{II ;-:1»: SS€ H . 6 Z2 11102-I27 WHITE HOUSE EFFORTS Ty‘ f~ O THWART CONGRESSIONAL INVESTIGATIONS T OF PRE-WAR IRAQ POLICY: THE CASE OF THE ROSTOW GANG HEARING COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS HOUSE OF REPRESENTATIVES ONE HUNDRED SECOND CONGRESS SECOND SESSION MAY 29, 1992 P nted fo th use f the Committee on Banking, Finance and U ban Affa s Serial N0. 102-127 % Y \ _ \ \_\ I . v \ / »uE\u /IIJRPARYNI i ‘ 1 I _ _ ‘ __] I ‘I ~ F | / y l I _~ ‘(I ‘\ \ _ , k / __ _ _ _ J ___I _' _ _ _ _ _ _ __ I! / _ ‘I _ /___l V _ _ _ _ \ __ I I. _ \ \ _ I _ _ \_ , I I _ |\ I \.‘ ,1 I __ ||__ u \ _ _ ‘ \ |\ / I _ _ I \ I _ '\ _ ‘ _ ‘ - I I I _ \ _ _ I I I l X ' I _ _\ \ / _ _\ I} I _ _ ‘ _ ‘ ’_ \ \ _ . / 1 __ ll‘ / I \_ I? \ I _| I ‘ _’_ \ I “ :' I I I _ \ “ ' I ‘ I \ I . "I \_ _ I I I I I ' ‘I ' _ . _ _ I _ - \ II __ _ ‘ I _ J, a _ ‘d ' f _ _ \ I \ _ _ _l _ ' ! 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I _ I? _ I I I _ I ( _ _ _ \ _ / _ _ _ _ I _ I I‘ \_\ _ I __ I I __ _ i ’ _I _ _ _ _- _ _I l ‘ Z \ |_ _ __I __ _ _ ' _ I _ _ I‘ , _ _ _ _ _ _ ' _' _ \| _ I I _ ‘ _ J I _ / _ _ _ | _ _ _ _ A ’ _ / J | I l_ I ‘K _ _ ‘I ‘\ ‘ '/ / ll‘ _ ,* I \ _ _ . P‘ _ \ \ I __ l $ I/\ ‘ WHITE HOUSE EFFORTS TO TIIWART CONGRESSIONAL INVESTIGATIONS OF PRE-WAR IRAQ POLICY: TIIE CASE OF TIIE ROSTOW GANG HEARING BEFORE THE OOMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS HOUSE OF REPRESENTATIVES ONE HUNDRED SECOND CONGRESS SECOND SESSION MAY 29, 1992 P nted fo the use of the Committee on Banking, Finance and Urban Affalrs Serial N0. 102-127 % U S GOVERNMENT PRINTING OFFICE 55 927* WASHINGTON 1993 F al byth USG mm tPr|t1ngOff SpetdtfD mtCgr lSlOff Whgt 1)c304()3 ISBN 0 16 040633 1 HOUSE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS HENRY B. GONZALEZ, Texas, Chairman FRANK ANNUNZIO, Illinois STEPHEN L. NEAL, North Carolina CARROLL HUBBARD, JR., Kentucky JOHN J. LAFALCE, New York MARY ROSE OAKAR, Ohio BRUCE F. VENTO, Minnesota DOUG BARNARD, JR., Georgia CHARLES E. SCHUMER, New York BARNEY FRANK, Massachusetts BEN ERDREICH, Alabama THOMAS R. CARPER, Delaware ESTEBAN EDWARD TORRES, California GERALD D. KLECZKA, Wisconsin PAUL E. KANJORSKI, Pennsylvania ELIZABETH J. PA'I'l‘ERSON, South Carolina JOSEPH P. KENNEDY II, Massachusetts FLOYD H. FLAKE, New York KWEISI MFUME, Maryland PETER HOAGLAND, Nebraska RICHARD E. NEAL, Massachusetts CHARLES J. LUKEN, Ohio MAXINE WATERS, California LARRY LAROCCO, Idaho BILL ORTON, Utah JIM BACCHUS, Florida JAMES P. MORAN, JR., Virginia JOHN W. COX, JR., Illinois TED WEISS, New York JIM SLA'I'I‘ERY, Kansas GARY L. ACKERMAN, New York CHALMERS P. WYLIE, Ohio JIM LEACH, Iowa BILL McCOLLUM, Florida MARGE ROUKEMA, New Jersey DOUG BEREUTER, Nebraska THOMAS J. RIDGE, Pennsylvania TOBY ROTH, Wisconsin ALFRED A. (AL) McCANDLESS, California RICHARD H. BAKER, Louisiana CLIFF STEARNS, Florida PAUL E. GILLMOR, Ohio BILL PAXON, New York JOHN J. DUNCAN, Jn., Temiessee TOM CAMPBELL, California MEL HANCOCK, Missouri FRANK D. RIGGS, California JIM NUSSLE, Iowa RICHARD K. ARMEY, Texas CRAIG THOMAS, Wyoming SAM JOHNSON, Texas BERNARD SANDERS, Vermont (II) f/27$/2 CONTENTS Hearing held on: Pace May 29, 1992 ............................................................................................................ .. 1 Appendix: May 29, 1992 ............................................................................................................ .. 97 WITNESSES FRIDAY, MAY 29, 1992 PANEL 1: Gejdenson, Hon. Sam, a Representative in Congress from the State of Con- necticut; Chairman, Subcommittee on International Economic Policy and Trade, Committee on Foreign Relations ................................................................ .. 7 Rose, Hon. Charlie, a Representative in Congress from the State of North Carolina; Chairman, Subcommittee on Department Operations, Research and Foreign Agriculture, Committee on Agriculture ......................................... .. 3 PANEL 2: Mendelowitz, Allan, Director, General Government Division, U.S. General Accounting Office; accompanied by Phil Thomas, Director, International Trade and Agriculture; Susan Pursell; Scott Einhorn; and Robert Hunter, Associate General Counsel ....................................................................................... .. 40 PANEL 3: Archibald, Jeanne S., General Counsel, U.S. Department of the Treasury ....... .. 65 Cifrino, Michael, Senior Attorney, Office of the Deputy General Counsel, International Affairs and Intelligence, U.S. Department of Defense; accom- panied by Judge Michael Luttig, Judge, Ninth Circuit, Court of Appeals [former Assistant Attorney General, Office of Legal Counsel, U.S. Depart- ment of Justice] .......................................................................................................... .. 69 Green, Col. Fred K., Legal Counsel for the Chairman, Joint Chiefs of Staff, U.S. Department of Defense ..................................................................................... .. 59 Rindskopf, Elizabeth, Office of the General Counsel, Central Intelligence ........ .. 54 Raul, Alan, General Counsel, U.S. Department of Agriculture ............................ .. 55 Williamson, Edwin, Legal Advisor, U.S. Department of State ............................. .. 56 Willkie, Wendell, General Counsel, U.S. Department of Commerce ................... .. 60 APPENDIX Prepared statements: Gonzalez, Hon. Henry B ........................................................................................ .. 1 Wylie, Chalmers P. ................................................................................................ .. 98 Johnson, Sam .......................................................................................................... .. 100 Gejdenson, Sam ....................................................................................................... .. 115 Rose, Hon. Charlie ................................................................................................. .. 106 Archibald, Jeanne S ............................................................................................... .. 214 Cifrino, Michael ...................................................................................................... .. 221 Green, Col. Fred K. ................................................................................................ .. 226 Mendelowitz, Allan ................................................................................................ .. 204 Raul, Alan ................................................................................................................ .. 230 Rindskopf, Elizabeth .............................................................................................. .. 233 Williamson, Edwin ................................................................................................. .. 235 Willkie, Wendell ..................................................................................................... .. 242 (III) IV ADDITIONAL MATERIAL SUBMITTED 1-‘on rm: Rnconn Banking Committee Staff Memos on Rostow Gang ................................................. .. Gonzalez Floor Statements on Rostow Gang ............................................................ .. Letters of Invitation to Testify Before the Banking Committee ........................... .. Barnard, Hon. Doug, a Representative in Congress from the State of Georgia; Chairman, Subcommittee on Commerce, Consumer, and Monetary Affairs of the Committee on Government Relations ........................................................ .. Dingell, Hon. John D., a Representative in Congress from the State of Michi- gan; Chairman, Subcommittee on Oversight and Investigations of the Com- mittee on Energy and Commerce ............................................................................ .. Bush, President George, Refuses To Allow White House Staff to Testify at Banking Committee Hearing ................................................................................... .. Luttig, Judge Michael, Justice Department, Refuses to Testify At Banking Committee Hearing ................................................................................................... .. U.S. Department of Agriculture Documents Related to Rostow Gang ................ .. U.S. Department of Commerce, Related Rostow Gang Documents (submitted at the request of Congressman Sam Gejdenson) .................................................. .. Barnard, Hon. Doug, Rostow Gang-Related Documents Dealing With Iraq Export Licensing Records ................................................................................. .. U.S. Customs Department-Related Rostow Gang Documents ............................... .. CIA-Related Rostow Gang Documents ....................................................................... .. U.S. State-Related Rostow Gang Documents ............................................................ .. Additional Rostow Gang Documents .......................................................................... .. Rostow Gang-Related Press Article ............................................................................ .. Rostow Involved in Thwarting GAO Investigation of Panama, Washington Post, March 12, 1989 .................................................................................................. .. Page 249 256 276 129 152 304 314 317 404 362 499 502 506 518 535 537 WHITE HOUSE EFFORTS TO THWART CONGRES- SIONAL INVESTIGATIONS OF PRE-WAR IRAQ POLICY: THE CASE OF THE ROSTOW GANG FRIDAY, MAY 29, 1992 U.S. HOUSE or REPRESENTATIVES, COMMITTEE oN BANKING, FINANCE AND URBAN AFFAIRS, _ Washington, DC. The committee met, pursuant to notice, at 9:45 a.m., in room 2128, Rayburn House Office Building, Hon. Henry B. Gonzalez [chairman of the committee] presiding. Present: Chairman Gonzalez, Representatives Vento, Frank, Hoagland, Moran, Slattery, Wylie, Bereuter, Roth, and Johnson. The CHAIRMAN. The committee will please come to order. The Chair apologizes. This is the second time I have been late to a hear- ing for the same reason. In fact, I told Chairman Rose that it would be at 10, and I was sitting there thinking it was 10, didn't bother to check the revision. I ask unanimous consent to place my opening statement at this point in the record, and if Mr. Wylie concurs, we will do the same and recognize our colleagues and get it going. OPENING STATEMENT OF HENRY B. GONZALEZ, CHAIRMAN, COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS Hearing on the Administration's Efforts to Frustrate Congressional Investigations of U.S. Policy Towards Iraq We meet today to hear testimony related to the Bush Adminis- tration’s efforts to thwart Congressional investigations of its pre-in- vasion policy toward Iraq. During its Banca Nazionale del Lavoro (BNL) investigation the Banking Committee unearthed documents indicating that the White House and National Security Council (NSC) formed a high level interagency lawyers group to discourage, frustrate, evade and thwart Congressional investigations of Iraq policy. This lawyers group, which I call the Rostow Gang, estab- lished a process whereby a Congressional Committee had to hurdle a series of increasingly difficult barriers in order to obtain useful information on Iraq from executive branch agencies. Ostensibly, the function of the group was to review documents and information and to establish a “coordinated” approach for the dissemination of that information. An NSC memo states as follows: “The NSC is providing coordination for the Administration's response to Congressional document requests for Iraq-related materials. The process is intended to be a cooperative one.” (1) 2 While on the surface it appears the Rostow Gang was created to ensure cooperation with Congressional investigations, in reality the true purpose and effect was to have the White House carefully choke off the flow of information to Congress. The same NSC memo states: “When access to documents maybe recommended, such recom- mendations should be circulated to this group for clearance.” This delay mechanism also gave the NSC the power to reverse an agency’s decision to provide access to documents. Committees were also being discouraged from obtaining physical possession of the Iraq-related documents, thus making it impractical to conduct an investigation. The April 1991 memo states: “A recommendation to provide access should be restricted to members only subject to these conditions: no document may be retained; notes may be taken but should be marked for classifi- cation by the department or agency in question.” As the quote indicates, the NSC even wanted to make it difficult for Members of Congress to look at or carefully study Iraq-related documents. A February 1991 Commerce Department letter to the former Undersecretary for Export Administration further reveals the purpose of the Rostow Gang. It states: “In sum, the printout provided to Mr. Barnard (Chairman of a Congressional Subcommittee) is a summary reference document. . . . The printout is also consistent with Fifth Floor (Secretary Mosbacher’s office) guidance and requests from both State (Department) and the NSC that no additional informa- tion be provided that does not directly address the Committee’s request.” Translated, top level “guidance” means that if a Committee does not know that a document exists, the agency should not volunteer the information. The Committee is disappointed that the President's General Counsel, Mr. Boyden Gray, and NSC’s Counsel, Mr. Nicholas Rostow, and Judge Luttig, formerly with the Justice Department, have decided to spurn the Committee’s request that they testify about their roles in the Rostow Gang. As I stated last week, the Committee will not be stonewalled by the White House and if need be, I will ask for subpoena authority in order to obtain the neces- sary information and witnesses that are necessary for the Commit- tee to conduct its investigation. The Administration's efforts to stall and frustrate Iraq-related investigations did not affect this Committee alone. Our first distin- guished witnesses, Chairman Charlie Rose and Sam Gejdenson, will show the Administration was doing everything within its power to frustrate Iraqi investigations. The Committee has also received written testimony from Chair- man John Dingell and Chairman Doug Barnard which demon- strates that their investigations of Iraq policy ran into similar roadblocks. There is no doubt that the various agencies have a legitimate right to work together to ensure coordination, but clearly the 3 Rostow Gang was not designed as a cooperative mechanism. The real motive was to allow the President and his top advisors to avoid potentially embarrassing revelations about their handling of Iraq policy and maybe even criminal activity. I look forward to the testimony of our witnesses. The CHAIRMAN. Mr. Wylie. Mr. WYLIE. That is all right. I will have an opening statement before the next panel maybe, Mr. Chairman. [The prepared statement of Mr. Wylie can be found in the appen- dix.] The CHAIRMAN. Chairman Rose, thank you very much. I, again, apologize for coming late, but you will recall that when you asked me I told you it was at 10, so thank you again. STATEMENT OF HON. CHARLIE ROSE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA, CHAIR- MAN, SUBCOMMITTEE ON DEPARTMENT OPERATIONS, RE- SEARCH AND FOREIGN AGRICULTURE, COMMITTEE ON AGRI- CULTURE Mr. Rosn. Thank you, Mr. Chairman, and members of the com- mittee. We appreciate the opportunity to appear before you today to discuss the Reagan and Bush administrations’ efforts to assist the country of Iraq prior to Iraq’s invasion of Kuwait and the sub- sequent efforts of both the Reagan and the Bush administrations to deter Congress from a full investigation of these efforts. First, I would like to commend you, Mr. Chairman, for all the work you have done to expose the depth of the coverup by various Federal agencies. I say coverup because I think you would agree with me that no Federal agency has been straightforward in dis- cussing what either the Reagan administration or the Bush admin- istration’s policy was toward the country of Iraq and what steps were taken either legally or illegally to accomplish these goals. I think you know that your staff and my staff have worked to- gether extensively for some period of time sifting through various documents and discussing my investigation of the U.S. Department of Agriculture’s Export Credit Guarantee Program. I am glad that we have been able to cooperate in this matter, and I look forward to continuing to work with you. Next week I will testify before the Judiciary Committee, Chair- man Jack Brooks, to discuss the necessity of appointing an inde- pendent counsel to fully investigate what has come to be known in some of the national media as “Iraqgate.” I am pleased that the Judiciary Committee has decided to go forward and investigate the concerns I have raised regarding the Banca Nazionale del Lavoro matter, and it is my hope that you, too, will assist him in this regard. We must pool all of the resources that we have and provide the Judiciary Committee with all of the information we have gathered so they can make an informed decision on the need for the inde- pendent counsel. I think you would agree with me that there is a need for such an individual, and I believe this is the best entity to address all the issues that we have raised. 4 You asked me to summarize the investigation that I have con- ducted through my subcommittee chairmanships on the Agricul- ture Committee; first, as chairman of the Tobacco and Peanuts Subcommittee and now as chairman of the Department Operations Research and Foreign Agriculture Subcommittee. I would like to submit for the record as soon as it is prepared a chronology of what I believe are the various steps taken by Federal agencies to either obstruct or limit my congressional investigation, and I will include in the chronology administration denials, particularly where we can establish that the administration actually had knowledge of ef- forts supporting arms sales to Iraq. I believe that those denials helped obstruct my congressional investigation. Unfortunately, I was not able to have this information for you today, but I am prepared to give you a brief summary of the inves- tigative efforts I took beginning in 1986. I want to stress for the record that beginning in 1986, and I would like to place now two letters in the record at this point, Mr. Chairman. [The information referred to can be found in the appendix.] I began questioning the United States Department of Agriculture about sales of foreign tobacco to Iraq. This is vitally important, be- cause I intend to establish specifically before the Judiciary Com- mittee that the Reagan administration and relevant Federal agen- cies involved in the decision to provide Iraq with economic assist- ance had knowledge that individuals involved in agricultural trans- actions were also involved in arms transactions. The Bush adminis- tration also had this information, and officials at the Department of Justice during the Bush administration have also been aware of the same information. Again, I made my first inquiry concerning sales of tobacco under USDA’s Agricultural Export Credit Guarantee Program to Iraq on June 11, 1986. The response from the United States Department of Agriculture was that I basically did not understand international business transactions and that Iraq was merely attempting to make a better deal. The record should reflect that this was the first official inquiry made concerning Iraq and Agricultural Export Credit Guarantee Programs and that officials in the Reagan admin- istration very clearly told me that I was wrong to be concerned about the sale of agricultural commodities to Iraq in 1986. I did not let the statements from USDA deter me, and I continued to investi- gate this matter with very limited resources. I had two staff members on the Tobacco and Peanuts Subcommit- tee. In addition to the normal duties associated with managing two complex agricultural commodity programs, I and my staff contin- ued to investigate the matter. It was not until the summer of 1988 that I made what I considered to be one of the first important breakthroughs in this case. I learned that summer that all of the tobacco dealers had obtained financing through an entity called Banca Nazionale del Lavoro in Atlanta, and also that USDA’s office of the inspector general had continued the investigation begun by me in 1986. In other words, Banca Nazionale del Lavoro was the entity through which tobacco dealers were receiving their loan guarantees for shipments of tobacco to Iraq. I only learned this because the GAO, in assisting with this inves- tigation, learned that the inspector general at Agriculture was in- 5 vestigating information I turned over to USDA concerning the indi- viduals who had shipped foreign tobacco to Iraq. To this day I do not know which individuals sent me the anonymous letter in 1987 from Paris, France, detailing the individuals shipping foreign to- bacco to Iraq, but the American people truly owe this person a debt of gratitude. Let me add that USDA’s office of the inspector general is to be commended for their dedication to the full and fair investigation of ag credit programs involving Iraq. Despite obstacles placed in their path by USDA employees, and I believe these obstacles were delib- erately placed in their path at the direction of higher authorities, the OIG has done a credible and worthwhile job of addressing the concerns I have raised since 1986. For all of 1988 USDA took a step that I believe shows the absolute complicity of this government in arms sales to the country of Iraq. Not only did USDA change the policy to permit practices which I believe encouraged extra cash or extra sales services which are nothing less than bribes, but USDA insulted the intelligence of the American public, the American farmers, and Congress through this effort. Some 30 odd colleagues of mine on the Agriculture Commit- tee joined me in decrying USDA’s blatant attempt to make it easier to violate the tenets of the Agricultural Export Program. What was the response of the U.S. Secretary of Agriculture? You just don’t understand, was what he told my colleagues on the Agri- culture Committee. Now, where had I heard that before? I must admit that I was intrigued by the rather common response from USDA, and hearing records of the Tobacco and Peanuts Subcom- mittee beginning in October 1988 dealing with USDA’s export credit guarantees programs are rife with feigned ignorance by USDA employees, as well as USDA’s assertions that Congress merely failed to understand that there was nothing wrong with ex- ecutive branch dealings with the country of Iraq. The transcripts of hearings I conducted as chairman of the De- partment Operations Research and Foreign Agriculture Subcom- mittee showed that USDA continues to deny the obvious. The dis- cussions concerning the 1990 Farm bill wherein high ranking offi- cials from USDA attacked me and my staff because we sought to regulate those export credit guarantee programs further confirmed the campaign waged by this government to cover up the extent to which this misuse of USDA s agricultural credit guarantee pro- grams was encouraged, if not fostered by the executive branch of our government. The administration’s opposition in 1990 to legislation offered by my colleague, Dan Glickman, eliminating Iraq’s eligibility in USDA’s export programs also is further confirmation. As I have diligently searched for records along with USDA’s office of inspec- tor general and the GAO, plea bargaining arrangements have been struck with individuals who knowingly and willfully engaged in much more than normal agricultural trade. The fact that some of these pleas were entered in my own hometown of Fayetteville, NC, is even more repugnant to me because they sought to appease my interest in this matter in my own backyard. Thinking that I was merely interested in this matter for reasons of publicity, the De- partment of Justice even named my subcommittee and an obstruc- 6 tion of my subcommittee’s investigation in the infamous BN L in- dictment. My friends, that just doesn’t cut it for me. I don't care how many times I am mentioned in the press releases. What I care about is the fact that the Department of Justice has deliberately broken up what may be one of the biggest RICO cases, white-collar criminal cases, as Dick Thornburgh called it, and failed to follow through because they know what is hidden behind the curtain. What I care about is that the U.S. attorney in Atlanta is on record as saying to the Associated Press that he saw no reason to recuse himself from the BNL matter despite the fact that he had very recently repre- sented Matrix-Churchill, a Treasury Department identified Iraqi arms dealer, prior to his appointment as U.S. attorney. What I care about is that the assistant U.S. attorney in Atlanta supervising the BNL case has written a damaging letter to the Cus- toms Service which effectively destroys the Federal Government’s case against Matrix-Churchill. What I care about is various Federal law enforcement agencies harassing what I consider to be a very strong, logical, centered witness with solid information on Iraq arms deals involving misuse of agricultural programs monies. What I care about is the failure of the government to vigorously pursue the Matrix-Churchill case. I could go on and on, but I think I can identify more of these issues for you in a more cogent fashion when I finish the chronolo- gy I have promised you. My farmers in North Carolina are owed an explanation, my colleagues on the Ag Committee and Congress are owed an explanation. You, Mr. Chairman, are likewise owed an ex- planation. What I mean by this is that we need to know how, when, and why the decision was made to permit this misuse of agricultural monies to funnel military assistance to Iraq. The families in North Carolina, and farmers across this Nation who lost their children in the Iraq war also are owed an explanation, because how on Earth could this government, namely the Reagan and Bush administra- tions, create the enemy we would later fight against and deny it‘? There is no logical explanation for this dangerous game, particular- ly where the stakes were so high. There is no farmer in my district or this Nation, for that matter, who can afford to arm the country of Iraq or any country, for that matter. This government has no right to do this, especially because we in Congress were misled and just plain lied to. The worst of it is that this has continued and you, Mr. Chairman, know of what I speak. You can drop 1 million bombs on the United States dual use or military use equipment that found its way to Iraq through an agri- cultural loan guarantee, but the paperwork remains, and when that paperwork is fully and finally examined, this Congress, like the Italian Parliament has done recently, will conclude that com- plicity is a nice term for what transpired between our executive branch and the country of Iraq over the last 10 years. Finally, today's Washington Post carried a story regarding the former manager of the BNL branch in Atlanta, Christopher Dro- goul. I believe we should look at that article for further confirma- tion of this administration’s effort to limit disclosure in the BNL case. As the Washington Post stated, the government has apparent- 7 ly offered Mr. Drogoul a 20-year deal, and this is clearly further evidence of the extent of the coverup. Mr. Drogoul, as Judge Marvin Shoob so eloquently stated, could not, as a branch manager, have moved $4.5 billion in the fashion that was done without some type of participation by people in this country and outside of this country. The Federal judge, with many years of experience, knows there is more to this story, and I ap- plaud Mr. Drogoul’s efforts to tell the whole story next week on Tuesday morning. It is time we heard it, and I am comforted by the Justice Department’s promise to pursue inquiries that might arise from Drogoul’s statements next week, because we already know that the government has deliberately chosen not to pursue the BNL case fully in the first instance. Mr. Chairman, thank you for the opportunity to be here today. d_ [Tihe prepared statement of Mr. Rose can be found in the appen- Ix. The CHAIRMAN. Thank you, Chairman Rose. I wish to acknowl- edge the fact that you, from the very beginning, have enabled the committee and its staff, particularly in the case of BNL, to do the work and fulfill its responsibility over on our end of jurisdiction, and we owe you a very deep debt of gratitude. I want to acknowl- edge it. Do you have time constraints? If you do, we could go on ahead and ask you questions, but if not and you have no objection, we will recognize Chairman Gejdenson, who is chairman of the Subcommittee on Foreign Affairs on Economic Policy and Trade, and who was one of those lonely voices at the very beginning and I guess even before we had any indication as to the contrived dimen- sions of this mess. Mr. Chairman, thank you very much. STATEMENT OF HON. SAM GEJDENSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CONNECTICUT; CHAIRMAN, SUBCOMMITTEE ON INTERNATIONAL ECONOMIC POLICY AND TRADE, COMMITTEE ON FOREIGN AFFAIRS Mr. GEJDENSON. Thank you, Mr. Chairman. I think one of the things that is astounding to all of us is that so many committee jurisdictions have come into play here, and I think as you sit back and examine the information that you are getting this morning and that you have gotten to date, what is clear is that this action by the administration was an action that utilized virtually every arm of a modern government. Not just the intelligence agencies, not just the State and Commerce Departments, but the Agriculture Department, and the Justice Department to facilitate a program of aiding and abetting Saddam Hussein. My committee’s activities began over 11/2 years ago when we were concerned about the Export Administration Act and whether or not the Commerce Department had done its job in precluding items that could be used in military systems from being shipped to Saddam Hussein. As a matter of fact, there was a little bit of what we thought was interagency back-stabbing going on that rumors kept leaking out that it was a sloppy Commerce Department, a Commerce Department that was in such a hurry to have American 9 Under the heading of “Iraq” on page 2, the President makes a series of remarkable statements, and if the committee staff will look, it is the one that has the section on the top redacted. First, he states in quote, “Normal relations between the United States and Iraq would serve our long-term interests and promote stability, both in the gulf and the Middle East.” What followed this attempt to achieve stability in the region by moving to normalize relations with Iraq? What happened after this? Ten months after the date that the President signed this doc- ument Saddam Hussein invaded Kuwait. Then the President states, and I quote, “The United States Government should pro- mote economic and political incentives for Iraq to moderate its be- havior and to increase our influence in Iraq.” There was virtually nothing in President Bush's experience that should have led him to the belief that such coddling of Saddam Hussein would produce positive results. From the time the United States took Iraq off the terrorist list in 1982 and provided Iraq with a panopl of militarily significant equipment and technology, handed over S5 billion worth of CCC ag- ricultural credits, Iraq harbored and supported all manner of ter- rorists, and 10 months after the date of this signature by the Presi- dent, Saddam Hussein invaded Kuwait. The President continued, and I quote, “At the same time the Iraqi leadership must under- stand that any illegal use of chemical or biological weapons will lead to economic and political sanctions for which we would seek the broadest support from our allies and friends.” The President was a bit late. Fourteen months earlier Saddam Hussein had spewed poison gas on his own people, killing 5,000 innocent men, women, and chil- dren. The administration not only refused to impose sanctions on Saddam Hussein after butchering these civilians, it sent its staff up to the Hill, including the Secretary of State, to fight any congres- sional efforts to criticize or condemn Iraq. It was an incredible mes- sage that we not only sent to Saddam Hussein, but to other butch- ers around the world that the United States would sit idly by when it suited our purposes after 5,000 men, women, and children had been gassed. The President of the United States states, and I quote, “We should pursue to seek to facilitate opportunities for U.S. firms to participate in the reconstruction of the Iraqi economy, particularly in the energy area, where they do not conflict with our nonprolif- eration and other significant objectives.” The President of the United States was interested in rebuilding the Iraqi economy, and in the field of energy no less, which 10 months later fueled and funded Iraq’s war effort against the United States. Finally, the President of the United States states, and I quote, “Also as a means of developing access to and influence with the Iraqi defense establishment, the United States should consider sales of nonlethal forms of military assistance, for example, train- ing courses, medical exchanges on a case-by-case basis.” Ten months to the day after the President of the United States, George Bush, said that we should provide military assistance to Iraq, Saddam Hussein invaded Kuwait. It is entirely possible that Amer- ican soldiers were confronted on the battlefield by those whom the 10 United States had provided training to. Perhaps what is most re- markable is that George Bush issued this directive 14 months after the end of the Iran-Iraq war. Even to the extent that the administration could argue that a tilt toward Iraq was justified while the Iran-Iraq war was going on, it seems to make no sense at all to continue to strengthen Saddam Hussein in the Middle East where he was a predominant military force once he had defeated Iran. The continuing classification of documents is only the latest chapter in a coordinated attempt to thwart the subcommittee’s inquiries. The administration withheld witnesses from the committee, documents from the committee that the committee was legitimately entitled to, and did not turn them over until we issued subpoenas. Secretary of State Baker only pro- vided the requested documents under threat of subpoena and after extensive negotiations with the committee. In fact, Secretary Baker violated his promise that he made to the committee. The Secretary did not provide all the documents re- quested. In addition, the State Department admits that it withheld relevant portions of summaries of Secretary Baker’s morning meet- ings. Many, if not most of the documents provided to the committee had significant portions redacted. In light of Secretary Baker’s withholding of important information for Congress, it becomes harder to accept the statement in his letter to the committee that “we have nothing to hide regarding the policy in this area.” A copy of that letter is attached to my testimony as well. In addition, in this letter Secretary Baker imposed numerous conditions under which the documents would be provided. Secre- tary Baker would allow only four Members of Congress to read the documents, four members of the committee and no others. Other members of the Foreign Affairs Committee and other Members of Congress were not allowed to see these documents. The administra- tion also tried to thwart the subcommittee’s investigation by not providing witnesses, by possibly firing witnesses from the Com- merce Department who testified before the committee. A witness who testified before the committee only days earlier indicating he was nervous that his testimony would cost him his job, several days after having testified before the committee mirac- ulously submitted his resignation and resigned from his position at the Commerce Department. In April, 1991, Secretary Dennis Kloske testified before the sub- committee. He stated that in the spring of 1990 he attended two meetings in the White House at which he recommended that the United States restrict the flow of technology to Iraq. His recom- mendations were rejected. Secretary Kloske told us prior to the hearing that at a meeting it was stated that neither Secretary Baker nor President Bush wanted to single out Iraq for sanctions. Mr. Kloske was fearful of testifying on those points publicly. Nev- ertheless, again, within 48 hours of his testimony it was announced that Mr. Kloske would be parting his ways with the administra- tion. Either it constituted a coincidence of miraculous proportions that the day after or so that he testified before the committee that suddenly he wanted to leave his job or was a direct result of that testimony. 11 Six weeks later when we finally got Under Secretary Kimmitt, presently the Ambassador to Germany, to testify before the com- mittee, Mr. Kimmitt, who is known as a rather bright and capable individual within the administration, could remember virtually nothing of the meetings that had occurred. His amnesia seemed to cover almost everything that had happened at those meetings and that led up to the dismissal or the resignation of Mr. Kloske. In fact, the fact that President Bush chose to romance the leader he later compared to Adolf Hitler was a huge miscalculation. Clearly, it is time for the administration to end its concerted attempt to withhold information from the Congress and the American people. This is a democracy. The people and their duly elected representa- tives have a right to know what led up to our war with Saddam Hussein. As you look over the series of events, Saddam Hussein must have been the most surprised individual in the world when the United States responded to his invasion of Kuwait. In 1982, the U.S. Gov- ernment took him off the terrorist list while he still harbored ter- rorists. When an American ship was attacked by Iraqi planes, the United States and Secretary Weinberger at the time took great pleasure in blowing up the Iranian oil wells. When 5,000 Kurds were killed, we heard not a peep from the administration about the death of these innocent men, women, and children, and when 6 days later, as my colleague pointed out, Mr. Glickman, others, and myself had an amendment on the floor to cut off the loan guaran- tees to Iraq, the administration opposed the legislation. It seems clear to me that what we had here was we never sent Saddam Hussein the message that he ought not invade Kuwait. Forget April Glaspie, forget the private letters between the Presi- dent and their descriptions. In the public statements from the State Department Margaret Tutweiler, and I can't give you the exact quote, but it seems to me my recollection is pretty accurate, was that we had no defensive treaty with Kuwait and that we didn’t get involved in Arab land disputes. We need to air all that was involved here: Why those companies that may have violated American laws weren't prosecuted, why we decided to coddle this criminal in the Middle East, and what was the result of that policy that extended for over 8 years? Thank you, Mr. Chairman. The CHAIRMAN. Thank you, Chairman Gejdenson. Well, just to say thank you doesn’t adequately describe the feeling I have had for some time for both of you gentlemen. Also I ask unanimous consent that statements prepared for this occasion by Chairman Dingell and our colleague, Chairman Doug Barnard of the Subcom- mittee on Government Operations, be placed in the record at the conclusion of Chairman Gejdenson’s testimony. [The prepared statements of Messrs. Dingell and Barnard can be found in the appendix.] You have very well outlined, in fact, you anticipated the only possible questions I would have had other than some general judg- mental questions I am going to ask you, and we really owe you a great debt of gratitude, because in your own jurisdictions you have done such a great job. As they coaligned with our concern about the banking system, the lack of regulatory laws which we have been working on in my 12 case since 197 5 have been most helpful. But the biggest worry that I personally have, and which I haven’t even had a chance to pursue it with the staff, is that I am sure there are dozens of other BNL and BCCI cases out there. We also have this mishmash of a system, if you want to call it that, that continues to exist. In the testimony that we heard last week, the Fed’s representative, I believe it was Mr. Kelley, stated that nothing had changed as far as the proce- dures and the meetings and also the decisions and the decisionmak- ing process. I found this to be very disturbing because I know that it is impossible for our main monetary setting authority, the Feder- al Reserve Board, to do a job of setting the monetary policy for this country without having a jurisdictional ability to know all of these extraterritorial transactions which are going on, and the offshore activities that coincide with these banks such as BN L, BCCI, and others. So that is the standpoint that we are looking at. But where we have joined together here and I will be more than honored to join you, Chairman Rose, because you have been ahead of us and God willing, I will be there shoulder to shoulder with you before Chairman Brooks Tuesday, June 2, and in your jurisdiction, Mr. Gejdenson on Foreign Affairs. I am glad to hear that you are going to pursue this as well. Here we are respectful of each other’s jurisdiction, and we have enough work on our own without having to worry about making incursions into each others. But there is one question I wanted to ask, because on a personal basis you know our officials involved, and you have the best of feel- ing on the personal basis. It is very difficult to answer these contra- dictions. In your opinion, what do you think was the motivation behind the administration’s efforts to obstruct or thwart the con- gressional oversight of the United States policy toward Iraq not only in your jurisdictional side, but on the financial and interna- tional financial and domestic financial side? Do you believe it was no more than just embarrassment in hind- sight to see a mistake in policy‘? Mr. RosE. Mr. Chairman, I think it is probably a number of things. I suspect that the Agricultural Loan Program, the GS—102, -103 Programs were chosen as a method for funneling economic aid of various sorts to Iraq because it was sort of a sleepy little pro- gram over in one corner of USDA that not a whole lot of attention had ever been paid toward. I think they were probably very con- cerned all along, especially now that it is out in the open, that Israel not get wind of all the aid that was being funneled into Iraq. They didn’t want to get Israel upset. I think probably the biggest problem they have got now with coming clean on what their policy was, what we find is—or what we are finding in companies like Kennametal, for example, is that these people who were running the company, in my opinion, felt like they could do just about anything to help Iraq and not have to comply with other laws such as getting export licenses or properly reporting what they were doing with dual use items that were being sold. I think the embarrassing point for this administration is that the NSD—26 clearly sets out what the policy was. That word went out through the administration and they went upon a course of making it happen quietly without getting attention, and some people in '/ 1 13 some agencies allowed things to get shipped without export licenses that were clearly dual use items. The Kennametal Co., in Latrobe, Pennsylvania, sold machine tool systems and gave us, from their records, drawings of artillery shell fuses that their machine tool systems were designed to make. It is a little hard to say you didn’t know that the machine tools were going to be used in a military fashion if you have the drawings in your files. Now that kind of thing has never been pursued by the Justice Department. As a matter of fact, the assistant U.S. attorney in At- lanta wrote the company a letter and said we don’t think you vio- lated any law. That is what caused them a lot of press attention. So simple answer, they are embarrassed about the way in which NSD—26 was carried out, and they don’t want the American public to find it out. Mr. GEJI)ENsoN. Mr. Chairman, I would just like to add two things. I think the chairman is right. I think clearly this document with the President of the United States’ signature means that you can’t write this off on a handful of bureaucrats back in some agency. This is national policy. It wasn’t an accident that Com- merce officials let things go. It was the intentional policy of the United States to support and assist the Government of Iraq and the Presidency of Saddam Hussein. Additionally, this does not stand with some kind of hindsight in a foreign policy leaked discussion. This can’t stand the test of show- ing it to the American people. If the American people forget what we have got here today, in some ways N SD—26 is the most dramatic because it has the President’s signature, but the things we are still fighting to get released, further demonstrate what a failure this policy was, and they should have known it at the time. Mr. RosE. Mr. Chairman, just one more footnote. I think this doc- ument is the key that Mr. Gejdenson has brought forward. I think this is the trunk of the tree, and all the other things are branches and fruit that come out from that, and they are embarrassed at the way this was carried out. The CHAIRMAN. Well, my compliments to you. You know, I may have mispronounced your name because whenever we see each other I don’t call you by your last name. I know you as Sam, but it doesn’t sound dignified this morning. Mr. GEJDENSON. You can call me Sam, Mr. Chairman. It is a good name, coming from Texas, I think. The CHAIRMAN. Well, you know, there are two good solid Ameri- can surnames, but actually I compliment you. We couldn’t get that document, and I will tell you the truth, you know, I have been either given credit or blamed, whichever point of view. But had I gotten this document, I probably would not have put that in the Congressional Record because it was NSC. So that leads to the second and final question. I Do you feel the classifications assigned to the documents that your committee requested merited the national security classifica- tion they received by the administration? Mr. RosE. Mr. Chairman, I had the privilege of serving on the Intelligence Committee when it was first formed in 197 7, and what I have learned and developed as an opinion back then carries for- ward in everything that I have seen here. Some administration 14 agencies would classify their-the weekly cafeteria menu if they could. I think very definitely they have gone far overboard in clas- sifying items regarding this whole Iraqi business for only one reason, and that is to keep it out of the public view, and I think you have met the sting of that yourself, and I think we in the Con- gress are very proud of you for standing up, and I think we can all work together. There are not enough hours in the day, not enough committee staff on the Hill for us to cover this whole thing, and we are just going to have to divide the work up and work the best we can. I believe the Judiciary Committee will create an independent coun- sel, and in my opinion this is a lot bigger scandal than Iran-Contra, Mr. Chairman, because I think it involves some of the biggest cor- porations in America. We have run across some frightening examples of intimidation by large corporations of major network news organizations, threat- ening them with billion-dollar lawsuits if they even mention that they were involved in selling equipment to Iraq. We have found to- bacco companies in North Carolina, in Winston-Salem, NC, who were supposed to be shipping tobacco to Iraq who we have on their letterhead lists of mortar shells, ammunition of all description that they have made available to Iraq. I think it was a very lucrative business for those few trusted ad- ministration corporate friends that got in this business. Everything was done very quietly, everything was very hush-hush, and it was never supposed to see the light of day, but as things happen to do in this world, especially in Washington, the truth will hopefully eventually come out. The CHAIRMAN. Well, thank you very much for your generous re- marks, both of you. Mr. Wylie. Mr. WYLIE. Thank you, Mr. Chairman. In the law that last ques- tion was known as a leading question to which you know the answer. I am not going to ask any questions because I think I know what the answers would be, but I do feel that I need to make a statement at this point. The notice of this hearing this morning was to examine the role that various counsels played in responding to document requests from this committee and other congressional committees on the preinvasion of Iraq policy of the administration. It appeared that the chairman was interested in determining the role of the Nation- al Security Council in the exchange of information with other agency lawyers to coordinate document requests pertaining to United States-Iraq policy before August 2, 1990. There does exist a memorandum regarding one of these meetings from Mr. Nicholas Rostow, dated April 8, 1991. Mr. Rostow is the legal advisor for the National Security Council, and having reviewed this memo and other documents, I find nothing out of the ordinary about this meeting. The Rostow memo simply suggests that document requests be re- viewed for executive privilege. The memo suggests that briefings might be preferable to giving documents, and finally the memo suggests that in the case of doubt one should seek advice from the working group established at the White House. 15 On April 17, 2 days after another meeting with the National Se- curity Council, the Agriculture Department counsel, Mr. Alan Raul, wrote a review of his impressions of the meeting. He wrote that it was noted that the objective is to cooperate with Congress. The memo indicates that Hill staff eventually got classified docu- ments from the Treasury Department. So far this fishing expedi- tion has disclosed no evidence of conspiracy or coverup. If any- thing, Congress circuits have been overloaded with voluminous doc- uments on administration policy toward Iraq. Many of these docu- ments have been widely publicized. Last week, Mr. Eagleburger said he felt that our preinvasion policies toward Iraq were a failure. Perhaps so,' but that doesn’t justify criminalizing our foreign policy differences. Another dimen- sion has been added, I think, to the hearing this morning. Now, Mr. Rose indicated that he hadn’t received any documents from the USDA, they hadn’t cooperated. In testimony a little later on from Mr. Raul he says in a letter dated August 21, 1991, Chairman Gonzalez requested documents from USDA. USDA cooperated fully with this request, and on Sep- tember 27, 1991, USDA submitted approximately 3,700 pages from Department files. All requested documents were provided except for a limited number of documents which had been originated out- side USDA by other agencies of the Federal Government. Were you given those documents, Charlie, or did this go through the chairman of the Banking Committee and you didn’t share the information? Mr. RosE. We have received a number of documents—Mr. Wylie—from USDA, but every time we see a new stack there is something in there we didn’t have. We just were given by counsel for this committee some USDA documents that we haven’t seen before that relate to this, so they selectively give a little bit here and a little bit there. Mr. WYLIE. Apparently, all the documents were submitted to the chairman of the Banking Committee, so you might want to commu- nicate with him. But when we started on this hearing as far as the Banking Committee was concerned, we were talking about BNL bank participation with Iraq, and as I have said, I think that an- other dimension has been added this morning, but it is entirely possible that there were overriding foreign policy considerations which come into play on our relationship with Iraq before Saddam invaded Kuwait, and I think that charges of a coverup coming as they are just before an election looks a little bit like politics as usual. I am reminded of an observation by Justice Leamed Hand in one of his famous opinions in which he says the wisdom borne after the event is the cheapest wisdom of all. Anybody could have discovered America after 1492. The CHAIRMAN. Will you yield to me? Mr. WYLIE. Yes, of course. The CHAIRMAN. I want to correct a malimpression you have. We never did receive the full documentation from USDA. Mr. WYLIE. Mr. Raul’s statement is not accurate, then, and he will make that a little later on in his testimony. 16 The CHAIRMAN. That is right. He will be a witness in the next panel, so we will straighten this out. I will tell you this, we got a relatively small, minuscule document. Mr. WYLIE. I might respectfully suggest that there be an ex- change of information between the two chairmen of the commit- tees. The CHAIRMAN. There has been fully. Mr. RosE. Can I just say one thing in response to Mr. Wylie’s statement. It is absolutely illegal to use agricultural loan guaran- tee funds for arms. That is not permitted in the law. That has not been pursued. Mr. WYLIE. I didn’t say it was. Mr. RosE. But the information about how that was done is only being painfully brought out as we go around and survey the scene, and second, there is a file at USDA on the Rafidain Bank, which is the central bank of Iraq, which is the bank BNL was relating to so far as credit was concerned, and we have asked USDA for the Rafi- dain Bank file, and they have said we have lost it. We don’t have it anymore. So the central bank, Mr. Chairman, in Iraq where all these billion dollars in credit loan guarantees were directed, the file at USDA on the Rafidain Bank is missing. Mr. WYLIE. Well, Deputy Secretary Crowley had a little different view when he testified before us last week, may I respectfully sug- gest. The CHAIRMAN. I will also, as a matter of personal privilege, ask my colleague to yield a little bit further. I somewhat resent your implication that this is a politically motivated witch hunt on the eve of an election. If the administration had given us the docu- mentsi Mr. WYLIE. Mr. Chairman, I didn’t? The CHAIRMAN. A year and a half ago, which wasn’t an election year. Mr. WYLIE. I didn’t use the words “witch hunt.” The CHAIRMAN. Well, you are alleging this has real political mo- tivations. We have been on this case through nonelection years, and if we had received the documents then the administration wouldn’t be yelling today that it was an election year. Mr. GEJDENSON. Mr. Chairman, the other thing I would say, Chairman Rose, I think, started in 1986, before this administration was in place, but let’s take a look at the facts. Everybody can argue that every action is political. Mr. Wylie, somebody could argue that your defense of the admin- istration is simply politically motivated. That doesn’t go to the merit of your arguments. Make your arguments. If you think they did a good job in getting the information to us, applaud them for getting the information to us. If you think they did a good job pros- ecuting people who may have violated the law, applaud them for that. Those of us who disagree will be happy to make the argu- ments. Mr. WYLIE. I thought I made the argument that the information from the U.S. Department of Agriculture, which is the argument that Mr. Rose had made, had been supplied at least to the chair- man of this committee. Maybe the chairman of the committee 17 didn’t get it. I don’t know. Mr. Raul is going to testify to that a little later on. The CHAIRMAN. He will be up. Mr. WYLIE. But in any event, as I indicated a little earlier, the notice of the hearing this morning belies the testimony which fol- lowed. The CHAIRMAN. Mr. Vento. Mr. VENTO. Well, thank you, Mr. Chairman. Sam, I paid special attention to your testimony. I want to commend both my col- leagues, Chairmen Gejdenson and Rose, for their work on this matter. I think that we really all owe them—it is very difficult to do under the circumstances where I think there has been bad faith, there hasn’t been good cooperation with this, but I think the point that concerns me is the statement that Chairman Rose—Chairman Gejdenson made pointing out that 14 months after the Iran-Iraq contest, that it took until this year, March and April, that the con- tinuing classification of documents is taking place right now. They didn’t find any reason to classify these documents until 1992. Is that accurate? Mr. GEJDENSON. No, no. What happened is we spent a consider- able amount of time battling with them to get the documents, and we had about 20 or 30 feet of documents in several piles, and it has taken us a while to get through them, but the battle with the ad- ministration was just getting them to give the classified documents to the appropriate committees so we had—the negotiations went on, and what we finally had to agree to was that only four mem- bers of the Foreign Affairs Committee could even see the docu- ments, and it seems to me that there ought to be an obligation on the part of the administration to share these documents. I think there is no question that there is no danger to America's foreign policy or any of our allies in having this information public, having read the ones that we have demanded be released, and the only thing it does is it protects the administration from making bad decisions throughout the process, and there was no hindsight in this. There were lots of people in town and around this country who thought it was a bad idea to sit by while Saddam Hussein killed 5,000 men, women, and children. People thought it was a bad idea. Obviously some people in the administration thought it was a bad idea to sell Saddam Hussein things he could make into weapons while it was going on. It was overruled by the President of the United States in NSD—26, and that is part of the information that needs to be released. Mr. VENTO. Well, Mr. Chairman, I think that the fact that there is an ongoing and continuing classification of these documents after the fact indicates that this is an effort simply to obstruct, not to give us what we need. It isn’t up to the administration to decide what we need. That is our call, our decision, and we have responsi- bilities if we are given certain material in terms of its classified nature. I think the concern here isn’t the administration deter- mined what we need, and I think that is the concern that we are always in elections here. We are in elections every 2 years, so that has nothing to do, I mean in terms of this issue, and we need the continuity and the cooperation of the other committees that are 18' working on these matters, and I appreciate the fact that there is an effort to accomplish that. I am pleased to see that we aren’t getting involved in jurisdiction fights on this. We have a common interest in bringing forth the in- formation. Everyone is entitled to their own attitude. They are not entitled to their own facts with regard to this. I think that we need to have the information here and the American public, I think, de- serves that information. We write these programs, put these laws into effect, and what is apparent here is that they have been disre- garded in a blatant way. They have been blatantly disregarded in terms of the application of these laws subservient to executive orders by people in the administration. Now we get a letter saying, well these people can’t come forward and testify. It is our policy that personal aides shouldn’t come for- ward and testify. Well, what are they doing, then, exercising public policy responsibilities if their personal aides, why are they given public policy decisionmaking power at the National Security Coun- cil and the other activities? I think that this is ludicrous on the surface. If they are going to be given these types of responsibilities, powers, and appointments, this is a problem within the administration where cabinet officials no longer have responsibility. You have got a clique within the ad- ministration with the National Security Council that are running things, then they throw a blanket of Presidential immunity and rights around them so they can’t come forth and talk about this. I just think we have to have this. We should be full partners in the decisionmaking. If we are there for the crash landing, we ought to be there for the takeoff. We at least ought to have the opportunity to set a policy for the future. Really, that is what we are talking about here. Obviously, if there is criminal wrongdoing, that is up to the Justice Department. That is up to a special counsel. Principally, though, we can’t expect it to write rational policies when we are denied information as to what is going on. If you want an example of why Washington doesn’t work, this is exhibit A as to why Washington doesn’t work, and it won’t work when you have this type of attitude and this type of denial of the facts and the process. Thank you, Mr. Chairman. The CHAIRMAN. Mr. Bereuter. Mr. BEREUTER. Thank you, Mr. Chairman. I understand we will be able to make opening statements before the next panel, so I would reserve-I just have two questions to Chairman Rose if I could proceed with those. On page 2, Congressman Rose, you made comments about the use of U.S. ag export credit guarantees and specifically run into foreign tobacco sales and to BNL. I am not sure that I see explicitly the links. I think that you believe they are there and they may be, but I want to put them on the record. Do you think—are you saying on page 2 and the top of page 3 that there was a sale of foreign tobacco to Iraq or elsewhere using United States ag export credit guarantee resources through BN L or through any other financial institution for that matter? Are you saying our resources were used for foreign tobacco to be shipped to raq. 19 Mr. ROSE. Yes. It is a little complicated, but not really. The to- bacco dealers were cheating Iraq. They were blending Brazilian and South American tobacco with American tobacco and selling it to Iraq as if it were 100 percent United States grown, but they were also, and they pled guilty to this in Federal court in Fayette- ville, North Carolina. They were also paying bribes to Iraq. Mr. BEREUTER. Since we are a Banking Committee, that is obvi- ously a violation of USDA’s responsibility and the Ag Committee's responsibility to oversee it. Should BNL have been knowledgeable about that and did they contribute knowingly to a violation of U.S. law in permitting that to happen? Mr. RosE. Yes. All of these transactions were taking place through BN L, and we have discovered that the Foreign Agriculture Service of the United States Department of Agriculture was en- couraging people who wanted to sell or do business with Iraq to go down to Atlanta and talk to the good people at BNL, because they have got the lines of communication, the doors open and so forth. Mr. BEREUTER. But you are saying specifically, Chairman Rose, if I could get this reiterated from you, as I understood you to say it the first time that BNL had reason to know that tobacco was being blended and, therefore, U.S. funds were being used illegally by the firrgs,? the tobacco firms to which they were extending USDA cre it. Mr. RosE. Yes, and worse than that, I think BNL clearly knew that the Iraqi Government was requiring extra sales services; that is, bribes, and that in most instances the price that Iraq was paying for the tobacco was many times the world price. Therefore, there was a lot of cash left sitting around on the table for other things, and I think this will come out next Tuesday when Mr. Dro- goul pleads guilty in Federal Court in Atlanta. Mr. BEREUTER. Thank you. Now, my second question, are you saying that United States ag credit export guarantees through BNL were used by Iraq in purchasing weaponry? Mr. Ross. Absolutely. Mr. BEREUTER. Why do you say that? Mr. RosE. Because we have cables from Iraq back to United States agricultural suppliers in which the buying company, the central buyer for Iraq says we want machine tool parts, we want trucks, we want military equipment to be sent to us or we are not going to continue to buy agricultural products from you. They were requesting and getting extra sales services, and we also know it has been reported in the national press that the Iraqis were bartering foodstuffs to the Soviets in return for weapons. Mr. BEREUTER. And you are saying that there was—there should have been no doubt in the minds of BNL officials that the condi- tions being sought for future sales using USDA credit extended throiugh BN L would require that weaponry be sent even with other un s. Mr. ROSE. Absolutely. Mr. BEREUTER. They didn’t necessarily say, I gather you are saying, that those ag export credit funds had to be used for weap- onry, but they would no longer be purchasing agricultural products under this USDA Program unless BNL could find weaponry avail- able and for purchase? 20 Mr. ROSE. No. The Iraqi letter, the Iraqi central buying-company would write to the company that was selling it something, not BNL, but BNL knew this was going on and the Italian Parliament investigating this whole affair has concluded that they knew exact- ly what was going on. Mr. BEREUTER. Do you have any evidence at this point that USDA officials or any other U.S. officials were knowledgeable about the violations of law that were being-were taking place on the part of BN L? Mr. RosE. Yes, we have extensive knowledge that they knew ex- actly what was going on. We were telling them what was going on. They were denying that it was going on. Secretary Baker has said publicly that he went to Yeutter and asked him to make an addi- tional $500 million in loan guarantees. We can get into how the National Advisory Committee works if you want to because that is where the word came to Agriculture to make these loans. Mr. BEREUTER. I am wondering at what point Chairman Rose, at the Agriculture Committee or through information you give to us, you will be able to lay out evidence that U.S. Government officials were knowledgeable that BN L officials were violating law with re- spect to USDA ag export credits. Mr. RosE. Well, BN L was simply doing what they were being en- couraged to do. NSD—.26 was the policy of the country. Baker was encouraging Yeutter to continue to make agricultural loans. Mr. BEREUTER. There is nothing in this United States—this number 26—number 24 which indicates violations of the law. Mr. Ross. I agree with you. That is why we say there should be vigorous pursuit of those violations of the law and there is no inter- est anywhere. I asked the head of Foreign Agriculture Service: Hoiiv do) you know that a load of rice left an American port and got to raq. How do you know it wasn't a hollow transaction and the only thing that made it was cash? He says we don’t know. We don’t in- spect. Mr. BEREUTER. We don’t know if, in fact, routinely that that always happens with respect to any of our USDA-Agriculture export credit sales? Mr. R0sE. That is right. Mr. BEREUTER. We don’t know that for a fact? Mr. ROSE. We know that Agriculture was getting a lot of feed- back that people who were trying to sell to Iraq were getting hit up for bribes. I think my good tobacco dealers just got a little ahead of the game. They were paying the bribes and cutting the product, you understand, at the same time. They were a little smarter than the average bear. Mr. BEREUTER. Thank you. I know my time has expired. I think the important point is, if it can be shown that these kind of bribes were being done with the knowledge and even support of U.S. Gov- ernment officials, and thus far we haven't seen that. The CHAIRMAN. Mr. Frank. Mr. FRANK. Thank you, Mr. Chairman. Let me say with regard to the questions of political motivation and timing, what I guess sometimes reflects around here, we all deny there could be any political motivation. My general feeling 21 has always been that if people want decisions made with absolutely no political motivation, they should never ask 435 elected officials to come anywhere remotely near them. There is, thanks to the Constitution of the United States, fortu- nately, a reasonable political motivation that everything we do the American people are entitled to know what are the different con- ceptions that people have, where do parties differ. I regard that as wholly correct. In this case, I was doing some homework and got my staff to give me all of the special orders you had done so I could reread them. And I notice the first special order in this series was dated February 4, I believe, 1991. That is about as far from an election as it is possible to get. So the chairman began this series in February 1991. If you were trying to influence elections I can’t imagine why you would be doing something in February 1991 unless you had a candidate for Valentine's Day Queen. Mr. WYLIE. Will the gentleman yield? I was making reference to the hearing this morning, not to the special order of February 4. Mr. FRANK. I appreciate that. But the fact is that this hearing this morning is a large culmination in that chain of events. I think the chairman has been working on this and has usually been able to get enough for the rest of us to focus on. Mr. WYLIE. Logical to you maybe, not to me. Mr. FRANK. OK, I will accept that. Mr. GEJDENSON. If the gentleman will yield. If we had received these documents earlier, we could have had this done a long time ago. Mr. FRANK. Instead of people marking when something might be done politically, I thought when watching the Senate on C-SPAN that they could save time, to have a card saying the Senate is con- ducting a quorum call. I thought they would have to use that less if they just had a card that said the Senate is conducting business and we could assume they are having a quorum call. On those rare occasions when this body of elected officials that has the duty of presenting competing views to the American public acts totally non-political I suppose we ought to notify that. Other- wise, it doesn’t seem to me, worthy of remarking. I would ask Chairman Rose in particular, I would say to follow up-I think the gentleman from Nebraska’s questions were perfect- ly reasonable, but I don’t think the question at this point is guilty knowledge on the part of the administration. What bothers me is what looks like invincible ignorance. That is, people who did not know, didn’t want to know, went to great lengths to avoid knowing, and were determined not to let anyone tell them anything. When we talk about an independent counsel, I would point out to people, most independent counsels—I have had some dealings with that through my subcommittee—I believe the majority of them have exonerated the people they have investigated. We should not have this view that the appointment of an independent counsel is a condemnation. What we say is that in some cases the indirection between the Justice Department and the matter to be investigated has been so intimate that no one will have confidence or very few people will have confidence in that investigation. 22 Remember, under the independent statute, if you are investigat- ed and not indicted, unusual in American law, your attorneys fees are paid. If you as a private citizen are investigated and you are not indicted, or your indictment is totally thrown out, you are out of the money. But in the independent counsel case you are reim- bursed and we have reimbursed in the hundreds of thousands of dollars. The question I would ask is this: When we had the panel before us of administration officials, they all quite confidently told us there had been no diversion of the CCC funds for arms, but none of them could tell me why they were sure of that. I think the gentleman from Minnesota had the same reaction. Do either of you have any knowledge about any executive branch agency that has seriously investigated this possibility? I agree with the gentleman from Nebraska you cannot assume that in every case. A basic principle of law enforcement, yes, you assume most people most of the time are doing things legally. But when you get indications there have been deviations, as it seems to me we clearly have in this case, a kind of threshold is reached and then that assumption is suspended and you go and in- vestigate. The question is, clearly there was enough evidence to jus- tify the investigation. Has any government Department, to the knowledge of either of you, seriously and thoroughly investigated gie possibility there was a diversion of CCC funds into arms? Mr. ose. Mr. ROSE. No. We have some documents that are in foreign lan- guages that will be translated and available at the hearing on Tuesday that will relate a little bit more to the knowledge that the government had. Mr. FRANK. Will you specify what language? Between you and me, they could think that was English. Mr. ROSE. Just French and German. If your French is pretty good, I will read them to you now. Other than that, nobody is doing a thorough investigation of this. Your term for practiced ignorance is absolutely right. That is the kind of thing we found over and over again at USDA, that people said, hey, we are just trying to sell farm products here, that is all we are trying to do. But they knew the customers—that the sellers were getting bribed. And they knew that they were sending money to Swiss bank accounts, but you know, by God, we got to look out for the old farmer. We got to keep on selling them farm products. I am on the Agriculture Committee and I want things sold by the bushel and the ton for the American farmer, anywhere we can sell it. But the National Advisory Committee within the executive branch of government was telling USDA what loans to make to Iraq. The whole history of GSM—l02, -103 Programs— there had been $25 billion in loan guarantees made. Iraq got five of them. Mr. FRANK. My time is out. It seems to me this: What you got here was minimal investigation. When outside sources brought in- formation suggesting criminal behavior, they did the minimum necessary to deal with that. And what I think we have is—and I agree—you should not criticize policy differences. The question I have here, given the burning desire which I cannot understand from this administration, after the war in Iran—and the gentle- man from Connecticut is right, that is really—-the policy makes no 23 sense after the war with Iran is over. The burning desire of the ad- ministration to be nice to Iraq afterwards may well have led the administration to ignore evidence of criminality. I don’t say that it is criminal for helping Iraq, I think it was a very poor policy. The question we have is: Given that there is a pattern of crimi- nal activity that various groups engage in, BNL and others, did the administration allow its zeal to help Iraq bind it to criminal activi- ties and then, subsequently embarrassed by that, they improperly withheld documents from us to cover up the fact they were not zealous or even active in going after the criminality? Mr. ROSE. Absolutely. You heard of the Supercannon. The Super- cannon was made by a company in England, among others, named Matrix-Churchill. Matrix-Churchill got the carbide tips you need to cut the steel, the machine system from Kennemetal in Latrobe, Pennsylvania. But the U.S. attorney in Atlanta used to be in a law firm in which he represented Matrix-Churchill before he came to be the U.S. attorney in Atlanta. He recused himself, let his assistant handle the investigation of Kennemetal and she wrote them a letter saying you all haven’t done anything wrong. That stinks to high heaven. The Justice Department has got to be out of its mind to let an assistant to the U.S. attomey who represented a link in the chain for manufacturing the Supercannon handle the investigation over one of the exporting companies here that is under question. Mr. FRANK. Is that the same office that would be handling the current matters? Mr. ROSE. It was also the office handling the investigation of BNL, absolutely. Mr. FRANK. Thank you. The CHAIRMAN. Mr. Jolmson. Mr. JOHNSON. Thank you, Mr. Chairman. I have to say that you know, I haven’t been up here long enough to really get the feel of the land, but I am learning a lot. I have to tell you, when I came up here from Texas, I couldn't understand about half the people, but Chairman Rose, I can understand you, you speak English. I ap- preciate that. Mr. FRANK. Mr. Chairman, can I get a translation of my re- marks? Mr. JOHNSON. Barney, I tell you I really appreciate you admit- ting this is a political hearing and I thank you for bringing that to our attention. I would also like to point out that this document that you gentlemen were showing us does have some comments about restricting certain aid if it is not appropriate. And I was glad to hear you say that it didn’t violate anything, because it appears to me there is nothing in there of substance. Could I ask you, Chairman Rose, please, sir, did the USDA, IG, as a result of your comments, start an internal investigation of their own? Mr. ROSE. There has been an internal investigation, yes, as a result of my request, yes. Mr. JOHNSON. Right. And I mean it has been ongoing for some period of time, hasn’t it? 24 Mr. Ross. It has been ongoing for a long time. We are getting ready to have another update in the next several weeks of what the investigators at USDA have located. Mr. JOHNSON. Did they get into the bank connection with that? Mr. Ross. Yes. They are the ones that told us about the connec- tion with BNL. See, when the Department of Agriculture enters into a loan guarantee program, they are relying on a bank in the foreign coun- try to guarantee that the loan will be paid back, and then the U.S. Government guarantees some local banker that they will see that the whole transaction is made good. The Central Bank of Iraq is called the Rafidain Bank in Bagh- dad, Iraq, beautiful downtown Baghdad it is called, the Rafidain Bank. And they were the central guarantor for all of these credit guarantees, $5 billion worth that were going to Iraq. We asked the investigators at USDA to let us see the file on the Rafidain Bank, because in the files of all the other central banks that are involved in this is information about the insolvency of the bank, what their condition is, their ability to repay, all that kind of good informa- tion. They couldn’t find the file. They said it has been lost. I just happen to find that amazing. Mr. JOHNSON. But they did provide you with the information they had on the investigation, did they not? Mr. Ross. Yes, they sure did. Mr. GEJDENSON. Mr. Johnson, I hope you can understand me—I think you can because I was down in North Carolina and they un- derstood me just fine. If you take a look at where we are, in 1982, the administration took Iraq off the terrorist lists. That was the green light for sales of dual use items to Saddam Hussein. That ba- sically said you can sell stuff to Iraq. With N SD—26, after the war with Iran was over, this was putting a cop in the intersection and waiving people on saying you should do business with Iraq, we want you to help Iraq. We want you to help rebuild their energy industry. We want you to sell them mili- tarily useful items. We want to aid and abet Saddam Hussein. That is the importance of this document. This isn’t some bureaucrat asleep at the switch, which is where my committee started off. The arguments to my committee at the beginning of this was, the reason technology was being transferred to Iraq was that those bureaucrats over in Commerce were asleep. And there were a bunch of guys running around this town selling the argument to us the reason stuff was getting to Iraq was because we either had a bad Export Administration Act or the Commerce Department was such an eager salesman for American industry, and that is why dangerous things were getting to Iraq. When you look at NSD—26 and the other documents we can’t re- lease yet, you find out it was the administration’s sole desire and policy to aid and abet Saddam Hussein. The cop was put in the intersection and he was waiving the sellers on. Mr. JOHNSON. I would comment there is probably one country over there we need to try to make strong enough to hold the peace and, at that time, we probably thought it was Iraq. I am not sure that the Iraq-Iran war was totally over. You all keep talking about how they beat Iran. 25 Mr. GEJDENSON. It was over for 14 months. The clear problem was now Saddam Hussein was not just another powerful dictator in the region, he was the most powerful dictator in the region. When he cgme up against the American forces, he didn’t look all that toug . You have got to understand this was the United States of Amer- ica. We were prepared to fight the Soviet Union and China simul- taneously if need be. This guy had more power than any of his neighbors combined in numbers of tanks and planes and people in uniform. When we went to war, we took 6 months to get ourselves ready to do it. There was no need to strengthen Saddam Hussein; he was the single danger in the region after the war was over. Mr. JoHNsoN. I understand that, but this document you brought up talks about no military weaponry. It is talking about nonessen- tial items. My time is up. Thank you, Mr. Chairman. I appreciate your re- sponse. Mr. GEJDENSON. Did you understand me? Mr. JoHNsoN. Yes, sir. Mr. GEJDENSON. Thank you. The CHAIRMAN. Mr. Hoagland. Mr. HOAGLAND. Thank you, Mr. Chairman. I want to set aside for a moment the question about what has been provided and what has not been provided for in the docu- ments and ask the gentlemen to help me with the big picture as to what is going on here and if you could comment. My understanding, first of all, over this period of several years we extended $5 billion in agriculture credits; is that right? Mr. ROSE. To Iraq. Mr. HOAGLAND. To Iraq, that is right. These funds were either diverted or they enabled the freeing up of other funds by Iraq. Mr. Ross. Absolutely, that is the key point. They enabled a cash- starved nation to either barter with what they got or, if they were able to bribe a supplier, use that hard currency directly—excuse me for interrupting. l\l/Ir‘; HOAGLAND. Those funds were then used to buy weaponry, rig t. Mr. Ross. Absolutely. I doubt if they used the extra money for their library system at this particular point in time. I think they were interested in strengthening their military. Mr. HOAGLAND. This concluded after the end of the Iraq-Iran war, right? Mr. GEJDENSON. As a matter of fact, it in some ways sped up after the Iran-Iraq war because what we had was now from the President of the United States, a signal we wanted to be more seri- ous about this. Some people have speculated that the embarrass- ment over selling arms to Iran in the Iran-Contra Affair may have contributed to some of this. Other people have speculated the growing strength of Iraq the administration was now fearful of losing its friend and there are all kinds of excuses. What we had was 771 licenses for dual use items worth $1.5 billion, 85 percent of which would have been denied if we wanted to sell it to Syria, because Syria is still on the 26 ' terrorist country list. It is hard to distinguish between these two guys, they are both about the same. Mr. HOAGLAND. During the Iran-Iraq war, you might argue there is some foreign policy justification for allowing agriculture credits to be diverted because we wanted to see Iran defeated. Mr. GEJnENsoN. You might have a debate before the war was over, but there shouldn’t have been any debate after the war. Mr. HOAGLAND. Clearly, the law was broken in terms of the way agriculture credits are supposed to be extended and used. Clearly, the law is broken in terms of the technology that was supplied-— Mr. GEJnI:NsoN. On the technology side, it is much worse. If the law is broken, you have some third-rate people in business violate American law. There may have been violations in licenses in some instances that Mr. Rose has uncovered that they failed to get li- censes they needed to. That is a violation of law. The central issue, when it comes to the dual use item exports is they were encouraged by the administration, that when people from Commerce went to the administration—in two instances-—not just Mr. Kloske and not just other documents but his predecessor argued against these sales he was overridden by Mr. Kimmitt and others in the administration. Mr. RosE. You didn’t get the answer to the piece of your other question. The BNL indictments, the 347 counts are about the misuse of these agriculture loan programs and the knowing manip- ulation of them by the Banca N azionale del Lavoro manager. Mr. HOAGLAND. All these loans were extended to a country about whom agriculture experts had serious reservations concerning their creditworthiness and repeatedly stated those. These loans were extended to a country that we know had used chemical weap- ons on its own people, and a country we know harbored terrorists, even though we had taken them off the terrorist list in 1982, is that right? Mr. BEREUTER. Would my colleague yield? Mr. HOAGLAND. Yes. Mr. BEREUTER. I think you have asked two questions. It is impor- tant, it seems to me, to differentiate between the two. There was no question that based on the record, that Iraq was creditworthy, had always repaid and would continue to repay until the time the conflict started. The other part of your question would be answered the opposite way, if I could inject that. Mr. SLATTERY. Would my friend yield? The CHAIRMAN. Let me correct the record. We do have evidentia- ry documentation showing that Iraq was not creditworthy and that that was brought out in the case of the Export-Import Bank time after time. I do want to straighten that out. Mr. BEREUTER. Would the gentleman yield? I do not believe that is the case. I would be happy to look at that. At the time, payments were still coming from Iraq until the time they invaded Kuwait, and, of course, that stopped any kind of payment. The CHAIRMAN. We have had hearings on that. Mr. BEREUTER. We went through discussion on the House floor on several occasions about creditworthiness. The CHAIRMAN. We had two hearings on that. 27 Mr. ROSE. We have put in the record documents that we have ob- tained that show both USDA and the National Advisory Council were raising questions about Iraq’s creditworthiness 11/2 years before the invasion. That is on the record. SLA'1'rERY. Would my friend from Nebraska yield for 30 sec- on s. Mr. HOAGLAND. Could I ask unanimous consent for an additional 3 minutes. The CHAIRMAN. Yes. Mr. SLATPERY. I thank my friend from Nebraska for yielding. In fact, last week at a similar hearing, I read into the record Exim- bank internal documents floating around indicating that they vlilewed Iraq as a terrible credit risk. There was no question about t at. There was discussion Iraq was threatening to cease further pay- ment on loans they had already entered into unless additional credit was extended. I think the record is very clear on this that the Eximbank viewed Iraq as a very serious credit risk, and in fact Iraq was threatening to terminate further payments on existing loans unless more credit was extended. Mr. BEREUTER. Would the gentleman yield one more time? Mr. HOAGLAND. Let me make a comment first. We have an ex- tensive staff memo here which I would be happy to share with the gentleman from Nebraska, providing it is all right with the chair- man of the committee, concerning Iraq’s creditworthiness. It de- tails various opinions of the Eximbank and elsewhere raising red flags. I will be happy to yield. Mr. BEREUTER. My point was with respect to USDA, the agricul- ture export credit. There was no indication whatsoever that Iraq, on the basis of its past arrangements, would fail to repay. I am not talking about the Eximbank. I am talking about the Agriculture Export Credit Program. Mr. RosE. Mr. Hoagland, can I make one point? The central file that would tell you whether or not Iraq is creditworthy or not is the CCC file on the Rafidain Bank and it is missing. Mr. HOAGLAND. To underscore that point, let me first wrap that up and then I will ask you a question about that. It seems to me that I am correct, the conclusions of the two of you and your subcommittee staffs are that the tremendous buildup in arms of $5 billion resulted in enabling Mr. Hussein to engage in increases in his military prowess and the growth of his own arro- gance. The conclusion that he could move in and take over a small but very, very wealthy nation like Kuwait with impunity, directly led to the war. Mr. GEJDENSON. I think there is no question Saddam Hussein was the most surprised man in the world when we responded nega- tively to his invasion of Kuwait, considering everything you heard from Chairman Rose and me, from 1982 when they took him off the terrorist lists, throughout the entire process. Mr. ROSE. To say it another way, to say the other side of that, George Bush became outraged when Saddam Hussein misunder- stood the relationship that existed between them. Saddam Hussein was, you know, sitting over there in Baghdad saying, look at what 28 the United States of America is doing for me. Look at what we are getting through BN L Atlanta, these are my pals. Surely we can straighten out a little border problem we have got down here in the south. And I think Sam is absolutely right. I think Saddam Hussein was probably the most surprised fellow on the face of the Earth when he turned on the TV and saw what was coming to get him. Mr. HOAGLAND. What about if our government had played it straight and followed the law, followed the regulations with respect to the extension of agricultural credit and with respect to enforcing laws concerning the exported technology and complex military equipment? What about following the Commerce regulations? Mr. RosE. It wouldn’t have happened. Let me give you another key point to this. The Banca Nazionale del Lavoro was the funnel for the Rafidain Bank adventurism in other parts of this country- the Financial Times of London reporter told me it was broadly known on Wall Street that BNL money was being used to put arms deals together for Iraq. Well, tell me how did BNL in Atlanta get so liquid? It got liquid because of USDA pumping $2 billion in loan guarantees into that little bank in Atlanta. And out from there this octopus was able to put together all kinds of arms deals that directly aided Saddam Hussein. Sure, USDA can sit back and say well, all of the loans were carried out properly. Well, that misses the point. Mr. GEJDENSON. The administration can’t point to one instance between 1982 and the invasion of Kuwait where they sent Saddam a signal that there was a line in the sand he couldn't cross. Not when he harbored terrorists and got taken off the list. Not when he attacked an American ship. Not when he killed 5,000 men, women, and children with chemical weapons. And not when he moved all his forces to the Kuwaiti border did he hear one objection from the administration or its representatives. Mr. HOAGLAND. Thank you. The CHAIRMAN. Mr. Roth. Mr. Ro'rH. Thank you, Mr. Chairman. I appreciate being allowed to ask a few questions here this morning. I must say Monday morn- ing quarterbacking is easy. Mr. Rose, of all the people in Congress, I must say you have got more chutzpah than anyone in the Con- gress for you to say, gee, Saddam Hussein must have really been surprised when we went in after him. Saddam probably thought we were all Liberals here in Congress, no patriotism left. How did you vote when the President came to you and said, Mr. Chaglie Rose, my good friend, support me in the Gulf. How did you vote. Mr. Ross. I voted the same way Ross Perot said he would have voted if he was here. Mr. Ro'rH. In other words, you didn’t back the President. Mr. GEJDENsoN. Let me say something to my friend. I had this discussion with a colleague of mine. Frankly, knowing what I know today reinforces my fear of leaving George Bush in charge of the war. As my friend knows, Saddam Hussein is still in power. More Kurds died. Mr. Rom. Let me say this. I have—there is no personal—I don’t have any sharing in personal animosity toward any of you people. 29 Mr. GEJDENSON. You are a good friend and good colleague. Mr. ROTH. The point is, this is all political. You guys are here to beat up George Bush. Why don’t we Democrats and Republicans work together for the good of the country at some time? My God, the chairman of this committee, whom I revere, who is a great guy, was going to impeach George Bush when he went into Kuwait. Now we are down here beating the hell out of him. Mr. ROsE. Where were you in 1986 when I was trying to get the USDA to cooperate with me to tell me how they were using this loan program? I could have certainly used your help. Mr. ROTH. You always have my help. Mr. GEJDENSON. The gentleman is a great defender of his party and he is a good friend of mine, but the gentleman and I stood shoulder to shoulder 11/2 years ago when we fought with the admin- istration to get the information out. If your and my President had given us the documents that you and I asked for when we asked for them, this wouldn’t be coming up now. We would have finished this investigation a year ago. Mr. ROTH. My friend, I must say this would always come up. This is a political charade. You guys just want to beat up on George Bush. George Bush is not going to be your big enemy, Ross Perot is going to be the guy that is ahead of you guys. This is what you slfiould be focusing on. This is getting too political. We cannot have t is. This country is coming apart at the seams. We cannot allow this type of political action anymore. It can’t be the Republicans’ and Democrats’ fight. You can’t continuously fight on Capitol Hill. We owe it to this country to stand united. By God, we aren’t doing this as a political charade. Mr. GEJDENSON. Does my friend believe the American people ought to know what the actions of their government were? Mr. ROTH. You bet they should and George Bush is telling them. Mr. GEJDENSON. This is what this is about. Let the American people know the facts of the case and they will decide that is how democracy works. Mr. ROTH. The American people do know how it works. I don’t believe George Bush would mislead the American people. He is not misleading the American people. The CHAIRMAN. Mr. Moran. Mr. MORAN. Mr. Chairman, I can’t believe what I just heard. Mr. ROTH. Would the gentleman yield? Mr. MORAN. Yes, but I am going to ask for the same time. Mr. ROTH. How did you vote, Mr. Moran? How did you vote when the President came and asked you for your support? First, you were with him. Then you held a town hall meeting and then you were opposed to him. What kind of political courage is that? Mr. MORAN. That is listening to my constituents and keeping my mind open, Mr. Roth. The CHAIRMAN. Will you both yield to me. Mr. MORAN. Sure. The CHAIRMAN. I will ask the gentleman from Wisconsin to strike those words. The gentleman was questioning the motives of a colleague as to his actions and his votes and I think that is not 55-927 O — 93 - 2 30 allowable under our rules and I will ask the gentleman to strike his words. Mr. MoRAN. Mr. Chairman, I would request it be kept in the record and I don’t want any of that struck, because the more I listen to this testimony, the more I am convinced that that vote was the right thing to do, that we had no business creating an enemy and then putting—then putting the lives of 200,000 Ameri- can men and women exposed to the very guns that we had supplied raq. The CHAIRMAN. If the gentleman would yield to me. Mr. MoRAN. Yes. The CHAIRMAN. It would impair your time. This involves the rules of the committee and the House and that is the reason that, as chairman, I am asking that unparliamentary language be strick- en from the record voluntarily. I would like to have a motion to that effect from the gentleman from Wisconsin. I think under the rules it should be forthcoming, Mr. Roth. Regardless of Mr. Moran’s wishes. Mr. ROTH. Could we have the words read back? The CHAIRMAN. Will the reporter read back Mr. Roth’s words with respect to Mr. Moran’s vote and position taken and the in- sinuation that he had. Mr. MoRAN. Supported the President until he got better informa- tion, listened to his constituents and then voted properly? The CHAIRMAN. That is right. The information is the motives were questionable. I know that is a violation. Mr. ROTH. Mr. Chairman, I insist those words be read back. I just asked the question. The CHAIRMAN. Will the reporter kindly favor us. [The record was read as requested.] Mr. ROTH. Mr. Chairman, that is a legitimate question and what I have said I have said. Maybe the gentleman will want to respond. Mr. MoRAN. Thank you, Mr. Roth. I appreciate you putting that in for the record, because, as I said, I am becoming more and more proud of that vote and I certainly think it is a pretty good idea to listen to one’s constituents, to keep one’s mind open, and not to make the assumptions that even the President of the United States is always acting, in fact, in the best interest of this country. That is the what is coming out of this hearing. My shock comes from people like you—frankly, I am disillu- sioned. Here I have thought the world of so many of you people that—and I would have to assume that you would have the courage to make the right decisions to want all the information, particular- ly provided to the American people, and based upon that informa- tion, to make the right judgment. And yet here you are suggesting that something is a political charade or whatever disparaging words you used in defending the actions of the President of the United States who, knowing that 5,000 men, women, and children were gassed, innocent people, and yet he is fighting to make available billions of dollars to Iraq, did not sanction them. In fact, even from 1982, knowing there were terrorists in the country‘ and the President of the United States was head of the CIA, he knew the intelligence information was available, that 31 there were terrorists in that country, yet he takes Iraq off the list of people harboring terrorists. We go through a full decade where we cozy up to Saddam. In fact, apparently more than any other member nation in the Middle East, perhaps including Israel, and here it is certainly a nondemocratic nation. A man who later he describes as Hitler, the most evil personifi- cation of anybody in modern history. Imagine how jilted Saddam must have been when the President is relying on information from people who were paid consultants to Saddam. That was brought out in the previous hearing. We have all this information made avail- able to agencies that Commodity Credit money was being used to acquire weaponry for Iraq. We have a national security directive to improve our economic and political relationship with Iraq, knowing that he has gassed, against all the international agreements, knowing that he has gassed thousands of innocent people, and yet we are supposed to improve our relationship with Saddam Hussein and then 5 days before he invades Kuwait, the administration is up arguing with you—and I would ask you how you voted, Mr. Roth, 5 days before the invasion, whether or not to provide another $500 million to Iraq when it came out in the amendment debate that Mr. Glick- man and Mr. Gejdenson have proposed that there were 40,000 Iraqi troops on the border of Kuwait that this money was being used cor- ruptly to finance Saddam’s military buildu and yet the adminis- tration is up here arguing to pour another S500 million into Iraq 5 days before he invades a country that was supposed to have been our friend. I ask you, Mr. Roth, how did you vote and how can a Member of Congress honestly compare this to some kind of political effort when our chairman, for 2 years, has been trying to make this infor- mation available and has had very little support, even from his own party, never mind the administrative branch of the govern- ment. We have the IG here telling us that documentation was altered within the Department of Commerce, that instead of what original- ly said military trucks, the word military is wiped out. Official doc- umentation is altered and yet you are suggesting this is some kind of pglitical hearing that we ought not get into this kind of informa- tion. Mr. ROTH. I would be happy to. I have always voted against for- eign aid. Saddam Hussein gassed 5,000 people. Yes, he was a mon- ster, but when President Bush went after Saddam Hussein, you were absent. You were nowhere to be found. Now you crawl out and attack the President, the man who stopped this monster. Mr. MORAN. OK. You confirmed my estimation of how far people can go for political purposes. I will discuss that with you, Mr. Roth, and get into a little bit more of the substance. I would like to ask Mr. Rose and Mr. Gejdenson if when we have such an extreme example of cozying up to somebody who is report- ed to be the worst tyrant, a personification of Adolf Hitler, and we cozy up to him for a decade, share military intelligence for a decade, intelligence that can’t even be shared with the Congress of the United States and we share it with Saddam Hussein, are there other examples? 32 Are we doing this with other countries? China, for example, this inexplicable determination on the part of the President of the United States to give most-favored-nation status to China. Is it pos- sible there is similar treatment to countries that stand for exactly opposite of what the United States of America stands for? Mr. GEJDENSON. I think that the real problem here is exactly what you have hit on. It is a very bad example to show the rest of the world that when the United States allows, whether it is the oc- togenarians in Tiananmen Square, or whether it is Saddam Hus- sein in the Middle East to continue to brutalize people and be a tyrant without taking some action, it then provides a message to other tyrants around the globe. And whether or not we are aiding and abetting other tyrants as we did Saddam Hussein, it is the message we sent them. That if there appears to be some advantage for the United States, we very well may let you do anything you want. And I think that is the real danger of the message. Mr. RosE. Can I add one point? You brought out something very important and it is not focused on here. George Bush was the Di- rector of the CIA. If anybody is ever the Director of the CIA, you maintain forever the kind of contact and understanding, and espe- cially if you become the Commander in Chief, you know exactly how that operation works. I am afraid that where we are headed with this investigation will disclose that some of the largest corporations in America were inti- mately involved in violations of the law with respect to reporting exports and dual-use of items to help carry out NSD—26. I mean, I am talking about large manufacturing of vehicles. I am talking about nuclear technology that moved to Saddam Hussein, and the lid is tight when you start asking questions about things like that. Mr. MoRAN. Thank you, Mr. Rose, and I also want to thank Mr. Roth for showing me the depths of political cynicism that some oth- erwise fine, intelligent people will go to to defend the administra- tion. Mr. ROTH. Mr. Chairman. The CHAIRMAN. You are out of order. You are not being recog- nized. Mr. Ro'rH. Point of personal privilege. The CHAIRMAN. The gentleman is not recognized on a point of privilege or any other. The Chair was about to comment on the re- marks made by Mr. Moran and they were inevitable in view of the fact that the previous remarks that I referred to as being out of order and in violation of the rules and it has nothing to do with your judgment. It is a clearly imposed duty on the Chair. Mr. ROTH. If you don’t agree with the chairman, then you are out of order in this committee. Is that what is taking place, Mr. Chairman? You have to follow the party line? The CHAIRMAN. The gentleman is out of order again and the Chair will ask him to keep in mind that the Chair has a responsi- bility of declaring any remarks that tend to demean, or ridicule, or in any way engage in personalities out of any consideration during a hearing. That is the clear duty imposed on me as the Chair. That is the only reason I am intervening. 33 I would just advise both gentlemen that you reached a point now where you are in violation of rule 14. The other one 10(c) as well, but 14 in which the Chair has that inescapable responsibility of preventing any debate degenerating into personality clashes and remarks. I will ask the gentleman to withhold. His time has ex- pired. The Chair will recognize Mr. Slattery. Mr. SLATTERY. Thank you, Mr. Chairman. You know as I sit here and listen to all this discussion, one word comes to mind and that is accountability. In a democracy and in an election year, that is what it is all about. All of us on both sides of the political aisle in both elected branches of our government have records we should run on. We make decisions every day. Those decisions are decisions that we should be judged on. Did we exercise good judgment, yes or no. That is legitimately what politics in its finest sense should be about, testing our judgment, determining whether we have exer- cised good judgment. Anticipating whether we have an answer to problems down the road. And one of the very relevant questions in this Presidential elec- tion is: Who is best qualified to shape this Nation’s foreign policy in a complex world? George Bush has held himself forth for a number of years as a renowned expert in foreign policy matters. Now we learn facts and information that raise new questions about whether he is the expert that he would like for the country to be- lieve that he is. I think that it is very relevant for all of us on both sides of the political aisle to seek the truth in these matters. I can acknowledge that it is most uncomfortable for those on this side of the aisle to deal with this hearing, because what we are get- ting to is some very uncomfortable information. I don’t think we have gotten to the bottom of this yet. I think it is important for us to pursue this and all of us must have the courage and willingness to take it where it leads us. The public has the right to know the facts and the right to know the truth. Last week at this hearing we answered one very important ques- tion; that is, who was responsible for this policy. And the answer to that fundamental question is President George Bush was responsi- ble. You need to look no further than NSD—26. In addition to that, Secretary Baker endorsed the policy. Secre- tary Yeutter endorsed the policy. Secretary Mosbacher endorsed the policy. They all embraced this policy and I hate to use this word because of its historical and inflammatory connotation—but this policy of appeasement toward Saddam Hussein. They mistak- enly believed they could buy his friendship. Last week, Secretary Eagleburger sat where Mr. Gejdenson is sit- ting today and basically acknowledged that. That is what N SD—26, when you read it in its entirety, basically says. We want to try to fihange this guy and the best way to change him is to be nice to 1m. In spite of all that evidence, apparently George Bush believed that he could do what Chamberlain thought he could do at Munich and what Roosevelt thought he could do with Stalin at Yalta and they were all wrong. 34 / I would say to my friend from Wisconsin, I voted to give George Bush authority to respond militarily to Saddam Hussein. I happen to believe I made the right decision. That decision had to be made at that time, but I have been intrigued and really amazed to learn how this administration got us to that point. That is why I am here on a Friday trying to learn as much as I can about exactly how this country got into that mess and what we should have done to have prevented this colossal blunder and hope- fully we will learn from all this so we will prevent future blunders. This is legitimate political discussion as far as this member is con- cerned and I think it is legitimate political discussion for American people. My friends, if elections in this great democracy stand for any- thing, they stand for determining who was responsible for this Nation entering wars and how we conducted ourselves before and after those great historic events. That is what this is all about. It is very political. Yes, you are darn right it is. All of us in this room have political interests or we wouldn’t be here and the people watching this on television have a political interest also. Thank goodness they do. There is nothing wrong with being political in an election year in a democracy and we shouldn't apologize for that one bit. Mr. GEJDENSON. Can I say something before you ask a question. I like what you said and I think you said it very well, obviously. When my committee started this work, we were looking for a battle not between partisans, not even a battle between people of different philosophy. I understand, as you get closer to the election, things get hotter. What my committee was doing, we were being told by people in this town that the Commerce Department hadn't done its job. That the Commerce Department, as one agency of the government, had failed to restrict high-technology items from getting to Saddam Hussein. So because Commerce was doing a bad job, we were told and that led to Saddam Hussein getting this technology. That is where I started with Mr. Roth and others on this committee. Mr. SLA'1'rERY. Another committee I spent some time on, the Energy and Commerce Committee, took a look at this stuff and there is some very revealing information there also. One of the things we had to answer was who. We know who was responsible. What we don’t know yet is why this was going on. There are some fundamental questions here, too, I think. Specifi- cally, why did this administration arm Iraq, and did they know that this money was being diverted through the CCC to purchase arms. This is a very important question, a very important question. Be- cause if in fact money was being diverted through the CCC to Iraq and that enabled them to purchase arms, we have serious questions here and serious problems. And I believe very strongly that if our government and the people in this administration knew this was going on or had significant reason to believe it was going on and didn t pry into it, didn’t determine what was involved here, we have a very serious problem, a very serious problem. Mr. RosE. I totally agree with you. Like what you said when you started, but the problem is best looked at from the executive’s 35 point of view and what Mr. Eagleburger said. It didn’t work. So then the problem became how do you cover up what didn’t work. Mr. Gejdenson’s perspective is that the "Commerce is allowing too much high-tech stuff to move over into Iraq. My perspective through companies like Kennametal is that they were cleverly using intermediaries so they could attempt to say we didn’t know the dual-use. We didn’t know the military use that was going to be made of this equipment, therefore we didn’t have to have the export li- censes that are required and that Justice has done almost nothing to go back and clean that up. Mr. SLATTERY. As the chairman probably knows, there were Offi- cials in the Pentagon who have publicly stated before different con- gressional committees that they were objecting to the export of a number of dual-use technology items. Mr. GEJDENSON. And people in Commerce. Mr. SLATPERY. And people in Commerce that were objecting and these people were being overridden by other people. Mr. GEJDENSON. By N SD—26. Mr. SLA'I'I‘ERY. Basically by the implementation of NSD—26. I think it is important to keep that in mind. As I sit here today, I have two basic questions I want to get an answer to. That is: Did this administration know—did anyone in this administration know whether CCC money was being diverted to buy arms by Iraq? Yes or no. That is a big question that we need to get an answer to. And the other question is: If the administration did know or had sufficient evidence so as to lead any reasonable person to conclude that this was going on, yet didn’t really explore it, if they were doing this, was it this administration’s policy to really arm Iraq after the end of the Iranian-Iraqi war? Yes or no. Then the next question becomes, if we were in fact, as a nation, committed to rearming Iraq in the face of the atrocities and in the face of knowledge that they were in fact building a nuclear capabil- ity, a biological capability, a chemical capability, what in the world was going on? These are the questions I think the American people have a right to know. And if the chief architect of these policies runs for reelection this year, saying reelect me because I am a brilliant for- eign policy strategist and leader, I think we have a right to know this information so the American public can make their own inde- pendent judgment as to the brilliance of these sort of problems. Mr. ROSE. If you take N SD—26 and what Eagleburger said to the Foreign Affairs Committee, it was the policy to get closer to Iraq, it didn’t work. What—the problem now is that Iraq used all that as- sistance to arm itself and then the question is: Did we know that they were about the business of arming themselves, and if we did, why didn’t we stop it? I say the record is clear that we had many indications that this NSD—26 directed aid was being misused and that the pipeline kept on flowing. Once you got that pipeline started and the business community was making a little extra money, boy, it is hard to stop. And nobody was able to stop it. 36 And now that it is all out on the table, nobody wants to go and investigate who the real criminals are that knew things were off track and that they should have been stopped. Mr. SLATTERY. One last observation I would make. That is, when we try to answer the question why this was going on, it is very clear—-and I have—and the chairman has this information, it has been entered in the record here, but this is information from the Export-Import Bank of the U.S. Country Risk Analysis Division dated January 23, 1989 and it is replete with statements about seri- ous questions regarding Iraq’s one, willingness to pay, and two, their ability to repay loans they had already obtained. The record is very clear on this. The Export-Import Bank had this information in 1989. The question also arises and I think a very legitimate question, one I raised last week and I am still waiting for information on, what banks in this country had money at risk, what banks had money at risk. And when Iraq was saying, if you want to get repaid‘, loan us more, I would like to know what banks had money at ris . Mr. ROSE. We have a list of that. Mr. SLA'I'rERY. That may help us understand maybe what was perhaps motivating some of this policy. Mr. GEJDENSON. Thank you, Mr. Chairman. Mr. WYLIE. Mr. Chairman, I wonder if the chairman would help us and the committee and supply that list to the Banking Commit- tee. Mr. RosE. Be glad to. The CHAIRMAN. We have had that list and I think it goes back to the first hearing we had in 1990. Before you leave, gentlemen, you have been very patient. Just one question. Everything you said and what has been brought out this morning indicates that, with the BN L demanding payment on the guarantee of a little better than $250 million and when I asked a question last week as to what the administrators were going to do about that, they said, well, they had passed it on to higher offi- cers, I guess, in the Justice Department. What I want to know is: Is your committee, Chairman Rose, doing anything to block the payment on those payments to the BNL; that is, to the Agriculture Department? Mr. RosE. Would you restate that? I was getting another piece of information for you. The CHAIRMAN. In view of all of this now, is BNL—which is really the Italian Government asking for payment, a little better than $250 million on those guarantees, CCC guarantees, is any- thing being done to try to persuade them to block those payments? Mr. ROSE. Let me tell you the problem. The problem is Dick Thornburgh in the indictment—or was it the press release—the press release accompanying the BNL indictments made a most re- markable statement, which I am sure the home office of BNL con- siders as a finding of fact that they will argue. Thornburgh, in his press release, said that the home office of BNL had done nothing wrong. Now that is why BNL is pursuing the $250 million credit guaran- tee. That whole—why would the U.S. attorney gratuitously hand a 37 W quarter of a billion dollars to the home office of Banca N azionale del Lavoro. Why didn’t he keep his mouth shut? Why did he say anything about that? Was Thornburgh part of the “be nice to BN L so they don’t tell too much”? I think we will know the answer to that next Tuesday morning when Drogoul makes his speech in At- lanta. The CHAIRMAN. Thank you, sir. Mr. GsJnsNsoN. Thank you, Mr. Chairman. The CHAIRMAN. Thank you, gentlemen. You have gone over and beyond the call of duty here. The next panel is Mr. Allan Mendelowitz, who is Director of the General Government Division of the U.S. General Accounting Office, and who once again has been most responsive to this com- mittee’s invitation. Thank you very much. Mr. MENDELOWITZ. Thank you, Mr. Chairman. With your permis- sion, I would like to introduce the folks who are at the table with me today. The CHAIRMAN. If you would for the reporter. Mr. MENDELOWITZ. On my immediate right is Mr. Phil Thomas who is our assistant director for agriculture trade issues. To his right is Ms. Susan Purcell who worked on—is working on the as- signments we will be talking about today. On my immediate left is N. Scott Einhorn who is evaluator in charge of the work we will be talking about today. On my far left is Mr. Robert Hunter, Associate General Counsel. The CHAIRMAN. Gentlemen, the ranking minority Member had preferred an opening statement at this point and I believe Mr. Be- reuter as well. I will recognize them. Mr. WYLIE. Mr. Chairman, I made the point I wanted to make in my opening statement. I don’t have any further opening statement at this time. I would yield to Mr. Bereuter. Mr. BEREUTER. Thank you, Mr. Chairman. Today’s hearing ap- pears to have been structured to produce testimony that alleges that administration lawyers conspired to obstruct proper congres- sional oversight of United States-Iraq relations prior to the gulf war. From the documents I have seen, I have seen nothing thus far to convince me any unlawful activities have occurred. One thing my colleagues should consider is that any time there is a potential confrontation between two branches of our govern- ment many lawyers get involved. This is true whether it involves congressional subpoenas of executive branch documents or grand jury subpoenas or records from the House Post Office. Meetings for the coordination of policy for the examination of documents for privileged status don t necessarily mean a conspiracy exists. I look forward to the panelists that are assembled here, hoping that some light will be shed, but at this point I am waiting for some evidence that anything illegal happened. I also want to comment briefly on the redacted document that was added by our colleague, Sam Gejdenson, to his testimony. He referred to it properly as NSD—26. I would say I have no idea what the information was that was redacted, but in looking at this docu- ment which is said to have guided these gentlemen and ladies here and others in the administration, I find that even after many months have passed and a war has been pursued that the objec- 38 tives set forth in this document do not seem inappropriate and seem—in fact, they seem highly appropriate. I encourage members of this committee and members of the news media and the citizens generally to take a look at what it ac- tually says. It says, for example—and I am just going to give you some highlights about the objectives-the United States Govern- ment should propose economic and political incentives for Iraq to moderate its behavior and increase our influence with Iraq. It says that at the same time the Iraqi leadership needs to understand that illegal use of chemical or biological weapons will lead to the economic and political sanctions for which we will seek the broad- est possible support from our allies and friends. It says that any breach by Iraq of IAEA safeguards for its nucle- ar program will result in a similar response. What similar re- sponse? Political and economic sanctions. It says that human rights considerations should continue to be an important element in our policy toward Iraq. It says that we want to encourage by our poli- cies to cause Iraq to stop ceasing—to urge it to cease its meddling in external affairs such as those in Lebanon and to encourage it to play a constructive role in negotiating a settlement with Iran and cooperating in the Middle East peace process. It says we would aid in the reconstruction of the Iraqi economy, particularly in the energy area where we do not—where they do not conflict with our nonproliferation and other significant objec- tives. I have to say also beyond this recitation of what the policy's statements really are that anyone in this Congress who did not un- derstand during the Iraq-Iran war that we were tilting toward Iraq, not because we wanted them to win the conflict, but because we dlidn’3 want Iran to win the conflict, must have had their eyes c ose . I can recall sitting in several meetings as a member of the For- eign Affairs Committee, bipartisan meetings where we were given explicit information about the way we were assisting Iraq during that Iraq-Iran conflict. Certainly, that was true of the Armed Serv- ices Committees of the two Houses. Certainly, it was true of the In- telligence Committees, and so I do not think it was a closely held secret on the part of the administration, that tilt toward Iraq during the war between Iraq and Iran was not—was known widely. It was suspected outside the Congress, it was known outside the Congress, and it was certainly known within the Congress. At that point in time there was no objection raised to that tilt toward Iraq to keep Iran from winning. And what happens if we had made it very public as an explicit statement that we were lean- ing toward Iraq? Do you think that Khomeini would not have used this as an additional factor to gin up his fundamental radicals in Iran‘? Of course, he would. He would have given them additional strength, and that was certainly not something we wanted to do at that time. Thank you, Mr. Chairman. The CHAIRMAN. Thank you. Mr. JOHNSON. May I enter some comments in the record and par- aphrase a few comments? The CHAIRMAN. Certainly. Mr. JOHNSON. Thank you, sir. I request unanimous consent to enter the comments in the record. 39 The CHAIRMAN. Without objection, it is so ordered. [T518 frepared statement of Mr. Johnson can be found in the ap- pen Ix. \ Mr. JoHNsoN. Thank you, sir. Last week the committee heard from the administration witnesses regarding our policy toward Iraq, and they admitted that foreign policy concerns were the driv- ing force behind our export policy toward Iraq in the 1980’s. They also admitted several times that the policy of favoritism toward Iraq didn’t work. As I said last week, looking after your interests sometimes means having to work with those you don t particularly care for, and in this case the greatest threat to stability was, and I believe still is Iran, and that fact dictated that we work with Iraq to stem Iran’s influence. You know, some of the members of the committee are not inter- ested in the truth as much as they are in reaping the benefits of misperceptions about the administration’s actions regarding Iraq. Mr. Chairman, I know that you—I respect you very much and I know that you are sincere in your pursuit of this matter, and that is why you have been by yourself for so long, but I find it interest- ing that only recently some of the Democrat colleagues of yours de- cided to jump on board, and again it has already been admitted by Mr. Slattery and others that it is an election year and this is an election debate. This hearing, though, concerns the White House Interagency Lawyers Group meeting of April 8, 1991, and the purpose of the meeting was to coordinate the release of documents requested from numerous branches by several committees of the Congress, and reasons for such a meeting were obvious and made good sense, and I agree with you, Mr. Chairman, that it is a matter of great con- cern anytime you get a group of lawyers together, but I believe that the record will show that no conspiracy to cover up informa- tion was discussed in this case. Thank you, sir. Mr. FRANK. Mr. Chairman? The CHAIRMAN. Yes. Mr. FRANK. I would like to make an opening statement. The CHAIRMAN. Pardon? Mr. FRANK. I would also like to make an opening statement, not having made one. The CHAIRMAN. Certainly. The gentleman is recognized. Mr. FRANK. Mr. Chairman, I am astonished at my colleagues on the other side objecting in various ways to the fact that we are having this hearing. I cannot imagine anything more directly in line with our constitutional duty. We are told, the previous speaker just said the administration admitted it was a mistake, it was a failure. It is not enough to say simply the policy was a failure. It is important, I think, to look at how that failure came about and what we can do in the future to restrict it. One of the important points here is that many of us believe that safeguards that were supposed to exist in the Export-Import Bank Program, in the Commodity Credit Corporation Program, and else- where were overridden inappropriately by a foreign policy consid- eration, and that is one of the things we want to focus on. We will also, and I think we have been very clear for many of us the major focus is not what went on during the Iran-Iraq war but what went 40 on afterwards, and, in fact, much of what we have been asking about has to do with afterwards. We are talking here about a disaster in foreign policy and how you can prevent it from happening in the future. Strengthening some of the safeguards in these programs now appears to me to be even more important than I would have thought before, and so I think these hearings are absolutely essential, and as my colleagues on the other side talk about partisanship, I gather it is their view that it is partisanship the Democrats are critical, but an entire co- incidence that the Republicans have been uniformly in defense of the administration. I don’t believe that either characterization is accurate, and I would repeat, yes, this is political in the best sense of political. It is in discharge of the function of elected officials in the democ- racy to present to the public various views, and in particular about this hearing it is very clear that there have been efforts by the ad- ministration to use the classification process, which is supposed to exist to protect national security, instead to prevent embarrass- ment. We asked, many of us asked, Mr. Eagleburger, in fact, chided me appropriately, because I had been in and out of the hearing for asking him again to point to any example of material divulged by yourself or anybody else which damaged national security, and the administration has not been able to advance one case where any- thing advanced in any way impinged on national security. I do think it is valid to look at the extent to which people think of ways in which they can use national security arguments inap- propriately to prevent material from getting to the public that is relevant to the public debate. Thank you, Mr. Chairman. The CHAIRMAN. Thank you. Mr. Mendelowitz, thank you for your patience, and once again cooperating with us. You have been before the committee before. You may proceed as you deem best. STATEMENT OF ALLAN MENDELOWITZ, DIRECTOR, GENERAL GOVERNMENT DIVISION, U.S. GENERAL ACCOUNTING OFFICE; ACCOMPANIED BY PHIL THOMAS, ASSISTANT DIRECTOR FOR AGRICULTURAL TRADE ISSUES; SUSAN PURCELL; N. SCOTT EINHORN; AND ROBERT HUNTER, ASSOCIATE GENERAL COUN- SEL Mr. MENDELOWITZ. Thank you very much, Mr. Chairman. We are here today to discuss our efforts to obtain information and docu- ments concerning our ongoing reviews of the BNL’s Atlanta oper- ations and Iraq’s participation in the GSM—102, -103 export credit guarantee programs. We are performing our reviews at the request of this committee as well as others in the Congress. As I will describe later, our work has been delayed significantly due to the reluctance of some government agencies to provide us with timely and complete access to the information we require. GAO’s basic authority to access records is contained in 31 U.S.C. 716. This statute grants GAO access to executive agency records for the purpose of conducting GAO audits and evaluations. Generally, we do not encounter problems in accessing records in the course of most of our work. However, this was not the case in 41 conducting our ongoing reviews of Iraq’s participation in the CCC’s export credit guarantee programs and issues involving the Banca N azionale del Lavoro. We have recognized from the outset that the work requested of us concerns issues of considerable sensitivity, some involving alleged illegal activity. In such instances, it is always our policy to avoid interfering with ongoing criminal investigations. Furthermore, we have proce- dures in place to protect classified and confidential information. Nevertheless, we have not received full cooperation from the agen- cies from which we have sought information. In April 1991, White House Legal Advisor, Nicholas Rostow, convened meetings consist- ing of representatives from the general counsels of a number of ex- ecutive branch agencies. The meetings were held to determine how the agencies should re- spond to congressional requests for information and documents per- taining to United States-Iraq policy prior to August 2, 1990. Proce- dures were established whereby agencies’ general counsels review all such requests, requesters would be permitted only to read some documents rather than receive copies, and alternatives to providing documents would be explored. In addition, Treasury reported at one of the Rostow group meetings that it was not even permitting the taking of notes on the contents of classified documents. Our experiences at the agencies were consistent with the results of these meetings. Typically GAO works with program officials in identifying and obtaining records relevant to our reviews. However, during the BN L and export guarantee credit reviews, different pro- cedures were adopted. At most of the agencies at which we were conducting work, we were instructed to direct our request for infor- mation to the agency's general counsel offices. Some of the experi- ences we encountered at the various agencies include the following: Generally the Department of Agriculture has cooperated with our request for access to records. However, there was one issue about which we had problems in obtaining timely information. We were not permitted to review the work papers supporting the USDA’s May 1990 administrative review of the GSM programs until we had submitted several oral and written requests. This process created a delay of about 5 months. We also faced considerable delay in meeting with officials and obtaining access to documents at the Department of Justice. We re- quested all Justice Department correspondence with other agencies on the BN L matter and all other relevant documents. To date we have only been allowed to review five documents. Furthermore, we are not allowed to either photocopy the documents or take exten- sive notes. This limited access to documents cannot be considered sufficient for audit purposes. At the State Department, the Office of Legal Advisor explained that it was concerned about grand jury secrecy rules and would therefore screen all documents we requested to avoid inappropriate disclosure. The Office of the Legal Advisor at State permitted us to read and take notes from, but not copy, 26 cables that were deter- mined by that Office to be both relevant to our review and not re- lated to the grand jury investigation of BNL. The Office of the Legal Advisor informed us that there were other documents, but that the office was withholding them from us because they con- 42 tailned information that might be covered by grand jury secrecy ru es. Despite the fact that the assistant U.S. attorney handling the BNL case had informed us that documents not in their possession are not subject to secrecy rules, State advised us to get clearance from the Justice Department to gain access to these documents. We have asked Justice for this clearance and the matter is still under consideration at this time. Furthermore, we were not able to deter- mine for ourselves which cables were relevant. This fact is particu- larly troublesome in light of Deputy Secretary of State Eagle- burger’s testimony before this committee last week in which the Deputy Secretary stated that over 4,000 documents relating to Iraq have been turned over to the committee. The State Department never informed us of the existence of this vast amount of documents. In December 1991, we visited Rome to meet with BN L and United States Embassy officials. That trip was coordinated with and approved by the State Department. In notify- ing the Embassy of our visit, the State Department cable reminded the Embassy that it was the Department's policy to be of assistance to GAO and to be as helpful as possible. Nevertheless, the U.S. Em- bassy refused to give us access to its files on the BNL Atlanta Issue. We met with the Deputy Chief of Mission who told us that he had not been instructed by Washington on how to respond to our request to review documents. He said he believed that all requests for documents were being coordinated in Washington. He said that in any case the Embassy would have limited information because its only efforts in the BNL matter had been to monitor Italian press reports. Subsequently, we learned that more substantive reports on the issue had been prepared and transmitted by the Embassy to the Department of State in Washington. The Department of Treasury did not permit us to photocopy any of the minutes of the meetings of the National Advisory Council on International Monetary and Financial Policies during which interagency discussions about the Export Credit Guarantee Program for Iraq took place. Some of those minutes were classified, and in those cases we are not permit- ted to take notes, either. The minutes iII question covered almost a decade and included a substantial amount of material. It is not rea- sonable to expect that GAO could adequately review, analyze, and report on such a substantial body of information on the basis of the auditor’s memory supplemented by limited notes. In addition, Treasury has still not complied with our outstanding request for relevant correspondence. In summary, Mr. Chairman, our principal concern is with the delay that we have experienced in resolving these issues. This problem was particularly acute in this instance given the number of agencies involved. We are com- mitted to providing Congress with the information it needs in as timely a manner as possible. Our ability to do so can be frustrated when, as here, we have less than full cooperation of the executive agencies. Mr. Chairman and members of the committee, this concludes my prepared statement. I would be pleased to respond to any questions you may have. 43 [The prepared statement of Mr. Mendelowitz can be found in the appendix.] The CHAIRMAN. Thank you very much, sir. It seems that there is really nothing new. I would like to place in the record at this point and ask unanimous consent a Washington Post article of March 12, 1989, in which I am going to read just the pertinent paragraph. It says, “On June 22, GAO investigators held a second meeting with the NSC, National Security Council, and White House staff person- nel.” And then it quotes, “Among those attending was Nicholas Rostow,” which you mentioned before, “a special assistant to the President and legal advisor for the NSC.” The GAO once again re- quested NSC cooperation. The chronology noted the White House, promised a prompt response, but the NSC failed to respond to the GAO despite at least 15 requests to NSC and other officials over a 3-month period according to the investigative chronology. So—that was in the case of General Noriega in Panama. It just seems that what you have described here so well and so succinctly describes what we have confronted, and there was a long delay before we finally did get some, even if there were some sub- stantial documents. You did make reference to the testimony of the Deputy Secretary last week in which he said he had submitted over 4,000 documents. I think he meant pages. By no means could it be documents, I will assure you that. I think he made a mistake. I believe that his statement, even written statement, says docu- ments, I think he meant pages because we certainly haven't re- ceived 4,000 documents. Well, I think that the main thing here is the fact that you have been delayed for obvious reasons in provid- ing the report that has been requested of GAO. Have you ever seen or have you asked for the so-called Rafidain Bank file? Is it normal for files to be lost or missing at the USDA? Mr. MENDELOWITZ. The Rafidain Bank file is obviously an impor- tant file for the project that we have under way. As a result we asked for it, and we have never seen that file, and it is extremely troublesome when an agency misplaces a file of documents that is obviously so important to a critical issue as in this case. The CHAIRMAN. Has the executive privilege question been raised with regard to GAO’s inquiry and if so, could you tell us on what occasions? Mr. MENDELOWITZ. GAO’s access to records has certain provi- sions under which the administration may choose to deny access to records. One of the provisions is executive privilege, and certainly, given the sensitivity of the issue, I would say that the administra- tion has looked very carefully at all the provisions of law with re- spect to our access in order to that use them as effectively as they could. I don’t remember, offhand, that on any particular issue we were told executive privilege was the basis on which something was denied, but certainly that was one of the factors being considered bar the administration when reviewing documents that we request- e . The CHAIRMAN. Have you been told by any government agency that they had no problem in acceding to your request except for the fact that the White House or the NSC had intervened to pre- vent. Mr. MENDELOWITZ. I don’t think we were ever told that directly. 44 The CHAIRMAN. Inferentially? Mr. MENDELOWITZ. I think in my statement what I tried to get across was that our experience with respect to accessing records was consistent with the procedures adopted by the Rostow group, and that clearly was a White House initiative. The CHAIRMAN. We had invited Mr. Rostow and Mr. Gray, but I believe the same reason was given by the executive branch as we had in the case of two witnesses last week, and that is that they were in a privileged position with respect to the President, and therefore you could say executive privilege was raised. Which would you say is the most troublesome agency? Mr. MENDELOWITZ. I think that the agencies ran the full gamut from the least helpful to the most helpful, and I would say that the Department of Treasury was the least helpful in terms of providing access. The CHAIRMAN. Well, yes, in our case the Department of the Treasury was the first to interpose the executive privilege, but the reason was because of the advice of the Justice Department. I think the testimony presented earlier by the two chairmen indi- cates that it is a pattern. I have one or two questions but there is no reason I can't submit those in writing. Mr. Wylie. Mr. WYLIE. Thank you, Mr. Chairman. Mr. Mendelowitz, Con- gressman Rose, in his testimony a little earlier suggested that CCC guarantees were connected with military purchases, but he was not able to offer any hard evidence of this. It was merely hearsay. Do you have any evidence to support any allegations along those lines? Or stated differently, have you provided any evidence to the U.S. Department of Agriculture to support those allegations? Mr. MENDELOWITZ. That is a good question. We have been work- ing on the CCC Program for some years and issued a number of reports, and when asked that specific question at a hearing before the Agriculture Committee I pointed out that there are two an- swers. One answer is related to the issue of fungibility of capital. That is, capital was in short supply and Iraq was having trouble borrowing money. Iraq had substantial capital needs in order to purchase armaments when it was prosecuting the war with Iran. By making capital available or loanable funds available to pur- chase needed agricultural commodities, we in effect enabled Iraq to free up other resources to meet its arms procurement needs. With that said, I pointed out that we did not have any specific evidence ourselves of criminal diversion of CCC funds for weapons procurement directly. We just don’t know. Mr. WYLIE. You are saying that as of this time you do not have any hard evidence. Mr. MENDELOWITZ. That is right. We do not know. There is the issue of after-sale service. Some of the items that were allegedly provided by after-sale service clearly border on being weapons. The fact that some of the after-sale services involved cash transfers, those cash transfers could have been used for weapons purchase, but we don’t have the evidence, unfortunately. Mr. WYLIE. You said or made reference to “given the sensitivity of the issue)" I think was the phrase you used, what did you mean by “given the sensitivity of the issue?’ 45 Mr. MENDELOWITZ. Well, this issue, first of all, involved questions of alleged illegality with respect to officials at the Banca Nazionale del Lavoro in Atlanta. Any time you get involved in work in which there are allegations of wrongdoing that would be violations of law, it creates situations of substantial sensitivity. We certainly don’t want to in any way confound U.S. attorneys’ efforts to prosecute a case, and so we always view those as especially sensitive. Mr. WYLIE. You don’t want to confound or jeopardize his-— Mr. MENDELOWITZ. We certainly would not want to jeopardize any U.S. attorneys’ efforts at prosecuting wrongdoing. Mr. WYLIE. OK. Thank you. Thank you, Mr. Chairman. The CHAIRMAN. Mr. Frank. Mr. FRANK. Thank you. Mr. Mendelowitz, on the question of the possibility of diversion to weapons, were you ever charged with in- vestigating that specifically? Mr. MENDELOWITZ. I don’t think that we were asked specifically to look at that issue, but we were given a broader request to look at wrongdoing or Mr. FRANK. Have you focused on that possibility? Have you thor- oughly investigated the possibility? Mr. MENDELOWITZ. I cannot say that we thoroughly investigated that possibility because so much of the information that would be needed to answer that question would be outside of the United States and beyond our ability to access records. Mr. FRANK. So you are basically agnostic, then, on that general question? Mr. MENDELOWITZ. We don’t know. There is a lot of smoke around the issue, but-i Mr. FRANK. But it has not been thoroughly investigated to get a definitive answer one way or the other by yourselves? Mr. MENDELOWITZ. That is correct. Mr. FRANK. By anybody else that you are aware of? Mr. MENDELOWITZ. I would say that to my knowledge I can’t say that anyone has so thoroughly investigated it that you could prove the negative. Mr. FRANK. Or the positive, either way? Mr. MENDELOWITZ. Yes. Mr. FRANK. Let me ask next, you say that there was delay in documents and you were aware of the sensitivity. In many cases you got the documents. You have had a lot of experience in this area. You are sensitive to national security. You are sensitive to not screwing up ongoing criminal investigations. Were there any instances when you received the document afterwards that you be- lieved that, in fact, it would have been a problem if you had gotten them earlier? Were you ever persuaded that you had asked for a document you shouldn’t have asked for? Were there any cases where your getting the document did interfere with the criminal investigation or did impinge on national security? Mr. MENDELOWITZ. No, absolutely not, and I think it is not just my opinion that the answer is absolutely not. The fact is one of the offices that was especially helpful to us was the U.S. attorney in Atlanta. They were quite forthcoming in sharing information, and so given the fact that they were directly charged with the prosecu- 46 tion, if they took a stance that they could be helpful to us, I don’t think that the other information from the agencies would have been problematic. Mr. FRANK. Based on what I think you said, your demonstrable sensitivity at GAO to these kind of problems is that, in fact, you had never asked for anything that would have been inappropriate? Mr. MENDELOWITZ. I am sorry, would you repeat that? Mr. FRANK. You didn’t ask for any documents that would have caused any of these problems? Mr. MENDELOWITZ. No. Mr. FRANK. Let me also ask you this. You ultimately got a lot of these documents where there was delay. Are you aware of any problem that was caused by your getting any of these documents? Mr. MENDELOWITZ. Not that I know of. Mr. FRANK. That strengthens my view that we were not talking here about concerns that were as stated but were, in fact, efforts to prevent political embarrassment. Thank you, Mr. Chairman. The CHAIRMAN. Thank you, sir. Mr. Bereuter. Mr. BEREUTER. Thank you, Mr. Chairman. Mr. Mendelowitz, are any of your current or past investigations at GAO specifically re- lated to criminal wrongdoing at financial institutions with respect to their handling of USDA Agriculture Export Credit Guarantee Programs, including BNL? Have you examined BNL for possible criminal activities related to USDA programs? Mr. MENDELOWITZ. I would have to say, given the U.S. attorney’s involvement with BNL, we did not think it was appropriate for us to simultaneously be doing any kind of criminal investigation. We basically were doing a case study of BNL’s activities and participa- tion in the program. Mr. BEREUTER. You were examining BN L before the criminal in- vestigations by the executive branch began? Mr. MENDELOWITZ. That is correct. Mr. BEREUTER. Did you find any evidence of criminal activity at BNL with respect to the USDA Export Credit Guarantee Pro- grams. Mr. MENDELOWITZ. Our familiarity with BNL at the time was not the result of work directed specifically at BNL, but it was the result of an effort to identify the—who was participating in the GSM—102 Program on the part of financial institutions, what that participation was. We were-i Mr. BEREUTER. Is your answer no, though, or yes? Mr. MENDELOWITZ. The answer is if we had found any evidence of criminal wrongdoing at any particular institution, we would have referred that to the Justice Department for prosecution. Mr. BEREUTER. Have you received or have you requested informa- tion from any congressional committee, for example, either of the two Agriculture Committees of the Congress with respect to evi- dence that BN L had been engaged in criminal activities with re- spect to the implementation of USDA’s Export Credit Guarantee Programs? Have you requested or have you received? Mr. MENDELOWITZ. No, I don’t believe that we received informa- tion from the Agriculture Committee. Mr. BEREUTER. Have you requested it? 47 Mr. MENDELOWITZ. Basically, you know, we try to undertake our efforts as an independent effort in the sense that we like to be sure where the documents came from, what they are, and so on, so we generally tend to do our own data collection and analysis. Mr. BEREUTER. Are you saying to me that—you are not answer- ing directly, and I am asking you-— Mr. MENDELOWITZ. The answer is, no, I don’t believe we have asked the Agriculture Committees. Mr. BEREUTER. Thank you very much. Thank you, Mr. Chairman. The CHAIRMAN. Thank you. I believe at this point I" will ask unanimous consent to recognize Chairman Rose, because I believe he has a question that is related to this line of questioning. No? OK. Mr. ROSE. I have no questions. The CHAIRMAN. Then we will defer to the end. Mr. Hoagland. Mr. HOAGLAND. Thank you, Mr. Chairman. In reviewing your testimony, Mr. Mendelowitz, you are here basically briefing us on your efforts to get the documents concerning these transactions from a variety of agencies. I gather from your testimony that the procedures that have been imposed are very different from virtual- ly all other document searches that you have conducted for the Congress? Mr. MENDELOWITZ. That is correct. Mr. HOAGLAND. You have come here and detailed the problems you have had with each agency. You state, for instance, the De- partment of Agriculture did not allow you to review their work papers concerning an administrative review of GSM programs re- sulting in a 5-month delay.” Is that right? Mr. MENDELOWITZ. It took us 5 months to gain access to the in- formation. We eventually did gain access. Mr. HOAGLAND. And the Justice Department, in spite of all your requests to date, has only allowed you to review five documents? Mr. MENDELOWITZ. That is correct. Mr. HOAGLAND. You found out when Mr. Eagleburger testified from the State Department last week that they had provided over 4,000 documents to a House committee, but had never advised you of the existence of those documents? Mr. MENDELOWITZ. Correct. Mr. HOAGLAND. You have documented in some detail here the difficulties you have had with each agency, the Treasury and CIA as well. This is quite different than the treatment you customarily receive; is that right? Mr. MENDELOWITZ. That is right. Mr. HOAGLAND. Do you have any explanation for that? Mr. MENDELOWITZ. Well, obviously, the explanation would be pure conjecture, and I think I would be stepping over the bounds of good auditing if I resorted to conjecture rather than fact. Mr. HOAGLAND. OK. Well, I will respect that we don’t want you to just speculate. Let me ask you about the specific file that Chair- man Rose discussed during his testimony, the Rafidain Bank file. Now, Rafidain Bank, as I understand it, is the commercial branch of the central bank of Iraq, is that right? Mr. MENDELOWITZ. Correct. 48 Mr. HOAGLAND. And the creditworthiness of Iraq as a potential recipient of loan guarantees is determined by the creditworthiness of the Rafidain Bank? Did I say that right? Mr. MENDELOWITZ. Well, the program works by requiring a guar- antee from the country purchasing the commodity that, in fact, a loan will be repaid. In the case of Iraq the guarantee was provided by the Rafidain Bank as a government-owned commercial bank that in effect represented the government's guarantee. Mr. HOAGLAND. All right. So as the central bank of Iraq, the Ra- fidain Bank had to guarantee these up to $5 billion in agricultural credits, is that right? Mr. MENDELOWITZ. Well, the $5 billion is cumulative over time. There was never a period in time when there were $5 billion in guarantee credits outstanding at one time. When the program began in 1983, the initial exposure was about $400 million. By the mid to late 1980's the annual extension of guarantees was in the vicinity of $1 billion a year, so that at any given time the maxi- mum exposure with respect to guaranteed loans was somewhere between $2 and $3 billion. Mr. HOAGLAND. But what it comes down to is that this file con- tains all the documents in the Agriculture Department concerning Iraq’s creditworthiness? Mr. MENDELOWITZ. No. The creditworthiness assessment is done as part of something which we would call a country risk assess- ment, and there is a group in the Agriculture Department that does country risk assessment. Then the country risk assessment generally is discussed within the NAC, and advice is provided by other agencies that do country risk assessments, such as Treasury or the Eximbank. We do have those documents, the country risk assessment docu- ments. Ultimately, when you talk about the soundness of Rafidain Bank, what you are really talking about is the willingness of the Iraqi Government to stand behind it and that, in effect, says that the ultimate soundness of the Rafidain Bank depends upon the creditworthiness of Iraq in the international capital markets. Mr. HOAGLAND. Why is this one file so important? Mr. MENDELOWITZ. Well, it includes a whole series of documents and analyses relating to the operation of the program with respect to Iraq. Mr. HOAGLAND. Which would reflect on Iraq’s creditworthiness the likelihood of their repaying these loans? Mr. MENDELOWITZ. I have to say that without having seen it I can’t say how important it is, and I would be speculating again. We assume it is important, that is why we asked for it. The fact that it is not in existence means that we just don’t know. We asked for it because we assumed it was important. Mr. HOAGLAND. Now, during this period of time, didn’t Iraq have a major external debt problem--around $50 billion in external debt of funds it owed to other countries around the world? Mr. MENDELOWITZ. Iraq, in the course of the war, ran up a very heavy international—set of international obligations and was run- ning into difficulties servicing those international obligations. Mr. HOAGLAND. And most European banks had declined to extend Iraq anymore credit; is that right? 49 Mr. MENDELOWITZ. Private banks had stopped extending in many cases extra credit, and Iraq had ceased servicing debt to some pri- vate sector banks. Mr. HOAGLAND. And Eximbank had serious reservations about extending Iraq credit? Mr. MENDELOWITZ. Eximbank monitored its program with re- spect to Iraq very carefully. Basically, during the period we are talking about, the only Eximbank assistance available to Iraq con- sisted of short-term export credit insurance, and any time Iraq fell into arrears on any of the credit that Eximbank had insured, the Eximbank would close the window and not open the window again until the arrears had been made up. Mr. HOAGLAND. A lot of the fundamental evidence of Iraq’s lack of creditworthiness, the problems it was having with the European banks, with the Eximbank, a lot of the documents that would lead the Agriculture Department to have concerns about it were con- tained in this file, were they not? Mr. MENDELOWITZ. That is correct, but I would sort of like to put the issue of Iraq and GSM-102 and creditworthiness into a some- what broader setting. The issue of Iraq and its creditworthiness is not a singular case with respect to GSM—102 and —103. Generally speaking, extensions of export credit guarantees under the pro- grams were extended for market development purposes. They were also extended for foreign policy purposes, and because a govern- ment guarantee was involved, they were extended to countries which, by definition, were not sufficiently creditworthy to enter the commercial credit market. I don’t think I could draw the conclu- sion that Iraq stands out as unique with respect to its questionable creditworthiness. I just think the program generally operated across the board in many cases with countries benefiting under the program with questionable creditworthiness. This is why in the 1990 Farm bill the Congress chose to change the criteria with re- spect to creditworthiness. Mr. HOAGLAND. My time is up. Let me just make one final point. The creditworthiness issue is an important issue. My understand- ing is that this file would show the underlying documents pertain- ing to that—many of which we can’t find in other files or from other sources, and is therefore a very important file inasmuch as it bears on the judgment of those who would have continued in ex- tending credit to Iraq. Mr. MENDELOWITZ. Obviously, a key file from the documents is important to understanding the process of what happened, but I think even without that file we have sufficient documentary evi- dence that we reviewed that reflects the fact that Iraq represented a very problematic credit risk under the program, that a number of agencies providing advice to the Agriculture Department with re- spect to CCC did not consider Iraq creditworthy and did not consid- er Iraq to be worthy of the large amounts of credit being extended to them. It is clear that the funds were extended for foreign policy and market development purposes rather than based exclusively on sober judgment of credit risk. The CHAIRMAN. The time of the gentleman has expired. Mr. HOAGLAND. Is there any explanation as to why this file is missing? 50 Mr. MENDELOWITZ. We don’t know. Mr. HOAGLAND. Did anybody: The CHAIRMAN. Mr. Roth. Mr. ROTH. Thank you, Mr. Chairman. Mr. MENDELOWITZ. We are just told it can’t be found. Mr. HOAGLAND. I have no further questions, Mr. Chairman. Thank you. Mr. ROTH. I thank you, Mr. Chairman. Mr. Mendelowitz and members of your group, I have had some dealings with GAO, and I want to compliment you for the work that you have done that I have been involved with, for example, in the Mirecki case and something that had far-reaching examples for military training, so I know you have done some excellent work. I know GAO doesn’t get involved unless you are asked to get in- volved. Who asked you to get involved, if I may ask? Mr. MENDELOWITZ. I am sorry, in this issue? Mr. ROTH. Yes. Mr. MENDELOWITZ. We have been doing work on CCC and BNL at the request of the Senate Agriculture Committee, the House Ag- riculture Committee, Chairman Rose’s subcommittee of the House Agriculture Committee, Chairman Schumer, Chairman Gonzalez, Chairman Wise. Mr. ROTH. So you have a whole host of people that have asked you to get involved? Mr. MENDELOWITZ. That would be correct. Mr. ROTH. All Democrats, incidentally? Mr. MENDELOWITZ. They are all chairmen of committees, but I believe—didn’t Senator Lugar cosign something? Some of the re- quests we have gotten have been cosigned by both chairmen and ranking Members. I will be honest, I don’t really remember who signed what, but I do know that there was a recent letter sent from the Senate Agriculture Committee to agencies asking them to help us in this effort, and it was signed by both the chairman and the ranking Member. Mr. ROTH. OK, thank you. You were involved in a trip to Rome. What was that all about? Mr. MENDELOWITZ. Well, I wasn't personally, but my staff was. Fortunately, they are here, they can talk about it, but basically the purpose of going to Rome was to interview headquarters staff at the BNL Bank to try to get their perspective on the events that we were looking at and also to meet with the United States Embassy folks in Rome because our understanding was that they had some understanding of the issue. hMr:? ROTH. What did the Embassy folks tell you when you got t ere. Mr. MENDELOWITZ. The Embassy folks told us that basically they had very little involvement with the BNL issue. They said they read local newspapers, summarized the articles that were appear- ing with respect to BNL and forwarded them to Washington. At the end of our visit, the team had a meeting with the Ambassador who actually went on at some length discussing the issue from his perspective. He said that he was relatively new. He was not familiar with the issue, but one of the first things that came up was the BNL issue, 51 and that he had met the new chairman of BNL when he was in Washington, that he had met the new chairman of BNL when he arrived in Rome, and that the BN L chairman was making certain requests and he was passing them along, so that-- Mr. ROTH. But did you learn anything of substance other than his perceptions or-- Mr. THoMAs. We asked a number of officials at BNL whether they knew anything about Drogoul’s operation in Atlanta. Each one of them essentially denied any knowledge of it. All they could confirm was that Drogoul had been a very successful branch man- ager and brought a lot of business in. One of the questions that continuously surfaces is how could such a large operation in Atlanta continue without the knowledge of headquarters people, and to a person the bank officials denied. Explanations ranged from just incompetence in some respects to no knowledge. They feel that there was no deliberate involvement of the Rome headquarters and we were unable to? Mr. ROTH. So we really didn’t get anything substantive out of that is basically the long and the short of that; is that right? Mr. THoMAs. We got impressions. We met with the inspector gen- eral of the Italian equivalent of Eximbank. He told us it was impos- sible to conceive that Rome would not know, that BN L Rome would not know what was going on in Atlanta if it had been of that mag- nitude and illegal. Mr. ROTH. Now, Mr. Mendelowitz, the other side, we heard from our friends on the other side of the aisle say this is a political hear- ing. Now, you in GAO are really--really don’t involve partisan pol- itics, do you? Mr. MENDELOWITZ. That is absolutely correct. If you would like to repeat that for the record, I would appreciate it. Mr. Ro'rH. Well, GAO is supposedly an impartial group. Other- wise your credibility suffers, credibility comes under question. Mr. MENDELOWITZ. I would ask you to strike the word “supposed- ly” from your statement, and if you do I would be happy to agree with it. We are absolutely a nonpartisan organization. We serve the Congress in its entirety, and we work very hard to do that, and we work very hard to make sure that—— Mr. ROTH. Is it true that on the floor of Congress, and I say you have done some good work for me, and that is why I like GAO, but on the floor of Congress it has come up that GAO is partisan, that it doe? lean to the other side. Now, of course, you would deny that, rig t. Mr. MENDELOWITZ. Not only would I deny it, I would state abso- lutely unequivocally in all my years working at the General Ac- counting Office, number one, I have never been asked to undertake a project or slant results for partisan purposes. I have consistently been encouraged to make sure that all conclusions we draw are based on fact and analysis, and that—- Mr. Ro'rH. Let me ask you, how do you do that when you have a political hearing like this and GAO is supposed to be as clean as Caesar’s wife? How do you do that? Aren’t you in sort of a tough predicament? 52 Mr. MENDELOWITZ. The way we do it is by relying completely on facts and analysis, and we do it by avoiding innuendo, we do it by avoiding conjecture. Mr. ROTH. OK. Thank you. The CHAIRMAN. Mr. Moran. Mr. MoRAN. Mr. Chairman, I would like to focus on this memo from Mr. Frank DeGeorge, the inspector general of the Commerce Department, and, incidentally, for the purposes of the member of this committee who was so obsessed with party affiliation, I think it might be instructive to let him know that I knew Mr. DeGeorge when I was an auditor for the Weinberger administration. He was hired for quality control administration, quality control of entitle- ment programs. He passed all the Republican litmus tests as a career military officer, and probably as crusty and no nonsense as anyone you could find, but has an extremely high standard of in- tegrity, so I have to put that into the record because of my col- league's implication that anybody that is not a Republican some- how has to prove their credibility. So let me get to this memo that Mr. DeGeorge has authored with regard to Iraqi export licenses. He says that Bureau personnel, in- cluding the former Under Secretary of Commerce, stated that while preparing printouts for submission to the chairman, changes were made to selected data on 66 approved export licenses for sales to Iraq. A review disclosed changes to data on two additional li- censes concerning trucks. Bureau personnel also changed perma- nent records on the export control automated support system data base, compromising the integrity of the Iraqi license records. Nei- ther the changes to the data provided to the chairman nor the changes to the data provided to the system data base were ade- quately supported. What these changes were, was to take out the reference that truck licenses were for military purposes. In fact, the total value of the license trucks was over $1 billion or approximately two-thirds of the total value of the approved export licenses for Iraq during the period under review, and they—what happened is that the Bureau of Personnel changed the commodity description for trucks from vehicles designed for military use to commercial utility cargo trucks or vehicles. Now, I don’t know who changed that, and I think it is important to get to the basis of that, because it seems to me that altering doc- umentation that is supplied to the Congress is, in fact, an offense. I believe it is a criminal offense if you change-if you alter factual information requested in an official capacity. Now, I would like to ask the—our witnesses if they have any indication at this point of who might have been responsible for altering these documents. Mr. MENDELOWITZ. The particular IG investigation you are talk- ing about was conducted by the Commerce IG. It involves the Bureau of Export Administration, and quite honestly I really have no information about Bureau of Export Administration, and I can’t be of any assistance. Mr. MoRAN. OK. I appreciate that. I wanted to know whether you had looked into this at all. I think Mr. Bereuter’s approach is an important one because not only do we want to look into the pro- priety of public policy, whether public policy was properly carried 53 out—that is a legitimate oversight function, particularly with regard to the international banking network—we also do want to determine whether there was any type of criminal offense involved here, and since the inspector general of the Department has indi- cated that, in fact, official documents have been altered, altered in a material way because military products that can be used for mili- tary purposes were not supposed to have been provided under that program, then I think this is a very serious area that needs to be pursued, Mr. Chairman. I would like to suggest to the General Accounting Office that we would like to know at any point when your legitimate inquiries have been obstructed from lack of information being provided. You have informed us of that today. I don’t know that we would have been informed had we not had this context in which to ask you, and it is not only in your interests, but it is certainly in the Con- gress’ interests and most certainly, most importantly in the Ameri- can public’s interest to know when information is withheld. That is what worries me so much. I would have far more confidence that impropriety had not taken place if information had been fully provided. Almost by implica- tion, if the information can be made available to the general public, and there is nothing to hide, then there is no reason for hearings like this, but when you have a document authored by the President of the United States that is addressed to the Vice Presi- dent, the Secretary of State, Secretary of Treasury, of Defense, At- torney General, Secretary of Energy, Director of OMB, Assistant to President of the National Security Affairs, Director of the CIA, Chairman of the Joint Chiefs of Staff, Director of the U.S. Arms Control and Disarmament Agency, the Director of the United States Information Agency, and those of you who have worked in the administration know that when you get this kind of circula- tion, there has got to be thousands of people throughout the admin- istration who are aware of this. For the Congress to be given a document the majority of which has been blacked out has to raise questions. This is a document cir- culated throughout the administration, which was designed to in- fluence foreign policy in a major way, and yet the Congress of the United States is given something like this? Imagine an entire page, the concluding paragraphs written by the President of the United States, “There is information here that cannot be shared with the Members of Congress, even the chairmen of the committees?” That is why I have the high level of anxiety here that there is something very seriously wrong, and I very much appreciate the role that the General Accounting Office has played in terms of tning to get this information. I apologize for Congress for the fact that we have a situation where the Federal Government employed, paid by the American people, will not provide you the relevant information you request even without giving adequate information. Mr. Chairman, I hope we can continue these hearings because you look at a page like this from a memo sent out by the President of the United States, and we can’t-—it is so damaging, apparently, that we can’t even be—it can’t be shared with us, let alone the American people. There is M‘ 54 something seriously wrong here that must be—to which we have to get at the heart of, Mr. Chairman. Thank you. The CHAIRMAN. Thank you very much. Let me assure the gentle- man that we intend to continue and persist. Thank you for your help which has been great. If the witness has any statement to make, we will hear or any questions to ask of us or any member of your panel has any addi- tional statement to make or observation, we want to thank you again very much. Mr. MENDELOWITZ. Thank you very much. The CHAIRMAN. Thank you, gentlemen, and Miss Purcell. The next panel consists of Miss Elizabeth Rindskopf, Office of the General Counsel, Central Intelligence Agency; Mr. Alan Raul, Gen- eral Counsel, U.S. Department of Agriculture, and I want to thank him in advance because this is the second show in 8 days; Mr. Edwin Williamson, Legal Advisor, U.S. Department of State; Col. Fred K. Green, Legal Counsel for the Chairman, Joint Chiefs of Staff, U.S. Department of Defense; Mr. Wendell Willkie, General Counsel, U.S. Department of Commerce; Ms. Jeanne S. Archibald, General Counsel, U.S. Department of the Treasury; Mr. Michael Ci- frino, Senior Attorney, Office of the Deputy General Counsel Inter- national Affairs and Intelligence, U.S. Department of Defense. Let me thank the panelists in advance and apologize for the lengthiness of your wait before you were heard and ask if any one of you has any time constraints, any appointments you must soon arrive at, and also if there is any objection to my recognizing you in the order that you were introduced. That is beginning with Ms. Rindskopf. If not, we will recognize you, Ms. Rindskopf. STATEMENT OF ELIZABETH RINDSKOPF, OFFICE OF THE GENERAL COUNSEL, CENTRAL INTELLIGENCE AGENCY Ms. RINDSKOPF. Thank you very much, Mr. Chairman. My state- ment will be brief so I am prepared to lead off, rather than summa- rize and let me simply read it. I am here today at your request to discuss the CIA’s role in pro- viding the committee with information concerning the Iraqi pro- curement network and Banca Nazionale del Lavoro (BNL). When the committee first contacted the agency for this information, we responded that we would be pleased to provide access to whatever intelligence we had on these topics. I understand that officers from our Office of Congressional Af- fairs sat down with members of the committee staff to work out procedures for doing so. We have been working with you and your staff ever since, and we have tried to be helpful. I know that the Director appreciates the positive comments you have made at pre- vious hearings and on the floor of the House concerning CIA’s co- operation with your committee on this investigation. Your concern today appears to be whether the White House had some role in deciding what documents or information we would provide to the committee during this investigation. My answer to your concerns is a direct and simple no. In particular, you have asked whether the CIA received any communication from the White House, the State Department, the NSC, or any other Depart- 55 ment asking the Agency to withhold information from congression- al committees investigating the administration’s Iraq policy. You have also asked whether the State Department, White House, or NSC reviewed and/ or cleared information that was sub- mitted by the CIA to congressional committees in response to infor- mation requests concerning Iraq or BNL. To my knowledge, the answer to both of these specific questions is also no. However, after I submitted my testimony, I did find one case where we let the NSC know we were going to send to the House Intelligence Committee analytical papers requested by that com- mittee. These papers related to warning of Iraqi military activities before Desert Storm. They did not pertain to the subject of your inquiry, which as I understand it, is BNL and the Iraqi procure- ment network. The agency officials who worked with your staff to provide rele- vant information followed our normal policies, and they received no directions from the White House, NSC, or any other agency to withhold CIA information. You have asked, in addition, about a meeting that was hosted by the NSC staff on April 8, 1991 concerning congressional requests for information pertaining to United States-Iraq policy prior to the gulf war. I did not attend that meeting, although I did attend a later meeting where I believe this subject was mentioned. My memory of those discussions, however, is not especially vivid, but my general impression is that they followed the routine that occurs whenever many agencies have been asked to respond to similar congressional requests—the NSC reminds agencies to coordinate the release of third agency information, and the NSC asks to be in- formed of any possible need to invoke executive privilege. I can say with certainty that I was never directed to withhold CIA informa- tion on these topics from congressional investigators. I would be happy to answer any questions you may have, al- though as I indicated in my opening remarks, my personal knowl- edge in this area is exceptionally limited. Thank you. The CHAIRMAN. Thank you very much. [The prepared statement of Ms. Rindskopf can be found in the appendix.] The CHAIRMAN. Mr. Raul. STATEMENT OF ALAN RAUL, GENERAL COUNSEL, U.S. DEPARTMENT OF AGRICULTURE Mr. RAUL. Mr. Chairman and members of the committee, at your request, I am here to respond to questions enumerated in the chair- man’s May 4, 1992 letter. The letter inquires about meetings con- ducted in the spring of 1991 by agency lawyers and legislative af- fairs officials to discuss the various document requests regarding Iraq that had been submitted to numerous agencies by multiple congressional committees. The following responds to your ques- tions: The Agriculture Department attended these meetings because it is entirely routine to establish and participate in an interagency process when more than one agency is involved in an issue. Partici- 56 pation did not require authorization. I attended meetings on April 9, 15, May 6, 13, 31, and June 5, 1991. Representatives of numerous agencies also attended. Issues involving overlapping and related congressional document requests regarding Iraq were discussed. In a letter dated August 21, 1991, Chairman Gonzalez requested documents from USDA. USDA cooperated fully with this request and, on September 27, 1991, USDA submitted approximately 3,700 pages from Department files. All requested documents were provid- ed except for a limited number of documents which had been origi- nated outside USDA by other agencies of the Federal Government. With regard to that limited group of documents, we referred the committee’s staff to the originating agencies; that is, the Treasury Department and Justice Department to obtain copies directly. When it was learned that the committee was publishing classi- fied documents, the issue of providing classified materials was raised since it appeared that readily available declassification pro- cedures were not being followed or requested. In any case, USDA is not an intelligence agency and does not typically create or initiate significant quantities of classified information. Nonetheless, in a February 24, 1992, letter, Chairman Gonzalez requested information about intelligence documents. On April 2, 1992, Secretary Madigan responded “that while USDA wishes to cooperate in every way possible with your request, USDA is not in a position to release information about classified documents which were originated by intelligence agencies. We respectfully suggest that you direct your inquiries about classified documents to the in- telligence agencies that originated them.” It is customary for USDA, and all other agencies, to consult with other agencies and/ or provide draft or final materials for informa- tion, review comment, or clearance by other agencies having an in- terest in the subject. In the case at hand, apart from the classified information imbroglio of which this committee is well aware, I have no knowledge that any agency, including the State Depart- ment and the National Security Council, ever directed or requested that we not provide any document to this committee or any other committee of Congress. I trust this responds to the committee’s questions. In closing, I should state that consultation among agency lawyers working on the same issue at the same time is entirely principled. Indeed, not to do so would be almost unprofessional. Effective legal counsel depends on the ability of lawyers to consult freely with col- leagues and clients. Mr. Chairman, if you or members of the committee have any fur- ther questions, I am prepared to answer them. Thank you. The CHAIRMAN. Thank you. d_ [Tihe prepared statement of Mr. Raul can be found in the appen- Ix. The CHAIRMAN. Mr. Williamson. STATEMENT OF EDWIN WILLIAMSON, LEGAL ADVISOR, U.S. DEPARTMENT OF STATE Mr. WILLIAMSON. Thank you, Mr. Chairman. 57 By the early part of April 1991, the State Department had re- ceived numerous congressional requests for information about United States-Iraq policy, including requests from the House For- eign Affairs Committee, the Senate Foreign Relations Subcommit- tee, and the House Permanent Select Intelligence Committee, as well as this committee. In response, we made an extraordinary effort to make available thousands of pages of documents to various congressional commit- tees at a considerable cost in employee hours. To this committee alone, the State Department has made available an estimated 4,000 pages of documents on more than a half dozen occasions. The suggestion that the administration has sought to cover up its policy toward Iraq is simply not true, and is belied by the extensive production of documents we have already made to Congress, the congressional testimony of administration policymakers, and our continued willingness to make available additional information. Mr. Chairman, you have specifically asked about the Depart- ment’s involvement with lawyers of other agencies in discussions about pending congressional document requests. The simple and complete answer is that we consulted with one another about our responses to the committee’s requests. Coordination among government agencies in responding to con- gressional document requests is a longstanding practice and an ap- propriate way to ensure that the interests of both the Congress and the executive branch are met. And the fact of this coordination was hardly secret. When we sent to your committee, Mr. Chairman, our first collection of documents on August 2, 1991, we informed the committee that the Department—quote, “Department is consulting with other agencies about the remaining documents identified by your staff,” close quotes. In responding to congressional requests, the Department at- tempts to meet several important objectives including: To provide Members of Congress with the information they need; to maintain the integrity and candor of the Department’s reporting and decisionmaking processes; and to protect the confidentiality of diplomatic communications and other national security informa- tion. Let me stop and elaborate on those objectives for a moment. On their face, they appear simple. In fact, they raise a host of complex considerations and potential conflicts. Developing ways to accom- modate these objectives is one of the principal things we lawyers consult about. The first objective is straightforward. The Department’s policy— our marching orders-is to give you the information you need. The second objective—maintenance of the integrity and candor of the Department’s reporting and decisionmaking processes—and the third—protecting the confidentiality of diplomatic communica- tions and other national security information—have spawned a group of operating procedures. Although not always legally binding, for the most part, they are based on legal considerations, and that is why, in my view, it falls to the lawyers to deal with them. The two most important proce- dures from a coordinating standpoint are those surrounding the 58 I issue of executive privilege and those embodied in what we refer to as the third agency rule. As you know, we have not asserted executive privilege in respect of any State Department documents requested by the committee. In fact, I do not-I am not aware it has been asserted in respect of any documents requested by this committee. But, part of what we lawyers do is to work with others in the executive branch to devel- op accommodations for congressional requesters to avoid the need to even consider asserting it. The third agency rule takes the most coordination between vari- ous agencies. Insofar as classified documents are concerned, this rule is codified in Executive Order 12356. The rule is simple in its formulation—one agency does not give up another agency’s docu- ments without the consent of the owning or controlling agency. But it requires a great deal of practical coordination. The reason it exists is very straightforward-the controlling agency typically is in the best position to determine the extent to which a document’s release would harm national security. have a chilling effect on the deliberative process, or compromise law en- forcement or other important confidentiality interests. Let me now try to answer the specific questions you put to me. The first was: Why did the State Department join this group- that is the lawyers group established by the White House? Who at the State Department authorized such participation? First, the group was simply a practical attempt to organize the voluminous document requests that the administration had received. It was en- tirely routine and no authorization was required. Second, you ask for a list of the meetings held by the lawyers group. To the extent that there were meetings of this group as such, I would list their dates as April 8, April 9, April 15, May 6, May 13, May 31, and June 5. I do not believe that formal minutes or lists of participants were generally kept, because these were working level meetings. Indeed I, myself, only attended two of the meetings. Third, you asked if we had been asked by other agencies to with- hold information from congressional committees investigating the administration’s Iraq policy. To the best of my knowledge, and ob- viously other than in the context of coordinating under and com- plying with the procedures that I outlined earlier, particularly the third agency rule, the answer to your question is no. Finally, you asked whether the White House or the NSC had re- viewed or cleared information submitted to congressional commit- tees in response to information requests regarding Iraq or BNL. The answer to that question is yes, but again I believe it is fair to say that such review or clearance was only in the context of the procedures I referred to. I will be happy to take your questions, Chairman Gonzalez. The CHAIRMAN. Thank you, sir. Colonel Green. 59 STATEMENT OF COL. FRED K. GREEN, LEGAL COUNSEL FOR THE CHAIRMAN, JOINT CHIEFS OF STAFF, U.S. DEPARTMENT OF DE- FENSE Colonel GREEN. Mr. Chairman, I reviewed your letter of May 4, 1992, requesting my appearance and want to provide this commit- tee with the following information in specific response to the ques- tions posed in that letter. At the time I prepared my statement, I recall attending only one of the interagency meetings of lawyers on the topics that you men- tioned. That was the meeting held on April 8, 1991. I know I was at that meeting because I have it noted on my personal calendar. I was invited to attend the meeting by the NSC counsel’s office. I did not request any specific authority from any Department of Defense officer or official to attend nor was I directed to attend. In listening to the other witnesses this morning and looking at a list of participants, I think it is possible I attended a meeting on April 15 there, as well, but certainly the occurrences at those meet- ings have melded together in my mind at this point. To the best of my recollection, the National Security Council memo of April—that you enclosed with your letter accurately sum- marizes the April 8 meeting. Operation Desert Shield and Desert Storm had been a particularly busy time for me and those in my office, and even with the ground war over, I was still attending nu- merous meetings involving Iraq. And this particular meeting on April 8 at the NSC was just one more of those meetings. As I recall, there were a number of people there, several of whom I did not know. I did not retain any notes made at that meeting, nor do I remember participating specifically in the discus- s1on. When I returned from the April 8 meeting, I gave no direction to any members of the Joint Staff and I took no specific actions as a result of that meeting. Later in June 1991, the Joint Staff respond- ed to a subpoena duces tecum signed by the chairman of the House Foreign Affairs Committee to the Secretary of Defense for docu- ments pertaining to the export or reexport to Iraq of equipment or technology controlled for national security or foreign policy pur- poses. Several responsive documents were found located within the Joint Staff files, and they were provided in their entirety to the Office of the General Counsel of the Department of Defense for use in responding to that subpoena. The Joint Staff had no further in- volvement in this matter until I received your letter concerning this hearing. In reviewing the events for the purpose of preparing for this hearing, I learned from personnel in the Office of the General Counsel of the Department of Defense that other interagency meet- ings with lawyers on this same topic occurred on May 6, 13, and June 5. I do not recall being invited to those meetings or attending. I have no personal notes or calendar entries that would indicate that I attended on those days. I do not know if the Department of Defense has ever received a document from the White House, State Department, or the NSC asking or directing that information be withheld from the Congress / 60 , the administration’s Iraq policy. I do not know if the White ouse, State Department, or NSC ever reviewed any information submitted by the Department of Defense to the Congress concern- ing the matters you indicate. I was aware, of course, based on the April 8 meeting, and per- haps on the 15, as well, that the NSC counsel wanted to ensure that any decision by any executive agency to withhold a document based on executive privilege would be coordinated in advance with the NSC before that privilege was asserted. I trust the foregoing has been responsive to your specific ques- tions and I would be pleased to attempt to respond to any further questions from the committee. Thank you, sir. The CHAIRMAN. Thank you, Colonel. [The prepared statement of Colonel Green can be found in the appendix.] The CHAIRMAN. Mr. Willkie. STATEMENT OF WENDELL WILLKIE, GENERAL COUNSEL, U.S. DEPARTMENT OF COMMERCE Mr. WILLKIE. Good afternoon, Mr. Chairman. I have submitted written testimony for the record which I will briefly summarize here. - As you know, several agencies are involved in the export licens- ing process. The Export Administration Act, the authorizing legis- lation for export controls on dual use items, requires consultation among several agencies, principally Commerce, State, and Defense. Administrative procedures elaborate on the statutory framework and specifically call for referral of export license applications to a number of other agencies. As a result of this interagency process, documents and informa- tion originated by one agency will often be found in the files of a number of other agencies. Therefore, in preparing to respond to a sweeping request for export control documents such as the 1991 re- quest from Congressman Gejdenson which he described this morn- ing, coordination among the agencies is not only prudent, but nec- essary. Coordination in the preparation of responses to such requests is necessary for a number of reasons: First, there is need for coordina- tion to ensure all agencies are working from a common interpreta- tion of the scope of the request. Second, coordination is necessary because of well-known and ac- cepted third agency procedures. Finally, coordination among agencies is necessary to address im- portant executive branch interests. In responding to requests, an important concern may be the protection of executive privilege which, under longstanding and well-known executive branch proce- dures, only the President can assert. There is nothing unusual, Mr. Chairman, about a group of law- yers from various agencies meeting with NSC lawyers to coordinate certain responses to congressional requests. Indeed, it is a common practice. 61 / I would like to address the specific questions posed in your letter of invitation. First, the Commerce Department participated in the meetings of the lawyers group and this kind of coordination is not an unusual response to congressional document request. There is no special au- thorization necessary for Commerce personnel to participate in the group. Second, I am providing a list of meetings held by the lawyers groups we have reconstructed to the best of our ability from docu- ments in Commerce files as well as other sources. We will also pro- vide copies of notes, minutes, and letters originated as a result of such meetings. Third, during the interagency coordination process, I have de- scribed, other members of the lawyers group asked the Department of Commerce not to produce, for the time being, certain documents that Congressman Gejdenson had requested, pending possible nego- tiations with his subcommittee and/ or determination of whether to assert executive privilege over those documents. And we will pro- vide copies of documents reflecting such communications. Fourth, in the course of preparing to respond to the Gejdenson request in 1991, lawyers and others at the White House, NSC, State Department, and other agencies did review information sub- mitted to Congress by the Commerce Department. These reviews were undertaken in accordance with third agency procedures as well as to assess whether to assert executive privilege. I want to emphasize in conclusion, however, that to the best of my knowledge, all responsive documents located in Commerce files were produced to Congress and no such documents were withheld. In closing, I would like to assure the members of this committee, the Department of Commerce is mindful of the oversight and legis- lative needs of the Congress and we have made and will continue to make every effort to be responsive to congressional requests for information. As you may be aware, we are doing so with respect to declassifying certain documents in response to Congressman Gejd- enson’s most recent request. Thank you. I will be pleased to take any questions you may have, The CHAIRMAN. Thank you. [Tgie ]prepared statement of Mr. Willkie can be found in the ap- pen 1X. Mr. MoRAN. Mr. Chairman, I have to leave momentarily. I have only questions directed to Mr. Willkie. Would it be possible to ask those questions of Mr. Willkie now? The CHAIRMAN. Any objections? Hearing none, the gentleman is recognized and the witnesses, please forgive. Mr. MORAN. Thank you very much for your indulgence, Mr. Chairman, and the ranking minority Member. Mr. Willkie, following up on your last statement, you want in every way to be responsive to the Congress’ request for informa- tion, you were here when I raised the issue of this report from the inspector general of the Department of Commerce that cited 66 cases in which a—the information requested by the Congress was altered and in the words of the inspector general, it was unjustified and deliberately misleading. 55-927 O — 93 — 3 62 Many of the changes were to change the description, commodity description for trucks from vehicles designed for military use to commercial utility trucks, cargo trucks. And then in another case, the end user—excuse me, the exporter had inserted a comment that, according to our information, the end user is involved in mili- gariy matters in the end use field. Apparently, that information was e eted. So there were material alterations of information that was sub- mitted by the Department of Commerce to the Congress of the United States and it was, of course, an official request, official doc- umentation. I know it must have been—you must have been aware of it as General Counsel for the Department of Commerce. Who authorized those changes in these documents, Mr. Willkie? Mr. WILLKIE. With regard to the specific changes to which you referred, it is my understanding that the Under Secretary for Export Administration authorized those changes. Mr. MORAN. Mr. Willkie, did he make those changes? Mr. WILLKIE. Did he personally make those changes? Mr. MORAN. Who made the decision what to take out, what to change? Mr. WILLKIE. Mr. DeGeorge’s report indicated he approved all the changes made. Let me provide a bit of background about this. When allegations surfaced that this conduct to which you refer may have occurred which appeared in certain trade publications, trade sheets, I was concerned—I asked Mr. Kloske for a report about this. He provided a detailed report about changes which were made and the rationale for the changes. I was not satisfied with the report that I received and I asked the inspector general—and I very much share your confidence in his integrity and judgment and independence. I asked him if he would look into this. And I also urged Mr. Kloske to divulge all informa- tion he had about this to Mr. Barnard. Mr. MORAN. When the information was submitted from Depart- ment of Commerce you must have been aware there were some changes made. Were you aware that changes had been made to documents? Mr. WILLKIE. I was not aware specifically of the changes that had been made until the report that I received from Mr. Kloske, I be- lieve it was about February 26. Mr. MORAN. To your knowledge, do you know whether the Secre- tary of the Department of Commerce was aware that 66 changes had been made to official documentation being supplied to the Con- gress? Mr. WILLKIE. It is my recollection that I said I had concerns about what I was hearing, these allegations that had surfaced and that I was going to ask Mr. Kloske for a report on this. I believe that I advised him about the report, said I wasn’t satisfied with the report and that I recommended he and I request the inspector gen- eral look into the matter. Mr. MORAN. In all due respect, that isn’t the answer to the ques- tion I asked. Do you know whether or not the Secretary of Com- merce was aware that changes had been made to documentation being officially supplied to the Congress, changes that, in the in- spector general’s words, were misleading? 63 Mr. WILLKIE. I don’t recall. This is more than a year ago. I don’t recall all the specifics of my conversation with the Secretary. I might add that you refer to—there were 66 changes. I think the changes regarding the trucks which have been the subject of a number of news stories, I think the New York Times, the Washing- ton Post, the Los Angeles Times, and other publications reported on this about a year ago at the time the IG’s report was released, are the source of particular concern and were certainly unjustified and inappropriate. There were other changes that were suggested when the docu- ment was reviewed in the interagency process because the initial printout had information which itself was misleading. In other words, had other of those changes not been made it is my under- standing, it is my impression, that the report that would have been provided would have itself been misleading. What Mr. Barnard had requested was not a document that previ- ously existed, but he was requesting information which was avail- able from the Department’s computer data base. Mr. MoRAN. The information that was originally developed for submission to the Congress in response to the chairman's request by the Department of Commerce employees, can you tell me wheth- er that information was retained in the physical possession of De- partment of Commerce at all times, or was there any other agency of the government, members of the government, not employees of the Department of Commerce, who had physical possession of that documentation at any time between the original preparation of it and the actual submission to the Congress? Mr. WILLKIE. The printout—copies of the printout—and there were several iterations of the printout because Mr. Barnard re- quested information about referrals to other agencies-copies of the printout were shared with other agencies where there was ref- erence made to referral of license applications to other agencies. Mr. MoRAN. But I am trying to get at this information that was in response to requests by the Congress for specific items, the origi- nal description of the information and the data base, the computer data base was in fact altered, and it is clear it was altered for un- justified reasons, reasons which not only were unjustified but delib- erately misleading. We know that now, and I think you would agree that that was inappropriate. Mr. WILLKIE. Absolutely. Mr. MoRAN. It was inappropriate. Do we know whether the Sec- retary of Commerce was active or complicit in the submission of that altered information, and do we know whether any other people in the administration were involved in the chain—in the al- teration of those documents before its submission to the Congress. Do you have any information? Mr. WILLKIE. Two questions. To the second question, the printout was shared with other agencies. Other agencies made comments such as: Your information here is incorrect, it indicates you re- ferred such and such an application to us and you didn’t. Mr. MoRAN. That is advisory. Did they change the document- they wouldn’t have any authority to change documentation coming from the Secretary of Commerce. 64 Mr. WILLKIE. Specifically, I don’t know where, physically, the changes occurred. I believe they occurred at the Department of Commerce, within the Bureau of Export Administration. Mr. MoRAN. To the best of your knowledge, the changes that were made to the documentation, the decision and actual alteration of the information was made wholly within the Department of Commerce and you are saying, to the best of your knowledge, you do not know whether the Secretary was aware of the 66 changes that were made to the information prior to their submission to the Congress. Is that accurate? Mr. WILLKIE. I don’t believe he was aware prior to their submis- sion to Congress. As to your other point—I would like to go back and check our records and follow up and confirm with you, if I may, but it is my understanding other agencies made recommenda- tions saying your information here is incorrect. Mr. MoRAN. Was any other agency authorized to make material changes to the information? Mr. WILLKIE. I don’t believe so. Mr. MoRAN. Those were only advisory, those recommendations as to changes. Mr. WILLKIE. That is my understanding, Mr. Moran. I want to confirm it is my understanding other agencies provided input based on—because they saw characterizations of their actions in that printout as being inaccurate, misleading information and they said this isn’t correct and so we ask that you change this. That is my understanding. Mr. MoRAN. I think you are fully aware. I don’t want to exagger- ate the importance of this, but we are talking about material infor- mation being altered prior to its submission to the Congress, in the words of the inspector general, that was altered for unjustified and misleading reasons, so it is terribly important for us to know the integrity of the process. Was it done within the Commerce Department? Are people in the Commerce Department solely responsible for altering material information given to the Congress, or was there some other people or body within the government that should assume equal responsi- bility or maybe sole responsibility. Mr. WILLKIE. The inspector general has advised me that responsi- bility for those changes rests solely with the Bureau of Export Ad- ministration. Mr. MORAN. So they are going to take the rap for that, is what we are saying. That is my own words and I understand. Mr. WILLKIE. I think this is a complicated picture, Mr. Moran. Mr. DeGeorge’s comment about the unjustified and misleading re- ferred to those truck—the truck licenses. Mr. MoRAN. But that was two-thirds. Mr. WILLKIE. He said—he didn’t have the same reaction to the other changes. I think the concern and I think the changes were made by Department personnel that they thought were appropri- ate. And had they not made changes, it is arguable they would be subject to allegations they were misleading because they were pro- viding a document that was incorrect. Mr. MoRAN. But you know they changed the data base. They changed information after the request. 65 Mr. WILLKIE. The inspector general has indicated such in his report, yes, that the data base was changed. Mr. MORAN. You agree this was wrong to do. Mr. WILLKIE. Absolutely. Mr. MORAN. You would agree it is important to identify who was responsible for making that change. Under normal procedures, the Secretary of Commerce should have been made aware of any mate- rial changes to information being submitted to the Congress. You would agree with that? Mr. WILLKIE. Yes, and as I think I indicated, I briefed him that I’d asked Mr. Kloske for a report and I was not satisfied with the report I received and I was asking Mr. DeGeorge to conduct a full investigation. Mr. MORAN. To the best of your knowledge, you have no reason to believe that the Secretary of Commerce was aware changes had been made to documentation being supplied to the Congress. Mr. WILLKIE. I don’t recall all the specifics of the conversation. I would leave my answer as I provided it. Mr. MORAN. You are a very intelligent and capable man, Mr. W illkie, I know that to be the fact. I am surprised you don’t recall that because your knowledge of the facts is ordinarily very precise and very—and reliable. I am trying to determine the scope of re- sponsibility here for submitting misleading-—deliberately mislead- ing information to the Congress and you are the representative of the Commerce Department and Secretary of Commerce. Mr. WILLKIE. I have no reason whatsoever to believe that he had any knowledge of the problems in the information that was submit- ted prior to the time of its submission. The concerns surfaced later, in the February—March time period. Mr. MORAN. That is different. You are saying if he had been aware of the fact this was going to be raised at the hearing, this was going to be a problem and publicized that is different. I am asking is he aware of material changes which he would have recog- nized as deliberately misleading, was he aware that information was being given to the Congress. Mr. WILLKIE. I have no reason to believe he did at the time it was submitted. Mr. WYLIE. Mr. Chairman, would the gentleman yield? Mr. MORAN. Yes, thank you. Mr. WYLIE. I think you have gone over the same question several times. It has been going on for about 15 minutes. Maybe what we ought to do is try to find out who made the change and ask him why he made the change. Mr. MORAN. Excellent suggestion. Thank you, Mr. Wylie. Thank you. The CHAIRMAN. Ms. Archibald. Thank you for your patience. STATEMENT OF JEANNE S. ARCHIBALD, GENERAL COUNSEL, U.S. DEPARTMENT OF THE TREASURY Ms. ARCHIBALD. I am pleased to be able to testify before the com- mittee today. As you requested, I will discuss my activities relating to several interagency meetings I attended in 1991 in which it was considered how to respond to congressional requests for Iraq-relat- 66 I ed information and documents. In doing so, I hope to dispel un- founded suspicions and incorrect assertions that these meetings were intended to impede congressional review of these matters. The facts are that these meetings were nothing more than an effort to provide a mechanism for consultation and coordination among executive branch agencies which were receiving numerous requests for Iraq-related information and documentation. The focus of these meetings was to determine means by which the congres- sional requests for information could be met in a manner consist- ent with the constitutional and statutory responsibilities of the ex- ecutive branch. Certainly, at none of these meetings did anyone suggest explicitly or implicitly we should cover up embarrassing or illicit activities, nor did anyone suggest there were any such activi- ties. There is nothing unusual or improper about such consultation and coordination. Indeed, it has been my experience that it is common in the executive branch for agencies to consult with one another with respect to similar or overlapping document requests from the Congress. This is particularly so where, as here, docu- ments in the possession of one agency may have originated with or concerned activities of other agencies. In such cases, those other agencies are best able to determine if a document request raises le- gitimate confidentiality concerns. N or should improper motives be imputed simply because an agency reviews documents requested by Congress to determine whether their disclosure will interfere with the agency’s perform- ance of its responsibilities. Treasury has received congressional re- quests for a variety of sensitive information, such as grand jury or other information on open criminal investigations, confidential business information, deliberative process information, and infor- mation about the fmancial transactions of private citizens. It is en- tirely proper in such cases to consider appropriate ways of provid- ing the access the Congress needs to fulfill its responsibilities while preserving the confidentiality needed to ensure the executive branch’s efficient and effective administration of the laws for which it is responsible. The need for mutual accommodation be- tween the branches is an essential element of the separation of powers under the Constitution. Having said this, it is important not to lose sight of the fact that Treasury has been very responsive to the Banking Committee's re- quests for documents relating to Iraq and Banca Nazionale del Lavoro. We made available approximately 175 documents relating to the National Advisory Council on International Monetary and Financial Policies and its review of Commodity Credit Corporation and Eximbank financing for Iraq. The Customs Service has provided the committee with approxi- mately 525 pages of documents relating to BN L and Matrix- Churchill. During an initial meeting with committee staff, Treas- ury counsel explained that a large number of documents which might otherwise be responsive to subpoenas issued by the commit- tee were considered by Customs and Justice to be Justice Task Force documents, some of which related to an ongoing grand jury proceeding. Committee staff and counsel concurred and noted the subpoenas did not cover the Justice Department documents. — 67 During the course of subsequent discussions with committee staff, numerous documents were identified which related to ongo- ing law enforcement investigations or prosecutions, which disclosed sources and methods, which identified agents, informants, or poten- tial targets or witnesses or which were provided by foreign sources under promises of limited confidentiality. In each instance, the in- dividual document or class of documents was identified and dis- cussed with the committee staff. Throughout the process, efforts were continuously made to pro- vide as much information and as many documents as possible, at least in redacted form, to aid the committee’s inquiry. In addition, Customs gave a member of the committee staff access to approximately 50,000 documents which were located at its Cleveland office and which Customs had obtained from Matrix- Churchill office in Solon, Ohio. Moreover, a photocopy machine was made available to the staff member. That staff member was also licensed by Treasury's Office of For- eign Assets Control to enter the Matrix-Churchill premises and have access to all documents on the premises. Now, if I may, I would like to respond to the four specific ques- tions contained in your letter of invitation. I do not require authorization by any other Treasury Department official to accept invitations such as the one Nicholas Rostow ex- tended to me, and I did not seek any authorization to accept that invitation. I chose to attend these meetings because I believed it would be useful to coordinate with the other agencies on the topic of requests for documents related to Iraq. My records indicate that I attended meetings convened by Mr. Rostow concerning congressional requests for documents on April 9, April 15, May 6, and May 13, 1991. The Deputy General Counsel of the Treasury Department, Dennis Foreman, attended one such meeting on June 5, 1991, and, to the best of his recollection, Wil- liam Mackay of Treasury's Office of Legislative Affairs accompa- nied me to the April 15 and May 6 meetings. We have been able to locate two documents responsive to your request of May 4 in our files. One was originated by a National Se- curity Council (NSC) official, and we have referred your request to the NSC. The second document is a set of notes taken by Mr. Fore- man at the June 5 meeting mentioned above. We are prepared to make arrangements to make that document available to the com- mittee for review, with attributions deleted. It is the recollection of Messrs. Foreman and Mackay and myself that all meetings concerned the subject of requests of congressional committees for access to Iraq-related documents and information. Except for communications received in the course of coordinating with Justice relating to the criminal investigations of BNL and Matrix-Churchill, which I referred to earlier, I am not aware that Treasury has ever received any communication from the White House, the State Department, the NSC, or any other Department or agency asking it to withhold Treasury documents from congres- sional committees investigating the administration’s Iraq policy. As you know, if a document originates in another agency, the third agency rule followed by the executive branch calls for the originat- 68 ing agency to make the decision whether to make the document available pursuant to a request from the Congress or the public. We have in our files several NSC documents responsive to a re- quest from the committee including one which was prepared by Treasury staff but which records the proceedings of an NSC meet- ing. The NSC has directed Treasury that these documents should be made available only with the approval of the NSC. This infor- mation was relayed to your staff. You also asked whether the State Department, White House, or NSC ever reviewed and/ or cleared any information submitted by the Treasury Department to congressional committees in response to information requests concerning Iraq or BN L. As a matter of course in dealing with requests concerning documents of the NAC, especially minutes of NAC meetings, we routinely seek the views of the other N AC members and of any other relevant agency. The State Department is a member of the NAC, and accordingly its views were sought. This is a well-established procedure that was being followed before any of the lawyers’ group meetings which are the subject of my testimony took place. In dealing with congressional committee requests for informa- tion, Treasury did coordinate with the White House and the NSC concerning several documents which we considered to be sensitive. With respect to each of these documents, Treasury made the final determination, and we proceeded as we had planned. In conclusion, Mr. Chairman, I believe that Treasury’s coordina- tion with other executive branch entities concerning responses to requests by congressional committees for Treasury documents con- cerning Iraq or BNL has been appropriate and consistent with our usual practice. We spent much time and effort in responding to re- quests from the Banking Committee. We believe our response has been thorough and honest. It has resulted in the committee’s ob- taining access to numerous Treasury documents. One final note, I would like to add, Mr. Chairman. Mr. Men- delowitz stated that Treasury has been uncooperative in providing information in response to GAO requests. I recall we received a re- quest from the GAO for access to the NAC minutes in the fall of 1990, and I also recall that, while we still had that request under consideration, I received a call from Mr. Mendelowitz telling me I could ignore that request because he had obtained the documents from another source. Thus, I was somewhat surprised when we received a further re- quest from the GAO in June 1991 to review those same documents, but we did make those documents available for their review. It has recently come to our attention through a letter from the Senate Agriculture Committee that GAO apparently is under the impres- sion it has made a further request for documents to which we have not responded. We are not in receipt of that request. We did call the GAO and asked them if they submitted one and we understand they are looking in their files for the request, but we have not heard back from them. Thank you, Mr. Chairman. I am prepared for my questions. The CHAIRMAN. Thank you very much. [The prepared statement of Ms. Archibald can be found in the appendix.] R 69 The CHAIRMAN. Mr. Cifrino. STATEMENT OF MICHAEL CIFRINO, SENIOR ATTORNEY, OFFICE OF THE DEPUTY GENERAL COUNSEL, INTERNATIONAL AF- FAIRS AND INTELLIGENCE, U.S. DEPARTMENT OF DEFENSE; ACCOMPANIED BY JUDGE MICHAEL LUTTIG, JUDGE, NINTH CIRCUIT, COURT OF APPEALS (FORMER ASSISTANT ATTORNEY GENERAL, OFFICE OF LEGAL COUNSEL, U.S. DEPARTMENT OF JUSTICE) Mr. CIFRINo. I am appearing at the request of the committee be- cause of my role as the primary Department of Defense official who participated in certain meetings called by the legal advisor to the National Security Council to discuss proposed responses to written requests from the chairman of the Subcommittee on Inter- national Economic Policy and Trade and at least one other commit- tee for documents regarding United States Government export policy for Iraq from 1979 through 1991. Your invitation to me, dated May 22, to testify today posed a number of questions which I will be pleased to answer. Attached to that invitation was a memo dated April 8, 1991, to Terrence O'Don- nell, the General Counsel of the Department of Defense, at that time, and other executive department’s legal counsel. While I sub- sequently attended other meetings for Mr. O'Donnell, I did not attend the April 8 meeting. On April 19, 1991, the Secretary of Defense received a letter from the chairman, Subcommittee on International Economic Policy and Trade requesting a wide range of intraagency and interagency doc- uments regarding United States Government export policy for Iraq and seeking a response to that request by May 13, 1991. On May 6, at Mr. O’Donnell’s request, I attended a meeting held at the Old Executive Office Building that was chaired by Mr. Nich- olas Rostow, Special Assistant to the President and Legal Advisor to the National Security Council. To the best of my recollection, the purpose of that meeting was to coordinate the responses of the various executive agencies that had received similar written requests from that subcommittee. The major topics of discussion that I recall were the extremely burdensome nature of the requests for documents, whether or not the issuance of a subpoena was likely, and the issue of executive privilege, generally. On May 13, I attended my second meeting, also called by Mr. Rostow. The discussion, I recall, dealt with the issue of whether the National Security Council would represent all executive depart- ments that had received documents requests from the Internation- al Economic Policy and Trade Subcommittee in discussions with that subcommittee staff or whether each Department would discuss the release of its documents directly with the subcommittee staff. It was decided as I recall at that meeting, as a practical matter, each agency would have to deal directly with the subcommittee. On June 5, I attended my third and I believe last interagency meeting on this subject. I recall that meeting was initially ad- dressed by Mr. Boyden Gray, Counsel for the President, who em- phasized the importance of maintaining the institutional preroga- 70 tives of the Presidency through the use of executive privilege where appropriate. There was discussion regarding the types of documents that should be considered for a claim of executive privilege. The meet- ing closed with a request that executive departments provide to the NSC staff any documents for which the departments were contem- plating a claim of executive privilege. I would like now to respond to the specific questions in your letter inviting me to testify today. As to the first question, I attended the first meeting I described above on May 6 at the direction of the DOD General Counsel and the two subsequent meetings I attended at the direct invitation of Mr. Rostow. I attended these meetings to ensure that the Department of De- fense response to the April 19 letter from the subcommittee chair- man would be legally consistent with the responses that would be provided by other executive departments that had received similar etters. As to your second question, I have described the three meetings I attended and, to the best of my recollection, the topic of each meet- ing. I am providing three memorandum dated May 8, May 14, and June 5 which I drafted for my superiors. Your third question. At no time during the course of my partici- pation in the process of responding to the subcommittee chairman’s letter of April 19, did I receive any communication from the White House, State Department, the NSC, or any other executive depart- ment asking me to withhold any information from any congression- al committee. Fourth. Subsequent to receipt of the letter from Secretary Cheney of April 19, at least three documents were provided by the Defense Department to the NSC staff for consideration of a claim of executive privilege. To the best of my recollection, access to those documents was subsequently provided to the subcommittee. I would be pleased to respond to any questions you may have. Thank you. [The prepared statement of Mr. Cifrino can be found in the ap- pendix.] The CHAIRMAN. Thank you very much. I again express my grati- tude in the name of the committee for your response to our invita- tion based on the letter in which we outlined what it was we wanted to have answered. The hour is late and I think I can boil down my basic question and I have two or three questions that I could submit in writing subsequently. Our impression is that the Rostow-originated meetings were not usual, they were unusual. My question would be, how many con- gressional requests for information are coordinated with the White House or the National Security Council? And if you want to pro- vide documentation or answer in writing, it is fine for the record. If you have an answer, fine. Again, if you wish to research that and provide the documentation in writing, that is fine, too. In other words, we know that there are considerable requests from Congress ranging from-the Department of Commerce as to how many chiles are imported from Mexico, and so forth. But obvi- 71 ously that is not our concern. Our concern is what motivated these-in what we feel are extraordinary meetings in response to congressional requests, particularly the requests involving this committee. We know that the committee issues document subpoenas and we had some withheld from the Federal Reserve Board, and their rea- sons were that they were under instructions or recommendations from the Justice Department. But to me meetings seem to me to be quite unusual. So if any of you can answer that now, I would by interested. How many congressional requests have then resulted in either consultation or arrangement with—the White House or NSC. Does any member wish to comment on that? Mr. WILLIAMSON. Mr. Chairman, let me say I have only been in this position since September 1990, so I can’t go back very far. I can think of at least two other congressional investigations that we had similar meetings on. In fact, one of the things that struck me very unusual when I got to the State Department and the first GAO request came to my attention was, there was no process for dealing with a GAO request that in any way assured that the Legal Advisor’s Office would even know about it. I came out of the private sector and I couldn’t imagine a private sector company getting a request similar to a GAO request without consulting its lawyers. Everything we have done seems to be abso- lutely plain, common sense. And I attempted to provide some co- ordination. The CHAIRMAN. You stated, Mr. Williamson, you could recall two other occasions with respect to other investigations. Could you ex- plain which investigations, if you can recall? Mr. WILLIAMsON. I have attended meetings of roughly the same types on both the POW/ MIA investigations, as well as the October Surprise question. Those are just two off the top of my head. I will be happy to do further looking. The CHAIRMAN. I appreciate that. The other basic question is: Could your respective agency have replied to the request without White House or National Security Council assistance? Mr. WILLIAMSON. Legally or as a practical matter? The CHAIRMAN. Well, either way. I mean, is there a legal impedi- ment to replying to an interrogatory that the agency on its own could do so—that is conforming to its rules and regulations without White House or national security clearance. Ms. ARCHIBALD. Mr. Chairman, if I might make an attempt at a response there. In our typical way of dealing with these, when we get a request and we are sure we know what the scope of the re- quest is, we then search our files to find the responsive documents. The third agency rule which has been mentioned a number of times already would come into play if in fact we had any docu- ments that either originated with another agency or contained in- formation originating with another agency. If the documents we have contain no such cross-cutting informa- tion, if I can use that phrase, the determination on how to reply would lie solely with our own agency. 72 Indeed, as you know, your request to us, your initial request to us predated by some months this group getting together, and we were already making decisions on how to respond to your request before this group ever met. Ms. RINDSKOPF. Mr. Chairman, if I might make a contribution on a broader note. As I mentioned, I had no involvement in this par- ticular case, but as one who has been in the intelligence communi- ty for the last approximately 8 years, in a sense I think that the community is the beneficiary here. We, in previous years, and in a previous administration, found that many times in a rush to comply with requests, whether from the Congress or other bodies, our information was released without proper attention to concerns, equities, and national security han- dling procedures, and so it is the case that we were, not in this in- stance, but in other cases, eager to see the kind of process put into play that we have described for you today. So that the third agency rule would be something that others, particularly Department level entities, would be mindful of as they considered requests, and simply from a standpoint of making cer- tain that they didn’t inadvertently reveal classified information without first consulting with us. The CHAIRMAN. I see. Well, I will have a couple of questions that I will submit in writing because they may call for some research and statistical information. Mr. FRANK. And they might have to get together before deciding if they can answer them. The CHAIRMAN. Well, I don’t know. Mr. WYLIE. Mr. Chairman, that very well may be true, and I can understand the need for coordination here. You have mentioned the so-called third agency rule here. How many requests do any of you remember where information was asked of seven different gov- ernmental agencies at the same time? Mr. WILLKIE. Mr. Wylie, I would say that we only had, in this context, considered the request from Mr. Gejdenson, which was an identical request submitted to several agencies which called for any and all documents regarding exports to Iraq and Iraq policy and so on. It was an extraordinarily voluminous request. We produced thousands of pages of documents. I think Mr. Gejd- enson said this morning there was 20 to 30 feet of documents that we produced, some of which were very highly classified documents involving high level deliberations, so this was an omnibus request that was submitted to several of the agencies represented at the table at the same time. Mr. WYLIE. I think that is the point I wanted to make. Coordinat- ing talk in this case might lend itself to efficiency in replying to the request for information. I was given a document in my file folder this morning that says “coverup mechanism and Lies to Con- gress, Statement of Henry B. Gonzalez, Chairman, Committee on Banking, Finance and Urban Affairs, March 16, 1992.” I have a feeling that that may have been circulated in other ways, and that seems to me to be a very serious allegation on the face of it. Now you have talked in terms of a procedure which you set up, and there is a procedural statement here. 73 That seems to me that the Rostow memo simply suggests that a document request be reviewed for executive privilege, and that is the first one that is in this-under this cover sheet. Now, is this statement here, the Rostow statement, indicative of what really happened, and I say that, are you aware of anything that could be characterized as a coverup coming out of that meeting or any meet- ing, with the possible exception of the alteration to the Com- merce—Commerce Department report which Mr. Moran referred to a little earlier, any member can answer that. Mr. Raul. Mr. RAUL. Well, I am certainly aware of absolutely no coverup at all. If what you are referring to, Mr. Wylie, is the April 8, 1991, memorandum which memorializes certain principles, if that is the document-— Mr. WYLIE. That is the document I am talking about. Mr. RAUL. I have to note that I was not at the meeting which-— this was an April 8 meeting. I attended a meeting on April 9. But I can say that the principles enumerated here are fairly standard operating principles in connection with providing any doc- uments by any agency, so there is nothing at all unusual, but you will have to ask someone who was at the April 8 meeting whether it fairly memorializes the subjects discussed. Mr. WYLIE. Well, in your own memo you said that the idea was to cooperate with Congress, and would anyone who was at the April 8 meeting-— Mr. RAUL. Mr. Wylie, I will be happy to address that further. The memo you were referring to was written and does fairly de- scribe some subsequent meetings to April 8. There was a meeting on April 9, and, as I testified, on April 15, I think that was an April 17 memo of mine that you may be referring to. It was quite clear that the purpose for the meeting was to ensure cooperation with Congress, with this committee, other committees, and at the same time bear in mind where there might be applicable issues of privilege or other matters that ought to be taken into account. It was an entirely principled discussion by government lawyers trying to respond to numerous requests from different committees. Some- times the same committee submitted requests to numerous agen- cies, and I should note that often the requests that come in, as I think Mr. Williamson or one of my other colleagues here noted, are extraordinarily voluminous requests, as Mr. Willkie indicated that he had 20 or 30 feet of documents. Almost routinely a committee, as I am sure you are all well aware, will submit a request for really an unbelievably large amount of documents, so that is a starting point from which discus- sions ensue with the agency. The committee recognizes, as staff members of this committee have recognized, that a request is ini- tially made and then it is discussed with the agency. Because the committee understands that the agency can’t possibly find enough copying machines to provide all of the documents that are request- ed, so that there is a process of discussion that ensues. It is entirely appropriate between the committee, generally the staff and the agency attorneys, and that process, it is very impor- tant to bear in mind that if the same request has been submitted by a committee to numerous agencies, the executive agencies should all ensure that they are being cooperative with Congress, 74 anld that requires some discussion, some consultations with each ot er. Mr. WYLIE. Well, as I look through these documents under this cover sheet, the only one where there might be some possible op- portunity for discussions other than this procedural statement or mechanism, which I just mentioned a little earlier, was this April 8, 1991 memorandum. Did Rostow make it clear that it was necessary to cooperate with Congress in responding to these requests for information? Was there any—Ms. Archibald, you seem to be reaching for the micro- phone. Ms. ARCHIBALD. Mr. Wylie, I also was not at or invited to the April 8 meeting, but certainly in all the discussions that occurred at the meetings I did attend and in all the many discussions I have had both prior to these meetings and after these meetings that re- lated to congressional requests, certainly all of my colleagues that I spoke to started from the premise that the Congress does have a legitimate interest in seeking documentation from the executive ranch. You start from recognizing that. At the same time we also recog- nize that there are legitimate interests that the executive branch wants to preserve. So we always start from the premise that we have to find some way to accommodate the interests of the two branches of government. Mr. WYLIE. All right. Thank you very much, Mr. Chairman. The CHAIRMAN. That was a leading question. 1\}/Ir. WYLIE. That is what you call a leading question, that is rig t. Mr. FRANK. Thank you. Let me start by referring to the burden- some nature of some of the requests. I understand it can be burdensome to be asked for all the docu- ments, but let me explain from the standpoint of a requester why you sometimes get those. I am referring to a memorandum from Mr. Kloske to Mr. Willkie, February 26, 1991, accompanying the proposed submission to Mr. Barnard about Iraq, and Mr. Barnard asked for it more specifically, and basically what the memo says is he is going to get what he asked for and nothing more. And if you are going to interpret the request in such a very, very specific manner, then you are going to get more general requests. On page 3 of the submission to you that came with-there is a cover memo from Mr. Kloske, then a three-page attachment, the last paragraph in the printout is also consistent with fifth floor guidance, that is the Secretary’s floor, I assume? Mr. WILLKIE. Yes, sir. Mr. FRANK. Only here do floors personify themselves and give orders, so we don’t know who did it, but the floor did it. The print- out is also consistent with fifth floor guidance and request from both State and the NSC that no additional information be provided that does not directly address the committee’s request. Provide this kind of very, very specific and careful response, and that is why you get what you get. In fact, as I read this memo, what it said was he didn’t even ask for the right things, some of the stuff isn’t that good, but he is 75 going to get that and only that. The way you get around that is to ask for the kitchen sink. I say that by word of explanation. Now, a couple questions. I understand the need to talk when there are third agencies, and if there was duplication. Were there discussions at these meetings about the release of documents that were wholly the property of a particular agency, did not involve a third agency, and were not duplicative? Were they also covered? Let me ask all of you. Why don’t we begin with this end and we will go down. Mr. Cifrino. Mr. CIFRINo. Yes. The best I recall as to the agencies, no. There was some discussion as to information that may be contained in an agency document that was originated at the White House staff, and we were under general instruction not to release such documents. Mr. FRANK. All right, let me go down the list. Treasury. Ms. ARCHIBALD. If I understand your question, you are talking about information other than third agency information, in other words, Treasury information. Mr. FRANK. I am talking about documents that were wholly within the control of a particular agency and were not duplicative since by definition they were wholly at one agency, they wouldn’t be duplicative. Were those discussed in those meetings at all, guid- ance about those? Ms. ARCHIBALD. Not that I recall. In fact, I don’t recall specific documents of any agency even being brought to a meeting or dis- cussed at a meeting. Mr. FRANK. What are you talking about then? Ms. ARCHIBALD. All the conversations were general, about how to go about responding and making sure we coordinate? Mr. FRANK. Then I should have rephrased the question. I appre- ciate your allowing me to not Barnard-ize myself this way by being too specific on what I asked. When you talked about the general guidance, were you talking about general guidance—I mean you have given two very plausible reasons why you had to talk to each other, I can’t release a document that says something about you that you helped me prepare without asking you, and then maybe duplication. - My question is, did the guidance that you discussed also apply that you would take back the documents that you had in your De- partment that did not fit that description that were not third agency documents? Were you also talking about first agency docu- ments or second agency documents, however—whatever the number is? Ms. ARCHIBALD. Not that I recall, not specifically. Mr. FRANK. None of this had to do with how you, Treasury, should respond with regard to Treasury documents? Ms. ARCHIBALD. That is correct. I do recall, though, that there was a general thought that we would keep each other informed as to what we were doing, but no requirement to bring documents to the group. Certainly, we did noti Mr. FRANK. You are saying that these meetings dealt only with shared documents? Ms. ARCHIBALD. That was the main focus? Mr. FRANK. No, main. Main only is what I am talking about. Ms. ARCHIBALD. Again, I do not recall ever having a specific 76 Mr. FRANK. You do not recall having a discussion that would apply to documents other than the shared documents? Ms. ARCHIBALD. I never had a discussion that I had to receive wholly Treasury documents to this group to be reviewed; that never happened. Mr. FRANK. But you weren’t talking about specific documents, you said, so it only had to do with shared documents. Ms. ARCHIBALD. I was never instructed, when I found Treasury documents, to bring them to the group to be reviewed. Mr. FRANK. If someone asked you for something which was a Treasury-only document, you could then simply make the decision by yourself without referring it to the group’s instructions? Ms. ARCHIBALD. That is what we did. Mr. FRANK. There was no general guidance from the group about this? Ms. ARCHIBALD. Other than the general guidance we have talked about, about trying to find ways to accommodate requests from the Congress while assuring that the deliberative process, the law en- forcement requirements, and so forth? Mr. FRANK. So that did apply to your own documents? You did get out of this general guidance for your own documents? Ms. ARCHIBALD. But that is a typical guidance process that has been in the executive branch as long as I have been there. Mr. FRANK. Why would it be peculiar in this? I assume you always have that. Are there documents where you don’t? Let me put it this way, in other areas where people ask you for a docu- ment, would you not be concerned about these things? Ms. ARCHIBALD. I am sorry. I am not understanding your ques- tion. Mr. FRANK. In areas outside of this particular Iraq situation, if you were asked for a Treasury document, you wouldn’t worry ?bOli11lE) whether or not it revealed the deliberative process, and so ort . Ms. ARCHIBALD. Oh, yes, of course. Mr. FRANK. You would. Then there is nothing peculiar about that. I am puzzled here because I still don’t understand what the role of the group was with regard to documents that were wholly within the jurisdiction of one Department. Ms. ARCHIBALD. As I recall, we simply shared information about what we had done in the past or ideas that we had about how you try to find an accommodation between the interests of the Congress and the executive branch. k_Mr. FRANK. Do others have a specific response to that? Mr. Will- 1e. Mr. WILLKIE. Mr. Frank, I only attended one such meeting. It is my understanding that most of the? Mr. FRANK. Just talk about the meeting that you were at. Mr. WILLKIE. At the meeting that I attended, there were—it is my distinct recollection that there were no specific documents under discussion. It was a bunch of lawyersi Mr. FRANK. The question was whether the guidance you had ap- plied to general documents, only third agency documents or specif- ic departmental documents. 77 Mr. WILLKIE. Well, there is a definitional question there, a specif- ic departmental document, using that phrase, OK? The discussion I attendedi Mr. FRANK. Never mind. My time has run out. I don’t think I am going to get an answer, soi Mr. WILLKIE. I think I can provide you an affirmative answer, Mr. Frank. Mr. FRANK. Go ahead. Mr. WILLKIE. You might call it a Commerce Department docu- ment, but if it calls for a recommendation from the Secretary of Commerce to the President of the United States, that would argu- ably invoke the concept of executive privilege. Now, you might call that a specific Commerce Department document, but that is a docu- menti Mr. FRANK. But it is not a third agency document. Mr. WILLKIE. That is correct. Mr. FRANK. Let me get on because I don’t think I am getting very much that is useful. I do have one specific question I want to ask of all of you because one of the questions we have is the ques- tion of whether or not any of these funds, some of which were clearly misspent, were diverted in some way directly or indirectly into arms sales, and I would like to know from each of you, did your Department investigate this, to what extent, and what did you find? Let's begin with Defense. Mr. CIFRINO. I am sorry, would you—investigate what? Mr. FRANK. Diversion of CCC funds into arms procurement. Mr. CIFRINO. To the best of my knowledge, the Defense Depart- ment did not. Mr. FRANK. Treasury is busy. What about Commerce? We will come back to Treasury. Mr. WILLKIE. I think we have been asked about that. It is my un- derstanding that Commerce has no information. Mr. FRANK. That was not the question, whether you had infor- mation. I am sorry. Mr. WILLKIE. Been asked to look into it, Mr. Frank. Mr. FRANK. No, have you investigated it? Have you investigated it? I am sorry, that is the only thing? Mr. WILLKIE. Can I check with staff and get back to you in the sequence? Mr. FRANK. Sure you can. Colonel GREEN. To the very best of my knowledge the Joint Staff has conducted no? Mr. FRANK. No, I wouldn’t expect you to. State? Mr. WILLIAMSON. I don’t believe we have investigated it. Mr. FRANK. You haven’t investigated it. Intelligence? Ms. RINDSKOPF. I think you have to ask someone more knowl- edgeable about what our information showed. I really have no—— Mr. FRANK. That is a great answer. I congratulate you. That is the best evasion I ever got. Ms. RINDSKOPF. I have no personal knowledge. Mr. FRANK. Do you know who in the Department has? Can you get back to me? MsaRINI)sKOI>F. We will be happy to take it as a question for the recor . s 78 Mr. FRANK. How about Agriculture? Mr. RAUL. Mr. Frank, our office of inspector general and the De- partment of Justice have been investigating the issue of diversion of CCC guaranteed agricultural commodities and shipments under GSM guarantees. There has been no evidence—and I have checked, others in the Department have checked with the inspector general, with the Department of Justice—there is no evidence to date that has been produced of any diversion for military purposes. Mr. Mendelowitz testified here earlier today, and I do appreciate his saying this especially in this arena, that he has no evidence that there have been diversions for military purposes. The Febru- ary 28, 1991 indictment handed down, 347 counts, has no reference to any diversions for military purposes. The May 13, 1992 plea agreement with Entrade, one of the exporters under the CCC Pro- gram, has no reference to military shipments. In fact, the factual basis for the plea which has been released as a plublic document indicates that they did not have anything to do wit :- Mr. FRANK. You are going beyond my question. Mr. RAUL. This is important because—— Mr. FRANK. I understand it is important, that is why I want to- I am sorry, sir, but you are not responding to my question. If you can get someone else to ask you that question, you can answer it. In the first place, I think—I asked Mr. Mendelowitz that ques- tion, and his answer was, as I said, and he agreed agnostic. He said no, he didn’t have any-i Mr. RAUL. He said he had no evidence. Mr. FRANK. Right. He hadn’t looked into it, and he said he was agnostic about it because he said he had no evidence one way or the other because he said he hadn’t looked into it. I understand that. I don’t have any evidence, either. Mr. RAUL. Mr. Frank, this is a key point. Mr. FRANK. I understand that, and I am not going to allow you to misstate the transcript of what we had with Mr. Mendelowitz. He did say when I asked him that he was agnostic on the question. That is a direct quote. He said that he had not really looked into it, and they hadn’t been asked to look into it enough to have an opinion one way or the other. I think you quoted him misleadingly. Mr. RAUL. I am sorry to interrupt. May I address this? This is a key point. These allegations keep being repeated as though there is evi- dence. That is why I thought what Mr. Mendelowitz said today was significant, but we can check the record. The point is that investi- gations have been made, they are continuing underway, and whether or not one is agnostic about what the investigations will ultimately discover, the point is that there is no evidence that has been provided, as far as I know, to date about any connection with Inlilitary shipments. It is an allegation that continues to be repeat- e . Mr. FRANK. In the first place, I will repeat, you have misstated the clear impetus of what GAO said because he didn’t simply say that he knew of no evidence. He said he was not in a position to evaluate that one way or the other when we questioned him. 79 Second, I am prepared to agree that we haven’t gotten the evi- dence yet. The question is whether we should have had some. The question is not whether we have hard evidence, but the dili- gence with which this has been pursued by the administration, and that is why my question to you was not what was in an indictment but has the Agriculture Department investigated this, to what extent, and what is your conclusion. I would like to know what is the extent of Agriculture’s independent investigation of these alle- gations. Mr. RAUL. Our inspector general has been working with the U.S. attorney’s investigation in Atlanta since just after that investiga- tion commenced around August 4, 1989. They have been working extremely closely. That represents the Department of Agriculture’s efforts to assist the investigation with regard to military ship- ments. Mr. FRANK. So it is primarily Justice? Mr. RAUL. It is a U.S. attorney investigation out of the Atlanta office. The FBI is involved, our inspector general at USDA is in- volved. I believe that other agencies either are or have been in- volved, such as Customs Service and Federal Reserve Board have been involved. Perhaps they continue to be involved, but the point is that it is a very extensive investigation. Our inspector general testified on this point, and there was ex- tensive testimony about this last week in the hearings before this committee, and the fact remains that the investigations are ongo- ing. I believe that is consistent with what Mr. Mendelowitz said, but the point is that these investigations, while they are ongoing, have uncovered no evidence to date, and neither you nor I can pre- dict what they will uncover in the future, but that is not the point. The point is what we have been told as of today about what the investigations have uncovered, and as Mr. Mendelowitz believes, as of today that investigation Mr. FRANK. I want to repeat, you are misstating the thrust of his testimony, you are citing as a-—please, I have listened to you and I will not be interrupted at this point. You lose me, some of what you said is perfectly reasonable, but I believe you misstate him for your purposes, put that kind of spin on it. He made it very clear that he didn’t feel he was in a position to comment one way or an- other; it was not an area of his expertise. When you cite him to the contrary, I think you are misstating Mr. RAUL. If I have done so, it is unintentional. Mr. FRANK. I am sorry, but I am not finished. Second, I do want to say, yes, I agree the investigation is ongo- ing. The question that many of us have is how thorough and how enthusiastic an investigation it is. I would be willing to end on a note of agreement. You predict nothing is going to be found. Mr. RAUL. I did not predict that. I said I could not predict. Mr. FRANK. Oh, I am sorry, you said you couldn’t. I apologize. Mr. RAUL. Thank you, Mr. Frank. Mr. FRANK. I apologize. Then we do disagree because I can pre- dict. I predict your guys are going to find nothing. Thank you, Mr. Chairman. 80 The CHAIRMAN. The Chair will recognize Chairman Rose who has requested to ask a question, and I am sure that it is in obedience to the statement he made to the committee earlier. Chairman Rose. Mr. ROSE. Thank you, Mr. Chairman. Mr. Raul, you said there has been no evidence to this point un- covered of any diversion of the CCC loan to, in any way, help Iraq militarily? Mr. RAUL. What I said-certainly what I intended to say, Mr. Rose, is that I am not aware that there is any evidence from any investigation that any CCC guarantees were used in connection with any military purpose. If that is the same as what you have said, then I agree with it. If not, I am? Mr. ROSE. Are you aware that Mr. Thomas Kay said under oath before my committee when he was still the Director of the Foreign Agriculture Service, that he couldn’t tell me whether or not any shipment ever arrived where it was sent. Are you aware of that? Mr. RAUL. I am not, Mr. Rose. Mr. ROSE. In other words, you can’t tell me that all the things that were guaranteed ever went anywhere? Mr. RAUL. Well, I have asked that question, and this is what I have been told about our basis for knowledge that shipments did arrive. One, our agricultural attache at the time in Baghdad has indicated, and it has been related to me, that he has seen United States-guaranteed shipments arrive at Baghdad. The team that we had in Baghdad in April 1990 reviewed a selec- tion of shipping documents that they requested, for GSM-guaran- teed transactions. They had with them an interpreter from the United States Embassy in Baghdad. Working with the interpreter and in reviewing that selection of documents, they ascertained that the shipments that they had in front of them did, in fact—there were invoices and customs receipts going into Iraq. Mr. ROSE. All right. You are aware that eight tobacco companies pled guilty down in North Carolina to blending and you also are aware that they paid restitution for bribes that they had paid, are you not? Mr. RAUL. For after-sales services; yes, sir. Mr. ROSE. After-sales services. You have also seen all the telex that have been provided to you from customers of Agriculture Com- modity customers who were asked for bribes. Mr. RAUL. I, of course, haven’t seen them all, but we have seen Mr. ROSE. You know about them? Mr. RAUL. I am aware of telexes where they were asked for after- sales services. Mr. ROSE. You know your response to Iraq was to just tell them to stop doing that and don’t do that anymore. Mr. RAUL. We did tell Iraq they shouldn’t do it. Let me explain about that, if I may, sir. The after-sales services are not, per se, illegal. They represent a violation of the GSM Program regulation, and this is very impor- tant. When the exporter, who has registered the shipment with CCC, has not discounted the price that is registered for guarantee with 81 CCC to basically net out the value of the after-sale service or the rebate or any other allowance, the exporter is not prohibited by our regulations from providing after-sale services or a discount. What is critical from our standpoint is that the amount registered with CCC be accurate. I Mr. RosE. It is clearly fraud, and it is clearly violating other U.S. aws. Mr. RAUL. Explain that, sir. Mr. RosE. Well, I aIn asking you the question. Isn’t it fraud? Mr. RAUL. To provide after-sale services? Mr. ROSE. Yes. Mr. RAUL. You will have to provide me with more details. The program violation concerns the failure accurately to provide infor- mation to CCC about the value. Now, if a—let me explain. If an exporter provides these after-sale services but nets it out of the amount registered with CCC, that is certainly not a violation of our program requirements. If it is fraud for some other reason under some other law, I would need further information about it. Mr. RosE. So even the tobacco companies that paid these bribes are still participating in USDA loan programs, are they not? Mr. RAUL. I believe not. I believe that theyi Mr. RosE. They haven’t been disbarred, Mr. Raul? Mr. RAUL. I believe—I will check, but I believe that the pleas in- dicate a voluntary debarment. Mr. RosE. I have had a hearing on this and I will be delighted to find out, but I believe they are still storing tobacco-program tobac- co, but that is another question. The last question. Why did USDA tell everybody to go to BNL in Atlanta? Mr. RAUL. I am not aware that that is accurate. Mr. RosE. You don’t—BNL Atlanta handles $4.2 billion, $5 bil- lion worth of loan guarantees, and you don’t have any idea how the commercial side of the transaction in the United States got down to Atlanta? You people told them to go to Atlanta. Mr. RAUL. I have no information about that. BNL is not a partic- ipant, as you know, sir, in the GSM Programs. They are an assign- ee of a guarantee that USDA provides to the exporter. I have no, absolutely no knowledge about USDA telling anyone to go to BNL. As of November 1989, BNL had agreed that they would not par- iéicipate by accepting assignments from exporters, and they did not o so. Mr. RosE. Thank you, Mr. Chairman. The CHAIRMAN. Mr. Slattery. Mr. SLATTERY. Mr. Chairman, thank you. I wanted, if I could, to follow up a little bit on what the chair- man was talking about. I am curious about information that we re- ceived last week that indicated that some of the exporters appar- ently were overbilling the Commodity Credit Corporation for some of the grain that was apparently moved. In other words, if something was selling for X amount per ton, they were claiming that they needed X plus Y to move it. I am just curious, what kind of supervision, what kind of oversight of this program is in place to deal with this or the sort of thing? 82 . Mr. RAUL. The testimony last week was that our administrative review discovered instances of high prices being charged to Iraq during a period from approximately 1985 through 1987, although I understand that some high-priced sales may also have taken place subsequent to that. To clarify one point that you made, sir, the CCC was not being billed, of course. Wei Mr. SLATTERY. I understand. Mr. RAUL. We are just guaranteeing a commercial transaction between the United States exporter and Iraq, so? lVIra SLA'I'l‘ERY. I use the term loosely, but the guarantee is in- vo ve . Mr. RAUL. The guarantee is involved, that is right, but during the period that the—that I mentioned, 1985 through 1987 , when we discovered this information about apparently higher price sales, all during that period, of course, the guarantees were—all of those transactions were completely paid for, and there were no guaran- tees tihat were paid out on at all, there were no claims for that perio . But during our administrative review of the higher prices, what we discovered was that it appeared that freight charges were on oc- casion included in the value of the transaction that was registered with CCC. Mr. SLA'1'rERY. Which was very uncommon? Mr. RAUL. During most of the period in question it was not per- mitted under our CCC regulations, and that was one of the viola- tions that we did reflect in the May 21, 1990 administrative review. Mr. SLATTERY. The thing that I found troubling about this, Mr. Raul, is that not only was the Commodity Credit Corporation in- volved in indirectly guaranteeing the payment on the grain that was overpriced in many instances by a significant amount, and just a casual observation should have caught that, but in addition to that there was this rather unique arrangement where you were also indirectly guaranteeing the payment of the transportation cos_ts, and based on the information that I have, this was highly unique. In fact, it may have been only with respect to Iraq that in fact the Commodity Credit Corporation indirectly guaranteed the pay- ment of transportation costs. Is that correct? Mr. RAUL. For some of those shipments that I mentioned where freight was improperly included, that was a program violation that we did reflect as a program violation in the report. At some point 1n Mr. SLA'I'I‘ERY. Let me ask you the question another way, do you have the legal authority to pay or to guarantee the payment of transportation costs under any circumstances? Mr. RAUL. Yes, sir. Yes, sir. In fact, in late 1986 or 1987 , in fact, the requirements changed, and freight was authorized to be includ- ed as a part of the guarantee. Mr. SLA'I'rERY. That was after when? Mr. RAUL. I believe it was late 1986 or early 1987. I believe that that time frame is accurate. Mr. SLA'I'rERY. But prior to this in the 1985 time period—— Mr. RAUL. Freight was not authorized to be included, and if freight was included in the amount registered with CCC, it was a 83 program violation. We did discover that and refer to it in our May 21, 1990, report. You asked a question which I didn’t get to answer previously, which was: What is in place in order to prevent these unusually high priced transactions from recurring in the present time. When we discovered this pattern of higher priced trades, we have estab- lished within the Department a price review so that when commod- ities are—when an exporter comes to CCC to register a transaction, the price for the commodities in question is reviewed by experts within the Department. Mr. SLATTERY. Well, that is encouraging. You know, I support the Commodity Credit Corporation; I sup- port the program. I did not support making the program available to Iraq. I voted for the Glickman amendment, and darn glad I did, but it is troubling, as I hope you understand, for us to now try to sort out what was going on in this time period and to realize that not only were we using the Commodity Credit Corporation to sell a lot of products to Iraq during this very dangerous period of time, but we were also doing it to help pay for some transportation costs, and we were doing it in a situation where apparently the cost of the grain in question was dramatically inflated, and it created this potential for real rascality and potential for this money being sloshed around and used for other purposes, and that is what is troubling when we look at this. Do you understand my concern? Mr. RAUL. Yes, sir, entirely. Mr. SLATTERY. OK. I have no further questions at this time, Mr. Chairman. The CHAIRMAN. Mr. Hoagland. Mr. HOAGLAND. Mr. Chairman, let me ask, first of all, of Ms. Ar- chibald. We have this testimony here from the GAO who testified right before you all did, and the gentleman went to great lengths to talk about the problems he was having with each Department getting documents. My question is: Why don’t you all just go ahead and produce these documents and let Congress see them? By resist- ing them, suspicions grow, everybody assumes the worst, and con- spiratorial theories develop. I think the Congress would like to see them. There is no doubt some members of the public that would like to see them. Why not just go ahead and produce them and let go of them? What is the problem? Ms. ARCHIBALD. I am glad you asked that question. I would like to make one point. I think perhaps, Mr. Hoagland, ou were out when I mentioned before my response to the GAO. Iwas a little surprised and in some ways a little amused. Mr. Mendelowitz and I know each other well. We have worked together before on other oc- casions. In the fall of 1990, they had asked for access to the NAC min- utes. While we were considering that, he called me up personally, and I think in a gesture of a little fun—we were ribbing each other—he said that he didn’t need them anymore because he had gotten them somewhere else. Then the following spring, or summer actually, we got a request from the GAO to review those same doc- uments, and I called him, and ribbing him a little bit, asked him / 84 /, why are you requesting these when you got them before. The end olf; it was that we did give them access; the GAO did get to see t em. - Mr. HOAGLAND. So everything they have asked for from Treas- ury, they have gotten? Ms. ARCHIBALD. There is apparently some misunderstanding be- cause he also made reference in his testimony to some further doc- ument requests that they had. We were unaware of them. We heard about it for the first time when we got a letter from the Senate Agriculture Committee that made reference to a further re- quest. We called the GAO and said we were not aware we had had this request. They said they were going to search their files; they thought they had sent in a written request, and they are still checking that out. Mr. HOAGLAND. But you intend to go ahead and produce those documents? _ Ms. ARCHIBALD. Congressman, I have to say, and I said this earli- er, too, that when we get requests we start from the premise that there are legitimate purposes for which the Congress or the GAO on behalf of the Congress can be seeking information. At the same time, as a coequal branch of government, there are legitimate interests that the executive branch wishes to protect. Sometimes, therefore, when we give documents to GAO, we do it under an agreement that they will be protected if they are confi- dential and classified. Sometimes we do it in a way to try to shield the deliberative process by asking them not to release names of in- dividuals, but we do definitely try to work out an accommodation to provide as much information as we can, consistent with our own obligations. Mr. HOAGLAND. But you certainly apply a high standard as far as there being any possibility of making documents public. You do that; don’t you? That really serves our open system of government the best. Ms. ARCHIBALD. Yes. Yes, we do. Mr. HOAGLAND. Mr. Raul, how about Agriculture? Why don’t you just produce these documents, let us see them? You don’t have any- thing to hide; do you? Mr. RAUL. We produced every document, I believe, that the com- mittee has requested, with the exception of the classified informa- tion issue that I referred to. The chairman requested on, I believe it was August Zli . Mr. HOAGLAND. Let me ask you this, what about the Rafidain Bank file? There has been quite a bit of reference to that. Mr. RAUL. I am glad you asked that question. That is not among the documents that have been requested, but there has been a lot of discussion about this file being missing. Mr. HOAGLAND. Is it missing? Mr. RAUL. While we were here this morning, when I heard the testimony that it was missing, we called back to the Department, and the file is not missing, and this is a canard that originated—— Mr. HOAGLAND. Is that the file you have here? Mr. RAUL. This is the file. The CHAIRMAN. For Rafidain? I 85 Mr. RAUL. This is the file. It is not missing. What happened wasi Mr. HOAGLAND. Are you willing to let us see that before you leave the hearing room? Mr. RAUL. I am willing to come up afterwards and let you all? Mr. HOAGLAND. Would you turn that over to the chairman? Mr. RAUL. And let you all see the file. It was just given to me. It is my only copy. Mr. HOAGLAND. Is it the entire Rafidain Bank file? Mr. RAUL. Well, I asked for the Rafidain file, and I was told that the Rafidain file isn’t missing and I was given the Rafidain file. This happened this morning while we were here. But let me explain because I have tried to reconstruct what has happened, based on these comments that the file was missing. Mr. HOAGLAND. You know, we are limited to 5 minutes here, so unless it is really important that you go through that detail? Mr. RAUL. It is. So much was made of this missing file and count- less Members have already mentioned it, and this gives me an op- portunity to correct the record because our inspector general-— Mr. HOAGLAND. Are you telling us—can you tell us under oath that that is the entire Rafidain file you have got there, the whole thing, not just—— Mr. RAUL. I don’t know that I am under oath. All I can tell you is I asked for the Rafidain file, and I was given this. Mr. HOAGLAND. So you are saying, you are representing that you have been told this is the Rafidain file? Mr. RAUL. Well, yes. I have also been told that our inspector gen- eral did review it in August 1990, and that if other people asked for the file and were told it was missing? You know, I don’t know how to explain that because the inspector general saw the file in August 1990 after originally requesting it and being told by some- one they couldn’t find it all. Then, it was provided to them. The file was found. It was reviewed by the inspector general, and I don’t see any problem in anyone reviewing the file. This is something that is available. Mr. HQAGLAND. OK. The CHAIRMAN. Is it in Arabic? Mr. HOAGLAND. Is it in code? Let me ask you this, let’s talk about something different. May I have unanimous consent for an- other 3 or 4 minutes? The CHAIRMAN. Hearing no objection. Mr. HOAGLAND. Thank you, Mr. Chairman. In response to Mr. Frank’s questions, you indicated that an in- vestigation is ongoing on this issue of whether CCC funds were ever diverted to military uses; is that right? Mr. RAUL. Yes. The inspector general, Mr. Snead, who was here last week, as was I, testified that his investigation is continuing into this matter, his investigation with the U.S. attorney. Mr. HOAGLAND. Now, how many people have been assigned to that investigation? Mr. RAUL. I don’t know. It is an inspector general investigation with the U.S. attorney, and I don’t know. Mr. HOAGLAND. Is this the inspector general of the Department of Agriculture that you are talking about? 86 Mr. RAUL. Yes, it is. Mr. HOAGLAND. Has any sort of task force or any special group of people been set up to undertake this investigation? Mr. RAUL. This is a matter within the office of inspector general. I don’t know. He has decided what resources to make available without any consultation. Mr. HOAGLAND. Have you seen any documents that have been generated by that investigation? Mr. RAUL. As I have stated, I have consulted with the inspector general and with the Justice Department many times to inquire what the state of their investigation is, do they have any evidence of these allegations, and I am sure all of you knowi Mr. HOAGLAND. Have you seen any documents that have been generated by the investigation? Mr. RAUL. I don’t know whether I have seen any documents that have specifically been generated by the investigation or not. That criminal investigation is being conducted pursuant to Rule of Criminal Procedure, rule 6(e), which permits only authorized per- sons access to information that comes before a grand jury. I am not on that rule 6(e) list. Mr. HOAGLAND. Here is what I would like you to do, will you agree to ask the inspector general to send the committee a letter describing what has been done up to this point, how many people are involved in the investigation, what they have looked into, and how long it has been going on? Mr. RAUL. I am happy to convey that request. Mr. HOAGLAND. And to satisfy our need to know that, in fact, Ag- riculture is checking out these allegations. I mean, these are very serious allegations. Mr. RAUL. The inspector general, of course, will speak for him- self, but I will be happy to pass on your request. Mr. HOAGLAND. Now, Mr. Willkie, in light of all the allegations of violations of Commerce Department statutes and regulations, wouldn’t it be appropriate for the Commerce Department to con- duct an investigation? Mr. WILLKIE. An investigation was conducted, sir. I requested the inspector general to conduct an investigation of the issues which have been raised here. I asked him to do that in March 1991, and he produced a report in early June 1991. Mr. HOAGLAND. Has that report been made available? Mr. WILLKIE. Yes. Mr. HOAGLAND. To the committee? Mr. WILLKIE. I believe it is in the record for the hearing. Mr. HOAGLAND. All right. OK. Now, how about Treasury, does Treasury see any need to conduct an investigation relating to any of these charges? Ms. ARCHIBALD. With your permission, I would like to keep the record open so I could add anything necessary, but my understand- ing is that the Customs Service, which is a bureau of the Treasury Department, has, of course, been conducting an investigation of BNL and was involved in some of the indictments there. That in- vestigation is ongoing, but I have no information on the details of the scope or the status of the investigation at this point. Mr. HOAGLANI). All right. Will you provide us those details? 87 Ms. ARCHIBALD. I will certainly ask. I don’t know whether there will be any problem in terms of having an adverse impact on the ongoing investigation and revealing exactly where they are now. Mr. HOAGLAND. Because you know there have been allegations here today that no investigation has been undertaken and, further, the administration is not interested in doing any investigating, and I think if each of you could send us a letter from your Department telling us what, if anything, you are doing, it would satisfy some of the concern about that. Ms. ARCHIBALD. I will be happy to provide whatever we can. Mr. HOAGLAND. And Colonel Green, will you do the same? Colonel GREEN. I am sure the Department of Defense will re- spond to that. The Joint Staff is not going to respond. Mr. HOAGLAND. That is Mr. Cifrino. Will you provide us with the details of any investigation that DOD is conducting into these alle- gations? Mr. CIFRINo. Of course. Mr. HOAGLAND. By these allegations, I mean the whole full pano- ply of allegations that have been made in this hearing, all right? Mr. Williamson. 4 Mr. WILLIAMSON. Yes, we will respond. I would appreciate it very much, though, if you would make that a little more of a formal re- quest, though, because I think the answer is going to be no, we are not conducting any investigation, but I think it is going to be very important to explain why we are not because the explanation that the implication of these hearings is that we are not doing it be- cause we are covering up, but we are not doing ‘an investigation of CCC because CCC isn't one of our agencies, and so—if I could ask you for a little more specific Mr. HOAGLAND. OK, well, we will get you a letter. Finally from the CIA, Ms. Rindskopf, is your organization con- ducting any kind of investigation? Ms. RINDSKOPF. We are very much in a similar situation that Mr. Williamson described. We don’t collect information on U.S. entities, and certainly the CCC is a United States, as I understand it, entity. Now, we have provided such information of a foreign intelligence nature that seemed to bear on this. We will certainly undertake, if your question is do we feel it necessary to conduct an investigation, but, thus far, I am advised the information we have that is rele- vant is minimal. We have provided all of that. Mr. HOAGLAND. OK. Well, thank you. Let me just say in closing that I would urge each of your Depart- ments to get these documents over to us. I mean, the more you resist, and the more you set up special procedures, and the more GAO tells us that most everything they do they has a routine, and in this particular area of subject matter extraordinary sense activi- ty has been shown, and a lot of foot dragging. All it does is add fuel to the fire. I would sure encourage all of you to go back and tell your supervisors to fully and properly comply because that is the best way to put all of this behind us. Thank you, Mr. Chairman. The CHAIRMAN. Mr. Wylie. Mr. WYLIE. Mr. Chairman, on that note I think the panel has been thoroughly examined as to the role of the various agencies 88 and the agency counsels played in responding to document re- quests. It seems to me that was the subject of the original hearing, and that we have gone into that in great detail. I want to congratulate the panel. I think you have done an ex- tremely commendable job answering the questions which have been put to you, and I am satisfied with the results and have no further questions, Mr. Chairman. Mr. SLATTERY. Mr. Chairman? The CHAIRMAN. Mr. Slattery has requested permission to ask some questions. Mr. SLATTERY. Thank you again, Mr. Chairman. I wanted to focus, again, if I could, on a sworn affidavit from Mr. Paul Freeden- berg, who was the chief export licensing official at the Department of (ggmmerce from 1985 to 1989. This is an affidavit given in April 1, 1 1. My question, I guess, would be directed to you, Mr. Willkie. I would just like to hear your comment on this. I will quote from the affidavit. It said: “In the summer of 1988 a number of licenses,” and he is referring to export licenses, “were pending with regard to technology transfer to Iraq. I asked for official guidance with regard to what the licensing policy would be toward Iraq since by that time there was credible evidence of the use of poison gas by the Iraqis against their own people and also against the Iranians. “I suggested that the imposition of foreign policy controls be con- sidered as a way of justifying the denial of export licenses to Iraq. I was told by the National Security Council that the licensing policy with regard to Iraq was that of normal trade and that under normal circumstances on an individual case-by-case basis I should clear the licenses that were pending to Iraq.” He went on to say, “I passed that information on to my licensing officers, and the few dozen licenses that were pending at that time were approved and licenses were issued for exports to Iraq.” Do you have any observations on what Mr. Freedenberg was saying? Mr. WILLKIE. I am not familiar with either his affidavit or the incidents that he describes therein. Mr. SLA'I'rERY. What Mr. Freedenberg was telling us, to make a long story short, is that he had some reservations about some of the exports that were heading to Iraq. He raised these questions, especially in light of evidence regarding the gassing of the Kurds and what Saddam Hussein was doing, and he was told by the Na- tional Security Council to press on, to in fact license these exports, and immediately that was done. I am just curious. Is that something unique that goes on in the Commerce Department where someone raises questions and the NSC involves itself and says press ahead with these, with this sort pf ligensing? Or was this sort of a rather unique situation involving raq. Mr. WILLKIE. I really, in all candor, Congressman, I was not at the Department at that time. I haven’t seen Mr. Freedenberg’s affi- davit. I am not familiar with the events in question there. I know that some export controls were considerably tightened in February 1989, and, of course, there has been a substantial debate since then whether the controls were sufficiently tight. 89 Mr. SLATTERY. Let me now share with you some testimony that I personally heard here at this committee about a year ago, on April 9, 1991. This was testimony by Dr. Steven Bryen, who was the former Deputy Under Secretary of Defense for Trade Security Policy and Director of the Defense Technology Security Adminis- tration, the DTSA. Let me share with you his testimony, Colonel. He said, and I quote: “Generally speaking, the Defense Department’s strongest ob- jections for Iraq concern the potential use of exported goods for Iraq’s nuclear program.” Now, this is the person in the Pentagon charged with monitoring this stuff and saying to folks in the government, in the Commerce Department and other Departments. We are concerned, I am the person in charge in the Pentagon, and I am concerned about this; this is what he was basically saying. We are talking about Iraq’s Nuclear Program. And also programs for missile testing and con- struction and for chemical and biological weapons development. So the Department of Defense was saying, we are concerned about t is. Now, I am back quoting him, he said: “In most cases when we raised these issues, we ran into strong opposition from the State and Commerce Departments. In July 1987, at the urging of the State Department, the National Security Council directed the DTSA to be more forthcoming with respect to Iraq. The NSC sin- gled out a number of cases DTSA held up and urged us to revisit them. We decided in all but two of the three cases identified by NSC to stick by our guns and not give in because we had evidence that technology was going into strategic programs.” I find this very, very troubling. Here you have the person in the Pentagon that is the expert, appointed by the President or his ap- pointee telling people in the State Department and the Commerce Department we have a problem. This technology is being diverted for nuclear use, for biological weapons, and for strategic programs, and somebody in the Commerce Department and somebody in the State Department basically overriding him, and when Dr. Bryen testified before the committee, as you might have imagined, he was terribly frustrated. I would just like to hear your comments on what Dr. Bryen had to say as you reflect back on all this now. Mr. Willkie. Mr. WILLKIE. Well, I think that I would defer to comments that were made last week about overall policies that were in place. I would be misleading you, sir, and misleading this committee, if I suggested competence or personal knowledge regarding the licens- ing policy that was in place at that time. As general counsel at the Department, I provide advice to 10 op- erating units. BXA happens to be 1 of the 10. I don’t have personal knowledge of the policy. Mr. SLATTERY. Should we have former Secretary Mosbacher come over and tell us what he was doing? I mean, who was in charge? Accountability is what I am looking for. Who was in charge? Who was the person Mr. WILLKIE. Preeminently, the official who has responsibility is tlée Under Secretary for Export Administration, and as I indicat- e M 90 Mr. SLATTERY. Who is that at this time? Mr. WILLKIs. At that time, it was Dennis Kloske who succeeded Mr. Freedenberg. It is now Joan McAntee who serves in an acting capacity. These policy questions are resolved on an interagency basis, as I indicated in my testimony. Mr. SLA'I'rsRY. Colonel Green, I am just curious. Do you have any evidence of how these kind of problems are being handled now? I mean, when the person in the Pentagon raises questions about the export of high technology that can be used for dual purposes—I mean, are you finding that the Commerce Department is more re- ceptive to putting a hold on things, or the State Department is more receptive? Or are they still interfering with the judgment of the experts in the Pentagon that these items should not be export- ed, or do you know anything about this? Colonel GRssN. I have no personal knowledge of any of those goings-on. What I would observe is that frustration in the interagency proc- ess is probably the norm. This is nothing unusual. If an individual is a regular participant in the process, he is bound to experience some frustration because we don’t always get our recommendations accepted in the process. Mr. SLA'I'rsRY. The chairman has been very generous in giving me another opportunity to ask questions. Mr. Raul, I will just conclude by observing that at the time that you all over in the Department of Agriculture were involved in making decisions about extending more credits to Iraq, you see that you had people over in the Department of Defense were saying to the Department of Commerce, we have a big problem with what Iraq is buying from us. You know, all money is fungible, and it is pretty amazing that we had this whole policy being pur- sued-either it was orchestrated pursuant to NSD—26, or it was all sort of happening by accident. It looks to me, based on what we have seen and heard here in the last few weeks, that there was a lot of pressure coming from the highest levels to move this policy forward of trying to help Iraq in any way we possibly could, with little regard given to what they were doing with a lot of resources that we were making available to them. I don’t know how you can look at this evidence that we are looking at and conclude otherwise. There is just overwhelming evidence out there that no one has refuted, that these people were involved in producing biological, chemical, nuclear devices with a lot of technology about which our own Defense Department had raised concerns. It is very troubling, especially as someone who comes from farm country, it is even more troubling to contemplate that CCC credits may have been indirectly, hopefully without the knowledge of our government, being diverted to help pay for some of this. And I hope that when we get to the bottom of this, we will find out that, in fact, our CCC credits were not diverted. I hope we can find that. I hope we can find that certainly there was no knowledge that this was going on. So, Mr. Chairman, I yield back any time that I might have. The CHAIRMAN. Thank you very much. Chairman Rose. 91 Mr. Ross. Mr. Raul, this is a very interesting file. It feels a little warm from the Xerox machine, but other than that—no, I am teas- Ing. Mr. RAUL. You didn’t make a copy, sir, did you? Mr. Ross. We haven’t made copies, but-— Mr. RAUL. We will be happy to send you a copy. Mr. Ross. Thank you very much. In this file you discuss a Commodity Credit Corporation, the letter-one letter in here to the Rafidain Bank seeks to recover from the Rafidain Bank $727 million. You are saying to the Rafi- dain Bank, we have paid out claims totaling $727 million on GSM— 102, -103, on the loan guarantees that—you haven’t made your payments, so we have had to make good on the guarantees: First City Bancorporation, $2.5 million; Arab Banking Corporation, $49.7 million; CoBank National Bank for Cooperatives, $69.4 million; DG Bank, $11.5; Girozentrale, $59.9 million, Gulf International Bank, $236 million; Morgan Guaranty, $67 million; National Bank of Kuwait, $106 million; UBAF, $103 million; total $7 27 million. Question, if you knew that things were not being run right at BNL—and you are right, after you found out things were going rotten at BN L, you stopped them and you spread that business around to all these people—my question is, did you conduct the same investigation of these banks that you conducted of BN L; and if you didn’t, why not? Mr. RAUL. You have me at a disadvantage, obviously, since you have the file and I don’t. I should say I haven’t really studied the file, because it did literally come while we were here. Do you recall the date of that letter? Mr. Ross. December 1991. Mr. RAUL. December 1991 was after—well after, of course, the Iraqi invasion of Kuwait and after thei Mr. Ross. The government paid off in September 1991. The gov- ernment paid out the claims of American bankers and European bankers who—to whom the Rafidain Bank was in default; the U.S. Government stepped in as guarantor and paid them off. You investigated BNL. You talked about people you sent down there because of the shenanigans that they engaged in with regard to these loan guarantees. Have you conducted the same investiga- tion with these banks? Mr. RAUL. Not to my knowledge, because no allegation whatso- ever that I am aware of has been raised. As I mentioned before, the banks who hold these guarantees which you enumerated in your question are not, as I stated, participants in the CCC Program. They are merely assignees from the exporter. Mr. Ross. You investigated BNL and it was just an assignee. Mr. RAUL. Regarding BN L, there was a criminal investigation that was initiated by a raid of the FBI in 1989 because of informa- tion they had as a result of an informant’s tip. To my knowledge, that has not been replicated with any other bank. The BN L situa- tion does stand out. There was a criminal investigation initiated there that began with a raid on August 4, 1989. Mr. Ross. If the same man arranged financing with these banks thatvarranged the financing with BN L, wouldn’t that raise a ques- tion. 92 Mr. RAUL. I am not certain what you mean by the same man, if it is Mr. Drogoul. . Mr. ROSE. Sadi Kaha. Mr. RAUL. I don’t know if he was involved with these banks. Mr. ROSE. You probably ought to start to find out. We will ask you that at another hearing. The CHAIRMAN. Mr. Slattery. Mr. SLA'I'l‘ERY. Thank you, Mr. Chairman. Getting back to a line of questions I had earlier with Mr. Willkie, to reconstruct what I was talking about earlier, the person over in Department of Defense who is responsible for monitoring the export of high technology had advised the Commerce Department not to approve some of these exports, and the person that was in the first instance responsible for making that determination in the Commerce Department was Mr. Dennis Kloske. Mr. WILLKIE. Not in the first instance. Mr. SLATTERY. It wasn’t the Secretary, the Under Secretary? Mr. WILLKIE. He would have been the senior policy official. Mr. SLATTERY. Senior policy official. Let's assume he was the one that ultimately would make these decisions. If it wasn’t the Secre- tary, it was the Under Secretary or someone below him, right? Mr. WILLKIE. Ultimately, there is a process if there is an inter- agency conflict where differences can be escalated all the way up through the chain of command. Mr. SLAT'rERY. Are you aware that Mr. Kloske testified before the Subcommittee on International Economic Policy and Trade, Committee on Foreign Affairs-and this was in May of—let’s see, he testified in April 1991, Mr. Kloske did, and he stated in that tes- timony that in the spring of 1990 he attended two meetings at the White House at which time he recommended—this was the Under Secretary of Commerce—recommended that the United States re- strict the flow of technology to Iraq. His recommendations were re- jected—this was in a White House meeting—and Secretary Kloske told the committee that prior to the hearing meeting that neither Secretary Baker nor President Bush wanted to single out Iraq for sanctions. And apparently Mr. Kloske was fearful of testifying, and within 48 hours he was apparently fired after his testimony before that committee. I was just wondering, are you aware of all this? Are you aware Under Secretary Kloske was saying he agreed with the recommendations, in effect, of the Department of Defense? He was saying we shouldn’t be selling them all this technology. And that recommendation that he took to the White House was re- jected. Are you aware of that? Mr. WILLKIE. I am generally aware of the testimony that he gave. I was not aware—I do not believe I was aware of his having made those recommendations prior to the time he gave his testimo- ny. Mr. SLATTERY. OK. His testimony has been that in the spring of 1990—this was the spring before the war broke out—he was saying, in effect, the Defense Department has some legitimate concerns, and those recommendations were being overridden. And apparent- ly, based on his testimony, they were being overridden by Secre- tary Baker. V 94 The CHAIRMAN. For the record, the committee transcript is what I am talking about. Yes, we would welcome a copy. Mr. RAUL. I have no reason to believe there is any business confi- dential information there from any exporters, but I am not certain there isn’t. If I could go back through it, but I will be happy to send it to you as soon as practical. The CHAIRMAN. Or Mr. Hoagland suggested maybe you could give us the original, and we would make copies. Seriously, I don’t have the words, and I am not, I guess you could say “eloquent” enough to express in proper words my concern for a few years now, but particularly the last 5—and with special em- phasis, the last 21/2. We seem to have hit a point in our conduct of matters where, for instance, in August 1990 we were in the midst of a so-called “budget summit” and, in fact, it had just broken up, and the Presi- dent had very bitterly assailed the Congress, and particularly those that participated in closed-door sessions at Andrews Air Force Base. I thought it was so undesirable to say this was a “summit,” as if it were two foreign potentates meeting. But anyway we are living in that kind of an era. I can't convey in words the seriousness, the gravity, the complexity of the crisis, the depth of the crisis that this Nation faces financially and eco- nomically, but mostly really the safety and soundness of our finan- cial and banking system. I just have been aghast since 1987 , par- ticularly, that there seem tobe such a smug, complacent sort of un- caring attitude. What Chairman Rose just mentioned and pointed to the number of banks—we had the information about those banks. We had ob- tained that from other sources. The thing that hurts me is that the United States, our country, is vulnerable. It is vulnerable to very, very cunning, most knowledgeable individuals outside of the United States who know our system, know its weakness, know the crevasses that exist and have played Uncle Sam for Uncle Sap. The banks Chairman Rose mentioned are just part. The reason is that BNL syndicates its involvement just as in the case of the hos- tages in Iran. The reason for the hostage-taking, the basis was really financial and a stake of our private banks to the tune of over $10 billion in Iran, which, incidentally, at the touch of a button on January 20, 1981, at the Federal Reserve Bank in New York, re- leasing several billion dollars in London to Iran, you had the simul- taneous announcement of the release of the hostages. The last hos- tages that were released were done so after one of the last pay- {nents—they still claim there are payments due of about $270 mil- Ion. So at the bottom of all this you have finances. Now, we are not protected in our country. We are the only coun- try of any magnitude that does not have any kind of a screening board as far as acquisition either directly or indirectly of our assets, including banking assets. Even Canada has more protection. BN L and BCCI, which have gained quite a bit of notoriety, in my mind. are just happenstance things that erupted and came to the attention of the general populace. But the more serious and insidi- ous conditions are still here. 95 And I want every one of you to know that when I tell you that I, as chairman of this committee, am grateful that you answered your summons. I say so sincerely, because my intention wasn't and neverlhas been-and I don’t know of anybody at any time that I have chaired any committee or subcommittee—and I have been chairman of subcommittees for 15 years before-that I ever abused or was disrespectful to any witness, because I consider them guests. The reason was that the system that gave rise to the judgmental decisions that canceled out, as Mr. Slattery brought up, not only defense observations and recommendations, and the fear of the na- tional interest impairment, but the financial—the Federal Reserve Board, for instance, and its spokesmen. At this point, the value of the dollar has decreased, just since 1985, somewhere around 60 per- cent. Now, what value will any kind of defense system be, or anything that we have that we appropriate money for, if our currency is de- valued? And these incidents—now the payoffs on those numbers of banks that Chairman Rose mentioned was close to $1 billion, tax- payers’ money. - . This is a reason that I have pursued this, and, besides the fact that I am, the reason why we had the first International Banking Act of 197 8—and I have said this before—it was because of the hearings that I caused to bring in my hometown of San Antonio in 1975. And I wasn’t chairman, but I persuaded the subcommittee chairman to come down. As a result of the 2-day hearings, they led to the indictments and convictions of both citizens and noncitizens. But there were no laws on the books governing national and international transactions in our country. It took 3 years in 197 8 before we finally got a minimum legislative enactment. I criticized it. It was watered down to a point of really no use whatsoever. Then with the advent in the early 1980’s of the drug money laun- dering, we finally had a few amendments having to do with the cash transactions and transportation requirements. So last year we finally had a little enhancement—but it was very little, it was still inadequate—to even have some idea of the movement of about $1 trillion in our country, domestically of this kind of money. So that is the reason—and I feel very strongly-and maybe per- haps I get over-emotional. I am a man that feels passionately about these things, because I am like you are, I love my country. Every- thing I am or ever have been is because of the unique institutions of our country, and I cherish them. And I see they are in grave danger, very grave danger that hasn’t even been perceived. There is a lot of talk of how I endured for 2 years. I didn’t make press releases when I had special orders. Mr. Slattery read into the record from the hearing we had the first month in 1991, but we read most of the things that have now been publicized when we had the first hearing in October 1990. What I wanted to tell you was, if we have detained you here, it is because we feel your presence has been a most valuable contribu- tion to us, trying to find from our standpoint, Mr. Rose from his, and the Foreign Affairs Committee from theirs, but certainly from our standpoint, how we have got to act and pretty soon to amend that law further. M M 96 It so happens that in the Credit Commodity Corporation’s doings and all of you did have to have your financial or what they call a fiscal agent—in this case the BN L, but it also so happens that we never have evaluated the fact that most of these banks are not, like in our case, private, they are really government-owned by other countries. V We have a very, very sensitive policy matter whereby through some activity such as this it is conceivable that our own national policies could be frustrated, even with the best of intentions. This is an extremely serious matter. It is complicated as all get out. We are going to have one devil of a time to sit down and get legislative counsel and work out the amendments we know are necessary in view of the testimony we have garnered, not only today but prior to today. I wanted to say that because I don’t know that that has come out. I haven’t been the one that had a special order and made a release. I did send copies to some of the members of the committee, but the members nowadays are besieged with a plethora of issues. Most members, if not all, have other committee assignments, and sometimes I understand that and I have nothing but the highest regard, and I wanted you to know I feel the same respect for you gentlemen. There was just one last thing, Mr. Willkie. You have a very his- torical name. Are you related or a descendant? Mr. WILLKIE. Yes, grandson, sir. The CHAIRMAN. You are the grandson. I am old and I can recall vividly, as if it were today, when your grandfather, against great odds even within the party structure became the nominee and, I think, was the opponent in the third try for reelection of Franklin Roosevelt. But he was a very impressive individual to me, and he published not only some speeches he made, but he published a book, and I still have them. And I just wanted to know if you were a direct lineal descendant or just were named after him. Mr. WILLKIE. Yes, sir. The CHAIRMAN. My congratulations. You stem from a very, very distinguished lineage. Mr. WILLKIE. Thank you. The CHAIRMAN. Thank you very much, ladies and gentlemen. You have been most patient. [Whereupon, at 3:15 p.m., the hearing was adjourned, subject to the call of the Chair.] 97 APPENDIX May 29, 1992 ‘~ 98 OPENING STATEMENT OF THE HONORABLE CHALMER8 P. IYLIB Hearing on Pro-Invasion of Iraq Policies May 29, 1992 Thank you Mr. Chairman. The nature of the hearing is to examine the role that various agency counsels played in responding to document requests from this Committee and other Congressional Committees on the pre- invasion policy of the Administration toward Iraq. It appeared the Chairman was interested in determining the role of the National Security Council in the exchange of information with other agency lawyers to coordinate document requests pertaining to United States-Iraq policy before August 2, 1990. There exists a memorandum regarding one of these meetings from Mr. Nicholas Rostow, dated April 8, 1991. Mr. Rostow is the legal Adviser for the National Security Counsel. Having reviewed this memo and other documents, I find nothing out of the ordinary about this meeting. The Rostow memo simply suggests that document requests be reviewed for executive privilege. The memo suggests that briefings might be preferable to giving documents. Finally, the memo suggests that in cases of doubt, one should seek advice from the working group established by the White House. 99 On April 17, two days after another meeting with the National Security Council, the Agriculture Department Counsel, Mr. Alan Raul, wrote "it was noted that the objective is to cooperate with Congress." Ihe memo indicates that B111 staff eventually got classified documents from the Treasury Department. So far this fishing expedition has disclosed no evidence of a conspiracy or cover up. If anything, Congress‘ circuits have been overloaded with voluminous documents on Administration policy toward Iraq. Many of these documents have been widely publicized. Last week, Mr. Eagleburger said he felt that our pre- invasion policies toward Iraq were a failure, perhaps so, but that does not justify "crimihalizing" our foreign policy differences. I think there were overriding foreign policies consideration which came into play on our relationship with Iraq before Saddam invaded Kuwait. Charges of a cover—up just before the election look like politics as usual. Finally, I am reminded of an observation by Judge Learned Hand, in one of his opinions said, a wisdom born after the event is the cheapest wisdom of all. After all, anybody could have L. discovered America after 1492! Thank you Mr. Chairman, I look forward to the testimony. \.._ 100 STATEMENT OF REPRESENTATIVE sxn JOHBON (rx) " HOUSE BANKING, FINANCE, AND URBAN AFFAIRS COMMITTEE HEARING ON PRE-INVASION IRAQ POLICY ' 29 HAY 1992 101 LAST WEEK THE COMMITTEE HEARD FROM ADKISTRATION WITNESSES INCLUDING DEPUTY SECRETARY OF STATE LAWRENCE EAGLEBURGER REGARDING OUR POLICY TOWARD IRAQ IN THE 19803. THEY ADMITTED THAT FOREIGN POLICY CONCERNS WERE THE DRIVING FORCE BEHIND OUR EXPORT POLICY TOWARD IRAQ IN THE 19805. THEY ALSO ADMITTED, SEVERAL TIMES, THAT THE POLICY OF FAVORITISM TOWARD IRAQ EVENTUALLY DIDN'T WORK. AS I SAID LAST WEEK. LOOKING AFTER YOUR INTERESTS SOMETIMES MEANS HAVING TO WORK WITH THOSE YOU ¢ DON'T PARTICULARLY CARE FOR. IN THIS CASE. THE GREATEST THREAT TO STABILITYI WAS -- AND I BELIEVE STILL IS -- IRAN. AND THAT FACT DICTATED THAT WE WORK WITH IRAQ TO STEM IRAN'S INFLUENCE. 102 THAT WAS THE TRUTH. BUT APPARENTLY SOME MEMBERS OF THIS COMMITTEE ARE NOT SO INTERESTED IN THE TRUTH AS THEY ARE IN REAPING THE BENEFITS OF MISPERCEPTIONS ABOUT THE ADMINISTRATION'S ACTIONS REGARDING IRAQ. MR. CHAIRMAN, YOU KNOW I RESPECT YOU VERY MUCH AND I BELIEVE THAT YOU ARE SINCERE IN YOUR PURSUIT OF THIS MATTER. THAT IS WHY YOU HAVE BEEN ON THIS, BY YOURSELF, FOR SO LONG. I FIND IT INTERESTING, THOUGH. THAT ONLY RECENTLY HAVE MANY OF YOUR DEMOCRATIC COLLEAGUES DECIDED TO JUMP ON BOARD THE BANDWAGON. IT'S NO COINCIDENCE THAT THIS IS AN ~ ELECTION YEAR. YOU KNOW, IN POLITICS PERCEPTION IS EVERYTHING. AND THE DEMOCRATS KNOW THAT THE TRUTH WON'T BE AS INTERESTING AS THE PERCEPTIONS THEY CAN CONCOCT. 103 IN THIS ELECTION-YEAR WAR OF POLITICS. THEY ARE QUITE CONTENT TO MAKE A CASUALTY OF TRUTH SO THEY CAN KEEP A FALSE PERCEPTION ALIVE. I THIS HEARING CONCERNS THE WHITE HOUSE INTER-AGENCY LAWYERS GROUP MEETING OF APRIL 8, 1991. THE PURPOSE OF THE MEETING WAS TO COORDINATE THE RELEASE OF DOCUMENTS REQUESTED FROM NUMEROUS EXECUTIVE BRANCH AGENCIES BY SEVERAL COMMITTEES OF CONGRESS. THE REASONS FOR SUCH A MEETING WERE OBVIOUS AND MADE GOOD SENSE. ALTHOUGH I AGREE WITH YOU MR. CHAIRMAN THAT IT IS MATTER OF GREAT CONCERN ANY TIME A GROUP OF I LAWYERS GETS TOGETHER, I BELIEVE THE RECORD WILL SHOW THAT NO CONSPIRACY TO COVER-UP INFORMATION WAS DISCUSSED. ‘ 104 I THANK OUR WITNESSES FOR BEING HERE AND LOOK FORWARD TO THEIR TESTIMONY. 105 PANEL NO. 1 106 Statement of Congressman Charlie Rose Before The House Banking, Finance and Urban Affairs Committge .1 May 29, 1992 Mr. Chairman, Members of the Committee, thank you for the opportunity to appear before you today to discuss the Reagan and Bush Administration's efforts to assist the country of Iraq, prior to Iraq's invasion of Kuwait, and the subsequent efforts of both the Reagan and Bush Administrations to deter Congress from a full investigation of these efforts. First, I would like to commend you Mr. Chairman for all of the work you have done to expose the depth of the coverup by various federal agencies. I say coverup because I think you would agree with me that no federal agency has been straightforward in discussing what either the Reagan Administration or the Bush Administration's policy was toward the country of Iraq, and what steps were taken, either legally or illegally, to accomplish those goals. I think you know that your staff and my staff have worked together extensively, for some period of time, sifting through various documents, and discussing my investigation of USDA's export credit guarantee programs. I am glad that we have been able to cooperate in this manner, and I look forward to continuing to work with you. Next week I will be testifying before Chairman Brooks to discuss the necessity of appointing a Special Prosecutor to fully investigate what has come to be known to some in the national media as "Iraqgate." I am pleased that the Judiciary Committee has decided to go forward and investigate the concerns I have raised regarding of the Banca Nazionale del Lavoro matter, and it is my hope that you too will assist them in this regard. We must pool all of the resources we have and provide the Judiciary Committee with all of the information we have gathered so that they can make an informed decision on the need for the Special Prosecutor.- I think you would agree with me that there is a need for this prosecutor, and I believe that this is the best entity to address all of the issues that have been raised. You asked me to summarize the investigation I have conducted, through my subcommittee chairmanships on the Agriculture Committee, first as Chairman of the Tobacco and Peanuts Subcommittee, and now, as Chairman of the Department Operations, Research, and Foreign Agriculture Subcommittee. I would like to submit for the record, as soon as it is prepared, a chronology of what I believe are the various steps taken by federal agencies to either obstruct or limit my congressional investigation. I will include in the chronology Administration denials, particularly where we can establish that the Administration actually had knowledge of efforts supporting arm sales to Iraq. I believe that those denials helped obstruct my 0 1 107 congressional investigation. Unfortunately, I was not able to have this information for you today, but I am prepared to give you a brief summary of the investigative efforts I took beginning in 1986. I want to stress for the record that beginning in 1986, and I would like to place two letters in the record at this point in time, I began questioning the U.S. Department of Agriculture about sales of foreign tobacco to the country of Iraq. This is vitally important because I intend to establish, specifically before Chairman Brooks’ Committee, that the Reagan Administration, and relevant federal agencies involved in the decision to provide Iraq with economic assistance, had knowledge that individuals involved in agricultural transactions were also involved in arms transactions. The Bush Administration also has had this information, and officials at the Department of Justice during the Bush Administration have also been aware of this same information. Again, I made my first inquiry concerning sales of tobacco, under U.S.D.A.'s Agricultural Export Credit Guarantee Program, to Iraq, on June 11, 1986. The response from the U.S. Department of Agriculture was that I basically did not understand international business transactions and that Iraq was merely attempting to strike a better deal. The record should reflect that this was the first official inquiry made concerning Iraq and agricultural export credit guarantee programs, and that officials in the Reagan Administration very clearly told me that I was wrong to be concerned about the sales of agricultural commodities to Iraq. This again, was in 1986. I did not let the statements from U.S.D.A. deter me and I continued to investigate this matter with very limited resources. I had two staff members on the Tobacco and Peanuts Subcommittee, and in addition to the normal duties associated with managing two very complex agricultural programs, I and my staff continued to investigate this matter. It was not until the summer of 1988 that I made what I consider to be one of the first important breakthroughs in this case. I learned that summer that all of the tobacco dealers had obtained financing through an entity called Banco Nazionale del Lavoro in Atlanta, and also, that U.S.D.A.'s Office of the Inspector General had continued the investigation begun by me in 1986. I only learned this because the General Accounting Office, in assisting with this investigation, learned that the Inspector General at Agriculture was investigating information I turned over to the Department of Agriculture concerning the individuals who had shipped foreign tobacco to Iraq. To this day I do not know which individual sent me the anonymous letter in 1987 from 2 108 Paris, France, detailing the individuals shipping foreign tobacco to Iraq, but the American people truly owe this person a debt of gratitude. At this point, let me add that U.S.D.A.'s Office of Inspector General is to be commended for their dedication to a full and fair investigation of agricultural credit guarantees involving the country of Iraq. Despite obstacles placed in their path by U.S.D.A. employees, and I believe these obstacles were deliberately placed in their path at the direction of higher authorities, the Office of Inspector General has done a credible and worthwhile job in addressing the concerns I have raised since 1986. In the fall of 1988, U.S.D.A. took a step that I believe shows the absolute complicity of this government in arms sales to the country of Iraq. Not only did U.S.D.A. change the policy to permit practices which I believe encouraged extra cash or extra sales services, which, ladies and gentlemen, are nothing less than bribes, but U.S.D.A. insulted the intelligence of the American public and American farmers, and Congress, through this effort. Some thirty odd colleagues of mine on the Agriculture Committee joined with me in decrying U.S.D.A.'s blatant attempt to make it easier to violate the tenets of agricultural export programs. And what was the response of the Secretary of Agriculture? "You just don't understand," was what he told me and my colleagues on the Agriculture Committee. Now where had I heard that before? I must admit that I was intrigued by this rather "common" response from U.S.D.A., and hearing records of the Tobacco and Peanuts Subcommittee beginning in October 1988, dealing with U.S.D.A.'s export credit guarantee programs, are rife with feigned ignorance by U.S.D.A. employees, as well as USDA's assertions that Congress merely failed to understand that there was nothing wrong with Executive Branch dealings with the country of Iraq. The transcript of hearings I conducted as Chairman of the Department Operations, Research and Foreign Agriculture Subcommittee also show that U.S.D.A. continues to deny the obvious. The discussions concerning the 1990 Farm Bill, wherein high ranking officials from U.S.D.A., attacked me and my staff because we sought to regulate these export credit guarantee programs, further confirm the campaign waged by this government to cover up the extent to which this misuse of U.S.D.A.'s agricultural credit guarantee programs was encouraged, if not fostered, by the Executive Branch of this government. The Administration's opposition in 1990 to legislation, offered by my colleague Dan Glickman, eliminating Iraq's eligibility in U.S.D.A. export programs, also is further confirmation. 3 I109 / As I have diligently searched for records, along with U.S.D.A.'s Office of Inspector General and the General Accounting Office, plea bargain arrangements have been struck with individuals who knowingly and willfully engaged in much more than normal agricultural trade. The fact that some of these "pleas" were entered into in my own hometown is even more repugnant to me because they sought to appease my interest in this matter in my own backyard. Thinking that I was merely interested in this matter for reasons of vanity, the Department of Justice even named my Subcommittee, and an obstruction of my Subcommittee's investigation, in the infamous BNL indictment. My friends, that just doesn't cut it for me. I don't care how many times I am mentioned in their press releases. What I care about is the fact that the Department of Justice has deliberately broken up what may be one of the biggest RICO cases, white collar criminal cases, as Dick Thornburgh called it, and failed to follow through because they know what is hidden behind the curtain. What I care about is that the U.S. Attorney in Atlanta is on record as saying, to the Associated Press, that he saw no reason to recuse himself from the BNL matter, despite the fact that he had very recently represented Matrix Churchill, a Treasury Department identified Iraqi arms dealer, prior to his appointment as U.S. Attorney. What I care about is that the Assistant U.S. Attorney in Atlanta supervising the BNL case has written a damaging letter to the U.S. Customs Service which will effectively destroy the federal government's case against Matrix Churchill. What I care about is various federal law enforcement agencies harassing what I consider to be a very strong, logical, centered, witness, with solid information on Iraqi arms deals involving misuse of agricultural program monies. What I care about is the failure of this government to vigorously pursue the Matrix Churchill case. I could go on and on, but I think I can identify more of these issues for you in a more cogent fashion when I finish the chronology I have promised you. My farmers in North Carolina are owed an explanation. I and my colleagues on the Agriculture Committee, and Congress, are owed an explanation. You, Mr. Chairman, are owed an explanation. And what I mean by this, is that we need to know how, when, and why, the decision was made to permit this misuse of agricultural monies to funnel military assistance to the country of Iraq. The families in North Carolina and across this nation who lost their children in the Iraq War are also owed an explanation, because how on earth could this government, namely the Reagan and Bush 4 110 *’ Administrations, create the enemy we would later fight against, and deny it? There is NO logical explanation for this dangerous game, particularly where the stakes were so high. There is no farmer in my District, or this nation, for that matter, who can afford to arm the country of Iraq, or any country for that matter. This government had no right to do this, especially because we in Congress were misled, and just plain lied to, and the worst of it is that this has continued, and you, Hr. Chairman, know of what I speak. You can drop 1 million bombs on the U.S. dual use or military use equipment that found its way to Iraq through an agricultural loan guarantee, but the paperwork remains, and when that paperwork is fully and finally examined, this Congress, like the Italian Parliament has done recently, will conclude that "complicity" is a nice term for what transpired between our Executive Branch and the country of Iraq over the last 10 years. Finally, today's Washington Post carried a story regarding the former manager of BNL in Atlanta, Christopher Drogoul, and I believe we should look to that article for further confirmation of this Administration's efforts to limit disclosure in the BNL case. As the Post stated, the government has apparently offered Mr. Drogoul a 20 year "deal," and this is clearly further evidence of the extent of the coverup. Mr. Drogoul, as the judge, Marvin H. Shoob, so eloquently stated, could not, as a bank branch manager, have moved "$4.5 billion in the fashion that was done without some type of participation by people in this country and outside this country." Marvin Shoob, a federal judge with many years of experience, knows there is more to this story, and I applaud Mr. Drogoul's efforts to tell the whole story next week. Its time we heard it. I am not comforted by the Department of Justice's hollow promise to pursue inquiries that might arise from Mr. Drogoul's statements next week, because we already know that the government has deliberately chosen not to pursue the BNL case fully in the first instance. Mr. Chairman, again, I thank you for the opportunity to appear before you today, and look forward to answering any questions you might have. Thank you. 5 éamaafllmva W Q -mas -Isce “I1 I11 dunes IIv\|e i. 'C\I I- \I\l0 Lia! I O Imsllii ll C Ii --;,-;,,-;'£-- _ (ommum an Igrirsltstt -. --m. * Ishasumiim as Cabana sat It Wfiiili '-F‘ sum ml. lllgisrfl pmm elrm III Iutinaiss. It 205]! . June ll. I906 hr. Iichard A. Smith Administrator _ foreign Agricultural Service 0.3. Department of Agriculture Washington. D. C. 20250 Dear Dick: ' At a recent tobacco meeting in my district the attached ras cable was given to me, regarding Iraqi purchase\_ol u.s. tsnqggq, lecause the issues raised in this cable have been s matter or concern to the Tobacco and Peanuts subco—ittee, I am caning this particular cable to your attention. as well as the ggggnggqn of your stall in the ‘tobacco Division. - l wonder it you would be so kind as to _ast the particular individual who sent the cable to expand on what he or she meant by the ‘consent 'Israsanchi. while pressured to accept the Iinbabwe otter. would rather continue purchasing 0.3. tobacco...‘ Specifically, I would like to know who it is that is pressuring llr. lsrasanchi to purchase Zimbabwe lest. I understand that the‘ individuals who are designated cooperators with the lAs are responsible for arranging the sale of the timbsbwe tobacco in question. To that end. I would rater you to s number or questions the Subcomittee submitted tor the record at our recent hearing which are directed at the Foreign Agricultural service. Additionally. I would also like some further intonation on the so-called blended tobacco which contained a blend ot 0.3. and toreign lest. could you please direct the consular ollicer in question to ask llr. barasanchi which capanies sent him this blended lest and whether or not the tobacco ln question was represented as a 0.8. tobacco at the time he purchased it. I would also be curious as to how he determined it use a blended product. l am sure you would agree with me and the other Ilembers at tnrsubcommittee that it is imperative that everything possible be done to protect the reputation ol 0.8. lest abroad. particularly because ot the importance of tobacco balance ot trade payments to our economy. As the Subcommittee intends to continue its review or this issue. I look lorward to a timely response to the questions I have asted. 112 Oi In addition. due to the possibility that there sey b action here which sight be co t as rued as fraudulent. l request that all further inquiries and responses fro lsraranchi be sarted as coniid ential and that they n distributed to your regular sailing list of subscribers to cables. Thanking you in advance for your attention to sy requen with best wishes. Sincerely; Charlie lose Chairman Enclosure cc: Gary llusenthsl holly tiler 113 O 83 Sobctittno on Tobacco and Peanuts Conittao on Agriculture lioose of lopresentatives liashington, 0.6. 20515 Door Ir. Chairean: This is in re stions yon raised aboet lragi tobacco purchases in yoar Jone l agency, _ Thanks to GSI-I02, export credit guarantees, the l|.$. sea able to capture no Iraqi nortat in I904 and lib Ira Zidabn, o traditional sqplior. Iioaevor. this year, a coalition oi’ Zidabee interests offered tbroo- credit at sore attractive terns than fll-I02, and at a loner loaf price. In year letter, you refer to oar layldad nyiceltarol Trade Officer's report citing pressere on the lraoi buyer. The lidabae grey obvioasly is moi a van strong bid to retrieve its traditional nortot in lrog. In addition,.Iraoi Goverqnt financial officials are doing everything they can to rehco oetfloas of scarce for-air oschango and therefore favor loser-cost iqorts. I Iliave the Iraqi oific al toot the oppertanih of the visit by D. Ion Iitabaad. of fobacco Associates to solicit on imroved 0.8. offor. In fact, the lroei foreip exchange shortage is so severe t is requesting financing oi’ freiflt on all cxediq iQorts. transportation cannot be financed under oar GS!-I02 proyn, it Iaald be possible for U.S. cqanies to do so, and no have diocassed this possibility with Tobacco Associates. _ The PAS tobacco nartet developnnt proyq afecaet has alleys been Jointly sipad by three cooperetors: Tobacco Associates ITAI. hrley and Dart Loaf Export Association ifitll and Loaf Tobacco Export Association ILTIAI. All three are non-profit associations and none carries oat any besiness transactions. l.TlA's eaters, as tobacco exporters are an essential part of the sales chain, and l.T£l's cooperator role is seloIy in connection with eartot developnnt. SQ LTEA jars also handle ioreip loaf bat as stated, PAS lnvolvint with LTII is solely on the basis of ‘riot developant. Additional details on this issae are covered in the PIS response to the.Subco-ittee's cpestions, nhich you shoald be receiving shortly. is =2 22 2! if 5 114 OQ Honorable Charlie lose 3 0e absolutely agree uitb your cement on the necessity of protecting up reputation of 0.5. tobacco abroad. For years PAS has egg-essively pruated the united States as a reliable supplier oi polity products. Ia; gfflgfglg constantly urge 0.8. suppliers to cqly uitl contract polity specifications. lie regret that problees occasionally arise, and believe current Congressional interest in qiality cqliance will be useful, Concerning the lraoi coqlaint about blended tobacco, as you tnou. camercial transactions under GSI-I02 are carried out directly betueen buyer and seller. PAS provides an export credit guarantee to the lending institutions. ‘Tile sale intonation available ta FAS is the record of sales rnistretions wider tne SQ-IQ credit lino. In FY 1904, a guarantee oi’ $l7 llion uitii three-year repaynnt terns uas approved for Iraq, and sales registrations totaled $16.7 oi lion HJIII oetric tons). The FY I85 credit line totaled $25 aillion, and sales registrations emaled $13.0 eillion (3.!!! mtric tons). 0.8. cqanies register ng sales were lntabes, A.C. lhnt, Casalee America and liofor Tobacco. At lrao's reqaest, the FY I906 GS!-I02 credit line has been reduced to $3 eillion. hr PB representative in lagndad has been reqested to transeit all future intonation on this issnn in an appropriate nanner. PAS takes very seriously its responsibility to increase 0.5. agricultural esports. Us appreciate your interest and continuing support. _ Sincerely, e ii /---/41 nouns 0. IA! i Ahinistrator *- 115 TESTIMONY OF SAM GEJDENSON CHAIRMAN SUBCOMMITTEE ON INTERNATIONAL ECONOMIC POLICY AND TRADE COMMITTEE ON FOREIGN AFFAIRS MAY 29, 1992 I THE SUBCOMMITTEE ON INTERNATIONAL ECONOMIC POLICY AND TRADE HAS, FOR OVER A YEAR, BEEN INVESTIGATING THE I RELATIONSHIP BETWEEN THE UNITED STATES AND IRAQ PRIOR TO THE WAR IN THE PERSIAN GULF. THE ADMINISTRATION HAS. AT EVERY TURN, TRIED TO BLOCK, DELAY, OBSCURE AND INTERFERE WITH THIS INVESTIGATION. THEY'VE COME UP WITH MORE DEFENSIVE SCHEMES THAN TI-IE WASHINGTON REDSKINS. AND WPIEN I OBJECTED TO TH.-\T TREATMENT, I WAS ACCUSED OF BEING PARTISAN. NOW THE ADMINISTRATION IS SAYING, 'WELL. WE MADE A FEW MISTAKES WITH IRAQ, BUT THAT'S BEHIND US’. I'M NOT SURE THAT IT IS APPROPRIATE TO BREEZILY DISMISS GEORGE BUSH'S SHAMELESS PRE-WAR CODDLING OF SADDAM HUSSEIN SIMPLY AS A 'MISTAKE'. IT WAS A FOREIGN POLICY BLUNDER OF THE FIRST ORDER. ESPECIALLY SINCE IT WAS FOLLOWED BY A WAR THAT MAY WELL HAVE BEEN AVOIDED. THE ADMINISTRATION HAS ATTEMPTED TO DENY TO THE AMERICAN PEOPLE ESSENTIAL FACTS REGARDING OUR PRE-WAR EMBRACE OF SADDAM HUSSEIN THROUGH THE CLASSIFICATION OF DOCUMENTS. EVEN TO THIS DAY. LAST WEEK I ASKED THE ADMINISTRATION TO 116 I \ \ DECLASSIFY 93 INTERNAL DOCUMENTS REGARDING ITS PRE-WAR POLICY ON IRAQ. NEXT WEEK IS THE DEADLINE FOR THE LION'S SHARE OF THE DOCUMENTS TO BE DECLASSIFIED. OUR SUBCOMMITTEE WILL CAREFULLY EXAMINE THE ADMINISTRATION'S RESPONSE AND PURSUE OUR INVESTIGATION. MR. CHAIRMAN. THE ADMINISTRATION HAS CRITICIZED YOU HARSHLY FOR RELEASING CLASSIFIED INFORMATION. NOW TI-IE_ ADMINISTRATION HAS PUT ITSELF ON A HOT SEAT. IF THEY CRITICIZE YOU FOR RELEASING DOCUMENTS, AND THEN GIVE ME THE RUN AROUND WHEN I PLAY BY THEIR RULES, THEY WILL HAVE CREATED A CATCH 22 SITUATION AND DEMONSTRATED AN INTENTION TO WITHI-IOLD INFORMATION FROM THE AMERICAN PEOPLE. IN RESPONSE TO MY REQUEST, THE ADMINISTRATION HAS, IN THE PAST 48 HOURS DECLASSIFIED A HANDFUL OF DOCUMENTS OR PORTIONS THEREOF. ONE SUCH DOCUMENT IS NATIONAL SECURITY DIRECTIVE 26, WRITTEN TO THE VICE PRESIDENT, THE SECRETARIES OF STATE AND DEFENSE, AMONG OTHERS AND SIGNED BY GEORGE BUSH ON OCTOBER 2, 1989. A COPY OF THE UNCLASSIFIED VERSION OF THIS DOCUMENT IS ATTACHED TO MY TESTIMONY. UNFORTUNATELY, THE K WHITE HOUSE HAS REDACTED LARGE PORTIONS OF THIS DOCUMENT. NEVERTHELESS, THE INFORMATION CONTAINED IN THE UNCLASSIFIED PORTION IS SIGNIFICANT. UNDER TI-IE HEADING OF IRAQ ON PAGE NUMBER 2, THE PRESIDENT MAKES A SERIES OF FAIRLY REMARKABLE STATEMENTS. ., 1 N. _‘. 0 117 FIRST, HE STATES THAT "NORMAL RELATIONS BETWEEN THE UNITED STATES AND IRAQ WOULD SERVE OUR LONGER-TERM INTERESTS AND PROMOTE STABILITY IN BOTH THE GULF AND THE MIDDLE EAST". WHAT FOLLOWED THIS ATTEMPT TO ACHIEVE STABILITY IN TI-IE REGION BY MOVING TO NORMALIZE RELATIONS WITH IRAQ? TEN MONTHS TO THE DAY AFTER THE PRESIDENT ISSUED THIS DIRECTIVE. SADDAM HUSSEIN INVADED KUWAIT. THEN, THE PRESIDENT STATES "THE UNITED STATES GOVERNMENT SHOULD PROMOTE ECONOMIC AND POLITICAL INCENTIVES FOR IRAQ TO MODERATE ITS BEHAVIOR AND TO INCREASE OUR INFLUENCE WITH IRAQ". THERE \VAS VIRTUALLY NOTHING IN PRESIDENT BUSH'S EXPERIENCE THAT SHOULD HAVE LED HIM TO BELIEVE THAT SUCH CODDLING OF SADDAM HUSSEIN WOULD PRODUCE POSITIVE RESULTS. FROM THE TIME THE U.S. TOOK IRAQ OFF THE TERRORIST LIST IN 1982, PROVIDED IRAQ WITH A PANOPLY OF MILITARILY SIGNIFICANT EQUIPMENT AND TECHNOLOGY. AND HANDED OVER $5 BILLION IN CCC AGRICULTURAL CREDITS— IRAQ HARBORED AND SUPPORTED ALL MANNER OF TERRORISTS. AND TEN MONTHS TO THE DAY AFTER THE PRESIDENT ISSUED THIS DIRECTIVE. SADDAM HUSSEIN INVADED KUWAIT. THE PRESIDENT CONTINUED, "AT THE SAME TIME, THE IRAQI LEADERSHIP MUST UNDERSTAND THAT ANY ILLEGAL USE OF CHEMICAL AND/OR BIOLOGICAL \VEAPONS WILL LEAD TO ECONOMIC AND POLITICAL SANCTIONS FOR WHICH WE WOULD SEEK THE BROADEST POSSIBLE SUPPORT FROM OUR ALLIES AND FRIENDS". 118 THE PRESIDENT WAS A BIT LATE. JUST 14 MONTHS EARLIER. WHEN SADDAM HUSSEIN USED POISON GAS ON HIS OWN PEOPLE. KILLING 5.000 INNOCENT MEN, WOMEN AND CHILDREN, THE ADMINISTRATION REFUSED TO IMPOSE SANCTIONS AND FOUGHT CONGRESSIONAL ATTEMPTS TO DO SO. THE PRESIDENT THEN STATES, "WE SHOULD PURSUE AND SEEK TO FACILITATE. OPPORTUNITIES FOR U.S. FIRMS TO PARTICIPATE IN THE RECONSTRUCTION OF THE IRAQI ECONOMY, PARTICULARLY IN THE ENERGY AREA. WHERE THEY DO NOT CONFLICT WITH OUR NON-PROLIFERATION AND OTHER SIGNIFICANT OBJECTIVES". SO GEORGE BUSH WAS INTERESTED IN REBUILDING THE IRAQI ECONOMY. AND IN THE FIELD OF ENERGY NO LESS. WHICH TEN MONTHS LATER FUELED IRAQ'S WAR EFFORT AGAINST THE UNITED .~» STATES. FINALLY, THE PRESIDENT STATED "ALSO, AS A MEANS OF DEVELOPING ACCESS TO AND INFLUENCE WITH THE IRAQI DEFENSE ESTABLISHMENT, THE UNITED STATES SHOULD CONSIDER SALES OF NON-LETHAL FORMS OF MILITARY ASSISTANCE, E.G., TRAINING COURSES AND MEDICAL EXCHANGES. ON A CASE BY CASE BASIS". AND TEN MONTHS TO THE DAY AFTER GEORGE BUSH SAID THAT VIE SHOULD PROVIDE MILITARY ASSISTANCE TO IRAQ, SADDAM HUSSEIN INVADED KUWAIT. IT IS ENTIRELY POSSIBLE THAT AMERICAN SOLDIERS \VERE CONFRONTED ON THE BATTLE FIELD BY THOSE TO WHOM TI-IE U.S. HAD PROVIDED TRAINING COURSES. 119 PERHAPS WHAT IS MOST REMARKABLE, IS THAT GEORGE BUSH ISSUED THIS DIRECTIVE I4 MONTHS AFTER THE END OF THE IRAN—IRAQ WAR. EVEN TO THE EXTENT THAT A TILT TO IRAQ WAS IUSTIFIED DURING THE IRAN-IRAQ WAR, 14 MONTHS LATER THAT PREMISE NO LONGER EXISTED. THE CONTINUING CLASSIFICATION OF DOCUMENTS IS ONLY THE LATEST CHAPTER IN A COORDINATED ATTEMPT TO THWART THE SUBCOMMITTEE'S INQUIRY. THE ADMINISTRATION WITHHELD FOR MONTHS DOCUMENTS TO WHICH THE SUBCOMMITTEE WAS LEGITIMATELY ENTITLED, AND DID NOT TURN THEM OVER UNTIL WE ISSUED SUBPOENAS. SECRETARY OF STATE BAKER ONLY PROVIDED THE REQUESTED DOCUMENTS UNDER THREAT OF SUBPOENA AND AFTER EXTENSIVE NEGOTIATIONS WITH THE COMMITTEE. IN FACT, SECRETARY BAKER VIOLATED PROMISES HE MADE TO THE COMMITTEE: ‘THE SECRETARY DID NOT PROVIDE ALL OF THE DOCUMENTS REQUESTED. IN ADDITION, THE STATE DEPARTMENT ADMITS THAT IT WITHHELD RELEVANT PORTIONS OF THE SUMMARIES OF SECRETARY BAKER'S MORNING MEETINGS. ‘MANY, IF NOT MOST, OF THE DOCUMENTS PROVIDED HAVE BEEN REDACTED. IN LIGHT OF SECRETARY BAKER'S WITHHOLDING OF IMPORTANT INFORMATION FROM CONGRESS. IT BECOMES HARDER TO ACCEPT TI-IE STATEMENT IN HIS LETTER TO THE COMMITTEE THAT "... WE HAVE / //!/ ,/ +. 120 NOTHING TO HIDE REGARDING THIS POLICY AREA". A COPY OF THIS LETTER IS ATTACHED TO MY TESTIMONY. IN ADDITION, IN THIS LETTER, SECRETARY BAKER IMPOSED NUMEROUS CONDITIONS UNDER WHICH CERTAIN DOCUMENTS WOULD BE PROVIDED. SECRETARY BAKER WOULD ALLOW SOME DOCUMENTS TO BE READ BY ONLY FOUR MEMBERS OF THE COMMITTEE. OTHER MEMBERS OF THE FOREIGN AFFAIRS COMMITTEE AND OTHER MEMBERS OF CONGRESS \VERE NOT ALLOWED TO SEE THESE DOCUMENTS: F THE ADMINISTRATION HAS ALSO TRIED TO THWART THE SUBCOMMITTEE'S INVESTIGATION BY NOT PROVIDING WITNESSES TO SUBCOMMITTEE HEARINGS, FIRING ADMINISTRATION WITNESSES \VI-IO TESTIFY IN A MANNER NOT TO THE ADMINISTRATIO.\"S LIKING, AND INDUCING AMNESIA ON OTHER ADMINISTRATION WITNESSES. IN APRIL OF 1991, COMMERCE UNDER SECRETARY DENNIS KLOSICE TESTIFIED BEFORE OUR SUBCOMMITTEE. HE STATED THAT IN THE SPRING OF 1990, HE ATTENDED TWO MEETINGS IN THE WHITE HOUSE AT WHICH HE RECOMMENDED THAT THE UNITED STATES RESTRICT THE FLOW OF TECHNOLOGY TO IRAQ. HIS RECOMMENDATIONS WERE REJECTED. SECRETARY KLOSKE TOLD US PRIOR TO THE HEARING THAT AT THE MEETING, IT WAS STATED THAT NEITHER SECRETARY BAKER NOR PRESIDENT BUSH \VANTED TO SINGLE OUT IRAQ FOR SANCTIONS. MR. KLOSKE WAS FEARFUL OF TESTIFYING ON THOSE POINTS PUBLICLY. 121 l I NEVERTHELESS. WITHIN 48 HOURS OF HIS TESTIMONY. IT WAS ANNOUNCED THAT MR KLOSKE WOULD BE PARTING WAYS WITH THE ADMINISTRATION. EITHER THAT CONSTITUTED A COINCIDENCE OF MIRACULOUS PROPORTIONS. OR MR. KLOSKE WAS FIRED AS A DIRECT RESULT OF HIS TESTIMONY. SIX WEEKS LATER. UNDER SECRETARY KIMMITT TESTIFIED BEFORE THE SUBCOMMITTEE. MR. KIMMITT WAS UNABLE TO REMEMBER VERY MUCH ABOUT THE WHITE HOUSE MEETINGS AND WAS EVEN UNABLE TO REMEMBER WHETHER HE HAD TALKED WITH ANYONE REGARDING MR. KLOSKE'S DISMISSAL SIX WEEKS EARLIER THE FACT THAT GEORGE BUSH CHOSE TO ROMANCE THE MAN HE LATER COMPARED TO ADOLPH HITLER WAS A HUGE MISCALCULATION. CLEARLY IT IS TIME FOR THE ADMINISTRATION TO END ITS CONCERTED ATTEMPTS TO WITHHOLD INFORMATION FROM CONGRESS AND FROM THE AMERICAN PEOPLE. THIS IS A DEMOCRACY, AND THE PEOPLE AND THEIR DULY ELECTED REPRESENTATIVES HAVE A RIGHT TO KNOW WHAT LED UP TO OUR WAR WITH SADDAM HUSSEIN. 122 TO: THE THE THE THE THE THE THE THE THE THE THE THE UNCLASSIFIED COVER SHEET FOR NSD 26 ADDRESSEES VICE PRESIDENT SECRETARY OF STATE SECRETARY OF THE TREASURY SECRETARY OF DEFENSE ATTORNEY GENERAL SECRETARY OF ENERGY DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET ASSISTANT TO THE PRESIDENT FOR NATIONAL SECURITY AFFAIRS DIRECTOR OF CENTRAL INTELLIGENCE CHAIRMAN OF THE JOINT CHIEFS OF STAFF DIRECTOR, UNITED STATES ARMS CONTROL AND DISARMAMENT AGENCY DIRECTOR, UNITED STATES INFORMATION AGENCY UNCLASSIFIED 123 October 2, 1989 UNCLASSIFIED U.S. Policy Toward the Persian Gulf A ss tc Persian Gulf oil and the security of key friendly cce states in the area are vital to U.S. national security. The ' d S*ates remains committed to defend its vital interests in Unite . the region, if necessary and appropriate through the use of U.S. military force, against the Soviet Union or any other regional wer wit“ interests inimical to our own. The United States also po A remains csmmitted to support the individual and collective self—defe:se of friendly countries in the area to enable them to la a mo*e active role in their own defense and thereby reduce P Y - the necessity for bnilateral U.S. military intervention. The United States also will encourage the effective support and participation of our western allies and Japan to promote our mutual interests in the Persian Gulf region. Released Partial Text 124 2 JNCLASSIFIED Normal relations between the United States and Iraq would serve our longer-term interests and promote stability in both the Gulf and the Middle East. The United States Government should propose economic and political incentives for Iraq to moderate its behavior and to increase our influence with Iraq. At the same time, the Iraqi leadership must understand that any illegal use of chemical and/or biological weapons will lead to economic and political sanctions, for which we would seek the broadest possible support from our allies and friends. Any breach by Iraq of IAEA safeguards in its nuclear program will result in a similar response. Human rights considerations should continue to be an important element in our policy toward Iraq. In addition, Iraq should be urged to cease its meddling in external affairs, such as in Lebanon, and be encouraged to play a constructive role in negotiating a settlement with Iran and cooperating in the Middle East peace process. we should pursue, and seek to facilitate, opportunities for U.S. firms to participate in the reconstruction of the Iraqi economy, particularly in the energy area, where they do not conflict with our non-prolifefation and other significant objectives. Also, as a means of developing access to and influence with the Iraqi defense establishment, the United States should consider sales of non—lethal forms of military assistance, e.g., training courses and medical exchanges, on a case by case basis. ' JNCLASSIFIED .‘ A " vI“'$ I-2.”-‘O I o‘.\ I I r -J Tn .1 0,“. Tu ':I .. L .-_;. - ,.. ,.. ....-..;:'_, - ;:?- . ‘.-.‘?- ' 4 ~‘.~o '- wl o no , _- I . _ ;~ v~¢_ ‘my 55-927 O — 93 — 5 ._v do - .--. ~.-‘vn~*‘_ - ‘. »‘§oI .2-{I aw: WI’ .1? Q “Q. _____ R‘ All?-L ~ 4 is loo. 5, o ,_'. _ ‘_::,:~7. Ios ‘-0. ,.. ‘.a v'_ 1| -1. 9,1 0 w- -I I. '. I I o I II‘ \- * lo. I is IA O I‘$‘ I1‘ -.4: . -_. ‘ 71:: I‘ I‘- IV ,,_'):.'r:v'.‘. ‘ll o 1. _-1».- UNCLASSIFIED .. .i_£-. L l‘ in o-hr 1;‘,-q&, aI|';f I ‘iii ~\ ‘r it-E’— ' . . ti:-~=*s~.s!~ I is ;r_';q. I "1.-=. P’ $1‘ 5»-~ . £1; T“ $ W‘ *' ~~‘ o I -‘=3 A #1 - cc!‘ PIX 21. aw»; ,_ II “-‘-i» ' it'll; I us. ,g.-_.4 YI Q .’:'>" ’ is ' ~ $ A s-‘Jo \ 0) _.‘I'§ I ."-I1) L-4 p '1‘ _ .- '93“;- .‘f'?7=§S:'*r“ 17;-'{~-Q § T-)1" (‘»§§I I r~“' R14‘ gs -. O UNCLASSIFIED I £3'?;;' it {ge- Q sf ,- ‘ #317‘ .‘.'o. n!I;*‘,»Jl ,4 , .\ . hr? . ‘ _ Q. ; , .- ?'7:.{3? ’w"‘.Z"}wL hi./. . ‘I '- I- IF I‘ -1,, -93-. <:, 126 THESECRETARYOFSTATE WASHINGTON I als July ll, 1991 Dear Dante: We have discussed several times the request of the Subcommittee on International Economic Policy and Trade for certain State Department documents. I appreciate the way in which we have been able to work together to resolve this matter. Although we believe that the President could assert executive privilege with regard to several of the documents requested by the Subcommittee, we do not wish to engage in a constitutional confrontation over this matter. I have previously undertaken to deliver or make available all State Department generated documents which are under our control and reachable by subpoena. We have discussed the fact that certain documents would be available in accordance with special procedures followed by the Intelligence Community and that other documents, because of their sensitive nature, would be made available on a limited access basis. we have made an extraordinary effort to search and review our files for materials on Iraq to meet the Subcommittee's needs and those of several other Congressional and GAO requesters. In order to respond, we have had to collect and review documents from numerous Department offices as well as from federal records centers. We have expended over 3,000 hours in this effort and have worked closely with other Executive Branch agencies to ensure a comprehensive response. Indeed, as I have said to you, we have nothing whatsoever to hide regarding this policy area. The Honorable Dante B. Fascell, Chairman, Committee on Foreign Affairs, House of Representatives. 127, - 2 - we are at the end of our document production for the Subcommittee and have been completely forthcoming in our response. In responding fully to the Subcommittee's request, we have already made available for the Subcommittee more than 1,200 documents. And we stand ready to make available the last 38 documents under special arrangements that provide the Subcommittee with the information it needs to carry out its responsibilities while protecting the sensitivity of these materials. These 38 documents include high-level, executive branch deliberative communications as well as extremely sensitive diplomatic communications and intelligence information. In our conversation of July 8, we offered the following procedures for protecting the sensitive materials in these 38 documents. We would provide these documents to the appropriate individuals for review (but not retention) whenever requested. Of these documents, 25 would be reviewed by Members and one majority and one minority staff members who possess the requisite security clearances. We offered for review by Members only five documents requested to be so handled by the Intelligence Community, and one document reporting on a Congressional meeting with Saddam Hussein. We offered for review by you and Mr. Broomfield only the remaining seven documents, which relate to sensitive interagency deliberations of various committees and subcomittees of the National Security Council. This recognizes the fact that the process of interagency NSC deliberations is central to providing foreign policy advice to the President. After further discussion with you, I can now confirm that we will expand the cleared staff access to the 25 documents to include review by two majority and two minority staff members who possess the requisite security clearances. Five intelligence-related documents and the report on the Congressional meeting will be made available to Members and one majority and one minority staff members who possess the requisite security clearances. As we discussed, the Administration feels strongly that the remaining seven documents be viewed only by you, as Chairman, and by Mr. Broomfield, the ranking member of the Committee. However, in response to your concerns, we will make these documents available to Subcommittee Chairman Gejdenson and Ranking Member Roth as well. I want to stress again, Mr. Chairman, that you, Hr. Broomfield, Mt. Gejdenson, and Mr. Roth will thus have full access to 111 relevant State Department information. No such information will be withheld. I am glad to confirm with you that these arrangements will satisfy the Comittee's request with no need for a subpoena. 128 - 3 _ Because of the sensitivity of the documents requested, I trust that I can count on-» Congress of ti): Gnitzb fitatzs ""-’- -* BEN llfllt Kl AAAIAIII ‘tun G um-uunrr. mus ' _‘ _“ bout: oi Rzprmntatmta ‘Al—(1QI|2::f'z::: °' commence. consumsn. AND MONETARY AFFAIRS SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS I RAYBURN HOUSE OFFICE BUILDING, ROOM B-377 WASHINGTON. DC 20515-dill thy 28, 1991 Hm. Henry B. Gcnzalez Oiniramn Oumaitteembanking, Fimmoanillrbanhffaizm 2129 Rayhim I-kale Offim Biilding Wuh.i.ng'tcn, D.C. Demrlir. 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Ridlifll Barth Natidhl Security Camcil Washingtaym DearMr. Barth: marflcyoliforymrinterestinhelpix-qtbadjustdifferemauiis sibommitteamsanamteredinitsdealirgswiflitrnoumeroabeparuxent ocrnernin;r'eleaseofinformticnmlioensesot"dualuse" itemtolraq. Biclosedar-eo@iesofthesubocnmittee'slettar'ofOctoberl6, 1990, thn&mneroaDepartuaIt'sreplyo1'October30, l990an:laneditorialwhich a;;:earodintheAugustaChruIiclefor'P‘etruary11, 1991. Alsoenclosedisa <::;qoftrnrelevantport1mofSectim12(c)oftheDlytothoa1mlativoinfor-naticzn, aswoll. 'Ihosuhoc||l|itteoissa'iously oc:s:I.deri.n; Imoldixqahearingcnthe i.sanot uflnrt!amtiaalh1terestreg.Iireodiscloa.meotfl1smterial saxzplslad. ibwu.IldtIIImkoareoummdatiaIthatthoful.lGoverIrnent qaaratiauqz-ittoovotacnthosubject. AsIsaid,Mr.Barnardwouldprefer togidfliilraIto,aIflhamkedthatIe:qala\sanocq:uniaowithycm- off . PlQlooallmoat225-4407\henyu.Ihavor'evie-Iedthislnttar. Thank yuifcyuxrozxnarri. S Egg 134 U.S. Department of Justice Office of Legislative % 7 / \ Office of the Asmum Anorney General Washingan. D.C. 20530 JAN3lI992 RECEIVED The Honorable Doug Barnard, Jr. J“ 3‘ 1992 Chairman Subcomittee on Comerce qmlimzcmsu Consumdr and Monetary Affairs ' nnyw‘flumsaB§:mP Committee on Government Operations “H U.S. House of Representatives Washington, D.C. 20515 Dear Hr. Chairman: This will respond to your letter to me concerning an investigation of the response of the Department of Commerce to certain subpoenas issued by your Subcommittee. In that letter, you note that attorneys from the Public Integrity Section interviewed your staff about the case, but ‘did not follow up on suggestions offered to them.’ You also request that the Subcomittee's Chief Counsel be briefed on the present status of the matter. I am informed that the investigation is still ongoing, and that interviews of a number of people, including some suggested by your staff, have already been conducted or will be conducted in the near future. Because this is a continuing investigation, our duty of confidentiality does not permit us to divulge further details to you or your staff. Please be assured, however, that you will be notified if the Department of Justice determines that no criminal charges will be brought. In addition, if you have any further information that you wish to be brought to the Department's attention on this matter, please advise the Public Integrity Section. ' Sincerely, ¢/"/1/75% H. Lee Rawls Assistant Attorney General I 1 I 135 I I DNE HUNDRED SECOND CONGRESS I ‘#0 DEDQVI wanna cm-voamu NKLIAIIPI Hull .1 um -‘AI§p -I III ilolltu aulaiaa M “'“' S‘ ""‘“'“""‘ In“ uaioevrv-<10)» ::s.uo1 IA.l—110|Ill!-llal house oi lltprzscntatihzs COMMERCE, CONSUMER. AND MONETARY AFFAIRS SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS RAYBURN HOUSE OFFICE BUILDING, ROOM B-377 WASHINGTON. DC 20515-6144 Deomer-19, 1991 Ihi. W. Lao lhwlm Aaistant Attorney General U.S. Dqaarbnit of Jistia wasningtm, o.c. 20530 Dear Hr. Rawlm: G1Aug\st20,l991Ire:x.iva:ithmerI:lcsdletterfrunyuIin rvspasetomyreqinstthatfliobqaarunentofdisticaopeiacrimiral hxvatigatima:nerIih'qU'ndoama1tspro:h.nedbyflnDQnruusItofOmmm-ca regard.irqsa1atoIraq. Tlnsihxnmittaostaffsiibsamnritlynmtwitlitwo attmrrmyofruafinR1blicIntegI:itySectimoftl'mQinina1Divisia1. ‘Ruse - attormyssemmdwenvusodwithtlnasqhxtaiboequmthquiriesirdiczate ttieydidrntfollowiipmsxygstiamofferedtottima. 'IhoattcImqsin:liczted totlnstaffthatatflncuipletimofflnirirnnstigatiaiadmcisimunldbe niadmoaaoemingwlietheracriimhadbeemormmnittod. 'lhcy1' .'therird.I.<2ted thattl'Iis@c.isicnwui1dbecummi<:atedtothissubc::Inittea. lbdatm,fl1msub::mnitteeIashadmfm'thmrcnImmiatidIfrunthe DepartmentofJustioa.Kirdlyarran;atotrief'Bnodm'aJ.Jaoobs, subcnInittoediimfcazmml,mthoprosentstat:mofth1mnmttmr. sincerely, Oiainmn 136 Q ,. H U.S. Department of Justice '5... I l ‘ I Office of Lcgnslauvc Affanrs \_\ .. T;-’ Office of the Assusum Atomey General lliuhmgzon. DC 20.530 At!-3 2 0 I99! *~IL' The Honorable Doug Barnard Jr. -p~ Chairman ' “J5 2 0199] Subcommittee on Commerce, Consumer __ and Monetary Attairs Ho~?r:"5FCE. ¢0NsuuERA~o Committee on Government Operations ' "Y““lW$SMOMmrm; U.S. House or Representatives - Washington, D.C. 20515-6144 Dear Mr. Chairman: - This is in response to your letter to Attorney General Dick Thornburgh requesting that the Department ot Justice open a criminal investigation concerning the documents produced by the Department of Commerce regarding licensed sales of commodities to Iraq. Your letter and the accompanying materials have been given to the Public Integrity Section ot the Criminal Division, who will conduct an appropriate inquiry. Thank you tor sending the information to us. Sincerely, wvé @ W. Lee Ravls Assistant Attorney General 137 °°""“"“'° * °‘°'“““"““' one nuuonco SECOND couonsss ‘ °""“’ """' “"'°" ".2...'“$.".3.“‘t".‘..‘f..‘2"°"“ ' 3'-‘>3-$51357-??~°°‘ ‘“‘° "' vvn.|..Aal Ii nun .a uw um .- ~f--W Congrzss of the limtzh btatzs M * ~ , TY—4 I -IIOI boas: oi Rzprzszntanhzs ...o....,..,... COMMERCE. CONSUMER. AND MONETARY AFFAIRS SUBCOMMITTEE OF TN! COMMITTEE ON GOVERNMENT OPERATIONS RAYBURN HOUSE OFFICE BUILDING. ROOM B-371 WASHINGTON. DC 20515-6144 my 1o, 1991 Hcn.Ridzd'I!rrrb.Ir§1 Atta-|1IyGmnral Dqnrultotmltim Hashirgtm,DC2053O Dear Ir. Attcrney Gcnral: 'Ihi.ssuI::aInitteehasbeer1ga@dinana:-goirg irlvstigatimof tlnactivitiuofvarinswvenmentagrimincusactimwithlioa-nedsales of<::—:ditientoIraqd.xringt.hspe:riod1985tol990. Int.hi.eoornoct_icn,the aIbamnitteeru;nstodmdaIlpoaaedvariaadoanmtsrrcntInDqnrunmto£ Qznnrmounsrrdrqflnoesales. Allegatimowaremdethat varioundnameni-_s s;pliedtotInGmnrI$1tOperatiaIQ:mitteepn'annttoa1kpoauuem altIredp:im'totIItinntlny\m'ema|havailabletom. BecuuseotthoaoallegatiaI,fl1oGmoral01IIelottheDq:artms1t ot(rmnnrmaskodflnDQari:a1t'shupectcrGaInltorovicrtJnsihntim. 'IheIG'srq:crt,dntodJ\:ne4, 1991isnowava.I.lable. Aowyisanclosedalcng withacqsyottJnnanowtumn;dBxeauotBc;n't0:1tzpl'srmpume. §.§,%l§§§I%. E,~F 9, egg §?I5§ If “SIII iiiiiii Igigg iiiiiag 5.? iii? st ii 5“ gi rims that dumps were mm to the data snare not Entely s.;p:rtai. liifli ipticn "military Crude," the IG an:llislen‘I.I.rq." (p. 4, IG rwort) over $1 billicn, export licerses IG's Replrt of criminal culpability. Yet I ly amply false infco.1|nt.icn to mngra. A¢I:I:di.rl;1, haveyu.IrDqnrtza1tq::a-Ian 1nvut.i.gat.1cn ilnlhitodstatmwas s Ityoucyu|rsi'. thavequeet1au,p1naeomtact'Ihooda:eJ. Jacds, ntaoclnittee diiot carnal, at 202-225-4407. Sirxely, ; Doug Barnard, Jr. }' I Qniranli 138 @ _/I K UNITED STATES DEPARTMENT OF COMMEHCE ' The Inspector General X / Weshmgton, D C 20230 ' "lvgi RECEIVED JUL 2199: JUL 8 W QMN ~@~@-Ei%§@22~m:¢.%E Honorable Doug Barnard, Jr. E Chairman Subcmnnittee on Commerce, Consumer, and Monetary Affairs Committee on Government Operations House of Representatives Washington, D.C. 20515-6144 Dear Mr. Chairman: This responds to your letter of June 28, 1991, requesting access to a copy of any report issued by our office concerning the allegedly altered records supplied to the subcommittee by the Bureau of Export Administration (BXA). We have issued two reports pertaining to this matter: Audit Report No. STD—206-1-0004, Report on Iraqi Export License Information, BXA, dated June 4, 1991; and Inspection Report No. OIRM-323, ECASS Internal Controls, dated June 28, 1991. Copies are enclosed. Please be advised that these reports are being released to you as an inter-governmental transfer falling outside the scope of the Freedom of Information Act. The reports are being provided for your official use only; any subsequent release of this information should be coordinated with our office. If I can be of further assistance, please let me know. Sincerely, A 5 Francis D. Detieorx Inspector General Enclosures 139 ,.. ii"? Thelnspectorfienerm Washington, DC, 202$ JUN 041991 MEMORANDUM FOR: Robert A. Mosbacher Secretary FROM: ’Frank DeGeo Inspector SUBJECT: Report on Iraqi Export License Information Bureau of Export Administration STD—206—l-0004 At the request of the Department's General Counsel, we reviewed the releases of Iraqi export license information to the Chairman of the Subcommittee on Commerce, Consumer, and Monetary Affairs, House committee on Government Operations. Our review disclosed no evidence that Bureau of Export Administration personnel deleted entire export license records before they submitted the information requested by the Chairman. However, we did confirm an initial report by the former Under Secretary for Export Administration that a small percentage of certain data of the Iraqi export licenses processed were changed in submissions to the Hill. Bureau personnel, including the former Under secretary, stated that while preparing printouts for submission to the Chairman, changes were made to selected data on 66 approved export licenses for sales to Iraq. our review disclosed changes to data on two additional licenses concerning trucks. Bureau personnel also changed permanent records on the Export Control Automated Support System database, compromising the integrity of the Iraqi license records. Neither the changes to the data provided to the chairman nor the changes to the system database were adequately supported. Our review disclosed that the former Under Secretary concurred with all changes to the data sent to the Chairman, but was unaware of any system database changes. with the exception of changes to five truck licenses to remove a reference to their potential military use, the changes were inconsequential and eliminated apparent inconsistencies in the license information. This report contains recommendations to ensure the integrity of the export licensing data and any such data submitted to the Congress in the future. These recommendations have been discussed and agreed to by Bureau officials: we are therefore issuing this report in final form. Department Administrative Order 213-5 requires operating units to submit an audit report action plan, including a timetable for implementation of the recommendations, within 90 days of the date of the audit report. Accordingly, we request that the acting Under Secretary of the Bureau of Export Administration be directed to submit such a / M, UNITED STATES DEPARTMENT OF COMMERCE 140 plan. We are providing a copy of this report to the acting Under Secretary and to the General Counsel. Intrpdnsiian Beginning in September 1990, Congressman Doug Barnard, Jr., Chairman of the Subcommittee on Commerce, Consumer, and Monetary Affairs, House Committee on Government Operations, sent several requests to the former Under Secretary for the Bureau of Export Administration for lists of export license information on Iraq from 1985 through 1990. The former Under Secretary responded with computer printouts on October 10, October 24, and December 12, 1990. The October 10 printouts did not show whether the licenses were referred to other departments under applicable licensing regulations. The regulations require BXA officials to submit certain license applications to the Departments of State, Energy, and Defense. The October 24 printout showed information on the referral to other agencies, but it did not show the other departments’ responses or recommendations. The December 12 printouts showed all referral information, including the other departments‘ recommendations. On February 8, 1991, the Department's General Counsel asked the former Under Secretary to provide a report addressing whether (1) the printouts were misleading, (2) certain end users of the ' licensed commodities were deleted or changed, and (3) the characterizations of the licensing information had been materially changed from those originally in the system database. This information was requested because of media-reported allegations that export license information and records were deleted from the Bureau’: files. The former Under Secretary provided the report on February 26, 1991, acknowledging that changes were made to the information given to the Chairman. On March ll, following continued media reports that Iraqi export license information was deleted from the Bureau's files, the General Counsel asked the Office of Inspector General to review this matter. ~nn The purpose of our review was to determine (1) if any changes were made to the information prior to submission to the Chairman, (2) if any changes were made to the export control automated system database records, and (3) the accuracy and completeness of notations indicating the positions of other departments involved in reviewing licenses for exports to Iraq. we interviewed Commerce officials involved in preparing the responses to the Chairman, including the former Under secretary, 2 vl \ ,\ ./ 141 I and officials from the Defense, State, and Energy Departments. We reviewed the Bureau's support for the acknowledged changes to the printouts furnished the Chairman, and determined whether Bureau personnel had also changed other license information in the export license system database. Bureau officials did not maintain any copies of the printouts provided to the Chairman, so we obtained Iraqi license information stored on magnetic tape as of May 22, 1990, and provided last August by the Bureau to another government agency. The tape did not include archived export license data for fiscal years 1985 and 198$. we also obtained a copy of the printouts from the congressional committee that received the information. We compared the copies of the printouts submitted to the Chairman with the information provided on the hay 22, 1990, computer tape. we also compared the data shown on the December 12 printout with the data from the Hay 22 magnetic tape to determine the reliability of the Iraqi information in the database -— that is, whether export license records were deleted from the database. we did not examine the internal controls over the input and maintenance of data in the export licensing system. Instead, have initiated a separate review over these controls and will provide you with a copy of that report when that review is completed. HO This review was performed at Bureau headquarters and at the Departments of Defense, State, and Energy in Washington, D.C. Except as noted above, the review was conducted in accordance with generally accepted government auditing standards and was performed under the authority of the Inspector General Act of 1978, as amended, and Department Organization order 10-13, dated Hay 22, 1980, as amended. — In his report to the General Counsel, the former Under Secretary stated that Bureau personnel changed licensing date on 65 of the 1,126 licenses (later amended to 1,130) processed for Iraq from 1985 through August 2, 1990. Bureau personnel acknowledged one additional license data change as we began the audit. During our review, we identified two additional license data changes that were not previously acknowledged, bringing the total to 68. The licnse data changes were as follows: (1) Descriptions of trucks were changed on five license records to eliminate a reference to a design for military use. (2) Notations were removed on 19 license records that had indicated referrals of licenses to another agency. (3) Stated positions of other agencies that review or approve 3 I I i / . /I 142 licenses were changed on 39 license records. (4) End use statements were changed on five licenses. On four licenses for equipment used in a "magnetic media factory," the descriptions of end uses were expanded, The expansion added the phrase "to [manufacture] video tapes for consumer electronics." on one license, the exporter had inserted a comment that, "According to our information the end user is involved in military matters" in the end use field. Bureau personnel deleted the comment. The export regulations provide an export control commodity number and general description for each commodity to be exported. Bureau personnel changed the commodity description for trucks from “VEHICLES DESIGNED FOR MILITARY USE‘ to 'COHERCIAL UTILITY CARGO TRUCKS" or "VEHICLES." The former term is consistent with the terms used in the export administration regulations as the general description of the trucks. We found no changes to general descriptions of other licensed commodities that made them inconsistent with the regulations. A Bureau official told us the commodity descriptions were changed to clarify that the Bureau does not license the sale of military trucks. The official also said that the description changes were justified by a State Department letter to an exporter in 1983. The letter indicated that the exporter's trucks, which were intended for sale to Iraq, were classified as "commercial utility cargo truck(s).' We disagree with both reasons for changing the commodity descriptions. The export administration regulations allow the Bureau to approve licenses for the sale of military trucks that are not on the U. S. Munitions List. Such vehicles are primarily transport vehicles designed for noncombat military purposes. Additionally, when we discussed the contents of the 1983 letter with State Department officials, they informed us that the letter provides no justification for the description changes. It merely informed the exporter that the trucks are not on the munitions list and can be licensed by the Bureau. we conclude that the changes were unjustified and misleading. Bureau personnel changed five licenses for trucks, including the two that we found. The total value of the licened trucks was over $1 billion, or approximately 2/3 of the total value of the approved export licensee for Iraq during the period under review. In fact, more than 97 percent of the total value of the changed licenses is accounted for by changes to the truck licenses. Although the licenses were approved, Bureau personnel informed us that no licensed trucks have been shipped. _ 4 143 .:. I. ~r Bureau personnel deleted 19 referral notations to other agencies; however, those actions were not clearly justified. Nine referrals to the Defense Department for computer parts and components were deleted, and ten other referrals for various other commodities were also deleted. Bureau personnel told us they deleted the notations related to the computer parts and components because the Licensing Officers’ Operating Manual stipulates that parts and components licenses should not be referred to the Defense Department. We reviewed the operating manual and found that it contained conflicting procedures as to whether licenses for computer parts and components should be referred to another agency. A dated procedure could be used to justify the referral notation deletions, but e more recent procedure required that the licenses be referred to the Defense Department for approval. Notwithstanding the position of Bureau personnel that computer parts and components need not be referred to the Defense Department, they were referred and licensing issues were settled among the appropriate agencies. Under the circumstances it would have been more appropriate to have included the referrals in the printouts and explain the resultant positions where necessary. We did not review the entire manual to see if it contained other conflicting or confusing procedures. However, Bureau officials should perform such a review to ensure that licensing personnel have clear, unambiguous procedures to apply to each license application. We reviewed the 39 changes made to other agency positions to determine whether the changes were well documented and supported. Bureau personnel told us that the changes to other agency positions were "corrections" supported by export licensing regulations and files of original documents. Our review of the docuentation used to support the changes showed that 13 of the changes were based only upon the Bureau licensing officer's written notation that an agency position had changed. In also found that 31 of the 39 changes were not supported by reliable independent docuentation. The licensing officers often did not base the changes on independent supporting documentation such as memoranda prepared by officials of other agencies. Bureau personnel also did not provide adequate support for changes that removed notations indicating referral to other 144 agencies. Additionally, each license application must include a statement on the end use of the commodity being exported. Bureau personnel did not provide adequate documentation to support the changes in the end use statements. Bureau personnel stated that they had discussed all changes with officials of other agencies to confirm that the changes accurately reflected their positions. Bureau personnel further stated that these officials concurred with the changes. We asked officials at the Energy, State, and Defense Departments to verify statements by Bureau personnel. The Energy Department official disagreed with three of 10 position changes. However, he did not indicate that additional action to correct the record was needed. A Defense Department official stated that approximately 30 percent of the licenses were approved "with conditions," while the Bureau's records indicated that the licenses were simply approved. Another Defense Department official stated that he told the committee staff that he was satisfied with the presentation of the Defense Department's positions on the printout. The State Department did not disagree with the stated positions. As a result of the other agency officials‘ cements, we consider the changes to the positions and the deletions of the referrals to have had little effect on the Iraqi license information given to the Chairman. We found that the other agencies did not maintain complete records of the license applications submitted for their review. Defense Department officials told us they depended upon the Bureau's files to support the changes in their positions. The Bureau maintains the Export Control Automated Support System, which provides license processing and historical information on export licensing activities. It also provides the data needed to support enforcement actions for export license violations. The system contains the official license application, the application tracking information, the license, and the follow—up actions. The system allows changes to applications before they are approved: however, once a license is issued it becomes an historical record and no changes by licensing officers are permitted. The date of final action is entered automatically by the system and cannot be changed. Changes to the database can be made only by computer personnel within the Operations Division with the specific authorization of the Director, Office of Information Resources Management. We found that Bureau personnel forwarded a list of the previously stated changes to BXA's Office of Information Resources 6 145 Management, with a request to change the permanent licensing database. OIRM officials acknowledged that they changed the license records solely on the basis of the highlighted list and oral assurances by licensing officials that the changes were justified. They neither reviewed the documentation used to support the changes nor requested copies to maintain in case questions arose in the future. OIRM officials should have required authorization and sufficient supporting documentation before changing permanent records in the system. Changing system data without support compromises the system's integrity and confidentiality. Recommendations We recommend that the acting Under Secretary for Export Administration take the following actions: 1. Ensure that any future changes to export license information submitted to Congress and to the Export Control Automated support System are authorized and adequately supported with appropriate documentation. 2. Retain complete documentation of the positions of all agencies involved in processing export licensee. 3. Ensure that the system database accurately reflects all agency positions. 4. Clarify the procedures in the Licensing Officers’ Operating Manual for the referral to the Defense Department of license applications for commuter parts and components intended for shipment to specific countries. 5. Ensure that the Licensing Officers’ Operating Manual is reviewed to eliminate other conflicting or confusing licensing procedures. cc: Wendell Willkie Joan McEntee 7 146 Q1 O /\ 4%‘ I S UNITED STATES DEPARTMENT OF COMMERCE ' ‘ _' The Under Secretary for Export Adf'hiI‘\i3trQg|Qn I, ,1‘ Washington. 0 c 20230 ‘"5"; U March ll, 1991 Honorable Doug Bamard Chairman, Subcommittee on Commerce, Consumer Protection and Monetary Affairs Committee on Government Operations House of Representatives Washington, D.C. 20515 Dear Mr. Chairman: In response to your request for Iraq licensing information that can be made available to the public, I am enclosing a printout summarizing applications for licenses to export to Iraq processed by the Department in the 1985-1990 period. Also enclosed is a fact sheet that includes a description of the print- out and a one-page summary of Iraq licensing statistic for that time period. The printout is based on the one provided to you on December 12, 1990, except that it does not include information that could identify exporters or suppliers. Specifically, all the names of license applicants have been removed and, where the end-use information included references identifying suppliers, those references have been deleted. Under the authority delegated to me by the Secretary of Commerce, I have made the national interest determination required under section 12 (c) of the Export Administration Act to release to the public the data contained in the enclosed printout The information previously provided to you identifying exporters and suppliers is not covered by the this determination, and therefore, remains subject to the confidentiality provisions of section I2 (c) . Should you or your staff have any questions, please contact Mark Neuman, Director of Congressional Affairs for Export Administration, at (202)377-0097. Sincerely, , [Q/6. - Enclosure cc: Honorable Dennis Hastert Ranking Minority Member 147 STATISTICS ON U.S. LICENSING FOR IRAQ was-1990 Each of these licenses was processed in accordance with the prtvailing export pdlicigs and interagency procedures described in the Licensing Action Aamnzsi Keimsi License Disposition 771‘ (68%) 39 (3%) Total Dollar Value $1.5 B” $27M lnteragency Review Ailmi Rsissnd Defense Position 487 (69%) 20 ( 3%) Energy Position 177 (60%) 28 ( 9%) State Position 62 (78%) 5 (6%) SNECII Position 24 (36%) 12 (18%) ' Ihisfigunisudmdesfearllmmeelnalwuesabsequuulysaqended. REAL 323 (29%) $442M BEA! 198 (28%) 91 (31%) 13 (16%) 30 (46%) " fldsfigunlmdmdedilbflflmwuthof cargokudcstlutvueflshippedblraq. "‘ Included Inlhaeappsevalshdsdaarethose cues Inwhldu Shhassened dutne foreign policy controls applied mdxelmmed the license wid\outrerlew:caseslmwhkhDefense shied IhatlthadnestatmtIyrekhrevkwir§theHouue;e:uivhkhm:yagmcyve1adeb]ec&em but didnet conIinmeloasalalethQ. lkehu-nedW1lhee\Acflom ll SNECIs Ihessb-GcoapemNmde7uEspe:tCoe:d|.nadom. 1'hbbaShlsDepIt:menl-duaired committee wii‘ Agency and the Imalllgemc an-sally. Cesumcee, Busy, due A1 Oemllel md Disanmament Ixml 1133 $19698 Total Kncinud 704 296 80 66 “"14.-.. 148 BXAfm:ts FACT 8828'!‘ ON EXPORT LICENSING FOR IRIQ The Commerce Department's export licensing policy toward Iraq has evolved in line with overall U.S. foreign policy and national security concerns about Iraq. Chronology of Major Export Control Actions In 1982, the State Department dropped Iraq from the list of terrorist-supporting countries. As a result, there were two principal grounds on which a dual-use item subject to Commerce Department export controls could be denied to Iraq: (1) risk of diversion to the Soviet Union, Eastern Europe or the People's Republic of China (the COCOH-proscribed countries) and (2) items that could contribute to nuclear weapons development programs in Iraq. In March and September 1984, controls were imposed on exports to Iraq of eight chemical precursors. ~ In November 1984, diplomatic relations with Iraq, suspended since 1967, were re-established. In April 1987, foreign policy export controls were expanded to include a list of items that could be useful in the development of ballistic missiles. Since this promulgation of the Missile Technology Control Regime (HTCR), no license applications for any MTCR items have been approved for export to Iraq. In July 1987, export controls were expanded for chemical precursors for Iraq. In February 1989, foreign policy export controls were further expanded to include an additional list of chemical and biological agents that could be developed into weapons. Since the establishment of the chemical/biological weapons (CBH) regime, no license applications for any items subject to CBW controls have been approved for export to Iraq. on August 2 and 9, 1990, President Bush issued Executive Orders suspending all trade with Iraq. U.S. Depanmlm ot Commerce - Bureau ol Export Achnstraion - Office <>r Pubic Aflaus - Room 3895 - Wastington. D.C. 20230 - Telephcne 222 3“ 2'21 149 Interagency License Application Review Procedures for Iraq The Department of Energy reviews license applications involving items subject to nuclear non—proliferation controls. The Department of State reviews applications for items subject to foreign policy controls. Further, the State Department chairs the interagency Sub-Group on Nuclear Export Coordination (SNEC), which evaluates the more sensitive license applications involving nuclear non-proliferation issues. In addition to State, SNEC membership includes representatives from the Departments of Defense, Commerce, and Energy, the Arms Control and Disarmament Agency, and the intelligence community. The State Department also chairs the interagency Missile Technology Export Committee (MTEC), which evaluates applications subject to missile technology controls. The Department of Defense reviews applications involving a select number of technologies to certain destinations to evaluate risk of diversion to COCOH-proscribed countries. DOD also reviews missile technology cases as a member of the HTEC and nuclear cases as a member of the SNEC. Note: Under the Export Administration Act, foreign policy controls expire annually unless they are extended and Commerce sends an appropriate report to Congress on its implementation of those controls. A copy of the most recent report is available from the Office of Public Affairs, Bureau of Export Administration. Iraq Licensing history trom January 1, 1905, through August 2, 1900 The Export Administration Act and administration procedures require referral of certain export license applications to other agencies. During this period, license applications sent to other agencies were as follovsi: —- Defense: 704 —- Energy: 296 -- State: 80 —— SNEC: 66 * Some of these figures include referrals of cases to more than one agency. 2 150 The applications during this period were acted on in accordance with statutory and procedural requirements. The Department of Commerce approved 771 license applications valued at $1.5 billion.** 362 applications valued at $469 million were not approved. ** Four of the approvals were subsequently suspended. Three of the approvals were for over $1 billion worth of cargo trucks that were not in fact shipped to Iraq 3 151 Description of Printout A summary printout of information on applications for licenses to export to Iraq for the period 1985-90 is available from the Bureau of Export Administration's Office of Public Affairs. The printout is divided into separate sections for applications approved, rejected, returned without action, suspended, and embargoed on August 2 (and subsequently returned to the applicants). It provides the date an application was received and the date of final action. It shows the name of the importer in Iraq, a general description of the item, a description of the intended end-use, and the value of the proposed export. The printout also provides the licensing recommendations of other agencies involved in the license review process. In certain instances, the State Department's positions are marked with an asterisk. In these cases, the State Department determined that no foreign policy—based controls applied. In other instances, the phrase "Not Restricted for HTCR, Chemical/Biological, or Nuclear Non—Proliferation" appears. In these cases, it was determined that the proposed export was not restricted by any missile technology, chemical/biological, or nuclear export controls in effect at the time and that referral to another agency was not required. The printout available from the office of Public Affairs does not include names of U.S. exporters or suppliers. Those names were included in printouts provided to Congress. iii 4 152 -\ J QVEWLAQGQNIA QIIWVDIKOKGOII DQIOISLICIAIIQW .IMSLAn'!IvuusAs GI@V$I@$lLIi$0YA .ounnn|rnnvrtxAs Oflf MMOIID SICOND CONGKSS 100* 0 muont lI\Cn|GAI4 I:-menu: THOMAS J luuv. JG. VIGMA noun»: I um, Kw volu DAI SDMIFIR CQOQIDO mm vvrou. llloiaul 11.5. mus: uf Rzprzsmtatinzs .5nhm|nmimz on C-Xansight and llmutigatinns mo N $YuwY‘L sun |>oatc'ron/cull coulsn ur nu """"’ "" °"""‘""°""°" olnmmimz an lung and Olummzm ‘lllashingtun, B61 20515 Hay 28, 1992 The Honorable Henry B. Gonzalez Chairman Committee on Banking, Finance and Urban Affairs 2129 Rayburn House Office Building Washington, D.C. 20515 DEBIT Henry: Thank you for your Hay 27, 1992 letter concerning the Committee on Banking, Finance and Urban Affairs’ upcoming hearing on Iraq. As you are aware, the Subcommittee on Oversight and Investigations held a closed hearing with the Department of Energy (DOE) and several Intelligence agencies on April 24, 1991 concerning the actions of the DOE in preventing Iraq and other nuclear proliferant countries from acquiring a nuclear weapons capability. You asked that the Subcommittee provide the Banking Committee with an overview of our investigation and a summary of the impediments we encountered. The Subcommittee has long been concerned that special nuclear materials and sensitive nuclear components —— the means to a nuclear bomb -— be safeguarded from terrorists and kept out of the hands of nuclear proliferant countries. The Subcommittee's hearing last year with the DOE raised a number of important concerns that I conveyed to President Bush in an April 22, 1992 letter. This letter provides a factual account of the Subcommittee's investigation and the concerns that we believe are still unresolved. Enclosed is a copy of this letter, along with a copy of the Subcommittee's recently sanitized record of the April 24, 1991 hearing entitled "Nuclear Nonproliferation: Failed Efforts To Curtail Iraq's Nuclear Weapons Program". I understand that the Banking Committee has experienced difficulty in obtaining from the Administration information you deem necessary for your investigation on Iraq. The Subcommittee has experienced similar problems with the DOE and the National Security Council (NSC) in obtaining in a timely fashion the information necessary to conduct our inquiry. From the beginning of our inquiry, we have experienced a pattern of delay, misinformation, and lack of cooperation. $00! 1121 uvluln >005! 00¢! lulwmc moral (101) zn_uu 153 The Honorable Henry B. Gonzalez May 28, 1992 Page 2 The Subcommittee experienced considerable difficulty in obtaining documents from the DOE and the NSC. Our investigation began on April 6, 1990, when I wrote to Energy Secretary James D. Watkins following media reports of the March 28, 1990 U.S.-British Customs sting at London's Heathrow Airport which apprehended Iraqi agents smuggling nuclear weapons capacitors to Baghdad. At an ensuing DOE briefing on May 1, 1990, the Subcommittee staff was told of a failed effort in the spring of 1989 to warn Admiral Watkins about Iraq's growing nuclear weapons program. Documents pertaining to this matter, which were identified by the DOE participants at this briefing, were requested by the Subcommittee staff. However, the documents were only obtained four months later pursuant to a Subcommittee subpoena. DOE documents obtained through the Subcommittee's subpoena show that Department officials were prepared to furnish the documents to the Subcommittee shortly after the Subcommittee staff requested them, but were blocked by the former Under Secretary. We also experienced a problem with the NSC in obtaining access to a key Presidential document pertaining to Iraq. On March 21, 1991, the Subcommittee wrote to the National Security Advisor, General Scowcroft, requesting a copy of National Security Directive 26. This document had been specifically cited in a Washington Post Magazine article as pertaining to Iraq's nuclear program and nuclear proliferation. The NSC was told of the Subcommittee's plans to hold a hearing the following month with the DOE concerning Iraq and nuclear proliferation. Instead of getting the document, General Scowcroft advised that access to the document would be limited to review by Subcommittee Members and Majority and Minority Staff Directors. when told in a subsequent letter from the Subcommittee's Ranking Republican Member and me that the Subcommittee wanted our designated staff to review the document, General Scowcroft, in a June 6, 1991 letter, advised that he could not permit such review. Only after the NSC was told that the Subcommittee would issue a subpoena for Directive 26 did the NSC's Executive Secretary write to the Subcommittee on June 17, 1991 advising "... upon further consideration ... we are now prepared, in a spirit of comity and cooperation, to afford access to the individuals identified in your letter ...." The Subcommittee staff reviewed Directive 26 at the Old Executive Office Building on June 26, 1991. As I mentioned in my letter to President Bush, "I tend to believe that this October 2, 1989 Directive would have had an entirely different focus had Secretary Watkins been privy to the concerns held by his own staff in early 1989." Not only did the NSC keep the Subcommittee away from Directive 26 until after our 154 The Honorable Henry B. Gonzalez May 28, 1992 Page 3 hearing on Iraq, it attempted to prevent a Committee of competent jurisdiction from having access to a document that had already been leaked to the press. I find this rather curious and in direct conflict with the Executive Branch's oft repeated accusations that it is the Congress who leaks classified ' information. In addition to the problems in obtaining documents, the Subcommittee experienced delays in gaining access to individuals so they could be interviewed by the Subcommittee staff. In the case of William Emel, a former DOE intelligence officer who had left the Department to work for a DOE contractor, the DOE refused to bring him to Washington, D.C. so he could be interviewed about Iraq in a classified setting. The staff eventually traveled to South Carolina and conducted the interview, but the investigation was unnecessarily delayed. Because this refusal to furnish a contractor employee was most unusual, the Subcommittee requested the General Accounting Office (GAO) to determine whether there was any legitimate basis for such refusal. The GAO, in a letter to the Subcommittee dated April 17, 1991, advised that the DOE did not make the necessary determinations as prescribed by its own regulations, but if such determinations were made, "... we would anticipate no basis upon which we would object to the use of DOE's funds to pay for the employee's travel." The abuse of classification was another problem experienced by the Subcommittee in its Iraq inquiry. Not only did the Subcommittee staff spend considerable time with DOE officials in reversing questionable classification determinations (some of which we still question), we found that the DOE apparently maintains a dual standard for classifying documents: one for the Congress, and the other for public relations. The Subcommittee was cautioned by the DOE on more than one occasion to protect its numerous classified documents on Iraq in the interests of national security. The Subcommittee complied with the DOE's classification requirements. When the Subcommittee requested declassified versions of certain documents on the Iraqi issue, Admiral Watkins furnished these documents on October 30, 1990 advising, "... classified information has been deleted in order to protect the national security interests of the United States." The Subcommittee incorporated these documents, in their sanitized versions, in the printed hearing record. The classified versions that were locked up in the Subcommittee's safe were stamped by the DOE as "SECRET", "NOFORN", "WNINTEL", "National Security Information". 155 The Honorable Henry B. Gonzalez Hay 28, 1992 Page 4 Curiously, last month, after the Subcommittee's sanitized hearing print was made public and after The ggw York Times and The Washington Post reported on the Subcommittee's investigation concerning Iraq's nuclear weapons program, the DOE suddenly declassified two of the documents allegedly containing sensitive national security information that the Subcommittee had diligently been protecting for approximately one and one—half years. We found that the DOE's Office of Public Affairs, reacting to negative newspaper stories, spearheaded the initiative to declassify the documents in an attempt to deflect further criticism. Not only did the Department fail to inform the Subcommittee of this dubious declassification effort, but it clearly illustrates that national security considerations are less important than the Department's public image. In addition to creating a document problem, delaying our investigation by not making people available in a timely manner, and abusing classification, we believe that DOE officials may have attempted to mislead the Subcommittee concerning their actions regarding Iraq's nuclear weapons program and the treatment of the DOE employees who attempted to sound the alarm in the spring of 1989. The Subcommittee is continuing its inquiry concerning possible inaccurate testimony at the April 24, 1991 hearing and other matters, unsatisfactory responses to written questions, and the misleading portrayal of events in documents furnished to the Subcommittee. We hope this information is helpful as your Committee proceeds in its investigation. Please let me know if I can be of further assistance. /””\ /' ,Sincerely, .\ John D. Dingell Chairman Subcommittee on Oversight and Investigations JDD:des Enclosures cc: The Honorable Thomas J. Bliley, Jr. Ranking Republican Member Subcommittee on Oversight and Investigations 156 Dill‘? SIC? CIOQII JO0GD?I¢LX€IC‘IlllZ 11.5. mus: of Rzprummiuu °‘~'-"-7-‘»?‘1“~"*"-'""‘ Smuussnz! 0| eump as muugmm ".::.’..*~':"..:".~':__=::.*;:.*:.:>':::'- ‘Y "I Comelm an ling u amp; ‘llifllfiillgfllli, BC mm-om April 22, 1992 The Honorable George H.W. Bush President of the United States The White House 1600 Pennsylvania Avenue, u.w. Washington, D.C. 20500 Dear Mr. President: I want to bring to your personal attention a matter of extreme importance. Last year, the Subcomittee on Oversight and Investigations held a closed hearing with the Department of Energy (DOB) on Iraq's nuclear weapons development program. The Subcommittee held this hearing because of its long-standing concern that the technology and materials for nuclear weapons be kept from terrorists and proliferant nations. In the case of Iraq, the Subcommittee's investigation demonstrated that the DOB blundered a unique opportunity to curtail the flow of sensitive nuclear weapons technology to Iraq at a time when it could have made a significant difference. As early as April 1989, DOE nuclear nonproliferation experts had concluded that Saddam Hussein's threat to construct a nuclear bomb was real and must be stopped. These dedicated career employees were acting with the same "real sense of urgency" that you called for over one year later when you met with the Desert Shield troops in Saudi Arabia on Thanksgiving Day 1990. At that time, you warned "[t]hose who would measure the timetable for Saddam's atomic program in years may be seriously underestimating the reality of that situation and the gravity of the threat." This grave Iraqi threat was the reason why these DOB career employees felt the urgency in 1989 to involve DOE Secretary Watkins, the State Department and the National Security Council to insure that the necessary actions be taken. Incredibly, their efforts to sound the alarm were thwarted. As the Federal agency with the expertise and responsibility for designing, manufacturing, and testing nuclear weapons, and as a member of the Intelligence Community, the D0! should have been out front in galvanizing U.S. government support to stop Iraq as well as other nuclear proliferant countries. Inexplicably, other issues seemed to have a higher priority at the DOB. K III! \Av\@ Kilns olwq puqwquq "if"! Ill-AIM 157 The Honorable George H.W. Bush April 22, 1992 Page 2 The significance of the failure to involve Secretary Watkins should not be underestimated. If he had been given the opportunity to act on the recommendations of his staff of experts, who had been watching Saddam's efforts to build the bomb, the widespread and covert Iraqi procurement network, which reached into the world's most sophisticated industrial concerns, could have been significantly curtailed. At the same time, it is entirely possible that Iraqi "scientists" would have been barred from attending an international symposium on explosives detonation held in the late summer of 1989 in Portland, Oregon. A top DOE weapons expert later characterized this symposium, which was sponsored by the United States government, as "the place to be in September 1989 if you were a potential nuclear weapon proliferant." One month after the Portland fiasco, you issued a National Security Directive on U.S. Policy toward the Persian Gulf. Classification restrictions prevent me from elaborating in this letter on the details of your Directive. However, I tend to believe that this October 2, 1989 Directive would have had an entirely different focus had Secretary Watkins been privy to the concerns held by his own staff in early 1989. If this had been the case, Saddam Hussein could very well have experienced far greater difficulty in acquiring from the world's marketplace the wherewithal for his nuclear weapons program. It is outrageous that a country such as Iraq was allowed to reach the brink of acquiring deliverable nuclear weapons, particularly with the knowledge and apparent assistance of the United States. Military action, I am sure you will agree, is normally not the preferred method for putting a crimp in a proliferant nation's weapons program. The problem with Iraq was that by the time Saddam invaded Kuwait on August 2, 1990, our options had been greatly reduced. The resultant war with Iraq and the subsequent inspections by nuclear experts under United Nations auspices have hopefully slowed or temporarily eliminated the imediate nuclear threat, although this is more likely due to bad timing on the part of Saddam in his invasion of Kuwait than to an effective policy by the Administration to curb the spread of nuclear weapons. Hr. President, it is time we stop playing "Russian Roulette" with nuclear proliferants. This past February, the Director of the Central Intelligence Agency publicly stated that proliferation is one of the top threats to our national security. If this is the case, and I have firmly believed this for over two decades, the American people, and indeed the entire world, rightfully expect that the best possible talent will be brought 55-927 O — 93 - 6 158 The Honorable George H.W. Bush April 22, 1992 Page 3 to bear on these problems by the United States government. Regrettably, I am not confident this is being done. The performance of certain DOE officials entrusted with these critical responsibilities has not been encouraging. There is another problem I feel compelled to share with you. Top-notch employees will not be attracted to the DOE as long as it subjects its employees to "bureaucratic execution" when individuals, who are concerned about important matters, conflict with others who place a premium on maintaining the status quo. we saw this at our hearing on Iraq, where the nuclear non- proliferation experts who wanted to stop Saddam instead found themselves stopped, and later punished, by the very Department they were diligently trying to serve. This practice is not unique to the DOE. It must change or the American people will not see the results they have every right to expect from their government. An important step would be your recognition of those DOE employees who tried, in 1989, to warn Admiral Watkins long before it was fashionable to express concern about Saddam's nuclear intentions. This would send a message that you are serious about how this job is performed. Curiously, while not recognizing its own employees, the Department has recognized four DOE laboratory employees who served on the post-war U.N. nuclear inspection teams in Iraq. These contractor employees recently received the Exceptional Public Service Award. While such recognition was undoubtedly deserved, and this subcommittee is grateful for the important service performed by the teams sent to Iraq, it is ironic that those who wanted to act before the horse was out of the barn are not similarly honored. We understand that since the Gulf war, there has been some revamping of the Federal Government's nonproliferation efforts. However, as our experience with the DOE has shown, merely reshuffling the same old players into new organizational configurations within the government will not produce the results you may desire. I am enclosing a copy of the Subcommittee's hearing record. I hope it will be studied carefully as I believe it provides a basis for strengthening our nonproliferation efforts. The lessons that can be learned from what has occurred at the DOE must not go unheeded. Bureaucratic ineptness must give way to sound policy direction, strong leadership, effective comunication, and rapid implementation. with bold leadership from the Administration and support by the Congress, our world 159 The Honorable George H.W. Bush April 22, 1992 Page 4 can become a safer place. For our part, please be assured of the Subcommittee's complete cooperation with you and the Executive Branch agencies in this mportant and difficult task. John D. Din ell §\ 9 Chairman subcommittee on Oversight and Investigations JDD:des Enclosure CC: The Honorable Thomas J. Bliley, Jr Ranking Republican Member Subcommittee on Oversight and Investigations The Honorable David L. Boren Chairman Select Committee on Intelligence U.S. Senate The Honorable John Glenn Chairman Committee on Governmental Affairs U.S. Senate The Honorable Claiborne Pell Chairman Comittee on Foreign Relations U.S. Senate The Honorable Dante B. Fascell Chairman Comittee on Foreign Affairs U.S. House of Representatives The Honorable Dave HcCurdy Chairman Permanent Select Committee on Intelligence U.S. House of Representatives The Honorable James A. Baker, III Secretary of State Department of State 160 The Honorable George H.W. Bush April 22, 1992 Page 5 The Honorable Richard B. Cheney Secretary of Defense Department of Defense The Honorable Robert M. Gates Director Central Intelligence Agency The Honorable James D. Watkins, Admiral, USN, Retired Secretary of Energy Department of Energy 161 Insull.Inknu 5Qu,Q_;“, 1"‘ ' Ovens! (nun Otlinzuttbzlilzri 3.5. inns: of Rzprzszntatihcs Indium. ml: 20515-coon - . '1 April 22, 1991 MEHQBBNDLIH TO: The Honorable John D. Dingell Chairman Subcommittee on Oversight and Investigations Committee on Energy and Commerce PROM: Steven R. Ross\CQn- General Counsel to the Clerk Charles Tiefer C T Deputy General Counsel to the Clerk Morton Rosenberg Wk Assistant Counsel to e Clerk SUBJECT: validity of Subcommittee Subpoena On August 16, 1990, the Subcommittee issued a subpoena duggs Lggum to Admiral James P. Watkins, Secretary of Energy, for documents, which was properly served on that date and was returnable on September 4, 1991. This followed months of non- cooperation with requests for documents from the Department of Energy (DOE) pertinent to an ongoing investigation into the adequacy of health and safety, and safeguards and security, at DOE's nuclear weapons facilities, including a document pertaining to the unauthorized acquisition of sensitive technology and nuclear materials by Iraq The subject documents were delivered to the Subcommittee on the specified date. 162 The Honorable John D. Dingell April 22, 1991 Page 2 During a March 29, 1991, staff interview of John C. Tuck,Under Secretary of Energy, the Under Secretary opined that the August 16, 1990, subpoena was not "a real document, not a real subpoena from the Subcommittee" because it was not an act by the whole House of Representatives. He further commented that "the subpoena confirmed nothing more than a written request by the Chairman." You ask for our analysis on the legal sufficiency of the Under Secretary's position. The Under Secretary's contention is, of course, completely without merit. The Constitution grants the Congress the investigative power, and the Supreme Court has found the use of compulsory subpoenas to be an "indispensable ingredient" of the investigative powers granted to Congress by the Constitution. ~, 421 U-S- 491, 505 (1975). ~, ~, 273 U.S. 135, 174 (1927) ("[T]he power of inquiry —- with process to enforce it —- is an essential and appropriate auxiliary to the legislative function."). The rationale for this subpoena power is that: A legislative body cannot legislate wisely or efficiently in the absence of information respecting the conditions which the legislation is intended to affect or change; and where the legislative body does not itself possess the requisite information--which not infrequently is true—- recourse must be had to others who do not possess it. Experience has taught that mere requests for such information often are unavailing, and also that information which is volunteered is not always accurate or complete; so some means of compulsion are essential to obtain what is needed. Ms:§irain_t.._l2aushtsr1. sunra. 2'13 at 175- 163 The Honorable John D. Dingell April 22, 1991 Page 3 The Supreme Court long ago established that a properly authorized subpoena issued by a committee or subcommittee has the same force and effect as a subpoena issued by the parent House itself. Thus, in' Mg§;3in_;L__JQaggh;g;y, the Court summarily rejected a contention like that propounded by the Under Secretary as "untenable": "The committee was acting for the Senate and, therefore, the subpoenas which the committee issued and the witness refused to obey are to be treated as if issued by the Senate." Lg. at 158. For a subpoena to be validly issued, a committee or subcommittee must act with adequate authority. House Rule XI(2)(m) confers on all standing committees and subcommittees the power to require by subpoena the attendance and testimony of witnesses and the production of documents. Rule XI(2)(m)(2)(A) allows committees to delegate the powers to authorize and issue subpoenas to the chairman of the committee. Rule 21 of the Rules of the Energy and Commerce Committee provides that "the chairman of the full committee many authorize and issue subpoenas under [clause 2(m)(A)] during any period for which the House has adjourned for a period in excess of three days. Subpoenas may be issued over the signature of the chairman of the full committee, or any member of the committee authorized by such chairman, and may be served by any person designated by such chairman or member." A properly issued subpoena receives the seal of the House. Those receiving it know thereby that it carries the full authority by the House. 164 The Honorable John D. Dingell April 22, 1991 Page 4 Finally, contrary to the understanding of the Under Secretary, a subpoena has more moment and significance than confirming a written request of a committee or its chairman as many officials, high (eigi, EPA Administrator Anne Gorsuch, Interior Secretary James Watt) and low (gigi, Rita Lavelle, EPA), can readily attest. willful refusal to obey a subpoena can result in a fine of $1,000 and imprisonment for up to one year. 2 U.S.C. S 192, 194 (1988). Our review of the Subcommittee subpoena issued on August 16, 1990, indicates no doubt that it was properly issued, served, and sealed was in furtherance of an investigation within your Committee's subject matter jurisdiction. Such a subpoena carries Congress's full Constitutional authority. Arguments to the contrary are without foundation. SRR:CT:M:kjb 166 101-2- IQ (J Su5pnaDuoes'l'e1 £9 Qutburitp at the Quits: of Qepreszntatihzs at the tllnngress at the Guiteb fitatzs of Qmerica The Honorable James D. Watkins, Admiral, USN. Retired, Secretary of Energy, To Jeunmeat.nL£ners2._£auestal-Bui1dinz~.L0nQ-ln¢enenaenee.Avenuee.s..H.... Washington, D.C. 20585 You are hereby commanded to produce the things identified on the attached schedule before the ,,__._._. ..... ..-.... Committee on .ED£.22¥_3.U.d..CQmmLtne.[Suh;nmm.iLLaa..on.-Qv.ersighL.3nd. Investigations of the House of Representatives of the United States. of which the Hon. ............................. --.. ___~.--_ is chairman. by producing such things in Room .-..Z.'1?.3 ......... -. of the _B_-‘m5_2£1.1..l'1.9.9.§$...Q§.f.1-.G§...-- Building ....................... -.. in the city of Washington. on I_l1§_§,‘!;i_X;._.§.@2.§§.'I'.P£.'I.’§i..1.9.?.0 at the hour of _...l.Q$.9.Q.-§.=.'I‘.- ............... .. /\ T. !1<2_§§L$.._.9s.ff_ts1--H2s!9.e§..9.053..§1.iif.<2.tQ..I:@.i§m§n .................................. _-_.. to serve and make return. Witness my hand and the seal of the House of Representatives of the United States. at the city of Washington. this Attest k 167 101-Z-23 5125255222 As used in this Attachment, the term "document" includes all classified and unclassified notes, drafts, memoranda, reports, correspondence, minutes of meetings, telephone logs, computer records or tapes, or other documents in the possession of the Department of Energy (DOE) or its contractors: (1) (8) (b) (2) (8) (b) (3) (B) (b) Copies of all documents, that were identified by the DOE during the DOE's Hay 1, 1990, briefing to the Subcommittee staff, referring or relating to actions and/or possible actions by the DOE or any other department within the Executive Branch regarding the attempted unauthorized acquisition of nuclear materials and sensitive technology by Iraq. Copies of all documents referring or relating to the Subcommittee's requests for the briefing and/or the documents and all documents referring or relating to the Department's action(s) in response thereto. Copies of all documents referring or relating to the document requested in Chairman Dingell's May 31, 1990, letter to Secretary James D. Watkins pertaining to nuclear materials criticality. copies of all documents, including the concurrence copy of Deputy Secretary w. Henson Moore's July 3, 1990, ' letter to Chairman Dingell, referring or relating to the initial decision not to inform this Subcommittee of the matters discussed in the document cited in (a) above, to the Subcommittee's request cited in (a) above and/or the Department's action(s) in response thereto. Copies of all documents referring or relating to Chairman Dingell's March 14, 1990, request to Secretary Watkins to have environmental samples that were taken near the DOE's Portsmouth Gaseous Diffusion Plant evaluated by the DOE's Oak Ridge National Laboratory. Copies of all documents referring or relating to the Subcomittee's requests cited in (a) above and/or the Department's action(s) in response thereto. 168 lO1-2-23 Page 2 of 3 (4) (5) (6) (B) (b) (6) (b) (B) Copies of all documents referring or relating to the preparation of the June 26, 1990, letter from Under Secretary John C. Tuck in response to Chairman Dingell's June 1, 1990, letter pertaining to nuclear weapons safety, including the concurrence copy of Mr. Tuck's June 26 letter. Copies of all documents referring or relating to the Subcommittee's request cited in (a) above and/or the Department's action(s) in response thereto. A copy of the classified document pertaining to safeguards and security vulnerabilities at the Rocky Flats Plant that was used by the DOB to brief the Subcommittee staff on July 23, 1990, at DOE Headquarters. Copies of all documents referring or relating to the Subcommittee's requests by letter dated July 16, 1990, and orally on July 23, 1990, and all documents referring or relating to the Department's action(s) in response thereto. Copies of all documents, relating to safeguards and security, and health, safety and environmental responsibilities, requested on behalf of the Subcommittee pursuant to Chairman Dingell's July 16, 1990, letter to Secretary James D. Watkins, during a field examination of the Albuquerque operations Office and the Rocky Flats Plant during the week of July 30, 1990. These documents include: (i) A copy of the agreement between the Office of Military Application, the Albuquerque Operations Office, and the Rocky Flats Area Office that was shown to the Subcommittee staff on August 3, 1990, at the Rocky Flats Plant. _ (ii) Copies of all documents from Under Secretary John C. Tuck, and the concurrence copies of these documents, which refer or relate to the Department's actions in removing safeguards and security responsibilities at the Rocky Flats Plant from the Albuquerque Operations Office. (iii) Copies of the classified viewgraphs that were used by the DOB's Albuquerque Operations Office to brief the Subcommittee staff on July 30, 1990, regarding safeguards and security at the Rocky Flats Plant. 169 101-2-23 Page 3 of 3 (iv) Copies of all documents since January 1, 1987, referring or relating to communications between or among: the Security and Nuclear Safeguards Division of the Albuquerque Operations Office, senior Albuquerque Operations Office officials (i.e., the manager, the deputy manager, the assistant manager for safeguards and security, and the assistant manager for management and administration), the Albuquerque Operations Office, the Rocky Flats Area Office/Rocky Flats Plant, and DOE Headquarters, concerning any or all of the following topics: the safeguards and security deficiencies at the Rocky Flats Plant, including the identification of vulnerabilities; recommendations, including requests for resources to correct these deficiencies; and actions that have been taken, including interim measures, to correct these deficiencies. (b) Copies of all documents referring or relating to the requests cited in (a) above, and the Department’s action(s) in response thereto. 170 Subpcna [of The Honorable James D. Watkins, Admiral, USN, Retired, Secretary _of Energy, '>eP"=""=."= °f .'§:!s¥.sz.-.-.1f2£§r=.=1§.==21-.§21}<'1'18~ 1000 Independence Avenue, S.W. , }§e§!1!.!\.a§9!3.=.-!2.-.9.-..-..29§§.§ .................... before 01¢ Committee on ch: -.E!2s.tsx-.ans!.---- 92211.1!!!-=.r.<.=.e.@ss.hs;9.'1'!=.\.1.!=.§se..<2n-.9xer.§iab.c--- .es!s!...I.2w.<.a=2.t.1ae!=.19!z§ ............................ .. .... -- M Rqlacsteuva U.S. ¥ : 67-Ill U354-/4, 172 Memorandum ‘tyaxggrfiua April 2:, 1991 ‘ " Page 2 proliferation of nuclear weapons." A senior Pentagon official told the subcomittee staff that the President considers nuclear nonproliferation one of the top concerns of the Administration. The DO! is given broad responsibilities in nonproliferation by the Nuclear Nonproliferation Act of 1978 and by the Atomic Energy Act. The Energy Secretary is required by statute to license sensitive nuclear technologies that could be exported to nuclear proliferant countries. The D02 also manages the nuclear weapons laboratories, which are an extremely valuable technical resource. Unfortunately, the Subcomittee staff is finding that ' nonproliferation has not been a high priority at the DOE. The DO! reviews thousands of Departments of Comercs and State license applications every year to provide technical judgments on the advisability of providing sensitive nuclear bomb-related technologies to foreign countries. However, the DOE has been woefully short on policy direction for nonproliferation, has operated with fragmented organizational responsibilities, and has not done its part to insure that sensitive nuclear technology and information is kept from Iraq and other proliferant nations. III. IRAQ; NUCLEAR WEAPONS THRZAT I18 FOR RZIL A Statements . Public The extensive investigation conducted by the Subcommittee staff shows that in the late l9s0's Iraq was making a serious effort to develop a nuclear weapons capability. In addition to the classified details that will be discussed at the hearing, significant public statements by government officials on Iraq’s nuclear bomb ambitions show that a serious threat existed and was recognized within parts of the government. As early as tebruary 22, 1909, the Director of Naval Intelligence, tear Adiral Thomas Brooks, told the House Armed services Committee: 'Ihile few names will be added to the list of Third-world states with a nuclear weapon capability over the next five years, many are working toward this goal. Those actively pursuing a capability include ... 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Hr. Emel left DOE Intelligence in September 1989, discouraged with the lack of support and because there were insufficient resources to do the job that was required. Hr. Emel went to work for Westinghouse at the DOE's Savannah River Site. - D ca \ c-1% ea) (4) Robert Walsh In contrast, Dob Walsh, who did not want the secretary alerted about Iraq, and whose Intelligence Office received less than high marks by Admiral Watkins, was rated "exceptional" and has been given important management responsibilities. Hr. Walsh's "exceptional" was given by Victor Stello. Under Secretary Tuck's name is on the form agreeing with Hr. Stello, although he did not actually sign the form himself and he does not recall reviewing hr. Walsh's work. I. Stello told the staff that he felt Hr. Walsh was doing "exceptional" work so he rated him "exceptional." He added he was impressed with Hr. Walsh's "ambition, honesty, integrity and knowledge of intelligence." This was probably fortunate for Hr. Walsh because hr. Tuck said DOE's top echelon was "less than satisfied" with the performance of ur. Walsh's Intelligence office. Apparently, the DOE mst not have been too concerned with the way Hr. Walsh ran his office. hr. welsh later was made hr. 8iebert's and hr. Heusser's new boss as Associate Deputy Assistant Secretary for Security Affairs under I. Darker. The April 1, 1991 "reorganization" has not changed this reporting arrangement. ‘ E. fleo anisation ggy Hinder Development of an Effective DOE Non-roliferat in =:£6== I I I on March ll, 1991, the Chairman and Ranking Republican Member wrote a letter (attached) to Secretary Watkins expressing concern that a reorganisation of nr. siebert‘s office not diminish the effectiveness of the DOE in carrying out its important responsibilities in nonproliferation and other areas. .._ _. ---‘Q De¥e5 180 _ ‘ Z’ \3ed Hemorandu April 23, 1991 Page 10 For five years. Bryan Siebert was the DOB's chief line. officer responsible for the Department's export control functions. when Hr. Siebert was out of the country representing the DO! in export control negotiations, he learned vis e phone call that he was to be removed from all nonproliferation responsibilities at the D02. I. sisbert, who ran the export control office, was not consulted on this plan to take away his important functions. victor Alessi, who did not run_export controls, but rather ran the Defense Programs Arms control office, gag consulted. I . Under Secretary Tuck believes the removal of the technology transfer and export control functions from Hr. siebert "will better serve the Department." hr. Tuck said the "reorganization" of Mr. Siebert‘s office is being done because the scope of the activities of the Assistant Secretary for Defense Programs "are too broad to manage." The Under Secretary told the staff that he does not see an "organisational link" between technology transfer and nonproliferation functions such as export control. However, this view is apparently not shared by I. Alessi, who may have engineered the removal of Hr. Siebert from Defense Programs. In an October 4, 1990 memorandum to hr. Tuck, Hr. Alessi recommended that all of Hr. Siebert‘s nonproliferation functions be placed in his own Arms Control office located, curiously, within Defense Programs. vi. -1nrr'sgg5g v rrowwnmrazsusconwnmsr nrrnrcrs RBSISTANCB so ACCOUNTABILITY um nrronn I I I I The DOB has continued its practice of substantially less than full cooperation with the Subcommittee in important investigations. first, the Subcommittee, after s delay of s few months, was forced to subpoena key documents which proved embarrassing to the DOB. Under Secretary Tuck had refused to listen to the advice of his senior officers and his Deputy General Counsel, whose advice, he told the Subcommittee staff, ‘is immaterial.‘ nr. ruox was delaying by asking for a letter specifically requesting the documents, even though everyone else st the D02 said the docuents could go. Ir. Tuck's explanation for his stubbornness: '1 like formality.‘ wr. Tuck has since characterised the subpoena es being nothing more than e written request from the Chairman end, erroneously, said it was "not s louse of Representatives subpoena.‘ second, the DO! was unwilling to bring William tmel up from the D0s's Savannah River site in south Carolina so that he could be interviewed in s secure room st DO! Headquarters about Iraq. oe.¥e<) 181 _De\-ed ~ Memorandum April 23, 1991 Page ll Because Hr. Emel was now a contractor employee, the DOE felt no obligation to furnish him. because of the importance of hr. reel to this inquiry, the staff interviewed him at Savannah River, but only after a delay of several weeks. The General Acouting Office later told the subcomittee that the not apparently had the authority, under its own regulations, to pay for Hr. lmel'e trip to Washington. All the DO! had to do was determine Hr. Emel's trip to meet with the Subcommittee staff was ‘in the interest of the governent.' The General Accounting Office reported that the DO! did not make the necessary determination. Third, petty harassment by the DOE has also occurred. In addition to being delayed from talking to Defense Programs employees because of a "confused" policy statement, the Subcomittee staff had to personally contact Assistant secretary for Defense Programs Richard Claytor in order to use a secure room at DOE Headquarters. The staff wanted to interview DO! Intelligence Office personnel about Iraq, and such rooms have been routinely provided. but in this instance, the DOt's Congressional Liaison said a room was not available for two weeks. Jacqueline Knox Drown, DOE's Assistant Secretary for Congressional and Intergovernental Affairs, tried to help but was not successful. Her reaction: ‘This appears to be a matter for Admiral Watkins and Chairman Dingell to handle directly." Everyone was blaming Hr. Claytor for the impasse, purportedly because he did not want his Defense Programs space used to acconodate employees from the Intelligence Office. H. Claytor told the staff this was not the case, and the roo was provided. Attachment Denied 182 Oil "UIOCD "Ci COOG_lI JOIGONIU. ¥ E .4AiIII=ClI0.§“W'°@ :‘»:_'?:_:~:f_»:'0-_m__fl_|__ ‘WI! 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RIO" JQQ KVAIY "Ill Qlfiflli iii‘ 2: 5,, mmime-1"'.3Z" cmolus|nusu.B|.uAIrun ',‘,1,',{ ~1TZI ON OVQSIGHT AND IIIVZSTIGLTIOUS DCQIAQIII-lIi.ClAXl cuans-wsIs.M.»suu xx-uoe.ueo.ouoanun Jmqnumloranmssecrou March 21' 1991 The Honorable Brent Scowcroft Assistant to the President for National Security Affairs The White House Washington, D.C. 20500 DOE!‘ GODQIBI $CI‘OVCl'OftZ Pursuant to Rules X and XI of the Rules of the U.S. House of Representatives, the Subcommittee on Oversight and Investigations has been investigating the Department of Energy's (DOE) role in preventing the unauthorized acquisition of nuclear materials and sensitive technology by Iraq. The Subcomittee plans to hold a hearing next month with the DOE in connection with this inquiry. In an article that appeared in the March 17, 1991, issue of The Washington Post Magazine: "Missed Signals In the Middle East", it was reported that President Bush signed National Security Directive 26 in October 1989. According to the article: "The directive recognized that there were significant differences over chemical and biological weapons, and important U.S. concerns about Iraq's nuclear prggggg .... Specifically, U.S. Companies would be encouraged to participate in the post war reconstruction of Iraq ... as long as this did not conflict.with U.S. concern about nuclear ~ proliferation." [emphasis added] In view of the importance of the President's Directive to the Subcomittee's inquiry involving Iraq, the Subcommittee requests a copy of National Security Directive 26 and any related guidance by Thursday, April 4, 1991. The Directive has apparently already been released to Th; Washington Post. 183 The Honorable Brent Scowcroft March 21, 1991 Page 2 Your assistance with the Subcommittee in this matter will be greatly appreciated.i If you have any questions, please Contact Messrs. Jeffrey C. Crater or Jeffrey L. Hodges of the Subcommittee staff on 22 John D. Dingell Chairman Subcommittee on Oversight and Investigations JDD:JCCtc Enclosure cc: The Honorable Thomas J. Bliley, Jr. Ranking Republican Member 184 rm: wan’: House--_-~. .»~; '*-W -i.£:J WASHIN Q April l7?Tl%r9:lI8 .~!?IC=r13 - ‘7U'.'.Q‘-' ¢nsmurH§' {J-. rfir-_ Ull-I I‘: L. If Dear Mr. Chairman: Thank you for your letter of March 21, 1991, requesting a copy of a presidential directive. As I am sure you appreciate, congressional requests for such documents raise important issues of Executive privilege. Based on our continuing effort to accommodate legitimate legislative requests for information while respecting long- established principles of presidential authority, the President's policy is to provide access to relevant directives for personal review by Members of congressional committees, with appropriate jurisdiction, and, if appropriate, by the staff director and Z minority staff director. In this case, we are prepared tdfgrant your request in so far as it pertains to policy toward Iraq by making available relevant portions of the directive. Consistent with our established practice, therefore, I should appreciate your designating in writing those Subcommittee Members who desire to review the relevant portions of the directive and whether you desire the staff director and minority staff director also to review them. This information should be transmitted to Virginia Lampley, Senior Director for Legislative Affairs, 395- 3055, who will arrange for review of the document.. Notes may be taken, but must be marked for classification by the NSC staff. Copies of the document may not be retained. With respect to the staff director and minority staff director, clearances should be passed to Patrick Gaughan, Security Officer of the NSC, at 395- 5127. Sincerely, The Honorable John D. Dingell Chairman Subcommittee on Oversight and Investigations Committee on Energy and Commerce U.S. House of Representatives Washington, D.C. 20515 185 oumnxslhliticlllmafise »- voou nn uveusu mun av <1 iv-we-<; -0-I nan:-4 4 ~ mans 11.3. hmuz uf Rqlruznmrinu ~'-"'"~' '"~ Skin m Guufi H Ilmjans "'.'.'.'."'."'..'.'.""'='.‘:.'.*'-.....,."-- I II ““' Cmmmmuulmngsitmmnu ‘lwulingmn. BC mm May io, 1991 The Honorable Brent Scowcroft Assistant to the President for National Security Affairs National Security Council The White House Washington, D.C. 20500 Dear General Scowcroft: On March 21, 1991, the Subcommittee on Oversight and Investigations wrote to you requesting a copy of National Security Directive 26 and any related guidance pertaining to U.S. nonproliferation policy. This request was made in connection with the Subcommittee's ongoing investigation of the Department of Energy's (DOE) role in preventing the unauthorized acquisition of nuclear materials and sensitive technology by Iraq. (The Subcommittee held a closed hearing with the DOE on April 24, 1991, pertaining to this issue.) By letter dated April 17, 1991, you advised that access to these documents will be limited to the Subcommittee Members and to the Subcomittee's Majority and Minority Staff Directors. As Chairman and Ranking Republican Member, we have designated Messrs. Jeffrey L. Hodges, Research Analyst, Jeffrey C. Crater, Special Assistant, and Dennis B. Wilson, Minority Counsel, to review the requested docuents on behalf of the Subcommittee. Messrs. Modges, Crater and Wilson hold active "Q" security clearances granted by the DOE. We trust there will be no problem with this arrangement. A similar situation arose in October 1909, when the National Security Council initially proposed that access to Presidential decision documents be limited to Subcommittee Members and the Majority or Minority Staff Directors or Counsels. In that instance, you subsequently agreed to permit the staff designated by the Subcommittee, Messrs. Hodges and Wilson, to review the docusnts. 186 The Honorable Brent Scowcroft May 10, 1991 Page 2 We would appreciate your further assistance at this time. Please have your staff contact Messrs. Hodges and Crater at 225-4441, and Mr. Wilson at 225-3641, to arrange for the Subcommittee staff's review of the documents. Sincerely, \ Jogb. égngell; f Tho as J. Bliley, Jr Chairman Ranki g Republican Me r Subcommittee on Subcomittee on Oversight and Investigations Oversight and Investigations 187 \~ THE WHITE HOUSE WASHINGTON J F Ila} I June 6, 1991 I liflf IN L- J __,‘ s i §=; 1'.':';i¢‘_ ll n J ll u 4.‘ - |. ~:| _ tn Dear Mr. Chairman: ’5 _. ¢ Thank you for your letter of May l0, 1991, requesting that three members of the Subcommittee staff be permitted to review a presidential directive. I regret that we cannot provide access to those staff members. As explained in my letter to you of April 17, 1991, the President's policy is to attempt to accommodate legitimate legislative requests for information while protecting national security information and the integrity of the Executive branch decision—making process. when committee chairmen or ranking minority members request access to national security information, we undertake a case-by-case review that considers both the importance of the information to legitimate committee functions and the sensitivity of the information. In most cases involving requests to see presidential directives, our review leads us to conclude that the most appropriate accomodation is to offer access to the chairman and ranking minority member, and, at their written request, additional members of the committee and the majority and minority staff directors or chief counsels. After reviewing your request of March 21, 1991, we concluded that it was an appropriate case to offer our usual accommodation: access to relevant portions of the directive for Subcommittee Members and for the majority and minority staff directors or chief counsels designated by you. Inasmuch as the three staff members named in your letter of May 10 are neither staff directors nor chief counsels, we cannot provide them access under our policy. I recognize that in an earlier case we agreed to provide access to another presidential directive for staff members who were neither staff directors nor chief counsels, and that our decision in this case may seem inconsistent to you. I can only respond that any system involving case—by—case review will yield results that appear inconsistent to those not privy to the review, and that we are satisfied that the different facts surrounding this request support a different decision. 188 2 we remain prepared to accommodate your request along the lines described above. Sincerely, Brent Scowcroft The Honorable John D. Dingell Chairman Subcommittee on Oversight and Investigations Committee on Energy and Commerce House of Representatives Washington, D.C. 20515 189 |WNHONALSECUHflW'COUNCl ' "6' "_' ' wAs|-mc1'0N.o.c_ zosoe 7 "H ‘ $33 June 17, 1991 . . . . . ., ..| |l.'_ L- ~. v- .-e- - ...!..Jt--1. Dear Mr. Chairman: I have been authorized to inform you that, upon further consideration of your March 21, 1991, request for access to a presidential directive, we are now prepared, in a spirit of comity and cooperation, to afford access to the individuals identified in your letter to General Brent Scowcroft of May 10, 1991. Specifically, we are prepared to permit Messrs. Jeffrey L. Hodges, Jeffrey C. Crater, and Dennis B. Wilson of the subcommittee staff to review the directive. I trust that this offer will satisfy your concerns. Si e y, /0’ //v / [ //_v liam F. Sittmann Executive Secretary The Honorable John D. Dingell Chairman Subcommittee on Oversight and Investigations Committee on Energy and Commerce House of Representatives Washington, D.C. 20515 55-927 O — 93 - 7 190 Oilfllilhifill JOCIILICI .neasu.acns|.m.ussvoI solnesluarvmewvouu Z:¥$3flf=£§'“ Z$:T§3=:$fififiLa ILih.1mus:al!hwnsuuanmu $2=flfiflfl£§““““" :E:T£=3%:1fi£2a ' GGLIII. ....... ...... ....--. -........... Cnmnuttzz on Cuztgp ant linmmzm ~asl__Ivses. ounnoue hi J. Islv. all. vwnsse ‘,":,:f;5f',_° loam 2125. llpisnl fleas: Ollie Istlbisg I HILL illfill. Ki . oueesucuuroven aunsousncauaeneo Illljlflflfill. 20515 Ill-L KNAQIZ. XI D JII IKIYTYIV lllifil G1 Illll ii?“ 100C QVAI1‘ YIIII "iii" 2%?“ §i§i§§§;zi€ igiéii 22%; it E 2 AV, January 30, 1991 Es ,5 #2 5: VIA FACSIHILE The Honorable James D. Watkins, Admiral, USN, Retired Secretary of Energy Department of Energy Forrestal Building 1000 Independence Avenue, S.W. Washington, D.C. 20585 Dear Admiral Watkins: On September 25, 1990, I wrote to you concerning the investigation being conducted by the Subcommittee on Oversight and Investigations involving the Department of Energy's role in preventing the unauthorized acquisition of nuclear materials and sensitive technology by Iraq. In connection with this investigation, it will be necessary for the Subcommittee staff to interview Mr. William A. Emel, currently employed with the Westinghouse Savannah River Company at the DOE's Savannah River Site. The interview will pertain to matters involving Mr. £mel's previous position at DOE Headquarters, where he was employed as a Physical Scientist in the Office of the Deputy Assistant secretary for Intelligence. we are requesting that the DOE arrange for Mr. Emel to be available for the interview at 1:30 p.m. on Thursday, February 7, 1991. Since this interview may involve classified discussions, and in accordance with the manner in which similar interviews have been conducted, we would suggest that the interview be held at the DOE’: Forrestal Building. Mr. Emel has been contacted by the Subcommittee staff and he advised that he was available on February 7. 191 The Honorable James D. Watkins, Admiral, USN, Retired January 30, 1991 Page 2 The continued assistance of the DOE in this matter will be greatly appreciated. Please contact Messrs. Jeffrey Crater or Jeffrey Hodges of the Subcommittee staff on 225-4441, if you have any questions. John D. Dingell Chairman Committee on Energy and Commerce JDD:JHdes cc: The Honorable Thomas J. Bliley, Jr. Member Comittee on Energy and Comerce 192 The Secretary of Energy Washington. oc 205:5 70 F11 n ill m ll) (-3 ~4 February 7, 1991 ‘EIFEB -7 P21 3= SU5CDHH(TTEE 2 ovsasmm men was SL5 ‘-0 R.) an The Honorable John D. Dingell Chairman, Committee on Energy and Commerce U.S. House of Representatives Washington, D.C. 'gQ§15 0/L’ Dear Mr. Cwany K ' This is in response to your letter of January 30, 1991, requesting that the staff of the Subcommittee on Oversight and Investigations be permitted to interview Mr. William A. Emel regarding the Department's responsibilities with respect to the acquisition of nuclear technology by Iraq. The Department has no objection to the requested interview. Since Mr. Emel is no longer an employee of the Department, we suggest you arrange the interview at a time and place of mutual convenience. Certification of his clearances, assuming you wish to discuss classified information, will need to be forwarded by his present employer to the interview site to assure he still possesses the appropriate access authorizations. If I can be of further assistance in this matter, please do not hesitate to contact me. Sincerely, /‘ls ames D. Watkins Admiral, U.S. Navy (Retired) 193 Dal TLIIOIIL‘ §lIC~O fI\C,l(§S J°II~° Ollfiflk BIO-~0AI Cnnlaun .AUl$ - so-lull new woes <:uv a wanna): CALIIOIIA M-cue 1 5|-Ab MMAIAA (Dunne 4 uumlv IASAAOIUIIYTS at swan wAs|emG70w CAIDISI COLLINS KLLWOQI ‘ill SVIAI OILAIOIC ea IILLY ‘Anne \OU|s|a|aa lOe WVOUI OQGOI use u -an vlxal 00005 I ICIAIY OM0 s kl. mcnaeosow uiw nu-co H ‘oil!!! I L011 NCW vqg “K0! 1 Iooewuo. cnuloem HAFNIW J Dumbo. IIIW JIIIIIY W\.LllI I Ni? C4040 D000 I175. Pevvulvivuea YNXAI J ULIJV JG, V|HU9!M lacs firms. mus illfllfi OILIV DUO untrue. alumnus. nausea Dan scusile toioaaoe JDI eurvoe rug lUWl@ I “lDfil~ Kl-lN°\l INQA 8.5. luau at Bznrzszntanhzl tommitm on Cnzrgp anh Cnmmzm loom 2\25. Rayburn Q0118 Oflin Inillmg Ilubinqton. It 20515 MI Su (IV IAIISA-I SOIIOIVCALLAMAM Arman“ cram snaossln Il|IuellOYe MIX Italian. @l'm ca@\|ma mew IMAM VIIAS 4 DINO“ MAJYII1‘ |u_mo|s I-4:: IOUDQII vvlcnua op“ c ..°,_L°,,," Loumuu -II" coo!!! Ylwvussll Plelv k IIUCI mulnon ' 4 I07 lOW\.A@ GIOIGIA Y»-onus . euuvow new vote soothe»! vovms new voam c Noauaezueuw laalvuno February 19; “$7 I SYUXQ U4llbCN\ISI1'V§ '1'?" ~ losflaavll Illnhsvivuea no-no n Llnaaan taanlowea cuuol -axes Aumnaa JOHN S OH-AIOO CNIII O7 SYAII 10:04 I CLODO1 Jl SYAII omecroe SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS The Honorable James D. Watkins Admiral, USN, Retired Secretary of Energy Department of Energy Forrestal Building 1000 Independence Avenue, S.W. Washington, D.C. 20585 Dear Admiral Watkins: Pursuant to Rules X and XI of the Rules of the U.S. House of Representatives, I have requested that members of the staff of the Subcommittee on Oversight and Investigations visit the Department of Energy's Savannah River Site during the week of February 17, 1991. The staff will need to interview DOE, contractor and subcontractor personnel. These individuals will be identified by the Subcommittee staff, who will also identify documents, including classified and Privacy Act documents, which should be made available to the staff and the Subcommittee . The Subcommittee staff's review will include matters pertaining to safeguards and security, as well as health and safety. In particular, we request that the staff be briefed on reactor restart upgrades for health and safety, and that the staff receive a suitable orientation regarding the Defense Waste Processing Facility. This request has been coordinated with Hr. Gary D. Knight, Deputy Assistant Secretary for House Liaison. 194 The Honorable James D. Watkins February 19, 1991 Page 2 The Department's assistance to the Subcommittee and its staff will be greatly appreciated. If you have any questions, please con ffrey C. Crater or Jeffrey L. - - taff on (202 Hodges of the Su ) 225-4441. . Dingell ~ Chairman Subcommittee on Oversight and Investigations JDD:JHt¢ cc: The Honorable Thomas J. Bliley, Jr. Ranking Republican Member Subcomittee on Oversight and Investigations 195 an -unease ucuo coeeaua i§mLii-(Xi mun uuvvnsanma an-auuemsepa.c¢uamu ‘.‘. ‘Dill! If Bqmszntanhcs agigaigaggilz 535; .¢§§i l_ :3;z§§5?Fi§§5 a E § §;*1"i2=:*: @5535-:4. gggigiiggiig V i Cnmmim: on tnzrgp anh (ommmz 3'" 1\35- llpilrll Ital Ohm Iealilsg IIaflMnIMm.I[205l5 E59? 2: £55! SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS EH!" igiai éz ‘ii ii 5: March 5, 1991 The Honorable Charles A. Bowsher Comptroller General of the United States U.S. General Accounting Office 441 G Street, N.W. Washington, D.C. 20548 Dear Hr. Bowsher: The Subcommittee on Oversight and Investigations recently requested the Department of Energy (DOE) to arrange for a former DOB employee (now a DOE contractor employee working at the DOE's Savannah River Site) to be interviewed at DOE Headquarters by the Subcomittee staff. The Department's role in preventing the unauthorized acquisition of nuclear materials and sensitive technology by Iraq is under review by the Subcommittee, and the individual's duties while at DOE Headquarters related to this ssue. The Department declined the Subcommittee's request to make the individual available for interview at the DOE's Washington, D.C. Headquarters. The DOE told the Subcommittee that because the individual was no longer a DOB employee, the Department was not obligated to pay his travel expenses. It has been the Subcommittee's understanding that the Secretary of Energy is responsible for all employees in the DOB system, including contractor employees. In fact, the DOE has previously arranged for DOE employees and DOB contractor employees to travel to Washington, D.C. to participate in Subcommittee hearings and to be interviewed by the Subcommittee and its staff. The Subcommittee would appreciate receiving a written GAO response to the following questions: -— Whether the DOB is required to arrange for the travel of DOE contractor employees when requested by the Subcomittee; I 1961 The Honorable Charles A. Bowsher March 5, 1991 Page 2 ~.w -- If not required to arrange for such travel, whether the DOE has authority, either expressed or implied, to arrange for that travel; and - —- Whether the DOE is prohibited from arranging for the travel of DOE contractor employees when requested by the Subcommittee. The Subcommittee would also appreciate an analysis of the contracts between the DOE and the Westinghouse Savannah River Company (the government-owned, contractor-operated company where the individual is now employed), with respect to the payment of travel for DOE contractor employees. Your assistance to the Subcommittee in reviewing this matter will be greatly appreciated. It will be helpful to the Subcommittee if we could receive your report by April 18, 1991. Messrs. Jeffrey L. Hodges or Jeffrey C. Crater of the" Subcommittee staff can be contacted on 225-4441 to answer any questions you may have. Thank you for your congjifing assistance to the work of the Subcommittee. ./ \ Cha irman 9g Subcommittee on Oversight and Investigations JDDSJHCC cc: The Honorable Thomas J. Bliley, Jr. Ranking Republican Member Susan W. Irwin, Esquire Attorney Advisor Office of General Counsel 197 CempudhrGemufl alflelhlmdshnm emesesenmzmeu _,, _ _ w. B-243336 April 17, 1991 The Honorable John D. Dingell Chairman, Subcommittee on Oversight and Investigations Committee on Energy and Commerce House of Representatives Dear Mr. Chairman: This is in response to your March 5, 1991, letter requesting, by April 18, 1991, our views on the Department of Energy’: (DOE) authority to arrange and pay for the travel to Washington, D.C., of DOE contractor employees for the purpose of being interviewed by the Subcommittee. In addition, you asked whether DOE is authorized to pay the travel expenses of a certain former DOE employee, currently employed by a DOE contractor, for such an interview about matters related to his prior DOE activities. This employee now works for Westinghouse Savannah River Company (Westinghouse), DOE’: contractor for the operation and management of the Savannah River Site. We understand DOE declined the Subcommittee’: request to make the individual available for the interview and to pay his travel expenses, including transportation, subsistence, and lodging while in Washington. Under clause 1.73 of DOE’: contract DE-AC09-89SR1803S with Westinghouse, contractor emloyee travel expenses in connection with performance of work under the contract are considered an item of allowable cost. This cost provision would permit DOE to reimburse the contractor for travel expenses of a Westinghouse employee who was asked by DOE to brief a congressional comittee staff about contract activities. However, the contract does not provide a basis for DOE to reimburse Westinghouse for the travel expenses of an employee to brief congressional staff on a matter outside the scope of the contract. ' Aside from the terms of DOE's contract with Westinghouse, there is the question whether DOE has the authority to use its funds to pay these travel expenses directly. In general, of course, agencies may use appropriated funds only for authorized purposes. 31 U.S.C. S 1301(a). In applying this rule, we have long held that a given expenditure is permissible if the agency determines that it is reasonably necessary to accomplish an authorized purpose or function of B—243336 198 the agency, or will contribute materially to the effective accomplishment of an agency function, and if it is not otherwise prohibited by law. See, e.g., 69 Comp. Gen. 38 (1989); 56 Comp. Gen. 111 (1976), and the cases cited therein Similarly, the Federal Travel Regulation (FTR), which by its terms applies only to travel of government employees, authorizes only that travel that is essential to the purposes of the government and for the accomplishment of the agency’s mission. 41 C.F.R. § 301-1.4(b)(2) (1990). e Under our authority to determine whether agencies’ funds have been spent properly, we have in some instances approved the use of appropriated funds to pay travel expenses of non- government employees, when the agency reasonably determined the expenditures were necessary to the accomplishment of an agency program. E.g., 69 Comp. Gen. 38, supra, where we upheld an agency determination that it would further the purposes of an award ceremony to pay the travel expenses of the spouse of an employee award recipient so she could be present for the award. However, we have not addressed the question whether an executive department or agency has the discretionary authority to use its appropriated funds to pav the travel expenses of a former employee to be interviewed about his former responsibilities by congressional committee staff. Under DOE regulations, DOE payment of non—government employee travel expenses, including transportation, lodging, and subsistence, may not be approved or authorized except in five situations. 10 C.F.R. § 1060.101. Thus, the travel expenses of a non-DOE employee may be authorized (1) to confer with DOE officials on essential matters, (2) to be interviewed for a position at GS-16 or above, or its equivalent, (3) to appear and testify, and to produce documents, pursuant to a DOE subpoena, (4) to serve as an attendant for a handicapped individual authorized to travel, and (5) for other agency- related travel which the DOB General Counsel determines is authorized by statute and which a principal officer of DOE determines in writing is in the interest of the government. On the basis of the limited information available to us, none of first four exceptions appears to fit the facts of this particular case. with respect to the fifth,-DOE did not make the necessary determinations. However, should DOE make the required determination of governmental interest, on the facts of this case as we know them, we would anticipate no basis upon which we would object to the use of DOE's funds to pay for the emloyee's travel. 2 a-243336 199 We trust this information will be helpful to you. If you have any additional questions, please let us know. As agreed in discussions with your staff, this opinion will be available for general distribution 30 days from today, unless you publicly disclose it sooner. Sincerely yours, was Jmt. Comptroller Glneral of the United States 3 B—243336 200 ’|lmmgmn,BCmI5 September 25, 1990 The Honorable James D. Watkins, Admiral, USN, Retired Secretary of Energy Department of Energy Forrestal Building 1000 Independence Avenue, S.W. Washington, D.C. 20585 Dear Admiral Watkins: On May 1, 1990, the Department of Energy briefed the Subcomittee staff on the DOE's role in preventing the unauthorized acquisition of nuclear materials and sensitive technology by Iraq. This briefing was requested in my April 6, 1990 letter and was prompted by media accounts of last spring's seizure by Customs officials of components destined for Iraq that could be utilized in nuclear weapons. During the May 1 briefing, documents pertaining to the Subcomittee's interests concerning Iraq were cited by DOE officials. The Subcomittee staff requested that these documents be promptly furnished to the Subcomittee. However, because of the Department's unwillingness to cooperate with the Subcommittee in this extremely important and sensitive matter, we did not receive the docuents until September 4, 1990 -- four months later -— and only after the Subcommittee issued a subpoena. Our initial review of the documents is discomforting. It appears that beck in May 1989, certain senior DOB officials had concerns about Iraq that they felt warranted your personal attention. Other senior DOE officials apparently felt_that these concerns should not be brought to your attention. The documents do not show whether you were ever advised of the concerns these DOE officials had at that time. I am directing the Subcommittee staff to continue with this investigation. It will be necessary for the Subcommittee to interview DOB and contractor personnel and to review docuents. including classified docuents and docuents subject to the Privacy Act. The individuals and docuents will be identified by the Subcomitte staff. I anticipate the Department's comlste cooperation with the Subcommittee and its staff. 201 I The Honorable James D. Watkins, Admiral, USN, Retired September 25, 1990 Page 2 I would also appreciate receiving as soon as possible a declassified version of the classified documents on the Iraq issue that were furnished to the Subcomittee pursuant to our subpoena. If you have any questions, please contact Jeffrey Hodges or Jeffrey Crater of the Subcomittee staff on 225-4441. JHZCC / John D. Dingell Chairman Subcomittee on Oversight and Investigations 202 Thesecrstaryoiinengy Wasfington.DC20585 October 30 , 1990 NOV 01 The Honorable John D. Dingell Chairman, Subcommittee on Oversight and Investigations -1-". Committee on Energy and Couerce - U.S. House of Representatives Z‘--_ Washington, DC 20515 "'7 Dear Hr. Chairman: _ 5:. Thank you for your letter of September 25. 1990, regarding the 9 Department of Energy's (DOE) documents pertaining to Iraq nuclear proliferation concerns. In your letter, you requested that the DOE provide you with an unclassified version of the classified documents. A sewer of the Subconittee staff has already reviewed the classified documents. The enclosure provides the unclassified documents from which classified information has been deleted in order to protect the national security interests of the United States. The Department will continue to cooperate fully with your Subcommittee in it i s nquiry regarding this matter. If you have any additional needs, please feel free to contact me. - Sincerely, J, AICU“/‘(_ ass D. llatkins Achiral, U.S. Navy (Retired) Enclosure / J I ..a\ -'. --u - .-1 -u r"- . I \- . a - 4 ll \J ‘J "J (_j;i;- 7998 203 PANEL NO. 2 J U 2.. United States General Accounting Ofliee G Testimony Before the Committee on Banking, Finance and Urban Affairs, House of Representatives ”="~=~ AGRICULTURE’ s EXPORT i,,,, CREDIT PROGRAMS Delays in Accessing Records Relating to Iraq Statement of Allan I. Mendelowitz Director, Intemational Trade and Finance Issues General Govemment Division GAOIT-GGD-92-47 cao Fern no mm) ormomorcc - 205 Mr. Chairman and Members of the Committee: We are here today to discuss our efforts to obtain information and documents concerning our ongoing reviews of the Atlanta operations of the Banca Nazionale Del Lavoro (BNL) and Iraq's participation in the Commodity Credit Corporation's (CCC) General Sales Manager (GSM) 102 and 103 export credit guarantee programs.‘ We are performing our reviews at the request of this Committee as well as others in the Congress. As I will describe later, our work has been delayed significantly due to the reluctance of some government agencies to provide us with timely and complete access to the information we require. GAO’s basic authority to access records is contained in 31 U.S.C. 716. This statute grants GAO access to executive agency records for the purpose of conducting GAO’s audits and evaluations. Generally, we do not encounter problems in accessing records in the course of most of our work. However, this was not the case in conducting our ongoing reviews of Iraq's participation in the CCC's export credit guarantee programs and issues involving the Banca Nazionale Del Lavoro. We have recognized from the outset that the work requested of us concerns issues of considerable sensitivity, some involving alleged illegal activity. However, in such instances, it is always our policy to avoid interfering with “The Banca Nazionale Del Lavoro is a bank that is largely owned by the Italian government. The Atlanta operation made almost $2 billion in CCC-guaranteed loans to Iraq without higher level bank authorization. Iraq has defaulted on almost $350 million of these CCC-guaranteed loans. ; xx - 1 206 \ i ongoing criminal investigations. Furthermore, we have procedures in place to protect classified and Nevertheless, we have not received agencies from which we have sought White House Legal Adviser Nicholas consisting of representatives from of executive branch agencies. The how the agencies should respond to confidential information. full cooperation from the information. In April 1991 Rostow convened meetings the general counsels of a number meetings were held to determine congressional requests for information and documents pertaining to U.S.—Iraq policy prior to August 2, 1990.‘ Procedures were established whereby the agencies’ general counsels would review all such requests, requesters would be permitted only to read some documents rather than receive copies, and alternatives to providing documents would be explored. In addition, Treasury reported at one of the Rostow group meetings that it was not even permitting the taking of notes on the contents of classified documents. Our experiences at the agencies were consistent with the results of these meetings. Typically, GAO works with program officials in identifying and obtaining records relevant to our reviews. However, during our BNL and export credit guarantee reviews, different procedures were adopted. At most of the agencies at which we were conducting work, we were instructed to direct our requests for information to the agencies’ general counsel offices. ‘On August 2, 1990, Iraqi forces invaded Kuwait. 2 207 Some of the experiences we encountered at the various agencies include the following: --Generally, the Department of Agriculture (USDA) has cooperated with our requests for access to its records. However, there was one issue about which we had problems in obtaining timely information. We were not permitted to review the workpapers supporting USDA's May 1990 Administrative Review of the GSM programs until we had submitted several oral and written requests. This process created a delay of about 5 months. --We also faced considerable delay in meeting with officials and obtaining access to documents at the Department of Justice. We requested all Justice Department correspondence with other agencies on the BNL matter and all other relevant documents. To date we have only been allowed to review five documents. Furthermore, we were not allowed to either photocopy the documents or take extensive notes. This limited access to documents cannot be considered sufficient for audit purposes. --At the State Department the Office of the Legal Adviser explained that it was concerned about grand jury secrecy rules and would, therefore, screen all documents we requested to avoid inappropriate disclosure. The Office 3 208 of the Legal Adviser at State permitted us to read and take notes from, but not copy, 26 cables that were determined by that office to be both relevant to our review and not related to the grand jury investigation of BNL. The Office of the Legal Adviser informed us that there were other documents, but that the office was withholding them from us because they contained information that might be covered by grand jury secrecy rules. Despite the fact that the Assistant U.S. Attorney handling the BNL case had informed us that documents not in her possession are not subject to secrecy rules, State advised us to get clearance from the Justice Department to gain access to these documents. We have asked Justice for this clearance and the matter is still under consideration at this time. Furthermore, we were not able to determine for ourselves which cables were relevant. This fact is particularly troublesome in light of Deputy Secretary of State Eagleburger's testimony before this Committee last week in which the Deputy Secretary stated that over 4,000 documents relating to Iraq had been turned over to the Committee. The State Department never informed us of the existence of this vast amount of documents. --In December 1991 we visited Rome to meet with BNL and U.S. embassy officials. That trip was coordinated with and 4 209 approved by the State Department. In notifying the embassy of our visit, the State Department cable reminded the embassy that it is the Department's policy to be of assistance to GAO and to be as helpful as possible. Nevertheless, the U.S. embassy refused to give us access to its files on the- BNL/Atlanta issue. We met with the Deputy Chief of Mission, who told us that he had not been instructed by Washington on how to respond to our request to review documents. He said he believed that all requests for documents were being coordinated in Washington. He said that in any case, the embassy would have limited information because its only efforts in the BNL matter had been to monitor Italian press reports. Subsequently, we learned that more substantive reports on the issue had been prepared and transmitted by the embassy to the Department of State in Washington. ——The Department of the Treasury did not permit us to photocopy any of the minutes from the meetings of the National Advisory Council on International Monetary and Financial Policies during which interagency discussions about the export credit guarantee programs for Iraq took place. Some of those minutes were classified. In those cases, we were not permitted to take notes either. The minutes in question covered almost a decade and included a substantial amount of material. It is not reasonable to expect that GAO could adequately review, analyze, and 5 210 report on such a substantial body of information on the 4 basis of the auditors‘ memory, supplemented by limited notes. In addition, Treasury has still not complied with our outstanding request for relevant correspondence. --The Central Intelligence Agency (CIA) has given a briefing on BNL to House Banking Committee staff. We asked CIA for a similar briefing, but officials told us to obtain the information from the House Banking Committee since it requested us to conduct our review. We asked CIA to reconsider its denial because (1) the House Banking Committee is only one of several requesters of this work and (2) GAO's policy is to conduct its work independently of congressional committees, even when the committees are our requesters. We were recently told that our request is being reconsidered and that no determination has been made yet. In summary, Mr. Chairman, our principal concern is with the delay that we have experienced in resolving these issues. This problem was particularly acute in this instance given the number of agencies involved. We are committed to providing Congress with the information it needs in as timely a manner as possible. Our ability to do so can be frustrated when-—as here—-we have less than the full cooperation of the executive agencies. 6 211 Mr. Chairman and Members of the Committee, this concludes my /- prepared statement. I would be pleased to respond to any questions you may have. (483630) ~.{ 1 7 \ A 212 Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superin- tendent of Documents, when necessary. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20877 Orders may also be placed by calling (202)275-6241. 213 PANEL NO. 3 214 STATEMENT BY THE HONORABLE JEANNE S. ARCHIBALD GENERAL COUNSEL OF THE DEPARTMENT OF THE TREASURY BEFORE THE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS UNITED STATES HOUSE OF REPRESENTATIVES HAY 29, 1992 Hr. Chairman and members of the Committee: I am pleased to be able to testify before the Banking Committee this morning. As you requested, I will discuss my activities relating to several inter—agency meetings I attended in 1991 in which it was considered how to respond to Congressional requests for Iraq-related information and documents. In doing so, I hope to dispel unfounded suspicions and incorrect assertions that these meetings were intended to impede Congressional review of these matters. The facts are that these meetings were nothing more than an effort to provide a mechanism for consultation and coordination among Executive branch agencies which were receiving numerous requests for Iraq—related information and documentation. The focus of these meetings was to determine means by which the Congressional requests for information could be met in a manner consistent with the Constitutional and statutory responsibilities of the Executive branch. Certainly, at none of these meetings did anyone suggest explicitly or implicitly that we should "cover up" embarrassing or illicit activities, nor did anyone suggest that there were any such activities. 215 2 There is nothing unusual or improper about such consultation and coordination. Indeed, it has been my experience that it is common in the Executive branch for agencies to consult with one another with respect to similar or overlapping document requests from Congress. This is particularly so where, as here, documents in the possession of one agency may have originated with or concern activities of other agencies. In such cases, those other agencies are best able to determine if a document request raises legitimate confidentiality concerns. Nor should improper motives be imputed simply because an agency reviews documents requested by Congress to determine whether their disclosure will interfere excessively with the agency's performance of its responsibilities. Treasury has received Congressional requests for a variety of sensitive information, such as grand jury or other information on open'criminal investigations, business confidential information, deliberative process information, and information about the financial transactions of private citizens. It is entirely proper in such cases to consider appropriate ways of providing the access Congress needs to fulfill its responsibilities while preserving the confidentiality needed to ensure the Executive branch's efficient and effective administration of the laws for which it is responsible. The need for mutual accommodation between the branches is an essential element of the separation of powers under the Constitution. 216 3 Having said this, it is important not to lose sight of the fact that Treasury has been very responsive to the Banking Committee's requests for documents relating to Iraq and Banca Nazionale del Lavoro (BNL). We have made available approximately 175 documents relating to the National Advisory Council on International Monetary and Financial Affairs (NAC) and its review of Commodity Credit Corporation and Export-Import Bank financing for Iraq. The Customs Service has provided the committee with approximately 525 pages of documents relating to BNL and to Matrix-Churchill. During an initial meeting with Committee staff, Treasury counsel explained that a large number of documents, which might otherwise be responsive to subpoenas issued by the Committee, were considered by Customs and Justice to be Justice Task Force documents, some of which related to an on-going grand jury. committee staff and counsel concurred and noted that the subpoenas did not cover Justice Department documents. During the course of subsequent discussions with Committee staff, numerous documents were identified which related to on-going law enforcement investigations or prosecutions, which disclosed sources and methods, which identified agents, informants or potential targets or witnesses or which were provided by foreign sources under promises of limited confidentiality. In each instance, the individual document or class of documents was identified and discussed with Committee staff. 217 4 Throughout the process, efforts were continuously made to provide as much information and as many documents as possible, at least in redacted form, to aid the Committee's inquiry. In addition, Customs gave a member of the Committee staff access to approximately 50,000 documents which were located at its Cleveland office and which Customs had obtained from Matrix- Churchill's office in Solon, Ohio. Moreover, a photocopy machine was made available to the staff member. That staff member was also licensed by Treasury's Office of Foreign Assets Control to enter the Matrix-Churchill premises and have access to the documents on the premises. Now, let me respond in order to the four specific questions contained in your letter to me of May 4, 1992. I do not require authorization by any other Treasury Department official to accept invitations such as the one Nicholas Rostow extended to me, and I did not seek any authorization to accept Mr. Rostow's invitation. I chose to attend these meetings because I believed it would be useful to coordinate with other agencies on the topic of requests for documents relating to Iraq. My records indicate that I attended meetings convened by Mr. Rostow concerning the Congressional requests for documents 218 5 related to Iraq on April 9, April 15, May 6, and May 13, 1991. The Deputy General Counsel of the Treasury Department, Dennis Foreman, attended one such meeting on June 5, 1991. To the best of his recollection, William Mackay, of Treasury's Office of Legislative Affairs, accompanied me to the April 15 and May 6 meetings. We have been able to locate two documents that are responsive to your request of May 4, 1992, in our files. One was originated by a National Security Council (NSC) official, and we have referred your request to the NSC. The second document is a set of notes taken by Hr. Foreman at the June 5 meeting mentioned above. We are prepared to make arrangements to make that document available to the Committee for review, with attributions deleted. It is the recollection of Messrs. Foreman and Mackay and myself that all meetings concerned the subject of requests of Congressional committees for access to Iraq-related documents and information. Except for communications received in the course of coordinating with Justice relating to the criminal investigations of BNL and Matrix-Churchill, which I referred to earlier, I am not aware that Treasury has ever received any communication from the White House, the State Department, the NSC, or any other department or agency asking it to withhold Treasury documents from Congressional committees investigating the Administration's Iraq policy. As you know, if a document originates in another agency, » I /- ‘ 219 6 the third agency rule followed by the Executive branch calls for the originating agency to make the decision as to whether to make that document available pursuant to a request from Congress or the public. We have in our files several NSC documents responsive to a request from the Committee, including one that was prepared by Treasury staff but which records the proceedings of an NSC meeting. The NSC has instructed Treasury that these documents should be made available only with the approval of the NSC. This information was relayed to your staff. You also asked whether the State Department, White House or NSC ever reviewed and/or cleared information that was submitted by the Treasury Department to Congressional comittees in response to information requests concerning Iraq or BNL. As a matter of course in dealing with requests concerning documents of the NAC, especially minutes of WAC meetings, we routinely seek the views of the other NAC members and of any other relevant agency. The State Department is a member of the NAC, and accordingly its views were sought. This is a well-established procedure that was being followed before any of the lawyers‘ group meetings which are the subject of my testimony took place. In dealing with Congressional committee requests for information, Treasury did coordinate with the White House and the use i 220 7 concerning several documents which we considered to be sensitive. With respect to each of these documents, Treasury made the final determination, and we proceeded as we had planned. In conclusion, Mr. Chairman, I believe that Treasury's coordination with other Executive branch entities concerning its responses to requests by Congressional committees for Treasury documents concerning Iraq or BNL has been appropriate and consistent with our usual practice. we have spent much time and effort in responding to requests from the Banking Committee. We believe our response has been thorough and honest. It has resulted in the Committee's obtaining access to numerous Treasury documents. Thank you. I would welcome any questions you may have. 221 STATEMENT OF MICHAEL JOHN CIFRINO SENIOR ATTORNEY OFFICE OF THE DEPUTY GENERAL COUNSEL (INTERNATIONAL AFFAIRS AND INTELLIGENCE) BEFORE THE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS UNITED STATES HOUSE OF REPRESENTATIVES MAY 29, 1992 55-927 O - 93 — 8 222 MR. CHAIRMAN, MEMBERS OF THE COMITTEE I am appearing at the request of the Committee to address my role as the primary Department of Defense official who participated in certain meetings called by the Legal Advisor to the National Security Council to discuss proposed departmental responses to written requests from the Chairman, Subcommittee on International Economic Policy and Trade (Committee on Foreign Affairs) House of Representatives, for documents regarding US Government export policy for Iraq from 1979 through 1991. Your invitation to me dated May 22, 1992 to testify today posed a number of questions which I will be pleased to answer. Attached to that invitation was a memorandum dated April 8, 1991, to Terrence O'Donnell, the General Counsel of the Department of Defense, and other Executive departments’ legal counsel. While I subsequently attended other meetings for Mr. O'Donnell, I did not attend the April 8th meeting. On April 19. 1991 the Secretary of Defense received a letter from the Chairman, Subcommittee on International Economic Policy and Trade requesting a wide range of intra-agency and inter-agency documents regarding US Government export policy for Iraq and seeking a response by May 13, 1991. On May 6, 1991, at Mr. O'Donnell's request, I attended a meeting held at the Old Executive Office Building that was chaired by Mr. C. Nicholas Rostow, Special Assistant to the President and Legal Advisor to the National 223 /, 2. Security Council. To the best of my recollection, the purpose of the meeting was to coordinate the responses of the various Executive agencies that had received similar written requests from the Subcommittee. The major topics of discussion that I recall were the extremely burdensome nature of the requests for documents, whether or not the issuance of a subpoena was likely, and the issue of Executive privilege. On May 13, 1991, I attended my second meeting called by Mr. Rostow. The discussion that I recall dealt with the issue of whether the National Security Council would represent all Executive departments that had received document requests from the Subcommittee in discussions with the Subcommittee staff or whether each department would discuss the release of its documents directly with the Subcommittee staff. It was decided that, as a practical matter, each Executive agency would deal directly with the Subcommittee. On June 5, 1991, I attended my third, and I believe last, inter-agency meeting on this subject. The meeting was initially addressed by Mr. Boyden Gray, Counsel to the President, who emphasized the importance of maintaining the institutional prerogatives of the Presidency through the use of Executive privilege where appropriate. There was discussion regarding the types of documents that should be considered for a claim of Executive privilege. The meeting closed with a request that 224 3. Executive departments immediately provide to the NSC staff any documents for which the departments were contemplating a claim of Executive privilege. In response to the specific questions posed in your letter inviting me to testify today: 1. I attended the first meeting I have described above at the direction of the DoD General counsel and the two subsequent meetings at the invitation of Mr. Rostow. I attended these meetings to ensure that the Cepartment of Defense response to the April 19th letter from Subcommittee Chairman Gejdenson would be legally consistent with the responses that would be provided by other Executive departments that had received similar letters. 2. I have described above the three meetings I attended and, to the best of my recollection, the topic of each meeting. I am providing separately three memoranda dated May 8, 1991, May 14, 1991, and June 5, 1991 which I drafted for my immediate superiors subsequent to each meeting. “) 3. At no time during the course of my participation in the process of responding to the Subcommittee Chairman's letter of April 19, 1991, did I receive any communication from the White House, the State Department, the NSC or any other Executive department asking me to withhold information from any Congressional 225 4. Committee . 4. Subsequent to the receipt of a subpoena Duces Tecum dated June 27, 1991 from the Chairman, Committee on Foreign Affairs, House of Representatives, at least three documents were provided to the NSC staff for consideration of a claim of Executive privilege. To the best of my recollection, access to all of those documents was subsequently provided to the Subcommittee on International Economic Policy and Trade. I would be pleased to respond to any questions the Committee may have at this time. 226 For Release Only By The Committee on Banking, Finance and Urban Affairs STATEMENT OF COLONEL FRED K. GREEN OFFICE OF THE CHAIRMAN OF THE JOINT CHIEFS OF STAFF BEFORE THE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS HOUSE OF REPRESENTATIVES MAY 29, 1992 227 Good morning, Mr. Chairman. I am Colonel Fred K. Green, Legal Counsel to the Chairman of the Joint Chiefs of Staff. I have reviewed your letter of May 4, 1992 requesting my appearance and would like to provide this committee with the following information in response to the questions posed in your letter. . I recall attending only one interagency meeting of lawyers on the topic that you mention. This was held on April B, 1991. I know this because I noted the meeting on my personal calendar. I, was invited to attend the meeting by the NSC Counsel's office. I did not request specific authority from any Department of Defense office to attend, nor was I directed to attend. To the best of my recollection, the National Security Council memo of April 8th that you enclosed with your letter accurately summarizes the April 8th meeting. Operations Desert Shield and Desert Storm had been particularly busy times for me and my office, and even with the ground war over I was still attending numerous meetings weekly on a variety of subjects. The April 8th NSC meeting was just one more. As I recall. there were a number of people there, several of whom I did not know. I did not retain any notes, nor do I remember making any remarks at the meeting. 2 228 \ when I returned from the April 8th meeting, I gave no direction to any members of the Joint Staff and took no action as a result of the meeting. Later in June 1991, the Joint Staff responded to a Subpoena Duces Tecum signed by the Chairman of the House Foreign Affairs Committee to the Secretary of Defense for documents pertaining to the export or reexport to Iraq iof equipment or technology controlled for national security or foreign policy purposes. Several responsive documents were located in Joint Staff files and provided in their entirety to the Office of the General Counsel of the Department of Defense for use in responding to the subpoena. The Joint Staff had no further involvement in the matter until I received your letter concerning this hearing. In reviewing events for the purpose of preparing for this hearing, I learned from personnel in the Office of the General Counsel of the Department of Defense that other interagency meetings of lawyers on the same topic occurred on May 6 and 13, and June 5, 1991. I do not recall being invited to these meetings or attending. I have no personal notes or calendar entries that would indicate my attendance on those dates. I do not know if the Department of Defense has ever received a document from the White House, State Department, or NSC asking or directing that information be withheld from 3 229 Congress on the Administration's Iraq policy. I do not know if the White House, State Department, or NSC ever reviewed any information submitted by the Department of Defense to Congress concerning the matters you indicated. I was aware, based on the April 8th meeting, that the NSC counsel wanted to ensure that any decision by any executive agency to withhold a document based on executive privilege was coordinated in advance with the NSC before the privilege was asserted. I trust the foregoing is fully responsive to your questions, Mr. Chairman. I will attempt to respond to any further questions from the committee. 4 231 2 outside USDA by other agencies of the Federal government. With regard to that limited group of documents, we referred the Committee’s staff to the originating agencies (i.e., the Treasury Department and Justice Department) to obtain copies directly. When it was learned that the Committee was publishingclassified documents, the issue of providing classified materials was raised since it appeared that readily available declassification procedures were not being followed or requested. In any case, USDA is not an "intelligence agency" and does not typically create or initiate significant quantities of classified information. Nonetheless, in a Febmary 24, 1992, letter, Chairman Gonzalez requested information about "intelligence documents." On April 2, 1992, Secretary Madigan responded that "[w]hile USDA wishes to cooperate in every way possible with your request, USDA is not in a position to release information about classified documents which were originated by intelligence agencies. We respectfully suggest that you direct your inquiries about classified documents to the intelligence agencies that originated them." It is customary for USDA, and all other agencies, to consult with other agencies and/or provide draft or final materials for information, review, comment or clearance by other agencies having an interest in the subject. In the case at hand, apart from the classified information imbroglio of which the Committee is well aware, I have no knowledge that any agency, including the State Department and the National Security Council, ever directed or requested that we not provide any document to this 232 3 Committee, or any other Committee of Congress. I tmst this responds to the Committee's questions. In closing, I should state that consultation among agency lawyers working on the same issue at the same time is entirely principled. Indeed, not to do so would be almost unprofessional. Effective legal counsel depends on the ability of lawyers to consult freely with colleagues and clients. Mr. Chairman, if you or members of the Committee have any further questions, I am prepared to answer them. Thank you. 234 NSC or any other department asking the Agency to withhold" information from congressional committees investigating the Administration's Iraq policy. You have also asked whether the State Department, White House or NSC reviewed and/or cleared information that was submitted by the CIA to congressional committees in response to information requests concerning Iraq or BNL. To my knowledge, the answer to both of these specific questions is "No." The Agency officials who worked with your staff to provide relevant information followed our normal policies, and they received no directions from the White House, the NSC, or any other agency to withhold CIA information. You have asked, in addition, about a meeting that was hosted by the NSC staff on 8 April 1991 conceming congressional requests for information pertaining to U.S.-Iraq policy prior to the Gulf War. I did not attend that meeting, although I did attend a later meeting where I believe this subject was mentioned. My memory of those discussions is not especially vivid, but my general impression is that they followed the routine that occurs whenever many agencies have to respond to similar congressional requests--the NSC reminds agencies to coordinate the release of third-agency information, and the NSC asks to be informed of any possible need to invoke executive privilege. I can say with certainty that I was never directed to withhold CIA information on these topics from congressional investigators. I would be happy to answer any questions you might have, although as I have indicated, my personal knowledge in this area is quite limited. 2 235 STATEMENT OF EDWIN D. WILLIAMSON LEGAL ADVISER U.S. DEPARTMENT OF STATE BEFORE THE HOUSE COMMITTEE ON BANKING FINANCE AND URBAN AFFAIRS MAY 29, 1992 236 _2_ MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE! MY NAME IS EDWIN D. WILLIAMSON, AND I AM THE LEGAL ADVISER FOR THE DEPARTMENT OF STATE. BY THE EARLY PART OF APRIL 1991, THE STATE DEPARTMENT HAD RECEIVED NUMEROUS CONGRESSIONAL REQUESTS FOR INFORMATION ABOUT U.S.-IRAQ POLICY, INCLUDING REQUESTS FROM THE HOUSE FOREIGN AFFAIRS COMMITTEE, THE SENATE FOREIGN RELATIONS COMMITTEE, AND THE HOUSE PERMANENT SELECT INTELLIGENCE COMMITTEE, AS WELL AS THIS COMMITTEE. IN RESPONSE, WE MADE AN EXTRAORDINARY EFFORT TO MAKE AVAILABLE THOUSANDS OF PAGES OF DOCUMENTS TO VARIOUS CONGRESSIONAL COMMITTEES AT A CONSIDERABLE COST IN EMPLOYEE HOURS. TO THIS COMMITTEE ALONE. THE STATE DEPARTMENT HAS MADE AVAILABLE AN ESTIMATED H.000 PAGES OF DOCUMENTS ON MORE THAN A HALF DOZEN OCCASIONS. THE SUGGESTION THAT THE ADMINISTRATION HAS SOUGHT TO "COVER UP” ITS POLICY TOWARD IRAQ IS SIMPLY NOT TRUE, AND IS BELIED BY THE EXTENSIVE PRODUCTION OF DOCUMENTS WE HAVE ALREADY MADE TO CONGRESS. THE CONGRESSIONAL TESTIMONY OF ADMINISTRATION POLICYMAKERS, AND OUR CONTINUED WILLINGNESS TO MAKE AVAILABLE ADDITIONAL INFORMATION. MR. CHAIRMAN. YOU HAVE SPECIFICALLY ASKED ABOUT THE DEPARTMENT'S INVOLVEMENT WITH LAWYERS OF OTHER AGENCIES IN DISCUSSIONS ABOUT PENDING CONGRESSIONAL DOCUMENT REQUESTS. 237 -3- THE SIMPLE AND COMPLETE ANSWER IS THAT WE CONSULTED WITH ONE ANOTHER ABOUT OUR RESPONSES TO THE COMMITTEE'S REQUESTS. COORDINATION AMONG GOVERNMENT AGENCIES IN RESPONDING TO CONGRESSIONAL DOCUMENT REQUESTS IS A LONGSTANDING PRACTICE AND AN APPROPRIATE WAY TO ENSURE THAT THE INTERESTS OF BOTH THE CONGRESS AND THE EXECUTIVE BRANCH ARE MET. AND THE FACT OF THIS COORDINATION WAS HARDLY SECRET. WHEN WE SENT TO YOUR COMMITTEE, MR. CHAIRMAN, OUR FIRST COLLECTION OF DOCUMENTS ON AUGUST 2, 1991. WE INFORMED THE COMMITTEE THAT THE "DEPARTMENT IS CONSULTING WITH OTHER AGENCIES ABOUT THE REMAINING DOCUMENTS IDENTIFIED BY YOUR STAFF.” IN RESPONDING TO CONGRESSIONAL REQUESTS. THE DEPARTMENT ATTEMPTS TO MEET SEVERAL IMPORTANT OBJECTIVES INCLUDING! -- TO PROVIDE MEMBERS OF CONGRESS WITH THE INFORMATION THEY NEEDS -- TO MAINTAIN THE INTEGRITY AND CANDOR OF THE DEPARTMENT'S REPORTING AND DECISION—MAKING PROCESSES? AND -— TO PROTECT THE CONFIDENTIALITY OF DIPLOMATIC COMMUNICATIONS AND OTHER NATIONAL SECURITY INFORMATION. / ' /‘I " , /-' I I Z 238 _q_ LET ME STOP AND ELABORATE ON THOSE OBJECTIVES FOR A MOMENT. ON THEIR FACE, THEY APPEAR SIMPLE. IN FACT, THEY RAISE A HOST OF COMPLEX CONSIDERATIONS AND POTENTIAL CONFLICTS. DEVELOPING WAYS T0 ACCOMMODATE THESE OBJECTIVES IS ONE OF THE PRINCIPAL THINGS WE LAWYERS CONSULT ABOUT. THE FIRST OBJECTIVE IS STRAIGHTFORWARD. THE DEPARTMENT'S POLICY -- I.E., OUR MARCHING ORDERS -— IS TO GIVE YOU THE INFORMATION YOU NEED. THE SECOND OBJECTIVE -- MAINTENANCE OF THE INTEGRITY AND CANDOR OF THE DEPARTMENT'S REPORTING AND DECISION-MAKING PROCESSES —- AND THE THIRD -- PROTECTING THE CONFIDENTIALITY OF DIPLOMATIC COMMUNICATIONS AND OTHER NATIONAL SECURITY INFORMATION —— HAVE SPAWNED A GROUP OF OPERATING PROCEDURES. ALTHOUGH NOT ALWAYS LEGALLY BINDING, FOR THE MOST PART THEY ARE BASED ON LEGAL CONSIDERATIONS, AND THAT IS WHY, IN MY VIEW, IT FALLS TO THE LAWYERS TO DEAL WITH THEM. THE TWO MOST IMPORTANT PROCEDURES FROM A COORDINATING STANDPOINT ARE THOSE SURROUNDING THE ISSUE OF EXECUTIVE PRIVILEGE AND THOSE EMBODIED IN WHAT WE REFER TO AS THE "THIRD AGENCY RULE". 239 / ' _ 5 _ AS YOU KNOW, WE HAVE NOT ASSERTED EXECUTIVE PRIVILEGE IN RESPECT OF ANY STATE DEPARTMENT DOCUMENTS REQUESTED BY THE COMMITTEE. IN FACT, I DO NOT BELIEVE IT HAS BEEN ASSERTED IN RESPECT OF ANY DOCUMENTS REQUESTED BY THIS COMMITTEE. BUT, PART OF WHAT WE DO IS TO WORK WITH OTHERS IN THE EXECUTIVE BRANCH TO DEVELOP ACCOMMODATIONS FOR CONGRESSIONAL REQUESTERS TO AVOID THE NEED TO EVEN CONSIDER ASSERTING IT. THE THIRD AGENCY RULE TAKES THE MOST COORDINATION BETWEEN VARIOUS AGENCIES. INSOFAR AS CLASSIFIED DOCUMENTS ARE CONCERNED. THIS RULE IS CODIFIED IN E0 12355. THE RULE IS SIMPLE IN ITS FORMULATION -— ONE AGENCY DOES NOT GIVE UP ANOTHER AGENCY'S DOCUMENTS WITHOUT THE CONSENT OF THE ”OWNING” OR CONTROLLING AGENCY. BUT IT REQUIRES A GREAT DEAL OF PRACTICAL COORDINATION. THE REASON IT EXISTS IS VERY STRAIGHTFORWARD -- THE CONTROLLING AGENCY TYPICALLY IS IN THE BEST POSITION TO DETERMINE THE EXTENT TO WHICH A DOCUMENT'S RELEASE WOULD HARM NATIONAL SECURITY, HAVE A CHILLING EFFECT ON THE DELIBERATIVE PROCESS, OR COMPROMISE LAW ENFORCEMENT OR OTHER IMPORTANT CONFIDENTIALITY INTERESTS. 240 _5_ LET ME NOH TRY TO ANSHER THE SPECIFIC QUESTIONS YOU PUT TO ME. "WHY DID THE STATE DEPARTMENT JOIN THIS GROUP [I.E., "THE LAWYERS GROUP ESTABLISHED BY THE WHITE HOUSE”]? WHO AT THE STATE DEPARTMENT AUTHORIZED SUCH PARTICIPATION?” FIRST, THE GROUP WAS SIMPLY A PRACTICAL ATTEMPT TO ORGANIZE THE VOLUMINOUS DOCUMENT REQUESTS THAT THE ADMINISTRATION HAD RECEIVED. IT WAS ENTIRELY ROUTINE AND NO AUTHORIZATION WAS REQUIRED. I SECOND, YOU ASK FOR A LIST OF THE MEETINGS HELD BY THE "LAWYERS GROUP". TO THE EXTENT THAT THERE WERE MEETINGS OF THIS GROUP AS SUCH, I WOULD LIST THEIR DATES AS APRIL 3, APRIL 9, APRIL 15, MAY 6, MAY 13, MAY 31 AND JUNE 5, 1991. I DO NOT BELIEVE THAT FORMAL MINUTES OR LISTS OF PARTICIPANTS WERE GENERALLY KEPT, BECAUSE THESE WERE WORKING-LEVEL MEETINGS. (INCIDENTALLY, I MYSELF ONLY ATTENDED TWO OF THE MEETINGS.) THIRD, YOU ASKED IF WE HAD BEEN ASKED BY OTHER AGENCIES "TO WITHHOLD INFORMATION” FROM CONGRESSIONAL COMMITTEES INVESTIGATING THE ADMINISTRATION'S IRAQ POLICY. IO THE BEST OF MY KNOWLEDGE, AND OBVIOUSLY OTHER THAN IN THE CONTEXT OF COORDINATING UNDER AND COMPLYING WITH THE PROCEDURES THAT I OUTLINED EARLIER (PARTICULARLY THE THIRD AGENCY RULE), THE ANSWER TO YOUR QUESTION IS NO. ' ‘ 241 -7- FINALLY. YOU ASKED WHETHER THE WHITE HOUSE OR THE NSC HAD REVIEWED OR CLEARED INFORMATION SUBMITTED TO CONGRESSIONAL COMMITTEES IN RESPONSE TO INFORMATION REQUESTS REGARDING IRAQ OR BNL. THE ANSWER TO THAT QUESTION IS YES, BUT AGAIN I BELIEVE IT IS FAIR TO SAY THAT SUCH REVIEW/CLEARANCE WAS IN THE CONTEXT OF THE PROCEDURES I REFERRED TO. 243 The statute and the administrative procedures specifically provide for escalation of agency disagreements to the President. As a result of this interagency process, documents and information originated by one agency will often be found in the files of a number of other agencies. Therefore, in preparing to respond to a sweeping request for export control documents, such as the 1991 request from Congressman Gejdenson, coordination among the agencies is not only prudent but necessary. This was particularly true in the case of Congressman Gejdenson's request, because a number of agencies had received substantially identical requests to produce export control documents. Coordination in the preparation of responses to such requests is necessary for a number of reasons. First, in the initial stages of preparing a response to a broad Congressional request there is a need for coordination to ensure that all agencies are working from a common interpretation of the scope of the request. There is also a need to estimate the volume of documents and resources necessary to respond, and to consider whether to approach the requesting Committee to discuss possible ways to narrow the scope of the request while still meeting the Committee's information needs. 2 244 Second, coordination is necessary because of well known and accepted "third agency" procedures. As an example, under these procedures, documents that are in Commerce files but were originated by State, or contain information originated by State, are referred to State to assess what State Department interests would be affected by disclosure. In the case of classified materials, the review might, for example, include an assessment of whether the documents contain information that might reveal intelligence sources and methods. Finally, coordination among agencies is necessary to address important Executive Branch interests. In responding to requests, an important concern may be the protection of Executive Privilege, which under long—standing and well known Executive Branch procedures only the President can assert. Accordingly, it may be necessary for agency lawyers to coordinate with White House lawyers before releasing documents. In addition, such coordination is necessary to assess the impact that the disclosure of documents may have on the deliberative process in the Executive Branch. As you can see from the foregoing description, there is nothing unusual about a group of lawyers from various agencies meeting with NSC lawyers to coordinate certain responses to congressional requests. Indeed, it is a common practice. 3 245 Members.of Congress and Hill staffers are well aware that such coordination is the normal course of business when similar requests are submitted to several agencies, as was the case with the Gejdenson request. with this background in mind, I would like to address the specific questions posed in your letter of invitation. o The Comerce Department participated in meetings of the lawyers group for the reasons I have just described. Because this kind of coordination is not an unusual response to a Congressional document requestf there was no special authorization necessary for Commerce personnel to participate in the group. o I am providing a list of meetings held by the lawyers group that we have reconstructed -- to the best of our ability —— from documents in Comerce files as well as other sources. We will also provide copies of notes, minutes, and letters originated as a result of such meetings. o During the interagency coordination process I have described, other members of the lawyers group asked the Department of Commerce not to produce, for the time being, certain docuents to Congressman Gejdenson, pending possible negotiations with his subcommittee and/or a determination of 4 246 whether to assert Executive Privilege over those documents. (We will provide copies of documents reflecting such communications.) In addition, in the course of preparing to respond to the Gejdenson request, the lawyers group discussed various options and possible approaches to responding to the request. The memorandum attached to your letter of invitation reflects some of these options, such as providing briefings or allowing members to review but not retain copies of sensitive documents. Members of Congress and their staffs are well aware that these types of options are discussed, considered, and negotiated in connection with many Congressional document requests. o In the course of preparing to respond to the Gejdenson request in 1991, and the earlier requests from congressman Barnard and other members of the Congress, lawyers and others at the White House, NSC, State Department, and other agencies did review information submitted to Congress by the Comerce Department. These reviews were undertaken in accordance with "third-agency" procedures, as well as to assess whether to assert Executive Privilege. In addition, the computer printouts of export licensing information provided to Congressman Barnard and other members of Congress were reviewed by other agencies to ensure that agency recomendations on specific license applications were accurately reflected in the printout. 5 1 I 247 o I want to emphasize, however, that, to the best of my knowledge, in the end all responsive documents located in Commerce files were produced to Congress; no such documents were withheld. In closing, I would like to assure the members of this Committee that the Department of Commerce is mindful of the oversight and legislative needs of the Congress and that we have made, and will continue to make, every effort to be responsive to Congressional requests for information. As you may be aware, we are doing so with respect to declassifying certain documents in - response to Congressman Gejdenson's most recent request. Thank you. 28 BANKING COMMITTEE STAFF MEMOS ON ROSTOW GANG 250 hEHORANDUH f 1 - Rostow Gang Backqrougg Tomorrow's hearing will focus report on the secret mechanism used by the Bush White House to frustrate, evade, and stifle Congressional investigations of its failed Iraq policy. The White House created this mechanism to cover up embarrassing and potentially illegal activities of persons and agencies responsible for the U.S.-Iraq relationship. Introduction to the Rostow Gang In April 1991, the National Security Council's (NSC's) legal advisor called a high level inter-agency meeting to discuss Congressional investigations of Iraq policy prior to the invasion of Kuwait on August 2, 1990. The meeting was chaired by Nick Rostow, the General Counsel to the NSC. Mr. Rostow's previous experience includes playing a key role in White House efforts to cover up the Iran-Contra scandal. Also attending was President Bush's General Counsel, Boyden Gray. Other persons at the meeting included the top lawyers for the Departments of Justice, Defense, State, Treasury, Commerce, Agriculture, Energy and the CIA. Each of their agencies had received requests for information from the Congress and the lawyers were responsible for overseeing the collection and submission of the information to the Congress. I will refer to this high-level legal team as the "Rostow Gang." Function Ostensibly, the function of the group was to review documents and information applicable to Congressional requests for Iraq- related information and to establish a "coordinated" approach for the dissemination of that information. A memo obtained by the Committee explains the overt function of the NSC process as follows: "The NSC is providing coordination for the Administration's response to Congressional document requests for Iraq—related materials. The process is intended to be a cooperative one." While on the surface it appears the Rostow Gang was created to ensure cooperation with Congressional investigations, in reality it gave the White House a direct hand in regulating the flow of information to Congress, thus limiting oversight of Iraq policy. Process The Rostow Gang established a process whereby a Congressional investigation had to hurdle a series of increasingly difficult barriers in order to obtain information from an executive branch agency. The first step required an agency's lawyers to review and inventory all Congressional requests for information in order to determine if documents could be denied on the basis of executive privilege. The Banking Committee was denied certain important documents on this basis. The next hurdle involved denying documents to Committees, and, instead, offering briefings for Members and their staffs. That way 1 251 an agency was able to put its own spin on its actions without Congressional staff or Members being able to question the veracity of the agency's statements. -T If a Congressional Committee that jumped the first two hurdles still insisted on receiving documents, the next hurdle was actual access to the documents. Under this scheme, before an agency could provide access to its documents, it was supposed to get a "clearance" from the Rostow Gang. The April 8 memo states: "When access to documents may be recommended, such recommendations should be circulated to this group for clearance." This delay mechanism also gave the NSC the power to influence an agency's decision to provide access to documents. The next hurdle in the chain discouraged Committees from obtaining physical possession of the Iraq-related documents, thus making it impractical to conduct an investigation. The April memo states: "A recommendation to provide access should be restricted to members only subject to these conditions: no document may be retained; notes may be taken but should be marked for classification by the department or agency in question." As the quote indicates, the NSC even wanted to make it difficult for Members of Congress to look at Iraq-related documents. Agency lawyers used this hurdle limit access to documents by insisting that investigators not retain documents that they were permitted to review on the agency's premisses. Subpoena Power The remedy to the Rostow Gang process is subpoena power, but even faced with subpoena, the Administration has refused to turn over documents to Congress. Committees that did not acquire the authority to use subpoena power to conduct investigations of Iraq were much less of a threat to the Rostow Gang. Without subpoena power, a Congressional Committee that jumped all the hurdles erected to limit their access to documents was often denied the documents it requested. Committees that voted to authorize the use of subpoenas found documents more readily available. However, in the Banking Committee's case, even though it has served a subpena on one agency, important Iraq-related materials are still being withheld. Real Definition of Cooperation The following quote from a Commerce Department letter sheds light on how the Administration planned to "cooperate" with Congress. In a February 1991 letter to the top lawyer at the Commerce Department, the former Undersecretary for Export Administration stated: "In sum, the printout provided to Hr. Barnard (Chairman of a Congressional Subcommittee) is a summary reference document ... The printout is also consistent with Fifth Floor (Secretary Mosbacher's Office) guidance and requests from both State (Department) and the NSC that no additional information be provided that does not directly address the Committee's request." 2 253 MEMORANDUM 1; - Commerce Department Scandal Commerce Department Scandal The Rostow Gang was established to delay Congressional investigations and to permit the White House to regulate the flow of Iraq-related information to Congress. In the case of the Commerce Department, the White House went beyond regulating the flow of information to Congress. The Committee has gathered evidence showing NSC involvement in a scheme to mislead the Congress about the licensing of military-useful goods destined for Iraq. The Commerce Department has been wrongfully subjected to severe criticism for its role in the transfer of military-useful technology to Iraq. The true responsibility for the transfer of U.S. high technology to the Iraqi war machine lies with the White House and the State Department - because they set technology transfer policy. The Commerce Department's role is merely to carry out the policies established by the White House and State Department. As with the CCC and Eximbank programs, the NSC and State Department viewed the export licensing process as a valuable tool of diplomacy - they used U.S. high technology transfer as an inducement to gain favor with Saddam Hussein. That explains why the NSC and members of the Rostow Gang became directly involved in a scheme to mislead the Congress and the American public about the military nature of U.S. technology transfers to Iraq. Congressional Request Beginning in September 1990, the House Subcommittee on Commerce, Consumer and Monetary Affairs, chaired by my colleague, Doug Barnard, requested Iraq-related export licensing materials from the Commerce Department. The Commerce Department eventually provided export licensing information to the Subcommittee, but press reports began to surface indicating that certain export information had been deleted prior to being submitted to the Congress. In February 1991 the Commerce Department's General Counsel, a Rostow Gang member, asked the former Under Secretary of the Bureau of Export Administration (BXA), Dennis Kloske, to investigate press allegations that export licenses were deleted from Commerce Department files. In late February, Mr. Kloske reported that in fact changes had been made to the export licensing information. As a result of Mr. Kloske's findings, the General Counsel wrote the Commerce Department inspector general asking him to investigate the matter further. Inspector General Report On June 4, 1991 the Commerce Department inspector general issued a report based on its investigation. The report concludes: "... changes were made to selected data on 66 approved export licenses to Iraq. ... Bureau personnel also changed permanent records ... compromising the integrity of the Iraqi license records. Neither the changes to the data provided to the Chairman (Barnard) nor the changes to the system database were 55-927 O - 93 — 9 4 254 adequately supported." The report goes on to state that it was "Bureau" personnel that changed the export licensing records. scope of Investigations Limited by Rostow Gang Member The Kloske and inspector general investigations of the changes to the export licensing information were both seriously flawed. Both reports are silent on the issue of who ordered the changes to the export licensing information that was submitted to Congress. Both reports are silent on that critically important issue because the Commerce Department General Counsel deliberately avoided investigating the question of who was responsible for ordering the changes to the licensing data. Could the changes have been ordered by the NSC staff? Despite the availability of evidence pointing in that direction, neither investigation was permitted to pursue that possibility. The NSC Role The Banking Committee has been informed by Administration officials that the NSC legal staff went beyond reviewing the Commerce Department documents that were to be forwarded to Mr. Barnard's subcommittee - an NSC staff lawyer actually took physical possession of various Commerce Department documents. On top of that, the Commerce Department lawyers did not prepare a control list for the documents so that it could keep track of which licensing records it had supplied to the NSC. The Committee has also been informed that prior to the submission of the export licensing records to the Congress, the NSC staff had numerous contacts with the General Counsel of the Commerce Department as well as the General Counsel of the BXA. Given that the NSC was instrumental in setting the export policy towards Iraq, it had a strong political motive to mislead the Congress as to the military nature of goods sent to Iraq - it did not want the public to know that the White House had provided aid to the Iraqi war machine. Placed in that perspective, the fact that the NSC actually took physical control of Commerce Department documents, and had numerous contacts with the Commerce Department lawyers, serious questions should be raised about whether or not the NSC altered the Commerce Department records or more likely, effectively ordered the changes to the records. After all, it is highly unlikely that numerous Commerce Department career bureaucrats would risk breaking the law and losing their jobs over a policy that they were not responsible for setting. Another important question relates to the fact that the Commerce Department lawyer that limited the scope of investigations also serves as a member of the Rostow Gang. It is certainly plausible to think that the NSC or others ordered him or pressured him into limiting the scope of the Commerce Department's investigations so that attention would not focus on the NSC staff. In addition, the circumstances surrounding Mr. Kloske's departure from the Commerce Department also raise suspicions. It was reported in the press that Mr. Kloske was forced out of his post at the Commerce Department because of derogatory comments he 5 255 made about the Administration's export policy towards Iraq. Could the NSC have ordered him or pressured him into authorizing the changes to the export licensing information? Criminal Inquiry On July l0, 1991 Mr. Barnard wrote to then Attorney General, Richard Thornburgh, asking him to investigate the possibility of "criminal culpability" related to the Commerce Department's provision of false information to the Congress. To date, the Justice Department's probe has not returned any indictments. It is interesting to note that one of the Justice Department's top lawyers is also a member of the Rostow Gang. Haginot Line strategy The Rostow Gang process operates as a sort of Maginot Line - if Congressional investigations pass the first barrier, they soon run up against the next. Under this strategy, the process of obtaining documents to investigate U.S.-Iraq policy is a painstaking, tedious, drawn-out process that ensures many months will pass before a Congressional Committee obtains documents needed to conduct Iraq—related investigations. The mere fact that the White House established and directs a group to regulate Congressional investigations of Iraq policy raises questions about the motive of the White House. Some important questions that need to be asked are: -- What do Congressional investigations of the pre—invasion Iraq policy have to do with designing and carrying out the President's national security strategies? With the world changing by the minute and our national security strategies becoming outdated daily, why would the NSC devote scarce staff time to regulating Congressional investigations? —- Since when did it become the responsibility of the NSC staff to involve itself in Congressional investigations? The only other example that comes to mind is the Iran—Contra investigation. -- Are the lawyers of the various agencies so incompetent that they need guidance on answering Congressional requests for information? On the contrary, executive branch agencies process hundreds of Congressional requests for information each year. The lawyers at these agencies are generally competent, highly motivated people who do not need, nor usually receive, guidance from the White House on complying with these requests. Given Mr. Rostow's close proximity to the cover-up of the Iran—Contra scandal, and the "unique" functions of the Rostow Gang, it is not outside the realm of possibility that the White House is hiding something about its Iraq policy. It used to be that cover-ups were an ad hoc occurrence — a mad scramble to provide damage control. The Rostow Gang advances the notion that cover-up mechanisms have become an integral cog in the machinery of the Bush Administration. 6 256 Chairman Gonzalez's Floor Statements on Bush Administration Efforts to Thwart the Banking Committee's Investigation of the pre—war Policy Toward Iraq 257 N co H1274 CO GRESSIONAL RE RD — HO gtgndlng wo who have tirelealy served ot through their work with a previous orde e House the gen thee cil. tleman from onsin [Mr Oanl is pleased to honor Cleopatra amlln Parson of Mount Vemon. whose musical talent is well known. She moved to Mount Vemon with her family and quickly took an active within the community. She ioi AME Zion Church and h her talents to the ch Bible clas. and the addition. she was he evoted the adult day school in arter member of on chapter of the the Mount esed the _ House. His re appear hereaf- NAACP "“'°l"°d "ml -'*¢"'¢"-1 ter in the Exte of Remarks.) seniors nters Indeed Cleopatra e . . Parson is working to leave no behind. Robena Ambrose Cotten. also of Mount Vernon. celebrated her 110th birthday last year. She was recogn by Mount Vernon Hospital for m d. H r ears ospital source of to thousands special contributions. Her of teaching and work at t have certainly provid comfort and tnsp who have tumed flcuit times. he hospital in dif- yes. Robena Am- brose Cot has done her part to leave ne behind. ia Marie Brown has always put ers before herself. She has worked tirelessly on behalf of our youth. She has targeted abrisk youth through Operation Clean Sweep and the li acy program for youthful off Also Marcia's commitment been crucial in the developmen the Girl r e fl» Scouts of Westcheste e was one of the founding mem vice president Westchester was Badg co and served as he Girl Scouts of am. Her dedication with the Thanks ir highest honor. and ahe ues to work with young girls as roop leader. We are grateful to her. for her consistent belief in our chil dren and her willingness to aff these youth the opportuni achieve. Marcia Marie mitted herself to behind. 1.0 @111- DO OHS r 60 minutes. [Mr BY addressed the House. emarks will appear hereafter in e Extensions of Remarks] The SPEAKER p empore. Under r _ . recognize I B H The SPEAKER pro tempore. Und a previous order of the House. the tleman from Georgia [Mr. G is recognized for 60 minu (Mr. GINGRICH marks rcr-rl a re order of the House the gen from Tennessee (Mr. Cununrrl recognized for 60 minutes. (Mr. CLEMENT addressed the House. His remarks will appear hereai ter in the Extensions of Remarks.) The S pro tempore. Under D _ . tl Under the gen- r. BURTON) is utes. addressed the House. will appear hereafter in ions of Remarks.) The SPEAKER pro tem e previous order of the tleman from Indian recognized for 60 (Mr. BUR His re the Ex e SPEAKER pro tempore. Under a previous order of the House. the gen- tleman from New York (Mr. Owns] recognized for 60 minutes ad USE March 16'. 1.9.92 Dr Olivia Hook her country when preiu the op Afri Q»; E Ellis: iggfiizgi f would ty She erican SP Guard in Worl t apecity she has tant role model for many Af American women in our communit Not only did she nobly serve her try. but ahe has earned many ic honors through her wor ehologilt. Again. she inspiration to others tional opportuni strengthening others. in ensure "lea em- ! P8!- rved as an pursue educa- as a means ofi ir ability to help ins. she has worked £43 our society does its beat no one behind." Speaker. I salute these wome the strength of their convict! and for their outstanding accomplish menu. Thanks to them. fewer in :3 society are being left. behind (Mr. OWENS of New dressed the House. His ks will appear hereafter in t xtensions of We did amend the 1978 international anking law somewhat. this last No- ember in the Banking Act which we pproved. But it is not enough. it was compromised. as all these ave been. My personal relationship ith this is that the i978 Intemation- Banking Act. which was the first ne in the history of our Congress to irect legislation. was bom out of the 1975 hearings that. after a lot of push- ¢:g and shoring. I managed to get in y home district of San Antonio. And it was as a result of the startling rev- elations that those hearings brought out that we ended up 3 years later with the minimal. or less than mini- mal. 1978 Intemational Banking Act. ' in those 1915 hearings, which inci- dentally I will tell my colleagues if you are interested. 1 believe we still have some copies of the printed hearings: we can see since l9‘l5 what now has been the big national headache, not only the banking and other financial institutions scandals as such but the dilemmas confronting our entire in- dustry and the serious. and critical condition in which our country‘: fl- nancial institutions find themselves. The fact that the perception still is not there doa not decry the fact that it is. So. today. I will report on the secret mechanism used by the Bush White House to frustrate. evade. and stifle congressional investigations of its failed Iraq policy. I have already brought out ad infini- turn for almost 2 years the lamentable REGULATION OP lN'1'ERNATIONAL MONEY Mr. GONZALEZ. Mr. Speaker, today wilrcontinue. of course. the discus- ons because of the pending nature of e need of legislation to get some ntrol. which we really never had none of our regulatory agencies. over this tremendous amount of inter- national money. so-called "iternation- billion. even as I speak here. floating around where iust a small portion of it can be highly ieverageable for such things as anything from armaments procurement indirectly through other banks and aueh things u drug money leundeflnl. it is e great necesity that we must continue. We must also report what the Committee on Banking. Finance and Urban Affairs has had to confront within the last 2 years that we have been on this aubiect matter. There has been an absence of great concem ex- preaed. But nevertheless that should not deter us from the fact that this Nation does not have-and it is the only Nation defined as a modern in- duatrialised Nation that doa not have-any kind of screening board or any real regulatory control over the fl- nancial and banking activities of other countries in our own. al money that amounts to about 88011 use of the guarantees backed by tax- payers. of course. that led to such a shameful and catastrophic policy. to the detriment of our national interest. The White House created this mecha- nism to cover up embarrassing and po- tentiaily illegal activities of persons and agencies responsible for the United States~lrao relationship. in April of 1991 the National Securi- ty Council's legal adviser called a high- level interagency meeting to discus congressional investigations of Iraq policy prior to the invasion oi Kuwait on August 2. i990. The meeting was chaired by Nick Rostow. the general counsel to the National Security Coun- cil. Mr. Rostow’: previous experience includes playing a key role in the White House efforts to cover up the Iran-Contra scandal. which still needs to be exposed. Also attending was President Bush's general counsel. Boyden Gray. Other persons at the meeting included the top lawyers for the Departments of Justice. Deferme. State. 'h'easury, Commerce. Agriculture. Energy and the CIA. Bach of their agencies had received requests for infonnation from the Congrw and the lawyers who were responsible for overseeing the collection and the submission of the information to the Congress. l will refer to this high-level legal team as the "Rostow 259 H 1276 CONGRESSIONAL RECORD — HOUSE March 16', 1.9.92 with the Commerce Department law- yers. serious questions should be raised about whether or not the NSC altered the Commerce Department records or. more likely, effectively or- dered the changes to the records. After ail. it is highly unlikely that nu- rnerous Commerce Department bu- reaucratr would risk breaking the law and losing their jobs over a policy that they were not responsible for setting. Another important question relates to the fact that the Commerce Depart- ment lawyer that limited the scope of the investigations also is a member of the Rostow gang. It is certainly plausi- ble to think that the NSC or others or- dered him or pressured him into limit» ing the scope of the Commerce De par-tment's investigations so that at- \C‘:!C;0l‘l would not focus on the NSC s . In addition. the circumstances sur- rounding Mr. Kloake's departure from the Commerce Department also raises suspicions. It was reported in the pras that Mr. Kloake was forced out of his post at the Commerce Department be- muse of derogatory comments he had made about the administration's export policy toward Iraq. Could the National Security Council have or- dered him or pressured him into ao- thoriaing the changes to the export li- censing information? That is a good question. and it should be asked. The Question and its asking should be lus- tained. Oo July I0. 1991. Mr. Baaluan wrote to then Attorney General Thornburgh asking him to investigate the possibili- ty of criminal culpability relating to the Commerce Department's provision oi false information to the Congra. ‘lb date. the Justice Department's probe bu not returned any indict» resting to note that ent's top member of the légiiii 1s-E: s 5?? prooaoperatesas llaglnotUne.lfcongr&ion- vest-isationspasstheiirstbarrier. they sotm run up against the next. UiIdol'thhstra£¢I!.theprocQofob- taming documents to investigate Unitcdfltatea-lraqpoiicyisapaimtab ill. Wllolllt drawn-out procem that ulurclmanymonthswillpambefon acrmgraionalcommitteeobtaimdoc umentsoeededtoconductlrao-related invest-laaticoa. Themereiaet that the White House stablhhedanddi.rectsagrouptcRI- mnsomouumuimnmunwm M lrldpolicyraiaquestionsaboutthe motivescftheWhiteHouss. Bomeimportantquationsthatneed tobeaakedarezwhatdoeongrmional ofthe preinvasionlraq policy havetcdowithdcsisninsand carryingoutthePrealdcut's national security an-geqiesr with the world changingbythe minuteandourrw tional security strategiu becoming outdated ¢_n;_ why would the 35¢ devotelcarcestafftimetoregulating Nnaremional investiaat-loos. or at E ports based on its investigations 'l“he report concludes. and I" quote, "Changes were made to selected data on 66 approved export licensa to lrao. Bureau personnel also changed perma- nent records. compromising the integ- rity oi the Iraqi license records. Nei- ther the changes to the data provided to the chairman," that is. the gentle- man from Georgia lM.r. Biuuuuml. "nor the changes to the system data bases were adequately supported." May i also add that the gentleman from Georgia iblr. Baaruaol is not only the chairman of a subcommittee of the Committee on Government Op- erations. He is also a very illustrious member of the Committee on Bank- ing. Finance and Urban Affairs. The report goes on to state that it was bureau personnel that changed the export licensing records. The Kiosks and inspector general investi- gations of the changes to the export li- censing information were both serious- ly flawed. Both reports are silent on the issue of who ordered the changes to the exporting licenses information that was submitted to the Congress. Both reports are silent on that critical. important issue beause the Com- merce Department's general counsel deliberately avoided invatigating the quation of who was responsible for gdiring the changes to the licensing D 1240 Could the changes have been or- dered by the National Security staff? Well. despite the availability of evi- dence pointing in that direction. nei- ther investigation was permitted to pursue that possibility. 'l‘he Banking Committee has been informed by ad- ministration officials that the NSC legal staff went-beyond reviewing the Commerce Department documents thatweretobeiorwardedtollr.Baa- nan’! subcommittee, and NSC ltaff lawyers actually took physical poms- sion oi variom Commerce Department doeuments.Ootopofthat.theOom- merce Department lawyers prepare a control lbt f ments so it could keep liceming recorth the the NSC. The committee formed that prior the export lice Cvnsrfi. the NSC staff contacts with the General Counsel of the Commerce Department as well as the general counsel of the BIA. the export licensing bureau. Given that the NSC was instrumen- the export policy E‘; . §i'* ‘P iii %§§§ iiiliiiiiii i§§‘i§§§?§E “@2555? g Eggg i§§:E E25.-all ive. the fact mmrmaiwagg rgaumerous contacts inst; attempting to and so far succeed Since when did it become the re- sponsibility of the National Security Councilstaff to involve itself in con- gressional investigations? Well. someone like me would want to know. We asked that question and we know what has been happening for many years. lt goes back many years. and I had knowledge of a lot of things that at the time we iound hard to be- lieve. The only other example that comes to mind is the lran-Contra investiga- tion. Are the lawyers oi the various agen- cies so incompetent that they need guidance on answering congressional requests for information? On the con- trary, executive branch agencies proc- 5 hundreds of congressional requests for information each year. The law- yers at thae agencia are most compe- tent. highly motivated people who do not need. nor usually receive. guidance from the White House in complying with these requests. Given Ir. Rostow‘: close proximity to the coverup of the lr-an-Contra lmndal and the unique functions of tho Rostow nnl. it is not outside the realm of possibility that the White House is hiding something about its Iraq policy. It used to be that coverup were sort ofadhoceventaamadescrambleto provide damage control for the moment. The Rostow gang advances the notice that coverup mechanisms have become an integral cog in the machinery of this administration. Officials of this administration have publicly stated that they would not use food as a political weapon. for ex- ample. and in tatimony before the Congrw than same officials often statedthatthcvnitedfistesdosnot singieoutfsrmelportsasatooiof {or-eignpolicy.lnthemseoilrao,thLs administration violated both of these policies, and in the procma they re peatedly mhiead the Congress and thereby the Amerlan people. The 0.8. Department oi Agriculture IUBDAI offers a variety of programs dilifllfifl to assist U.S. farmers to sell their products overseas. The biggat oi thus programs is the Commodity Credit Co rai.loo's Import Credit Program. Kn was also the main United Bta-in program utilised by The goal of the CCC Program is to assistU.8.farmeraloselltheirsgricui- tural products abroad by granting ugh-strapped nations aedit to pur- chase 0.8- aarioulturai products. The O00 is required by resulation to allo- atsitsacditcothsbasisoiaioreign gum;-fa nceb. its market potential. andabova all. thalikalihood that mg“ guaranteq or loam will be repaid. mthccaloflraq, thou pm-qy commcnihlcooditionawersrelegated toasowtllfilfatlmhchkwtngforeign 260 March 16', 1.9.92 CONGRESSIONAL RECORD— HOUSE H I277 policy objectives became and remained the prime goal of the CCC program; for Iraq. ' ’ I have shown in previous floor gnu,-. menta that from the beginning of mg United States-Iraq relationship in I982 until the Iraqi invasion of Kuwait. the CCC Program was the cornerstone of United States-Iraq relations. The CCC Program financed the sale of $365 mil- lion in U.S. agricultural product: in I983. That was the year that President Reagan took Iraq off the list of tenor- ist nations and opened the sluice gates for all of this interchange. and so forth. and by 1988 it had reached over 81 billion annually, all guaranteed by taxpayers. and the taxpayer: have been left with a bag of over $2.5 billion lust on thse Iraq letters of credit fi- nanced through the CCC Guarantee Program. Cl I250 The CCC Program was by far the largest U.S. Government program became the two nations. With the advent of the BNL scandal. that is. the Italian bank. the Banca Nazionale del Lavoro. which, incidentally, all these banks are government-owned. and all of these transactions are by the cen- tral bank of Inc. for whatever that means. Of course. our regulators. the Federal Reserve Board. which h gup- posed to have prime jurisdiction gays. "Well. of coune. our reciprocity meam we can‘t get behind these accounts of a central bank of another country." But what about these othu banks that are also owned? They may not be the central bank. but they are owned by that government. And how can the policies of our Government not be frustrated. on one hand expressed through the State Department and what not and. on the other hand. un- ceied out by the mentl? Ari havenld.atthebottomofev- erythlng is financing. Banking. Honey. AatheysayinSpa.niah.dondenaropo- deroeo caballero. or, Mr. Money Bags. a mighty powerful individual indeed. The BNL investigation uncovered the fact that top Iraqi Government of- ficials were involvod in this scheme. Well. of course. We do not under- stand. It in nd Ike up. any more than the setup bank in than OGBI oura or the screening sight and the regulating ing functiona both domestic foreign. are comparable to o try. Ewen the Europeans. German. French, we are not talking about the same thing. That docs not seem to have dawned on our leaders in our country even now. E 3 s‘§§%§: Ellis: Italsobroughttolighttheabmelof theCCCProgramtowardIraq.Onto9 of the BNL scandal. Iraq’: alreedypre- carious financial position took e turn for the worse in 1989. as it began to t i Aa a result of these factors. the ‘h-easury Department and the Office of Management and Budget began to have serious doubts about extending ccc credits to Iraq. Pursulnl friend- ships with Saddam Hussein. above all else. the State Department was not datmted by Iraq‘: poor financial condi- tion or the pessimistic outlook of its sister agencies. Based on purely foreign policy grounds. the Stale Department presed the USDA. the Department of Agriculture. to give Iraq $1 billion in CCC credits for fiscal year I990. The invasion of Kuwait happened on Auguatl. l990.'I‘hkwaadespitethe USDA's contention that the CCC Pro- gram should be held under $800 mil- lion. _ Now. what tioning. but I have in th be I should not regurgi I think I ought to runlnd embers that these credita through the BNL were leveraged and led to the purchase of high technology from American corpo- ratiom. such as the giant gun that was in the orocaa of being developed. whoee originator was aasaminated in Belgiumattheheightofallthla.Alao chemlml weapons and ingredients for chemical weapon. They were all leveraged through these licensing credits through not only BNL. but BNL acts as a bank. It gyndicator? meamtheydo bringinother lgn ii; zit; =§E§ ztggii 1% 5215332: F .. iglili Zr llillig géiléiéii infill i E-.E ‘ ltililli tahoetofnot Vbenkainto on foreign I i 9. Agrtcullarre Ioodwaaeparticularlyexploelveareebe cauaethegcwernmentmuatfeedi Beflmlmldthelnnlde ooacerncdthatfailureto iii billion] programnow toeeareh immedlatelyfcr alternative ptieraandsuehmrpplierawerenotevailable. U3.amlonewilIaourrelar.iom.becondud- ill sliil 3 Afteranlriterieelobbyingeffortin ove|nberl989the8tateDepar1.ment finallywonapprovalforatlbilllon fiscalyearl99000CPr0grl-mforlrac. Theotheragendeedtdprevallinget» tingtheprogramaplltintou-08500 milliollinsiallrnenta. Underthatlv proeehtheeecondt500mi1lioncould bewithneld additionalproblenl were uncovered thetwarrantedsus- progr-am.Additlonal problelnedidarlae. I990 unfotdedlraqhecamelm eredngly belligerent United Staten. As that b¢l1|8¢I'!l‘l>0 grew.the8tateDepartme1tandN8C 2 ‘E a looked for leverage that could be used to modify Iraq‘: actions. They decided that the leverage would be the release of the second 8500 million installment of CCC credit. The United Stats Ambasador to Iraq, April Giaspie counseled against using food as a device to modify the actions of Iraq. In a May 18, 1990 cable to the State Department and the NSC. Arnbasador Glaspie stated: My own thinking ll that unless Agricul- ture haa uncovered a legal homeu nest. we will want to proceed with the second tranche of cred-lta It remains unclear why wewouldwanttoinefoodasaweapon. Later that month the NSC called a meeting to discuss potential strategies for dealing with Iraq. In preparation for that meeting the State Depart- ment formulated a list of policy op- tiona that could potentially be used as e tool to modify Iraq's actions. Re gardlng the CCC Program the paper states: 0% we eurruxtly he ttom legislation Inouye-Kastln exempts Pmlflm the sanc- ide from PRO. Since .nm- ew will bill of point N: . §il§§”i 5? HE it it 5 5 gigégzfi i§= a. E; §§%=-IE Q5? iiiiigiiiiirii §i§§§.e§%§ ‘E’ litsii healthsuapenaion ve we learned anything? No; Even as I am speaking now, of my colleague: know that States. this administration. to a lllyear treaty with years for defense. How tremendous amount of money that the Import-Export Bank has released for Kuwait? How many Members realise that at this time our home builders. those in areas in which masonry h not the big ingredient. but lumber. are finding that the cost of lumber is going up because it is being ahipped to Kuwait? But under what conditions? Export-Import Bank guar- anteee. $0 it looks like we have learned nothing. or at least our executive branchhasnotmrdoesnot want to. At the conclusion of the meeting it was decided that a strong mmage would be sent to Iraq-the second 8500 million installment wel not released. Thb too lit-f-IQ. too late effort to get tough on Saddam Hussein was a viola- tion of the Bush administration‘: own policy against ualng food as a political 5555?‘; g§§§EE% -s default on its loans to nations. - State Department. arguing agaimt aapasion. feared that Ia p¢n¢|n| (,3 I10 allits debiato state Depart- aocount but when less eetlng Iraq 5.355% Eléig §EsEE§ §§§?8% 261 i H 1278 CONGRESSIONAL RECORD — HOUSE Mamh I6‘, 1.9.92 lnvaded Kuwalt and defaulted on tts 82 billion tn COC debts. - " The committee has many more docu~ rnents showing that the admlnlstra~ tlon used the CCC Program Ior Iraq as a foreign pollcy tool in an attempt to improve relations between our two na- tlons. What ls troubling h that the Bush administration repeatedly snhled the Congress and the American public about how It was using the CCC Pro- gram. It did this to circumvent pru- dent controls that would have llmlted the amount of credit that would have been made available to Iran. 'l'hat de- ccptlon has left the United Stata tas- payer holding a much inflated tab for Iraq’: default. " D 1300 Former Under Seaetary of State tor Near Izast. and South Asia [NBA]. John Kelly. wasone of the chlel heu- tensnts assignedtocarryingoutthe Un|ted8tatapolleytowardlraq.'!‘he committee has numerous documents wrtttenbyMr.Kellyshowtngthatt.he Btatabepartmenthnowtnglyuscdthe CCCProgramasa!wdsnp0ltcytool tnordertoachtevsfiesldent Btmht deeseetohavedoseandfrlendlylrb ttomwtthlrae. Tolllustratethatpotnt. whcnthe BN'!.scandalthreatenedtocuto!1thc CCC Program torn-an, llr. Kelly wrotelnafebruarylflomtunoz ladbmlumewlnentastaetsonthe U.l.\|ndar|tnathetsagslltyeloerrelatlen- shlpwlthlragdxl thsrelatkmmhlp ssecndt t wast: ism Eiitgggiiig iii iii‘ iitiiiiiitiéiit i§*§§§~ iii 2 i §‘s‘§ =2 tit till; its Otmysem and Amciean public about tlsetlnltedstatespollcytowardlrae. IQIIIIIKIIZAIOHIQIQ Illllllfililfifliifls IwlllnowmowhowaeveralUfl)A officials. Including the lwlmer Geese- tary.sepeatedlymlsledt-hefitmgst and the pubhe about the fest poheymetunolthetlttfllosramlee i E E E s Congress that the OCC Program for Iraq was subject to foreign pollcy pres- sures and It also indicated that the O(X2ProgramtorLraowasnotmalnly foretsn policy based. Concrete evi- dence gathered by the committee eon- tradtct both those asertlons. The USDA was. tn fact. well aware that the CCC Program for lrao was foreign policy based. To Illustrate that point consider a comment from a 1989 Agriculture Department memo related totheproposedtl bllllonnscslyear 1900 CCC Program for Iraq. The memo statx ' ' ° this plosflln cannot be seat by the lraolstdsoutstdsthecontextoltheoverall U3-lrsol polltlcal relationship. The U5. re latlomhlp with the moat powerful of Arab statatbothmllltartlyandlntermsofltsdl reserves. has been carefully nurtured during theyearlolthell-an-Iraowarandmore palflcularly. Gull! the I0 mlootlm since the eaass-fire. Tbs CCC program. as the ambas- mdere pesmmlal tabla have nsphuhed playedebeyselelnthlsapproaeh.'l'hsAsm- baladofs ably have strmcd the thsnts E‘ it '2‘ téigéiti ‘$555531 riiiiig Triiiai its? statement thatdoeanotunden gnpoltcynatnreotthe tX?CProgramnmlr-so? DupttahnowtngthattheCOCPro- gramior Iraq wasbeingtnflatedto aehteveloretgnpollcy S t l E temtmony before the Home Banking OmmmttteelnOctober l990,theOOC'I Pau.lDlt-kersonstated: Itlthetifiprogramlorlraelwssa Illl‘Ul¢fiV!lIaeflcultuII-rdated program wttbntreleraumteothetbuqt The UBDA attempted more than cmscstoaeepthstruenatuseofthe l'sogramh'osnpubllcscrottny.ln tlI0.'rreasuryDepars- a 5 ttg. l!;F§§§?"'§ agar; ggra Etglgggiglgg =;i§§§§§§t@§;5§i@§ - =, . 2,; "‘ §5§ =§§ Zia §§==;%§iti;l§§§g t list .35 itstlti i USDA to approve the CCC Program for lrao was intense. It was so intense that In late 1980, both Secretary of State James Baker and Deputy Secre» tar! ct State, Iawrence Eagleburger put the lull weight of their otflcea behind winning approval for the CCC Program for Iraq. They lobbied the USDA and other agencies and neither rnlnced wonds—they wanted the CCC Program for Iraq approved for forelm policy purposes. During the period surrounding the I989 debate on whether or not the CCC Program for Iraq should be ap- proved. the USDA stlll strongly sup- ported the program—albelt at a lower level than the State Department 8lnce Iraq had become a large market for United States agricultural prod- ucts. the USDA feared that a sudden termination of the program would place too much of a burden on United States farmers. As I900 unfolded the USDA began to seriously doubt the wisdom of re~ leasing the second $500 mllllon install- mentof(XJCcI'cdltstolrao.'l‘he Stats Department detected the U8DA's growing apprehension and tt uerted emstderablc procure on the Ufibatowtnapproval lortherelease of the second 8500 mnllon lnstalhnent for lsao. The State Department's position b Illustrated tn a January 4. 1000. infor- maatonalmemowhlehstates: "°U8DAmaystlllbereluctsnttopn> ecedwlththcscc|mdtranche.CCChasbeen ti? :2‘ lg iiiiir Eitzit‘ Zggsig EETEEDI did heavily IQ lnhnanagesnent reeentmntlmand plshbsl-be e IQDAI ltbefwethe tteel. The8tateDepa.rtment's posltlon h turtherlllustratedlnaPebruary I090 memo to the Treasury Department eal1lng!oraNAC meetlngtodlseum tlsenleaseottliesecondtranchaln themcnollnkellywrlts UlDAjs prnnt delay In releasing mend tramhehlmagfl the hr O.8.psothicassthatsalltolnoaswell ourpollttalrelat.lenshtpw1thanIms»I\lI\l eoantrytlraexlthsratosvreewfllhltrou Depamnantlmnveneameetlrm I la? Z fworryamong managers. lnprepara. lay 1900 NSC meeting tloned earlier. the USDA wbhfnl background mane to ftwhlchstated: IQ 5 P Q slthellacdsputlmassconsspeeslbleso thllanxlsitalfsuslfortmmedimle asthma. A third example showing that the EAwasunderlntensepresureto Qppfbtli the O00 Program ls eon- talnedlnallay25.l990,'h'easuryDe~ panmentmemoflmmartsmgameev |p|heldbetIsentheU8DA.'I‘|easury, and State Department. The memo states: ¢1'D4)I9¢"!IMsbsenlnltiatedbythe Ilfistallbeatmsthqwanttoprrvvnttne tII3I’\II7llfl'1DlIQls0elelII vwl¢Il=Ih|staeapssanuauear¢- dslpstiqlvleuavmwlthlne-Agneulusu lI4I"'"'¢nIssetanr-reassess ilF'°°"ll-lllatbspvogramweneomplete 262 I l March 16', 1.9.99 CONGRESSIONAL RECORD— HOUSE ' H I279 ed. The NSC prevailed on Agriculture to say only that their investigation showed the im- proprieties may have occurred and remained silent on the suspension. in fact there is a suspension in effect. ' ' ' D I310 Even though the USDA was under inteme pressure from the State De- partment. on several occasions USDA officials deliberately misled Senator PATRICK Lunr. the chainnan of the Senate Agriculture Committee about those pressures. In l-‘ebruary 1990 Senator lsuunr took opportunity of hearings on the 1990 farm bill to question the USDA’s Richard Crowder about allegations that the USDA was being pressured to approve the CCC Program based on foreign policy grounds. During the hearing Senator Luurr stated: I assume you are getting some pressure. either from the State Department or else where. within the administration to loan money to Iraq. Or is it Just an internal ded- sion made simply by the Department of Ag- riculture? Mr. Crowder responded: We (USDA) are not getting undue pres- sure from anyone on either aide. either for iraqoranyoneelseatthi.st.ime.l.fwedid notlgreewithitwewouldnotrecommend it. If we thought it was appropriate. we would recommend it. The Secretary of Agriculture even got into the act. On February la. 1990. Senator Learn wrote to that Secre- tary of Agriculture. Clayton Yeutter. asking about the BNL scandal and the fiscal year 1990 ti billion CCC Pro- gram for_ Iraq. in the letter. Senator Lauurr wrote: lamalsodisturbedbyrumorsthatforeign policy praures have encouraged the De- partment to give Iraq medal tratment tn thi.scaae." On February 20. 1990. Secretary Yeutter answered Senator IIAIY and in letter he states: ~ You mentioned that there that foreign policy aged the Depanmen E E5554 ti?" seiiiii netethatanea.rli- erdraf DscetaryYeutter‘s reply wasmuchmsremedfleandmisiad ins.'l'hedraftlsttercontsinedaflat denial. asoppgdtothedacrlptive version that was actually sent. The draftletterstatx Youmentlonedthat thatforeimrpeliey i iii iii agedthe tl'satmeatinthh¢ss.ltanaI'ureyo\|thst tberehnobadstethhnmaw. Tbe8tataDepartmentdirsr:lyin- tervenedatleaattwlosinUIDA‘l0& erationofthsOOCProgram.Il.ratit Iaisedtheemountofthafhalyesr i”fiOOCProgramfor!raefromt.he U8DArecommendedamountoflIl0 miliiontotibIlllaa.8ecend.the8tate ii it ii a. for Iraq in April 1990. The State De- partment sought. to tum the program on and off for policy reasons. and nothing else. Despite these and other pressures the USDA continued to misled the Congress and the American public by insisting that the State Department was not applying undue pressure on the USDA. Given that high-level offi- cials of the USDA were willing to mis- lead the Congresl and public about the use of the CCC Program. one must be concerned about the integrity of the entire CCC Program. How much of it is involved now in our lumber producers. lumber going to Kuwait. making our potential home buyers. who can afford one. pay a much higher price even now with so- called deflation? One must be ooncemed. The CCC Program for Iraq is a prime example of how the State Department and the NSC use United States credit pm- grams as a backdoor means of financ- ing your foreign policy objectives. often at. the expense oi’ the United States taxpayer. if not almost 100 per- cent. Because the administration strongly denies that these programs areused in this manner there isa'de- cided lack of accountability over such ' use of the programs. In 1989 and I990 the State Depart- mentusedt.heCCCProgramfor1raq as a political weapon in a failed at- tempt to modify the actions of Saddam Hussein. That dubious effort cost the U.S. taxpayer, in one in- stance. as l said before. not necessarily CCC. 8500 million. $500 million. with less than that amount we could target the needed improvements we have in the sorely reduced housing stod for :3; very poor. known as public holis- Tha State Department clearly does not hesitate to misuse commercial export programs nor to lie about its actions. Mr. Speaker, I include here ument and the records on the which I have issued this repo colleagues. Nsrroau. Sarvarrr Covwcn. Wuliiaptow. DC. April L 1”]. Memorandum ion Jeanne 8. Archibald. Treasury: C. Boyden Gray. White House: Fred Green; Michael but-tie. Ju- tics: Terrence O'Donnell DOD. Alan Raul. usna; Elisabeth itindsaoot. Iidwin Williamson. Stats: Wendell Will- kie. Commerce. Subject: Meeting on Congrwional Requests for Information and Documents. First of all. I apologies to Treasury and for not invitlm this to the lneetirfl today on rupondirj coltrldolr al reouflu for information and docisnazts psaaiaiu to Us-Inc policy slhr to Augtl I. 2:. At the meeting. it bsmiae have been present. I shall schedule a meat- III for tomorrow on reqoms pertalnfm to the III./OOC matters to whlfl Agriculture will be invited the regent thin far ro- tetyt meatim en- “ E §§t E 2%; Department General Counseis should review and inventory all requests to deter. mine which. if any. raise iaues of executive privilege (deliberative proces. foreign rela- tlonl. national security. etc): Aitematives to providing documents should be explored (e g._br1efingal: When accas to documents may be recom- mended. such recommendation should be circulated to this group for clearance; A recommendation to provide woes should be restricted to members only sub- ject to these conditions: no document may beretained; notes may be taken but should be marked for clmsification by the depart- ment or agency in question. (FYI: our legis- lative affairs office recommends against in- aisting that members come to departments to read documents. l: and in any event. depanrnents and agencies should seek guidance from this group in cast: of doubt I hope you agree that this summary fairly repraents where we tame out. Nrcaous Roerow. Special Assistant to Ute President and Leool Adviser. U.S. Dsnarasnrr or Acarcotrwna Orrin or ras Osnaai. Comrssg Washington. DC Apfll 11, 19!]. Ilnsoaanmr ros rrts Sscarrur Prom: Alan Charla Raul. General Counsel Subject: lreo-Related Document Requests; Response to Congrasman Rose. issos OnApril ll.OeneBa.i1eyandlattendeda meeting alled by the NSC to discus the Admlnbtrationi ruponse to Connwional requests for Iraq-related documents. USDA has received document requests from Coo- grxnan Oomlq Chairman of the House Bankizl Committee. and from Congrusman Ross of the Home Agriculture Committee. Qmg:|'1san Rosa wrote to you on Anni ll. llll (copy attached). erpressing his re qu¢ for dotairnaats in rather forceful ternm A proposed reply for your signature h attached. srscvsstos l. Beckpvund. The N8C‘s legal adviser anddireiaoroflegislattveaffain calledan inter-agencymeet.tngtodbeumtheAdmin- Braden‘! rspott to numerous requests for Iraq-related documents. Boyden Oray attendedthemeet.ing.asdidtheAssLstant Attorney General for the Offia of legal Oournel and theielll andoongressionai of- ficers for Btete. Trusury. Commerce. and liter-gyDepertment.sasweilastheCiA. N8AandJoint Chiefs of8taff.Eaeh agency reported on document requests it had re- ceived. The House Banking Committee. Bouss AgrlculturaCommittee. House Ways andIeaiIOoaamit.tee.Oeoerai Accounting 01fla.perhaQthsPbreignR.elatlorisOom- mlttam.aswellasot.heroommittees.arere- quQ.iiulraq-relatedmateriala 'l‘he'l‘reasuryDepartment reported that fthadpenIaitliedHillstafftorevtewtheNa- tiorml Advhory Coundl minutes regarding lntr-egeasqcomideratioaoithelraqO8I requ1'l‘haIlACminuteswerereriewedin thso(!lamefthe‘h'I!asuryDepa.rt.ment.;tbe notprovtdedwithany utm. Congressional eveopenaitted to utu. ustioeDe- i*E*ii"“i§ Eigiiéiiéi §:';Eg€5 55%;; 1 263 H 1280 CDNGRESSIONAL RECORD — HOUSE March 16', 1.992 nority aa well aa majority rtaff member! be included in whatever document review h al- lowed. Be further eoareated that if appro- priate, aaencla ahould oonatder enterirq into confidentiality aareemeata with the Gong:-eaalonal oonunitteea or aditlna out the deliberate or advlaory portlona of potential- ly privileged documenta S. Coordination and Review. The meeting concluded with NSC auzaeatina that the oo- ordlnatina proca would continue to be available ao that agencies do not puraue in- oonatatent lbproachq. it waa alao noted that the oblectlve ia to cooperate with Con- preaa whfle also enaurina that appropriate protectiona are accorded to deliberative ma- teriala. also. the inter-agency nature of tbe aubleot ahouid be reoon¢l:ed—there.fore, aaencica ahould not act unilaterally. I par- ticular. an agency ahould not diacloae docu- ment: in lta fllea that were originated by an- other aaency without advance oonaultatlon. finally. it waa agreed that material: ahould be reviewed before belna provided to the Conamuional committee and that each aaency ahould maintain a llat or copiea of the documenta provided. 4. Suggested Ouideiinea. I propoaed the following procedurm and auldellnu in re- aponae to these document request: within USDA: l. Requeata ahould be received in writlna. 1. Party receiving roouct ahould forward oopiu to: L Blumenthai/O'connor (Cale); b. Raul/Brooch (OOC); c. Orowder/Acleu Hovelnale (LAQ/FAB); D. Bailey (OCR): a. Snead (OIG). I. OOC will review each request and pro- vide advice. 4. Potentially ruponaive filea and/u do» tnnctta will be reviewed or avahlted M r§,§ ii? §: 53 it ii O.Relevanta¢acywi.llnaaecupiuofpo- kl- lallyl'@omiveIataialaandprovidat.o 00¢. 1. arena or OOC (to he dcdded afta oonnaltation)wllln'ovideoopaItoCanm|t fee with appropriate cover letterdraftcdby atnnaaar ’l‘heIt8Cbprovidlngcoordina.tionforthe Admlnbtratiodareaponoatocongrmlooal document roouda fulno-nlaaodlntart a.|a.Theprooemiatntandedtobeaooopera- tlve one; it alao reooanlam the taacutivo Branch'aappropriataoon!ldanthlityinter- eata.llanyOonarenionalcnnunitiemareh- vlltiaatioothaaubioct B03 Banalnatiorntnlttaaand lrhuiture Commiuaafheaetwouaami |nittaddocu|nentvoouito' lnoonnaetionwiththe tromtho fiouaa Anicultura ComlI§.aIIOCd relponae to Cotillion Z‘! II" 13 lettartovouhattachad. Dnarran-Ir or Ooanlaaa ‘ha Una Baueraav roa larder Antuna-nanol. , Waahiagtog DC. hbruarp ll fill. llezaorandu-forzwendellwlllaiqflanar-al nab Counaet. Protazbuanhllula. . 8\|b1ool;lraoPrintout. Atyourrequct.lhaveaaaedtheOil’loa of hport Uoenaim atatf to Iapan a reportuthapreparatiooofthaprlntout for animal Iannrd A cop; d thb |eporttitlod"I-Ianbatahaallzanfb at|-achod.alooaIith¢taaand.afil~b7- nnaumlaryofanyoorraotlonaladato theprbtootlballevethlafullyraapooaato yourmemorandumtolaalfobruaryl E E E 2 tee iaaaurnmary reference doaunentwhlch la Ieaponaive to tbe Chalrman‘a request con- cerning the hiatory of exporta to Iraq. The document also reflecta Fifth floor and White Houae guidance not to provide infor- ma-tiootbatwaanotdlrectlyreaporuiveto tbe Qiainnani request Piaae not that to bio. four printout: have been provided to the Cotnrnlttee-the fir: two by lX2CNa. and the other two by end-uaera I have alao been informed that the list of four am-pended caaea to fran waa not rup- ptied to the Committee. althouyh Mr. Jacoh. Barnard‘a Chief of Staff, waa told about it during one of the brieflna aaiona. I rave given inatructlona that the llat he given to the Committee. I would be happy to brief you on the report in aroater detail. laao Dara Ban Asnssnwr lrdormatlon on export llcenae appllutiona in Iraq la contained in the Export Control Automated Support Syatem KRZABS) date baaa. That data baae contatna more tmn 1.8 million rcoorda datlna bael. to 1880. ‘there are more than 600 different computer pm- arama that can be uaed to aocaa the data baae to obtain dllferent information. Record: datina back to 1980 are very aketehy and cover little more than the flte oi receipt and final action. ln the mid-lI&. the data baa: improved neatly but atill con- tained many lnaocuradea aa data waa imput- odbyleypunchoperatoralnl888.thedata baaa aocuraq incrcaaed once again aa appli- cation information waa entered either elac- tronfcally from the exporter or by canning applicatlom with Optical Character Read- era. Thoaet-mldatabaaecanonlybelnodlliod bythoDtrectoroftbeO!i‘loeofl.nforumtiu\ ll-ao\|roalla.|aenimtlOll'tM) Depoty.Nooneinthe lioenaina anyaenlornanapementofficial pahllitytoaooathecomputer anyaziathjflt-L &gramanBarnardreqomedon tembu-Iltllimailetofallexportiicenau to!rqbomlI8ltoAu| tl.ll90.Ke aaacdlor: V Dboaithoolaaohliomaeappllatiut, lteouoaterofeachlicenee application. Prodtaottobaaxpprtott Approxlinatevalueofaale. t ma-Uae.‘ had-0Ier.and V hport Commodity Control Itnbc @130. Tbofimarxnanrtated ttntbelnder-atoodthat“tha fonaationhonaoomputerda raadflyaooamibta.‘ Aanrdin¢1y.wedecldedlorea'pondtothe Ollliaalra raquut by preparinalflfifllr ooaivlar-atadbytheDCA88dat-aball-P0? thokodthodmaupathannbwllflr tlQ,weaaaedtheoomputertolIwhether tboflaowaaapproved. veiettfll l'¢"I°°4 withootactloagoremba.r|oed.!‘ort-he re~ euaaiar.wepruvid¢dthenameo1thewpli- not-thaaaportar. I\'Ithopvoddtoboeaported.we\lI!4 thogriptionanociatadwithtbelflport Con Glnrnodityllunabartlitlfill fill- baaa. We tbwah \-NI tetheconcreannal tthahnatltrlilill andnoddoulr 55%: 8 55:; 2*? ail i§:§E‘~i§§§%E E? §E§= ii: €Ei‘§?§€%§‘ iii it at :5; E i end-uae. we aaled the computer to the end-we an llated in the data the EX)‘. we provided the IIOCN. In Ieviewirq the printauta before their |ubrnlslon_ to the Ooncreaa-nan. be coro- pared each entry for accuracy with informa- tion that was available an microfiche rccorda ln 66 tnatancea out of the l.l2d li- oenau procsacd for lraq during thla period. we found that the data baae did not correct» ly reflect the diapoaitlon of the application. No lurprisinaly. moat of theae instance: were for appiiutlona before 1988. Based on concrete and apecific documentation avail- able on microfiche. we corrected the data baae by including the additional infonna- tion. Thea: correction: are detailed case-by aae at the attaohrncit. Generally. they in- chadet Additional Information not reflected in the data ban, Updating other agency recornmendatlona or addlna poaitiona where the moat. recent recommendations had not been entered into the data hue. and llore detailed commodity or acriptlona were the infonnation base waa lnauffldent or mlaleadim. 2'2 3% E: All of the recommended correction; were forwarded to OLRM for entry into the date bane. All-in no correction: were made by any licauing peraonnel or by any aenior rnanagera tn the oraanlntion. Withreapecttothedataprovidedtothe Congrxamandthepoaitionoftheotiie agenda. these report: were cleared with thoae aaenciu. All advisory aaenciea-De~ fenae. Btate, linerey and the Babe-roup on Nuclear hport Ouutroh (8N‘lt)—have re~ viewed than ra-porta and concur in the aocrr racy of Cunmucwa information and. with one exception mted below. in tbe manner whkh it appeared in the data baae. The one exception concerned the State Department which requested a modifica- tion to the data presented to the Contra- man. While Oommeroe'a data baae ahowed that aeveral of the application: which had beenrefcrredto8tatehadreceivcdareoou- menhtion of approval. the 8tate Depart tomtwiahedinthoaefewcaaatohavethe nconunenmtion changed to one veflectln; that State had railed no foreign policy ob hctiorl. Q-ate otlatendod that in theae few calm there waa not fonml requirement to refar the apptiatim to 3-ate. and thtl. no formal eflnim of approval tron State na roouiad. Qaalheroe refund to aha the data ban but did aeroe to footnote than few iltancea with Btatei preferred dcacrrp tlon of its podtlon. Wflh the elceptitn oi the corrceuoru noted above and it the attached caaeby- caaa lxbtlon, no chamu were made to thada.tab1.'l‘beprintoutaprovidedtotha 0olar$unn factually repreaent what la h data baae and what haa aiwaya A5 data baae. The DCASB of exceptional aecurity and with internal nfenardl and wedode alteration. printout provided to Ir. Bar- lmnlnary refarence document that ptember 28. 1990. re consistent with from 2Ezs_;'§;:=§§* £5255 iii 2 rt‘ 5?? 2% 264 Mamh 16‘, 19.92 CONGRESSIONAL RECORD — HOUSE H 1281 Dnrsansxrr or Corsican ‘Pits insranoa Ooveuu. Wanhinston. DC. lane 4. nu. Memorandum ior: Rnhcrt A. Iuhseher. Secretary. Prom: Prank DeGeorge. Inspector General. Subject: Report on Iraqi Iixport License in- iormatlon, Bureau oi Export Adrntnls. tration. At the request cl the Department‘; om. erai Counsel. we reviewed the reieaau oi lraqi export license inlormatloo to the Chairman oi the Subcommittee on Com- merce. Consumer. and Monetary Aflaira. Rouse Committee on Government Oper- atiom. Our review disclosed no evidence that Bureau at hport Administration per- sonnel deleted entire export iicensa record] before they Iubmit-ted the lnlormation re- quested by the Chairman. However. we dld confirm an initial report by the tor-mer Under Secretary tor hport Admlninratlon thataamallpcrvzzntaeaoicertalndataoi the Iraqi export licenses procmaed were changed in suhmiaaiorl to the Bill. Bureau personnel. tncludtm the tormer Under Secretary, stated that whiis prepar- ing printouts ior submiaion to the Chair- man. changes were made to selected data on O0 approved export licmaes ior aslm to Iraq. Our review disclosed changes to data on two additional liocrmm concerning trucka. Bureau peraonnel also chanced permanent recorm on the Dtport Control Automated Support System database. compromising theinter-rityoithslraqiiicanssreoorda. Neither the changes to the data provided to the Chairman nor the change: to the syatan database were adequately supported Our review disclosed that the former Under Seqetary concur-red with all changu to the data sent to ths Chairman but was unaware oi’ any system database changes. With the exception ot changes to Ova trud llccnsu to remove a re-terenos to thetr potential military uaa, the changu were inconsequen- eliminated apparmt tnctmalstenoia i'nlorrnai.iosa erg 5 F2 g§%§§§§§%§ .§§€’E§§g% ililiilll 3 igaézgégz unitatosu tncludlngattmetshla therecmnmendationawithlntddayaoitlu dateo!theaud.itreport.Aa:ordtfi.wure- quest that the acting Underbcratary ct thsBureauoikpwtAdmtrz&-% rectcdto IN I FE ii?‘ E E §, WEE’ -*5? E a in trill; ll giiiggii .;;;;.=!~;,!;;; i§i§§§§E§ ttéélzii it "=*"a:::“" Gil l0.0ctohar 2 8 s IUI-H17 PBIOKIIIL CIIAIGD INYORIATIOI OI II LHIISB In hla report to the General CounseL the lormer Under Secretary stated that Bureau penonnel changed licensing data on 65 of the L128 licenses (later amended to l.lJ0) processed tor Iraq from X935 through Auzuat I. i990. Bureau personnel acknowl- edged one additional license data change as we began the audit Durim our review. a'e identilicd two additional lieenss data changm that were not previously acknowl- edsed. brinsins the total to sa The license data changes were aa (oilora: ' ii) Dacriptlona oi trucka were changed on iiva license record: to eliminate a relu- encetosdesign iormilitaryusa. (I) Notations were removed on 19 iioeme reoorm that had indicated reierrala oili- oenau to anothe agency. (3) Btated pmitiom ot other agcneiu that revieworapproeelicenseawerechanredon 38 lltznse rmorth. (0 Itnd me datements were changed on five ilcemu. On tour licenses for equipment used h a fiaaenettc media factory.‘ the de- scription ol aid incl were expanded. The xpansion added the phrase ‘to [manufac- ior convumer eiectronim." the exporter had inserted s "According to our informa- end nae: U involved in military matters" in the end use tieid Bureau per- aonnel deleted the comment. Genoa to "Military 15-act" Llceasa . Ulahslttlld The etport regulations provide unmet commodity number and auiptirm for each commodity to ed. Bureau personnel changed the commodi- tydel:riptiooiortruch|rom"vehideade- dsned tor military t_" to ‘commercial util- ity and truda” or 'vehidea“ The iormer term h oonshtmt with the terms ifi tn the export administration reruiatioua as the nasal dxwt-in ol the trutta. We iound no fill to gm:-al dun-iptiona o! other leased mmmodiflu that made than incon- 55:5" '駧 53% aimentwiththsreeulataicn. ABurnno.kaltold thaoommo-dill dssuipttomwm-a&anaedtodariiy that thohwQadom|aotllesrmsthaaa.taolmni- tarytrudafhaslrkislalaomldthatthe dasabtlen dmmas wee instilled by a latabepsrbmtietlmrtoanuportdin l$.'!‘holett&hadimted qfitriadawhlchweretnteoded lraq.werecladtiedas'comme-rctal oaraotruttsif Wadi.mgreswtthhothreaeonsiorchang- iruthecommoditidcacriptlotnflieetport adminlstratitlireauhtlomailowthebureau iortheaaleoimilitlry onthe 0.8. lltmltiona a.|-eprtmarilytrarlport deakned for ncncomhat military purpi. Addttlaaally. when wedmbed thseonteoflolthailidletaerwith mentotthht they hlormed isttlprovidlnoyuatil suiptitmchalillt Z 5? git rig $55 is. iii? manta‘ responses or recommendations. The De-amber ii printouts showed all referral tnlormation. tncludins the other depart- ment‘: recommendations. On February I. lfll. the Department's General Counsel asked the iormcr Under 5;“-gtary to provide a report addreaaing whether ti) the printouts were mi.\leading> tticertalnendususoithelicensedoom moditiea were deleted or daanred. and m the characterizations ol the licensing inter- mation had been materially changed irom those originally in the system dalahaae. This iniormation was requatcd bctause oi media-reported alieeations that export li- cense iniormation and reconh were deleted irom the Bureau's tiles. The iormcr Under Secretary provided tha report on February 25. int. acknowledging that cha-uses were made to the information given to the Chair- man. On March ll. ioilowing continued media reports that Iraqi export lhenae informa- tion was deleted from the Bureau‘s mg the General Counsel aated the Oiflce oi lnspeo tor General to review this matter. ruarosa an smra or arvuw ‘nu purpose oi our review was to deter- minatl)i!anychs.ngesweremadetothotn- formation prior to suhmimlon to the Chair- man.(2li!anychangeaweremadetothe export control automated syltean database records. and (I) the aoairacy and complete nmotnotatioru indicatinathepositionsoi other departments involved In reviewing ll- censes icrexports to Iraq. We interviewed Commerw officials tn- voived tn preparing the responses to the Chairman indpdtng the former Under Beo- retary. and otfictaia from tlas Delmsa. Btata. and Enemy Depsrtmeota We re- viewed the Bureau‘: support tor the ao- lnowtedged changes to the printouts iur- nished the Chairman. and detamlned whether Bureau personnel had aim changed other inner tniormation kl the export license ayatem datahaae. Burau om- dall 4H not malnlllll lb! U918 ill tb printouts provided to the Chairman. so wa obtained Iraqi liouasa tnlormai-kn stored on magnetlctapaaaotlayli. illO.andpao- vided last Ausust by the Bureau to another ‘$2? grgggggg :§§§§§§5F I E ggfi E igtear Egirg tttiéiitllggsi We auhmittedto mationprovi miter tape We shown on the Dccem thsdatairumthsllayli deter-minstrurellshllityotthe mation in the datahaso—t-hat elportiloecnareoortwarudsistodhoaa dat-sham. aaamhaathohternsloontrob olbtam §§‘%‘%ll§§’§%%§%% E gilgigfia igggi igiiétiil 5-235 -ziéiissii :22 expoItertbtthstrucbarenotonthamu- ntflfll K and can he lloenacd M the lrnnmflactuadtatthattheeharigeswuu malmtiiiadandmhleadmg. Iurnu psrsolmsl changed flve licsrues thetwothatwaiound ikaensedtruolawere fiolthe l§§%§§%%§ iii??? 3%??? r§Ee§ 265 H 1282 fcoucru-issi61~iAL RECORD -'-' H6 anniversary of the White Ho JXlllW.H710NOIDISIG\l USE 1-Ma;-én 16, 1992 CO CE REPORT ON HR. 3337. ITE HOUSE COMMEB-(O- R VE COINS r. HUBBARD submitted the foi- owlng conference report and state- ent on the bill (H.R. 333'!) to require the Secretary of the Treasury to m oins in commemoration of the th and for other purposes: Corrruuzncs Rzrosr (B The committee of co arreelns votes of th amendment of the ire l02-(54) nce on the dis- wo Houses on the nate to the bill (KR. 3337). to requ e Secretary of the Treas- ury to mint in commemoration of the 200th of the White House. and for oth urpoaea. having met after full P . conference. have agreed to recom- and do recommend to their respective uses as follow: That the House recede from its disagree- ment to the amendment of the Senate asree to the same with amendments lowt dm and III ol- ln lieu of the matter pro aerted by the Senate amen following: be in- insert the TITLI V SIC MI. DEGN CIANC QUIID NR CERTAIN COINS Ill! --Section 511214) cl ltlll Id.) IIG United Code, is amended by end the /OUOIIIII new porn- rideé/the rshdiibese I. 5-cent and oeomuidered/or rederia 32% it; dfrriecoinssholl Thsfini rcdesipncdcoiashdllhoveode that h adredtho eowimernomiino too a son of the miiflcotiorl ol the Bill to the Untied Stowe Cbnstii tion. §s %E§§! E§?n%§ pertodollyeorsallertuas seorperiodthebicenienn itldesiaa changed in rdo Allnu:hrede- ‘ a>ifhiheirI-scriP- hrth is mmmnh In prooirioruo/this ricncdcoiasshail tioareoaireirien dlhieeaoscc IN Iiati dad lsnumce.-The rriinlinp of thsflnt selected for mission under sec- time 21¢)!!! ol fills 31. United Slated shall bepin aoi later than one sear o/eaactneai ol this Act sad shall bepia as soon as prncticdl ii thereafter. Ihsduldlchonourwliredbrfl Iaadsbysociioa Sdishaii a. Q E Etthedisereiioaolihs Treora be one Q iii § 2.. §§§§ lheddlsoleaoc mfioaol Ulteddoilh rldlldlhdll 1294 tab circuls discretion. direct the "K C8810! o/an! '9" Ia adecfiap new dericru. the co-arider. anion; other lac- repnsenlatioas nlihelolloio Jrowifheliiiolliphla.-heedorn - aadasse|r\oiy.'!nedornq!fhepr'¢sa' r-iohttodaeprocsssoIloio:aadotherap- themes. Thedeaioasshailbe by the Secretary UNI consultation Commission of lino Aria A Med under section 501 shall "IN GOD WI TRU iascrtptioasasare |dl.ll!‘|'|¢VtY1Il Section Illllallll I informed us that no licensed trucks have been shipped. Jiutiflcofion /or Deietinp Computer Ports and Oomponents Re/er-mu Not Cleor Bureau personnel deleted ii referral nota- tions to other asencica: however. those ac- tions were not clearly Justified. Nine refer- rals to the Defense Department for comput- er parts and components were deleted. and ten other referrals for various other com- modities were also deleted. Bureau person- nel told us they deleted the notations reiat» ed to the computer parts and components because the Licensing Officers‘ Operating Manual stipulates that parts and compo- nents licenses should not be referred to the Defense Department. We reviewed the operating manual and found that it contained conflicting proce- dures as to whether licenses for computer parts and components should be referred to another agency. A dated procedure could be used to justify the referral notation dele- tions. but a more recent procedure required that the licenses be referred to the Defense Department for approval. Notwithstanding the position of Bureau personnel that com- puter parts and components need not be re- ferred to the Defense Department. they were referred and licensing issues were set- tled among the appropriate asenciu. Under the circumstances it would have been more appropriate to have included the referrals in the printouts and explain the resultant positions where necessary. Wedidnotreviewthoentiremanualto see if it contained other conflicting or con- fusing procedures. Bowever, Bureau offi- dais should perform such s review to ensure that licensing personnel have clear. unam- biguous prooedura to apply to each license application , adeoaois Documentation /or Ions Chance: Not-Prpoidd by Bureau Personad We reviewed the I9 changes made to other agency positions to determine wheth- ar the chansu were well documented and supported. Bureau personnel told us that the ehanrcs to other agency pfitiona were “correctiom” supported by export licensing resulationa and files of original documents. Our review of ths documentation used to supportthschamuahowedthatllotthc changes were based only upon the Bureau liceruing officers written notation that an asency position had changed. We aho found thatiloithetlchangeswemnotsupporv ed by reliable independent documentation. -‘hs licensing officers often did not bass the changes on indepmdent supportmd docu- mentation sueh as lnamoranfl prepared by officials of other esancic. - _ Bureau personnel also did not Iwrlde ade- quata support for chansm thflxovad no tations indicating referral to k apcic. Additionally. each lioesma apatnsn must ineiudeastatemmtonthsnlumaclthe commodity being exported Burma person- nel did not provide adeouata documentation to siagaort the chanscs in the end use stats- men . ' lure-au personnel stated that they had diseumed all chanaes with officials of other asendes to confirm that the chanses accu- rately refiodied their positions. Bureau per- sonnel furthr stated that these officials concurred with the charmm. Wsashcdoffii:iaiaatthaIiner|y.Stsia. and Deferus Departments to verify state- ments by Bureau paraonnet partment official dhsreed position ehangu. However. are that additimal action to record was needed. A Defeme Departmen official stated that approximately I0 per- cent of the licenam were approved “with oooditiosmf while the Burtnwl rooonb indi- $9 §=§i .223? caied that the licenses were simply so proved. Another Defense Department offi- cial stated that he told the committee staff that he was satisfied with the presentation of the Defense Department‘: podtions on the printout. The State Department did not disagree with the stated positions. As a result of the other asency officials‘ com- ments. we consider the changes to the posi- tions and the deletions of the referrals to have had little effect on the lradl license in- formation [iven to the Chairman. we found that the other asenciea did not maintain complete records of the license ap- plications submitted for their review. De~ fense Department officials told us they de- pended upon the Bureau's film to support the changes in their positions. reaiuxurr Ci-IAIGB -ro ms axrorr cox-nror. AU‘l’OI.Ii1'I:D sorrorr svs-rnr wtna mos wmrorrr aorouirs surr-oar The Bureau maintains the Export Control Automated Support System, which provides license proceslnd and historical informa- tion on export licensing activities. lt also provides the data needed to support en- forcement actions for export license viola- tiona The system contains the official ii- cense spplimtion. the application tracking information. the license. and the follow-up actiona The system allows changes to application: before they are approved; however, once licenaeisissueditbeoomuanhistorical record and no chsnsu by licensing officers are permitted. 'l'he date of final action is en- tered automatimily by the system and cannotbechan¢ed.Chan:atothedatahase can be made only by computer personne within the Operations Division with the elflc authorization of the Director, Office o Information Reaourm Management. We found that Bureau personnel forward- edalistofthepreviouslystatedchangeato B1A's Office of lnformation Resources- llanasement. with a request to change the permanent licensing database. OIRK offi- cials actnowiedled that they chanled the li- cense records solely on the basis of the highlightcdlmandoralassurancabylb censinsoffidalsthattheehsnseawemiua tified. They neither reviewed the documen- tationrrsedtosupportthechangesnorns quested copies’ to maintain in case quations arose in the future. Olftll offidals should have required au- thorhtion and sufficient supporting docu- mentation before chansins permanent recorb in the system. Chansins system data without nrpport compromises the sys- tem's integrity and confidentiality. lillflhfltill Warccommeadthatthesetingflnderfico retaryfor Ixporthdministrationtakc the followinsaction: L Buurc that any future changes to export license information submitted to Oon;reasandtothalhportControlAuto- mated8upport Bystem aresuthoriaed and adeouatelysupportedwithapDf09I'iltedoc- umentatima. 1 ltetaincomplets documentation of the mtiomofaiiasenoisinvoivedinproc&- exportlioemm !.hisurethatthssystemdatabaseaccu- ratelyreflcctaallaaencypoaitiom. a.Clarifyt.heprooedurealnthoLicenaina 0fficera'Operatin3llanual forthareferral totheDafenssDepartmentoflicemeappli- cationaforcomputerpartsandcornponents lntendedforshipmanttospedficcountriqt l.IlmurothattholJccnsinsOfficera'Op- crating Manual h reviewed to eliminate ggiuconflictinsorcmsftllnalioensinspro-. U3 the fri- sad rach by lore. NIT. title ll. United tab file. fl by iaserfiap all-er lrdseaieau IolloIriI|l."'AnyMnIll-I ihmn -fir» -r..-..l._.-_--1 - 266 July 7, I 992 CONGRESSIONAL RECORD - HOUSE H “X15 toappearin per-sonsteoslnmansoipl me. the discouraging requirement still esaoted is BststeaBtate'swocldalmbersquiredb distribute registration iorms and give asht- ance st public agesscin like unemployment d elf om an w are cas. These common sense step deserve the sup- port of all who care about expanding democ- racy. Indeed. a similar bill passed the House in ISM with strong bimrtisan supwirt. Yet Senate Republicans. evidently out of fear that unregistered voters are more likely to vote Democratic. have succeeded In blocking “motor voter” from even getting to the floor—that is. until today. By loining the present honorable hank of Republicans who support the measure. Re- publicans like Alfonse D'A.mato oi New York and Arlen Specter of Pennsylvania can show the kind of bipartlsanahlp "motor voter“ needs ii it's to have s realistic chance of avoiding s veto. Opponents of "motor voter“ aay they're worried about cost and vote fraud. But these concerns are exaggerated. What's hard to es- sggerateistheshameAmericansconii'untin a system that leaves only six of every tan el- igible voters registered. The Senate today can vote to ethos that shame and enhan- chise the other four. THE BOSTOW GANG The SPEAKER pro tempore. (Mr. As- DRSWS of New Jersey). Under a pre- vious order of the I-louse. the gen- tleman from Texas [Mr. GONZALEZ] is recognized for 60 minutes. Mr. GONZALEZ. Mr. Speaker. today I will provide an update on the Rostow gang which will reveal that President Bush. his legal adviser. Boyden Gray. and National Security Adviser Brent Scowcroft. were all directly involved in the efforts to thwa.rt the congressional investigation of the Iraq policy. I will also detail some of the more prominent examples of why the President is con- tinuing to thwart the Bankim Com- mlttee‘s inquiry of the Banca Nazionale del Lavoro. These include new evidence that shows that 1 days prior to winning approval for a ti bil- lion fiscal year 1990 Commodity Credit Corporation program for Irao—those are taxpayer-guaranteed programs- the National Security Council and the State Department received a detailed secret CIA report on BNL indicating that BNL loans were used to ibnd Iraq's clandestine missile and nuclear weapons procurement program. The report concludes that a tailure to approve the Si billion iiecal year 1990 CCC program for Iraq would harm the United States-Iraq relations. The White House stal! intervened in the BNL investigation being conducted by the U.S. attorney in Atlanta GA. Criti- cal intelligence information about the BNL scandal was withheld from pros- ecutors in Atlanta until after the Iraqi invasion of Kuwait. In my floor statement of larch id thisyea.rIrevealedhowtheBushad- ministration had set up a high-level interagency group cf lawyce to thwart or obstruct these congressional inves- tigation of prewar Iraq not have evidence nsost of his cl §E 11% 55% involvement In the attempt to stem the flow of Iraq iniormation to the Congrem. We did know that the Presi- dent. both as President and before as Vice President. has intervened in be- halfofaid tolran. We did nothave the documentation showing his participa- tion in this elaborate net that was ini- tiated by the lawyer for the NSC. Rostow. in order to keep Congress in ignorance. Last week I obtained new evidence showing that the President and at that time his principal adviser. John Sununu. and Brent Scowcroft and Mr. Robert Gates. the Director of the CIA. and Boyden Gray. all had direct roles in limiting congressional access to Commerce Department export licens- ing information on Iraq. These were the licenses that were doctored before they were given to another Member. a distinguished Member of our Congress, of the House of Representatives. in which the purpose. for military pur- poses. of those licenses were blotted out. Before I get into the details of the new evidence. let me refresh my col- leagues‘ memories about what I call the Rostow gang. In April 1991. the Na- tional Security Council's legal adviser. Mr. Rostow. called a high-level. inter- sgency meeting to discum congres- sional investigations of Iraq policy prior to the invasion of Kuwait on Au- gust 2. i990. The meeting was chaired by Nick Rostow. the individual referred to. the General Counsel to the NSC. Mr. Rostow‘s previous experience in- eludes playing a key role in the White House eiiorts to cover up the Iran- Ccutra scandal and to obetmct a 1338 CAO investigation of then-Vice Presi- dent Bush's ties to Panamanian leader and drug lord. one Gen. Manuel Anto- nio Noriega. Alec at the meeting were President Bush‘s General Counsel. Boyden Cray. and the top lawyers for the Departments of Justice. Defense. State. Treasury. Commerce. Agri- culture. Ene!‘I7. and the CIA. Each of the agencies had received requests for information from the Oongreu. and these lawyers were responsible for overseeing the collection and submis- sion of the information. That is where I referred to this high-level legal team as the "Rostow gang." The Rostow gang established a proc- ess whereby a congressional investiga- tion had to hurdle a series of increas- ingly dimcult barriers in order to ob- tain information irom an executive branch agency. Ostensibly the inaction of the group was to review documents and information applicable to congres- sional requests for Ina-related infor- mation and to establish a coordinated approach for the dissemination of this information. On the euribce. that is understand- able. If you are in the enecutive branch and you have requssh from various oommittec and members of the mittees hes: the wrcsgwitb thing. Int is reality this 2%? rig? tabliahed to limit and control and oth- erwise dewive this flow of information tothefloikresatodelayitthrough dilatory Pfilitiocst as they did with our Banking Committee. That was ans even after the Bankim Committee had issued about 50 documenh or subpoe- nas. and we still are not getting the in- formation. In reality. this was the mainpurposecfthisgang.aawellasto permit the White House to also regu- late the flow of potentially embarrass- ing Iraq-related information to the Congress. Now. all executive branches have done this. I have been in this Congress and I have been very fortunate and blessed to have been a Member of this great body known as the U.S. Rouse of Representatives for ill years and ‘I months. and I can recall the 1914 epi- sodes. I also remember the so-called Houston memorandum. Houston then being one of President Nixon's highly placed Security Council. and there were other related agency leaders. I re- member the memorandum he prepared. Then, believe it or not. there were other aide Executive rs-omulg-ations all under the secrecy of the President's National Security Council, either advi- sory or as memorandums. which were even intended to suspend the 1914 gen- eral electicns. ii‘ neoemary. 'l‘he whole point of all this basically. and the reason I am triggered ofiin my interest. is that we are at this time and period in our country's development lacing the greatest constitutional cri- sis since the adoption of the Constitution. including the Civil War. Now. that has not come true yet. but that does not diminish our responsibil- ity. We are charged under the Con- stitution to respect the integrity and the independent ooequality and sepa- ratenees of this body. So the records obtained by the oom- mittee indicate that the Rostow gang met at least eight times during April. May. and June last year. 1991. The Banking Committee recently received documentation indicating that Presi- dent Bush participated directly in the process of the Rostow gang. On June 5. L991. there was a meeting of the Rostow gang chaired by the President's legal adviser. Boyden Gray. Lawyers from the State. Treasury Commerce. and Justice Departments were in attend- ance. 'l‘he meeting was called to discuss a long pending Commerce Department request for Iraq licensing information and to discuss congressional requests for data. including my own Banking Committee's request. D 1430 Moat of the meeting was dedicated to the different strategies that could be used to limit the new of information to Congress. Claims of executive privi- lege. which we received one h-om Treasury. were mendoned most cttan. It is clear ii-cm interviews. docu- ments. and notes that tbs Rostow gsq' eseoutive m-ivllese .1 s§? E5 267 H 6006 CONGRESSIONAL RECORD — HOUSE July 7, 1992 process over as many documents as possible. The Congress was not to have the entire story on the administra- tion's Iraq policy. It was hoped that making these claims would work to deny Congress the most embarrassing and damaging information on Iraq, As l said before. not only executive agencies. but all people in power. whether it is political power. money power. or religious power. will do ev- erything to try to not disclose an em- barrassing mistake. We know that. The Houston memorandum. for in- stance. was highly secret. it was kept from the American people. Everybody else knew about it. Finally it was pub- lished intact in a book by the assistant to J. Edgar Hoover. Mr. Sullivan, who died under. some people claim. mys- terious circumstances. There he has it in the book. So here is the Congress though. the Representatives of the people. sup- posedly. denied information through this highly secure state of national matters. that they alone, the American people and the Congress do not know about. but everybody outside of the United States knows. Let me tell you about that later on. Congressional challenges to the falla- cious executive privilege claims only worked to deny the submission of in- formation. One agency's notes indicate that Robert Kimmett of the Stats De- partment sdvocatd the delaying of a request for information as long ss pos- sible so that the congressional sub- poena authority would lapse at the end of the let session of the 102d Congress. They knew that. As a matter of fact. we in the Banking Committee unani- mously passed out these subpoenas and renewed them. This way the committee would have to go to its members for subpoena authority which would delay the production of documents for still more months. The following quote from notes of a Rostow gang meeting provides a feel for the strategy that this group de- ployed. “By Monday. identify the most sensitive documents in each agency. We will go to the mat. There are many of these that will head toward denial." Several Cabinet members. including Secretary of State James Baker and Education Secretary Lamar Alexander. were apparently opposed to certain as- pects of the Rostow gang process. Notes indicate that they thought bet- ter of obstructing the Congress to the point oi’ being subpoenaed. Secretary Baker also did advocate withholding information related to the State Department's position on certain Commerce Department export licenses that were to be submitted to Con- gressman GSJDENSON. On October 26. 1991. Commerce De- partment memorandum states. "Note: Kimmett/Baker (per Matheeon): Do not want agency recommendations to be provided but will not argue for Execu- tive privilege." Other agency documents indicate that Brent Bcowcnoft played a promi- nent role in determining what informa- tion should be provided to the Con- gress. I should say that is Gen. Brent Scowcroft, the National Security Di- rectory for this administration. For example. s Commerce Depart- ment note related to the submission of a sanitized list of export license infor- mation to subcommittee Chairman D0110 BARNARD of the Government Af- fairs Committee states, “Up to Scow- croft at the NCS." Other Commerce Department notes state. “Scowcroft willing to stand up and be counted." Yet others state. “Scowcroft will take the lead on asserting executive privilege." Mr. Robert Gates is also listed as a recipient of several Commerce Depart- ment memos dealing with the submis- sion of information to Congress. So is Mr. Mosbacher. the former Secretary of Commerce from Texas. In fact. notes related to Mr. Mosbacher‘s response to a congressional subpoena for docu- ments related to National Security Di- rective 3l5. NSD4ii.'>. and National Se- curity Review i'I. NSR-17. are rather interesting. The notes state: Secretary Mosbacher will have to sppsar before Congress or run the risk of contempt. or appear without documents and still run risk of contempt Able to say President di- rected him to withhold. No criminal risk. Burford. U.S. Attorney. will not prosecute when officials withhold at direction of Presi- dent on Executive privilege gronnda The previous quote appears to indi- cats that the Rostow gang was con- templating what potential criminal li- abilities lay ahead if Commerce De- partment Secretary Mosbacher refused to comply with s congressional sub- poena. It certainly appea.ra that the President is willing to allow his name to be used ss a defense for not comply- ing with the law. What could the White House and the Commerce Department be hiding that would be that sensitive? The question arises. did the President know his top advisers were using his name and good office as a shield’! So far I have shown that Brent Scow- croft, Robert Mosbacher, James Baker. and other Cabinet-level members of the Bush administration participated in the efforts to limit the flow of informa- tion to the Congress. What is most astonishing and dis- turbing is that the President of the United States appears to have been di- recting this effort. Notes from one Rostow gang meeting quotes the Presi- dent's legal adviser. C. Boyden Gray: The President will want to meet with all Cabinet Secretaries one-to-one to work it out adequately internally. Very sensitive. Sununu impressed with the significance. That is not the only occasion that the President hsd a lead role in the Rostow gang process. A Commerce De- partment memorandum dealing with the submission of information to Con- gressman GIJDINBON again states: ‘Ibis memorandum is to report that Coun- sel to the President. C. Boyden Cray indi- cated this week it may be necessary to have Cabinet level discussions with the President on Executive privilege issues. The same Commerce Department memorandum states: On June 4. 1991. Chairman Ountnsou sent you. Secretary Mosbacher. s latter relterat» ing his request and complaining that we had not provided any documents. We. Commerce. will soon seek to meet with his staff to dis- cuss s possible accommodation under which we would begin providing information. Any such accommodation will have to be cleared by the White House. Any such accommodation would have to be cleared by the White House. These notes indicate that the President has participated in the effort to stem the flow of Iraq-related information to the Congress. The fact that President Bush would require his Cabinet to go along with the scheme is startling. With all the responsibilities associated with the Presidency of the United States. it is reminiscent of the Water- gate days. that the President and his top advisers should have time to con- sider such trivial matters. The time and effort spent on developing schemes to thwart congressional oversight is monumental. D1440 It is too bad the President didn't put ss much effort into high level inter- agency meetings designed to ensure that law enforcement agencies had enough resources to track down and prosecute companies that violated United States export control laws re- lated to illegal export to Iraq. New come these notes. and the ques- tion is. how come there are no indict- ments of these companies like Matrix- Churchill that were helping to arm Iraq? Where is the Carlos Cardoen in- dictment? Sadly there has been no high-level Presidential directive aimed at bringing the United States compa- nies that armed Iraq to justice. In- stead. scarce resources are spent on coverup. The President and his top advisers took an osth of office to uphold the Constitution. as we all do. The courts have repeatedly ruled that the Con- stitution granted the Congress a legiti- mate right to executive branch infor- mation. yet the President and his clos- est advisers have shown a complete dis- dain for the Congress and the Con- etitution. These are frightened officials who ap- parently cannot face having their ac- tions iudged by the Congress. They hide behind the cloak of secrecy rather than facing up to their actions. The President. or at least people acting in his name and apparently with his knowledge. has conspired to keep the truth about his Iraq policy from the very public that elected him and fought and died to support his efforts in the gulf. After reading the Rostow gang docu- ments and seeing the great lengths to which the President has gone to stop 269 H 6008 CONGRESSIONAL RECORD -- HOUSE July 7, I992 gested in 187 that U.S. and Soviet involve- ment in the Third World reflects "the bipo- lar structure of world politics and the com- petitive relationahip they have with each other." l.n their mutual quest for strategic advantage. each superpower has sought to as-pand its own perimeter of influence while "minimising the power and influence of the other." As part of this process. each side has used arms transfers to lure new allies into its own camp or to discourage existing allies from breaking away. Thisuseofarmstransfersbegan in the lliddle East in 156. when President Gamal Abdel nswser of Egypt turned to Moscow for the modern weapons the West had denied him. By giving Egypt advanced weapons. Moscow forged a de facto alliance with Cairo. and succeeded. for the first time. in leaping over the ring to hostile states orga- nised by the United States to contain Soviet power in Eurasia. This feat prompted Wash- ington to establish arms-supply relation- shim with other countries in the region. in- cluding lran. lsraei. Jordan. and Saudi Arbai. These moves. in wrn. aroused anxiety among the more radical Arab regimes. lead- ing Syria. and the Iraq to forge military ties with the Soviet bloc. Igypt switched sides following the October War of 1973. but the lliddle Eastern arms acquisition patterns es- tablished ln the mid-to-late lilfiih have ra- mained essentially intact to this day. ln iustiiying U.S. arms transfers to the Middle East. U.S. leaders repeatedly asserted that supplier and recipient were bound by common opposition to communist expan- sionism. For their part. Soviet leaders stressed the common struggle against impe- rialism. However. the recipients‘ principal motive for acquiring arms was not the strug- gle between communism and imperialism. but rather a desire to oilset the military might of their regional rivals or to deter at- tack by an antagonistic neighbor. As Ste- phen hi. Walt suggested in his masterful swdy of Middle East alliance patterns. "The suD6l‘D0wers sought to balance each other. [while] their clients sought outside support to counter threats isom other regional states." At first glance. this system has a certain logic: each party receives something it wants. and the various arms deliveries bal- ance each other out. In reality. however. the system is fundamentally unstable. No recipi- ent is content with balancing its rivals. but seeks a margin of advantsge—either to allow for a preemptive strike (should that be deemed necessary). or to compensate for the other side's perceived advantages. Any malor weapons delivery to one side automatically triggers a comparable but larger delivery to the other. prompting a new round of deliv- eriss to the first party. and so on. The only break in this grim pattern occurs when one side or the other seeks to forestall an immi- nent shift in military advantage to the op- posing side by launching a preemptive at- tack—as has occurred again and again in the Middle East. This instability is mirrored in the rela- tions between client and supplier. By agree- ing to provide arms to a client. the supplier seeks a local ally for its ongoing struggle against the other superpower. Once the rela- tionship has been forged. however. the recipi- ent comes to expect continuing and even es- panded arms deliveries in exchange for its continued loyalty to the suppller—and any reluctance on the part of the supplier will be condemned as evidence of inconstancy and unreliability. Such charges usually have the eifect of prying additional or more advanced weapons out of the supplier's hands. ‘De result is "reverse dependency." 'l‘he pau'on finds itself beholden to the good will of tho client. and snuat satisfy the client's / bia (a as billion deal). and In cevtembsr he approved a fli billion package of tanks. ais- craft. and missiles. The White House sub- sequently agreed to downsise the second package in order to allay congressional con- cerns. but the items removed from this mle are incorporated into another package scheduled for early 181. Bush also agreed in principle to sell sl billion worth of-addi- tional military hardware to lsrsel. and for- gave a 8‘! billion El"7‘Ptian arms debt in order to allow new military sales to Cairo. Mean- while. as Aerospace Daily reported in early September. other maior suppliers-including France and Britain—havs been flocking to the Middle Bat. looking for new military aalee of their own, helping to insure that lfi and lfll will break all existing records for arrm sales to the region. In approving new arrna exports. the admin- istration maintains that the weapons will help deter further lraqi aggression. But most of the weapons ordered in lfi and 199i will not be delivered until 192. 1993. or there- after—long after the wesent crisis in the Gulf has been resolved by one means or an- other. these new arms shipments will then be available for other military purposes. re- gardless of the administration's claims. 1‘he intended beneficiaries of these sales will con- tinue to purse their own political and mill- tary obiectivee-often risking armed combat with their neighbors in the process. The most likely outcome of fresh a.rms deliveries to the middle East will thus be intensified regional tensions and a heightened risk of armed conflict. This prospect dampens hope that the Per- sian Gulf crisis will help usher in a new era of peace and stability. as some in Washing- ton suggested. "Out of these troubled times.“ George Bush told a ioint session of Congress on September 12. "a new world order can emerge." on in which “the rule of law supplants the rule of the jungle. [and] nations recognise the shared responsibility for freedom and Justice." While the Gulf cri- sis has engendered an extraordinary degree of international cooperation. it has not re- sulted in any talks on controlling the con- ventional a.rms trade. As long as contentious regional powers are able to obtain large quantities of sophisticated weapons. the prospects for averting future conflict are not promising. The risk of escalating conflicts in volatile Third World areas has led nations to agree on the need to prevent sales olchemical and nuclear weapons and to curb the diifusion of ballistic missile delivery systems. Despite repeated crises. however. there are no such constraints on conventional weapons—eepe- cially on modern tanks and aircraft that can be used for aggressive military moves of the sort undertaken by lraq. Are curbs on arms transfer possible‘! '*n.|-zvmss DEPINDENCY" Many countries offer some type of weapon for sale. but the trade in malor combat sys- tsrns is highly concentrated. According to the congressional Research Service of the Li- brary of Congress. in the lflls the United States and Soviet Union accountad for three- flfths of all arms sales to the Third World. and five other natious—France. Great Brit» sin. West Oermsny. ltaly. and China-shared another H percent. These nations remain the source of most heavy weapons supplied to Middle Eastern countries. and it is their sales policies that must be addressed if the flow of combat sear is to be constrained. llany factors—political. economic. and military—ngure in these nations: rams aa- port behavior. For the superpowers, eco nomic considerations have generally played a secondary role to political and strategic considerations. Samuel Huntington Ing- appetite for modern arms. As Walt points out “A large [military] aid relationship may actually be a reflection of the client's ability to extort support from its mtron. rather than being a sign of the patron's ability to control its client." For the Soviet Union. the principal beneficiaries of reverse dependency were Egypt (until 1973). Syria. and Iraq: for the United States. they were lran (until 1978). Israel. and Saudi Arabia. canrm. mm. awn can It was the U.S. arms-supply relationship with lran that first prompted U.S. policy- makers to perceive a need for restraints. 'l‘he relationship was initially forged in 1964. after the U.S. Central intelligence Agency engineered the overthrow of Mohammad Moesadeq and installed Shah Mohammed Rena Pahlavi as virtual dictator. During the lane lfifi and throughout the l960e. Washing- ton provided lran with a staady. but not ex- orbitant. supply of munitions in order to hal- ance Soviet military deliveries to neighbor- ing Iraq. In the early 1770s. however. there was a sharp increase in U.S. arms deliveries as the Shah. with mounting oil revenues at his disposal. sought to greatly enhance l.ran‘s overall military capabilities. lran's desire for arms was complemented. more- over. by a U.S. desire to recover some of the petrodollars sent to the Middle East in the aftermath of the 1914 OPEC oil price in- crease. and to implement the so-called Nison Doctrine. which called for Third World allies to shoulder more of the burden of regional defense against Sovieubacked insurgents and regimes. ' Between 1772 and 1978. Teheran ordered 820 billion worth of advanced U.S. armaments- the largest arms export endeavor ever con- cluded with a Third World nation up to that point. for the first time. U.S. officials agreed to transfer fronvllne U.S. combat equipment. including F-ll aircraft. Spruance-class destroyers. and Phoenix sir- to-air missiles. These sales were widely ap- plauded by Defense Department ofilcials and American anns makers. But Congress be- came concerned when the scale of the trans- actions were revealed and when it was dis- closed that U.S. companies were using bribes to get lranian officials to sign military or- ders. According to a l9'!6 Senate Foreign Re lations Committee staff report. "U.S. arms sales to Iran were out of control" in the early 1770s. with senior administration offi- cials routinely approving the Shah's extrava- gant arrns purchases. Suggesting that the United States had be- come “s kind of anris supermarket into which any customer can walk and pick up whatever he wants."-' Sen. Hubert ll. Hum- phrey in l9'!S sponsored legislation to give Congress veto power over maior U.S. mill- tary sales. ‘hie resulting measure. later in- corporated into Section Nb) of the Arms Ex- port Control Act of 1976. gives Congress some control over arms transactions. but unfavor- able court decisions. and a waive allowing the president to overrule congressional res- ervations when he concludes that critical na- tional eecurity issues are at stake-which Bush used to rush tanks and aircraft to Saudi Arabia in September—have diluted congressional power. With Carter's election in 1976. the momen- tum shifted to the White l-louse. On May l3. 1977. Carter formally adopted an "arms es- port restraint policy"-Presidential Direc- tive No. lli (PD-l3)—wbich imposed an sn- nual ceiling on the dollar value of U.S. arms sales to all non-NATO nations except Israel. Japan. South Korea. Australia. and New Zea- land. and restricted the export of certain high~technology weamns to Third World countries. “l have concluded." Carter af- flrrned on May II. “that the United States \ Z \ \ .\ Ii l \ ' I I \ i 270 July 7, 1992 CONGRESSIONAL RB@RD-—HOUSB ' H6009 enveilingthsnewb0lfl=!.Ueder-secretarycf StatsJarnesL&ckieyai!l.r1nedthat"this Administratioabelievesthatarrnstrsnsfers. judiciously appiied_ can complement and mpplcneatoarowudefeaseeffortsaodssrve asavitalandooinuectiveiastrumeutofour foreknpolicy."'B-eeganquiokiyapproved the saiecfP-is tighten to Pakistan. I-its and AWAC8 radar patrol planes to Saudi Arabia AK-l Oobra hsliceper gunrhips to Jordauasdsimilaritenntocther U.8.cli- entsintheliddleEastandAsia. U.S. arms flowed to the Third World in recor-darooants.Carpedbya$$billionsale of I-ils and AWACS to Saudi Arabia. total U.S. siilitarysalesrceeto8ifl.lbiliioninfis- oallfihanall-time record.&iLytheoil-in- daced reoemicu of l&—ei. which greatlycon- stricted the spending ability of would-be Third World arms buyers. prevented new reca~dsn'om beingsetinsubeequent years. The recession notwithstanding. Washixtou contineedtousearnsssalestce.rtendU.8. infleenoeabroadandtooountersimilaref- forts by the Soviettluioa "Armssalesare he hardcarreacyoffordgs ai!airs."annn- identified State Dear-uncut omcial told U.8.NewsandWurHRepurtin&1.“‘l$ey rvplacedaeseoer1typaccclthel9o0s."" Ihswastrueforiamingtonwastreefor Iceoow.leckingmabtoc6ereconornicas- sistancecrcaprtal investment. Soviet lead- ers essfirwed the one foreign policy tool available to them is eeekisg influence stream arms transfers. According to the OongressiomlIteeeartiSd'vioe.Sovietarms ta-anshstothe'l‘birdWorldn-omllltollfl amosntedtoswhopmng8l8billlcn(incon- stantlfidollarshanamountthatenoeeds theU.S.totalbyasignificantma.rgia.'!‘he maiorrecipientscfSovietarsmisthelflh were clusteredinthe Middle last and South Asia.with&elargeetdeliveriesgoingtoAl- §eria.lndia!rau.Lib7l.8yri-a.andthetwo e Asinpastyears.bothsape soughttowooawayeachothers clienfl. often arms trans! grocem. The Soviet Union. for instance. has readily supplied Jordan and Kuwait with modernweepouswhenleadersoftheeecoum Q-ies encountered difllculty in obmining high-bchsystermfrom the West.'l‘heUnited 8mtea.forits;nrt.hasenoou.ragedseveral long-standingsovietallies. includinglndia andlraq.todiminhhtheirrnilitarydepeud- esscecathefloviet Uuion.Coaaisteut with QB policy. the Reagan administration raisednoobJecticateI‘reuohsalesofad- vanoedrnissileeandairuafttolramcrto Braaiiias sales of rmltiple-launch rocket sy'sterns.inafurtherel!orttopnllBaghdad oetoftheSovietorbit.leegaa(andlater Bnshanthorisedmem.letelrsqcf8l.$bil- lion worth of sofiistimted U.S. scientific andtechnicalequi;snent—mnch of whichhas apparently heeuusedin thsdeveiopment of conventional. nuclear. and chemical weap- ons. lndeed. so eager was Washington to forgelinkswidlraqthatleaganandflush oontinuedtoalicwdeiiveriesolsnchequip- mentevenafterithadbeoomeevideatthat thistechnolmywasbeingdivertedformilb tarypurpoeeaandlongafterlraqhadused chemicalweaponsinsttackscnlrsnandits ownlnnh. As a result of theerdeeply entrenched armeauppiy parser-namanylliddlelastern aationsrsowpomemarsenalecoraparabieor mperlorto oaaderncagtheirontline l E 2%? til E 2 S 22 E will henceforth view aflll traseisrs as an es- ceptional foreign policy inmiemeat. to be usedonlyin instanoeswhsreitmnbeclear ly demonswated that fie trader contrib- utes to our national security inter'est."‘ The Carter policy also called for negotia- tions with other suppliere—inclsding the So- viet Uniou—that might lead as the adopdcn of multilateral curbs on arms transfers. Carter made clear that the United States would adhere to self-imposed limits only so long as it appeared likely that other maior suppliers would follow suit. “X am initiating this policy." Carter noted. “in use fall un- derstanding that actual reductions in the worldwide traffic in arms will require multi- lateral At Carter's urging. U.S. and Soviet rep- resentatives began the Conventional Anna Transfer Talks (CA'l'!'l. licst observers es- pected little progress. and were surprised when the first few rounds of mike. held in Washington and Helsinki in December 197'! and May and July ifll. resulted in agree- mentonparametersofaregimetorestrain conventional arms transfers. In October ifll. U.S. negotiator Leslie Oelb testified that “humanized national guidelines" similar to those of the London Suppliers‘ Group (for nuclear technology) were “realistic posdbili- ties."' But before further progress could be achieved. CAT!‘ fell prey to a souring inter- national environment and to bureaucratic wrangling within the Carter administration that pitted Oelb against the president's hawkish security adviser. Zbiguiew Brser.inski;nofurthertalkswereheidaf'tera fruitless negotiating session in December 1978.‘ By late 1979. Carter's unilateral arms re- straint policies and the GATT pooess had been essentially abandoned ‘! decline in presidential enthusiasm for these measures was prompted. to a considerable degree. by Iran's Islamic revolution and the Soviet in- vasion of Afghanistan—events that largely erased any public or congressional support for U.S. initiatives of this t.ype. ln s more fundamental way. however. the policy of re- straint was doomed from the start by the ad- ministration's failure to question the poli- tics of arms sales. Washington still viewed arms transfers as an effective tool for diplo- macy—one of the few such tools available- audCsrterwasneverahlstosignificantlyre- duoe the role of military miss in U.S. rela- tions with such allies as Egypt. Iran. Israel. Jordan. and Saudi Arabia The fate of Carter‘s initiatives became ap- parent early on. ln February lflt. only nine months after PD-ll was sigh“. the White I-louse approved a multibillion-dollar sale of advanced it!-fls'!iterstcEl79$.lsrael.and Saudi Arabia. ‘the “aircraft mic of the oeu- as it was called at the time, had been in the works for several years. and its can- cellation would have wovoked howls of dis- may from the nations involved. along with threats to shop elsewhere—thr~ats (krter was not prepared to face. For much the same reason. Carter then approved a new 88 billion arms request from the Shah. despite Iran's internal unrest. which his advisers warned could result in chaos. Any hopes of keeping arms exports under the ceiling Oarter had eetweredashedinlI7i.when.asmrtcfthe Qmp David Accords. he United States agreed to provide billions of dollars worth of new arms to Israel and R70‘- “Allll I-IPI-AZ 8}!!!" FACTS" By the time Ronald kagas became peei- dentinlU1.armse.rpor-treswaintwasao lcngera rnaicr objective cfU.S. foreign pol- icy. Nonetheless. Reagan felt compelled to denounce his predecessors initiatives and to is-ornulgate a new, open-door sprs-eam to rcreigemilitaryeaies.§aIayBlspeech IarmwPact.Butif thegsaesisufmsssaruuespply relation- shipswastheeariyOohiI'ar.itwouldesern lcgioallI'therstehdesstheOold War §?5§ 55;; 3?}: £52; 555% eign Minister Eduard Shevardnadse wrote that "the Soviet Union considers that the in- clusion on the U.N. agenda of the rroblems of restricting international sales and sup- plies of conventional weapons is a logical de- velopment of the trend toward the inter- nationalisation of the dialogue on most im- portant questions of world politics." " Presi- dent Bush and Secretary of State James Baker have made similar comments. noting that the control of conventional anus trans- fers should be considered along with efforts to curb the proliferation of nuclear arms. chemical weapons. and ballistic missiles. Despite progress on the rhetorical front. however. the superpowers have taken no stem to curb their exports of conventional arms to the 'l1iird World. As noted above, the United States has announced record~break- ing sales to Saudi Arabia. and sales of so- phisticated anns to Egypt. Israel. 'l\irkey, and the United Arab Emirates are in the off- ing. The Soviet Union continues to supply maior equipment to lndia. Libya. and Syrin. and was pouring arms into Iraq until the mo- ment Saddam Hussein ordered the invasion of Kuwait. ' loonomic conditions have something to do with this. ‘fire Soviet Union is desperately in need of hard currency for its industrial reha- bilitation. and weapons are among the few commodities it can successfully market abroad. Arms exports give U.S. weapons manubcturers an atwactive “safety valve" at a time of declining military spending at home. But political factors remain a major determinant of the nperpowerf arms trans- Isr policies. Moscow and Washington once sought Third World allies in their struggle with one another: today they seek allies in order to better position themselves for glob- al influence in an uncertain. bolycentric era. in the view of senior U.S. strategists. this era is likely to witnem the emergence of re- gional powers. many of which will be armed with weapons of mass destruction. and some will be hostile to long-term U.S. interests. “The emergence of regional powers is rapidly changing the strategic landscape." President Bush noted in an address to the U.S. Coast Guard Academy in May 189. “In the Middle East. in South Asia. in our own hemisphere. a growing number of nations are acquiring advanced and highly destmctive capabili- ties." posing s significant threat to U.S. se- curity. In this environment any effort by the United States to protect its overseas in- terests through military means—as in Oper- ation Desert Shield-will require the oo- operation of friendly Third World powers. “Where American intervention seems nec- the U.S. Commission on Integrated Long-Term Strategy affirmed in 188. “it will generally require far more cooperation with Third World countries than has been re- quired in the " And cooperation is secured through arms transfers. In lrlllins for congressional ap- proval of the administration's September 1% emergency arms package for Saudi Ara- bia Under-secretary of State for inter- national Security Afiairs Reginald Sar- thclornew told the House Foreign Affairs Committee that these sales are intended to "develop the interoperability that will allow the U.S. and other friendly forces to rein- force the Saudis more effectively should that ever again be and _to “help con- tribute to stronger and more stable post-cri- sis security arrangements“-' ls other wcrdaarmsealesarstheesseutialgluefor the “regional security structure" that Sec- retar7cfStateJarnesBabertoldthellonse Foreign Affairs Committee on September 4 theedministratioawantstoestabliflinfle Middle bet. Whether the Soviet Uaioa has similar in- tentions cannot be determined It is clear 271 H6010 CONGRESSIONAL RECORD—HOUSE July 7, 1992 that Soviet leaders want to maintain close ties with regional powers like Syria and India. and to establish new tiee-—cemented by arms transfers if necessary-with other powers in the region. Potential buyers are still able to play one suitor off against the other. obtaining favorable conditions for the acquisition of ever more capable weapons. Whatever impact the end of the Cold War may have in other areas. it has not dimin- ished the intensity of local arms racee—or the likelihood of regional conflict—in the Middle East SEVEN WAYS TO CURB ARMS There is no escape from this pattern if the maior powers continue to view arms exports as tools of convenience in their quest for po- litical advantage. and if regional powers con- tinue to rely on military means to resolve disputes with their neighbors. U.S. and So- viet leaders—and subsequently. the leaders of France. Britain. and China—-must be con- vinced that a stable international order can- not be achieved in a world of uncontrolled arms transfers. and that curbs on arms are essential to post-Cold War stability. At the same time. Middle Eastern leaders must be persuaded that the best hope for long-term protection against dissension and bloodshed lies with a regional peace agreement that re- spects the national aspirations of unrepe- sented peoples. eliminates nuclear and chem- ical weapons. and limits the acquisition of offensively oriented conventional weapons. 'l‘hese objectives may take years of effort. but intermediate goals could build momen- tum for more sweeping and long-lasting ob- iectives. Seven measures could produce real improvements in global security: Reconvene the CAT!‘ talks. As the only U.S.-Soviet negotiations ever undertaken in this field. the Conventional Arms Transfer Talks are a useful mechanism. At the origi- nal sessions. CA'l'l‘ negotiators reportedly reached agreement on many basic elements of nomenclature. scope. and applicability which could save months of future talks and consultations. Resuming CAT!‘ talks would also send a powerful signal to other suppliers and to recipients that the two superpowers had agreed on the need to constrain the arms traffic. If the talks are resumed. the two sides should agree to set a mutual ceiling on arms transfers (perhaps $8-l0 billion each per year) while pledging to negotiate lower levels in subsequent talks. after experience has been gained in implementation and verification. The superpowers should also agree to ban or restrict the sale of particularly inhumane and destabilizing weapons such as wide-area cluster bombs. fuel-air explosives. incendiary devices. shoulder-fired anti-aircraft missiles. and long-range bombers. Expand and enhance the MTCR. ‘Die Mis- sile Technology Control Regime. established in 1987 to restrict exports of ballistic missile technology. represents an important prece- dent for multilateral action. But it has criti- cal defects: several countries that have played a vital role in the transfer of missiles and missile technology to areas of conflict are not signatories--notably Argentina. Brazil. China. and the Soviet Union. And the MTCR generally exempts technology used in developing missiles for space exploration. most of which can be converted to military use. To be effective. the MTCR. needs to be sub- stantially strengthened. lncluding the Soviet Union should be the most immediate prior- ity. particularly as Soviet officials have al- ready met with their U.S. counterparts to discuss possible cooperation in this area. and an agreement would be consistent with pol- icy statements issued by Soviet leadership. lt would then be easier to persuade other holdouts to ioin. Restrictions on the transfer of sensitive technology. including space-re- lated technology. should be tightened. Establish controls on other advanced mili- tary systems. lnstruments similar to the MTCR should be established for controlling the export of other destabilizing weapons. in- eluding cruise missiles. submarines. and deep-penetration strategic bombers. Convene an nternational conference on nuclear and chemical disarmament in the Middle East. No lasting progress toward re- gional security can be made unless the na- tions of the Middle East agree to restrict possession of weapons of mass destruction and their means of delivery. A Middle East agreement will require progress in other areas. including boundary disputes. But the history of snow»: negotiations dem- onstrates that progress on arms control will not occur unless countries talk to one an- other. and preliminary negotiations can often result in the adoption of confidence- bnilding measures that help set the stage for political accommodation. When the crisis in the Gulf is resolved. ef- forts should be made to convene a U.N.-spon- sored regional conference on nuclear and chemical disarmament. which might also provide the impetus for adopting confidence- building measures tailored to the Middle East. These could include international in- spection and monitoring of nuclear and chemical facilities; establishing “hot lines" for communication between hostile nations in a crisis; and mutual promises to sign and abide by the Nuclear Non-Proliferation Trea- ty and the proposed Chemical Weapons Con- vention. A U.N. conference could also de- velop into an ongoing negotiating process. as did the Conference on Security and Coopera- tion in Europe. Impose economic and trade sanctions against nations developing nuclear weapons. The U.N. trade embargo has prevented the transfer of materials and technology to lraq's weapons development and production facilities. including its nuclear and chemical installations. These sanctions should be maintained until Baghdad agrees to disman- tle its nuclear and chemical weapons facili- ties under international inspection. When the current crisis is over. the United Nations should develop an array of trade and eco- nomic sanctions to apply against nations that persist in developing such weapons after international norms are established. Sanc- tions could be limited to a ban on transfers of military technology in the case of states that agree to participate in regional negotia- tions. or entail more stringent measures if states refuse to participate in such a process. Reduce or restrict international aid to na- tions developing domestic arma industries. Many of the more affluent Third World coun- tries are developing elaborate military-ln- dustrial complexes modeled on those found in the major military powers of the industri- aiised "North." These complexes contribute to the world- wide diffusion of conventional weapons. and. in the case of lran and Iraq. help to sustain regional wars of great duration and ferocity. Most of these countries receive significant technical and economic assistance from the North that enables them to divert scarce na- tional resources to pet military proiects. ln the future. such assistance—whether pro- vided by individual governments or my mul- tilateral agencies like the World Bank- should be denied to states that divert an ex- cessive share of their national income to military-industrial purposes. Establish an international clearinghouse for intelligence on clandestine arms tech- nology transfers. Iraq's apparent success in acquiring sophisticated arms-making tech- nologies through black market arms chan- nels highlights the need to collect and proc- ess intelligence on clandestine arms oper- ations. A clearinghouse could track sus- picious "front" operations in target coun- tries and inform police and military authori- ties of any apparent wrongdoing. Such a mechanism might draw on the staff and ex- perience of COCOM (the Co-ordinating Com- mittee for East-West Trade Policy). the Western agency established to intercept transfers of high-technology goods to the So- viet bloc. In the absence of controls. the arms trade will continue to operate as in the past. and there will be a continuing series of regional crises and conflicts. But these seven meas- ures could signiflcantly improve the global security environment and set the stage for a comprehensive solution to the Middle East's outstanding security concerns. Presidents Bush and Gorbachev have spo- ken glowingly of the new world order they hope to construct on the ruins of the Cold War system. But a new order cannot be built on the premises that have guided inter- national behavior in the past. Obsolete prec- tices will have to be abandoned. particularly the practice of supplying implements of war in return for political promises and favors. Only when munitions are eschewed as an in- strument of statecraft and diplomacy will a more peaceful order be possible. li‘%'l"N(7'l'ES ‘Richard I. Orimmett. fiends in Coneentianal Anna fionslevs to the Third Wovld D1 Io)ov Jhnpplier. I81- ms (Washington. D.C.: Congressional Research Service. Library of Oomresa. i3). B. hi. ‘Stockholm International Peace Research insti- tute. SIPRI Yearbook I99 (Oxford and New York: Ox- ford University Press. lm). and earlier editions. ‘Samuel P. Huntington. “Pattans of interven- tion: America and the Soviets in the Third World." The Notional huevess (Sprig 187). pp. lb-D: for s discussion of supplier and recipient motives. see An- drew J. Pierre. The Global Politics el Anna Soles (Princeton; Princeton University Pris. 1%). ‘Stephen ll. Walt. The Origins of Allhnoss (Ithaca. N.Y.: Cornell University Press. ill). pl 8)-lib. ‘Quoted in New York fines. Oct. ll. lflh. ‘U.S. Congress. I-louse Committee on Foraign Af- fairs. Chongung Perspectives on U3. Anne fionrlev Pel- icy. Report by, the Congressional Research Service. 97th Cong.. lst sess.. ill. ‘U.S. Congress. l-louse Committee on Anne-d Serv- iom. Indian Ooeon Anna Lbnirotiona and Mairiiauml Cooperation on R-esrvuining Conventional Ann: Trans- /ers. Bearings. Sth Cong.. id eees.. 1978. p. 1?. ‘See Jo L. Husbands and Anne lleesingahrn "The Gsnventionai Arms ‘Premier Talks." in Thomas Ohlaou. ed.. Anne fiunslev Limitations end Third world Security (Oxford; Oxford University Press. lfi). pp. lib-25. ‘James L. Buckley. address. Aerospace industries Association meeting. Williamsburg. Va. May 21. 191 (U.S. State Department transcript). "Quoted in Wail Street Journal. June ii. ifi. “Lrnssiiyo. Aug. l8. lfi (tramlated in Foreign Broadcast In/ovvnoiion Ser-moe~Soe-M-I59. Aug. ll. lim. p. 6). “U.S. Commission on integrated Long-Term Strategy. Discriminate Deterrence (Washington. D.C.- U.S. Government Printim Office. 188). p. l0. "Testimony. October 3. mo (State Department text). Here is the President telling us now that he would continue. and depend on him to protect the national interest. these agricultural credits. Here are the records, which we have already pub- lished in the CONGRESSIONAL Rncoan. from the Federal Reserve Board mem- bers at the Advisory Council. the Na- tional Advisory Council to the Export- lmport. the professional credit ana- lyser saying. “But look. lraq has de- faulted with six other countries." most of those that had obtained these arms that l just referred to in the bulletin of the Atomic Scientist. and it is not creditworthy. but then here comes the 272 July 7, 1992 oouoluzssrouu. nnooan-House H6011 Vice President at that time and then later the President. Bush: here comes the Deputy Secretary of Stats. one Eegleberger: and here comes Secretary of Stats James Baker and says. "No. no. this is essential to maintain our ro- lations with Iraq. We have to do this. It is essential to our political foreign pol- icy." This is where I came in. This is where I still am. because at this moment there is no telling how many BNL's and BCCl's which incidentally. Mr. Speaker. our committee is not finished with yet. there are right now. because of our lax defense of our national inter- ests from the standpoint of safety and soundness. not only of our banking sys- tem. but the use of our credit and our Government's credit. We have learned nothing since then. We are now doing the same thing with other countries that conceivably. and God forbid. I pray daily does not happen. the so- called Balkan area in flames. yet is has enlarged and it is headed that way. We are exposed with millions of dollars in guarantees to some of these countries that might be on the opposite side be- fore too long. such as with China. We not only consider China as a fa- vored nation trading partner, but we have also extended some governmental guarantees that I think are inst abso- lutsly fantastic and unbelievable. Our committee hes jurisdiction. in accordance with the definition of the rules providing its jurisdiction. on all credltrissuing activities. This is where we come in. This is why some coi- leagues seem surprised when I say. "We have Jurisdiction over Farmer Mac. the credit-issuing secondary banking sys- tem. and all of this system is shaky." It is very shaky. We are in an acute critical condition. However. there seems to be no gen- eral awsrencs. like in [$8 than scemedtobeandtherewasaplsnned effort not to reveal the serious condi- tions of the 8&.L‘s. Incidentally. the banking system. too. even though it has been denied. but today it is the banking system. and still continuing 5&1. conditions. How can the Federal Reserve Board. which is our monetary policymaking body. be able te set the right monetary policy for a country if it has no knowl- edge about SI trillion of this kind of money floating around in this country‘! I am not talking about the external money. international, I am talking about that that can be levernged with lust a small chunk of it. My estimate is that in this there is at least SI trillion involved in the drug money laundering illegality that is so nefariously adverse to the best interests of our country. and at the bottom of it all is financing. banking. That is why we are concerned. I am not interested in the foreign policy. but I am if that politics of for- eign policy is used to oanoel out the policy of the monetary-aemng bodies. and our central bank. as it is known. That is where I come in and that is where I have amyed. ‘Die main memo of October lfiil. indi- cated that there was a risk that Iraq was diverting. as I said and repeat. credit to pay for weapons and nuclear equipment. In met. lust this morning. I repeat. the United Nations certainly suspects it and they are there now in Baghdad camping out. They have been refused access, but they are still there. It is clear that the administration violated its own policy and used food as a political tool. All these years we have been denying it to the world. and here it is. Ambassador April Glsspie admit- tsdthat.andIplacsdt.herecordinthe OONOR§SI0liA.I. Rnmnn. The decision toapprove thefiscalyea.r1990COCPro- gram for Iran is not without cost 'l‘o date the taxpayer is out more and still in defhult over till! million, but I0 American banks have already been paid out 81.! billion of taxpayers‘ money, so the exposure to the taxpayer for these activities, not counting the Export-In» port Bank. will be around $2 billion. How desperately our States. our cities. our communities, our school system needs lust a little chunk efthat I-2 bil- lion. which could make a big difference to any one of our more seriously det- rimentally impacted communities. We are out. The taxpayer is going to have to make up for the default on those guarantees. The Italian bank. and nobody seerns to realise. even some of the people. the regulatory authorities. do not seem to realize that when we talk about foreign banks, like the BNL. we are not talk- ing about an sntiw like a United States bank or a private bank. These are all government-owned hanks. The Italian Government. the Italian Senate, to which. incidentally. I owe a great debt of gratitude. particularly to the chairman. Senator Carts of Roms. who did a magnificent lob in its inves- tigating committee. '1'hey came over and I rust with them. In fact. when the Federal Reserve Board would not give rne some documents we found a way to get them ii-om this other source. so that the Italian Government and the taxpayers of Italy will be out about an- other S2 billion on BNL for that and other involvement. incidentally. where BNL and BCCI dovetail. It is like a giant web. a big web. We touch one end and the whole thing quivers. ' The decision to approve that fiscal year l990CCCPrograrnforI.raqisnct without cost. I repeat. That is not the end to this costly story of imprudent and improper management. It gets worse. Two days prior to winning ap- prov-al for 81 billion. the National Secu- rity Agency and the State Department received a detail secret CIA report on BNL. The CIA report is entitled. "Iraq- Italy. Repercussions of the BNL-At» ianta Scandal." ‘hie report was pre- pared by the CIA's special division. the Office of the Near East and Southeast Asia Analysis. D ifl lamwritingandlhavesentaiettsr totbsCIADirsotoraskinghimtode- ciassib this report so that it can be made public. to wit: to us. the Con- gress. The secret report indicates that BNL loans were used to fund Iraq's clandes- tine milimry procurement network which was operating in the United States and Europe. The report indi- cates that several of the BNL-financed bunt companies in the network were secretly procuring technology for Iraq's missile pr-cg-rams and nuclear. bi- ological. and chemical weapons pro- grams. 'I‘hs President recently denied point blank that the White House or the Stats Department knew of the charges that Iraq was diverting United States assistance to build nuclear weapons. The President was quoted as saying: We didn't know that. The Stats Depart- maut dldn‘t know that. You can talk about what one Stats Department employee ' ' ° and if we had known it wouldn't have hay psned. Given the contents of the CIA report the President's statement seem rather disingenuous. The White House and State Department were keenly aware that BNL loans were tied to Iraq's highest priority weapons programs. ’l‘he CIA also had plenty of information in its files showing that the Iraqis in- volved in the BNL scandal represented the highest levels of the Iraqi Govern- ment. For example. one of the unindicted ccconspirators in the BNL scandal is Husaain Kamll. Mr. Kamil is Saddam Hussein's son~in-law and at the time he was in charge of Iraq's massive mili- tary industrialization sflort. At the timeoftheBNLacandaltheC1A1isted him as'the second most powerful man in Iraq. At this point I would like to placeatslexint.heRac0nDshowing Kamil wishing the employees of BNL a happy Easter. The telex referred to is as follows: Mann & IND. For the attention ofhlr. C. Drougol; I would like to sxpre-as my greetings and psrrsonslgoodwishssioryouandyouriamily and all your staff at Del Lavoro Bank-At» hnmontheoocanonofthehnerfsstivb ties. Wishing you all happiness. good health, and lrospsrity. I-iusssnl KAIIL Haanl. The Miauuy 0/ Industry and Military Producdon. Another example is Safa Al Habobi. one of the Iraqis indicted for his role in the BNL scandal. Al Iiabobi was the head of Iraq's secret military tech- nology wocurement network. He di- rected how much of the BNL money was spent and at the time of the BNL raid the CIA lists him as an Iraqi intel- ligence agent. It is important to note that the BNL investigation in Atlanta was not pro- vided access to the CIA report on BNL or the CIA information on Mr. ltsniii a.ndI.r.AlBahobiandothcs.Inhcl-. the committee has been told that re- quests for CIA information went unan- swered until aftw the Iraqi invasion of Kuwait—l year after the BNL raid. 273 H3012 CONGRESSIONAL RECORD-1-IOUSE July 7, 1992 The lack of CIA cooperation with the prosecutors in Atlanta was a cal- culated administration ef!ort to con- ceal the true nature of the BNL scan- dal and to hide the level of Iraqi Gov- ernment complicity in the scandal. The CIA could have easily opened its tiles and allowed the Atlanta prosecutors to know what they were up against. New leads could have been pursued. but that is not what happened. Instead the CIA was silent. It is downright criminal that the CIA did not help the prosecu- tors in Atlanta understand BNL‘s role in funding Iraq's military technology procurement network. Astonishingly. it appears that the Bush administra- tion wanted Iraq's clandestine procure- ment activities to continue. It is beyond me how the President and his advisors can claim that the de cision to approve $1 billion in CCC credits for Iraq was prudent. Providing Iraq with a billion dollars in additional credit while knowing of Iraq's sinister intentions is inexplicable. How can the administration explain that‘! Clearly they don’t want to. The CIA report also sheds light on the reasons why the President author- ized the release of the CCC credits for Iraq despite all the ominous ws.rning signs. In the late summer of I989 Iraq was in dire financial straits. Iraq badly needed the $1 billion allocation of OOC credits in order to meet the food de- mands of its people. When the BNL raid occurred in August 1&9. investigators found over $4 billion in unreported loans to Iraq--$4 billion. not million. billion—three quarters of a billion of the loans were guaranteed by the OOC Program. One of the main focuses of the investigation was fraud against the CCC Program. Starting in August I989. it was obvi- ous that the new fiscal year I990 CCC Program for Iraq was in trouble. On top of the BNL scandal the Treasury Department. OMB. and the Feders.l Ite- serve doubted that Iraq could make good on $1 billion in new guarantees that had been planned for fiscal year 1990. In September 1989. these agencies balked at that Agriculture Department proposal to go ahead with the mu $1 billion program. The State Department and White I-louse were stunned. Together they were just completing work on a new Bush administration policy for the Middle East called National Security Directive 26. The publicly available part of NSD 26. which was signed by the President on October 3. 19$. states: Normal relations between the U.S. and Iraq would serve our long-term interests and promote stability in both the Cull and the Middle East. The U.S. Government should propose both economic and political incen- tives for Iraq to moderate its behavior and to increase our influence with Iraq. 'I'he CCC Program for Iraq was the largest economic incentive the United States had to ofier—termination of the program would frustrate the Presi- dent's orders. A State Department memo to Secretary Baker dated Octo- ber 28. 1990. states: larlisr this month the President signed N81)-I mandating pursuit of improved eco nomic and political ties with Iraq. Our abil- ity to influence Iraqi policies in areas impor- tant to us. trons Lebanon to the Middle East peace recess. will be heavily influenced by the outcome oi the CCC negotiations. Consequently. the White House and NSC devised a strategy to win approval for the corruption riddled program. In early November. Secretary of State James Baker called Agriculture Sec- retary Clayton Yeutter pledging his support for the mu 81 billion program. At the same time Deputy Secretary of Stats Lawrence Eagleburger called his counterparts at the OMB and Treasury Department to ask for their support for the full $1 billion program for Iraq. What is generally not known is the role the CIA report played in the deci- sion to grant the CCC credits for Iraq. 'l‘he CIA report states that a failure to approve the mu :1 billion CCC Pro- gram for Iraq will harm United States- Iraq relations. It was with that secret information in hand that the White House and State Department went to the NAC Deputies Committee meeting of November 8. 1989. The various agen- cies discussed the proposal for the CCC Program for Iraq. Notes of the meeting stats: The State Department's Robert Rimmitt stated that his comments reflected the views of Secretary Baker who believed that the program in Iraq was crucial to the U.S. bilat- eral relationship with Iraq. He noted that in National Security Directive 3 the President had called for improvement of the U.S. rela- tionship with lraq and bilateral trade expan- sion oiiersd a good means to achieve that end.'I‘oa!s'uptlyterminststheCCC:rogram in Iraq would. he said. clearly run counter to the President's intention and would fur- thsrmore cause s deterioration in our rela- tionship with the Iraqis. The high level lobbying eifort paid oil. This time the CCC Program for Iraq was approved. The CIA report shows that unless the full 81 billion CCC Program was approved. the Presi- dent's goal of improving relations with Saddam Hussein as spelled out in NS!)- N would be frustrated. Making NSD-28 work appears to be the main motive and driving force behind the decision to release the CCC credits. The problem was that NSD-Z6 was ilawed-—closer re- lations with the brutal Saddam Hus- sein was not a prudent strategy. It is reasonable to infer that the President himself authorized the re- lease of the CCC Program for Iraq and it is the President who should answer to the taxpayers for this faulty judg- ment. 'I'hat inference is supported by recently acquired Treasury Depart- ment notes of November ‘I. 1989. which state: "Non-attributable: Rumor: White House ordered release of the Si billion." These revelations are important for several reasons. First and foremost is the striking stupidity in giving Sad- dam Hussein 81 billion in credit when he is obviously intent on building weapons of mass destruction. The ad- ministration clearly had more in mind than helping American farmers. The Bush administration had a pol- icy of not allowing food to be used as political weapons. yet clearly the CCC Program was used as a political tool and not a market enhancement mecha- nism as the highest levels of the ad- ministration have claimed in recent congressional testimony. U 1610 The decision to approve the CCC credits also shows that prudent man- agement was abandoned for political expediency. and yet in recent teati- mony before the Banking Committee Mr. Lawrence Eagleburger stated: I intend to make clear that the adminis- tration followed a prudent policy toward Iraq. including the management oi’ the CCC ~I I I Now. this is the same Mr. Eagleburger. Deputy Secretary of State. when in his appearance before a committee. looks at me and says. “Well. it was not until I saw in the CONGRESSIONAL RECORD in preparation for this hearing the cable memorandum that you put in the Rnconn that I did not even know existed." I said. "Well. you signed it." He said. "That is true." It is signed as Acting Secretary of State. But somebody sent that cable. To whom? To our Ambassador in Bagh- dad. What did the cable say? It said. “Hey. we s.re going to get that help for Saddam Hussein. Be sure to tell him." but then the last paragraph said. "But do not tell anybody back here in the States." So when we bring this out. the Dep- uty. with great ado. alams the docu- ment on the table in our committee bearing room and says. "That proves I did not know about this. I would never have written such a stupid paragraph." Well. who then is acting? Who is re- sponsible for anything then? If I should send a cablegram like that and it is over my signature. I should not be answerable for that‘! I should blame some unknown. undetermined. unidentified. locally placed State De- partment Foreign Service Oiilcer somewhere? Of course not. But those s.re the times we are livins in. Yes. we made a mistake. but nobody is taking responsibility. no account- ability. What are we waiting for in our coun- try’! What is the net dead-end reeult of all of this on levels reflected. as I can tell you in hearing alter hearing in the Banking Committee. irom the high and the low and the banking and big iln.an- cial experts and all’! “Yes. sure. but we are not responsible." because. you know. everybody was riding that merry-go-round at the time. You know. that was the thing to do. But who an- swers for it? And what are you going to dotomakeupforthesecrasserrofl. and if not greedy. greed-driven activi- ties. and redeem such as it can the na- tional interest‘! No volunteer there. 274 July 7, 1992 ooncussiouu. sncoao_r-nous: H6013 E 25‘ 5 éga The sandal committee has learned tober-early November assistan House called the t U3. eRor~ neyinAtlantatodiscul thsBNLoass. Lest week the committee was mo- videdacceastoamlsoflongiost Treasury Department notes on the NAC. The committee asked for them in October I990. and they were recently uncovered and turned over by an hon- est Treasury Department lawyer. Theee meticulous and comprehemive notes were taken by a dedicated mzeer 'i‘reasury Department employee who wae aasigned responsibility for mon- itoring the BNL simndal and the NAC decision on the fiscal year I990 GOC Program for Iraq. Last. the committee here give credit to th been the most rewarding. limited staif. but Mr. Dennis has been in the forward ofthis. under the most able direction of the staff di- rector. Kr. hissk. Kelsay leek. with credit for painstaking night after night all night, weekends all night. poring through theee dooumenb. assembling them. and then consulting and identi- Hing. Mr. DORGAN of North Dakota. Mr. Speaker. will the gentleman yield’! Mr. GONZALEZ. I am happy to yield to the gentlemen from North Dakota. Mr. DOROAN of North Dakota. Ir. Bpeaker. I wanted to observe that I have watched the gentleman in the well. the gentleman irom ‘hues (Hr. Gouulnl. take the floor over recent months on this same subject. and I think that the Home of Rep- resentatives owes the gentleman from Texas (Mr. Gowzanati adebtofgrsti- tude for the work he has done. Mr. GONZALEZ. I thank the gen- tlemen from North Dakoh (Mr. DOI- DAN]. Mr. DOROAN of North Dakota. Clear- ly something strange has gone on here under the cloak of greet secrecy in which billions of dollars have flowed in unusual ways that have apparently ended up buying weapons for Saddam Hussein, and the gentleman from 1%:-as (Mr. Gorraanazi has been determined to find the answer to theee questions that have been posed. and I think the House owes him s debt of gratitude. I do not know where this all leads. I do not know where it all ends up, nor I sus- pect does the gentleman from Tens, but the American people deeerve the truth. ’I'hey wanted to know what has happened. Mr. GONZALEZ. The gentleman is correct. Mr. DOROAN of North Dakota. What happened. why It happened. under what conditions it happened. who authorized it. That is what the gentleman irom Texas seeks. and I hope that he will pressunallcfthsforoesintheflouse and in the whole Oongrem and in the executive branch to make sure the mechanisms e.re available for you to get at the truth ee that the Amerimn -ii 552% éiia people can undeniand what the truth is. Mr. GONZALEZ. tleman very much. I say to the gen- tleman trom North Dakota nu-. Don. Gal). I deeply app-euiate that. and par- ticularly coming ihnn a gentleman I honor and esteem highly. I went him to know that he has succinctly stated the main underlying motiyation that guidesushere.a.ndesIsaid,insotares theee collateral issues touch on the banking and financial and the safety and soundness of our system. which un- fortunately and sadly is not so safe and so sound. as the gentleman well knows. and the gentleman has developed quite an expertise in that line even though he is not a member of the Banking Committee. and we respect him very much. But I thank the gentleman again for his generous words. So we had last week finally provided alook atapile of’I‘reasury Depart- ment notes on the NAC. It resisted. de- nied. in fact. I had one letter in which Treasury interposed executive privi- lege. but we persisted and iinally. last week. the etsilf was permitted to look at some of theee documents, not all that we are still looking for. and the committee asked for them in October 1990. That is over a year and a half ago. We were told that. "Well. we did not know"; they did not know they had them. So here they uncovered them last week, and they were turned over to an honest Treasury Department law- yer, probably a career. You know. we always forget how many dedicated areer, what we used to call civil service. but which has been undone. that on the eubleaderehip level, and I know in the case of the reg- ulatore and the old Home Loan Bank Board how many heroically performed despite facing either the Ion of their careers or the removal of their iuris- diction if the big cheeses up in D.C. did not like what they were doing. Now. what I have mid all along is that seuecy by its very. very identi- fication is an enemy of democracy. Ihaveaervsd,andIhavebeenpr1vi- leged. as I have said before time and time ll‘!-ln. to serve on the local legio- lative level S years. 25 years and I months ago city council of my ciw. State senate 5 years. and SM years here, SI years and 1 months here on this level. and I can honestly tell any- body that I know of no occasion in which I would participate or know of any pa.r1'.icipation in any matter that had to be secret. that the doors could not be thrown open, the windows opened. and I cannot for the life of me understand all of this penchant for se- crecy other than the fear of ridicule for being shown up to have made a very dumb mistake. Well. we all make mistakes. but if we thent:-ytodenyitandthenwhatis worse. cover up or olntruct the legiti- mate iurisdictionally wise organ of our Oovernment that is directly respon- sibls to the people itself. the knowl- edge and the inclination that men such E E 3 esJ.‘lladisonandtheoneswhowrots the Ooiltitution say is indispensable. '1‘his employee had regular contact with the various agencies involved in the handling of the BNL scandal and the decision to approve the COG Pro- gram for Iraq. This includes regular contact with the State Department, Agriculture Department. Federal Re- serve. and the Justice Department. The contacts also included the White Iiouee. On November 7. 1989. this individual had a conversation with a fellow Treas- ury Department employee and the as- sistant U.S. attomey in Atlanta. Ms. Gail McKenzie. The notes oi the con- versation read: Helen-sis: She has been called by the White Ilonse—-got impression (they are) con- cerned about embarrassment level. It is clearly improper for the White House to be calling an assistant U.S. attorney to talk about an open crimi- nal case—eepecially a case as sensitive estheBNLcase. Acall from thewhite House could certainly be perceived as threatening. This revelation raises a myriad of questions: Who at the White House made the call? who at the White Rouse authorized the call? Was the prosecutor required or asked to reveal grand Jury secrets? Who at the Justice Department was aware of the call? Did the Justice Department approve of the all? Whywaatheoallrnadeintheiirst place? It is interesting to note that during recent hearings before the Judiciary Committee whether to appoint an inde- pendent counsel Attorney General Barr did not inform the committee that the White Rouse called the prosecutor in Atlanta to discuss the BNL case. Clear- ly someone at the White House wanted theprosecutortoknowthattl-nBNL investigation was an extremely impor- tant case. noe-row cam erru. ACTIVI Iamsorrytorepcrtt.hatthePresi- dent's ei!orts to thwart the Banking Committee's investigation of BNL and Iraq policy are still quite active. On May I5. I892. the Attorney General sent me a letter stating that the Banking Committee would not be provided ac- cess to classified information. The At- torney General spuriously claimed that I harmed the national security by plac- ing documents in the CONGRESSIONAL Rloonb during my floor statements on BNL. I should note that the Attorney Gen- eral did not send his letter until nearly 1 months alter I entered the first docu- ments in the CONORISSIONAL Itsconn. In tact, the Attorney Gcneral's letter ‘arrived just after the Bush administra- tion started getting negative press for its tailed policy toward Iraq. On numerous occasions I have asked the Attorney General and the State Department to demonstrate how the 275 H6914 CONGRESSIONAL RECORD—HOUSE July 7, 1992 [Mr. GINGRICH addressed the House. Hie remarks will appear hereafter in the Extensions of Remarks.) iv The SPEAKER pro tempore. Under a previous order of the House. the gen- tleman from California [Mr. DR!-HER] is recognized for 60 minutes. [Mr. DREIER of California addressed the House. His remarks will appear hereafter in the Extensions of Re- marks.) ~- THE FUTURE OP AMERICA The SPEAKER pro tempore. Under a previous order of the House. the gen- tleman from North Dakota [Mr. D01» 0A.N] is recognized for 60 minutes. Mr. DORGAN of North Dakota. Mr. Speaker. yesterday I was in my district in the State of North Dakota and I met someone who said that they had been involved in some investments in the country of Poland. I was thinking about that on the airplane yesterday coming back to Washington. DC. think- ing a bit about Poland and thinking about an experience I hsd here in the House of Representatives about 2 or 3 years ago. It was kind of an unusual experience. As you know, Mr. Speaker. we have joint sessions cf Congress in which the Senate comes over in this Chamber. meets with the House. the diplomatic corps comes. the President's Cabinet arrives. the Supreme Court shows up. and then we have an address. Typi- cally. the address is by the President of the United States to give a State of the Union or some other special address. In other cases. it is from a head of state. In this case. several years ego the Speaker of the House recognized and the Doorkeeper announced from the back door of the Chamber a gentleman from Poland. The Doorkeeper said Speaker. Lech Waleea from Poland." and Lech Walesa marched in that back door and walked to the front of the room and stood at the podium. lust be- neath where the Speaker now sits. and the joint session of Congress rose and gave him a long standing ovation. This rather short. pudgv man. with a mustache and red cheeks. was not a politician. He was not a diplomat. He was not an intellectual. He was not a scholar. He was an electrician. an un- employed electrician st the shipyard in Gdansk. Poland. who i0 years earlier had been beatan by the Communist Se- cret Police in Poland because he tried to lead a labor strike for a free labor movement in Poland. Lech Waleaa stood at that micro- phone and told us of the experience. Ten years earlier he had been beaten in the shipyard in Gdansk for trying to lead a labor strike. They took him and threw him over the fence outside oi the shipyard. and Lech Walesa lay there bleeding. unemployed. beaten. wonder- ing what to do next, wondering about the future. his family. his country. and this common man. this ordinary man documents I placed in the Concuss- SIGNAL Rzconn harmed the national se- curity. Not surprising. neither has re- plied and I bet they never will because the documents in no way harmed the national security. The truth is that the President and his advisers are hiding behind the cloak of national security to cover up embarrassing and potentially illegal activity related to his policy toward Iraq. INDEPENDENT covusu. The Judiciary Committee is now con- templating appointment of an inde- pendent counsel to investigate poten- tial criminal activities associated with the Bush administration's policy to- ward Iraq. It is now clear that the President. Brent Scowcroft. and other top advisers had their hands in the ef- fort to thwart congressional oversight of Iraq policy. We know that the administration submitted false Commerce Department export licensing information to the Congress. Before today all we knew was that Dennis Kloske was pointing his finger in the direction of the White House. We now know that the White House called the assistant U.S. attomey in Atlanta iust prior to deciding to ap- prove the Sl billion fiscal year 1990 CCC Program for Iraq in November 1989. That was clearly improper. We know that the White House and State Department had CIA information showing how the loss of BNL loans could harm Iraq's procurement effort which apparently was the linchpin of the policy to mollify Saddam Hussein. a man who a few months later would be referred to as Adolf Hitler by President Bush. The White House wanted to keep the money and the technology flowing to Saddam Hussein. And naturally. today they do not want to talk about it. But it will not go away. The people of this country are entitled to know what hay pened and why. C1520 The SPEAKER pro tempore (Mr. AN- DREWS of New Jersey). Under a pre- vious order of the House, the gen- tleman from Indiana [Mr. BURTON] is recognized for 60 minutcs. [Mr. BURTON of Indiana addressed the House. His remarks will appear hereafter in the Extensions of Re- marks] The SPEAKER pro tempore. Under a previous order of the House. the gentle- woman from Maryland [Mrs. BENTLEY] is recognized for 60 minutes. (his. BENTLEY addressed the House. Her remarks will appear hereafter in the Extensions of Remarks.) The SPEAKER pro tempore. Under a previous order of the House. the gen- tleman from Georgia [Mr. Onnucsll is recognized for N minutes. with extraordinary courage pulled him- self up of! the ground. climbed back over the fence and went back into that shipyard once again. and 10 yeam later he showed up at the door of this House of Representatives as a leader of Po- land. now President of Poland. From that podium he said something to us that I shall never forget. He said. “You know, we didn’t even break a window pane in Poland. The Com- munists had all the guns. The Com- munists had all the soldiers. We had no bullets. What we had was an idea and ideas are more powerful than weapons. the idea that free men and women should be free to make their own choices." And the power of an idea toppled communism in Poland, and then. too. it toppled communism in East Ger- many. Czechoslovakia. and Romania. Eastern Europe is largely free and democratic as a result of the courage and leadership of common people will- ing to exhibit uncommon courage to stand for freedom. I was thinking of that yesterday be- cause I was thinking about the politi- cal trouble in our country. all of the nail biting. all of the knashing. all of the concern. all of the fretting that goes on at the White House and here in Congress and in the cafes all around the country. in the small town res- taurants. wondering what is becoming of this country. How do we fix what is wrong? What on Earth has happened to America? ‘ I wondered yesterday. thinking about all of this. where is the courage‘! Where is the courage in the White House. in Congress; yes. even in the restaurants across the country for all of us to stand together and decide that we are as good in this country as anybody else in the world? We took on the world and beat them economically. We became the most powerful economic center in the world. We made the best products. sold them at the best prices. We outcompeted everybody. We outtraded everybody and we became No. l. I-grew up in a town of 350 people. went to school there for my first 18 years. Every day that I walked to school. I knew this with certainty. This country was the biggest. the best. the strongest. the most important. and we were No. I. I knew it without a de- bate as l walked to school and as I came home from school. I did not think much about it. I. like everybody else in this country. lust took it all for grant- ed. but it is not true anymore. We live in a different world. We now face enor- mous challenges. We had the chief economist of the Deutschbank in Japan come to Con- gress and testify a couple weeks ago and here is what he said. and it reaf- flrms.the knot of fear in the stomachs of most Americans. It is why people are worried. It is why they are biting their fingernails about the future. Here is what the chief economist of the Deutschbank in Japan said: 276 Invitation Letters 279 -(hm 1 ;:~;4l&E; ‘sus tum“ 1-4“ Al4'~\~l o -uvncm 5-1»-4~ _ um ~cnv~ :u-ouvu mum. -ulnnb -' ll~Y‘-Kilv J°~I 1 \J"§cl ~t\~ 'o~1 nun I08! Gaul O~\O Illltl I vlN‘O MINNESOVA DOUG IAINAIO Jo GIOIGIA (“nu I Sfinuldi-I NIW '01: !Al'|(' ‘IAN! IIASSACIIUSITVS lln non c- MJIAMA YIQMAS I culltn nruwnt uvu-~ wwnn wuu unroamn Gnu.) '2 MECZKA wvsconsm nu I ~ m_onsn Icnusv-.un\A IL Ill!" 1 PAYYi-13004 $00"! CAIOUIA .‘C$i'" P ll‘>q\iO' I \ll$iACl'llSL'1'7i Ilivo - |,ni ~(w won: us! 5| ur_;U£ 'nnv"_;~D It'll -cautpuo nlusu re»-no I ~11; Mlsncnuiffll c.-nits »..:z~ omo lAlmi flA'ilS uuromu Lflllv ulOCCO |DAflO I'LL ORTQN. UVAN .-ma ncc-us swam: .A||(S noun 1- v~n<2m|A 10-". col Jl muuou 1:0 wt|SS ~Ew won J-u Survnv unsn GAIN L Acunwm ncw volu U.S. HOUSE OF REPRESENTATIVES coumrrrts on BANKING, rmmce mo uaam AFFAIRS oueuuuoneosecouocoucasss 1113 RAYBURN HOUSE OFFICE BUILDING WASHINGTON, DC 20515-8050 May 27, 1992 owmtvs - -~_,l 3-0 an JAc~ own Bu \¢u.m HOIIOA I.A§l @ullMA III“ AFSIY D006 ulw‘YUL ucusu n-onus M004. P(h~Sv ul\A VDIY non VHSCONSII kunm A was-nus: CAL-IOIMA ICNAIO '4 IA!!! ~OV'$|lI4l curl svurms ILOIIQA PAM l GILLIOI 0000 um rue-4 unv vuu JONN \J~\|MY\ 0\JcC4~ .1 voa auntie cA.¢IOI~IA uh KANCDCI u-ssoun rum macs cwroanu fill IIUQSLL IOWA ~c>uno 1 nun nus CIAAG Noun wvou I15 nu nnnsou run lvuwu muons vuuoorr 1201» 12:-4141 Vtnnflilt Honorable John D. Dingell Chairman Committee on Energy and Commerce 2125 Rayburn House Office Building Washington, D.C. 20515 Dear John: The Committee on Banking, Finance and Urban Affairs will hold a hearing on the Bush Administration's efforts to frustrate Congressional investigations of pre-invasion policy toward Iraq on May 29, 1992 at 9:30 a.m. in Room 2128 Rayburn House Office Building. The Committee respectfully asks for your assistance with this hearing. The Committee would appreciate any written comments that you have related to the Subcommittee on Oversight and Investigations‘ review of the Bush Administration's failed efforts to curtail Iraq’s nuclear weapons program. An overview of your Subcommittee's investigation and a summary of the Bush Administration's efforts to frustrate your investigation would be most helpful. Your written comments will be placed in the hearing record. The Banking Committee appreciates your valuable assistance. I Si%;ely, Hen y B. Gon alez with best wishes. Chairman HBG:dk 23531 ~lIUIVI.GD'¢ALIlTIXALD\NIlAl mu usual!!!) I-LIIOII IY@# L NA $7" Milli all “Ill. -I. IIIVIJCIV JOI J LJDLEK _W Ifll IMV Ell QAIAI. U00 ll“ 1. VQVO Iiifil DUI Ill. Jla Qlfifill CHAKII I. IGIIKQ. K VOC lllii“ filial. UlSlN°\I“"I In lwulcu. Auanu 'I\QUAl \ CAD‘ HLAUIQ "YUM! IDNAID ‘OX1. Ullil DIIMJ I KLLCZIA Wlfilli um. l uauosnn. nnnlnvmu ltllfllnl J PAWIIIOU IOU"! CIEUIM 4000* v unuov 1 Iusncnullffl rum: n nan. raw vol! any nmnll. uurvuai ‘NI néflflkfibfi. Dill!-{IA l'CI¢l0 I Ina IMIUO-vlIf"I CIAI-II HIM. BN6 lflflul WATUI. UAIOQZI all U339 -NRO ll“ OI'Ul. UTMI AU lfillll. lufibé Alli IAOMII. 41.. vI\GInA .0-In COL an. uncut "D Wfil ‘W Vi 1 KLAYYIIV I-All-ll M-Iv - utxllnnm um You Mr. Allan Mendelowitz Director U.S. HOUSE OF REPRESENTATIVES coammu on nmuno. mumcl mo unm AFFAIRS U45 HUNDRED BECOND CONGRESS ZIZI RAYIURN HOUSE OFFQCE BUILDING WASHINGTON. DC ZOGIB-6050 Hay 26, 1992 General Government Division U.S General Accounting Office 441 G Street, N.W. Washington, D.C. 20548 Dear Mr. Mendelowitz: §§€'i*iiF§§g§§§£§"§ ;z'§*§i¥‘§i=”=: @5- :;§'§g§§§:i§§§!g§i § will Mlolau ND“!!! 10$ Ill. E1 I193 Ill-4241 The Committee on Banking, Finance and Urban Affairs will hold a hearing on the Bush Administration's efforts to frustrate Congressional investigations of United States policy toward Iraq on May 29, 1992 at 9:30 a.m. in Room 2128 Rayburn House Office Building. The Committee respectfully requests that you testify at the hearing. The Committee would appreciate hearing any comments that you would like to make related to the GAO's review of the Commodity Credit Corporation (CCC) program for Iraq and the Banca Nazionale del Lavoro (BNL) loans to Iraq. An overview of the GAO's investigations and a summary of the Administration's efforts to frustrate your investigations would be most helpful. The Banking Committee appreciates your valuable assistance and looks forward to your testimony. with best wishes. HBG:dk Sizerely, ! Henry B. Gonzalez Chairman 282 Isss urnuvazun a_--cos sfirv-0' L -u-_ vormr calouua cassou vmeeaee JI. nun.-on new 4 units ~rv: vols: uasn nos! onus one elucr I vliflo mausscva 0006 IAsaano JO GGOQGM c-wu; l $CIuasll ~r vols: sun-Iv llana uassacva.|sfl'1s sr-1 rsulrlcn anelaaaa 1»-onus I carts ottawaus rs'uu- rowaao rollers neurones Gi\ALD D lLiCZ'~A WISCOOISI Hui r uvuoessl Prunsvwama luulrn. i oi.-rrsson souw .050» v rrwnrnv n uassacwusrfls Horn as ruin. nrw voss rwlm as!u\IL uasvuno IiVlI »OAGl.ANO NEIRASKA IOAAQ L MEAL IASKACNUSF-'73 5»-Anus LUIII ono Ballad WAYIKS CAUFOMAA <74"l2~'-\lAaQ'&A.\.OaARaAl (A.@)\.i4\A U.S. HOUSE OF REPRESENTATIVES COMMITFEE on smxmc, nuance mo unam asrams oueuuuoasoszccuocoucnzss 1129 RAVBURN HOUSE OFFICE BUILDING WASHINGTON, DC 20515-6050 May 4, 1992 c>\~.ar|.lsI-I'i.I.wQ Altletnflvla sail IsrCOu.uII. Roma liafil QUIIIA. CV I08" DOUG IIIUYII. HIIAIIA "wise-I I001 Flewlflvuwa voev lbw. Wlicosaisr MJIIB A IKKJEIJSI CLLIONIA Dtnanu n oasis iouaiasra Curr nuns Roma Pun. I oaluoli or-vo su sason nrw won sown u-nun our-can ;- r\~~isxi:| roar cnsrsru. uuvoeeua In nancots uiiioull mans moot fJu¢Olsna an NUSML vows Iscraaao L umrv fuss CKMG T\40\dAi WVOOIWG Saar roe:-sou flilul IIIKAE Sill}. VIINOIIT uuw ufiottu omc ¢°111"-41" I>\.L oevoe WM Jlal IICCNUS ILONOA AMI} nous )a_ wecmu .0"! COL .|a_ IUJVOOG no wuss ~rw vouu JIU SLATYEIV IA-ISQ $4!" L Acsuuanr MCW YOU Hon. C. Boyden Gray Counsel to the President Executive Office of the President Second Floor, west wing 1600 Pennsylvania Avenue, NW Washington, D.C. 20500 Dear Mr. Gray: The Committee on Banking, Finance and Urban Affairs will hold a hearing on the need for and function of the lawyers group established by the White House related to the congressional investigations of pre-invasion Iraq policy. As a member of that group (see attached memo), you are invited to testify on May 29, 1992, at 9:30 a.m. in Room 2128, Rayburn House Office Building. Please address the following questions in your testimony 1. Why did the Executive Office of the President join this group? Who at the Executive Office of the President authorized such participation? 2. Please provide a list of all meetings held by the lawyers group referred to in the attached April 8, 1991 National Security Council (NSC) memo that you or any Executive Office of the President representative attended. Please include the topic of each meeting and those persons attending each meeting. In addition, please provide the Committee with all notes, memorandums, meeting minutes, letters, etc., originated as a result of each meeting. 3. Has the Executive Office of the President ever received any communication from the White House, the State Department, the NSC or any other department asking the Executive Office of the President to withhold information from Congressional Committees investigating the Administration's Iraq policy? If so, please explain and provide documents, if available. 4. Did the State Department, White House or NSC ever review and/or clear information that was submitted by the Executive Office of the President to Congressional Committees in 283 response to information requests concerning Iraq or BNL? Please explain. Banking Committee rules require your written testimony to be made available to Members of the Committee forty-eight hours in advance of a hearing. Accordingly, please deliver 200 copies of your written testimony to Room 2129 Rayburn House Office Building by 9:30 a.m., May 27, 1992. Thank you for your time and consideration of this request. The Committee looks forward to your testimony. with best wishes. Sincerely, I Henry ~' Chairman HBG:dk,aa 304 President Bush Refuses to Allow White House Staff to Testify at Banking Committee Hearing Z 306 response to information requests concerning Iraq or BNL? Please explain. Banking Committee rules require your written testimony to be made available to Members of the Committee forty—eight hours in advance of a hearing. Accordingly, please deliver 200 copies of your written testimony to Room 2129 Rayburn House Office Building by 9:30 a.m., May 27, 1992. Thank you for your time and consideration of this request. The Committee looks forward to your testimony. with best wishes. Sincerely, I Henry ~ Chairman HBG:dk,aa 307 Ivan Misfit ups: INF‘! 1 QM. flfll (AQUA Ci; ‘QUIZ A IIIWQV null J MIILCI. (I vnfl ll $81 Gilli. Q09 llutl I v1nvo.Inv-risen £06 IAQAQ Jl Gilli cl-AA" I. IOIAIII. nnv v& IAQQV IE1. IA-IIAOQQITTI ll~ lloflutu nuenu '-emu I curl! Nummfl Iflllnn low-no vclnu uuollu Glkkfl U IKIKZIL WUCUISD Mu I. ulurllul. nvmsvivuu ll-Iurv I IA'YtI:eIn IOU“! .':9lI\- I unuvv I. nun:-ant"! have - Iuu. Haw vol: Inns: ulull. \MIv\.uQ van -ouanno. nunasu ac-no I. HAL uuucmusflfl C-nu! LUIIII. one HAIII IAYIIS. Camila user wntco. memo CW'l50fiMll'\lA-Iéuiii CAL)“ U.S. HOUSE OF REPRESENTATIVES COMMITTEE on amxmc. rmmcs mo unam AFFAIRS one uuuoaso secouo concaess Z129 RAYBURN HOUSE OFFICE IUILDING WASHINGTON. DC 20515-6050 May 4, 1992 cvumnln ~ aw-.4. 8% Amntlaol Gin —-AXCQQKKOI wiifiifiii gs .4 5z%§§§§§§§§ ' §§i§ YI%I$Sl'l :5‘; 5%; Ousvwonumnflu-um uu|D¢ls0|.Iflu nmuwunaeemvlnnonn Fill!-4247 nlelvonvvuw suuzznnaema uuuueunimnnuu .= 4eIn|coI.n.u.|Ius ‘ rlownn.It voI nnsumilvunsu santacununrtwmu Honorable C. Nicholas Rostow Special Assistant to the President National Security Affairs National Security Council Room 348 Old Executive Office Building Pennsylvania Avenue and Seventeenth St., NW Washington, D.C. 20506 Dear Mr. Rostow: The Committee on Banking, Finance and Urban Affairs will hold ' a hearing on the need for and function of the lawyers group established by the White House related to the congressional investigations of pre-invasion Iraq policy. As a member of that group (see attached memo), you are invited to testify on May 29, 1992, at 9:30 a.m. in Room 2128, Rayburn House Office Building. Please address the following questions in your testimony 1. Why did the NSC join this group? who at the NSC authorized such participation? 2. Please provide a list of all meetings held by the lawyers group referred to in the attached April 8, 1991 National Security Council (NSC) memo that you or any NSC representative attended. Please include the topic of each meeting and those persons attending each meeting. In addition, please provide the Committee with all notes, memorandums, meeting minutes, letters, etc., originated as a result of each meeting. 3. Has the NSC ever received any communication from the white House, the State Department, or any other department asking the NSC to withhold information from Congressional Committees investigating the Administration's Iraq policy? If so, please explain and provide documents, if available. 4. Did the State Department or White House ever review and/or clear information that was submitted by the NSC to Congressional Committees in response to information requests concerning Iraq or BNL? Please explain. 308 Banking Committee rules require your written testimony to be made available to Members of the Committee forty-eight hours in advance of a hearing. Accordingly, please deliver 200 copies of your written testimony to Room 2129 Rayburn House Office Building by 9:30 a.m., Hay 27, 1992. Thank you for your time and consideration of this request. The Committee looks forward to your testimony. ncerely,é§ Z enr Gonzale with best wishes. .5 Y Chairman HBG:dk 309 NAl|ulv\.:n:v~n-.. ...-_ _" wmiodflliddflfll *4@§ . Ce’ C|'¢.$'§(l Ap 1' 0 1.991. C} if . I en I "so _ ///!E'M¢1/. Q | - hcfifi we .1 V t-£!'..\4oaA.\1ot.'M son .21-...\.\ms s. aacnraam -'12.......~a, rm o.“ __. . c. aororrgncaaz ; M-*1: /l~u- .z,v\:~o’o-,¢l.{ ram car . ' ' . zacanrr. to}-ggo -L@»g'3.5 '%4‘1,\!1i‘§i.Q,~'.\._1..1 rtantnct o we - . W. anus not-usde '2" "V_"*‘- rmzssrm axxosxoar 5 C\>.“...~ sown: wntunsos ~$&:b.. wtuotnn wznnxrt ~ ' Nicholas E. calio Assistant to the President for Legislative Affairs The Honorable Henry B. Gonzalez Chairman U.S. House of Representatives Coittee on Banking, Finance and Urban Affairs Washington, D.C. 20515 cc: The Honorable Chalmers'P. Wylie 314 Justice Department's Michael Luttig Refuses to Testify Banking Committee Hearing 316 - Banking Committee rules require your written testimony to be made available to Members of the Committee forty-eight hours in advance of a hearing. Accordingly, please deliver 200 copies of your written testimony to Room 2129 Rayburn House Office Building by 9:30 a.m., Hay 27, 1992. Thank you for your time and consideration of this request. The Committee looks forward to your testimony. Sm erely yogs, I He y B. Gonzalez Chairman I with best wishes. HBG:dk,aa 317 U.S. Department of Agriculture Documents Related to Rostow Gang ss-921 o - 93 - 11\_ 318 O*.'“!2Z'I'~'3.-3 rt";-,‘ United States Office of the Washington, A .3 A ; Department of General D.C. \ Agriculture Counsel 20250-1400 1"/>4” .’_ I‘ /_~- " ‘I April 17, 1991 MEMORANDUM FOR THE SECRETARY FROM: Alan Charles Raulxa General Counsel SUBJECT : Iraq-Related Document Requests; Response to Congressman Rose LSSLIE ’ On April 15, Gene Bailey and I attended a meeting called by the NSC to discuss the Administration's response to Congressional requests for Iraq-related documents. USDA has received document requests from Congressman Gonzalez, Chairman of the House Banking Committee, and from Congressman Rose of the House Agriculture Committee. Congressman Rose wrote to you on April 12, 1991 (copy attached), expressing his request for documents in rather forceful temis. A proposed reply for your signature is attached. l$_CllS§lQI! 1. ~. The NSC’s legal adviser and director of legislative affairs called an inter-agency meeting to discuss the Administration's response to numerous requests for Iraq-related documents. Boyden Gray attended the meeting, as did the Assistant Attomey General for the Office of Legal Counsel and the legal and congressional officers for State, Treasury, Commerce, and Energy Departments as well as the CIA, NSA and Joint Chiefs of Staff. Each agency reported on document requests it had received. The House Banking Committee, House Agriculture Committee, House Ways and Means Committee, General Accounting Office, perhaps the Foreign Relations Committees, as well as other committees, are requesting Iraq~related materials. The Treasury Department reported that it had pennitted Hill staff to review the National Advisory Council minutes regarding inter-agency "consideration of the Iraq GSM request. The NAC minutes were reviewed in the offices of the Treasury Department; the Committee staff was not provided with any copies of the NAC minutes. Congressional staff members were not even permitted to take notes on any classified minutes. KB GG¢{€3 Memorandum for the Secretary Page 2 2. The Justice Department emphasized the need to determine which documents contained information that could be central to the Presidency, such as national security, diplomatic and other deliberative matters. The Assistant Attorney General also suggested that minority as well as majority staff members be included in whatever document review is allowed. He further suggested that, if appropriate, agencies should consider entering into confidentiality agreements with the Congressional committees or editing out the deliberative or advisory portions of potentially privileged documents. 3. The meeting concluded with NSC suggesting that the coordinating process would continue to be available so that agencies do not pursue inconsistent approaches. It was also noted that the objective is to cooperate with Congress, while also ensuring that appropriate protections are accorded to deliberative materials. Also, the inter-agency nature of the subject should be recognized - therefore, agencies should not act unilaterally. In particular, an agency should not disclose documents in its files that were originated by another agency without advance consultation. Finally, it was agreed that materials should be reviewed before being provided to the Congressional committees and that each agency should maintain a list or copies of the documents provided. 4. I propose the following procedures and guidelines in response to these document requests within USDA: 1. Requests should be received in writing. 2. Party receiving request should forward copies to: a. Blumenthal/O'Connor (Cage) b. Raul/Brosch (OGC) c. Crowder/Acker/Hovermale (IACP/FAS) d. Bailey (OCR) e. Snead (OIG) 3. OGC will review each request and provide advice. 4. Potentially responsive files and/or documents will be reviewed or evaluated by OGC. 5. To the extent requested and appropriate (within OGC advice), access to files may be provided. mm GGZTQ7 Memorandum for the Secretary Page 3 6. Relevant agency will make copies of potentially responsive materials and provide to OGC. 7. Agency or OGC (to be decided after consultation) will provide copies to Committee with appropriate cover letter drafted by OGC. SMQMBX The NSC is providing coordination for the Administration's response to Congressional document requests for Iraq-related materials. The process is intended to be a cooperative one; it also recognizes the Executive Branch’s appropriate confidentiality interests. Many Congressional committees are investigating the subject, including the House Banking Committee and House Agriculture Committee. These two committees have submitted document requests to USDA. In connection with the request from the House Agriculture Committee, a proposed response to Congressman Rose’s April 12 letter to you is attached. Attachment cc w/attachment: Richard T. Crowder F. Eugene Bailey Leon Snead Kelly M. Shipp Gary R. Blumcnthal William O'Connor 345 3.5. finest at Btprtstntatlbzs Cunnnittz: mt Qgritultut: llubington. DI; 20515 April 12, 1991 The Honorable Edward R. Madigan Secretary U.S. Department of Agriculture washington, D.C. 20250 Dear Ed: g; I deeply appreciate your assistance with respect to my request to you dated April 3, 1991. Up until today, my staff had the access I requested to review the materials in USDA files relating to export credit guarantee transactions. However, staff of the General Counsel's office, in particular Mr. Kevin Brooch, has indicated that before there can be any further review by my staff, all materials have to be reviewed by the Office of the General Counsel. This is completely unacceptable, and amounts to nothing less than an effort on Mr. brosch's part to delay my Subcommittee's investigation. since 1986 I have been requesting that the Department review export credit guarantee transactions with respect to the country of Iraq. As your staff knows, my staff has pursued this matter despite significant road blocks and barriers placed before them by employees and officials of the Department. The forthright manner in which you have addressed my requests led me to believe that I would receive the assistance I have been requesting for several years now. I have been patient, but persistent, and I am frankly tired of the back and forth which seems to pccur every time requests are made of the Department with respect to my requests fer information related to export credit guarantees and the country of Iraq. Further, yesterday my staff, who were willing to make their own xerox copies of materials they wanted on first City Bank in Houston, were told that the Department would make copies and deliver this material to them. however, I understand that the Office of General Counsel has requested that Congressional Affairs turn these materials over to them for review prior to the release of these materials to me. If I need the Office of General Counsel's assistance in reviewing these materials, I will ask them. I want my staff to review the materials, not USDA's office of General counsel. . 346 The Honorable Edward R. Hadigan page two April 10, 1991 on April J, I991, I also indicated to you that my start was willing to review these materials over the weekend in order to expedite my review or this matter. Mr. Brosch has indicated to my start that tederal employees, particularly Department employees, do not work weekends, and thus, there would be no review or materials by my start over, last, this, or any other weekend. Frankly, I am appalled by this assertion, and hope that you will be able to explain to Mr. Breech that when necessary, federal employees do indeed work nights and weekends. Ed, I need your assistance in expediting my review or this material. As Chairman ot the Departmgnt Operations, Research and Foreign Agriculture Subcommittee, I and my start are clearly entitled to review this material, and I certainly hope that this will be accomplished without further delay. I thank you in advance tor your attention to this request, and would appreciate the review beginning again today, and going through the weekend it necessary. I will be glad to supply the start to xerox whatever materials I and my start need tor this investigation. with my very beat wishes, arl e Rose chairman Department Operations, Research and Foreign Agriculture Subcommittee cR:mgh 347 , s-.. .-...__...- _ ECUTIVE CORRESPONDENCE DEPARTMENT OF AGRICULTURE ounce or rue secnrramv wunumorou. o.c. aoamo The Honorable Charles Rose Chairman Subcommittee on Department Operations, = Research and Foreign Agriculture Committee on Agriculture U.S. House of Representatives --- Washington. 0.c. 20515 . '°* Dear Charlie: Thanks for your April 12 letter regarding your Subcommittee's interest in reviewing materials relating to the former GSM program for export credit guarantee transactions with Iraq. I understand that members of your staff have already been provided access to, and copies of, certain relevant materials. ' ’ If any significant issues arise, please have your staff contact the General Counsel, Alan Raul We intend to provide your Subcommittee with the maximum access to these materials consistent with our proper confidentiality interests. As appropriate, we will be pleased to make copies of relevant documents and provide them to your Subcommittee Again, thank you for raising this important issue with me. We look forward to mutual cooperation and accommodation with your Subcommittee. Again, please feel free to have your staff call Alan should they encounter any difficulties or have any questions. -1 Sincerely, l i X Edward Madigan Secretary cc: The Honorable Pat Roberts 348 NATIONAL SECURITY COUNCIL wuoamu. ac. zosoe OFFICE OF LEGAL ADVISER FAX TRANSMITTAL COVER SHEET —. DATE: puny a, 1991 i 1 1'9; FROM: ‘ Alan Raul Nicholas Rostow _ _ PHONE NO.: PHONE 80.: 447-3351 456-6538 J Tux t~to.: PM N0-= 447-8666 395-1039 I COEIIDTIS NUIEER OF PL§S (aautnqauwpp): 4 349 ut)t,t,m. ax wt --' mnomt sscunrnr oouuctt WAS-IGTUI D.C. IBM May 3, 1991 MEMORANDUM FOR JEANNE S. ARCHIBALD C. BOIDEN GRAY MICHAEL LUTTIG TERRSNCE O'DONNELL ALAN RAUL EDWIN WILLIAMSON WENDELL WILLKIS SUBJECT: Meeting on Congressional Requests for Information and Documents We are scheduled to meet to discuss the attached request for documents and information from Congressman Gejdenson tc the Secretary of Comerce. A similar letter was sent to the Secretary of Defense and perhaps others. Our meeting is scheduled for Monday, May 6 at 10:30 a.m. in Room 324 of the Old Executive Office Building. Please call my secretary, Kay Larlante, on (202)456-6538 with information regarding your attendance at the meeting Thank you. 1/.i;, 44//<7 ,5’, §'I”\/ .h4¢// a-/"J *2-<*§1**/“’:*“ i ,4». 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"%»%*/f ~ .._/z%_i¢d¢,7/A/7‘,VA*/M4 */I/w-’£4Mr/7¢/4=w¢,¢£/‘Z “>3”?-,“”3%,““’@;‘%§..,ggZ€ % 5% » 735$] i;§%— @251] 373 Z” %: --> 374 2% /w>/Z—%>6~ 4%.-;.-__:/x,”~— "—> Jaw /A, %z¢ W2 mfigyfiwfli %%$¢~ fly/Q -~ {W/&%4f' 75./aw-/Qz¢ wi 1324;: 5”; ~%a» 376 379 *' Y ‘ umrso sures osnnnrmsm or commence K’ Office of the General Counsel ',,"",/ Washmgton, D.C. 20230 November 1, 1990 MEMORANDUM FOR: Iain Baird mom Tom Stil1man|/‘é .\,_, _,-"7 Roman Sloniewskyv"” I SUBJECT: Response to Barnard letters of October 26 Thanks for sending us an advance copy of your draft response. following O O O In addition to our notes on your draft, we have the comments: The information on the 22 applications will include‘ agency positions, interagency communications, and pre- decisional documents. We expect that the fifth floor and other agencies will object to providing this material on deliberative process grounds. We have provided an alternative paragraph stating such an objection. To present the issue up the line, we suggest that you send the letter forward with both alternatives. After review by the Office of the Under secretary, that office should coordinate with Wayne Berman's office and other agencies. We suggest that the letter not try to justify the issuance of licenses for viruses. We recommend deleting paragraphs three and four of your draft. We suggest that you not get into the amount of time spent in responding to the requests. In addition to being confrontational, it probably is an understatement of all Commerce and Executive Branch hours spent on these requests. 381 Honorable Doug Barnard, Jr. Chairman, Subcommittee on Commerce, 45 Consumer, and Monetary Affairs ;@LZvue¢+-/ 1,/ Committee on Government Operations ‘kn ;::.j> House of Representatives ' [fita//it.-/4.4 f’ Washington, D.C. 20515-6144 Dear Mr. Chairman: ,,,, r-"'.;;;.;l>1 Thank you for you5\~lettera§e@esting additional information related to license applications for exports to Iraq submitted to the Department of Commerce from 1985 to the_present. ([ 'D|5C1.O5u.A7.Z. A-zxtasm-avé: ' ;1Enclosed is information in the possession of the Department regarding the 22 applications specified in your two letters. There were no other applications approved for ECCN“Z997 and 4998 commodities to Iraq during this time. Each of these licenses was processed in accordance with the prevailing export policies and interagency procedureszl countries frequently do research on specific diseases which are either endemic to the area or have the potential of developing in epidemic proportions. This research may have one or more goals. Primary goals include development of inoculations or antigens (I».\5‘v£’/T A1/1’?/9/N g ' 55-927 O - 93 — 13 I Regarding ECCN*1997 and 4998 commodities, many diseases of man and animals, which are rare or unknown in the U.S., are relatively common in other parts of the world. Individual against infection: evaluation of specific treatments, and production of vaccines. X & The causative organisms are normally available in the country produce results which are repeatable, and to maintain quality control on any products such as vaccines, it is imperative that a standard reference strain free of any adulterants be used. There are a limited number of repositories in the world for these standard strains. One of the largest repositories for such strains is American Type Culture Collection in Rockville, Maryland. I _ T Regarding application no. B318857, issued to Gateway International tor 3000 commercial utility cargo trucks, you I//'6 Q’ should know that AH Generalpadvised~ that no export was made against this license te—§raqr In your letters, you request that we supply information omitted from the printouts we have supplied to you. The information was not intentionally omitted. As you will recall, this data is located in our archiveJ ilef we are currently working with our computer programmers to determine it this information can be recovered. As soon as we can locate the information, we will where the concern exists, but only in contaminated versions. To;;?? provide it to you. §Tfils has been a time~consuming task. To / date, the Department has expended 3§;\statt hours and 20 hours of L 383 we are providing this information to you, as the Chairman of the Subcommittee on Commerce, Consumer, and Monetary Affairs of the Committee on Governmental Operations, pursuant to the confidentiality provision set forth in section 12 (c) of the Export Administration Act, as amended. That section states that the information may not be further disclosed unless the full Committee determines that "withholding of that information is contrary to the national interest". In providing this information to you, I would like to underscore the importance of protecting the information from furtheg : disclosure. The information provides details of U.S. exporters’ business transactions. Among other concerns, release of the _ information could discourage exporters from participating, or being fully candid, in the export licensing process. Finally, you have requested a briefing by the Department on the background on some of-theYEbhsignees and end-users. As this briefing would involve sensitive informationp I ask that you ) direct your-request through normal intelligence channels. 2; ' /A M.‘/flee‘ _ C¢§L9 Should you'or your subcommittee staff have any questions or Q ( '/(jib  ’ require a briefing on this matter, please contact Ralph Pg) ‘ls Nurnberger, Director of Congressional Affairs, at (202) 377- tayqgd 0091. /£;,’_.:-‘,'!.:{.;r. I s / 384 Enclosures Sincerely, Dennis Kloske 385 GENEIALCOUNIELOFTNE UNITED STITES DEPARTMENT OF COMMERCE Wasnmgton. O C 20230 NOV 9 I99) .~"' ' ""'~»\ ?.F¥f7?~]*'-'-'l* \. . ./' MEMORANDUM FOR: Edwin Williamson Legal Adviser Department of state Terrence O'Donnell General Counsel Department of Defense Stephen Wakefield General Counsel Department of Energy Nicholas Rostow _ Legal Adviser National Security Council FROM: Wendell L. Willkie ;25’ SUBJECT: Response to Senator Glenn's and Congressman Barnard's Letters . For your information,_attached please find.letters proposed in response to Senator John Glenn's October 16, 1990 letter, and to Congressman Doug Barnard's October 26, 1990 letters. We plan to send the replies by C05 IQDAX. If you would like to discuss these matters, please call Dan Haendel at (202) 377-4772. cc: J. Michael Luttig John Schmitz 402 w ' -..\ {$4 7 ‘Q. pf - UNITIO ITATII DIPAIITMINT OF COMMIFICE luv-emu of Iapov-t Admlnletretlon Weshvnqton. D C. 20230 December ll, 1990 MEMORANDUM FOR: Dennis Kloske Joan Mclntee Craig Helsing Dan Haendel Info Copies to: Michael Gale Tom Stillman From: Bill Sargent M Subject: Chairman Barnard (Ted Jacobs) Requests I talked with Ted Jacobs of the House Government Operations Subcommittee on Commerce, Consumer and Monetary Affairs late yesterday. In doing so, I tried to determine what actions Commerce could take to meet his requests (which would include, but not be limited to, the outstanding subpoena). He indicated the following would be responsive and noted that if we were to provide these items the subpoena would be dropped by the subcoflittee. l. A sanitised version of the licenses approved to Iraq \O during the 199$-1990 time frame. I would envision this .to "_/ include aggregated data by ZCCN, giving a short description ‘ of the types of co_odities, the total dollar volume of the exports, and the number of exports aproved by ICC 2. A cumulative list of approved licenses to Iraq during L the 1915-1990 time frame listed by end users. This would showo the total number of licenses, dollar value, and type of ciodities approved for each end user. /Q 5‘) 3. A briefing on the export licensing process and how the _ . various agencies work with each other in reviewing export .-'\' license applications. This briefing would be both general in < nature, covering the process overall, and specific, covering > the approved licenses to Iraq. 4. A printout of the cases approved, denied, and returned ffi’ without action, showing the interagency positions for each license. ‘S ‘led eeeepted the position that information on specific end users oeuldnotbeeuppliedbycieroeandthathewouldhaveto 404 Commerce Department—Related Rostow Gang Documents '5’- 406 3% 5%’ » _ Q f GENERILCQUNSELOFTHE < UN|TED STATES DEPARTMENT OF COMMERCE 3,6 If Washmgton. 0 c 20230 “Wu 0' July a, 1992 Honorable Henry B. Gonzalez Chairman Committee on Banking, Finance and Urban Affairs _ JUL 7 W92 U.S. House of Representatives 2129 Rayburn House Office Building _ _ , p» Washington , DC 2 os 15-6 os o °°m"““‘;°l;‘;§na§f§;§;h"‘me Dear Chairman Gonzalez: Enclosed are recently identified documents responsive to your May 4, 1992 request. I am advised that the Department of State will be referring potentially responsive documents to the Department of Commerce. If any of these documents are responsive, we will provide them to you. Sincerely, Wendell L. Willkie, II Enclosures cc: The Honorable Chalmers P. Wylie Ranking Minority Member A 407 /\/Awe" Der» ,- nu: l\‘Q__fl G Fa» /v.¢L. jflqrfllul Z 1’i'5*" ‘/_\"6;6F3£/ 375'-'/Tin D/1/J 1~/1>‘e7u)6¢ 00¢ 377 ~9/772_ 377-vov 171M 7‘I+£ss~\/ H7-7 75/L 6 7/7./0. M“ O“?'>F'\‘ 7 6"”-8'=§~l _--p_§11-J.1_<_>:' ¢(¢‘/“A J. fivfiaé M0699 m7%i1l_‘/'3 Z515“ 7.:/§-.$D7. IQ‘/an’/24M ¢(SM- W41-3357 W 71- 8664 72714 577cc/I/4-J '7»>oc. 377-5201 377-we D04 377- 3443 377- 0714 ,la¢ C9[>~/no M 697-7.2/5" 2»:/6/I-/-9; _ Q 6 />>~ >/7>2 )">7- 00¢/1 %%4¢~’ //id/4 I/é dc’? 3 X4 — 8?’: 6”‘ §"6““"'/ w'»+93; /14/:1; /W072/"05 Msc, 365- -3053* as:-73$ §TE~1£ 2/H1517»!/<£fL _ A/5 ¢ 3?;-50:; 377-/a3.‘ 408 "~1' 1, " mi? :3" 1. .>~:.? P201’ 78 ii?) 1. 2. 3. 4. 5. 6. 7‘ 10. 11. 12. - GFJDENSON DOCUMEVT REQUBT LIST OF SELECTED DEPARTMENT OF COMMERCE DOCUMDTIS Laue: from Gates (NSC) no Kloske (Commerce). 1-29-91. letter from Kloske (Commerce) to Gates (NSC). 1-24-91. Loner from Gates (NSC) to Kloske (Commence). 1-8-91. Kloske (Commerce) no Gates (NSC). 55 Memorandum from Hughes (State) to Kloske (Commence), Poneman (NSC), ct 10-19-90. -- -- fxomhowen(De1'enae)toK1oske(Commmee),Hma(NSC),sa1. 10-ll-N. MemonndumfromWo1fowuz(Defeue)toSoowooft,0ams(NSC) ee Kloske (Comme:ce)Banho1omew(S1ate) 10-2-90 Mmnoruadumfiomlheddentliashmalldepannamuuriagmdm. 8-2-90. i'|omhanbolomew(Sme)toK1oske(Oomme:ce). 7-23-90. Mesmr.;:dumfromBa:unbmew(Sm1e)bK1osb(Commmoe),Ham0iSC),eta1. 10-17 . - Memonndumf:omF:oahe|'(CIA)1oHaa:s(NSC),ce: K1oah:(Commen:e),eta1. 7-19-90. .- 410 25 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36 37. 3 Letter from Kloske (Commerce) to Wallop (Senate) with attachment. 9-10-90. ~ Memorandum from Panen (Commune) to Mosbacher (Commerce) with attachments. 8-6-90. Memorandum from Stillman (Commerce) to McEntee (Commerce) with attachments. 8-6-90. Letter from Kloske (Commerce) to Mulford (Treasury). 8-2-90. Memorandum from Murrin (Commerce) to McEntee (Commerce) with attachment. 8-l-90. Memorandum from Kloske (Commerce) to Mosbacher (Commerce) with attachments. 7-30-90. Attachments are: 1. Letter from Mosbacher (Commerce) to Baker (State) dated 7-30-90; 2. Letter from Baku (State) to Mosbacher (Commerce) dated 7-25-90; 3. Memorandum from Roy (State) to Casper (Commerce) dated 7-25-90; 4. -_ Memorandum from Shrzynski (Commerce) to Kloske (Commerce), et _al., dated_7- 20-90; and 5. Memorandum from ‘Staff’ m Dingell (House) dated 7-18-90. Letter1'|omDake:(State)toMosbacher(Commerce). 7-25-90. MemorsndumfiomClmnm:n(Commerce)mXloale(Commeace)withatmchmmtt. 7-17-N. Memorandum from Kloske (Commerce) to Moabacher (Commerce). $11-90. Memorandum from Goldman (Commerce) to Kloske (Commute) with attachment. 4-9-90. from uuunym (Commerce) to mm and Mcfintee (Commmce). 4-3-90. Memorandum from Sienkiewlcz (Commerce) to Kimmitt, Ross (State). 2-26-N. Mmaoraeduml'romIloaie(Commmca)mMomacl|m'(Commerce)wltI_ l2-7-I9. 411 38. 39. 40. 41. 42. 43. 44 45 46 47. 48. 4 Memorandum from Mcfintae (Commerce) to Murrin (Commerce) with attachments. 8-15-89. Memorandum from McEntee (Commerce) to Mosbacher (Commerce) with attachment. 8-10-89. Memorandum from McPntee (Commerce) to Mosbacher (Commace) with attachment. 7-18-89. Memorandum from Frcedenberg (Commerce) to Tuttle (Commerce) with attachments. 8-23-88. Memorandum from Hoydysh (Commerce) to bcharia (Commerce) with attachment. 7-25-88. Memorandum from Baird (Commerce) to Zacharia (Commerce). _ _ *_ 7-25-88. ' Memorandum from Fresdenherg (Commerce) to Verity (Commuce) with attaehmtmts. 2-5-88. Attachmenuare: l. Letafrcmvcity (Commerce)m Po ell('NSC)undatsd;2. LemerfromFrecdenhe|1(Commerce)toDwt(NSC) dsted2-5-88;3. LetaerfrcmPowe1l(N_SC)toVerity(Commerce),ce: Stamand Defmue,damdl .3 Memorandum from Mercer (Commerce) to Frcedmberg (Commerce). 1-25-88. Memorandum from Hoydyah (Commace) to Preedlmbeg (Commerce). 1-‘I-88. M from Preedenberg to Verity with attachments. Attachments are: 1. Lu!’ host Veity (Commerce) to Bentsen (Saute) dated ll-l7-87; 2. Letter from Bantam (Scmaae) to Verity (Commerce) dated 10-16-87. 10-30-87. _ -... -.-t 9-11-rt. , 412 ) m? .4 "4-r OPTIONS ON GEJDENSON REQUEST o Provide copies of all documents responsive to the request. o Provide no copies of documents, but allow selected subcommittee staff members to see all documents. o Provide no copies of documents, but allow Gejdenson to see a selection of the most sensitive documents gathered by Commerce. o Provide copies of only non—deliberative, final policy decision documents, along with a briefing on the policy decisions. _£ C / ’ /_ o Provide no copies of docu ents, but allowgseiected“ .staff—membere—§§freview/n%n—deliberative, final policy decision documents, and provide a briefing on the policy decisions. 1-. o Provide only a briefing on the policy decisions —— no documents. o Provide copies of only documents in the less sensitive categories (for example, categories F, G, and H). o Provide nothing. 413 fi’ ./"\ I xi, UNITED STATES DEPARTMENT OF COMMERCE Office of the General Counsel Washington. D.C. 20230 MEMORANDUM FOR: Michael Cifrino (Defense) Paul Clayman (State) Paul Colburn (Justice) Eric Fygi (Energy) . Steve Rademaker (NSC) FROM: Thomas H. Stillman Chief Counsel for Export Administration SUBJECT: Document Request from Rep. Gejdenson Attached is a copy of an April 19 letter from Rep. Gejdenson to Secretary Mosbacher seeking documents relating to exports to Iraq, Wendell Willkie has transmitted a copy of the letter to Nick Rostow, and has s m E8 O Attachment cc: Wendell L. Willkie, II Joan H. McEntee 55-927 0 - 93 — 14 g _- .4/ i I .- 415 3.‘ 1 nests u.s.- /-. Onion- 'used—-$euu-_- Ivivavvlle-me.- e-e-‘bu scan.--v-v new-Qwwu\m@n-4 saJ5e4_esea.g--aueuu llfliltlltansqsnn Ieevnuc.eas—nm sevens Ieuaettuve-am nan-autumn-.uuo-1 $e\l\‘IQ_l|4s_m| §ii5l5§§ fill? Iflvfiltlvsevean oedvslsvatenmsnven tr nleqnasipm Iii reoweeee u ane- - va- Ie$Avexe~ apnea ea—a "pd. lsJdnfl9\ lwllfl Iearwn-n i . R15 I. afsmavll. In-wanes IQIFJ g WfiI_ Ie-mvquau XI —Q:’|". Uilll UIKXI 3 IAP'l\ @l (veal w "Ill. III Inn as hrnlrzl 5:221 arse: .1.» Ad‘! C’ tiungrtss of tilt ‘Ln ,atatz2s Cnmmrrtzz on jmrzign srrm £2’ E of "Rqx'.zznt-sr§'ats =Ia.'-fclngrn. Br; 22115 -~'-5‘ ______ April :9. 1991 The Honorable Robert A. .\€os2:acher Q»-s~ u lnfl Secretary D:-.patjtmen*. of Commerce Washmgton. D.C. Dear Secretary Mcsbachar: “M A la‘-Ml. Paw '1-.1 -mu‘ a a4m..uumu fa -e-. wuss I coon»; I\~.-\.-at -1: an-=1. —. ISI ‘fit Iieeeam as-an 4 than euq qgn ; 11:1, luvs! 10:-e n-awn, S-.-. Ollfsbdl u tam an new an no-es. ..-.- as IIYIPI. nu» 4@~ nun -In---— III III. Ia-4 cute enmatv. t--an nail HOW»-‘:1. Iota nu -1-w . nus. n.-- us» ‘cl-~_|rMs I.:n: aC.Q I li<'.Afl -¢~-n e-... , ..__ Tne Subzommmittce or. inzernaticral Economic Polity and Trade is continuing its i-westiggation into the Ur.:'.ed Stat-as going‘ regarding the export to Irac; oi sensitive equtpment and teclwtznlogy a'.- how that tr-liq: was 1:’?.pl-znented. To_assisi the Sub~:crr.:r.i:tce in this 2.-wes:ig_atic::. phase pro‘-“Ids us with the following documents: ' "- ~-' 1. All 0'->cu::'.cnts from J.1nt;:.fy 1. 1585 until Erqemrar 31. 19.7-J. regarding the export or re-export to {rag 0: :'.]u|p§‘ne.1! or trmnolcgj-' :o.':Ir:tlec or suggested for control for ta.-.uo_nal secuntyl or lcretgr. po_i;c;: _:=u_.',':o:cs_. Fcr purpc-szs ot _tlus letter. the term document; ;r.cluccs but ts ac: lmuzez :0 all draft and {anal t-ernon; sf the following: msmoranés. and correspondence tot}-. within the Conirncrts Department and ':et'.veen_ the Cct'."_'nc.':c D-:;:.':r::ner.t and any mdzvtdusi. department. or :>zl~.:.- enuty. as well 5 :r.c:r..:r:=.r.d:l to 11:: izie. notes and nunutes oi meetings. and no'es cl‘ leis;-hone ®fi\'8fE2'.IlCI‘.S. You may exclude frc-tn thi: c:tt::gor)' export ll-.221 zpplicaticns. and documents provides in support of st:ch applications by ex_:>:r: license a;:plicant:. l-10'.-:e'.'e.'. please 'r_:clu_da an this category all policy memorzlzzda related to any export Ezcanse apphcatzcn. and all memorandza related to any dispute beta-can the de_:::rn?.ar.:s of State. Ccmrnerce and/or Defense regardxzg any _:-allay mazter related to experts to Iraq andior any liconne applicatton for export: to Iraq. 2. All minute: of the so-zeiifi '-'_‘e&uti:s ::*=r-zi.m_z:' Securzty Counc-.1 on Apnl 25. and . 3:.’ N. . that coo‘; place at the .\'a:ional 3. All note: an-d other :7‘.-zmora.-zda of L’:der S.m:etarv Iennis Kiosk: and other ttpftstntslivcs of the Commerce E€§'."£fl.".‘.!.‘l'l\ taken £2 1: -xrizte.-. about the Paouttc: meeting: of Aprzl 15. and May 29. I9;0. -1. All correapondcncr from .'s::ua:_v E. Dr::ertmcnt of Cornt.-.'.:r-:¢ '2 1'" \= an -..'.-utcd States zxporz pa J] El (Y . F Q F1 Fl E, I-. .. .1. c:1rre:.pcr.cl:n-:.: ct’ D-:::: ‘=;.1::'.:-.5 tit: ~::< ' and K m'r~'!:;It~r‘.'.Icn:; 0;‘ .’-‘ F :-: 31:5-" ‘ :11: l~':'.ic . , __ _ . A _ _. :'ccur|aj.' C;-.:nc:: r-:-41:: :1 :.-.: r-.--...! ~..~.... _. 193:’ unzii -K-.'r'.:::I J) from the 1:-c:‘..-.l :e':.::..'-' C:=.;.-- e:::.'.:::e:5-_15 a c.‘:a:~.g-;- 2-.:l is ll -u zi ll 416 any reaponcea to such correspondence, and any dozumenta (as defined above) in which any individual "at the Conimertm Department react: to or conveys the response of the National Sscunty Council. 5. All documents (as defined above) containing instruction: andior reoornmen-iations 1‘ rom the Department of Stats to the Department of Co:-_:nerce in 1990 cr 1991 regarding how to respond to the request: for docuznenzs from the House Committee on Government Op-srations. and all internal Commerce Dcparmcnt dousment: (as defined above) regardilmg such instructions :1.-1:’-‘or re';orr.xnen:lat.icn: from the State Department. 6. All document: (as defined above) 1' rem January 1. 1979 to the p the status of Iraq in relation to the list of t-zrronst countries ident- secllcn 6(j) Of the Export Adrnintstratron Act. as amended. t-:§? ... 0 J C|.'J FY ." . ti '9 '1 It \~,u-2 t- ul |a >1 J fl- " tr 605 7. All documents (as defined above) from August 2. 1990 through the ;:'t.:.::".t regarding cxp~D‘.'KS to Jordan and/or transsiupzncnt to Iraq. including but -~'. lmuted to rccammendau-ans to Mr. Oates or other: at the Nazzcnal 5::-_. :1 ~'.'g k Council or to the depa_ru-heats or State or D-=r=.-.se. respomes to any such reoommcndanons received from the NSC. Stat: or Dctcnse. and ar.;- reaction: to such responses by mdtvtduzus wulun the Department of COI1‘..'r.ercc. _ 5. ./_\ll documents (as defined above) from Jam.-_ary 1. 2985 to 13:: present. .-egzrcing 3 dtmutc on any Incense Io: export to Iraq '='i'.:ch msputc was sent to the .\'::ic:::\.l Secunty Councu. - 9. All notes mad minutes of meetings from Jag-.ua.'y_1. 1.990 to the present at --tliich exports or re-ezoprtz to lraqiwerc discussed. znsludzng but not limit-st‘ :0 mtelltgeno: bncfmgs and po -cj: mectmgs. dccu_men_ts requested in paragraphs 2 through 9 s!'.o\_:I: r.c'¢ iv: coast:-.;:: as def uung or lzmtung the broader request 1:‘. ;a:a;_;ra;:;-: 1. Please (provide us with the documents rc:;=.:e::2_£‘. no later than l'.€a;.- 13 ‘.551. Please aer. the t‘lOC.ll'lltIll3_1-J the Subcommittee ctfzce at 7'02 I-Zeus: .~‘.r:>.. Z. Should you have any questaons, please feel free to cc-mac cr Jolt: oz.-.e:':-:3. Staff Darector and Counsel to the Sutccmmtttcc a: 226-7 PM r0 I.» _ 7-’ :1 m If there are any document: fh2.t_ycu :21: use to g:_:c-‘ride. glare tar. ' cxpectleri tans :-. memcrar.-_:um srttmg out tn 1'11: 2.1: legal ;'.;:ttf:~'.-2.2:- wnthhcldmg, such tr-.:'or?nat1on from C0ng1'£.-ss. The:-.2 you for-your cooperation. Sincerely. /l /7 ' 1' 2' ' .1 f, he-re" /" _/'1 "-',"""’ - -. / -I .>.1 -e ;:e:~..=.=:n C man nmizfsa on Iz:t2r:'*-- "" 1:- 1'1 0 r\ 1° ;'!. I | -c, ta‘; e .1 7.1 C1. . ..] 417 "LAWYERS' GROUP" MEETINGS AS REFLECTED IN COMMERCE DOCUMENTS TOPIC: RESPONSES TO CONGRESSIONAL REQUESTS FOR DOCUMENTS ON IRAQ Date: Attendees: Date: Attendees: Date: Attendees: Date: Attendees: Date: Attendees: Date: Attendees: Date: Attendees: Date: Attendees: Note: April a, 1991 Nick Rostow, Boyden Gray, Gary Chase, Mike Luttig, Fred Green, Ed Williamson, Jim Thessin, Mike Sterlacci, Dan Haendel April 9, 1992 Nick Rostow, Alan Raul, Jeanne Archibald, Jim Thessin, Dan Haendel April 15, 1992 Nick Rostow, Mike Luttig, Dan Haendel, Michael Gale May 6, 1991 Nick Rostow, Boyden Gray, Mike Luttig, Jeanne Archibald, Alan Raul, Jim Thessin, Mike Cifrino, Wendell Willkie, Dan Haendel, Tom Stillman May 13, 1991 Nick Rostow, Steve Rademaker, Mike Andricos, Alan Raul, Mike Cifrino, Frank Bray, Michael Gale, Cecil Hunt, Jim Thessin, Gardner Peckham, Dan Haendel May 31, 1991 Nick Rostow, Steve Rademaker, Dan Haendel, Tom Stillman, Michael Gale, Paul Colborn, Alan Raul, Frank Bray, Mike Cifrino, Jim Thessin June 5, 1991 Boyden Gray, Dan Haendel, Mike Luttig, Jim Thessin, Mike Cifrino June 26, 1991 Nick Rostow, Gene Schaerr, Steve Rademaker, Dan Haendel, Tom Stillman, Michael Gale, Paul Colborn, Jim Thessin This list is reconstructed, to the best of Commerce's ability, from documents in Commerce files and other sources. It may not be a complete list of lawyers‘ group meetings or of the individuals'who attended those meetings. 418 \lI\lli-III O The Underleareeery 9°" liner: Aamuuec. .... 0 - .. ._ was:-sngton.O52033O “II! " February 36, 1991 MEMORANDUM IO! IENDILL IILLEII General Counsel non: Dennis xicskefl/L s0lJfCT: Iraq Printout At your request, I have asked the Office of Export Licensing staff to prepare a report on the preparation of the printout for chairman Barnard. A copy of this report titled "Iraq Data Base Assessment" is attached, along with Qs i As and a case-by-case summery of any corrections sade to the printout. I believe this fully responds to your memorandum to as of February s. The first printout provided to the committee is a summary reference docu- nent which is responsive to the Chairman's request concerning the history of exports to Ira . The docust also reflects Fifth floor and White louse giganoe not €:.!:::de information that was not directly responsive to the 's reguest._ ‘Please note that to date, four printouts have been prov ded'to the Conittee - the first two by lCCNs, and the other two by end- “Illi- I have also been informed that the list of four suspended cases to Ir:g was not supplied to the comittee, although N. Jacobs, Berna 's Chief of staff, was told about it during one of the briefing sessions. I have given instructions that the list be given to the Committee. _ I would be happy to brief you on the report in greater detail. Attachments 419 (,.*’;;';\ us. DEPARTMENT or commence .7 -- 202-377 4772 .i"»*i. Y/2-"/7» '°‘ S“/M @..&._../La ..... .'“§..C........g>;; 4;/...A.Z $4.... Mg”? if/13"‘ ' I/7_ 0,./.1 //... ,..,/1 W ~ cc= éulbu 421 NAT\ONAL SECURITY COUNCIL wuwcnmmuzzuw April 8, 1991 MEMORANDUM FOR JEANNE S. ARCHIBALD C. BOYDEN GRAY \ FRED GREEN MICHAEL LUTTIG TERRENCE O'DONNELL ALAN RAUL ELIZABETH RINDSKOPE EDWIN WILLIAMSON WENDELL WILLKIE v SUBJECT: Meeting on Congressional Requests for Information and Documents First of all, I apologize to Treasury and Agriculture for not inviting them to the meeting today on responding to congressional requests for information and documents pertaining to U.S.—I:aq policy prior to August 2, 1990. At the meeting, it became apparent that these departments should have been present. I shall schedule a meeting for tomorrow on requests pertaining to the BNL/CCC matters to which Agriculture and Treasury will be invited. After reviewing the requests thus far received for information, today's meeting concluded that: |-I -— Department General Counsels should review and inventory al requests to determine which, if any, raise issues of executive privilege (deliberative process, foreign relations, national security, etc.); -- Alternatives to providing documents should be explored (e.g., briefings); —- when access to documents may be recommended, such recommendation should be circulated to this group for clearance; —— A recommendation to provide access should be restricted to members only subject to these conditions: no document may be retained; notes may be taken but should be marked for classification by the department or agency in question- (FYI: our legislative affairs office recommends against insisting that members come to departments to read documents.); and I 422 2 —— In any event, departments and agencies should seek guidance from this group in cases of doubt- I hope you agree that this summary fairly represents where we CZUHG out . Nicholas Rostow)-£271-— '- Special Assistant to the President and Legal Advise: 426 Honorable Sam Gejdenson Chairman Subcommittee on International Economic Policy and Trade Committee on Foreign Affairs House of Representatives Washington, D.C. 20515 Dear Mr. Chairmen: __/D / 4 /,q,,5[u4_ 1_¢,__ a‘,1_'_0_.+ |‘_'_A"_§;,,r' ?."f‘\/-L AP“ I "*"" r°““I 1 ms writing in response to your lettergequesting documents ,;,|;-hvv 1'0 \ rra~ 1: understand that similar letters have been sent to the- I ' ale a...¢ 'D¢$v-<4. Q Departments oft Your letters have requested e wide range or intra-agency and inter-agency documents for e twelve-year period from 1979 until the present. Compliance with your requestwill require this agency to divert its attention from current businessfto review tens of- thousands of E£::;s.<:"21-;>;~gf ~,--1.?»-:<.?-¢~#*~“'~' “ JN H '1 aifi -2 > W F $1.}; LE WE ‘~ Kai 5:5 ',§ documents, which will require more than a thousand man—hours. The review will be particularly time-consuming because o£—ehe- t the docun t hut n~ many o _en B~€ __ - vb 4/tMLwv..._ 0/ ,~¢-(fleet wt. /1-<4/xx/44...‘ /JI ~e0mmen\’J-6-h—b\¥l.'IQl\-)2 'It will also be necessary to coordinate our response with other agencies. [I R” In an effort to accommodate the Subcommitteefi lo ,% terests in this matter, we are proceeding expeditiously to _ I collect and review ments that are responsive to your _ request. In light 0! the volume and numerous locations of these an T’ materials, however, we will be unable to respond by nay nth, the date requested in your letters. Although we intend ¥° fiipond ee soon thereafter as possible, we believe it would be in the Y I "1 1 .tereste or all d it t if 1' . th- "= .._-".~ ittu a cl th 2"'jm‘_P ‘L r 7 concerne 7 s_a :7a:\p_ J:-=____sp_n__\ e wvuuji) agencies you have contacted could meet in the near future to /Z'-AL, discuss how the agencies can best allocate ..he1r l.mitad resources in responding to your requests. At such a meeting we W T _- '="6i?1B.?'1amu,- the categories of documents the subcanaitzoa ie p||.P Y) ‘ /J most interested in reviewing and discuss ways in which your requests mlqnt be narrowec} ~lM1£ie§ "P /'04-¢4»¢/If I T.‘-ll ~4_ \_ CC.’ C5-Pal; Dlfinscj 428 OIPARTMiN'l’ OI DIFENIC once: or alzutnu. COUNIIL - wAlnm¢rou.o.c. nu:-inn TILICOII II. IQOILIDUI nan» Ms»! 9 runs: I-;'_-13$" pa _¢I_ '1‘°* 4~ €%€%¢4?¥A ~ *’°;<'s3°?;.‘%@—..%.i'.=, non: ~Pr\‘@ i '*_W_;_ . E‘ OE ,: GC, zwoiuwnf-jovaia (onrcz; (tax nun) IO are uubniteinq _g_ pagan, 1351341“ the Iolooopior "‘.O:ll‘\I.o It yau do not rccoivn 111 paqu, 9.10100 can 52%,," at 19; Q11-7.111: REMARKS 8 E5 §§> ms W ~mh&& ..¢A¢Q_- ~” ' % _~IZZ.._._fi~£¢A-Z, 430 :vvc54o: .3 511 CF? ubmil Onglflbl conv of this qr...-1 - shoot i:h rho llocumeul to be llilnsmillad 1;, yr... . mcsuvms TR/ws-wsswow coves sHEH §.?.I'.‘.1.°.'..f.‘;’.'l.'§.'l‘ZI'ZJ'I»'L‘..T&'1;.£‘.§.'1.'Z'...'I1L§" "~' JTGFCO-MERGE‘ nnsraucnons s I | Q 1 mu“ ;__M,\u 9.215 5;-;~.\|Hl9 30l;u‘.1lXYTl1'li NO OI r;:;;5 ' -f 5;‘-~.i_ i Dept of Commerce I 5/10/91 .' W - .-.-.‘..-.:¢ .\.~.oe.1.-.|u:.-c.:.ocn¢ss or =25»-my IECIPII‘-?sY£.H*~0‘~E‘--I Hi!-'-==:EY!=!"-0'-5 I; Jim Thessin 1.0‘ State Department 202-6l779|l2 202-691-1037 John Osborn State Department 202-691-863i ._ 202-6117-1031 '.--....;.. _ 1.... .. . .. T -..-.-.-¢ am) at-u:>=.-.c .-.:>:a-rss cl szxccn Inn-on .-.o "‘-"5-'-""‘° ;flQM Cecil Hunt 05/‘O/9‘ Office of General Counsel Dept of Commerce 377 53°‘ ll 1 n . .- ‘£3? Attached is the Commerce wort-up of the Justice/OLC draft letter to lap. Gejdenson with his April 19 document request. OLC (Colburn) and NSC (Iademacher) have obeyed the changes. Please advise ASAP whether anything bare is a problem for you. Ia want to send it up today. Ia would also like to see States proposed letter if different from the OLC draft. 431 | . Honorable Sam Gejdenson Chairman Subcommittee on International Economic Policy and Trade Committee on Foreign Affairs House of Representatives Washington, D.C. 20515 Dear Mr. Chairman: 1: S_L__;._=__*,JJ L.\osh;.¢\¢r‘ I am writing in response to your letterirequesting documents Q.)LPor'i l|c.e.\:..\j ale 'pol\CY rel..>~+-mq ‘Yo -I,ra..3,,, concerning{experts-to-Iraq_of_sensitiue-equipment—and—teehnelegy~< I understand that similar letters have been sent to the 5-\'aK é-vvd. D¢&'\5¢. 4 _ Departments offLname—the-other-agencieei. Your letters have requested a wide range of intra-agency and inter—agency documents as rwwoh as for{a twelve-year period from 1979 until the present. Compliance with your request will require this agency to divert its (lnaémlnj /lC&r1 arch"/es or s-lured av: A-"angle-... ——> ' 432 comments-on_burdenlz It will also be necessary to coordinate our response with other agencies. In an effort to accommodate the Subcommittee's legislative interests in this matter, we are proceeding expeditiously to g|den+|{y 7 i /};"’ fgzllect and reviewfghe documents that are responsive to your request. In light of the volume and numerous locations of these materials, however, we will be unable to respond by May 13th, the date requested in your letters. Although we intend to respond as soon thereafter as possible, we believe it would be in the 2. 3 rou-p mp r~c:en4\ Na»- interests of all concerned if staff from,the Subcommittee andlthe agencies you have contacted could meet in the near future to discuss how the agencies can best allocate their limited resources in responding to your requests. At such a meeting we could identify the categories of documents the Subcommittee is most interested in reviewing and discuss ways in which your requests might be narrowedqerrotherwise modified, av~ J2w5$f;¢<£ J . 1»... same 0‘H“-"/ ""°"’"“’- 433 If you agree that such a meeting would be useful, please \ have a member of your staff call,£name—and—number+7to make the necessary arrangements. s\ I-r C 317- )J c¢:/:Z4n¢'“/141.4-4/é L0/10 $17/L a-De/Qnsr /as/1‘£r5J Sincerely, /,/'a&/ Ga ll] /ESISJ?/:..+_ .)/<.Z-Gr\&’/'§:17 ‘F3? Z-$15/3-'-'17-/‘C /I'Ff_5||¢ ‘[7/.|,, M, ..-/}T,;','_. /' I I I /' . - ' I 4 ' - if , ///~I'~'—v ///-~/1*? \ 434 u.s. nsvanmsm or commence /7!? ?/ T a¢,,.._ W/4 £-’vZZz_ From: @’M Al Y 0.1 A/Scd,~,¢i J. .0 rvt‘ ‘E ~0444/“J V aw ' ,’;@~ 47”“ -,...J 7 é/ :4 :,, 7-}‘*¢ ,a.a_aJ=.4»»/., ,,.,..‘/Q2 /4-=» ¢=,»w:»z,a.a»_, ¢v7.¢’,\_. . '0 006 . 435 U-S. OEPAITIEIIT OI’ COMMERCE OAYE Fxporc Achrinistracion °5/m/9‘ IQ“ T"|@ IUEPQEI coucuansucs RECORD "$‘.'.'§.§.f;I',I'.fL,,,,, 5- IIOII A TU II SUIJECT OF DOCUIENT: RESPONSE TO APRIL 19, DOCUMENT REQUEST FROM IIEPIIES. GEJDEISON nan: AND orflcz or ORIGINATOR TELEPHONE munlti DE‘°uNE °‘T£ CECIL HUNT 202-11]-§j01 Dep. Chief Counsel m,.,.,Au Mn — _ 5/to/91 suenrrrso "ro= en; INITIALS. DATE suemrrzo 1'0: IlS§lNlTlAL$ BATE "Mil ' name: i ~* " C: _i__ . OI’l'|C£; CFFICE: ‘ Dir. Cong. Affair§ I | NAIIE: | - nA\I£: Joan 3-leintee 8 . OFFICE: OFFICE: Acting U/S 1 MATL cunt. " corral: enter. I III‘; ' IIAMI; OFFICE: OIIICI: aoomovuti lnloluaflou oe srecm. IOISTIUCTIONS: (Cave-he on reveled if neeeuevyl Thin coordinated reeponee to the April 19 Cejdeneon document ._ . requeat was drafted by Justice and incorporates Commerce reviaione coordinated with other agenciee. State. Defense and Commerce are to use the coordinated text in their eepar-ate r-eeponeee. '°"" "*'" """- ""' to es ntzo wtrn "o|=ncm. FILE" con ""°“"°‘ "“"" 436 - ){_‘_' _ The Under Secretary for Export Administration Q I Wmhww1DC ammo Q ¢“”?m\ f l; UNITED STATES DEPARTIVIENT OF COMMERCE "av" I " Honorable Sam Gejdenson Chairman Subcommittee on International Economic Policy and Trade Committee on Foreign Affairs House of Representatives Washington, D.C. 20515 Dear Mr. Chairman: I am writing in response to your April 19, letter to Secretary Mosbacher requesting documents concerning export licensing actions and policy relating to Iraq. I understand that similar letters have been sent to the Departments of State and Defense. . Your letters have requested a wide range of intra-agency and inter—agency documents for as much as a twelve—year period from 1979 until the present. Compliance with your request will require this agency to divert its attention from current business (including license processing, the Core List, and the Enhanced Proliferation Control Initiative) to review tens of thousands of documents, which will require more than a thousand man-hours. The review will be particularly time-consuming because of the volume of documents generated by the licensing process, many of which have been sent to archives or stored on microfilm. It will also be necessary to coordinate our response with other agencies. In an effort to accommodate the Subcommittee's legislative interests in this matter, we are proceeding expeditiously to identify documents that are responsive to your request. In light of the volume and numerous locations of these materials, however, we will be unable to respond by May 13th, the date requested in your letters. Although we intend to respond as soon thereafter as possible, we believe it would be in the interests of all concerned if staff from the Subcommittee and a group representing the agencies you have contacted could meet in the near future to discuss how the agencies can best allocate their limited resources in responding to your requests. At such a meeting we could identify the categories of documents the Subcommittee is most interested in reviewing and discuss ways in which your requests might be narrowed, otherwise modified, or satisfied in some other manner. i :- a \I \- ‘bu 438 no/oa/01 02:11 czoz aosioaa use LEGAL ~~~ contact LEGAL Q90; \ NAUONAL SECURITY COUNCIL \ W$'I*fiTO*l. D.C. 20505 p *5? \% OFFICE OF LEGAL ADVISER FAX TRANSMITTAL COVER SHEET oars: ._ 1:0: Mg, 7 moss: s . ‘W J D/L40 MMM /Uri E 1§=<,D - _ ' I , 0'1 PHONE NO.: PHONE NO. : 7 7 377.:/772 g ~/_<‘c,~z.,r3$Z FAX NO.: g ‘ FAX NO.: g 3/may/7’ ' aw /03‘? CON;""£NTS: @%LL/, ' Q 5 éJc»4a@»Z/*' . _ i Jar '4 => P" =a¢"5 ( ---- -=_-_=- .~== ;==-): 5 ‘ 439 \ ‘ ‘ 4 \ l <€$%£ MEMORANDUM FOR i <,< _ s ‘ are permitted to review either the'originals or I -2 Cgvflé;/‘ redac€EH‘versions of the originals. ‘ tigfi . i ‘ . . . . - l - 4 I _ _ — p ‘hwpil dfijfipssion, I would propose the following breakdown: “épgftikvel 1: Publicly available information and all other responsive _ . , . W’ BY FAX *45f1 ‘ /Mai ,0» secumv couuct iK ”’,___,_ ‘ fa, wascunuwdczum .,,_.J>_,'\ _ ,.,...#L? 0'1“: ./e>T§§' 31, 1991 ~11») r at iii‘; E "§ e uw@““ M) E1 ._ C»?-‘=1 c. sorneu can sown: WILLIAMSON JEANNE ARCHIBALD -» renames o'0oNN1-zm. Micah!-:1. LUTTIG A1.aN Ram. WENDELL w1m.l*°° J dfkesponse to Requests from Congressman Gejdenson and Others The time has come for the General Counsels to meet and decide 1 what positions they recommend to principals with respect to'the Gejdenson and other requests for documents. 3 The deliberations on this subject have identified four levels of protection that we may seek to extend to documents, listed below in ascending order of protection: ' l. Copies provided directly to the requesting committee. \ 2. No copies provided, but Members and all oroperlv cleared mi 3. No copies provided, but Members and senior staff (i e., staff directo ch f 1 rs and ie counse s) are permitted to :ev1ew the originals. 4. No access provided, but briefings may be offered. If we can agree on these levels of protection, all that remains i s to decide which level of protection that should be accorded to 6 particular classes of documents. As a starting point for la P/D" information not telling into one of the categories below. Level 2: Deliberative process information involving intra-agency decisions at the Assistant Secretary level and below. Level 3: Qfigleyént national security inforgationjlother than intelligence in ormition), including cables reporting diplomatic " 440 2 communications and policy recommendations; and deliberative process information involving intra—agency decisions above the Cabinet and Deputies Committee. Finished intelligence should be handled separately. The products Assistant Secretary level and inter—agency decisions below the Deputies Committee level. Level 4: Deliberative process materials involving the President, at issue are DIA lists of countries and weapons systems, with no analytical or deliberative or source backup. You should be aware that the State Department has provided summaries of the Secretary’s morning intelligence summary, CIA has provided finished product, and NSA has provided processed intelligence. The issue for decision is whether copies of this DIA product should be provided with an understanding that it remains classified. The seriousness of the privilege questions involved merits a final meeting of senior counsel to reach agreement on recommendations to policy principals, which such principals should accept or reject within 24-48 hours. Our hope would be. for the Administration to decide on its bottom line by next j Friday morning so that departments and agencies may work with the Members making requests in an effort to satisfy legitimate Z legislative interests while protecting the President's ‘ prerogatives. Boyden Gray has agreed to chair a meeting of us all to discuss this matter Tuesday, June 4 at 5:00 p.m. My office will inform you of the room on Monday. Nicholas Rostow Special Assistant to the President and Legal Adviser 441 . ~*“"°' us. osmarmaur or comm-zacs ' “*4 L . 1 2%’? ""54 . 1'!‘ /\. I /' (,1 A,.! (3 "° ' From : Thomas H. Stil~ Chief Counsel I I for Export Administration J 1.» 0») (5) ’.Da,»<@- or-= p \g 442 IEEQBMAIlQE_HEHQEAEDQM From: Wendell L. Willkie, II General Counsel Prepared by: G. Roderick Gillette, OS/OGC/OCC-EXA, 377-5301 Subject: Gejdenson request for Iraq information Summary: This memorandum is (1) to advise you of the status of preparations for responding to Chairman Gejdenson's April 19 request for Iraq-related documents, and (2) to report that Counsel to the President C. Boyden Gray indicated this week that it may be necessary to have Cabinet-level discussion with the President of executive privilege issues raised by the request. Qjgggggign: As you know, OGC and BXA have been working on Commerce’: response to the Gejdenson request. BXA has done a preliminary inventory and estimates that it has more than 58,000 pages of responsive» docuents. BXA has searched and retrieved documents from many of its- ~ files in the main Commerce building. Still to be searched are a large volume of files that have been sent to storage, as well as files of lower level staff in the building. r we have attended several NSC-chaired intergency meetings to discuss executive privilege issues and to coordinate State, Defense, and Comerce responses. At our June 5 meeting, Hr. Gray asked that we... .. .. .... ~ .-v- - prov1de@h1m copies of decuents with respect to-which tn want to assert executive privilege. 443 State, Defense, and Commerce to discuss executive privilege issues and responses to the request. ;§’ we will provide documents to the White House this week. We will inform you immediately of any further developments. 444 ’yI U r --X . .1 ’°"47ts I7" U.S. DEPARTMENT OF COMMERCE 377-4772 (ZQQF 4/,./,, {___ | 0 . From : Dan Haendel% Deputy General ounsel 7“ [,7-. “WM/WM /. /4»-/U4» - "7 “>6 (cynic §\)-/»-~‘*"’4) 7:"“‘”7 ‘M _ ok? 7%“-’A¢ cc: CULLO 446 W DRAFT ’"“,t..‘>“;‘..“$.t‘Z.f“ 4/wwwd,/sawed *9“/.;.,.’f/"f.."?’”“W..//-~ $9 opfl-~ on ~=')w/v M71“ Honorable sen Gejdenson chairman _ subcommittee on International Economic Policy and Trade committee on Ioreiq-n Atzairs louse of Representatives Washington, me. 20515 Dear Hr. Chairman: this is a joint letter on penal: of the Departments of commerce, Defense, and State, in turthar response to the requests groan your subcommittee for documents concerning exports to Iraq or sensitive equipment and technology. A8 we have interned the Suicomnittee and its staff in our various letters, meetings, and ephcme conversations, our departments have been expenziing considerable ettort in assembling and reviewing relevant intro-agency and Late:-gqqggcy fipqmgngg from s twelve-year period {rem 1.979 until the present. the volmnl in question is extrsoroise:y- Having completed the ooncultstiom that ere accuser} where inter-agency dommentS are involved, we are now prepared to make available imgdigtsly the doouneute that ere responsive to your requests, exoqt for e relatively small mmmer or doamsutsiésanylirt which are aia--111.-a) about which we naveloont ent ity aancerns. I ‘the Administration certainly recognizes congress’ legitimate interest in export controls, and we look to:-ward. to Votking closely with you and the Su.bcommittee to address issues in this area. Is asonro you that we will sake every effort to so-conno- date the luhoo:mittae's interests in intonation that my he oontsined in the oonziaential documents. towards this end, we request the Qportunity to meet|witb Subcomittee stat! to discuss our confidentiality concerns and to develop leans of providing information to the subcommittee consistent with thagg oonoerns. ‘ asonq our moat significant lconfidentiality oonosrns ars those pertaining to documents reflecting the deliberations within tn I tionsi seouri to il ls ~ ' ‘ %“"= <-mus:-*-~ w===»»~-=- sscnmotioasessent lyosthe -i_;@,n1ttee'o£taevru1- dent's Cabinet that focuses on nation security letters, and me nlsc system includes various subgroups, soot notably the "Deputies committee,’ to assist tho use its work. It 1,. eh 1,,-,q- 448 us. Dl~Zl'ARTMENT or commence 8 of" . \ 0330 To :~ ~/ From: €n9masH.s¢i||@.;|/'1/_.-— hucf Counsel J for Export Administration Qoaz/<7 Pf "P"5°“§ 4//1 Q 0‘ Jm W5 /rt/So fheoca/3 F/”’””"”J75 /i’(a&$3-4) ¢fi1/?> 454 2. Office of Technology and Policy Analysis A decision was reached that OTPA would not be required to produce commodity classifications that are not country specific. I understand that 0TPA's archives include commodity classifications going back to 1985. While the incoming letter from the exporter may note that the product in question is destined for Iraq, the commodity classification itself does not designate the country of destination but instead simply provides a country code to which countries the export can be shipped. I will be prepared to show Hr. Sheibel an example of these documents and produce these documents if it is deemed necessary in the future. 3. Office of Export Enforcement As I explained yesterday, the Office of Export Enforcement conducts ongoing Export Enforcement investigations both from Washington and their field offices. I understand that the field offices do not keep their files sorted by country investigation. However, I have since learned that any cases that are deemed to have some merit by the field offices are sent to Washington headquarters and become HQ cases. OEE has approximately 30 to 40 Export Enforcement HQ files in Washington. Rather than asking them to produce these bulky files, I have instructed them to make a copy of one of those files as well as a listing of all of the other HQ files to show to Hr. Sheibel. I have been told by OEE that the production of non-HQ files would take weeks. 4. Non-BIA documents I am responsible for the production of all BXA documents responsive to the Gedjenson request. Dwight Holloway has taken responsibility for the Office of the secretary and the Office of the Deputy Secretary. I understand that you have searched the Office of the General Counsel and I have reviewed your two files. As you know, during our first meeting with John Scheibel, we pointed out that the language of the Gedjenson request can be interpreted to call for the production of documents from Census, ITA and Economic Affairs. While no agreement was reached, John Scheibel was sympathetic to our position that we would not ask for production of documents outside of BXA and the 5th floor offices designated above. I recommend that we undertake document production from these other offices address this issue after we' provide Sheibel with documents now being produced by BXA and the 5th floor. Please call me immediately with any coments/questions about anything contained in this memorandum. ‘ cc: Joan HcEntee _ Ton Stillman , lg; Dwight Holloway ‘ 455 I __~- - - ‘ ~' 7 - UNITIDITATII DEPARTMENT OF COHANIEPCL \ E5‘ I Iur-emu of Ixport Adminimtretaon ‘v I . J.N|3|99| i Q‘, ',J' Wash "910" D C 20230 411: MEMORANDUM TO: Dan Haendel FROM: Doug Lavin SUBJECT: Gedjenson document production All of BXA is now producing documents responsive to the overall Gedjenson request. I anticipate that these documents will be gathered by Friday, June 14, 1991. I would like your guidance on the following issues pertaining to this'document production: 1. Office of Export Licensing: OEL has already produced all documents not specifically included in an export application file. Those files fall under two categories: o First, all individual validated licenses are on microfiche. There are 1133 of these licenses containing approximately 11,000 pages. We estimate it will take approximately 50 hours to copy these documents off of the microfiche with additional hours needed to copy the copies and sort them. I understand that Gejdenson already has a list of all of these licenses as part of the Barnard request. Assuming we have White House clearance, I recommend we consider asking Shiebel to designate 20 or 30 license files from that list that he is interested in looking at immediately, provide him those files, and let him know he can get more when he is finished. You should also note that the Barnard license files contain most of the information I assume Congressman Gejdensons is interested in. we may wish to provide him with copies of those files at the start. o Second, all special license files are in boxes in the archives. Of all of these special licenses (100 boxes of mostly distribution licenses), we believe there are approximately 200 license files that either list Iraq as a consignee or Iraq as a country for permissive reexport. we estimate that each of these 200 licenses is approximately 300 pages, making the total number of possible pages to sort through approximately 60,000. Unlike the individual validated licenses, these special licenses would contain little information pertaining to Iraq in particular. As such, we do not anticipate that this arduous search would produce anything of value to Congressman Gejdenson. However, we are prepared to conduct the search immediately on your word. . »‘*~ u’ I ‘ xv / 4 / 456 2. Office of Technology and Policy Analysis A decision was reached that we would not require OTPA to produce commodity classifications that are not country specific. I understand that OTPA's archives include commodity classifications going back to 1985. While the incoming letter from the exporter may note that the product in question is destined for Iraq, the commodity classification itself does not designate the country of destination. I will not ask them to produce these documents unless you direct otherwise. 3. Office of Export Inforcememt As we have noted in the past, the Office of Export Enforcement conducts ongoing Export Enforcement investigations both from Washington and their field offices. I understand that the field offices do not keep their files sorted by country investigation. However, I have since learned that any cases that are deemed to have some merit by the field offices are sent to Washington headquarters and become HQ cases. OEE has approximately 30 to 40 Export Enforcement HQ files in Washington. I have instructed them to make a copy of one of those files as well as a listing of all of the other HQ files for possible presentation to Congressman Gejdenson. I understand that each file is set up with a docket in litigation form, each containing approximately 150 to 200 total pages. Given the difficulty of reproducing these files, I propose we provide the Congressman with the one file and ask him to designate which of the remaining files he would like to see. We should also anticipate problems with the confidential nature of ongoing investigations. 457 .~"“'°' i elk ‘~e./' U.S. DEPARTMENT OF COMMERCE é//4 To = //1'1c+#»a~;<_. G-#1:-1.6 From : Thomas H. StilI~ Chief Counsel _ / for Export Admin slmlion I/2:/ni@— 458 y {,.+*';E;\ us DEPARTMENT or commence x 1 (0 , .."47l8 W ’ ! T” 1/iactmai From : Thomas H. Sli||m~ Chief Counsel \ for Export Adminisl ation 1245*. C1?) :;nrL_ f IHWS MMZA4--u./P gems mar uuwraavs /m~W".C em/L? Q4@\.,f,,.,(,¢=,L o»/6Q- ’ 11+? '91-\z>t>Z;". 459 5o¢22y- 1:1>.1>u'1' uévwdit wamw TD (»r\~\-v~‘L"M4\6£ "“e'°""“;'T° kw ¢’cvA1u u':."--'_E wnsJusr (,4-n -ni-vs t$ Aw-$ H-\ ,- "‘“" "‘f , ° Ass-use aha. wow a65’?°"‘5" To 6&7 3 mm? were-F wi A-Q»L'I'O BO L __ __ ém'@' 7° 5“; w¢—n+'noe...ué»JT‘5. I'D Dear Mr. Chairman: ,p?_‘;Fbp__|_Dl H I Q T,,hs This letter is in further respons to the request tron: your "MA,'¢§-' subcommittee for Department c:| documents concerning export licensing decisions and Flicy with respect to Iraq. As we have informed the subco:'::\ ttee and its staff in previous letters, meetings, and telepho e conversations, our departments have been e:r_:endin;'coz*.side: effort is asses-bling and W511) reviewing relevant :.ntrs—age:~ y e_*::c inter-agency documents fro twelve-year per-.cc from 1979 until the present. The volut we Hoe‘ Z question is extras:-:L=nar;-'. ‘aging completed the consult‘ ions W r that are necessary where in er—acency documents a e ir lved, new are new prepared tc immediately documents 5904/ iresponsive to your requests, except for those documents §"““° many 0: which are classified) about which we have ,, / " confidentiality concerns. u ‘rho Administration recognizes Cons-‘ress's lcqitimate interest in es-port controls, and we will continue to work closely with you and the subccnurittee to address issues in this area. We assure you that we will make every effort to accommodate the subcommittee’: intereszs in information that may be contained in and the confidential doc-uzaents. ‘toward this end, we request the 'b&(,aha', opportunity to meet with subcommittee staff to discuss our ‘ , ' confidentiality concerns and to develop means of providing "‘”N\ fid information to the subcommittee consistent with those concerns. Pu,“ I Among our most significant confidentiality co s are those i?3*e'"‘\¢ pertaining to‘ documents reflecting &§'de ' eretions within the National Security Council ('NSQ"1 oyct As you know, the NSC functions essentially as the "subcommittee" at the President's cabinet that focuses on national security matters, end the N system includes various subgroups, most notably the '0 __es ,4; Committee,‘ to assist the NSC in its work. It is e long- __|6¢n‘\'5 standing policy or the sxecutive branch to tre documents 50%;“ revealing deliberations vitninltne use syst as well as within the other policy councils and working groups 1' the President’: QJK5-Yr Cabinet, as among the most confidential documents in the government. Although our departmett does not possess minutes of meetings conducted within the 85¢ system some of the requested dowments reveal the conficen:i_'al deliberations or such leetinc,-E ' .s m use ‘ 6-\ I In addition, we havefionqicentiality concerns with respect to W ‘ other docummts that contain or reflect predecisional ‘Q f ._ ._ deliberative communications within our department or esamq ‘ 4 , _, 3‘. :riu.uwoseuu>1*W' Wsm J65’ muxan. eve-no say?“-*\’ I5 .5. Va’ we mo. s-eR>¢r1=w_ UJ['Bf"$l$hJL mic wwmw, 8w={‘,,/u. _,@\~'f_“e'¥ / 460 U 2: __3>. ~ -n -i I components of the Executive bragch, diplomatic communications, and presidential directives in ‘he national security area. While we believe it is important to preserve the confidentiality of the Executive branch celiberztive process, of diplomatic communications, and of p we are also committed to subcommittee’: interests legitimate need for info the Executive Branch has information confidential _ively smell ac: or) residen ial national security directives, seeking to accommodate the . In éircumstances where Congress has a rmation that will help it legislate, end e legitimate need to keep certain , we bedieve it is appropriate for each cdetc the needs of the ether. To assist con£;dent__l documents, 1: would be _el ‘-1 if your staff would proyidc at the proposed meeting an explanation of the subcommitteefs particular need go: confidential information we request that your sta that may be contaizea igérhe documents. ff contact {name and number] to arrange the meeting to discuss an accommodation regarding the documents raising confidentiality concernf. - -. The Honorable Sam Gejden Chairman Subcommittee on Internet Economic Policy and I Committee on Foreign Affairs House of Representatives Washington, D.C. 20515 sincerely, lpignature lines for Department Assistant Secretary for Legislative Akfairsl SOB ional rede- ..,. DRAFT branch to seek to acconm - . ~ |- I us in CCCODfl0C&CL$g the suhcommnttcc's request for shee----_;_+4~£/54L - - - - :. _ - / 462 , - o .~ I .-. ,.\~....- "5- - '. . 0- I H ,,.,... r k ’—e_ ‘luv.-3 a\ l /Pending Document Request: S , __ Gs;;’-*7“-"’-‘W has an outs | request for documents related mg the-dual-use mm-apm19,~1991€r date the Department has not provided any of the documents or the legal tificatton reququd for withholding such materials. Gejdenson has intimated that he has the support qf Chairman Fasall to subpoena those documents that the Department refuses to provide. _ - Commerce Response: Craig Helsing wrote Gejdenson this week stating 1) Commerce is preparai to prooidg some documents immediately and 2) Commerce would like to meet with your staff to reach an accommodation on additional documents about which we have confidentiality concerns. We are coordinating our response with the White House, but within those constraints, we wantilto be as forthcoming as possible. /‘ / Q 4 /» 1 i §(I/L 14:)-_}/U K g l___ ,/ 6 1'*'z/1 /I 0% / 463 \ \ ‘\ .\ \ *1 ~* (T iii ~m On April 19, Cejdenson's subcommittee requested from Commerce, State, and Defense a large volume of documents related to Iraq licensing and policy, ranging as far back as 1979. BXA, OGC, and Congressional Affairs have been working with other agencies and the White House to coordinate responses to the request. On June 4, Gejdenson wrote you, as well as the Secretaries of State and Defense, complaining that he had not yet received any documents (copy attached). This week, Assistant Secretary Helsing sent Gejdenson a response (coordinated through the white House) (copy attached), saying that (l) Commerce is prepared to provide some documents immediately and (2) Commerce would like to meet with subcommittee staff to attempt to reach an accommodation on additional documents about which we have confidentiality concerns. Commerce representatives are now scheduled to meet with subcommittee staff on . QQEE£I§£_E£§22fl§£ Commerce is working hard on responding to the document request. We will continue to cooperate with the subcommittee, and we will provide all appropriate information. we are coordinating our response with other agencies and we will be as forthcoming as possible within those guidelines. [E9131 we ‘d o e recommended that you pg; suggest that we will provi e m r information than other agencies or that we will push the White House to permit more extensive disclosures.] We sent you a letter this week advising that we are prepared to provide some documents immediately. The letter also requested a meeting with your staff to reach an accommodation on-additional documents. I understand that Commerce representatives are scheduled to meet with subcommittee staff on . 464 NAUONAL SECURITY oouwcu. VIA PM WASHNGTON, D.C. 295C-6 June 18, 1991 MEMORANDUM FOR DAN HAENDEL (PE: 377-4772) '” TOM STILLMAN QPH: 377-5301) JIM THESSIN GPH: 647-7942) PAUL OSBORN €?H: 647-8634) MIKE CIFRINO GPH: 703/697-7215) PAUL COLBORN GPE: 514-2048) mom: srsvs ' _ I SUBJECT: Letter to Congressman Gejdenson The attached letter to Congressman Gejdenson has been approved by all relevant agencies. Accordipgly, you are authorized to arrange for transmission of the letter on behalf of your-agency. 465 Dear Mr. Chairman: This letter is in further respopse to the request from your subcommittee for Department ofl ' documents concerning export licensing decisions and Policy wiEE respect to Iraq. As we have informed the subcommhttee and its staff in previous letters, meetings, and telephone conversations, our departments have been expending considerable effort in assembling and reviewing relevant intra—agencm and inter—agency documents from a twelve—year period from 1979 until the present. The extent of the search and the volume of documents reviewed are extraordinary. Having completed the consultations that are necessary where inter—agency dobuments are involved, we are now prepared to make available immediately documents responsive to your request, except for those Pocuments (many of which are classified) about which we have.confidentiality concerns. The Administration recognizes CLngress' legitimate interest in export controls, and we will continue to work closely with you and the subcomittee to addressgissues in this area. We assure you that we_will make every effprt to accommodate the subcomittee's interests in information that may be contained in the confidential documents. Toward this end, we request the opportunity to meet with subcomittee staff to discuss our confidentiality concerns and toidevelop means of providing information to the subcommitteeiconsistent with those concerns. We have significant confidentiality concerns with respect to documents that contain or reflect predecisional deliberative comunications within our department or among components of the Executive branch, diplomatic communications, and presidential directives in the national security area. Among our most significant confidentiality concerns are those pertaining to documents reflecting deliberations within the National Security Council ("NSC") system. Although our department does not possess minutes of meetings conducted within the NSC system, some of the requested documents reveal the confidential deliberations of such meetings. Ilhilo we believe it is importanl to preserve the of the Executive branch deliberative process, of diplomatic i 1 communications, and of presidential national security directives we are also committed to seeking to accommodate the eub- e committee’: interests. In oi: anoes where CeQg5pe(a;1 » at legitimate need for information that will help it legiel :0}; F’ 471 UNITED STATE] DEPARTMENT W %MMEEl '~'~~=-. .:.-1:-~'-=*~ w-W.» " ~ 6/, 2&1/4-(4 The Honorable Sam Gejdenson // " 4*’ Chairman Subcommittee on International Economic Policy and Trade C;’t£¢7*-Z, Committee on Foreign Affairs ll House of Representatives Washington, D.C. 20515 Dear Mr. Chairman: This is in response to your recent letter to Secretary Mosbacher and in further response to the request from your subcommittee for Department of Commerce documents concerning export licensing decisions and policy with respect to Iraq. As we have informed the subcommittee and its staff in previous letters, meetings, and telephone conversations,-this department has been expending considerable effort in assembling and reviewing relevant intra-agency and inter-agency docuents from a twelve-year period from 1979 until the present. The extent of the search and the volume of documents reviewed ere extraordinary. Having completed the consultations that are necessary where inter-agency documents are involved, we are now prepared to make available immediately documents responsive to, your requests, except for those documents (many of which are classified) about which we have confidentiality concerns. The Administration recognizes Congress's legitimate interest in export controls, and we will continue to work closely with you end the subcommittee to address issues in this area. Is assure you that we will make every effort to eccomodete the subcommittee's interests in information that may be contained in the confidential documents. Toward this end, we request the opportunity to meet with subcommittee staff to discuss our confidentiality concerns and to develop means of providing information to the subcommittee consistent with those concerns. we have significant confidentiality concerns with respect to documents that contain or reflect predecisional deliberative communications within this department or among components of the Executive Drench, diplomatic communications, end presidential directives in the national security area. -1 75" Q: U0“ 469 do Q €$\‘~Among our most significant confidentiality concerns are ti deliberations within the those pertaining to documents reflec ng National Security Council ("NSC") system. clud notabl es," to e SC in it work. ng polic of the ecutive anch to sling - ratio within t e other *4 icy co ils and Although department does not possess minutes of meetings conducted withi the NSC system, some of the requested documents reveal confid deliberations of such meetings. tial |S While we believe it is important to preserve the confidentiality of the Executive Branch deliberative process, of diplomatic communications, and of presidential national security directives, we are also committed to seeking to accommodate the subcommittee's interests. In circumstances where Congress has a legitimate need for information that will help it legislate, and the Executive Branch has a legitimate need to keep certain information confidential, we believe it is appropriate for each branch to seek to accommodate the needs of the other. to assist us in accommodating the subcommittee's request for these confidential documents, it would be helpful if your staff would provide at the proposed meeting an explanation of the subcommittee's particular need for confidential information that may be contained in the documents. we request that your staff contact Michael Gale, Deputy Assistant secretary for legislative Affairs, at 377-3663 to arrange the meeting to discuss an accommodation regarding the documents raising confidentiality concerns. Sincerely, Craig R. Relsing 475 Executive Privilege issue with Chairman Fascell, before the subpoena's due date. The objective of the discussion would be to obtain the committee's agreement to abide by the privilege claims or, failing that, to obtain an extension of the subpoena's due date. If the subcommittee and committee do not believe the privilege claims are well founded, and the documents are still not produced to Congress on the due date, they could vote to hold you (and the other Cabinet Secretaries involved) in contempt of Congress. The full committee's vote would then be reported to the full House. The House could then consider and vote out a citation holding you in contempt of Congress. / Enforcement of such a citation presents difficult, technical legal issues. The House has three enforcement options: (1) it can refer the matter to a U.S. Attorney for prosecution under the criminal contempt of Congress statute: (2) it can initiate a civil action in Federal District Court to obtain a judicial order requiring compliance with the subpoena and, if necessary, a - contempt of court enforcement order; and (3) thggggtigally, it can dispatch the Sergeant—at-Arms to arrest you and detain you in the Capitol (this is yer! unlikely today). Each action would be met by appropriate legal responses by Comerce and Department of Justice lawyers. . cc.-" 2"/one//% wii4.,J) 476 July 3, 1991 ~ Wendell L. Willkie, II General Counsel Prepared by: Thomas H. Stillman OS/OGC/OCC—EXA 377-5301 Subject: Subpoena for Documents Requested by Rep. Gejdenson As you know, you have been served with a subpoena signed by the Chairman of the House Committee on Foreign Affairs (copy attached at Tab A). The subpoena demands production by_Honday, July 8, of all documents requested by Rep. Gejdenson's subcommittee in its April 19 letter to you. The subpoena demands that if the documents are not produced by July 8 you appear before the subcommittee on July 10. comerce produced six boxes of documents to the subcommittee on June 24, three days before the subpoena was served. We are prepared to produce the remaining documents, with the exception of two [one] categories[y] of documents. [First, BXA recently located in Comerce archives additional responsive documents dating back 12 years to 1979. These " ,@~_ .__ angu documents must be reviewed and processed before production to the- subcommittee. [we plan to seek the subcommittee's agreement to . -~< ~ - ii»? +--~- - » - - ..1v»~:auu:f1ssJk¥¥§ accept these documents after the July I sbpoensHdeadline.I =‘.-'. 1-? ,9‘ 478 Executive Privilege issue with Chairman Fascell, before the subpoena's due date. The objective of the discussion would be to obtain the committee's agreement to abide by the privilege claims SI or, failing that, to obtain an extension of the subpoena's due date. If the subcommittee and committee do not believe the privilege claims are well founded, and the documents are still not produced to Congress on the due date, they could vote to hold you (and the other Cabinet Secretaries involved) in contempt of Congress. The full committee's vote would then be reported to the full House. The House could then consider and vote out a citation holding you in contempt of Congress. Enforcement of such a citation presents difficult, technical legal issues. The House has three enforcement options: (1) it can refer the matter to a U.S. Attorney for prosecution under the criminal contempt of Congress statute: (2) it can initiate a civil action in Eederal District Court to obtain a judicial order requiring compliance with the subpoena and, if necessary, a contempt of court enforcement order; and (3) theoretically, it can dispatch the Sergeant-at-Arms to arrest you and detain you in the Capitol (this is ggry unlikely today). Each action would be met by appropriate legal responses by Commerce and Department of Justice lawyers. 1600 I’F.NNSYI.VANIA AVENUE WASHINGTON w DATE HCSDULE TMNSHITTAL SHEET _ to lm§§“;i;'\l\13'Ln,4/5' ‘__ T I __ _ T MW PM ml, __ _ TELEPHONE IWIE TELEPHONE IUNIEE H038: TOTAL NUIOEI O? COHEN?! W” 480 1. E1 E1 5. 6C 7. Ell ll. E5! C2] EL] 15. 16. NSC-Related Documents Responsive To Gejdenson Request ~mLmmm Stevens memorandum to departments, 9/9/88, with draft NSDD re missile proliferation (former Tab 16) Powell memorandum to departments/agencies, 9/23/88, ‘4/7 forwarding NSDD 315 (former Tab 1) Hughes memorandum for PCC working group, 2/23/89, with draft options paper re pending CBW legislation (former Tab 17) National security Review 17, 6/15/89, re nuclear gi/C, proliferation, CBW, missile technology (former Tab 2) Charles memorandum to Scowcroft, 4/4/90, outlining broad strategy for deradicalizing Iraq (former Tab 20) Handwritten notes of 4/12/90 Pcc meeting re export policy toward Iraq, etc. (former Tab A5) Gnehm memorandum to Ximmitt reporting on 4/16/90 DC meeting re availability of CCC and Exim programs to Iraq (former Tab A2) Gnehm note: of 4/16/90 DC meeting re ccc, Exim, proliferat on. " pJ Sm“! Bartholomew memorandum to Nonproliferation PCC, 5/14/90,. 2blh.1r with discussion paper re nonproliferation initiative for Iraq (as well as two earlier drafts of this) (former Tab 21) Scowcroft memorandum to Deputies Committee, 5/18/90," 41 w/attached options paper re economic and political measures /51 to take toward Iraq (former Tab 4) _ Handwritten notes of 7/l2/90 PCC meeting re HTCR, export controls, missile proliferation (former Tab A5) Wolfowits memorandum to Scowcroft and Gates, 9/28/90, ++é3 w/draft NSR re export policy toward Iraq, Syria, Libya, Iran (former Tab 7, attachment to Tab 5) (|o(;/qo) Bartholomew memorandum to Departments/Agencies, 10/17/90, 4 w/attached discussion paper re countering Iraq's weapons of '7, mass destruction during war and beyond (former Tab l) Rowen memorandum, 10/1a/so, w/attached draft paper re 4 é dismantling Iraq's military power (former Tab 9) _ aittman memorandum, 11/29/90, w/attached discussion papar--- entitled "Implementing lPcI,' and draft (former Tabs 28,,24) Non—proliferation PCC paper (and six attachments) entitled l '2nhancing Proliferation Controls," for ll/30/90 DC meeting~~~~ em IICI (former Tab 21) @;~ ,§§;qa; 481 ’.~*“Il‘,';.‘°~,t u 9 DFPARTMENT OF commence i"°'v....'¢ ii 7 X To : M H415’ G-141.4?" From : Thomas H. Still|~ Chad Counsel for Export A¢l|_ninisl|':uion A1, wé’D1s0<.< -ssag age; .S14|TT7?"L/ 99/7735- /srrr/w?'7>¢A-\ P/ileneesavs /rrawf 71255- 7>,¢_»se;-,./1% A/my Gr-f>‘h\J4'€» ,4» 1/rrn/1, /r=— Jcawaéw-%"" AN3 ¢'7?'1$a6/24.. G07/vi»7?3 a 7w/1\<.>:~1, Tam/~>"»J"""-5 A W,'r;q- Came 8v'7?1‘vfi'T7T/ 0,41.) 3:. 7/‘Y//9° 773 5’b’“.J 94-any 7'1-.I>S'11*H'1éiJbz>»~J:{\'\‘*’"'*¥ 432 ~ ~*"°"\ us I):-zmlmm-:\'1" 0|-' c0.\|.\1r:nu~. ,.-*“"'~. 5 y ...‘ "*e..v=P T" = [A/é»JD€t4_ l/\)lttu.¢E From : Thomas H. Slilw Chaef Counsel for Export Administration 26 : 5. A 'E>'PL>&u A 2., _e‘s.>¢>..> 5.; I am,<,za'7z> en/.rymi,A $v*v1'mS Z,-;59o&— ,,q &A$£-.5 \/mi, H-n»w_/f’~>?" Hem auzf. 7/%'f5Z. Q/vi we A Mu. W? P1//\~J7o PE‘-o‘DwM_» 'Do0u//EIJE» ‘Z>y 5%‘/7’ “Z-”"D" Amen/12.000»). Aqmcmb Is 7m 50/4-W$»~J7" "D:'2A*fi" 0);’/777» ‘T72-r‘i>J§14l7'777'l» Ls/1W£~ 1" »/=41/.4 &M,4»M»>'77rz. 7'"/I-£A'é»ZA1°»4 newt:-" 732:5/awvv/r-c. ’D/¢7»5'i7l/{AI 14/i'7'?—l @A"D'3'}4A'l9ZZ.. //,'n,;a4e11a,Qnfl*M mmee flwv Ur; jwwflgpfirv/j"?/ifidfilm 2¢n¢¢+fl»Z7 484 Draft of July 8. 1991 The Honorable Dante Fascell Chairman Committee on Foreign Affairs House of Representatives Washington, D.C. 20515 Dear Mr. Chairman: This is in response to the Committee's June 27 subpoena seeking Department of Commerce documents concerning export licensing decisions and policy with respect to Iraq. These. documents were originally requested by the Committee's Subcommittee on International Economic Policy and Trade. As you may know, we have previously advised the Subcommittee of our confidentiality concerns with respect to documents that contain or reflect predecisional deliberative communications. We have determined, however, that in the unique circumstances presented here —- such as the fact that the United States has just fought a war —- it is appropriate to provide a broader-than- normal range of information about Executive Branch policy-making. Accordingly, we are providing many documents that would not be provided under normal circumstances. As you may know, we delivered six boxes of documents to the Subcommittee on June 24, 1991. Today, with this letter, we are delivering to the Committee one additional box of documents}??? 1 489 .‘..~"(." 5' Laid’ , H ‘ 4 |,,,.4-1.,-¢ . '.' (Y\¢u»l f' 7 ll 485 “ _' _ ~ we have in our possession two classified Presidential directives responsive to your request. we understand that the National Security Council is willing to make these documents _ available to you in accordance its standard procedure for dealingia with Congressional requests for access to such documents. we ask that you contact Michael Andricos, the NSC's Acting Senior Director for Legislative Affairs, at 395-3055. You will appreciate that many of the documents provided to you contain information protected by the confidentiality provisions of section l2(c) of the Export Administration Act of 1979, as amended, and that they must be protected against any public disclosure not authorized in accordance with that law. Sincerely, Craig R. Helsinq cc: Chairman Gejdenson 491 FROM D.U-U.| o.u.\... l¢”A- DIPAITMINT OF OIPINII OPIICI OI Gllellll. COUNIIL WAINIIOTQN. D.C. 191.!-IOCC TBLICOIIII IIIOI-IIDUI DAT2: -1-xxx: ¥_ _ w gm Hamel . " Lg/6<'_ _ 2.; 377- com’ (OYT Cl) (I'll I1“) if nos: _ }k\_F6'C\L@}K/D -' (B5)! ( nos) sic-use mu 1 i'!B'iFliI'i_ we are submitting :5 pages, inglggflg the-Ieleeepier D Remeremdtl. If ye a 3 " eive all pages, p1ease~ull~ at m~ ...... P4... ,...r 3% if fig ~ 5 _ --,'-\;i ~‘ . I - *";f.':';?‘:._;- “G as ; _ F . H ‘ ‘.35--‘Q.-....-. D~ / 492 OFFICE OF THE SECRETARY OF DEFENSE WASHINGTON DC. 20101 July 8 , 1991 Honorable Dante D. Iascell Chairman, committee on Foreign Affairs U.S. House of Representatives Washington, D.C. 20515-6128 Dear Hr. Chairman: This is in response to the Committee's subpoena dated June 27, 1991, that was properly served on June 28, 1991, seeking document; regarding exports to Iraq and Jordan and export policy with respect to Iraq. I have been officially designated as the custodian of records responsive to the subpoena for the Department of Defense. These documents were originally requested by letter dated April 19, 1991 from Chairman Gejdenson of the Subcommittee on International Economic Policy and Trade. A number of documents responsive to the April 19th letter were delivered to the Subcommittee prior to service of the subpoena. As you may know, we have previously advised the subcommittee of our confidentiality concerns with respect to documents that contain or reflect predecisional deliberative communications. Ie have determined. however, that in the unique and extraordinary circumstances that were created by the invasion of Kuwait by Iraq and the resulting military response by the United states and other coalition forces under United Nations authority, it will best serve the national interest to provide the congress greater access to documentation of Executive Branch policy-making in this instance than is normally warranted. _ In addition to the documents which were provided prior to service of the subpoena, we provided several thousand pages or documents -to the subcommittee last week. Today with this letter we are delivering to the committee the remainder or the documents that have been identified as being responsive to the subpoena with the exception of certain documents the delivery of which must be ' The subpoena initially was served on June 27, but was returned to you that day by the General Counsel of the Department of Defense because it was not accompanied by a schedule describing t be produced. In the cover letter returning the the documents o l Counsel asked you to reconsider whether it subpoena, the Genera was necessary to issue e subpoena to Dob in light of the fact tin: tn pepertment we willing to make suitable aooxede en:ure that the co:mittee has the intormetien it needs. ti-"ff-=' 493 arranged with the National Security Council and the House Permanent Select Committee on Intelligence. A small number of the Department of Defense documents that we are providing are highly classified and particularly sensitive for national security reasons. with the concurrence of the House Permanent Select Committee on Intelligence (HPSCI), we are delivering those documents to that Committee for safekeeping. It is our understanding that the HPSCI requires that an authorized staff member of your Committee or the International Economic Policy and Trade Subcommittee receipt for those documents. Accordingly, you are requested to designate a staff member to arrange with me a time to sign for those documents at the H?SCI. In addition, the Central Intelligence Agency has requested that documents generated by that Agency in the possession of this Department that are responsive to the subpoena also be submitted through the HSCI. An excerpt from National Security Decision Directive No. 70 (NSDD #70 of November 30, 1982) which is responsive to the subpoena is held by this Department. we understand that the National Security Council has a standard procedure for dealing with Congressional requests for access to such documents. We ask that you contact hr. Michael Andricos, the NSC's Acting Senior Director for Legislative Affairs, at 395—3055 in regards to that document. Additionally, six documents that would not normally be provided to the Committee, including correspondence to a cabinet Secretary and the National Security Advisor and records-of high- level NSC meetings, are being provided on a temporary custody basis only. After those documents have been reviewed by the Comittee, you are requested to notify me (703/693-7110) so that I may arrange for their return. There are two additional documents that are responsive to the subpoena and are still under review at the Department. we will be in touch with you with respect to these two doucments prior to the subpoena return date. In view of the size and organizational complexity of the Department of Defense, it is possible that documents responsive to the sub oena in addition to those already identified and being id d,to the Committee will subsequently be located. In this prov e eventuality we will immediately bring such documents to the attention of the Committee. ‘ Director, Industry and Governmental Affairs Defense Technology Security Administration ': E ME 3' 10 ¢ a) 0° :1.» "agar ,»“““a “Q Y3‘ V 17¢ .5 ‘Q U.S. DEPARTMENT OF COMMERCE General Counsel July l2 , 1991 202--377-4772 Craig Helsing Dan Haendel To : Tom Stillman“//I Michael Gale From : Wendell L. \’illkie. ll FYI 496 NATIONAL SECURITY COUNCIL wnanofcn. o.c. zcsoo July 12, 1991 MEMORANDUM FOR TEFRENCE O'DONNELL m W Q EDWIN WILLIAMSON WENDELL WILLKIB mcaoms Ros'rovn{ . SUBJECT: Fascell Letter The attached is provided for your information. lhero are a total of 3 pages in this FAX. 497 NAHONALSECUHWYCXRRKJL wmaecnmmoczau July 12, 1991 Dear Mr. Chairman: Pursuant to a verbal request from John Scheibel of your staff to Mike Andricos of our staff, I am writing to spell out the conditions under which we are prepared to afford access to three classified presidential directive: responsive to the subpoenas you recently issued to the Commerce and Defense Departments. Two of these directives are from the files of the Commerce Department and the third from the files of the Defense Department. As stated in Kenneth Hill's letter to you of July S, 1991, N8DDs and similar presidential directives are controlled by the National Security Council, but access to such directives may be afforded only with the consent of the President and under such conditions as he may require. As further explained in that letter, it is our policy to engage in a case-by—casc review of congressional requests for access to presidential directives, considering both the sensitivity of the directive and the nature of the legislative interest in the directive. Based on our review, we are prepared to offer access to these documents under the following conditions. Specifically, we are prepared to permit embers of your conittee designated in Writing by you, chairman Gejdenson or your International Econoic Policy and Trade subcommittee, or your respective ranking minority members, to review the directives. In addition, we will permit the majority and minority staff directors and chief counsels of the committee and subcomittee to review the directives if designated in writing to do so by the cnairen cr ranking minority members. Members will be shown the directives at their convenience on Capitol Hill; staff members with appropriate security clearances are asked to review the directives in our offices. Copies may not be retained, but notes may be taken. Any notes will be reviewed solely for security classification purposes and returned to you. If these notes are determined to contain national security information, they will be appropriately marked and returned to you under classified receipt and must be provided appropriate security protection. This opportunity for the committee to review these docuents is offered solely as an accommodation and does not constitute a waiver of any privileges that may be asserted with respect to them. 498 2 I trust that these procedures will fully satisfy your need for the information contained in the directives. To arrange to review the directives, please contact Mr. Andricos, our Acting Senior Director for Legislative Affairs, at 395-3055. Sinc r Mb ' William F. Sittmann Executive Secretary The Honorable Dante B. Eascell Chairman Coittee on Foreign Affairs House of Representatives Washington, D.C. 20515 cc: The Honorable William Broomfield The Honorable Sam Gejdenson The Honorable Toby Roth 499 Customs Department-Related Rostow Gang Documents 500 Uxrrzn sum-:s covznrmx-;>rr DEPARTMENT OF nu; rausuav M 6 m 0 1- 8 n du m uvrrzn smrzs CUSTOMS sznvrcx-:' oars; 957 25 2990 FILE: EN-90-0601 CC:MEC TO : Tom Reinhardt, Office of Legislative Affairs Department of Justice FRCM : Mary Cupp, Senior Attorney Office of Chief Counsel SUBJECT: Procedures for BNL Investigation and House Banking Committee This office has reviewed your draft procedures for processing documents required in the above—referenced matter. Ho i It would be useful to have each agencies‘ have one suggest on. documents sequentially numbered so they may be readily identified ld than and referenced wherever they appear. This numbering wou remain consistent throughout this exercise for privilege referencing or transmittal to the ccmittee. If you have any questions, please call me at 566-2482. Mary B. Cupp 503 4 June 1992 Commit! The Honorable Henry B. Gonzalez Chairman Comittee on Banking, Finance, and Urban Affairs House of Representatives Washington, D.C. 20515 Dear Mr. Chairman: This responds to your letter dated May 4, 1992 RECEIVED JUN 9 1992 as on Banking, Hnam; &UnnnAflmm regarding your request for notes, memorandums, meeting minutes, letters, etc., originated as a result of any meeting held by the lawyers group referred to in the April 8, 1991 National Security Council (NSC) memorandum. Our General Counsel has asked me to forward to you a copy of her handwritten notes from the meeting on April 15, 1991. These are a page and a third long and are the only notes that she has found on these meetings. . Enclosure Sincerely, ~\ Stgl M M n ey . os wi z Director of Congressional Affairs 506 State Department-Related Rostow Gang Documents 507 United States Department of State Va;/lington, ac. 20520 J" " we RECEIVED JUL l 5 I992 Committee on Bankmg, Flnanoe Dear Mr. Chairman: audnnmhm I am transmitting under cover of this letter a collection of documents in response to your May 4, 1992 request to Edwin D. Williamson for testimony in connection with your consideration of certain allegations concerning Iraqi policy. We are allowing the Committee to have access to these documents in an effort to accommodate fully your need for information and in light of the unique circumstances surrounding these allegations. The documents transmitted today stem from interagency meetings which the Legal Adviser and various other State Department officials attended. We request that the Committee not duplicate any of these documents except as necessary to conduct its business, and we ask that all materials (including duplicates, if any) be returned to the Department after the Committee has completed its work on this matter. The documents provided to the Committee today do not include documents created by other Executive Branch agencies. We respectfully refer you to such other agencies so that each agency may provide the Committee with all relevant documents that it created. we remain committed to working to meet the needs of Members for information to perform their legislative responsibilities, and we look forward to receiving the cooperation of the Members as we work together with you on this matter. W G. Mullins Ass tant Secretary Legislative Affairs ' The Honorable Henry B. Gonzalez, Chairman, Committee on Banking, Finance and Urban Affairs, House of Representatives. 508 1/5/w - /I/544' 34*“/”"“£§’ . in /. .‘ l p/?jAy~rPOD _ l _i —~¢Qhé . .\ . ..@6y/ Q S 7> 1'2Z:rW ’iE“'”*"‘@/"tr: ":‘-"M;""a"*"2 i e-’Z)._”€2./,zO%V/km.-rz4'¢...£¢»...z:.~e. pop —'%2fi~' 5,4,9 -~aMe /p ~¢/¢~/ ‘_/»~/4 ,4/41» ”.”%7/' _//ré»///~/wé/‘ D W5‘? ’>‘:“/"'24/‘l’ meme Cm /V5_Dn / V‘/§Zuhm75/ 509 ~A/~»7¢44a»4/%z;.( g ~ %”””"”.”Z@‘””W“”””“ WT, 7//¢/W Mag, ,4“-it/>1 iéew//”/$7“ Cgéh/W‘ ‘_:;‘_Z§;,”£,§j%(a,,§z..)(~»»¢»§¢~,.»@/Masg ~%,.£;,/w/%u%&x.M/ _~-USM fl7~ '-%~nm4»f/W‘1~i»~1 14'2"’;/"""”6£""‘;: Z41‘ ‘KW ),Z,M4,M,,@¢,,7,,4,% i MM . - W4 . - fig/1-. _ , W45‘ W‘%z2'<;a/ZWQ/W 55 927 O 93 17 511 A fl"”7- 7//I/W av? h/<44 4’/ye»/_/-//4/-e¢*4».»C( 97- L»-¢@W/U”/'5. -*y>~\/ -Z..h/ <+M -'1/46/Mi-H./£6 %'&4~j1?’~A~4~z“//4c/wM_‘¢a.A/r/»»»z;W11;%»%’¢%/ 0 {Q40-62/CLé¢( ‘ '. “L WW M /LA7,“//15 é_\L-<<5pY'\'/*~\/A/ _ ‘L?/X@~»-6 /W1», /7/1/L6. /00,ooo@Z/¢¢..¢J5 / "/“'@<"‘/‘7*-= *8 Ms’ -/vwwffivffa-z:~»f.A."O~::;§§,@, A (1/4 I“ gi’ % 512 @/ %Z”@”?'”””* “W” We/*\ M”.i2%;%$%%2c”” @W WW cf T ~ W‘ ‘M W '9 4>0/61 _ ,/ am A» /Iéwfiw/.. zzwi J~m...1ér Z-5.,/2//~»r’v? 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In N |- n ,4 “<2 I1 m '0 -1 cu m m ‘J (‘Y (ll I hope you agree that this summary where we >/..Z¥1L__ Special Assistant to the President and Legal Ad -ser 521 4;. united States Otfico ct the Washington, _ Oeoartrnent ot General OC. ', \/ Agriculture Counsel 20250-t400 _ /'_.. I I. April 17, 1991 MEMORANDUM FOR THE SECRETARY FROM: Alan Charles Raulxa General Counsel SUBJECT: Iraq-Related Document Requests; Response to ‘Congressman Rose ISSUE On April 15, Gene Bailey and I attended a meeting called by the NSC to discuss the Administration's response to Congressional requests for Iraq-related documents. USDA has received document requests from ~Qdmm of the House Banking Committee, and from Congressman ose 0 e ouse Agriculture Committee. Congressman Rose wrote to you on April 12, 1991 (copy attached), expressing his request for documents in rather forceful terms. A proposed reply for your signature is attached. D_lS§1.lSSIQhl 1. Backzmund The NS s l al dviser and director of legislative affairs called . . . . , an inter-agency meeting to tscuss the Administrations response to numerous requests for Iraq-related documents. Boyden Era attended the meeting, a did the Assistant Attorney General for the ice o g Counsel and the legal and congressional officers for State, Treasury, Commerce, and Energy Departments as well as the ClA, NSA and Joint Otiefs of Staff. Each agency reported on document requests it had received. The House Banking Committee, House Agriculture Committee, House Ways and Means Committee, General Accounting Oflice. perhaps the Foreign Relations Committees. as well as other committees, are requesting Iraq-related materials. National Advisory Council minutes regarding inter-agency consideration of the Iraq GSM request. The NAC minutes were reviewed in the offices of the Treasury Department; y ‘Die Treuury Department reported that it had permitted Hill stafl to review the the Committee staff was not provided with any copies of the NAC minutes. Congressional staff members were not even permitted to take notes on any classified minutes. 522 Memorandum for the Secretary P 2. The Justice Department emphasized the need to detemiine which documents contained information that could be central to the Presidency, such as national security, diplomatic and other deliberative matters. The Assistant Attomey General also suggested that minority as well as majority staff members be included in whatever document review is allowed. He further suggested that, it’ appropriate, agencies should consider entering into confidentiality agreements with the Congressional committees or editing out the deliberative or advisory portions of potentially privileged documents. 3. The meeting concluded with NSC suggesting that the coordinating process would continue to be available so that agencies do not pursue inconsistent approaches. lt was also noted that the objective is to cooperate with Congress, while also ensuring that appropriate protections are accorded to deliberative materials. Also, the inter-agency nature of the subject should be recognized - therefore, agencies should not act unilaterally. In particular, an agency should not disclose documents in its files that were originated by another agenq without advance consultation. Finally, it was agreed that materials should be reviewed before being provided to the Congressional committees and that each agenq should maintain a list or copies of the documents provided. 4. l propose the following procedures and guidelines in response to these document requests within USDA: 1. Requests should be received in writing. 2. Party receiving request should forward copies to: a. Blurnenthal/O'Connor (Cage) b. Raul/Brosch (OGC) c. Crowder/Acker/Hovermale (LAC?/FAS) d. Bailey (OCR) e. Snead (OIG) 3. OGC will review each request and provide advice. 4. Potentially responsive files and/or doatments will be reviewed or evaluated by OGC. 5. To the extent requested and appropriate (within OGC advice), access to files may be provided. age 2 523 Memorandum for the Secretary P334; 3 6. Relevant agency will make copies of potentially responsive materials and provide to OGC. 7. Agency or OGC (to be decided after consultation) will provide copies to Committee with appropriate cover letter drafted by OGC. SHMMARX The NSC is providing WO~lOfl for the Administration's response to Congressionafdocument requests or raq-related materials. The process is intended to be a cooperative one; it also recognizes the Executive Branch's appropriate confidentiality interests. Many Congressional committees are investigating the subject, » including the House Banking Committee and House Agriculture Committee. These two committees have submitted document requests to USDA. in connection with the request from the House Agriculture Committee, a proposed response to Congressman Rose's April 12 letter to you is attached. Attachment cc w/attachment: Richard T. Crowder F. Eugene Bailey Leon Snead Kelly M. Shipp Gary R. Blumenthal William O'Connor 525 l IRAQ DATA BASE ASSESSMENT Information on export license applications to Iraq is contained in the Export Control Automated Support System (ECASS) data base. That data base contains more than 1.5 million records dating back to 1980. There are more than 400 different computer programs that can be used to access the data base to obtain different information. Records dating back to 1980 are very sketchy and cover little more than the date of receipt and final action. In the mid- l980s, the data base improved greatly but still contained many inaccuracies as data was inputted by key punch operators. In 1988, the data base accuracy increased once again as application information was entered either electronically from the exporter or by scanning applications with Optical Character Readers. The actual data base can only be modified by the Director of the Office of Information Resources Management (OIRM) or by his Deputy. No one in the licensing office nor any senior management official has the capability to access the computer and modify any existing data. ' Congressman Barnard requested on September 28, 1990, a list of all export licenses to Iraq from 1985 to August 2, 1990. He asked for: . ~- o Disposition of each license application, o "Requester of each license application, o Product to be exported, o Approximate value of sale, o End—Use, 0 End—User, and " o Export Commodity Control Number (ECCN). The Congressman stated in his request that he understood that "the requested information is on a computer data base and is readily accessible." Accordingly, we decided to respond to the Congressman's request by preparing a printout generated by the ECASS data base. For the disposition of the export license application, we asked the computer to list whether the case was approved, rejected, returned without action, or embargoed. For the requestor, we provided the name of the applicant -— the exporter. 528 pmfi i ‘J ‘ Y ,' ‘Sh. $Nl‘l’ED STATES DEPARTMENT OF COMM£n( \ - I he Inspector General *.,_ '1' V\4vw\g\on oc 202:0 "ll JUN 0 A \99\ Robert A. Mosbacher Secretary Frank DeGeo Din Inspector 6 Report on Iraqi Export License Information Bureau of Export Administration STD-206-l-0004 MEMORANDUM FOR: FROM: SUBJECT: At the request of the Department’: General Counsel, we reviewed the releases of Iraqi export license information to the Chairman of the Subcommittee on Commerce, Consumer, and Monetary Affairs, House Committee on Government Operations. Our review disclosed no evidence that Bureau of Export Administration personnel deleted entire export license records before they submitted the information requested by the Chairman. However, we did confirm an initial report by the former Under Secretary for Export Administration that a small percentage of certain data of the Iraqi export licenses processed were changed in submissions to the Hill. Bureau personnel, including the former Under Secretary, stated that while preparing printouts for submission to the Chairman, changes were made to selected data on 66 approved export licenses for sales to Iraq. Our review disclosed changes to data on two additional licenses concerning trucks. Bureau personnel also changed permanent records on the Export Control Automated Support System database,'compromising the integrity of the Iraqi license records. Neither the changes to the data provided to the Chairman nor the changes to the system database were adequately supported. Our review disclosed that the former Under Secretary concurred with all changes to the data sent to the Chairman, but was unaware of any system database changes. Hith the exception of changes to five truck licenses to remove a reference to their potential military use, the changes were inconsequential and eliminated apparent inconsistencies in the license information. This report contains recommendations to ensure the integrity of the export licensing data and any such data submitted to the Congress in the future. These recommendations have been discussed and agreed to by Bureau officials: we are therefore issuing this report in final form. Department Administrative Order 213-5 requires operating units to submit an audit report action plan, including a timetable for implementation of the recommendations, within 90 days of the date of the audit report. Accordingly, we request that the acting Under Secretary of the Bureau of Export Administration be directed to submit such a 529 plan. We are providing a copy of this report gq the acting Under Secretary and to the General Counsel. Introduction Beginning in September 1990, Congressman Doug Barnard, Jr., Chairman of the Subcommittee on Commerce, Consumer, and Monetary Affairs, House.Committee on Government Operations, sent several requests to the former Under Secretary for the Bureau of Export Administration for lists of export license information on Iraq from 1985 through 1990. The former Under Secretary responded with computer printouts on October 10, October 24, and December 12, 1990. The October 10 printouts did not show whether the licenses were referred to other departments under applicable licensing regulations. The regulations require BXA officials to submit certain license applications to the Departments of State, Energy, and Defense. The October 24 printout showed information on the referral to other agencies, but it did not show the other departments’ responses or recommendations. The December 12 printouts showed all referral information, including the other departments’ recommendations. On Pebruery 8, 1991, the Department's General Counsel asked the former Under Secretary to provide a report addressing whether (1) the printouts were misleading, (2) certain and users of the licensed commodities were deleted or changed, and (3) the characterizations of the licensing information had been materially changed from those originally in the system database. This information was requested because of media-reported allegations that export license information and records were deleted from the Bureau's files. The former Under Secretary provided the report on rebruary 26, 1991, acknowledging that changes were made to the information given to the chairman. On March ll, tollowing continued media reports that Iraqi export license information was deleted from the Bureau's files, the General Counsel asked the otfice of Inspector General to review this matter. The purpose of our review was to determine (1) if any changes were made to the information prior to submission to the chairman, (2) if any changes were made to the export control automated system database records, and (3) the accuracy and completeness of notations indicating the positions of other departments involved in reviewing licenses for exports to Iraq. we interviewed commerce officials involved in preparing the responses to the chairman, including the former Under Secretary, 2 530 9? and officials from the Defense, State, and Energy Departments, We reviewed the Bureau's support for the acknowledged Changes to the printouts furnished the Chairman, and determined whether Bureau personnel had also changed other license information in the export license system database. Bureau officials did not maintain any copies of the printouts provided to the Chairman, sq we obtained Iraqi license information stored on magnetic tape as of May 22, 1990, and provided last August by the Bureau to another government agency. The tape did not include archived export license data for fiscal years 1985 and 1996. we also obtained a copy of the printouts from the congressional committee that received the information. We compared the copies of the printouts submitted to the Chairman with the information provided on the Hay 22, 1990, computer tape. we also compared the data shown on the December 12 printout with the data from the Hay 22 magnetic tape to determine the reliability of the Iraqi information in the database —— that is, whether export license records were deleted from the database. we did not examine the internal controls over the input and maintenance of data in the export licensing system. Instead, have initiated a separate review over these controls and will provide you with a copy of that report when that review is completed. _ U8 This review was performed at Bureau headquarters and at the Departments of Defense, state, and lnergy in Washington, D.C. Except as noted above, the review was conducted in accordance with generally accepted government auditing standards and was performed under the authority of the Inspector General Act of 1970, as amended, and Department Organization Order 10-13, dated Hay 22, 1960, as amended. In his report to the General counsel, the former Under Secretary stated that bureau personnel changed licensing data on 65 of the 1.126 licenses (later amended to 1,130) processed for Iraq from 1985 through August 2, 1990. Bureau personnel acknowledged one additional license date change as we began the audit. During our review, we identified two additional license data changes that were not previously acknowledged, bringing the total to 6|. The license data changes were as follows: (1) Descriptions of trucks were changed on five license records to eliminate a reference to a design for military use. (2) Notations were removed on 19 license records that had indicated referrals of licenses to another agency. (3) Stated positions of other agencies that review or approve 3 531 licenses were changed on J9 license rggqfdg, (4) End use statements were changed on five 11¢enses. on {Gut licenses for equipment used in a "magnetic media factory," the descriptions of end uses were expanded. The 8Xpqn51Qn added the phrase "to [manufacture] video tapes for Consumer electronics." On one license, the exporter had inserted q comment that, "According to our information the end user is involved in military matters" in the end use field. Bureau personnel deleted the comment. The export regulations provide an export control commodity number and general description for each commodity to be exported. Bureau personnel changed the commodity description for trucks from "VEHICLES DESIGNED FOR MILITARY USE" to "COMMERCIAL UTILITY CARGO TRUCKS" or "VEHICLES." The former term is consistent with the terms used in the export administration regulations as the general description of the trucks. We found no changes to general descriptions of other licensed commodities that made them inconsistent with the regulations. A Bureau official told us the commodity descriptions were changed to clarify that the Bureau does not license the sale of military trucks. The official also said that the description changes were justified by a State Department letter to an exporter in 1983. The latter ndicatad that the exportsr's trucks, which were intended for sale to Iraq, were classified as ‘commercial utility cargo truck(s).' we disagree with both reasons for changing the comodity descriptions. The export administration regulations allow the Bureau to approve licenses for the sale of military trucks that are not on the U. 8. Hunitions List. such vehicles are primarily transport vehicles designed for noncombat military purposes. Addit anally, when we scussed the contents of the 190: letter with state Department officials, they informed us that the letter provides no justification for the description changes. It merely informed the exporter that the trucks are not on the munitions list and can be licensed by the Bureau. we conclude that the changes were unjustified and misleading. Bureau personnel changed five licenses for trucks, including the two that we found. The total value of the licensed trucks was over $1 billion, or approximately 2/J of the total value of the approved export licenses for Iraq during the period under review. In fact, more than 97 percent of the total value of the changed licenses is accounted for by changes to the truck licenses. Although the licenses were approved, Bureau personnel informed us that no licensed trucks have been shipped. 4 532 aef.errals_x1n.t_clur Bureau personnel deleted 19 referral notations to other agencies; however, those actions were not clearly jugg1¢1q¢, ~15. referrals to the Defense Department for computer parts and components were deleted, and ten other referrals for various other commodities were also deleted. Bureau personnel told us they deleted the notations related to the computer parts and components because the Licensing Officers’ Operating Manuel stipulates that parts and components licenses should not be referred to the Defense Department. _ We reviewed the operating manual and found that it contained conflicting procedures as to whether licenses for computer parts and components should be referred to another agency. A dated procedure could he used to justify the referral notation deletions, but a more recent procedure required that the licenses be referred to the Defense Department for approval. Notwithstanding the position of Bureau personnel that computer parts and components need not be referred to the Defense Department, they were referred and licensing issues were settled among the appropriate agencies. Under the circumstances it would have been more appropriate to have included the referrals in the printouts and explain the resultant positions where necessary. ' we did not review the entire manual to see if it contained other conflicting or confusing procedures. However, Bureau officials should perfon such a rev ew to ensure that licensing personnel have clear, unambiguous procedures to apply to each license application. Bureaujmrsemsl we reviewed the 39 changes made to other agency positions to determine whether the changes were well documented and supported. Bureau personnel told us that the changes to other agency positions were 'corrections" supported by export licensing regulations and files of original documents. Our review of the documentation used to support the changes showed that 13 of the changes were based only upon the Bureau licensing officer's written notation that an agency position had changed. Ie also found that J1 of the J! changes were not supported by reliable independent documentation. The licensing officers often did not base the changes on independent supporting documzntation such as memorsnde prepared by officials of other egenc es. _ Bureau personnel also did not provide adequate support for changes that removed notations indicating referral to other 533 ¢99n¢193- Add1t1°n811Y, eflch license application must include e statement on the end use of the commodity being exported. Bureau personnel did not provide adequate documentation to support the changes in the end use statements. Bureau personnel stated that they had discussed all changes with officials of other agencies to confirm that the changes accurately reflected their positions. Bureau personnel further stated that these officials concurred with the changes. We asked officials at the Energy, State, and Defense Departments to verify statements by Bureau personnel. The Energy Department official disagreed with three of l0 position changes. However, he did not indicate that additional action to correct the record was needed. A Defense Department official stated that approximately J0 percent of the licenses were approved "with conditions," while the Bureau's records indicated that the licenses were simply approved. Another Defense Department official stated that he told the committee staff that he was satisfied with the presentation of the Defense Department's positions on the printout. The Stats Department did not disagree with the stated positions. 'As a result of the other agency officials’ comments, we consider the changes to the positions and the deletions of the referrals to have had little effect on the Iraqi license information given to the chairman. ' we found that the other agencies did not maintain complete records of the license applications submitted for the r review. Defense Department officials told us they depended upon the Bureau's files to support the changes in their positions. The Bureau maintains the Bxport Control Automated Support system, which provides license processing and historical information on export licensing activities. It also provides the data needed to support enforcement actions for export license violations. The system contains the official license application, the application tracking information, the license, and the follow-up actions. The systsm allows changes to applications before they are approved: however, once a license is issued it becomes an historical record and no changes by licensing officers are permitted. The dsts of final action is entered automatically by the system and cannot be changed. changes to the database can be made only by computer personnel within the operations Division with the specific authorization of the Director, Office of Information Resources Management. we found that Bureau personnel forwardod s list of the previously stated changes to BXA's Office of Information Resources 534p Management, with a request to change the patnqngnt licensing database. OIRM officials acknowledged that they changed the license records solely on the basis of the highlighted list and oral assurances by licensing officials that the changes were justified. They neither reviewed the documentation used to support the changes nor requested copies to maintain in case questions arose in the future. OIRM officials should have required authorization and sufficient supporting documentation before changing permanent fqcqgdg in ghq system. changing system data without support compromises the system's integrity and confidentiality. Recommendations we recommend that the acting Under Secretary for Export Administration take the following actions: i. Ensure that any future changes to export license information submitted to Congress and to the Export Control Automated Support System are authorized and adequately supported with appropriate documentation. 2. Retain complete documentation of the positions of all agencies involved in processing export licenses. . 3. " Ensure that the eyates database accurately reflects all agency positions. 4. Clarify the procedures in the Licensing officers’ operating Manual for the referral to the Defense Depertsent of license applications for cosputer parts and cosponents intended for shipment to specific countries. 5. Ensure that the Licensing Officers’ Operating lsnual is reviewed to eliminate other conflicting or confusing licensing procedures. cc: Wendell Iillkie Joan lclntee 7 $5 Rostow Gang-Related Press Articles 536 White House Curbed Release of Data On Prewar Support of Iraq, Hill Told By George Lardner Jr. vutnn-gioii Pi-1 $4 iii Wnlel The White House last year set up an elaborate mechanism to review and restrict the release of informa- tion concerning the Bush adminis- tration's support for Iraq prior to Iraq's invasion of Kuwait, according to documents released in Congress yesterday. House Banltin Committee C ' - man ex.) in a r speec t t anism was set up under the Nation- al Security Council's legal adviser, Nicholas Rostow, and prescribed a series of increasingly difficult hur- dles to stifle congressional requests for information. The disclosure provided new in- sight into how the administration, embarrassed by having miscalcu- lated Iraqi President Saddam Hus- sein's intentions and his suscepti- bility to U.S. entioements, sought after the Persian Gulf War to limit investigation of its earlier policy toward Iraq. While the broad out- lines of prewar U.S. efforts to assist Iraq had been known, congressional probes and news reports have in recent weeks revealed the lengths to which senior Bush administration officials went to sustain the assist- ance despite warnings from others in the govemment. ‘It used to be that coverups were sort of ad lice events—a mad scramble to provide damage con- trol,‘ said Gonzales, a leading critic of the administration’s previous pol- icy toward Iraq. "The Rostow Gang advances the notion that coverup mechanisms have become an inte- gral cog in the machinery of the Bush administration.‘ Gonzalez used the phrase ‘Roa- tow Gang‘ repeatedly yesterday to describe the group of top govern- ment lawyers—-from the White House, the CIA and the depart- ments of State, Justice, Defense. Treasury. Commerce, Agriculture and Energy—who first convened April 8 last year to review congres- sional requests for information and coordinate approaches. Rostow could not be reached for comment yesterday, and attempts to reach some of the other govem- ment lawyers at the meetings with Rostow were also unsuccessful. But CIA spokesman Peter Eamest said ofthegroupthatit“isnotuncotn- mon at all to coordinate the release or disclosure of information when you've got more than one depart- ment involved.’ Under the arrangement agreed to by the group. the general coun- sels for each agency were to review congressional requests to see if they could be withheld on grounds of executive privilege. Congression- al access to documents this hurdle was to members only, note~talting. The marlted for clasaifica partment or agency in question.’ according to an April 8. 1991. memo by Rostow that was among the documents released yesterday. Rostow was in charge of coordi- nating responaes, according to an- other memo. so that ‘agencies do not pursue inconsisteiit ap- proaches.' Gonzales said the ostensible pur- pose of the process was ‘to ensure cooperation‘ with Congress, but in reality, he added, it put the White House in charge of limiting con- gressional oversight. He said the only way to overcome the hurdles was to use subpoenas. But even with the issuance of about 100 sub- poenas by his committee. Gonzalez said, important records are still be- ing withheld by one agency. Several other agencies, he added, ‘conven- iently could not find’ subpoenaed documents. 5221 -5 5? isgig fiis Among the documents that tbe administration withheld on the basis of executive privilege. Gonzalez said. was an October 1989 National Security Decision Directive signed by Bush—known as NSDD 26- which ordered ‘pursuit of improved economic and political ties with Iraq.‘ Gonzales also voiced suspicions that NSC officials had a hand in al- tering Commerce Department in- fomiation supplied to Congress last year about the licensing of goods shipped to Iraq. The changes, which affected 66 export licenses. includ- ed deletion of the phrase ‘military use‘ from five truck licenses worth more than $1 billion. ‘Die truclta were never shipped. Under policies initiated in 1982 during the Iran-Iraq war, the Reagan and Bush undertook a number of measures tn assist Iraq; including approval of Export-Import Bank loan guarantees, expansion d Commodity Credit Corporation (CCC) credit guarantees up to $1 billion a year and sharing of intelli- gence information. But officials at Agriculture and other agencies grew uneasy about the CCC guarantees following dis- closure in August X989 of a scandal involving the Atlanta office of the Italian-owned Banca Nazionale del I.avoroand$4billionworthofun- authorized BNL loans to Iraq, includ-‘ 2138900 million guaranteed by the Nonetheless. the State Depart- ment and the NSC continued to press in the fall of I989 for a $1 billion CCC program on grounds that providing additional farm cred- its was crucial to maintaining U.S.- Iraqi relations. The program was approved in two installments, but the second installment of $500 mil- lion was subsequently suspended in May 1990 as relations with Iraq were deteriorating. n\ ifélji 0 537 Rostow Involved in Thwarting GAO Investigation of Panama Washington Post 3/12/89 538 181‘ STORY of Level 1 printed in FULL format. Copyright 1989 The Washington Post The Washington Post March 12, 1989, Sunday, Final Edition SECTION; QUTUJOKI PAGE D5; INSIGHT LENGTH: 1380 words HEADLINE: Noriega: A Probe That 1-‘izzlcd; Did s July '88 NSC Heno Help Defuse the Panama Issue? BYLINE: Hurray Uaas BODYI DID THE Reagan adainistration attempt to keep Panana out of the news during the height of last year's election canpaign? Previously undisclosed docusenta suggest that the Iational Security Council acted to delay a government investigation last sulamer into ties between the U.S. governnent and Panananian strongman Manuel Antonio Noriega. There ie no evidence of any conspiracy to sabotage the politically sensitive investigation. But the inquiry, begun at the request of Congress by the Government Accounting Office (GAO), was never completed, and no report was ever released. Such a report night have shed light on George Bush's knowledge of the United States’ ties with Noriega just at the time that Bush was campaigning for the presidency. Bush was director of the Central Intelligence Agency while Noriega was a paid CIA informant. Because Noriega was also reportedly involved in drug trafficking at that tine, the question of whether Bush was aware of the Panamanian dictator's illicit activities became an issue. at one point in the campaign, Bush trailed Michael Dukakia in the polls by as much an 20 percentage points, a deficit then attributed in part to Bush's Noriega problems. Dukakis attelpted to keep the issue alive during the campaign, but it eventually faded. Bush has yet to consent publicly on the setter, citing national-aecurity concerns. The GAO probe into the U.S.-Noriega ties was stynied when the NSC, in a confidential directive dated July 22, 1988, instructed officials of the CIA and Departments of State, Defense, Treasury and Justice not to cooperate with the GAO Lrnmatigation. Other government investigative filea show that while NSC officials were privately telling goverrseent officials not to cooperate with the GAO, they were assuring GAO investigators they would not interfere with their investigation. The collapse of the GAO inquiry is detailed in a chronology kept by one of the investigators. According to that record, shortly after the probe wee initiated, between liay ll and nay 16, 1988, the GAO ‘sent routine notification letters to the Departments of State, Justice, and Defense, and the National security Council, advising than of our review and identifying the subject and scope of our work.‘ The CIA was notified soon afterward. But GAO officials found that officials of the State Department, Justice Department, Custoas Service and Drug Enforcement Agency among others refused to provide access to needed docunents. Officials at several agencies told 539 The Uaahingtim Post, March 12, 1989 investigators that they could not assist the investigation until officials at the NSC gave the go-ahead. On June 8 and June 9, 1958, the chronology states, the CAO investigators were “advised' by officials at State and Justice that the "NSC instructed than not to deal with us until [the] NSC had developed operational guidelines on what to to do and what not to do on this assignment." GAO investigators wore surprised by the reaction. Only days earlier, on Juno 6, they had net with Dan Levin. the NSC‘: deputy legal adviser. At that meeting, says the chronology: ‘Hr. Levin stated we are free to deal with each agency directly an that [the] NSC would not be a bottleneck.‘ A spokesman for the NSC said in an interview that he could not comment because the matter involves an administration no longer in office. But the spokesman said information contained in Nsc files reflected that the Reagan administration did not cooperate with the GAO probe because the GAO had gone ‘beyond GAD's statutory authority‘ and had aaked for ‘extremely sensitive intelligence and law-enforcement information.‘ The spokesman added later: ‘There was no attaupt to withhold information to which GAO was legitimately entitled.‘ Nancy Kingshury, a senior official in GAO‘: National Security and International Affairs Division, said that the 880's coordinating activities were unusual. ‘The NSC would not ordinarily have played that kind of role,‘ Kingshury said. "That was certainly unusual. The people in ly division could not remeaber any other instance of agencies being directed not to cooperate with us by the NSC." on June 13, the cia also informed the GAO that it would not cooperate with the probe. In a letter to the GAO. John L. Helgerson, the C1A's director of congressional affairs. stated: ‘All agency activities in central America, as well as iniornation we receive concerning other U.$. Government activities in the region, are subject to close and continuing scrutiny by the Houao and Senate Intelligence Committees.‘ Saying that ha was responding on behalf of CIA Director Uillian Webster, Halgorson than stated that the CIA thus could not cooperate. On June 22, GAO investigators ‘held a second meeting with the NSC and White House staff personnel.‘ among those attendi was Nicholas Roatow a special assistant to the president and 1 al advisenaior the use The ca6'a ca -5.1? e r . n requested'§§E cooperation. The cgéonology noted: ‘They [the Uhite House] promised a prompt response.‘ But the NSC failed to respond to the GAO despite at least l5 requests to NSC and other officials over a three-uonth period, according to the investigative chronology. On Aug. 8, the I86 told the GAO it was still considering its request. On July 22, however. NSC Executive Secretary Paul Stevens had already sent the directive to the Departments of State, Defense, Treasury, and Justice, as well as the cla. instructing than not to assist the GAD. Citing what it said were "legal isauas requiring in-depth analysis," the directive instructed its recipients that '[T]here should be no meetings with GAO, and no documents or other infornation should be provided to GAO" util NSC completed a legal analysis. The result was that no executive agencies cooperated Vith the probe, and the GAO was unable to complete its investigation. '\ I e . ‘I I \ ‘ t I I ../ \ .- m __~ _____________.- ______.i 5; ___________{- !——- it h m \ L ' \L\l\\2\l>l\l,lll\:\1l\ll\'il\j\/l\l\l)l\\L:Z; \l(l\ll\l\ ' A \ p h ~ \ \ I 4',’ - \ I s \ » \ ‘- f Z \ \ I ,- | - I \ \ L . ' l _ . 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