2 Plead Guilty in Scheme Linked to Iraq : Banking: The Atlanta institution allegedly helped Baghdad acquire weapons. The officers admitted to fraud charges.

The Justice Department announced Thursday that two former officials of an Atlanta bank thought to have aided Iraq in its massive weapons acquisition program have pleaded guilty to conspiracy to commit fraud and other charges.

Paul R. Von Wedel, former vice president of Banca Nazionale del Lavoro’s (BNL) Atlanta branch and Leigh Ann New, administrative assistant to BNL’s Atlanta branch manager, pleaded guilty to conspiracy to defraud the bank through loans BNL made to the Central Bank of Iraq.

Additionally, Von Wedel pleaded guilty to filing a false tax return in 1987 and New pleaded guilty to aiding and abetting others who made false statements to the Federal Reserve and the U.S. Treasury.

Both Von Wedel and New have agreed to cooperate with the government in its ongoing investigation of what happened at the small but controversial bank.

Last week, the Justice Department unveiled a 347-count indictment against 10 other persons stemming from the bank’s relationship with Iraq. The indictment accused two former executives of the bank, including branch manager Christopher P. Drogoul, of conspiring with Iraqi officials to illegally arrange more than $4 billion in unauthorized loans and credit extensions to Iraq.

BNL’s small Atlanta branch agreed to provide more than $2 billion in industrial loans to Iraq in 1988 and 1989. The other $2 billion in loans was extended to the Iraqi government in agricultural loans guaranteed by the U.S. government, according to government officials.

According to letters of credit issued by the branch, Iraq used the industrial loans to finance construction of a petrochemical plant, a dam and a steel mill. However, U.S. intelligence sources have said the Iraqis used the money, in part, to finance a huge weapons complex at Taji and for missile and chemical weapons projects.

Among the other persons indicted in Atlanta last week were two Iraqi government officials, one who headed the Taji weapons complex and another who held a major position in Iraq’s Ministry of Industry and Military Production.

Von Wedel faces a maximum prison sentence of eight years and a $500,000 fine. New faces a maximum sentence of five years in prison and a $250,000 fine.