Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.twt.news From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Justice probe of CIA focuses on branch chief Date: Thu, 12 Nov 92 14:51:51 EST Message-ID: \SE A;NATION \HD Justice probe of CIA focuses on branch chief \BY Bill Gertz \CR THE WASHINGTON TIMES Investigations into why the CIA did not tell all it knew about illegal loans to Iraq made by an Italian bank are focusing on a branch chief inside the CIA's espionage directorate, said U.S. officials close to the agency. The branch chief in charge of CIA clandestine operations in Italy, who was not identified by name, did not properly handle four years of secret cables from the CIA's Rome station, the officials said. The CIA inspector general and the Senate Intelligence Committee are investigating why the cables and other secret information from Rome about the Banca Nazionale del Lavoro (BNL) were not supplied to the Justice Department during its prosecution of the Atlanta branch of the Italian government's bank. The lapse affected the prosecution of the Atlanta bank, which made $4 billion in illegal loans and loan guarantees to Iraq. Baghdad used some of the money to purchase arms. The Justice Department's case against the bank manager in Atlanta, Christopher Drogoul, ended in his guilty plea to charges that he acted alone in giving Iraq the loans in exchange for $2.5 million in bribes. The plea agreement was withdrawn Oct. 1 after the CIA cables from Rome were uncovered. A trial is expected next year. Attorney General William P. Barr appointed a special prosecutor Oct. 17 to look into the handling of the BNL case. The raw intelligence cables from Rome, some from 1989, implicate senior BNL officials in the Iraqi loan scheme, the officials said. They said the CIA branch chief placed the raw cables in a box. "Everything on BNL sat there for four years," one official said. The official said the information in the cables was not passed to the agency's analysis branch or to other senior officials. As a result, senior CIA officials were unable to provide the Justice Department with everything the agency knew about the BNL loans. A CIA spokesman declined yesterday to comment. "The bottom line is that this is a major embarrassment for [CIA Director Robert] Gates and the CIA," an official close to the agency said. Another official said the agency's first search for documents to support the BNL prosecution included only materials filed outside the directorate of operations, known as the DO. A later search in the DO found that some BNL-related documents had not been filed or disseminated properly within the directorate. "Overall, they did not do a good job" in finding documents, the second official said. This official said the CIA as an institution sees itself as independent, answering only to the president, and is reluctant to adopt its new role of supporting law enforcement. Democrats have charged that the CIA deliberately covered up the involvement of Rome BNL officials in the Iraqi loans. Mr. Gates wrote a letter to Congress in July rejecting charges that the agency has not cooperated with the Justice Department's BNL investigation. The agency later said it made a mistake in providing incorrect and incomplete information on the case to prosecutors but added that it had not done so to cover anything up. This article is copyright 1992 The Washington Times. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM