To: Roberts - Consarc March 25, 1985
From HM Rowan Interoffice correspondence
Subject: Consarc Engineering, Scotland Russian Job.
Knut Royce of Hearst News called. He was running down some leads and some concepts related to Richard Perle's (Under Secretary of Defense) comments in a speech that some $70 million worth of carbon densifing equipment had been sent to the Russians and that the densified carbon could be used to improve the accuracy of their missiles. He had heard that our Consarc, Scotland, division had some equipment "seized" and he was checking on this report. Apparently it was indicated that the equipment was built in France or in England which perhaps explains how he got on to the problem in the first place.
I told Royce that "seize" would seem to be the wrong word. I explained that we had received an inquiry from the Russians about two years ago, had checked with the Department of Commerce and with the British Ministry of Defense on whether we could supply the equipment, and neither had any objection to our building it or shipping it. It did not even require a license. We, therefore, quoted the Russians, received an order, and built the equipment.
I further explained that in December 1984 personnel from what I thought was the Ministry of Defense had visited Consarc, Scotland, to inspect the equipment and the designs to make sure it conformed with our original inquiry. We were given a clean bill of health and told to go ahead and ship the equipment. In February, just as we were making shipment, we received notice from the British government that they had changed the rules and the equipment now required a license that would not be available. We were instructed not to ship any more, and the equipment at the dock was embargoed.
The communication from the British government indicated that they recognized that this would give us financial difficulties and that we should look to our British government insurance for compensation. After a day or two of study, the British government did indeed pay for the equipment.
Royce asked if any of our people had been called before a grand jury in this connection, and I told him "no" that we had kept both the British and American governments fully informed and there was no reason for the grand jury action.
I further commented that about the same time we had an inquiry for about $17 million worth of vacuum casting furnaces which were allegedly intended to be used for land based turbine blades. Recognizing that these same furnaces could also be used for jet aircraft turbine blades and recognizing that some factions of our government were not anxious that these be supplied, we declined quoting. Apparently Heraeus in Germany supplied this equipment.
I told him I knew nothing about the French activities but I had understood that Sweden had furnished a number of isopresses to Russia which might be used for this same carbon product and that possibly this was the basis for Richard Perle's $70 million estimate. I indicated that this one order was the only equipment we had built for the Russians that may be used for the manufacture of densified carbon.