CIA Inside Story (A Golden-Triangle Poppy)

1972 CIA Inspector General Report Confirms Heroin Complicity

Heroin Production

The CIA's policy of tolerance towards its Laotian allies did not change even when they began producing heroin to supply U.S. combat forces fighting in South Vietnam. 

In 1968-69, CIA assets opened a cluster of heroin laboratories in the Golden Triangle, the tri-border area where Myanmar(Burma), Thailand, and Laos converge. When Hmong officers loaded opium on the CIA's Air America and the Lao Army's commander opened a heroin laboratory to supply U.S. troops in Vietnam, the Agency was silent. In a secret internal report compiled in 1972, the CIA's inspector-general said the following to explain their inaction:

The past involvement of many of these officers in drugs is well known, yet their goodwill considerably facilitates the military activities of Agency-supported irregulars.

All this heroin was smuggled into South Vietnam where, by 1971, according to a White House survey, 34 percent of U.S. troops were addicted.

Instead of trying to restrain drug trafficking by its Laotian assets, the Agency engaged in concealment and cover-up. Professor McCoy recalled that when he went to Laos to investigate in 1971, the Lao army commander graciously opened his opium accounts but the U.S. mission stonewalled. In a Hmong village, where he was investigating opium shipments on Air America, CIA mercenaries ambushed his research team. A CIA operative threatened to murder his Lao interpreter unless he quit.

When his book was in press, the CIA's Deputy Director for Plans pressured his publisher to suppress it and the CIA's general counsel demanded deletions of all references to Agency complicity. After the book was published unaltered, CIA agents in Laos pressed his sources to recant and convinced investigators from the House Foreign Affairs Committee that his allegations were baseless.

Simultaneously, the CIA's inspector-general conducted a secret internal investigation that confirmed his allegations. "The war has clearly been our overriding priority in Southeast Asia and all other issues have taken second place," the inspector-general said in defense of their inaction on drugs. "It would be foolish to deny this, and we see no reason to do so."

Smack to Crack and the Outlaw Government

By 1971 the greatest threat to the 400,000 member U.S. military force that had invaded Vietnam was not Communist firepower or lack of air support, it was heroin. Ninety to ninety nine percent pure, No. 4 heroin was being sold at roadside stands by Vietnamese children, in army camps, and at sidewalk cigarette stands throughout downtown Saigon. The heroin epidemic was considered so pervasive that one U.S. authority told a Newsweek reporter that "Heroin is wrecking the U.S. Army and creating a whole new class of American addicts.

As the heroin epidemic surged through the force structure the army's Criminal Investigation Division (CID) uncovered incriminating evidence that South Vietnam Major General Ngo Dzu, commander of II Corps, was "one of the chief traffickers" in the country. The CID investigation also revealed that the Chief of the Laotian general staff, General Ouane Rathikone, was "deeply involved."

The conclusions of the army investigation were sent, through channels, to the U.S. Embassy in Saigon which ignored the findings and assembled a spirited defense of General Ngo Dzu. "There is no information available to me that in any shape, manner or fashion would substantiate the charges" declared the U.S. advisor to General Dzu.

That high officials in the South Vietnamese, Laotian, and Thai governments were controlling the heroin industry should have been as shocking as the information conveyed to the police chief in the classic movie "Casablanca" when told of gambling at Rick's American Cafe.

The Central Intelligence Agency had been in Indochina since at least l949 and formed allegiances with groups who had been trafficking in opium for centuries. The CIA facilitated the transport logistics of the opium trade among it's allies as part of it's mission, first to initiate a covert invasion of the People's Republic of China using KMT irregulars, then in it's effort's in support of the U.S. invasion of South Vietnam.

Shocking to some, unbelievable to others, and consistently denied by the U.S. government, the U.S. Government and CIA at best ignored, or as the record will show actively participated in the facilitation of the illegal drug industry, that was "wrecking the U.S. Army".

Operation PAPER, a covert CIA/KMT invasion of China supported by Civil Air Transport (CAT) a CIA proprietary airline was resoundingly crushed by Chinese soldiers in 1951. Two more invasions of China were attempted as the CIA inaccurately predicted, as they would in Cuba in 1961, that large number's of Chinese would spontaneously rise and join the fight. Each abortive invasion met the same fate at the first.

After these defeats the war lords of the KMT consolidated control of the Thai Burma border areas, expanded their tradition of opium production and shipped much of its contraband to Bangkok not only on mules but also on CAT C-47's.

After delivering arms from Bangkok many KMT reloaded the transports with opium for the return trip. This aspect of the KMT's existence was hardly covert as the New York Times reported detailed accounts of the KMT's drug trafficking as early as 1952. As the Chinese Peoples Liberation Army was repeatedly crushing the CIA/KMT incursions the French were struggling to hold their colonial possessions in Southeast Asia.

The war against the Vietnamese had become increasingly unpopular in France and the French intelligence and paramilitary operatives in Vietnam turned increasingly to the opium business for financial resources.

Dubbed OPERATION X, this covert initiative came to control most of the opium trade and incorporated Corsican gangsters for the purposes of export. Service de Documentation Extrieure et du Contre Espionage (SDECE) was the French equivalent of the CIA and it's program of using illegal drugs to finance an unwanted war was top secret, known only by a few high ranking French officials. The SDECE used its planes to transport drugs from the highlands into the urban markets and mobilized drug gangs to fight the liberation forces.

After the French defeat in 1954 the U.S. began its direct involvement to protect the Vietnamese from what President Eisenhower described as the "red ruler's godless goons". South Vietnam President Diem decided to fight the "godless goons" by resurrecting the French drug distribution network.

As opium could not be grown in Vietnam it had to be imported from Laos by air and the CIA's CAT (now called Air America) and Vietnamese First Air Transport Group, under the command of Col. Nguyen Ky (later Premiere) became the mules. 

By 1960, CIA asset and head of the South Vietnamese secret police, Ngo Dinh Nhu, working with Cholon Chinese syndicates had increased the number of opium dens to 2,500 and incorporated Corsican mobsters as part of the transport logistics. The secret police had a well developed drug infrastructure with Col. Ky's air force providing most of the transit bypassing customs and using air force bases as distribution hubs.

By 1968-69 the Golden Triangle was producing over 1,000 tons of raw opium, much of which was now being refined into heroin for shipment to Europe, the U.S., and South Vietnam.

The CIA reported in 1971 that much of the Golden Triangle increases in production "appears to be due to the sudden increase in demand by a large and relatively affluent market in South Vietnam". This, of course, was a reference to the 500,000 U.S. troops now stationed in Vietnam who could buy high grade no. 4 heroin everywhere, from road side stands to 14 year old street dealers.

In 1971 New York Congressman Seymore Halpern reported that up to sixty thousand U.S. troops in South Vietnam were either addicted or users of heroin. Other estimates placed the number as high as 15 percent prompting Newsweek to report in part ""heroin addiction among U.S. troops is reaching epidemic proportions and, in the view of many American officers, now poses a greater threat to the young soldiers in Vietnam than Communist firepower does".

The Air America fleet, another CIA proprietary which included Iran Contra Air Force officer Richard Secord as its logistics person, became a factor in solidifying the power of Hmong leader Vang Pao, who was given the authority to approve rice delivery's and opium pickups to remote villages. 

These villages had been separated by rugged mountain terrain and the introduction of air communications not only unified these tribes but provided them with advanced capabilities of marketing their opium. "By flying bundles of raw opium from remote villages to refineries, the CIA allowed the Hmong to continue their cash crop income, thus reducing the Agency's direct costs in maintaining tribal households."

Much of the opium transhipped by Air America was converted into no. 4 heroin for the GI market in South Vietnam. In 1958, after a neutralist government was elected in Laos, prohibited by John Foster Dulles in the Grand Arena, the CIA financed a right wing political coalition.

Within three months, the neutralist government was replaced by the right wing which included Cabinet Minister Phoumi a CIA asset. Phoumi had controlled the Laotian opium traffic working in collusion with Corsican and Chinese smugglers and went on to open opium dens in Vientiene, the capital city.

In 1962 Phoumi moved to consolidate his control over the opium trade by establishing links with Burmese traffickers. He appointed Laotian Army General, Ouane Rattiake, Chairman of the Laotian Opium Administration and within several months Ouane brought the first major opium caravans across the Mekong River. 

General Ouane went on to become one of the largest drug traffickers in the Golden Triangle using Laotian C-47s and helicopters to open new trading relations with KMT and Shan brokers. One of the largest shipments he is known to have organized was a winding mile long 16 ton load carried over the jagged mountain terrain on a 300 pack horse caravan, guarded by five hundred Laotian soldiers.

This caravan provoked a battle that came to be known in the media as the 1967 Opium War. The confrontation, between KMT drug units and the Shan warlords who were delivering the drugs, was a fight to control the traffic in this region. General Ouane entered the fight with Laotian jets and a paratroop battalion decisively defeating the opposing forces and retrieved the 16 tons of opium.

The drug war between the KMT's 1,400 troops and Ouanes 1,800 paratroopers was reported in the U.S. media, however, it's deeper implications and the connections with heroin sales to U.S. GI's were overlooked. General Ouane consolidated this victory by displacing the KMT forces from the Burmese border and using the Laotian army to tax opium shipments.

Ouane operated five heroin refinery's producing no.4 and his operation became the lead processor for Burmese opium. This massive heroin operation was widely know to be operating including a Time magazine article that reported "the kingpin of the Laotian opium trade is General Ouane. He is reputed to own one of Laos's two major opium refineries, and five smaller refineries scattered along the Mekong".

Ouane, the Laotian Chief of Staff, whose army was largely funded by the U.S., held a press conference with U.S. reporters in 1971 where he was quoted as saying "the opium traffic was a good thing, since it provided the Meo (Hmong) tribesmen with a livelihood and kept them out of the hand of the Communist Pathet Lao." Ouanes candor was apparently too much for the CIA as he was reportedly forced to resign his army position several weeks later, but not from his drug operations.

Heroin and Black Ghettos

Ouane, in the finest traditions of free market entrepreneurship, responded to the GI demand for No.4 by marketing his own brand name "Double U-O Globe" heroin and increasing production to 10 kilos per day. Double U_O Globe was following U.S. troop home as 8 kilos were seized in New Jersey and 16 kilos in New York in November 1971. 

These large seizures, the GI problem and increasing media attention led to President Nixon's "war on drugs". Announced in June of 1971 Time magazine reported that the problem had become exacerbated since it (heroin addiction) had been traditionally "confined to black urban ghettos" and now it appeared the "disease has come to invade the heartland of white, middle class America."

Fearing that heroin was moving beyond the politically and racially segregated ghettos, Nixon declared a "national emergency" and using rhetoric future politicians would borrow and build upon pronounced that "America's Public Enemy No. l is drug abuse". Part of Nixon's "War on Drugs" included cooperation between U.S. drug enforcement personnel and police of other nations.

In 1971, the U.S. Bureau of Narcotics (DEA) sent a team of agents to Laos to investigate the problem. Upon their arrival they were prevented from conducting investigations by the U.S. Embassy, the CIA, and the Laotian government.

The U.S. Embassy, apparently unaware of "America's Pubic Enemy No. 1", defended this action by claiming that U.S. narcotics agents would be violating Laotian sovereignty as Laos had no legal prohibitions against drugs. The State Department, which was then demonstrating its respect for the principle of sovereignty in neighboring Vietnam, was concerned that any pressure on the drug traffickers might damage the war effort.

The CIA and U.S. government role in the Southeast Asian drug trade was considered logical and pragmatic in a region where opium had been a primary cash commodity for centuries. Opium was and is a mammoth agro-business in this area just as coca in the Andean nations of South America. Covert aggression required alliances with "powerful warlords who necessarily deal in drugs" in the U.S. war against Communist's who did not, as the experience in post revolutionary China demonstrated.

The CIA in 1972 denied any involvement in the drug trade while expressing "some concern that local officials with whom we are in contact... have been or may be still involved in the drug business". The CIA went to explain that alliances with Laotian military officers whose drug connections were well known while their "goodwill facilitates Agency military irregulars".

The report concluded with the observation that the war had been the "overiding priority" and all other issue "have taken second place. It would be foolish to deny this, and we see no reason to do so".

Excerpt of comments by: Alfred W. McCoy, professor of Southeast Asian history at the University of Wisconsin; author of "The Politics of Heroin: CIA Complicity in the Global Drug Trade" (Lawrence Hill, 1991) and "The Politics of Heroin in Southeast Asia" (1971).

At "Drugs, Impunity and the CIA" A seminar sponsored by the Center for International Policy's Intelligence Reform Project Dirksen Senate Office Building, November 26, 1996. 

(Colonel Thet Oo's "My Opium Operations")