The nuclear industry in West German is being shaken by a massive scandal that 1) presents a level of embezzlement and intrigue quite beyond that of a good spy novel and 2) raises the most fundamental questions concerning the institutional will and capability of the nuclear sector to administer radiation waste and safeguards programs. The scandal involves Transnuklear GmbH, a private company which had been responsible for the transportation of nuclear fuel in West Germany until its operating licenses were suspended by Bonn. Transnuklear (TN) is a subsidiary of Nukem, a German firm which is a major force in international uranium brokering.
What has become known as the “Transnuklear affair” revolves around the discovery of high level nuclear wastes, including plutonium, in several thousand drums designed to hold low level radioactive waste (LLW) that had been illegally shipped to German sites from the Belgian treatment plant at Mol. Investigations have uncovered a systematic embezzlement and bribery ring among high-level employees of companies in Germany and Belgium that generate, transport, condition, and store nuclear waste. Some US$11.6 million in illicit payments, subsequently laundered in Swiss banks, has been documented. Two of the organizers of the ring have (apparently) committed suicide.
Investigative journalists have also charged that the Transnuklear affair involved diversion, from the Nuclear Research Centre at Mol, of weapons-grade nuclear material which was shipped to Pakistan through the German port of Lubeck. These charges are still under investigation and the government in Bonn denies that the TN affair involves violation of the Nuclear Non-Proliferation Treaty (NPT). At the very least, the TN affair demonstrates that the current institutional arrangements in the German nuclear industry are permeable and vulnerable to determined violators of either safety or NPT norms.
The TN scandal comes on top of the 1985 conviction of German businessman Albrecht Migule for smuggling from Germany to Pakistan an entire plant for converting uranium to uranium hexafluoride. The German firm Leybold-Heraeus is suspected of exporting plans that may have helped Pakistan to build a uranium enrichment plant. Two executives of Leybold-Heraeus are suspected of delivering blueprints to a Swiss company, Meta11werke, for autoclaves used to heat uranium hexafluoride. In early 1986, Swiss authorities seized blueprints and three autoclaves from Metallwerke. Some components had already been smuggled to Pakistan (Markham, 1987). Neither Pakistan’s uranium hexafluoride conversion plant nor its Kahuta enrichment plant are under International Atomic Energy Agency (IAEA) safeguards (Hibbs, 1988N).
Revelations of the depth of the corruption in Germany’s nuclear waste handling system, and charges of NPT violations, led the Bundestag to create an investigative committee, complete with prosecuting powers, to examine the national nuclear waste and spent fuel program. Committee hearings have become an arena for experts from throughout the world to present and exchange analyses on the efficacy of the safeguards system. For many experts, European bulk handling facilities are a weak and relatively unknown area of the non-proliferation regime. The German commission of enquiry should shed light on this matter as its investigations proceed; the investigation could take another year to complete. An energy expert from the dominant partner in the ruling centre-right coalition, the Christian Democratic Union, stated that: “Because nuclear industry violations very likely go far beyond what has been revealed so far, there is a strong possibility that an American-style nuclear Watergate will be the result” (Hibbs, 1988D).
My examination of the TN affair and its implications proceeds in three stages: first, we see how the TN affair began as a relatively minor scandal and was subsequently discovered to involve embezzlement on a grand scale; second, we examine the plutonium factor in the TN affair and how this transformed the situation into a nuclear Watergate i and third, we look at the NPT implications.
Stage 1: From Minor Scandal to Grand Embezzlement
The TN affair began when Nukem GmbH, which is headquartered in Hanau (Hesse), informed the Hesse state prosecutor’s office on April 8, 1987, that it had discovered evidence of systematic bribery, deception, and embezzlement by employees of Nukem, its subsidiary Transnuklear GmbH, and also employees of the Biblis nuclear power plant (which is owned by RheinischWestfalisches Elektrizititswerk AG). The scandal involved improper transportation of fuel elements to and from Biblis and improper on-site waste conditioning services. The sums involved were thought to be between 3 and 5 million German marks ($US1.7 to 2.8 million) between 1982 and 1987. At the time, employees were suspected of padding service contracts and laundering the money in Switzerland. The two Biblis officials involved were from top management (MacLachlan and Hibbs, 1987).
TN Hanau is owned two-thirds by Nukem and one-third by Transnucleaire SA, a sister firm based in Paris and controlled by Pechiny and the Paribas holding company. TN is the only company licensed to transport fresh fuel, plutonium, and high-enriched fuel within Germany. It also does about 30 per cent of its German business in on-site waste services. The TN Radioactive Waste Division provides mobile waste compacting systems and has a stationary compacting plant operated jointly with Kraftlagen Heidelberg AG at the Karlsruhe nuclear research centre, which is used to compact scrap metal parts from retrofitting work at reactors (MacLachlan and Hibbs, 1987). Things began to turn spectacular when investigations led to the arrest of three former Transnuklear employees on December 10, 1987. The three included Hans Holtz, former chief of TN’s radioactive waste department, Wilhelm Bretage, a nuclear engineer who had 15 years’ experience with TN, and Hans-Guenther Knackstedt, a project director. Holtz committed suicide in his prison cell on December 15. Between April and December, about 40 employees of West German utilities had been fired and another 40 to 50 were being investigated. In addition, the top waste official at Belgium’s Nuclear Research Centre (CEN/SCK) in Mol was also fired.
The scope of the scandal was far greater than originally thought: some DM 21 million (US$11.6 million) had changed hands. Holtz and Knackstedt were suspected of having embezzled DM 5 to 6 million (US$2.8 to 3.3 million) each and laundering the money in numbered Swiss accounts (Hibbs, 1987A:3-4).
Stage 2: The Plutonium Factor in Germany’s Nuclear Watergate
The scenario changed from spectacular embezzlement to graver material concerns on December 17: West German federal prosecutors announced that 321 drums of radioactive waste from Belgium were discovered to have been illegally transported to West German interim waste storage sites. By December 20, prosecutors raised their estimates to 750 drums (Hibbs, 1987B).
Even more seriously, Plutonium-239 and Cobalt-60 were discovered in some of the steel 200-liter drums, which were designed only for low-level waste (LLW). Some of the waste was still in a liquid state despite concrete solidification treatment. The drums coming from Belgium should have contained LLW transported by TN from German utilities to CEN/SCK for conditioning and shipping back to Germany for storage at reactor sites or at the interim waste storage facility at Gorleben. Belgian officials alleged that TB employees had bribed Belgian waste officials to accept 1,100 cubic meters of various types of waste from West Germany which “did not meet specifications” (Hibbs, 1987B).
The radiation emitted by individual drums corresponded closely to expected activity from German LLW. This pointed to careful organization by the parties who falsely labeled and shipped the drums from Mol (Hibbs, 1987B). Audits eventually revealed that between 1982 and 1985, Nukem was storing drums supposedly containing LLW which actually had enough U-235 to qualify as nuclear fuel. Nukem than cut this material with depleted uranium in order to meet Mol requirements for processing the waste. Regulatory officials were not informed either of the presence of U-235 in the waste or the subsequent dilution with tails material (Hibbs, 1988E).
Investigators traced one group of 50 drums of supposed LLW incinerated and compacted at Mol, and then returned to Germany. They found that 26 drums contained cesium-137 and cobalt-60 which could not have come from the material Nukem originally sent to Mol. The presence of cesium should have been a red flag for plutonium. Nukem checks also revealed high levels of U-235.
Subsequent investigations revealed that Nukem had in fact refused shipments of some drums from Mol because sampies revealed Pu-239. Nukem shipped some of the contaminated material to a private German contractor for removal of fissile material. It is not clear whether the contractor was aware of the presence of Co-60, Cs-137, and Pu-239 in the mixture. Two of the 50 drums containing U-235 are still missing (Hibbs, Tigner, and Seneviratne, 1988). Federal prosecutors speculated that the LLW may have been contaminated from an unreported reactor incident either at Philipsburg or Grundemmingen in 1984 (Hibbs, 1988A). TN’s licenses to transport nuclear fuel were suspended by Federal Minister for Environment and Nuclear Safety Klaus Toepfer. The suspended operations amounted to about 22 per cent of Nukem’s business (Hibbs, 1988G:11).
By the end of 1987, some 1,942 illegally shipped drums had been discovered, and this total climbed to 2,438 by January 15, 1988 (Hibbs, 1988D). Charges were made that top management at TN as well as its parent firm, Nukem, had been aware of the contaminated waste problem since 1984; it was later found that Nukem had been aware of the problem since 1982.
On January 3, 1988, Toepfer announced a complete investigation of West Germany’s entire nuclear industry. On January 14, an indefinite suspension of operating licenses was extended from TN to its parent company Nukem. The government of Hesse, where Nukem is headquartered, ordered the removal of Nukem’s top officials. At the same time, investigators going over TN’s books discovered an additional scandal: an official from the firm Belgonucleaire, which was responsible for engineering subcontracting at the German SNR-300 breeder reactor at Kalkar, had apparently forced subcontractors to pad contracts (Hibbs, 1988B). The official was alleged to have laundered kickbacks through a Geneva mailbox firm. Opposition leader Hans-Jochen Vogel of the SPD maintained that the TN affair reached beyond the criminal activities of a few individuals: it demonstrated that regulation of West Germany’s nuclear industry “is evidently only possible on paper.” For their part, German nuclear industry officials viewed the TN affair as worse than Chernobyl: the industry had now lost public confidence (Hibbs, 1988A).
One concrete result of federal investigation has been a total restructuring of Germany’s nuclear fuel cycle industry. The previous structure involved a complex and interlocking web of private companies and utilities responsible for the entire nuclear fuel cycle: supplying and transporting fuel, generating waste, and conditioning, transporting, and storing waste. This structure was ripe with potential conflicts of interest. Now, different parts of the fuel cycle will be separated and operated by distinct sets of companies. Nukem has been forced out of the nuclear transportation business. Its activities now focus on uranium brokering, planning and designing nuclear plants and equipment such as storage casks, and waste management. Its subsidiary, Transnuklear, was ordered to sell its transportation and waste treatment branches to other firms, both internationally and within Germany. TN’s transportation business was about one-third of the company’s total revenues of DM 60 million (US$36 million) (Hibbs, 1988K, L, M).
As of April, Federal Minister Klaus Toepfer was claiming that the TN affair had not resulted in nuclear risk to the public (Nucleonics Week, 1988). It remains to be seen whether this is borne out by the Bundestag committee of enquiry and whether the German public has confidence in Toepfer’s claim.
Stage 3: An Arms Connection?
The TN affair took a more serious turn yet on January 14, 1988: the government of the state of Hesse, where Nukem is headquartered, announced that they had received leads that Nukem had been involved in shipping weapons-grade uranium from the Belgian Nuclear Research Centre in Mol to the north German port of Liibeck and then on to Pakistan or Libya. If this was the case, this would explain the size of the bribes and kickbacks which had been revealed. Speculation was further fueled by the fact that Nukem had a license to transport nuclear medical equipment to Lahore, Pakistan (Hibbs, 1988C).
The primary source of the NPT violation story was Dieter Kassing, editor of the monthly Bonn Energy Report. The lead was not substantiated by documentary proof and Kassing himself did not consider the leads he provided to Hessian government
officials sufficient to launch the official investigation of NPT violations which resulted. Kassing added, however, that proof would be difficult to obtain since weapons-grade uranium shipments “would have the dimensions of organized crime” (Hibbs, Rigner, and Seneviratne, 1988). Additional and troubling information has been delivered to Hanau prosecutors. This includes specific documentary evidence on the trade activities of numerous companies with Pakistan through the port of Lubeck. Although Bonn now claims that NPT violation charges are unsubstantiated, this will have to remain an open question until the Bundestag committee has delved further into the matter.
Let us turn our attention to what has come out of the Bundestag hearings to date. At the very least, these hearings have demonstrated how permeable nuclear industry institutions are to determined efforts to violate safety or NPT regulations.
The Permeability of Nuclear Institutions.
The Bundestag hearings are being held against the backdrop of West German nuclear export policies that have frequently violated the spirit of the NPT while managing to stay within the letter of the law. German exports that were legal under NPT’s Article 3.2 have contributed to the danger of the spread of nuclear weapons. These exports include German enrichment technology sent to South Africa, and the transfer of German reactor and fuel cycle technology to Brazil and Argentina.
In the case of Argentina, for example, Germany insisted on full scope safeguards for the Atucha-2 heavy water reactor only if they got orders for both the reactor and the heavy water production plant. This contrasted with Canada’s competing bid, which insisted on full scope safeguards for all equipment. Germany circumvented the full safeguards condition by having Switzerland’s Sulzer Brothers receive the heavy water plant order. Germany’s Kraftwerk Union (KWU) thus could legally export heavy water reactor technology without full-scope safeguards. Argentina admitted that this was a factor in their choice of KWU over AECL. Germany has replaced the USA as the leading exporter of nuclear technology to Latin America (Hibbs, 1988J).
We have already mentioned the illegal diversion of enrichment technology to Pakistan by Albrecht Migule and the LeyboldHeraeus company. The Migule trial revealed that Abdel Qadeer Khan, the scientist widely described as head of Pakistan’s nuclear weapons program, once worked for a Dutch firm involved with Urenco’s centrifuge enrichment facility at Amerlo in the Netherlands. Urenco is a German-British-Dutch joint venture. Khan returned to Pakistan in 1974 and helped develop the non-safeguarded enrichment plant at Kahuta. Western diplomats say that Pakistan has an active network of scientists in Western Europe seeking components and special metals associated with Islamabad’s nuclear program (Markham, 1987). Germany signed a formal bilateral nuclear cooperation treaty with Pakistan in 1972. Despite warnings from the USA in 1974 concerning Pakistan’s nuclear weapons intentions, Germany permitted some of the estimated 50-80 scientists trained in Germany since 1972 to have access to technologies with weapons implications. At least one Pakistani scientist, for example, had access to a plutonium reprocessing hot cell at the Karlsruhe Nuclear Research Centre (Hibbs, 1988N).
The Bundestag inquiry could provide a major forum to compare what US non-proliferation experts know about developing countries with nuclear weapons ambitions with knowledge of other experts about European proliferation issues. Comparatively little is known in the USA about allegedly “notorious problems” presented by bulk handling of high-grade nuclear materials in European facilities such as those of Nukem and its subsidiary Alkem. The US Department of Defense is very interested in the German investigation: the Pentagon has been studying physical security of US-flagged nuclear material in Europe for the last 4 years (Hibbs, 1988F). SPD committee members have proposed that invitations be issued to US non-proliferation experts such as Leonard Spector, Victor Gilinsky, Joseph Nye, Paul Leventhal, Lawrence Scheinman.
In the course of the Bundestag hearings, officials from both the European Economic Commission and IAEA have denied charges published in Der Spiegel that weapons-grade nuclear materials were diverted to Pakistan and Libya. IAEA safeguards chief Jon Jennekens indicated, however, that TN’s illegal shipments of LLW from Mol were not a safeguards problem since LLW is not under agency safeguards (Hibbs, Rigner, and Seneviratne, 1988). This raised the question as to whether supposedly LLW drums could be used as a vehicle for diverting sensitive materials.
Euratom safeguards director Wilhelm Gmelin argued that there had been no diversion of significant quantities of weapons-grade material but in any case: 1) the mandate of Euratom was safeguards, i.e., timely detection of diversion, not physical protection, which is the responsibility of national authorities; (this is not actually the whole story: some Euratom facility attachments contain provision for physical protection); 2) the same holds for violations of transport or storage standards; e.g., Euratom is not concerned that 600 kg of German plutonium were sent from Cogema’s La Hague reprocessing plant to Belgonucleaire, because Alkem’s Pu storage capacity was insufficient; Euratom knew where the plutonium was and this is its only mandate; 3) LLW is also not a Euratom responsibility. In any event, Gmelin maintained that the 200 mg of plutonium added in Belgium to German LLW was so diluted that it was could not have been separated and diverted for military use. The same would go for the 24 kg of plutonium which Germany’s Green Party claims was deposited in 125,000 LLW drums over 10 years ago in the Asse final LLW storage facilities.
In fact, as demonstrated by testimony from David Fisher, head of external relations at the IAEA from 1957 to 1981, current safeguards techniques might fail to detect significant diversion of fissile materials in 5 to 10 per cent of cases. Putting together the testimony of Gmelin and Fisher, we see that the European nuclear industry cannot verify the location of all its weapons-grade nuclear materials not does it have adequate physical protection and storage standards for the materials that it can verify. The real problems of safeguards, according to Fisher, are: 1) the biggest proliferation dangers arise from legal nuclear exports, not illegal diversion; 2) the next major problem in the European case is that enforcement of safeguard agreements is poor. There is footdragging on enforcement by the EEC nuclear bureaucracy. The IAEA convention on physical protection has not been ratified by the EEC largely due to resistance by France and Germany.
First, the TN affair has shaken the German nuclear industry more than Chernobyl. For non-proliferation issues, one consequence may well be the slowing down or cancellation of a plutonium-based nuclear fuel cycle. It is difficult enough to impose effective safeguards on the “once through” cycle of light water or Candu-type reactors. In the case of “closed” cycles based on plutonium, effective safeguards are improbable to the extreme. For political reasons, it is likely to be at least some years, if ever, before the Kalkar fast breeder reactor is licensed to operate. German participation in constructing a second cooperative European full-scale breeder (the first was the Super-Phoenix) will be problematic; without such participation, it is doubtful that a second breeder will go forward.
The German nuclear industry had pointed to the relative sophistication of their reactor designs and administration of the nuclear sector in comparison with Russian graphite reactors and bureaucratic inefficiency. Despite the importance of Germany’s Green Party and the adoption of an anti-nuclear platform by the SPD after Chernobyl, these arguments appeared to be carrying the day in Bonn. The election of a conservative coalition in 1987 was a key element in the survival strategies of the German nuclear industry. Germany’s nuclear Watergate has negated these arguments and may have reversed the pro-nuclear stance of conservative politicians.
The German nuclear industry is losing public support in the wake of the TN affair. An opinion poll taken just after the Chernobyl accident in 1986 indicated that 12 per cent of West Germans favoured immediate shutdown of the country’s 21 nuclear plants. In February, 1988, just after the full implications of the TN affair had been revealed, 21 per cent of the public favored immediate shutdowns. Phasing out the nuclear industry was favored by 76 per cent of the public in 1988, compared to just over half in early 1986. Politicians are reacting to the opinion polls. The ruling Christian Democratic Union/Christian Social Union has even spawned an antinuclear caucus which is attempting to stop the Kalkar fast breeder and the Wackersdorf spent fuel reprocessing plant and is pressing for a redirection of federal funds to alternate energy projects. The other partner in the conservative coalition, the Free Democratic Party, is openly wooing the antinuclear vote.
Secondly, the TN affair, coming on top of the Migule and Leybold-Heraeus case of illegal export of enrichment technology to Pakistan, demonstrates the permeability of present safeguard institutions to determined efforts of countries bent on acquiring nuclear weapons. Even if the charges of diversion of weapons-grade nuclear material to Pakistan and Libya are not confirmed in the current round of investigations, the extent of the embezzlement ring and the technical difficulties which preclude 100 per cent accounting for the inventory of sensitive nuclear materials suggest that the present nuclear institutions are all too vulnerable to clandestine activities.
Thirdly, the Bundestag investigation into the TN affair has highlighted gaping loopholes in the non-proliferation regime. Legally permitted exceptions to full safeguard requirements on nuclear exports have allowed countries such as Germany to violate the spirit of the NPT. The norms which do exist are frequently stronger on paper than in real resources and procedures for enforcement. National authorities which have the actual task of enforcement often carry it out in a quite slipshod manner. Key planks of the NPT regime have not been ratified by major players in the nuclear industry, an example being the EEC’s footdragging on signing the IAEA’s physical protection convention. A possible positive outcome of the TN affair is that it will serve as a catalyst to close loopholes and strengthen the enforcement of NPT safeguards. Otherwise, the nuclear energy sector will remain quite permeable to countries or political groups that are determined to acquire weapons-grade materials and technologies.
1987A Hibbs, Mark, “Employees’ Arrest Leads to Prison Suicide in Transnuklear Case,” Nucleonics Week (NW), 17 Dec 87, pp. 2-3. 1987B —, “Transnuklear Licenses Suspended Over Illegal Pu Shipments,” NW, 24 Dec 87, pp. 1-12. 1988A —, “German Industry’s Credibility Challenged as TN Affair Unfolds,” NW, 7 Jan 88, pp. 3-4. 1988B —, “German Nuclear Industry Probe Widens to Include Kalkar,“NW. 7 Jan 88, pp. 4-5. 1988C —, “West Germany Checking Reports of TN Shipments of HEU to Pakistan,” NW, 15 Jan 88, pp.1-2. 1988D —, “German Parliament Orders Inquiry into Fuel Cycle Plan,” NW, 15 Jan 88, pp. 2-3. 1988E —, “German NPT Violations in Doubt But Prosecutors Probe New Lead,” NW, 21 Jan 88, pp. 1, 11. 1988F —, “Bundestag Nuclear Panel Prepares Inquiry Outline,” NW, 11 Feb 88, pp. 6-7. 1988G —, “New Nukem Management Targets Public Acceptance Above All,” NW, 18 Feb 88, pp.’, 10-11. 1988H —, “West German Nuclear Industry Losing Conservatives’ Support,” NW, 25 Feb 88, pp. 3-5. 1988I —, “Witnesses Testify No Evidence Found of German NPT Violation,” NW, 3 Mar 88, pp.5-6. 1988J —, “Former IAEA Official Slams West German Export Policy,” NW, 3 Mar 88, pp. 6-7. 1988K—, “No Place for Transnuklear in German Waste Management Future,” NW, 24 Mar 88, pp. 1-2. 1988L —, “European Nuclear Players Altered as West German Firms Consolidate,” NW, 7 Apr 88, pp. 2-3. 1988M —, “Deutsche Bundesbahn Unit to Take TN Transport Business,” NW, 21 Apr 88, p. 6. 1988N —, “U.S. Warned Germans in 1974 to Beware of Pakistan Ties,” NW, 28 Apr 88, pp. 7-8. 19880 —, “Nukem Involvement in U Diversion Attempt to Be Questioned in Bonn,” NW, 28 Apr 88, p. 7. Hibbs, Mark, and Brooks Tigner, Gamini Seneviratne. “Nukem Suspends Other Directors; More Violations Found in Harlan,” NW, 21 Jan 88, pp. 1, 10. MacLachlan, Ann and Mark Hibbs, “Transnuklear, Nukem and Biblis Employees Implicated in Bribery,” NW, 16 Apr 88, pp. 2-3. Markham, James M. “Bonn Checks Report of Smuggling of Atomic Energy to Pakistan.” New York Times, 5 May 87, p. A8. Nucleonics Week. “No Risk, No NPT Violation in TN Scandal, Toepfer Says,” NW, 21 Apr 88, p. 8.