'Air force colonel' dupes electronics firms of millions

Promising billions of dollars in contracts for a top-secret military project, a man identifying himself as a US Air Force officer attached to Nato convinced 90 top-name electronics companies to part with tens of millions of dollars worth of equipment. Belgian authorities confirmed yesterday they are investigating the ruse which has cost several multinationals as much as $50m (£30m) in cash - and even more in terms of reputation.

The companies - including Electronic Data Systems, Sony, 3Com and Adobe - were told the project was so secret that they were not allowed to breathe a word about it to each other or to anybody else.

The "officer" went by the name of Lt Col Lamar Reed.Sometimes it was Lt Col A West. The ponytail he wore ought to have been a clue that this serving US air man was not who he seemed but somehow "Col Reed" orchestrated one of the biggest and most extraordinary scams in recent memory.

It involved him approaching some of the best-known names in the electronics business and dangling the prospect of multi-million pound military orders. There were, however, conditions. All discussions had to be kept confidential, with not a word divulged to outside sources. Secondly, the 90 or so companies involved would have to send equipment for trials which, because of the exhaustive nature of the tests, would be destroyed.

In this way companies sent millions of dollars worth of equipment to a fictional "materials test unit" in Belgium.

According to the Wall Street Journal, which first reported on the scam, those stung include a British company called Techex. But perhaps the most bizarre feature of the episode is the ease with which "Col Reed" - who has now disappeared - deceived his victims, despite leaving more than a few clues. There was the ponytail for a start, albeit often tucked into his officer's cap. The officer travelled in style more suited to his supreme allied commander, sometimes meeting clients in a black limousine flying Nato flags on its fenders. And none of the duped clients ever paid so much as a brief visit inside a Nato complex.

The gullibility of the companies appears to have been prompted by pure desperation to break into the lucrative world of defence contracting. "I suspect," said a source yesterday, "their sales representatives saw gigantic dollar signs in front of their eyes. This is how fish get caught. They go for what looks like a gigantic juicy fly, only to find out that this is something else. In this case they found out too late."

Although several of the companies affected declined to comment yesterday, sources confirmed that Sony was one of those involved.

At Nato a spokesman said: "We have seen the reports of lament that such a thing appears to have happened. However this is a legal and judicial case that does not affect Nato."

Nato'sheadquarters had already received inquiries about a hi-tech scam from the Japanese media. In this case, companies were said to have been conned into taking part in a phoney project to store the fingerprints of Nato soldiers.Whether this was the handiwork of "Col Reed" is unclear, as is something else in this strange episode: the motive. Bizarrely, there is no evidence that any of the highly specialised machinery was resold.