UPDATE: Malaysian Report Has Details Of Nuclear Smuggling

(Adds news in paragraph 4 that the report absolves a Malaysian company of which the prime minister's son is a majority owner, and other details)

KUALA LUMPUR (AP)--Pakistan's rogue scientist Abdul Qadeer Khan sold nuclear equipment to Iran for $3 million cash and had enriched uranium shipped to Libya for its nuclear program, police said Friday, citing the alleged financier of an international trafficking network.

Malaysian officials on Friday released a 12-page report, based on an investigation of Sri Lankan businessman Buhary Abu Syed Tahir.

It presents the first detailed insider's view of the black-market network, established by Khan, father of Pakistan's atomic bomb.

The report also absolved a Malaysian company that manufactured centrifuge parts for Libya's nuclear weapons program of having any knowledge of what it was making -or for whom.

The firm, Scomi Precision Engineering, or Scope, is majority-owned by the son of Prime Minister Abdullah Ahmad Badawi, though company officials say he doesn't have an active management role.

Tahir is married to a Malaysian and lives in this Southeast Asian nation. He has been questioned by police and kept under surveillance since a ship carrying equipment, including centrifuge parts made by Scope, was seized en route to Libya in last October.

A senior Malaysian official said on Friday that Tahir won't be arrested because he had broken no laws in Malaysia or in other countries, but that his passport could be impounded if he tries to leave.

Tahir has avoided reporters, vacating his Kuala Lumpur apartment shortly after The Associated Press tracked him down Tuesday. But officials have said he cooperated fully with investigators.

Tahir told police that Khan sold centrifuge parts to Iran for its nuclear program in the mid-1990s for $3 million in cash. Two containers of used parts were shipped aboard an Iranian merchant ship from Pakistan to Iran in 1994 or 1995. An unidentified Iranian made the payment in Dubai.

"The cash was brought in two briefcases and kept in an apartment that was used as a guesthouse by the Pakistani nuclear arms expert each time he visited Dubai," the report says. The expert is never identified in the report, but it obviously refers to Khan.

Separately, Tahir said Khan informed him that Libya received enriched uranium from Pakistan in 2001. It was flown aboard a Pakistani airliner, though Tahir said he no longer remembered which one. Centrifuge units were also flown to Libya.

The network launched a project to build a workshop in Libya to make centrifuge components, Tahir said. The machines came from Spain and Libya. The middleman was allegedly Peter Griffin, a Briton now retired in France, who headed the Dubai-based company, Gulf Technical Industries, the report said.

Tahir described "a loose network, without a rigid hierarchy, or a head or deputy head as was alleged," the report said.

A key figure was Urs Tinner, 39, a Swiss engineer and son of Friedrich Tinner, a Khan associate since the 1980s who allegedly sourced material for centrifuge components from several companies in Europe, the report said.

The younger Tinner supervised the machine work of centrifuge components made at the Scope factory in Malaysia, the report said.

Scope is a subsidiary of Scomi, an oil-and-gas firm whose biggest stakeholder is Kospadu, an investment company majority-controlled by the Malaysian prime minister's son, Kamaluddin Abdullah.

Tahir joined the board of Kospadu in December 2000, about the same time that Scomi established Scope and built a factory to manufacture parts ordered by Gulf Technical Industries, according to public documents. Tahir left the board in early 2003.

Scomi and its staff thought the parts were going to be used in the oil and gas industry in Dubai, the report said. Only Tahir and Tinner, whom he brought in to oversee the work, knew the true purpose and destination.

According to the report, Tinner kept all the working drawings personally with him.

The release of the police report comes as the international investigation into Tahir widened to Kazakhstan.

The Kazakh intelligence agency, the National Security Committee, is investigating allegations that an affiliate of a company linked to Tahir, SMB Computers, was dealing with highly enriched uranium, spokesman Kenzhebulat Beknazarov said.

SMB is a Dubai-based company established by Tahir and his brother that U.S. President George W. Bush alleged Tahir used as a front to organize the clandestine movement of parts for centrifuges.

The Malaysian report says that though Malaysia has ratified the Nuclear Non-Proliferation Treaty, it hasn't signed an additional protocol ensuring control over so-called "single-use" nuclear components.

Malaysian Foreign Minster Syed Hamid Albar insisted Friday that the parts made by Scope could have had other applications.

Syed Hamid told reporters that Malaysia was upset that Bush singled out the country in a speech last week calling for tougher controls on trafficking in nuclear equipment.

The report concluded with an appeal for the Vienna-based International Atomic Energy Authority to "start investigations" into individuals and companies from Europe.

Updated February 20, 2004 10:18 a.m.

Indian Man: Banned Parts Were For Space Program, Not Arms

NEW DELHI (AP)--An Indian businessman named in a nuclear black market case in the U.S. said Thursday that the material he sought from an Israeli trader wasn't for weapons.

The Indian businessman, Raghavendra "Ragu" Rao of Foretek Marketing in Bangalore, said he was trying to get materials by circumventing U.S. economic sanctions imposed after India's 1998 nuclear weapons tests.

"They were for the space program, which is entirely civilian in nature," Rao told The Associated Press in a phone interview from his office in the southern Indian high-tech hub.

Indian atomic energy officials asked to comment on the case said their dealings were above board.

After India and Pakistan tested nuclear weapons in May 1998, the U.S. banned business deals between U.S. suppliers and Indian laboratories working in nuclear, rocket and space research.

Documents in a court case in Washington, D.C., showed that the South Africa-based Israeli businessman Asher Karni, facing felony charges of exporting nuclear bomb triggers to Pakistan, was also dealing with Rao, trying secretly to buy material for two Indian rocket factories.

The U.S. court documents showed that Rao had written to Karni: "Be careful to avoid any reference to the customer name."

"It was only a business strategy. We weren't trying to hide the fact that it was meant for the government," Rao told the AP. "These materials weren't used for nuclear or missile guidance systems."

U.S. federal prosecutors filed Rao's communication with Karni in court as part of their attempts to persuade a judge to keep Karni behind bars before his trial. Karni has pleaded innocent.

"It was only an inquiry, as a matter of routine," Rao told the AP, answering questions about his e-mails to Karni that are now part of the court case. "Because we couldn't source it out of the USA, we were asked to source it out ... of other countries like France, Germany, or Israel."

In Bombay, Swapnesh Kumar Malhotra, the chief spokesman for India's Department of Atomic Energy, denied knowledge of Rao.

"The Department of Atomic Energy has nothing to do with such persons. This has nothing to do with us," said Malhotra. "We have never heard of such a person or company. Our deals are very much white in color."

Rao's e-mails from India ask Karni to procure three kinds of high-tech equipment and to conceal that they were meant for the two rocket labs. The U.S. restricts exports of missile-related material to the two Indian government organizations, the Liquid Propulsion Systems Center and the Vikram Sarabhai Space Center.

The prosecutors accuse Karni of using front companies and falsified documents to buy nuclear bomb triggers in the United States and ship them to Pakistan.

"We had no idea that he was dealing with Pakistan as well," Rao told the AP. "We stopped dealing with this man a long time back," around 1999.

Updated February 20, 2004 8:03 a.m.

Libya Got Enriched Uranium in '01 From Pakistan, Malaysia Police Say

KUALA LUMPUR, Malaysia -- Libya received enriched uranium from Pakistan in 2001 for use in nuclear programs, police said Friday, citing the alleged chief financier of an international trafficking network.

Buhary Syed Abu Tahir, a key operative in the alleged black-market nuclear network run by Pakistani scientist Abdul Qadeer Khan, said Dr. Khan told him that "a certain amount" of enriched uranium was flown to Libya from Pakistan on a Pakistani airliner, Malaysian police said in a report released Friday.

Mr. Tahir is in Malaysia and has been questioned by local authorities in connection with his activities on Dr. Khan's behalf in this Southeast Asian country. The police released their report into the investigation Friday.

Mr. Tahir told investigators that Dr. Khan also said a "certain number" of centrifuges -- sophisticated machines that can be used to enrich uranium for weapons and other purposes -- were flown to Libya direct from Pakistan in 2001-02.

In addition, Libya set up a workshop to produce centrifuge components that could not be supplied from outside the country, the report says. Machines for the workshop, identified as "Project Machine Shop 1001," were obtained by Peter Griffin, a Briton who once owned Dubai-based company Gulf Technical Industries, who also prepared plans for the machine shop, the report said.

Mr. Tahir told investigators that Libya contacted Dr. Khan in 1997 for help in building centrifuges.

Mr. Tahir accompanied Dr. Khan to a series of meetings with Libyan officials starting that year and lasting until 2002 and held in Istanbul, Turkey, Casablanca, Morocco and Dubai, the United Arab Emirates, the report says. The Libyan delegation was led by Mohamad Matuq Mohamad, it says.

Copyright (c) 2004 The Associated Press

Updated February 20, 2004 5:25 a.m.