Military parts shipped from territory to Middle East

STRATEGIC components for guiding air-to-air missiles and fighter aircraft were smuggled through the territory in a lucrative illegal arms trade with Iran. In the first case of its kind to go before the courts, two companies based in the territory - HawkerPacific and Jetpower Industrial - pleaded guilty this month to Customs and Excise Department charges relating to the import and export of ''strategic commodities''. Six of the components, magnetrons, and a quantity of fighter aircraft parts, used to direct US-manufactured Phoenix AIM-54A missiles, were shipped to Iran before other strategic magnetrons were seized in Hong Kong last year. The seizure indirectly led to the Government increasing penalties for importing and exporting strategic commodities. This is the first known case in which military parts have been sent to China for modification and then shipped through the territory to Iran, and is the latest but the most serious in a series of arms-smuggling rackets to the Middle East country. Previous cases involving Hong Kong-based companies were Seaconsar Far East, which was used as a front for a European cartel shipping artillery shells to Iran, and Heirax and Fairsun, which shipped $54-million worth of F-4 fighter aircraft parts to Teheran. The two companies were run by Iranian military officers and are linked to the latest case. A complex trail of deals involving at least one ''nominee'' company and false end-user certificates allowed Jetpower to ship military parts from the US and China through Hong Kong to Teheran. All the shipments were made on behalf of the Iranian Air Force on commercial flights between January and July last year. Jetpower's application to the Trade and Industry Department in July last year to export three magnetrons to Iran for civilian use was referred to the customs department. ''On August 11, 1992, in conducting a consignment check application, Customs and Excise officers established that the defendant company [Jetpower] received an order for 15 magnetrons from the Iranian company [Golden Lawell],'' Government lawyer Timothy Casewell said in court last week. ''The defendant company ordered the magnetrons from a local company known as Hawker Pacific Limited, which in turn obtained the supply from China. ''Three separate shipments, each comprising three magnetrons were imported by Hawker through courier service.'' Mr Casewell explained that Hawker Pacific delivered the first two shipments, which he described as ''munitions'' to Jetpower. The magnetrons, valued at $277,000, were in turn exported to Iran on January 24 and July 1 last year. He said the remaining three magnetrons were seized by customs officers in a raid on a warehouse used by Hawker Pacific. Jetpower also sought to ship strategic aircraft parts, which were identified by a weapons expert as being aircraft parts for ''military applications'', believed to be for the F-14 Tomcat. These had been ordered by Jetpower through a ''nominee'' firm from the US and were imported into Hong Kong in September last year. Jetpower also imported other parts - including 17 rotor generators - and exported them to Iran without a licence. Mr Casewell said the parts involved in the case were worth $2.45 million. Evidence read out in court from a US Navy specialist who inspected the magnetrons at the secret Naval Air Warfare Centre (NAWC) in California concluded the magnetrons were ''inappropriate for civil use''. A British Army officer based in Hong Kong also inspected the items seized from Hawker and said they were compact and from an external examination were ''well suited to withstanding high gravitational loads typical of those experienced in a highly manoeuvrable military aircraft, its sub-systems or weapons components''. He said that on the basis of the documentary evidence the six magnetrons exported to Iran had a ''similar design and function and could be used for the same purpose''. Last Monday, Jetpower admitted to two counts of importing strategic commodities without a licence, six charges of exporting strategic commodities without a licence and three of furnishing false information on licence application forms. Individual charges were initially brought against three Jetpower Industrial employees, John Chan Hok-shek, 39, who runs the firm, secretary Queenie Chow Wai-lee, 31, and Andy Lo Ting-kong, 27, but were later dropped. Both Ms Chow and Mr Lo have since moved to Singapore, where they are believed to still be working for the company. In mitigation, Ronald Tang for Jetpower said the company had been ''deceived'' and that it thought it was genuinely exporting civilian aircraft parts to Iran. ''The company all along believed they were civilian aircraft parts,'' he said. ''They had no idea they were military parts.'' Mr Tang said Jetpower, which had an annual turnover of $30 million before the prosecution but is now almost nothing, conducted most of its business with Iran. ''There is nothing sinister in dealing with Iran or other Middle Eastern countries as long as it is civilian parts,'' he said. Hawker Pacific, involved in importing the magnetrons into Hong Kong from the Oriental and Scientific Instrument company in China, pleaded guilty to three counts of ''furnishing false information regarding the end use of strategic commodities''. An Iranian company in Hong Kong, Golden Lawell Ltd, which ordered the parts from Jetpower, has effectively stopped operations since customs officers raided the Hawker Pacific and Jetpower offices last year. Golden Lawell is linked to Faisun and all their directors operate from the same Teheran address - a suspected military facility - and are believed to be fronts for the air force. Hawker Pacific, which made a profit of $63,634 in the transaction, was fined a total of $78,000 on November 5, while Jetpower, which made $170,000 profit on all items covered by the summonses, was fined $310,000 last week. The Government is taking legal advice on whether to review both fines and impose stiffer penalties. Peter Bourton, Principal Assistant Secretary for Trade and Industry, who is responsible for issuing licences for strategic items, said the magnetrons smuggled to Iran from China through Hong Kong were specifically for military use. ''I'd like to make it clear that we have Asia's most comprehensive system of import and export controls on strategic commodities,'' he said. Both Jetpower Industrial and Hawker Pacific are to move their operations out of Hong Kong following their prosecution, but their officials were informed that they would be kept under close scrutiny.