Anatomy of A Smear

By RICHARD BEHAR LITTLE ROCK

TO HEAR TERRY REED TELL IT, during the mid-1980s he was a key player in a covert "resupply network" that flew arms to the Nicaraguan contras and drugs back to the U.S., using a small airport in rural Arkansas as a base. On top of that, the enterprise was personally supervised by Governor Bill Clinton, whose state received 10% of the profits from the operation. And according to Reed, he even discussed the scheme with Clinton while the Governor smoked marijuana in a van parked outside a busy Mexican restaurant in Little Rock.

The only trouble with Reed's sensational tale is that not a word of it is true. That inconvenient fact has not stopped a busy rumor mill in Arkansas from cranking out ever more preposterous allegations, nor has it prevented some credulous journalists, including Andrew Cockburn, a columnist for the Nation, from using Reed as a source for absurdly speculative accounts. None of those who are taking Reed's wild stories seriously seem to have asked why Clinton, a vocal critic of U.S. aid to the contras who even then was considering running for President, would have done risky favors for the Reagan Administration. But then again, answering that question would spoil the fun.

As with most smears, Reed's allegations are built on a slim foundation of truth. Before being gunned down in Louisiana by a squad of Colombian hit men in 1986, a convicted drug smuggler and dea informant named Barry Seal was involved in something fishy at the airport in Mena, a heavily wooded town 130 miles west of Little Rock. In 1984 Seal played a part in Oliver North's campaign to prove that the Sandinista government was in league with Colombia's Medellin cocaine cartel. In exchange for a reduced sentence on drug-smuggling charges, Seal flew his C-123 transport plane to Managua and picked up 750 kilos of cocaine from a high-ranking Sandinista official, recording the transaction with hidden cameras.

What does this have to do with Reed, a 43-year-old pilot and machine-tool salesman who now lives in Moorpark, Calif.? He claims that in 1983 North recruited him to go to Mena to work with Seal and help train contra pilots. He also says North asked him to donate a Piper airplane to the contras and then report the plane as stolen so that insurance would cover his loss. Later that year, Reed and his wife Janis received a $33,000 insurance payment for the Piper. He says he quit the contra effort in August 1987 after he learned that it involved drug running. For that, he claims, the government sought revenge.

Two months later, a Little Rock private investigator named Thomas Baker stumbled on a rusted Piper in a local aircraft hangar. He asked his best friend, state police captain Raymond ("Buddy") Young, who has been Clinton's chief of security for a decade, to run the plane's identification numbers through the fbi's national crime data base. Lo and behold, it turned out to be Reed's missing plane. Reed and his wife were indicted for mail fraud in Wichita. The case was dismissed in 1990 after the government refused to turn over North's diaries, notes and phone records, which Reed claimed would back up his alibi.

Since then Reed has been waging a vendetta against Baker and Young. He began by filing a suit accusing them of fabricating a federal crime. More recently he has added Clinton to his list of targets. In an interview with TIME, he breathlessly proclaimed that "I just spoke to my lawyer and he says that a Clinton emergency fund was just increased considerably, and he seems to think that some kind of offer will be made to get this thing to go away." That was news to Reed's attorney, John Wesley Hall, a constitutional expert from Little Rock, who says he actually told Reed that no one would ever settle the suit. Adds Hall: "I haven't been able to corroborate ((Reed's story)), that's the problem."

No wonder. There is absolutely no proof that Reed ever worked with either the CIA or Seal. Oliver North denies that he has ever met or spoken with him. A couple with whom Reed claims he was dining on the night of his alleged conversation with Clinton say they have never been to the restaurant with Reed.

Over the past decade, Reed has shuttled from one job to another, leaving behind a string of charges that he absconded with company funds. Among his victims: an Illinois-based Japanese machine-tool company named Gomiya, which currently has a $600,000 judgment outstanding against him. Last month U.S. marshals seized Reed's van for Gomiya. Reed blames the CIA.

Given Reed's track record, why does anyone take him seriously? In part because there are so many unanswered questions about what was going on at Mena. In 1988 a federal grand jury that had investigated the affair for three years failed to return indictments, leading some state law-enforcement officers to grumble that the case had been scuttled by higher-ups in Washington. Clinton says the state has done everything it can to solve the mystery. But Charles Black, a deputy state prosecuting attorney, says when he asked the Governor to provide financial assistance so the state could conduct its own grand jury investigation in 1988, Clinton never got back to him. Last year Democratic Congressman Bill Alexander obtained $25,000 from the Federal Government to fund a probe by the state police, who will soon decide how to proceed with the investigation. That is a timely idea, if only to lay Reed's fabrication to rest.