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Banker Imprisoned in BNL Case Tells Story to House Committee

November 9, 1993

WASHINGTON (AP) _ A former banker imprisoned for helping channel U.S. aid to Iraq through an Italian bank testified today that federal prosecutors refused to listen to his story and badgered him into saying what they wanted to hear.

Christopher Drogoul made the allegations in sworn testimony at a hearing of the House Banking Committee, after being brought from federal prison in Atlanta, Ga., to Washington by federal marshals.

Drogoul was manager of the Atlanta office of Banca Nazionale del Lavoro, a government-owned Italian bank. Prosecutors say he masterminded a scheme that funneled $5.5 billion in unauthorized loans to Iraq’s Saddam Hussein through BNL’s Atlanta operation.

Some of the loans allegedly were used to build up Saddam’s military and nuclear arsenals in the years preceding the Gulf War.

But Drogoul told the committee he was merely a tool in an ambitious scheme by the United States, Italy, Britain and Germany to secretly arm Iraq against Iran in their 1980-88 war.

Drogoul said he acted with full authority from his bosses in Rome and that the U.S. government also supported the loan schemes.

He said his later efforts to cooperate with the U.S. Attorney’s office in Atlanta in its investigation ″were frustrated by their continued unwillingness to allow me to tell them the truth.

″They would pose a question, and when I began to tell them an answer which was inconsistent with their theory of the case, they would either say ‘We’re not interested’ or ’You’re lying,‴ Drogoul charged. He said he finally limited his responses to saying ″Yes, you’re right,″ in hopes of receiving a lighter sentence.

″It was obvious that the government team investigating the matter was wedded to a particular theory, in part because they never looked at the most significant documents which had been at the bank,″ Drogoul said.

Drogoul, 44, said he pleaded guilty in September to three federal charges of bank fraud because of his wife’s pleas to ″end this nightmare.″

He faces a sentence of up to 6 1/2 years in prison. Sentencing by U.S. District Judge G. Ernest Tidwell in Atlanta is scheduled for Nov. 29.

Drogoul has been confined without bail to the federal penitentiary in Atlanta since April 1992. The committee voted unanimously last Thursday to compel Drogoul, a former Italian ambassador to Washington and five others connected with the BNL case to testify at the hearing.

Rep. Henry B. Gonzalez, D-Texas, the committee’s chairman, called the BNL case ″the single greatest banking fraud in U.S. history.″

″The sad, lamentable thing of this whole deal is that we have become corrupted in our country,″ Gonzalez said after Drogoul’s opening statement. ″I think the most corrupt Justice Department that I have witnessed was the immediate past one,″ he said, referring to the department under the Bush administration.

Gonzalez said that because several new positions have yet to be filled at the Clinton Justice Department, ″the same hands″ still have responsibility for the BNL case.

Drogoul, who holds both U.S. and French citizenship, originally was indicted in February 1991 on 347 counts, but prosecutors issued a revised 70- count indictment in July.

Gonzalez had asked the committee to approve the subpoenas for testimony by Drogoul; Rinaldo Petrignani, Italy’s former ambassador to the United States; Paul Von Wedel, Jean Ivey and Mela Maggi, former employees of BNL’s Atlanta operation; and Luigi Sardelli and Giuseppe Vincenzino, former employees of the bank’s North American headquarters office in New York.

Petrignani surrendered to Italian police last Thursday for questioning as part of a widening corruption probe in Italy and was not expected to appear at today’s hearing. Petrignani, for whom an Italian court recently issued an arrest warrant for allegedly accepting a bribe, has denied any wrongdoing.

Ivey and Maggi were the whistleblowers who told the FBI in July 1989 about the unauthorized loan scheme at BNL’s Atlanta office. Maggi was an assistant vice president and money-market trader in that office, and Ivey was a loan officer.

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