Bloomberg: Iran increasingly is obtaining U.S. military equipment and technology through shipments to Malaysian middlemen that illegally circumvent trade restrictions, according to American officials and analysts. By Justin Blum
Sept. 14 (Bloomberg) — Iran increasingly is obtaining U.S. military equipment and technology through shipments to Malaysian middlemen that illegally circumvent trade restrictions, according to American officials and analysts.
The U.S. has charged, convicted or sentenced defendants in at least six cases involving Malaysia since August 2008. The shipments have included parts for bombers and items sent to firms linked to Iran’s nuclear and ballistic missile program, according to court papers. More Malaysia shipments are under investigation, according to a law enforcement official who spoke on condition of anonymity.
The shipments illustrate how difficult it is for U.S. law enforcement to keep military secrets and equipment from reaching Iran, a country the U.S. accuses of developing nuclear weapons and sponsoring terrorism. The U.S. bans most trade with Iran.
Middlemen also have operated out of the United Arab Emirates city of Dubai. Shipments through Malaysia increased after the U.A.E. cracked down on exports more than a year ago, said Steven Pelak, the principal deputy chief of the Justice Department’s counterespionage section in Washington.
“We’ve seen a lot more being now diverted through Malaysia in particular,” Pelak said in an interview. “We have seen Iranian front companies there and we’ve seen an increase there since there’s been a tightening in Dubai.”
Military goods also have been illegally shipped to China, which has been trying to obtain missile, imaging, semiconductor and submarine technology from the U.S., according to a Defense Department report this year. Espionage allegations against China are “unwarranted,” said Wang Baodong, a spokesman for the country’s embassy in Washington.
Shopping List
The Iranian government creates a shopping list of items it wants and gives it to middlemen who seek the products in the U.S. and elsewhere, said Pelak.
When one country that is home to intermediaries cracks down, the shipments move elsewhere, said David Albright, president of the Institute for Science and International Security in Washington and a former Iraqi weapons inspector.
The activity in Malaysia “poses a threat,” Albright said in an interview. “It allows Iran to improve its military capabilities, nuclear capabilities.”
In a case unsealed last year, the Justice Department alleged that electronics were illegally sent from the U.S. to Iran through Dubai and Malaysia. Some of those electronics are the same type found in roadside bombs in Iraq.
U.S. Supplier
Shipments to Malaysia have increased, Albright said, because “it’s harder to do it from Dubai. You’re trying to get a U.S. supplier to send it to a false end user.”
The U.S. broke off diplomatic relations with Iran in 1980 after militant Iranian students occupied the American embassy in Tehran in 1979.
Malaysian Prime Minister Najib Razak declined to comment, according to an aide. Afdal Hashim, a spokesman for the Malaysian embassy in Washington, didn’t respond to phone calls or an e-mail.
The U.S. companies that supply middlemen typically are closely held sole proprietorships, said Pelak.
In 2007, the U.S. brought charges against a larger company, defense contractor ITT Corp., based in White Plains, New York, for allowing the transfer to China of night-vision technology. The company agreed to pay $100 million and plead guilty to two criminal charges.
Military Items
The U.S. announced a crackdown in 2007 of illegal exports of restricted military technology and “dual-use” equipment with military and commercial applications.
The multiagency effort resulted in criminal charges against more than 145 defendants in the fiscal year that ended Sept. 30, a 32 percent increase from the year before. Nearly half of the 2008 cases involved munitions or other restricted items headed for Iran or China, according to the Justice Department.
Authorities increased enforcement after concluding other countries were taking advantage of the U.S. to develop their own militaries and compete economically, said David Szady, who retired as an assistant director of the counterintelligence division of the Federal Bureau of Investigation in 2006. The FBI trained agents to better detect illegal exports of sensitive materials, he said in an interview.
Evertop Services
In a March criminal complaint, the U.S. said Iranian national Majid Kakavand oversaw an international network that purchased thousands of military and commercial items from U.S. companies and illegally sent them to Iran via Malaysia.
Recipients included two Iranian military firms that the U.S. says are linked to Iran’s nuclear and ballistic missile programs, according to court papers.
Kakavand allegedly used a company in Malaysia called Evertop Services Sdn Bhd to purchase products for Iran from U.S. and European companies, according to court papers. Among the items were capacitors, spectrometers, resistors and airborne antennae. It’s unclear whether Evertop is still operating. The company couldn’t be located.
Kakavand concealed from the U.S. companies that the products were going to Iran, according to court papers. He was arrested in March in France. The U.S. is seeking his extradition.
The U.S. ambassador to Malaysia, James Keith, said in a February speech in Washington that Malaysia should create a strong system to control exports. A proposed law has been pending since 2004, he said.
“One reason this has become an increasingly urgent priority is trade diversion to Iran by entities who seek to exploit the Malaysian system,” Keith said, according to the prepared text of his speech. “Malaysia has more to contribute to international mechanisms to manage the flow of sensitive technology, including nuclear and missile-related equipment.”
