By Chris Lane
By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
For two years, supervisors at Houston-based Tex-Co International kept a file on a client that was simply marked "AL." AL was a great customer, with plenty of hard cash and a big appetite for drilling equipment. In a letter dated September 21, 1993, a local Tex-Co worker told the company's London affiliate that AL had agreed to buy one shipment of drilling materials for $142,220.65, paid in German marks and delivered to London.
Four months later, an ocean freighter pulled out of Charleston, South Carolina, the oil field equipment from Houston on board. Only now, the same equipment being sold through the London affiliate had a shipper's export declaration stating that the equipment was worth $27,201.
On March 29, 1994, the sales rep in London was feeling good about the business. The mysterious "AL," according to a letter written to one L. Emerson, was identified by its full name of Umm Al-Jawaby, which had confirmed that it would be handing over a payment of 240,352.69 deutsche marks worth $142,220.65 in U.S. currency -- not the declared value of $27,000 and change. And there was more money on the way. This business, wrote a London emissary, promised a "brighter future and strong relationship" in the three-way deal between Houston, London and Umm Al-Jawaby.
This was just one of several shipments made over a two-year period from 1993 to 1995. But there was a problem with the "strong relationship" they were developing: Umm Al-Jawaby is the chief purchasing arm of the Libyan government and its ruler, Colonel Muammar al-Qaddafi. And that equipment was bound for the rich oil fields in Libya's desert.
Customs agents here have been on Umm Al-Jawaby's trail for years in a cat-and-mouse game aimed at bottling up the Libyans' supply master and enforcing a hard-line trade embargo. A city where Emperor Oil has long ruled over the business community, Houston has been a natural source for the drills, bits and equipment Libya needs to keep its oil fields pumping. Tex-Co proved an early win for the feds, one of the first in a series of investigative scores. And over the past year, the trail has grown hotter as federal prosecutors have picked up the pace in leading local executives to a date with a federal judge. But even as small outfits get caught up in Customs' net, Houston's multinational companies have been among the biggest profiteers in Libya.
Construction giant Brown & Root, which built many of the city's most notable landmarks and is in the process of adding another, downtown's cavernous $250 million baseball stadium, is project manager, through its London office, of a $25 billion Libyan drilling project recently linked to a possible covert military scheme and Qaddafi's new chemical weapons plant. Other Houston-based multinationals openly sell equipment to the Libyans from foreign subsidiaries, operating beyond the reach of the U.S. Attorney's office in countries that value jobs over America's Libyan embargo.
Libya has managed a huge sanctions-busting covert operation, pushing immense public projects, often with the help of Houston-based companies, and frequently funneling equipment through European fronts. And they're doing it despite more than a decade of bitter, often explosive conflicts between the U.S. superpower and the Libyan colonel in his desert regime.
Dating back to the Reagan administration, U.S. officials have been pointing fingers -- and occasionally high-explosive missiles -- at the defiant, sunglasses-sporting Libyan colonel, placing him behind a string of terrorist attacks, from a nightclub bombing in West Germany to harboring the prime suspects in the downing of Pan Am flight 103 over Lockerbie, Scotland. And for 12 years, U.S. officials have taken a hard-line position on Libya, working to make Qaddafi an international pariah, blockading commercial shipments and keeping Libya away from just the kind of equipment Tex-Co was more than willing to provide.
Two years ago, President Clinton weighed into the fray, laying claim to his own hard line on terrorism by signing legislation that was intended to make it harder for European companies to do business in Libya and Iran. At the same time that Clinton and Congress were waging legislative combat, Assistant U.S. Attorney Richard Berry signed off on an agreement allowing Tex-Co to plead guilty to one count of "unauthorized export" to Libya in return for an agreement to act as an informant on other cases.
But the feds had much more on their plate than one little exporter like Tex-Co. Over the past three years, investigators from U.S. Customs have been working with the U.S. Attorney's office on at least a half-dozen cases involving Houston companies. Several, like the case of Tex-Co, involve shipments from Houston through intermediaries in Europe or the Bahamas.
In one of the biggest cases announced to date in the United States, Customs agents swooped down on a pair of Houston businessmen last spring -- Jerry Ford and Preston Engebretson of Thane-Coat -- seizing property Customs agents claimed was paid for with Libyan money and accusing them of operating an international shell game designed to circumvent trade sanctions. High-profile defense attorney Dick DeGuerin has been representing the two, who are accused of making more than 100 illegal shipments bound for Libya.