Navy Theft Ring Linked to Iran Undetected for Years

An international theft ring that diverted sophisticated U.S. military equipment to Iran operated within the Navy supply system for several years before coming under surveillance by federal investigators, government sources said Monday.

A federal indictment charging five men with conspiring to steal spare parts for the Navy’s F-14 Tomcat fighter and then sell them for shipment to Iran was unsealed here Monday. The indictment followed a two-year investigation by three federal agencies.

Additional arrests of sailors and civilians are expected as the Navy, U.S. Customs and FBI agents continue their investigation, authorities said.

Although investigators said that no “critical” aircraft parts had reached Iran since the investigation began, they conceded that they have no idea how much equipment may have reached Iran before 1983. One investigative source said the ring may have been operating for as long as seven years.

The disclosures raised new concerns in Washington about the security of the Navy’s procurement system.

At the Pentagon, Navy Secretary John Lehman was described by an aide as “very much concerned” about the apparent vulnerability of the Navy’s supply system. And on Capitol Hill, Rep. Jim Bates (D-San Diego) demanded that a “freeze” be placed on the system until safeguards are installed, saying, “Our national security could be endangered.”

At a Monday morning press conference here, federal investigators said that the smuggling ring ordered military parts for use on aircraft carriers based in California. Those parts were then stolen or intercepted and shipped to Iran.

Five suspects, including a sailor on active duty who was assigned to the carrier Kitty Hawk in San Diego and an Iranian national working out of London, were arrested last week and are being held without bail in connection with the smuggling ring.

Both Active and Retired

FBI Director William H. Webster, in a statement issued by his Washington office, said the investigation “is continuing and will include interviews of active-duty and retired U.S. Navy personnel.”

The probe was launched by Customs agents and included FBI and Navy investigators. Using wiretaps and electronic surveillance in California and New York, investigators were able to record elaborate conversations regarding the transactions of spare parts, according to an affidavit filed in federal court here in connection with the case.

Arrested in San Diego were Franklin Pangilinan Agustin, 47; Pedro Manansala Quito, 60; and Primitivo Baluyat Cayabyab, 36. Cayabyab was identified as an aviation storekeeper on the Kitty Hawk and Quito as a civilian warehouse worker assigned to the Fleet Avionics Logistics Support Center in San Diego. Arrested in New York was Edgardo Pangilinan Agustin, 45, brother of Franklin.

Alien From Philippines

Franklin Agustin, a native of the Philippines, was identified by federal officials as an illegal alien, while the other three are naturalized U.S. citizens, also from the Philippines. Authorities declined to identify the Iranian, except to say that he was taken into custody by British officials.

However, an affidavit filed in the case identified Saeid Asefi Inanlou as an Iranian national shipping military parts to Iran after receiving them from the U.S. ring members. Customs authorities in England cooperated in the arrest of Inanlou.

The five were indicted last week by a federal grand jury in San Diego. The indictments were sealed until Monday, when those arrested in San Diego were arraigned on charges of conspiracy, theft of government property and exporting war materials.

The arrests come on the heels of a series of procurement scandals that in past weeks have bombarded the Navy. Federal agents are investigating the disappearance of more than $1 million in equipment and supplies from the Kitty Hawk. Investigators say that case is unrelated to the theft of parts intended for Iran.

‘Very Significant Case’

“There’s no question this is a very significant case,” said Winston C. Kuehl, regional director for operations of the Naval Investigative Service. “We’re not very pleased with it. Anytime you have a disclosure like this you’re embarrassed.”

According to experts outside the government, the case marks the first known instance of a foreign government penetrating the U.S. military supply system to obtain sensitive weapons.

“I’m tempted to say it is devilishly clever of the Iranians,” said Gordon Adams of the Defense Budget Project, a Washington-based group that studies military procurement.

The Iranians, locked in a grueling war with Iraq, have been “desperate” for spare parts for their F-14s, according to Stephen Goose, senior research analyst for the Center for Defense Information, a private Washington-based organization.

Fewer Planes in Service

In the 1970s, when Shah Mohammed Reza Pahlavi controlled the government, Iran received 80 of the sophisticated fighters from the United States but now has “less than a dozen” in service because of the U.S. embargo on spare parts imposed after Ayatollah Ruhollah Khomeini came to power in February, 1979, Goose said.

According to a 58-page affidavit filed in U.S. District Court in San Diego, some of the aircraft combat equipment was sent from Navy warehouses in Richmond and Norfolk, Va., to three West Coast-based aircraft carriers--the Ranger and Kitty Hawk in San Diego and the Carl Vinson, near San Francisco. These parts are made exclusively for the F-14 fighters and are sold only to the U.S. military and its licensed contractors, according to court documents.

The affidavits don’t make clear whether the shipments were intercepted in transit or stolen from the ships. The shipments then were forwarded in cartons identified as “auto parts” and “medical supplies” via Federal Express to New York, where they were flown to London aboard commercial flights, according to the affidavit.

The shipments included air attack computers, gas turbine fuel control systems, amplifier parts to the F-14 radar system, washers, rings, transmitter liquid and unclassified aeronautical charts of the Persion Gulf region. Authorities said none of the known parts were considered classified material.

Quintin Villanueva, regional commissioner for the U.S. Customs Service, said that in order to keep the investigation alive, agents allowed about “two dozen” spare jet parts to be shipped through to Iran. He said none of the parts were critical to military security.

Times staff writer H.G. Reza in San Diego contributed to this report. Glenn F. Bunting reported from San Diego and Gaylord Shaw reported from Washington.