BLUE LANTERN LEVEL 3: PRE-LICENSE END-USE CHECK ON

UNCLAS SECTION 01 OF 03 BANGKOK 003261 SIPDIS SENSITIVE SIPDIS DEPARTMENT FOR PM/DTCC BLUE LANTERN COORDINATOR (RVALERIN) E.O. 12958: N/A TAGS: ETTC KOMC TH BLUE LANTERN SUBJECT: BLUE LANTERN LEVEL 3: PRE-LICENSE END-USE CHECK ON APPLICATION 05-050009999LPREAN, 05-050009568 REF: A. SECSTATE 72555 ¶B. DIAIMADSWA 11131721 11/13/2003 ¶1. (U) Reftel requests post conduct a Blue Lantern check on Royal Defense Col Ltd. POL FSN conducted background research and determined that The Royal Defense Co., Ltd is listed in the data base maintained by the Thai Ministry of Commerce, Department of Business Development as follows: Registration No. 0105539046969 Registered Date: 19 APR 1996 Status: Still valid. Name: The Royal Defence Col, Ltd. Capital Registration: 30,000,000 Baht Company Executives: --Mr. Charan Chawla --Ms. Thanberkor Khanijour --Mr. Visanu Chawla --Mr. Kamol Phichitsingh Location: 77/154, 35 Fl. the Sinn Sathorn Tower,Krung Thonburi Road, Khlong Ton Sai Sub-District, Khlong San District, Bangkok The Business submitted annual financial reports in 1999, 2000, 2001, 2002, 2003, and 2004. Purpose of Company: To sell spare parts and all types of ammunition. ¶2. (U) According to the Telephone Directory Center, The Royal Defence Co., Ltd is listed as being located at 77/154, Somdet Phrachao Taksin Road, Khlong San District, Bangkok Tel: 02-440-0212 (3 and 4) ¶3. (SBU) On May 24, POL FSN visited the 35th floor of the Sinn Sathorn Tower and was met by Mr. Santi Khanijour, the Company's Chief of Defence Equipment. Mr. Charan Chawla, the POC named in reftel, was abroad. Mr. Santi told FSN that Mr. Charan and Mr. Santi are Thai-Sikhs. He answered questions raised in reftel as follows: Q: When was the company established and who are its principals? A: The company opened in 1996. Mr. Santi provided a copy of the registration documents which correspond with the information related in para 1 above. Mr. Charan, Mr. Santi and other senior representatives previously worked for G.H. International, Co., Ltd for approx. 10 years, then worked for Kemco International for ten years before setting up their own company. Mr. Santi said that the company has seven Thai share holders and one non-Thai, a Mr. Louis Barron who resides in Madrid, Spain. Q: Who are the firm's typical customers and where are they located? A: The company sells to all branches of the Royal Thai Armed Forces, the Police and other Ministries authorized to carry arms including the Departments of Forestry and Customs and the Ministry of the Interior. The company does not have a private sector customer nor does it sell to the general public. The company bids on government contracts (usually those bids are made in Bangkok) and supplies Government customers throughout the country. Q: Does the company have an established, legitimate customer base to which it plans to sell these commodities? A: Yes. For the two lots of commodities identified in reftel, the company produced bid documents, purchase agreements and all other forms required by Thai law. The copies are kept in hard copy, not electronically. Q: Does the company have adequate on-site security? A: The company's office covers approximately 1/4 of the 35th floor of a commercial office building. There is a CCTV at the reception area to monitor traffic coming into the office suite. The door connecting the reception area with the work area is locked from the inside. However, that lock was broken at the time of FSN's visit. The company has a fire alarm and water sprinkler system. The company has 11 employees -- several of whom are family members of the owners. The company does not conduct background checks or fingerprint its employees with the National Police. The company does not have a warehouse and the main office is not/not used to store any weapons or defense equipment. Company records indicate it annual sales of U.S.-made equipment ranges from two to four million baht (approx. 50,000 -- 100,000 USD). Q: Does the company keep proper, detailed records of its sales and customers? A: Yes, as described above. Q: Does the company understand the restrictions of USML articles, particularly regarding re-exporting? A: Yes. Moreover, the state agencies to whom the company sells its products also clearly understand those restrictions. Q: Does the company have the proper firearms license and import permit for the items listed on the license application? A: N/A those two contracts were for Thai Armed Forces use and thus exempt. When the company won the two bids from the Army's Ordnance Department and the Naval Ordnance Department, both Departments issued the company official letters signed by their Directors General to present to the U.S. Department of State and the concerned Thai authorities certifying the contracts. These letters serve the purposes of regular import permits and firearms licenses. The Army Ordnance Department's letter was numbered MOD 0443/1525, dated March 31, 2006, addressed to the U.S. Department of State's Office of Defense Control, signed by LTG Veravidh Kusamran -- the Director General. The Navy Ordnance Department's letter was numbered MOD 0524/1066, dated March 31, 2006, addressed to the U.S. Department of State's Office of Defense Control, signed by RADM Surasak Kaewkamthong -- the Director General. Mr. Santi also presented copies of Purchase Order No. RTA 4908, dated February 28, 2006, and No. RTA 4910, dated March 27, 2006, to Bushmaster Firearms, Inc. Details of that PO conform with information contained in reftel. When the imported items arrive at the port of entry in Thailand, after completing Customs clearance, they will be transported directly to the Department's warehouse with a security escort. The company will never have physical possession of the items. CONFIRMATION OF SALE AND PURCHASE ROYAL THAI ARMY 05-050009999 ¶4. (SBU) On May 24, POL FSN met with COL Panu Panthong, Chief of Procurement and the POC named in reftel. Panu confirmed the contract between his Department and the Royal Defence Co., Ltd. and provided a list of purchased equipment which corresponds with the list provided in reftel. Panu also allowed FSN to view the original contract, Ref. No. 21/2549, signed by his Director General and the company which also corresponds with the information contained in reftel. Panu did not have a copy of the foreign end-user statement from Bushmaster Firearms. The end user certificate from teh Royal Thai Army was made available. It was signed by LTG Veravidh Kusamran, dated March 31, 2006 (not signed by Lt. Kusamran and dated April 10, 2006 as described in reftel). COL Panu said he had worked with the company for seven or eight years and unaware of any negative information about the company. CONFIRMATION OF SALE AND PURCHASE ROYAL THAI NAVY 05-050009568 ¶5. (SBU) On May 25, POL FSN met with LTCDR Domporn Pethai and LT Ekkasit of the Royal Thai Navy Procurement Section at their office at the Sattahip Naval base, about two hours outside of Bangkok. Somporn and Ekkasit confirmed details of the contract between Royal Defence and the RTN and provided a list of equipment which corresponded with that provided in reftel. They provide the original contract, Ref. No. 60/49, dated March 22, 2006 which also corresponded with information in reftel. They did not have a Foreign end-user statement from Bushmaster Firearms signed by Rita DeSimone, dated April 13, 2006 nor did they have a copy of the Royal Defence Company's Purchase Order No. RTA 4910. The DSP-83 and end-user certificate from the Royal Thai Navy were actually signed by RADM Surasak Kaewkamthong, not by RADM Surasak Kamthong as stated in reftel. Somporn said that he has worked with Royal Defence since ¶2000. Ekkasit said he has worked with the company since ¶1997. The only derogatory information they had involved Royal Defence's inability to deliver some equipment several years ago due to the closure of the foreign manufacturer. Q: Are there any indications that the firm has engaged or is continuing to engage in any nefarious activities? A: POL FSN made inquiries of several watchdog agencies. The Ministry of Commerce, Department of Foreign Trade, Department of Business Development (Mr. Charan and Ms. Ratchani) had no negative information. The Economic and Technological Crime Suppression Division (Police Lt. Col. Phongsawat of Sub-Division 2) had no negative information. Police Special Branch (Police Col. Sanya who monitors transnational crime),had no derogatory information. The Consumer Protection Board's Bureau of Trade Mark Control (Mr. Wara) had no derogatory information. The Industry Control Division (CDR Maitri of the Royal Thai Navy) and the Equipment Control and Industry Development Division (COL Somchet of the Royal Thai Army) of the Ministry of Defence's Defense Industry Department had no negative information on the company. BOYCE