The Internal Revenue Service has revoked the tax-exempt status of a foundation headed by retired major general John Singlaub, saying that the foundation failed to prove it was not helping the contras militarily in Nicaragua.
The U.S. Council for World Freedom, which raises money to help foreign anticommunist movements, will file a lawsuit in federal court next week to fight the decision, spokeswoman Joyce Downey said yesterday.
She denied that the organization engaged in anything other than humanitarian aid but acknowledged the group bought two helicopters, four small planes and three high-speed boats. All were for medical transport and humanitarian supplies for the contras, not for military use, she said.
The only equipment that was actually delivered to Central America before the Singlaub group became involved in the IRS investigation was a helicopter -- dubbed the "Lady Ellen" after contributor Ellen Garwood of Texas, who provided the money to buy it.
In a Nov. 25 letter to the Phoenix-based group, the IRS said the tax-exempt status was being lifted because the group had failed to establish that its activities were all charitable, did not have "sufficient controls and accountability" to ensure the activity was charitable and did not show its activities were helping to decrease the burden on the U.S. government.
But the council said in a statement, "We are confident the U.S. Council for World Freedom will be vindicated and that its members will once again be allowed to execute their constitutional right to aid anticommunist causes worldwide."
Singlaub figured prominently in the Iran-contra affair, telling congressional investigators that he helped solicit donations from third countries to help the contras, traveled the United States raising private money for them, and helped them buy weapons during the time Congress banned military aid.
The IRS investigation was requested in September 1985 by Rep. Thomas A. Luken (D-Ohio) and 36 other members of Congress after reports linked Singlaub to Contra assistance during the congressional ban on U.S. aid.
Luken said that "United States foreign policy ought to be conducted by public officials, not self-appointed soldiers of fortune." He referred to Singlaub's organization as "renegade operators who have abused the exemption available to charities under the tax code."