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House Banking Committee Votes For Subpoenas In BNL Case

November 4, 1993

WASHINGTON (AP) _ The House Banking Committee voted unanimously Thursday to compel a former Italian ambassador and six others to testify about U.S. aid to Iraq channeled through an Italian bank.

The former Italian envoy to Washington, Rinaldo Petrignani, surrendered to Italian police for questioning as part of a widening corruption probe in Italy. An Italian court issued an arrest warrant for Petrignani eight days ago for allegedly accepting a bribe from Italian companies. He has denied any wrongdoing.

The testimony of Petrignani, who lives in Washington, before the banking committee likely will be delayed by the proceedings in Italy. But another key witness, former banker Christopher Drogoul, is virtually certain to appear. Drogoul, a federal prisoner, will be escorted from Atlanta, Ga., to Washington by U.S. marshals.

The 44-member committee approved a request by its chairman, Rep. Henry B. Gonzalez, D-Texas, to subpoena Petrignani, Drogoul and five others associated with the Banca Nazionale del Lavoro case.

Gonzalez has charged that Petrignani asked top Bush administration officials to provide ″damage control″ regarding U.S. prosecutors’ investigation of BNL, a major Italian bank that is government owned. Petrignani, 65, who was Italy’s ambassador to the United States from 1981 to 1991, had a close relationship with former President Reagan and other high- level Washington figures.

Drogoul, 44, the former manager of BNL’s office in Atlanta, pleaded guilty in September to three federal charges of bank fraud.

U.S. prosecutors accused BNL’s Atlanta operation of funneling $5.5 billion in unauthorized loans to Iraq’s Saddam Hussein. Some of the loans allegedly were used to build up Saddam’s military and nuclear arsenals in the years preceding the Gulf War.

The subpoenas are for a banking committee hearing next Tuesday.

But now that Petrignani has turned himself in to Italian authorities, the committee apparently will have to wait longer for his testimony.

The banking panel ″will continue to pursue (Petrignani’s) cooperation and his appearance,″ said a committee aide, who requested anonymity. He said the committee also will ask Petrignani to provide documents related to BNL.

The Italian arrest warrant for Petrignani said he took a bribe from the state-run ENI energy conglomerate and SAI, a privately owned insurance group, in exchange for trying to interest the U.S. investment firm Salomon Brothers Inc. in investing in a joint venture between the Italian companies.

Petrignani was a consultant for Salomon at the time. Salomon said recently that Petrignani had suggested it might want to invest in the Italian venture but that it had declined.

The others to be subpoenaed are 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 City.

U.S. prosecutors accused Drogoul of masterminding the Iraq loan scheme. But his defense lawyers said 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 has argued that he acted with full authority from his bosses in Rome and that he understood that the U.S. government also supported the lending schemes.

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