The SPEAKER pro tempore (Mr. Laughlin). Under a previous order of the House, the gentleman from Texas [Mr. Gonzalez] is recognized for 60 minutes.
Mr. GONZALEZ. Mr. Speaker, today I will continue the discussion concerning the Banca Nazionale del Lavoro branch or agency of the bank headquartered in New York, the branch in Atlanta, GA, and its involvement in the sizable transactions involving letters of credit from Iraq and other countries.
The German Government has admitted that it permitted German companies to assist Saddam Hussein in upgrading Iraq's military capability. In fact, German firms were often the main contractors at Iraqi plants that produced the weapons of war, including chemical weapons. Unlike the United States Government, the German Government has announced that it has identified and is investigating numerous companies that are suspected of violating German export control laws. Dozens of these German companies were the beneficiaries of BNL loans to Iraq.
The revelation by the Bonn government raises the question of why the United States Government has not admitted to the American people its own role in upgrading the military capability of Saddam Hussein. This floor statement today will address several actions of the administration that are in effect working to cover up the truth about our Government's role in upgrading Iraq's military.
One of the biggest surprises uncovered by the Committee on Banking, Finance and Urban Affairs, of which I happen to be the chairman, in its investigation into BNL's relationship with the Soviet Union, was the fact of this highly intricate, meshed relationship with the Soviet Union plus Germany plus other countries.
BNL was a major player in Soviet Union purchases of United States grains such as wheat and corn. For example, in the first quarter of 1989, BNL helped finance United States exporters for $565 million of Soviet grain purchases. BNL also loaned a Soviet trading company $100 million in unsecured and unreported loans.
I will remind my colleagues that in the $3 billion of the total of over $5 billion with the letters of credit on agricultural commodities, the taxpayer is now being dunned for billions of dollars on those guarantees that, once the Iraqi Government and others failed to honor their obligations, the guarantees of the United States Government through the Commodity Credit Corporation guarantees, that have been the mainstays of our policy, once the default was in, it left the taxpayers holding the bag with respect to those guarantees, as in the case of the S&L's, the banks now, and the other insured or guaranteed institutions.
Mr. Speaker, BNL's relationship with the Soviet Union raises several interesting questions, including whether or not our Government would have or should have known about BNL's relationship with the Soviet Union. It is reasonable to assume that Government knowledge of BNL's involvement with the Soviet Union most certainly would have led directly to the unreported $4 billion in BNL loans to Iraq. Unfortunately, that was not the case. Either through the sheer ignorance of U.S. authorities--which I doubt--or with their tacit approval--which I more or less suspect--the BNL scandal went on for years.
Over the past 20 years the Soviet Union has been an important customer of the United States grain farmer, purchasing $26.4 billion in United States agricultural products. During 12 of the past 15 years, the Soviet Union has annually purchased well over a billion dollars' worth of United States wheat, rice, and corn. In the past 3 years alone the Soviets have purchased over $6.4 billion in United States grains.
For a time, the small Atlanta office of BNL played a significant role in Soviet Union purchases of United States grains. During the first quarter of 1989, BNL helped finance in excess of $565 million In United States grain sales as I repeat, to the Soviet Union. If you project that rate out over the entire year, BNL would have financed 75 percent of the Soviet's grain purchases from the United States in 1989.
The loan scheme with the Soviet Union worked in the following way. During 1989, the Soviet Union was in the process of purchasing a record $3.1 billion in United States agricultural products. Until late 1990, when the Bush administration decided to allow the Soviets to purchase United States agricultural products using the CCC credit program, the guaranty the Soviets had to pay cash for the United States agricultural products.
Mind you, this did not come until late 1990. And it is easy to see why. And this was the unofficial bribe to gain Soviet support for the U.N. resolution, and it is, up to a certain point, tacit acquiescence in our activities in the Persian Gulf.
Mr. Speaker, the United States exporter would have to wait for the Soviet Union to pay for the goods which would occur anytime from a few days to a few weeks after shipment. BNL helped to streamline that process by paying United States exporters immediately upon shipping goods to the Soviet Union.
In effect, BNL was acting as the collecting bank for U.S. exporters. BNL would pay exporters such as Cargill, Continental Grain, and Louis Dreyfus for sales of grains to the Soviet trading company called Exportclub. While the exporter had to pay BNL a small fee to get its money immediately, it did not have to worry about the payment risks involved in dealing with the Soviets. In turn, a Moscow-based Soviet Union bank called the Bank for Economic Affairs, would later reimburse BNL for its previous payments to the United States-based grain exporters.
Beside acting as a collecting bank, Federal Reserve reports reveal that BNL also extended the Soviet trading company Exportclub between $100 and $150 million in unsecured credits. Like the BNL loans to Iraq, only a small portion, just $20 million were authorized by BNL's management, so it said.
The former BNL employees concealed the unreported and apparently unauthorized loans to Exportclub by recording the loans under BNL-Rome approved lines of credit supposedly set aside for major U.S. companies like Georgia Pacific.
These corporations never knew BNL was using their names to conceal BNL loans to the Soviet Union.
These false bookings or gray book operations supposedly started because BNL's headquarters in Rome refused to approve a larger loan balance for the Soviets. In many instances the employees of BNL would create forged documents, fraudulent telexes, and facsimiles. Supposedly, the former employees of BNL were forced to hide the loans to Exportclub because Rome threatened to close BNL's Atlanta office. Making false bookings in the name of prominent U.S. companies worked to give BNL in Rome the impression that the Atlanta operation was worthwhile.
One can only guess how the unreported $100 million was used. Given Iraq's need for cash and its arms purchases from the Soviets, the money could have been used to pay for Soviet weapons shipments to Iraq, and in my mind unquestionably did.
BNL also dealt with the Soviet Union through the New York-based Turkish trading company called Entrade International, Ltd. Entrade is a subsidiary of a large Turkish company called Enka, and it specializes in international trade in goods and agricultural commodities.
The Justice Department recently indicted Entrade and its chief officer, Yavuz Tezeller, for providing cash, houses, jewelry, vacations, and other things of value for the personal use and benefit of BNL employees in consideration for the unauthorized loans made to finance Entrade's exports to Iraq and elsewhere. Entrade faces a maximum fine of $54 million for its involvement in facilitating the BNL scandal.
Mr. Tezeller, a Turkish national, was charged with directing Entrade's contacts with BNL and with Enka entities in Europe and the Middle East. Mr. Tezeller fled the United States to escape prosecution.
One very worrisome aspect of BNL's Soviet relationship relates to the bank regulators' inability to detect the fraudulent practices by foreign banks.
This is what we are interested in in the Banking Committee. I have said this before, and I will repeat it. The United States is the only country that has no minimal oversight; that means protection or regulation, of a huge activity in excess of $735 billion from these foreign financial entities doing business in the United States, and who can with just a modicum of this amount put together deals that can result in huge, huge dollar activities? For what purposes? Only God knows.
I will tell my colleagues one: drug money laundering. As a matter of fact, I will say by way of parentheses that, when we invaded Panama, and captured its then national official, leader, Noriega, and installed the officials that are there now, the men we installed are all bankers, and every one of them had been involved and associated with banks that had been very much involved in the famous or infamous Panamanian secret bank account systems that had grown to a sophisticated level almost, but I would think even better than the so-called Swiss secret accounts, and which facilitated and has continued to, among others, the Medellin drug cartel's activity for which we have incarcerated under very questionable status General Noriega in Florida today.
Now mind you, behind all of this are finances and financial transactions that the United States has no screening board. Almost every other country, even Canada, does, and so we have at this time, for instance, especially during the President Reagan administration, allowed vital,
direct assets and indirect assets purchase and control by foreign entities and investments into what I would say is a level that would call for some kind of similar screening boards such as Canada belatedly found out it had to do.
Now there is no desire to say that one should stop international transactions since these things are global today, and there is such an interdependence it would be very difficult to do it. However certainly the United States has its own national interest, has a basic responsibility to look after, and what I am saying is we have not. There is nobody. The Federal Reserve Board cannot, and since we have this dual system, banks, like the BNL, are chartered by the State regulatory commissions. So, neither the State regulators have the ability, nor the Federal Reserve knows or has the ability to adequately audit, supervise, or follow these activities of these foreign financial institutions doing business in our country.
Mr. Speaker, this is the reason we consider this one of the most important and prime of issues, and, as of this moment, our purpose, being wholly legislative, we are not intent in going out here and pursuing revelations and exposes of individuals. Those will come in place as the facts fall in place, and some other agency in the executive branch, like the Justice Department, will properly take care of that, I hope.
But we are vitally interested in plugging the hole in our regulatory system that leaves the national interest unprotected, as far as the unrestrained activities of these huge financial resources floating around in our country are concerned.
Now there were indications that former employees of BNL had a history of making false loan entries, creating false credit files and falsifying telexes and facsimiles going back as far as 1984. Federal Reserve examiners stated that, and I quote, `Fraudulent bookings have been used routinely since 1984 to conceal other overlines.'
So what? Was anything done? Was there followthrough? Was there any attempt to find out how much of this could be possible in the rest of this massive amount in our country? For this is just the tip of the iceberg. No, it never has been. How could such practices have occurred for so long without detection by the State of Georgia or the Federal Reserve Board or both? If the bank examiners were doing their job correctly, there is no way such a massive fraud could have been perpetrated over such a long period of time.
But then let me say this, that even in our own domestic oversight, our own regulatory system, it is so totally broken down that even at this late hour with the crisis engulfing us, with the bankruptcy insolvency in both of the fundamental deposit insurance funds, there is no perception of the crisis engulfing us now.
Let me tell my colleagues, as chairman of this Committee on Banking, Finance and Urban Affairs, that is the most
demoralizing thing of all. The people simply cannot on their own, if their Representatives do not or will not, and what I am saying is the perception is not here as to the depth, the scope, the scale, the gravity, the complexity of the crisis that is now endangering the very essential well-being of this country in the most vital way.
So, when we talk about this other kind of activity, how can I tell my colleagues, a member of the Committee on Banking, Finance and Urban Affairs for 30 years, that I have not been alarmed for almost 28 of those 30 years, if I could see that one of the principal regulators, the Office of the Comptroller of the Currency?
I remember several directors or Controllers of the Currency coming in and looking at us in the committee, and some were very petulant, saying, `Hey, we're here by our sufferance. The Congress doesn't appropriate any money to keep the Comptroller of the Currency's office. We are funded by the fees the banks pay us to examine them.'
So all of a sudden in 1984 we began to see the handwriting on the wall as plain as anything with the failure of the Continental Illinois, and all of a sudden we bring in the auditors, and we bring in the Comptrollers of the Currency, and they say, `Yes. Well, you know, when we went to this Oklahoma shopping center bank that had astoundingly borrowed way beyond its ability from the Continental Illinois, we discovered that, yes, we could see there were bad things.'
`Well, what did you do about it?'
`Well, we're not supposed to do anything about it.'
This was 1984. Did our committee do anything about it?
Well, I am here to tell the Members that I finally was put down definitely when I was insisting on having a hearing in order to assess the newly announced doctrine by the then Chairman of the Federal Reserve Board, Paul Volcker, that Continental Illinois would be too big to be allowed to fail. So the taxpayers have dished out billions of dollars, and Continental Illinois is still a ward of the Federal Deposit Insurance Corporation to this day.
But did anybody want to have a hearing? Did anybody want to know, how could it be that this could happen? And what immediately precipitated the failure? What was the immediate cause?
The immediate cause was that in 3 days' time the Japanese and the European depositors removed $8.3 billion. That happened in 3 days. Well, of course, the bank collapsed.
But why would it have reached that point with this amount of foreign money? Because this is the way the so-called Reagan prosperity was founded, in an illusory way. Let me say to my friends that the country has been sold down the river, and we have not begun to hear the auctioneer's hammer yet. We are just beginning to hear and see just visible symbols of what it is about, but we still have no perception.
What I am bring out here by this exploration, which started when I say a little item in the newspaper saying that an Atlanta branch of a bank was involved in over $3 billion,
is that that is a huge amount for a little old branch supposedly. Then one thing led to another, and over the 2 1/2 years it finally led to these reports I am giving.
How could such purchases have occurred? If the bank examiners were doing their job correctly--and as I said, even if they were, according to their lights and according to their standards, they were doing all they said they were supposed to do, which was to say, yes, that they checked the books and this is what they saw, but that is it--in reality the BNL employees knew the Federal Reserve and the State of Georgia examiners were ineffective and they took every advantage of that, as many, many interests today in the United States are taking advantage of the facts in existence today. BNL dealings with the Soviet Union also raise a question of whether or not the United States banking activities of the Soviet Union or any foreign entity are being properly monitored. After the BNL scandal, I have little confidence that our bank regulators make any effort to monitor the banking activities of foreign governments. In fact, I know they do not.
Besides the BNL scandal, the LBS and BCCI-First American cases are further evidence of this relative to the Federal Reserve, the agency that the Congress empowered, even though you would think that it came from on high as being independent, as John Adams said of George Washington. We know that our history books do not ever give us everything, but there was a lot of rivalry then, and the level of debate would be considered pretty raw even by today's standards, and old John Adams would say to that tall Virginian, `who thinks like the ancient Hebrew judges that he was selected for his height,' because Washington, of course, towered over the others, and furthermore he said that he `believes that he was even sent booted, spurred, and ready to ride on the hapless back of lesser mankind.'
That is the way the Federal Reserve Board is today. It is free wheeling. There is no accounting of what it does. The Congress created it, but I will bet that any attempt such as the attempt some of us have made for 29 years to reform it, to bring it more within the accountability of the people, would immediately not even get out of a subcommittee. I will say that is true even today.
Why? Because this myth is that it is to be independent, so independent that it is freewheeling. It has total control today of the monetary policy, and in effect that
means indirectly the fiscal policy, and even though the Federal Reserve Act says the Federal Reserve Board shall be the fiscal agent of the U.S. Treasury, that is not true today. Today the Treasury is an agent of the Federal Reserve Board, if it is anything at all. It is the Federal Reserve Board that is printing our money, not, as the Constitution says, the Congress or the U.S. Treasury.
Why, if we would pick out any bill from our pocket, any $1 note, $5 note, or $10 note, we will see, `Federal Reserve Note.' Now, it used to be that it would say, `U.S. Treasury Note.' But who cares? Everybody has enjoyed the merry-go-round, and now that it is beginning to slow down, there may be some alarm if they find out it has broken down.
Time is awasting. What we should have been doing 20 or 30 years ago, even in our committees and in the Congress, generally has not been done, and now we have the accumulation today, in the words of one author, of a witches' brew. And let me say that that is a good description.
So why should we be surprised? Now, the most troubling thing, as I said, is the lack of oversight and the reason why the assets of some banks have risen to dramatically over the past decade. Now, this is most troubling because many of these, like the BNL and agencies of other foreign banks command, as I said and as they say, $635 billion--but let me say that we can still be conservative and add $100 billion to that--in assets in the United States. Now, that represents 20 percent of the assets of our entire banking system. The BNL-Iraq-Soviet Union nexus is very intriguing, and it raises many additional questions.
For example, did any of the $4 billion in BNL loans to Iraq go to pay for Soviet weapons? This seems very plausible, since hundreds of millions of dollars in BNL loans to Iraq cannot possibly be traced because the money was placed directly in secret Iraqi bank accounts.
Let me say something about that. We had a hearing not too long ago. We had a representative from the Treasury there.
We asked him about the President's executive order in August.
The SPEAKER pro tempore (Mr. Laughlin). If the gentleman will suspend for a moment, the Chair would like to admonish our guests in the gallery that official House business is being conducted at this time. We very much appreciate your presence, but we would very much appreciate your being considerate of the speaker and keeping your discussions to a whisper so that those who are present to listen to the speaker can hear him and so his statements can be recorded.
We thank our guests very much for their consideration.
Mr. GONZALEZ. We had this Treasury official to report on the President's Executive orders that were supposed to have frozen Iraqi assets and the like. When I asked him if private assets were frozen, he said no, the Executive order did not cover that.
Well, now, all of the sheiks from Kuwait, for instance, when they were here waiting for our Army to go and put them back in, had at least close to $200 billion here in the United States in the family name, not in the country's name, and another close to $100 billion in European and other banks. At lot of that, I am sure, was used in the ads you saw in the paper asking us to go on ahead and go to war and go in there and retrieve Kuwait. Fine, that is OK.
But it is entirely possible, because every one of these leaders, the sheiks, Saddam Hussein, and others in those countries and in other countries do have money not in the name of the government or the central banks of those countries, but in their own personal names, so it is very possible that Saddam Hussein can have an untold amount of money right here in the United States, without anybody really knowing, because the Federal Reserve Board says, well, no, we cannot reveal to you anybody, because that is comity here; we have to respect the privacy.
Well, that may be so, but I will bet you there is no other country in the world that could happen in.
The BNL-Iraq-Soviet Union nexus is very intriguing and it raises many additional questions. For example, did any of the $4 billion in BNL loans to Iraq go to pay for Soviet weapons? This seems very plausible since hundreds of millions of dollars in BNL loans to Iraq cannot possibly be traced because the money was placed directly in secret Iraqi bank accounts. Only the Iraqis know for sure what happened to the money, but it is safe to assume that some of the BNL money went to pay for Soviet armaments. At a minimum, the BNL loans freed up scarce foreign exchange that could then be used by Iraq to purchase Soviet weaponry.
Another interesting question is how a small branch of an Italian bank operating in Atlanta could become a major source of funds for Iraq and the Soviet Union procurement of United States goods. Is it possible that Iraq informed the Soviets about BNL's ability to loan billions at cheap rates without reporting the loans to United States authorities? Is it possible that the Soviet Union was utilizing the BNL-financed Iraqi technology procurement network to obtain U.S. technology? These interesting questions dealing with the relationship between BNL, Iraq, and the Soviet Union may never be answered. It is certainly not in the best interest of Iraq or the U.S.S.R. to reveal how they used BNL and the United States banking system to obtain secret funds.
In order to better illustrate the link between Iraq and the Soviet Union, and the potential importance of BNL to that relationship, I will provide some background on Iraq and Soviet Union military relations.
Iraq was the second largest importer of arms in the Third World during the 1980's when it was in its long, bitter, and inconclusive war with Iran. Between 1982 and 1989, Iraq imported $45.7 billion in arms, second only to Saudi Arabia. Arms imports represented about one-half of Iraq's total imports during the decade of the 1980's.
The Soviet Union was by far Iraq's largest supplier of arms accounting for nearly half of Iraq's arms purchases during the 1980's. While the French supplied important systems for Iraq's military capability, especially fighter planes and nonballistic missiles, the Soviets provided the backbone of the Iraqi military.
Before the Persian Gulf war, Iraq's arsenal included over 5,000 Soviet tanks, thousands of armored vehicles; about 1,500 ground-to-ground artillery pieces, close to 5,000 ground-to-air artillery pieces; almost 200 Soviet fighters and bombers; 40 Soviet helicopters; hundreds of Soviet surface-to-air, air-to-air, and air-to-surface missiles; 3,000 rocket launchers; 3,000 antitank missiles, and hundreds of Scud missiles.
The Soviet Union supplied the majority of Iraq's `off the shelf' weapons purchases, but there have not been accusations that the Soviet Union was not helping Iraq develop its own military research and production capability. That task was left to the Germans, French, Italians, English, Swiss, and Americans.
Much has been reported about the United States `tilt toward Iraq.' The accepted explanation for this tilt is our concern about the implications of Iranian dominance in the Middle East which was fueled by the Iranian Revolution and the hostage situation.
It was not a tilt, it was a complete crawling over. As a matter of fact, I would think that with every one of our agencies, from the intelligence agencies to the State Department and the Commerce Department saying this is a policy of the United States to do business with Iraq, to foster their commercial developments, and whatever else, forgetting that the title of the minister doing business with us is the Minister of Economics and Military Procurement in Iraq. And also the fact that if that is the policy, the banks, like BNL, are really government-owned.
Americans here do not realize the sophisticated side of this thing. BNL is really Italian government-owned, so that basic policy in Italy, that otherwise would be frowned upon. If the CIA and the ambassador say, `But this is U.S. policy, and we would like for you to cooperate,' they are going to cooperate. They have cooperated. Our Government has done a lot of business that way with the French. We really stimulated them in a way, and in a way indirectly helped finance them in many areas. I will tell you that right now. Also other countries besides France. But that is not the issue at this time.
One often overlooked, but nevertheless important factor in the so-called tilt toward Iraq was the United States attempt to detach the secular regime of Iraq from the influence of the Soviet Union. Pursuing fundamentalist Iraq as an ally had the potential benefit of helping thwart Iranian plans in the Middle East while at the same time potentially striking a blow to Soviet influence in that area.
We must remember all along the United States-Soviet Union antipathy and enmity all during the cold war was being used for the individual purposes, aims, and intents of many countries, all the way from Europe to the Middle East, to Asia and Central America, and Latin America.
All that any dictator had to do was say, `I am your friend, Uncle Sam. I am for America. You have got to help me take care of these communists,' or what they labeled as communists, and maybe the communist was a labor leader asking for an increase in wages and working conditions improvement.
Saddam Hussein was able to use the United States-Soviet Union competition to his advantage. He was one of those, among many others, as I said, all the way from Europe, Central America, Asia, and the Middle East, that maintained relations with both superpowers, and in the process was able to obtain food, high-technology products, billions of dollars in credit from the United States, and, at the same time, military hardware and training from the Soviet Union.
In order to ensure that the West maintains its military edge over the Soviet Union, or any other potential enemy, the United States and other industrial nations have adopted export control laws that prohibit the sale of sophisticated technology.
Technology such as high speed computers, computer driven machine tools and lathes, sophisticated electronic equipment, and other high-technology products all must go through an export licensing process.
During the latter half of the 1980's, the United States and other Western nations such as Germany routinely allowed Iraq to obtain export licenses for this type of sophisticated Western technology.
A good portion of the United States technology that went to Iraq would not have been legal to sell to the Soviet Union, but the Soviet Union could easily have persuaded Iraq to send its Western technology across the line. The Iraq border is less than 100 miles from the Soviet border, I want to remind Members.
The Soviet Union was an important arms supplier to Iraq and even had thousands of military advisers in Iraq, up until the United States offensive against in Iraq in January. The Soviet Union was also providing Iraq with credit to purchase Soviet weapons. Iraq was always short of cash and had relied upon Soviet credit to make direct arms purchases, the Soviets having made the loans contingent upon receiving western technology from Iraq.
Another factor that makes such technology transfer possible is the Soviet Union's efforts to obtain western technology.
The recent Toshiba case, whereby the Soviets obtained sophisticated machine tools that enabled them to silence their submarine propellers, for example, is a prime example of the Soviet procurement operation. Given their strong and strategic alliance with Iraq, it seems highly likely that the Soviets would have attempted to obtain sophisticated United States and western technology from the Iraqis. After all, how hard would it have been for Iraq to transfer sophisticated United States and western technology to the Soviet Union given that their borders are almost contiguous?
The United States may never know if such a technology transfer occurred and, if it did occur, how much United States and western technology was sold to Iraq and then passed on to the Soviets. If the Soviets were smart they used their leverage over Iraq to obtain sophisticated and United States western technology. If Iraq was smart, it used its access to that technology as a bargaining chip for obtaining weapons from the Soviet Union. We know Saddam Hussein lied, not the only one, but we certainly know he did routinely. Why should he keep his word and not let the technology go to the Soviet Union?
I am writing the Defense Department, the CIA, and the State Department to ask them if they have any knowledge of such transfers and if they have a process in place to ensure that third party nations like Iraq are not being used by others to obtain western technology. The BNL relationship with the Soviet Union also raises the question of our Government's knowledge of BNL activity. Given our Government's ability to monitor international communications as well as monitoring the Soviet Union's actions in the United States, our Government had to know about BNL loans to the Soviet Union. Monitoring BNL's relationship with the Soviet Union should have led to the BNL relationship with Iraq.
There is a U.S. Government agency specifically in the business of monitoring these types of communications. Telexes, phone conversations, facsimile communications are monitored by the NSA and that is our huge National Security Agency. Dr. Norman Bailey, a former National Security Agency staffer and a specialist in tracking the flow of suspected money abroad recently stated:
The likelihood of a branch of an Italian bank in Atlanta, Georgia dealing with the kind of sums that were involved not coming to the attention of U.S. authorities would be almost zero.
I will vouch for that statement from personal knowledge in the case of other activities in the course of the years that I have been involved as a Member of this House, over 30 years. This assertion is further strengthened by the fact that BNL had a significant relationship with the Soviet Union. As I stated, BNL was providing the Soviet Union with hundreds of millions in short-term loans. This business required BNL to communicate with Moscow through telex, facsimile, and the phone. Given that the administration considered the Soviet Union to be, in the words of President Reagan, `the evil empire' during the time the BNL scandal was taking place, it is safe to say that the NSA was monitoring Soviet communications with entities like BNL, especially communications involving large fund transfers.
But then last week I brought out that ensconced in the highest places of our Government, in the most sensitive of all judgment-making, decision-making levels, like the National Security Council, you have men like Scowcroft, its present director, who was there before and never bothered to divest himself of all the interests he had obtained as a member and vice president of Kissinger Associates and all of the corporations that I listed in last week's Record that had business with Iraq, for instance.
Here is a man that is shaping the policy, having to do with export licenses, having to do with the Export-Import Bank and guarantees, the Department of Commerce. I can tell you this, that if the Export-Import Bank is having its meetings and present are listed a representative from CIA, who says, `Yes, it is the policy of government to do business with Iraq and help Iraq; it is Iraq that is the enemy of our enemy,' meaning Iran. And then you have Mr. Kissinger himself, through these two agents and one in the State Department that I brought out last week, the Deputy Director of State, Eagleburger, and who still
are influencing these decisions, should we be surprised if there is a reluctance for our Government to reveal the truth? Of course not.
It would be too embarrassing. It is like the series of addresses that I made here on this House floor in the late 1970's on the occasion of the murder of a Federal district judge, the most heinous crime ever committed against a member of the U.S. judiciary, and alongside with the assassination of President Kennedy, was really the crime of the century.
It was going to die. It was going to be covered up. And it was obvious that there were a lot of things, and I began to talk about them.
Then I had had a series of over 50 addresses which I entitled `King Crime' and brought out the now hard to discern, much less to disentangle, presence of organized crime in the most intricate levels of not only business but in our Government.
We should not be surprised that we have the drug business we have. There is such an intertwining here of all levels, private business, government and crime organized, highly sophisticated.
When I made those speeches in the early 1970's, I brought out how sophisticated.
In many ways, I had such a system that exceeded any ability of our organized governmental forces supposedly tyring to act as antibodies from this invasion of crime in our society. It is the same thing here. It is no different.
If you have got men who are profiting on their own and have an interest, whether it is legal or illegal is beside the point, whether it is technically or not in violation of conflict of interest, it is certainly immoral and it is certainly putting the well-being and the selfish interest of individuals above the national interest, as we now see to our calamity.
What else does the sorry record show? I brought it out fully last week, and if anybody wants fuller, we will give them fuller details of Mr. Scowcroft and Mr. Eagleburger, other than they were procurers. They prostituted themselves. In effect, there is no other word to describe it.
If this be treason, then make the most of it.
While the majority of the Iraqi military machine--aircraft, tanks, artillery--was acquired mainly through government-to-government deals, such countries as the Soviet Union and France and other countries like the United States, United Kingdom, Italy, Germany supplied Iraq with the technology and equipment to build or operate its nuclear, chemical, biological, and nuclear capability.
The country most involved in helping Iraq build a self-sufficient military was Germany. German companies helped Iraq build the largest armament plant in the Middle East, build a chemical weapons factory and move years closer to developing nuclear weapons. Some of the biggest names in German industry have been implicated for being involved in supplying these critical technologies--Daimler-Benz, Messerschmitt, Gildemeister, and Siemens--along with many smaller, lesser known firms. In total, over 100 German firms contributed technology and/or equipment to Iraq's war machine.
But let me again have this say: I doubt seriously that without the United States Government officials advising that this was in consonance and in congruency with United States policy that the German Government would have prohibited.
Mr. Speaker, at this time I would like to place in the Record a list of German beneficiaries of BNL loans.
German companies were the major suppliers to Iraq's chemical weapons program. The chemical weapons complex in Samarra was a product of German technology. Pilot Plant, the subsidiary of Karl Kolb, has stated it was exporting an insecticide plant from Germany, although experts say that nothing in the Samarra plant indicates that it could be used to make insecticides. Rather, it is believed that the Samarra plant produced mustard gas used against Iranian soldiers and the Kurds.
Now, with respect to mustard gas, there is no comfort for us Westerners to take in saying, `Oh, these violent and criminal Iraqis who used poison gas against Kurds and even Iranians,' and then the evidence showing that, well, Iranians used some, too, but let me say that the first one to approve the use of chemicals was Winston Churchill when he was in the War Office in 1919.
Officials of the Royal Air Force said, `Sir, we would like to be given permission to use these weapons against `recalcitrant Arabs.' The recalcitrant Arabs were what is today Iraqis and the like.
Winston Churchill said, `Of course. What are the qualms? In war, why you use every means available. What is the difference between a chemical weapon and an artillery shell?'
Even though he approved it, it was not until 1923 that the British Royal Air Force did use it against Iraqis in what is now Iraq and with untold and unreported deaths and injuries. But we know it was used first by us, civilized whites or Westerners. So we had better remember this before we start casting judgments.
BNL loans were particularly significant in building the Taji armaments complex. The Taji complex was the largest weapons plant in the Middle East building artillery, machineguns, rifles, and other battlefield equipment. Ferrostaal, a beneficiary of BNL loans, was one of the prime contractors for the Taji complex. It supplied a smelting plant, and other German firms, Klockner, Thyssen, SMS Hasenclever, Siemens, and Mannesman together received over 200 million deutsche marks from BNL for supplying critical elements of the Taji complex.
The Saad 16 project was a laboratory complex for militarily usable missiles, aircraft, and other armaments that were developed and smaller missiles could be produced.
The German firm Gildemeister was the general contractor for the project, and a Messerschmidt joint venture was the biggest subcontractor.
Two other companies financed by BNL, Inwako and Havert Industrie, have been reported to have provided technology which allowed Iraq to increase the range of its Soviet-supplied Scud missiles. The increased range allowed Iraq to hit Tehran, Tel Aviv, and Riyadh where, if you will remember, 28 of our soldiers died when a Scud missile hit their barracks.
If anybody wants to tell you that the Scud did not get by, go and ask the Saudi kings, for their palace windows all shook and broke.
In addition, Inwako and Siemens have reportedly supplied
technology and equipment to Iraq's nuclear weapons research.
Many of these companies have been indicted by the German Government for violating export control laws. So, in effect, at the time doing what the United States was doing, Germany winking at the violations of its own laws, today though is not pulling back. It is exposing, unlike our Government and our President.
Now, where was the U.S. Government in all of this? Supposedly, we complained to German officials, but to no avail, but this appears to be a classic case of, `Do what I say, not what I do.' It is likely that our CIA or Defense Intelligence Agency knew about the German involvement in upgrading Iraq's military capability.
In fact, I will say categorically they did.
It would be hard to imagine that they did not know, given that some of the equipment that German companies sent to Iraq was from United States sources. For example, according to the German Ministry of Economics, electronic equipment supplied to a German company by Hewlett-Packard and Wiltron received United States export licenses, even though the equipment was expressly for a missile project. Gildemeister, the general contractor for the Saad 16 missile research project, obtained a United States export license for computerized microfilm equipment made by Kodak specifically for use at this project. Siemens, Carl Zeiss, and Leybold AG were other German firms that received United States export licenses for United States-made equipment that was later used by the Iraqi military.
At a national security meeting in the summer of 1987, a Department of Defense official actually presented satellite photographs of the Saad 16 project in order to stop United States technology from being used by Gildemeister to upgrade the Iraqi missile program. Based on the photos, Paul Freedenberg, then the Commerce Department official in charge of export controls, directed that the Gildemeister license involving U.S. hybrid analog computers be suspended. I believe that the exportation of the hybrid analog computer was later approved at the direction of the national security staff.
Mr. Speaker, there are many other cases. Remember, Scowcroft, Mr. Kissinger lurking in the background, and Mr. Eagleburger brought U.S. technology.
Our Government knew about the military uses of this technology and did nothing to stop it. The truth about the United States export licensing process is that the NSC, State Department, and Commerce Department routinely ignored and actually encouraged the transfer of militarily useful technology to Iraq in violation of its public oath to prohibit such uses.
On top of that, they are now engaged in a comprehensive effort to cover up, unlike the German Government to its credit, the American people, like the German people, expect its Government to come clean and to admit its blunders. The people have the right to know which companies helped to build up the Iraqi war machine. Unfortunately, the names of these companies that were the beneficiaries of the bankrupt United States export control policy toward Iraq cannot be released.
The administration has stated that the list of export licenses for Iraq must be kept secret because of this supposed proprietary information it contains. The real reason, I say, my colleagues, is that the administration is embarassed by the list, because it will show that the United States Government actually encouraged United States firms to help upgrade Iraq's military capability plus its own highly placed policymakers cheek by jowl and in comfortable commercial relationships for
profits with these very same companies.
Keeping the export licensing list as a secret is not only an indication that United States export is involved, the United States Government is involved, in trying to cover up its past policy related to Iraq, but also not quite willing to face the reality of the truth that it must admit.
If the Congress does not, and this is the reason I feel the committee has a broader obligation and have thought so for 2 1/2 years, even though there have been those that have directed some criticism.
While the Bonn Government has admitted to its role, the U.S. Government continues to cover up. Another indication of the administration's effort to conceal their past policy toward Iraq relates to reporting requirements contained in the Iraq Sanctions Act of 1990. On November 5, 1990, President Bush signed into law the Iraq Sanctions Act of 1990. This act contains a provision requiring the President to conduct a study and report on individuals, companies, and countries that sold, exported, or otherwise transferred technology useful in the development of Iraq's nuclear, biological, chemical, and ballistic missile programs.
Like I say, that is locked out, and we know the result and the products of the secret basements that obscure to the eyes of the people and the Congress the nefarious and the unwholesome aspects of these germinating insidious darkroom plants.
The SPEAKER pro tempore. Under a previous order of the House, the gentleman from Georgia [Mr. Gingrich] is recognized for 60 minutes.
[Mr. GINGRICH addressed the House. His remarks will appear hereafter in the Extensions of Remarks.]
The SPEAKER pro tempore (Mr. Laughlin). Under a previous order of the House, the gentleman from New York [Mr. Owens] is recognized for 60 minutes.
[Mr. OWENS of New York addressed the House. His remarks will appear hereafter in the Extensions of Remarks.]
The SPEAKER pro tempore. Under a previous order of the House, the gentleman from Ohio [Mr. Pease] is recognized for 60 minutes.
[Mr. PEASE addressed the House. His remarks will appear hereafter in the Extensions of Remarks.]
The SPEAKER pro tempore. Under a previous order of the House, the gentleman from California [Mr. Dreier] is recognized for 60 minutes.
[Mr. DREIER of California addressed the House. His remarks will appear hereafter in the Extensions of Remarks.]
The SPEAKER pro tempore. Under a previous order of the House, the gentleman from New York [Mr. Solomon] is recognized for 60 minutes.
[Mr. SOLOMON addressed the House. His remarks will appear hereafter in the Extensions of Remarks.]