Since the late 1970's, reports that many drug dealers, especially Turkish nationals, operate out of semi-permanent bases in Bulgaria have been in circulation. The allegations against Bulgaria include charges that the Bulgarians, primarily through an official government trading firm, Kintex, officially sanction the sale of illicit drugs to Western Europe and use the proceeds from those sales to finance illegal arms transactions and to bankroll terrorist groups. There are consistent reports that top-ranking members of the Bulgarian Security Service or ex-Bulgarian ministers comprise the directorate of Kintex.
Certain smugglers are reportedly permitted to conduct activities within Bulgaria. In effect, Bulgarian officials, though Kintex, assign representatives to establish fee arrangements with smugglers for bartered contraband. Smugglers trafficking through Bulgaria are primarily Turkish nationals of Kurdish background, but include Syrian, Jordanian, Lebanese and European nationals.
(America's Habit: Drug Abuse, Drug Trafficking, & Organized Crime -- President's Commission on Organized Crime, 1986)
The Atlanta, Georgia branch of the state-owned Banca Nazionale del Lavoro(BNL)-Italy's largest bank-extended $3.2 billion in 2,500 unauthorized letters of credit for Iraq between February 1988 and July 1989. US and Italian authorities have been investigating the scandal since July for violations of banking regulations and tax and custom laws.
Fragmentary reporting indicates BNL-Atlanta disbursed $1.85 billion of the $3.2 billion, including at least $800 million in letters of credit guaranteed by the US Commodity Credit Corporation(CCC)...
BNL-Atlanta's unusual activities included:
- Exceeding the branch's allowable debt of $500,000 per customer.
- Charging Baghdad an average 0.2-percent commission instead of the usual 15 percent for a poor credit risk.
- Financing the letters of credit by borrowing from other banks for 90 to 180 days but allowing Iraq up to five years to repay.
Iraq used some BNL credits-at least $600 million, according to British press-to buy military and dual-use technology through various front companies and legitimate firms in Western Europe.
British press says that BNL-Atlanta also financed Iraqi military purchases from Kintex, the Bulgarian armament company.
Baghdad has created complex procurement networks of holding companies in Western Europe to acquire technology for its chemical, biological, nuclear, and ballistic missle development programs.
(IRAQ-ITALY: REPERCUSSIONS OF THE BNL-ATLANTA SCANDAL -- Directorate of Intelligence, 1989)
Normal relations between the United States and Iraq would serve our long-term interests and promote stability in both the Gulf and the Middle East. The United States Government should propose economic and political incentives for Iraq to moderate its behavior and to increase our influence with Iraq. At the same time, the Iraqi leadership must understand that any illegal use of chemical and/or biological weapons will lead to economic and political sanctions, for which we would seek the broadest possible report from out allies and friends. Any breach by Iraq of IAEA safeguards in its nuclear program will result in a similar response.
(National Security Directive 26.--U.S. President, October 2, 1989)
Federal Reserve Bank of New York,
April 5, 1990.
To: Mr. Corrigan.
From: Thomas C. Baxter, Jr.
I followed up on your suggestion about a possible connection between Banca Nazionale del Lavoro (`BNL') and the nuclear triggers that were seized in London. As you suspected, there is a connection. Apparently, Von Wedel (a former officer of BNL who is now cooperating with the government) says that one of the transactions done with Rafidian Bank at some point referenced nuclear detonators. According to Von Wedel, this reference scared BNL away from this particular transaction, but it is possible that the lesson the Iraqis learned was to be generic in preparing the credit documentation. Thus, it is entirely possible that BNL financed some of this material.
At any rate, I have been assured that those conducting the criminal investigation in Atlanta are looking into these connections, with a view to developing additional criminal charges. The resignation of the United States Attorney in Atlanta has led to a number of difficulties in that investigation. These difficulties have been compounded by what is perceived an interference from the Justice Department in Washington.
The press has also made a connection between BNL and the detonators. Attached you will find copies of two Financial Times articles doing just that
Office of International Affairs,
Washington, DC, March 15, 1990.
Re request for meeting with Iraqis.
Deputy Legal Adviser, U.S. Department of State, Washington, DC 20520
Finally, the Commodity Credit Corporation (CCC) and the Department of Agriculture (USDA) are considering a request by Iraq to extend $500 million in export credit guarantees under CCC's GSM-102 program for the remainder of fiscal year 1990. The USDA and CCC also need to meet with the persons named above in connection with their own investigation into alleged irregularities concerning extensions of credit by BNL to Iraq for commodity purchases under the GSM-102 program during the period from 1985 to 1988 in order to complete the processing of the Iraqi application.
Drew C. Arena,
SUMMARY OF SALES APPROVED UNDER CCC CREDIT GUARANTEE PROGRAMS FOR IRAQ
[In millions of dollars]
---------------------------------------- Fiscal year: GSM-102 GSM-103 Total ------------------------------------------ 1983 364.5 0 364.5 1984 646.1 0 656.1 1985 340.1 0 340. 1986 392.9 9.7 392.9 1987 652.5 85.1 652.5 1988 1,112.1 83.3 1,113.1 1989 1,088.8 38.4 1,088.8 1990 495.4 0 481.2 Total 4,862.7 216.5 5,079.2 -----------------------------------------
On August 2, 1990, the USDA suspended Iraq from the GSM-102/103 Program. As of the latest reading, the total GSM Program exposure to Iraq is approximately $2 billion. Of this amount, CCC owes BNL between $347 million--BNL says $382 million--because of Iraqi nonpayment.
(Congressional records -- SCANDAL INVOLVING ATLANTA AGENCY OF BANCO NATIONAL DEL LAVORO -- Henry B. Gonzalez, (TX-20) House of Representatives - February 04, 1991)
The documents referred to are as follows:
SEVERAL OF THE LARGEST BENEFICIARIES OF BNL-ATLANTA LOANS TO IRAQ
CE (Kintex), Bulgaria $30,750,000 Transfer of know how, technologies and equipment for manufacturing of personal computers. Direct arms purchases.
(CONCERNS ABOUT FOREIGN BANK REGULATION, BNL LOANS TO IRAQ, AND BNL LOANS TO IRAQI FRONT COMPANIES -- Henry B. Gonzalez, (TX-20)-- House of Representatives - July 31, 1992)