N.J. Firm Seeks Fraud Judgment Against Iraq

A New Jersey corporation asked a federal judge in Washington on Thursday to grant a $66.5-million fraud judgment against the Iraqi government as compensation for the blocked sale of high-temperature furnaces whose purpose allegedly was misrepresented by the Iraqis.

The furnace deal has become a centerpiece of a major controversy in Washington in which Defense Department officials contend that Commerce Department officials were lax in granting export licenses for items that could have military use.

Iraqi officials told representatives of Consarc Corp. of Rancocas, N.J., that the furnaces would be used to make artificial limbs for victims of the Iran-Iraq War. Commerce Department officials approved the sale last year, even after they had been warned by Consarc President Raymond J. Roberts that the furnaces could be used in nuclear arms development.

Last June, after learning that the furnaces were about to be shipped, Defense Department officials objected to the export. The Commerce Department resisted.

The shipment was halted by the White House on July 20 after National Security Council officials were persuaded by Defense Department representatives that the Iraqis intended to use the four furnaces for nuclear purposes--casting highly enriched uranium for bomb cores or melting titanium for rocket motors.

Iraqi officials assailed the decision killing the $11-million furnace sale. Mohammed Mashat, Iraq’s ambassador to the United States, maintained that the furnaces were to be used to make prosthetic devices. On July 27, he said that reports Iraq planned to use the furnaces for military purposes “are completely without basis” and that the export ban had been imposed unjustly.

Less than a week later, Saddam Hussein’s troops invaded Kuwait and President Bush declared a total ban on exports to Iraq.

In September, Consarc filed the fraud suit against Iraq, contending that the furnace sale had collapsed because Iraq misrepresented the purpose for which it was buying the equipment. The suit seeks compensatory and punitive damages from Iraqi funds deposited in U.S. banks. Iraq has not filed a formal response to the lawsuit.

U.S. District Judge Stanley Sporkin has scheduled an April 5 hearing on Consarc’s motion for a default judgment.