Former Bank Executive Pleads Guilty in Illegal Iraqi Loans Case
ATLANTA (AP) _ A former executive of an Italian bank branch in Atlanta accused of making $4 billion in unauthorized loans to Iraq has pleaded guilty to being part of the conspiracy.
Thomas Fiebelkorn, former vice president and corporate lending officer for the Atlanta office of Banca Nazionale del Lavoro, entered a plea bargain with the government, agreeing to testify against his former bosses, who are key defendants in the case.
Fiebelkorn pleaded guilty to two counts filed in U.S. District Court Wednesday - one count of conspiracy to defraud the government, federal agencies and the bank and one count of making a false statement to the Federal Reserve Bank.
In return for Fiebelkorn’s testimony, the government agreed not to prosecute him on any other charges in connection with the bank’s investigation, to urge leniency in sentencing, and to help him enter the Federal Witness Protection Program if he so desires.
Sentencing was postponed until after Fiebelkorn testifies in the trials of others involved in the case. The maximum sentence would be 10 years in prison, a $500,000 fine and $1.8 billion in restitution to the bank.
Ten others connected with the bank were charged last month in a 347-count indictment involving more than $4 billion in unauthorized loans to Iraq.
Half the amount financed farm exports through the federal Commodity Credit Corporation’s financial aid to Iraq; the other half went for industrial products, some with potential military applications, the indictment says.
Two key defendants are former bank manager Christopher Drogoul, who pleaded innocent, and former vice president and trade finance officer Paul R. von Wedel, who pleaded guilty.
The indictment says that beginning in 1985 the bank’s Atlanta branch made a series of large loans to Iraq that bypassed U.S. and Georgia regulators as well as Italian officials of the bank. Prosecutors allege that Drogoul was the key figure in a scheme in which the loans were recorded on a separate, secret set of books.
Assistant U.S. Attorney Gail McKenzie said Wednesday that Fiebelkorn was unaware of the industrial loans to the Central Bank of Iraq but was ordered by his bosses to sign doctored records concealing the fact that the branch was making farm loans that exceeded its lending limit.
Those loans will cost the bank a total of $1.8 billion - the $347 million in loans Iraq has not repaid plus interest and cost of making the loans - but Fiebelkorn’s actions will not cost the United States money, she said.
″Mr. Fiebelkorn, again, did not devise the scheme,″ she told Judge Marvin H. Shoob. ″He was told to participate or lose his job.″
Fiebelkorn said he was not aware of the size of the alleged scheme until February 1989, when he began looking for another job.
″With regard to the Central Bank of Iraq, I never knew anything about that,″ he said. ″When I found out (about the CCC loans), I immediately tried to find a way to get myself out of there.″
But under questioning by Shoob, Fiebelkorn admitted that he did not alert authorities to the loans and stayed at the bank another five months - until federal agents raided the office - because he could not afford to lose his salary.