Identifier
Created
Classification
Origin
05MUMBAI2418
2005-12-29 11:14:00
CONFIDENTIAL
Consulate Mumbai
Cable title:  

MTAG: SANCTIONED INDIAN FIRM SEEKS TERMS FOR PENALTY

Tags:  PARM PREL ETTC KSCA MTCRE IN IR 
pdf how-to read a cable
VZCZCXRO8911
PP RUEHBI RUEHCI RUEHDE
DE RUEHBI #2418/01 3631114
ZNY CCCCC ZZH
P R 291114Z DEC 05
FM AMCONSUL MUMBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 2500
INFO RUEHBI/AMCONSUL MUMBAI 7151
RUEHNE/AMEMBASSY NEW DELHI 4148
RUEHBJ/AMEMBASSY BEIJING 0042
RUEHKL/AMEMBASSY KUALA LUMPUR 0011
RUEHCI/AMCONSUL CALCUTTA 0867
RUEHCG/AMCONSUL CHENNAI 0937
RUEHDE/AMCONSUL DUBAI 0008
RUEHIT/AMCONSUL ISTANBUL 0001
RHEHNSC/NSC WASHDC
RHMFISS/CDR USPACOM HONOLULU HI
RUEHGV/USMISSION GENEVA 0078
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/HQ USSOCOM MACDILL AFB FL
RHMFISS/HQ USCENTCOM MACDILL AFB FL
RUEKJCS/SECDEF WASHINGTON DC
RUEKJCS/JOINT STAFF WASHDC
C O N F I D E N T I A L SECTION 01 OF 02 MUMBAI 002418 

SIPDIS

SIPDIS

DEPT FOR ISN/MTR AND SA/RA, DEPT PLEASE INFO MISSILE
TECHNOLOGY CONTROL REGIME COLLECTIVE

E.O. 12958: DECL: 12/29/2015
TAGS: PARM PREL ETTC KSCA MTCRE IN IR
SUBJECT: MTAG: SANCTIONED INDIAN FIRM SEEKS TERMS FOR PENALTY
REVERSAL

REF: NEW DELHI 9758

CLASSIFIED BY: William Klein, Pol/Econ Chief, Consulate General
Mumbai, State.
REASON: 1.4 (b),(d)



C O N F I D E N T I A L SECTION 01 OF 02 MUMBAI 002418

SIPDIS

SIPDIS

DEPT FOR ISN/MTR AND SA/RA, DEPT PLEASE INFO MISSILE
TECHNOLOGY CONTROL REGIME COLLECTIVE

E.O. 12958: DECL: 12/29/2015
TAGS: PARM PREL ETTC KSCA MTCRE IN IR
SUBJECT: MTAG: SANCTIONED INDIAN FIRM SEEKS TERMS FOR PENALTY
REVERSAL

REF: NEW DELHI 9758

CLASSIFIED BY: William Klein, Pol/Econ Chief, Consulate General
Mumbai, State.
REASON: 1.4 (b),(d)




1. (U) This is an Action Request. See paragraph 9.

Summary and Action Request
--------------


2. (C) The vice chairman of an Indian company sanctioned under
the Iran Non-Proliferation Act (reftel) approached Consulate
Mumbai on December 28 and said his company would do whatever was
necessary to get the USG decision reversed as quickly as
possible. Mohit Chuganee of Mumbai-based Sabero Organics
acknowledged that his company sold a chemical substance
classified as dual use under the Chemical Weapons Convention
(CWC) to an Iranian company. However, it did so with the full
knowledge of the GOI and in full compliance with the CWC,
Chuganee claimed. Following guidance from the GOI, Sabero
stopped doing business with Iran after the media approached the
company about the sale. Post asks Washington for guidance on
how to respond to Sabero's overture. End Summary and Action
Request.

Sabero Organics "absolutely floored" by News of Sanctions
-------------- --------------


3. (C) Mohit Chuganee, vice chairman and director of
Mumbai-based Sabero Organics, called Pol/Econ chief on December
28 after hearing press reports that his firm was among the two
Indian firms sanctioned under the INPA (reftel). Chuganee said
he was "absolutely floored," as the reports were the first he
had heard of the sanctions. He said the decision could deliver
a severe blow to the reputation of the company, and asked what
the firm could do to get them lifted as quickly as possible.

Chuganee Describes Transaction That He Believes Led to Sanctions
--------------


4. (C) Chuganee offered his version of how his company got
sanctioned. He acknowledged that Sabero sold a certain chemical
to Iran several years ago. Chuganee said Sabero was aware that

the substance was classified as dual-use under the Chemical
Weapons Convention (CWC). Sabero followed all procedures
required by the CWC, he claimed. It filed the appropriate
reports with the GOI nodal agency, the Ministry of Chemicals and
Fertilizers, and has kept a complete audit trail on the
transaction. Sabero asked whether it needed a license to export
the product, to which the Ministry said no. Chuganee said a UN
agency tasked with auditing CWC members' compliance inspected
the company about two years ago and concluded that Sabero had
engaged in the transaction with the full knowledge of the GOI.


5. (C) Chuganee said Sabero sold the product to an Iranian
company which used it to make fertilizers. Sabero received an
end-use certificate from the company. It filed the certificate
with the Ministry of Chemicals and Fertilizers as well as with
the MEA. Chuganee acknowledged that his company could not know
the exact relationship between the Iranian company and the
Iranian government, or whether the Iranian government might be
able to weigh in with the company to divert the use of the
chemical.


6. (C) Some time after the sale, the GOI again approached Sabero
following a media inquiry about commercial deals with Iran,
Chuganee said. Sabero was able to fully document the
transaction and convince the GOI that it, the GOI, had always
been fully informed of Sabero's sale to the Iranian company.
Sabero then asked the GOI for guidance on future business with
Iran, Chuganee said. The GOI advised the company to refrain
from dealing with Iran, to which Sabero agreed.

MUMBAI 00002418 002 OF 002



Background on Sabero Organics
--------------


7. (C) Mohit Chuganee and his father, Hero Chuganee, are the
prime owners of Sabero, a publicly listed company which had a
turnover of about $30 million during the last Indian fiscal
year. The company specializes in organic chemicals.
Reportedly, it is the third largest manufacturer worldwide of
mancozeb, a popular fungicide, and claims to have a 40 percent
world market share in trimethyl phosphite, an intermediary used
in producing insecticide. The company reportedly supplies large
U.S. chemical companies in India such as Dow Chemical and
Monsanto. India's capital markets regulator suspended trading
in the shares in 2002 for failure to comply with listing
regulations, but lifted the suspension four months later after
the company came into compliance. Hero Chuganee is a well-known
businessman in Mumbai and is noticeably active in the
IndoAmerican Chamber of Commerce. Mohit Chuganee is
U.S.-educated, has business experience in the U.S., and is
reported to be an American citizen.

Second Indian Company Denies Shipping to Iran
--------------


8. (SBU) Sandhya Organics, the other Mumbai-based Indian company
sanctioned under the INPA, has not approached the USG mission in
India. The local media quoted the company's management on
December 29 as denying that any shipment ever went out to Iran.


Action Request
--------------


9. (C) Chuganee stressed that Sabero had stopped doing business
with Iran and said his company would do whatever is necessary,
including providing assurances to the USG, to get the sanctions
lifted as quickly as possible. Post seeks Washington guidance
on how to respond to Sabero's overture. Embassy New Delhi,
which cleared this cable, recommends a positive reply to this
overture, building on the precedent of INPA sanctions being
rescinded against a Spanish company that agreed to desist from
future trade with Iran and to disclose all past transactions.
Aside from the advantages this approach would offer to managing
the GOI reaction to the INPA sanctions decision, a Sabero offer
of transparency could be helpful to learning more about Iranian
procurement networks in India at a time when Tehran appears to
be targeting India as a source of dual-use materials. End
Action Request.
POMPER