The World's Most Dangerous Man

It began with an ambitious American banker named Christopher Drogoul, BNL's Atlanta branch manager. He was driven, friends say, by suggestions from Rome that the branch would soon be closed. Before long, however, Drogoul found some Iraqi government representatives who wanted credit to pay for U.S. grain, frozen poultry and other commodities. Within months, BNL had extended them millions of dollars.

That deal marked the beginning of a relationship that would lead to 2,500 letters of credit and loans. BNL soon found itself underwriting an ambitious Iraqi shopping list, many of the items on it classified by Western governments as "dual use," meaning they have both industrial and military applications. Iraq, U.S. officials say, used as much as a billion dollars of BNL credit to purchase such equipment to build weapons. One American company, Lummus Crest of Bloomfield, N.J., was given $53.8 million in credit for construction of a petrochemical plant near Baghdad. Another, XYZ Options of Tuscaloosa, Ala., arranged to sell Iraq $14 million worth of machinery to make carbide tools, but was prevented from delivering a precision grinder after U.S. officials questioned its ultimate use. Still other funds went to finance the purchase of either high-tech companies themselves or the construction in Iraq of new factories that will soon become state property.

The transactions were complex. Take the sale of Matrix-Churchill. A British machinery firm, it hadn't made a profit in a decade. Nevertheless, the company was purchased in 1987 by TMG Engineering, which in turn was controlled by TDG, a subsidiary of Al-Arabi Trading, a Baghdad holding company with close ties to Saddam Hussein's government. Within two years, Iraq had used $16 million in BNL credit to purchase precision lathes and other equipment from Matrix-Churchill. TDG officials have denied that their company is controlled by the Iraqi government.

That wasn't the end of it. According to Britain's Financial Times newspaper, TDG also had a hand in buying a Northern Ireland aerospace company, Lear Fan, which specializes in composite plastics, the kind used to make advanced airplanes and, conceivably, missiles. A partner in the deal was SRC Engineering, a company run by Gerald Bull, the arms dealer and engineer who had sold Iraq on his supercannon, known as the Big Gun. The new aerospace firm, SRC Composites, applied to Northern Ireland for a start-up grant of more than $1 million. British officials, fearful that SRC Composites' real mission was making missile parts, quashed the grant on Aug. 14, 1989, effectively killing the project.

The weapons laboratories of Iraq and the machinations of SRC and Al-Arabi Trading are a long way from Atlanta. There, Drogoul now faces the federal investigation and a racketeering suit filed by BNL. Drogoul's lawyer concedes that his client failed to report the proper loan-risk information to the Federal Reserve and the correct amount of the loans to BNL's New York office. But he says his client earned no bonuses or personal commissions on the business. For its part, BNL recently agreed to make good on the outstanding letters of credit in dispute, which means Iraq will get most of the technology it wanted. With results like this, there is no reason to expect that Iraq will stop its byzantine procurement practices anytime soon.

THE BIG GUN

A make-my-day superweapon

If anything galvanized the West's attention on Iraq, it was evidence that Gerald Bull, a renegade, naturalized-American artillery genius, was helping Baghdad build the world's biggest gun. But it wasn't until Bull was shot to death outside his Brussels apartment on March 22 with $20,000 untouched in his pocket—and after customs agents across Europe seized 298 tons of massive polished steel tubes headed for Iraq—that the mysterious project was revealed.

Bull himself was something of a mystery. He was given to hyperbole and self-promotion, but he was also brilliant and of unquestioned accomplishment. Born in 1928, he quickly established himself as a Canadian "whiz kid" in rocketry and ballistics. In the 1960s, he co-ran the U.S.-Canadian High Altitude Research Project (HARP) that fired probes into space with giant cannons. One, in Quebec, had a 16-inch barrel and was 172 feet long. A 120-foot version in Yuma, Ariz., set a world record by shooting a projectile 112 miles straight up. The U.S., more interested in rockets, quit the project in 1970.