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Obscure Endowment Thrust Into Limelight by Oliver North’s Notes

March 16, 1987 GMT

WASHINGTON (AP) _ The National Endowment for Democracy, created by Congress in 1983 to promote democratic institutions overseas, has labored in obscurity to distribute nearly $60 million in grant money - until now.

Along came the Iran-Contra affair, and something Oliver L. North called Project Democracy - PRODEM in his computer messages. North’s program was a massive, secret operation to aid the Nicaraguan Contras.

Because of North’s choice in a name, the federally financed but privately run endowment is obscure no more.

The New York Times wrote a front-page story that described North’s operation as the endowment’s ″secret arm.″ Further stories appeared when an organization administering four endowment grants was linked to the Iran-Contra controversy. When the endowment board met last Friday, a network television crew was there.

A North memo described his democracy program as $4.5 million in ″assets″ to help the Nicaraguan Contras: ″six aircraft, warehouses, supplies, maintenance facilities, ships, boats, leased houses, vehicles ordnance, munitions, communications equipment and a 6,520-foot runway″ in Costa Rica.

Ever since North’s designation became known, top endowment officials have been spending their time trying to convince people there is no link between North’s operation and the public endowment.

″We’re getting entangled with a problem that isn’t our problem,″ endowment board chairman John Richardson said.

Endowment officials say their difficulty began with a Feb. 15 New York Times story. It said:

″Although the public arm of Project Democracy, now known as the National Endowment for Democracy, openly gave federal money to democratic institutions abroad and received wide bipartisan support, officials said the project’s secret arm took an entirely different direction after Lt. Col. Oliver L. North, then an obscure National Security Council aide, was appointed to head it about three years ago.″

Endowment officials fought back. Two members of its board, former Vice President Walter Mondale and Republican National Chairman Frank Fahrenkopf Jr., wrote an article in the Times that denied any connection with North - the central figure in the Iran-Contra affair.

Then, came another setback.

The Tower board that reported on the Iran-Contra case reproduced a chart found in North’s safe that contained initials of organizations believed to be involved in aiding the Contras.

One turned out to be a group administering four grants for the endowment, which uses U.S. organizations as middlemen to encourage contact between Americans and grant recipients.

Last Friday, the board voted unanimously to remove the grantee - the Institute for North South Issues in Washington - from its program, while admitting there was no evidence of wrongdoing. The endowment said it was awaiting completion of a financial review of the $444,000 in grants the institute received to administer four projects in the Caribbean.

Carl Gershman, president of the endowment, told the board he has met with the Times editorial board to try to clear up the confusion.

In an editorial Friday titled, ″The Good Project Democracy,″ the Times said, ″The lamentable result of the North confusions is to re-ignite suspicions of sinister American manipulation.″ The editorial went on, to ask, ″What’s in a name? Credibility, and this is one form of it well worth restoring.″

Asked if there’s any link between the two projects, Gershman said, ″None whatsoever. North usurped a name. There’s not even an informal relationsip. It’s absurd,″ he said.

In fact, Gershman said in a recent interview, a covert operation would be contrary to what his organization is trying to promote.

″If we are going to be working with democracy in the world, it should be done openly,″ he said.

The endowment grew out of a 1982 speech by President Reagan, which called for a study on an initiative of private organizations to promote democracy overseas.

In February 1983, in a program called Project Democracy, the administration proposed such programs be funneled through federal agencies. Congress, seeking a program that was independent and bipartisan, refused to approve the plan.

Instead, Congress that year backed what became the endowment.

Since commencing operations in April 1984, the endowment has issued about 300 grants, spending nearly $60 million, Gershman said.

In the Philippines, the endowment supported Filipino trade unions, which had been the target of violent attacks.

In Haiti, support also was given to an emerging free trade union movement, and for establishment of a center to promote research, education and democratic cooperation.

It has supported the Cultural Council of the Afghan Resistence, which has launched a massive education program inside that nation.

Support has been given in Chile to a broad group of political and social forces working for a return to democracy.

Lawyers, journalists, church leaders and community groups working for human rights in South Africa received support. So did a labor federation in Nicaragua and the newspaper La Prensa.

Other projects were backed in Poland, Grenada, Guatemala, Costa Rica, Panama, Czechoslovakia and China, among other countries.