Gates Orders CIA Probe in Iraq Loan Case : Law: Agency’s failure to turn over some papers raises questions about whether it cooperated fully in the investigation of prewar aid to Baghdad.

CIA Director Robert M. Gates ordered an investigation Wednesday into the agency’s failure to provide accurate information to the Justice Department and a federal judge about its knowledge of a massive scheme in which loans were funneled to Iraq before the Persian Gulf War.

A CIA spokesman confirmed that Gates ordered the internal inquiry after learning that four key documents had not been turned over to federal prosecutors handling the criminal case against the former manager of the Atlanta branch of Italy’s Banca Nazionale del Lavoro or to the presiding judge.

The former manager, Christopher P. Drogoul, has been charged with masterminding the scheme in which $5 billion was loaned illegally to Iraq, aiding the country’s military buildup before the war. Drogoul, facing charges in Atlanta, has said senior bank officers in Italy were aware of the loans, and his attorney has asserted that the scheme was in keeping with Administration policies of appeasement toward Iraqi leader Saddam Hussein.

The documents in question showed that the CIA suspected earlier and with more certainty than it had disclosed that officials of BNL’s headquarters in Rome knew about the loans, a government source said.

The disclosure of the CIA omission, first reported in the New York Times, is potentially embarrassing to the Bush Administration because it raises new doubts about the thoroughness of the investigation into the loan scheme.

The CIA’s failure to turn over all of its available information also raises questions about how aggressively the Justice Department tried to obtain intelligence information that might have had a bearing on the case and whether the intelligence agency has cooperated fully with inquiries into prewar U.S.-Iraqi relations.

On Monday, Marvin H. Shoob, the federal judge presiding over the sentencing hearing for Drogoul, said evidence indicated that Bush Administration officials had interfered in the case and withheld information from prosecutors and investigators.

The judge suggested that the Administration may have wanted to avoid further disclosures about the extent of its prewar assistance to Iraq or to avoid embarrassing the Italian government, which owns the bank. He also criticized prosecutors for failing to examine seriously whether bank officials in Rome knew of Drogoul’s activities.

Shoob made the accusation in an order permitting Drogoul to withdraw an earlier guilty plea.

Among Shoob’s findings was that the CIA had information indicating that senior BNL officials knew of Drogoul’s loans to Iraq. Such information could have severely damaged the prosecution’s case against the former branch manager. The government accused him of masterminding the scheme without the knowledge of his superiors.

The specific omission by the CIA concerned the timing and sourcing for information about when the intelligence agency first learned that officials of BNL’s Rome headquarters were believed to have known about the Atlanta loan scheme.

In response to questions from Shoob during Drogoul’s sentencing hearing, the CIA wrote to Atlanta prosecutors on Sept. 17, saying it first learned that BNL officials in Rome were aware of the loan scheme from public sources in December, 1989, and January, 1990.

The CIA spokesman acknowledged that the response was incomplete and that additional documents were discovered a few days later. He said the investigation will attempt to determine why some information was not passed on to the Justice Department and Atlanta prosecutors.