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Cablegate: A.Q. Khan Associate Lerch Avoids Jail Time in Deal

VZCZCXRO3157
OO RUEHAG RUEHDF RUEHLZ
DE RUEHFT #3206 2980832
ZNR UUUUU ZZH
O 240832Z OCT 08
FM AMCONSUL FRANKFURT
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8350
INFO RUCNFRG/FRG COLLECTIVE IMMEDIATE
RHEBAAA/DEPT OF ENERGY WASHINGTON DC IMMEDIATE
RUEHSA/AMEMBASSY PRETORIA IMMEDIATE 1621
RUEHIL/AMEMBASSY ISLAMABAD IMMEDIATE 4352
RUEHTRO/AMEMBASSY TRIPOLI IMMEDIATE
RUEHKL/AMEMBASSY KUALA LUMPUR IMMEDIATE 0245

UNCLAS FRANKFURT 003206

DEPARTMENT FOR T, EUR, ISN, SCA, AF, EAP

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: PARM MNUC PREL KNNP ETTC KJUS KCRM PREL GM
SUBJECT: A.Q. Khan Associate Lerch Avoids Jail Time in Deal

REF: A. 07 Berlin 2239
B. 08 Frankfurt 1817
C. 08 Frankfurt 2272

1. (SBU) SUMMARY: Nuclear smuggler Gotthard Lerch struck a deal
with the prosecution ending his trial October 16 and avoiding any
jail time. Lerch received a five and a half year sentence for his
involvement in exporting nuclear technology to Libya, but the
remaining time of his sentence will be commuted to probation. The
prosecution struggled during the long investigation to obtain
information from foreign governments, leading it to settle with
Lerch who wanted to end the trial and avoid any time in prison. END
SUMMARY.

Plea-Bargain Deal Brings Trial to Early End
-------------------------------------------

2. (U) On October 16, the Higher Regional Court in Stuttgart issued
Gotthard Lerch a five and a half year prison sentence for violating
German export control regulations. Prior to the verdict, Lerch's
attorneys and the federal prosecutors had agreed that Lerch would
plea guilty in exchange for a sentence of no more than six years.
The two sides have met several times since August of this year in an
attempt to end the long-running case.

3. (U) Lerch admitted in his confession that he had taken part in
the design and production of pipe systems for a gas centrifuge
facility in South Africa, which was to be shipped to Libya for use
in its now-abandoned nuclear weapons program. Lerch also admitted
to being a long-time associate of A.Q. Khan, the Pakistani nuclear
engineer who helped Iran, North Korea and Libya develop nuclear
technology (see reftel C). Media sources have speculated that Lerch
and other associates shared information with U.S. and other foreign
intelligence services on Libya's program, which led to its eventual
exposure and end, in exchange for assistance in avoiding prosecution
for their actions.

4. (SBU) In addition to his sentence, Lerch must make a one-time
payment of 3.5 million euros ($4.69 million) to the Federal Republic
of Germany, an amount estimated to equal what he received as payment
for his participation in the nuclear weapons smuggling network.
Lerch has already spent twenty-two months in pre-trial detention,
which counts as time served. The judge also ruled that the trial
and investigation had gone on too long (almost four years) and
therefore suspended another year of the sentence in compensation.
Thus, Lerch will most likely not return to prison and will instead
be on probation for the remaining time of his sentence, one and half
years. The Federal Prosecutor's Office in Karlsruhe told ConGen
Econ Spec that the case had gone on so long in part due to a change
in law moving jurisdiction for the trial from the state to federal
level, which took place once the investigation was well underway.

Court Criticizes International Assistance
-----------------------------------------

5. (SBU) Presiding Judge Juergen Niemeyer said in his ruling that
Lerch had taken part in the proliferation of nuclear weapons, but
had not been a leading player. He praised the amount of legal
cooperation Germany had received from Switzerland, Lichtenstein and
Malaysia. One of the prosecutors, Sigrid Hegmann, told ConGen Econ
Spec that the prosecution settled due to the lack of cooperation
from numerous foreign governments in the investigation. Of the
fifteen requests for assistance, only Switzerland, Lichtenstein and
Malaysia had responded. Hegmann stated that among those that only
partly responded or not at all were the U.S. and Great Britain.
However, South Africa's refusal was particularly damaging as so much
of the evidence is believed to lie there.

6. (SBU) Comment: Lerch's motivations to confess were clear as he
avoids jail time and brings his long legal troubles to an end. The
sixty-five year old engineer has been found guilty of helping the
Libya program, but will most likely avoid any further investigation
into his long association with A.Q. Khan and his ring of nuclear
smugglers. Thus, the final verdict was mostly likely bittersweet
for the prosecution, which won the case, but was forced to settle
for a weak sentence. End Comment.

7. This cable was coordinated with Embassy Berlin.
POWELL

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