UNCLAS SECTION 01 OF 02 TEGUCIGALPA 003428

SIPDIS

STATE FOR WHA/CEN

E.O. 12958: N/A
TAGS: KOMC ETTC KCRM US HO
SUBJECT: PROPOSED MUNITIONS EXPORT APPLICATIONS #865798 AND
#865799

REF: A. TEGUCIGALPA 988

B. SECSTATE 113261


1. SUMMARY: Omni Engineering Company, Inc. has applied for
two (2) licenses to import arms and ammunition to Honduras.
Application #865798 is a proposed sale of revolvers, pistols
and rifles to La Armeria (the Honduran distributor/end user)
valued at $312,500. Application #865799 is a proposed sale
of 3,050,000 rounds of ammunition to La Armeria valued at
$346,500. After careful consideration, Post recommends that
neither sale be allowed to go forward. This recommendation
is supported by a variety of factors, including the
inordinately high rate of violent crime, the lack of any
meaningful arms control or regulation by the government, and
because La Armeria continues to do business without firm
purchase orders or sales contracts (in violation of guidance
provided in Ref B). END SUMMARY.

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APPLICATION #865798--800 GUNS
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2. In its application #865798, Omni Engineering Company,
Inc. (Omni) has applied to import 800 revolvers, pistols and
rifles. Omni states that it intends to sell the arms to La
Armeria--the Honduran distributor/end user for retail sale to
the general public. Specifically, Omni seeks to import 400
.38/.357 caliber revolvers, 150 .32 caliber pistols, 50 .25
caliber pistols and 200 .22 caliber rifles. The value of the
proposed sale is $312,500.

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APPLICATION #865799--3,050,000 ROUNDS OF AMMUNITION
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3. Omni has applied to import 3,050,000 rounds of
ammunition, including 2,000,000 rounds .22 caliber, 100,000
rounds .30 caliber, 100,000 rounds .40 caliber, 300,000
rounds 9mm, 50,000 rounds .223 (5.56) caliber, 400,000 rounds
.357 caliber and 100,000 rounds .380 caliber. In its
application, Omni proposes to sell the ammunition, valued at
$346,500, to La Armeria.

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RATIONALE FOR DENIAL OF APPLICATIONS #865798 AND #856799
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THE PROBLEM OF NO CONTRACT OR PURCHASE ORDER
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4. The primary problem that exists for Omni (as well as for
other U.S. arms exporters) is that La Armeria has not yet
rectified its problematic procedures for doing bu

siness.
There is no actual contract for sale or firm purchase order
for these items. It is the standard operating procedure of
La Armeria (the purported initial purchaser) not/repeat not
to enter into firm contract of sale, but rather routinely
makes projections of arms and munitions that it might or
might not need and might or might not purchase.


5. Post's investigations have indicated that La Armeria
routinely obtains "quotes" or "bids" from more than one arms
manufacturer for exactly the same arms. Thereafter, they
might or might not purchase the arms from one or more of the
companies that gave them quotes. These two applications
appear to be two more of those cases where La Armeria has
provided the potential seller (here, Omni) with mere
projections, and that no contracts for sale exist.


6. Post understands that relevant regulations provide that,
in order to obtain a license from the Department of State,
the U.S. firm or individual seeking an export license must
have a firm purchase order or sales contract from the buyer.
Moreover, letters of intent, invoices unconfirmed statements
of purchase projections of likely purchases are not
sufficient to meet the requirements for issuance of such a
license. Via Ref B, The Department of State clarified this
issue for Post, after Post sought guidance with respect to
this La Armeria dilemma in Ref A.

A SOLUTION IN THE OFFING?
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7. La Armeria is aware of the problem. In addition to
having been advised by Post, officials from Remington Arms
traveled to Honduras in October to visit with officials at La
Armeria in an attempt to rectify the problem. Additionally,
on October 2, PolOffs met with the Remington officials in
order to provide them with any information that might help
solve the dilemma. At this meeting, PolOffs were advised by
the Remington representatives that the La Armeria officials
had promised them that they would immediately begin issuing
specific, firm contracts for sale and/or purchase orders. To
date, La Armeria has not instituted the necessary changes.


8. Post remains hopeful that La Armeria will soon correct
the problem. On December 19, PolOffs were approached by
Colonel Carlos Humberto Ramos, Commander of the Honduran Air
Force (who is the President of the Board of La Armeria), who
expressed concern and dismay regarding the problems faced by
U.S. arms exporters. PolOffs explained the issue to Colonel
Ramos, and he indicated that there should be not problem
correcting the problem within La Armeria. PolOffs and
Colonel Ramos agreed to schedule a meeting in early January
to reach a definitive solution once and for all.

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IN THE MEANTIME...
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9. Until La Armeria succeeds in changing its internal
methods in a manner that complies with Department of State
requirements, the importation of arms and ammunition from
U.S. manufacturers will continue to be problematic and in
violation of current guidance. In the meantime, Post once
again recommends that the pending Omni applications be denied
for the reasons stated herein.
Palmer