CHAPTER EIGHTEEN

Following Ronald Reagan’s presidential election, one of his great concerns was the perceived communist threat throughout Latin American. Many years of Castro had taken its toll on the United States and fears of yet another communist-led government established anywhere in the Western Southern Hemisphere was foremost in the minds of those in a position to influence American policy in that region. So the Reagan administration resorted to some questionable and illegal tactics to stop this perceived communist threat, beginning with the United States’ government-backed attempt to overthrow the democratically elected Daniel Ortega-led San-dinista government in Nicaragua. He accomplished this by clandestinely shipping money and arms to equip a right-wing insurgent group known as the Contras. When Congress discovered what was taking place, however, and that the Contras were guilty of rape, murder, kidnapping and other hideous crimes, and fearful of U.S. involvement in another protracted Vietnam-like situation, they passed a number of measures to ban the flow of money and arms. The first of these laws, the Boland amendment, was enacted in December 1982 and followed by other versions that remained in effect until October 1986.

Congress believed this legislation would eliminate the shipments as it prohibited them outright. However, the Reagan Administration’s illicit response was to “privatize” the operation. This was undertaken through the efforts of individuals such as then Defense Secretary Casper Weinberger; former CIA Director, William Casey; former National Security Advisor, Robert McFarland; retired Admiral John Poindexter; Lt. Colonel Oliver North; former General Richard Secord; and others, allegedly including then Vice President George H. W. Bush, along with a host of other sleazy characters thrown into the mix. Highly secretive, hush-hush sales of arms, including anti-tank, anti-aircraft missiles and other weapons, were made to Iran for support in its war with Iraq, with the supposed “private” profits diverted to support the Contras, in direct and clear violation of a number of U.S. laws. But this wasn’t a private operation at all. Instead it was subterfuge, a clandestine federal government within the government, a CIA-run undertaking. Only a very few, hand-chosen people within the Executive Branch were even aware of its existence. It was run furtively out of the White House basement by North, who resorted to arm-twisting of wealthy benefactors to make certain the shipments continued.

One of this illicit operation’s biggest logistical problems was physically transporting the large amounts of money from the arms purchases to a location where the funds could be laundered. At the outset, this was done mostly in offshore banks in the Bahamas, with private charter planes utilized. Since this was a top-secret operation, there was guaranteed entry back into the United States, with no questions asked.

Some of the disreputable characters involved in the scheme quickly realized that anything could be brought back, including illegal drugs. It didn’t take long until unprecedented amounts of drugs began flooding American streets. But the goings-on became so huge that they could no longer be kept in check. A few of the people involved were finally apprehended, which put the entire operation at risk of exposure. So the use of small planes was abandoned and Eastern Airlines was chosen as the carrier of choice, with the new money routing process moving the cash from the United States through Panamanian banks. Of course, when he discovered what was taking place, then-US. ally Panamanian dictator Manuel Noriega cut himself in on a percentage of the deal.

Since Panama City was Eastern’s hub for its South American flights, it was a natural fit, as there would be no special attention paid to large, unmarked pallets of “air freight,” which were actually cash. This was facilitated even further because U.S. dollars are officially used by Panamanian citizens, meaning the expenditure of U.S. currency was commonplace in Panama, as it has no paper currency of its own. Additionally, there were no foreign exchange restrictions in place in Panama during this timeframe.

But Eastern was soon more than just the best selection for smuggling the money into Latin America for laundering. It quickly became the carrier of choice for smuggling drugs back into the States, the amounts of which were truly mind-boggling. Smugglers later admitted to drug loads worth hundreds of millions of dollars.

Like most Eastern employees, I had heard stories of enormous amounts of drugs discovered aboard our planes returning from South America, with no special measures apparently being taken to stop it. To give you an idea exactly how large these amounts were, I secured official U.S. Customs records for the first part of 1984 under the Freedom of Information Act. These records indicate there were 232 pounds of cocaine seized on Eastern planes in twenty separate incidents. At the time, these drugs had a wholesale value in excess of $2 million and a street value of over $17.5 million. And these cases covered less than one year and only represented the tip of the iceberg, since they were only the drugs that were interdicted. From mid-1984 until January 1989, a period of just over four years, official government records revealed there were 2,723 pounds of cocaine, over a ton, and 826 pounds of marijuana seized by Drug Enforcement and U.S. Customs on Eastern aircraft flying into the United States.

These numbers represent an estimated total street value of over $2 billion! At the time, officials estimated that twenty to twenty-five percent of the total amount of cocaine smuggled into the U.S. entered the country via Eastern. The numbers were so mind-boggling that when reported by the media they could no longer be ignored, with federal lawmen forced into taking action. Standard U.S. Customs procedures call for impounding the mode of transportation responsible for the importation of illegal drugs and subsequently selling them at auction. Advertisements appear in many newspapers for these cars, boats and planes. In the case of Eastern, however, although the aircraft were initially confiscated, within hours they were returned. Fines were levied, which until February 1989 amounted to over $21 million. But according to the official U.S. Customs records, of this amount, only a paltry $465,808 was actually paid. That amount equals roughly 02.2 percent of the total fines. Could you imagine being fined, say, $100 for speeding, and paying the court only $2.20? First you would be laughed at and then thrown in jail. Yet that is what Eastern got away with, and you would be astute in wondering why this was so.