Cablegate: Blue Lantern Level 3: Pre-License End-Use Check

VZCZCXYZ0024
RR RUEHWEB

DE RUEHC #8200 3232149
ZNR UUUUU ZZH
R 192138Z NOV 07
FM SECSTATE WASHDC
TO RUEHBK/AMEMBASSY BANGKOK 0000
INFO RUEHBO/AMEMBASSY BOGOTA 0000
RUEAIIA/CIA WASHINGTON DC 0000
RUCPDOC/USDOC WASHINGTON DC 0000
RUEKJCS/SECDEF WASHINGTON DC
RHMCSUU/FBI WASHINGTON DC 0000
RUEPINS/HQ BICE INTEL WASHINGTON DC 0000

UNCLAS STATE 158200

SIPDIS

SENSITIVE
SIPDIS
BANGKOK FOR THOMAS HINES
POL-MIL

E.O. 12958: N/A
TAGS: ETTC KOMC TH
SUBJECT: BLUE LANTERN LEVEL 3: PRE-LICENSE END-USE CHECK
ON APPLICATION 610001321

REF: A. 01 BANGKOK 1861

B. 00 BANGKOK 7745
C. 99 BANGKOK 10552
D. 97 BANGKOK 1331
E. BLUE LANTERN GUIDEBOOK 2006

1. (U) This is an Action Request. Please see paragraphs 3-6.

2. (U) The Department's Office of Defense Trade Controls
Compliance (PM/DTCC) requests post's assistance in conducting
a pre-license check on application 610001321 for the
temporary import (form DSP-61) to the U.S. of M113 armored
personnel carrier components from Thailand. Post is
requested to complete this Blue Lantern check within 30 days.
Lack of response to a Blue Lantern check will affect pending
and future applications involving parties to this license.

3. (SBU) Reason for request: possible unauthorized
possession and/or distribution of United States Munitions
List (USML) items by a private foreign consignee/end-user.
In recent years, Chaiseri Metal & Rubber Co. has been the
subject of several Blue Lantern checks (refs A-D). While
confirming the company's bona fides as a recognized supplier
of the Thai MOD, these checks also have identified
irregularities in the firm's importation, distribution, and
possible unauthorized re-transfer of USML armored vehicle
components, including the types listed on this application.

4. (SBU) The proposed temporary import in question appears to
indicate a larger pattern of potential violations of the
International Traffic in Arms Regulations (ITAR) by Chaiseri.
During the last several years, Chaiseri has received
hundreds of thousands of dollars worth of M113 parts as a
foreign consignee on behalf of the Thai MOD. This DSP-61
application (610001321) suggests that Chaiseri may be
stockpiling USML defense articles and/or have improper
procurement, accountability, and re-transfer procedures.
(COMMENT: In order to stock USML items, a company must be
party to an authorized warehousing and distribution
agreement. According to PM/DTCC's records, Chaiseri is not a
party to either a warehousing and distribution agreement or a
manufacturing licensing agreement. END COMMENT.)

5. (SBU) Post should make appropriate inquiries to verify the
bona fides of Chaiseri; to determine how the firm acquired
the USML items listed on this application; to assess the
firm's procurement, inventory, and re-transfer procedures;
and finally, to assess the firm's understanding of the ITAR
and restrictions placed on USML items. The following
questions are provided as suggested guidance:

--How did the company acquire the items listed on this
application?

--How did this proposed transaction come about?

--Were the items in fact manufactured by Chaiseri, as stated
on the license application? If so, under what authorization
is Chaiseri manufacturing these USML defense articles?

--If the items are of U.S. origin, under what
authorization(s) were the items exported from the U.S. and
who were the authorized foreign consignee(s), end-user(s),
and end-use(s)?

--Chaiseri has been listed as the foreign consignee or
foreign intermediate consignee on several export
authorizations involving M113 parts and other USML items.
Are the company's record-keeping procedures adequate to track
all these transactions and keep them separate?

--Does Chaiseri maintain stocks of M113 parts and/or other
USML items? How does Chaiseri acquire these items? To whom
does it sell the items? What authorization(s) does it
receive in order to acquire, store, and/or re-transfer such
items?

--What is the nature of Chaiseri's business -- what types of
items does it handle, does it serve as a broker?

--What types of organizations are among Chaiseri's typical
customers and where are the customers located? Does the
company have an established customer base?

--Does the company understand the restrictions on USML items,
especially the prohibition against unauthorized re-transfers
and re-exports?

6. (U) Department requests that post conduct a site visit to
the company in order to provide Department with an assessment
of its business operations and on-site security. If a site
visit is not possible, please inform PM/DTCC case officer.
Finally, post is asked to assess whether the company appears
to be a reliable recipient of USML items. End action.

7. (SBU) Background: U.S. applicant International Parts
Supply Corporation (IPS) submitted to the Department this
Form DSP-61 to request the temporary import to the U.S. of
M113 armored vehicle components from Chaiseri. IPS then
intends to permanently export the components from the U.S. --
without modifying them in any way -- to private company IMCOA
Importadora y Comercializadora in Colombia, where they will
be used in the maintenance of M113A2 vehicles for the
Colombian Army. These two transactions normally would
require two separate authorizations: one for a permanent
(vice temporary) import to the U.S., which would be subject
to U.S. import tariffs, and another authorization for a
permanent export to Colombia (Form DSP-5). (COMMENT:
Re-transfer requests are normally submitted and authorized
via a general correspondence (GC), not via a Form DSP-61.
END COMMENT.) Furthermore, according to PM/DDTC's records,
IPS has submitted dozens of improper requests via DSP-61s to
re-transfer USML items from Chaiseri and other private
companies to third countries. Although PM/DDTC mistakenly
authorized many of these re-transfers, we hope this Blue
Lantern check will be help identify and correct this improper
practice.

8. (SBU) For additional background, the following details of
the application in question are provided:

DTC Case: 610001321

QUANTITY/COMMODITY:

3,097 Track Shoe Assy P/N 1167798-6 NSN 2530-00-078-2908
Components used on M113A2 armored personnel carriers
469 Road Wheel (aluminum) P/N 11678270 NSN 2530-00-334-5877
Components used on M113 armored personnel carriers

License Value: USD 187,947.00

SELLER:

International Parts Supply Corp.
7220 Ohms Lane
Minneapolis, MN 55439
POC: Dan Everson, tel.: 952-832-0707

FOREIGN OWNER/END-USER IN COUNTRY FROM WHICH SHIPPED:

Chaiseri Metal & Rubber Co.
59 Moo 6 Pathum-Banglen Road
Kubangluang, Ladlumkaen
Pathumtanee 12140
Thailand

MANUFACTURER OF COMMODITY:

Same as foreign owner/end-user in country from which shipped

FOREIGN CONSIGNOR IN COUNTRY FROM WHICH SHIPPED:

Same as foreign owner/end-user in country from which shipped

U.S. INTERMEDIATE CONSIGNEE:

International Parts Supply Corp.
7220 Ohms Lane
Minneapolis, MN 55439

FOREIGN CONSIGNEE IN COUNTRY OF ULTIMATE DESTINATION:

IMCOA - Importadora y Comercializadora Ltda
Avenida Sexta No. 29-05
Bogota
Colombia

END USER IN FOREIGN COUNTRY OF ULTIMATE DESTINATION:

Army of the Republic of Colombia
Bogota
Colombia

PURPOSE:

For transshipment to Colombia for end-use by the Colombian
Army. Material is used for maintenance of M113A2 armored
tracked vehicles.

9. (U) Submitted in support of the license application were
the following documents (PM/DTCC can fax documentation to
post upon request):

--Purchase order # 004-2007 from IMCOA to International Parts
Supply Corp., signed by Carlos Arturo Rojas Beltran, General
Manager, dated October 9, 2007

10. (U) Please slug reply for PM/DTCC - BLUE LANTERN
COORDINATOR and include the words "Blue Lantern" and the case
number in the subject line. POC is Judd Stitziel, PM/DTCC,
Phone: 202-663-3455; email: StitzielJD@state.gov; SIPRNET:
StitzielJD@state.sgov.gov. The Blue Lantern Guidebook (ref)
is available as a PDF file in the Bunche Library's Electronic
Library collection on the DOS Intranet:
http://virtuallibrary.state.gov/
BlueLanternGuidebook2006%2520 final .pdf

11. (U) Department is grateful for post's assistance in this
matter.
RICE

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