Reno Aide to Lead New Probe of Iraq Ties Before Gulf War

The Justice Department, after months of scrutiny, has decided to open a broad new investigation into whether laws were broken by U.S. officials and American companies in arming Iraq before the Persian Gulf War.

The inquiry, which is being led by a special assistant to Atty. Gen. Janet Reno, raises the possibility of new criminal charges in a controversy that many skeptics thought had been dismissed by the Clinton Administration.

So far, one U.S. company has been charged and six employees of an Italian bank have been convicted in connection with transactions that helped Iraq obtain billions of dollars worth of sensitive computers and weapon technology in the years before the war.

John Hogan, a longtime associate of Reno’s when she was Miami’s chief prosecutor, said that he and a team of prosecutors and investigators are examining whether U.S. export laws were violated by sales to Iraq and whether any government officials were involved in misconduct in arranging aid to Baghdad or covering it up after the war.

“I perceive my task to include looking at various investigations and prosecutions around the country to see if there are common threads that reveal criminal activity in conjunction with how Iraq was armed,” Hogan said in an interview at his Justice Department office.

Along with examining sales by U.S. businesses, the investigation will scrutinize the actions of some government officials under former President George Bush in providing assistance to Iraq before the war and concealing the extent of such aid after the conflict.

U.S. District Judge Marvin H. Shoob, a persistent critic of the Justice Department’s handling of the Iraq investigation, called Hogan’s inquiry a step in the right direction.

“I’ve met with Mr. Hogan, and I think he will do his best to ferret out the details and information concerning these complex matters,” Shoob said. “However, I think you still need an independent counsel, with the resources and time to fully investigate the issues.”

Justice Department officials said Hogan’s inquiry does not rule out later efforts to appoint an independent counsel, who would enjoy more autonomy than would a typical federal prosecutor. The law establishing the independent counsel process was allowed to expire last year, but Congress is expected to consider renewing it later this year.

Former Atty. Gen. William P. Barr, who rejected congressional requests for an independent counsel in the case last year, declined to comment on the new inquiry. But Ira Raphaelson, a former key aide to Barr, said the Clinton Administration’s investigation mirrors plans Barr had for examining Iraq-related matters through a task force of prosecutors and investigators.

“It would appear that Hogan’s intention is the (same) mission of the task force,” Raphaelson said.

During last fall’s campaign, President Clinton promised a fresh and aggressive review of allegations that laws had been violated in executing the U.S. policy of assisting Iraq before the Gulf War. He said the results would determine whether an independent counsel was necessary.

However, Democrats in Congress have complained that the Administration has been slow to move on the Iraq investigation. The impression of reluctance was reinforced last month at a hearing in Atlanta before Judge Shoob.

The hearing was to sentence five former employees of the Atlanta office of Italy’s Banca Nazionale del Lavoro. They had pleaded guilty to roles in a scheme to provide Iraq with $5 billion in loans, some of which were used by Baghdad to buy weapon technology and improve Iraq’s arsenal of Scud missiles.

Hogan surprised Shoob by saying that he had investigated the bank case and agreed with the Bush Administration’s Justice Department that the Italian bank had not authorized or approved the loans by its Atlanta office. But Hogan was careful not to say that his inquiry had exonerated individual bank officials or any U.S. officials.

The Banca Lavoro case ended on Sept. 2 with the surprise guilty plea of the sixth defendant, former branch manager Christopher P. Drogoul. With the conclusion of the bank case, Hogan said, the investigation has turned to the broader inquiry into possible export violations and official misconduct.

“All the doors are still open in this investigation,” said Hogan, who is devoting all of his time to the matter and reports directly to Reno.

At least 10 prosecutors and numerous investigators from the FBI and other agencies are conducting the inquiry out of an Atlanta office, which is overflowing with thousands of documents subpoenaed in connection with the Banca Lavoro case.

While part of the investigation involves transactions financed by Banca Lavoro, Hogan said, it will include examining actions of U.S. officials. He refused to identify any of the subjects or targets.

The Italian bank’s tiny Atlanta office financed $5-billion worth of commodity and technology purchases by Iraq between 1984 and 1989. After the Gulf War, United Nations inspectors discovered that some U.S. and European technology financed by Banca Lavoro had been used in Iraqi programs to develop nuclear weapons and other arms.

The only American company charged in an arms deal with Iraq to date is a division of Teledyne Inc., the Los Angeles-based defense contractor. But sources said Hogan’s investigators are examining sales by other firms.

About $1.9-billion worth of rice, grain and other goods sold to Iraq through the bank were guaranteed by a U.S. Agriculture Department program. Allegations have been raised that there were kickbacks and overcharges in those deals, and some are likely to come under investigation, according to the sources.

Investigators also will examine actions by U.S. policy-makers, who have been accused by Democrats of deceiving Congress about U.S. aid to Iraq and trying to conceal the extent of that assistance after the war.

A British investigation into that country’s policy toward Iraq has determined that businesses were quietly encouraged to sell Iraq arms and weapon technology despite a public policy of not providing defense products to the Baghdad regime.

Documents and testimony from civil servants have disclosed a concerted attempt by the British government to conceal the scope of defense sales to Iraq and to deceive Parliament about the relaxation of the guidelines against such sales.

Prime Minister John Major is expected to testify early next year in the British inquiry, and former Prime Minister Margaret Thatcher is scheduled to give testimony in December.