Josef Mengele, the Nazi doctor known as the "Angel of Death" at the Auschwitz concentration camp, may have been "heavily involved in narcotics traffic" from his home in Paraguay in the 1970s, according to CIA documents released yesterday.

The declassified material shows that Mengele, the most notorious accused Nazi war criminal believed to be still at large, traveled freely in South America, did not try to hide his identity, and may have lived under the protection of Paraguayan President Alfredo Stroessner.

The Central Intelligence Agency began receiving reports of Mengele's alleged involvement in drug trafficking in 1972, and as recently as 1979 it asked other federal agencies if they had any information on Mengele, wanted for prosecution in West Germany and Israel.

Sens. Arlen Specter (R-Pa.) and Alfonse M. D'Amato (R-N.Y.), who released the documents, charged that federal officials failed to follow up leads about Mengele and asked the U.S. government to lead a worldwide hunt for him.

Nazi atrocities are "a chapter in history that the United States wants to sweep under the rug," Specter said. "Nobody really gives a damn about Nazi war criminals."

Mengele, who would be 73 if alive, was a physician and former major in the Nazi secret police who allegedly sent thousands of concentration-camp prisoners to their deaths in gas chambers and used others, including many children, in painful medical experiments.

The Simon Wiesenthal Center in Los Angeles has offered a $1 million reward for information leading to his capture and extradition.

The 28 pages of heavily-censored CIA documents provide many fascinating glimpses of Mengele's life, but it is difficult to determine how much of the information is credible or is hearsay.

A 1972 document said that Mengele arrived in Paraguay for the first time in 1951 and lived alternately there and in Brazil, Argentina and Uruguay, working at times as a salesman for a West German farm-machinery firm owned by his family, and as an auto mechanic.

Mengele "never tried" to hide his identity in his early years in South America and in 1959 was naturalized as a Paraguayan citizen under his own name, another document said. In 1970 the CIA reported rumors that Mengele lived at a well-guarded ranch in eastern Paraguay "protected by Stroessner."

One source told the CIA that Mengele underwent plastic surgery in 1974 and "looks much younger than his age," a document said. The same source said that, in 1968, Mengele lived with Martin Bormann, Adolf Hitler's designated successor, widely believed to have died in Berlin in 1945.

Another source who reportedly knew Mengele well told the CIA that Mengele was "a nice person," who provided free medical care.

Mengele apparently was first brought to CIA attention by a "petty criminal," who told them Mengele, using the name Dr. Henrique Wollman, lived on a farm near Encarnacion, Paraguay, and was "heavily involved in narcotics traffic."

In 1979, the CIA's Strategic Narcotics Team submitted an article to the International Narcotics Review mentioning the drug reports. The article was withdrawn because it was based on very circumstantial evidence, according to a CIA memo.