A YOUNG Foreign Service officer named Frank Lemay ought to be a hero. He was the first to warn his bosses at the State Department that Iraqi President Saddam Hussein was using U.S.-backed grain loans to build a nuclear bomb.
In his memorandum of Oct. 13, 1989, he recounted a conversation with four nervous Department of Agriculture officials who had been briefed on a probe into Iraq's multi-billion-dollar abuse of the Lavoro bank's Atlanta branch.
"Payments required by Iraq of exporters . . . may have been diverted into acquiring sensitive nuclear technologies," Mr. Lemay wrote to his superiors two and a half years ago.
He reported Agriculture's inspector general to be concerned that "commodities were bartered in Jordan and Turkey for military hardware" and that the U.S. attorney in Atlanta (a former CIA man) had indicated that diverted funds "were used to procure nuclear related equipment."
Lest the diplomatic and political import of this perversion of taxpayer funds be missed, he added: "If smoke indicates fire, we may be facing a four-alarm blaze in the near future."
But Frank Lemay is a pariah, not a hero, at State because his memo -- made public by Rep. Henry Gonzales, D-Texas -- proves that State policy makers possessed the guilty knowledge of Saddam's unlawful use of American financing.
Despite that written notification of likely diversion, Secretary of State James A. Baker III leaned on Secretary of Agriculture Clayton Yeutter to extend an additional $500 million to Saddam.
And despite Mr. Yeutter's 1989 pledge to Sen. Patrick Leahy, D-Vt., chairman of the Agriculture Committee, not to issue new credits until suspicions of corruption were resolved, Mr. Yeutter -- under heavy Baker pressure -- rushed the "grain" financing to Saddam.
Mr. Lemay is one of the witnesses scheduled to testify this week before the House Judiciary Committee as it decides whether to request that the attorney general determine in 30 days if evidence exists of high-level malfeasance requiring a court-appointed independent counsel.
Why is Mr. Baker allowing Mr. Lemay to appear, when the White House has refused to let higher-ups testify? The answer is provided me by a colleague of his at State: "Because Frank is being set up to be discredited by the coverup crowd at Agriculture, who have already lied to Congress. And because Frank does not know to this day what happened after his memo went upstairs."
What did happen to the Lemay warning at State? Copies went to his boss, Undersecretary for Economic Affairs Richard McCormack, who has left government, as has then-Counsel Abraham Sofaer; to Sam Hoskinson, who has gone to CIA; to State's Jack "Mr. Iraq" Covey of the Near East Bureau; and to four participants in the meeting at Agriculture.
My mid-level State source believes that Mr. McCormack took his assistant's red-hot memo to Secretary Baker and read sections of it aloud. Amazing result: The economic oversight was taken away from Economic Affairs and assigned to "Baker's man," Robert Zoellick. From that point on, Mr. Lemay was out of the loop.
What motivated Mr. Baker, a lawyer of legendary caution, to ignore the report of the way our money was being diverted to Saddam's nuclear program?
Who else knows the Bush-Baker motive for knowingly allowing a dictator to divert a half-billion dollars in supposed grain credits to military and nuclear use?
William Safire writes a column for the New York Times.