Scot, 2 Americans Charged in Banned Sales to Libya

Federal undercover agents in New Orleans arrested a Scots businessman and the operators of a Louisiana oil services company Thursday on charges of supplying critically needed oil field equipment to Libya in violation of a U.S. trade embargo, federal authorities here announced.

The arrests--the first since President Reagan imposed near-absolute barriers to business dealings with Libya last February--followed a six-month undercover investigation that ended when U.S. Customs agents posing as employees of a San Diego equipment manufacturer succeeded in enticing the Scottish trader to the United States, where he could be seized.

A federal prosecutor said the arrest of Francis George Christie of Aberdeen, Scotland, may have broken a major conduit supplying American oil equipment to Libya’s nationalized oil industry, which was built largely by U.S. oil companies and remains dependent upon U.S.-manufactured spare parts.

“The case is significant because the Libyan economy is being run through the tacit support of American business,” said Assistant U.S. Atty. Phillip L. B. Halpern, leading prosecutor in the case. “And this prosecution hopefully will bring to light this problem.”

Besides Christie, the owner of Christie Noble Services Inc. of Aberdeen, those arrested Thursday were George and Cheryl Smith of Gretna, La., the operators of Oil Patch Production Services Inc. Charges against the three include illegal export of petrochemical equipment, making false statements and conspiracy.

Halpern said Oil Patch purchased equipment from such U.S. manufacturers as Pratt & Whitney Co. and sold it to the Scottish firm, which then supplied the equipment to Libya through two state-controlled trading companies, Um-Al-Jawabi and Agip.

Beginning in August, a Customs agent operating undercover as an employee of Solar Turbines Inc. of San Diego penetrated the alleged embargo-busting scheme, Halpern said. The undercover agent sold Oil Patch more than $250,000 worth of Solar Turbines equipment for shipment to the Libyans through the Scottish intermediary.

Halpern said that the Solar Turbines equipment unavoidably was delivered to Libya as part of the investigation but that U.S. authorities did not consider the delivery too high a price for Thursday’s arrests.

“In order to catch Christie alone, it was considered worth it,” he said.

Undercover agents lured Christie to Louisiana this week with offers of a possible deal for $5 million to $7 million in additional purchases through Oil Patch.

Investigators suspect that Christie may be responsible for funneling millions of dollars worth of additional American-made materials to Col. Moammar Kadafi’s regime.

“We know Oil Patch is only one of his customers,” Halpern said of Christie. “And we know when he comes to the U.S., he has many other customers.” Agents were preparing late Thursday to seize records Christie carried with him to the United States in hopes of learning more about the extent of his Libyan dealings.

A spokesman in San Diego for Solar Turbines, a subsidiary of Caterpillar Tractor Co., said late Thursday that he had no information about the company’s role in the investigation. Halpern said the firm cooperated in the investigation.

Christie, described as a dapper, graying businessman in his mid-50s, was being held without bail in a New Orleans parish jail pending a detention hearing later today. George Smith was released after posting $100,000 bond. His wife was released on $5,000 bond.

Contacted Thursday night at their home, Cheryl Smith had little to say about the arrests.

“We have not been involved in anything more than a traffic ticket,” she said. “We are not criminal people. We are good people.”

According to an affidavit filed in U.S. District Court in New Orleans, undercover Customs investigators made tape recordings in which Smith stated, among other things, her disagreement with Reagan Administration policy toward Libya.

“Cheryl Smith also stated that when the U.S. becomes friendly with Libya, she hopes they (the Libyans) would remember what a nice girl she was during the embargo,” the affidavit says.

Reagan imposed the latest, stiffest American sanctions against Libya in the wake of terrorist attacks at the Rome and Vienna airports in December, 1985. U.S. officials blamed Libya for the attacks, which the United States said were carried out by a radical Palestinian group supported by Kadafi.

The sanctions--designed to sever virtually all contact with Libya by Americans and U.S. corporations--struck especially hard at the Libyan oil industry, which Tripoli depends on for 90% of its exports, according to the Customs Service.

Despite U.S. calls for the imposition of similar sanctions by its European allies, other Western countries did not follow suit. Because Britain did not bar oil trade with Libya, U.S. investigators had to orchestrate Christie’s arrest on American soil, where such trading activity is illegal. He could not have been extradited from Scotland, Halpern said.

“We weren’t going to wait around for months and supply him with millions of dollars of stuff to get this guy here,” Halpern said.