ABSTRACT: In 1980, the order for a whole war fleet to the Cantieri Navali Riuniti (1) on the part of Iraq marked the beginning of the mysterious story of an exorbitant bribe, amounting to 135 billion lire, which was to be paid to specific persons as a commission, and which on the contrary followed mysterious paths, made of non-existent bank accounts and fictitious companies in a Luxemburg-Switzerland-Panama plot. Who really received that money?

(Notizie Radicali, 1987)

Thirty billion lire vanished into thin air

Mr. Paul Gengler, legal adviser of the Luxemburg-based Paribas bank, was peremptory with Luxemburg's Chief Police Superintendent Mr. Joseph Butgenbach: in 1982 no sum amounting to 23 million dollars, which the interrogation request of the parliamentary Commission for accusation proceedings was referring to, was ever entered on account n. 50482 registered under the name of Dowal Corporation, Luxemburg.

The thirty billion lire paid in 1982 by the Cantieri Navali Riuniti to Mr. Nadhmi S. Auchi, an Iraqi citizen, owner of the Dowal Corporation, one of the two middlemen in the sale of an entire naval fleet to Iraq, would therefore have vanished. Once again questioned by the zealous Chief Police Superintendent Butgenbach, Mr. Gengler stated: "I cannot exclude that the money passed through the Paribas bank to later be transferred on another bank account of another bank". Someone is obviously lying: either the Italian banks that materially performed the transfer of the funds on bank account n. 50482; or the Luxemburger legal adviser of the Paribas bank, who does not want to unveil the real name of the payee.

Another mystery to be added to the many ones that distinguish this turbid affair of the highest bribe ever paid in Italy for weapon traffic.

A mega-bribe of 135 billion lire

One hundred and two million dollars, the equivalent, considering the 1982 exchange rate, of 135 billion lire, were transferred abroad, with the authorization of Spadolini, who was Prime Minister at the time, to pay two unknown middlemen. As compared to the Lockheed affair, this sum is but a tip. But if at the time, after an endless parliamentary debate and a referendum against the political leadership, a President of the Republic was forced to resign from his office, today the Parliament in ordinary session seems incline to dismiss, in just one day of debate, the 29th of January, the greatest scandal of this regime.

The Radicals' statement of facts

But let's reconstruct the whole affair. It all starts in May 1982, when Radical member of Parliament Roberto Cicciomessere presents a statement of facts to the Public Prosecutor's Office of Rome, concerning the so called broker's commissions for the mediation of the sale of Italian weapons abroad. In the statement it is said that the commissions were purposely "boosted" to enable the payment of sizeable bribes to some Italian political parties. And to support this statement, a series of cases are mentioned in which the "brokerages" exceeded 15% of the value of the sold weapon systems, or, as in the case of Iraq, reached figures that were absolutely unjustified and unusual considering their global value.

The Assistant Public Prosecutor, Mr. Paoloni, thereafter ordered an investigation, charging the Guardia di Finanza with the acquisition of a considerable documentation concerning the most important negotiations of these last years. Among these negotiations, there is the contract of the Cantieri Navali Riuniti and of the Oto Melara, for the sale of 4 frigates, 6 corvettes, one logistic ship, a floating dock and relevant ammunition and logistic support to Iraq, for a basic price of 1,825 million dollars, which, after further revisions and adjustments, become 2,485. The loss in value of the American currency will further contribute to raising the cost of this order. Moreover, the Iraqis were forced to accept any price, because they were vitally interested in a parallel agreement. The latter provided for the supply of ammunition for the artillery and for the tanks, which were of fundamental importance for Iraq to continue the war against Iran. As you may see, the enormous bribe amounts to over 135 billion lire.

The persons who benefit from it are two lucky persons, Merhej al Talal, a Syrian citizen, who receives the largest share, amounting to approximately 79 million dollars, and Iraqi Nadhmi S. Auchi, owner of the Dowal Corporation based in Luxemburg, who must be content with just 23 million dollars. It must be said that the 135 billion lire correspond to the sum that, according to the documents collected by the Guardia di Finanza, seem to have really been paid to the two "middlemen", whereas the sums agreed upon in the contract are much inferior to this. Spadolini, in a letter addressed to "La Repubblica" (2), states that the the bribe amounted to 180 billion lire. Another mystery: given the fact that we cannot question the figures given by then Prime Minister Spadolini, through which channels were the missing 45 billion liras paid?

Cossiga, Manca, Forlani, De Michelis are against

The bribes are paid out only in the second half of 1982 by the Banca Commerciale Italiana in Genua and by the Banca Nazionale del Lavoro in Lucca. This is due to the fact that for two years, no Italian Minister is willing to sign the decree authorizing the payment of the bribe.

It was, as a matter of fact, difficult to justify, under a strictly commercial aspect, a brokerage of this importance, just as it was not clear which important politicians, capable of asking for such a high sum, were hiding behind the official payees of the bribes.

Many people had already begun to suspect that there was something fishy in the affair. Already in September 1980, the Minister for Foreign Trade Manca discussed the matter with Prime Minister Cossiga, who had already successfully negotiated with U.S. ambassador Gardner the revocation of the U.S. embargo on the sales of General Motors engines of the 'Lupo' category frigates, destined to Iraq. They therefore decided to give their consent to the agreement for the supply of ships, but not to authorize the payment of the brokerage, even if, a few days later, they met the delegation of the Iraqi government, arrived in Italy to sign the mega-contract for the supply of the war fleet on the part of the National Research Council and of the Oto Melara. There is no evidence that the Iraqis were particularly annoyed by this decision.

Even during the following government, with Forlani as Prime Minister, Manca confirmed the previous attitude toward the orders, supported by the negative opinion of then Minister for State shares De Michelis. The request for the authorization of the payment of the "brokerage" is therefore made official by the Italian war industries on the 9th of April 1981. In June a new government is formed, with Spadolini as Prime Minister, and former Minister for Foreign Trade is replaced by Capria.

Even the new Minister for Foreign Trade seems inclined to conform with the negative opinions of his predecessor. In fact, it is only in January 1982 that Capria addresses himself to Prime Minister Spadolini to solicit a decision on this embarrassing affair of the bribes. He is induced to do this following a suit filed by Merhej before the Chambre de Commerce International on the 15th of December 1981, and a subsequent warning by the Cantieri Navali Riuniti, represented by lawyer Massimo Severi Giannini, addressed to Minister Capria.

For Spadolini, instead, there are no juridical or political difficulties

Spadolini, unlike the two Prime Ministers Cossiga and Forlani, seems inclined to authorize the payment of the "bribes", but does not want to expose himself to risks on such a complicated affair: he summons the Foreign Minister, the Minister for Industry, the Defence Minister, the Minister for state shares and foreign trade, ministries which at the time were held by Colombo, Marcora, Lagorio, De Michelis and Capria respectively, to reach a collective agreement. We ignore the nature of the discussions, and know only the conclusion such as it was expressed by Spadolini himself: "during that meeting, what I had written to Capria on the following 26th of May was ascertained; that is, that 'there are no juridical or political difficulties to authorize the payment". "It was ascertained": does this mean that all the summoned ministers agreed with Spadolini?

At this stage, the situation is definitively cleared: Capria therefore signs the authorization on the 7th of June 1982. After two days the Banca Commerciale and the Banca Nazionale del lavoro start paying the incredible bribes, transferring the money to Swiss and Luxemburger banks.

One of the payees of the bribe is unknown

But another difficulty arises, a difficulty which could block the thing once more: the Zurich based Banque Suisse states, by means of a telex addressed to the Banca Commerciale, that is is not in the conditions to perform the payment because the payee is unknown. At this point, Spadolini and Capria, who had sworn on the guarantees of "the established and identified payee", faced with the obvious indeterminateness of one of the payees, unknown even to banks such as the Swiss banks, which are certainly not known to be fussy as regards the paternity of the money they keep, had the possibility to retract the previous decision. None of this happens, and in the end the Swiss bank accepts to pay. But the question is, to pay Merhej or someone else?

Let us go back to the enquiry conducted by Judge Paoloni. An examination of the seized documents, and the questionings carried out, convince the magistrate that the Minister for Foreign Trade had authorized the payment of the commissions without the preliminary controls, that are provided for in the current regulation, concerning the real existence of a mediation relation prior to the stipulation of the contract, the effective identification of the physical or juridical persons who are to receive the commissions and the incidence and the consistency of the mediation relation as regards the main affair. In particular, it must be verified if there are traces of "good offices" put into action by the middlemen to reach a successful conclusion of the negotiations, and if the middlemen themselves are "not completely identified". There is, therefore, the legitimate suspicion that many people were concerned about cover up the true payees of the 135 billion bribe. Given that for the Ministers concerned with the affai

r there was the risk of an accusation of neglect of an official duty, if not a more serious accusation, Judge Paoloni remits the documents to the Parliament and from there on to the Parliamentary Commission for accusation proceedings. The investigating commission confirms its function, that is, that of hindering all proceedings against Ministers, and in December 1985 prepares to dismiss and bury the whole affair. It is only thanks to the new documents presented by Roberto Cicciomessere from the Radical Party and Franchi from the Italian Social Movement, that on the 10th of December the proceeding is resumed.

The other middleman doesn't exist either

The Radical member of Parliament produces a document of the Trade Registry Office of the Court of Luxemburg which states that the Dowal Corporation has never been registered. At least in Luxemburg, the Dowal Corporation does not exist. But it is not enough. The Radical member of Parliament produces the papers relating to a a money order of 100 Belgian Franks, which he sent to account n. 50482 of the Paribas Bank in Luxemburg, the bank to which the Banca Commerciale Italiana had sent the 23 million destined to the Dowal Corporation. He then produces a letter sent to him by the Paribas bank; the latter, returning him the money, states that this account number was not opened under the name of Dowal Corporation. Therefore, no one at the Ministry for Foreign Trade had bothered to check the identity of the payee of the sum of 30 billion, or to verify the existence of the Dowal Corporation in Luxemburg.

As far as Mr. Merhej al Talal is concerned, Cicciomessere produces the report of the questioning of Colonel Giovannone, carried out by Judge Palermo, in which Giovannone, responsible for the intelligence service and specialized in Middle East affairs, states that Merhej al Talal is a well-known weapon and drug trafficker.

The brilliant career of President Melito

On his part, Franchi, of the Italian Social Movement, gives the Commission a letter in which a certain Franco Bongia complains about the non-payment of a brokerage due to him for a supposed intervention aimed at facilitating the payment of the bribes to Merhej for the Iraq affair. Bongia would have convinced Merhej to pay 15% of his share to former department President of the State Council Pasquale Melito, for his "good offices" with the governmental authorities. In that same letter he states that Melito later on informed him that the whole affair would have come to nothing, because Merhej had successfully discussed the affair directly with Spadolini's Secretariat. Obviously Bongia refuses to believe this version of the facts and claims his share of money. Questioned by the Commission, Bongia appears vague and fundamentally reticent. Only at the end of the interrogatory does he provide an explanation for the reasons of his strange behaviour. When asked why he gave up his share, he answers: "I regret, but I w

as afraid"..."It is extremely easy to kill someone out here". From that moment on, he refuses to speak.

From the scarce enquiries carried out by the investigative commission, there is one thing that captures the attention: the brilliant and rapid career of Pasquale Melito, who, from Division President of the State Council becomes, in the course of years, first adviser of various aeronautic companies, then insurance broker and finally president of a holding company, Memo services, the most important of six companies operating in the field of insurance, engineering and informatics, the total sales of which amount to 100 billion. For a long period, Melito is assisted in his activities by a precious collaborator, former general of the intelligence service, Minerva.

Melito's luck seems to begin when he meets and becomes acquainted with precisely Merhej al Talal. Melito states that he met Merhej while he was adviser for Aeritalia in 1981. But his version is contradicted by the managers of this company, who, questioned by the Commission, state that the first contacts with Merhej occurred in 1982. Does this mean that in 1981 Melito met this Syrian trafficker for personal purposes, possibly introduced to him by Bongia?

From Auchi to Pazienza

As far as the Dowal Corporation is concerned, the investigations of the Commission confirm that "this company is not registered at the Public Trade Registry of the Grand Duchy of Luxemburg", and that at the address stamped on its headed paper, 11 Boulevard Prince Henry, the above mentioned company is unknown". Instead, Dowal is a Panama based company, run by three Luxemburg citizens, and the address of the company is; 11, Boulevard Prince Royal. They are three managers of the Charles Montbrun trust company, whose offices are located precisely in that street. According to a document it seems that Nadmi Auchi was appointed attorney of the Dowal Corporation by the three managers; Auchi, on his part, gives the same address: 11, Boulevard P. Henry. The circle tightens up.

But there are other interesting coincidences that the parliamentary commission for accusation proceedings refuses to unveil. The Dowal Corporation is connected first of all to the Montbrun trust company, passes through the Figed A.S. company, to reach the office of Nico Schaeffer, lawyer. But the commission does not realize that, together with Schaeffer and a representative of the Paribas bank, Auchi is the manager of the "Banque Continentale du Luxembourg". The correspondence of companies continues, under other names: Matza S.A.; Brosa S.A.; Cargolux Airlines International S.A.; Burglux A.G.H.

There is a bundle of names, but everyone appear to be founders or partners of the "Amitiés Arabes/Luxembourg" association, a non profit- making organization.

The last rings of the chain are represented by two companies, the Sices Luxembourg S.A., the agent for Luxemburg of an Italian company which operates only in the field of exports toward certain country of the Middle East, and the Se Debra S.A.

In the board of directors of the latter company, together with Auchi's partner, Nico Schaeffer, there is a "Mr. Francesco Pazienza, physician, resident in Geneva". At this stage we start to sense the presence of the P2 (3) and of the intelligence service.

In the 12 months during which the Commission for accusation proceedings handled the affair, not one action has been carried out to identify and clear this chain of connections, to discover the real payee or payees of the bribe. The Commission has even refused to summon Merhej al Talal and Auchi, the official protagonists of the affair, to try to give an answer, even a partial one, to the too many mysteries.

The convincing letter of Spadolini to the other parties

But the final action to bury the "affair" is represented by the meeting of the Council of ministers, held before the reply of the government to the interrogations on the Italian involvement in the "Irangate" scandal of the 21st of November 1986.

The interrogations concerned both the Italian exports toward Iran and those toward Iraq. But the under-secretary of the Presidency of the Council, Amato, avoids making even the slightest mention to Iraq in Parliament. The reconstruction of the events that have lead to this behaviour on the part of the government is easily made. Spadolini, with his letter of 7 November to "La Repubblica", already mentioned above, in reply to the attacks that were being addressed against him, expresses an extremely clear warning to his government allies: if it is true that in his office of Prime Minister he authorized the payment of the enormous bribe, it is equally true that the Ministers for foreign trade, for industry, defence, state shares and trade shared the responsibility of that decision with him. It was therefore not an individual but a collective decision, Spadolini repeats. During the meeting of the Council, held before the reply of the government on the Irangate scandal, it is clear that Spadolini's signal has been

fully received: the decision is to maintain complete silence as regards Iraq, also thanks to big fuss that is going on on Iran.

What were Spadolini's good reasons?

When Parliament will meet on the 29th of January for an ordinary session, will someone be able to break down the wall of complicity that exists around this state bribe? Parliament will have to answer just one question: What were the good reasons that induced Spadolini to overcome all the good reasons that advised two Prime Ministers to deny the authorization for the payment of the bribe?

Translator's noted

(1) Cantieri Navali Riuniti: Italian shipyard

(2) "La Repubblica": Italian daily newspaper

(3) P2: a Masonic lodge involved in criminal and subversive activities, headed by Licio Gelli