written statement I provided the committee early in, I believe, 1985 when he was working, when Dr. Helmy was working with Teledyne, McCormick, Self and Hollister, he had been contacted by the same principals in this case from the Egyptian side, primarily Colonel Khairat, about obtaining some fuel-air explosive bombs.

As I am sure you gentlemen are aware of in the current conflict over in the Middle East that became an issue. It turns out that during the time that Mr. Helmy was working for Teledyne, McCormick, Self, the Egyptian Government, through a person on the east coast, attempted to purchase some of these and they were informally denied a license by the State Department for the purchase of them. They, then, turned to Dr. Helmy in his capacity at Teledyne and asked him to obtain the patents on the more critical portions of that system, specifically the dispenser and the ignition units. He admitted during my debriefings with him that he, in fact, turned those over to the Egyptian officials.

I also developed information in interviewing some of the other corporations that he had been in contact with during this investigation that he had approached the Coleman Research Corp., located down in Huntsville, about obtaining Stinger guidance systems. The Stinger missile being one of our primary surface-to-air missiles.

He had, also, early in our wiretap investigation, we overheard him being asked to check on the remotely piloted vehicle, known as the SCARUB that was being built by Teledyne Rhein, which is essentially, for lack of a better word, the poor man's cruise missile. Teledyne Rhein is in the process of building this up particularly as this RPV for the Egyptian Government. They had asked Dr. Helmy to check on its status through his back channels. But, I think, clearly in this case there was some evidence and not that there were other Egyptians involved, but there was more than one program that the Egyptian Government was interested in Dr. Helmy following up on.

As Mr. Sundquist had asked during his questioning about the moneys involved in this, there was some evidence at the end of our wiretap that Dr. Helmy and Mr. Huffman were intent on establishing this as a full-time smuggling venture, if you will. They talked about buying their own warehouse. They talked about using the money that-Dr. Helmy made the comment to Mr. Huffman that "In the future rather than buying one or two of these various types of items, we're going to be buying large quantities of one chemical, then large quantities of another, and shipping them in the same way." So, this wasn't a one-time effort on the part of the Egyptian Government or on Mr. Helmy to try and smuggle something for one particular time.

Chairman PICKLE. If you will suspend just a minute, Mr. Burns, Mr. Sundquist, I believe, wants to ask a question on that point.

Mr. SUNDQUIST. Mr. Burns, thank you for that comment. I would like to go to Dr. Helmy. Is this the new business that you were talking about?

Mr. HELMY. No, I would like to clear this because a lot of this is not accurate, sir. First, with respect to the Coleman Industry, this is not a Stinger. This was the Pershing. What happens, the Egyptian Government sent a representative here to Coleman Industry

and Coleman Industry is the company which manufacture software for the Pershing missile. They came through officially and asked him to prepare a proposal. They prepared the proposal. He was, also, looking to obtain a license. It is not any illegal things, number

one.

Number two, with respect to the RPV, this was already a program between the United States of America and the Egyptian Government. It was paid through even the Government, not through me and it was manufactured by Teledyne Brown for the Egyptian Government. There was a big Egyptian delegation from the Egyptian Air Force working with Teledyne, not Teledyne Brown, I am sorry, it is Teledyne Aerospace in San Diego.

There was a big Egyptian delegation which was working with the Teledyne Aerospace in San Diego in this program and at one time they have a flight test which failed. So, I was contacted by the Egyptian Government to know why this was failed and what I think. But nothing was illegal about this because this was the program.

With respect to the Egyptian

Mr. SUNDQUIST. What year were you contacted by the Government to ask what you thought?

Mr. HELMY. What happened

Mr. SUNDQUIST. What year?

Mr. HELMY. I don't recall. I think it was 1987, I believe, 1987. Mr. SUNDQUIST. Did they call you often to find out what you thought about defense systems?

Mr. HELMY. No, they called me OK. The program which we have with Teledyne Brown, we have a flight test and the flight test was failed. What do you think? Do you think we should cut this program with Teledyne Brown?

Mr. SUNDQUIST. Dr. Helmy, my question, I want to get back and let Mr. Burns respond to what you said, but my question was this. Earlier I had asked you about moneys and who got moneys, and what it was going to be used for, and maybe I didn't ask the question exactly right. But apparently there has been some evidence on wiretap that the money was going to be used for other kinds of things like this in the future with Mr. Huffman. You didn't say that on the wiretap?

it.

Mr. HELMY. For sure, this was only list which I have and this is

Mr. SUNDQUIST. You are saying that the wiretap did not occur and you didn't say that?

Mr. HELMY. For more program and future program more than the list which I have, as I recall, this was the only program which

Mr. SUNDQUIST. You weren't going to use this money to buy a warehouse? What did you say to Mr. Huffman about what you are going to use the money for? Do you recall?

Mr. HELMY. The money which I had received?

Mr. SUNDQUIST. Yes.

Mr. HELMY. Huffman didn't know how much money I received. Mr. SUNDQUIST. No. But did you talk to Mr. Huffman about doing more of this kind of thing?

Mr. HELMY. No.

Mr. SUNDQUIST. Did you talk to Mr. Huffman about what you were going to do with the money?

Mr. HELMY. The only thing which I ask Huffman to do is just to procure me the material which is on the list and if I don't give him the whole material at once, maybe I give him something at the beginning, then

Mr. SUNDQUIST. Could you hold up just a second and then we can get Mr. Burns to respond? Is that possible?

Mr. BURNS. Yes, sir. I am referring here to the Government Sentencing Memorandum that I believe is a part of the record of this filed in the Eastern District of California, United States of America, Plaintiff, v. Abdul Khadar, et al., Defendants. Page 26, lines, basically, 4 through 7 when Mr. Flynn, the assistant U.S. attorney that prepared this, is quoting some of our wiretaps.

I will read, it says, starting at line 4,

Later conversation on June 22nd, Helmy suggested that he and Huffman should get their own warehouse for future shipments. Attachment 57, page 7, which was the original attachment to this document. Huffman said that he could get one for maybe even, oh, 50 or $60,000. Huffman said he knew a place out here in the country that would be kind of remote and would suit our purposes just fine.

Now, that is a direct quote off of the transcripts of that wiretap, sir.

Mr. SUNDQUIST. Mr. Helmy, does that refresh your memory?

Mr. HELMY. Yes. But I know for definite, for sure, 100 percent, that there is no more than the list which I received from the Egyptian Government.

Mr. SUNDQUIST. Are you denying under oath to us that you said that?

Mr. HELMY. Maybe I said that, but I know for sure that there was more than the-there was nothing more than the list which I have, that could be more shipment from the same list because I haven't given him the list at once. I give it him

Mr. SUNDQUIST. Well, let me go back. You are saying that you may have said that or you did say that?

Mr. HELMY. I say I might have said that on the wiretap, but the intention is that with no more than the list itself.

Mr. SUNDQUIST. Well, I mean, this is a fairly major thing for you. to remember. I mean, what you are going to do with the money and where the money was going to go and would you invest with Mr. Huffman. You don't remember that discussion with Mr. Huffman at all?

Mr. HELMY. I don't remember it at all. But the thing which I remember clear for my mind is that there was nothing except this list. If there is, I would tell it to them because I told them something which is more important than this. So, if it was more activity, I would tell it to them. I have no reason to hide it from them. Mr. SUNDQUIST. Well, Dr. Helmy, I am disappointed. I have not been so far because I thought you came in here as an American citizen, as Mr. Rangel said, with some remorse over what happened and some concern about your country, your new country, and that you were going to be cooperative. But something this major when you said, no, you didn't say it and we read it and you say I may have said it. I mean, that really disappoints me. Can we believe the other things that you are saying to us?

Mr. HELMY. Yes. I tell you something, sir. You know, this is now like 3 years before this happened. But the thing which I remember because the wiretaps first when they were translated, they weren't translated correct. There was even-my lawyer contested that there was a lot of not accurate translation. But for the reality, one thing for real, I am telling you everything the truth. This is no problem with all of this.

The second thing which I am very clear about is that there was nothing more than this list. This is the list. It might, I was giving it to Huffman piece by piece and not telling him everything at once. It could be this is the way, but not for more shipment or no more activity than this.

Mr. SUNDQUIST. And you don't remember discussing with Mr. Huffman $60,000, if that was the number, for a warehouse that might be suitable? You don't recall that? For the record, you are saying this?

Mr. HELMY. What happens for the warehouse, he used it to handle the warehouse problem. Whenever he has a problem he comes to me.

Mr. SUNDQUIST. You are saying you don't remember saying that or you are denying saying that?

Mr. HELMY. I say I am not remembering.

Mr. SUNDQUIST. Thank you.

Mr. Burns.

Mr. BURNS. Yes, sir. I would just like to address one other point that Dr. Helmy just said. I am referring in this matter to Customs report of investigation number 17 for the Abdul Khadar Helmy case that I believe, also, is a part of the record. This particular report documented my traveling to Huntsville, Ala., and interviewing officials at the Coleman Research Corp.

Just to read, the paragraph that I am reading is off of page 3 of that particular report. It says:

Transtechno, which was one of the companies that was affiliated with Consen, one of the engineering companies over in Europe, was inquiring about two distinct systems. One, the infrared seeker system for the Stinger missile and one relating to tactical ballistic missiles. The current president of CRC, Mr. James Morrison, who was vice-president and general manager of Huntsville office of CRC, handled the project for the Huntsville office.

The report goes on to say that besides looking at those two items that I just mentioned there, they also had been approached by Consen and Dr. Khairat about providing missile test range facilities and software for optimizing trajectory of warheads. The company, which is a legitimate up front company, provided the proposal to Transtechno and to Consen and in that proposal they told them that in order to export this we are going to need license. Then, at that point, the Egyptian Government lost their interest in it. Shortly, thereafter, they began the whole process of acquiring it by the illegal means.

Mr. SUNDQUIST. Thank you for allowing me to interrupt, Mr. Chairman.

Chairman PICKLE. Mr. Davis, do you want to add anything else at all?

Mr. DAVIS. No, thank you, sir.

Chairman PICKLE. The Chair wishes to move on to the next panel. We have many questions that we wish to submit to the panelists for further answers. It is not the Chair's position today to attempt to draw conclusions about much of the testimony that has been presented. I appreciate the fact that Mr. Davis has given a very factual, chronological development of this particular case. Mr. Davis, Mr. Burns has not only confirmed that, but also has related some of the background to it. We are glad to have the testimony that Dr. Helmy has presented here as an addition to all this.

It is hard, I would think, for the average person to believe that Dr. Helmy was not an agent for the nation of Egypt, an outright agent developing materials for the use of that nation aided and abetted by, one, finances from Iraq, the engineering from West Germany, and the cooperation of Argentina. It would seem to me that this case is an obvious example that it was relatively easy to buy almost any kind of goods, put them together and ship them out of the country contrary to our laws, particularly if you had the cooperation of one of the nations involved. That is the conclusion that one may or may not come to.

The committee now will attempt to sort out all this testimony. Our concern is in what way can we, the United States, establish better control of our exports, both purchase and shipments, in order to ensure the safety of our country. I don't know that we know the answer. But we know it is relatively easy to do it, at least from the testimony that has been introduced this morning. I think that it should be a clear bell ringing to our Commerce Department and the State Department that we are woefully weak in this regard. But we will try to address those specific Customs questions at a later point.

I do want to thank each of the panelists for their participation today. Thank you very much.

Now, our next panel will be Dennis Bass, who is a Senior Special Agent from Baltimore, and Leslie Hinkleman, former export manager of Alcolac International in Baltimore. I am going to ask both Mr. Bass, if he would take his seat at the table, I am also going to ask Leslie Hinkleman if she will take her seat. We will give the oath to her at one time and we will proceed as a panel then.

Then I will yield to Mr. Jenkins and to Mr. Bunning for any comments or questions. We have asked some of our special witnesses to take the oath for the testimony being presented. Ms. Hinkleman, will you raise your right hand?

[Witness sworn.]

Chairman PICKLE. The record will show that Ms. Hinkleman has answered in the affirmative.

All right. The Chair recognizes Dennis Bass who is Senior Special Agent of Customs Service in Baltimore. Mr. Bass. And then the Chair will yield to Mr. Jennings and Mr. Bunning.

STATEMENT OF DENNIS J. BASS, SENIOR SPECIAL AGENT, U.S. CUSTOMS SERVICE, BALTIMORE, MD.

Mr. BASS. Thank you, Mr. Chairman. This investigation began in 1988 when information was developed which indicated that Alcolac International, a chemical manufacturer in Baltimore, was arrang