Aussie in US spy scandal

AN Australian Defence employee has become embroiled in an international espionage scandal involving the alleged sale of top-secret US B-2 Stealth bomber technology to foreign powers.

Defence Materiel Organisation officer Arthur Lazarou, a retired Royal Australian Navy lieutenant-commander, is the subject of an internal Defence investigation over his links to US engineer Noshir Gowadia, who was charged last month with disclosing military secrets - which could be "used to cause injury" to the US - to representatives of eight foreign governments and corporations.

Although prosecutors have not disclosed the identity of foreign interests involved, US press reports named China as among countries that acquired the Stealth secrets.

Indian-born Mr Gowadia, 61, is described as having played a crucial role in developing the B-2 Stealth bomber while a design engineer at Northrop Corporation, where he worked for 18 years. He was instrumental in creating a secret defence system that makes aircraft "virtually invulnerable to attack" by making them invisible to infra-red heat-seeking missiles.

Mr Lazarou, 44, was hired a fortnight ago by the DMO to work as a project management coach at Defence Department headquarters - just days after Mr Gowadia was arrested by FBI agents at his Hawaiian mansion.

Company records show Mr Gowadia and Mr Lazarou are listed as joint directors and shareholders in the Canberra-based company, NTech Australia Pty Ltd.

The company, registered to Mr Lazarou's home address and set up in mid-2001, is one of two companies US prosecutors allege were used to launder the proceeds of the sale of the military secrets that funded Mr Gowadia's lavish lifestyle.

US Assistant Attorney Ken Sorenson told The Australian yesterday the Canberra shelf company and another related entity in the tax haven of Liechtenstein were central to the espionage case.

"There are two corporations that are involved in the case, NTech A (Australia) is, of course, Australian, and NTech E (Equipment), which is based in Europe," he said. "It (NTech Australia) was a corporate identity that Gowadia worked through for reasons that we suspect are not altogether legitimate."

A US federal grand jury returned a six-count indictment against Mr Gowadia last week. Three counts allege he broke federal law by "wilfully communicating national defence information to persons not entitled to receive it" from three countries. The remaining three counts accuse him of violating the Arms Export Control Act. He faces up to 10 years' jail on each count.

DMO deputy chief executive Norm Gray said he did not know if there were any links between NTech Australia and the FBI's allegations against Mr Gowadia.

He said Mr Lazarou had been upfront about his link to NTech. "He has offered full assistance to the Defence Security Authority. When he applied for the job, he declared his association with NTech before Gowadia was arrested."

It is understood that Mr Lazarou, a qualified aeronautical engineer, has handed over all relevant company documents to the DSA and maintains the company has not traded since it was set up by Mr Gowadia four years ago in a failed attempt to win Defence funding for a hi-tech electronic warfare project.

Under the plan, funding of $2 million to $3 million under Defence's concept technology demonstrator program would have allowed NTech to develop technology with the aim of commercial production.

"We could not reach agreement with him in the intellectual property or on price," Mr Gray said.

While Defence insisted on owning the intellectual property generated by the project, Mr Gowadia wanted total control, he said. Contract negotiations were terminated in late 2002.

At least eight foreign governments and corporations are alleged to have received top-secret documents and briefings involving the Stealth technology, as well as classified information Mr Gowadia got from his work at the Los Alamos National Laboratory in New Mexico - home of the US nuclear development program.

A US Federal Court hearing last week rejected Mr Gowadia's bid to be released on bail, ruling he was a "flight risk" because of a history of secret overseas trips and numerous foreign connections.

After initially denying the allegations, Mr Gowadia has since allegedly admitted he passed on classified information "verbally, in papers, computer presentations, letters and other methods to individuals in foreign countries".

"Gowadia admitted he provided classified information to approximately eight named countries," according to US Federal Court documents obtained by The Australian. "At that time, I knew it was wrong and I did it for the money," Mr Gowadia allegedly said in an October 14 statement to the FBI. It is alleged he may have been selling military secrets from as far back as 1999.

Mr Sorenson declined to disclose Australia's possible involvement in the scandal because "it is an ongoing investigation" or whether Mr Gowadia had travelled to Australia.

According to the documents, Mr Gowadia admitted he knew the information he was selling was classified. "The reason I disclosed this classified information was to establish technological credibility with potential customers for future business," he allegedly told investigators. Mr Lazarou could not be reached for comment.

http://us.rediff.com/news/2005/nov/05nri.htm?q=np&file=.htm

Indian American engineer charged with selling top secret info

November 05, 2005 13:56 IST

An Indian-American engineer, who helped develop B-2 stealth bomber technology, has been arrested and charged with selling top secret information to eight "foreign" countries.

Noshir Gowadia, 61, was arrested by the Federal Bureau of Investigation in Maui, Hawaii, on Wednesday and is being held in federal detention centre in Honolulu.

His son, Ashton Gowadia, who came to Hawaii from California for Noshir's detention hearing, told reporters that charges were the result of "misunderstanding" and that his father is an "American hero" whose work has saved many lives.

Noshir was a design engineer for Northrop Grumman Corp for 18 years till 1986 and had worked on development of B-2, which has the capability of avoiding detection by radar.

He has been charged with selling top secret information to eight foreign countries, which have not been identified but a section of media suggested that China could be one of them.

Noshir is accused of selling "infrared suppression" technology, which allows the plane to dodge heat-seeking missiles -- a critical technology.

He allegedly faxed the details of the technology to a foreign country.

The prosecutors allege that Noshir had travelled abroad to train foreign nationals using the secret information and that "vast amounts" of classified data had been found on a computer seized from his home.

More than 14,000 files of concern to Air Force were found on one computer, Assistant US Attorney Ken Sorenson claimed.

Any "hostile" foreign government that obtains such material would get an invaluable jump in developing stealth aircraft of their own -- or in countering the advantage the US now has with its bombers -- and that could affect the balance of power in that part of the world, prosecutors argue.

"That has the potential to impact future conflicts, especially in places like the flashpoint between China and Taiwan."

In court documents, the government claims Noshir has told investigators he "disclosed classified information and material both verbally and in papers, computer presentations, letters and other methods to individuals in foreign countries with the knowledge that information was classified."

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