THE VIRGINIAN-PILOT 

                         THE VIRGINIAN-PILOT
                 Copyright (c) 1994, Landmark Communications, Inc.

DATE: FRIDAY, June 17, 1994                    TAG: 9406170777 
SECTION: FRONT                     PAGE: A1    EDITION: FINAL  
SOURCE: BY CHIP BROWN, ASSOCIATED PRESS 
DATELINE: 940617                                 LENGTH: AUSTIN, TEXAS

NORTH: COCAINE STORY ``NUTTY'' \

{LEAD} A spokesman for Oliver North dismissed as a ``nutty conspiracy theory'' allegations North knew that the pilots he hired to run guns to the Contras were smuggling cocaine into the United States.

The allegations against the former national security aide - now the Republican candidate for U.S. Senate in Virginia - were leveled by the Drug Enforcement Administration's former supervisor in El Salvador.

{REST} ``I risked my life to fight the war on drugs and watched him turn his head. North can call it garbage if he wants, but the fact remains that all of it is true,'' Celerino ``Cele'' Castillo said.

Castillo reiterated allegations from as early as 1987 that North's supply organization allowed drug traffickers to fly weapons from the United States into El Salvador and Costa Rica and return with loads of cocaine.

Castillo said he complained to the U.S. ambassador to El Salvador and then-Vice President George Bush in 1986, but no official action was taken.

``Oliver North was running the operation. His pilots were known drug traffickers listed in government files and these people were being given U.S. visas,'' Castillo told The Associated Press on Thursday.

Castillo retold his story for the June 17 issue of The Texas Observer, a 10,000-circulation magazine, and has written a book due out next month on North's secret operation to supply the Nicaraguan rebels in the mid-1980s.

``It's totally garbage, absolutely, 100 percent untrue,'' said North spokesman Dan McLagan. ``I think he's trying to sell books, make money. It's a nutty conspiracy theory with not one scintilla of truth.''

Castillo, who resigned from the DEA in 1992 and now works as a private investigator in Texas, said he watched pilots unload weapons in El Salvador and return with cocaine to Florida, Texas and California in 1985 and 1986.

by CNB