Iran Obtains Sensitive American Military Equipment in Pentagon Sale

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

WASHINGTON — Fighter jet parts and other sensitive American military gear seized from front companies for Iran and brokers for China have been traced in criminal cases to a surprising source: the Pentagon.

In one case, federal investigators said, contraband purchased in Defense Department surplus auctions was delivered to Iran, a country President Bush has branded part of an “axis of evil.”

In that instance, a Pakistani arms broker convicted of exporting American missile parts to Iran resumed business after his release from prison. He purchased Chinook helicopter engine parts for Iran from an American company that had bought them in a Pentagon surplus sale. Immigration and Customs Enforcement agents say those parts did make it to Iran.

Sensitive military surplus items are supposed to be demilitarized or “de-milled” — rendered useless for military purposes — or, if auctioned, sold only to buyers who promise to obey American arms embargoes, export controls, and other laws. Yet the surplus sales can operate like a supermarket for arms dealers.

“Right Item, Right Time, Right Place, Right Price, Every Time. Best Value Solutions for America’s Warfighters,” the Defense Reutilization and Marketing Service says on its Web site, calling itself “the place to obtain original U.S. Government surplus property.”

Federal investigators are increasingly anxious that Iran is within easy reach of a top priority on its shopping list: parts for the precious fleet of F-14 “Tomcat” fighter jets that America let Iran buy in the 1970s when it was an ally.

In one case, convicted middlemen for Iran bought Tomcat parts from the Defense Department’s surplus division. Customs agents confiscated them and returned them to the Pentagon, which sold them again — customs evidence tags still attached — to another buyer, a suspected broker for Iran.

“That would be evidence of a significant breakdown, in my view, in controls and processes,” said Greg Kutz, the Government Accountability Office’s head of special investigations. A Defense Department official, Fred Baillie, said his agency followed procedures.

“The fact that those individuals chose to violate the law and the fact that the customs people caught them really indicates that the process is working,” said Mr. Baillie, the Defense Logistics Agency’s executive director of distribution. “Customs is supposed to check all exports to make sure that all the appropriate certifications and licenses had been granted.”

The Pentagon recently retired its Tomcats and is shipping tens of thousands of spare parts to its surplus office — the Defense Reutilization and Marketing Service — where they could be sold in public auctions. Iran is the only other country flying F-14s.

“It stands to reason Iran will be even more aggressive in seeking F-14 parts,” said Stephen Bogni, head of Immigration and Customs Enforcement’s arms export investigations. Iran can produce only about 15% of the parts itself, he said.

The GAO, the investigative arm of Congress, found it alarmingly easy to acquire sensitive surplus. Last year, its agents bought $1.1 million worth — including rocket launchers, body armor, and surveillance antennas — by driving onto a base and posing as defense contractors.

“They helped us load our van,” Mr. Kutz said. Investigators used a fake identity to access a surplus Web site operated by a Pentagon contractor and bought still more, including a dozen microcircuits used on F-14 fighters.

The undercover buyers received phone calls from the Defense Department asking why they had no Social Security number or credit history, but they deflected the questions by presenting a phony utility bill and claiming to be an identity theft victim.

The Pentagon’s public surplus sales took in $57 million in fiscal 2005. The agency also moves extra supplies around within the government and gives surplus military gear such as weapons, armored personnel carriers, and aircraft to state and local law enforcement. Investigators have found the Pentagon’s inventory and sales controls rife with errors. They say sales are closely watched by friends and foes of America. In cases in which American military technology made its way from surplus auctions to brokers for Iran, China, and others:

• Items seized in December 2000 at a Bakersfield, Calif., warehouse that belonged to Multicore, described by U.S. prosecutors as a front company for Iran. Among the weaponry it acquired were fighter jet and missile components, including F-14 parts from Pentagon surplus sales, customs agents said. The surplus purchases were returned after two Multicore officers were sentenced to prison for weapons export violations. London-based Multicore is now out of business, but customs continues to investigate whether American companies sold it military equipment illegally.

• In 2005, customs agents came upon the same surplus F-14 parts with the evidence labels still attached while investigating a different company suspected of serving as an Iranian front. They seized the items again. They declined to provide details because the probe is still under way.

• Arif Ali Durrani, a Pakistani, was convicted last year in California in the illegal export of weapons components to the United Arab Emirates, Malaysia and Belgium in 2004 and 2005 and sentenced to just over 12 years in prison. Customs investigators say the items included Chinook helicopter engine parts for Iran that he bought from an American company that acquired them from a Pentagon surplus sale, and that those parts made it to Iran via Malaysia. Durrani is appealing his conviction.

An accomplice, former Naval intelligence officer George Budenz, pleaded guilty and was sentenced in July to a year in prison. Durrani’s prison term is his second; he was convicted in 1987 of illegally exporting American missile parts to Iran.

• State Metal Industries, a Camden, N.J., company convicted in June of violating export laws over a shipment of AIM-7 Sparrow missile guidance parts it bought from Pentagon surplus in 2003 and sold to an entity partly owned by the Chinese government. The company pleaded guilty, was fined $250,000, and placed on probation for three years. Customs and Border Protection inspectors seized the parts — nearly 200 pieces of the guidance system for the Sparrow missile system — while inspecting cargo at a New Jersey port.

“Our mistake was selling it for export,” said William Robertson, State Metal’s attorney. He said the company knew the material was going to China but didn’t know the Chinese government partially owned the buyer.

• In October, Ronald Wiseman, a longtime Pentagon surplus employee in the Middle East, pleaded guilty, and was sentenced to 18 months in prison for stealing surplus military Humvees and selling them to a customer in Saudi Arabia between 1999 and 2002. An accomplice, fellow surplus employee Gayden Woodson, will be sentenced this month.

The Humvees were equipped for combat zones and some weren’t recovered, Assistant U.S. Attorney Laura Ingersoll said.

• A California company, All Ports, shipped hundreds of containers of American military technology to China between 1994 and 1999, much of it acquired in Pentagon surplus sales, court documents show. Customs agents discovered the sales in May 1999 when All Ports tried to ship to China components for guided missiles, bombs, the B-1 bomber, and underwater mines. The company and its owners were convicted in 2000; an appeals court upheld the conviction in 2002.

Rep. Christopher Shays, a Republican of Connecticut, called the cases “a huge breakdown, an absolute, huge breakdown.”


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