Take a Closer Look at `Iraqgate'

IS scandal starting to seep out beneath the doors of the Bush administration?

Until recently, accusations that the administration engaged in a coverup regarding its policy toward Iraq before the Gulf war were the largely unheeded cries of a few voices in the wilderness - primarily those of Rep. Henry Gonzalez (D) of Texas, chairman of the House Banking Committee, and New York Times columnist William Safire.

But the ranks of those questioning the administration's actions are swelling. In light of recent events, they deserve to be heard.What some people are calling "Iraqgate" involves two issues. The first is a policy question: Did the Bush team go too far in trying to build bridges to Saddam Hussein in 1989-90?

The administration's goal - to strengthen Iraq as a counterbalance to Iran in the Gulf region - was an extension of US policy for a decade. But critics charge that the administration unreasonably pursued the policy despite mounting evidence that Saddam was using US financial credits and dual-use technology to build both his conventional war machine and, more ominously, weapons of mass destruction.

The second Iraqgate issue is narrower than this broad policy debate, but in some respects it's more troubling. It goes not just to questions of policy, but also to questions of integrity.

Has the Bush administration tried to cover up proof that it kept aiding Iraq despite knowledge that Saddam was misapplying US resources? The query centers on a prosecution in Atlanta involving an Italian bank, the Banca Nazionale del Lavoro (BNL).

A federal investigation in 1989 revealed that BNL's Atlanta branch had illegally channeled billions of dollars (including funds guaranteed under US agricultural programs) to Iraq. The US attorney's office in Atlanta recently let the branch manager, Christopher P. Drogoul, plead guilty, accepting his claim that he pulled off the fraud without the knowledge of superiors in Rome.

In a rare move, however, a federal judge in Atlanta turned Mr. Drogoul's sentencing hearing into a lengthy probe of the government's prosecution. The probe unearthed evidence that Drogoul's BNL bosses knew of the fraudulent loans, that Italian government officials urged US officials in Washington to restrict the scope of the BNL prosecution, that White House and Justice Department lawyers telephoned the assistant US attorney in Atlanta who was in charge of the case, and that the CIA - possibly on Justice 's instructions - failed to disclose relevant information both to the Atlanta prosecutors and to a Senate committee.

Drogoul was allowed to withdraw his guilty plea and will stand trial, where he can raise defenses.

Congressional Democrats have called for the appointment of a special prosecutor to investigate Iraqgate. We earlier opposed that step, when the matter seemed more a foreign policy issue than a legal one. But such an appointment should be reconsidered, as the seepage increases.