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Raw Blame History

aliases

The Atlanta Branch

The Atlanta branch was managed by Christopher Drogoul. A Central Intelligence Agency memorandum of November 6, 1989 recorded that the branch had issued 2,500 unauthorized letters of credit for Iraq totaling $3.2 billion between February 1988 and July 1989, and that about $1.85 billion of that amount had been disbursed, including at least $800 million in letters of credit guaranteed by the Commodity Credit Corporation of the United States Department of Agriculture.³ The memorandum recorded that the branch had exceeded its allowable debt of $500,000 per customer, that it charged Baghdad an average commission of 0.2 percent where the usual rate for a poor credit risk was 15 percent, and that it funded the credits by borrowing from other banks for 90 to 180 days while allowing Iraq up to five years to repay.³ The same memorandum stated that BNL's North American headquarters in New York and the bank's directors in Rome publicly denied knowing about the letters of credit, "although a BNL official in Chicago claims he notified New York and Rome several times about the unusual activity in Atlanta, according to press reports," and that Rome "appears satisfied to date with the cooperation of the US investigating agencies and appreciates the low-key manner in which Washington has reacted."³ In the Los Angeles Times of November 13, 1992, Douglas Frantz described the investigation as concerning "$5 billion in secret loans to Iraq by the Atlanta branch."⁴

Gonzalez put the total at $4 billion and said that $2.2 billion of the loans had gone to the Iraqi military technology procurement network.⁵ The Italian Senate commission of inquiry, in a preliminary report approved on December 21, 1991, put the exposures at about 4,000 billion lire, roughly a third of the bank's net worth, and recorded that facilities outside the official books, found after August 4, 1989, totaled $2,867.6 million against $991 million in credits registered at July 31, 1989.⁶ Two BNL-Atlanta employees went to federal authorities in July 1989 and reported the unauthorized loans. FBI agents raided the branch on August 4, 1989 and seized its records.⁷

What Rome Knew

Luigi Sardelli was appointed executive vice president and managing director of BNL's North American operations in July 1987. Gonzalez reported that Sardelli audited the bank's American operations and found major problems in Los Angeles, Chicago and Atlanta. In August 1988 he found a poorly collateralized loan to Entrade International, which Gonzalez described as one of Iraq's key procurement agents, and reported it to Rome. Two months later his superior praised the Atlanta manager, Drogoul, despite Sardelli's criticisms. In October 1988, according to Gonzalez, Giacomo Pedde, the director general in Rome, told Sardelli that it was premature to chastise the Atlanta manager. A critical audit report that Sardelli sent to Rome in late December 1988 was in English and was not translated into Italian until July 10, 1989, less than a month before the raid.⁸

At about the time that report was sent, the management of the Udine branch received a request to finance a steel plant in Iraq for the Italian steelmaker Danieli. On January 26, according to Gonzalez, Pedde telephoned the head of his financial division and told him that the Danieli deal should get personal attention. Two days later Danieli signed a contract for 140 million German marks, about $70 million, to supply a rolling mill to the Nassr State Enterprise in Iraq. The loan was originated at Udine but handled through Atlanta.⁸ "Why not New York City," Gonzalez asked, "especially since Sardelli had already reported problems in Atlanta to his superiors in Rome?"⁸ Gonzalez reported that the Italian Senate believed the deal was routed through Atlanta to keep other Italian companies with claims against Iraq from freezing the account.⁸ The Senate commission's own report recorded that the offices of the central direction in Rome worked to have the DM 140 million operation carried out through the Atlanta agency, and that the Danieli operation had been moved from Udine to Atlanta "anche per dirette pressioni esercitate dalla Direzione centrale" (also through direct pressure exercised by the central direction).⁶

The commission also recorded the history of the audit report prepared by the bank's auditor Messere after the inspection that Sardelli ordered in September 1988: the report was filed away by the competent office of the inspectorate in Rome instead of being forwarded, and when Sardelli later sent all the area's inspection reports to Rome, the Messere report, written in English, was translated only after August 4, 1989.⁶ No inspection of the Atlanta branch had been ordered directly by the central inspectorate in Rome before the raid.⁶ Sardelli wrote that when he directed a Rome chief inspector then working in New York to audit the Atlanta agency, the inspector answered that Pedde, then managing director, had instructed him to audit Sardelli's expense account instead.⁹

The Senate Select Committee on Intelligence staff recorded that CIA analysts concluded in January 1990 that "managers at BNL headquarters in Rome were involved in the scandal," and that in November 1991 CIA reports "confirmed press allegations that more senior BNL officials in Rome had been witting of BNL-Atlanta's activities."¹⁰ The staff wrote that "the evidence does not show that this failure was a deliberate attempt to withhold information from the Department of Justice."¹¹ The staff also reported that it "could find no legal support" for the CIA guidance that a report not formally disseminated outside the agency would not be subject to discovery in a criminal case.¹²

Gonzalez stated that the scandal forced the chairman, Nerio Nesi, and Pedde, whom he there called vice chairman, to resign soon after the disclosure.¹³ Pedde was indicted in Italy by 1992 over transactions with Iran.⁸ The Italian Senate commission recorded that no official of BNL in New York or Rome was among the defendants in the Atlanta prosecution, and that the thesis of a fraud by disloyal employees had proved "inconsistente" in light of the evidence the commission had gathered, which included confessions, testimony and documents.⁶ Of the thirteen Italian nationals whose depositions the government sought in Rome in 1993, six declared that they would testify in the United States and seven that they would not. The Eleventh Circuit's opinion lists the seven as Angelo Florio, "Nero Nesi" (the bank's chairman in 1989 was Nerio Nesi), Giacomo Pedde, Giovanni D'Ercole, Marco Lunazzi, Francesco Bignardi and Gerardo Ruggero, and records that Drogoul asserted that Pedde, Teodoro Monaco and Angelo Florio were the BNL officials who provided the authorizations he relied on.¹⁴

Cantoni and Secchia

Nesi's successor was Giampiero Cantoni, whose ties to the Italian Socialist Party and to the former prime minister Bettino Craxi were, in the words of a State Department cable, a prerequisite for the appointment.¹ The director general, Paolo Savona, was close to President Francesco Cossiga and to Guido Carli, the treasury minister. A capital increase already in preparation would bring in the state insurer INA and the state pension system INPS and reduce the treasury's holding from 75 percent to 56 percent.¹⁵

Cantoni and Savona called on Ambassador Peter Secchia on October 19, 1989, at Cantoni's request, made on the return flight from the United States with President Cossiga.¹⁶ Savona was concerned about losing the Commodity Credit Corporation guarantee on roughly $1 billion of the bank's three billion dollar exposure in Atlanta. Cantoni said that his American lawyers were urging him to raise the matter to a "political" level, and that they thought charges would be filed under the Rico Act and that BNL or Iraqi assets could be frozen.¹⁵ The cable reported that the two men wanted to achieve "some kind of damage control." Gonzalez told the House that "on numerous occasions Mr. Cantoni approached United States Ambassador to Italy, Peter Secchia, about achieving damage control," and that less than ten days after one such request the White House called the Atlanta prosecutor in charge of the case.¹⁷

On March 16, 1990, an executive vice president named DeVito told the embassy's economic officer that the bank might soon be indicted in the United States, that "matter was urgent," and that he believed the Department of Justice had taken the investigation out of the hands of the United States attorney in Atlanta.¹⁸ On July 25, 1990, eight days before the invasion of Kuwait, Cantoni again "made a pitch for the U.S. government to go slowly before making indictments."¹⁷ Frantz wrote in November 1992 that a White House lawyer had telephoned the prosecutor early in the inquiry.⁴ On October 24, 1989, Carli responded negatively to a request by opposition senators to conduct an investigation of the affair.¹⁵

The Indictment and Entrade

The indictment, No. 1:91-CR-078 in the United States District Court for the Northern District of Georgia, was returned on February 28, 1991, the day after President George H.W. Bush ordered the ceasefire in the Gulf War. It charged Drogoul on 347 counts with nine other defendants: two other branch officers, Therese Barden (vice president and operations officer) and Amedeo DeCarolis (operations assistant); Entrade International and its executive vice president, Yavuz Tezeller; the Iraqi state Rafidain Bank; and four Iraqi officials, Sadik Taha, Abdul Rasheed, Raja Hassan Ali and Safa al-Habobi.¹⁹ Two other Atlanta officers, Thomas Fiebelkorn and Leigh Ann New, were not carried into the indictment because they had negotiated plea agreements (New pleaded guilty on March 6, 1991 and Fiebelkorn on April 3, 1991), and the trade officer Paul Von Wedel pleaded guilty as a cooperating defendant; the five Atlanta employees were sentenced on August 24, 1993.²⁰ Al-Habobi, described in the independent counsel's report as director general of the Al-Nasser Complex of the Iraqi Ministry of Industry and Military Industrialization, was also chairman, president, director or vice president of Iraqi-controlled corporations in England and the United States, including the Matrix Churchill entities, and returned to Baghdad after the search of the Atlanta office.²¹

Entrade was an affiliate of the Turkish conglomerate Enka. A January 9, 1990 Justice Department letter described Tezeller as someone who could "provide information regarding after sales services (a fancy word for bribes, kickbacks), unearned consulting fees, and other payments to Iraqis."²² Tezeller refused to return from Turkey after the raid. Gonzalez reported that the State Department would not allow the Atlanta investigators to travel to Turkey to question him, and that Entrade had been involved in 52 CCC-guaranteed transactions with Iraq and BNL, in which, he said, a Department of Agriculture investigation found no evidence that the commodities arrived in Iraq.²²

Gonzalez also reported that the Justice Department had placed the Jordanian businessman Wafai Dajani on its list of proposed indictments, and that a February 1991 State Department memorandum said it had "no objections to indictment of any individual on the list" but added a disclaimer on Dajani, describing him as "a Jordanian businessman, not a government official" and noting that he was "considered well connected" and that his brother had been a minister.²³ Joseph D. Whitley, acting United States attorney in Atlanta from June 1, 1990, recused himself from the case the same day, because his former law firm had represented Matrix Churchill, the Iraqi-owned machine tool company that the branch had financed.²⁴

Judge Shoob, the Plea and the Lacey Review

Drogoul pleaded guilty to 60 counts in June 1992. At a sentencing hearing on September 23, 1992, Marvin Shoob asked to see the intelligence underlying Gonzalez's summary of CIA reporting. Shoob took the documents home and concluded from one of them that it did not support the summary's analytical comment.²⁵ On October 1, 1992, Shoob orally allowed Drogoul to withdraw the plea and, on the government's motion, recused himself; the written order is dated October 5, 1992. The order stated: "The Court concludes that officials at BNL-Rome were aware of and approved Mr. Drogoul's activities." The order noted that Drogoul had testified "only that his superiors should have known."²⁶

A CIA statement of February 5, 1993 announcing the release of the Inspector General's BNL report said: "The CIA's Inspector General found no evidence of deliberate withholding of information or wrongdoing by any Agency employee in connection with the BNL case." The statement attached a memorandum of January 19, 1993 from the Director of Central Intelligence, Robert Gates, to the Inspector General. Gates wrote that Gonzalez "was given summaries of CIA intelligence reports accompanied by analytical comments that led him to conclude that CIA had information confirming that BNL-Rome knew of illegal lending activity by BNL-Atlanta," and that "the intelligence reporting on which this analysis was based does not support such a definitive conclusion." In the same memorandum Gates wrote two sentences about the CIA reports: "None of the information available to CIA establishes that BNL-Rome did know of the activities of BNL-Atlanta that later became the subject of DoJ's investigation and prosecution." and "Nonetheless, several of the CIA reports clearly contain indications that BNL-Rome may have been aware of BNL-Atlanta's actions." He also wrote that "In retrospect, mistakes clearly were made by Agency officers in their handling of events related to the BNL matter, and there was carelessness and a number of instances of poor judgment."²⁷

On October 16, 1992, William Barr appointed the retired judge Frederick Lacey as an "independent counsel" under Justice Department regulations, rather than under the independent counsel statute.²⁸ Lacey's own report gives October 27 as the date on which Barr authorized a preliminary investigation and asked for a report by December 8, 1992. The Senate staff recorded that Lacey submitted his report on December 9.²⁸²⁹ Lacey wrote that "I find Judge Shoob's specific charges against the USAO, and his concern about the interference of other agencies, to be inaccurate."³⁰ Gonzalez called the review "the Lacey Job" and said that "at best Lacey's probe was a whitewash."³¹

Lacey wrote of the national security adviser and the deputy secretary of state: "It is clear that, while at Kissinger Associates, Brent Scowcroft and Lawrence Eagleburger came into contact with BNL management. I have seen nothing, however, to suggest that they knew of BNL-Atlanta's wrongful loans to Iraq or influenced the prosecution of this matter."³²

On November 13, 1992, the Los Angeles Times reported that Lacey had sent Barr preliminary findings sufficient to proceed to a second phase. Senator David Boren, chairman of the Senate Intelligence Committee, said that the committee was trying to determine "whether a decision was made at some level of government that the gathering of information took precedence over the prosecution of any individuals."⁴

Kissinger Associates

According to Gonzalez, Kissinger Associates was set up in 1982 when Henry A. Kissinger and Scowcroft joined in founding it.³³ Lacey recorded that Scowcroft had served as vice president of the firm and headed its Washington office, and that Eagleburger had served as its president, before each joined the government.³² Gonzalez said that Scowcroft worked on the BNL account, met BNL management on numerous occasions, and briefed the BNL board on three occasions between 1986 and 1989.³³ He also reported that a former head of BNL's American operations attended a 1987 meeting in New York with Alan Stoga, the head of BNL's Rome headquarters, and Kissinger, Scowcroft and Eagleburger, held to give BNL advice on doing business in several countries including India, after which Stoga and Scowcroft took the BNL officers to lunch.³⁴ Gonzalez said that "Kissinger, Scowcroft, and Eagleburger maintain that they were unaware of the BNL loans to Iraq," and added: "I offer no definitive proof that they were aware of the BNL loans."³⁵

Drogoul testified before the House Banking Committee on November 9, 1993, with other former employees of the bank. He said that he was made aware of Kissinger's membership on the bank's international advisory board at a business meeting in Italy. "As we became involved in the medium-term lending," he said, "it became clear to us that the people at Kissinger and Associates were somehow assisting clients of Iraq in further developing business." He added: "By the time we moved into the 1988 period or early 1989 period, it was fairly clear to me that Kissinger and Associates' people were involved in some way in trying to enhance and develop a relationship between Iraq and the United States. I really shouldn't go farther than that, because the rest is probably speculation."³⁶

Gonzalez reported that the White House had intervened in late 1989 to make sure that Iraq received a $1 billion allocation of Commodity Credit Corporation credits, and that the NSC staff contacted the Department of Agriculture about a delayed second installment of $500 million after the Iraqi ambassador complained to Scowcroft.³³

Commodity Credit Corporation Credits

The Commodity Credit Corporation guaranteed repayment to American banks that financed exports of farm products through its GSM-102 and GSM-103 programs. Gonzalez said that BNL was the largest participant in the program that Iraq used to purchase about $5 billion in American agricultural commodities between 1983 and 1990.³⁵ The General Accounting Office reported in October 1990 that the CCC had paid out about $3 billion in claims, was at risk for approximately $2 billion in guarantees on loans that Iraq had stopped paying, and that the Justice Department was investigating irregularities at one bank that had made more than $2 billion in loans to Iraq, only a fraction of them properly authorized.³⁷ A March 1991 GAO report found that export credit guarantees approved for Iraq rose from about $400 million in fiscal 1983 to about $1.1 billion in fiscal 1988 and fiscal 1989, and that the Department of Agriculture rated Iraq a high-risk market in fiscal 1989 and 1990 while continuing to approve guarantees.³⁸

On January 21, 1993, Gonzalez told the House that BNL had sued on December 15, 1992 in the United States Court of Federal Claims to recover over $340 million on defaulted Iraqi loans guaranteed under the program.³⁹

Matrix Churchill and the Arms Network

In a January 1993 floor statement Gonzalez asked whether the British government had informed the United States that the exports of Matrix Churchill to Iran were being financed by the Atlanta branch of BNL.⁴⁰ He said that as early as 1987 Matrix Churchill sources had told British intelligence that machine tools shipped to the Nassr and Hutteen state establishments in Iraq were used in armaments production, and that British officials approved export licenses for the company well into 1990.⁴⁰ Gonzalez called the appointment of Scott Inquiry to review the matter "akin to the U.S. Government appointing Judge Lacey to investigate the BNL scandal."⁴¹

Italian Senate Commissions and the P2 Lists

The Italian Senate created a special commission and then, by resolution of February 19, 1991, a commission of inquiry under Article 82 of the constitution into the Atlanta branch and its connections, chaired by Senator Gianuario Carta. Its preliminary report, approved on December 21, 1991, stated that the thesis limiting the affair to a fraud by a group of unfaithful officials had proved inconsistent, that the Atlanta operations could not have been unknown in Rome and New York and were instead tolerated if not encouraged ("tollerata se non incoraggiata"), and that the Department of Justice had denied the commission access to documents and witnesses, invoking grand jury secrecy and national security.⁶ The commission took testimony in New York in June 1991. Its final report was approved on April 22, 1992 as Doc. XXII-bis n. 4.⁴² The final report stated that the severest of BNL's early-1980s crises was connected to "la accertata partecipazione di gran parte dei suoi alti dirigenti alla loggia massonica P2" (p. 6) and declined to fix the degree to which "Drogoul, i suoi complici e le stesse strutture superiori della BNL" knew of Iraq's military design (p. 8). It recorded that credits to Rafidain Bank before June 1987 had been reported to the Rome head office under an internal circular of June 23, 1983 (p. 20); that dissent existed inside the US administration over licenses and refinancing decisions taken "con il consenso del Consiglio per la Sicurezza Nazionale"; that President Bush had expressly admitted support initiatives for Iraq extending from the start of the Reagan presidency to shortly before the Gulf War; and that Lawrence Eagleburger (adviser to the Ljubljanska Banka), Brent Scowcroft and Henry Kissinger (both BNL consultants) were among those connected to the bank (p. 23). The report asked whether the development of Atlanta as the center for financing Iraq was "casuale e indipendente, anziché organicamente strumentale" to US policy toward Iraq (p. 25). It noted the coming House Banking Committee interim report on the intelligence services and the National Security Council, and the consultancy given to BNL by Kissinger Associates and by Scowcroft "anche diversi mesi dopo il 4 agosto 1989" (p. 34). On the coming Atlanta trial, the report stated that Drogoul could confirm what he had told the commission, "la consapevolezza e la tolleranza dei vertici di Roma della BNL e delle autorità federali a fronte della macchina finanziaria attivata a favore dell'Iraq" (pp. 34-35). A second commission, chaired by Senator Giampaolo Mora, was created by resolution of November 17, 1992, was constituted on February 11, 1993, and approved its final report on February 23, 1994 as Doc. XXII-bis n. 1.⁴³ Gonzalez told the House in January 1993 that the second commission's mandate was to probe whether Italian government bodies, possibly acting in concert with foreign governments, had aided Iraq's military industrialization.⁴⁴

Rinaldo Petrignani, the Italian ambassador in Washington from 1981 to 1991, answered Gonzalez's questions in writing on January 31, 1994 and listed his meetings in 1990: with Robert Ross, assistant to the Attorney General, on March 21, at which he expressed the Italian government's concern about a possible indictment of BNL as an institution and said it seemed possible that Drogoul and his associates would try to place part of the responsibility on BNL; with the State Department legal adviser Abraham Sofaer; and, briefly, with Attorney General Richard Thornburgh at a White House reception. Petrignani named the director general for economic affairs at the Italian foreign ministry and the ministry's director of cabinet as the officials who directed him to attend.⁴⁵ The independent counsel's report recorded that on September 21, 1990 Urgenson, the prosecutor Gale McKenzie and others from the Justice Department met Petrignani, Senator Carta and Professor Zanelli, counsel to the Italian committee, and that Petrignani was reported to have asserted that "BNL was the victim of a terrible fraud" and that the "reputation of BNL was of great importance as the Italian State is a majority owner." A Justice Department memorandum of January 1, 1991 recorded that Carta expressed skepticism that only BNL-Atlanta was involved in the scheme.⁴⁶ In his written answers Petrignani said he had no knowledge of the Italian government's use of BNL-Atlanta to finance the sale of military hardware such as Sidewinder missiles and attack helicopters.⁴⁵

Sardelli's written responses quoted testimony of the Italian foreign ministry's secretary general, B. Bottai, before the second Senate commission on September 23, 1993: "the behavior of the Embassy was the one suggested also by the Ministry of Treasury, guardian angel of BNL's," and "it was in the interest of Italy that the responsibilities remained circumscribed to the Atlanta Agency." Sardelli also quoted a hearing of August 4, 1993 at which the former foreign minister Gianni De Michelis said that only one loan to Iraq "had characteristics of irregularity."⁴⁷

Luigi Sardelli wrote that Professor A. Ferrari, then BNL's managing director, "had to resign in shame in 1981 because of his affiliation with Lodge P2," which he called an illegal lodge in Italy, and that on December 25, 1975 Ferrari had asked him to go to the Gulf area to explore a BNL merchant bank in partnership "with a group of BNL friends." Sardelli wrote that on his return he told Ferrari that the people he had met, Pakistani nationals connected to Bank of Credit and Commerce International, were Ferrari's friends and that he was the wrong man to lead the joint venture. He wrote that Ferrari and A. Florio, whom Ferrari had handpicked to head the International Division, organized a BNL financial affiliate in Luxembourg; that Ferrari was a close friend of Roberto Calvi of Banco Ambrosiano; that Ferrari, assisted by Florio, put deals that lost money on the books of the BNL affiliate Capitalfin; and that the relationship with BCCI, Ghaith Pharaon and Marc Rich was the exclusive domain of Ferrari, Florio and A. Conzara.⁴⁸

The membership lists of the Propaganda Due (Propaganda Due) lodge seized at Castiglion Fibocchi in March 1981 and made public by the Italian government on May 21, 1981 include "dott. Alberto Ferrari (Roma, 520)," annotated "ex direttore generale BNL."⁴⁹ The parliamentary commission of inquiry on P2 chaired by Tina Anselmi reported that among the banks represented in the lists the Banca nazionale del lavoro was one for which the presences were particularly significant for quality and representativeness: four members of the board of directors, the director general, and three central directors, one of them the board's secretary.⁵⁰

Venice and Iran

Gonzalez reported in January 1993 that prosecutors in Venice had filed, in December 1992, a 523-page indictment, after three years of investigation, implicating former top-level BNL officers and Italian export licensing officials in a scheme to send arms secretly to Iran in the latter half of the 1980s, in violation of an Italian government ban on arms sales to either side in the Iran-Iraq war.⁴⁴ He said the indictment charged that senior BNL executives in Rome, and BNL branch officials in Paris and Turin, provided over $100 million in financial support for the shipments, that it also implicated BNL employees together with Italian secret service agents and Ministry of Defense officials who helped disguise the shipments, and that in total 59 persons had been indicted.⁵¹ Gonzalez noted that some of the BNL Rome executives implicated in the Venice indictment were at the center of the Atlanta loans.⁵¹ He quoted the Venice prosecutor: "I'm not a politician, I'm a Judge. But my main impression is that it was all greed * * *. Nobody had a straight policy."⁵¹

Drogoul's Sentence

On September 2, 1993 the Eleventh Circuit reversed the district court's refusal to allow depositions of the Italian witnesses in Rome.⁵² Drogoul then pleaded guilty in September 1993 to three counts and was sentenced in December 1993 to 37 months in federal prison.⁵³ Alan Friedman wrote that the loans were used by Iraq's government to finance purchases of weapons, weapons components and dual-use industrial equipment.⁵⁴

Footnotes

Gonzalez, Henry B. "The Banca Nazionale del Lavoro Scandal: High-Level Politics Try to Hide the Evidence," Congressional Record, House, September 14, 1992, pp. H8349-H8356, reproducing State Department cables from Rome, including the October 1989 cable at p. H8355. https://www.globalsecurity.org/military/library/congress/1992_cr/h920914g.htm ↩︎
Senate Select Committee on Intelligence, The Intelligence Community's Involvement in the Banca Nazionale del Lavoro (BNL) Affair, Committee Print S. Prt. 103-12, February 1993, p. 9. https://www.intelligence.senate.gov/sites/default/files/publications/10312.pdf ↩︎
Central Intelligence Agency, Directorate of Intelligence, "Iraq-Italy: Repercussions of the BNL-Atlanta Scandal," November 6, 1989, printed in House Committee on Banking, Finance and Urban Affairs, Testimony of Former Employees of the Banca Nazionale del Lavoro, Serial No. 103-95 (Washington, 1994), pp. 194-195; CIA reading room document 0000491425 (NESA M# 89-20119, EURA M# 89-2002), pp. 2, 6, https://www.cia.gov/readingroom/document/0000491425 ; also https://archive.org/details/testimonyofforme1994unit ↩︎
Frantz, Douglas, "Probe of U.S. Aid to Iraqis Is Stepped Up," Los Angeles Times, November 13, 1992 (copy in the American Cybercasting archive). https://stuff.mit.edu/afs/net/user/tytso/usenet/americast/latimes/news/282 ↩︎
Gonzalez, Henry B. "Efforts to Thwart Investigation of the BNL Scandal," Congressional Record, House, March 30, 1992, p. H2010 (in a passage stating $4 billion in unauthorized loans to Iraq, of which $2.2 billion went to the Iraqi military technology procurement network). https://www.globalsecurity.org/military/library/congress/1992_cr/h920330g.htm ↩︎
Senato della Repubblica, X Legislatura, Commissione parlamentare d'inchiesta sul caso della filiale di Atlanta della Banca nazionale del lavoro e sue connessioni (established by resolution of February 19, 1991; Carta, President), Rapporto preliminare, approved December 21, 1991, Doc. XXII-bis n. 3, pp. 2-9 (no BNL New York or Rome official among the defendants, p. 2; testimony in New York in June 1991, p. 3; exposures of about 4,000 billion lire, p. 4; Messere audit report and translation, p. 6; $991 million and $2,867.6 million, Danieli routing and Matrix Churchill Corporation among the beneficiaries, p. 7; DM 140 million operation through Atlanta, p. 8; conclusions on the fraud thesis, Department of Justice denial of access, and operations "tollerata se non incoraggiata," pp. 8-9). https://www.parlamento.it/service/PDF/PDFServer/BGT/914635.pdf ↩︎
Senate Select Committee on Intelligence, S. Prt. 103-12, February 1993, p. 9. https://www.intelligence.senate.gov/sites/default/files/publications/10312.pdf ↩︎
Gonzalez, Henry B. "The BNL Case: Hear No Evil, Speak No Evil," Congressional Record, House, September 28, 1992, pp. H9589-H9598; the Sardelli audit history, the Pedde call, the Danieli contract, the Udine origination, the Italian Senate's view and Pedde's indictment appear at pp. H9594-H9595. https://www.globalsecurity.org/military/library/congress/1992_cr/h920928g.htm ↩︎
Sardelli, Luigi, "Written Responses to Chairman Gonzalez's Questions," printed in Serial No. 103-95, p. 159 (answer to question 2: the Constantini inspection instruction). https://archive.org/details/testimonyofforme1994unit ↩︎
Senate Select Committee on Intelligence, S. Prt. 103-12, February 1993, p. 28 (CIA analysis of January 1990 and November 1991); the transmittal letter of January 31, 1990 is quoted at p. 47. https://www.intelligence.senate.gov/sites/default/files/publications/10312.pdf ↩︎
Senate Select Committee on Intelligence, S. Prt. 103-12, February 1993, p. 34. https://www.intelligence.senate.gov/sites/default/files/publications/10312.pdf ↩︎
Senate Select Committee on Intelligence, S. Prt. 103-12, February 1993, p. 26. https://www.intelligence.senate.gov/sites/default/files/publications/10312.pdf ↩︎
Gonzalez, Henry B. "The Banca Nazionale del Lavoro Scandal: High-Level Politics Try to Hide the Evidence," Congressional Record, House, September 14, 1992, p. H8351 ("The scandal forced BNL Chairman Nerio Nesi and Vice Chairman Giacomo Pedde to resign soon after public disclosure of the debacle"); Gonzalez, "The BNL Case: Hear No Evil, Speak No Evil," September 28, 1992, p. H9595 (Pedde, "the director general of BNL in Rome resigned in the wake of the scandal"). https://www.globalsecurity.org/military/library/congress/1992_cr/h920914g.htm ↩︎
United States v. Drogoul, No. 93-8964, 1 F.3d 1546 (11th Cir. 1993) (the government's motion to depose thirteen Italian nationals in Rome; six declared they would testify in the United States, seven that they would not; the footnotes to the opinion name the seven and state that Pedde and Florio were among them, and that Drogoul asserted that Pedde, Monaco and Florio provided the authorizations). https://static.case.law/f3d/1/cases/1546-01.json ↩︎
Gonzalez, Henry B. "The Banca Nazionale del Lavoro Scandal," Congressional Record, House, September 14, 1992, p. H8355 (Cantoni and Savona's concerns, the Commodity Credit Corporation exposure, the Rico Act, the capital increase reducing the treasury's holding from 75 to 56 percent, and the October 24 response of Treasury Minister Carli). https://www.globalsecurity.org/military/library/congress/1992_cr/h920914g.htm ↩︎
Gonzalez, Henry B. "The Banca Nazionale del Lavoro Scandal," Congressional Record, House, September 14, 1992, p. H8351 (cable reporting the October 19 meeting at Cantoni's request during the return flight with President Cossiga). https://www.globalsecurity.org/military/library/congress/1992_cr/h920914g.htm ↩︎
Gonzalez, Henry B. "The Banca Nazionale del Lavoro Scandal," Congressional Record, House, September 14, 1992, p. H8351 (cable of October 26, 1989; White House call "less than 10 days" after Cantoni's request; cable of July 25, 1990). https://www.globalsecurity.org/military/library/congress/1992_cr/h920914g.htm ↩︎
Gonzalez, Henry B. "The Banca Nazionale del Lavoro Scandal," Congressional Record, House, September 14, 1992, p. H8353 (cable of March 19, 1990 reporting DeVito's March 16 call). https://www.globalsecurity.org/military/library/congress/1992_cr/h920914g.htm ↩︎
Lacey, Frederick B., Part I of the report of the Independent Counsel, printed in Serial No. 103-95, pp. 361-366 (defendants and cooperating individuals) and p. 413 (the February 28, 1991 indictment returned against Drogoul, Barden, DeCarolis, Entrade, Tezeller, Taha, Rasheed, Ali, Al-Habobi and Rafidain Bank); United States v. Drogoul, 1 F.3d 1546 (11th Cir. 1993) (347-count original indictment); General Accounting Office, T-NSIAD-91-13, March 14, 1991 (347-count indictment of 10 defendants); the criminal action number 1:91-cr-078 is cited in S. Prt. 103-12, February 1993. https://archive.org/details/testimonyofforme1994unit ↩︎
Lacey, Frederick B., Part I of the report of the Independent Counsel, printed in Serial No. 103-95, pp. 362-363 (Barden and DeCarolis), p. 366 (Von Wedel as cooperating individual), and p. 411, note (Fiebelkorn and New "were dropped because they had negotiated plea agreements"; New pleaded guilty March 6, 1991; Fiebelkorn April 3, 1991); Judge Shoob's sentencing order of August 24, 1993 for five BNL-Atlanta employees (DeCarolis, Barden, New, Von Wedel, Fiebelkorn), printed in the same volume at pp. 200-201 (index) and 215 ff. https://archive.org/details/testimonyofforme1994unit ↩︎
Lacey, Frederick B., Part I of the report of the Independent Counsel, printed in Serial No. 103-95, pp. 365-366 (Al-Habobi); Senato della Repubblica, Doc. XXII-bis n. 3, December 21, 1991, p. 7 (Matrix Churchill Corporation, $16.2 million, among the beneficiaries of the financing). https://archive.org/details/testimonyofforme1994unit ↩︎
Gonzalez, Henry B. "Efforts to Thwart Investigation of the BNL Scandal," Congressional Record, House, March 30, 1992, p. H2009 (Justice Department letter of January 9, 1990; Entrade as an affiliate of Enka; State Department refusal of Turkey travel). https://www.globalsecurity.org/military/library/congress/1992_cr/h920330g.htm ↩︎
Gonzalez, Henry B. "Efforts to Thwart Investigation of the BNL Scandal," Congressional Record, House, March 30, 1992, pp. H2009-H2010 (February 1991 State Department memorandum and disclaimer on Dajani). https://www.globalsecurity.org/military/library/congress/1992_cr/h920330g.htm ↩︎
Lacey, Frederick B. "The Banca Nazionale del Lavoro Investigation: Report of the Independent Counsel," printed in Testimony of Former Employees of the Banca Nazionale del Lavoro, Serial No. 103-95, pp. 514-515 (Whitley acting from June 1, 1990, recused the same day; his former firm had represented Matrix-Churchill). https://archive.org/details/testimonyofforme1994unit ↩︎
Senate Select Committee on Intelligence, S. Prt. 103-12, February 1993, p. 24 (Shoob opened the September 23 sentencing hearing and asked for the intelligence underlying the Gonzalez summary; Brill offered to discuss the reports ex parte, Shoob declined and asked that she bring them to chambers; he took them home and read one that evening). https://www.intelligence.senate.gov/sites/default/files/publications/10312.pdf ↩︎
United States v. Drogoul, Order of Judge Marvin H. Shoob, October 1, 1992, printed in Testimony of Former Employees of the Banca Nazionale del Lavoro, Serial No. 103-95, pp. 205-206. https://archive.org/details/testimonyofforme1994unit ↩︎
Central Intelligence Agency, Office of Public and Agency Information, "CIA Statement: Release of BNL-related Report," February 5, 1993, with Memorandum for the Inspector General from the Director of Central Intelligence, "BNL Investigation," January 19, 1993, pp. 1-2 (reading room document 0005617864). https://www.cia.gov/readingroom/document/0005617864 ↩︎
Senate Select Committee on Intelligence, S. Prt. 103-12, February 1993, p. 4 (Attorney General's appointment of Lacey on Friday, October 16, 1992 as an "independent counsel" under Justice Department regulations). https://www.intelligence.senate.gov/sites/default/files/publications/10312.pdf ↩︎
Lacey, Frederick B., report of the Independent Counsel, printed in Serial No. 103-95, pp. 344-345 (Barr's October 27 authorization of a preliminary investigation and request for a report by December 8, 1992); Senate Select Committee on Intelligence, S. Prt. 103-12, February 1993, p. 5 (report submitted December 9, 1992). https://archive.org/details/testimonyofforme1994unit ↩︎
Lacey, Frederick B., remarks on the Shoob charges, printed in Serial No. 103-95, p. 473. https://archive.org/details/testimonyofforme1994unit ↩︎
Gonzalez, Henry B. "Update on BNL Investigation," Congressional Record, House, January 21, 1993, pp. H132-H133 ("the Lacey Job"; "At best Lacey's probe was a whitewash"). https://irp.fas.org/congress/1993_cr/h930121-bnl.htm ↩︎
Lacey, Frederick B., Part I of the report of the Independent Counsel, printed in Serial No. 103-95, p. 514 (Kissinger Associates section). https://archive.org/details/testimonyofforme1994unit ↩︎
Gonzalez, Henry B. "Kissinger Associates, Scowcroft, Eagleburger, Stoga, Iraq, and BNL," Congressional Record, House, April 28, 1992, pp. H2696-H2697 (Scowcroft's briefings of the BNL board; the late 1989 $1 billion allocation; NSC contact about the second $500 million installment). https://www.globalsecurity.org/military/library/congress/1992_cr/h920428g.htm ↩︎
Gonzalez, Henry B. "Kissinger Associates, Scowcroft, Eagleburger, Stoga, Iraq, and BNL," Congressional Record, House, April 28, 1992, p. H2698 (1987 New York meeting as reported by Gonzalez from the former head of BNL's American operations). https://www.globalsecurity.org/military/library/congress/1992_cr/h920428g.htm ↩︎
Gonzalez, Henry B. "Kissinger Associates, Scowcroft, Eagleburger, Stoga, Iraq, and BNL," Congressional Record, House, April 28, 1992, pp. H2694-H2695 (the three maintained they were unaware; "I offer no definitive proof"; BNL as largest participant in the program used for about $5 billion in purchases, 1983 to 1990). https://www.globalsecurity.org/military/library/congress/1992_cr/h920428g.htm ↩︎
Testimony of Christopher P. Drogoul, House Committee on Banking, Finance and Urban Affairs, Testimony of Former Employees of the Banca Nazionale del Lavoro, Serial No. 103-95, hearing of November 9, 1993, p. 14. https://archive.org/details/testimonyofforme1994unit ↩︎
General Accounting Office, Report on the Commodity Credit Corporation's GSM-102/103 Export Credit Guarantee Programs and Iraq's Participation in the Programs, T-NSIAD-91-1, testimony of October 16, 1990 (summary of findings on CCC claims paid and exposure). https://gao.justia.com/department-of-agriculture/1990/10/report-on-the-commodity-credit-corporation-s-gsm-102-103-export-credit-guarantee-programs-and-iraq-s-participation-in-the-programs-t-nsiad-91-1 ↩︎
General Accounting Office, Iraq's Participation in the Commodity Credit Corporation's GSM-102/103 Export Credit Guarantee Programs, T-NSIAD-91-13, March 14, 1991 (summary of findings on guarantees approved for Iraq). https://gao.justia.com/department-of-justice/1991/3/iraq-s-participation-in-the-commodity-credit-corporation-s-gsm-102-103-export-credit-guarantee-programs-t-nsiad-91-13 ↩︎
Gonzalez, Henry B. "Update on BNL Investigation," Congressional Record, House, January 21, 1993, p. H134 (suit filed December 15, 1992 in the Court of Federal Claims for over $340 million in defaulted Iraqi loans). https://irp.fas.org/congress/1993_cr/h930121-bnl.htm ↩︎
Gonzalez, Henry B. "Update on BNL Investigation," Congressional Record, House, January 21, 1993, pp. H132 (question whether the British government informed the United States that Matrix-Churchill's exports to Iran were financed by BNL Atlanta) and H134 (1987 British intelligence sources on Nassr and Hutteen; export licenses approved into 1990). https://irp.fas.org/congress/1993_cr/h930121-bnl.htm ↩︎
Gonzalez, Henry B. "Update on BNL Investigation," Congressional Record, House, January 21, 1993, p. H135 (Lord Justice Scott appointment). https://irp.fas.org/congress/1993_cr/h930121-bnl.htm ↩︎
Senato della Repubblica, X Legislatura, Commissione parlamentare d'inchiesta sul caso della filiale di Atlanta della Banca Nazionale del Lavoro e sue connessioni, Doc. XXII-bis n. 4 (Relazione conclusiva, relatore Carta), April 22, 1992, pp. 6, 8, 20, 23, 25, 34-35. https://www.senato.it/documenti/repository/relazioni/archiviostorico/commissioni/X%20LEG_BNL.ATLANTA_DOC_RELAZ/X_%20LEG_BNL-ATLANTA_DOC%20XXIIBIS_4_22.4.92.pdf ↩︎
Senato della Repubblica, Archivio storico, repertorio of commissions, "Bnl Atlanta (monocamerale d'inchiesta)": X Legislature commission established February 19, 1991, constituted March 6, 1991, President Gianuario Carta, final report Doc. XXII-bis n. 4 approved April 22, 1992; XI Legislature commission established November 17, 1992, constituted February 11, 1993, President Giampaolo Mora, final report Doc. XXII-bis n. 1 approved February 23, 1994. https://patrimonio.archivio.senato.it/repertorio-commissioni/commissione/IT-SEN-COM001-000161/bnl-atlanta-monocamerale-d-inchiesta?t=sintesi ↩︎
Gonzalez, Henry B. "Update on BNL Investigation," Congressional Record, House, January 21, 1993, p. H133 (second Italian Senate commission; 523-page Venice indictment filed in December 1992). https://irp.fas.org/congress/1993_cr/h930121-bnl.htm ↩︎
Petrignani, Rinaldo, written response of January 31, 1994 to Chairman Gonzalez's questions, printed in Serial No. 103-95, pp. 154-157 (meetings with Ross, Sofaer and Thornburgh; the foreign ministry officials who directed his attendance; answer on Sidewinder missiles and attack helicopters). https://archive.org/details/testimonyofforme1994unit; Italian embassy in Washington, list of previous ambassadors (Petrignani, ambassador from June 15, 1981; successor from August 31, 1991). https://ambwashingtondc.esteri.it/en/chi-siamo/lambasciatore/ambasciatori-precedenti/ ↩︎
Lacey, Frederick B., Part I of the report of the Independent Counsel, printed in Serial No. 103-95, p. 400 (September 21, 1990 meeting with Petrignani, Carta and Zanelli; Lippman memorandum of September 21, 1990) and p. 407 (Lippman memorandum of January 1, 1991 on Carta's skepticism). https://archive.org/details/testimonyofforme1994unit ↩︎
Sardelli, Luigi, "Written Responses to Chairman Gonzalez's Questions," printed in Serial No. 103-95, p. 162 (answer to question 4, quoting the August 4, 1993 and September 23, 1993 hearings of the Italian Senate committee). https://archive.org/details/testimonyofforme1994unit ↩︎
Sardelli, Luigi, "Written Responses to Chairman Gonzalez's Questions," printed in Serial No. 103-95, p. 176 (answer on BNL's relationship with BCCI: Ferrari, Florio, Capitalfin, Calvi). https://archive.org/details/testimonyofforme1994unit ↩︎
Presidenza del Consiglio dei Ministri, "Elenco degli iscritti alla loggia P2," published May 21, 1981 (list of names as reproduced at https://www.stragi.it/archivio/doc/66.pdf, which includes "Dott. Alberto Ferrari"); entry "dott. Alberto Ferrari (Roma, 520) (ex direttore generale BNL)" as transcribed at https://unita2.org/lista-appartenenti-alla-p2/ ↩︎
Camera dei deputati and Senato della Repubblica, IX Legislatura, Commissione parlamentare d'inchiesta sulla loggia massonica P2 (Anselmi, President), Relazione, Doc. XXIII n. 2, p. 116 (banks represented in the lists: Banca nazionale del lavoro, four members of the board, the director general, three central directors). https://www.archivioantimafia.org/p2/commissione_parlamentare/01.%20Relazioni%20Minoranza%20(0-005)/000-relazione-anselmi.pdf ↩︎
Gonzalez, Henry B. "Update on BNL Investigation," Congressional Record, House, January 21, 1993, pp. H133-H134 (indictment charges, $100 million in support, "In total 59 persons have been indicted," quotation of the Venice prosecutor). https://irp.fas.org/congress/1993_cr/h930121-bnl.htm ↩︎
United States v. Drogoul, 1 F.3d 1546 (11th Cir. 1993), decided September 2, 1993. https://static.case.law/f3d/1/cases/1546-01.json ↩︎
"Drogoul gets 37 months in BNL bank scandal," United Press International, December 9, 1993; "Was Banker Just Fall Guy in Loans to Iraq?" Deseret News, December 5, 1993. ↩︎
Friedman, Alan. Spider's Web: The Secret History of How the White House Illegally Armed Iraq. Bantam Books, 1993. ↩︎

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