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Defense Contractor Ready to Plead Guilty in Illegal Export Case

January 17, 1995

MIAMI (AP) _ Teledyne Industries Inc. has agreed to plead guilty on an indictment charging the defense contractor shipped 130 tons of weapons-grade zirconium to Chile for use in Iraqi cluster bombs.

The company plans to plead guilty rather than face trial next month on charges of conspiracy and filing false export statements, a source close to the case said Tuesday, speaking on condition of anonymit.

Teledyne would face a fine of $3 million to $4 million, or twice the gross profit estimated by prosecutors on zirconium sales to its Chilean buyer, if the company pleaded to the two counts, said Assistant U.S. Attorney Frank Tamen.

Teledyne has not signed a formal plea agreement, Tamen said. But prosecutors have requested a hearing for a ``change of plea″ by the company Jan. 26, said William Heede, deputy clerk to U.S. District Judge Shelby Highsmith.

``We are preparing for trial,″ Tamen said. ``If a plea agreement is actually signed and worked out prior to trial, we will certainly advise all concerned.″

Asked about the report of a plea change, company attorney William Linklater, said, ``I can’t comment on it, I guess is the only thing I can tell you.″ A call to the company itself was not immediately returned.

The Los Angeles-based company was charged in 1993 with violating the U.S. Arms Export Control Act and conspiracy by illegally exporting enough zirconium to make 24,000 cluster bombs.

Teledyne’s customer, Chilean arms maker Carlos Cardoen, allegedly sold at least 10,000 cluster bombs to Iraq in the 1980s during the Iran-Iraq war.

Teledyne had accused the Bush and Reagan administrations of complicity by claiming the United States winked at arms sales by Cardoen to Iraq.

But Highsmith barred that defense, saying the company undermined its own arguments by also claiming the company was unaware Cardoen was using the zirconium in bombs.

Teledyne and two employees had been set for trial Feb. 6. If Teledyne settles its charges with a plea, the two employees are to face trial by themselves.

Cardoen and his company, Industrias Cardoen Limitada, were indicted in the same case, but he has remained in Chile and hasn’t been arrested.

Teledyne’s export licenses for the zirconium said the material was approved only for civilian use, and Commerce Department license applications filed by Teledyne said the material would be used in explosives for mining operations.

Classified CIA documents indicated the agency knew as early as 1984 that the zirconium would likely end up in Iraqi cluster bombs. Teledyne’s sales to Cardoen continued to 1987.

The zirconium, a hard, metallic element with weapons and industrial uses, was shipped by Teledyne Wah Chang Albany of Albany, Ore., to Cardoen’s arms company.

Cluster bombs consist of hundreds of tiny bomblets in a single casing, reducing the need for precision in bombing runs while raising human casualties.

At the time of the indictment, Teledyne was inundated in defense fraud cases. The company settled a criminal case charging tests were falsified on aerospace switches for $17.5 million in 1992, then a record fine for U.S. defense contractors.

The company’s prosecution in Miami stems from a customs investigation here. An indictment filed last year in Washington builds on the Miami case, charging $3.5 million worth of Teledyne zirconium pellets were sent to Jordan in 1988 for use in Iraqi bombs.

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