Iraq Loan Indictment Plan Was Changed

The Justice Department intended to file charges last year against a politically connected Jordanian businessman in connection with billions of dollars in illegal loans to Iraq but abruptly changed plans just days before the indictment was returned, according to newly obtained documents.

The documents show that on Feb. 15, 1991, prosecutors planned to indict Wafai Dajani, a close ally of Jordan’s King Hussein and brother of a former Jordanian Cabinet member. When the indictment was handed down on Feb. 28, 1991, however, Dajani was named only as an un-indicted co-conspirator. Also eliminated from the final charges was the Central Bank of Iraq.

Classified records have shown that the State Department objected to charging the Iraqi bank and also noted that Dajani had ties to King Hussein, but did not make a recommendation against charging him.

The last-minute decision not to charge Dajani came in the sensitive Banca Nazionale del Lavoro bank scandal involving $5 billion in concealed loans funneled to Iraq before the Persian Gulf War.

The internal Justice Department documents add a new twist to an investigation already tainted by allegations that the Bush Administration interfered and withheld critical CIA reports from local prosecutors and a federal judge to avoid revealing the full extent of its prewar assistance to Iraq.

The disclosure came as two Democrats called on Atty. Gen. William P. Barr to seek an independent counsel to lead the investigation into why the CIA records were not provided to the judge in the BNL case. The records shed light on whether BNL officials in Rome were aware of the loans to Iraq when they were occurring, according to sources.

The FBI and the Justice Department’s public integrity section opened a joint criminal investigation Friday into whether the CIA or the Justice Department was responsible for the failure to provide the CIA reports to U.S. District Judge Marvin H. Shoob.

But Sen. Howard M. Metzenbaum (D-Ohio), a member of the Senate Intelligence and Judiciary committees, and House Banking, Finance and Urban Affairs Chairman Henry B. Gonzalez (D-Tex.) wrote separate letters to Barr asking for an independent counsel.

“I don’t think the FBI and the Justice Department can investigate this matter independently,” Metzenbaum said in a telephone interview from Cleveland.

In addition to asking for an independent counsel, Gonzalez said that Barr should resign because of his handling of the BNL case. In August, Barr rejected a similar request from the House Judiciary Committee. Paul McNulty, the chief spokesman for Barr, said Tuesday that there is no reason to change that position.

The FBI also defended its independence and denied a report in Monday’s New York Times that its officials had clashed with the Justice Department over how to investigate the matter. “Like all investigations, the FBI is working closely as a team with the Department of Justice prosecutors,” said a one-page statement.

Dajani was to be charged as part of the alleged conspiracy to conceal $5 billion in loans to Iraq by the Atlanta branch of BNL, according to a draft document prepared by Laurence A. Urgenson, the Justice Department lawyer supervising the BNL inquiry.

Urgenson said in an interview that Dajani was not charged because it was determined that there was not enough evidence to justify indicting him. He denied that there were political considerations.