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SPIEGEL ONLINE

06/17/2008 06:48 PM

Trouble in Tackling Khan Network

Intelligence Agencies Undermine Nuclear Smuggling Trial

By Juergen Dahlkamp, John Goetz and Holger Stark

An engineer is on trial in Germany for allegedly attempting to help Libya develop a nuclear bomb. But the network the man was allegedly part of was under surveillance by intelligency agencies, with the CIA getting involved early on. The Swiss government has even gone so far as to eliminate evidence by secretly shredding thousands of documents.

The story should really begin in Stuttgart, the southern Germany city where the case has now been on trial for the past two weeks, where defendant Gotthard Lerch, 65, can be seen on Thursdays and Fridays in Courtroom 18, and where an international smuggling ring, which sought to sell the makings of a nuclear bomb to Libya between 1997 and 2003, is acquiring a face. It's the wrong face if you go by Lerch's defense lawyers, but the right one, according to the federal prosecutors. The face of the defendant, at any rate, is that of an elegant older man with grey hair and an occasional smirk. He stands accused of having been part of a ring of which US President George W. Bush once said he would capture and eliminate, "each and every one."

But as large as Courtroom 18 is, it is unlikely the whole truth will ever be told here. What role, for example, did the intelligence services play after they managed to infiltrate the nuclear weapons mafia? It is possible to reconstruct what actually happened, but not in this court. The facts, twisted and concealed in other countries -- for reasons of state security -- are unlikely to be cleared up in Stuttgart. And in Courtroom 18, no one is likely to discover the exact content of a group of files found in the possession of a Swiss co-defendant. In November, the Swiss government quietly decided to shred 30,000 documents. They claim the decision was made to preserve world peace, not because they had anything to hide.

It is because of this lack of evidence that the truth will likely elude the participants in the Lerch case in the coming weeks, while Lerch himself will probably walk away a free man. The real story begins in the southwestern German city of Karlsruhe, on a cold winter day in late December 2004.

The smuggling ring had been cracked more than a year earlier, and a witness was being heard by the investigating judge on Germany's Federal Court of Justice. The witness, who had come all the way from Malaysia, was a foreman in a factory that had supplied parts for a plant in which Libyan dictator Moammar Gadhafi had planned to enrich uranium. The proceedings began with the clerk of the court recording the personal details of the participants, but then Lerch's defense attorney, Gottfried Reims, pointed out that there was one man in the room who wasn't on the list.

According to a source familiar with the case, Reims wanted to know the identity of the Malaysian man standing next to the foreman. The witness's Malaysian attorney, he was told. Oh, but that's unacceptable, Lerch's attorney insisted, because a witness's attorney must be licensed to practice law in a German court. Besides, he added, who is to say that the man isn't a Malaysian intelligence agent? As if someone would actually admit to being an agent, even if it were true, the judge snapped. But Reims, undeterred, asked the man point-blank: "Are you with the intelligence agency?" The mysterious Malaysian answered, proudly: "Yes."

A foreign intelligence agent appearing incognito at a witness hearing in one of Germany's highest courts -- now that says more about the cause than the case being made in Stuttgart. Something that would be unthinkable in any other trial is par for the course here: The intelligence agencies seem to have their fingers in every pie, raising the same dilemma that forced a court in the southwestern German city of Mannheim to throw out the first case against Lerch in 2006. In those proceedings, the investigators repeatedly withheld documents, claiming reasons of national security, while in fact the real reason had more to do with the paranoia of intelligence agencies.

The current case, in Stuttgart, is also groaning under a discrepancy that couldn't be greater. On the one hand, you have the constitutional state with its criminal code, and the other you have the American and British intelligence agencies, which have only one objective in a matter like this: a success.

Pakistani nuclear scientist Abdul Qadeer Khan developed this black market of horror. In the 1970s, Khan stole plans for uranium enrichment from Urenco, a company headquartered in the Dutch city of Almelo, and used them to elevate Pakistan to the status of a nuclear power and turn himself into a national hero. But Khan wanted more. He wanted to see others -- Iran, Libya, any Islamic "rogue nation" with the necessary cash -- get their hands on the bomb, a tool that could be used both as a deterrent and to instill fear in their enemies. In the mid-1990s, Khan provided the government in Tehran with the construction plans for a modern centrifuge system. He even did business with the North Korean regime in Pyongyang. This black market, organized with what Mohammed ElBaradei, the head of the International Atomic Energy Agency (IAEA), calls "fantastic cleverness," flourished for about 20 years.

Given the complexity of a technology in which thousands of perfectly synchronized centrifuges are needed to constantly enrich uranium to an ever-higher level, drawings alone were not enough to guarantee his customers a bomb. To overcome this hurdle, Khan offered a more comprehensive service: the delivery of a complete system with training included.

Khan assembled a team of old confidants and assigned a specific task to each of them so that Gadhafi's components could be produced around the world. At the top of the hierarchy was a confidant of Khan's, Sri Lankan businessman Buhary Seyed Abu Tahir, who acted as a business manager of sorts, responsible for payments and contracts. He also appointed several division managers, who may not even have known of each other's existence. They were comprised of the Swiss Tinner family of engineers, including Friedrich Tinner and his sons Urs and Marco, who were apparently responsible for centrifuge parts; Briton Peter Griffin, a specialist in the procurement of tool-making machines; and Lerch, whose job, as the prosecution claims, was to obtain the pipes that connect the centrifuges. Lerch's source for the pipes was Gerhard Wisser, a German national living in South Africa, with whom he had been doing business for decades.

The names on the roster of the global plot included Khan, Tahir, Tinner, Griffin, Lerch and Wisser. The only problem was that not everyone plotted on the same side. The Tinner family, in particular, played both sides, collecting payments from Khan and from the CIA.

The first piece of solid evidence that the Tinners, a family based in the Swiss town of Haag, had switched sides and were keeping the Americans apprised of their steps, stems from early 2003. In December 2002, Friedrich Tinner, the father, contacted the IAEA and then the United States Embassy in Vienna, telling them he wanted to speak with a nuclear scientist. Tinner, a specialist in vacuum technology suspected of engaging in unscrupulous business dealings for decades, waited a few weeks until he was eventually contacted by a man named Jim Kinsman, who claimed to be the representative of an American specialized company in Washington. This was correct, in a sense, because Kinsman's employer is a specialized business of sorts: the CIA. Given his association with the CIA, it comes as little surprise that Kinsman didn't even have a US Social Security number until 2003. Neither did his colleague, a man named Sean Mahaffey, who introduced himself as the company's "general counsel."

According to the Swiss government, the seized Tinner files, which have since been shredded in Switzerland, contained plans for building nuclear weapons, gas centrifuges and guided weapons systems as well as a contract Tinner's son Marco had signed with the alleged US company. Under the contract, the Tinners agreed to supply the Washington-based company with "technical know-how" in the "field of vacuum technology and valve design, as well as design specifications for vacuum plants." In other words, everything a Libyan dictator would need to fuel his megalomaniacal ambitions. The Americans showed a willingness to pay a respectable sum for the information the small Swiss family owned company planned to deliver through the five-year contract. The first payments came in 2003. At first the Tinners' bills were for amounts as modest as 2,000 Swiss francs ($1,917), but by May 2004, Marco Tinner was sending the family's new friends in Washington a bill for $2 million (€1.3 million). Could the money have been a reward for information that enabled the CIA to crack the ring in 2003?

Peering Inside the Network of Doom

In later questioning, Friedrich Tinner admitted that there had been secret "meetings with US authorities." The first of those meetings, Switzerland's Sonntagszeitung reports, took place in a hotel in Innsbruck, Austria. Urs Tinner also admitted to investigators he had worked for the CIA, although he declined to disclose any details.

Perhaps it was because his joint venture with the CIA began before 2003, when investigators cracked the ring by stopping the German freighter "BBC China" in the Italian port of Taranto, which had been carrying a load of cargo bound for Libya. The raid spelled the end of Gadhafi's dreams of hegemony.

According to American author Douglas Frantz, the CIA assigned an agent called "Mad Dog," one of its best, to begin trailing Urs Tinner in 2000. After he had learned from French intelligence that the young Tinner was being investigated in France, the CIA agent followed the man to Dubai, bought him a few drinks at a hotel bar and suggested the CIA could help him solve his French problem. That, apparently, prompted Urs Tinner to switch sides.

Frantz, quoting a CIA officer, says: "Tinner enabled us to see what the network was doing." The Swiss national apparently wasn't a classic agent at first, but he did show a willingness to cooperate, enabling the CIA agents to confirm information they had received from another informant inside the network. There are many indications that the CIA uncovered the Libya project early on. It wasn't until April 2002, long after his meeting with "Mad Dog," that Urs Tinner traveled to Malaysia to have parts manufactured there for Gadhafi's bomb factory. Later on George Tenet, the head of the CIA at the time, even gloated about his agency's surveillance of the group: "We were everywhere these people were."

Robert Einhorn, a former senior advisor at the State Department, recalls that in 2000 he and other officials were discussing "whether we should put a stop to it right way or observe and gain insights into the network."

The Americans chose the riskier strategy and allowed it to continue for years, until they finally intercepted the delivery with the greatest fanfare possible -- just as it was headed for Gadhafi. The strategy produced the desired effect. Caught red-handed the dictator, an outlaw until then, suddenly put an end to his eccentric, unilateralist behavior, especially his support for terrorists. Since then Iran, which also benefited from Khan's self-enrichment through uranium enrichment, has come under heightened pressure to abandon its centrifuge program.

Though no one knows yet how high the price of waiting really was, the Americans already have some idea. In autumn 2003, shortly before the raid on the BBC China ship, Tinner allegedly flew to Dubai to copy Khan's top-secret documents onto several CDs, including the design of a Chinese nuclear warhead for a carrier rocket. The Dubai dossier represents the core of the material shredded in Switzerland. It was something of a manual of global nuclear expertise, information that, though not entirely current, was nonetheless sufficient to cause a nuclear catastrophe. Since then, the "million-dollar question" for observers like Washington nuclear expert David Albright is this: Who else is still in possession of the plans?

Switzerland has a more pressing problem at the moment. The country is in a quandary over its identity as a constitutional state. In a hearing Urs Tinner, who has been in detention awaiting trial since 2004, claimed that the Americans had promised that they would discreetly help him in order to prevent any trial. There's a good chance they will deliver. A country that destroys documents in a pending legal case, argues Lerch's attorney Reims, can no longer guarantee the trial is in fact being conducted in accordance with the rule of law. Reims is convinced that "the Americans have now launched an all-out effort to get him out of there."

This sort of thing has to be "accepted when world peace is at stake," says Christoph Blocher, who was the Swiss justice minister reponsible for the case in November. On other fronts, the Swiss have also ranged from accommodating to subservient to the Americans. In August 2007, the Swiss government decided that no public prosecutors would be permitted to investigate the Tinners on suspicion of engaging in espionage. Additionally, not even a house visit presumed CIA agents paid on the Tinners in 2004, when the agents apparently made copies of several boxes of documents, has resulted in any consequences.

"This is unbelievable and a huge scandal," says Dick Marty, a Swiss member of parliament who served as a special investigator in the scandal involving the CIA's extraordinary rendition flights over Europe. But there will be no investigative committee in this case. And this is likely to suit a number of parties involved -- including the Swiss government, because evidence of secret CIA operations on Swiss soil has been destroyed, and the Vienna-based IAEA, because the destruction of the documents means that at least those bomb-making instructions were taken out of circulation.

The Tinners aren't the first members of the network who appear to be enjoying the protection of higher powers. Khan himself managed to come away with no punishment more serious than intermittent house arrest, and only last week he defended his actions without a trace of remorse. "I did what my country wanted from me," he said. Tahir has been similarly spared. Foreign investigators are only permitted to question him if they agree not to ask any questions about other Malaysians.

Briton Peter Griffin continues to live scot-free in southern France, even though he is described in the German case against Lerch as one of the key figures. The Mannheim District Court even guaranteed him free passage so that he could testify in the first case.

Finally, in South Africa Gerhard Wisser has saved his skin by reaching a deal with government prosecutors. He was given 18 years -- not in prison, but of nighttime house arrest in his mansion in a luxury neighborhood in Johannesburg. He provided a full confession in return.

That leaves Stuttgart defendant Lerch as more or less the only one who is not under some form of government protection. This may explain why his attorneys' defense strategies seem so old-fashioned. There is no hard evidence to tie Lerch to the Libya project, says attorney Reims, no fingerprints or signatures relating to the deal.

Federal prosecutors in Stuttgart are largely pinning their hopes on witness testimony. They can expect little from the Tinners, who aren't expected to travel to Stuttgart. Besides, their testimony in Switzerland has already been exculpatory -- they claim not to have know anything about Lerch's alleged role. Briton Griffon hasn't implicated Lerch either. Instead, the prosecution's case will rely almost entirely on witnesses -- and on Tahir, who the court can only question in Malaysia.

In a statement issued in June 2006, obtained by SPIEGEL, Tahir claims that Lerch, as a supplier, dealt with gas process technology and was paid 55 million deutsche marks at the time. Tahir also says that it was "completely clear" to the German that the plant was intended for Libya. Lerch, according to Tahir, also instructed him to transfer money to a Swiss bank account and make arrangements for shipping a lathe to South Africa. Finally, Tahir claims that Lerch also arranged for the visit of two Libyans to South Africa, where they allegedly inspected the facility.

Lerch's attorneys have refused to comment. However, they will certainly be aided by the fact that the German Federal Constitutional Court rejected a petition to seize the DM 55 million from Lerch, arguing that the Tahir was not necessarily considered a credible witness.

The confession with which Lerch's old friend Wisser reached an agreement with South African prosecutors has a different quality. A copy of the agreement obtained by SPIEGEL states that Lerch's company, AVE, ordered parts from Wisser for an uranium enrichment plant back in 1994. The shipment was apparently ready by January 1995 and was sent to Dubai. But to whom? Ironically, the recipient was a company owned by Tahir. Adding to Lerch's problems is the fact that an invoice still exists for 441,614 deutsche marks, which Wisser's company issued at the time to Lerch's company, AVE. The reference line on the invoice read "Your order."

AVE ordered more parts from Wisser in 1995, including, once again, vacuum technology used in uranium enrichment. And the destination port, yet again, was Dubai.

And then there was the Libyan deal. Wissers' version goes something like this: Lerch met him in Dubai in July 1999, where Lerch gave him his instructions. On Feb. 15, 2000, Lerch met Wisser in Zürich to give him the technical details, and later told him that Khan is the head of the project. Around the end of 2001, Lerch allegedly told Wisser that the plant was meant for Libya.

In the summer of 2003, the South African connection finally reported implementation. But during a meeting in Switzerland on Sept. 30, 2003, Lerch apparently asked Wisser to destroy everything: the system, the computer containing the plans, everything. Had he received a warning?

Lerch isn't saying anything now. He has told defense attorney Reims that he had "no point of contact" with the Libyan project. For this reason, Wisser's credibility will also be critical. But will he be willing to appear in person to testify as a witness? The National Prosecuting Authority in Pretoria has indicated that it will give serious consideration to an inquiry -- but no more than that.

Translated from the German by Christopher Sultan.

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