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Daily Oklahoman

TK-7 Fuel Case May Have U.S. Security Implications
Bob Vandewater
05/12/1991

A continuing legal battle between an Oklahoma City company and a now dead Iraqi businessman and his surviving son took some new twists this months, after it was suggested the case might have national security implications.

In the latest, a federal judge recently dismissed several out-of-state companies as co-defendants in the more than $7 million lawsuit, brought by Oklahoma City fuel additives producer TK-7 Corp. The case is set for trial in July.

But U.S. District Judge Robin Cauthron denied motions on behalf of Haidar Barbouti and the estate of his late father, Dr. Ihsan Barbouti. Barbouti had asked that the remaining case against him and his late father be thrown out. And, if the case does reach trial, Barbouti had asked that punitive damages be disallowed.

Those are among the latest twists in a court case involving what defense attorney James Ikard says are "bizarre" claims against the Barboutis.

However, TK-7 attorney Mike Johnston says the case has major national security implications.

Ikard claims Dr. Barbouti was misled into investing in TK-7 in 1987 with claims that the fuel additive "was going to take the market by storm. "

But TK-7 president Moshe Tal said Barbouti tried to take over his firm for the illegal purpose of using its product and purchasing systems to procure chemicals or other items for Libya and perhaps Iraq. Trading by U.S. firms with these countries is generally barred by presidential executive order.

Dr. Barbouti died of heart and lung problems last July - just 63 days before TK-7's 1989 conspiracy lawsuit against him was to go to trial.

"He (Dr. Barbouti) is dead, so they (feel they) can say anything they want to about him," Ikard said.

Dr. Barbouti, an Iraqi native who had resided in London, had acknowledged dealings with Libyan dictator Col. Moammar Gadhafi.

An architect and wealthy international businessman, Barbouti said he designed and was the prime contractor for construction of a technological and pharmaceuticals complex at Rabta, Libya.

U.S. intelligence officials have said they believe that complex houses a Libyan chemical weapons plant.

But Dr. Barbouti had said he did not design the complex under a contract with the Libyan government for that specific purpose.

A federal grand jury in Houston last month also began hearing testimony about whether Dr. Barbouti or his son Haidar illegally exported U.S. technology or products to Libya and perhaps to Iraq.

For such reasons, Johnston said in papers filed in federal court in Oklahoma City that, "Dr. Barbouti and his companies in this country continue to pose a clear and present danger to the people of the United States. "

The U.S. Justice Department is expected to report to Cauthron soon on whether it believes revealing the formulas for certain TK-7 fuel additives to the defendants would pose a threat to national security that should not be permitted.

Johnston said he and Tal, a native Israeli, did not mind giving the unpatented formulas to Justice officials. However, they do not want the formulas to end up in the hands of "enemies of the United States. " They include the Barboutis in that category.

Johnston said that while TK-7 fuel additive may not be used by Libya or Iraq to make poison gas or chemical weapons, "it could be used for missiles to deliver poison gas. ... It's a fuel additive that could extend the range. "

Cauthron, only recently appointed as a U.S. district judge in Oklahoma City, last month ordered Tal to turn over his formulas to Justice officials. That was after the officials claimed "important national security interests may be at stake. "

The order came in connection with what started out as a $10 million lawsuit that Tal, TK-7 Corp. and Tal Technologies Inc. - all of Oklahoma City - filed in 1989 against the Barboutis and nine U.S. firms. The plaintiffs said the list of defendants were just "alter egos" or extensions of the Barboutis.

Cauthron's May 3 order said the plaintiffs argued convincingly that all nine firms are merely alter egos of the Barboutis.

As such, the judge said, "it is legally impossible for the corporations to conspire with each other" or with the Barboutis, so she dismissed all but one of them from the case.

Because of Barbouti's allegedly illegal motives, Tal contends the 1987 deal to give Dr. Barbouti or his business affiliates 51 percent interest in TK-7 Corp. was invalid.

One of the companies named as a defendant in the lawsuit, IBI Inc., has a pending countersuit against Tal and TK-7 Corp. IBI alleges it should be awarded more than $660,000 for money that Dr. Barbouti caused to be advanced, mainly to gain a stake in the fuel additives firm.

Cauthron this month rejected a bid by Tal and TK-7 to throw out that countersuit.

TK-7's own lawsuit also alleges the Barboutis interfered with efforts to market its fuel additive products in Venezuela and the United Kingdom.

The plaintiffs earlier dropped efforts to recover damages from claims of lost TK-7 domestic sales and wages lost to Tal. That trimmed the claimed actual damages in the case down to about $7.5 million, Ikard said.

TK-7 Corp., meanwhile, registered total sales last year of about $63,500, down from its peak of $750,000 in 1986.

But the company, which last year relocated about two miles to facilities at 200 SE 3 near downtown Oklahoma City, should have sharply higher 1991 revenues. That's due largely to growing sales in Puerto Rico and stepped-up marketing efforts in Oklahoma and elsewhere, Tal said.

Although Cauthron denied the defendants' motions to drop the case, "I don't think there's any good news in this order for the plaintiffs," Ikard said.

Unless Cauthron decides otherwise, "there will be a jury trial where Dr. Barbouti's estate and Haidar will be the sole defendants," he said.

But Johnston said he is encouraged by Cauthron's conclusion in this month's order that the firms she dismissed are the Barboutis' "alter egos. "

That indicates if TK-7 and Tal win in the trial, but Haidar Barbouti and his father's estate lack the resources to cover the judgment, "it will probably be possible to pursue lawsuits against those companies" to recover the balance, he said.

Meanwhile, U.S. Customs Service agents, earlier this year raided the New York City offices of a Barbouti family controlled business. They were seeking information on alleged illegal exports of technology or products to Libya and maybe Iraq, sources said.

Such factors, Johnston said, suggest illegal activities that perhaps should be brought to the attention of the court and jury.