Millions of dollars earmarked for victims of the Ethiopian famine of 1984-85 went on buying weapons, according to a BBC investigation.
Former rebel leaders told the BBC that they posed as merchants in meetings with charity workers to get aid money.
They then diverted the cash to fund their attempts to overthrow the government of the time.
Documents released by the CIA confirmed aid was "almost certainly being diverted for military purposes".
I was given clothes to make me look like a Muslim merchant, this was a trick for the NGOs, they didn't know me
Gebremedhin Araya
Although millions of people were saved by the Western aid that poured into the country, evidence suggests not all of the aid went to the most needy.
At the time, the Ethiopian government was fighting rebellions in the northern provinces of Eritrea and Tigray.
Much of the countryside was outside of government control, so relief agencies brought aid in from neighbouring Sudan.
Some was in the form of food, some as cash, to buy grain from Ethiopian farmers in areas that were still in surplus.
Undercover rebels
Max Peberdy, an aid worker from Christian Aid, carried in nearly $500,000 in Ethiopian currency across the border in 1984.
On his journey, Mr Peberdy was guarded by 50 young fighters of the rebel movement, the Tigray People's Liberation Front (TPLF).
CIA INTELLIGENCE
Some funds that insurgent organisations are raising for relief operations, as a result of increased world publicity, are almost certainly being diverted for military purposes
But he insists he went in with the rebels' relief organisation, Relief Society of Tigray (Rest).
"There had to be a complete separation between the support we got from the TPLF and the logistics of this grain purchasing, which was in the hands of the Rest officials," he said.
But the merchant Mr Peberdy dealt with in that transaction claims he was, in fact, a senior member of the TPLF rebels.
"I was given clothes to make me look like a Muslim merchant. This was a trick for the NGOs," says Gebremedhin Araya.
Underneath the sacks of grain he sold, he says, were sacks filled with sand.
He says he handed over the money he received to TPLF leaders, including Meles Zenawi - the man who went on to become Ethiopia's prime minister in 1991.
Mr Meles' office declined to comment on the allegations.
Mr Peberdy still believes that none of the aid was diverted.
"It's 25 years since this happened and in the 25 years, it's the first time anybody has claimed such a thing."
He insists that to the best of his knowledge, the food went to feed the starving.
But Mr Gebremedhin's version of events is supported by the TPLF's former commander, Aregawi Berhe.
Now living in exile in the Netherlands, he says the rebels put on what he describes as a "drama" to get the money.
Michael Burke's 1984 report in Ethiopia which shocked the world
"The aid workers were fooled," he says.
He says that in 1985, of the $100 million that went through the hands of the TPLF, 95% was allocated either to buy weapons or to build the hard-line party within the rebel movement - the Marxist Leninist League of Tigray.
Both Mr Aregawi and Mr Gebremedhin fell out with the TPLF leadership and fled from the country.
A 1985 CIA assessment, Ethiopia: Political and Security Impact of the Drought, concluded: "Some funds that insurgent organisations are raising for relief operations, as a result of increased world publicity, are almost certainly being diverted for military purposes."
Soviet confrontation
It should not be forgotten that this all took place at the height of the Cold War.
The Soviet Union had poured $4bn into Ethiopia, and provided Soviet officers to direct Ethiopia battles against the rebels.
"US policy will seek to limit and destabilise activities of Soviet Third World allies and clients," it said.
In November 2009, US Secretary of Defence Robert Gates gave a speech describing how he briefed Mr Reagan during his time as deputy head of the CIA.
He said that the president's approach was to "impose ever stiffer costs on the Soviet Union for its Third World adventurism".
And he includes Ethiopia among the states like Nicaragua and Afghanistan in which "Soviet surrogates soon faced their own lethal insurgencies".
Mr Gates was unwilling to expand on just how the US backed the Ethiopian insurgents.
But since there were only a limited number of rebel movements, the suggestion cannot be ruled out that the CIA not only knew about, but supported, the diversion of aid funds to the TPLF.
