The Banca Nazionale del Lavoro is closing its Atlanta branch nearly. five years after federal investigators raided that office to uncover one of banking's biggest scandals.

A spokesman for the bank in New York confirmed that the Atlanta branch will be closed by the end of the month, with its few remaining assets transferred to New York.

Two of the eight employees will be transferred to other Layoro offices in the U.S. and the rest will be laid off, the official said.

Meanwhile, the Justice Department appears to have reached the end of its probe into billions of unauthorized loans to Iraq that Lavoro's Atlanta branch made in the late 1980s.

Justice Department spokesman John Russell said the agency has completed its final report. The findings are being reviewed internally at the Justice Department before their release in the next month or two.

A Plea Bargain

Federal prosecutors in Atlanta subsequently reduced the original 347-count indictment against former Lavoro branch manager Christopher P. Drogoul to three narrowly drawn charges.

Mr. Drogoul pleaded guilty to the charges in December and was sentenced to 37 months in jail. He is expected to serve less than a year.

Lavoro's Atlanta branch had been a low-profile trade finance operation until the FBI raid on Aug. 4, 1989.

When Mr. Drogoul's "unauthorized" Iraqi loans were officially put on the books in 1990, total assets of the Atlanta agency ballooned 20-fold to $2.2 billion, making it the sixth-largest bank in Georgia at the time.

Mr. Drogoul and most of the branch officers were dismissed in the wake of the investigation. The New York-based Lavoro official admitted Friday that the bank's remaining employees in Atlanta have done little for the past five years except "cooperate with the federal authorities investigating the fraud."

The closing of Lavoro's Atlanta office is part of a broader restructuring program the bank announced in April for its North American operations.

The Miami office has also been closed, and offices in Chicago and Los Angeles have been downgraded to representative status, which means they can originate but not book loans.

The official said Lavoro, which has $65.5 billion in worldwide assets, will now concentrate U.S. business in its New York headquarters.

However, the bank's Atlanta nightmare is not quite over. Lavoro still has a suit pending against the Agriculture Department to collect on $350 million in grain shipments made to Iraq in the late 1980s.

The Lavoro-financed shipments had been guaranteed by the U.S. government, which then refused to pay up after the Atlanta scandal broke.

In May, Lavoro lost another scandal-related suit in Atlanta. The bank had sued Lloyd's of London to collect on a $5 million insurance policy covering losses due to dishonesty among its Atlanta branch employees.

The judge in the case ruled that the policy was voided by evidence that Lavoro officials had been aware of problems in Atlanta before August 1989.

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