WASHINGTON — A pilot told a Senate hearing Wednesday that his firm contracted with the State Department to fly clothing to Nicaragua's Contras in 1986 at the same time he was operating as an undercover drug smuggler for two federal agencies.
Michael Palmer, appearing under heavy guard, said that before he started working for the government in his extraordinary dual role, he had illegitimately smuggled $40 million worth of marijuana into the United States from South America over an eight-year period.
The Justice Department dropped smuggling charges against him last year, he said, apparently because of his value as a witness in cases developed while he was an undercover agent for the Drug Enforcement Administration and U.S. Customs Service. Several others indicted along with Palmer were convicted and imprisoned.
Palmer's testimony Wednesday was protected by a grant of congressional immunity.
Sen. John F. Kerry (D-Mass.), presiding at the hearing of his Foreign Relations subcommittee on terrorism, narcotics and international operations, denounced the "absurdity" and "impropriety" of giving a $97,000 Contra-supply contract to "someone involved in drug operations for a long period."
"There will be other witnesses who will testify about running drugs simultaneously while running supplies to the Contras," Kerry said.
Sources said the State Department's Nicaraguan Humanitarian Aid Office awarded the contract to Vortex Aircraft Sales and Leasing because it was on a CIA list of suggested vendors. The General Accounting Office, an audit arm of Congress, has reported that there has been accounting for a large amount of the money that went to Vortex.
Robert Duemling, former director of the aid office, is scheduled to testify about the contract today.
Palmer, who was vice president of Miami-based Vortex and a former pilot for Delta Air Lines, denied at the hearing that he was a CIA agent but hinted that Vortex had done maintenance work for the agency.
He also indicated that he had sold one of the firm's DC-6 aircraft to a CIA proprietary company in 1986 for $320,000, turning a profit of more than $100,000.
Palmer, who said he used to keep more than $1 million in cash in tool boxes at his home, claimed that he stopped dealing in drugs after serving three months in a Colombian prison for a botched marijuana pickup in 1985.
Palmer described in detail a harrowing undercover mission for the DEA and Customs Service in 1986 that almost ended in disaster, partly because some customs agents did not trust him and partly because other customs agents were unaware of the operation.
Palmer said that when his marijuana-laden plane developed engine trouble on the way from Colombia to Detroit, Mich., a trailing customs plane did not offer critical navigation assistance, apparently suspecting that Palmer might be trying to make a getaway.
When Palmer landed, he said, two heavily armed customs agents arrested him after a communication breakdown that took time to resolve.
Kerry said the incident raised serious questions about the ability of law enforcement officials to stem the massive tide of drug imports into the United States.
Earlier, Ramon Milian Rodriguez, a convicted money launderer for the Medellin drug cartel based in Colombia, testified that it will be tough to curb massive cocaine trafficking because everybody--from coca-growing peasants to corrupt officials to money-laundering banks--thrives on the trade.
And, he said, fiscally strapped Latin governments "cannot do without drug cash."