MANUEL "TONY" NORIEGA ROSE TO POW- er at an opportune time in Central America, and Noriega is nothing if not a compleat opportunist. The available evidence paints Panama of the 1980s as a Casablanca of profiteering and intrigue in which Nori- ega, for a time, played a masterful balancing act, doing the bidding and receiving the gratitude (if not also the gratuities) of drug traffickers and the U.S. lawmen on their trail. After 1984 however, that evidence also indi- cates the General cut back Panama's role in the drug trade and stepped up cooperation with U.S. law-en- forcement officials. The underpinning for Noriega's criminal enterprise was Panama's booming international banking center, whose secrecy and security were enhanced by Pan- ama's unique dollar-based financial system. By 1975 Panama was a major center for legitimate off-shore transactions, but the country had also become a hub of the international financial underworld, sheltering de- posits and laundering cash for everything from New York off-off track betting to multimillion dollar ran- soms from Salvadoran kidnappings, to the booty of South American dictators.' Inevitably, drug money also was a significant part of the flow. But at that time-when Colombia was known for quality marijuana and psyche- delic mushrooms rather than cocaine-a couple of hundred thousand dollars was still considered big money among Latin drug traders. T HE FIRST REAL PANAMANIAN BLACK market was in arms, and it started for idealistic rea- sons. Gen. Omar Torrijos was the foremost Latin American supporter of the Sandinista struggle against Nicaraguan dictator Anastasio Somoza. As the fighting accelerated in 1978, Torrijos ordered Noriega, then his chief of intelligence, to set up an arms pipeline using small planes and airstrips in Costa Rica. 2 Following the Sandinista victory, the Panamanian arms network shifted to support the Farabundo Marti National Liberation Front in El Salvador, whose bank accounts were already in Panama and who were prepar- ing for open warfare against the U.S. backed military- civilian regime. While the Carter and Reagan Admini- strations were manipulating and massaging all available clues to make a case that Cuba and Nicaragua were the FMLN's chief arms suppliers, Noriega's network, still using the Costa Rican airstrips, was operating a regular 2(RPR ON~--~-' TH AMER ICA REPORT ON THE AMER S 20shuttle of weapons into El Salvador. In June 1980, when one overloaded plane crashed and was traced to Panama, that country's role became public knowledge.' What was left of the idealistic veneer that coated the already substantial profits accruing to Noriega, wore off abruptly with the 1981 death of Torrijos in a plane crash. From that point on, the Colonel, soon to be General, ran the supply network as a personal enter- prise. Although it took him almost two years to climb over three rivals to become the commander of the Pana- manian National Guard, he did not wait to put the covert network to immensely more profitable uses. FROM A PURELY BUSINESS POINT OF view, an enterprising venture capitalist could not have chosen a better moment than the cusp of the 1980s to get in on the ground floor of the Colombian cocaine industry. And Noriega, with his established clandestine networks for transport, supply and finance, had a lot to offer. It was a moment when the young men later to be- come world famous as kingpins of the Colombian car- tels had only recently graduated from flying small suit- cases of cocaine to the West Coast on the Red Eye from Miami. Colombians were in the process of wresting control of the U.S. cocaine business out of the hands of Cuban exiles in Miami and imposing their hegemony over Mexicans, Bolivians and Peruvians. In Miami, police still considered confiscation of a pound of cocaine a big bust, while in Colombia men like Jorge Ochoa, Pablo Escobar and Carlos Lehder were moving a thousand pounds in a single flight. They established new coca plantations and built processing factories that, by late 1983, were producing upwards of two metric tons of refined cocaine per week. At the same time U.S. consumption doubled, tripled, increased ten-fold. An outline of Noriega's alleged role is contained in two federal indictments against him handed down in Miami and Tampa, and in the testimony of witnesses before the Senate Foreign Relations Subcommittee chaired by Sen. John Kerry. July 1982: Pilot Floyd Carlton, a chief operative of Torrijos' arms network, meets with cartel leaders Escobar and Gustavo Gaviria in Medellin on Noriega's behalf. The contact results in Carlton flying three planeloads of approximately 400 kg. of cocaine to Panamanian airstrips for transshipment to the United States. Carlton says he passed on to Noriega the cartel's payments of $470,000 for the three flights. Similar flights and payments continued throughout 1983. May 1983: Cuban exile Ram6n Milidn Rodriguez is arrested in Florida carrying $5.4 million in cash. The arrest is considered so important that it is announced at a press conference by Vice President Bush. Mili.n tries to tell prosecutors about his links to Noriega, but is not allowed to enter into a plea bargaining agreement. When he finally tells his story in 1987, he claims that he has laundered up to $200 million of cartel drug money per month through foreign (including U.S.) banks in Panama under an agreement with Noriega. According to the deal, Noriega was paid up to $10 million a month; in exchange, the General provided total security for the gigantic shipments of cash, including armored cars. 4 (Indicative of Noriega's careful efforts to play both sides, it was his tip-off to the Miami office of the Drug Enforcement Agency that resulted in Milidn's arrest.) September 1983: American marijuana smuggler Stephen Kalish makes an outright cash payment of $300,000 to Noriega for permission to set up headquar- ters in Panama. Kalish pays Noriega an additional $500,000 as downpayment on a $4 million fee for serv- ices in connection with two gigantic shipments of mari- juana from Colombia to the United States-one million pounds on a container ship and 400,000 pounds using a barge and tugboat. 5 Spring and summer 1984: Medellin cartel bagman Boris Olarte delivers $4 million to Noriega to allow the cartel to move major parts of its operations to Panama. In one episode, parts of which remain unclear, the cartel begins to build a large coke processing factory in Pan- ama's remote Darien Province. In May, while Noriega is traveling in France and Israel, the factory is discov- ered and raided by Panamanian soldiers. Noriega di- rects his representatives to reimburse $2 million to the cartel. Around the same time, Panamanian officials confis- cate over 5,000 barrels of ether and acetone used for cocaine processing. Photos are taken of troops suppos- edly dumping the chemicals in trenches. A Panamanian colonel, Julidn Melo Borbtia, is linked to the shipment and the Darien factory, charged and dismissed from the military. He is later cleared. According to federal in- vestigators, Noriega sells 500 barrels of the confiscated chemicals to the cartel, which flies them out of Panama on a DC-6. The General receives $250,000 in payment. T HE YEAR 1984 WAS A CLEAR TURNING point for Noriega. The Darien raid and the chemi- cals seizure placed Panama on the front pages as a narcotics center for the first time. Although official in- vestigations have yet to fully explain the events of 1984, some observers believe Noriega feared Panama would fall under the same scrutiny as Colombia, endan- gering the "deniability" of his hitherto low-profile drug enterprise. It would be rash to conclude that he broke his ties with the Colombian cartel and went straight. But his known activities from that point on are of a clearly different nature. Low-risk, high-security money laun- dering activities are thought to have continued-perhaps even during the crisis of the past year. But there is no evidence of further cocaine production in Panama and few examples of transshipments. UJ LY/AUGUST 1988 -- 21RePANAMA t Am ias PANAMA The most radical change appears to have been in Noriega's cooperation with the U.S. Drug Enforcement Agency, the sincerity of which is still fiercely disputed inside the U.S. government. DEA letters of commenda- tion-known as "attaboys" to insiders-regularly con- gratulated Noriega on each bust in which his agents helped out. And the Justice Department insisted that Noriega's people were acting on all leads provided by the DEA, not simply turning in people of their own choosing. As late as May 25, 1987, the Justice Depart- ment's Steve Trott called Noriega's cooperation "su- perb." "The Panamanians have given [the DEA] 100% of their requests in terms of drug traffickers that they are looking for," he added. In July 1984 Stephen Kalish was arrested during a brief visit to Florida to set up a cocaine shipment, al- though there is no hard evidence Noriega had anything to do with it. In an interview with the Spanish magazine El Pais two years after cartel kingpin Jorge Ochoa's November 1984 arrest in Madrid, a Panamanian official claimed in Noriega's presence that it was the result of information supplied by Panama. As recently as May 1987, Noriega collaborated with the United States in a joint investigation of drug money laundering at Pan- ama's international banking center. THE UNITED STATES KNEW OF NORIEGA'S drug connections long before the Administration turned on him in 1987. According to former State Department intelligence and research official Frank McNeil, serious reports of Noriega's drug activities were received as early as 1984. Former National Secu- rity Council aide Norman Bailey claims he received numerous intelligence summaries on the subject going back to 1983. In 1984, even before the publicity sur- rounding the Darien laboratory and ether shipment, Noriega was denounced publicly in Panama by Hugo Spadafora, Torrijos' vice-minister of health (who re- signed to lead international volunteers into battle against Somoza alongside Sandinista commandante Ed6n Pastora). He had collected his information first- hand from his old comrade-in-arms Floyd Carlton and is known to have shared it with DEA agents in Costa Rica. Spadafora was murdered in 1985 after being taken into custody by Defense Forces troops. 6 Despite their knowledge, U.S. intelligence and drug enforcement agencies, including Vice President Bush's drug task force, chose to focus on Noriega's coopera- tion in turning in drug dealers, which began in earnest in 1984, rather than on his criminal activities during the great cocaine expansionary period of the previous three years. Of course, once the United States turned against the General, public criticism of Noriega rose with dizzying speed into a crescendo of condemnation bordering on sheer demonization. Even for the man who could play all sides, it became too much to balance the cartel and the DEA, the Sandinistas and the contras, Cuba and the CIA. General Coke? 1. A prime example would be Chilean secret police czar Manuel Contreras. He maintained secret corporate accounts in Panama following his golden-handshake dismissal from the army because of his indictment in the assassination of Orlando Letelier in Wash- ington. 2. A series of Senate hearings starting early this year provided the most complete testimony about Panama's underworld of arms and drug trafficking created by Noriega. See Senate Foreign Rela- tions Subcommittee on Narcotics and International Terrorism (known as the Kerry Committee), Feb. 8-11, April 4-6, and July 12- 14; and Senate Permanent Committee on Investigations, Jan. 28, 1988. The more than 1,000 pages of testimony contain those of former Panamanian official Jos6 Bland6n, and several convicted drug traffickers and money launderers, including Steven Michael Kalish, Floyd Carlton and Ram6n MiliAn Rodriguez, as well as Reagan Administration officials. 3. The crash was widely publicized in Panama, El Salvador and Costa Rica, although it received little attention at the time in the U.S. press. Although the plane bore Panamanian Air Force mark- ings, El Salvador accepted Panama's explanation that the plane had been pirated and that the arms flight had no official authorization. 4. Of all the witnesses before the Kerry Committee, Milidn is the hardest to evaluate. Congressional investigators find some of his claims exaggerated and others downright unbelievable. There is general skepticism about his claim that he arranged a payment of $10 million from the cartel to the Nicaraguan contras. 5. Kalish, while testifying about relatively small transactions with Noriega (compared to Miliin's claims), is able to provide documentary evidence for some of them. He was given a Panama- nian diplomatic passport and Noriega wrote a personal note to his wife. Most interesting is an official "irrevocable letter of credit" from the National Bank of Panama for $1,995,000. The letter was Kalish's guarantee for a loan he made to the Panamanian Defense Forces, part of one of his kickback schemes with Noriega and his cohorts. The military was still making monthly payments on the loan early this year, even though Kalish had been in prison for almost four years and was known to be testifying against Noriega. 6. Brian Barger and Robert Perry of AP reported in Dec. 1985 that Spadafora met with a DEA agent a few days before his death.
