Remember Iraqgate? It may seem ancient and obscure. But just two years ago, it was big. Very big.

This was the "scandal" that hounded George Bush as he slumped toward the 1992 election. Thousands of newspaper articles and a gaggle or television specials turned his greatest triumph-his victory over Iraq’s Saddam Hussein in the 1991 Persian Gulf war-into a political liability, by spreading unfounded claims that Bush had secretly and illegally plotted to arm Iraq and then had orchestrated a cover-up.

Iraqgate grew out of legitimate criticism of the Reagan-Bush policy of seeking normal economic relations with-and, some say, appeasing-the brutal, Kurd-gassing, arms-buying Iraqi regime in the years leading up to its August 2, 1990, invasion of Kuwait. Bush may well have paid too little heed to warnings that Iraq was intent on using Western technology to build nuclear, chemical, and biological weapons.

But what made Iraqgate front-page news everywhere was a crescendo of allegations and innuendos of criminality, which New York Times columnist William Safire sum marized as "the Bush administration’s fraudulent use of public funds, its sustained deception of Congress, and its obstruction of justice." Such charges multiplied throughout 1992, due to assiduous promotion by an array of prominent journalists, congressional Democrats, and a federal judge.

The basic conspiracy theory was that the Bush administration had paved the way for Saddam Hussein’s aggression by secretly and illegally helping Iraq arm itself, mainly by allowing it to use U.S. agricultural credit guarantees to buy weapons. Then, the theory went, the administration had covered this up both by lying to Congress and by obstructing justice in a big bank fraud case, which involved billions in loans and U.S.-backed credits to Iraq from the Atlanta branch of the Italian-owned Banca Nazionale del Lavoro (BNL). Each of these claims-disseminated through most of the nation’s major news organs-was unsupported by credible evidence in 1992 and has since been proven false.

Why write now about a two-year-old phony scandal, which has already merged in many memories with Iran-contra (a real one)? Because the false hoods and distortions that pervaded reporting and commentary about Iraqgate in 1992 were truly outrageous. Because compelling evidence of their falsity has been piling up, virtually ignored by the media. Because phony scandals like this one (and the House bank "check-kiting" scandal, and others) are a recurring phenomenon. Because the costs-which include the smearing of innocent officials of all ranks and the spread of cynicism about government, the media, and public affairs-are heavy.

And because all this suggests that the media are badly botching their fundamental job of telling the truth about major public issues, due to political bias, sloppiness with facts, and old-fashioned sensationalism.

Among those who abused their journalistic powers in Iraqgate were Safire, whose 20-odd Iraqgate columns include some of the worst yellow journalism ever to appear under such a prominent by line; Mike Wallace of CBS News’s 60 Minutes, who aired, with no hint of skepticism, outlandish charges by sources of low credibility; The Los Angeles Times, which helped start a feeding frenzy that was joined by almost the entire journalistic pack, including The New York Times (especially the editorials) and The Washington Post (ditto); and U.S. News & World Report, which popularized the name "Iraqgate" and the myth it embodied.

The media built upon and magnified reckless and unfounded claims of Bush administration misconduct by congressional Democrats, led by Henry Gonzalez (D-Texas), the flaky, fiercely partisan chairman of the House Banking Committee, and then-senator Albert Gore, Jr., who falsely accused President Bush of presiding over "a bigger cover-up than Watergate ever was," to hide a "decision by George Bush to arm Saddam Hussein."

Iraqgate conspiracy theories were also promoted by U.S. district judge Marvin Shoob of Atlanta, a would-be John Sirica presiding over the BNL case, whose error-plagued innuendos of a Justice Department cover-up and clamoring for a special prosecutor gave the scandalmania a patina of apolitical respectability.

All this had impact: "Last week," Ted Koppel (another promoter of the Iraqgate scandal) reported on ABC News’s Nightline on October 28, 1992, "a Wall Street Journal /NBC poll showed that 68 percent of the American public has major doubts about George Bush’s explanations of his administration’s role in providing aid to Saddam Hussein before the Persian Gulf war." That’s a pretty big slide from Bush’s 89 percent popularity rating immediately after the war.

BIG LIES

It was a big lie to say that Bush secretly and illegally armed Iraq. It was preposterous to say that Bush was "principally responsible" for creating Saddam Hussein’s war machine, as Gonzalez said two days before the 1992 election on 60 Minutes, with Mike Wallace prompting him. And it was the biggest lie of all to say that attorneys general Dick Thornburgh and William Barr rigged a cover up by obstructing justice, as Gonzalez (also on 60 Minutes) and Safire asserted without qualification, and as others, including Judge Shoob, The New York Times, and The Washington Post hinted more circumspectly.

The proof on the public record is compelling, though widely ignored. Some of it is in the reports of three official investigations since the 1992 election, which found no evidence of any Iraqgate crime or cover-up. More is laid out in an excellent article entitled "The Myth of Iraqgate," in the Spring 1994 issue of Foreign Policy, by Kenneth Juster, an international law partner at Arnold & Porter who was a senior official in the Bush State Department. Still more is laid out in Juster’s 114-page uncut draft.

Most significant, the Clinton administration, which campaigned on Iraqgate, has spent a year and a half combing through the record for any evidence of Bush administration crimes without finding a single shred. Justice Department lawyers led by John Hogan, a longtime close aide to Attorney General Janet Reno, have rejected a central tenet of Iraqgate conspiracy theorists by concluding that there was no Bush administration cover-up in the BNL bank fraud case. (This earned Hogan ugly attacks from Safire and from Shoob, who told Hogan in an August 1993 hearing, "Any one with any experience in the real world would know better, sir.") Two sources familiar with Hogan’s investigation say his final report, due to be made public, will show yet again that all the hype about "crimes of Iraqgate" (Safire’s phrase) was groundless.

But as the 1992 election approached, most of the nation’s major news organizations seemed intent upon spreading the impression that much of the top echelon of the Bush administration could be implicated in illegally arming Iraq and covering it up. This edifice of innuendo was erected on a foundation of factual errors and distortions that spread like a contagion; latecomers to the story, with little time to master the complex facts, followed the lead of Iraqgate conspiracy theorists like Safire-who, by September 1993, had veered into fantasies about the Clinton Justice Department joining the supposed Bush cover-up.

ENTER THE INVESTIGATIVE REPORTERS

Starting in early 1991, shortly after the Gulf War, Congressman Gonzalez made dozens of floor statements claiming that government documents (which he had gotten from the Bush administration) showed that Bush had spent years building up the Iraqi military threat and then sought to cover his tracks. But despite scattered news reports (especially in London’s Financial Times) floating these and similar charges, few in Congress or in the press initially took Gonzalez seriously; nicknamed "Gonzo" by some on Capitol Hill, he has a long record of making wild and unsubstantiated charges.

The first major blast in a leading U.S. newspaper came in a three-part series in The Los Angeles Times that began on February 23, 1992, under the headline "Secret Effort by Bush Helped Hussein Build Military Might." The reporters, Douglas Frantz (now with The New York Times) and Murray Waas (then and now a freelancer), went on to do more than 100 articles in 1992, blazing a trail down which they were followed by the rest of the media, and to win journalism awards and media critics’ praise.

The pair "drew on secret documents being gathered" by Gonzalez, as Safire later noted, and "got a good chunk of the story first." The Frantz-Waas series included some original reporting on internal Reagan and Bush administration debates about Iraq, including warnings by some officials that credit guarantees and high-tech exports should be cut off because of Iraq’s alleged abuses of these programs, uncreditworthiness, use of poison gas, and arms buildup.

But the Frantz-Waas series was also highly misleading, and littered with distortions that greatly exaggerated Bush’s assistance to Iraq. These are worth examining in some detail, since this series in The Los Angeles Times laid a foundation of misinformation on which many others were later to build.

The opening two paragraphs of the first article said:

"In the fall of 1989, at a time when Iraq’s invasion of Kuwait was only nine months away and Saddam Hussein was desperate for money co buy arms, President Bush signed a top secret National Security Decision directive ordering closer ties with Baghdad and opening the way for $1 billion in new aid, according to classified documents and interviews.

"The $1 billion commitment, in the form of loan guarantees for the purchase of U.S. farm commodities, enabled Hussein to buy needed foodstuffs on credit and to spend his scarce reserves of hard currency on the massive arms buildup that brought war to the Persian Gulf."

The other central allegation of the series was that the Reagan and Bush administrations had also "approved the sale to Iraq of $1.5 billion worth of American technology," comprising "so-called ‘dual-use’ technology…with both military and civilian applications," which "was critical to Iraq’s quest for nuclear and chemical arms."

But facts in the public record show that first, there was nothing very "secret" about Bush’s Iraq policy; second, the 1989 decision to extend $500 million (not $1 billion) in agricultural credit guarantees (not "aid" or "loan guarantees") to Iraq made no contribution whatsoever to Iraq’s military buildup, and probably had the (incidental) effect of depleting Iraq’s hard currency reserves by some $455 billion; and third, the $75 million (not $1.5 billion) in dual-use exports under Bush (and $425 million worth under Reagan), was marginal to Iraq’s $150-200 billion in military spending in the 1980s, including well over $30 billion in arms imports.

To claborate:

The heart of the Bush policy-the decision to continue agricultural credit guarantees and dual-use exports-was public all along, contrary to the implication of The Los Angeles Times. It’s true, as Frantz and Waas (and others) stressed, that the October 1989 National Security Directive (NSI)-26) in which Bush formalized his Iraq policy was originally classifed top-secret. But every detail of that policy was publicly disclosed to Congress by early 1990, excepting the language of NSD-26; the portions regarding Iraq were sent to Congressman Cionzalez. in April 1991 and declassified and made public in May 1992. Nonetheless, critics kept decrying what an October 6, 1992, New York Times editorial called Bush’s effort "to conduct (Iraqi policy surreptitiously."

(Waas responds, "I stand by my stories," and suggests, incorrectly, that portions of NSD-26 discussing Iraq were never disclosed, l’rantz declined to comment on criticisms of his lraqgate coverage, A spokesman for Howell Raines, who now heads The New York Times editorial page, said he would have no comment.)

ARMING IRAQ-WITH GRAIN

As for the "$1 billion commitment, in the form of loan guarantees" (in the words of Frantz and Waas), in fact Iraq did not get $1 billion from the Bush administration in any form. Furthermore, the "loan guarantees" were really credit guarantees, meaning that Iraq got no cash loans at all-only farm exports.

The $1 billion figure, which is repeated 20 times in the l-Frantz-Waas series, is a nice, big number. But it is a false number. While Iraq had sought over $1 billion in credit guarantees in the fall of 1989, the Bush administration agreed lo only $500 million, of which only $392 million was extended before Iraq’s August 2, 1990, invasion of Kuwait. (None of this involved BNI., whose $1.5 billion in U.S.-backed credits to Iraq were approved before the Bush administration took office.) The administration dangled the possibility of approving a second $500 million "tranche" pending further scrutiny of (and in the vain hope of moderating) Iraq’s conduct. But insistent Iraqi demands for the second tranche were never granted. Still, throughout their first article, Frantz and Waas used the $1 billion figure in a way that would mislead many readers into believing the Iraqis had received that much. (Waas responds that Iraq might have gotten $1 billion but for the invasion.)

An unusually careful reader of the first Frantz-Waas article might have deduced from the twenty-fifth paragraph (and later pieces) that the "$l billion" at the top had been misleading. But that twenty-fifth paragraph itself was also misleading: "As late as July 1990, one month before Iraqi troops stormed into Kuwait City, officials at the National Security Council and the State Department were pushing to deliver the second installment of the $1 billion in loan guarantees, despite the looming crisis in the region."

That assertion-later repeated by The New York Times, The Washington Post, and others-is contradicted by documents that have since become public, showing that by April 1990 the State Department had joined others in the Bush administration in spurning Iraqi requests for the second tranche.

Frantz and Waas also claimed there was "evidence that Iraq had used the aid illegally to help finance a secret arms procurement network to obtain technology for its nuclear weapons and ballistic missile program." Many journalists and Democrats went even further in misleadingly equating the agricultural guarantees with cash handouts that Iraq spent on weapons:

In the May 18, 1992, U.S. News & World Report cover story, headlined "lraqgate: How the Bush Administration Helped Finance Saddam Hussein’s War Machine with American Tax Dollars," Brian Duffy and Stephen Hedges wrote: "Iraqi representatives secured loans for commodities purchases at prices far above prevailing market rates. By paying commodities suppliers less than the amount borrowed, Iraqi representatives were left with millions of dollars in excess profits, [some of which were] used to finance weapons research and purchases," including "improved Scud missiles and nuclear engineering."

ïIn his July 3, 1992, column, A.M. Rosenthal of The New York Times asserted that "the U.S. gave [Saddam Hussein] loans [that were] used by Saddam to help him buy missile power and nuclear technology." (Rosenthal says now, "Money is fungible. What I was really saying was that the fact that we supported him in a variety of ways enabled him to buy arms.")

ïIn an October 6, 1992, editorial, The New York Times suggested that the Rush administration may have illegally allowed Iraq "to divert bank loans, backed by U.S. commodity credits, to pay for the arms purchases."

ïAnd in a September 29, 1992, speech, Albert Gore asserted that Bush "gave to Saddam Hussein" $1.9 billion and that "Saddam was using our dollars to buy weapons technology.

But in fact, as detailed in Kenneth Juster’s Foreign Policy article, such allegations were based on a fundamental mischaracterization of the nature of the Agriculture Department’s credit guarantee program-which is not so much foreign aid as a spur to U.S. farm exports: Foreign buyers like Iraq received no U.S.- guaranteed cash at all from the banks. Rather, banks were induced by the U.S. guarantees to provide credit to Iraq (which would otherwise have been a bad risk), in the form of payments by the banks to U.S. exporters for grain, rice, and other foodstuffs to be sent to Iraq, which would then have three years (in most cases) to pay down its debt to the banks.

So if was, quite literally, impossible for Iraq simply to take U.S.-guaranteed "loans" and use them to buy weapons instead of grain.

Allegations that Iraq had nonetheless diverted credits to buy arms through various strategems were widely reported in early 1992 by The Los Angeles Times, The New York Times, U.S. News, and others. Partly on the basis of speculation in leaked government documents, these organizations suggested that Iraq bartered U.S. grain for arms and bought arms with kickbacks that the Iraqis demanded from U.S. farm exporters and middlemen, who generated cash by charging inflated prices and obtaining excess profits.

But even if such bartering occurred, which has never been proved, there is no evidence whatsoever that the U.S. consented to it. And while there were almost $2 million in kickbacks, according to Agriculture Department audits, there is no evidence either that they mounted into the "hundreds of millions of dollars" (as U.S. News asserted) or that Iraq used them to buy arms. Nor is there a shred of evidence that "Bush…knew that Saddam was using the money, or bartering our grain, to buy and develop weapons of mass destruction," as Safire wrote in an especially outrageous fabrication.

(Safire declined to address such criticisms point by point, saying, "I’m glad I wrote what I wrote, and it you dish it out, you have to expect to take it, and it’s a free country. Go ahead and take your pop.") (As for Duffy of U.S. News, he responds that the "pathetic" Agriculture audits had vastly understated the kick-backs; that they had been described by "multiple sources" as a source of cash for Iraq’s arms program; that he had alleged only "mismanagement," not a Bush plot to arm Iraq; and that in order "to make it as uncomplicated as possible for readers, possibly we erred somewhat" by failing to specify that U.S.-backed loans did not go directly to Iraq.)

ERRORS IN ARITHMETIC

Even more fundamentally, the major premise of both the Frantz-Waas series and the entire Iraqgate scandal-that Bush administration agricultural credits freed Iraq’s "cash reserves to finance the massive arms buildup"-was contradicted by one simple, public record fact that I hadn’t seen in print until Juster reported it this spring:

During fiscal year 1990-the only time the Bush administration extended agricultural credit guarantees to Iraq- Iraq made some $847 million in hard currency repayments of previous credits to U.S. banks, while receiving only $392 million in new credits. So in the months before Saddam Hussein’s tanks rolled into Kuwait in August 1990, Iraq’s payments exceeded its new credits by some $455 million. Bush’s decision to extend $500 million in new guarantees (and Iraq’s hope for more) thus had the paradoxical effect of reducing the cash available to Iraq in 1990. For if Bush had cut off all new guarantees (as critics like Frantz and Waas suggested he should have), Iraq would probably have fulfilled its threats to default on old credits (as Frantz and Waas reported).

As a matter of simple arithmetic, this excess of Iraqi payments over new U.S. guarantees obliterates the central Frantz-Waas thesis that Bush augmented Iraq’s currency reserves. (Waas rejects this logic as "specious.’)

Of course, during the early years of the credit guarantees, which totaled $5 billion from 1983 through 1990, Iraq probably did save some hard currency. Anytime anyone buys anything on credit, he may thereby free up some of his own money for other purposes-until the debt comes due. But this was also obvious at the time, and relatively un-controversial, because it was consistent with the Reagan administration’s pro-Iraq "tilt" during the 1981-1988 Iran-Iraq war. That policy enjoyed bipartisan support because of concerns that Iran’s militant, America-hating regime would, if victorious over Iraq, threaten the world’s oil lifeline. And by the time the Iran-Iraq war ended in August 1988, Iraq’s repayments were catching up with its new credits.

("The amount of loan guarantees steadily increased each year," Frantz and Waas asserted, falsely. The official numbers: $1,113 billion in fiscal 1988; $1,088 billion in fiscal 198…

Remember Iraqgate? It may seem ancient and obscure. But just two years ago, it was big. Very big.

This was the "scandal" that hounded George Bush as he slumped toward the 1992 election. Thousands of newspaper articles and a gaggle or television specials turned his greatest triumph-his victory over Iraq’s Saddam Hussein in the 1991 Persian Gulf war-into a political liability, by spreading unfounded claims that Bush had secretly and illegally plotted to arm Iraq and then had orchestrated a cover-up.

Iraqgate grew out of legitimate criticism of the Reagan-Bush policy of seeking normal economic relations with-and, some say, appeasing-the brutal, Kurd-gassing, arms-buying Iraqi regime in the years leading up to its August 2, 1990, invasion of Kuwait. Bush may well have paid too little heed to warnings that Iraq was intent on using Western technology to build nuclear, chemical, and biological weapons.

But what made Iraqgate front-page news everywhere was a crescendo of allegations and innuendos of criminality, which New York Times columnist William Safire sum marized as "the Bush administration’s fraudulent use of public funds, its sustained deception of Congress, and its obstruction of justice." Such charges multiplied throughout 1992, due to assiduous promotion by an array of prominent journalists, congressional Democrats, and a federal judge.

The basic conspiracy theory was that the Bush administration had paved the way for Saddam Hussein’s aggression by secretly and illegally helping Iraq arm itself, mainly by allowing it to use U.S. agricultural credit guarantees to buy weapons. Then, the theory went, the administration had covered this up both by lying to Congress and by obstructing justice in a big bank fraud case, which involved billions in loans and U.S.-backed credits to Iraq from the Atlanta branch of the Italian-owned Banca Nazionale del Lavoro (BNL). Each of these claims-disseminated through most of the nation’s major news organs-was unsupported by credible evidence in 1992 and has since been proven false.

Why write now about a two-year-old phony scandal, which has already merged in many memories with Iran-contra (a real one)? Because the false hoods and distortions that pervaded reporting and commentary about Iraqgate in 1992 were truly outrageous. Because compelling evidence of their falsity has been piling up, virtually ignored by the media. Because phony scandals like this one (and the House bank "check-kiting" scandal, and others) are a recurring phenomenon. Because the costs-which include the smearing of innocent officials of all ranks and the spread of cynicism about government, the media, and public affairs-are heavy.

And because all this suggests that the media are badly botching their fundamental job of telling the truth about major public issues, due to political bias, sloppiness with facts, and old-fashioned sensationalism.

Among those who abused their journalistic powers in Iraqgate were Safire, whose 20-odd Iraqgate columns include some of the worst yellow journalism ever to appear under such a prominent by line; Mike Wallace of CBS News’s 60 Minutes, who aired, with no hint of skepticism, outlandish charges by sources of low credibility; The Los Angeles Times, which helped start a feeding frenzy that was joined by almost the entire journalistic pack, including The New York Times (especially the editorials) and The Washington Post (ditto); and U.S. News & World Report, which popularized the name "Iraqgate" and the myth it embodied.

The media built upon and magnified reckless and unfounded claims of Bush administration misconduct by congressional Democrats, led by Henry Gonzalez (D-Texas), the flaky, fiercely partisan chairman of the House Banking Committee, and then-senator Albert Gore, Jr., who falsely accused President Bush of presiding over "a bigger cover-up than Watergate ever was," to hide a "decision by George Bush to arm Saddam Hussein."

Iraqgate conspiracy theories were also promoted by U.S. district judge Marvin Shoob of Atlanta, a would-be John Sirica presiding over the BNL case, whose error-plagued innuendos of a Justice Department cover-up and clamoring for a special prosecutor gave the scandalmania a patina of apolitical respectability.

All this had impact: "Last week," Ted Koppel (another promoter of the Iraqgate scandal) reported on ABC News’s Nightline on October 28, 1992, "a Wall Street Journal /NBC poll showed that 68 percent of the American public has major doubts about George Bush’s explanations of his administration’s role in providing aid to Saddam Hussein before the Persian Gulf war." That’s a pretty big slide from Bush’s 89 percent popularity rating immediately after the war.

BIG LIES

It was a big lie to say that Bush secretly and illegally armed Iraq. It was preposterous to say that Bush was "principally responsible" for creating Saddam Hussein’s war machine, as Gonzalez said two days before the 1992 election on 60 Minutes, with Mike Wallace prompting him. And it was the biggest lie of all to say that attorneys general Dick Thornburgh and William Barr rigged a cover up by obstructing justice, as Gonzalez (also on 60 Minutes) and Safire asserted without qualification, and as others, including Judge Shoob, The New York Times, and The Washington Post hinted more circumspectly.

The proof on the public record is compelling, though widely ignored. Some of it is in the reports of three official investigations since the 1992 election, which found no evidence of any Iraqgate crime or cover-up. More is laid out in an excellent article entitled "The Myth of Iraqgate," in the Spring 1994 issue of Foreign Policy, by Kenneth Juster, an international law partner at Arnold & Porter who was a senior official in the Bush State Department. Still more is laid out in Juster’s 114-page uncut draft.

Most significant, the Clinton administration, which campaigned on Iraqgate, has spent a year and a half combing through the record for any evidence of Bush administration crimes without finding a single shred. Justice Department lawyers led by John Hogan, a longtime close aide to Attorney General Janet Reno, have rejected a central tenet of Iraqgate conspiracy theorists by concluding that there was no Bush administration cover-up in the BNL bank fraud case. (This earned Hogan ugly attacks from Safire and from Shoob, who told Hogan in an August 1993 hearing, "Any one with any experience in the real world would know better, sir.") Two sources familiar with Hogan’s investigation say his final report, due to be made public, will show yet again that all the hype about "crimes of Iraqgate" (Safire’s phrase) was groundless.

But as the 1992 election approached, most of the nation’s major news organizations seemed intent upon spreading the impression that much of the top echelon of the Bush administration could be implicated in illegally arming Iraq and covering it up. This edifice of innuendo was erected on a foundation of factual errors and distortions that spread like a contagion; latecomers to the story, with little time to master the complex facts, followed the lead of Iraqgate conspiracy theorists like Safire-who, by September 1993, had veered into fantasies about the Clinton Justice Department joining the supposed Bush cover-up.

ENTER THE INVESTIGATIVE REPORTERS

Starting in early 1991, shortly after the Gulf War, Congressman Gonzalez made dozens of floor statements claiming that government documents (which he had gotten from the Bush administration) showed that Bush had spent years building up the Iraqi military threat and then sought to cover his tracks. But despite scattered news reports (especially in London’s Financial Times) floating these and similar charges, few in Congress or in the press initially took Gonzalez seriously; nicknamed "Gonzo" by some on Capitol Hill, he has a long record of making wild and unsubstantiated charges.

The first major blast in a leading U.S. newspaper came in a three-part series in The Los Angeles Times that began on February 23, 1992, under the headline "Secret Effort by Bush Helped Hussein Build Military Might." The reporters, Douglas Frantz (now with The New York Times) and Murray Waas (then and now a freelancer), went on to do more than 100 articles in 1992, blazing a trail down which they were followed by the rest of the media, and to win journalism awards and media critics’ praise.

The pair "drew on secret documents being gathered" by Gonzalez, as Safire later noted, and "got a good chunk of the story first." The Frantz-Waas series included some original reporting on internal Reagan and Bush administration debates about Iraq, including warnings by some officials that credit guarantees and high-tech exports should be cut off because of Iraq’s alleged abuses of these programs, uncreditworthiness, use of poison gas, and arms buildup.

But the Frantz-Waas series was also highly misleading, and littered with distortions that greatly exaggerated Bush’s assistance to Iraq. These are worth examining in some detail, since this series in The Los Angeles Times laid a foundation of misinformation on which many others were later to build.

The opening two paragraphs of the first article said:

"In the fall of 1989, at a time when Iraq’s invasion of Kuwait was only nine months away and Saddam Hussein was desperate for money co buy arms, President Bush signed a top secret National Security Decision directive ordering closer ties with Baghdad and opening the way for $1 billion in new aid, according to classified documents and interviews.

"The $1 billion commitment, in the form of loan guarantees for the purchase of U.S. farm commodities, enabled Hussein to buy needed foodstuffs on credit and to spend his scarce reserves of hard currency on the massive arms buildup that brought war to the Persian Gulf."

The other central allegation of the series was that the Reagan and Bush administrations had also "approved the sale to Iraq of $1.5 billion worth of American technology," comprising "so-called ‘dual-use’ technology…with both military and civilian applications," which "was critical to Iraq’s quest for nuclear and chemical arms."

But facts in the public record show that first, there was nothing very "secret" about Bush’s Iraq policy; second, the 1989 decision to extend $500 million (not $1 billion) in agricultural credit guarantees (not "aid" or "loan guarantees") to Iraq made no contribution whatsoever to Iraq’s military buildup, and probably had the (incidental) effect of depleting Iraq’s hard currency reserves by some $455 billion; and third, the $75 million (not $1.5 billion) in dual-use exports under Bush (and $425 million worth under Reagan), was marginal to Iraq’s $150-200 billion in military spending in the 1980s, including well over $30 billion in arms imports.

To claborate:

The heart of the Bush policy-the decision to continue agricultural credit guarantees and dual-use exports-was public all along, contrary to the implication of The Los Angeles Times. It’s true, as Frantz and Waas (and others) stressed, that the October 1989 National Security Directive (NSI)-26) in which Bush formalized his Iraq policy was originally classifed top-secret. But every detail of that policy was publicly disclosed to Congress by early 1990, excepting the language of NSD-26; the portions regarding Iraq were sent to Congressman Cionzalez. in April 1991 and declassified and made public in May 1992. Nonetheless, critics kept decrying what an October 6, 1992, New York Times editorial called Bush’s effort "to conduct (Iraqi policy surreptitiously."

(Waas responds, "I stand by my stories," and suggests, incorrectly, that portions of NSD-26 discussing Iraq were never disclosed, l’rantz declined to comment on criticisms of his lraqgate coverage, A spokesman for Howell Raines, who now heads The New York Times editorial page, said he would have no comment.)

ARMING IRAQ-WITH GRAIN

As for the "$1 billion commitment, in the form of loan guarantees" (in the words of Frantz and Waas), in fact Iraq did not get $1 billion from the Bush administration in any form. Furthermore, the "loan guarantees" were really credit guarantees, meaning that Iraq got no cash loans at all-only farm exports.

The $1 billion figure, which is repeated 20 times in the l-Frantz-Waas series, is a nice, big number. But it is a false number. While Iraq had sought over $1 billion in credit guarantees in the fall of 1989, the Bush administration agreed lo only $500 million, of which only $392 million was extended before Iraq’s August 2, 1990, invasion of Kuwait. (None of this involved BNI., whose $1.5 billion in U.S.-backed credits to Iraq were approved before the Bush administration took office.) The administration dangled the possibility of approving a second $500 million "tranche" pending further scrutiny of (and in the vain hope of moderating) Iraq’s conduct. But insistent Iraqi demands for the second tranche were never granted. Still, throughout their first article, Frantz and Waas used the $1 billion figure in a way that would mislead many readers into believing the Iraqis had received that much. (Waas responds that Iraq might have gotten $1 billion but for the invasion.)

An unusually careful reader of the first Frantz-Waas article might have deduced from the twenty-fifth paragraph (and later pieces) that the "$l billion" at the top had been misleading. But that twenty-fifth paragraph itself was also misleading: "As late as July 1990, one month before Iraqi troops stormed into Kuwait City, officials at the National Security Council and the State Department were pushing to deliver the second installment of the $1 billion in loan guarantees, despite the looming crisis in the region."

That assertion-later repeated by The New York Times, The Washington Post, and others-is contradicted by documents that have since become public, showing that by April 1990 the State Department had joined others in the Bush administration in spurning Iraqi requests for the second tranche.

Frantz and Waas also claimed there was "evidence that Iraq had used the aid illegally to help finance a secret arms procurement network to obtain technology for its nuclear weapons and ballistic missile program." Many journalists and Democrats went even further in misleadingly equating the agricultural guarantees with cash handouts that Iraq spent on weapons:

In the May 18, 1992, U.S. News & World Report cover story, headlined "lraqgate: How the Bush Administration Helped Finance Saddam Hussein’s War Machine with American Tax Dollars," Brian Duffy and Stephen Hedges wrote: "Iraqi representatives secured loans for commodities purchases at prices far above prevailing market rates. By paying commodities suppliers less than the amount borrowed, Iraqi representatives were left with millions of dollars in excess profits, [some of which were] used to finance weapons research and purchases," including "improved Scud missiles and nuclear engineering."

ïIn his July 3, 1992, column, A.M. Rosenthal of The New York Times asserted that "the U.S. gave [Saddam Hussein] loans [that were] used by Saddam to help him buy missile power and nuclear technology." (Rosenthal says now, "Money is fungible. What I was really saying was that the fact that we supported him in a variety of ways enabled him to buy arms.")

ïIn an October 6, 1992, editorial, The New York Times suggested that the Rush administration may have illegally allowed Iraq "to divert bank loans, backed by U.S. commodity credits, to pay for the arms purchases."

ïAnd in a September 29, 1992, speech, Albert Gore asserted that Bush "gave to Saddam Hussein" $1.9 billion and that "Saddam was using our dollars to buy weapons technology.

But in fact, as detailed in Kenneth Juster’s Foreign Policy article, such allegations were based on a fundamental mischaracterization of the nature of the Agriculture Department’s credit guarantee program-which is not so much foreign aid as a spur to U.S. farm exports: Foreign buyers like Iraq received no U.S.- guaranteed cash at all from the banks. Rather, banks were induced by the U.S. guarantees to provide credit to Iraq (which would otherwise have been a bad risk), in the form of payments by the banks to U.S. exporters for grain, rice, and other foodstuffs to be sent to Iraq, which would then have three years (in most cases) to pay down its debt to the banks.

So if was, quite literally, impossible for Iraq simply to take U.S.-guaranteed "loans" and use them to buy weapons instead of grain.

Allegations that Iraq had nonetheless diverted credits to buy arms through various strategems were widely reported in early 1992 by The Los Angeles Times, The New York Times, U.S. News, and others. Partly on the basis of speculation in leaked government documents, these organizations suggested that Iraq bartered U.S. grain for arms and bought arms with kickbacks that the Iraqis demanded from U.S. farm exporters and middlemen, who generated cash by charging inflated prices and obtaining excess profits.

But even if such bartering occurred, which has never been proved, there is no evidence whatsoever that the U.S. consented to it. And while there were almost $2 million in kickbacks, according to Agriculture Department audits, there is no evidence either that they mounted into the "hundreds of millions of dollars" (as U.S. News asserted) or that Iraq used them to buy arms. Nor is there a shred of evidence that "Bush…knew that Saddam was using the money, or bartering our grain, to buy and develop weapons of mass destruction," as Safire wrote in an especially outrageous fabrication.

(Safire declined to address such criticisms point by point, saying, "I’m glad I wrote what I wrote, and it you dish it out, you have to expect to take it, and it’s a free country. Go ahead and take your pop.") (As for Duffy of U.S. News, he responds that the "pathetic" Agriculture audits had vastly understated the kick-backs; that they had been described by "multiple sources" as a source of cash for Iraq’s arms program; that he had alleged only "mismanagement," not a Bush plot to arm Iraq; and that in order "to make it as uncomplicated as possible for readers, possibly we erred somewhat" by failing to specify that U.S.-backed loans did not go directly to Iraq.)

ERRORS IN ARITHMETIC

Even more fundamentally, the major premise of both the Frantz-Waas series and the entire Iraqgate scandal-that Bush administration agricultural credits freed Iraq’s "cash reserves to finance the massive arms buildup"-was contradicted by one simple, public record fact that I hadn’t seen in print until Juster reported it this spring:

During fiscal year 1990-the only time the Bush administration extended agricultural credit guarantees to Iraq- Iraq made some $847 million in hard currency repayments of previous credits to U.S. banks, while receiving only $392 million in new credits. So in the months before Saddam Hussein’s tanks rolled into Kuwait in August 1990, Iraq’s payments exceeded its new credits by some $455 million. Bush’s decision to extend $500 million in new guarantees (and Iraq’s hope for more) thus had the paradoxical effect of reducing the cash available to Iraq in 1990. For if Bush had cut off all new guarantees (as critics like Frantz and Waas suggested he should have), Iraq would probably have fulfilled its threats to default on old credits (as Frantz and Waas reported).

As a matter of simple arithmetic, this excess of Iraqi payments over new U.S. guarantees obliterates the central Frantz-Waas thesis that Bush augmented Iraq’s currency reserves. (Waas rejects this logic as "specious.’)

Of course, during the early years of the credit guarantees, which totaled $5 billion from 1983 through 1990, Iraq probably did save some hard currency. Anytime anyone buys anything on credit, he may thereby free up some of his own money for other purposes-until the debt comes due. But this was also obvious at the time, and relatively un-controversial, because it was consistent with the Reagan administration’s pro-Iraq "tilt" during the 1981-1988 Iran-Iraq war. That policy enjoyed bipartisan support because of concerns that Iran’s militant, America-hating regime would, if victorious over Iraq, threaten the world’s oil lifeline. And by the time the Iran-Iraq war ended in August 1988, Iraq’s repayments were catching up with its new credits.

("The amount of loan guarantees steadily increased each year," Frantz and Waas asserted, falsely. The official numbers: $1,113 billion in fiscal 1988; $1,088 billion in fiscal 1989; $500 million-of which only $392 million was extended-in fiscal 1990.)

It was fair game to criticize the Bush administration for approving new guarantees despite some officials’ warnings that Iraq was not creditworthy, that it might have abused the program by demanding kickbacks and possibly bartering food for arms, and that it might well be implicated (as Iraqi officials later were) in the BNL bank fraud case.

But it was unfair for Frantz and Waas, Gore, and many others to lay at Bush’s door the fact that U.S. taxpayers got left holding the bag for the $2 billion in outstanding guarantees on which Iraq defaulted after its invasion of Kuwait had led to U.S. economic sanctions. In fact, had Bush shut off the program in 1989, the bag would have been larger.

The errors and distortions about the agricultural credit guarantees in the Los Angeles Times series were replicated by many others through the year. For example, in the October 26, 1992, issue of U.S. News, Duffy and Hedges summarized the "worst controversy of George Bush’s presidency" as follows:

"The details of the Iraqgate scandal are complicated, but the essence of the story is really quite simple. After a well-reasoned policy of quietly assisting Iraq during its eight-year war with Iran, George Bush continued to provide billions of dollars in loans to Saddam Hussein after the war with Iran ended in 1988. Despite evidence that Iraqi agents were stealing some of the American loan money and using it to buy and build biological, chemical, and nuclear weapons, the Bush administration increased the amount of the loans. Even after the discovery of the $5 billion in fraudulent BNL loans-some $2 billion of which was guaranteed by American taxpayers-Bush and Secretary of State James Baker continued to push the loan program right up until the day Iraq invaded Kuwait."

I count six errors in that brief passage: Bush didn’t provide any "loans" to Iraq; he didn’t provide "billions" even in credit guarantees (he extended $392 million); his administration didn’t increase the "loans" (it decreased the credit guarantees); there were not $5 billion in fraudulent BNL loans to Iraq (there were $4 billion in unauthorized loans and credits); U.S. taxpayers did not guarantee $2 billion in BNL loans (they guaranteed $1.5 billion in BNL credits, all before Bush became president); and 3ush and Baker did not push the program up until the invasion.

In addition, of course, there was no lard evidence that any U.S.-backed credits-BNL or otherwise-were ever diverted to buy weapons.

HIGH-TECH EXPORTS

As for dual-use exports, it’s true; that Bush, like Reagan, permitted U.S. companies to sell Iraq trucks, computers, machine tools, and other high-tech equipment that could be turned to military as well as civilian purposes. It’s also true that some such exports were allowed despite well-founded warnings by career officials that Iraq might divert them (illegally) into its programs to develop nuclear and chemical weapons and missiles. Reagan and Bush could fairly be criticized for blindness to such risks in their push to cultivate Iraq as a market and a potential ally.

But the U.S. did bar all arms exports to Iraq, and enforced the toughest restrictions on dual-use exports of any industrial power. And the policy of allowing some such exports was quite public and pushed by (among others) many Democrats in Congress.

While ignoring these facts, critics greatly exaggerated the Bush dual-use contribution to the Iraqi war machine. In asserting that the Commerce Department had "approved the sale to Iraq of $1.5 billion worth of American technology," for example, Frantz and Waas neglected to mention that only some $500 million in such dual-use exports had ever been shipped. (Iraq had canceled a $1 billion truck order.) Nor did they mention that most of these were during the Iran-Iraq war, and only $75 million worth were shipped under Bush. (Waas says he may not have known these facts.)

Such vast exaggerations of the dollar volume of dual-use exports to Iraq were rampant. The June 8, 1992, Newsweek, for example, said, "Iraq-gate’ involves the sale of billions of dollars’ worth of militarily useful U.S. technology to the Iraqi government."

Even assuming (implausibly) that all such exports were diverted to Iraq’s military, U.S. dual-use exports were relatively minimal additions to the Iraqi war machine-into which Iraq had poured $150-200 billion during the 1980s, including $30 billion in arms imports from 1984 to 1988 alone, according to Anthony Cordesman’s Iran and Iraq: Threat from the Northern Gulf. (Almost all came from the former Soviet bloc, China, and Europe.) And-contrary to a claim in The Los Angeles Times (echoed elsewhere) that the Bush administration sent "massive aid and support to Baghdad until virtually the eve of the invasion of Kuwait"-Saddam Hussein complained to the State Department in July 1990 that there was "nothing left for us to buy from America …only wheat. Because every time we want to buy something, they say it is forbidden."

AN IRAQGATE/BNL COVER-UP?

Building on their suggestions that Bush had secretly armed Iraq, the Frantz-Waas team added a new claim in a March 8, 1992, piece-that the administration was covering up its wrongdoing. Like Gonzalez’s charges, the initial Frantz-Waas cover-up claims focused on a few arguably misleading official responses to congressional inquiries and on the administration’s interagency process for screening materials sought by Congress, which caused delays in document production.

At worst, these responses were a few tainted drops in a huge bucket of accurate responses by senior officials from several agencies, which also (eventually) produced boatloads of documents. Democrats in Congress darkly suggested that they had been criminally misled by Clayton Yeuttet, Bush’s agriculture secretary, and Yeutter’s undersecretary, Richard Crowder. But the challenged statements were well within the tradition of literally accurate answers that deflect flaccidly framed congressional questions rather than answering them head-on. They were nowhere near the line of criminal duplicity-as the Justice Department (under Clinton as well as Bush) was to conclude.

The actions of Dennis Kloske, an undersecretary of commerce, were closer to the line. These included changing draft submissions to Congress to downplay the potential military use of $1 billion in truck exports that were licensed but-contrary to many news reports and two New York Times editorials-never shipped. But the Clinton Justice Department found in April 1993 that there was no basis for prosecuting Kloske or anyone else for these alterations.

As 1992 progressed, the cover-up claims mushroomed to include full blown fantasies of a high-level obstruction-of-justice conspiracy in the BNL case. These claims were based on the additional fantasy that there was something big to hide: that the huge Italian-government-owned bank had been part of a U.S.-Italian plot to arm Saddam Hussein.

Nobody (other, perhaps, than Gonzalez) did more to spread these allegations than Marvin Shoob, the federal judge hearing the BNL case, who gave the scandalmania an ostensibly apolitical imprimatur, and William Satire, whose credentials as a conservative Republican gave his Iraqgate Bush-bashing a patina of bipartisanship.

In 13 Iraqgate columns in the six months preceding the 1992 election and about ten more since, Safire recklessly smeared both career prosecutors (the "corrupt criminal division") and top officials (like "cover-up General [William] Barr"), while making false statements of fact by the dozen. For such feats he was lionized as "one of the most respected and influential columnists in Washington," in the words of Los Angeles Times media critic David Shaw.

Safire’s first Iraqgate column, on April 27, 1992, described "Bush’s Lavoro Scandal as "an election-year Watergate" upon which Democrats should seize. He claimed that "the Bush Justice, State, and Agriculture Departments impeded the investigation [of BNL]…The Bush administration manipulated the prosecution to avoid embarrassment to Saddam and more recently to itself." Safire also asserted that the BNL indictment was delayed "for political purposes’ and that "key conspirators went unindicted" because "justice was obstructed by officials carrying out Mr. Bush’s disastrous [policy]." A few months later, Satire was writing: "Never before in the history of the Republic, in my opinion, has the nation’s chief law enforcement officer been in such flagrant and sustained violation of the law."

False. All of it.

BNL: FACTS AND MYTHS

It was the BNL case that transformed Iraqgate from a garden-variety election-year flap into the mother of all phony scandals. Gales of publicity were generated by House committee hearings in May and June 1992-with Democrats reveling in scandalmania and Gonzalez demanding Bush’s impeachment-and by Judge Shoob, who began calling on June 2 for a special prosecutor to investigate the supposed BNL cover-up.

The BNL case was a perfect vehicle for conspiracy theories. It combined billions of dollars-some of which apparently did go into Iraq’s war machine-with international intrigue, superficial implausibilities in the prosecution’s account of the facts, and such complexities as to sow confusion even among careful journalists.

The case began on August 4, 1989, when federal agents (acting on a tip from two BNL/Atlanta employees) raided the Atlanta branch and hauled away documents showing that branch manager Christopher Drogoul and his 18 subordinates had provided $4 billion worth of loans and credits to Iraq (along with $1.9 billion to other countries) with neither the required disclosures to U.S. regulators nor the required approvals from BNL’s headquarters in Rome (BNL/Rome).

About $2.5 billion of this total were direct BNL loans to Iraq, with money raised by BNL/Atlanta on the interbank market, some of which Iraq used (unbeknownst to U.S. officials) to buy military technology. Another $1.5 billion involved agricultural credits that the U.S. had guaranteed from 1984 through 1988; these did not involve cash loans to Iraq, were approved before Bush became president, and have never been shown to have been diverted to buy arms.

Many journalists never grasped the distinction between direct loans and U.S.-backed agricultural credits, and suggested that the BNL case involved Iraq using $4 billion ($5 billion, some said) in U.S.-guaranteed cash loans to buy military technology. From this false premise, conspiracy theorists proceeded to the false conclusion that U.S. officials must have known.

Contrary to myriad news reports, there was nothing inherently "illegal" about BNL lending to Iraq, or even about Iraq using BNL/Atlanta loans to buy weapons outside the U.S. The clearest illegality was the concealment of these transactions- which greatly exceeded BNL/Atlanta’s lending limits under BNL/Rome policies-from U.S. banking regulators and BNL’s auditors. This involved elaborate strategems by Drogoul and his BNL/Atlanta subordinates. The eventual February 1991 indictment alleged that BNL/Rome was the primary victim of the scheme and had not authorized Drogoul’s actions in any way.

Drogoul was also charged with taking millions in kickbacks from a Turkish trading company in the case, and with tax fraud. Indicted along with him were five other BNL/Atlanta employees, four high-level Iraqi officials who allegedly had conspired with Drogoul to take unauthorized loans, the Iraqi-owned Rafidain Bank, and two other defendants.

These charges were hyped as "the mother of all indictments" by Attorney General Dick Thornburgh at a February 28, 1991, press conference, the day after the Persian Gulf war ended. The 347 counts were an example of prosecutorial piling on that could have brought Drogoul a grossly excessive life-without-parole sentence. And the hype was later to blow up in Thornburgh’s face.

A CHAIN OF WEAK LINKS

The BNL scandalmania hung from a chain of four links, which ranged from debatable, to weak, to weaker, to weakest. The first link was the plausible but unexciting claim that Christopher Drogoul and his subordinates could not have pulled off the fraud in Atlanta without the complicity of some BNL/Rome officials. Even if true, this would hardly show wrongdoing by the Bush administration. Nor-contrary to a hopelessly confused December 10, 1992, Washington Post editorial-would any such evidence have "cleared" Drogoul of defrauding BNL or his other crimes.

The second link was the less plausible claim that Drogoul’s alleged accomplices were not just people acting for personal gain, but rather were BNL/Rome’s top management and the Italian government. No convincing theory has been suggested why BNL/Rome would have condoned Drogoul’s transactions with Iraq, which were almost certain to bring BNL huge losses because of giveaway interest rates, tiny profit margins, and a very high risk of default.

The third link was the claim that the White House had also known of BNL’s loans to Iraq, and had encouraged them as a "corruption of Agriculture’s loan guarantee program to help slip foreign aid billions through [BNL] to Saddam Hussein, which he used to finance his secret nuclear buildup," in William Safire’s words. There was never a shred of evidence of this. But the claim persisted.

The fourth link was the bold and utterly groundless claim-asserted by Gonzalez, Safire, and others, and floated more circumspectly by Judge Shoob and leading newspapers including The New York Times, The Los Angeles Times, and The Washington Post-that the Bush Justice Department had obstructed justice in the BNL case, with Drogoul as the fall guy, to hide the supposed BNL/Rome role and BNL-Italy-U. S. conspiracy to finance Iraq’s arms buildup.

To compensate for the weakness of the other links in this chain, promoters of BNL conspiracy theories focused on the first link-the claim that Drogoul could not have been "a lone wolf," as Shoob and Mike Wallace of 60 Minutes like to put it. But even this first link wasn’t very strong.

To be sure, the "BNL-as-victim" theory met with skepticism not only from Shoob, Gonzalez, and many journalists, but also (initially) from Justice Department lawyers in Washington; they pressed the Atlanta prosecutors for over a year to probe more aggressively for any evidence of BNL/Rome knowledge. But no convincing proof turned up. And the prosecutors, drawing on detailed documentary evidence and interviews, cogently defended their theory by stressing Drogoul’s elaborate efforts to cover his tracks; his repeated admissions-against-interest that he had never disclosed his actions to anyone outside BNL/Atlanta; lax internal controls at BNL; and BNL/Atlanta’s ability to raise billions in loans for Iraq on the interbank market without attracting attention.

Eventually the professionals at Justice accepted the BNL-as-victim theory, without ruling out the possibility that Drogoul may have had one or more accomplices in Rome. That theory also ended up being endorsed by retired federal judge Frederick Lacey, who reviewed the matter as special counsel to the Bush Justice Department, and by the Clinton Justice Department, which had every incentive to seek evidence vindicating the Clinton-Gore campaign’s cover-up charges, but found none.

Rather than crediting Justice for its thoroughness, the Iraqgate conspiracy theorists went from (1) savaging Justice for "delaying prosecution" of Iraqi officials in the BNL case by the "obfuscation" of searching for any evidence that "the Italians at bank headquarters were the real villains" (as Safire did on June 25, 1992), to (2) inconsistently attacking Justice officials for "averting their eyes from CIA data showing BNL/Atlanta was in cahoots with Rome higher-ups" (as Safire did on February 11, 1993).

JUDGE SHOOB- A SIRICA WANNABE

The white-haired Judge Shoob, then 69, seemed to confer great credibility on the conspiracy theories. His assets included a courtly demeanor, a reputation as a liberal crusader brimming with rectitude, and a willingness to return reporters’ phone calls. And Shoob knew his case- or So, at first, it seemed. "Judge Shoob I understands the Lavoro case the way Judge Sirica understood the Watergate case," Safire wrote.

But in fact Judge Shoob’s public statements suggesting a BNL cover-up, and impugning the integrity of the prosecutors and other officials, were littered with gross factual errors. These were soon exposed by the prosecution, but widely ignored by the media.

Shoob catapulted himself into the I headlines at a June 2, 1992, hearing, packed with reporters, on the plea bargain that the lawyer for Christopher Drogoul, the head of BNL’s Atlanta branch, had just reached with the Atlanta prosecutors. It included a guilty plea to 60 of the indictment’s 347 counts, with Drogoul admitting that he and his subordinates at BNL/Atlanta had defrauded BNL/Rome by lending billions to Iraq without authorization.

It was a terrific deal for the prosecution: Under the federal sentencing guidelines, Drogoul would still get life without parole unless, before sentencing, he could convince both the prosecution and Judge Shoob that he had disclosed everything he knew implicating others, and thus deserved a reduction from the guideline sentence.

But Shoob smelled a rat. Certain that Drogoul could not have loaned billions to Iraq without high-level help, the judge voiced suspicion that there had not been "full disclosure here either by the government [or] the defendant"; that the prosecution was muzzling Drogoul to give a "sanitized" account; and that it would rig his debricfings to produce "a sanitized version at the time of the sentence." Shoob stressed that "a special prosecutor ought to get into this whole matter, because [otherwise] … I will have no way of knowing what sort of disclosure has been made to the government."

The judge was not assuaged by career prosecutor Gale McKenzie’s assurances that he would get transcripts of all Drogoul debriefings. Nor by the assurance that Drogoul’s counsel, Sheila Tyler, would be present to ensure he could say what he wished. Nor by the insistence of both McKenzie and Tyler that they had not "sanitized" anything. Nor by the fact that McKenzie invited Drogoul at the June 2 hearing-nine times-to make any statement he wanted, then and there.

When Shoob pressed Drogoul to reveal whether he had "had the blessings of" BNL/Rome or U.S. officials, the answer was not what the judge was looking for: "I think I can say straightforward that I did not have formal approval from the bank in Rome, and I did not have discussions with any Washington official about these matters." While Drogoul’s demeanor was flip and evasive, and while he did suggest vaguely that perhaps some "substantial people" should have known what he was up to, he denied ever having told anyone; he admitted his guilt on the 60 counts; and he said that "I am not protesting my innocence" and "the loans were unauthorized."

Shoob threatened to throw the book at Drogoul unless he changed his story before coming back for sentencing: "I don’t believe for a minute that you . . . were able to do all these things and handle all these complex transactions on your own. . . . There are other people involved who are equally culpable." Addressing Tyler, the defense lawyer, Shoob added: "When it comes time to sentence him, if I get a sanitized version of what took place, he is never going to get out of jail."

It should thus come as no surprise that three months later, at his (first) sentencing hearing, Drogoul and a new lawyer said what Shoob wanted to hear, repudiating Drogoul’s prior admissions of guilt and claiming-for the first time-that three high-level BNL officials had encouraged him to lend billions to Iraq.

SHOOB FUMBLES THE FACTS

To explain his suspicions that the fix was in from Washington, Shoob cited the unremarkable fact that the plea deal had been struck just days before the June 2, 1992, hearing, and relied heavily on several assertions that were soon to be proven erroneous. Among them: (1) McKenzie, the lead Atlanta prosecutor, "had not participated in the negotiations that resulted in the late plea bargain"; (2) the deal had been "initiated" and "arranged" by another prosecutor named Randy Chartash; and (3) Chartash had "recently arrived from the Department of Justice in Washington."

Wrong, wrong, and wrong, as Shoob was told by McKenzie and Chartash at a June 16 conference in chambers: (1) McKenzie said she had participated actively in the recent plea negotiations, and stressed that "there has been no political pressure brought to bear on me"; (2) The negotiations were "initiated" not by Chartash, but by Drogoul’s counsel, Tyler, in a May 1 5 letter that McKenzie had answered the next day by proposing the 60-count plea that Drogoul later accepted; and (3) Chartash had left Justice (where he had been a civil division trial attorney) in 1986, for a Washington law firm.

Shoob also claimed that Tyler, Drogoul’s counsel, had told him, in ex pane conversations before the June 2 hearing, that Drogoul feared his information would be "suppressed, concealed, or stonewalled" by the prosecution unless he had a chance to tell all by reading in open court a lengthy statement that he was preparing. Wrong again, Tyler told Shoob on June 16: "1 don’t recall telling you that the information would be suppressed." She said Dfogoul’s only reason for wanting to make a statement in court, to Judge Shoob, had been concern that otherwise, the prosecutors might "get the information and not make the motion for the downward departure."

Shoob’s suspicions proved immune to factual correction, however. At the June 16 hearing, he added a new innuendo: "My sense is there is an effort here to extend the sentencing hearing until after the elections." Suspecting a plot to deny ammunition to the Democrats, Shoob vowed to thwart it by holding the hearing before the elections.

(In a recent telephone interview, Judge Shoob conceded his error about Chartash’s background; insisted that McKenzie "was not a party to the |plea] agreement" and that Tyler had warned of a cover-up; and stressed that "there is no way [Drogoul] could have orchestrated this whole thing.")

Finally, in an effort to acquaint the judge with reality, Tyler urged Shoob to satisfy himself by questioning Drogoul in person. The judge declined, saying he did not know enough "to conduct an intelligent examination."

Shoob evidently thought he did know enough, however, to create a media sensation by slurring the integrity of (among others) Justice Department officials ranging up the ranks from McKenzie and Chartash to Attorney General Barr, and by floating the innuendo that they were all conspiring to muzzle Drogoul.

The media paid little (if any) attention to Judge Shoob’s problems getting his facts right. Instead, they portrayed him as a straight shooter bent on purging politics from this prosecution. But some former officials (who insist on anonymity) say the one being political was Shoob, a Jimmy Carter appointee who is friendly with Democratic political figures, and whose actions delighted Democrats hoping to beat Bush. Shoob now says "the election had absolutely nothing to do with it."

While Shoob was making headlines from Atlanta, Democrats were stepping up their attacks in Washington. On July 9, 1992, those on the House Judiciary Committee formally urged Attorney General Barr to seek a court-appointed special prosecutor to investigate unspecified allegations of wrongdoing by unnamed "high-ranking officials of the executive branch … to illegally assist the regime of Saddam Hussein . . . and to attempt to conceal information about potential criminal activity from Congress." This politically tinged request was quickly backed by editorials in publications including The Washington Post.

Barr said no on August 10, 1992, supported by a comprehensive, 97-page report by career prosecutors in the Public Integrity Section, which (Ban-stressed) represented the unanimous view of the many prosecutors involved. The report carefully reviewed every allegation to which the Judiciary Demo crats had alluded, showed that there was not a scrap of credible evidence of any crime by any high-level official, and shredded the feeble reasons invoked by Shoob and others for seeking a special prosecutor.

But such details were not about to slow down the scandal bandwagon that rolled into the fall of 1992. Barr was widely denounced as lawless. Saifire wrote that lie "has taken personal charge of the cover-tip," including "coaching Dragoul [sic] on what not to say." A Washington Post editorial later called Barr "the leading suspect in the BNL, affair."

One scandal-scarred member of what Safire called Ban’s "corrupt crew" recalls: "To wake up in die morning, and read on the front page of The New York Times and The Washington Post that you’re involved in a high-level criminal conspira-cy-its Kalkaesque; you feel like you’re a cockroach or something." This lawyer requested anonymity, for fear of journalistic retribution.

SHOOB THE "ED WILLIAMS OF THE SOUTH

As Drogoul’s September 1992 sentencing hearing approached, he changed lawyers, replacing Sheila Tyler (his fourth, of seven) in late August with Bobby I.ee Cook, who agreed to work for free. The well-known Summerville, Georgia, trial lawyer was touted by Safire as "the Ed Williams of the South." Cook also happened to be a leading contributor to Democrats, including $1,500 to the Clinton-Gore ticket. And he had been friendly with Shoob for over 40 years. (Cook defended Shoob’s brother-in-law, unsuccessfully, in a January 1994 corruption trial.)

On September 2 a fellow inmate of Drogoul’s at the Atlanta Penitentiary named Anthony Flowers-who forecast some developments in Drogoul’s case with remarkable accuracy-wrote in a letter to prosecutor McKenzie:

"Mr. Drogoul states that his defence [Sic] does not want Republican President Bush reflected. It is a defence [Sic] ploy to protract the September 14 sentencing date, so that Mr. Bush will continue to receive negative publicity concerning the Italy bank scandal, arms to Iraq. . . . Mr. Drogoul informs me that Judge Shoob is a Democrat and that his new attorney Bob Cook is a Democrat. Also, with their combined powers, you are not needed for a recommendation for the sentencing departure." (Cook rejects these innuendos, saying, "The purpose of the defense was to defend him; it had nothing to do with politics.")

The sentencing hearing stretched from September 14 until October 1, providing ample grist for the scandal mill. Cook theatrically proclaimed this "the mother or all cover-ups," saying that "the government has attempted to suppress the truth, and to substitute "sanitized" (borrowing Shoob’s word) facts. With Shoob chiming in that the prosecution wasn’t giving him "all the facts," Cook painted Drogoul as a pawn in a plot to funnel money to Iraq, and as the fall guy in a U.S.-BNL cover-up.

These claims, and Drogoul’s subsequent testimony that top BNL/Rome officials had explicitly approved his loans to Iraq, contradicted not only Drogoul’s sworn statements at the June 2 plea bargain hearing, but also his dozens of previous statements to prosecutors and his own former defense lawyers, in interviews, debriefings, and memoranda, from August 1989 until early August 1992.

But you wouldn’t have learned any of that from the September 20, 1992, 60 Minutes program, which featured Mike Wallace introducing Drogoul as a man who "told us he’s . . . the fall guy, taking the rap" for helping the U.S. help Saddam Hussein. Wallace lobbed Drogoul and Cook softballs like this: "Are you saying, Mr. Cook, that the United States armed Iraq, effectively, . . . and that BNL financed that rearming of Iraq, and that is what they’re trying to cover up?" The answer: "With the full knowledge of the American government, and that’s what they’re trying to cover up."

I asked Wallace and his producer, Lowell Bergman, why there had been no mention in this program of the many previous, contrary statements by Drogoul, by his former lawyer Tyler, and by other former Drogoul lawyers who said he had no evidence of any such grand conspiracy. Wallace stressed (incorrectly) that Drogoul had "never given an interview" before. Tie also noted (correctly) that the Italian government had lobbied the Bush administration to keep a lid on the BNL scandal. Bergman said that Drogoul had told him that Tyler "and the government people did not want to hear the story that he had to tell."

FIASCO: A GIFT TO THE DEMOCRATS

Meanwhile, Drogoul, Cook, and the Democrats gunning for George Bush were handed an enormous gift by their adversaries, in the form of a stunning succession of CIA and Justice Department blunders that fanned the cover-up allegations into a raging fire.

On September 14, 1992, the day the Drogoul sentencing hearing started, Gonzalez claimed on the House floor that the CIA had evidence showing BNL/Rome complicity in Drogoul’s crimes. He quoted a CIA analyst’s written "comment," based on raw intelligence reports, that CIA sources had provided "confirmation of press allegations that more senior BNL officials in Rome had been witting of BNI./Atlanta’s activities."

This contradicted what the prosecution was telling Judge Shoob, and Cook made the most of it. The CIA bombshell caused a media sensation-and consternation at the Justice Department; amazingly, Justice had never seen the analyst’s "comment," which the CIA had shown to Gonzalez’s staff almost a year before. As officials scrambled to find out what else the CIA had not told them and the prosecution team, more CIA documents kept turning up; some of them had been lost in the Justice bureaucracy without reaching the BNL team.

Tense CIA-Justice discussions about what had gone wrong and how to fix it led to a succession of bureaucratic blunders that only made things worse. These culminated in CIA testimony on October 8, in closed Senate Intelligence Committee hearings, that left some senators with the impression that Justice had pressured the CIA to mislead the public and Judge Shoob by implying that nothing (other than news articles) in the CIA’s files suggested possible BNL/Rome complicity with Drogoul.

Justice Department lawyers angrily denied any improper pressure. Then, on October 10, FBI director William Sessions told senators he would conduct an independent" investigation of Justice and the CIA. This infuriated Barr. "The next day, word leaked out that Justice was investigating Sessions for alleged (unrelated) ethical lapses. It looked like a shot fired across Sessions’s bow-even though the ethics inquiry was months old, and ended up getting Sessions fired, by President Clinton.

The CIA-Justice-FBI feuding put the media on full scandal alert. People found it hard to believe that such a messy tangle in such a high-profile case could be the result of mere bureaucratic bungling. The New York Times led the front page on October 10, 1992, with the headline: "Justice Department Role Cited in Deception on Iraq Loan Data." Washington Post columnist Jim Hoagland wrote the next day: "That Bush is tolerating a cover-up on Iraq . . . can no longer be seriously doubted." But the proof is in the pudding. And it turned out that the raw, classified CIA reports on BNL-on which this whole flap was based-didn’t amount to much. "The whole world was coming down," recalls a career official with Democratic leanings, "and all because somebody neglected to give somebody else a copy of some documents that had nothing interesting in them anyway." Justice Department lawyers (under Clinton as well as Bush) found that the CIA reports underlying the analyst’s "comment" contained only informants speculation and gossip-of little value either as evidence or as investigative leads-along with recycled news clips. The Democratic-controlled Senate Intelligence Committee’s staff agreed in February 1993, in a 163, page report that attributed the CIA-Justice flap to a series of blunders rather than a cover-up conspiracy. So did retired judge Lacey, acting as special counsel to Barr.

PROFILES IN CONFUSION

Iraqgate misinformation and conspiracy theories reached a crescendo in the weeks running up to the November 3, 1992, election.

In Judge Shoob’s courtroom in Atlanta-where, by late September, Drogoul was protesting his innocence and the "sentencing hearing" had become a circus, with Cook as ringmaster-prosecutors consented on October 1 to let Drogoul withdraw his 60-count guilty plea. (Ultimately, in September 1993, Drogoul entered a new, three-count plea bargain with the Clinton Justice Department, under which he is due to go free this December, after less than 33 months in prison. That was a very sweet deal for a man who had compounded his original crimes by lying repeatedly under oath. But that’s another story.)

On October 5, while agreeing to recuse himself from Drogoul’s case because of his "tentative conclusions" against the prosecution, Shoob fired a parting shot. "Decisions were made at the top levels of the United States Justice Department, State Department, Agriculture Department, and within the intelligence community to shape this case," Shoob wrote, suggesting that prosecutors had been blocked "by agencies with political agendas from developing a full picture of this affair," and that the BNL-as-victim theory had been concocted "to avoid embarrassing a foreign government or to contain criticism of a failed foreign policy." Like previous Shoob statements, this opinion was later shown by prosecutors to be full of demonstrable factual errors.

Meanwhile, vice-presidential nominee Gore, among others, was making Iraqgate a major campaign theme. "George Bush wants the American people to see him as the hero who put out a raging fire," Gore declared in a 40-minute speech on September 29, 1992. "But new evidence now shows that he is the one who set the fire." Recycling Iraq-gate charges by Gonzalez, Safire, and others, Gore’s attacks were replete with falsehoods.

Among them, Gore asserted in his speech that Iraqgate involved "$1.9 billion [that] President Bush gave to Saddam Hus-sein" and that "Saddam was using our dollars to buy weapons technology." On October 25 he added his claims that "this is a bigger cover-up than Watergate ever was," to hide "the decision by George Bush to arm Saddam Hussein." (Gore did not respond to a letter seeking his comment on my criticisms.)

If Gore was confused, he was far H from alone. Several editorials in The New York Times, for example, confounded the elementary facts of the Iraqgate controversy. For example, an October 14, 1992, editorial said: "Crimes also were committed as the United States favored Iraq with loan guarantees to pay for food. The money was diverted to military purposes and government records were doctored to disguise the transactions." The (anonymous) editorialist apparently did not understand (among other things) that the guarantees were unrelated to the allegedly doctored records, which involved dual-use exports. Other whoppers in Times editorials included the assertion that "the Bush administration [conducted an] effort to arm Iraq months before the invasion of Kuwait" and the suggestion that there was evidence that "in the months leading up to Iraq’s invasion of Kuwait, the Bush administration secretly underwrote a good chunk of the $5 billion lent to Saddam Hussein to buy the makings of nuclear and chemical arms in the U.S." (Where the Times got this "$5 billion" is a mystery.)

ANOTHER 60 MINUTES EXCLUSIVE

Two days before the November 3, 1992, election, the first thing you would have heard had you watched CBS News’s 60 Minutes would have been this exchange:

Mike Wallace: "What I hear you saying, Mr. Chairman, is that Dick Thorn-burgh, when he was attorney general, and William Barr, now that he is attorney general, have been involved in obstruction of justice."

Congressman Gonzalez. "Yes, sir."

Wallace: "Obstruction of justice?

What was the White House trying to hide?"

Gonzalez: "That terrible skeleton in the closet or skunk in the closet that they can’t hide, showing that they were principally responsible for arming Saddam Hussein."

Wallace went on to present Gonzalez as almost the voice of revealed truth, giving no hint of his notoriety as a fount of outlandish charges. The two of them did a 20-minute tag-team number on the Bush administration that was littered with distortions.

Asked whether he believed Thornburgh and Barr had obstructed justice, Wallace says, "It has nothing to do with what I believe…. I would be remiss if I failed to report what the chairman of the House Banking Committee said." He also stressed that this was the first television interview of Gonzalez (who had been flogging Iraqgate for months to anyone who would listen); noted Shoob’s alarums; suggested that nobody could believe Drogoul had been a "lone wolf"; said the election did not affect the program’s timing; and claimed his own remarks had been true.

AFTERMATH: WHACK-A-MOLE

Any journalist-or judge-who took the (substantial) time necessary to study the evidence on the public record in 1992 should have been able to discern that there wasn’t much beef in this gigantic scandalburger.

And by now, the phoniness of Iraq-gate has been successively confirmed by the massive report released by Frederick Lacey in December 1992; by the even more detailed report of the Senate Intelligence Committee staff in February 1993, which found no evidence of any crime by any U.S. official, or of CIA involvement in BNL loans or Iraqi arms purchases; by CIA inspector general Frederick Hitz’s report released the same day, which also found no evidence of deliberate wrongdoing; by the Clinton Justice Department; and by U.S. district judge F. Ernest Tidwell of Atlanta, who said at Drogoul’s (second) sentencing hearing, in December 1993, that while he felt "BNL knew, should have known, or could have known" of Drogoul’s activities, and he questioned the U.S. "policy of economic support to Iraq," he found no evidence of misconduct by any Justice Department official.

You would hardly know any of this from the newspapers, however. The mounting evidence of Iraqgate’s phoniness has been attacked as dishonest whitewashing, ignored, or buried, while the conspiracy theories have lived on in Washington Post and New York Times editorials and, above all, in Safire’s columns.

By late 1992 Safire had moved fro it distortions of fact and law into outlandish ravings. His November 12 1992, column, headlined "1st Global Political Scandal," claimed that President Bush was implicated with the leaders of Great Britain and Italy "in a criminal conspiracy … to misuse taxpayer funds and public agencies in the clandestine buildup of a terrorist dictator [and] to conceal the dirty deed."

The more the evidence has mounted that Safire was dead wrong, the wilder his claims have become. On December 10, 1992, Safire trashed Lacey’s report the preceding day as a "whitewash," asserting that the retired judge was "dishonest" and "came through for the Cover-up General and his corrupt crew in a style that would have made a Water-gater blush." (Lacey, whose arrogant demeanor did not enhance his credibility, was also trashed in New York Times and Washington Post editorials.)

And on September 9, 1993, after the Clinton Justice Department’s John Hogan had adopted the Bush Justice Department’s theory of the BNL case, Safire savaged Hogan’s heresy in a flourish worthy of Oliver Stone. "In what may be an unspoken quid pro quo, the Clinton administration has moved to quash any revelations about Bush’s Iraqgate scandal." The quid, Safire explained, was that "George Bush privately assured Bill Clinton that he would not criticize the new president during the first year of his new term." Wow.

"After all this time, it’s fair to ask, ‘Where’s the beef?’ "says Juster, the former State Department official. He was so incensed by this phony scandal that he put off returning to his law practice to spend three months with the Council on Foreign Relations writing "The Myth of Iraqgate."

"Refuting charges about Iraqgate is like playing the children’s game ‘Whack-A-Mole,’ " adds Juster. "Every time you whack down one mole, another pops up. Suffice it to say that after five years of hearings and investigations by various executive branch, congressional, and judicial bodies, during both the Bush and Clinton administrations, there is no proof that the Iraqgate charges are true."

Perhaps Juster and I are wrong. Perhaps, as Mike Wallace’s producer Bergman, Waas, and others have advised me, I’d better spend a few more weeks (months? years?) investigating before daring to criticize them; there are arms dealers in Geneva, and customs agents in Cleveland, and middlemen in Jordan, and other sources I have never reached, documents I have never read, rocks on the road to Baghdad I have never turned over. And, to get this down to publish-able length, I have cut out some points stressed by Iraqgate mavens. If anyone thinks I omitted crucial evidence, please send a letter to the editor, and I’ll respond. And if I learn that I have been wrong or unfair, I will publish a retraction.

But what if I’m light? Or even half right? Will any of those who created this phony scandal ever admit their errors? Or does journalism-and, in Shoob’s case, judging-mean never having to say you’re sorry?