestine movement of money. Every one of those facilities was a perfect facility for someone in the drug business. So there people who were connected very directly to the CIA who had those facilities, and allowed them to be used, and indeed personally profited from their use as drug trafficking...

SPECTER: Do you have specifics on that...?

BLUM: I do, and I would...

SPECTER: Wait, let me finish the question. Who from the CIA permitted those facilities to be used?

BLUM: It's not that someone from the CIA permitted them to be used. It's that a contract employee had the facilities. He was doing a job. That job wasn't delivering drugs for the CIA...

SPECTER: A contract employee but not a member of the CIA?

BLUM: That's right. And what he...

SPECTER: So the contract employee allowed those facilities to be used, and the contract employee benefited from the proceeds.

BLUM: You bet.

SPECTER: OK.

BLUM: You bet. And none of that money went to the Contras. And I've shared with your staff the name of the person involved. I don't want to here violate the secrecy requirements that we were bound by.

The point is that this was going on in tandem with the war. And the people who were organizing it from our side saw all of it. In fact, you had to be blind not to see it. And instead of trying to stop it or say, "Wait a minute, we really ought to change our policy here, or rethink how we're doing it," they went forward and said, "We're going to solve the problem with the Sandinistas, and the devil take this other set of issues."

SPECTER: Mr. Blum, referring now to some specific individuals who have been cited in the Mercury News series, Adolfo Calero and Enrique Bermudez (ph)...

BLUM: Yes.

SPECTER: Were either of those individuals involved in the investigations which you conducted?

BLUM: Certainly. They were central figures in the Contra movement, and their names came up again and again in conversations about the problem. Not...

SPECTER: Were they involved in cocaine trafficking?

BLUM: Directly? Directly, to my knowledge, no. I have to say no.

SPECTER: All right. Indirectly, to your knowledge?

BLUM: Many of their people and their close associates were.

SPECTER: But how about those individuals specifically?

BLUM: I can't say that I have evidence of it.

SPECTER: And who among their close associates were involved?

BLUM: We have listed people in the report. We have additional material, and you'll find it in our transcripts. After eight years, I can't list names. And if I did, I'd be taking a terrible risk.

SPECTER: Well, I can understand that. Are any of those individuals identified in the San Jose Mercury series?

BLUM: Not to my recollection, no.

SPECTER: Going back to the issue of covert operations, Mr. Blum, based on what you have found, do you think the United States Congress as a matter of public policy ought to ban covert operations?

BLUM: I think that there may in some circumstances, desperate matters of national urgency, be some kind of argument for them. But I will say that in my experience we have rarely considered the blowback, we have rarely considered the long-term political consequence. And if you look at the kind of catastrophic record that the operations that got us tangled up in the drug business led to, I would say they failed. Remember, we lost the war in Nicaragua. Remember that our dear friends in the Argentine military disappeared thousands of people. Look at the horrible, brutal reality of Pinochet's Chile. And ask what kind of threat there was to the United States that warranted that kind of behavior.

SPECTER: Well, I come to the public policy question because this committee has been very deeply involved and is continuing at this moment on a valuation of what may or may not be covert activities. And I'm interested in your judgment.

BLUM: I...

SPECTER: But your net conclusion is that there are some situations which may be sufficiently serious to warrant covert activities?

BLUM: Yes. There may be, but I believe that nowhere near the scale, not even a smidgen of the scale that they were carried out on in the past, and certainly a complete rethink of the idea of building alliances with criminals and drug dealers.

SPECTER: Well, are you...?

BLUM: I think we need to spend much more money on overt diplomacy and on public help for people who are our friends and on real diplomacy. We've slashed the State Department budget by a tremendous amount. And not done the same for the intelligence budget. I find that quite mysterious.

SPECTER: Do you think we have slashed the State Department too much in the past several years?

BLUM: Way too much. There's no money for people to travel, no money for them to negotiate, no money to bring foreign leaders here to teach them, to educate them, no opportunity to bring emerging leadership here.

BLUM: We have a very real budgetary problem in the State Department.

SPECTER: Well, my time is up, and I want to just ask you two very pointed questions.

When you say that there have been too many covert activities, are you aware of how many covert activities there have been? Because the findings are secret. They're made by the president. They're supposed to be secret.

There are a fair number that do remain secret, believe it or not, because this committee does review them.

So I just wonder what your basis...

BLUM: Well, you know...

SPECTER: Let me finish...

BLUM: ... one of the difficulties...

SPECTER: Now, wait a minute. Let me finish the question.

BLUM: Yes.

SPECTER: So the question is what is your basis of knowledge as to the covert activities which are -- which have been undertaken to say that there are too many?

BLUM: I have now spent a number of years in the field -- that is traveling around the world talking to people. I will give you just one experience with Washington's notion of secrecy and the world's notion of secrecy.

It was one of my first trips to Asia in the middle of the Vietnam War. I was on a KLM plane flying over Vietnam. The pilot -- Dutch -- said, "Ladies and gentlemen, look outside the window. We're flying over Laos. See that area? It's been carpet bombed."

I came back to Washington and I said to Senator Symington -- I was then working for the Senate -- Senator, you know we're bombing in Laos?

He said, "Shhh. That's classified."

Now, I submit to you...

SPECTER: Well, he didn't -- he didn't fly KLM.

BLUM: Right.

I submit to you that lots of what you sit here and look at and say -- boy, this is classified, it's code-worded, it's secret, that can only be talked about in a skiff by people who've had their backgrounds investigated to the nth degree -- out in the field is being talked about at 40 decibels in a saloon somewhere.

SPECTER: Well, let me come back to that. It's a -- it's a fairly involved subject, which I do want to pursue with you. But I want to yield at this time to Senator Kerrey.

KERREY: Thank you very much, Mr. Chairman. Well, Mr. Blum, the record should show I disagree with you on that -- on that point.

I mean, there are people out there who are at considerable risk and if what you said was true, they wouldn't be alive. So I mean, just let the record show that I disagree with what you just said.

First, Mr. Blum, can you tell me -- it seems to me that the subcommittee -- and on that committee at the time, Senator John Kerry of Massachusetts, Brock Adams -- Washington, Senator Moynihan of New York -- on the ranking side it was congressman -- Senator McConnell of Kentucky and Senator Murkowski of Alaska -- it seems to me that the recommendations -- I want to give you an opportunity to talk about this -- it seems to me the subcommittee was successful in some areas.

In other words, that there were some policy changes that occurred, both in law and on the administrative side, as a consequence of the subcommittee's work. Is that -- is that correct?

BLUM: I hope so.

KERREY: Well...

BLUM: The answer is yet.

KERREY: Can you...

BLUM: I think we did begin to change the public perception of the foreign policy issues. I think we did begin to get people to understand the dimension of the drug problem and refocus on the drug problem.

KERREY: But there were very specific administrative recommendations and very specific legislative recommendations that were made.

Do you know, Mr. Blum, how many of those administrative recommendations and how many of those legislative recommendations were either accepted by the executive branch or enacted by the legislative?

BLUM: I can't really tell you that. I left in 1989 and did not have all the follow-through.

I think some of them were considered. Maybe some of them were adopted. But I don't think they were all accepted readily. I think we had some changes, but they were not really very dramatic.

KERREY: Well, would you be prepared to evaluate this? Or perhaps I should just ask the Foreign Relations Committee to do it...

BLUM: I think that it would be more appropriate to ask them...

KERREY: ... because it seems to me that...

BLUM: ... to evaluate them. I know we had some very strong...

KERREY: It seems to me that on the...

BLUM: ... recommendations.

KERREY: ... as I look through the list, and there's one, two, three, four, five, six, seven on the administrative side, and one, two, three, four, five, six, seven, eight on the legislative side -- as I look at the list, there are a number of them that I recognize immediately as being current U.S. policy.

And so it seems to me that -- that it's likely to be the case that a number of these recommendations were made both by the executive branch and by the legislative branch in response to the subcommittee's work.

BLUM: I think that there were changes, and I think the hearings did have a positive impact.

KERREY: Secondly, Mr. Blum, when you talked to me, you said that there was a systematic effort to discredit the work of the subcommittee, and you separately mentioned that there was a refusal by the Department of Justice to -- was it justice?

BLUM: Justice.

KERREY: ... to provide you with information that you needed.

BLUM: Right.

KERREY: Is that correct?

Can you -- can you tell me -- put a little more detail on what you mean by systematic?

BLUM: Some examples -- we would want to talk...

KERREY: No, no, no. Systematic to me means that there was -- there was an organized effort.

BLUM: Right.

KERREY: Is that -- that a correct...

BLUM: That's a correct way, and I...

KERREY: How would you define systematic?

BLUM: An organized effort from the top...

KERREY: Who was in charge in of it?

BLUM: As best I could tell, it was coming from the top of the criminal division.

KERREY: Who was at the top of the criminal division?

BLUM: Bill Weld.

KERREY: And when you say the effort was made -- what would they do? Would they call...

BLUM: They would tell U.S. attorneys, systematically -- you can't talk to them. Don't give them paper. Don't cooperate. Don't let them have access to people who you have in your control.

And we had a very tough time finding things out.

KERREY: Thirdly, Mr. Blum, I don't want to get into a great deal of arguing about this, but I think it might be important, just from the standpoint of your evaluation of when, in a covert environment, U.S. personnel should say that we're going to provide this information to law enforcement in order to be able to -- in order to be able to bring a conviction.

It seems to me you're saying...

BLUM: This is one of the trickiest questions in the law enforcement/intelligence agency world. And I should spend a minute to give you just a little bit of a flavor of why it's so devilish.

KERREY: Well, I -- actually, you needn't give me a minute because I could give you an hour as to what's devilish.

BLUM: OK.

KERREY: I understand that it's devilish. What' I'm -- what's your view, Mr. Blum, of the Contra policy itself? Do you -- did you support at the time the Contra policy? Did you believe it carried a high priority? That it was good?

BLUM: I thought that next to other things that were going on in the hemisphere, the problem of a Sandinista government in Nicaragua was really at the low end of the scale.

KERREY: But did you -- did you think the Contra effort -- I understand that, but did you -- did you think the Contra effort was worthwhile? Did you support it publicly?

BLUM: I didn't think it was worthwhile. I didn't take any...

KERREY: You didn't...

BLUM: ... position on it publicly. I thought that it was a wrong -- a wrong affair.

BLUM: But my business was to find out what was going on in the drug trade. And we looked not only at the Contra problem, but we looked at drugs going through Cuba, drugs going through the Bahamas, and all of the different national security issues that were tangled up in those as well.

So -- and we had bipartisan support. This was not a political effort to unstring the Contra war. It was a political effort to understand how it could have come to pass that we had tons of cocaine in Miami and people instead of trying to solve that problem, were telling law enforcement people to look in a different direction.

KERREY: Can you imagine a scenario, Mr. Blum, under which you would say that the objective, the foreign policy objective was so important that it would in fact be a higher priority than the law enforcement effort?

BLUM: Here's my problem. I think that if people in the government of the United States make a secret decision to sacrifice some portion of the American population, in the form of exposing them let's say -- deliberately exposing them to drugs, that is a terrible decision that should never be made in secret...

KERREY: Are you saying that...?

(APPLAUSE)

BLUM: Now, I want to be clear. I'm not saying here that was such a secret decision.

KERREY: Well then, why did you make the statement, Mr. Blum?

BLUM: Let me explain that...

KERREY: I mean, I appreciate -- well, it drew a wonderful round of applause...

BLUM: Mr. Chairman, I'm not trying to draw a round of applause...

KERREY: Well, Mr. Blum...

BLUM: I'm trying to explain to you...

SPECTER: Just a minute, Mr. Blum. Let Senator Kerry finish his question.

KERREY: I mean...

(AUDIENCE NOISES)

KERREY: I mean you made a statement that was in the context of this overall discussion of what's going on with the CIA's efforts in the Contra policy. And it seemed to leave the impression at least that U.S. policy makers consciously sacrificed a portion of the U.S. population...

(AUDIENCE NOISES)

KERREY: Mr. Chairman, I will say to the members I support the chairman when he says that this public hearing has to be conducted with some civility. And the audience is welcome and invited here. But I will support the chairman's decision to clear this room if we continue to get interruptions. It does not work for us. You've heard my opening statement. We're not trying to cover up anything.

(AUDIENCE NOISES)

KERREY: Mr. Chairman,...

(AUDIENCE NOISES)

KERREY: Well, Mr. ....

BLUM: May I have an opportunity to respond...?

KERREY: Mr. Blum,...

SPECTER: My judgment is that we ought to proceed. There is a lot of public interest in this matter. We want people to be present. We can't identify who's saying what. We're not going to get into any investigations. We just ask for your cooperation in allowing us to proceed with the questions without a response, to the extent that you can.

BLUM: I would like to try to answer that, as best I can. When people who are engaged in an operation say, "We're going to look the other way -- we're not going to do anything", interfere in the law enforcement process to protect people who are running the operation, and in that process of interference permit drugs to flow in, you have an extraordinarily serious problem.

BLUM: Now, the DEA, when it has...

KERREY: Mr. Blum, Mr. Blum, let me get you back to the question I asked.

BLUM: Yes, right.

KERREY: I don't disagree with your statement. If you listen -- the audience listens and who keeps interrupting with their enthusiastic support of what you said earlier, I do think it is a terrible mistake to say that we're going to allow drug trafficking to destroy American citizens, as a consequence of believing that the Contra effort was a higher priority.

I ask you a question. The question is this: Do you in your own mind have a situation -- Obviously you were at best lukewarm to the Contra effort. Do you see, in your own mind, risk to the people of this country that would carry with it a high enough priority that in that circumstance you believe that it would not be wise to bring the evidence out and pursue a prosecution in that case?

BLUM: In the rarest...

KERREY: Let me give you an example. How about nuclear proliferation? How about...

BLUM: I can't...

KERREY: How about a covert operation...

BLUM: The answer, Senator...

KERREY: ... that's designed to interrupt and to prevent the flow of chemical and biological agents in the United States. In that situation, Mr. Blum...

BLUM: Yes.

KERREY: ... in that situation, Mr. Blum, what is your view if the people that are involved in that uncover evidence that might lead to a prosecution. Should they shut down the operation?

BLUM: I understand that. And there are...

KERREY: Mr. Blum...

BLUM: ... circumstances where I would agree that you would shut down a prosecution. But you don't do it on -- the question isn't is there a bright line and can we draw a bright line.

KERREY: Right.

BLUM: There was a judgment call here. And that judgment call erred so far on the wrong side of where judgment should have been that we wound up with a terrible problem. And that terrible problem was a defacto result that I was describing; that is, where many people did suffer as a consequence.

And I started to say, when DEA allows a controlled delivery of drugs, there is a furious debate. Those controlled deliveries are monitored because DEA says, our job is to prevent it from coming in. And if it escapes on the street, for any reason, we've blown it. And that kind of standard is really the kind of standard that should have, I think, been applied here.

And maybe you can give me -- and maybe we would both agree, that there is some dreadful circumstance where this should have occurred and been allowed to occur and so on. And I probably could be convinced in the right set of circumstances. But the problem was that that issue wasn't put that way. And the sensitivity to what was going on was simply missing.

KERREY: Thank you, Mr. Chairman.

SPECTER: All right, thank you very much, Senator Kerrey.

Senator Robb?

ROBB: Mr. Chairman, I think that I will defer any questioning at this point. I think the challenge to the committee has been sufficiently articulated. And I think the sensitivity and volatility of the concerns are such that it would be appropriate to have the two inspectors general complete their work before, at least, as far as my own participation is concerned, it is -- the matters that are under discussion are extremely serious. And I think they deserve as factual an investigation as we can provide.

I'm not sure that attempting to come to conclusions at this point would advance the cause that I know that the chairman and the vice chairman seek in holding these particular hearings.

ROBB: I would ask a procedural question, perhaps, to Mr. Blum. And that is whether or not you believe that the authority of the inspectors general is sufficient to provide the kind of answers and the kind of objectivity that your concerns have addressed to whatever conclusions this committee might draw from those reports?

BLUM: I think that the authority is sufficient as far as the behavior of people who are employees of a specific agency in question, the Justice Department or the CIA.

The rest of the question, which is at the political level, of the NSC and the policy decisions taken, will undoubtedly wind up in that realm of executive privilege. And top secrecy. And therein lies the very great difficulty in expecting the inspectors general to solve the problem.

I think we can find out whether CIA employees followed the rules. I don't think that the inspector general can tell you all about what Ollie North did and didn't do, or what...

(APPLAUSE)

... what was going on in that circle of people and who they brought in and what they told people to do. And we know enough now to know that many people played out of channels and did things out of channels, or didn't necessarily report them.

So I have a sense we can get a good part of the way. I'm not at all sure you can get all of the way.

ROBB: Mr. Chairman, I think that I will persist in withholding at this point. I do have a couple of articles that I was going to use as the basis for questions that I would like to simply provide to those who are going to conduct the investigations to consider as a part of any other information they may bring to bear on their investigations.

And I will await formal completion of their activities. I know that they haven't had an opportunity to speak formally yet. But some indication of when they believe that their reports would be available would be useful, at least to me, in terms of figuring out what kind of time frame we're talking about, getting the kinds of facts that would hopefully address and perhaps put to rest some of the questions that have been raised.

SPECTER: Senator Robb, we will address that time frame, what they expect to do.

ROBB: Thank you, Mr. Chairman.

SPECTER: Thank you, Senator Robb. Mr. Blum, just a few more questions. Coming back to the end point of my inquiries as to covert actions, and you gave the one illustration as to KLM, and I think it is obvious that there are covert activities which are known beyond the realm of secrecy.

But your critique is very forceful. And it may well be that the Congress ought to make some different conclusions as to covert activities. So that's why I was asking you the basis for your statement that there are too many covert activities.

As a generalization, the covert activities are only known to the oversight committees. The covert activities are undertaken after a finding by the president, so people in the executive branch know.

SPECTER: And we have some oversight. And it is true that sometimes covert activities are disclosed in the public media, but it is a relatively rare occurrence, considering how many there are. So that's why I ask you the question. To what extent do you know of the covert activities to come a judgment that there are too many, and they're too far-fetched? To far gone?

BLUM: Maybe what I should be doing is paying much more careful attention to language. And I understand that in defining a covert activity you have a very specific definition in mind.

The question may turn more on relationships and ongoing arrangements than specific presidentially-authorized covert activities. So in the question of protecting our friends in different places, whether they'd been engaged in human rights violations or in drug trafficking violations, there may not be a covert activity as defined by law, as authorized by the president. But there may be ongoing relationships.

This may be a definitional question. I may be saying something different than what you mean. I can't tell you, though, that I know. And I don't want to deceive you.

I don't know what has gone on in the executive branch in secret. I have not been privy to the findings, and I don't want to mislead you.

SPECTER: Well, it is a different matter as to whether there are human rights violations which are not begin pursued. And this committee has been very diligent in our pursuit, for example, of what goes on in Guatemala.

BLUM: And the committee is to be commended.

SPECTER: And behind closed door. I'm sorry, I didn't hear you.

BLUM: And the committee is to be commended for it.

SPECTER: I wanted you to repeat that.

(LAUGHTER)

BLUM: That's quite all right.

SPECTER: You had made a comment about things that were taught to people that were hard to erase from their minds. And one of them was to teach people how to assassinate other people. Do you have any evidentiary basis for the conclusion that the United States is seeking to assassinate someone, contrary to existing U.S. policy?

BLUM: Certainly not currently. But I refer you back to the Church committee investigation...

SPECTER: Well, I'm familiar with that.

BLUM: Yes, I know you are. So...

SPECTER: That comes back from the '70s.

BLUM: But that's the historical base from which I'm talking. I'm not talking about currently. That was specifically prohibited, and that problem was addressed.

SPECTER: Mr. Blum, in the course of the report, which was filed by the Subcommittee on Terrorism, Narcotics and International Operations, what is the most explicit statement, if you can give it to us, on a finding that U.S. intelligence forces were permitting people working for them to engage in drug activities?

BLUM: I think I have to let the language of the report speak for itself, and I'll say why. That report went through so many editorial changes, that even after a few reading it, I can't remember which version got to where.

The report does speak for itself. The problem that we saw and we could definitely speak to, and I know the report speaks to it, is the problem of standing by when you knew that people were doing the drug, were in the drug business when you were an employee of the government.

SPECTER: Well, that's a very, very serious matter...

BLUM: And that's a very tough problem.

SPECTER: ... very serious matter.

BLUM: And we thought that would be addressed.

SPECTER: Are you suggesting that it was stated more explicitly but was cut out in the editorial process?

BLUM: No, I think we were pretty -- I think it is there, though we believed that the government -- that is, the CIA -- was aware of this problem, was aware of trafficking by people. And I think we said that.

I don't think that that's something that was edited out. I don't, I'm not sure...

SPECTER: With respect...

BLUM: ... what you're referring to.

SPECTER: With respect to the question of what policymakers have done, do you have an evidentiary base for concluding that the policymakers were aware that the intelligence operatives were allowing drugs to be disseminated?

BLUM: Certainly in the case of General Noriega.

SPECTER: Beyond the...

BLUM: There was no question about that.

SPECTER: Beyond General Noriega?

BLUM: My guess is -- and it's a guess, but I think a very educated guess -- that, in the case of Honduras, yes. In the case of Haiti, yes. They knew. They knew there was a problem.

SPECTER: How about with specific reference to the distribution of drugs, say, in Los Angeles?

BLUM: I don't think they were ever given the clean understanding of the full implications of what was going on.

SPECTER: The policymakers were not.

BLUM: That's right.

SPECTER: With respect to Colonel North -- and there you raise very, very serious questions -- and the Congress had said there'd be no more support for the Contras. I voted with the majority on that, opposed to supporting the Contras.

There was a select committee which investigated that matter. The investigation was started by the Intelligence Committee when I was on it at an early stage. And it was my hope that the Intelligence Committee would have pursued that. But a select committee took over. You had access to challenge the refusal of the Executive Branch to turn over information to you.

Let me tell you this, Mr. Blum, that's going on today.

BLUM: Right.

SPECTER: Senator Kerrey and I are fighting with many of the departments of the Executive Branch about not disclosing materials to us. And it is an extraordinarily laborious process. And I believe that started in George Washington's day. It didn't -- It's been going on a long time. And it is very frustrating and I think very damaging to the country that we do not have access to materials.

But the select committee, with Senator Inouye, an outstanding chairman, you had your own committee. You did not lack for political power to pursue the committee's investigation and to pursue in a judicial context to find out more about Colonel North.

Why wasn't it done? Is there really something there...

BLUM: We did...

SPECTER: ... that should have been done that wasn't done?

BLUM: We did try to do it. But the committee was for a one- term, two-year mandate. And the mandate of the committee expired at the point...

SPECTER: Did you seek a supplemental mandate?

BLUM: Senator Kerrey (ph) did. And it was turned down.

SPECTER: Do you think the select committee was derelict in not pursuing North further?

BLUM: I think that North should have been pursued further, that the diaries should never have been accepted in an expurgated form, that they should never have remained classified to the degree they did.

And some of the things that happened with the classification of those diaries was bizarre.

Once when they were declassified in part by the select committee, some passages were declassified, others kept secret. Then, in the Freedom of Information suit, they were put through the classification process a second time, and the second time, some of the things that had been released before were classified, and some of the things that were secret before were made public.

And that undermined any confidence at all in the process that went on.

You have two sets of those diaries with different classifications.

SPECTER: Senator Kerrey.

KERREY: I have no final questions, Mr. Chairman.

SPECTER: Senator Robb.

ROBB: I have no questions at this time, Mr. Chairman.

SPECTER: Well, thank you very much, Mr. Blum. We'd appreciate it if you have the time if you would stay because...

BLUM: Certainly.

SPECTER: ... there may be some issues which will arise during the course of the testimony from Mr. Hitz and Mr. Bromwich which would be -- we'd like to have your information on.