FOR IMMEDIATE RELEASE                                         CIV
THURSDAY, FEBRUARY 16, 1995                        (202) 616-2765
                                               TDD (202) 514-1888


     WASHINGTON, D.C. --  The Department of Justice announced
today that the Department of Agriculture's Commodity Credit
Corporation (CCC) will pay Banca Nazionale del Lavoro (BNL) $400
million in settlement of the bank's claim for over $450 million
filed against the United States in the U.S. Court of Federal
     The settlement honors guarantees issued to American farmers
and exporters who engaged in credit sales of agricultural
products to Iraq in the mid to late 1980s.  Iraq defaulted in its
payments on the sales in August 1990, shortly before the Gulf
War, triggering the government's liability on the guarantees. 
BNL holds the guarantees by assignment.
     The guarantees were issued under the CCC's Export Credit
Guarantee Program.  The program is intended to expand foreign
markets for domestic agricultural goods by reducing the risk for
American farmers and exporters of doing business with developing
countries.  The program accomplishes this goal by providing
guarantees to farmers and exporters who sell their products on
credit to designated countries.  Typically, the exporter then
assigns the payment rights and the guarantee to banks like BNL in
return for immediate cash.
     When Iraq defaulted on its foreign debt just before the Gulf
War, ten banks, including BNL, filed claims with the CCC based on
the guarantees.  Consistent with the program, the CCC promptly
made good on approximately $1.6 billion of its guarantees, all
except for those held by BNL whose Atlanta branch was under
investigation for fraud.
     BNL's activities have been the subject of multiple and
extensive investigations.  Those investigations resulted in seven
guilty pleas including those of BNL's Atlanta branch manager,
Christopher Drogoul, and five other employees.  In September
1993, Drogoul pleaded guilty to concealing billions of dollars in
loans to Iraq, most of which was not guaranteed by the
government, in violation of the bank's own internal limits and
also in violation of state and federal laws requiring accurate
disclosure to government banking authorities, including the
Federal Reserve.  Drogoul was sentenced to 37 months in prison. 
In 1991, the Federal Reserve issued a cease and desist order
enjoining BNL's Atlanta branch from continuing its fraudulent
practices and assessing a deficiency penalty.  Most recently, an
investigation was conducted by a task force appointed by the
Attorney General, which issued its final report in January. 
     BNL's civil case against the United States to honor the
guarantees was stayed pending conclusion of the government's
investigation.  The CCC backed transactions were only a small
part of BNL's operations being investigated.  In the end, the
Justice Department found no evidence to link BNL's alleged fraud
to the CCC guarantees which would provide a legal basis for
refusing to pay the guarantees.
     The Department stated, "Now that the investigation of BNL is
complete, the CCC is honoring its guarantees."
     The guarantees plus interest the United States would have
been required to pay totaled more than $451 million.  The Justice
Department's Civil Division attorneys were able to negotiate a
settlement for $400 million.  The settlement does not relieve
Iraq of its indebtedness, and any future recovery on these loans
will flow to the United States.