More than $100,000 from Swiss Iran-contra bank accounts was spent for private detective work and legal fees in connection with a lawsuit filed against retired Air Force major general Richard V. Secord and other key members of Lt. Col. Oliver L. North's private network, according to Secord and other sources.
Secord described the civil lawsuit, filed last year in U.S. District Court in Miami by an anticontra law group, as "an outrageous fairy tale." But he said the payments were justified because the suit threatened to "knock out" the secret system former National Security Council aide North set up to supply arms to the contras during a two-year ban on official U.S. military aid to the rebels.
The Christic Institute, a liberal, church-funded law group, filed the suit six months before the Iran-contra affair became public. The suit, which seeks more than $20 million in damages, alleges a conspiracy to use drug money to purchase weapons for the contras. It named 29 defendants, including Secord and contra leader Adolfo Calero.
Members of the congressional Iran-contra panels have become increasingly critical of the way Secord and his associates handled proceeds from the secret sale of U.S. arms to Iran and have asserted that the profits from the Iranian deals belong to the American taxpayers.
Secord has strongly denied that he profited from his assistance to North. But he has insisted that the profits from the Iranian arms sale do not belong to the government and instead are the property of the "enterprise," his name for the secret network of dummy corporations and Swiss bank accounts set up to carry out North's Iran-contra operations.
It is difficult to trace the precise origin of funds in the Swiss accounts, because profits from the Iranian arms sales were mingled with private donations to the contras as well as the proceeds from separate weapons sales to the Nicaraguan rebels.
Secord said in an interview that the legal fees and detective work were legitimate business expenses because the Christic lawsuit could have exposed the "enterprise's" continuing efforts to help the contras.
Secord hired Glenn A. Robinette to investigate the backgrounds of those behind the Christic lawsuit. Robinette, a former Central Intelligence Agency official, has told the congressional committees investigating the Iran-contra affair that at Secord's request, he arranged the installation of a $13,900 security system at North's home last year.
According to Secord, Robinette was paid more than $60,000 from Swiss Iran-contra bank accounts for his work on the lawsuit.
Robinette testified that in an effort to develop "derogatory" information on those involved in the Christic lawsuit, he passed out $7,000 to informants during a trip to Costa Rica last November. The funds came from Secord.
Robinette also posed as a lawyer last year in an attempt to elicit information from Jack Terrell, a vocal contra critic, according to Terrell and another person involved in the encounter. Terrell, a sometime mercenary who once worked for the contras before turning against them, was expected to be a "star" witness in the Christic suit, Secord said.
Robinette was not asked about this incident in his public congressional testimony. A congressional source said investigators knew Robinette had approached Terrell but declined to say how Robinette disguised himself.
Robinette, through his attorney, declined to be interviewed for this article.
Secord said the legal fees he authorized included funds that went to a Washington law firm that initially represented contra leader Calero.
Joseph Portuondo, a Miami lawyer who currently represents Calero, said that after the suit was filed, North directed Calero to Shea & Gardner, a well-known Washington law firm. Shea & Gardner's attorneys told Calero that his legal fees would be paid by supporters of the contra cause, Portuondo said. The lawyer said Calero did not know at the time that the $45,000 Shea & Gardner was paid came from the Swiss Iran-contra accounts and was unaware that Secord was arranging the payments.
Efforts to obtain comment from the Shea & Gardner firm were unsuccessful.
Portuondo said that Shea & Gardner's attorneys have told him that Thomas C. Green, Secord's attorney, contacted Shea & Gardner about representing Calero.
Green confirmed that he got in touch with the firm at Secord's request. Secord said North asked him to find Calero a lawyer. Green said that neither he nor Shea & Gardner lawyers knew then that their fees were coming from accounts tied to the secret Iranian arms sales.
Green received $25,000 from the Swiss Iran-contra accounts for preliminary work he did on the Christic lawsuit for Secord and two close associates who also were named in the suit, according to Secord and a congressional source.
The Christic Institute filed the lawsuit on behalf of two American free-lance journalists based in Costa Rica, Tony Avirgan and his wife, Martha Honey.
Several of the defendants -- including Secord, his business partner Albert A. Hakim, former CIA official Thomas G. Clines, retired Army major general John K. Singlaub and Robert W. Owen -- were key members of North's private contra network.
In addition to the drug charges, the suit alleges that some of those named participated in an unsuccessful attempt to assassinate former contra leader Eden Pastora at a May 1984 jungle press conference in southern Nicaragua. Eight people were killed when a bomb exploded at the press conference. Avirgan was seriously wounded in the incident. Pastora also was wounded.
The defendants have strongly denied the lawsuit's allegations.
But Secord said both he and North were concerned that the suit would jeopardize their efforts to continue to aid the contras, which began around the time U.S. funds were cut off in 1984.
Secord said that Terrell was among those he asked Robinette to investigate in connection with the lawsuit.
Terrell said Robinette was introduced to him as an attorney who might be willing to help Terrell publicize his criticism of the contras. "He kept trying to offer me money, and I wouldn't take it," Terrell said.