[ROGER, ROGER -- SIRO Out...]
October 30, 1988, Sunday, Final Edition
How Scandal Almost Sank Our Secret Cambodia War
By Mark Perry and William Scott Malone
A $ 3.5-MILLION corruption scandal involving Thai military officers nearly derailed funding last summer for the Reagan administration's covert program to assist non-communist rebels in Cambodia.
The scandal surfaced last spring, when Central Intelligence Agency officers in Thailand involved in running the covert program uncovered evidence that Thai military officers, and perhaps businessmen, had skimmed money from the U.S. covert-assistance program, which totaled $ 12 million in fiscal 1988.
The CIA then informed the Senate Intelligence Committee, which sent a team of auditors to Thailand to review the program. The auditors reported back to the committee on July 12 about "corruption which had been uncovered" in the Cambodia aid program, according to a late July document prepared by the State Department and made available by a source in the executive branch. The theft of U.S. funds appears to have totaled about $ 3.5 million, according to intelligence sources.
The corruption problem emerged at a delicate time, when the Reagan administration was hoping to expand U.S. support for the resistance forces that are fighting Vietnamese troops in Cambodia. The goal of the program isn't simply to drive out the Vietnamese, but to help develop a non-communist alternative to the communist Khmer Rouge -- so that if the Vietnamese eventually withdraw their troops in a negotiated settlement of the war, the Khmer Rouge won't simply fill the vacuum with another bloody dictatorship.
There had been bipartisan congressional support for the Cambodia program until the money scandal surfaced. Members of the Senate Intelligence Committee were so disturbed by the evidence of corruption that "one group wished to terminate [the] program in view of magnitude of misappropriated funds," according to the July State Department document. The document noted, however, that "a second group was prepared to continue the program, but with strict periodic review."
The latter group won, and the U.S. covert-assistance program has been authorized for fiscal 1989 at $ 8 million, sources say. The July State Department document explained: "[Senate Intelligence Committee Chairman David] Boren, who supported Option B, managed to fend off pressure to end [the] program and, finally succeeded in creating a consensus around its continuation, albeit with continuing [Senate Intelligence Committee] oversight." (A spokesman for the Senate Intelligence Committee declined to comment on any aspect of this story.)
The $ 8-million authorization for this fiscal year represents a cut from last year's $ 12 million level and is less than administration officials had wanted. But the House and Senate Intelligence panels did agree to "front load" the money in the first quarter of fiscal '89, so that the Cambodian resistance will get over $ 3 million, or nearly half the total, by the end of this year.
Rep. Stephen Solarz (D-N.Y.), chairman of the House subcommittee on Asian affairs, said in a telephone interview Friday that the scandal in Thailand had threatened an otherwise popular program. "What happened was an outrage, not only because it involved corrupt diversions and activities, but because it threatened to undermine support for a movement that may be essential for the survival of Cambodia as an independent nation," Solarz said.
"My impression, based on discussions in Bangkok, is that steps have been taken to prevent similar corruption and diversions in the program," Solarz added. (Solarz is the principal sponsor of an additional, overt program to support the resistance, which provided about $ 3 million last year and is expected to increase to as much as $ 5 million in fiscal '89.)
The Cambodia covert-aid program, which began in 1982 or 1983, has probably been the least controversial -- and least known -- of the Reagan administration's secret operations to confront Soviet-backed proxy forces in the Third World. Under the program, the CIA works through the Thai government to disburse non-lethal aid and training for the non-communist Cambodian resistance fighters. The program is backed by U.S. allies in Southeast Asia who are members of the ASEAN alliance, and some ASEAN members have joined the U.S. in providing funds for the covert effort.
Until the corruption scandal was uncovered, the U.S. approach had simply been to provide money to the Thais and tell them what to buy. This loose arrangement kept the United States from becoming too deeply involved in the program, but it also opened the door to profiteering in Bangkok. Since the scandal emerged, the CIA is said to have established new auditing and administrative procedures to
make sure that U.S. money is spent as intended.
The U.S. ambassador in Bangkok, Daniel A. O'Donohue, has also discussed the corruption problem with Thai government officials, according to intelligence documents. The Thais are said to have expressed regret and changed some of the personnel who were involved in distributing the covert assistance to the Cambodian rebels.
By last month, the Senate Intelligence Committee auditors saw "solid evidence of effective new monitoring procedures" that would prevent a recurrence of the corruption scandal, according to a mid-September intelligence document.
One deadline driving the administration's efforts to boost funding for the program was the visit to the White House Oct. 11 by Prince Norodom Sihanouk, the former ruler of Cambodia and titular leader of the resistance. Sihanouk is attempting to end the nine-year war by three resistance groups against the Vietnamese-backed government of Hun Sen in Phnom Penh. According to intelligence documents, Sihanouk will meet with Hun Sen on Nov. 5 in Paris and again in January.
The Reagan administration spent the weeks before Sihanouk's visit trying to get the maximum aid possible. In late September, Morton Abramowitz, assistant secretary of state for intelligence, sent a message to Ambassador O'Donohue in Bangkok asking for a breakdown of how the resistance would spend $ 3.1 million in U.S. covert aid during the first quarter of fiscal 1989, if Congress would agree to the "front-loading" approach the administration favored.
O'Donohue responded with a memo prepared by CIA officers in Bangkok. The memo noted that the $ 3.1-million figure would be the minimum necessary to provide such items as uniforms, food, and non-lethal field equipment for the resistance under a planned expansion by year end to 35,000 men from 25,000.
The U.S. Embassy memo from Bangkok also noted items that would have to be canceled or reduced sharply under this limited budget, including: Radio Kampuchea; leadership-development and psychological-operations programs for resistance leaders; an intelligence-collection center; and a program to debrief defectors from the Khmer Rouge.
If the first-quarter budget were raised to $ 5 million, the memo noted, the CIA could maintain such programs as the intelligence center, the defector program and a program to train resistance forces in mine detection, demolition, sniping and other specialized skills. A realistic annual budget for the program, the memo advised, would be $ 15 million to $ 20 million a year.
One reason the administration has fought so hard to expand the non-communist resistance is that officials believe the war in Cambodia may be nearing an end-game. Vietnam, prodded by the Soviet Union, appears serious about negotiating a phased withdrawal of its troops from Cambodia. Vietnamese officials have stated publicly their intention to withdraw 50,000 troops from Cambodia by the end of this year and the remaining 50,000 to 70,000 by March 1990.
The nightmare for U.S. officials is that if the Vietnamese withdrew tomorrow, the Khmer Rouge -- with about 35,000 troops -- would be the strongest political and military force in Cambodia. That, in turn, could mean a return to the sort of bloody Khmer Rouge rule that led to the deaths of an estimated 2 million Cambodians between 1975 and 1979.
[Information contained in BKNT E-Posts is considered Attorney-Client and Attorney Work Product privileged, copyrighted and confidential. Views that may be expressed are those of the author(s) and do not necessarily reflect those of any government, agency, or news organization.]Mark Perry's book on the Joint Chiefs of Staff, "Four Stars," will be published by Houghton Mifflin next March. Scott Malone is an Emmy-award-winning documentary producer for PBS Television's "Frontline."