Arming Saddam Hussein
Barnard, Patrick
THE BNL SCANDAL ARMING SADDAM HUSSEIN A WASHINGTON COVER-UP? Just as the 1992 presidential campaign really begins, the Bush administration finds itself faced with a major scandal, what the...
...The Customs Service intercepted, the CIA and Pentagon warned prophetically about Iraq, memos were written...
...Drogoul' s trial is scheduled to begin this month in Atlanta, but Drogoul and two other defendants, who have already pleaded guilty, insist that both BNL Rome and the U.S...
...When the chairman of the House Banking Committee, Henry B. Gonzalez (DTex...
...1.8 billion secretly raised on world money markets...
...Customs Service and the CIA, an action which led eighteen months later to a sting operation in London that prevented the nuclear circuit from reaching Baghdad...
...Although local prosecutors were ready within weeks to bring charges against Drogoul and others, then Attorney General Dick Thornburgh took a fur6: 5 June 1992 Commonweal ther sixteen months, until February 1991, to file the indictment...
...From 1983 to 1987, BNL Atlanta brokered CCC loans for food shipments sent from the U.S...
...of Nashville, Tennessee...
...PATRICK BARNARD Commonweal 5 June 1992: 7...
...Congressman Gonzalez has stated that "several" BNL officials told him the CIA was involved in the concession of loans to Iraq...
...government officials must have known about the secret BNL Atlanta activity while it was taking place...
...Some years later, in 1988, Mr...
...For more than five years, huge amounts of taxpayers' money were misappropriated to help arm Saddam Hussein, and serious questions have arisen concerning the possible involvement of the Bush administration itself...
...He and three colleagues wrote a memo in April 1989, arguing for stricter export controls in Europe and the U.S., a plan they hoped would go forward to the secretary of state and the National Security Council...
...As has been reported by the New York Times (April 20, 1992), in 1989 the head of the Energy Department's Office of Classification and Technology Policy, A. Bryan Siebert, Jr., found out about Euromac's attempt to buy a nuclear circuit for a bomb from CSI Technologies...
...When the covert money operation collapsed, U.S...
...that BNL was responsible for what took place in Atlanta...
...The BNL Atlanta affair cries out for full congressional investigation, if not for an independent counsel...
...They discussed the fact that U.S...
...According to testimony before the House Banking Committee by W. Seth Carus of Washington's Institute for Near East Policy, in February 1984 U.S...
...Congressman Gonzalez has called for both...
...In October 1989, President George Bush signed National Security Directive 26 committing the U.S...
...The Atlanta branch kept a secret set of books to record these loans, and the manager who ran the operation, along with a handful of colleagues, was a young man who held dual FrenchAmerican citizenship, Christopher Drogoul...
...Safa Haji al-Habobi...
...The 1984 intercept linked Al Haddad with possible chemical weapons production in Iraq (Baghdad first used chemical weapons against Iranians in 1983...
...Interception took place because the chemical can be useful in the production of nerve agents...
...A White House aide in the late 1980s, Norm Bailey, ran a money-tracking computer analysis of BNL using National Security Agency intercepts, and he told the Financial Times (May 3, 1991) what conclusion he reached about the U.S...
...The illicit cash flow from Georgia was staggering: $3 billion of unauthorized loans to the Central Bank of Iraq and to the Rafidain Bank of Iraq...
...authorities to tell about what they had observed at the branch...
...The Banca Nazionale del Lavoro (BNL) is Italy's largest bank in deposits, 96 percent owned by the Italian government, and for the last decade it has maintained a Georgia branch in Atlanta's fashionable Peachtree Center...
...administration's knowledge of BNL Atlanta-Baghdad telex traffic: "The only explanation I can think of is that the authorities knew all about it and approved it...
...If Customs people knew enough to link agricultural exports with Iraqi production of weapons of mass destruction in 1984, why wasn't the money spout at BNL Atlanta immediately investigated...
...A growing and imposing body of evidence in the Congressional Record, and in major newspapers (among them the New York Times, the Washington Post, and the Los Angeles Times), indicates that U.S...
...Just as the 1992 presidential campaign really begins, the Bush administration finds itself faced with a major scandal, what the House Banking Committee calls "the Banca Nazionale del Lavoro affair...
...They were using this as a channel for the financing of certain activities...
...government to "improve and expand our relationship with Iraq...
...But Al Haddad was also connected with BNL Atlanta, which from 1983 on handled more than 40 percent of the U.S...
...food aid to Iraq had been diverted in order for Baghdad to purchase weapons, even for "sensitive nuclear technologies" and "nuclear-related equipment...
...food exporters about Iraqi demands for kickbacks produced immediate suspicions at Agriculture about the real use of CCC funds...
...yet the information, apparently, never went outside the department...
...The contracts for military goods sent to Iraq, which were paid for by these loans, went through Iraq's Ministry of Industrial and Military Production, and were coordinated by Dr...
...People who worked on the case in Atlanta have subsequently said that the Justice Department, the Federal Reserve, and the State Department all delayed the crackdown on BNL Atlanta until immediately after the end of Desert Storm...
...government agricultural loans, many of which were ultimately transformed into weapons purchases—a total of more than $6 billion...
...The commercial demand came in September 1988 from Iraq's principal military procurement agent in Europe, Euromac of the United Kingdom...
...Commonweal 5 June 1992: 5 The true scandal, however, concerns much more than money...
...During the 1980s the Reagan and Bush administrations adopted the "Iraq tilt" to favor Baghdad against Tehran...
...to Iraq with State and Commerce Department approval: "It is ridiculous to think that American intelligence did not know what Safa Habobi was doing in the United States, when he was simultaneously the president of Matrix Churchill and the main Iraqi in charge of military-industrial supplies...
...Customs officials intercepted a shipment of potassium fluoride by the Al Haddad Brothers Trading Co...
...and $1.8 billion in U.S...
...and that the gradual development of BNL Atlanta as a finance center for Iraq fit into a plan of "some circles in the American political-military-industrial complex...
...but Washington's embrace of Iraq continued until a war became necessary...
...Jerry Kowalsky, an executive at CSI Technologies, a California producer of custom-designed electronic capacitors, received a fax request from Europe for what he recognized to be a nuclear warhead trigger circuit...
...But, according to Milan's Corriere della sera (April 23, 1992), a just released special report by a commission of the Italian Senate says that Drogoul had direct and unusual access to the director general of BNL in Rome...
...wanted to press forward with the House investigation of BNL Atlanta, Thornburgh attempted to stop him, warning him in a letter dated September 26, 1990, that "this is a sensitive case with national security concerns...
...and Euromac of Italy both did business with BNL Atlanta...
...financial hub for Saddam Hussein's international arms procurement network...
...In July 1989, two American employees of BNL Atlanta went to U.S...
...This company was involved in grain shipments to the Iraqi regime, and was the beneficiary of BNL Atlanta loans to Iraq...
...government knew about their activities...
...Beginning in 1987, however, the Atlanta operation became much bigger, financing British, German, and U.S...
...food loans channeled to Iraq through the Department of Agriculture's Commodity Credit Corporation (CCC...
...There were many warnings about the policy's consequences from government employees in the CIA, the Pentagon, the Customs Service, as well as in the Departments of Energy, Commerce, and Agriculture...
...Apparently the discussion did not have any impact outside the department...
...taxpayers were left with a bill of approximately $400 million because of unpaid food loans...
...But Euromac, U.K...
...As he subsequently told the House Banking Committee, Kowalsky immediately informed the U.S...
...companies, among others, for the most specialized military contracts: quartz crystals for radar, a satellite tracking system, rocket components, software for missile and bomb production, chemical precursors for the production of nerve gas...
...Al-Habobi was simultaneously director general of the Al Nassr weapons complex in Iraq, and the man in charge of Baghdad's front companies in Britain, which included Euromac and a holding called Matrix Churchill with a subsidiary in Solon, Ohio...
...On October 13, 1989—shortly after the August raid on BNL Atlanta—lawyers and officials of the CCC met in the Agriculture Department...
...Complaints from U.S...
...Since the CIA knew about the suspicious activities of Euromac in September 1988, why wasn't the telex trail followed straight to BNL Atlanta...
...to Iraq...
...At the same time, BNL Atlanta had contacts with East European firms which, it is believed, smuggled weapons into Iraq in exchange for the U.S...
...When Thornburgh finally did hand down his indictment, he attempted to portray the BNL affair as merely "an international white-collar scam," in which the Atlanta bank had simply been "a victim of this criminal enterprise rather than a participant...
...Weary as the citizenry is of scandal, the BNL Atlanta affair is a pressing case of the public's need and responsibility to know...
...Furthermore, on a number of occasions, diligent bureaucrats uncovered and prevented transactions which pointed at BNL Atlanta...
...This single, obscure BNL branch funneled vast amounts of undisclosed loans to Baghdad's military-industrial complex, where the money was used to produce chemical weapons, missiles, munitions, and components for atomic bombs...
...He noted that before 1989 Matrix Churchill exported from the U.S...
...The memo went nowhere, according to Siebert's boss, because the intelligence section within the Energy Department vetoed it...
...food...
...Siebert, an expert on the proliferation of nuclear weaponry, knew that the Iraqis had been purchasing uranium-enriched centrifuges in Europe, and he was convinced Baghdad had embarked on a crash program to develop an atomic bomb...
...From 1983 to 1989, BNL Atlanta was the U.S...
...In an interview quoted by Corriere della sera, Drogoul declared that "the governments in Rome and Washington knew perfectly well what was going on...
...On August 4, 1989, officials from the FBI and the Federal Reserve Board raided BNL Atlanta...
Vol. 119 • June 1992 • No. 11
