* Pakistan "National hero" built world's most dangerous black market .

* 'First, he exploits a fragmented market and develops a quite
advanced nuclear arsenal. Then he throws the switch, reverses the flow
and figures out how to sell the whole kit, right down to the bomb
designs, to some of the world's worst governments.'

* Abdul Khan bought twice the amount of nuclear parts needed by
Pakistan, then sold excess to other countries.

When investigators went to Libya, they found that Dr Khan's network
had also provided blueprints for a nuclear weapon. For investigators,
it was a startling revelation of how dangerous the black market had
become. -- New York Times

===========

NEW YORK - The break for American intelligence operatives tracking Dr
Abdul Qadeer Khan's nuclear network came in the wet August heat in
Malaysia as five giant cargo containers full of specialised centrifuge
parts were loaded into one of the nondescript vessels that ply the
Straits of Malacca.

The CIA had penetrated the factory of Scomi Precision Engineering,
where one of the nuclear network's operatives - known to the workers
only as Tinner - watched over the production of the delicate machinery
needed to enrich uranium for nuclear bombs.
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Spy satellites tracked the shipment to Dubai, where it was re-labelled
'used machinery' and transferred to a German-owned ship, the BBC
China.
When it headed through the Suez Canal, bound for Libya, the order went
out from Washington to have it seized, according to accounts from
United States officials.

That seizure led to the unravelling of a trading network that sent
bomb-making designs and equipment to at least three countries - Iran,
North Korea and Libya - and has laid bare the limits of international
controls on nuclear proliferation.

This week, US President George W. Bush proposed to enhance that system
by restricting the production of nuclear fuel to a few nations.
The scope and audacity of the illicit network are still not fully
known. Nor is it known whether the Pakistani military or government,
which had supported Dr Khan's research, were complicit in his
activities.

But what has become clear in recent days is that Dr Khan, a Pakistani
national hero who began his rise 30 years ago by importing nuclear
equipment to secretly build his country's atom bomb, gradually
transformed himself into the largest and most sophisticated exporter
in the nuclear black market.

'It was an astounding transformation when you think about it,
something we've never seen before,' said a senior American official
who has reviewed the intelligence.

'First, he exploits a fragmented market and develops a quite advanced
nuclear arsenal. Then he throws the switch, reverses the flow and
figures out how to sell the whole kit, right down to the bomb designs,
to some of the world's worst governments.'

Dr Khan started in the mid-1980s, according to nuclear proliferation
experts, by ordering twice the number of parts the Pakistani nuclear
programme needed, and then selling the excess to other countries,
notably Iran.

Later, his network acquired another customer, North Korea, which was
desperate for a more surreptitious way to build nuclear weapons after
the US had frozen the North's huge plutonium-production facilities in
Yongbyon.

And in the end he moved on to Libya, his ultimate undoing, selling
entire kits, from centrifuges to enrich uranium to crude weapons
designs. Investigators found the weapons blueprints wrapped in bags
from an Islamabad dry cleaner.

Mr Bush said in a speech on Wednesday that the network even sold raw
uranium to be processed into bomb fuel.
He also identified Dr Khan's deputy - 'the network's chief financial
officer and money-launderer' - as Bukhari Sayed Abu Tahir, a
businessman in Dubai who, investigators say, placed the order for the
Libyan equipment.

One longtime trading partner of Dr Khan's was Mr Peter Griffin, a
British engineer who said in an interview that he had been a supplier
to Pakistan for two decades during the period when Dr Khan was
building nuclear weapons.
'Anything that could be sent to Pakistan, I sent to Pakistan,' he
said.

Mr Griffin is also the partner in a Dubai company that investigators
said placed the order for materials that wound up on the ship headed
for Libya, although he denies knowing anything about that shipment.

Pakistan's President, General Pervez Musharraf, confronted Dr Khan
after the BBC China was seized on its way to Libya and evidence of the
network tumbled out.
'Khan had a complete blank cheque,' said one aide close to Gen
Musharraf. 'He could do anything. He could go anywhere. He could buy
anything at any price.'
The multilingual Dr Khan led the acquisition effort. His shopping
spree spanned the world.

'Africa was important because of the materials needed,' said a senior
Pakistani official involved in the investigation of Dr Khan.
'Europe was crucial for bringing in high-tech machines and components.
Dubai was the place for shipments and for payments.

'We were not the first beneficiaries of this network. But the
intensity of Pakistan's nuclear acquisition effort did enlarge the
market. Everybody knew that there is a buyer out there, loaded with
money and hell-bent on getting this ultimate weapon.'

At first, Western intelligence agencies tracking Dr Khan were
perplexed.
'In the 1980s, I remember being told by officials that Khan was
over-ordering centrifuge parts and they couldn't understand why,'
recalled Mr Simon Henderson, a London-based author who has written
extensively about Dr Khan. It eventually became clear that the extras
went to clients outside Pakistan.
Around 1987, Dr Khan struck a deal with Iran, which wanted to build
50,000 centrifuges of a type known as P-1, for Pakistan-1, an
entry-level model, Western investigators found.

If ever completed, a plant that size would enable Teheran to make fuel
for about 30 atom bombs each year.
As Pakistan's own technology became more sophisticated, Dr Khan sold
old Pakistani centrifuges and parts, Western investigators found, some
contaminated with highly enriched uranium.

Iran appears to have acquired such second-hand gear. 'They were not
happy to discover they overpaid for old wares,' said one American
intelligence official. But for Iran, it was a start.
In the final stages of his export career, Dr Khan simply used his
middlemen to order large shipments of parts for foreigners, even if
Pakistan had no apparent role in the transaction and appeared to
receive no direct benefits, American investigators said.

When Libya embarked on a two-step effort to become a nuclear-weapons
nation, Dr Khan's network was presented with an opportunity to sell a
particularly sophisticated system. The network was moving to a new
level of ambition.
Libya's initial focus was the ageing P-1 design, American and European
investigators said. But eventually the Libyans sought a more efficient
technology, the P-2.

The central figure in the Libyan P-2 effort, American officials said,
was Mr Tahir, a Sri Lankan native who moved to Dubai as a child. Dr
Khan had attended Mr Tahir's wedding in 1998, Malaysian officials
said.

In his speech, Mr Bush said Mr Tahir used a company in Dubai, SMB
Computers, 'as a front for the proliferation activities of the A.Q.
Khan network'. Corporate records list him as an owner.

Another associate whose name surfaced in the Libyan deal was Mr
Griffin. Interviewed by telephone from France where he lives, Mr
Griffin, 68, said that all the items he sent to Pakistan were approved
by the British Department of Trade and Industry and that he had done
nothing illegal.
In June 2000, according to investigators and public records, Mr
Griffin set up a trading company in Dubai, Gulf Technical Industries.
The following year, it contracted with a Malaysian manufacturing
conglomerate to make sophisticated parts.

The manufacturer, Scomi Group Berhad, said it signed a contract with
Gulf Technical in December 2001 to supply the components.
Scomi set up Scomi Precision Engineering, hired some 40 workers,
bought costly machine tools and began work, said Scomi spokesman
Rohaida Ali Badaruddin.
Scomi Precision made its first shipment to Gulf Technical in December
2002 and the last in August 2003. Investigators said the shipments
were largely P-2 centrifuge parts.

Malaysian officials said Mr Tahir was under investigation in Malaysia
but was not under arrest.

When investigators went to Libya, they found that Dr Khan's network
had also provided blueprints for a nuclear weapon. For investigators,
it was a startling revelation of how dangerous the black market had
become. -- New York Times