The Dirty Secrets of George Bush

The Vice President's illegal operations

George Bush in Washington, D.C. on May 9, 1988 Credit: Diana Walker/Liaison/Getty

During the most violent years of the war in Nicaragua, a retired CIA agent – a man of many talents and pseudonyms whose given name is Felix Rodriguez – was the logistics officer for airlifts of weapons and supplies from the Ilopango air base, in El Salvador, to the jungle hide-outs of the Nicaraguan rebels known as contras. On October 5th, 1986, one of Rodriguez's cargo planes, a Southern Air Transport C-123K, loaded with 10,000 pounds of ammunition, failed to return from a scheduled drop in Nicaragua. Fearing the worst, Rodriguez made a series of phone calls to Washington that evening. What was unusual was that Rodriguez did not notify anyone at the Defense Department or the CIA but rather attempted to get word about the missing plane to Donald Gregg, the national-security adviser for Vice President George Bush.

When Rodriguez failed to reach Gregg, he telephoned Gregg's deputy, army colonel Samuel Watson. Watson relayed the information to the White House Situation Room, and an order was given to send U.S. aircraft toward the Nicaraguan border on a search-and-rescue mission. The following morning Rodriguez learned that Sandinista-government artillerymen had knocked the Southern Air plane out of the sky, killing the pilot and copilot. The third crewman, Eugene Hasenfus, had been captured. Again Rodriguez called Vice President Bush's office with the news, and the search-and-rescue mission was called off.

The subsequent investigation of the downed cargo plane revealed for the first rime a connection between the office of George Bush and a clandestine campaign to arm the contras – during the 1984-86 period when the U.S. Congress had ordered a halt to CIA and Pentagon aid. In response to reporters' queries, however, Bush's press officers issued statements claiming that the phone calls from Rodriguez represented the only time that the vice-president's office had played any role in the arms-supply campaign. Later Gregg expanded on the official denials in a deposition to the joint select committee investigating the Iran-contra affair. "We [Bush and Gregg] never discussed the contras," Gregg testified. "We had no responsibility for it; we had no expertise in it."

A ROLLING STONE investigation, however, has found that the denials of Bush and Gregg are part of a continuing cover-up intended to hide their true role in the Reagan administration's secret war against the Sandinista government of Nicaragua. Bush and Gregg were, in fact, deeply involved in a previously undisclosed weapons-smuggling operation to arm the contras that began in 1982, two years before the much publicized Iran-contra operation run by marine lieutenant colonel Oliver North and financed by the sale of missiles to Iran. This earlier operation, known as Black Eagle, went on for three years, overlapping North's operation. The idea of both operations was to circumvent congressional restrictions on the CIA and the Pentagon. Although conceived by William Casey, the late CIA director, these operations were not sanctioned officially by the CIA or other government agencies. They were the instruments of a secret U.S. foreign policy carried out by men who constituted a kind of shadow government.

After meetings with Casey in the summer of 1982, Bush agreed to use the vice-president's office as a cover for Black Eagle, according to a retired army covert operative assigned to Black Eagle. Gregg, a veteran CIA official, was assigned to work out of Bush's office as the Washington liaison to Black Eagle operatives in Central America, coordinating financial and operational details. Gregg made regular status reports on Black Eagle to Bush, who relayed them to Casey. "Bush and Gregg were the asbestos wall," says the career military man, who used the code name Lew Archer. "You had to burn through them to get to Casey."

Felix Rodriguez, a close friend of Gregg's since 1970, when they served together in Vietnam, had a unique soldier-statesman role in the Black Eagle operation: he not only handled airfield logistics for the arms airlifts to the contras but also traveled throughout Central America as a special envoy, authorized to negotiate with military commanders and even chiefs of state.

The ROLLING STONE investigation – based on congressional and court documents and more than fifty interviews with government diplomats, career military officers and intelligence agents, including key Black Eagle operatives – also found that General Manuel Noriega, the Panamanian dictator indicted in the U.S. on drug charges early this year, played an important part in Black Eagle, making available his country's airfields and front companies to the American operatives. In exchange, Noriega appropriated Black Eagle's fleet of cargo planes to smuggle cocaine and marijuana into the U.S. on behalf of the notorious Medellín cartel of Colombia. Several of those involved with the operation contend that Bush and Gregg knew about Noriega's use of Black Eagle for drug running and that nothing was done to stop it.

Noriega had been brought into the Black Eagle operation by agents of the Mossad, the Israeli intelligence service. It had been Casey's idea to use the Israelis to arrange for the acquisition and shipping of weapons to the contras as a way of distancing American officials and agents from the Black Eagle operation. The Mossad provided cover and gave the American operatives plausible deniability.

Late in 1985, after a falling-out and a near gunfight between Israeli and American operatives, the Black Eagle operation came to an end. By this time North's operation, known as the Enterprise, and a third one, which was called the Supermarket, had been set up. The Supermarket smuggled weapons to the contras for about ten months in 1985, until North, consolidating his power in the shadow government, forced the operation out of business. North's own Enterprise remained in business, with Rodriguez as a logistics officer, until the Southern Air plane was shot down.

On December 1st, 1981, at a meeting in the White House Situation Room, William Casey laid out his plan to launch a secret war against the Sandinistas. While the plan was modest, calling for about $19 million to be spent by the CIA to train a 500-man guerrilla force of Nicaraguan exiles living in Honduras, its implications were enormous. After the scandals and reforms of the Seventies, CIA agents would once again become unknown soldiers in undeclared wars.

Yet the plan encountered remarkably few objections from the top-level policy makers at the meeting. Bush readily supported it, and the others, including President Reagan, also approved it. With CIA assistance, the small band of contra exiles expanded over four years into an army, 15,000 strong, and Casey came to believe that they could force the Sandinista government out of power, notwithstanding congressional prohibitions. In August 1982, a conference committee of the U.S. Senate and House had approved a resolution ordering a halt to the expansion of the war. The resolution, known as the first Boland amendment for its author, U.S. representative Edward Boland of Massachusetts, explicitly prohibited the CIA and the Pentagon from financing military efforts to overthrow the Sandinistas.

Within days Casey had found a way to circumvent the resolution without violating, or so he believed, the letter of the law. According to agent Lew Archer, Casey set in motion a secret campaign to defy the Boland amendment by continuing full military funding of the contras. For this campaign he enlisted a few trusted men, most notably Bush, and added over the next few years retired CIA agents and U.S. military officers, foreign intelligence agents, international arms dealers and freelance operatives. All of them reported to Casey through a team of managers hidden strategically in the vice-president's office, at the National Security Council and at the State and Defense departments.

It was perfectly in character for Bush – who takes great pride in his ability to ingratiate himself with powerful people – to have joined in this conspiracy with Casey, a magnetic authoritarian figure. Bush himself had been CIA director in 1976, and except for Reagan, he was the administration's staunchest supporter of Casey. "Once you're CIA, you're family," says Lew Archer. "All Casey had to do was ask."

Bush shared Casey's view that Congress had added untenable risks to intelligence work. Under the Intelligence Oversight Act, enacted by Congress in 1980, covert operations that were once the sole province of the president and the CIA director now had to pass political muster with the two congressional intelligence committees.

The long, bitter effort by Congress to bring the CIA to heel had begun in 1976, following revelations about assassination plots and renegade operations at the agency. As CIA director, Bush had resisted some of the reforms, and the vice-president's position has changed little over the years. "Congress overreacted and seriously weakened the CIA," Bush said in a campaign speech this summer.

Bush's year at the CIA left him with an intense interest in national-security issues. With President Reagan's consent, Bush early in his vice-presidency was placed – to use his expression – "in the loop" of top-secret memos, briefings and meetings. In addition to the highly classified CIA briefings given exclusively to the president and the vice-president, Bush received additional briefings as a member of the National Security Council (NSC) and the National Security Planning Group and as chairman of the Task Force on Combatting Terrorism and the National Narcotics Border Interdiction System – all organizations concerned with the politics of Central America.

Accordingly, the details of the Nicaraguan war were regularly called to his attention. An NSC request in November 1983 to furnish more weapons to the contras – one of the few documents that escaped Oliver North's later shredding – noted that Bush had "been asked to concur on these [weapons] increases in each previous case." Other NSC memos were marked "cc: The Vice President."

While some administration officials expressed their doubts about or kept their distance from the Nicaraguan war, Bush did not. When Congress debated whether to cut off aid, he said, "We must not abandon the contras now." And Bush's close ties to Cuban American exiles in Miami who provided significant financial and political support to the contras made him a hero in that community.

By the time President Reagan signed the first Boland amendment into law, on December 21st, 1982, Casey and Bush already had launched the secret campaign to render it meaningless. According to Lew Archer, around the time the Boland amendment was voted on in committee, in August 1982, Bush agreed to have Donald Gregg, a thirty-one-year veteran of the CIA, coordinate Black Eagle operations through his office. Gregg then joined Bush's staff as the vice-president's national-security adviser, immediately resigning from the CIA in order to sever any official connection with Casey.

As the Black Eagle operation developed, Gregg received periodic reports on the arms going to the contras – AK-47 rifles, shoulder-mounted missiles, grenade launchers. Many of the weapons had been captured from the PLO by Israeli troops in their 1982 invasion of Lebanon. The remainder were purchased through international arms dealers in Poland and Czechoslovakia. Pilots of the Black Eagle air carriers, mostly aging DC-6s and C-123s, had two staging areas – one in El Salvador, servicing the largest concentration of contras, on the northern front (in Honduras and northern Nicaragua), and the other in Panama, servicing the contras on the southern front (in Costa Rica).

Bush and Gregg, who are now good friends, met in 1976 at CIA headquarters, in Langley, Virginia, where Gregg was a manager in the Operations Directorate. In 1981 and in the first half of 1982, when Gregg was assigned by the CIA to the NSC, he frequently held briefings that Bush attended. Transferred to Bush's office, Gregg continued to be in the thick of intelligence activities – a break with tradition. Past foreign-policy advisers for vice-presidents had usually served as mere advance men for overseas trips.

Gregg, however, in addition to overseeing the Black Eagle operation, often filled in for Bush at top-security meetings. He also continued working closely with the NSC staff, particularly Oliver North, who'd taken over for Gregg as Casey's man at the NSC. "I'm the first vice-president's national-security adviser to ever have been given the access that I have been given to the NSC," Gregg said in his Iran-contra deposition.

Gregg had applied to the CIA in 1951 right out of Williams College, where he majored in philosophy. Before settling in at CIA headquarters in 1975, Gregg had been posted to Japan, Burma, South Korea and Vietnam, among other places. A trim, soberly dressed six-footer in his late fifties, Gregg calls to mind the CIA's "gray men," about whom former director William Colby wrote in his book Honorable Men – men who succeed without calling attention to themselves. Gregg's style and personality are well suited to Bush. "Both the vice-president and [I] have a reputation for being sort of orderly, process-oriented people," Gregg has said. Reporters who staked out his house in Bethesda, Maryland, an affluent Washington suburb, found that although he ducked most of their questions, he could be disarmingly courteous. One CBS reporter was served coffee and cookies on a silver tray by Gregg's wife, Margaret.

Gregg is most at home in the white-shoe world of the East Coast, playing tennis with such good friends as William F. Buckley. But his seminal experiences came in the jungle war of Vietnam. From 1970 to 1972 he was CIA station chief in Saigon, directing an elite counterinsurgency unit known for both the zealousness of its interrogation techniques and for the boldness of its helicopter-gunship raids, which took few pains to differentiate the Vietcong combat regulars from civilian supporters.

One of the heroes of Gregg's unit was a Cuban-born helicopter pilot named Felix Rodriguez. Rodriguez's penchant for courting danger – flying at treetop level through hails of enemy groundfire – got him shot down two times in Vietnam. Oliver North, whose own Vietnam record was filled with daredevilry, once described Rodriguez as "crazy and suicidal."

In Vietnam, a close friendship sprang up between Rodriguez and Gregg. It was, in the words of North's deputy, Robert Earl, "almost a blood-brother relationship." The Gregg-Rodriguez bond, which remains strong to this day, has always been that of a mentor and protégé. During the Vietnam War, Rodriguez would endlessly throw himself into combat, and afterward Gregg would talk him down from the battlefield highs and traumas. "He would come back from an operation in which some people had been lost, and he would tell me about it," Gregg told the Iran-contra lawyers, "what I would call sort of combat catharsis."

Over the years, Rodriguez's addiction to combat and his anticommunist fervor have taken him to Africa, the Middle East and Central America, keeping him away from his Miami home for long periods of time. When the fighting broke out in Nicaragua, in 1981, Rodriguez immediately volunteered to "help the contras in any way I could," he recently told ROLLING STONE. In March 1983, Rodriguez flew to Washington to see Gregg. Rodriguez had decided that Central America needed a guerrilla unit modeled on Gregg's counterinsurgency squad in Vietnam. He had written out a plan for conducting hit-and-run air raids against leftist bases in Central America. Gregg forwarded the plan to the NSC with a cover memo endorsing it. Rodriguez's plan, code-named the Pink Team, and Gregg's memo were found later in North's safe. The Pink Team plan met with skepticism at the Pentagon and was never fully implemented. But its author was soon afterward recruited by Gregg for full-time duty in the Black Eagle operation.

Rodriguez certainly must have seemed to Bush and Gregg the ideal man for Black Eagle. An explosives expert, sharpshooter and stunt-level pilot, Rodriguez was a highly versatile soldier with an impressive knowledge of communications and logistics. While one among dozens of Black Eagle operatives, Rodriguez quickly rose to prominence, meeting frequently with Gregg and on at least three occasions with Bush. No other operative was so visible in official Washington, but then Rodriguez, during a long history with the CIA, had always stood out. A tall, dark, wavy-haired man now in his middle forties, Rodriguez had become legendary for taking on one high-risk mission after another. "Felix is one of the really extraordinary human beings I know," Gregg has said.

Rodriguez's politically prominent family had been forced to flee Cuba after the Castro revolution, in 1960. The following year, at age nineteen, Rodriguez led a five-man team (that included Eugenio Martinez, later a Watergate burglar) into Cuba in advance of the Bay of Pigs invasion. After the invasion failed, he returned to Cuba several times as a contract agent for the CIA's Operation Mongoose, which involved a series of abortive plots to assassinate Castro. According to Gregg, Castro singled out Rodriguez for retaliation, targeting him for at least two assassination attempts.

In 1967, after being hired as a full-fledged CIA agent, Rodriguez was the leader of an American intelligence team that helped the Bolivian army hunt down the fabled guerrilla Che Guevara. Rodriguez says he was the last American to talk to Che before the Bolivians executed him. Two versions of Che's last moments are told today in Miami's Little Havana community, where Rodriguez is the object of much hero worship: In one version, Che stripped off his watch, handed it to Rodriguez as a surrendering general gives up his sword, and said warmly, "We are all brothers under the skin." In the second, Rodriguez and his fellow CIA men divided up Che's possessions like the Roman soldiers at the Crucifixion. In any event, Che's watch is one of Rodriguez's prized souvenirs.

In 1976, Rodriguez formally retired from the CIA and began collecting a disability pension for back injuries sustained in Vietnam. Over the next few years he attempted a business career as an international arms broker, but it appears he continued to take on special CIA assignments. Gerard Latchinian, who was briefly a partner of Rodriguez's in the weapons business, says that men he took to be CIA agents were frequent visitors when he and Rodriguez shared offices in 1979 in Miami. Rodriguez then was driving a baby blue, bulletproof Cadillac and, according to Latchinian, he had it serviced at CIA headquarters, in Virginia. After meeting with mixed success in his weapons ventures, Rodriguez returned to the war zones of Central America. "Felix's heart has always been in fighting communism," says Fernando Mendigutia, an uncle who is also his attorney. "I told him the other day, 'Why don't you leave this thing and come back and live with your family?' He can't do it. He just can't do it."

Indeed, Rodriguez still spends much of his time in Central America, advising and fighting alongside anticommunist forces. "Castro wants Central America to be one huge Cuba," Rodriguez told ROLLING STONE. "As long as I'm alive, I have to fight."

He says he finances his activities with his disability pension, the earnings of his wife, Rosa, a college administrative assistant, and a few donations from wealthy Cuban Americans who support the contra cause. But, according to Lew Archer, Rodriguez and the other Americans in the Black Eagle operation were paid secretly with discretionary CIA and Pentagon funds referred to as "black money." Casey had established this method of payment, insisting that everyone in the field be removed from official government payrolls.

Rodriguez's main job in Black Eagle, according to several operatives, was to organize the logistics for weapons drops to contra camps in Honduras and northern Nicaragua. His base of operations was El Salvador's Ilopango airfield, commanded by a close friend, Salvadoran general Juan Bustillo. Rodriguez met with Bustillo in December 1983 at Ilopango to discuss Black Eagle, according to two men who were also at the meeting – an Israeli agent we will call Aaron Kozen and Jose Blandon, the former Panamanian chief of political intelligence. During the meeting Rodriguez pointed out the Black Eagle aircraft on the tarmac. The four men watched as wooden crates of weapons were transferred from large planes to smaller ones for flights into the jungle. "Felix Rodriguez was in charge," Blandon says. "He was the man sent by Gregg to handle all this."

Rodriguez played at least two other roles in the shadow government: first, he was a key member of an elite group of veteran intelligence men recruited by Gregg to be military advisers to the contras; second, acting as if on authority from the vice-president's office, he served as a kind of special envoy, empowered to undertake important negotiations with officials who ordinarily would have far outranked him, such as General Wilfredo Sanchez, chief of military operations in Honduras, and Guatemala's then chief of state Oscar Humberto Mejia Victores.

"Felix made everybody feel that the vice-president was on the case," says Kozen. "He spoke with the authority of both [Casey] and the vice-president. You know that unique status that Kissinger had with his shuttle diplomacy? That is the closest I can describe for the position that Felix had in Central America. He was more than the voice of the CIA; he was the voice of the Reagan administration. Felix ran the show [among the American operatives] because everyone knew he could call down the wrath of God on any lonely bureaucrat who crossed him."

While Rodriguez was practicing his unique blend of logistics and shuttle diplomacy, Panama's General Noriega was becoming more and more involved in Black Eagle. A bizarre mistake had led to Noriega's entry into the operation in the spring of 1983. During the first phase of Black Eagle, in late 1982 and early 1983, Mossad agents – whose cooperation Casey had gained by bartering copies of coveted satellite photographs – had been shipping weapons to the contras through San Antonio, Texas. But then, inexplicably, the words CIA Warehouse had been stamped on some crates of weapons, alerting U.S. customs agents and compromising the route.

The mistake was apparently the fault of the Israelis, but Casey chose to overlook it; he still needed the Mossad to cover for the Americans in the operation. Casey asked the Israelis to change the smuggling route's central transfer point from San Antonio to El Salvador and Panama. In El Salvador the government, mired in its own civil war, was hugely indebted to the U.S. for military aid, and in Panama it was clear Noriega was eager to do business with arms traffickers.

The Mossad already had a high-ranking official in place in Noriega's inner circle. His name was Michael Harari. In the spring of 1983, Harari, assigned to Black Eagle, began negotiating with Noriega and his intelligence chief, Blandon, requesting landing privileges at Panamanian airfields for Black Eagle planes and the use of Panamanian companies to conceal payrolls and other transactions. "He told us that Israel and Casey and Bush were involved in this," Blandon says. "Harari wanted Noriega to have a relationship with Bush." If Noriega cooperated, Harari reasoned, he would have political IOUs not only at the CIA but also at the vice-president's office.

Noriega jumped at the chance, quickly establishing himself at the center of the operation. A guileful politician, Noriega for years had deflected U.S. criticism of his dictatorial rule by making himself valuable to powerful officials at the CIA and the Pentagon. In 1983 he had allowed Casey's agents to train contras on Panamanian soil, and back in the middle Seventies, when he was intelligence director of the Panamanian National Guard, he had been a paid CIA informant. In 1976, Noriega had used his position, says Blandon, to arrange a meeting at the Panamanian embassy in Washington with George Bush, then his CIA counterpart. For years afterward Noriega boasted about the Bush meeting – and later meetings with Casey – as proof of the esteem in which the CIA held him.

Noriega met Bush face to face for a second time in December 1983, during a vice-presidential tour of Central America. Bush was joined at the meeting by Gregg and North, and while the vice-president paid lip service to the idea of more democracy and less corruption in Panama, he reassured Noriega that he would always be an important American ally in the region. Shortly thereafter, says Blandon, who is now in political exile in the U.S., "Harari told Noriega in front of me that Bush was very grateful for the help Noriega was providing."

Noriega is the classic embodiment of power Central American style, a composite figure of the political, military and criminal worlds. It was widely known at the CIA by 1977 that Noriega was abetting drug smuggling in the region and by the early 1980s that he was permitting the Medellín drug cartel – a ruthless syndicate estimated by the U.S. Drug Enforcement Administration to control eighty percent of the world's cocaine market – to launder billions of dollars through Panamanian banks. Noriega's personal commissions from his dealings with Medellín, according to Kozen, have amounted to an incredible $400 million.

Soon after Noriega was brought into the Black Eagle operation, he began to commandeer Black Eagle planes and pilots for drug-running flights to the southern United States, according to Lew Archer, who'd been assigned to keep the Panamanian strong man under surveillance. Instead of immediately demanding that the drug trafficking cease, says Blandon, U.S. policy makers struck a devil's bargain with Noriega. Under terms of the deal, one percent of the gross income generated by the drug flights was set aside to buy additional weapons for the contras. This eventually amounted to several million dollars.

While helping to raise funds for the contras, Noriega was pursuing a favorite pastime – adding to his store of potential political-blackmail material. An insatiable collector of "negative information" about both friends and foes, Noriega is known to have hidden video and audio equipment in government offices to record meetings and phone calls. Early in the Black Eagle operation, according to Blandon, Noriega began to compile a dossier about the role of Bush and his staff. In the dossier is said to be copies of status reports sent to Gregg and videotapes of meetings held in Noriega's office, plus a special report that Blandon prepared about Black Eagle on Noriega's orders.

"I've got Bush by the balls," Noriega boasted early this year, according to a former aide, Colonel Roberto Díaz Herrera, after the White House moved belatedly and unsuccessfully to oust Noriega. "Noriega has enough to sink Bush," Kozen says. Blandon adds, "This is why the Reagan administration is afraid of Noriega, because in this operation was involved Bush and his men."

Many of those familiar with the Black Eagle operation contend that Bush and Gregg were well aware that Noriega was turning Black Eagle flights into drug-smuggling flights. Jorge Krupnik, an Argenune arms dealer brought into the operation by Noriega, told Blandon that everything in the operation had the full backing of Bush and Gregg. According to Harari's description of the operation to Blandon, Gregg passed on plenty of information about the drug flights to Bush. Richard Brenneke, an Oregon-based arms dealer who brokered Black Eagle purchases in Czechoslovakia, says that he became disgusted after copiloting two drug flights but was told by Gregg not to question his orders. "This business with the dope was policy," says Kozen, "and George Bush was running the covert policy decisions."

The war in Nicaragua continued to lose favor in Congress, and in October 1984 a second Boland amendment went into effect. It ended all but humanitarian assistance to the contras and left them more than ever dependent on Casey, Bush and their operatives.

Bush began to involve himself more personally in the war. In March 1985 he traveled to Honduras to head off a diplomatic crisis. The Honduran president, Roberto Suazo Cordova, had never been enthusiastic about having to host the main body of the contra army, and now, with legal U.S. military aid cut off, he was apprehensive that the contras would turn to banditry. Before Bush interceded, Suazo had threatened to disarm the contras and move them into refugee camps. Bush talked Suazo out of it by assuring him that the contras would be maintained as a military force through funds being raised independent of Congress. "We will fight with everything we have," Bush reportedly said.

In anticipation of the second Boland amendment, a slush fund for the contras had already been created. NSC aide Oliver North had set up secret bank accounts whose assets eventually totaled more than $30 million, which he and other administration officials solicited from foreign governments. Bush, according to the Iran-contra report, was kept informed of these fund-raising activities. In May 1984, Bush was the first person notified, after the president, about a $1-million-a-month contribution promised by Saudi Arabia. According to the report, on June 25th, Bush was briefed about the fund raising at a meeting of the National Security Planning Group, and on September 18th, Gregg prepared a memo about the fund raising – as requested by the vice-president.

This money now became critical, not only because of Boland II but because Black Eagle was about to be shut down. A number of U.S. and Israeli field operatives had grown nervous about Noriega's increasing use of Black Eagle planes and pilots for drug trafficking. Noriega was indispensible to the operation, yet every flight ran the risk of exposure. The situation was rife with dissension, each side holding the other responsible for Noriega's corruption of Black Eagle. The Israeli agents were leery about being made the scapegoats if the operation were to unravel. The U.S. operatives, for their part, felt manipulated by Noriega's persistent efforts to pull them into his drug-trafficking schemes. "He tried all the time to set up Uncle Sam," the agent Lew Archer says. "He would get somebody to take a load to the U.S., and, presto, he's got you for life. This is his modus operandi. Compromise somebody, and then blackmail him."

The drug activity precipitated the Mossad's withdrawal from Black Eagle in late 1985, according to Kozen. When Kozen announced the decision in Honduras to a group of American and Honduran operatives, he recalls, "one called me a traitorous Jewish bastard and accused me of throwing them in the creek." An American operative drew a gun, at which point Kozen and two fellow Israeli agents drew theirs. For a moment it looked like an international incident was about to erupt, Kozen says, "until cooler heads prevailed."

But the real reason for the Mossad's withdrawal from Black Eagle may have had nothing to do with Noriega or drugs. Days earlier, Jonathan and Anne Henderson-Pollard, two Americans spying for Israel, had been arrested in Washington. Furious, the Mossad decided to retaliate by pulling out of Black Eagle, according to Archer and Blandon. "The Pollard case – that was the biggest part of it," says Blandon. 

On January 23rd, 1985, George Bush had a meeting with Oliver North. Afterward, North made a single, cryptic comment about it in his notebook: "Central America C/A." C/A is intelligence jargon for "covert action." North may have been referring to Black Eagle or to one of the new operations that were then just getting under way. For the shadow government, the end of 1984 and the beginning of 1985 was a time of great upheaval.

As Black Eagle was disintegrating, Casey asked North to organize an alternative operation, which became known as the Enterprise. By selling TOW missiles and missile parts to Iran, this new operation raised $48 million, $16.5 million of which was diverted to support the contras. But the Enterprise was slow to get going. The first Enterprise shipment, purchased in China, took five months by boat to reach Central America, arriving in April 1985.

In the interim an impatient Casey turned to a third weapons-smuggling operation. Known as the Supermarket, this operation purchased Soviet-made weapons in Portugal, shipping them first to warehouses in Honduras and then to the contra base camps. The Supermarket's principal organizers were not members of the shadow government but instead entrepreneurs who had learned about the contra slush fund and hoped to profit from it.

Two of them, Ronald Martin and Mario Delamico, were close friends of Felix Rodriguez's. Martin, an international arms dealer from Miami, had been introduced to Rodriguez in 1980. "He came to my house," Rodriguez told us. "I think he was impressed by all my medals on the walls." Delamico, a naturalized U.S. citizen born in Cuba, had once paid the travel expenses for Rodriguez's mother, who was dying of cancer and wanted to make a final visit to Guatemala.

Rodriguez admitted to us that he had lent a helping hand to Martin and Delamico. "I made a few introductions," he said. Theodore Klein, a Miami lawyer who represents the Supermarket, describes Rodriguez's role as an "arm's length" business relationship. But he refuses to be more specific.

Regardless of the motives of those behind the Supermarket, the operation was welcomed by the contra leadership and by Miami's powerful community of contra supporters. One of the best-known leaders of that community was John "Jeb" Bush, the vice-president's thirty-five-year-old son. While serving as the Dade County Republican-party chairman, Jeb Bush had been raising money privately to keep the contras intact. "The word on the street was that Jeb was the man to see if you wanted to help the contras," says John Mattes, a former assistant federal public defender. A 1985-86 U.S.-customs investigation of contra gunrunning implicated Jeb Bush, but he has denied any wrongdoing. The investigation of him was not pursued.

In the first ten months of 1985, Martin and Delamico delivered $2 million in weapons. At first North and Adolpho Calero, the civilian leader of the contras, approved the payments, but in late 1985, North suddenly ordered Calero to refuse all further Supermarket weapons shipments. To enforce the decision, North rearranged the secret bank accounts, eliminating Calero's authority to disburse funds and allocating the power strictly to himself. In the meantime, Martin and Delamico had continued their purchases, amassing an additional $18 million in weapons in Honduran warehouses, pending further payments. "They got left hanging," Rodriguez told us.

North testified before the Iran-contra committee that the reason he turned against the Supermarket operation was the mysterious origins of its start-up capital. Martin and Delamico were not themselves wealthy men, yet they had somehow managed to come up with $20 million to spend on weapons. "You don't buy arms on credit," says John Singlaub, a retired army general who also was raising money privately for the contras. "It's cash and carry." According to Singlaub, many people he dealt with thought that perhaps Martin's contacts in the Honduran military had raised the money by collaborating with Noriega. That assumption was based in part on the location of the Supermarket's holding company, Gretsch World, which had been incorporated in Panama City. (Klein denies that his clients had any involvement with Noriega.)

North had heard the rumors that Noriega was secretly financing the Supermarket. On July 12th, 1985, he wrote in his notebook, "discussion re Supermarket; [Honduran military] plans to seize all ... when Supermarket comes to a bad end; [cash] to finance came from drugs." In North's explanation of why he terminated the Supermarket, he implied that while others in the shadow government were willing to deal with Noriega, he was not. According to Blandon, however, North had been well aware of Noriega's involvement in Black Eagle and, in addition, had met with Noriega in an ultimately unsuccessful attempt to coordinate other covert operations on behalf of the contras.

Rodriguez, who says he does not know whether Noriega was the Supermarket's banker, is nevertheless bitter about how his friends were treated. He believes that North took advantage of the controversy to broaden his base of power and to secure for the Enterprise a virtual monopoly over the slush fund.

Throughout 1985 and 1986, the shadow government was racked by disputes and power struggles. The problems began with the competition for profits between the Supermarket and the Enterprise, with millions of dollars at stake for the arms dealers. But the central conflict involved the war of egos between North and Rodriguez. Perhaps the main reason the two men rubbed each other the wrong way was that they were so much alike – swaggering, much decorated Vietnam veterans, obsessed with communism and contemptuous of working within official government channels. There was profound irony in their rift: North was a favorite of William Casey's and Rodriguez was widely perceived to be George Bush's emissary. So the CIA director and the vice-president now found themselves uncomfortably on opposing sides in a number of arguments.

In August 1986, Rodriguez got into a petty dispute with one of North's pilots, William Cooper, later killed in the downing of the Southern Air plane. Everyone assumed, says Eugene Hasenfus, the crewman who was captured and subsequently released, that Cooper was "going to lose right away because [Rodriguez could go] back to the States – he knows George Bush personally." When Rodriguez and Cooper flew back to Washington, however, North was able to call on the higher authority of Casey to settle the disagreement in Cooper's favor.

Still, it irked North a great deal that Rodriguez had special access to the vice-president's office, and he accused Rodriguez of dropping Bush's name too freely. "Felix talking too much about VP connection," North wrote in his notebook. North complained to associates that Rodriguez was a "loose cannon" and went out of his way to harass him, imposing nit-picking restrictions on Rodriguez's modest expense budget at Ilopango while making almost no accounting demands on the millions being spent by the arms dealers.

As for Rodriguez, he considered North a power-mad bureaucrat. In one confrontation, after North had accused Rodriguez of carelessly using open phone lines, Rodriguez replied, "Stick this goddamn operation. Fuck it!"

For a while in 1985, it appeared that Rodriguez had removed himself from the ranks of the shadow government. In February of that year he began flying with Salvadoran troops on helicopter raids against leftist-guerrilla strongholds. Over the following months he went on more than a hundred raids and was nearly killed several times when his helicopters were hit. Yet authentic though the derring-do was, it may have been part of a cover story to disguise Rodriguez's real mission – his work on behalf of the contras. "Felix had such a high profile in Central America he needed a cover," Kozen says. Kozen's contention is denied by Rodriguez but appears to be borne out by a letter written in February 1985 by army general Paul Gorman, then commander of U.S. forces in Central America. The Gorman letter, which was sent to U.S. officials in the region, affirmed Rodriguez's role in the Nicaraguan war, noting also that Rodriguez's "acquaintanceship with the VP is real enough."

North was no doubt delighted to see Rodriguez go off to battle in El Salvador, but Casey and Bush may well have realized that without Rodriguez, whose close friend Bustillo still commanded the Ilopango air base, the Enterprise would have difficulty smuggling its weapons to the contras. By September 1985, Rodriguez had been reassigned to Ilopango, this time working for the Enterprise under circumstances bound to chafe at him – he had to take orders from Oliver North.

In the piecemeal paper trail of the Iran-contra affair reconstructed by congressional investigators, there is a surviving handwritten note from George Bush thanking North for his "dedication and tireless work with the hostage thing and with Central America." Bush has said he doesn't recall why he sent the note. But the timing of it, in November 1985, suggests that he was making a diplomatic overture to relieve the tensions that existed within the shadow government. Two months later, however, Bush apparently was having doubts about North, and he dispatched one of his own staff men, Colonel Samuel Watson, to inspect the contra base camps and supply warehouses in Honduras. Watson returned with a detailed report for Bush.

Meanwhile, back in Ilopango, Rodriguez was having trouble controlling his resentment of North. Along with Richard Secord, a retired army general, North was now effectively calling the shots on the contra arms shipments. In late 1985, North had approved Secord's bringing into the Enterprise another arms broker, Thomas Clines, a bitter enemy of Rodriguez's. Clines, a former CIA official, and Rodriguez had once been friends, working together on weapons deals in the late Seventies. But now Rodriguez detested Clines, whom he believed had betrayed him when Clines began entertaining the idea of doing business with Libyan leader Muammar Qaddafi, an ally of Castro's. "I swore I'd never have anything more to do with him," Rodriguez told us.

From the point Clines joined the operation late in 1985, the Enterprise seemed destined for the same fate as the Supermarket and Black Eagle. Rodriguez openly criticized Clines and other Enterprise operatives. Gregg too was infuriated that Clines had been recruited. "Goddamnit, he's a darn snake," Gregg told North's deputy, Lieutenant Colonel Robert Earl.

Rodriguez was angered by the profiteering of some arms brokers working for the Enterprise – who allegedly marked up weapons as much as 300 percent – and by the shoddiness of the operation's equipment. When an Enterprise plane crashed, killing most of the crew, he blamed it on faulty radar.

By the spring of 1986, the shadow government that Casey and Bush had assembled four years before was breaking apart. The morning of May 1st, 1986, Rodriguez walked into North's office in Washington and told him to find someone else for Ilopango. That caused a small panic. A few hours later, while Rodriguez was showing off his photo albums of Central America to Bush and Gregg in Bush's office, North dropped in for an unscheduled visit, along with Edwin Corr, the U.S. ambassador to El Salvador. (The official agenda for that now famous meeting listed "resupply of the contras" as a topic for discussion, although Bush and Gregg deny the subject ever came up.) When North and Corr arrived, Rodriguez has testified in a deposition, "North stayed in the background [and] the ambassador said hello to all of us and then asked the vice-president to use his influence in getting me to stay." Put into a position where he could hardly say no, Rodriguez reluctantly returned to his Ilopango post.

North then attempted to placate Rodriguez by sending him a phony organizational chart with North's name removed. But Rodriguez saw through this trick, and relations between them continued to deteriorate. In July 1986, Rodriguez flew an Enterprise plane from Miami to El Salvador and then, in a symbolic gesture, confiscated it in the name of the contras. Next he began refusing passage through Ilopango to any Enterprise flights. North made repeated complaints to Bush's two men, Gregg and Watson. "You're the only one who can control Felix," North said to Gregg, exploding in exasperation.

Then, on August 8th, 1986, Rodriguez appeared in Gregg's office to register his own formal complaint. The Enterprise operatives, he told Gregg, were "running a corrupt, shoddy, unsafe operation." Four days later, Gregg called an emergency meeting. North, perhaps afraid he'd lose his temper, sent his deputy in his place. A semblance of unity was restored. Weapons resumed going to the contras on Enterprise planes until Sandinista artillerymen happened to hit the Southern Air cargo plane on October 5th, 1986, setting off a cover-up that was almost successful.

Ever since the iran-contra scandal broke, in late 1986, the vice-president and members of his office have vehemently denied their involvement. "There is this insidious suggestion that I was conducting an operation," Bush has said. "It's untrue, unfair and totally wrong." In response to repeated inquiries during this year's presidential campaign, Bush has stuck to his basic story, insisting that he and his staff were exonerated by the Iran-contra committee. That investigation, however, focused on North's Enterprise operation and its Iranian connections. It made only oblique reference to the Supermarket and no mention at all of Black Eagle. Bush considers the whole issue to be "old news." He says, "You get sick and tired of saying, 'I've told the truth.'"

Now the presidential candidate is refusing to answer any more questions. Asked to respond to the allegations in this article, Bush had his deputy press secretary, Kristin Taylor, reply for him. "He will stand on the statements he's already made," she said. Felix Rodriquez Donald Gregg Manuel Noriega George Bush