| 22 Mar 2004 21:31 GMT AWSJ(3/23) How A Nuclear Ring Skirted Export Laws |
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(From THE ASIAN WALL STREET JOURNAL)
By David Crawford In Berlin and Steve Stecklow In London
One German company believed it was supplying parts for Apple iMac computers. Another firm, which prided itself on the due diligence it conducted on new customers, thought its aluminum tubes were being used in tanker trucks.
In fact, investigators believe the materials ended up being used by a Malaysian factory to build components for Libya's secret nuclear-weapons program.
Last month, the world learned that a Pakistani scientist, Abdul Qadeer Khan, had overseen a black-market nuclear network that sold parts and technology to Libya, Iran and North Korea. A look at the network's supply chain -- gleaned from documents and interviews with investigators, company officials and a key consultant to the Malaysian factory -- shows the surprising ease with which it operated.
Efforts by European regulators to tighten export laws and circulate lists of companies suspected of trading in nuclear contraband proved largely fruitless. In many cases, investigators say, middlemen simply created new companies and placed small orders with small suppliers to avoid arousing suspicion.
The black-market network also took advantage of the fact that many materials used to build nuclear bombs have much more mundane uses as well, and are perfectly legal to export. Indeed, the network's suppliers say they didn't know what the parts would be used for, and they shouldn't be held responsible if customers deceive them. "These are basic supplies that can be used for almost anything," says Konstantin Bikar, a German metals dealer whose company sold aluminum tubes to the Malaysian factory. Even employees at the Malaysian factory claim they didn't know what was being produced there, Malaysian police say.
Even seized shipments and criminal prosecutions didn't seriously disrupt the network's procurement activities. Three years ago, a British businessman who was convicted of illegally shipping tons of equipment to Dr. Khan received no jail time. His business partner, who wasn't charged in the case, redirected his activities to Malaysia, where he helped set up the nuclear-components operation.
Following a spate of nuclear-related exports to Iraq from Germany, German officials toughened the penalties for such activities in the early 1990s and tried to prosecute more companies for trade violations. Yet German customs investigators say at least a half-dozen companies in Germany apparently supplied parts to Dr. Khan's network in recent years under the impression that they were selling legal goods to legitimate enterprises. No charges have been filed and investigators say that so far, they have no evidence that any export laws were broken.
In one instance, the German-Pakistan connection began at a Christmas party. At the December 1998 gathering in Germany, Mr. Bikar, an aluminum dealer from a mountain town in western Germany, met Thorsten Heise, a German mechanical engineer living in Singapore. Both men were looking to open a metal-export company in Asia. Mr. Heise -- who referred all questions for this article to Mr. Bikar -- had moved to Singapore with his wife in 1997, according to Mr. Bikar. Mr. Heise knew Singapore business and the metals trade, so Mr. Bikar asked him to scout prospects there for launching an export operation.
By September 1999, Bikar Metal Asia Pte. Ltd. was operating, with Mr. Heise as managing director. During a visit he made to Singapore in November 2001, Mr. Bikar says Mr. Heise told him, "There is a good chance we will land a major contract." The potential customer was Scomi Precision Engineering Sdn. Bhd., a Malaysian company that builds trucks, aircraft refuelers and garbage compactors.
Mr. Bikar considered himself an expert in export-control measures, and had assisted other German companies in training their staffs. He says he did his own research on Scomi Precision on the Internet and elsewhere, and felt assured the company was reputable, especially after reading a brochure that stated it was active in manufacturing tanker trucks. That would explain why the firm needed a lot of metal, he recalls thinking.
By early 2002, Scomi Precision was placing orders with Bikar Metal Asia for metals; records show some of the orders went directly to the parent company, Bikar Metalle, in Germany. German investigators say they are reviewing, among other deals, the sale of more than a ton of aluminum tubes, valued at about 3,500 euros ($4,300), that Bikar Metalle shipped directly to Scomi Precision on July 23, 2003. Mr. Bikar says that at the time of the sale, he believed the tubes would be used for tanker-truck parts.
Meanwhile, Malaysian authorities say Bikar Metal Asia sold 300 metric tons of aluminum bars and tubes to Scomi Precision that were used to manufacture "components for certain parts of a centrifuge unit." The parts were seized in October on a ship in Italy destined for Libya, sparking the exposure of the nuclear network.
Centrifuges are used to increase the concentration of uranium-235, a uranium atom that can produce nuclear energy for weapons or peaceful uses. Interconnected metal cylinders filled with uranium gas are rotated rapidly to separate out the uranium-235.
Mr. Bikar says he doesn't know how many deliveries his companies made to Scomi Precision, saying only, "It was a lot." He says that he and Mr. Heise did nothing wrong, and that he has voluntarily turned over all of the sales records to customs investigators in Cologne.
An official at Scomi Precision says the company has no comment.
Malaysian authorities say the aluminum products shipped to Scomi Precision were not controlled items. An official with the United Nation's International Atomic Energy Agency in Vienna, which assists enforcement agencies in preventing the shipping of nuclear contraband, says the aluminum parts are used for so many legitimate purposes that their sale wouldn't have raised red flags. Aluminum tubes, for example, are used in bicycles, while some window frames are made of aluminum bars, says Mr. Bikar.
Mr. Bikar says one of Bikar Metal Asia's contacts at Scomi Precision was a Swiss engineer, Urs Tinner. A Malaysian police report on the Pakistan nuclear ring says the 38-year-old Mr. Tinner served between April 2002 and October 2003 as a full-time technical consultant to Scomi Precision and was responsible for importing and setting up machinery that was used to make nuclear components.
In a lengthy telephone interview, Mr. Tinner said he didn't know the components the Malaysian factory was producing were intended for Libya's nuclear-weapons program. "I had no idea what was going on. The Malaysian police should have asked to talk to me," he said. "If I had been working in the final production, where one could see the final product, then I would be guilty. But I didn't know what we were making."
Mr. Tinner says he wasn't told what the parts were going to be used for, or the identity of the buyer. Mr. Tinner says he never questioned any of this because he assumed the buyer had insisted on secrecy to prevent counterfeiting.
Mr. Tinner says he went to Malaysia in 2001 at the request of Buhary Seyed Abu Tahir, a 44-year-old Sri Lankan businessman he knew in Dubai. U.S. President George W. Bush recently described Mr. Tahir as the nuclear network's "chief financial officer and money launderer." Malaysian police say Mr. Tahir told them he helped Dr. Khan, the Pakistani scientist, ship nuclear components to Iran and Libya. Mr. Tahir couldn't be reached for comment.
Mr. Tinner says he knew Mr. Tahir only as the manager of SMB Group, a well-known Dubai computer-services company. Mr. Tinner says his assignment in Malaysia was to create a new business plan for Scomi Precision, which eventually hired him as a consultant. "I arranged everything," he says. "I found a business location, set up the workshop and oversaw production."
Mr. Tinner says he contacted Bikar Metal Asia because he needed better-quality aluminum than he could get from Malaysian companies. He adds that neither he nor Mr. Bikar could have known the aluminium would be used for nuclear components. "Bikar Metal is a very well-run company that takes export control extremely seriously. That is one reason why I selected them," Mr. Tinner says.
Mr. Tinner doesn't deny that when he left Scomi Precision last October, he took all of his computer records, including technical drawings. The Malaysian police report says, "This gave the impression that Urs Tinner did not wish to leave any trace of his presence there." Mr. Tinner says, "They are my personal property. It is nobody else's business."
Mr. Bikar's company isn't the only German firm facing scrutiny. German customs investigators say they are looking into sales other German companies made to Scomi Precision, Bikar Metal Asia and Gulf Technical Industries, a Dubai-based steel and engine-parts trading firm that Malaysian authorities have linked to the nuclear network. (Gulf Technical's manager, a British businessman named Peter Griffin, denies the allegation.) The German sales include three small shipments of specialty steel rods by Dorrenberg Edelstahl GmbH to Bikar Metal Asia between February and May 2002.
In a written response to questions about those sales, Gerd Bohner, a Dorrenberg Edelstahl director, says, "According to the customer's statements, the material was to be used for a swivel joint for the new Apple iMac's computer arm." Newer Apple iMacs have a metal arm that supports a flat-screen computer monitor; Mr. Bohner says the company at one point even sent drawings of the part.
"As a rule, we carefully examine the German export-control regulations for each purchase order," Mr. Bohner wrote. Since there are no restrictions on shipments to Singapore, and the use of the parts seemed "obvious," he says his company saw no reason not to make the sale.
Mr. Bikar says he can't explain why Bikar Metal Asia would request parts for an iMac, and notes his company doesn't supply computer parts. An Apple spokeswoman says the company doesn't discuss its supplier arrangements.
(MORE) Dow Jones Newswires
March 22, 2004 16:31 ET (21:31 GMT)
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| 22 Mar 2004 21:31 GMT AWSJ(3/23) How A Nuclear Ring Skirted Export Laws -2- |
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In February 2003, Urs Tinner contacted another German company, BGH Edelstahl Siegen GmbH, and requested prices for nearly five tons of steel rods, according to Joachim Schreiber, head of export sales. Mr. Schreiber says he checked an official European Union list of suspicious customers and sensitive technology before he approved the 12,361 euro sale. "Neither the customer nor the goods were listed, so we could make the sale," he says.
The International Atomic Energy Agency official confirms that the materials aren't considered sensitive items and can be sold without restriction. Mr. Tinner says the steel rods were for a project unrelated to the shipment that was sent to Libya, but declined to elaborate.
German investigators say they also are reviewing sales of industrial-quality metal cutters to Gulf Technical Industries in Dubai by Dietrich Karnasch Sagen, a tool-supply company, in 2002 and 2003. The tools are common in machine shops. The company's owner, Dietrich Karnasch, says he would have refused to sell the tools had he known they could end up being used to make nuclear components, as investigators now suspect.
Meanwhile, as investigators look into the buyers' side of the nuclear ring, a lot of scrutiny has fallen on Mr. Tahir. The Malaysian police report says Mr. Tahir first met Dr. Khan in the mid-1980s and sold him air-conditioning equipment for his research laboratory in Pakistan. According to the report, Mr. Tahir soon came to know various middlemen who were involved in helping the scientist acquire uranium-centrifuge components, mostly from European suppliers.
The report says Mr. Tahir told police that at Dr. Khan's request he shipped to Iran used centrifuge units about 10 years ago. According to the report, Mr. Tahir said he attended a meeting in Istanbul in 1997 with Dr. Khan and two Libyan officials who "asked the arms expert to supply centrifuge units for Libya's nuclear program." Mr. Tahir said that about two or three years ago, Dr. Khan admitted supplying Libya with enriched-uranium and centrifuge units, the report says.
Mr. Tahir, managing director and co-owner of SMB Group in Dubai, got involved with Scomi Precision through a complex set of connections. In June 1998, Mr. Tahir married a Malaysian woman at a gala reception in Kuala Lumpur attended by Dr. Khan. According to Malaysian corporate filings, in 2000 the woman bought a minority stake in a private company called Kaspadu Sdn. Bhd. -- controlled by the son of Malaysia's prime minister -- and Mr. Tahir joined as a director. Around that time, Kaspadu acquired a controlling interest in Scomi Group, which in 2001 took over a company that became Scomi Precision. Mr. Tahir then recruited Mr. Tinner to work there. (Mr. Tahir's wife sold her equity interest in Kaspadu in January; Mr. Tahir left Kaspadu's board last year.)
Mr. Tahir wasn't an unknown player in Dr. Khan's nuclear network. As was first reported recently by the National Security News Service in Washington, in August 2001 Mr. Tahir was a central figure in testimony at the London trial of a British businessman charged with illegally exporting nuclear components to Pakistan.
The businessman, Abu Bakr Siddiqui, was accused of shipping electronic measuring devices, a five-ton crane, a 12-ton heat furnace and a quantity of aluminum bars to Dr. Khan via his network between 1995 and 1999. The equipment was shipped by two British-registered companies on which Mr. Siddiqui served as a director, including SMB Europe Ltd., described in corporate filings as a computer-services firm. Set up in 1994, its largest shareholder was Mr. Tahir, who also managed SMB Group in Dubai.
Mr. Siddiqui, whose father was a friend of Dr. Khan's, was arrested in 1999 after British customs agents seized a shipment of aviation-grade aluminum bars, destined for Dubai, that could have been used for centrifuges and missiles.
Mr. Tahir wasn't charged or present at Mr. Siddiqui's trial, because he was outside British jurisdiction, according to a person familiar with the case. "Customs wanted to arrest" Mr. Tahir, says the individual. At the trial, Mr. Tahir was described in testimony as Dr. Khan's middleman and procurement agent.
Mr. Siddiqui was convicted of three counts of export violations. A judge gave him a 12-month suspended sentence and ordered him to pay court costs.
Mr. Siddiqui didn't return calls seeking comment. A man at the London accounting firm where he works, who identified himself as Mr. Siddiqui's uncle, said, "It's something that's behind us, and we don't want to talk about it again."
A spokeswoman for Britain's Customs & Excise department, which brought the case against Mr. Siddiqui, declined to comment on why Mr. Tahir wasn't pursued further. The department said it is "investigating allegations relating to the supply of components for nuclear programs, including related activities of British citizens. Our inquiries are continuing and it would be inappropriate to comment further."
Meanwhile, Malaysian officials say they can't charge Mr. Tahir because he hasn't broken any Malaysian laws.
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Leslie Lopez in Kuala Lumpur and Simeon Kerr in Dubai contributed to this article.
(END) Dow Jones Newswires
March 22, 2004 16:31 ET (21:31 GMT)
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