BOGOTA, COLOMBIA, JULY 28 -- A military training school to be set up on the Caribbean island of Antigua by a retired Israeli army commando was going to be paid for and used by the Medellin cocaine cartel, according to a recent secret Colombian intelligence report obtained this week.

Retired Lt. Col. Yair Klein, a former paratrooper who is under investigation in Colombia, Israel and the Caribbean nation of Antigua and Barbuda for his alleged role in delivering a load of Israeli weapons through Antigua to the cocaine cartel in Colombia, acknowledges that he tried to set up a military tactics school on Antigua in early 1989.

But Klein, founder of Spearhead Ltd., a Tel Aviv-based security services firm, says the school was paid for and was to be used by Panamanian exiles seeking to overthrow Manuel Antonio Noriega, then ruling Panama, and that the plans were known to the CIA. The project never got underway because it was not approved by the Antiguan government.

Thursday, Israeli police recommended that Klein be prosecuted for his involvement in planning the school because he did not receive advance clearance from the Israeli government for the deal -- an offense punishable by three years in prison.

The police recommendation grows out of the discovery this March that 500 Israeli-made guns -- 400 Galil rifles and 100 Uzi submachine guns -- and 250,000 rounds of ammunition, allegedly ordered from Israel by the Antiguan government, ended up in the hands of Medellin cartel leader Gonzalo Rodriguez Gacha, known as "The Mexican."

Rodriguez Gacha was killed in December 1989, and the weapons were discovered on one of his farms in January 1990 and traced to the Antiguan arms sale.

Colombian and Antiguan investigators have said they believe Klein was a key figure in the arms shipment, but he has repeatedly denied any role in the affair.

He is also wanted by Colombian authorities for allegedly training cartel gunmen in Colombia in 1988-89. Klein says he was training ranchers to defend themselves from Marxist guerrillas.

According to news reports from Israel, the Israeli police said that "Lt. Col. Klein is suspected of exporting equipment and defense know-how to Antigua in contravention of the supervision regulations of goods and services," meaning he did not obtain a proper Defense Ministry permit for the training school project.

The Colombian intelligence report, obtained by The Washington Post, goes much further, alleging that in early 1989 Klein asked a government informant who had been infiltrated into Rodriguez Gacha's organization to "become an instructor in a training school to be located in Antigua, paid for by the Medellin cartel." According to the report, the source met Klein at one of the training courses paid for by Rodriguez Gacha.

"It is also known that in Antigua the organization of 'The Mexican' . . . planned to install the principal training center for the organizations of private justice from Colombia and Sri Lanka," the report says. "Under the plan, groups of 'sicarios' {assassins} without training or equipment would leave Colombia clandestinely to receive training, then return trained and armed."

A senior Colombian investigator told the Bogota newspaper El Tiempo this week that the cartel had arranged to train groups from Sri Lanka at the school, and in exchange the Sri Lankans would provide a cocaine distribution network in Asia so the cartel could expand its operations.

Foreign narcotics experts said they had heard reports of the cartel's plan to train foreign terrorists and find them credible. They said it has been well established that the Medellin cartel has made contact with organized crime figures in Asia to handle cocaine distribution.

Klein said in a sworn affidavit, obtained by The Washington Post, that he visited Antigua on his own initiative to "propose the installation of a survival school the purpose of which will be to train various elements from private organization {sic} or law enforcement personnel."

In the affidavit, dated April 24, 1990, and witnessed by attorney Yigal Shapira, Klein says he discussed establishing the school with Antiguan officials, and was told "some cabinet members were informed of the project and that in principle, everybody was in favor but requested to wait {for} the formal approval until after elections, so in my mind . . . understood that the project was accepted and therefore decided on my own initiative to forward the equipment required for the school."

"I negotiated with a group of Panamanian exiles headed by Mr. Eduardo {Col. Eduardo Herrera}, the present defense minister of Panama, who at the time was interested in training his own forces in the intended school in Antigua," the affidavit says. "The funds for the purchase of the material was {sic} provided by the Panamanian organizations."

"This information was held only by myself . . . since the understanding between myself and the Panamanians was that absolutely nobody should be aware of the information except {the} CIA who I was told gave its blessing and approval," the sworn statement says.

"Therefore when I was informed that the project of the training school was not approved I was most disappointed and schocked {sic} and had no other alternative but to divert the equipment to the Panamanian entity who paid for it. . . . For the sake of clarity, the equipment consisted only of 200 Uzi and 200 Galil rifles which initially were intended for the Antigua training school and were shipped to Panama."

Herrera, a former Panamanian military attache in Israel who was relieved of his duties by Noriega and now heads Panama's Public Security Force, said in an interview with Colombia's Caracol radio in May that he had talked to Klein about the school but that no steps were taken to establish it because Klein wanted $2.8 million for the project.

"We never discussed arms," Herrera said. "Because there were so many difficulties, we decided we could not do it, and in reality we never arranged to buy any weapons or anything."