$Unique_ID{bob01021} $Pretitle{} $Title{Iran-Contra Affair: The Report Chapter 4B Channell-Miller Network - The Beginnings} $Subtitle{} $Author{Various} $Affiliation{} $Subject{miller north channell contras ramsey gomez nepl ibc money calero} $Date{1987} $Log{} Title: Iran-Contra Affair: The Report Author: Various Date: 1987 Chapter 4B Channell-Miller Network - The Beginnings In late March or early April 1985, Channell, Conrad, Miller, and to a significantly lesser degree, Gomez, embarked on an effort to assist the cause of the Contras. Their joint efforts would extend into the latter portion of 1986. According to Miller, Channell initially offered to IBC a retainer of $15,000 per month, which IBC accepted. In exchange for this retainer, IBC was to handle media relations, political analysis, research, advertising copy, film production, and other public relations functions. There was never any written agreement, however, reflecting the arrangement between NEPL and IBC. At first, IBC lent support to the American Conservative Trust and NEPL in their efforts to educate the public on the Nicaraguan issue. Very quickly, however, Channell expressed to Miller an interest in raising money for the Contras. Because of their prior contact with the Contras' organization and leaders, Miller and Gomez believed that they could be of assistance. One of Channell's first steps, with IBC help, was to secure a letter from Adolfo Calero authorizing NEPL to solicit contributions on behalf of his organizations. This letter,, dated April 10, 1985, opened "Dear Spitz," and read in part: Please help us to achieve our dream, a free and democratic Nicaragua, not tied to a hostile Soviet threat but to a peaceful democratic American tradition. All resources you can raise will be appreciated. We can put all of them to good purposes. Richard Miller and Frank Gomez can keep you informed of our progress and serve as our contact point in the United States. The Initial Solicitations In early April 1985, Channell spoke with one of his prior contributors, John Ramsey of Wichita Falls, Texas, who Channell felt might be interested in contributing to support the Contras. Ramsey seemed receptive to the idea, but wanted to meet Calero in person to ensure that any money he contributed would, in fact, be used to support the Contras. Channell scheduled a dinner for himself, Conrad, Miller, Gomez, Ramsey, and Calero in Washington, D.C., on April 10, 1985. At the last minute, however, Calero was unable to attend and the dinner went forward without him. Going into the dinner, Channell had told Miller and Gomez that Ramsey was a "tough cookie" who probably would be most interested in the Contras' need for arms and other lethal supplies. At the dinner, in a private room at the Hay-Adams Hotel, Miller and Gomez spoke at length about the Contras' need for supplies, both lethal and non-lethal. Gomez showed Ramsey a book of photographs taken during a recent trip Gomez had made to various Contra bases in Central America. This collection included pictures of Contra fighters, mortars, and machine guns. Conrad openly tape-recorded the conversation during dinner, supposedly because he was learning new information about the Contras and wanted to preserve it. The transcript of the tape, as further interpreted by Channell, Conrad, and Miller during depositions, confirms that Channell, Miller, and Gomez discussed the Contras' military and non-military needs at length, often in response to questions from Ramsey. At one point, Miller deflected a suggestion by Ramsey that people be solicited to send used shotguns to the Contras: RAMSEY: "The best I can tell, a shotgun is the best thing to use in jungle warfare." GOMEZ(?): "Or a very rapid fire machine gun. That's why the AK-47s and the M-16's are the best weapons." MILLER: "The M-16 fires a 22.5 caliber bullet." RAMSEY: "I bet I could get 10,000 people to give their old shotguns to this." MILLER: "Only one problem. You can't export guns without a license." Shortly after this exchange, the subject turned to methods of counteracting Soviet-supplied HIND helicopters: GOMEZ or MILLER: "Calero has said publicly, so that the Sandinistas could hear on secret radio communications in the field saying we have red eyes [missiles]. It's a big lie." UNKNOWN: "They're playing a psychological war against the Sandinistas." MILLER(?): "The more sophisticated of the shoulder-held missiles, the red eyes. There's 2 different kinds. One that's a little less expensive and there's one that's $8,000. It can take it out." Later, Channell itemized some of Calero's needs: CHANNELL: "Calero wants those red eye missiles. He wants boots. He wants back packs. He wants AK-47 rounds which you can get on the international market. He wants communications equipment." Ramsey, however, returned again to his suggestion to provide the Contras with donated arms, which is not what Channell and Miller had in mind: RAMSEY: "We're going to call it the Shotgun Drive. And we're going to get Remington to put up the amo [sic]. Dupont owns Remington. "We're going to start on CBs. We're not even going to invoke the electronic media until we get support or we have about three semis going north on Tobacco Road out of North Carolina full. "And they keep calling on another semi. "We got an empty semi out there? Somebody got an 18-wheeler empty can come down and help liberate Central America?" Near the end of the transcript, the Channell-Miller group succeeded in turning the discussion back to missiles and money: UNKNOWN: "Between now and May 1 the red eye missiles could be the entire key. "Because if they succeed at this point in launching an offensive including tanks and M124 helicopters into that region and go for the cans . . . . "There's two different kinds of red eye missiles. There's one that's very unsophisticated which is just a direct shot missile. And then there's one that's able to take on the Hind [sic] because the Hind has major decoy devices, has heavy armament, and it has these flares on the back of the exhaust from the jets - the expulsion from the engine - that mask the heat. "So you have to have the $8,000 red eye to make it work." The transcript concludes with an observation, attributed to Miller, summing up well the philosophy with which Channell, Conrad, and Miller approached their solicitations: MILLER: "If you provide money for ammunition, the money they've set aside for ammunition can go to boots. "On the other hand, if you provide money for boots, what they've set aside for boots can go to ammunition." The solicitation was a success. The next morning Ramsey had breakfast with Calero and, at that time or shortly thereafter, donated $20,000 directly to the Nicaraguan Development Council. As noted earlier, the NDC had previously retained IBC as a public relations consultant. [When Ramsey was shown a copy of the dinner transcript, he indicated that, while portions of the dialogue seemed familiar, "[t]here is very much on there I have never heard of before." Ramsey Dep. at 70. Ramsey suggested that Channell, Conrad, Miller, and Gomez "might not have ask[ed] for the money [for lethal supplies] directly." Instead, "[t]hey were just saying that if the [Contras] had the money they could buy them." Ramsey Dep. at 87.] Later, in early June 1985, Miller received a telephone call from North, who asked him to try to raise $30,000 for an undisclosed purpose related to the Contras. North also gave Miller the name and number of a Robelo-controlled account in the United States - although Miller did not know that - into which any contribution could be deposited. At Channell's suggestion, Miller contacted Ramsey, who sent $10,000 directly to the Robelo-controlled account. North later confirmed to Miller that the contribution had been received. Channell then asked Miller to have North send telegrams of appreciation to both Ramsey and Channell. Miller got North's approval for these telegrams and sent them over North's name. In those June 6, 1985 telegrams, North thanked Ramsey and Channell or their support. The Ramsey solicitation was not, however, to become the model. It did not produce enough money for the effort and the donation was sent directly to Robelo so that the Channell-Miller group was not compensated. A new approach was undertaken. North's Maiden Presentation After the Ramsey solicitation, Channell drew on his experience with NCPAC briefings, and worked with Miller to sponsor a White House "event" for prior and potential NEPL contributors. This event was intended to educate contributors about the situation in Nicaragua and to solicit funds for the Contras. Through North, Miller and other IBC associates were successful in arranging a White House briefing for a group invited by NEPL. The briefing was held on June 27, 1985, in the Old Executive Office Building next to the White House with North as the principal speaker. According to Channell, North delivered what became his standard speech about Nicaragua and the Contras. North showed slides during his presentation, some of which had been provided by IBC. North's speech was an impassioned plea. He discussed the Communist threat posed to Nicaragua's neighbors by the Soviet and Libyan military buildup in Nicaragua, the political and religious repression in Nicaragua, the humanitarian and military needs of the Contras, and the importance of United States support for the Contras. North also emphasized that the United States would be flooded with millions of refugees if Nicaragua continued under its existing regime and policies. [North presented a version of his slide presentation during the public hearings. North Test, Hearings, 100-7, Part II, at 142-46.] This briefing was the initial substantive encounter between Channell and North. [Some donors who contributed money to Calero through NEPL had received expressions of appreciation from North prior to the June 27 briefing. E.g., RM 3577. These communications were apparently arranged by Miller at Channell's request. R. Miller Dep., 6/23/87, at 27.] After the briefing, the potential donor group was taken across the street for a reception and dinner at the Hay-Adams Hotel. As was to become customary, NEPL arranged and paid for food and lodging at the Hay-Adams for persons attending this special White House briefing. At the dinner, Channell presented Calero with a check for $50,000, which represented all Contra-related contributions received to date by NEPL. At Miller's instruction, the check was made payable to a Calero account. Channell testified that his understanding was that the contributed funds would be used for humanitarian supplies. This understanding was based on Calero's specific appeal that night for medicine and food. The Establishment of I.C., Inc. Meanwhile, in March or April 1985, North was contacted by Kevin Kattke - whom North described to Miller as an "intelligence community gadfly" - about an alleged Saudi Prince who proposed donating to the Contras $14 million of profits derived from the sale of Saudi oil. [The Prince eventually was determined to be a fraud, and now is imprisoned for a separate swindle involving a Philadelphia bank.] North referred the Prince - who used a variety of pseudonyms, the most common of which was Ebrahim al-Masoudi - to Miller, who was engaged to market the Prince's oil. Miller and the Prince met several times over the course of the next several months. Miller's interest was twofold: he and North wanted to raise money for the Contras, and he was to receive $1 million of the profit that would be derived from the sale of the oil. Miller kept North fully apprised of his dealings with the Prince, which eventually also included a prospective gold transaction and assistance in freeing the hostages held in Lebanon. Indeed, Miller believed that he "was an agent working on [North's] behalf" in connection with these and other activities undertaken at North's request. [For a more detailed account of the Prince's activities in connection with operations and persons under investigation by the Committees, see Chapter 6.] On April 26, 1985, Miller and Gomez incorporated a Cayman Islands corporation known as I.C., Inc. This entity originally was intended to receive the profits from the transactions conducted with the Prince. Gomez was included because Miller needed a second corporate director under Cayman Islands law and Gomez was a close business associate on whom Miller could rely. The Cayman Islands were chosen by Miller on the recommendation of a "political friend." Miller wished to keep "offshore" any money that he derived from his transactions with the Prince, because: (1) he did not want to incur federal income tax on these proceeds; and (2) he and North "took precautions all the time . . . not to have organizations be readily available for public view." Miller was told that it was cheaper to maintain bank accounts in the Cayman Islands than in Switzerland. He also received advice from an attorney that such an offshore "collection point" was a lawful arrangement. Although no proceeds were derived from the venture with the Prince, I.C., Inc. became an integral part of the Channell-Miller fundraising network for the Contras. [According to Miller, he spent approximately $370,000 on activities involving the Prince. North was aware of and approved these expenditures. Miller did not incur monetary loss, however, because North authorized Miller to reimburse himself for these expenditures from Contra assistance funds transferred to IBC from NEPL. R. Miller Dep., 8/21/87, at 404-07.] It served as a conduit, protected by Cayman Islands bank secrecy laws, through which the funds contributed to the tax-exempt NEPL could be transferred to the Contras or to the Enterprise. Miller advised North in late April or early May 1985 of the actual formation of I.C., Inc. Indeed, North testified that he directed Miller to establish this Cayman Islands corporation to be used for Contra funding efforts. In May 1986, Miller changed the name of I.C., Inc. to "Intel Co-Operation, Inc.," and amended the corporate charter to specify that the company was engaged, among other things, in providing grants to "political and benevolent" organizations. At that time, Miller told North about this name change and charter amendment, which Miller asserts was not aimed at providing increased cover for the operation. The Creation of the Network Soon after the June 1985 briefing, Channell asked Miller to arrange a meeting with North. Certain contributors to NEPL were concerned about press reports suggesting that contributions for the Contras were being skimmed or spent on unnecessary or obsolete items. In addition, Channell wished to express his appreciation to North for the June 27 briefing. Miller ultimately arranged a meeting on July 9 for himself, North, Channell, and Conrad at the Grill Room in the Hay-Adams Hotel. At the meeting, Channell asked North how best to ensure that funds contributed to NEPL for the benefit of the Contras actually were used for that purpose. North told Channell that henceforth "continued" contributions to NEPL for the Contras should be passed to IBC for proper dispersal. From shortly after this meeting through the fall of 1986, NEPL made all Contra assistance payments to IBC or to I.C., Inc. North had shown a flow chart to his deputy, Robert Earl, and Miller sometime in 1985, which showed NEPL, IBC, and I.C., Inc. as vital parts of an elaborate Contra funding network. While this chart turned out not to be a fully accurate depiction of the actual workings of the network, North used it with Miller to explain "how a covert operation is set up." Miller recalls that the chart was similar to (although not as complete as) a chart found in North's safe and reproduced in the Tower Review Board Report at C17.