WASHINGTON -- Attorney General William Barr will not seek appointment of an independent counsel to probe the handling of an investigation into $4 billion in unauthorized loans allegedly funneled by an Italian-owned Atlanta bank to Iraq to build its arsenal before the Persian Gulf War.
Rep. Jack Brooks, D-Texas, chairman of the House Judiciary Committee, criticized Barr's action and said Wednesday the administration of President-elect Bill Clinton should investigate the matter.
Barr's decision came after release of a report from former federal judge Frederick Lacey, who was asked by the attorney general to decide if a special prosecutor was needed in the case.
Lacey, who said he was given total access to FBI reports and Justice Department personnel during his two-month investigation, said he found 'no warrant at all for the appointment...of an independent counsel' to look for possible criminal wrongdoing.
Barr later announced, 'I have accepted Judge Lacey's recommendation and will not apply to the court for appointment of an independent counsel.'
'While there are certain matters involving non-covered persons unrelated to the Department of Justice that warrant further investigation, there is no reason that those matters cannot be handled by the Department of Justice in the normal course,' Barr said, adding, 'Indeed, with one exception those matters were already under investigation by the department.'
Barr also responded to Lacey's conclusion that the Justice Department has 'inadequate procedures' and exhibited sloppiness in the handling of certain classified information.
'I have directed the deputy attorney general to immediately take steps to correct any deficiencies in this area,' Barr said.
Banca Nazionale del Lavoro is owned by the Italian government and has a small branch in Atlanta.
Loans were issued to help finance Iraqi purchases of weapons technology from the United States and Europe before the Persian Gulf War.
The Justice Department pinned a $1.8 billion bank-fraud charge on Atlanta branch employees, but a plea bargain in the three-year-old case fell apart in September when new information implicated BNL officials in Rome and indicated the CIA may have had knowledge of the situation.
Federal investigators, including a number of congressional committees, had been trying to determine whether Bush administration officials wrongly tried to protect themselves by pinning blame for the illicit loans on the Atlanta branch.
Brooks strongly criticized Lacey's findings.
'After this futile exercise, the American public is left with the unmistakable impression that the wheels of justicecan grind so exceedingly fine as to crush the truth in the process,' Brooks said.
'It now rests with a new administration...to see that justice is done in the investigation of U.S. assistance to the government of Iraq,' he said.
Barr appointed Lacey in October and had said publicly he would abide by Lacey's recommendation in deciding whether to appoint an independent counsel.
The law allowing for appointment of such independent prosecutors expires Dec. 15.
'Having concluded my investigation, I can say with confidence that I have found little fault with the handling of the investigation and prosecution,' said Lacey. 'It's virtually perfect.'
Lacey did say that while investigating written communications between the FBI and CIA, he found 'carelessness' and 'casual treatment of sensitive information,' but no illegalities.
Nearly 200 pages of Lacey's report were released Wednesday, while other sections that included classified communications between the FBI and CIA were not made public.
At a news conference, Lacey blamed journalists and congressional critics for giving credence to a story that, he said, had little merit.
'All of this stuff...about there being a cover-up' as evidenced by a delay in seeking indictments in Atlanta, 'is errant nonsense,' said Lacey.
The Atlanta branch allegedly sent $4 billion in unauthorized loans to Iraq shortly before Iraq's invasion of Kuwait.
