Terrorists May Have Used East German Loan

WASHINGTON —  Terrorists linked to a bombing that killed a U.S. Marine got part of a $600-million loan made to East Germany with the help of an American bank, according to a former National Security Council staff member.

Norman A. Bailey, senior director of national security planning from 1981 to 1983, made his allegations during Thursday’s taping of “Follow the Money,” a Public Broadcasting System program to be broadcast July 12.

He said the money from the 1985 loan was dispersed to front companies and tax havens around the world.

“It was then concentrated again in Libya and was sent from Libya to various accounts, which were controlled by terrorist organizations, and was then used by those terrorist organizations in their activities,” Bailey said.

The official Libyan news agency, JANA, denied the story.

“Such claims are the latest inventions of the machine of misinformation and lies,” JANA said.

The bombing that killed the Marine occurred on April 5, 1986, in a West Berlin discotheque. It also killed a Turkish woman and wounded 204 other people. Nine days later, the United States, blaming the Tripoli regime, sent planes to bomb Libya.

The loan, Bailey said, was traced through the National Security Agency, a super-secret group at Ft. Meade, Md., that listens in on international communications.

Refuses Direct Comment

Lt. Gen. William E. Odom, who directed that agency from 1985 to 1988, said on the PBS program that he could not comment directly.

“I will say that such flows would not be abnormal for the East Bloc’s way of supporting Third World activities,” Odom said.

White House spokesman Roman Papadiuk said he had no information to substantiate Bailey’s statement, and the State Department said it had “no knowledge” of such a loan.

Tom Lindeman, a spokesman for the First National Bank of Chicago, said a $600-million loan to East Germany was organized in 1985 with the International Bank of Japan. About 50 banks from various nations were involved, he said.

Alan Delp, the Chicago bank’s senior vice president in charge of international banking, said he would be very surprised if the money went to Libya.

“It would be very foolish on the part of the East Germans,” he said.

Helmut Krausser, a representative of the bank that received the money, East Germany’s Aussenhandelsbank (Foreign Trade Bank), said on the PBS program that he doubts that Libya received that kind of support.