Ian MacLeod, Canwest News Service Published: Thursday, October 16, 2008

OTTAWA – An Iranian-Canadian businessman who spied on Iran for Germany has been arrested in Frankfurt on suspicion of using his companies to support Iran’s missile program, a German news magazine reports.

The magazine Der Spiegel says the 61-year-old man, identified only by his code name, “Sinbad,” holds dual Canadian and Iranian citizenship and spied for the German foreign intelligence service, the Bundesnachrichtendienst (BND), for more than a decade.

With the knowledge of the BND, the man set up a company in Canada and another in Germany, which helped provide him with a cover for extensive world travel, it says.

But he reportedly failed to tell the agency he was using one of the companies to allegedly ship machinery to an Iranian company blacklisted by Berlin on suspicions it was involved in Iran’s ballistic missile program. The magazine does not identify which of the two companies was allegedly involved, though his detention by authorities suggests it was the German firm.

At least two shipments over the past year are believed to have been destined for Iran’s Shahab rocket program, according to Germany’s federal prosecutor’s office. The rockets have an estimated range of 1,300 to 1,600 kilometres and could reach Israel. There are fears they also could someday be fitted with nuclear warheads.

The machinery was not identified, other than that it can be used for both military and civilian applications. Two further shipments were planned, says Der Spiegel.

Prior to his Oct. 5 arrest at Frankfurt Airport, the country’s top intelligence officials and its chief federal prosecutor clashed over what to do with the wayward spy.

Sinbad was the BND’s most valued agent in Iran – few western agents have been able to penetrate the Iranian government – and the agency argued he should not be arrested under Germany’s strict armament export controls.

But German law only allows for exceptions in such cases if national security law, not export control law, is violated.

Sinbad, according to the magazine, now faces charges and a potential prison term.

His intelligence reports to the Germans were delivered to the foreign office and for years served as important building blocks for the Iran policy of the German government. On a number of occasions, the information from the spy was directly incorporated into the situation analyses of Foreign Minister Frank-Walter Steinmeier.

Also, according to the magazine, Sinbad’s information appeared to come from the inner sanctum of the Tehran state apparatus and its ministries.

At times, he would hand over pictures of tunnel-boring machinery, at other times details of secret storage facilities. He would also provide freshly minted papers on progress in the development of delivery systems for nuclear warheads, it reported.

He was “one of our highest-value sources in the entire area of proliferation,” an unidentified government official is quoted as saying.

The material he offered was so rich, Germany’s secret service at least twice investigated suspicions that their Iranian counterparts might be feeding the West manipulated material through Sinbad. In return for the information, and the risks he took, the BND reportedly paid him about $1.6-million.

Meanwhile, what started as a routine government financial audit of the businessman’s books – those officials were unaware of his work for the BND – soon mushroomed into a full investigation by the customs criminal division, or ZKA. It soon learned of his BND work, but continued to pursue the case.

The question now, says Der Spiegel, is why Sinbad would betray his government in Tehran, while at the same time ship it material for armaments?

“To that, the investigators have yet to find any conclusive answer. Perhaps he thought he was untouchable.”

The German government, which now fears a diplomatic row with Tehran, has not commented on the report.

Ottawa Citizen