Mr. NIELDS. What was the nature of the project that you were then engaged in having to do with the Contras?

Mr. SECORD. In November of 1985, I was at the very beginning of a complex project we referred to as the "airlift project," a project which was designed to ultimately make air drops, parachute air drops to various Contra forces.

Mr. NIELDS. In Nicaragua?

Mr. SECORD. In Nicaragua.

Mr. NIELDS. Now, Mr. Secord, such an operation, I take it, requires finances?

Mr. SECORD. Yes, it requires millions of dollars.

Mr. NIELDS. Where was the money supposed to come from to support this air supply operation?

Mr. SECORD. The money was coming from donated funds and these funds were coming, as I understand it, from private individuals and from some friendly countries.

Mr. NIELDS. And where were these moneys being put?

Mr. SECORD. In November of 1985 they were being deposited in a Swiss bank account in favor of a company, a Panamanian company, Lake Resources, Incorporated?

Mr. NIELDS. And who controlled the Lake Resources, Incorporated?

Mr. SECORD. Mr. Albert Hakim was the person who was in control of this account and others that were created for various support purposes—but there was, at my request, and really under my oral direction.

Mr. NIELDS. And was Mr. Hakim then a business associate of yours?

Mr. SECORD. Yes, he was.

Mr. NIELDS. How did the donors know where to put the money, to your knowledge.

Mr. SECORD. I gave the account name and number to Colonel North and he, in turn gave it to whomever was interested.

Mr. NIELDS. I take it then, Mr. Secord, that at the time that you received this letter requesting your assistance on the Iran initiatives, there was then in existence in Switzerland a bank account containing money for the benefit of the Contras.

Mr. NIELDS. And that bank account was Lake Resources?

Mr. SECORD. Yes.

Mr. NIELDS. At a later point in time, February of 1986, and forward, were the proceeds of arms sales to Iran also put into the same Lake Resources bank account?

Mr. SECORD. Yes, they were.

NIELDS. What was the total amount of money representing the purchase price of arms sold to Iran that was put into the Lake Resources or related Swiss bank accounts?

Mr. SECORD. Something over $30 million.

Mr. NIELDS. I take it by your answer that means something just a very little bit over $30 million?

Mr. SECORD. Yes.

Mr. NIELDS. So if you were speaking in round numbers, it would be $30 million?

Mr. SECORD. Yes, sir.

Mr. NIELDS. How much money was paid, to your knowledge, either directly or indirectly to the U.S. Treasury out of that money?

Mr. SECORD. I believe it was about $12.3 million.

Mr. NIELDS. So in round numbers, $12 million?

Mr. SECORD. $12 million.

Mr. NIELDS. I want to ask you some questions about, I think you will agree there is a difference there of approximately $18 million. I want to ask you some questions about where that money went. Before I do, let me ask you this. Up until a few days ago, did you have access to the records necessary to determine where that money went?


Mr. NIELDS. Who did?

Mr. SECORD. The committee, the House and Senate Select Committee had these records which they received recently from Mr. Albert Hakim.

Mr. NIELDS. So that prior to that time Mr. Hakim had the records?

Mr. SECORD. Correct.

Mr. NIELDS. Mr. Hakim identified in testimony given to this committee some eight Swiss bank accounts relating to the flow of this money that you just have been testifying about. Those records were then subpoenaed from him by the committees, both committees and they are now undergoing a preliminary review by accountants working for the two committees. The records reflect that there is now in the bank accounts approximately $1,360,000. In addition, Mr. Hakim has testified to the committees that $6,527,000 of this money is presently being held in an account for his benefit by a Swiss fiduciary. Those two numbers total approximately $8 million, and if you subtract that from the $18 million difference that you testified about a moment ago, that leaves $10 million presently unaccounted for. I want to ask you what happened to that $10 million, how it was spent and again before I do, I am going to ask you whether you have been given access to print-outs of the disbursements from these various bank accounts by the committee during these past few days?

Mr. SECORD. Yes, I have.

Mr. NIELDS. And have you reviewed those together with the Members of the committee?

Mr. SECORD. Yes, I have conducted a preliminary review of these records.

Mr. NIELDS. Based on that review, can you give us now an approximate amount of money from the process of the sales of arms to Iran, which went to the benefit of the Contras?

Mr. SECORD. Based upon my review of Mr. Hakim's records, in which I identified all disbursements that I could locate, which were identified with the various Contra projects, it appears that approximately $3.5 million of these funds were expended in support of the airlift project, the various Contra projects.

Mr. NIELDS. How did you arrive at that number?

Mr. SECORD. By going through Mr. Hakim's records in detail and identifying the disbursements that were made for these projects.

Mr. NIELDS. And what was the total amendment of disbursements that you identified from February 1986.

Mr. SECORD. Between $5 and $6 million.

Mr. NIELDS. And did you then try to determine what other sources of funds those disbursements might have come from?

Mr. SECORD. Yes. And we located donations that came in during the timeframe for the Contra projects of $1.649 million. In addition to that, there were in the accounts in February of 1986 some $470,000. So if you total those two numbers, you have about $2 million.

Mr. NIELDS. And you have assumed all of that $2 million was spent on Contra projects?

Mr. SECORD. It was.

Mr. NIELDS. And then the remaining amount of money that was spent on Contra projects, I take it, had to come out of the proceeds of the arms sales to Iran.

Mr. SECORD. That is the method we used; that is correct.

Mr. NIELDS. Can you give us a little bit more detail on the subject of just what kinds of expenditures for the benefit of the Contras were made out of these bank accounts?

Mr. SECORD. The airlift project had three components to it. The procurement and the operations of the aircraft, of course. That meant two C-123 K transport aircraft, two Caribou aircraft, and one light utility airplane, a Maule, so there were five aircraft to support it. We also were required to construct an emergency landing field in one of the Central American countries. That was the second component, and the third component was the procurement of limited quantities of munitions, light infantry munitions for the purpose of troops, air drops, to the southern Contras, the Contras located in the southern part of Nicaragua.

Mr. NIELDS. Did you have to spend money on salaries in addition?

Mr. SECORD. Yes, of course. To support the airlift operation we spent money on salary, fuels, spare parts, on maintenance, on support for the air crews.

Mr. NIELDS. Was there any money paid to Contra leaders?

Mr. SECORD. Yes.

Mr. NIELDS. Who and how much?

Mr. SECORD. There was a monthly disbursement of $10,000 a month to one Contra leader and $5,000 a month to another. That is Robelo and Cruz, and on several occasions we made disbursements to Mr. Adolfo Calero's account with the FDN, the main body of the Contras.

Mr. NIELDS. During this period of time were there any payments directly to Mr. Calero, past February 1986?

Mr. SECORD. I believe there were some. I would have to look at the records to refresh my memory on that point, but I think there was $200,000 disbursed during that period for the FDN contras.

Mr. NIELDS. In any event, your memory is there was $200,000 at some point in time, and you would be willing to refresh your memory on that question by further consultation with the records?

Mr. SECORD. Yes, sir.

Mr. NIELDS. Now, by my calculation, after approximately three and a half or so million dollars was spent on the Contras, there is still something over $6 million which we have not yet accounted for. How was that money spent?

Mr. SECORD. Well, there were in the vicinity—and we added these expenses up, too, by looking at Mr. Hakim's records—there were in the vicinity of $3 million spent in support of the Iran project, basically on the transportation of materials from the United States to Iran.

Mr. NIELDS. And that still leaves a little over $3 million unaccounted for. What was that money spent on? Let me rephrase that question. Were there other projects on which money was spent that were neither Iran nor Nicaragua related?

Mr. SECORD. Yes. There was a requirement to procure a small ship in April of 1986, and then to operate that ship from then until the end of the year, ultimately, and that was a substantial expense. The procurement cost was about $350,000, and there were monthly operational costs. We have not yet audited those accounts.

Mr. NIELDS. And when you said there was a requirement, was the ship bought for private purposes or was this ship bought for governmental purposes?

Mr. SECORD. This ship was bought for, initially, to be used on another Government project which is not related to Iran.

Mr. NIELDS. Was it related to Nicaragua?


Mr. NIELDS. And at whose request was the ship purchased?

Mr. SECORD. I received the request from Colonel North.

Mr. NIELDS. Were there any other projects or purposes for which money was spent? Mr. SECOHD. Yes. There was $100,000 expenditure to buy radiotelephone equipment for a Caribbean country. This was a request that we received from Colonel North. And then there were expense payments made. We have yet to determine the exact amount of these payments—made to U.S. Drug Enforcement Agency agents who were working on a separate project to try and locate and rescue some American hostages in Lebanon.

Mr. NIELDS. How were those expense payments made?

Mr. SECORD. They were made in cash.

Mr. NIELDS. How?

Mr. SECORD. In some cases the cash was given to Colonel North. He would give the money to the agents for the expense bills that they submitted, and in some cases the money was picked up by the DBA people Europe.

Mr. NIELDS. Was any explanation ever given to you as to why the DEA agents' expenses were being paid for in cash out of Lake Resources' bank account?

Mr. SECORD. Yes. I was told that the Director of the Drug Enforcement Agency had agreed to detail some agents to this project from time to time, but the expenses of these agents would have to be born by outside financing. So, we financed.

Mr. NIELDS. Mr. Secord, if I may attempt to summarize—before I do that, I guess I should say, are there some additional expenditures that at this point in time you have not been able to identify the purpose of?

Mr. SECORD. That is correct. This unquantified balance that we are talking about right now, the $2 to $3 million probably something on the order of $2 million, we have not yet been able to identify the other elements of overhead and expense that had to be paid out of this, and I am sure we will get to this before too long.