Aussie in US Spy Scandal over Stealth Bomber

November 19th, 2005 - by admin

Michael McKenna and Patrick Walters / The Australian – 2005-11-19 09:13:50 story_page/0,5744,17272347%255E601,00.html

(November 17, 2005) — 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.

Deadly Blow Delivered by ‘Invisible’ Strike Force
The B-2 Stealth bomber is one of the most potent weapons in the arsenal of the US military.

• The long-range strategic bomber is designed to avoid detection and elude heat-seeking missiles as it delivers a 18,000kg payload of conventional or nuclear weapons.

• The US’s 21 aircraft, which each cost $2.2 billion, can fly more than 9600km without refuelling. If they refuel just once they can fly further than 16,000km, giving them the capacity to strike almost anywhere in the world within 24 hours.

• How the B-2 achieves “stealth” is a closely guarded secret, but its component materials, special coating and wing design all contribute to its “low observability”.

• The B-2 is coated with a radar-absorbing paint on its leading edge and has a unique engine system that hides the heat coming from the jet exhaust.

• This exhaust-cooling technology protects the plane from heat-seeking missiles.

• The B-2’s first combat missions were in Kosovo — Operation Allied Force — in 1999. Since then, it has been used in Operation Enduring Freedom (Afghanistan, 2001) and Operation Iraqi Freedom, the US-led invasion of Iraq in March and April of 2003.

Numerous websites testify to the effectiveness of the B-2 in combat.

• In Kosovo, the aircraft was responsible for destroying 33 percent of all Serbian targets in the first eight weeks by flying non-stop to the eastern European country from its home base at Whiteman air force base in Missouri.

• Supporting Operation Enduring Freedom, the B-2 flew one of its longest missions: from Missouri to Afghanistan and back again.

• Its first full-scale combat deployment was in the second Gulf War, where it flew 22 sorties from Diego Garcia as well as 27 sorties from Whiteman. B-2s released more than 680,000kg of munitions during that campaign.

• The design of the B-2 can be traced back to the flying wing of the 1940s but the development program began during the early 1980s in California.

NTech Australia
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.

The Secret’s Out
INDIAN-born Noshir S. Gowadia, 61, helped develop the B-2 Stealth bomber while a design engineer at Northrop Corporation, where he worked for 18 years. He was instrumental in the creation of a classified system that helps protect the aircraft by making it “virtually invulnerable to attack” from heat-seeking missiles.

Gowadia, who later worked as a contract engineer at the top-secret Los Alamos National Laboratory in New Mexico, is accused of disclosing the Stealth’s infrared-suppression secrets to representatives from eight foreign governments.

• October 13, 2005: FBI agents raid Gowadia’s $US2 million mansion on the Hawaiian island of Maui, finding several classified documents.

• October 14: Gowadia gives a statement to the FBI in which he admits knowingly disclosing top-secret information. “At that time, I knew it was wrong and I did it for the money.”

• October 28: Gowadia is charged with one count of “wilfully communicating national defence information to a person not entitled to receive it”. He is currently in federal custody in Honolulu and faces up to 10 years in prison, with further charges possible

• November 8: A federal grand jury returns a six-count indictment against Gowadia. Three counts allege he broke federal laws by communicating national defence information to people in three unidentified countries. The remaining three counts accuse him of violating the Arms Export Control Act.

FBI Allegations
On October 23, 2002, Gowadia faxed a proposal to develop infrared-suppression technology on military aircraft to a representative of an unspecified foreign country. The information in the document was classified as top secret.

In December 1999, Gowadia taught a course to foreigners in a second unspecified country, including information deemed “secret” that he had access to while working for Northrop and as a subcontractor for Los Alamos.

On several other occasions, Gowadia provided “extensive amounts of classified information” to individuals in a third unspecified country while teaching a course on “low observable technology”.

The Aussie Conection
Gowadia and Australian Department of Defence contractor Arthur Lazarou are listed as directors and shareholders in Canberra-based company NTech Australia Pty Ltd. On several other occasions, Gowadia provided

The company, registered to Mr Lazarou’s home address and set up in mid-2001, is alleged by US prosecutors to be one of two foreign entities used to launder money from the sale of the secrets to fund Gowadia’s lavish lifestyle. Gowadia had 970 A-class shares in the company and Lazarou 30 B-class shares.

Lazarou, a former Australian Navy lieutenant-commander and aeronautical engineer, joined the Defence Materiel Organisation a fortnight ago as a project management coach. Lazarou approached Defence officials about his links to Gowadia and denies having any knowledge of his former business partner’s activities.

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