Lt. Col. Oliver North collaborated with a conservative activist, Carl R. Channell, to wage a multimillion-dollar campaign this year to influence Congress and American opinion on behalf of the Nicaraguan contras, sources familiar with the campaign said.
The campaign, which came as the rebels were complaining that private fund-raising efforts had been disappointing, included lobbying in Congress for the Reagan administration's $100 million contra aid request, financial support for the rebels' main Washington office and an aggressive television ad campaign portraying the contras' congressional opponents as Communist dupes.
Sources familiar with the campaign said North provided Channell's media consultants with information on contra aid in Central America to help them portray U.S. policy in the region.
It is illegal under federal law for an active-duty military officer or any other government employee to engage in partisan politics, a Defense Department spokesman said.
For his efforts, North presented Channell with a "Freedom Fighter" award at a black-tie dinner at Washington's Willard Hotel Nov. 11. Just two weeks later, North was fired from his White House post for allegedly engineering the diversion of funds from secret Iranian arms deals to the contras.
The whereabouts of the $10 million to $30 million North allegedly diverted remains a mystery.
Channell, 41, a former member of the National Conservative Political Action Committee, told reporters earlier this year that he had raised $7 million for television spots and said that his funds had come from "13 to 15" phone calls to wealthy Americans sympathetic to the contras.
But sources who claim to have knowledge of several of Channell's transactions expressed doubts Wednesday that Channell had raised the millions through conventional fund-raising. Contra leaders have said recently that they were experiencing severe financial difficulties and had found private fund-raising efforts this year extremely disappointing.
Last month when news of North's diversion of the Iran funds first emerged, contra leader Adolfo Calero estimated to reporters that private donations to the contras in 1986 had amounted to "less than $1 million." Channell, however, is known to have access to generous conservative donors.
Channell did not return phone calls placed both to his office at the Washington-based Endowment for the Preservation of Liberty and to the office of his lawyer, J. Curtis Herge of McLean, Va. Herge is active in establishing a legal defense fund for North.
Richard R. Miller of International Business Communications, a public relations executive hired by Channell this year, said the questions raised about Channel's fund-raising were unfounded. Miller said Channell had raised all of the pro-contra campaign funds from conservative American contributors.
Channell hired Miller's firm earlier this year to set up and manage the main Washington office of the primary contra umbrella group, United Nicaraguan Opposition (UNO), sources familiar with UNO's operations said. They said Channell's funds paid Miller's firm to choose and rent an office, staff it with clerical help, and cover phone and other expenses.
UNO's Washington office serves to promote the contras' point of view to reporters, members of Congress and the American public.
Channell also paid the salaries of some of the UNO representatives at the Washington office, the sources said. The sources estimated the rebels' monthly salaries at between $2,000 and $2,500 per representative.
Asked specifically about his and Channell's involvement with the rebel office, Miller, a former Agency for International Development official, declined to discuss "any client matters."
Ernesto Palazio, the chief UNO representative in Washington, refused Wednesday to discuss his organization's financial backers. "We are a guerrilla organization, and therefore we cannot publish a balance sheet or provide any other public financial data, as if we were General Motors, " Palazio said.
Independently of the rebels, Channell orchestrated simultaneous media campaigns on behalf of the contras through several conservative committees and groups.
Using two groups, Sentinel and the Anti-Terrorism American Committee, Channell bought extensive television time for pro- contra commercials.
In the weeks before a crucial House vote on the Reagan administration's $100 million contra aid package alone, Channell spent more than $200,000 on a nationwide television campaign to persuade at least 11 key Democratic opponents to support the aid package.
Some $50,000 of the money was spent in Maryland, where Democratic Rep. Michael Barnes, an influential contra aid critic, lost a primary campaign. The commercials mingled a photo of Barnes with pictures of Fidel Castro, Daniel Ortega and other Communist leaders.
Channel also bought several full-page ads in The Washington Times and Baltimore Sun portraying Barnes as a dupe.
Several congressional candidates targeted by Channell raised questions about the source of his funds.
"During the campaign we kept wondering who was funding this media campaign against us, and we could never figure it out, " Barnes said. "Now the question is much more pertinent in light of the diversion of the funds and the fact that it is still an unresolved question how that money was used."
Sources said that in private testimony before the House Foreign Affairs Committee, CIA Director William Casey said Wednesday that he did not know how the diverted money had been spent.
When congressional races began in earnest for last November's mid-term election, Channell targeted key candidates opposed to Reagan's contra policies. Again, in the Maryland Senate campaign alone, Channell spent $90,000 on commercials blasting Democratic Rep. Barbara Mikulski as too liberal.
Mikulski's opponent, Republican Linda Chavez, a former White House aide on Central American affairs, found Channell's advertisements so abrasive that she publicly requested that he end the campaign. Chavez, who lost to Mikulski, wrote an opinion piece in The Washington Post recently, denouncing Lt. Col. North as a "zealot" who had damaged "the Reagan Revolution."
A public relations aide to Channell said "millions and millions of dollars" were spent on the contra television campaign nationwide.
Beyond seeking to influence public opinion, Channell, in coordination with North, carried out a direct campaign on Capitol Hill.
Among the lobbying efforts sponsored by Channell was the Council for Democracy, Education and Assistance, which was established last January by conservative public relations specialist Robert W. Owen. Owen had served as North's private intermediary with the contras during the period when U.S. officials were prohibited by law from aiding the contras. Owen declined to answer questions before the Senate Intelligence Committee Monday.
Channell donated at least $66,000 to the council for congressional lobbying in the House alone, according to House records.
Using Channell's funds, the council hired an influential human rights activist, Bruce Cameron, to design the pro-contra lobbying campaign that culminated in June with House approval of the $100 million aid package, the House records show. Cameron was out of the country Wednesday and could not be reached for comment.
In a parallel effort, Channell funded a speaker's bureau, sending Nicaraguan exiles on journeys throughout the United States to persuade audiences face-to-face of the legitimacy of contra aid.
The speakers included Nicaraguan rebel representatives in the United States including Bosco Matamoros of the Washington office, Mario Calero of New Orleans, who is a brother of contra leader Adolfo Calero, and Teofilo Archibald, a Miskito Indian. Channell paid the speakers' travel expenses but did not pay them for their appearances.