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II 2552 CONGRESSIONAL RECORD HOUSE April 25, 1991 ble for carrying out the President’s directive calling for improved relations with Iraq. Volvo and General Motors are partners in a company called Volvo GM Heavy Truck Corp. In 1989, Volvo GM Heavy Truck proposed to build a 5,000unit-per-year heavy truck factory in Iraq. A copy of that proposal is in the record. GM and Volvo had considerable dealings with Iraq. In 1988, GM sold 5,125 Chevrolet Celebrities to Iraq. During 1989, GM secured_ financing from BNL for 10,000 Cutlass Cieras to be sold to Iraq. The BNL operation may have been shut down prior to actual disbursement of BNL moneys. BNL money paid for Volvo exports of spare parts for dump trucks, water tank trucks and tanks, and units for Volvo diesel engines to Iraq. GM frequently met with Eximbank officials to secure additional GM projects in Iraq totaling an estimated $800 million. Saddam Hussein’s son-in-law. BNL employees met with Mr. Kamel when they traveled to Iraq. Mr. Kamel is said to have been responsible for the secret Iraqi technology procurement network operating in Europe and the United States; Mr. Kamel was the head of the Ministry of Industry and Military Manufacturing in Iraq. On June 20, 1989, Volvo GM Heavy Truck Corp. wrote to the Iraqi Minister of the Ministry of Industry, Hussein Kamel, proposing the construction of a 5,000-unit-per-year heavy truck factory in Iraq. The Volvo GM letter failed to add the words “Military Manufacturing” to Mr. Kamel’s title. Two other U.S. automotive companies considered participating in the project. They were Cummings Engine Co. and Eaton Corp., Cleveland OH. In a memo describing their visit to Iraq, Volvo GM staff stated: First, the delegation meeting them was headed by a Brigadier General. Second, the ministry they met with is responsible for Industry and Armament. Third, the delegation visited a number of top secret defense operations. The Volvo GM memo goes on to state: U.S. authorities have been approached with the objective to obtain loans from the Eximbank. The different government agencies have responded very positively and appointments are made for further talks with the government including the White House. So far, no credit line is available from Eximbank. Who at the White House was contacted remains a mystery. But the White House was not alone in being sought out to support the project. Eximbank received 15 letters from Congressmen, Senators, and one Governor interested in Eximbank financing for the truck factory. Thankfully for the taxpayer, the Eximbank refused to fund the project because It did not think Iraq was creditworthy. The project provides a good illustration of the sort of pressure the Eximbank was under to do business in Iraq. EATON CORP IDENTIFIES MATRIX CHURCHILL AS IRAQI OWNED COMPANY A startling revelation appears in the Eaton Corporation portion of the Volvo GM memo. In that portion of the memo an Eaton employee states: “It is interesting to note that Matrix Churchill in the U.K. is 75 percent owned by the Iraqi Government.” Matrix Churchill, Ltd., was the prime Iraqi front company operating in the United Kingdom. Its Cleveland. OH affiliate, Matrix Churchill Corp.. was the main Iraqi front company operating in the United States. Matrix was responsible for procuring technology to be used in Iraqi weapons factories. What is amazing is that the U.S. Government did not confiscate the Cleveland operation of Matrix until September 1990 and the British did not confiscate the London operation until October 1990, both after the Iraqi invasion of Kuwait and months after Iraqi assets were supposed to be frozen. BNL was a main source of funds for Matrix Churchill and other members of the secret Iraqi technology procurement network. SCOWCROFT-EAGLEDURGER AND EXIMBANX MILITARY SALES The Legal Times article I referred to before mentions the EagleburgerScowcroft effort to get the ExportImport Bank to finance military sales. I have two points to make regarding the Eximbank financing of military sales; the first regards Iraq. I have evidence showirig that Eximbank backed the sale of military articles to Iraq. I would like to place in the RECORD several examples of Eximbank financed military sales to Iraq. In 1986, the Eximbank approved the sale of 600,000 dollars’ worth of “portable radio communications equipment” and in 1987 it approved the sale of “250 armored military truck ambulances” to Iraq. I have also included a Mack Truck sale of 200 fifth wheel trucks to Iraq that the Eximbank refused to finance because of their military applications. Mack Truck sold trucks, tractors cranes, and dumpers worth $6.4 million to Iraq with the help of BNL loans. Iraq also paid for 40 heavy duty Mack truck chassis worth over $2.5 million with BNL loans. The sad part about the Exim-backed sales to Iraq is that only a small handful of the 187 transactions were checked for military use by the Eximbank engineers familiar with dual-use technology. The vast majority of the Eximbank backed sales to Iraq were checked only by a loan officer. Nobody really knows the extent of Exirnbank-backed militarily useful ex ports to Iraq. It is imperative that the Banking Committee plug the loophole that allows Eximbank-backed exports to go to dangerous nations without being adequately checked by professional engineers. The second point I have relates to the Eagleburger-Scowcroft proposal to finance $1 billion in military sales using Eximbank. I have stated before and I will state again, Eximbank should not be used as a tool to augment declining military sales. This program should be run out of the Defense Department using their resources. Eximbank is poorly equipped to review the military implications of given sales. CONCLUSION One interesting question that remains unanswered is why United States law enforcement authorities have not arrested or charged many companies with violations of U.S. export control laws related to Iraq. Other governments, such as Germany, have announced efforts to pursue dozens of companies, many very prominent, for criminal violations of export control laws. I challenge you to name one United States company that has been indicted for violating the export control laws related to Iraq. Clearly, it was official U.S. Government policy to provide Iraq with the credit necessary to purchase enormous amounts of United States agricultural products and sophisticated United States technology. Warnings about the military uses of the technology, warnings about Iraq’s creditworthiness, and warnings about Saddam’s ruthlessness were routinely ignored. It was In this climate that the BNL flourished, and close friends of those in key positions of power facilitated and profited from this shortsighted policy. This official neglect may in large part account for BNL’s disastrous conduct. 1230 Mr. Speaker, let me conclude by saying that the worst of all is that this is just a small fragment of the huge, over 730 billion dollars’ worth, of this type of money, foreign financing or banking money in our country, that is here, that can justwith a small proportion of that, as in BNL, propel huge financial packages, for God only knows what purpose, because nobody in our Government knows, neither the Federal Reserve Board nor the State banking regulators in the States where these foreign entities charter their agencies, know just what is being done in the United States. Mr. Speaker, as chairman of the committee I have set forth the urgent need for the Congress to legislate with some priority in order to provide the American people with the sufficient assurance that their national interests and the very policies of their Government are in turn being protected, and at least being overseen. 12 JULY 4, 1992