WASHINGTON — The Justice Department cleared the George Bush Administration Monday of any wrongdoing in the so-called "Iraqgate" affair, releasing an internal department report saying that no evidence could be found of any criminal conduct beyond that of six U.S.-based employees of an Italian bank who have been convicted of illegal transactions.
The department's report, more than a year in the making, dismissed allegations by the bank's convicted Atlanta manager, Christopher P. Drogoul, that higher officials in Rome approved his branch's illicit loans of $5 billion to Iraq before the Persian Gulf War and that U.S. intelligence officials were aware of them.
The report by John M. Hogan, special counsel to Atty. Gen. Janet Reno, fulfilled a promise by President Clinton during his 1992 election campaign that he would order an aggressive review of allegations that laws had been violated in extending technical assistance to Iraq before the Gulf War. At the heart of the controversy were loans by the Atlanta branch of Rome-based Banca Nazionale del Lavoro.
Hogan said his team of attorneys and FBI agents conducted more than two dozen interviews overseas with Italian bankers and others--besides numerous interviews in this country--and perused "many thousands" of documents.
Hogan concluded in his report that his team "did not find evidence that U.S. agencies or officials illegally armed Iraq or that crimes were committed."
Congressional hearings in 1992 examined allegations that the bank loans had helped Iraq's military buildup before the Gulf War and that the Bush Administration deliberately ignored U.S. export laws on grounds that a stronger Iraq facing arch-enemy Iran would better serve U.S. policy interests.
But Hogan's report to Reno said that he found no "chargeable crimes" against any past or present U.S. government officials or other persons outside the bank, including allegations that Bush Administration officials had deceived Congress on the issue.
The controversy also involved debate over the appropriate policy toward Iraqi dictator Saddam Hussein's regime before the war. But, Hogan added, "this report is not intended either to criticize or to approve of any policy decisions."
Reacting to the report, Rep. Henry B. Gonzalez (D-Tex.), who led congressional investigations of the Italian bank as chairman of the House Banking, Finance and Urban Affairs Committee (renamed Banking and Financial Services by the GOP Congress), said that the Justice Department's findings "do not exonerate the many high-level officials of the Bush Administration who made sustained efforts to thwart the Banking Committee's investigation . . . and to fool the public by concealing the complete facts about the Bush Administration's tragically flawed policy toward Iraq."
Drogoul, recently released from prison after serving a 32-month sentence, was the most senior of six BNL employees in Atlanta to plead guilty in the case. U.S. District Judge Marvin H. Shoob, while not excusing their conduct, said that these employees had seemed to be only "pawns and bit players" in a secret prewar effort by the United States and Italy to arm Iraq.
In examining the actions or knowledge of U.S. intelligence officials, Hogan conceded some difficulty in obtaining full cooperation from the CIA. He said it took the agency from last February through August to answer his requests for information.
Hogan's report added that "we also considered whether the (Bush Administration) Justice Department's earlier work in the BNL investigation and prosecution was subverted for political purposes, and found that it was not."