CIA, Justice accuse each other over fraud slip-up FBI also looking into case involving Iraqi connection

October 12, 1992|By New York Times News Service

WASHINGTON -- Even as Justice Department officials leveled new accusations at the CIA, they found themselves in a dispute with the FBI over how the Justice Department should investigate whether evidence was concealed in a politically sensitive case involving Iraq.

At issue is whether the CIA or the Justice Department is to blame for providing incomplete, and therefore misleading, information to prosecutors and a federal judge in Atlanta about one of the largest bank frauds in history.

The CIA says the Justice Department is to blame, and Justice officials deny that. They also want to know why the CIA gave Congress classified information that could have been helpful in the case, but did not turn it over to them.

FBI Director William S. Sessions has said he has opened an internal investigation of the problem that will be independent of his superiors at the Justice Department, according to Sen. David L. Boren, D-Okla.

Mr. Boren, who is chairman of the Senate Intelligence Committee, said in an interview that Mr. Sessions had called him with assurances that "Justice will not participate in the inquiry and the FBI will not share information" until it is completed. That is so because Justice Department officials might be targets of the investigation.

But at the Justice Department yesterday, a spokesman disputed that, saying that the Justice Department is in charge of the internal investigation, and the FBI will be merely a participant.

"The department got the FBI into the investigation to assist us," said Paul McNulty, a Justice Department spokesman. "The public integrity section of the Justice Department is in charge -- working with the FBI." He said Mr. Boren's characterization of the investigation "is entirely inconsistent with what I know."

Asked about the apparent discrepancy, the FBI tried last night to take the middle ground.

"Although we expect to conduct this investigation independently, we are consulting with and coordinating with the Department of Justice," said John Collingwood, an FBI spokesman. "But it's absolutely our investigation."

The politically sensitive case involved an illegal scheme that extended $5 billion in unauthorized loans to Iraq and other countries by the Atlanta branch of Banca Nazionale del Lavoro, which is almost wholly owned by the Italian government.

Some loans were used to finance Iraqi President Saddam Hussein's weapons programs, and there have been allegations -- never proven -- that some of the money used for weapons was guaranteed by an American farm credit program.

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