By Stephen Pizzo,
Originally published on October 22, 1992.
Awarded one of 1992 - Sonoma State University's 10 Most Censored Stories Award
I wrote the story that appears below a decade and half ago. Why am I re-posting it here, now? In part, it has to with those pesky non-existent WMD and what the George H. Bush administration knew and what they did about it. And, since they knew a lot, if what they told sonny, W. Bush, when as he greased up the wheels of war.
At the time I wrote the original piece, then Chairman of the House Banking Committee, Rep. Henry Gonzalez (D-Tx) was conducting an aggressive investigation into the failure of an Italian bank that happened to have a branch in Atlanta, Georgia. The reason the failure drew the attention of the crusty old congressman was that the bank had been a conduit for billions of dollars in US government guaranteed loans to Iraq. The money was supposed to be used to buy US agricultural products but instead had gone to beefing up Saddam Hussein's military machine. There were also hints the money had been used to buy chemicals for the production of chemical weapons.
Few people gave Gonzalez much credit pursuing the case, even when the CIA hinted that they would prosecute him if he kept disclosing classified information he got out of them using his subpoena powers as chairman of the banking committee. Despite his best efforts the investigation died when Bush was defeated by Bill Clinton the January following the publication of the story that follows. ( I have more to say about that at the end of the story.)
One final note before I let you dive in to this remarkable tale. What you are about to read is, in my experience as a journalist, the most aggressive and successful cover-up in modern times. Punishing those responsible is less important than understanding how wrong things go when government officials choose to operate in the shadows, depriving themselves of dissenting voices and alternative views.
Story as it was published on October 22, 1992
Washington: Amidst the din of election year rhetoric a new "gate" has been added to the political lexicon: "Iraqgate." What hasn't yet been understood is how serious a matter this new scandal is. The gravity of the Iraqgate affair was brought home to me one day when I went to the mailbox. There I found a reporter's most blessed sight a fat manila envelope with no return address. Even better, it bore a Washington, D.C., postmark.
Gregg was then Vice President George Bush's national security adviser. The memo was a cover letter for "talking points for the Vice President in calling Eximbank Chairman William Draper concerning Exim financing" for Iraq.
As I peeled back page after page, a remarkable drama unfolded before my eyes. Even before I reached the final page, I had concluded that President George Bush had participated in at least two felonies and could be impeached. Here is what the documents showed.
First a bit of history
The Reagan/Bush administration had spent a good portion of its first term in office secretly selling arms to Iran in an abortive attempt to get our hostages in Lebanon released and a more successful program to fund a rogue Contra supply network. The nation would not loam much about that until well into their second term.
Meanwhile war had broken out between Iran and Iraq and by 1984 Iran was licking Iraq. The administration had to figure out how to balance the fight so that neither side could actually win. But they could hardly go to Congress for funding to aid Iraq since then they might have to explain why Iran was so well equipped.
So the administration again chose the now familiar covert route. They had already gotten Congress to remove Iraq from the list of countries harboring terrorists, clearing the way for non-military trade. All Iraq needed now was funding. The administration decided to supply the funding via two federal loan-guarantee pre-grams administered by two executive branch departments, Agriculture and Commerce, and overseen by the State Department.
The two loan programs-the Export/Import Bank (Exim) and Commodity Credit Corporation-could funnel billions of dollars secretly to Iraq by simply authorizing that the bank loans made to Iraq carry a 100 percent U.S. payback guarantee. Of course, the law limited the loan proceeds to specific, non-military uses, such as buying grain from American farmers. But never mind. That little problem could be easily overcome if they used the right bank.
The little bank that could
The bank they chose for this specialized operation was the Banco Nazionale del Lavaro (BNL), an Italian-owned bank that just happened to have a branch in Atlanta, Georgia. This was no ordinary bank. BNL also just happened to have former Secretary of State Henry Kissinger on its board of advisers, and his consulting firm, Kissinger Associates, represented BNL. At the time the loan program began in 1985 the vice chairman of Kissinger Associates was Larry Eagleburger (now acting Secretary of State) and the KA's president was Brent Scowcroft (now White House National Security Adviser.)
(On the international scene BNL had even more interesting connections. Its wholly owned subsidiary in Zurich, Lavaro Bank, AG, was headed by Dr. Alfred Hartmann, a mysterious Swiss banker who was also a director of the Bank of Credit and Commerce International (BCCI). Hartmann also was president of the Swiss Chemical Manufacturer's Society. Sto-ries in the Swiss press quote Hartmann in 1986 complaining that sales of Swiss chemical producers was way down and that new markets had to be developed. In 1989 the U.S. Federal Reserve would report that tens of millions of dollars were funneled from BCCI through Lavaro Bank to BNL/Atlanta and then to Iraq at the very time Saddam Hussein was building his chemical warfare capabilities.)