In September 1981, as the Reagan administration was approving a covert CIA program to finance anti-Sandinista exile organization attempts to overthrow the Nicaraguan government, "an asset" told the agency that one of the major contra rebel groups intended to sell drugs in the United States to pay its bills.

The cable described for CIA headquarters a July 1981 drug delivery from Honduras to Miami, including the names of those involved, and called it "an initial trial run" by members of the Nicaraguan Revolutionary Democratic Alliance. An earlier cable had said the rebels felt they were "being forced to stoop to criminal activities in order to feed and clothe their cadre."

Although the cables were circulated to the departments of State, Justice, Treasury and Defense and all U.S. intelligence agencies, the CIA neither followed up nor attempted to corroborate the allegations, according to a 450-page declassified version of a report by the CIA's inspector general released last month.

Nearly a decade after the end of the Nicaraguan war -- and after years of suspicions and scattered evidence of contra involvement in drug trafficking -- the CIA report discloses for the first time that the agency did little or nothing to respond to hundreds of drug allegations about contra officials, their contractors and individual supporters contained in nearly 1,000 cables sent from the field to the agency's Langley headquarters.

In a few cases, the report says, officials instructed the Drug Enforcement Administration to hold back inquiring about charges involving alleged drug dealers connected with the Nicaraguan rebels. The report also shows that at times, wide suspicions or allegations of drug trafficking did not disqualify individuals from being recruited for the CIA effort.

Looking back, Frederick P. Hitz, the now-retired CIA inspector general who supervised the report, said, "We fell down on accountability. . . . There was a great deal of sloppiness and poor guidance in those days out of Washington."

Hitz's report disclosed, however, that in 1982, after the CIA's covert support of the contras began, then-Reagan Attorney General William French Smith and CIA Director William J. Casey agreed to drop a previous requirement that agency personnel report information about alleged criminal activities when undertaken by persons "acting for" the CIA.

The Smith-Casey agreement covered those associated with the contra effort. The provision remained unchanged until 1995, the report said.

The report also said the CIA gave Congress "incomplete" briefings that "often lacked specific detail." Jack Blum, counsel for a Senate Foreign Relations subcommittee that in the mid-1980s investigated contra drug activities, said after reading the report that many details were denied his panel. Instead, he said, "they put out stories that spun the facts against us," denying contra connections to drug activity.

Although the report contradicts previous CIA claims that it had little information about drug running and the contras, it does not lend any new support to charges of an alliance among the CIA, contra fund-raisers and dealers who introduced crack cocaine in the 1980s in south-central Los Angeles. Those charges created a national sensation during the summer of 1996 when they were published in a series of articles by the San Jose Mercury News.

The allegations, which were not substantiated by subsequent reporting by other newspapers, prompted a year-long CIA inquiry that produced two reports, including the one released last month. The first report found that there was no evidence to indicate that the CIA had any dealings with the California drug traffickers. The classified version of the second report, sent to Congress earlier this year, concluded that there was no evidence that the CIA "conspired with or assisted contra-related organizations or individuals in drug trafficking to raise funds for the contras or for other purposes."

However, the unclassified report provides a wealth of anecdotes indicating that the CIA routinely received allegations about drug trafficking links to the contras. Although the report does not specify in most cases whether the allegations proved accurate, it suggests that in many cases the charges were simply ignored or overlooked because of the priority to keep the contra effort going.

For example, a 1984 Defense Department attache report described Alan Hyde, a Honduran businessman, as "making much money dealing in white gold,' i.e. cocaine." A 1985 CIA cable quoted Hyde as boasting that he had a U.S. Customs Service agent "in his pocket" and friends in "Cosa Nostra." A July 1987 CIA cable reported that the Coast Guard had placed three ships owned by Hyde on suspected drug-smuggling lists.

However, after an early offer to help the CIA was turned down, in 1987 Hyde was enlisted to provide logistical support to the contras. A CIA cable from the field said none of the prior reports were "firm proof that {Hyde} is involved in {drug} smuggling or nefarious activities."

When questions were raised within the CIA about Hyde's background, a cable from the field argued that Hyde was being used for a short-term project that was an "operational necessity." This view was endorsed in a cable signed by the then-director of operations. A later cable said Hyde's role had been approved at the level of the deputy director of Central Intelligence, although the incumbent at that time, Robert M. Gates, told the inspector general he had no recollection of approving Hyde's employment.

The report contains a concluding item without comment. A March 11, 1993, cable discouraged counter-narcotics efforts against Hyde because "his connection to {CIA} is well documented and could prove difficult in the prosecution stage."

There is no evidence in the report that the allegations against Hyde were proven accurate or that he was ever charged with a crime. Attempts to locate Hyde for comment for this article were unsuccessful.

The CIA report shows that the agency did not follow up on allegations of drug dealing involving individuals, the so-called "benefactors," who were part of former White House aide Oliver North's program to evade legal restrictions on U.S. military aid to the contras through a secret supply operation run from Ilopango air base in El Salvador.

An August 1985 CIA cable identified Carlos Alberto Amador, a veteran supply pilot for the contras, as someone who was to ferry planes from Miami to Colombia to be used in drug trafficking. A CIA headquarters cable nearly a year later attributed to a "DEA source" information that Amador was believed, as of April 1986, to have flown cocaine from San Salvador to Florida.

The 1986 cable noted that Amador, a Nicaraguan with a U.S. passport, has access to Hangar 4 at Ilopango, which was used by North's "benefactors." A DEA report in April 1986 noted that the DEA wanted San Salvador police to investigate Amador and the contents of Hangar 4.

After a U.S. Embassy official asked the CIA if it had any connection to Amador, CIA headquarters told its local station in San Salvador it "would appreciate Station advising {DEA} not to make any inquiries to anyone re Hanger {sic} no. 4 at Ilopango since only legitimate . . . supported operations were conducted from this facility," according to the IG report.

The report also provides new allegations about rebels led by one of the best-known anti-Sandinistas, Eden Pastora. While the CIA has maintained that it cut off funding to Pastora in 1984 before his aides turned to drug dealers for financial and materiel support, the IG report indicates that Pastora's colleagues were suspected of involvement with drug dealers while the agency was supporting his operations. Pastora has denied knowledge of any funds coming to his rebel forces from drug traffickers.

A different problem was represented in the case of Juan Ramon Rivas, one of the first rebel fighters to enter Nicaragua in 1982. By 1986, he had created a 5,000-person task force in the north and in March 1988 was selected as rebel chief of staff in the area. In November of that year, however, a DEA report identified Rivas as a fugitive from a Colombian prison who had been arrested on a drug charge.

Rivas, a former member of the Nicaraguan National Guard, acknowledged to DEA officials that after the Sandinistas took power in 1979, he went to Colombia and became involved in the drug trade. He told officials he was prepared to resign from the rebels if his past drug activities would be politically damaging to the cause.

The CIA decided, however, that he remain at his post. A CIA lawyer said agency regulations "focus solely on individuals currently in narcotics trafficking. . . . What we have here is a single, relatively petty transgression in a foreign country that occurred a decade ago and that is apparently of no current interest to DEA."

In the end, Hitz's report does not make it easy to sort out who is to blame. It consists of more than 1,000 items containing unsourced allegations about hundreds of individuals and companies, and none reaches a conclusion.

Hitz said his aim in the report was "to try to find out what was on the written record . . . and not develop any cases to bring to closure. . . . This is grist for more work, if anyone wants to do it."