In June 2006, WMD Insights published “Germany, Belgium, and U.K. Act on Iranian WMD and Missile Equipment Trafficking”; this article updates information on the inquiries in Germany and the U.K.

During the summer of 2007, reports were published detailing ongoing investigations in Germany and the United Kingdom regarding the alleged shipment of commodities to be used in Iran’s nuclear program. In Germany, prosecutors broadened their investigation into an elaborate supply network of dual-use goods trans-shipped through Russia and Dubai to the Iran’s nearly completed nuclear power plant at Bushehr. In the United Kingdom, investigators have disrupted an alleged plot to supply Iran with weapons-grade uranium.

Germany
On July 12, 2007, German prosecutors announced that they had expanded their investigation into German companies suspected of exporting dual-use commodities to Iran. [1] The Potsdam-based investigation, which began in September 2004, originally targeted six German firms and goods valued at around 3 million Euros. [2] Christoph Lange, the spokesman for the Potsdam public prosecutor’s office, stated that now over 50 companies and 150 million Euros worth of exports are thought to be involved. Of those 50 companies under investigation for illegally exporting dual-use materials, however, Lange noted that only 12 appear to have done so knowingly. [3]

According to German prosecutors, the final destination for the dual-use items was Iran’s Bushehr nuclear power plant. West Germany began construction on the facility in 1975 but suspended work in the wake of the 1979 Iranian Revolution. In 1995, Russia signed a contract with Iran to complete the facility. It is scheduled to be become operational in 2008. [4] (The Bushehr plant is not of a type that can provide direct access to weapons-usable nuclear materials; nonetheless, because of concerns that Iran may be using other nuclear facilities to pursue a nuclear weapons program, Germany and other Western governments
have banned all nuclear-related transfers to the country.)

Because German export controls would have prohibited the direct export of the dual-use items in question to Iran, the commodities were allegedly transshipped through other countries that were eligible to receive such exports from Germany. Many of the companies appear to have been deceived regarding the final destination of their goods and therefore will likely not face prosecution. [5] However, one company in particular – the now-defunct firm Vero Handels GmbH – is suspected of masterminding the operation, acquiring and smuggling dual-use goods for the Iranian reactor through an elaborate network of front companies and transshipment points. [6] According to a 2004 report, the firm was headed by two Russian nationals (identified as Dmitriy S., 45, and Igor E., 36) who fled to Spain and then Eastern Europe before investigators raided their Berlin office. [7] Nevertheless, the documents acquired in the raid revealed that Vero Handels served as a middleman for illicit exports to Iran, actively seeking suppliers for certain dual-use items and then providing false end-user information for shipments that were diverted to transshipment points in Russia and Dubai and, ultimately, to the Bushehr plant. [8]

Reportedly, members of Vero Handels contacted dozens of German companies, including sub-sidiaries of Siemens and international electronics giant Asea Brown Boveri Ltd. (ABB), in an effort to acquire the commodities, although most of the companies refused their requests. However, many other companies complied, agreeing to provide peripheral dual-use items (e.g., motors, switch gear, and electromagnetic brakes) for the Iranian nuclear facility. Although the status of many of the questionable exports being investigated remains unclear, investigators have revealed that at least some of the goods, including electric motors, Neoflex cable, and cooling units to be used in a crane for exchanging nuclear fuel elements in the reactor’s core, successfully reached Iran. [9] The motivations for the smuggling ring have also not been clarified and remain puzzling, as Russian companies could have legally exported any items required for the Bushehr facility under Russia’s agreement with Iran to build the plant. However, at least one source claims that German components were needed because Germany began construction of the reactor and the German equipment is incompatible with standard Russian nuclear equipment. [10]

The smuggling operation was originally uncovered in early 2004. During a routine sampling of export licensing documents, German export control authorities discovered a fraudulent invoice address, indicating that dual-use goods had been shipped to Dubai instead of to their stated destination in Russia. On the basis of these revelations, the supplier, identified as German firm ISV, was prosecuted under Germany’s Foreign Trade Act, and the firm’s owner and his brother (Alex and Georg K.) received one-year suspended sentences in return for their cooperation in the investigation. It was through the investigation into ISV that German authorities discovered the involvement of Vero Handels. [11]

Since the investigation began, there have been other reported incidents of smuggling involving German companies or German nationals, but it is not clear what connection, if any, these incidents have to the Potsdam investigation. In 2005, for example, Austrian authorities reportedly intercepted a German dual-use export at Vienna’s international airport. [12] In April 2006, Russian customs officers stopped and returned a minivan ferried from Germany carrying a container with radioactive materials. The van was without proper export licensing documents, a violation of German export regulations. [13]

United Kingdom
The British investigation focused on the attempted transfer of material suitable for use in nuclear weapons to Iran. According to a report published in June 2007, the British Secret Intelligence Service, working with the British Security Service and Her Majesty’s Revenue and Customs, disrupted a plot in 2006 by British nationals to obtain and sell weapons-grade uranium to Iran. The report states that “a group of Britons was tracked as they obtained weapons-grade uranium from the black market in Russia.” [14] Such a black market has long been rumored, but if the report is accurate, this would be one of the few cases where its existence has been confirmed. [15] The uranium was then to be exported through Sudan to Iran, where it was to be used, presumably in Iran’s nuclear weapons program. [16]

British officials intervened before the uranium could reach Sudan. According to the report, the plot involved “a group” of British citizens, as well as an unnamed British company which has since been closed. One of those involved has been charged with attempting to proliferate weapons of mass destruction, and “a number” of other British citizens have since been subject to surveillance. [17]

If accurate, this report would also confirm suspicions that Sudan has long been a key transshipment point for nuclear technology. [18] Western intelligence officials have previously stated that Sudan was a “major conduit” for the nuclear smuggling network organized by Pakistani nuclear specialist A. Q. Khan, importing equipment related to the production of weapons of mass destruction worth many millions of dollars that has since disappeared. [19]

Adam P. Williams – Monterey Institute James Martin Center for Nonproliferation Studies