Ms. WATERS. Mr. Chairman, this amendment would call for a review of the 1995 memorandum of understanding that currently exists between the Director of
Central Intelligence and the intelligence community and the Department of Justice regarding reporting of information concerning Federal crimes.

This amendment is very simple and noncontroversial. It calls for a review of the current memorandum of understanding to ensure that drug trafficking and drug law
violations by anybody in the intelligence community is reported to the Department of Justice. Specifically, the review would examine any requirements for
intelligence employees to report to the Director of Central Intelligence and any requirements for the Director to report this information to agencies.

This information would be reported to the Attorney General. The review would be published publicly. This simple amendment fits well with the recent calls for a
reinvigorated war on drugs. The need for this amendment, however, cannot be understated.

One of the most important things that came out of the hearing of the House Permanent Select Committee on Intelligence was an understanding about why we did
not know about who was trafficking in drugs as we began to investigate and take a look at the allegations that were being made about the CIA's involvement in
drug trafficking in south central Los Angeles and the allegations that profits from that drug trafficking was going to support the Contras.

We discovered that for 13 years the CIA and the Department of Justice followed a memorandum of understanding that explicitly exempted the requirement to
report drug law violations by CIA non-employees to the Department of Justice. This allowed some of the biggest drug lords in the world to operate without fear
that the CIA would be required to report the activity to the DEA and other law enforcement agencies.

In 1982, the Attorney General and the Director of Central Intelligence entered into an agreement that excluded the reporting of narcotics and drug crimes by the
CIA to the Justice Department. Under this agreement, there was no requirement to report information of drug trafficking and drug law violations with respect to
CIA agents, assets, non-staff employees and contractors. This remarkable and secret agreement was enforced from February 1982 to August of 1995. This
covers nearly the entire period of U.S. involvement in the Contra war in Nicaragua and the deep U.S. involvement in the counterinsurgency activities in El
Salvador and Central America.

Senator Kerry and his Senate investigation found drug traffickers had used the Contra war and tie to the Contra leadership to help this deadly trade. Among their
devastating findings, the Kerry committee investigators found that major drug lords used the Contra supply networks and the traffickers provided support for
Contras in return. The CIA of course, created, trained, supported, and directed the Contras and were involved in every level of their war.

The 1982 memorandum of understanding that exempted the reporting requirement for drug trafficking was no oversight or misstatement. Previously unreleased
memos between the Attorney General and Director of Central Intelligence show how conscious and deliberate this exemption was.

On February 11, 1982, Attorney General French Smith wrote to DCI William Casey that, and I quote, this is what he said:

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I have been advised that a question arose regarding the need to add narcotics violations to the list of reportable non-employee crimes . . . no formal requirement
regarding the reporting of narcotics violations has been included in these procedures.

On March 2, 1982 William Casey responded:

I am pleased these procedures which I believe strike the proper balance between enforcement of the law and protection of intelligence sources and methods will
now be forwarded to other agencies covered by them for signing by the heads of those agencies.

My colleagues heard me correctly.

The CHAIRMAN. The time of the gentlewoman from California (Ms. Waters) has expired.

(By unanimous consent, Ms. Waters was allowed to proceed for 3 additional minutes.)

Ms. WATERS. Mr. Chairman, the fact that President Reagan's Attorney General and Director of Central Intelligence thought that drug trafficking by their assets
agents and contractors needed to be protected has been long known. These damning memorandums and the resulting memorandum of understanding are further
evidence of a shocking official policy that allowed the drug cartels to operate through the CIA-led Contra covert operations in Central America.

This 1982 agreement clearly violated the Central Intelligence Agency Act of 1949. It also raises the possibility that certain individuals who testified in front of
congressional investigating committees perjured themselves.

Mr. Chairman, every American should be shocked by these revelations. Given the shameful history of turning a blind eye to CIA involvement with drug traffickers,
this amendment seeks to determine whether the current memorandum of understanding closes all of these loopholes to the drug cartels and narcotics trade.

At this time I know that there is a point of order against my amendment. The chairman of the committee is going to oppose this amendment, and so I am going to
withdraw the amendment. But I wanted the opportunity to put it before this body so that they could understand that we had an official policy and a memorandum
of understanding that people could fall back on and say I did not have to report it. Yes, I knew about it.

We have a subsequent memorandum of understanding of 1995 that is supposed to take care of it. I am not sure that it does.

Mr. Chairman, I submit for the Record the following correspondence between William French Smith and William J. Casey:

Office of the Attorney General,
Washington, DC, February 11, 1982.

Hon. William J. Casey,
Director, Central Intelligence Agency, Washington, DC.

Dear Bill: Thank you for your letter regarding the procedures governing the reporting and use of information concerning federal crimes. I have reviewed the draft
of the procedures that accompanied your letter and, in particular, the minor changes made in the draft that I had previously sent to you. These proposed changes
are acceptable and, therefore, I have signed the procedures.

I have been advised that a question arose regarding the need to add narcotics violations to the list of reportable non-employee crimes (Section IV). 21 U.S.C.
874(h) provides that `[w]hen requested by the Attorney General, it shall be the duty of any agency or instrumentality of the Federal Government to furnish
assistance to him for carrying out his functions under [the Controlled Substances Act] . . .' Section 1.8(b) of Executive Order 12333 tasks the Central Intelligence
Agency to `collect, produce and disseminate intelligence on foreign aspects of narcotics production and trafficking.' Moreover, authorization for the dissemination
of information concerning narcotics violations to law enforcement agencies, including the Department of Justice, is provided by sections 2.3(c) and (i) and 2.6(b)
of the Order. In light of these provisions, and in view of the fine cooperation the Drug Enforcement Administration has received from CIA, no formal requirement
regarding the reporting of narcotics violations has been included in these procedures. We look forward to the CIA's continuing cooperation with the Department
of Justice in this area.

In view of our agreement regarding the procedure, I have instructed my Counsel for Intelligence Policy to circulate a copy which I have executed to each of the
other agencies covered by the procedures in order that they may be signed by the head of each such agency.

Sincerely,

William French Smith,
Attorney General.

                                                            --

                                                            --

THE DIRECTOR OF

Central Intelligence,
Washington, DC, March 2, 1982.

Hon. William French Smith,
Attorney General, Department of Justice, Washington, DC.

Dear Bill: Thank you for your letter of 11 February regarding the procedures on reporting of crimes to the Department of Justice, which are being adopted under
Section 1-7(a) of Executive Order 12333. I have signed the procedures, and am returning the original to you for retention at the Department.

I am pleased that these procedures, which I believe strike the proper balance between enforcement of the law and protection of intelligence sources and methods,
will now be forwarded to other agencies covered by them for signing by the heads of those agencies.

With best regards,

Yours,
William J. Casey.

Enclosure.