Iraq-loans probe enters 2nd phase

November 13, 1992|By Los Angeles Times

WASHINGTON -- A special Department of Justice investigator has taken the first step toward the appointment of an independent counsel to investigate whether Bush administration officials violated the law in carrying out and possibly covering up U.S. dealings with Iraq before the Persian Gulf War.

A department official confirmed yesterday that retired U.S. District Judge Frederick B. Lacey has determined that there is sufficient information to proceed to the second phase of the inquiry into whether an independent counsel should open a full-scale criminal investigation.

OC Mr. Lacey reported his preliminary findings to Attorney General

William P. Barr late last month and was given a green light by Mr. Barr to go ahead with what is termed a "preliminary investigation," the department official said.

Should the further inquiry determine that federal laws may havbeen broken, Mr. Lacey will recommend to Mr. Barr that he seek appointment of an independent counsel. The department official said that Mr. Lacey is expected to report back to Mr. Barr by Dec. 8.

Mr. Lacey's appointment by Mr. Barr last month was greetewith skepticism by Democrats who questioned whether he had sufficient independence to delve into the politically charged issue. However, an aide to a key senator said last night that Mr. Lacey's early findings are encouraging to the administration's critics.

If Mr. Lacey recommends an independent counsel and Mr. Baraccepts the recommendation, a special three-judge panel from the U.S. Court of Appeals here would pick the special prosecutor.

Mr. Lacey's inquiry has focused primarily on the administration's handling of the criminal investigation into $5 billion in secret loans to Iraq by the Atlanta branch of Italy's Banca Nazionale del Lavoro. The Department of Justice has blamed the loans on the branch manager, but CIA documents withheld from prosecutors indicate a wider knowledge of the scheme within the bank.

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