Iraqgate feud breaks into open

A BITTER public feud between the Justice Department and the CIA, over the latter's involvement in huge improper loans to Iraq by a US branch of a big Italian bank in the late Eighties, has reinforced suspicions of a Bush administration cover-up of its misguided pre-Gulf war policy towards the regime of President Saddam Hussein.

In extraordinary developments culminating this weekend, two of the most powerful agencies in the US government have accused each other of withholding information from federal prosecutors investigating the alleged fraud, carried out from the Atlanta branch of Banca Nazionale del Lavoro (BNL).

The loans, which were never properly recorded in the bank's books, reportedly totalled between dollars 3bn and dollars 5bn (pounds 1.77bn-pounds 2.9bn). They are widely believed to have helped President Saddam to build up his military machine before the Gulf war.

The renewed headlines made by the affair have arrived at the worst possible moment for President Bush, threatening to tarnish further his proudest foreign policy achievement - and on the very eve of last night's first presidential debate, which offers probably his last chance to reverse his dismal standings in the polls before the 3 November election.

The issue has already been seized upon by his Democratic opponents. Al Gore, the candidate for Vice President, who last week gave a scathing speech on the administration's pre-1990 dealings with Iraq, yesterday declared that more than bad judgement was involved. 'It is a seemingly blatant disregard of the law by those responsible for enforcing it.'

The tangled tale of the BNL Iraq loans, which stretches from Atlanta to Washington to the corridors of political power in Italy, is a central strand in what has become known as 'Iraqgate', the mistaken attempts of the Bush adminstration to win President Saddam round by financial and political inducements until almost the eve of the invasion of Kuwait in August 1990. The irregular loans from BNL were first discovered a year earlier.

Acting on a tip-off, FBI agents raided the bank's offices, seizing thousands of documents and closing down the operation. Until lately, it was maintained that the entire scheme had been carried out singlehandedly by Christopher Drogoul, the head of the branch, unbeknown to his superiors in Rome. In June he struck a plea-bargain deal with prosecutors, admitting guilt in 60 of 347 counts of conspiracy and fraud. In the past three weeks, however, even as the Attorney General, William Barr, refused a request from Congress for an independent special council to examine 'Iraqgate', that version has all but unravelled.

First came word of a classified letter from the CIA indicating that the agency knew that BNL officials in Rome were aware of the loans, but withheld the information from the federal judge trying the Drogoul case. Then CIA officials, in leaked testimony to the Senate Intelligence Committee, admitted that they had deliberately concealed evidence from the judge but claimed they had been urged to do so by the Justice Department. The department in turn has denied those allegations.

It has also emerged that the Italian government last year lobbied the administration strenuously for a planned extension of the investigation into Italy to be called off. Ten days ago, the plea- bargain agreement with Mr Drogoul was scrapped, and a full-scale trial will be held next year. The original Atlanta judge withdrew from the case, saying that prosecutors 'may have been blocked by agencies with political agendas from developing a full picture of the affair'.

Now the CIA has said it is conducting a full internal investigation, while the FBI is probing the Justice Department's role.

(Photograph omitted)

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Sport
sportWWE latest including Sting vs Triple H, Brock Lesnar vs Roman Reigns and The Undertaker vs Bray Wyatt
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
tvPoldark, TV review
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Junior Web Designer - Client Liaison

£6 per hour: Recruitment Genius: This is an exciting opportunity to join a gro...

Recruitment Genius: Service Delivery Manager

Negotiable: Recruitment Genius: A Service Delivery Manager is required to join...

Recruitment Genius: Massage Therapist / Sports Therapist

£12000 - £24000 per annum: Recruitment Genius: A opportunity has arisen for a ...

Ashdown Group: Practice Accountant - Bournemouth - £38,000

£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor