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An Iraqi businessman was arrested on charges he kidnapped...

STUTTGART, West Germany -- An Iraqi businessman was arrested on charges he kidnapped two American and two Yugoslav children 15 days ago for a $2 million ransom, the state criminal bureau in Stuttgart announced Monday.

The father of the Yugoslav youths also was in police custody in connection with the kidnapping, police said.

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The two American children were returned to their family in West Germany Monday.

None of the victims nor the businessman was immediately identified.

The Iraqi businessman, 45, remained in Yugoslav custody. The father of the two Yugoslav children was under arrest in Karlsruhe, West Germany, on suspicion of involvement in the kidnapping.

The kidnapper was arrested and the four youths were freed Friday by a team of West German special agents who joined police in Yugoslavia and 'pounced' on the businessman's hideout in the southern Yugoslav province of Montenegro.

The children were reported to be ages 10 to 13.

The Yugoslav children were placed in custody of their grandparents in Yugosalvia, a police spokesman said.

A police statement said the kidnap occurred July 4. It said the Iraqi businessman, based in Karlsruhe, received permission of the children's parents to take the youths and his 7-year-old son on a trip to Italy.

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Five days later, the businessman phoned a contact in West Germany claiming he was in Kuwait and that he had kidnapped the children.

He demanded a $2 million ransom to be paid to a Middle East liberation movement for their release and the dropping of criminal charges againist him in West Germany.

Police said the businessman threatened to kill one of the children and hand over the dead body to a West German Embassy if his demands were not met.

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