Company questioned in Iran 'black market' inquiry

A Christchurch company is under scrutiny as part of a global investigation into the black market trade of United States military parts to Iran.

Diesel engine specialist TransDiesel has been swept into an investigation of a Netherlands company and the movement of US-sourced military supplies into Iran.

Some of the machinery parts in question allegedly came to and moved through New Zealand on a convoluted route to the Middle East.

A British company is believed to have acted as a broker.

The global trade in ex-US military supplies, including parts for tanks, is estimated to be worth millions of dollars and appears to breach US trade sanctions against Iran.

US President George Bush labelled Iran as part of an "axis of evil", alongside Iraq and North Korea, in early 2002.

The US Government forbids most trade with Iran as a "state sponsor of terrorism" and tries to control the on-selling of military supplies made in the States.

While New Zealand does not have sanctions against Iran, the export of "strategic goods" like guns, howitzers, weapon sights, tanks, armoured vehicles and their parts, needs special consent.

TransDiesel director Alister McLaughlin said his company was "on the fringes" of the investigation.

Netherlands authorities were investigating Iwah Import-Export, a Dutch truck parts dealer in Maarheeze, and came across records of its dealings with TransDiesel.
Dutch investigators descended on Christchurch and combed through TransDiesel's documents.

They requested police help and a crack police investigation unit became involved. Among other roles, the Special Investigations Group (SIG) assesses threats to national security.

Customs representatives from both countries are also involved.

For months, investigators have been trying to unravel the labyrinth behind the sourcing, financing and distribution of parts. Some single transactions ran into hundreds of thousands of dollars.

Iwah owner-manager Enno Noll said Customs began investigating his company about two years ago and was still asking questions.

"I am as surprised as you are," he said, from Holland.

Mr Noll said he was unaware of any of his truck parts ending up in Iran. "Not at all".

He did not know what sparked the investigation and was continuing to trade, in spite of it.

"It's not easy. I just do my normal business."

Mr McLaughlin said the investigators had been thorough on their visit to TransDiesel and "we're not expecting any more really".

SIG leader Detective Sergeant Earle Borrell would not discuss the operation, "because it wouldn't be right to do so".

Customs' communications manager Zelda MacKenzie said the department was liaising between the police and the Netherlands authorities. Beyond that, she would not comment.

The Foreign Affairs and Trade Ministry (MFAT) would not confirm whether or not it was involved in the investigation. Neither would spokeswoman Emma Reilly comment on whether TransDiesel had sought consent to export strategic goods, citing "commercial confidentiality and the Privacy Act".

TransDiesel is jointly owned and directed by Mr McLaughlin, and Stephen and David Wooff.

The firm supplies diesel parts, engines, earth-moving equipment, filtration and exhaust products. Its website also boasts a large stock of obsolete and surplus parts.
Mr McLaughlin said parts could end up in a truck, a boat, an armoured vehicle, or a tank.

Military watch websites show that Iran's main battle tank, the Zolfaqar, is believed to be pieced together or developed from major components of the Russian T-72 and American M48 and M60 tanks.

The tank is said to have a similar makeup to the American tanks.

Some versions of the M60 tank use Allison transmissions. TransDiesel is the New Zealand distributor for products including Allison transmissions, Detriot Diesel and Terex earth-moving equipment.

In 1992 the US sought to tighten export controls on Iran, including technology that could improve Iran's military capabilities.

The Ministry of Foreign Affairs and Trade's website warns exporters that although US regulations on "re-exporting" strategic goods are not recognised in New Zealand law, US authorities penalise foreign companies that do not comply.

Such companies are denied access to US goods or technology in future. Companies with a presence in the US may face legal action.

Despite the US ban, an estimated $80 million of Iran's imports reportedly originate in the US.

In the year to June, New Zealand exports worth $76m went to Iran, mainly butter and wool. Iran also bought gas compressors, seafood, paper and electronics.

Iranian imports in that period totalled about $43m, mostly petroleum products, carpets and dates. Exporters require the consent of the Secretary of Foreign Affairs and Trade to supply strategic goods. They include dual-use goods -- primarily for civilian life, but which may have military applications -- and goods designed for military use.

- nzpa