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Underground Market

July 26, 2005 at 12:00 AM EDT
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TRANSCRIPT

MARK SHAPIRO: Cape Town is famous for its spectacular setting, at the tip of Africa where the Atlantic and Indian oceans meet. It lays claim to being the most beautiful, relaxed city in South Africa.

It’s one of the last places you’d expect to find a nuclear black market. But this Cape Town businessman, Asher Karni, is at the center of one of the biggest nuclear smuggling cases uncovered by the U.S. government. He has pled guilty to violating U.S. export control laws in what the U.S. government says was a plot to export nuclear weapons parts from the U.S. to Pakistan.

Karni came to South Africa from Israel 20 years ago and worked here at Eagle Technology, importing high-tech electronic equipment. The company’s lawyer, Michael Bagraim, says they discovered that Karni was making secret deals on his own.

MICHAEL BAGRAIM: These electronic components were sourced, a lot of it in America, in the United States, and then in turn sent on to other countries. We also then investigated and we found that the other countries were India, Israel and Pakistan.

And that, to us, was a turning point. It was like having a viper in your bosom. And you couldn’t have that viper in your bosom. You had to remove it before it bit you, and we did remove them straight away at that point.

MARK SHAPIRO: After he was fired, Karni moved to a mansion in one of the wealthiest neighborhoods in Cape Town. He set up his own company, Top-Cape, and continued doing business from home. The nuclear smuggling deal began in the summer of 2003, when Karni received an e-mail from a longtime business associate in Pakistan, Humayun Khan. Those e-mails were disclosed by federal prosecutors in their indictment against Karni.

Khan wanted to buy 200 triggered spark gaps manufactured in the United States. These are highly specialized electronic devices. They can be used in a high-tech medical machine to break up kidney stones, or they can be used to detonate a nuclear weapon.

Khan asked Karni to make the purchase from a sales agent in France. His e-mail advised, “Please do not disclose the end destination.” A few days later, the French agent sent a fax saying that Karni would need an export license to ship to a country like Pakistan; it was a U.S. requirement.

Karni told Khan he would not be able to complete the deal. But Khan persisted. “I know it is difficult, but that’s how we came to know each other,” he wrote. “Please help to negotiate this from any other source.” Nine hours later, Karni sent his response: “Will do.”

What Karni didn’t know was that his e-mail traffic was being forwarded to officials in the U.S. Commerce Department by an anonymous tipster in South Africa. The Commerce Department regulates the export of U.S. goods and technology that may be used by rogue states or terrorists to make weapons of mass destruction. The Department monitors a list of some 3,000 dual-use products that can be used for civilian or military purposes. Peter Lichtenbaum is the acting undersecretary for industry and security.

PETER LICHTENBAUM: The triggered spark gaps in the Karni case are a perfect example of an item that has a perfectly appropriate civil use in hospitals, but also can be used in a nuclear weapons program as the triggering device for nuclear weapons. So our job is to identify those items that do have that potential for a bad end use, and then set policy for their control.

JOHN McKENNA: We began the Karni case in July of 2003.

MARK SHAPIRO: Special agent John McKenna began investigating Karni after the South African informant called the Commerce Department hotline.

JOHN McKENNA: He identified Asher Karni as attempting to secure U.S. origin goods, and goods that were not going to stay in South Africa. They were going to be sent on to other proscribed end users. Initially, that information was it may be going to Pakistan, India, and at one time we thought maybe North Korea.

MARK SHAPIRO: The informant revealed that Karni would use a middle company in Secaucus, N.J., to order the spark gaps from the manufacturer, PerkinElmer, in Massachusetts.

JOHN McKENNA: So his information was accurate and it was up to the minute, almost daily.

MARK SHAPIRO: This is quite an informant.

JOHN McKENNA: Yes. Yes.

MARK SHAPIRO: The South African informant told the Commerce Department that Karni was trying to evade U.S. export control laws by claiming that the triggered spark gaps were destined for an acceptable end user, a hospital in South Africa.

Baragwanath Hospital in Soweto is where Karni declared the spark gaps were headed. Lloyd Thompson is a doctor in the Urology Department. I showed him Karni’s case file.

LLOYD THOMPSON: End users. Okay, I see.

MARK SHAPIRO: End user. And what does it say there? It says…

LLOYD THOMPSON: Baragwanath Hospital.

MARK SHAPIRO: Yeah, right here. But the idea that this man, Asher Karni, was sending 200 spark gap triggers to Baragwanath Hospital –

LLOYD THOMPSON: No, no we don’t have that kind of… no. They definitely have never arrived here, and they sure as hell are not wanted here.

MARK SHAPIRO: In the summer of 2003, Karni finalized the deal with Pakland, Humayun Khan’s company in Pakistan. Two hundred spark gaps would be sent in three shipments from the United States.

But what Karni didn’t know was the first shipment of 66 triggers was being followed by special agents from the Commerce Department. The U.S. had set up a special sting operation, assisted by the anonymous tipster in South Africa. The triggers had been disabled before they were sent to Pakistan.

Then Karni made his fatal mistake. On New Year’s Day, 2004, he flew into Denver, Colo., to go on a skiing holiday with his family. As Karni stepped off the plane, U.S. customs agents arrested him. After spending months in federal custody, Karni pled guilty to five felonies and is now cooperating with U.S. investigators.

Karni’s confession led to an indictment against his partner in Pakistan, Humayun Khan. The U.S. hopes to extradite Khan. If found guilty, he would face up to 35 years in prison.

MARK SHAPIRO: Good morning, Mr. Khan.

HUMAYUN KHAN: Good morning, yes.

MARK SHAPIRO: After many attempts, I finally reached Mr. Khan in Islamabad. He had been importing U.S. technology for years, but denied he was involved in importing nuclear weapons parts.

MARK SHAPIRO: That’s not what it looks like in the correspondence between you. And I have to ask you –

HUMAYUN KHAN: I know, everything is pointing right at me. I mean, I think I will … I am being made a scapegoat, you know.

MARK SHAPIRO: Khan said he would never do business with an Israeli, and had no idea Asher Karni was Jewish.

HUMAYN KHAN: It is very unfortunate that he introduced himself as a Muslim.

MARK SHAPIRO: Uh-huh. He told you he was a Muslim man?

HUMAYN KHAN: Yes, because you see, Mark, if you … I’m sure you must have heard that Asher Karni is a Muslim name.

MARK SHAPIRO: I asked Khan who in Pakistan wanted 200 nuclear triggers.

HUMAYN KHAN: You can imagine yourself that a country like Pakistan cannot order 200 bombs, you know.

MARK SHAPIRO: Well, I don’t know how many bombs Pakistan has. How many do they have?

HUMAYN KHAN: That is a good question.

MARK SHAPIRO: Yeah, can you give me an estimate?

HUMAYN KHAN: No, I don’t know. I really … we actually try to stay away from such … such customers. We don’t touch fire.

MARK SHAPIRO: The case of nuclear smuggling uncovered in Cape Town is still under investigation by U.S. Commerce Department agents. They say it may reveal more secrets about the illicit trade in nuclear technology.

MARK SHAPIRO: How big do you think this case is?

JOHN McKENNA: Certainly in its significance, this case represents certainly one of the largest nuclear black market cases out there. There’s no question about that. And there again, there are leads that are ongoing that we are pursuing that are — as part of this investigation.

SPOKESMAN: We are gathering the facts, interviewing key people involved in the case.

MARK SHAPIRO: Commerce Department officials still wonder where those nuclear triggers were ultimately headed.

SPOKESMAN: Were they going to the Pakistani military? Were they intended for onward proliferation to al-Qaida nuclear weapons program? We will follow the trail wherever it leads, but I don’t think that work is yet complete.

MARK SHAPIRO: For now, the U.S. government will pursue its case against Humayun Khan, who remains in Pakistan. Meanwhile, Asher Karni, who has pled guilty, is due to be sentenced on Aug. 4 in a case of nuclear smuggling uncovered, thanks to that anonymous source in South Africa.