Document Tells of Bank Execs' Meetings With U.S. Officials Over Loan Scandal
Sep. 30, 1992
ATLANTA (AP) _ Executives of Italy's Banca Nazionale del Lavoro met extensively with U.S. government officials to plan how to distance the bank from a loan scandal involving its Atlanta branch, according to a document presented today in federal court.
An attorney for Christopher Drogoul, the Atlanta branch manager who pleaded guilty to illegally loaning billions of dollars to Iraq, introduced the document at Drogoul's sentencing hearing. Attorney Bobby Lee Cook said the BNL executive summary was slipped under his hotel room door last night.
U.S. District Judge Marvin Shoob allowed the Italian-language paper to be read in court by Drogoul, despite the vehement objections of federal prosecutors and attorneys for BNL, who said it was privileged bank information.
The document detailed meetings in Washington between bank executives and officials of the State Department, Justice Department and Agriculture Department, as well as with federal prosecutors in Atlanta.
Bank officials also sought legal advice from former Attorney General Griffin Bell and former Secretary of State William Rogers, it showed.
Cook told the court the report would ''stand the government's case on its head.'' It was the second apparent blow in as many days to the government's contention that Drogoul alone masterminded the $5.5 billion in loans to Iraq, some of which were used for its military.
On Tuesday, Shoob said classified CIA documents supplied to him support Drogoul's contention that top BNL officials in Rome knew about and approved of his dealings with Iraq.
The document read by Drogoul today detailed a meeting in the spring of 1990, a few months after the loan scandal surfaced, at which officials of the Italian government-owned bank met with U.S. officials to press their view that the bank was a victim in the scheme.
At one meeting between BNL executives and representatives of the Justice and State departments on March 17, 1990, the U.S. officials asked the bankers why they were so concerned about the Atlanta case, the document said. A federal official told the bankers ''there would be no surprises for the Italians in this matter,'' according to the excerpt read by Drogoul.
''The tone (at another meeting) was decidedly more political and also in this meeting we were asked why were we so preoccupied with this issue,'' another excerpt said.
Prosecutors told Shoob the defense should not be allowed to introduce the report because its authenticity hadn't been established.
''There has to be some rules and credibility here,'' Assistant U.S. Attorney Gale McKenzie said.
Prosecutors have argued that Drogoul alone masterminded the scheme, which they say helped pay for Iraq's military buildup and yielded kickbacks for Drogoul.
But Droguol testified that his first dealings with Iraq were approved by his superiors.
The CIA documents discussed Tuesday were supplied to Shoob by prosecutors at his request. The judge said they support Drogoul's statements. He said three of the CIA reports indicate the Rome bank knew of the loans.
''Now what do I do with these reports?'' asked the judge, who had said before sentencing that he would consider evidence that others knew about Drogoul's activities.
Drogoul could be sentenced to up to life in prison, fined $17.5 million and ordered to pay $1.8 billion in restitution.
Drogoul testified Tuesday that he began dealing with Iraq in 1985.
Working through the U.S. Department of Agriculture's Commodity Credit Corp., which guarantees loans for countries to buy U.S. grain, the branch cut its first $45 million deal with Iraq's Rafidain Bank that year, he said.
Drogoul said he discussed the deal with Angelo Florio, head of the bank's international division in Rome.
''I mentioned the countries we were doing business with. He was agreeable,'' he said. ''I mentioned the countries and I mentioned the amounts and he said, 'Yes, yes, yes.'''
Florio's only objection was Mexico, where the bank then was having problems, Drogoul said.