Salvadorans Improperly Transferred U.S. Fuel to Contras, GAO Says
LAWRENCE L. KNUTSON
Jun. 08, 1989
WASHINGTON (AP) _ El Salvador's air force improperly sold $100,000 worth of fuel provided by the United States to air crews resupplying the Nicaraguan Contras in an effort set up by Oliver North, the General Accounting Office told Congress Thursday.
Assistant Comptroller General Frank C. Conahan testified that the transfer of the fuel ''violated agreements between the United States and El Salvador stipulating that title or possession of U.S.-supplied defense items or services cannot be transferred without prior U.S. government consent.''
Conahan said pilots under contract to the Contra resupply operation run by former Air Force Maj. Gen. Richard V. Secord bought fuel on at least 63 occasions in 1986 from tanks on the military side of Ilopango Air Base. He said U.S.-supplied fuel was provided on 32 of those occasions.
Conahan testified on behalf of the GAO, an investigatory arm of Congress, before the Senate Appropriations Foreign Operations subcommittee.
Felix Rodriquez, a private individual supporting the Contra effort, had, at the request of National Security Council official Oliver North, set up an operations center at the Ilopango base to use air drops inside Nicaragua to resuply the Contras.
Conahan said that from April to September 1986 the Salvadoran air force old 61,107 gallons of the U.S.-provided fuel to the Contra resupply enterprise.
''We found no evidence that the Salvadoran government requested or obtained U.S. consent for the Salvadoran air force to transfer military aid program funded fuel to the Contra supply operation,'' Conahan said.
Nor, he said, was evidence found that any U.S. personnel knew of the sales.
But he said a ''substantial violation'' of the 1986 sales agreement with El Salvador may have occurred because the transfers took place at a time when the United States was barred by law from using aid funds to support military or paramilitary operations of the Contras.
Conahan said it was also learned that the Salvadoran air force sold nearly a million gallons of aviation fuel worth some $580,000 to U.S. military and contract aircraft delivering non-lethal aid to the Contras.
He said the GAO accepted as ''reasonable'' the explanation that those transfers were not improper because the U.S. government provided the fuel in the first place and because it was transferred to U.S. entities.
But Sen. Patrick J. Leahy, D-Vt., chairman of the Foreign Operations subcommittee, said it would seem ''unique'' that the United States put itself in the position of first giving away the fuel, then paying for it.
''You could well say we were paying for it twice,'' he said.
Sen. Tom Harkin, D-Iowa, who initiated the investigation, said the GAO had ''uncovered the first documented case of a transfer of U.S. foreign aid dollars to the Contra resupply network.''
Additionally, he said, when sales to other ''third-party'' aircraft are taken into account, ''the Salvadoran air force received $800,000 in cash for fuel it received free under the U.S. foreign aid program.''
Michael Kozak, acting assistant secretary for state for Inter-American Affairs, acknowleged that the sales and transfers did take place.
But he said the department does not believe the violation to be ''substantial,'' given the fact that the United States gave El Salvador $230 million worth of aviation fuel in 1986 and 1987.
''Furthermore, it does not appear that the transferred fuel sustained the Nicaraguan resistance resupply operations over an extended period of time, nor does it appear that this was support that the resistance could not have purchased from any commercial facility,'' he said.
Kozak said a ''lack of understanding'' on the part of ground personnel at Ilopango as to which fuel required U.S. permission before it could be transferred ''seems to have been the main, if not the most important, factor in this unauthorized diversion.''
H. Diehl McKalip, operations director of the Defense Security Assistance Agency, said that because of a concern that assistance funds might have been or might be ''converted into unrestricted cash,'' regulations have been issued to assure that any future funds generated from fuel transfers be deposited in a special holding account.
Prior to the change, he said, $801,519 was paid directly to the Salvadoran air force. Since the change, $973,543 has been credited to the holding account, McKalip said.