General Coke?

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.