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