U.S. Asked Sultan for Contra Funding

WASHINGTON--The State Department persuaded a wealthy Asian potentate to contribute millions of dollars to U.S.-backed Nicaraguan rebels earlier this year, and a published report says the money was sent to a bank account administered by a central figure in the Iranian arms scandal.

U.S. government sources, speaking on condition they not be identified, confirmed a report in The Los Angeles Times on Saturday that the ruler of oil-rich Brunei, Sultan Hassanal Bolkiah, agreed to give millions of dollars to the Contras in Central America.

It could not be learned whether Secretary of State George P. Shultz personally discussed the aid with Bolkiah on June 24 when they met at the sultan's 1700 room-marble and glass palace on a hilltop in Brunei's capital, Bandar Seri Begawan.

Since the eruption of the furor over the Iranian arms sale and the Administration's revelation that proceeds were funneled to Nicaraguan rebels, State Department officials, including Shultz himself, have taken strides to distance themselves from the operation.

Shultz opposed the sale of arms to the Iranians and the department took no part in the operation, according to President Reagan. On the other hand, the State Department has been active in formulating and carrying out U.S. policies in Central America, notably efforts to help the contras in their fight against Nicaragua's leftist government.

The idea to ask Bolkiah for money came from Elliot Abrams '69, assistant secretary of state for inter-American affairs, who provided the number of a Swiss bank account where the funds were to be sent, The Times said.

The newspaper quoted sources as saying the account was administered by Lt. Col. Oliver L. North Jr., the fired National Security Council staff member under investigation by the Justice Department.

The sources did not know whether the ruler intended his money to go for medical supplies and other humanitarian aid or for weapons for the Contras.

At the time, the Reagan Administration was prohibited by Congress from sending military supplies or supporting such shipments.

The department would not comment on the Brunei donation.