CARLOS A

FERNANDE

PILVENO WISE M

GUILLERMO

MADIEL R

GUILLERMO M

HUBERTO J

ANTONIS

RICARDO C

CASTILLO V

HERRERA

OSSA RIVERA

WATSON G

BARRET E

General MCAULIFFE. I have to say that I have never seen this or even anything that might have looked like an earlier version or even a later version of this. I am not familiar with it.

Mr. O'BRIEN. I would note for the record that this was transmitted to President Carter by Chairman Murphy by letter in 1977. Would you look at the name that is asterisked by staff at page 5 and read the name?

General MCAULIFFE. The name by the asterisk is Edgardo Lopez, and I am not sure what this purports to show here.

Mr. O'BRIEN. That is, according to the authors of the document, purportedly a payroll of the Panamanian G-2 section of the National Guard. General McAuliffe, do you know if any of the Department of Defense funds have ever been disbursed, either appropriated or unappropriated, to members of the G-2 section?

General MCAULIFFE. No; not to my knowledge.

Mr. O'BRIEN. At any time during the last 20 years has any agency of the U.S. Government, to your knowledge, disbursed any funds whatsoever to any members of the Panamanian National Guard G-2 section?

General MCAULIFFE. I do not believe I can answer that categorically. I will have to say that I certainly do not know about anything of that nature. I learned informally the other day that a question to that effect would come up, and I have had some inquiry started and, so far, I find nothing.

Mr. O'BRIEN. Would you be able to provide a more detailed answer in a secured setting?

General MCAULIFFE. I would be pleased to.

Mr. O'BRIEN. Do you have sufficient information regarding Mr. Lopez and his affiliation with the G-2 section which you would be prepared to provide in a secret setting?

General MCAULIFFE. No; I do not with me, no.

Mr. O'BRIEN. Does the State Department?

Mr. GROVE. No, sir.

Mr. O'BRIEN. Going back to your question, the earlier question about the document testified to by Colonel Thomas, you indicated that you have read documents pertaining to Cuban involvement. Is that correct?

General MCAULIFFE. I have read all sorts of intelligence reports, some of which capture rumors and others facts, literally about every country in the region.

Mr. O'BRIEN. Could you indicate what the level of classification would be for that type of material?

General MCAULIFFE. I think the kind I am referring to is what I would call compartmentalized intelligence.

Mr. O'BRIEN. That is above top secret?

General MCAULIFFE. Correct.

Mr. O'BRIEN. And you could provide that for us in a closed session?

General MCAULIFFE. Such information could be marshaled for a closed session; yes.

Mr. O'BRIEN. Let me nail this down too while we are on that subject. We have distinguished between agents that were employees of the Panamanian Government and between private citizens who happened to be Panamanian citizens.

Do those reports speak to the former or the latter? Do they refer to agents of the Panama Government or to private citizens? Can you say that to us without going into classified session?

General MCAULIFFE. I guess it depends on what is the general nature of the subject. But I have seen intelligence reports pertaining to members of the Government, citizen groups and whatnot. It sort of depends on the nature of the activity, so to speak.

Mr. O'BRIEN. You just used the term members of the Government. You have read in those reports of members of the Panamanian Government who have been associated with the illegal transmission of arms? Is that a correct restatement of what you just told me?

General MCAULIFFE. No. I think that in order to get into the substance of those kinds of reports, I would ask that there be a closed session.

Mr. O'BRIEN. I will not ask the chairman to read back your immediate answer right now. But I believe you said members of the Government were referred to in those reports. Am I not correct that you said that in your initial answer to me?

General MCAULIFFE. Yes. But I think you were asking me whether I have seen reports about activity or pertaining to members of the Government in Panama as opposed to others. I said certainly I have because there are all types of reports and with various shades of credibility that come my way.

Mr. O'BRIEN. Secretary Grove. According to the New York Times November 29, 1978, Hodding Carter III, indicated that our Government had been unable to confirm reports that "Cuban and other Latin American governments had been supplying weapons to the Sandinista National Liberation Front."

It continues, "Nonetheless, Mr. Carter continued, we have raised these concerns with Cuba and, I emphasize, other governments.” That is from the New York Times.

What other governments was he referring to?

Mr. GROVE. I do not have that account in front of me. You said November 29, 1978, is that correct?

Mr. O'BRIEN. That is correct.

Mr. GROVE. In the press briefing on November 28, Mr. Carter said in response to a question:

We have seen the reports that various governments, including Cuba, have sent assistance, to the Sandinistas, some of it allegedly through Panama. They are obviously being studied, though I am not able to confirm them. We have raised these reports with the pertinent governments-specifically, if you ask me, yes, Cuba; yes, others. I am not going to comment any further on our representations, but let me say they were raised directly.

That was a correct statement at the time. We are still not able to definitely confirm the intelligence reports. We did give them sufficient weight to raise them with the governments concerned.

We expressed our strong view that the activity described in the report would only increase the bloodshed and violence in Nicaragua, and undermine efforts by the OAS to reach a democratic solution in Nicaragua.

Panama was one of the countries with which these reports were raised. We were assured that Panama shared our concern, and

would support the mediation effort of the OAS in Nicaragua. The Government of Panama did support that effort.

Mr. O'BRIEN. What form did those communications take? Were they written or oral?

Mr. GROVE. I am sorry. I would rather provide that for the record.

[The following information was supplied:]

Our views were expressed orally.

Mr. O'BRIEN. By whom and on what date?

[The following information was supplied:]

This was done in Panama by our Ambassador on November 18, 1978.

Mr. O'BRIEN. Let me ask you a hypothetical question. Assume that these cases are adjudicated, and in the course of that, the affidavit testimony of Agent Kimbler is proved to be credible; namely, that he spoke with Mr. Lopez, and that Mr. Lopez did indeed confess his complicity in the arms transactions; and that indeed, he was acting as an agent of Panama from instructions of his leadership.

What action would the State Department then take?

Mr. GROVE. We would have to take that very seriously, indeed. I am not a lawyer, and I cannot tell you what exactly we would do. But I can assure you that we would take that very seriously indeed.

Mr. O'BRIEN. In your estimate or the estimate of the counsel accompanying you, would that come under Article XV of the OAS Charter which proscribes any direct or indirect interference in any form in the internal affairs of another country?

Mr. GROVE. I will ask that we take that one and provide a written reply.

[The following information was supplied in response to the above:]

PANAMANIAN CONSUL

In his affidavit, Special Agent Donald Kimbler, of the U.S. Bureau of Alcohol, Tobacco and Firearms, has stated that the Panamanian Consul told him "he has been involved in at least seven firearms transactions. . . [involving] the purchase of over two hundred firearms to be exported from the United States" and that "he had received his instructions from an offical of the Panamanian G-2, an intelligence agency of the Republic of Panama." In a subsequent diplomatic note, the Panamanian Government has confirmed that the consul was acting under instructions in the purchase of these arms and that they were intended for, and are presently under the control of, the Panamanian National Guard. While it is alleged in the indictment that some of these arms may not have been exported from the United States in accordance with domestic licensing requirements, neither their purchase nor export would violate Article 18 of the OAS Charter as such acts by themselves do not constitute intervention in the affairs of another state.

Mr. O'BRIEN. In that general subject area, in the opinion of the State Department, would aiding, abetting, or directing the transshipment of military weapons to an irregular guerrilla force indeed constitute a violation of this same article or any other provision of this OAS Charter?

Mr. GROVE. I would also like to provide an answer for the record. [The following information was supplied in response to the foregoing:]