The Iranian businessman was looking for high-quality American electronics, but he had to act stealthily: The special parts he coveted were denied to Iranians, especially those seeking to make roadside bombs to kill U.S. troops in Iraq.
With a few e-mails, the problem was solved. A friendly Malaysian importer would buy the parts from a company in Linden, N.J., and forward them to Iran. All that was left was coming up with a fake name for the invoice. Perhaps a Malaysian engineering school? "Of course, you can use any other company as end-user that you think is better than this," the Iranian businessman, Ahmad Rahzad, wrote in an e-mail dated March 8, 2007.
The ruse succeeded in delivering nine sensors called inclinometers to Iran, the first of several such shipments that year and the latest example of what U.S. officials and weapons experts describe as Iran's skillful flouting of export laws intended to stop lethal technology from reaching the Islamic republic.
Despite multiple attempts by the Bush administration to halt illegal imports -- including sanctions against several Dubai-based Iranian front companies in 2006 -- the technology pipeline to Tehran is flowing at an even faster pace. In some cases, Iran simply opened new front companies and shifted its operations from Dubai to farther east in Asia, the officials said.
Iran in the past two years has acquired numerous banned items -- including circuit boards, software and Global Positioning System devices -- that are used to make sophisticated versions of the improvised explosive devices, or IEDs, that continue to kill U.S. troops in Iraq, according to documents released by the Justice Department and a new study by a Washington research institute. The deadly trade was briefly disrupted after the moves against Dubai companies in 2006, but it quickly resumed with a few changes in shipping routes and company names, the officials said.
"Without doubt, it is still going on," said one former U.S. intelligence official who investigated Iran's networks.
Bomb circuitry is only a small part of the global clandestine trade that continues to flourish, despite U.S. efforts to end it. A federal investigation in New York into whether banks helped customers skirt U.S. rules forbidding business with Iran and other countries turned up evidence of Iranian interests trying to buy tungsten and other materials used in the guidance systems of long-range missiles. As part of the investigation, a British bank agreed to forfeit $350 million.
Internet-based and sophisticated
While illegal trafficking in weapons technology has occurred for decades -- most notably in the case of the nuclear smuggling ring operated by Pakistani scientist Abdul Qadeer Khan -- the new documents suggest that recent trading is nearly all Internet-based and increasingly sophisticated.
Many of the schemes unknowingly involve U.S. companies that typically have no clue where their products are actually going, the records show.
"The schemes are so elaborate, even the most scrupulous companies can be deceived," said David Albright, president of the Institute for Science and International Security (ISIS) and co-author of a forthcoming study of black markets for weapons components.
Albright said the deceptions can be even more elaborate when the target is nuclear technology. "That's where the stakes are the highest," he said. "If Iran is successful, it ends up not with an IED but with a nuclear weapon."
Rare details about the illicit markets emerge in court records from the Justice Department's investigation of Iran's Dubai network, as well as in the ISIS study, which tracks four years of secret trading by Iranian and Pakistani front groups. The study includes copies of invoices and the contents of e-mails from companies looking to buy Western technology.
Iran, a veteran of such schemes, appears in the documents to be increasingly adept at using front companies, which pose as schools or private laboratories conducting business through seemingly legitimate Web sites, the Justice Department records show. If discovered -- as happened with the Dubai-based Mayrow General Trading in 2006 -- the businesses frequently reopen under different names in other locations.
According to the records, Mayrow was the hub of a procurement network that operated from early this decade until about 2006, chiefly in Dubai, which is part of the United Arab Emirates and a close U.S. ally. U.S. intelligence officials have long identified the small Persian Gulf kingdom as a center for shell companies seeking to buy weapons parts and technology for countries that cannot import them legally. Since 2006, Dubai has moved to close Mayrow and toughen export regulations.
Mayrow worked in tandem with three other companies that alternated placing orders with U.S. firms for electronic parts. All four companies had the same business address and same principal managers, yet on paper they appeared to be separate and legitimate trading companies seeking parts for a variety of industrial uses, Albright said in the ISIS report, titled "Iranian Entities Illicit Military Procurement Networks." The report is due for release this week.
"The trading companies effectively created a wall between the Iranian entities and the U.S. suppliers, making it difficult for the U.S. suppliers to identify the true end-user of an item," the report says.
The Mayrow network resulted in the acquisition of hundreds of sensitive parts from U.S. manufacturers in California, Florida, Georgia and New Jersey during a four-year period, according to a federal indictment returned by a Florida grand jury in September.
IEDs contain U.S. parts
All the items were shipped from Dubai to Iran, where most appear to have been distributed among several manufacturers of IEDs. These bombs account for the majority of U.S. troop casualties in Iraq, as well as the deaths of thousands of civilians, police and troops in Iraq and Afghanistan. Examinations of unexploded bombs have confirmed the presence of circuit boards, timers and other parts of U.S. origin, federal officials confirm.
Mayrow's ability to trade with Americans essentially ended in 2006 when the Commerce Department imposed extensive trade restrictions on the company and its known partners. Yet months after the sanctions went into effect, a similar network based in Malaysia began asking U.S. companies for the same kinds of technology, the Justice Department documents show. The orders were primarily from a firm that called itself Vast Solution and was headed by Majid Seif, an Iranian national. Seif was named in the federal indictment as a co-conspirator in an international plot to acquire components for Iranian-made IEDs.
By 2007, the Dubai-based operation had been almost entirely replaced by the Malaysian networks, the ISIS study found. Yet, while perhaps less conspicuous than before, the Dubai network probably continues to exist, though in a different form. Typically, the new front companies will not be discovered until long after crucial technology has left American shores aboard ships ultimately bound for Iran, Albright said.
"The current system of export controls doesn't do enough to stop illicit trade before the item is shipped," he said. "Having a law on the books is not the same as having a law enforced."