The BBC, citing interviews with former rebels and CIA documents, said militant leaders had posed as merchants in meetings with aid groups and diverted the money to weapons purchases as they attempted to overthrow the government.
At the time, the Ethiopian government was fighting rebellions in the northern provinces of Eritrea and Tigray.
Gebremedhin Araya, who had posed as a merchant, was actually a senior member of the Tigray People's Liberation Front, the BBC said.
"I was given clothes to make me look like a Muslim merchant," he said.
Beneath sacks of grain were sacks of sand.
Araya said he gave money he received to TPLF leaders, including Meles Zenawi, who became Ethiopia's prime minister in 1991.
Meles' office would not comment.
The TPLF's former commander, Aregawi Berhe, said in 1985, of $100 million in aid that went through the TPLF, 95 percent went toward purchase of weapons or to support the party within the rebel movement, the Marxist Leninist League of Tigray.
In a 1985 assessment, the CIA concluded, "Some funds that insurgent organizations are raising for relief operations, as a result of increased world publicity, are almost certainly being diverted for military purposes."
Notable deaths of 2014 [PHOTOS]