US and Germany Tussle over Arresting Suspected Smuggler

Der Spiegel:  US investigators have been trying to get Germany to arrest and extradite a German citizen who allegedly belongs to a network smuggling US electronic components to Iran to be used in roadside bombs in Iraq and Afghanistan. But a German court is blocking the move.

The case has to do with temperature and humidity gauges as well as valves that regulate water flow — the kind of things you can pick up in any sanitation-equipment store.

But what makes it unusual is that it also has to do with a request by American law-enforcement officials for their German counterparts to search through the office of a man they have in their sights and confiscate, in particular, “electronic data, written correspondence, invoices and lists of addresses.”

What’s more, these same officials would also like the Germans to extradite the suspect — a German citizen who, for legal reasons, can only be identified as “N.” — so he can face criminal charges in the US. As far as the Americans are concerned, the ethnic Iranian businessman from the northern German city of Kiel is an enemy of the state who deserves to be put in prison for up to five years — whether he was involved with the temperature and humidity gauges or not.

The case is very explosive. Federal prosecutors in Miami want to bring N. and seven other suspects before a US court for breaking an arms embargo against Iran and defrauding the US government. But German officials have refused to carry out the American demands in the belief that there is no legal basis for moving against the accused.

Is N. cleverly gaming the German legal system to get around the embargo against Iran and aid terrorists? Or, as he has reportedly claimed, did he just unknowingly stumble into a confrontation with the US justice system?

Smuggling US Products to Its Enemies

The story goes back to 2005, when a group of American specialists in Iraq disarmed a live roadside bomb — or, in US military lingo, an improvised explosive device (IED) — like the ones that have killed an estimated 2,000 US soldiers in recent years. While examining the bomb, they found a number of electronic components labelled “Made in the USA.”

These findings prompted US officials to launch a concerted investigation into just how American computer chips and GPS systems could wind up in the hands of terrorists. From recovered serial numbers, they learned that some of the parts were first sent from a company in Arizona to Dubai, then to Iran for assembly and, finally, to insurgents in Iraq and Afghanistan.

Investigators also uncovered a network of some 16 companies and private individuals, including N., who now stand accused of having helped smuggle the electronic parts needed to build the IEDs from the US to Iran.

Their work has led US investigators to conclude that N. belongs to a network that has ordered roughly 30,000 electronic parts and other “dual-use” equipment — meaning ones that can have both military and civilian uses — from the US since 2004, only to deliver them to middleman firms in Dubai or Malaysia that then relay them to Iran.

he investigators believe the parts of the network based in the US have ordered a total of 17 different kinds of electronic equipment — including 7,500 microchips, 2,000 microprocessors, 40 GPS units, custom-built logic circuits and thousands of electronic resistors, boosters and filters — from companies such as Texas Instruments, Motorola and Ericsson. Among the ordered parts were also 5,000 of the exact same kind of microchip — the PIC16F84A-04I/P — found in the IED that was disarmed in Iraq in 2005.

According to a 45-page report released by American investigators, in most cases, the end-customer for these parts was a Dubai-based company called Majidco, which then flew the equipment to Iran.

Still, the report adds that, at a certain point, the route through Dubai apparently became too dangerous for the network. When the first indications emerged that the Iran embargo had been breached, US officials reportedly put pressure on Dubai, which resulted in the closing of the company that received most of the deliveries.

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Part 2: Did N. Commit a Criminal Offense?

At that point, the network reportedly started trying to figure out new ways to get around the embargo on Iran. And this is where American investigators believe N. comes in. According to their findings, in 2008, N. ordered pressure valves, water valves and temperature and humidity gauges from companies in Chicago before turning them over to a Malaysian company called Vat Solutions. This company, which is owned by an Iranian-born man living in Malaysia, then purportedly shipped the equipment to Iran.

N.’s ties to this Malaysian company are what put US investigators on his tail. Indeed, American authorities were already monitoring Vat Solutions’ activities because it had supplied components to Iran for remote-control systems, sensors and electronic circuits.

N. continues to plead his innocence and claims that this has all been a big mistake. But the US is still investigating him. Last year, American officials unsuccessfully petitioned their German counterparts to detain N. Their hopes were stymied when an upper district court for the northern state of Schleswig-Holstein, which is home to Kiel, blocked the request, saying it couldn’t find any factual basis that justified launching a criminal inquiry into N.’s deliveries. The court based its decision on the fact that both German and European law permits the exportation of the components he traded. “The subject is accused of doing something that does not constitute a criminal offense in Germany,” the court found.

Still, the court’s views aren’t wholeheartedly shared by German customs officials, who believe the parts N. ordered from the US could certainly be classified as “dual-use,” thereby rendering their exportation illegal. “One should have applied for an export permit in this country depending on the specification of the components,” one customs investigator said.

Suspected Money Laundering

What’s more, N. is no stranger to German authorities. Indeed, in 2008, the public prosecutor’s office in Kiel investigated him on suspicion of being part of a money-laundering scheme related to Iran.

On July 18 of that year, Citibank filed a legal complaint about suspected money laundering related to a transfer of €80,000 ($107,000), which was reportedly initiated in Iran before making its way to N. via an Iranian businessman in Hamburg.

At that point, German federal prosecutors started looking into the matter because they suspected that the money could be used for funding terrorism. N. eventually gave the authorities a plausible explanation for the payment, saying it came from the sale of a house in Iran and had nothing to do with his business dealings in the United States. Lacking a basis for continuing their investigation, German authorities shelved it.

Disappeared

Since then, N. seems to have disappeared. He doesn’t respond to e-mails. Inquiries made during a recent visit to his home in Kiel were answered with the claim that he is traveling abroad. His lawyer in Kiel refuses to speak to SPIEGEL. And he appears to have removed his company from the business register of Kiel’s chamber of commerce in 2006.

The only sign of life is his website, which looks more like something you would expect from a major corporation than from a small local businessman. It advertises oil- and gas-related devices, high voltage transformers and automation equipment. “We have strong partners in many firms, in state organizations in the Middle East, Malaysia and Azerbaijan,” the website proclaims. But it makes no mention of the fact that the company’s strongest rival is the American justice system.

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