Western Authorities Investigate China Connection in Export of French Valves
By PETER FRITSCH and DAVID CRAWFORD
In recent weeks, the officials said, an Iranian procurement firm obtained critical valves and vacuum gauges made by a French company that until December was owned by U.S. industrial conglomerate Tyco International. The French and U.S. firms said they knew nothing of the case.
Western authorities are still struggling to understand precisely how the valves and gauges in question reached Iran. The International Atomic Energy Agency is investigating the matter, according to a Vienna-based diplomat, and Western intelligence agencies also are investigating, The Wall Street Journal has learned.
A Jan. 14 email that triggered the IAEA investigation alleged that the valves moved through an intermediary representing a Chinese company based near Shanghai.
The hardware is part of a high-stakes game of cat and mouse played out on a daily basis between Iran and Western authorities determined to frustrate Tehran's nuclear ambitions.
An investigator familiar with the IAEA probe said Iran has made about 10 attempts to acquire valves used in uranium enrichment in the last two years. "Some deliveries got through, others didn't," he said. Other officials said it isn't uncommon for manufacturers' products to land in Iran without the makers' knowledge.
Policing the flow of goods, which often involves multiple foreign transhipment ports and a constantly shifting cast of middlemen, is a notoriously difficult task, but is gaining urgency as Western governments fear Tehran is inching closer to being able to make a nuclear weapon.
The U.S. is intensifying a push for China and other members of the United Nations Security Council to agree on sanctions that could clamp down more strongly on shipments headed to Iran that might break existing bans on equipment sales.
The Obama administration is focused on a mid-April goal to agree on a proposed slate of sanctions, and Chinese president Hu Jintao is attending the White House's summit on nuclear security then. China, which just hosted Iran's top nuclear negotiatior, has been the strongest holdout among member countries who can veto U.N. sanctions.
Little is known about the Iranian firm alleged to have obtained the valves, Javedan Mehr Toos. The company couldn't be reached to comment, and Iranian officials didn't immediately respond to a request for comment.
Western officials said the firm has been working since last year to procure nuclear materials on behalf of the Kalaye Electric Company, an Iranian firm involved in centrifuge research and development that is part of the Atomic Energy Organization of Iran. The officials said JMT also has sought to acquire magnets used in centrifuges systems during uranium enrichment.
Both Kalaye and the AEO were sanctioned by the U.N. in December 2006 for alleged nuclear activities. Iran says it has the right to develop nuclear technology for peaceful purposes, including technology that could be used to build nuclear weapons.
It couldn't be learned how many valves JMT acquired or the extent to which they represent an important advance in Tehran's ultimate ability to enrich uranium, a key step in developing a nuclear weapon. Analysts who track proliferation say the JMT case exemplifies the difficulties in keeping abreast of sanctions-busting efforts.
"What we see over and over is you have a core smuggling ring in Iran where some procurement entity within the conventional military establishment needs things, and they find companies or individuals in Iran to buy these things," said David Albright, a former U.N. weapons inspector who heads Washington's Institute for Science and International Security. "Each one doesn't buy that much." Valves are a frequently sought-after component, he said.
Some of the valves obtained by JMT are used on cylinders used to transport uranium powder; others in the enrichment process. According to people familiar with the matter, the valves were produced by the French firm KD Valves-Descote, a maker of specialized hardware used primarily in the nuclear and chemical industries.
The firm, based near Lyon, was taken private in December by its French owners. It still sells its products in the U.S. under license by the Department of Energy, and in many other countries under strict export rules. Both KD Valve and Tyco said they had no knowledge of how the equipment would have reached Iran, and said they hadn't been contacted by investigators.
The IAEA and Western authorities began looking into the matter after the IAEA received the Jan. 14 email, with the subject line "For Iran Inspectors," alleging that illicit goods were being sent to Iran in a "careful and secret" way, according to a person familiar with the email.
The email named JMT and alleged the firm acquired the valves from an intermediary named Vikas Kumar Talwar representing Zheijiang Ouhai Trade Corp. of China, a subsidiary of the Wenzhou-based Jinzhou Group.
Mr. Talwar, whose nationality couldn't be learned, couldn't be located to comment. Zheijiang, which imports and exports a wide range of manufactured products from electronic cigarettes to steel pipes, didn't respond to requests to comment.
A U.S. law enforcement official said Mr. Talwar's name has come up in prior investigations of Iranian efforts to procure nuclear equipment, as has Zheijiang Ouhai. "Vikas Kumar Talwar — he's definitely a procurement agent who acts on behalf of Iranian entities," said the law enforcement official. "JMT is a known supplier to Kalaye."
Jean-Pierre Richer, president of KD Valves, said in an interview that his firm does no business with China due to the sensitive nature of the products he sells. "We have never sold to China—believe me, I wish we could," he said. Such sales would require export licenses that are difficult to obtain, he said.
Mr. Richer said he has never heard of Mr. Talwar and that KD Vales only does business with well-known customers. He said no Western authorities have contacted his firm to inquire about valve sales to Iran or China. A Tyco spokesman said the company had searched its records back to 2006 and found no record of sales to Zheijiang or Mr. Talwar.
U.S. intelligence officials declined to discuss the case. Responsibility for keeping track of companies and individuals in violation of U.S. sanctions regimes falls to the U.S. Treasury, which also acts as an informal watchdog over other international sanctions. Neither JMT, Mr. Talwar nor Zheijiang Ouhai are on the Treasury's list of companies or individuals that allegedly violate sanctions.
A Treasury spokesperson said the agency has cases involving hundreds of sanctions-busting suspects, but to comment on any pending investigation "would threaten the integrity and effectiveness of our actions."
U.S. investigators say they have seen cases of nuclear parts routed to Iran through countries like the United Arab Emirates, China, Singapore and Malaysia with relative frequency. "We probably have a dozen cases ongoing right now where we're looking into those types of allegations," said Clark Settles, a senior counter-proliferation official with Homeland Security's Immigration and Custom's Enforcement agency.
"Legitimate companies have been duped before," Mr. Settles said. "Since 2001, we've gone out to more than 18,000 companies and talked to them" about knowing who their customer really is.
Last month in Italy, police arrested seven men on charges of illegally exporting military equipment to Iran. Two of those arrested are Iranian government officials, according to a statement by the prosecutor in the case. The seven men are accused of buying sensitive goods legally in Germany and other European countries and shipping the goods to Iran via Switzerland, the U.K., Romania and the United Arab Emirates.
—Siobhan Gorman, Peter Spiegel and James T. Areddy contributed to this article
