U.S. Shrugged Off Corruption, Abuse in Service of Drug War
Peru

President Alberto Fujimori ran Peru for a decade after the Cold War, and his regime, whose mainstay was the shadowy Vladimiro Montesinos, received abundant aid from the United States. The Central Intelligence Agency, ICIJ has learned, gave Montesinos at least $10 million over the last decade in counternarcotics cash. Montesinos, who had total control over the funds, diverted the CIA money to other, illegal activities, according to U.S. and Peruvian sources. In addition, Peruvian investigators now say that Montesinos amassed a personal fortune of more than $264 million. The United States accumulated plenty of evidence over the years of corruption, human rights abuses and anti-democratic action by Montesinos, but it shrugged off the reports because Montesinos was a CIA asset deemed key to Washingtons drug war in the Andes.

In what is surely among the most embarrassing turns in post-Cold War U.S. foreign policy, Montesinos used his CIA-backed position of influence to get rich and ultimately, it would seem, to betray his benefactors. Several senior U.S. and Peruvian sources have stated publicly that Montesinos—the unofficial head of the National Intelligence Service, known by its Spanish acronym SIN— arranged an arms deal that sent at least 10,000 AK-47 assault rifles to Colombia's FARC guerrillas, public enemy number one in the U.S. war on drugs in Latin America. He also used high-tech surveillance equipment, which was provided by the CIA for intelligence-gathering on narcotraffickers, instead to spy on political opponents, according to several Peruvian and U.S. sources. Montesinos has since been charged with death squad activities, corruption, arms and drug trafficking, and illegal enrichment. Other senior Peruvian officials closely tied to Montesinos, including the former head of Peru's central military command, stand accused of taking bribes from drug smugglers during the Fujimori reign.

Fujimori was elected president in June 1990, seven months after the fall of the Berlin Wall. He first circumvented and later amended the Peruvian constitution in order to retain the office for nearly three presidential terms. By the end of 2000, however, both Fujimori and Montesinos, his spymaster, had been disgraced by multiple scandals. Montesinos disappeared on Oct. 29, 2000, and was in hiding for eight months until his capture in Venezuela on June 23. He was sent back to Peru to face trial. Fujimori fled to Japan, where he resigned from office on Nov. 20, 2000.

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The demise of both Fujimori and Montesinos began with the mysterious release of a videotape showing Montesinos paying a $15,000 bribe to an opposition politician in September 2000. Hundreds of videotapes subsequently made public showed Montesinos and his subordinates paying off politicians, businessmen and journalists. Former military officers and civilian officials have since come forward to provide court testimony about the regimes involvement in bribery, arms and drug trafficking, and human rights violations including torture, espionage, extortion of political opponents and harassment of the press.

Montesinos long had been fingered as corrupted by drug money, although many of the earlier claims that surfaced came from arrested drug dealers. But by 1997, the State Department began to document Montesinos' questionable activities in its annual human rights reports. In 1999, the Senate Appropriations Committee noted that it had "repeatedly expressed concern about U.S. support for the Peruvian National Intelligence Service," and the committee requested that it "be consulted prior to any decision to provide assistance to the SIN." Despite the concern about Montesinos, the United States continued to provide Peru with military aid because the Fujimori government was thought to be playing a critical role in supporting the drug war.

CIA directed cash payments

Montesinos had founded and personally controlled a counter-drug unit within SIN. It was to that Narcotics Intelligence Division (DIN), U.S. officials told ICIJ, that the CIA directed at least $10 million in cash payments from 1990 until September 2000. Most of the money was to finance intelligence activities in the drug war, though officials acknowledged a small part went to antiterrorist acitivities. The CIA knew the money was going directly to Montesinos and had receipts for the payments, the sources said. "It was an agency-to-agency relationship," one U.S. official in Lima told ICIJ, "with Vladimiro Montesinos as the intermediary. . . Montesinos had the money under his control."

The CIA suspected that Montesinos was involved in some illegal activities and was not surprised when informed of the diversion of funds, the U.S. sources said. Even though the agency had its suspicions about Montesinos, it continued doing business with him "because he solved problems, including problems he created himself," one source said. The U.S. Embassy has provided Peru's anti-corruption prosecutor with detailed information about the CIA's payments to Montesinos in response to the Peruvian government's wide-ranging investigations into Montesinos' malfeasance. The prosecutor, Ana Cecilia Magallanes, has told U.S. officials that she has documents showing the diversion of SIN money, including the CIA payments, toward illegal activities. Sources would not elaborate on what those activities included, but the prosecutor said it did not appear that those monies were diverted into Montesinos' personal accounts.

The CIA, according to published reports, began supporting Montesinos in the mid-1970s after Montesinos, then a middle-ranking Peruvian army officer, came to Washington on an unauthorized visit and handed over documents concerning Soviet arms deals with Peru. When the CIA learned of Montesinos double-dealing with Colombia's FARC guerrillas, according to U.S. and Peruvian sources, it decided to try to bring him down. Peruvian military sources, speaking on condition of anonymity, said they believed the CIA leaked some of the videotapes showing Montesinos' dirty deals.

Peruvian prosecutors also allege that Montesinos collaborated with drug traffickers, who paid him and his associates protection money. After 10 years as the power behind Peru's president, Montesinos had at least $264 million deposited in foreign bank accounts in Switzerland, the United States, the Cayman Islands and other nations, Attorney General Nelly Calderon Navarro announced in June 2001.

Arms dealer brokered rifles from Jordan

One of the principals involved in private arms sales to Peru was the Lebanese arms dealer Sarkis Soghanalian, who had previously collaborated with both the CIA and the FBI and had been involved in selling arms to Iraq in the 1980s. In December 1999, Soghanalian was charged in a $3.2 million bank fraud case in U.S. federal court in Los Angeles. He pleaded guilty in March 2001 to receiving a stolen check and is awaiting sentencing.

In an interview at his home in Palm Springs, Calif., Soghanalian told ICIJ that he remains on good terms with U.S. intelligence authorities and that he engages only in arms sales consistent with U.S. interests.

Soghanalian said he acted as a middleman in 1999 to broker a sale by the government of Jordan to Peru of 50,000 Kalashnikov automatic rifles manufactured in the early 1980s in the former East Germany. U.S. officials were aware of the transaction and had no objections to it, Soghanalian said. Although the deal was odd for Peru, which had recently purchased some 80,000 assault rifles from Israel, there were no U.S. objections because Fujimori in October 1998 had signed a peace agreement with Peru's neighbor and traditional enemy, Ecuador. At no time did Peruvian officials indicate that they planned to resell the rifles to Marxist guerrillas of the Revolutionary Armed Forces of Colombia, or FARC, Soghanalian said.

In January 1999, Soghanalian told ICIJ, he traveled to Lima to finish negotiations on the arms purchase. He was received by one of Montesinos' associates, José Luis Aybar, a former army lieutenant turned businessman. A military escort brought Soghanalian from the airport to Lima's Hotel Sheraton, and the next morning, Aybar gave Soghanalian a tour of various Peruvian military bases. Aybar then brought Soghanalian to Montesinos' office at the National Intelligence Service, and they had lunch at the Capital Yacht Club, Soghanalian said, where he learned that Montesinos' military colleagues referred to him as "the doctor."

He [Montesinos] talked about million-dollar contracts to buy missiles, cannons, parts, along with real estate transactions, like the construction of a new airport for Lima and the installation of an airline business with new planes," Soghanalian told ICIJ. "But I told him that first we must finish the business that we had agreed to with the Peruvian government. That is to say, the sale of 50,000 AK-47 rifles. Montesinos was in agreement."

Soghanalian had hoped to meet Fujimori as well, but Montesinos said he could not arrange the meeting at that time. Soghanalian told Montesinos that he would instead send Fujimori a gift of a fine Arabian horse along with a gold-plated sword. He flew to Amman to tell the Jordanian government that he had reached an agreement. "It is not common for intelligence services to be involved in the purchase of military equipment, but Montesinos appeared to have the authority of Fujimori to do so," Soghanalian said.

Five Hungarian-registered cargo flights brought a total of 10,000 AK-47s from Amman, via Algeria, Mauritania and/or Cape Verde to Trinidad and Tobago or Grenada. From there, according to the plane's manifests, the merchandise was to be flown to Iquitos, Peru, in the middle of the Amazon jungle, not far from Colombia. In fact, the planes were diverted to FARC-controlled territory in the eastern Colombian province of Vichada, where Peruvian officials say the crates of guns were parachuted to the Colombian guerrillas. Later, the planes flew on to Iquitos, where they picked up wood, coffee and other products ostensibly destined for Jordan.

The arms deal began to fall apart in July 1999, when Peru failed to make a scheduled payment for the first shipment of rifles. Soghanalian says he immediately suspended the arms deliveries while he demanded payment from Peru. He soon learned from U.S. contacts, who along with Colombian police investigators traced battlefield weapons seized from the FARC, that the rifles had been resold by the Peruvians to the FARC.

Arms diverted to Colombian guerrillas

"The Peruvian government failed to pay me as we agreed so I stopped the shipments," Soghanalian told ICIJ. A few months later, Jordanian military intelligence officials told him that, according to their CIA contacts, the arms were not going to Peru but to the Colombian guerrillas. "I tried every way I could to recover my money, but I could not do so," he said. Soghanalian said he had done everything by the book, including clearing the arms deal with the U.S. embassy in Amman. "I would not have sold arms to Peru if the sale would have compromised U.S. interests."

In late 2000, Soghanalian began cooperating with the new Peruvian government and a prosecutor, José Carlos Ugaz, who is investigating wrongdoings by the Fujimori regime. "What Sarkis Soghanalian knew is fundamental to demonstrate that Montesinos controlled arms purchases during the Fujimori administration, at least since the conflict with Ecuador in 1995," Ugaz said in an interview with ICIJ in Los Angeles.

The same conclusion was reached by Rear Adm. Humberto Rozas Bonuccelli, the last titular head of the SIN during the Fujimori regime, and Gen. Julio Salazar Monroe, Rozas' predecessor in the job from 1991 to 1998. Both have testified in court that they ran the National Intelligence Service in name only and that Montesinos was its de facto chief. Montesinos had Fujimori's authority to manage his own state funds and personnel without any oversight, Rozas said. "Montesinos had a very independent way of working and it was compartmentalized. He had his own private revenues, and he handled them himself and we had no access to them. Furthermore, Montesinos had a group of people that worked exclusively for him, even though no one knew how many they were or who they were." Rozas said he discovered Montesinos' role in the arms sale to the FARC with the help of unspecified "American" intelligence agents, who provided him with photocopies of documents concerning the transaction. The Americans, Rozas said in court testimony, "wanted an investigation to be carried out to determine if the Peruvian army had bought these arms." U.S. Embassy officials told ICIJ that it was the CIA that provided documents about the arms deal to Rozas.

His meeting with the "Americans," Rozas says, took place on Aug. 10, 2000. Eleven days later, after he had begun an investigation, Fujimori and Montesinos announced they had uncovered the arms deal. At an Aug. 21 news conference at the presidential palace, they declared that a serious blow against an arms trafficking ring had taken place, "in which not one Peruvian intelligence agent is compromised." The Organization of American States was pressuring Peru to restructure and reform the duties of the SIN at the time, which may be why Fujimori attributed the "notable success" of the operation to the SIN, and, of course, to Montesinos. Angered by cuts in U.S. aid ordered by Congress in response to reports of abuses by the SIN, Fujimori called the sting operation "Plan Siberia" and said it was much smaller, yet more effective than Washingtons $1.3 billion Plan Colombia.

Montesinos was apparently trying to manipulate the American discovery of the FARC connection in a way that would allow him to claim he had been investigating the deal rather than perpetrating it. "After they received the documents, they rushed to publicize the case. This was a political decision," testified Rozas. The Peruvian judge hearing the case asked Rozas, "What would have happened if the documents from the American intelligence agents had not been delivered to you, but instead only to Vladimiro Montesinos? Would the arms trafficking have been uncovered?" The ex-SIN head replied, "Most likely, no."

The arms deal with the FARC is the most staggering example of how U.S. officials seem to have been duped by their Peruvian partners. There are many other examples, surfacing since the fall of the Fujimori government, of official abuses carried out with U.S. resources.

According to U.S. Embassy officials in Lima, interviewed by ICIJ, the SINs narcotics intelligence unit was funded and assisted by both the CIA and the State Department's Bureau for International Narcotics and Law Enforcement Affairs. The State Department's share included $36,000 in 1996, $150,000 in 1997 and $25,000 in 1998, according to U.S. embassy officials. In 1999, State withheld aid to the SIN because of congressional anger about reports that Montesinos was using the unit to conduct intelligence against the regime's political opponents.

Phone calls of opposition figures intercepted

Three separate Peruvian military intelligence sources told ICIJ that surveillance equipment provided by the CIA, for use in the drug war, was instead used by the SIN to intercept the telephone conversations of opposition political figures, journalists, businessmen and military officers suspected of disloyalty to the Fujimori regime. Peru's naval, air force and army intelligence services were also involved in illegal surveillance of the regime's political critics and opponents, the sources said. Each agency also sold "intelligence services" to wealthy individuals, corporations or influential officers. A buyer could pay $1,000-$2,500 per week to receive intercepts from the tapping of a single phone. Or, sources from each of the three intelligence agencies told ICIJ, the wealthy buyers could pay spies to gather other information about individuals of their choosing.

A number of Peruvian intelligence officials were charged with drug trafficking, and several officers under Montesinos' command at the SIN were implicated in drug-trafficking organizations. Gen. Nicolas Hermoza Rios, chief of the Armed Forces Joint Command from 1991 to 1998, is currently jailed on charges of narcotrafficking. Lt. Gen. Elesban Bello Vasquez, who as the air force intelligence chief from 1992 to 1998 worked closely with Washington, is accused of illegal wiretapping. Gen. Eduardo Bellido Mora, whose army command included the key narcotrafficking areas in Peru, fled the country after being formally charged with Hermoza of collecting bribes from drug traffickers. Boris Foguel Ysuengas, an influential Panamanian drug smuggler, has told Peruvian authorities and ICIJ that he rented helicopters from the army and used them to transport coca paste from clearings in the Amazon to processing labs on the coast.

Charges against lower-ranking officers—all members of the National Police's special counternarcotics command—hinted at higher-echelon corruption years earlier. Maj. Eduardo Milla Espinoza was accused of shipping 2.2 metric tons of cocaine from Peru by cargo ship in 1999. Three years prior to Milla's arrest, Capt. Jorge Aste Chivlchez, a National Police agent who worked for the SIN, was convicted of collaborating with a drug-trafficking syndicate led by Carlos Cárdenas Guzmán, who the U.S. Drug Enforcement Administration claims has been involved in shipping cocaine to the United States from Colombia. Capt. Luis Alemán Delgado was convicted of collaborating with Cárdenas Guzmán and with another Colombian drug-trafficking syndicate led by Pastor Elías Delgado García.

The involvement of Peruvian intelligence officials in drug trafficking is one reason why the State Department cut off counternarcotics aid to Peruvian intelligence agencies in 1999. The other is that U.S. officials became aware that Peruvian intelligence agencies were using U.S. aid to gather information against the regime's unarmed political opponents, as the three Peruvian intelligence officers also told ICIJ. As early as 1997, the State Department annual human rights report's chapter about Peru described the massive power SIN had acquired under Montesinos' direction and its use against domestic political opponents. Despite those concerns, arms sales to the Fujimori regime by the U.S. government and U.S.-licensed companies nearly quadrupled in 1998 to $4.42 million, compared to $1.17 million in 1997.

U.S. official concern may have been mediated by satisfaction with the success of Fujimori and Montesinos in defeating two insurgent groups, Sendero Luminoso (Shining Path) and the Túpac Amaru Revolutionary Movement.

With the ebbing of the rebel movements and the government counterinsurgency campaigns after 1997, violence and human rights abuses declined. But there was an increase in selective abuses, particularly by the SIN and one of its special branches, the Army Intelligence Service.

Eavesdropping on Congress members

SIN eavesdropped on members of the Peruvian Congress, the political opposition, business people and independent journalists. When confronted with evidence of the abuse, Fujimori, reported the State Department in 1997, "absolved the intelligence services of the accusations against them, asserted that private individuals with scanners had carried out the wiretapping, and charged the opposition with trying to further its own ends by portraying the government as a dictatorship."

Some of the best-documented human rights violations involved three army intelligence agents, Leonor La Rosa, Mariela Barreto and Luisa Zanatta. The three infiltrated the news media as part of their covert government work, but when their actions were revealed by the press, they were detained and tortured by the SIN in an attempt to get them to absolve their superiors. La Rosa was severely injured by her torturers, while Barreto was killed. Zanatta fled to asylum in the United States.

The harassment of the regime's critics and opponents was part of the overall anti-democratic trajectory that Fujimori's government took almost from the beginning. In 1992, Fujimori imposed martial law and severely restricted civil liberties, opposition activities and the media. His stated justification for the "self-coup" was to enable the Peruvian military to pursue an aggressive counterinsurgency campaign. The military subsequently committed many human rights violations, but it succeeded in crushing the rebels. In 1992, the government, with the help of the CIA, captured Abimael Gúzman, head of Sendero Luminoso. Its defeat of Peru's rebel forces was capped in April 1997, when commandos stormed the Japanese embassy and killed most of the Túpac Amaru rebels who had held hostages inside the building for four months.

Although neither rebel movement showed signs of a resurgence, the Fujimori government's repression of its unarmed political opponents continued. In 1997, a majority of the Peruvian Congress amended the country's constitution to allow Fujimori to run for a third presidential term. Three judges of Peru's Constitutional Tribunal bravely declared the amendment unconstitutional; Congress fired them. The Fujimori regime also manipulated the country's electoral boards and its judiciary and harassed the independent news media. "Government intelligence agents allegedly orchestrated a campaign of spurious attacks by the tabloid press against a handful of publishers and investigative journalists in the strongly pro-opposition daily, La Republica, and other print outlets and electronic media," said the State Department's 1998 human rights report.

By 1999, there was no longer any doubt that the Montesinos-controlled SIN was behind many of the anti-democratic actions designed to keep the Fujimori regime in power. "The security forces were responsible for several extrajudicial killings and one disappearance, the State Department said in its Peru report that year. "Security forces tortured, beat, and otherwise abused persons, and impunity remained a problem. Lack of accountability within the armed forces, particularly regarding counterterrorist operations, continued to be a problem."

Still, aid continued, though it was increasingly focused on counternarcotics. In 2000, the United States provided $42 million to Peru as part of its regional aid package in support of Plan Colombia. The aid included $15 million for economic alternative programs in areas of high coca leaf growing, $7 million to upgrade four UH-1H Huey helicopters to tactically superior "Super Hueys" or Huey II configurations, and $20 million for interdiction operations. That operation would come back to haunt the United States on April 20, 2001, when a missionary and her infant daughter were killed by a Peruvian air force jet that fired on a plane whose possible drug-trafficking link had been suggested by CIA contract workers.

As of mid-2001, the United States continued to consider Peru a reliable ally in the drug war and the Peruvian military a trustworthy partner to receive U.S. aid. The Bush administration's 2002 State Department budget proposal calls for $49.18 million in military aid to Peru, an 82 percent increase over the previous year.

U.S. support for Fujimori and Montesinos promoted a regime that not only misused U.S. assistance to repress its own political enemies, but that also took money from drug traffickers and profited from arms trafficking. From one standpoint, U.S. aid could be seen as positive in that it supported a government that rid Peru of two dangerous leftwing insurgencies. But whatever disruptions in the drug trade U.S. aid to Peru achieved, they appear to have been local and temporary. The legacy of the Fujimori period has been to undermine Peru's civilian democratic institutions and the rule of law.

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