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Clintons, Contras and Cocaine

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The political rise of the Clintons has been monetarily fueled by a man linked to one of the biggest banking scandals in the nation’s history. Arkansas financier and political king-maker Jackson Stephens, with his son Warren, helped raise more than $100,000 for Clinton. More important, Stephens’ Worthen National Bank extended Bill Clinton a $2 million line of credit in January 1992, when the campaign was reeling under multiple allegations of adultery.

It was Jackson Stephens who brokered the arrival of the Bank of Credit and Commerce International (BCCI)–the bank later identified as an institution of preference for global criminals and drug peddlers–into this country in 1977. He steered the bank’s founder, Hassan Abedi, toward Jimmy Carter’s budget director, Bert Lance, whose bank an Abedi front man took over. Stephens then helped clear the ground, according to SEC documents, for Abedi’s secret takeover of First American Bankshares. In the wake of BCCI’s downfall, these institutions are gravely weakened; other U.S. banks secretly taken over by BCCI–including CenTrust, the biggest S&L in Florida, and Independence Bank of Encino–collapsed, leaving taxpayers holding the multi-billion dollar bag.

Just as the BCCI trail heads back toward Arkansas and a prime cash register for the Clintons, so too does another  long-running and explosive scandal within the state, involving money-laundering, drug-running and support for right-wing insurgents backed by the CIA.

By the mid-1980s, Arkansas was a crucial link in the contra war against Nicaragua being masterminded from Washington. One scheme for maintaining a cover-up for Oliver North’s network was, it appears, played out in the Governor’s mansion occupied by Bill Clinton.

Among the occupants of that same mansion was Buddy Young, a man then, in charge of Clinton’s security, who later became a regional director for FEMA. According to court documents filed by Terry Reed, a former C.l.A. asset involved in North’s contra supply effort, Young was a pivotal figure in a case designed to land Reed in prison not long after Reed had walked out of an arms-for-drugs operation in Guadalajara, Mexico, where he had been working with C.I.A. man Felix Rodriguez.

Arkansas’s role in the contra war and in an arms-for-drugs supply network goes back to the early 1980s and the airport at Mena, Arkansas. A federal investigation aided by the Arkansas State Police established that Barry Seal, a drug dealer working for the Medellin cartel as well as with the C.I.A. and the D.E.A., had his planes retrofitted at Mena for drug drops, trained pilots there and laundered his profits partly through financial institutions in Arkansas. Seal, at this time was in close contact with North, who acknowledged the relationship in his memoir. These were the years in which North was constructing his covert supply lines for the contras.

Among those recruited by North was — so the man has subsequently asserted in court papers — Terry Reed, formerly with Air America in Thailand. Reed says he was working for North by 1983. North put Reed in touch with Seal and by 1984, Reed had established a base at Nella, ten miles north of Mena in the Ouachita National Forest. There Nicaraguan contras and other recruits whiteouthbkfrom Latin America were trained in resupply missions, night landings, precision paradrops and similar maneuvers. Reed, familiar with the commercial affairs of Mena, asserts that large sums of drug money were being laundered through leading Arkansas bond brokers, a pattern of investment also being considered by a federal investigator just as his researches were abruptly terminated.

One of Reed’s contacts in North’s network was William Cooper, another Air America veteran then working for Southern Air Transport. Cooper was at the controls of the C-123, once owned by Seal, that was shot down by a Sandinista soldier on October 5,1986, thus — since it was loaded with arms and documentation linking the crew to a chain stretching back to the office of Vice President George Bush — helping to fuel the Iran/contra scandal then bursting upon the world. That plane had been serviced at Mena. Cooper died in the crash.

His crewman, Eugene Hasenfus, survived.

Back in 1985, Cooper had suggested to Reed that he go to Mexico and set up an operation expanding the supply network. Reed agreed, traveled to Veracruz for discussions with Felix Rodriguez and, in July of 1986, set up a front company, Machinery International, in Guadalajara.

Three months later Cooper was dead and Hasenfus was being paraded by the Sandinistas before the Managua press corps. Reed says that Machinery International’s business, “trans-shipping items” in “support of our foreign policies,” was put on hold until January 1987, this at a time when the cover-up was pressing forward in Washington. Seven months later, Reed says, he became aware that drugs were part of the shuttle passing through Machinery International’s premises in Guadalajara and that he himself presented a likely candidate as fall guy if things came unglued.

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Reed says he confronted Rodriguez and told him he was quitting. By early September 1987 he had returned to the United States. A month later Buddy Young was activating — from Bill Clinton’s mansion — a sequence of events designed to land the potentially troublesome Reed in prison.

The instrument at hand was a plane owned by Reed.

On March 24, 1983, Reed’s plane had been stolen from a repair shop in Joplin, Missouri (Reed’s home state). Prior to this, Reed says, Oliver North had asked him to contribute this same plane to Project Donation, a scheme by which individuals would allow their fully insured planes and boats to “disappear” for the sake of counterrevolution in Nicaragua. Reed claims he had refused. At all events, the plane was removed while Reed was out of town. Reed duly reported the theft to his insurance company and received compensation. He says that in 1985 North’s people contacted him in Mena, told him that his plane was being returned after having been in Central America for two years and asked that he not report its return because they might need to “borrow” it again. Reed consented. He left the plane at his hangar in the North Little Rock Airport and left for Guadalajara soon thereafter.

On October 8, 1987, Tommy Baker, a former Arkansas State Police officer and longtime friend of Buddy Young, says he happened to be passing Reed’s hangar when a powerful gust of wind blew the door open, revealing a plane. Baker says he thought the plane looked “suspicious” and so called his pal Young at the Governor’s mansion. Young later claimed in testimony that he called the registration number on the plane into the National Crime Information Center to see if a plane with that number had been stolen, found no record of this and so instructed Baker to check if the plane’s markings had been changed, a common practice of plane thieves (also a routine practice at Mena and in North’s Project Donation). Baker established that they had been, and by October 21 the two had turned the case over to the F.B.I.

Under scrutiny, that sequence, as set out by Baker and Young, did not stand up. On October 5, three days before that fortuitous gust blew open the hangar door, Young was phoning Reed’s parents masquerading as an old friend of their son, according to legal papers filed by Reed. Young had called in the plane’s correct registration number to the N.C.I.C. — so the center’s records show — on October 7, before Baker had, by his account, even set eyes on the plane (and before Young had called in with the doctored number). That same evening Young had called Joplin to inquire about the plane’s original disappearance. In June of 1988, Reed was indicted on mail fraud charges in connection with his 1983 insurance claim on the plane.

This article is excerpted from Whiteout: the CIA, Drugs and the Press by Alexander Cockburn and Jeffrey St. Clair.

Jeffrey St. Clair is editor of CounterPunch. His new book is Killing Trayvons: an Anthology of American Violence (with JoAnn Wypijewski and Kevin Alexander Gray). He can be reached at: sitka@comcast.net. Alexander Cockburn’s Guillotined! and A Colossal Wreck are available from CounterPunch.

CounterPunch Magazine

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