Firm Admits Giving Iraq High-Tech Gear : Military: Dutch company pleads guilty to violating American laws curbing transfer of technology. Case links Atlanta bank to Baghdad.

A Dutch company pleaded guilty Friday to illegally providing military night-vision equipment with U.S. components to Iraq and Jordan, admitting the final shipment occurred four months after the Iraqi invasion of Kuwait.

Delft Instruments N. V. of Delft, the Netherlands, agreed to pay $2.5 million in criminal fines and $800,000 in penalties assessed by the State Department after admitting that it violated laws restricting the transfer of U.S.-origin military technology. The firm also agreed to cooperate if four former employees of two subsidiaries are arrested and tried on similar charges.

The guilty plea in federal court here covered two prototypes of thermal-imaging systems produced for Iraq under a $35-million contract financed by the Atlanta branch of Italy’s Banca Nazionale del Lavoro. Five ex-BNL employees have pleaded guilty in connection with $5 billion in concealed loans to Iraq, but this is the first proof the bank financed Iraq’s acquisition of U.S. military technology.

Thermal-imaging systems help military gunners and observers see through smoke, haze and darkness. The systems built for Iraq depended on detectors made by Hughes Aircraft Co. and scanners from Litton Systems.

Hundreds of the U.S. components had been provided to Delft for equipment for the Dutch and Indian armies under a State Department license. However, the Arms Control Export Act prohibited the transfer of the components to another country without a new license.

Assistant U.S. Atty. Eric A. Dubelier said an employee of OIP Instrubel, a Delft subsidiary in Belgium, filed serial numbers off Hughes detectors used in a vehicle-mounted imaging system shipped to Iraq in April, 1990.

A second, ground-based system also using U.S. components was not completed until after Iraq’s invasion of Kuwait on Aug. 2, 1990, and the imposition of the U.N. embargo against Iraq.

According to Dubelier, employees of OIP Instrubel took the system to Jordan in December, 1990, and demonstrated it for the Jordanian military. Iraqis involved in the contract were present and Dubelier said the OIP Instrubel employees left the system behind.

A company lawyer said the December shipment did not violate the U.N. embargo because the device was left with the Jordanian military.

Terence J. Lynam, an attorney for Delft, said the company had intended to retrieve the device from Jordan, but was stopped by the start of the Gulf War in January, 1991. He said Delft has not been paid for the system.

Lynam said both systems would have been hard to use because the Iraqis and Jordanians were not trained to use them and no manuals or spare parts were provided.

Government officials said efforts have failed to discover whether the second device was transferred to Iraq.