My response to the Quora question:
I would like to respond here by addressing CIA’s involvement in drug trafficking in South America as an answer to the question of criminality.
A December 1988 report from the Senate Committee on Foreign Relations cited SETCO Aviation, the company the U.S. had contracted to handle many of the flights to deliver weapons and supplies to Contras camps in Hondura, was also ferrying cocaine into the U.S.[1,2]
According to a 1983 Customs Service report, SETCO, a Honduran airline company, was “headed by Juan Ramon Matta Ballesteros, a class I DEA violator.” Ballesteros had been arrested in 1970 at Washington, D.C.’s Dulles International Airport trying to smuggle in 26 kilos of cocaine. Rather than receiving a stiff jail sentence, Ballesteros, a CIA asset, was deported to Honduras where, in 1975, he formed a partnership with Mexican drug lord Felix Gallardo.
Ballesteros and Gallardo used their drug profits to overthrow Honduran President Juan Alberto Melgar Castro, an opponent of then-President and CIA favorite Anastasio Somoza Debayle of Nicaragua. Under new Honduran leader General Policarpo Paz Garcia, the two drug traffickers flourished as Honduras became a way station for cocaine and marijuana from Columbia to the U.S.
During this time, Argentine military officers were training the Contras, a right-wing, U.S.-backed rebel force fighting against the socialist Sandinista Junta government of Nicaragua. At the breakout of the Falklands War, these officers pulled out to join in the fighting. CIA’s then-lead officer in Latin America, Dewey Clarridge, began to depend more heavily on Ballesteros and Arias for money until the U.S. Congress appropriated money—humanitarian aid—for the Contras.
The connection between CIA, the Contras and drug trafficking was the head of Honduran military intelligence, Leonides Torres Arias. After the coup that put Paz Garcia in power, Arias had been accepting kickbacks from Ballesteros.
One of the pilots for SETCO was an American named Frank Moss, who flew more than a dozen missions for the company. Moss was identified by the DEA as a drug smuggler “as far back as 1979.” The weapons supplied to the Contras came from a U.S. firm called R&M Equipment, which had a warehouse in Tegucigalpa, Honduras. R&M was partly owned by Ron Martin, a former CIA operative. His partner was James McCoy, a former military attache to the Somoza regime.
CIA had clearly entrusted some of its support of the Contras to known drug smugglers. But the Agency was not alone in looking the other way.
In 1981 the DEA had established an office in Tegucigalpa. Thomas Zepeda, its resident agent, had quickly come to the conclusion that the entire Honduran government was involved in the drug trade. In May 1983, Zepeda opened an investigation into SETCO. A month later, the investigation was shut down, Zepeda was transferred out of Honduras, and the DEA’s Honduras station was shut down.
The man responsible for this was the DEA’s Ed Heath, head of Latin American operations in Mexico City and a man suspected by fellow DEA agents as having ties to CIA.
One conclusion that can be inferred from this is that then-CIA Director William Casey, whose world vision echoed that of then-President Ronald Reagan, wished to see the Contras succeed at any cost. This included alternative sources of funding—such as the arms sales to Iran—at a time when the Boland Amendment would have ended further funding of the Contras.
When President Reagan was asked in written interrogatories from Independent Counsel whether he authorized Casey, among others, to take action with respect to the Contras, Reagan responded that “administration officials were generally authorized to implement that policy.”
Another conclusion that can be drawn is that private individuals—a former CIA officer, others under contract to enterprises involved in supplying the Contras—exploited the situation for personal gain.
Director Casey died of a brain tumor before he could expand on CIA’s role in drug trafficking in the Iran-Contra scandal. Oliver North, a key figure here, revealed in an August 9, 1985, entry in his diary that “Honduran DC-6 which is being used for runs out of New Orleans is probably being used for drug runs into the U.S.”
CIA has had to respond to allegations it conspired to introduce crack cocaine into U.S. ghettos and waged a war against Blacks in an internal newsletter. In instances where journalists sought confirmation or denial of such allegations, CIA’s commitment to protecting its source and methods resulted in no comment—a response misinterpreted as culpability.
There is no doubt drug trafficking occurred in Honduras, and that some of the funds were furnished to the Contras. An investigation by CIA’s Inspector General’s Office, however, did not find evidence of direct Agency complicity. But as with any large organization, the acts of a few reflect upon the reputation of the many. CIA has had to pay that price in terms of a tarnished image. But that in and of itself does not presume criminal liability.
 Whiteout: The CIA, Drugs, and the Press, by Alexander Cockburn and Jeffrey St. Clair, Verso Press, 1998.
 Los Angeles Times, February 13, 1988.
 Whiteout… Op. cit.
 https://fas.org/irp/offdocs/wals…, “Answers of the President of the United States to Interrogatories, In re Grand Jury Investigation”
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