Dutch Firm Indicted in Sale of Military Devices to Iraq : Inquiry: The charges say a $35-million deal that included U.S. components was financed through the Atlanta branch of an Italian bank.

A Dutch company and four employees were indicted Wednesday on charges of illegally selling military thermal-imaging equipment with U.S. components to Iraq four months after the invasion of Kuwait.

The indictment by a federal grand jury here said the devices were part of a $35-million contract between Delft Instruments N. V. of Holland and the Iraqi government. The deal was financed by the Atlanta branch of Italy’s Banca Nazionale del Lavoro.

The charges represent the first direct allegation by the government that BNL financing helped Iraq acquire U.S. military technology. Five former bank employees have pleaded guilty to fraud and other charges in connection with $5 billion in hidden loans to Iraq.

A task force of federal agents and prosecutors has been investigating BNL’s activities for nearly three years. Several U.S. companies are under scrutiny in that inquiry, prosecutors have acknowledged.

Thermal-imaging equipment enables tank gunners and other observers to see through darkness, haze or smoke by sensing small differences in infrared heat radiated by objects. Advanced U.S. equipment provided American troops with a significant advantage over Iraq in the Persian Gulf War.

According to Wednesday’s indictment, Delft began developing three prototypes for advanced thermal-imaging systems and a night-vision camera for Iraq in 1988. The prototypes depended on critical scanning and detection components manufactured by two major U.S. defense firms, Hughes Aircraft Co. and Litton Systems.

Delft had received State Department approval to use the U.S. technology because it said the devices were being developed for the Dutch and Indian armies, according to the charges. But the indictment says that the systems were transferred to Iraq between April and December of 1990.

U.S. Atty. Jay B. Stephens said in an interview that Delft allegedly provided Baghdad with prototypes for a vehicle-based imaging system, a ground-based system and a night-vision camera. He said the Dutch company was prepared to begin producing the equipment in Iraq.

The case was investigated by the U.S. Customs Service, which has numerous investigations under way involving the illegal sale of U.S. technology to Iraq.

After still-unconfirmed reports that the equipment had been discovered on captured Iraqi tanks by U.S. troops, Delft said its own internal investigation had found that its Belgian subsidiary violated company guidelines by shipping the devices to Iraq.

Also Wednesday, a federal grand jury indicted Aero Systems Inc. of Miami and three subsidiaries on charges of conspiring to sell military aircraft and Hawk missiles to Iran from 1983 to 1986.

Stephens said Aero Systems bought the weapons from Connecticut Machine Products in New York after claiming that the material was destined for the Philippines and Singapore. According to the charges, the equipment was then resold to Iran and transferred there.

Aero Systems and the subsidiaries are scheduled to go on trial in November on similar charges involving a scheme to sell F-4 jet fighter parts to Iran through a Japanese company, Japan Aviation Electronics Industry Ltd.

The Japanese company pleaded guilty last March to 10 counts of illegal arms transfers and paid a fine of $10 million, the highest penalty ever assessed in an export violation case.