Lawyer Charges Cover-Up in Italian Bank Loan Case : Hearing: He says his client, former Atlanta branch manager, is a victim of a plot by the Administration to conceal extent of its aid to Iraq.

The lawyer for the former manager of an Italian bank branch here charged Monday that his client is the victim of a politically motivated plot by the Bush Administration to conceal the extent of its pre-Gulf War assistance to Iraq.

“This case, as it has developed, is the mother of all cover-ups,” argued lawyer Bobby Lee Cook.

Cook’s accusation came on the opening day of a sentencing hearing for his client, Christopher P. Drogoul, 43, the former manager of the Atlanta branch of Italy’s Banca Nazionale del Lavoro.

Drogoul has pleaded guilty to conspiracy, money laundering and other charges in connection with $5 billion in illicit loans to Iraq. Prosecutors now concede some of the money was used to build Baghdad’s military machine. But they say Drogoul was a lone wolf who masterminded the scheme without the knowledge of his superiors.

Cook, however, sought to cast the case in far larger terms. He said Drogoul’s lending activity was approved by his superiors at the bank with the knowledge of unnamed U.S. officials to further the American tilt toward Iraq in the late 1980s.

His voice often rising as he turned to face the six prosecutors in the courtroom, Cook accused the Justice Department of obstructing congressmen who sought an independent counsel to examine the case. He said the efforts to keep a lid on the case ran to the highest levels of the White House and the State Department.

Describing U.S. relations with Iraq in his flamboyant 90-minute opening statement, Cook said: “We had a common law marriage with ‘em. It was a love affair.”

It was a day on which the contrast in courtroom styles was as sharp as the differing views of the case.

Government prosecutors, in a numbingly methodical presentation, described Drogoul as nothing more than a common criminal whose unauthorized loans to Iraq and other businesses were made to line his own pockets with $4.25 million in bribes.

“What motivated Chris Drogoul?” Gerrilyn G. Brill, the acting U.S. attorney, asked in her opening statement. “As far as we can tell, old-fashioned greed.”

Brill said the government’s investigation had found no evidence that higher-ups at BNL or any U.S. officials were aware of the loans. She said even Drogoul has maintained to the government and his own lawyers that no one outside the branch knew about the scheme.

But in Washington, Rep. Henry B. Gonzalez (D-Tex.) went on the floor of the House and described a CIA document in which he said the intelligence agency had concluded in July, 1991, that BNL officials in Rome were aware of the activities in the Atlanta branch.

Gonzalez said the CIA informed him that Iraqi officials had sought approval for the Atlanta loans from BNL officials in Rome. He quoted the CIA as saying: “BNL agreed to this request and the loans were then signed by bank officers in Rome.”

The CIA assessment was the opposite of the position taken by prosecutors here. Throughout the afternoon, assistant U.S. Atty. Gale McKenzie led Agriculture Department investigator Arthur J. Wade through a laborious description of the schemes employed by Drogoul to conceal the billions in loans from BNL and federal auditors and his superiors in the bank.

Using elaborate multicolored charts, Wade described an unending series of fake documents and bewildering financial manipulations used by Drogoul to conceal his lending activity. Often, said Wade, Drogoul used BNL’s own money to pay off bad loans that he had secretly made to cronies and Iraq.

Even after the scheme was discovered in an FBI raid on Aug. 4, 1989, Drogoul continued to work with top Iraqi government officials to hide the nature of the transactions and keep BNL money flowing to Baghdad.

The sentencing hearing is expected to last all week. The government has withdrawn its earlier pledge to seek a lighter sentence for Drogoul, claiming that he has not provided information to help prosecute anyone else and that he broke off debriefing by government agents three weeks ago when Cook entered the case.

Times staff writer Jim Mann, in Washington, contributed to this story.