BLUE LANTERN CHECK ON POSSIBLE F100 ENGINE

UNCLAS BANGKOK 004984

SIPDIS

SIPDIS

PM/DTCC FRO BLUE LANTERN COORDINATOR TWATKINS

E.O. 12958: N/A
TAGS: ETTC KOMC IS TH
SUBJECT: BLUE LANTERN CHECK ON POSSIBLE F100 ENGINE
TRANSFER FROM THAILAND TO ISRAEL

REF: SECSTATE 127228


1. On August 3 and 10, POL FSN met with Thai Aviation
Industries (TAI) Logistics Department Director, Air Vice
Marshall Thawon Mailson to discuss this Blue Lantern case.
On August 10, POL FSN also met with Mr. Phonchet
Likhitthanasombat, Director of the Government Policy
Promotion Section, Office of Small and Medium Enterprises
Promotion, Ministry of Industry. On August 3 and 15, POL FSN
met with Group Captain Santichai Phatklap, Director of
Engineering Supply Division at the Royal Thai Air Force's
(RTAF) Directorate of Aeronautical Engineering.


2. Answers to Reftel questions follow:


Q. How did the RTAF acquire these F-16 aircraft and F-100
engines?


A. The RTAF has procured 59 F-16 in five separate shipments.
58 of these planes are deemed airworthy. The first four
shipments were procured via FMS in 1988, 1991, and the mid
1990's. Shipment 5, which included 7 aircraft, was arranged
via FMS as a transfer of aircraft from the Singaporean Air
Force in 2004. RTAF has never procured F-16s commercially.
RTAF contracts engine repair work through TAI.


Q. Have any F-100 engines been transferred to BSEL in Israel
for repair? If so, when and under what authority?


A. Yes, as follows:


1. Fan Drive P/N 4067223-800
--S/N L010405
--S/N L011169
--S/N L010420
--S/N L001594


2. Inlet P/N 4081821-800
--S/N F010419
--S/N F010442

All six modules were sent to BSEL in July 2004 and all,
except S/N L011169 have already been returned to Thailand.
The latter part is scheduled to return in late August 2004.

Representatives from DSCA and JUSMAGTHAI visited TAI in 2004
to investigate this matter. At that time, TAI and RTAF were
fully cooperative. RTAF and TAI acknowledged their mistake
in permitting this repair work to be undertaken without USG
approval in letters dated September 20, 2005.


Q. What is the precise role of TAI in this transaction?
Please elaborate on the relationship between TAI and the RTAF.


A. TAI was set up in 2003 under the authority of a Royal
Thai Government Cabinet Resolution dated September 23, 2003
to separate, privatize and modernize the RTAF's maintenance
and logistics capabilities. TAI is a joint investment
between the RTAF (owner of 49 percent of shares) and the
Office of Small and Medium Enterprises Promotion, Ministry of
Industry (owner of 51 percent of shares). Approximately one
half of the company executives are RTAF officers seconded to
TAI. The others are from the Ministry of Transport. The
company plans to be listed on the Thailand Securities
Exchange soon and might be tasked by the Royal Thai
Government to supervise civilian aircraft maintenance at
Bangkok's soon-to-be-opened Suwannaphum Airport. TAI is
listed with the Ministry of Commerce:

Registration Number 0105546131801
Registered Date 31 October 2003
Company Executives;
--Air Chief Marshal Chalit Phukphasuk (RTAF CINC)
--Air Marshal Sitthiphon Chaiyalak (Retired RTAF)
--Air Marshal Manit Saphanthuphong (Deputy Commander of Air
Support Command, RTAF)
--Air Vice Marshal Supphason Kesonmala (Director of
Aeronautical Engineering, RTAF)
--Mr. Chalo Kotcharat (Deputy Permanent Secretary, Ministry
of Transport)
--Mr. Prasong Thiennu (DDG, Ministry of Transport)
--Mrs. Chittraphon Techachan (DG Ministry of Industry)
--Mr. Phonchet Likhitthanasombat (Director, Ministry of
Industry)
--Mr. Wanchai Phalothaithakoeng (Member of the Executive
Committee of the Ministry of Industry)
Capital Registration: 100 million baht
Location 171, Building No. 4465, Equipment Maintenance
Division, Phaholyothin Road, Sikan SubDistrict, Don Muang
District, Bangkok


(NOTE: Our interlocutors pointed out that Former Defense
Ministry Sumpan Boonyanan had sent a letter dated March 10,
2005 to PM/RSAT requesting the USG recognize TAI as a legal
representative of the Royal Thai Armed Forces. TAI itself
sent a second letter to PM/RSAT dated September 20, 2005
apologizing for its unintentional violation of U.S.
regulations and again requesting TAI be recognized as a legal
representative of the Royal Thai Armed Forces. Neither
letter has been answered. END NOTE).


Q. What is the background of Thailand's relationship with
BSEL. How did TAI end up seeking BSEL's services for repair
of its F-100 engines?


A. RTAF has used BSEL to perform maintenance work for over
ten years. In the past, RTAF maintenance contracts were
conducted via FMS. However, after the privatization of RTAF
maintenance and logistics work, the maintenance contract has
been performed on a private company (TAI) to private company
(BSEL) basis. BSEL services were selected based on cost and
proven reliability.
BOYCE