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