A fugitive U.S. defense scientist wanted on charges of smuggling nuclear weapons components to Israel is under arrest in Spain, a development that could prove a major embarrassment for both Israel and a billionaire Hollywood producer. Richard Kelly Smyth, a retired 71-year-old aerospace scientist, was arrested July 10 in Malaga and now awaits extradition to the United States.

SMYTH, A FORMER science adviser to the U.S. Air Force, disappeared in August 1985 after his indictment, leaving federal investigators unable to prove his role in the illegal shipment of 800 nuclear weapons triggers to Israeli companies owned by Arnon Milchan, a Hollywood producer and industrialist with dual citizenship in Israel and Monaco.

Smyth fled the United States five months after being indicted by a federal grand jury in Los Angeles on 15 counts of exporting nuclear arms technology and 15 counts of falsification of documents from 1979 to 1982. Officials at the U.S. Embassy in Madrid and the U.S. attorney’s office in Los Angeles said Smyth was in a Spanish jail while the United States prepared an extradition “package” that would take months to complete.

“All we can say is that he is in custody in Spain and we are delighted,” Dean Boyd, a spokesman for the U.S. Customs Service, when asked about Smyth’s arrest.

THE HOLLYWOOD CONNECTION

Federal officials have long sought a way to revisit the case involving Milchan, whose producing credits include “JFK,” “L.A. Confidential” “Brazil,” “Fight Club,” and “Pretty Woman,” as well as the “Free Willy” series and the Fox television comedy “Malcolm in the Middle.” The 1985 indictment identified Milchan’s companies as the recipient of the nuclear triggers, known as krytrons. Federal authorities told NBC News in 1993 that Milchan also shared in the profits derived from the sales. Krytrons, at the time, were considered “dual use” components — which have other civilian and military applications — requiring export licenses.

Internal documents obtained at that time by NBC News from Milco International Inc., Smyth’s company, revealed that he had also exported other equipment to Israel, including chemicals used to make missile fuel. Both the krytrons and the chemicals in question are so-called “dual use” items.

But Smyth’s disappearance, and the unwillingness of Israeli officials to cooperate with U.S. investigators on the case, left federal authorities unable to proceed. Nowhere, that is, until Smyth turned up in Spain.

U.S. officials say Milchan has no exposure to any smuggling charge, as the statute of limitations on conduct dating from before 1982 has expired. However, customs officials, who requested anonymity, said anyone can be prosecuted for obstruction of justice if evidence shows that he or she aided or in any way encouraged Smyth to flee. Because Smyth fled after being indicted, the smuggling charges against him are still active, and no statute of limitations applies.

Milchan has denied that he had done anything illegal in interviews with NBC News in 1992 and 1993. Friday, his Los Angeles office said he was traveling and could not be reached for comment in the wake of Smyth’s arrest.

‘ANYWAY I CAN HELP ISRAEL, I WILL’

InsertArt(1142314)However, in interviews with both “60 Minutes” and Los Angeles magazine over the past year, Milchan was less circumspect. In Los Angeles magazine, he said: “Let’s assume that there’s nothing that Israel and the United States do separately. ... I’ll say it in my own words. I love Israel, and any way I can help Israel, I will. I’ll do it again and again.

“If you say I am an arms dealer, that’s your problem. In Israel, there is practically no business that does not have something to do with defense.”

Israel has never publicly admitted that it possesses nuclear weapons. However, U.S. intelligence agencies estimate that Israel’s arsenal is the fifth largest in the world, with about 200 warheads, behind those of the United States, Russia, France and China.

The Israeli nuclear issue frequently has caused problems for the United States in its efforts to curb the proliferation of nuclear and ballistic missile technology in other regions and to get nations like India, Pakistan and North Korea to adhere to the Nuclear Non-Proliferation Treaty. Arab states, among others, accuse Washington of a double standard for not putting similar pressure on Israel to sign the treaty, which would require declaring the extent of nuclear capabilities and opening nuclear sites to international inspection.

Robert Windrem is an investigative producer at NBC News and co-author with William E. Burrows of “Critical Mass: The Dangerous Race for Superweapons in a Fragmenting World” (1994, Simon & Schuster, New York). MSNBC’s Michael Moran contributed to this report.