Counsel Wraps Up Report on Iraq Loan Case Investigation

A Justice Department special counsel on Tuesday finished a report on whether an independent criminal investigation should be conducted into the Bush Administration’s handling of a bank fraud case involving Iraq.

The counsel, retired federal judge Frederick B. Lacey, planned to deliver the report to Atty. Gen. William P. Barr’s office in the evening, Justice Department spokesman Paul McNulty said.

Barr and Lacey said they would have no comment immediately on whether Lacey was recommending that a court-appointed independent prosecutor take over the case.

Lacey was picked by Barr to investigate the case and to decide whether there is enough evidence of possible criminal wrongdoing to warrant an independent counsel.

Barr has until Dec. 15, when the independent counsel law expires, to call for appointment of an independent prosecutor by a special three-judge federal court.

The case poses a dilemma for Barr and the Administration.

Barr generally is opposed in principle to calling for appointment of independent counsels, arguing that the Justice Department is competent to handle such sensitive cases.

But refusing to call for an independent prosecutor in the Iraq loan case could mean that President-elect Bill Clinton’s Administration will do the investigating.

At issue is whether the Bush Administration approved aid that may have helped build up Saddam Hussein’s military prior to the Persian Gulf War and whether the Administration later tried to cover up its alleged approval of the aid.

Last month, Lacey said he had found sufficient credible allegations that government officials may have violated that law. He recommended, and Barr approved, a preliminary inquiry into the allegations.

The results of that inquiry were being put into final form Tuesday by Lacey and his staff.

Democrats in Congress for months have been asking that Barr authorize a court-appointed independent counsel in the case.