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Witness Claims U.S. Loans Used to Finance Parts for Iraqi Super Gun

August 2, 1991 GMT

WASHINGTON (AP) _ A former lawyer for a machine tool company claims U.S. farm loan guarantees were used by an Atlanta bank to finance the purchase of parts intended for the Iraqi ″super gun″ project.

Marianne F. Gasior, a staff attorney for Kennametal Inc. of Latrobe, Pa., from May 1989 to January 1990, told a House hearing Thursday that Iraq used letters of credit issued by the Atlanta branch of the Italian-owned Banca Nazionale del Lavoro to buy carbide tools and inserts from the company

Gasior said the same documents were listed in a recent federal indictment as having been issued by BNL-Atlanta using loan guarantees the bank obtained from the Agriculture Department by claiming it was financing commodity exports.

Kennametal lawyers denied any wrongdoing by the company in a statement this week to the House Agriculture subcommittee on department operations, research and foreign agriculture.

″Our investigation has revealed no illegalities, improprieties or questionable practices concerning exports to Iraq or elsewhere by Kennametal, its employees or subsidiaries,″ the statement said.

Gasior, who claimed she was harassed and threatened by company officials before agreeing to resign in March 1990, provided no direct proof that Kennametal-manufactured equipment was used in the super gun project.

But she said Kennametal was selling products that would be critical to such a project both to Iraq and to Matrix Churchill, an Iraqi-owned British machine tool company. And she said Kennametal managers told her Matrix Churchill was involved in producing the super gun.

The alleged designer of the gun, Gerald Bull, was found murdered outside his Brussels apartment in 1990, shortly before British customs officers seized large steel tubes destined for Iraq which they said could be used to construct a giant gun barrel.

Gasior said Kennametal officials ″deliberately transshipped″ military products intended for Iraq through third countries, such as Canada, Germany and Britain, in order to circumvent U.S. export regulations.

Rep. Pat Roberts, R-Kan., the senior Republican on the subcommittee, said Gasior’s allegations are serious enough that Congress should consider suspending the $5 billion farm export loan guarantee programs until ″we get to the bottom of it.″

But Rep. Charles Rose, D-N.C., chairman of the panel, opposed such a move. He said Congress should provide more oversight of the farm export programs and ensure that they are not used in the future for foreign policy purposes.

″I don’t really think anybody at USDA knowingly thought they were supplying arms to Iraq,″ Rose said, ″but I believe that the program was misused at the very highest levels of our government ....″

Gasior said she ″repeatedly had doors slammed in my face by the federal agencies that are supposed to be investigating these matters″ when she tried to tell her story to law enforcement officials throughout 1990.

A federal grand jury in Atlanta began investigating BNL-Atlanta after FBI agents raided the bank’s offices in August 1989.

The grand jury charged in a 347-count indictment last February that the Atlanta branch provided Iraq with more than $4 billion in unauthorized credit, including $1.9 billion in loans guaranteed by USDA.