Michael Vernon Townley, an American working for the Chilean National Intelligence Directorate (DINA), told the FBI last week he would supply information on DINA operations in exchange for a reduced sentence for his role in the 1976 assassination of former Chilean Ambassador to the U.S. Orlando Letelier, and his associate at the Institute for Policy Studies (IPS), Ronni K. Moffitt.

Townley, who had lived in Chile since 1958, is believed by the FBI to be the link between a group of anti-Castro Cubans suspected of placing the bomb under Letelier's car in September 1976, and DINA, formerly headed by General Manuel Contreras Sepulveda.

The Chilean government deported Townley last month in response to pressure by the U.S. government which culminated in a threat to withdraw the American ambassador to Chile, George Landau.

Two anti-Castro Cubans suspected in the assasination of Letelier and Moffitt, Guilermo Novo and Alvin Ross Diaz, were arrested in Miami earlier this month; Novo for violating probation, and Ross for illegal possession of bomb components.

The FBI is still looking for a third suspect in the case--Rogelio Paz, from Union City, N.J. Sources in the FBI told The New York Times last week that Townley contacted the Cuban suspects at least two times during the summer of 1976, three months before the assasination.

The telephone contacts occured only a short time after Townley arrived in the U.S. with an official passport falsely identifying him as Juan Williams Rose. He entered the country with Armando Fernandez Larios, a Chilean army captain whose official passport identified him as Alejandro Romeral Jara.

On the morning of September 21, 1976, Ronni Moffitt and her co-worker and husband, Michael Moffitt, drove Letelier's dust-blue Chevelle out to suburban Maryland to pick Letelier up for work. They had driven his car home the night before because their own car wouldn't start. The three left the Letelier home at 9:15 a.m.--Michael Moffitt in the back seat, his wife and Letelier in the front. Just as they passed the Chilean embassy in downtown Washington a bomb exploded in the car. Both Letelier and Ronni Moffitt died shortly after their arrival at the hospital; Michael Moffitt escaped with a minor head wound and bruises.

"In the fraction of a second, and for the rest of his life," Saul Landau, a fellow at IPS, writes of Michael Moffitt, "fascism will have its most concrete meaning."

Nineteen months have elapsed since that tragic day in September; 19 months since the Justice Department investigation began. Only now do Michael Moffitt's original assumptions seem to be borne out by the facts FBI investigators have garnered. Moffitt is a soft-spoken 26-year-old. He is friendly, yet constrained; he seems to be goaded on by the urgency of his duties. The pain is there, but it is forceably overcome. Moffitt, who joined the IPS, a Washington-based think tank, five year ago and worked under Richard Barnett before joining Letelier, says he always worried about an attempted assasination of Letelier--who was also a former Chilean foreign minister and defense minister--when they traveled but never entertained the possibility of anything happening in the U.S. In retrospect, however, Moffitt believes that it is logical that the assassination took place in the U.S. because of the history of U.S. involvement in Chile and because, he suggests someone here had something to hide.

The Chilean press has more than covered the allegations surrounding the Letelier case. They have even suggested the Central Intelligence Agency (CIA) was in collusion with DINA--an organization started by the head of the ruling Chilean junta, Gen. Augusto Pinochet. Moffitt draws a parallel between the Chilean coverage of this investigation and the American press coverage of Watergate; he says that Pinochet's enemies are using this scandal to force him out of office, in the same way Americans said that Nixon couldn't govern the country amidst the Watergate revelations. He adds that an official in the State Department said two weeks ago that, "Pinochet's days are numbered clearly; that he'll never last the assassination investigations."

Moffitt says Pinochet has fallen into disfavor with many Chileans who had earlier supported him. He claims the middle class, members of which make up a large portion of the Christian Democrats Party (PDC), has been squeezed by Pinochet's rigid "free trade" Chicago school economic policies, and that there has been a split within the ruling junta. He suggests that there are people in the U.S. and in "influential circles" in Chile who would like to see Pinochet replaced by a government formed by General Gustavo Leigh, commander of the Chilean Air Force, and Eduardo Frei, former president of Chile and a leader of the PDC, Moffitt says many people believe that Pinochet "is not an asset any longer--he's a detriment because he's done so much." Moffitt points especially to the crackdown on members of the PDC, who began in 1976 to openly criticize the Pinochet government for the ruin they say it is inflicting on the Chilean people. Though Leigh is a former member of Patria y Libertad, a right-wing group of which Townley was also a member during the administration of former Chilean president Salvador Allende, Moffitt-believes that a government with both Frei and Leigh could change the human rights situation in Chile. "I think Frei would probably try to get some form of limited civilian rule back into the country," he says.

"I think Leigh probably thinks the economic policy is too extreme and that Pinochet's personal power is a direct threat to him," Moffitt says, adding that if one looks at the situation historically it is interesting that Pinochet has the most power in the junta because the reins of government "fell on his lap"--he was not, for the most part, involved in anti-Allende activity.

Moffitt says that the Pinochet government turned Townley over hoping he would not talk. Pinochet would like to make the assassination look like it was the work of Patria y Libertad so that he can dissociate himself from Townley and at the same time discredit Leigh, Moffitt says, adding that Pinochet was forced to deport Townley because he couldn't deny that Townley was issued an official passport. An interesting sidelight Moffitt mentions is a subscandal involving Guillermo Ossorio, the man who issued the passports to Townley and Larios. Ossorio died on October 21, 1977, after last being seen with Contreras, the former head of DINA. In November, the government announced he had died of a heart attack, but when his body was exhumed in February of this year, it was apparent Ossorio had been shot. The Chilean government has now termed his death a suicide.

Moffitt claims the FBI is "terrified that the Cubans are going to kill Townley before he ever gets to the grand jury," because he theoretically knows a lot of behind-the-scenes information on both the anti-Castro Cubans and DINA. "I think that he's the kind of character that could plea bargain for a lesser charge, and talk about the other people," Moffitt claimed prior to the report last week that Townley is indeed prepared to talk in order to reduce his sentence. "Although the problem with that is, if he does, he'll never sleep again or else he'll sleep permanently," Moffitt adds.

Moffitt projects three reasons for the junta's "assassination" of Letelier. First, the government was "terrified of the Democrats coming to power because of the possible cut-off of loans." In early 1976, Letelier managed to convince the Dutch government to cancel its $60 million loan to Chile. In addition he met with the heads of the dockworkers union and convinced them not to unload Chilean goods--not only in Holland but anywhere in the world. Shortly after this successful trip, Moffitt says, the Chilean press began to extensively cover Letelier's activities. He notes how Letelier and his wife then became subject to harassment--"They would call up Isabel Letelier at night and say, 'Are you Orlando Letelier's wife?' and she would say yes and the voice would say, 'No--you're his widow' and hang up." And Orlando Letelier was continuously "observed" at lunches and meetings.

Secondly, the junta is "almost obsessed with the fact that there are people walking around--Chileans--who know how they operate," Moffitt says, adding that every other defense minister under Allende "who knew these guys (the junta) intimately is dead, Jose Toha, Carlos Pratts, and the others."

The third reason Moffitt offers is that Letelier was one of the principal movers in getting a dialogue-in-exile going with the Christian Democrats following the military coup that overthrew the Allende government. Letelier apparently united the Christian Democrats and the remnants of the Popular Unity Party to draw up concrete plans for a transitional government in Chile. Moffitt claims the Christian Democrats trusted Letelier because he was a graduate of the military academy in Chile, a lawyer at the Inter-American Development Bank, and "he was never identified with the far left of the Socialist Party."

Moffitt has toured the country, talking to different groups to try to put pressure on the U.S. government to solve the "murders" of his wife and Letelier. In addition, he and Isabel Letelier published a report last month through the Transnational Institute, an adjunct of IPS, detailing the "relationship between foreign economic assistance, private capital flows and the state of human rights in Chile since September 11, 1973, when the military junta led by General Augusto Pinochet overthrew the democratically-elected government of President Salvador Allende." One of the purposes of the report is to air "the conflicts between the officially stated human rights policy of the U.S. government and the behavior of private U.S.-based corporations and banks." Moffitt and Isabel Letelier assert that without private bank assistance Pinochet could never have turned down a 1977 U.S. government offer of $27.5 million in economic assistance, a loan with attached human rights concessions. In 1976, the U.S. Congress, over the opposition of former President Gerald R. Ford, voted to stop all military assistance to Chile and curtailed economic assistance to a maximum of $27.5 million for the fiscal year 1977. In May of the same year, William Simon, then secretary of the Treasury, visited Chile and "congratulated Pinochet for bringing 'economic freedom' to Chile," Isabel Letelier and Moffitt write in their report. They add, "This positive assessment by a prominent Wall Street figure buoyed Chile's reputation in the financial community." With bilateral agreements to Chile declining and loan obligations coming due, Chile received a 500 per cent increase in private multinational bank lending between 1975 and 1976. And, the report continues, the total amount "soared over $800 million in 1977." The report states that in 1977 alone, Chile received $514 million in loans and credits from private U.S.-based multinational banks--with the total lending from U.S. banks since the coup in 1973 surpassing $900 million. The report identifies the major U.S. banks who have "buoyed" the Chilean government. They are the Bankers Trust of New York, the Chemical Bank of New York, Wells Fargo Bank of San Fransisco, Citicorp of New York, First Chicago Bank, and Morgan Guarantee Trust.

Moffitt explains that if Pinochet had to answer to President Carter, he would not have outlawed the PDC in March of 1977. Instead, the report states, the same month the party was outlawed, U.S. banks loaned him $51 million. In January, 1978, Pinochet exiled 12 Christian Democrats for participating in illegal political activities and the same month, the report indicates, "the bank consortium headed by Wells Fargo lent the government $125 million and Exxon purchased approximately $100 million worth of shares of the La Disputada (copper) mines."

"Clearly," the report concludes, "private multinational bank loans and suppliers' credits to Chile have not only replaced official bilateral and multilateral loans as Chile's principal sources of external financing, but far surpassed them in importance to the military junta. The tremendous influx of private bank loans since 1976 gave the Pinochet regime a green light to thumb its nose at international pressure designed to improve the human rights situation in Chile."

Following the release of the report, Rep. Henry S. Reuss (D-Wisc.), chairman of the House Banking Committee, sent telegrams to the six major banks lending to Chile, expressing concern that their actions did not "appear consistent" with standards aimed at keeping banking practices from interfering with the public interest, and that they were not "helpful" to the U.S. human rights policy. At the same time Rep. Thomas R. Harkin (D-Iowa) is drawing up legislation to force disclosure of private bank loans to governments the U.S. Congress has tagged as human rights violators, and is exploring a way to bring private policies more in conformity with public policies through legislation. Moffitt and Isabel Letelier also sent letters to the heads of all the banks loaning money to Chile saying, "We don't think it's appropriate for banks which are based and chartered through the U.S. to be lending to the Pinochet government at the same time as leading members of his government are implicated in a terrorist murder here." Moffitt added, "We don't believe that there should be lending to governments who the U.S. Congress and a dozen other countries have condemned as the worst of the human rights violators." To pressure the banks, Moffitt has encouraged the initiation of shareholder resolutions by groups around the country. His efforts evoke the recent student attempts to pressure the Harvard Corporation to prevent U.S. banks from loaning money to South Africa. Deja vu?