A Costa Rica-based U.S. businessman testified yesterday that he and a partner allowed a remote Costa Rican airstrip they owned to serve as a clandestine air-drop zone for arms sent to the Nicaraguan contras.
William H. Crone, a surprise witness before a joint hearing by two Senate Foreign Relations subcommittees, testified that the airstrip was managed by his business partner, John Hull, a key member of the private contra air network run by fired National Security Council aide Oliver L. North.
Farmland and airstrips tied to Hull in northern Costa Rica have been used as a staging area for contra troops for several years, provoking speculation in Congress and elsewhere about Hull, an Indiana rancher who lives in Costa Rica, and his relationship with the U.S. government.
Yesterday's hearing was called to examine a $375,000 loan given to a Hull-controlled Costa Rican firm by the Overseas Private Investment Corp. (OPIC), a U.S. agency that provides development assistance to U.S. businessmen abroad. The loan, which was to help set up a woodworking company in Costa Rica, has gone into default and has been referred to the Justice Department for possible investigation of criminal fraud, OPIC officials said yesterday.
Eric I. Garfinkel, OPIC's general counsel, testified that when the loan was made in 1984, the agency was unaware of Hull's involvement with Marine Lt. Col. North or the contras. Garfinkel and other OPIC officials said the loan was handled routinely and defended the decision to approve it. However, Garfinkel said that after the money was disbursed, the agency discovered that the loan's collateral was inadequate and that financial statements supplied by Hull were incorrect.
Garfinkel said the business never really was launched, and internal company financial records were so incomplete that OPIC does not know what happened to much of the funds.
Hull could not be reached for comment yesterday. In an interview with the Wall Street Journal published yesterday, Hull denied any money had been misappropriated and was quoted as saying the venture "was one of those things that didn't work."
Crone, a partner in the business that received the loan, testified that about half the money was wasted by "bad management," and added that since Hull controlled the funds, he does not know how the rest was spent.
Crone said he voluntarily made a last-minute decision to appear at yesterday's hearing to discuss the loan, but became concerned when Sen. John F. Kerry (D-Mass.), a longtime contra critic, began questioning him about the contra arms deliveries. "I may be subject to some harassment from Mr. Hull in Costa Rica for the information I have given you on the arms drops," Crone said.
Crone said his involvement with the secret arms shipments ended in mid-1983, more than a year before Congress banned U.S. military aid to the contras.
Previous testimony before the Senate and House Iran-contra panels has shown that Hull first assisted the Central Intelligence Agency and then continued to aid the contras through his work with the North network.