CIA GAVE AT LEAST $10 MILLION
TO PERU'S EX-SPYMASTER MONTESINOS
by Angel Paez
The Public i, September 2001
Center for Public Integrity
The Central Intelligence Agency gave ex-Peruvian spymaster
Vladimiro Montesinos at least $10 million in cash over the last
decade, as well as hightech surveillance equipment that he used
against his political opponents, the Center for Public Integrity
Montesinos, who faces trial on murder, arms and drug trafficking
charges, among others, had founded and personally controlled a
counter-drug unit within Peru's National Intelligence Service,
known by its Spanish acronym SIN.
It was to that Narcotics Intelligence Division, known as DIN,
that the CIA directed at least $10 million in cash payments from
1990 until September 2000, U.S. officials told the Center's International
Consortium of Investigative Journalists. Most of the money was
to have financed intelligence activities in the drug war, though
officials said a small part was for antiterrorist activities.
The CIA knew the money was going directly to Montesinos and
had receipts for the payments, the sources said. "It was
an agency-to-agency relationship," said one U.S. official,
speaking on condition of anonymity in Lima, the capital, "with
Vladimiro Montesinos as the intermediary . . . Montesinos had
the money under his control."
The material on Montesinos is based on multiple interviews
with U.S. and Peruvian officials.
A CIA spokesman in Washington refused to confirm or deny that
the agency had helped fund DIN, and that part of those funds went
However, an intelligence official who asked not to be further
identified confirmed that Montesinos had pocketed some, but not
most, of the funds. He said that the CIA had been fully aware
that Montesinos was involved in corrupt deals and that the CIA
had briefed the National Security Council, State Department and
Pentagon about the alleged corruption. He said the agencies directed
the CIA to continue to work with Montesinos because he was Peru's
designated chief of counternarcotics and the only game in town.
Montesinos disappeared in October as the regime of Peruvian
President Alberto Fujimori collapsed under wide-ranging corruption
allegations and was seized in Venezuela on June 23.
REPORTS SHRUGGED OFF
Over the years, the United States accumulated plenty of evidence
of corruption, human rights abuses and other antidemocratic actions
by Montesinos, but it shrugged off the reports because Montesinos-
the unofficial head of the National Intelligence Service- was
a CIA asset deemed key to Washington's drug war.
But the final blow appeared to be Montesinos' double-dealing
in Colombia. Montesinos used his CIA-backed position of influence
to get rich and to betray his benefactors. He arranged an arms
deal that sent at least 10,000 AK-47 assault rifles from Jordan
to Colombia's leftist FARC guerrillas, collectively public enemy
number one in the U.S. war on drugs in Latin America and the main
target of Washington's $1.3 billion counternarcotics aid package
Montesinos had long been fingered as corrupted by drug money,
although many of the earlier claims that surfaced came from arrested
drug dealers. But by 1997, the State Department began to document
Montesinos' questionable activities in its annual human rights
reports. The Senate Appropriations Committee noted in 1999 that
it had "repeatedly expressed concern about U.S. support for
the Peruvian National Intelligence Service" and requested
that it "be consulted prior to any decision to provide assistance
to the SIN."
DIVERSION NO SURPRISE
The CIA suspected that Montesinos was involved in some illegal
activities and was not surprised when informed of the diversion
of funds, U.S. sources said. It continued doing business with
him "because he solved problems, including problems he created
himself," one U.S. source told ICLl.
The U.S. Embassy has provided Peru's anti-corruption prosecutor
with detailed information about the CIA's payments to Montesinos
in response to the Peruvian government's wide-ranging investigations
into Montesinos' malfeasance. The prosecutor, Ana Cecilia Magallanes,
has told U.S. Officials that she has documents showing the diversion
of SIN money, including the CIA payments, toward illegal activities.
Sources would not elaborate on what those activities included,
but the prosecutor said it did not appear that those monies were
diverted into Montesinos' personal accounts.
However, Peruvian prosecutors also allege that Montesinos
collaborated with drug traffickers, who paid him and his associates
protection money. After 10 years as the power behind Fujimori,
Montesinos had at least $264 million deposited in foreign bank
accounts in Switzerland, the United States, the Cayman Islands
and other nations, Peru's equivalent of attorney general, Nelly
Calderon Navarro, announced in June.
According to U.S. Embassy officials in Lima interviewed by
ICIJ, the SIN's narcotics intelligence unit was funded and assisted
by both the CIA and the State Department's Bureau for International
Narcotics and Law Enforcement. The State Department's share included
$36,000 in 1996, $150,000 in 1997 and $25,000 in 1995, according
to U.S. Embassy officials. In 1999, State withheld aid to the
SIN because of congressional anger about reports that Montesinos
was using the unit to gather intelligence on the regime's political
Three separate Peruvian military intelligence sources told
ICLJ that surveillance equipment provided by the CIA for use in
the drug war was instead used by the SIN to intercept the conversations
of opposition political figures, journalists, businessmen and
military officers suspected of disloyalty to the Fujimori regime.
"Intelligence services" were sold to wealthy individuals,
corporations or influential officers. A buyer could pay $1,000
to $2,500 per week to receive intercepts from the tapping of a
single phone. Or, the military intelligence sources said, the
wealthy buyers could pay spies to gather other information about
individuals of their choosing.
SUPPORT BEGAN IN 1970s
The CIA began supporting Montesinos in the mid-1970s when
he, as a middle-ranking Peruvian army officer, came to Washington
on an unauthorized visit and handed over documents concerning
Soviet arms deals with Peru. When the CIA learned of Montesinos'
double-dealing with Colombia's FARC guerrillas, according to U.S.
and Peruvian sources, it decided to try to bring him down.
The demise began with the mysterious release of a videotape
showing Montesinos paying a $15,000 bribe to an opposition politician
in September 2000. Hundreds of videotapes subsequently made public
showed Montesinos and his subordinates paying off politicians,
businessmen and journalists.
Fujimori, who was re-elected president in June 2000 and amended
the Peruvian constitution in order to retain the office for nearly
three presidential terms, fled to Japan, where he resigned from
office on Nov. 20, 2000.
Angel Paez is a Peruvian member of the Center for Public Integrity's
International Consortium of Investigative Journalists.