http://www.nytimes.com/2008/08/25/world/25nuke.html

August 24, 2008

In Nuclear Net's Undoing, a Web of Shadowy Deals

By WILLIAM J. BROAD and DAVID E. SANGER

The president of Switzerland stepped to a podium in Bern last May and read a statement confirming rumors that had swirled through the capital for months. The government, he acknowledged, had indeed destroyed a huge trove of computer files and other material documenting the business dealings of a family of Swiss engineers suspected of helping smuggle nuclear technology to Libya and Iran.

The files were of particular interest not only to Swiss prosecutors but to international atomic inspectors working to unwind the activities of Abdul Qadeer Khan, the Pakistani bomb pioneer-turned-nuclear black marketeer. The Swiss engineers, Friedrich Tinner and his two sons, were accused of having deep associations with Dr. Khan, acting as middlemen in his dealings with rogue nations seeking nuclear equipment and expertise.

The Swiss president, Pascal Couchepin, took no questions. But he asserted that the files -- which included an array of plans for nuclear arms and technologies, among them a highly sophisticated Pakistani bomb design -- had been destroyed so that they would never fall into terrorist hands.

Behind that official explanation, though, is a far more intriguing tale of spies, moles and the compromises that governments make in the name of national security.

The United States had urged that the files be destroyed, according to interviews with five current and former Bush administration officials. The purpose, the officials said, was less to thwart terrorists than to hide evidence of a clandestine relationship between the Tinners and the C.I.A.

Over four years, several of these officials said, operatives of the C.I.A. paid the Tinners as much as $10 million, some of it delivered in a suitcase stuffed with cash. In return, the Tinners delivered a flow of secret information that helped end Libya's bomb program, reveal Iran's atomic labors and, ultimately, undo Dr. Khan's nuclear black market.

In addition, American and European officials said, the Tinners played an important role in a clandestine American operation to funnel sabotaged nuclear equipment to Libya and Iran, a major but little-known element of the efforts to slow their nuclear progress.

The relationship with the Tinners "was very significant," said Gary S. Samore, who ran the National Security Council's nonproliferation office when the operation began. "That's where we got the first indications that Iran had acquired centrifuges," which enrich uranium for nuclear fuel.

Yet even as American officials describe the relationship as a major intelligence coup, compromises were made. Officials say the C.I.A. feared that a trial would not just reveal the Tinners' relationship with the United States -- and perhaps raise questions about American dealings with atomic smugglers -- but would also imperil efforts to recruit new spies at a time of grave concern over Iran's nuclear program. Destruction of the files, C.I.A. officials suspected, would undermine the case and could set their informants free.

"We were very happy they were destroyed," a senior intelligence official in Washington said of the files.

But in Europe, there is much consternation. Analysts studying Dr. Khan's network worry that by destroying the files to prevent their spread, the Swiss government may have obscured the investigative trail. It is unclear who among Dr. Khan's customers -- a list that is known to include Iran, Libya and North Korea but that may extend further -- got the illicit material, much of it contained in easily transmitted electronic designs.

The West's most important questions about the Khan network have been consistently deflected by President Pervez Musharraf of Pakistan, who resigned last Monday. He refused to account for the bomb designs that got away or to let American investigators question Dr. Khan, perhaps the only man to know who else received the atomic blueprints. President Bush, eager for Pakistan's aid against terrorism, never pressed Mr. Musharraf for answers.

"Maybe that labyrinth held clues to another client or another rogue state," said a European official angered at the destruction.

The Swiss judge in charge of the Tinner case, Andreas Muller, is not terribly happy either. He said he had no warning of the planned destruction and is now trying to determine what, if anything, remains of the case against Friedrich Tinner and his sons, Urs and Marco.

Some details of the links between the Tinners and American intelligence have been revealed in news reports and in recent books, most notably "The Nuclear Jihadist," a biography of Dr. Khan by Douglas Frantz and Catherine Collins. But recent interviews in the United States and Europe by The New York Times have provided a fuller portrait of the relationship -- especially the involvement of all three Tinners, the large amounts of money they received and the C.I.A.'s extensive efforts on their behalf. Virtually all the officials interviewed spoke on condition of anonymity because they were not authorized to discuss matters that remain classified.

The destroyed evidence, decades of records of the Tinners' activities, included not only bomb and centrifuge plans but also documents linking the family to the C.I.A., officials said. One contract, a European intelligence official said, described a C.I.A. front company's agreement to pay the smugglers $1 million for black-market secrets. The front company listed an address three blocks from the White House.

The C.I.A. declined to comment on the Tinner case, but a spokesman, Paul Gimigliano, called the disruption of Dr. Khan's network "a genuine intelligence success."

With the evidence files destroyed and a trial in question, it is unlikely that the full story of the Tinners will be told any time soon. If it is, it is unlikely to come from the elder Mr. Tinner.

Approached at his home in Haag, Switzerland, near the Liechtenstein border, Mr. Tinner, 71, was polite but firm in his silence. "I have an agreement not to talk," he told a reporter.

Beginning a Double Life

An inventor and mechanical engineer, Friedrich Tinner got his start in Swiss companies that make vacuum technology, mazes of pipes, pumps and valves used in many industries. Mr. Tinner received United States patents for his innovative vacuum valves.

By definition, his devices were so-called dual-use products with peacetime or wartime applications. Governments often feel torn between promoting such goods as commercial boons and blocking them as security risks.

As recounted in books and articles and reports by nuclear experts, Mr. Tinner worked with Dr. Khan for three decades, beginning in the mid-1970s. His expertise in vacuum technology aided Dr. Khan's development of atomic centrifuges, which produced fuel for Pakistan's nuclear arsenal, now variously estimated at 50 to 100 warheads.

Yet while Mr. Tinner repeatedly drew the attention of European authorities, who questioned the export of potentially dangerous technology, he never faced charges. Mr. Tinner's involvement with Dr. Khan deepened beginning in the late 1990s, when, joined by his sons, he helped supply centrifuges for Libya's secret bomb program.

In 2000, American officials said, Urs Tinner was recruited by the C.I.A., and American officials were elated. Spy satellites can be fooled. Documents can lie. Electronic taps can mislead. But a well-placed mole can work quietly behind the scenes to get at the truth.

For instance, the United States had gathered circumstantial evidence that Iran wanted an atom bomb. Suddenly it had a direct view into clandestine Iranian procurement of centrifuges and other important nuclear items.

"It was a confirmation," recalled Dr. Samore, the former national security official who is now director of studies at the Council on Foreign Relations. "That was much more significant than Libya," because that country's atomic program was in its infancy whereas Iran's was rushing toward maturity.

Despite considerable income from their illicit trade, the Tinners had money problems, a European intelligence official said. Eventually, Urs Tinner persuaded his father and younger brother to join him as moles, and they began double lives, supplying Dr. Khan with precision manufacturing gear and helping run a centrifuge plant in Malaysia even as their cooperation with the United States deepened.

At the time, Washington was stepping up efforts to penetrate Libya's bomb program. In early 2003, the European official said, the Tinners and C.I.A. agents met at a hotel in Innsbruck, Austria, to discuss cooperative terms. Several months later, in Jenins, a Swiss mountain village, Marco Tinner signed a contract dated June 21, 2003, with two C.I.A. agents, the official said.

The contract outlined the sale of rights that the Tinners held for manufacturing vacuum gear, and of proprietary information about the devices. In exchange, $1 million would be paid to Traco Group International, a front company Marco Tinner had established in Road Town, the capital of the British Virgin Islands, on the island of Tortola.

In the contract, according to the European intelligence official, the two C.I.A. agents used cover names -- W. James Kinsman and Sean D. Mahaffey -- and identified their employer as Big Black River Technologies Inc. In military and intelligence work, "black" means clandestine. In the contract, Black River gave an address on I Street in Washington, the intelligence official said. But no business directory lists the company, and employees in the mailroom at the address said they had no records for a company of that name.

Four months after the signing of the contract, American and European authorities seized cargoes of centrifuge parts bound for Libya. "The Tinners were a source," a former Bush administration official said.

Two other officials credited the Tinners with helping end the Libyan bomb program. In Libya, investigators found the rudiments of a centrifuge plant and a blueprint for a basic atom bomb, courtesy of Dr. Khan's network. The Bush administration celebrated Libya's abandonment as a breakthrough in arms control.

But the secret lives of the Tinners began to unravel. The Malaysian police issued a report naming them as central members of Dr. Khan's network. An official of VP Bank Ltd., Traco's business agent in the Virgin Islands, said it ended that relationship in early 2004, when Marco Tinner was exposed.

Under growing pressure, Dr. Khan confessed. His clients turned out to include not only Libya but Iran and North Korea, and his collaborators turned out to be legion.

"We will find you," Mr. Bush said in February 2004 of Dr. Khan's associates, "and we're not going to rest until you are stopped."

Acts of Sabotage

After the Tinners were arrested, Swiss and other European authorities began to scrutinize their confiscated files and to conduct wide inquiries. European investigators discovered not only that the Tinners had spied for Washington, but that the men and their insider information had helped the C.I.A. sabotage atomic gear bound for Libya and Iran. A former American official confirmed the disruptions, saying the technical architect of the operation was "a mad-scientist type" who took pleasure in devising dirty tricks.

An American intelligence official, while refusing to discuss specifics of the sabotage operation or the Tinners' relationship with the C.I.A., said efforts to cripple equipment headed to rogue nuclear states "buy us some time and space." With Iran presumably racing for the capability to build a bomb, he added, "that may be the best we can hope for."

The sabotage first came to light, diplomats and officials said, when inspectors from the International Atomic Energy Agency traveled to Iran and Libya in 2003 and 2004 and discovered identical vacuum pumps that had been damaged cleverly so that they looked perfectly fine but failed to operate properly. They traced the route of the defective parts from Pfeiffer Vacuum in Germany to the Los Alamos National Laboratory in New Mexico, the birthplace of the bomb. There, according to a European official who studied the case, nuclear experts had made sure the pumps "wouldn't work."

A more serious disruption involved a power supply shipped to Iran from Turkey, where Dr. Khan's network did business with two makers of industrial control equipment.

The Iranians installed the power supply at their uranium enrichment plant at Natanz. But in early 2006, it failed, causing 50 centrifuges to explode -- a serious, if temporary, setback to Iran's efforts to master the manufacture of nuclear fuel, the hardest part of building a bomb. (Iran says its nuclear efforts are for electricity, not weapons.)

Gholamreza Aghazadeh, the head of the Iranian Atomic Energy Organization, told a reporter last year that Iranian investigators found that the power supply had been manipulated.

After the episode, he added, "we checked all the imported instruments."

Discussions With Washington

In 2005, Swiss authorities began asking the United States for help in the Tinner case. Among other things, they wanted information about the Libyan centrifuge program to press charges of criminal export violations. For more than a year, the Swiss made repeated requests. Washington ignored them.

"Its lack of assistance needlessly complicates this important investigation," David Albright, of the Institute for Science and International Security, a private group in Washington, told Congress in May 2006. Mr. Albright said he had helped Swiss prosecutors write to the State Department.

The Swiss turned to the I.A.E.A. for help in assessing the Tinner cache. European officials said the agency was surprised to find multiple warhead plans and judged that most had originated in Pakistan. The country denied that Dr. Khan had access to nuclear weapon designs and questioned the agency's conclusions.

In late July 2007, according to Swiss federal statements, the justice minister, Christoph Blocher, flew to Washington for talks with Mike McConnell, the director of national intelligence; Alberto R. Gonzales, then the attorney general; and Robert S. Mueller III, the F.B.I. director.

Officially, the statements said, the main topic was "cooperation in the criminal prosecution of terrorist activities." But the real agenda was what to do about the Tinners.

A former Bush administration official said different government agencies had differing views of the case. The State Department wanted the bomb plans destroyed as a way to stem nuclear proliferation, while the C.I.A. wanted to protect its methods for combating illicit nuclear trade.

The C.I.A. also wanted to help the Tinners. "If a key source is prosecuted," a former senior official involved in the case said, "what message does that send when you try to recruit other informants?"

American officials discussed a range of possible outcomes with the Swiss and expressed their clear preferences. The best result, they said, would be turning over the family's materials to the United States. Acceptable would be destroying them. Worst, according to the former administration official, would have been making them public in a criminal trial, where defense lawyers would have probably exposed as much American involvement as possible in hopes of getting their clients off the hook.

A Furor Over Destroyed Files

Last March, Mr. Muller became the examining magistrate in the Tinner case, charged with assessing if a trial was warranted. Soon after, he was quoted as saying the evidence files contained "obvious holes." Sketchy reports of deleted computer files and shredded documents had been circulating, but he was the first identified official to hint at a widespread destruction. Then, on May 23, the Swiss president, Mr. Couchepin, revealed that Switzerland had begun a series of extraordinary actions just days after Mr. Blocher, the justice minister, returned from Washington.

Swiss citizens are prohibited from aiding foreign spies. But in his statement, the president said that in late August 2007, the government canceled a criminal case against the Tinners for suspicions of aiding a foreign government. Though unmentioned, the C.I.A. seemed to peer out from his statement.

On Nov. 14, his statement continued, the government decided to destroy "the comprehensive holding of the electronic files and documents" seized from the Tinners. The most dangerous items, the president said, included "detailed construction plans for nuclear weapons, for gas ultracentrifuges for the enrichment of weapons-grade uranium, as well as for guided missile delivery systems." International atomic inspectors, he added, supervised the destruction.

Mr. Couchepin said keeping the documents "was incompatible with Switzerland's obligations" under the Nuclear Nonproliferation Treaty and added, "Under all circumstances, this information was not to reach the hands of a terrorist organization or an unauthorized state."

The statement provoked a political furor. Some politicians and columnists accused Switzerland of surrendering to Washington's agenda and violating Swiss neutrality. Among the strongest critics was Dick Marty, a prominent Swiss senator. "We could have respected the treaty by avoiding their publication and putting them under lock and key," he was quoted as saying on Swissinfo, the Web site of the Swiss Broadcasting Corporation. Destroying them, he added, " could lead to the collapse of the legal case."

Many European officials dismissed the government's arguments about terrorists and rogue states as empty.

"If they had kept the material in federal possession for years, why not keep holding it?" asked Victor Mauer, a senior official at the Center for Security Studies of the Swiss Federal Institute of Technology. "Their explanation is not convincing."

An Action's Repercussions

In an interview, a senior European diplomat familiar with the I.A.E.A. said the destruction could have repercussions far beyond the criminal case.

For one thing, he said, the international atomic agency had been allowed to examine only parts of the archive. He called it "a good sample" and judged that the agency had missed no significant clues. Even so, he said, the agency might "come to regret" its inability to examine the materials further for insights into hidden remnants of Dr. Khan's network.

And while the Swiss president made much of the proliferation danger, the diplomat insisted that the warhead designs were in many respects sketchy and incomplete. "These are almost like studies -- bits and pieces," he said, adding that they "wouldn't be enough to let you build a replica."

So while they might have little or no value for a terrorist with no atomic experience, the plans might prove quite helpful for an ambitious state intent on building a nuclear arsenal. He said the agency had no evidence that Iran had acquired the bomb plans.

The diplomat added that the Swiss had "lots of possibilities" other than destruction. He said they had no legal obligation to destroy the files under the nonproliferation treaty, and could have put them under I.A.E.A. seal in Vienna or Switzerland.

Several European officials speculated that Washington might actually have kept secret copies of the archive. A senior American official said the United States had reviewed the material but declined to say if there were copies.

As for the Tinners, the father was released in 2006, pending legal action. In a brief interview at his home, Mr. Tinner pleaded ignorance about basic aspects of the criminal case, such as where the authorities kept the materials that had belonged to him and his sons. "The newspapers know more about these things than I do," he insisted.

Should the case fall apart, the Tinners would join a growing list of freed associates of Dr. Khan. In June, Malaysia released the network's chief operating officer, B. S. A. Tahir, saying he was no longer a national security threat. The authorities have kept the Tinner brothers in jail for fear that they might flee the country. In late May, a Swiss court rejected their bail application, and early this month, the ruling was upheld. But the judges also told the authorities that they could not hold the brothers indefinitely without charging them.

With much of the evidence gone, the magistrate, Mr. Muller, expressed frustration at finding "no answers to the really interesting questions in this case." He declined to predict how it might turn out.

"At the moment," he said, "it is impossible to make any schedule, since the case is in many aspects extraordinary."

Souad Mekhennet contributed reporting from Frankfurt, and Uta Harnischfeger from Zurich.