Police don't plan to arrest an alleged middleman in an international nuclear technology smuggling ring, saying it doesn't appear he broke Malaysian (search) law.

But Malaysia's Special Branch police have Buhary Syed Abu Tahir (search), a Sri Lankan businessman, under surveillance and would consider seizing his passport if he tries to leave the country, a government official said Friday on condition of anonymity.

The official said Malaysian police had not found "any compelling evidence that he has broken any laws in this country."

Tahir vacated his apartment in one of Kuala Lumpur's (searchmost exclusive suburbs on Wednesday, after an Associated Press reporter sought him out for comment on allegations that he was a deputy to the smuggling network of Pakistani scientist Abdul Qadeer Khan (search), who gave the Islamic world its first atomic bomb.

President Bush has called Tahir the "chief financial officer and money launderer" of the network run by Khan, who has confessed to leaking nuclear technology to Iran, Libya and North Korea.

Tahir is "still in the country," the Malaysian official told AP on Friday. "He is not under arrest, but he is under surveillance."

Police said Friday they had completed their investigation into Tahir's Malaysian connections and compiled a 12-page report that will be handed to the International Atomic Energy Agency, the Vienna-based U.N. organization that oversees the international nuclear nonproliferation treaty.

Police were expected to release a statement on the report later Friday.

Malaysian authorities have said they would cooperate if the nuclear watchdog agency seeks further action and are considering whether to confiscate Tahir's passport.

Tahir, 44, is married to a Malaysian and has permanent residency status here.

The police report is expected to formally clear Malaysian company Scomi Precision Engineering of knowingly supplying parts to Khan's network.

But it is expected to reveal new details about the nexus of companies in Europe, Asia and the Middle East that Khan's operatives used to cover their tracks while they traded nuclear technology on a black market.

Scomi Precision Engineering says it made 14 "semi-finished components" -- which may amount to thousands of parts -- for a Dubai-based company, Gulf Technical Industries, under a contract negotiated by Tahir. They were seized last October in a shipment en route from Dubai to Libya.

Western intelligence agencies say the parts were for centrifuges, highly specialized machines that can be used to enrich uranium for weapons. Scomi says it did not know what the parts were for.