The BNL Scandal
Adams, James Ring
The BNL Scandal And how the Iran-contra investigation gave carte blanche to Saddam Hussein. by James Ring Adams Asultry Georgia weekend was just half an hour away for the staff on Friday, August...
...One has to wonder how it eluded the FBI check, the Justice Department, and Sen...
...It took the Washington Post several months to catch on, but that still scooped the New York Times, which didn't stumble on the story until four months after Gonzalez started his lectures, and then lamely explained that "no one was listening...
...He made a deal with the prosecutors shortly after...
...I. Rogue Bankers and the Pariah State The bankers at BNL-Atlanta quickly learned that they were in over their heads, but it began innocently enough in December 1984...
...In that position, he had supervised the Immigration and Naturalization Service, the U.S...
...Drogoul, does your boss know you are here...
...An internal Federal Reserve memo after Barr's departure had already complained of "what is perceived as interference from the Justice Department in Washington...
...At their hotel, their host Sadiq Taha of Iraq's Central Bank astonished von Wedel by announcing they would be signing an agreement for a medium-term loan...
...The BNL turned down one Matrix-Churchill request to finance "nuclear triggers...
...On August 3, 1990, almost the first anniversary of the raid, the U.S...
...Republicans in opposition suggests that the motion will pass with substantial support...
...aker delivered...
...Even then, it named only the Iraqis who had acThe American Spectator August 1992 23 tually signed the loan agreements...
...But by mid-summer, Barr was no longer the U.S...
...Such a bloody conflict in an area of vital importance to the industrialized, oil-using world raised grave questions of what used to be called high policy...
...After meetings with the company auditor, Drogoul would sometimes burst into von Wedel's office, doubled over with laughter over another narrow escape...
...But did the government sponsor the illegalities, and even more, is it now trying to cover them up...
...BNL itself is demanding repayment of $350 million...
...The Pro-Iraq scandal is a direct consequence of the criminalization of the Iran-contra affair, and the reason is that a court proceeding simply cannot cope with the real significance of either...
...The branch manager had just started his summer vacation and the number two man was still away on his, so the sixteen clerks and traders in Suite 2000 of Atlanta's Peachtree Center Gas Light Tower were spending their time watching the clock...
...Only at 5:45 did they begin to let them leave, one at a time...
...attorney for Atlanta...
...In these circumstances, the state-owned bank couldn't give written approval for the loans from Atlanta...
...Treasury bureaucrats had long worried about Sad-dam Hussein's credit rating, and the Export-Import Bank had already suspend its lending...
...Shortly after taking office, Whitley recused himself from the BNL case, transferring supervision to the number two in the office, who reported directly to main Justice...
...The intent of the law is worthy...
...But even acknowledging the contribution of Congress and the many questions in this case, the specter of a special prosecutor still raises qualms...
...Ambassador to Iraq April Glaspie as22 The American Spectator August 1992 cured Baghdad officials that the second $500 million would soon be forthcoming...
...Scarcely a week after the loan signing at von Wedel's "terrorist convention," requests for BNL financing began to easy...
...The strongest voices against Saddam were discredited, and the attempt to control the export of dangerous technology was reduced to a guerrilla war fought from the bowels of the Pentagon...
...By January 1987, BNL-Atlanta was the only bank in the big cases were overturned on appeal, Lawrence Walsh drags out his tenure, with total expenses far exceeding the sums diverted in the scandal...
...The official, a Mr...
...On July 9, 1990, U.S...
...Unlike the grain loans, which were funneled through the Central Bank of Iraq, the dam loans entailed BNL's writing letters of credit directly to Iraq's suppliers, including some of the largest corporations in America...
...The BNL staff also began working with an Iraqi outfit called the Technology and Development Group (TDG...
...They toured the Badush Dam site itself, with its jumble of heavy machinery, and heard the local Bedouin shepherds complain that the Vietnamese workers kept stealing their herd dogs for dinner...
...ut the unleashing of the special prosecutor produced B an even worse disaster...
...Then–Attorney General Richard Thornburgh had tried to talk him into staying as a member of his personal staff...
...So far, the Atlanta bankers could tell themselves they were helping to save American farms and providing humanitarian aid to Iraqi civilians...
...This memo, a briefing paper for the State Department toured a horizon filled with warning flares...
...The Commodity Credit program was up for renewal...
...Scandalously stupid policies can occur without criminal intent, and the tilt toward Iraq is a prime example...
...There were crimes...
...That is a more complicated question than Congress is likely to admit...
...The Feds swept papers off desks, rifled through drawers, and even checked the women's purses...
...But Whitley had said he wanted to go into private practice...
...A line of FBI agents and Federal Reserve Bank examiners, maybe fifty in all, filed quickly into the office and ordered employees not to touch their desks...
...Oh, didn't I tell you...
...Should we tilt to one side or another, and how...
...IL What Washington Was Doing That Washington could have been involved in the BNL-Atlanta scam seems likely, given the record of its reaction to Drogoul's downfall...
...The Atlanta office always assumed Drogoul had a wink and a nod from Rome, and other branches sometimes sent in business just as unauthorized as their own...
...Branch manager Christopher Drogoul, a slim, French-educated native of New Jersey whose father was part-Lebanese, had an introduction to two Iraqi bankers who had come to the U.S...
...The Forward, the national Jewish weekly, has reported that NSDD 26 was drafted by James ("Jock") Covey, then acting assistant secretary of state for Near Eastern affairs...
...In the meantime, Drogoul's staff was scrambling to raise money for the Iraqi loans and to hide the business from their auditors...
...No question...
...No matter what Whitley might do, the message sent by this stunning conflict of interest would crush anyone's morale...
...but the British Matrix-Churchill that was fully owned by the Iraqi government...
...Covey was one of six senior bureaucrats on the distribution list for the October 13 memo...
...To many, the sure sign of this interference was the yearlong delay in a BNL indictment...
...attorney, but he had one problem...
...Whitley came with an impressive résum...
...The BNL raid couldn't have come at a worse time for aid to Iraq...
...The spurned lover started by gluing together the pages of her rival's desk calendar and ended up by calling the FBI...
...The purpose, after all, is to enlighten the citizenry, not to create the conditions for even worse policy in the future...
...the Iraqis quickly learned to use a more generic description...
...Yes, there is the powerful smell of cover-up in the BNL case...
...Grain under the CCC program may never have reached Iraq...
...But the commission did reject emphatically the idea that Drogoul had embarked on this rogue adventure alone...
...In the negotiations after the Gulf War, Iraqi Foreign Minister Tariq Aziz claimed that the threat to end the commodity credit program helped trigger Saddam Hussein's decision to invade Kuwait...
...By the middle of 1985, Iraq wanted another $500 million, and Drogoul was glad to do the business...
...Another experience like Iran-contra would leave Washington in the condition of the Mingrelian royalty of the sixteenth century...
...Italy had said no Iraqis were involved, he claimed, and so did unidentified U.S...
...Iraq was making grain shippers pay substantial "consulting fees" to Matrix-Churchill in Ohio, possibly for military purchases...
...Even before the 1992 presidential campaign turned into a three-cornered James Ring Adams is the co-author of A Full-Service Bank: How BCCI Stole Billions Around the World (Pocket Books) and author of The Big Fix: Inside the S&L Scandal (Wiley...
...The raid on BNL-Atlanta had created a major inconvenience for the pro-Iraq policy of the Bush Administration...
...BNL had a top credit rating, thanks to its Italian government backing, and America's biggest banks were eager to lend it billions...
...True, there were rumors that Iraq was playing games with the grain pricing, raking cash off the top and demanding "after-sale services," i.e., kickbacks from its suppliers...
...Before we go that road again, let's separate the scandal from the crimes...
...the economic tie with Iraq was presidential policy...
...was happy...
...Long after his But Drogoul went ahead anyway, for a total of nearly $2 billion in commodity loans...
...Western intelligence concluded that the Badush Dam was the cover for Special Project 395, Iraq's attempt to develop a missile capable of striking at a range of 1,000 kilometers, a radius that would dominate most of the Middle East...
...The upshot of it all has been to silence any career bureaucrat who might have opposed the tilt to Iraq...
...Now he stands up before me and says he wants to work it out with the government prosecutors and tell me later," the judge said in court...
...On June 2, Chris Drogoul finally had his day in court...
...But the case raised a question that still hasn't been answered: Was Drogoul operating on his own, or did he have tacit approval, either from his superiors or from one or more Western governments...
...From an initial $200 million, they reached a total of $2.2 billion by April 1989...
...He also served on the board of directors of its American subsidiary, LBS Bank...
...Apart from the damage to the CCC program and the embarrassing revelations about Iraqi arms purchases, the incident need not have concerned the administration any further...
...Senior auditors from Rome visited other American branches, but never Atlanta...
...The commission launched into some dark speculation...
...Is it a big scandal...
...The bank was the problem, not the customer, said Aziz...
...The first reports said that Drogoul would plead guilty to all 347 fraud counts and read a long statement explaining just what had gone on...
...Congress revealed the extent of the administration's tilt toward Iraq in the late eighties...
...Baker asked...
...They tolerated the use of chemical warfare and blinked at the build-up of a strategic nuclear industry...
...As the staff looked on, not entirely in disbelief, the agents lifted armloads of files from the filing cabinets and dumped them into cartons...
...Drogoul innocently asked von Wedel...
...If smoke indicates fire," said one pungent essay dated October 13, 1989, "we may be facing a four-alarm blaze in the near future...
...Special Prosecutor, Pro or Contra...
...von Wedel asked him once...
...What, after all, is the consequence, of presenting this scandal as a crime...
...Chris, do you really feel invincible...
...He had agreed to move from grain deals into financing an Iraqi dam project...
...To be sure, the relationship for Whitley was purely commercial...
...Most of these deals were disguised as "dual use" exports, ostensibly for peaceful use but easily converted to the military...
...The lobbying paid off...
...His latest target, former defense secretary Caspar Weinberger, was actually one of the most vehement opponents of the arms-for-hostages deal with Iran...
...This move gave a meddling Washington even more control over the case...
...by James Ring Adams Asultry Georgia weekend was just half an hour away for the staff on Friday, August 4, 1989...
...The Gulf War cost $60 billion, and if earlier restrictions on Iraq would have saved even the modest number of allied casualties, then the Bush Administration committed appeasement of the worst sort...
...With BNL funding, Matrix-Churchill became the hub of the Iraqi procurement network in the U.S...
...III...
...The "rogue banker" theory certainly played well with the BNL hierarchy, and the U.S...
...to arrange financing for their grain imports...
...Not just the Ohio subsidiary that was coordinating arms procurement in the U.S...
...Secretary Baker caved in forthwith...
...More than $2 billion of this lethal arsenal had been financed by the American taxpayer...
...CI When Robert McFarlane was hounded from the White House, the pro-Iraq tilt proceeded without opposition...
...One has to wonder how it eluded the FBI check, the Justice Department, and Sen...
...Von Wedel once caught him necking in the parking garage with one secretary, and a former girlfriend, still on the staff, set out to make her life miserable...
...He was the lawyer for Matrix-Churchill...
...Devastating memos began to circulate...
...But Eagleburger vehemently denied any impropriety during recent testimony to the House Banking Committee...
...IV...
...Matrix needed a local attorney to enforce several BNL letters of credit once the trouble hit, and Whitley had joined one of the most prestigious local firms...
...One grain broker paid for von Wedel's house...
...Critics have called this statement one of the "green lights" that encouraged Saddam Hussein to invade Kuwait on August 2. When the West struck back with an embargo, Saddam defaulted on his borrowing, sticking the U.S...
...taxpayer with nearly half a billion in claims...
...Ten separate investigations, it said, were targeting the BNL, and they "were at the explosion stage...
...Drogoul soon took a step, however, that lifted BNL-Atlanta to a new level of complicity...
...Instead, he startled the court by taking a plea bargain and keeping his silence...
...In the meantime, Iraq's credit rating took a nosedive and respectable lenders, like Morgan Guaranty, quietly dropped their business with the country...
...Sam Nunn, who by tradition has veto power over U.S...
...The Iraqi loan files went into "floating bankers' boxes," which frequently wound up in Drogoul's car or von Wedel's garage...
...The staff in Solon acted as advance men for touring Iraqis...
...After an evening with the Iraqis at the New York Sheraton, Drogoul and his second man Paul von Wedel came away with a contract for a $100 million line of credit...
...One of its early orders included a high-precision tungsten carbide grinder suitable for making parts for missiles and nuclear components...
...n February 1988, Drogoul brought von Wedel on a business trip to Baghdad...
...The sudden clam-up visibly annoyed presiding judge Marvin Shoob, who had already said he didn't believe the rogue-banker theory...
...he White House responded immediately...
...On a later trip to Baghdad, they met the head of the Technical Corps for Special Projects, the group that, among other things, built the Scud missile that killed twenty-seven members of the Pennsylvania National Guard in Dhahran...
...Drogoul had more trouble handling the churning jealousies of his own staff...
...It took lobbying from the cabinet and a Presidential National Security Directive to keep the credit flowing to Iraq...
...Drogoul, some staff, a Turkish trading company, and 20 The American Spectator August 1992 four Iraqis were eventually indicted for bank fraud, namely for hiding the unauthorized loans from BNL headquarters and from American bank examiners...
...Senior American officials had ties of unknown significance to the banks in the case...
...But these were bad policies, not crimes, and they thrived because our politics made crimes of a previous set of bad policies...
...By January, Iraq had spent most of the first tranche and started lobbying for the rest...
...Then–U.S...
...His current efforts are devoted to harassing senior officials far removed from the original offense...
...We'll see what can be done, Baker promised...
...Among the accusations: •Iraq demanded kickbacks from its CCC suppliers, including trucks, spare parts, and other equipment...
...Even Saudi Arabia and Kuwait had cut it off...
...The approach to some of these questions necessarily had to be covert, given the high emotions raised by the Ayatollah's revolution...
...The American weapons shipments that weren't bungled strengthened the wrong Iranian faction, and the basic point became lost in side issues...
...Mingrelia is the region of the Caucasus that produced Lavrenti Beria...
...Drogoul's secretaries recorded these loans in "grey books," which they kept on the side...
...Both jobs were surprisingly The "Badush Dam" loans grew rapidly...
...He spent his weekends doing housework for his wife and two children, but he kept falling into affairs at the office...
...But it could have been just an inconvenient coincidence...
...On November 8, the deputies to the Advisory Council approved the full one billion, in two installments of $500 million...
...No," he answered, "but close to it...
...The pathetic performance of of the Agriculture Department's Commodity Credit Corporation...
...The Reagan and Bush Administrations clearly appeased a nasty tyrant and paid the price with a war...
...Wait and see, it said, as the investigations of the U.S...
...And, contrary to the BNL's claim, it wasn't true that the fraud was undetectable...
...By the end T of October 1989, President Bush had signed National Security Decision Directive 26, ordering federal agencies to expand their economic ties with Iraq...
...The grain credits had become almost its sole source of external borrowing...
...By historic coincidence, Judge Shoob spoke just as the House Judiciary Committee sat to hear four congressional committee chairmen call for an independent counsel...
...This claim doesn't quite wash, because the credits didn't end, but Aziz had to work hard to save them...
...The press "exposés" on the case relied almost entirely on documents that Chairman Gonzalez released from this February on in weekly floor speeches...
...That is why the conduct of his prosecution raises questions as serious as the cabinet-level pressure for the commodity credits...
...And Drogoul's father Pierre was in on the action, as a business partner with Iraqi procurement agents...
...In spite of Barr's hope for charges by February 1990, the document was not finally handed up until January 1991, just as the ground war started in Iraq...
...It would depend on the information," Aziz replied, but this matter had to be settled quickly...
...Secretary Baker wrote to Agriculture Secretary Yeutter, asking for the full one billion, then followed up with a personal call...
...If there has been obstruction of justice, take it to the courts...
...Iran-contra quickly became a disaster, of course...
...Von Wedel certainly worried enough about it, and Drogoul and von Wedel took substantial gifts for their work...
...The players in Iran-contra saw that it was important to reopen American channels to the Ayatollah's successors, that America and Iran are, as one analyst puts it, "natural allies...
...But was it criminal...
...try to shut down the war or prolong it...
...Italy wouldn't let them go, or refund the down payment, so Iraq stopped paying its own debts to Italy...
...The firm coordinated the building of a fiber glass plant in Iraq with an output applicable to missile rocket casings...
...With only a mild harrumph at Iraq's use of poison gas against the Kurds of Halabji, he sat through a tirade from Aziz about the BNL case...
...Congress needs full information about policy to preserve popular control...
...All these short guys with black moustaches wearing army fatigues and carrying guns were standing around with drinks in their hands having a good old time...
...Their ace in the hole was NSDD 26...
...As he walked into the office of the Minister of Trade, he recalled, "I thought I had crashed a cocktail party at a terrorist convention...
...Would Iraq cooperate with the investigation...
...During its dynastic wars, the practice of the victor was to put out the eyes of the king who was overthrown...
...Baghdad produced documents showing that shipments arrived there before other documents showed they, had passed through interim ports in Jordan and Turkey...
...None of them could be settled in a court of law...
...Whitley seemed like an outstanding choice for U.S...
...Drogoul had already handled grain export deals for other countries, and he knew the ins and outs world willing to finance Iraq under the CCC program...
...But it could have been just an inconvenient coincidence...
...Drogoul doled out company cars and cash bonuses to keep them quiet...
...Since February, congressional probers have published document after classified document detailing cabinet-level coddling of Saddam Hussein in the two years between the end of his war with Iran and his invasion of Kuwait...
...The Italian commission didn't pursue these speculations much further...
...Much as the Ayatollah's provocations tried to obscure the fact, this nature sooner or later had to assert itself...
...By the time of the signing ceremony, von Wedel's nerves were completely shot...
...Attorney Barr anticipated an indictment in early February, and described a potential breakthrough: a Turkish broker in Istanbul, Yavuz Tezeller, was willing to talk about his substantial grain deals and kickbacks with both Christopher and Pierre Drogoul...
...In the seven years that I had known Chris," said von Wedel, "this was the first time he was completely speechless...
...But women were his downfall...
...TDG bought a failing British machine tool company and renamed it Matrix-Churchill Ltd., which in turn set up an American subsidiary in the Cleveland suburb of Solon, Ohio...
...officials who had met with the governor of Iraq's CenNo matter what Whitley might do, the message sent by this stunning conflict of interest would crush anyone's morale...
...marshals, and the ninety-three U.S...
...His government, he added, "was very unhappy...
...The criminal proceedings destroyed the careers of the pro-Iranian wing of our policy bureaucracy...
...Drogoul spoke privately with the man from headquarters and told von Wedel that the officer agreed in principle with the deal...
...The appointment had a practical impact...
...But the case needs a forum that can treat it as a policy issue, not as another vendetta...
...They drank orange-juice in the tightly guarded office of Hussein Kamel Hassan, head of Iraq's crash program to build military industry and the son-in-law of Saddam Hussein himself...
...Iraq and Italy were squabbling over the non-delivery of a fleet of warships...
...Since the factions were fairly evenly matched and the losers often made a comeback, for much of the century, all of the Mingrelian kings were blind...
...The Atlanta branch, it noted, was opened by a bank officer who "moved in politico-military circles in the United States and other NATO countries...
...Not even a perjury charge, this somewhat arbitrary statute would be triggered if a witness managed to give Congress the wrong impression by his testimony...
...But the association was a major embarrassment for the head of the office that would conduct the country's most important prosecution of the Iraqi arms procurement network...
...Iraq took this cutback seriously, far more seriously than anyone in the West realized...
...A member of the TDG board, Fadel Kadhum, had roomed with Drogoul at the University of Montpellier in France...
...Yet there is a standing warning of the folly of making a police matter out of foreign policy disputes, and that is the career of the existing Iran-contra special prosecutor...
...As his employees caught on to the Iraqi operation, they began to hint for favors...
...They questioned members of the staff...
...More likely, said Agriculture Department investigators, "commodities were bartered in Jordan and The use of NSDD 26 quickly became apparent...
...Just a year earlier, he had been serving as the acting number-three man inthe Justice Department...
...It The American Spectator August 1992 19 was the BNL officer from Rome in charge of Middle East lending...
...Six defendants in the BNL case have already pled guilty...
...attorney, this case ought to have a special prosecutor...
...Turkey for military hardware...
...Iraqi Foreign Minister Tariq Aziz had just met with Ronald Reagan in the White House...
...The credits that Whitley sued to collect were to buy machine tools for Iraq's Nassar Establishment for Mechanical Industries, an arm of the giant military-industrial complex at al-Taji...
...The raid on BNL-Atlanta had created a major inconvenience for the pro-Iraq policy of the Bush Administration...
...No one spoke with greater authority than House Banking Committee Chairman Henry Gonzalez, who had spent nearly two years trying to interest the public and the press in the BNL case...
...Von Wedel started talking freely almost as soon as the FBI agent showed up at his door at 5:30...
...in a campaign to discredit the document, Agriculture Department investigators later testified to Congress that he misunderstood what they were telling him...
...the list, complete with contact names and phone numbers, included several divisions of the Dresser Corporation, Mack Trucks Inc., Caterpillar Tractor, Ingersoll Rand, Dynapac Manufacturing, General Motors-Canada, and Terex...
...18 The American Spectator August 1992 contest, the scandal was a godsend to those who want to end Republican control of the White House...
...This revelation differed so drastically from the testimony of the BNL management that the commission at first didn't believe it...
...Furthermore, the way the money was borrowed on the financial markets to fund the Iraqi loans could be reconstructed from the brokers' statements...
...A January 9, 1990 letter signed by U.S...
...The CCC was set up to boost farm exports by putting an American government guarantee behind private bank loans...
...The government had its case within two hours of the August 4 raid...
...In sum, the whole clandestine movement of money in and Iraqi loans out was waiting to be discovered in the bank's open records...
...Just as the two bankers entered the hotel lobby in the evening, a familiar voice said, "But Mr...
...Mid-level civil servants at Treasury The American Spectator August 1992 21 and Agriculture saw a megaton of bad publicity heading right for their desks and wanted to run for the shelters...
...Four of the five congressional committees on the case think they've seen enough to call for a special prosecutor...
...Senate confirmed his successor, a private lawyer from Atlanta named Joe D. Whitley...
...But this issue was too hot for career bureaucrats, and they kicked it up to a meeting of political appointee–level deputies...
...At 4:30 p.m., the door burst open...
...Drogoul and von Wedel began to hobnob in the highest reaches of Iraqi government...
...But nagging facts kept cropping up...
...Deputy Secretary Eagleburger twisted arms at Treasury...
...Should the U.S...
...In August 1988, a telex from the Technical Corps for Special Projects–Project 395 told its Cleveland outpost to set up appointments with nineteen corporations for the Badush project...
...attorney appointments in his state...
...On a late-1990 trip to Washington, an Italian parliamentary commission was astonished to be told by a Federal Reserve examiner that the hidden funds could have been detected by anyone who knew where to look...
...But problems cropped up in Rome...
...attorneys...
...heavy-hitters, some of them Fortune 500 companies, and they were happy to do the business...
...Sam Nunn, who by tradition has veto power over U.S...
...Without any reflection on the U.S...
...If Drogoul had truly been a rogue acting from his own obscure motives, he could have gone to his fate without any interference from Washington...
...T he sudden raid on the Atlanta office of the Banca Nazionale del Lavoro kicked off a scandal that Democrats now hope will finish off the Bush Administration, for BNL was the financial linchpin of a global network that for the better part of a decade had been supplying Iraq's Saddam Hussein with the makings of poison gas plants, nuclear bombs, and missiles capable of reaching Cairo, Tehran, and all of Israel...
...For the next hour none of the staff could leave the office, make phone calls, or go to the bathroom without an escort...
...attorney in Atlanta Robert Barr believed that Iraq "was malfeasant and involved" in the case...
...Von Wedel claims he was totally surprised, but he was savvy enough in the ways of Iraq to locate the hidden police camera and microphone in his room's television set and drape a towel over the screen...
...In late August, they voted to cut Iraq's annual share from $1 billion to $400 million...
...24 The American Spectator August 1992...
...The entire tilt toward Iraq needs to be exposed, regardless of the political consequences...
...attorney appointments in his state...
...He had learned of the cutback from the Iraqi agricultural team, he said, and he considered it a "setback...
...The BNL Prosecution Secretary Baker's behavior clearly implied that he would have preferred that Drogoul keep doing what he was doing...
...Former Secretary of State Henry Kissinger and present National Security Adviser Brent Scowcroft had served as consultants to the BNL...
...While at Kissinger Associates, on the board of LBS Bank or elsewhere," he said, "I do not recall having done any substantive work for BNL...
...He was indicted because he didn't tell Congress, or the independent counsel, about his personal note-taking in administration meetings...
...Von Wedel had better reason than he knew to be nervous when the minister announced that most of the loan would help build the Badush Dam near Mosul...
...Incredibly, twelve separate audits, by BNL officials, the Peat Marwick accounting firm, and federal and Georgia state bank examiners, failed to pick up the telltale movements in the Morgan Guaranty account...
...What kind of power balance did we want to emerge at the end...
...These were the Middle East...
...These scandals are the neurotic symptoms of the American attempt to ignore one of the major wars of our generation, the eight-year conflagration between Iraq and Iran...
...When Robert McFarlane was hounded from the White House, the pro-Iraq tilt proceeded without opposition...
...Martinson, told the commission that BNL-Atlanta transferred its funds, even the illicit Iraqi payments, through its correspondent bank, Morgan Guaranty Trust, and that all of these transfers, thousands of them, were meticulously recorded...
...Western intelligence later concluded that the Badush Dam was the cover for Special Project 395, Iraq's attempt to develop a missile capable of striking at a range of 1,000 kilometers, a radius that would dominate most ofissue from the nondescript Matrix-Churchill building in Ohio...
...Among other items, al-Taji made rocket casings and centrifuge parts for the nuclear program...
...The supervisors of the Commodity Credit program were thoroughly rattled by the BNL raid...
...The House Judiciary Committee heard them out at the end of May and is holding more hearings before deciding whether to forward the request to the Attorney General...
...The decision on the credits belonged B to a National Advisory Council on International Monetary and Financial Policies...
...Some of the pro-Iraqi excesses may indeed deserve to be prosecuted, but the most common charge is likely to be the Star Chamber offense of "misleading Congress...
...There must have been collusion at higher levels...
...But as the senators went through the actual documents, with "transfers in the trillions of lire . . . all noted down to the last centesimo," they found that the Fed couldn'tbe doubted...
...Iraq had no part, he said, in the BNL-Atlanta branch scandal, he said...
...prosecutors bought it...
...But that was a problem for the Agriculture Department auditors...
...The list of unindicted co-conspirators included two Iraqi officers of Matrix-Churchill and Hussein Kamil Hassan, the son-in-law of Saddam Hussein...
...It undercuts the great triumph of the Bush Administration, Operation Desert Storm, by raising the question of whether the Gulf War was necessary...
...Their superiors in Rome approved the deal and the U.S...
...Tezeller's attorneys," wrote Barr, "also indicate he can provide information regarding 'after-sale services,' unearned consulting fees, and other payments to the Iraqis, as well as kickbacks paid by United States and multinational companies to obtain Iraqi contracts...
...The perverse result, however, as Michael Ledeen argues in Perilous Statecraft, his trenchant memoir of Iran-contra, is to cut off communication with the executive branch...
...The senators concluded that incompetence alone couldn't explain it...
...On October 6, 1989, he lobbied Secretary of State James Baker himself in a meeting at the State Department...
...tral Bank, the employer of Drogoul's contacts...
...It profoundly changed their outlook on the scandal...
...Some diverted funds, and possibly direct bank loans, were buying nuclear equipment...
...After three days of negotiations, von Wedel was just beginning to relax when a supposedly chance encounter rattled him once more...
...The memo was written by a State Department officer, Frank LeMay, who was new to the case...
...Normally the cabinet departments on the council, Treasury, State, and Commerce, would send mid-level delegates...
...It had taken direct lobbying by then–Vice President George Bush to shake loose its last loan, in possible violation of the Ex-Im Bank charter...
...More curiously, present Deputy Secretary of State Lawrence Eagleburger had been an adviser to the Ljubljanska Bank in Yugoslavia, which served as one of Chris Drogoul's main conduits and which, the commission said, hired the former BNL director for North America as a consultant at the behest of Drogoul's father...
...the bank would lend directly to a foreign importer, confident that if the loan went bad, the taxpayer would cover 98 percent of the loss...
...State went to work on the other departments...
Vol. 25 • August 1992 • No. 8
