U.S. Cracks Ring Sending Stolen F-14 Parts to Iran

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 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 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.

Another source told The Times that the ring is believed to have earned an estimated $5 million in the last two 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.

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 in San Diego, 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 Nabbed Last Week

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

FBI Director William H. Webster, in a statement issued in Washington, 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 wire taps and electronic surveillance in California and New York, investigators were able to record elaborate conversations regarding the transactions for spare parts, according to an affidavit filed in connection with the case.

“It’s a totally lucky break for the United States that we were able to find something like this,” said Quintin Villanueva, regional commissioner of the U.S. Customs Service. “If we had not stopped it when we did, it would have gone on and on.”

The three men arrested in San Diego were identified as Franklin Pangilinan Agustin, 47; Pedro Manansala Quito, 60, and Primitivo Baluyat Cayabyab, 36, all of San Diego. 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.

Iranian Held by British

Franklin, a native of the Philippines, was identified by federal officials as an illegal alien. The other three are naturalized U.S. citizens 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 who shipped military parts to Iran after receiving them from the U.S. ring members. Federal officials refused to disclose whether they were planning to extradite Inanlou or if he would be tried by British authorities.

The five were indicted last week by a federal grand jury in San Diego. Those arrested in San Diego were arraigned Monday 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 rocked the Navy. Federal agents are investigating the disappearance of more than $1 million in equipment and supplies from the Kitty Hawk. In that case, which investigators say is unrelated to the theft of parts intended for Iran, agents are trying to trace 31 bars of silver.

Navy Admits Embarrassment

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

“Anytime you have a disclosure like this you’re embarrassed by it. Our problem right now is to seek this type of offense out and put a stop to it.”

Kuehl added that, at this point, Navy officials know very little about the specifics of the smuggling ring because they held off any inquiries until the arrests were made.

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

Stephen Goose, a senior research analyst for the Center for Defense Information, a private Washington-based organization, said he and others at the center, whose staff includes many retired high-ranking military officers, could recall no previous instances where a foreign government had illegally diverted parts and equipment from the U.S. military supply system.

Another independent expert, author and analyst Gordon Adams of the Defense Budget Project, a Washington-based group that studies military procurement procedures, also called the case unprecedented. “I don’t know of another case where somebody acting for a foreign government has tapped into the procurement system for spares,” he said. “I’m tempted to say it is devilishly clever of the Iranians.”

The Iranians, locked in a grueling war with Iraq, have been “desperate” for spare parts for their F-14s, according to Goose.

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

Serious Maintenance Problems

“The best reports we have are that no more than 10 F-14s are in operation and are being used very sparingly because they are afraid to lose them,” he added. “They are finding it hard to get them up into the air” because of maintenance problems and pilot shortages.

According to a 58-page affidavit filed in U.S. District Court in San Diego, some of the aircraft combat equipment was sent from two 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, based 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 were stolen from the ships. The shipments then were mailed in cartons identified as “auto parts” and “medical supplies” via Federal Express to New York, where they were sent to London aboard British Airways or Trans World Airlines flights, according to the affidavit.

Fictitious companies in Los Angeles, San Diego and London were used to support the ring.

“They’re opportunists,” Villanueva said of the ring members. “They had access to equipment that someone else wanted, they took advantage of the opportunity to steal it, and they gave it over to Iran.”

The shipments included air attack computers, gas turbine fuel control systems, amplifier parts for the F-14 radar system, washers, rings, transmitter liquid and unclassified aeronautical charts of the Persian Gulf region. Federal authorities are uncertain about how much of the equipment actually got to Iran.

Authorities said none of the parts so far identified was considered classified material. But they were investigating the possibility that two shipments included secret military hardware.

Villanueva said the suspect arrested in London supplied a shopping list of F-14 parts to Navy personnel who had access to the computerized order system.

A Customs agent familiar with the case said that investigators seized a catalogue of parts for naval equipment at Franklin Agustin’s home “along with a truckload of parts and paper work.”

Last month police were called to a disturbance at the Agustin home while he and his wife, Julie, were out, according to the affidavit. When Agustin called the house and was told by a niece staying there that police had been called to quell a ruckus, he became concerned.

Disturbed by Police Visit

“If they’re (police) searching the house, tell them not yet till your aunt (Julie Agustin) . . . And the garage, don’t let them search it. Tell them to wait for your aunt,” the affidavit quoted Agustin, based on a phone tap. Julie Agustin has not been charged in the case.

According to the Customs agent, there is some evidence that the Iranians were encouraging Agustin and his accomplices to obtain a sophisticated radar device for the Iranian Air Force’s F-14s. The device, known as FLIR (Forward Looking Infrared Radar), tracks enemy aircraft by following the heat emitted by plane engines.

But Villanueva said that, while the investigation was in progress, ring members failed in their attempt to steal the sophisticated radar.

Villanueva 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 was critical to military security. Federal investigators Monday were uncertain whether, as reported earlier, bogus parts had in some cases been switched with the shipments to Iran.

On Capitol Hill, Bates called for immediate congressional oversight hearings on “the extent of the damage” and said the Pentagon should make a thorough audit to determine if other, similar thefts have occurred.

In letters to the chairmen of the House and Senate Armed Services committees, Bates recalled his disclosures last week that more than $1 million in equipment had disappeared from the Kitty Hawk and urged “an immediate computer ‘freeze’ be placed on spares and sensitive equipment controlled through computer inventories until a thorough audit can be done.”

“I have recently received information that our entire inventory system, much of which is computerized, might be compromised so that equipment can be diverted and accessed from outside the system,” Bates wrote to Rep. Les Aspin (D-Wis.) and Sen. Barry Goldwater (R-Ariz.). “This information, if accurate, would extend the damage to our national security well beyond that occasioned by the theft and diversion of equipment aboard the Kitty Hawk.

“At this point in the investigation we cannot assume that sensitive equipment is not now in the pipeline to hostile or embargoed nations. Information that I have received would indicate that the activities have continued for several years.”

Glenn F. Bunting reported from San Diego and Gaylord Shaw reported from Washington.