Plot to Buy Air Defense System Thwarted : Customs sting: A weapons-export probe leads to arrest of two munitions dealers believed trying to smuggle device out of the country.

Disclosing yet another major weapons-export sting, the Customs Service said Friday it had thwarted a plot to smuggle out of the United States a sophisticated air defense system being sought by Libya, Iran and the Soviet Union.

Federal authorities in Baltimore said an undercover sting had led to arrests of two munitions dealers in the case, including a West German national with connections to the Middle East and Eastern Europe.

The case marked the second time this month in which munitions dealers believed to be working on behalf of foreign governments were accused of trying to buy some of the United States’ most advanced military technologies.

Authorities said they saw no connection between the latest case, which involves an electronic system used by the military for identifying and tracking aircraft, and an earlier bid by the government of Iraq to acquire electronic triggers used in the production of nuclear weapons.

But they noted that the United States has taken extensive efforts to safeguard the sophisticated WJ-38000 electronic intelligence (ELINT) system after being warned by intelligence agencies that Libya, Iran and the Soviet Union were actively seeking to obtain it.

The acquisition by a hostile government of even one such air defense system could undermine the effectiveness of a U.S. aerial threat and would force the United States to take costly countermeasures, Bush Administration officials said.

“If Libya had had this thing when we raided Tripoli (in 1986),” one official said, “our planes might have had a real tough time.”

In providing details of an 18-month investigation, the Customs Service said the munitions dealers had become suspicious of the sting before it could be learned to which country the air defense system was to be delivered.

But federal officials said they remained optimistic that West German authorities who are now pursuing the case might uncover clues to confirm what they called “vague” indications that a Middle East or East Bloc nation was behind the export scheme.

“I’m hopeful,” U.S. Atty. Breckenridge L. Wilcox said from Baltimore. “But whether or not we ever know who it was destined for remains to be seen.”

Arrested in the case on April 11 were Saul Lieberman, 54, of Hackensack, N.J., and Herbert Hoffman, 50, a West German citizen. The two men were indicted Friday in Baltimore on charges of money laundering, conspiracy and violating the Arms Export Control Act.

Documents filed in federal court charge that the two have sought since October, 1988, to purchase the compact air defense system from its manufacturer, the Watkins-Johnson Co. of Palo Alto, Calif., and deliver it abroad.

After failing to win State Department permission to ship the device to Kuwait, Lieberman allegedly enlisted the assistance of an undercover customs agent posing as an export-specialist who said he could arrange the shipment of the device to Germany.

As part of the sting, the Customs Service last month delivered a “dummy” WJ-38000 to Hoffman in Frankfurt, West Germany, in hopes that he would then forward the air defense system to its final buyer in another country.

Instead, the German munitions dealer apparently inspected the device himself and determined that it was fake. He was arrested early this month when he came to the United States for a meeting April 11 with the still-trusted undercover customs agent.

Authorities said they believe Lieberman, arrested at the same meeting, was paid more than $200,000 for his part in the alleged scheme.

The documents show that Watkins-Johnson was the first to notify the Customs Service of the attempted purchase and cooperated in all phases of the investigation.

Watkins-Johnson officials said the WJ-38000 is a highly compact air defense system that weighs just 300 pounds and is designed for use on the battlefield, where it can be mounted in a helicopter or in a ground vehicle. The company has manufactured the system for the Defense Department and a limited number of foreign buyers since 1985.

“It’s the kind of technology in which we have to be very careful about what we export,” said Steve Witmer, a company spokesman.

Federal officials said that the United States has permitted fewer than half a dozen of the devices to be sold abroad, all of them to countries closely aligned with the United States.