Iraq loan probe incomplete, Clinton says Special prosecutor to be considered

December 11, 1992|By New York Times News Service

WASHINGTON -- President-elect Bill Clinton said yesterda that despite a Bush administration investigation that found no criminal wrongdoing in a bank fraud case involving loans to Iraq, he does not think all the facts are known.

Mr. Clinton said that after he takes office, he will consult with his attorney general to decide whether to ask the courts to name an independent prosecutor to examine allegations that Bush administration officials covered up efforts to help Iraq build up its military in the years before the invasion of Kuwait.

The law that provides for the appointment of such special prosecutors expires next week. Mr. Clinton said yesterday that he will would support its early re-enactment, making it a virtual certainty.

Asked at a news conference in Little Rock, Ark., about the Bush administration's decision not to seek an independent prosecutor in the case, Mr. Clinton replied, "I certainly think we need to know more about it than we now know. What I intend to do is to appoint an attorney general and get a recommendation on it."

Of the special prosecutor law, he said, "I think it should be re-enacted, and I will support that."

Mr. Clinton's comments came the day after a special counsel appointed by the Justice Department concluded there was no criminal wrongdoing. The special counsel, Frederick B. Lacey, a retired federal judge, scornfully dismissed accusations by critics Congress and elsewhere that officials might have stifled criminal investigations of loans made to Iraq by the Atlanta branch of an Italian bank, Banca Nazionale del Lavoro.

But rather than lay to rest the issue of whether Bush administration officials engaged in wrongdoing in the case, Mr. Lacey's report appears only to have spurred fresh suspicions.

Mr. Lacey, by both his conclusions and the brusque air of certitude with which he delivered them, sought to put an end to congressional demands for a judicially appointed independent prosecutor to investigate the government's behavior.

But yesterday, a variety of people, including Marvin H. Shoob, the federal judge who began hearing a criminal case involving the bank, and several members of Congress sharply criticized the Lacey report, which was used by Attorney General William P. Barr as the basis for rejecting an independent prosecutor in the case.

Mr. Barr, who is opposed to the independent counsel system, demonstrated consistency on the issue yesterday, rejecting another call for an outside inquiry, this one sought by Republicans on the Senate Judiciary Committee who wanted a court-appointed prosecutor to investigate Lawrence E. Walsh, the Iran-contra independent counsel.

One of the issues in the case involves the prosecution by the U.S. attorney in Atlanta of Christopher Drogoul, the manager of the local branch of the Italian bank. Mr. Drogoul was charged with fraud for making sizable unsecured loans to Iraq without the knowledge of his superiors in Rome.

But at a tumultuous court hearing before Judge Shoob in September, it was disclosed that the CIA withheld information that the Italian managers were aware of the loans and thus could not have been defrauded.

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