North Allegedly Held $1 Million for Rebels in ’84

WASHINGTON —  About 18 months before he allegedly began diverting money from Iranian arms sales to Nicaraguan rebels, Lt. Col. Oliver L. North displayed an office safe stuffed with cash to colleagues at the National Security Council and boasted that it held $1 million, an official familiar with the incident said Wednesday.

North told his astonished co-workers that he was holding the cash for transfer to the rebels, although Congress had banned all U.S. aid to the contras at the time, the official said.

One NSC aide told associates that the cache “was more money than I’ve ever seen in one place in my entire life,” an official said.

The incident, which the official said occurred near the end of 1984, lends new weight to allegations that North was directly involved in financing the contra movement, contrary to assurances that the Administration gave Congress at the time.

“My impression was that it was (private) donors who gave him the money,” said a source who dealt with North during that period.

Moreover, the incident adds to reports that North, as the NSC’s covert operations specialist, routinely handled large sums of cash--in some cases without clear accounting, officials said.

North was assigned to coordinate private and foreign fund raising for the rebels after Congress cut off the contras’ CIA funding in mid-1984, Administration officials and contra leaders said.

In that job, he maintained contact with several private fund raisers for the rebels, sometimes directly and sometimes through conservative activist Robert W. Owen, officials and contras said.

Went to Rebel Camps

North and Owen met frequently with rebel leaders in Washington and in their guerrilla camps in Central America, they said.

It could not be confirmed how much money North had in his office or whether it went to the rebels. But several contra officials and private American supporters of the rebels have said that they believe Owen carried money to the rebels on North’s behalf.

Dan Howard, a White House spokesman, said he could not comment on the report. “There’s nobody still on the NSC staff who would know,” he said. “There’s nobody who was around in 1984.”

One American formerly involved in the contra aid network said Wednesday that Owen claimed in January, 1985, to have carried $10,000 a month in cash from the NSC to an American in Costa Rica who was aiding Nicaraguan rebels, the Associated Press reported.

Broke With Rebels

“Owen stated that he drew $10,000 a month and carried it to John Hull in Costa Rica and that money was no object,” said Jack Terrell, the former contra supporter, who has since broken with the rebels and accused them of misusing funds.

“I asked: ‘Where did the money come from?’ He stated: ‘From the NSC.’ I said: ‘What is that?’ He said: ‘You don’t know Ollie?’ I said: ‘Ollie who?’ He said: ‘Ollie North at the National Security Council,’ and I said: ‘No.’ ”

Hull has denied receiving money from the NSC and said he gave the contras “strictly humanitarian” assistance, the AP reported.

North and Owen have refused to testify before several congressional committees, invoking their Fifth Amendment right against self-incrimination. Both have refused to respond to repeated requests for interviews.

During the ban on U.S. military aid for the contras, which lasted from 1984 until last October, Administration officials repeatedly assured Congress that they were not soliciting outside funds for the rebels. “We did not solicit funds or other support for military or paramilitary activities either from Americans or third parties,” Robert C. McFarlane, then President Reagan’s national security adviser, wrote in a letter to the House Intelligence Committee on Sept. 5, 1985.

U.S. ‘Encouraged’ Aid

But, since Congress approved a resumption of military aid, several officials have acknowledged that the Administration did “encourage” private U.S. and foreign aid to the contras during that period, although they said the actions fell short of directly soliciting contributions.

“We gave public approval,” Assistant Secretary of State Elliott Abrams told reporters in October. “We think it is right and proper that Americans should help the freedom fighters. I don’t think it’s a violation of the law to say that we think an activity is a fine activity.”

North also handled the transfer of a $10-million contribution from the sultan of Brunei that was intended to go to the contras but which apparently disappeared into the Swiss bank accounts of North’s associates, officials said.

Abrams, who had solicited the contribution from the sultan, told Brunei officials that they should ask for a refund after North was fired, but the money was already missing, officials said.

No Personal Profit

The officials said there was no suggestion that North had personally profited from the enormous sums that passed across his desk.

“We don’t know that he controlled the money, once it got to Switzerland,” one said.

Secretary of State George P. Shultz, who flew to Africa Wednesday, confirmed in Dakar, Senegal, that the State Department has been unable to trace the $10-million contribution by the sultan of Brunei to the contras.

Although he refused to identify Brunei, an oil-rich state on the Pacific island of Borneo, as the donor, Shultz said:

“It is a mystery just what happened to that money. We tried to track it. I don’t believe we in the State Department can say (where it is).”

Staff writer Norman Kempster in Dakar, Senegal, contributed to this story.