Judge in bank-fraud case given documents to quell charges of CIA knowledge

September 20, 1992|By New York Times News Service

WASHINGTON -- In an unusual step, the Bush administratio has moved to dispel accusations that it concealed information in a huge bank-fraud case involving Iraq by making intelligence documents available to the judge in the case.

The Justice Department said yesterday that it had offered to make a small number of intelligence documents available to Judge Marvin Shoob in Atlanta, including a letter that the Central Intelligence Agency sent to a Democratic Party congressman in July 1991 dealing with what it knew about the bank.

On Friday night, the Justice Department released an unclassified version of a letter that the agency sent to the U.S. attorney's office in Atlanta earlier in the week. That letter denies that the agency was involved in the scheme.

Assertions that the CIA and perhaps other intelligence agencies either knew about the fraud scheme or were somehow involved in it were raised by the defense lawyer for Christopher P. Drogoul, who has pleaded guilty in the case, at a sentencing hearing in Atlanta last week. The lawyer, Bobby Lee Cook, relied in part on classified documents to argue that the Bush administration, blinded by foreign-policy considerations, had manipulated the case to conceal "blunders" in its relationship with Iraq.

Mr. Cook also suggested -- without providing evidence -- that Drogoul had contacts with intelligence agents and former agents and that the Atlanta bank he managed lent money to what the lawyer described as CIA front companies that provided militarily useful equipment to Iraq.

The government repeatedly denied the accusations in court.

Drogoul has pleaded guilty to charges that in exchange for bribes, he illegally lent billions of dollars to Iraq and other countries without the knowledge of the Rome headquarters of the Banca Nazionale del Lavoro.

Laurence A. Urgenson, acting deputy assistant attorney general, said yesterday that Judge Shoob, who has been critical of the administration's handling of the case, would be permitted to review a letter that the intelligence agency sent to Rep. Henry B. Gonzalez, D-Texas, as well as the intelligence reports used to prepare the letter.

But the CIA letter that the Justice Department released on Friday night said that the agency was not involved in and did not know of the fraud or any other illegal activities by the bank.

It also said that the CIA did not monitor the Atlanta bank's financing of a U.S.-backed farm-loan program to Iraq.

The letter raised as many questions as it answered.

It was an unclassified version of the one sent on Thursday to the U.S. attorney's office in Atlanta, an administration official said, but it could not be learned whether the Atlanta prosecutors received the classified data as well.

It was also not known why the prosecutors only received the letter in the midst of the defendant's sentencing hearing.

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