CIA data said to hurt bank fraud case tied to Iraq

September 30, 1992|By Chicago Tribune

ATLANTA -- Classified CIA documents contradict the central premise of the government's fraud case against a former Atlanta banker charged with making more than $5 billion in loans illegally to Iraq during the 1980s, a federal judge says.

U.S. District Judge Marvin Shoob dealt a serious setback to the government shortly before the central figure in the banking scandal, Christopher Drogoul, 43, took the stand to rebut charges that he was a "lone wolf" acting without the authority or knowledge of his superiors at Italy's Banca Nazionale del Lavoro.

That could set the stage for the judge to permit Mr. Drogoul, former manager of BNL's Atlanta branch, to withdraw his guilty plea.

Such a ruling would be a major defeat for the Bush administration, which already is alleged to have meddled in the case to try to avoid embarrassment to the White House and Italian government.

Judge Shoob initially said last week that he was baffled by the CIA files, which were provided to him by the government only after Rep. Henry Gonzalez, D-Texas, disclosed their existence in a speech on the House floor. Mr. Gonzalez had asserted that the documents show that the administration had suppressed politically sensitive intelligence relating to what it knew about the case.

After studying the five raw intelligence reports over the weekend, the judge said yesterday he had reversed his earlier reaction and he complained about being presented with such key evidence so late in this case.

Speaking to defense and prosecution attorneys at the bench, Judge Shoob said, "Three definitely do support the defendant's position that BNL-Rome was aware of what he was doing and they also undermine the government's position that this was a 'lone wolf' operation." He found other documents inconclusive.

Judge Shoob asked the government prosecutors to ask the CIA to declassify the documents so they could be put into the record, which would be the only way the government could explain them in open court and seek to alter the judge's conclusions.

That pits the CIA's desire to protect its raw intelligence against the possibility that Judge Shoob otherwise may throw out Mr. Drogoul's guilty plea and leave the government facing the possibility of pursuing a long and costly trial in what prosecutors have called one of the biggest banking frauds in U.S. history.

Judge Shoob had said last week that he would permit Mr. Drogoul to withdraw his guilty plea if it was shown that more senior BNL officials "explicitly or tacitly" knew about the billions of dollars BNL-Atlanta was lending to Iraq. Saddam Hussein's government was using the money to build up its military machine before the invasion of Kuwait.

Mr. Drogoul has changed lawyers since pleading guilty to 60 counts of fraud, conspiracy and tax evasion carrying a possible life sentence.

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