Where There's Smoke. . .

November 16, 1993

As if the notorious Bank of Credit and Commerce International weren't enough, Washington has another troubling foreign bank on its hands.

The Banca Nazionale del Lavoro, a government-owned Italian institution with offices in the U.S., is far less familiar than BCCI, with its high-profile prosecutions. But BNL raises far more important issues, not just of the quality of supervision it got from federal authorities but also of possible misconduct by very high U.S. officials.

BNL made billions of dollars in U.S.-guaranteed loans intended for grain purchases that were diverted to military supplies by Saddam Hussein's Iraq right up to the eve of the Persian Gulf war. Was this the doing of a relatively junior bank official or a covert plot carried out with the complicity of high U.S. officials?

Much of the testimony by Christopher Drogoul, former manager of BNL's Atlanta office, has been aired before. He has pleaded guilty to several charges of concealing the illegal loans. Though he protests that whatever he did in Atlanta was known to his superiors in New York and Rome, as well as U.S. intelligence agencies, he has not provided corroborative evidence. And there are some troubling questions about his personal behavior. Still, there is circumstantial evidence and strange official behavior that can't easily be swept aside.

One question is how a junior banker could make billions of dollars in loans from a small office without careful supervision by his bosses -- or detection by U.S. intelligence. And why bank examiners found no evidence of them. Also troubling is the prosecutors' insistence Drogoul be held without bond awaiting trial -- for two years.

Another branch of the Justice Department for a while made arguments similar to Drogoul's claims that his superiors knew all along what he was doing. The trial judge in Atlanta was so suspicious of the way the case was handled that he openly questioned the government's statements in court.

Added to the legal doubts is evidence of high-level meddling in the case in Washington, while George Bush was waging a tough re-election fight. And admissions by senior British intelligence officers that their superiors had lied in a somewhat similar case there. This is a lot of smoke for there not to be a fire somewhere.

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