Iraq loan inquiry urged

ATLANTA (Reuter) - A judge has urged an independent investigation of a scandal involving dollars 5bn (pounds 2.9bn) in loans to Iraq before the Gulf war, saying that the US government was trying to limit criticism of a 'failed foreign policy'.

In an order obtained by Reuters, the federal judge, Marvin Shoob, was strongly critical of the government's investigation and said Washington was trying to shield Italian officials from being implicated in the Iraqi loan scandal.

He also concluded that executives of the Italian state-owned Banca Nazionale del Lavoro approved huge loans to Iraq made by their Atlanta branch from 1985-1989 despite US prosecutors' claims that the bank was a 'victim'.