AP NEWS
Related topics

‘Unknown’ Foreign Money Backed Contras’ US Lobbying

January 10, 1987

WASHINGTON (AP) _ The leading Nicaraguan rebel group has told the Justice Department that it financed its Washington operations last year with money from ″unknown″ foreign sources.

The statement from the United Nicaraguan Opposition, the political umbrella group for most rebel forces, comes as congressional investigators are looking into allegations that Iranian arms sales profits controlled by fired White House aide Oliver L. North might have gone to the Contras.

In a filing this week with the Justice Department’s foreign agent registration office, UNO said it paid its office expenses over a six-month period ending Nov. 14 with $91,608 provided through three deposits - May 9, Aug. 11 and Nov. 6 - ″from foreign source.″

The sworn UNO declaration, signed by its Washington representative, Ernesto Palazio, last Monday, added: ″Sources of UNO support unknown to registrant,″ which is listed as UNO.

The group has said it has no knowledge of any money given to the Contras from weapons sales to Iran.

Although the filing refers to unknown sources of money, two Nicaraguans involved in the rebel movement said a source of the expense money was conservative fund-raiser Carl ″Spitz″ Channell. The two Nicaraguans, who spoke on condition they not be identified, said Channell transferred the money through a bank in Costa Rica.

Channell, head of the National Endowment for the Preservation of Liberty and several other conservative groups, did not return repeated telephone calls to his office this past week.

Last month, he denied receiving any Iranian money to pay for his Contra support activities but acknowledged getting non-financial help from North in a $1 million pro-Contra television advertising campaign against election of congressional opponents of military aid.

North was fired Nov. 25 for his alleged role in a scheme to divert millions of dollars from secret Iranian arms sales to the Contras during a period when Congress barred direct or indirect U.S. military assistance.

As a White House official and a Marine lieutenant colonel, North also was prohibited by law from participating in lobbying activities. North has invoked his Fifth Amendment protection against self-incrimination when called to testify before congressional committees investigating the Iran-Contra connection.

In past years, Contra spokesman Bosco Matamoros has said that expenses for a small office he maintained in Washington were paid with donations from private Americans. Last spring, the Contras moved to a larger office and expanded their staff.

In an interview last month, UNO spokesman Xavier Arguello said he had no knowledge of Channell providing money for the UNO office, although he said that the conservative fund-raiser did pay for a speaking tour around the country last yar by Contra representatives.

According to documents and sources, Channell’s tie to North dates back at least to April 1985 when both participated in a Nicaraguan Refugee Fund dinner that featured a Reagan speech. The dinner raised only $1,000 for refugees while paying more than $100,000 to ″consultants,″ including $10,000 to Daniel Conrad, a Channell employee.

Nicaraguan sources said Channell became increasingly important in the Contra support network in late 1985 because of his ability to raise large sums of money from wealthy conservatives and his connections to North, who was the principal White House link to the rebel leadership.

The Associated Press reported this week that North managed cash and other funds out of his National Security Council office to pay Contra expenses as early as 1984. One source said that about a year ago, Channell obtained cash from North’s office to pay expenses from a Contra fund-raising activity.

Documents obtained by the AP also show a business connection between Channell’s American Conservative Trust and International Business Communications Inc.(IBC), which well-placed Nicaraguans identified as another source of lobbying funds. According to the documents, the trust paid IBC $20,000 over several months in 1985.

The Nicaraguans said IBC assisted the rebels financially while under contract with the State Department’s Office of Public Diplomacy, which also was working closely with North in trying to rally public support for the Contras.

The new director of that office, Bob Kagen, said he let the three-year IBC contract expire last Sept. 30, because he ″didn’t think it was a necessary expense.″ But Kagen refused to release a copy of the agreement or say how much IBC was paid.

The State Department said that under the contract, IBC arranged interviews and briefings, placed opinion articles in newspapers, arranged speakers for meetings and prepared suggestions for points that could be made by U.S. government officials.

During one October 1985 lobbying trip, which sources said IBC paid for, Contra field commanders traveled to Washington to talk with Congress and the news media.

While in Washington, two of the commanders got into a fight in their room at the Wellington Hotel with one being badly cut and bleeding profusely on the rug, according to three sources familiar with the incident. The sources said the police were called, and Contra spokesman Matamoros paid for the damages and other hotel costs with money provided by IBC.

IBC official Frank Gomez, a former State Department official, failed to return calls to his office.

AP RADIO
Update hourly