The Crimes of Mena:

IRS Blocked Probe

"Demo Says IRS Blocked Probe Of Drugs, Arms"
July 28, 1989  

Washington --  An Arkansas congressman yesterday accused the 
Internal Revenue Service of blocking congressional and police 
attempts to investigate an alleged drugs-for-arms operation linking 
Arkansas and Central America.
        Representative Bill Alexander, D-Ark., said two House
subcommittees, the Arkansas State Police and the General Accounting
Office have been investigating possible violations at the Mena, Ark.,
        He said cargo planes apparently were leaving the airport for
Central America with arms and returning with drugs.
         "This investigation led us to the IRS about a year ago," said
Alexander during House Government Operations subcommittee hearings on
alleged corruption at the IRS.
         Investigations of reported links between drug trafficking and arms
supplies to the Contra rebels in Nicaragua have been conducted by
congressional hearings in August 1987, the CIA Central American Task
Force chief said many members of the Nicaraguan resistance were known
to be trafficking in cocaine.

         Alexander's comments came during questioning of newly appointed
IRS Commissioner Fred Goldberg, former Commissioner Larry Gibbs,
Senior Deputy Commissioner Michael Murphy and other IRS officials.
         Alexander said Congress and the State Police wanted access to
William Duncan, then an agent for the IRS' Criminal Investigative
Division, who was investigating a money laundering scheme connected
to the overall narcotics trafficking probe.
        Alexander said the IRS would not cooperate, citing privacy
restrictions regarding tax information.
       "The effect of the failure of your cooperation has been to let
the statute of limitations run out on drug traffickers," Alexander
said to the IRS officials.
      "I will make it crystal clear to all our employees that they will
cooperate to the fullest extent of the law" with you, said Goldberg,
after Alexander asked him to order his people to cooperate.
       Duncan was investigating the activities of the late Barry Seal, a
convicted drug smuggler turned government informant, who operated out
of the Mena airport from 1984 until he was slain in February 1986 in
Baton Rouge, La., the Arkansas Gazette reported yesterday.
       Alexander told the Gazette that Duncan was under orders from the
office of then-Attorney General Edwin Meese to withhold evidence in
federal grand jury proceedings that examined activities at the Mena

        Alexander said during the hearing yesterday that it was only through
Duncan's resignation from the IRS that any information became
        Duncan, who testified earlier in the day, said he resigned after
17 years with the IRS because he was advised by an IRS attorney to
lie to Congress about the investigation.
         He said he was told by an attorney with the IRS Disclosure
Litigation office not to offer an opinion to the subcommittee on
whether the case was being stalled.
         Before he was to testify, Duncan said, he received a phone call
with a tip on possible bribery of a ""high-level government official"
connected to the case.
        He said an IRS attorney told him that if he were asked about the
matter by the subcommittee, he should respond, ""I have no
information on that."
        Duncan said he felt that would be perjury and said he would not
testify rather than lie.
        Eventually, after many heated discussions, Duncan said, his
superiors at the IRS said he could say that he got a phone call with
the tip.
         Duncan said he did testify on the money-laundering case in
February 1988, telling about the tip.

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