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Central figure in Iraq loans scandal, Drogoul, pleads guilty to 347 counts


WASHINGTON -- The central figure in a scandal involving nearly $5 billion in loans to Iraq by a U.S. branch of an Italian bank agreed unexpectedly yesterday to plead guilty to all 347 counts of conspiracy and fraud.

The surprise plea by the former manager of the Banca Nazionale del Lavoro (BNL) branch in Atlanta, Christopher P. Drogoul, means there will be no trial.

That will spare the Bush administration from facing potentially embarrassing public testimony about its assistance to Iraq in the months leading up to Saddam Hussein's invasion of Kuwait in August 1990.

The Bush administration allegedly held up the case for more than a year to avoid straining relations with Iraq. Drogoul was the sixth and final former BNL employee to plead guilty.

Defense attorneys for Drogoul had planned to call senior White House aide Clayton K. Yeutter as a witness at the trial, according to a copy of a subpoena.

Mr. Yeutter, President Bush's chief domestic adviser, played a central role in approving U.S. economic aid to Iraq in the fall of 1989 when he was secretary of agriculture.

Defense attorneys had planned to question Mr. Yeutter about pressure from other administration officials to grant nearly $2 billion in loans, guaranteed by the Department of Agriculture's Commodity Credit Corp., to Iraq, according to sources close to the case.

The loans were part of the $5 billion in financing provided to Iraq in 1986-1989 through the Banca Nazionale del Lavoro's Atlanta branch. Prosecutors charge that the BNL loans were fraudulent and made without approval from the bank's senior executives in Rome.

Published reports have said that Iraq used the loans to help fund weapons purchases.

The government's handling of the BNL case has attracted criticism from Democrats in Congress.

The White House has refused to allow senior officials to testify before the House banking committee, which is investigating the BNL case and other aspects of U.S. policy toward Iraq.

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