NORINCO CLAIMS TO BE FORGOING SALES TO IRAN

C O N F I D E N T I A L BEIJING 002896


E.O. 12958: DECL: 02/14/2017
TAGS: PARM PREL ETTC CH IR

SUBJECT: NORINCO CLAIMS TO BE FORGOING SALES TO IRAN

REF: 72 FED REG 13550 (3/22/07)

Classified By: Deputy Chief of Mission David S. Sedney. Reasons 1.4 (b
/d).


1. (C) Summary: The United States decision to permanently
waive missile proliferation sanctions against NORINCO
(reftel) confirmed for company officials that they had made
the right decision to forgo sales to Iran, China Arms Control
and Disarmament Association Secretary General Li Genxin told
Poloff recently. According to Li, who advises NORINCO, the
decision helped quell internal dissent by a NORINCO employee
responsible for sales to Iran that was "causing lots of
trouble" for NORINCO. NORINCO officials are seeking meetings
with emboffs. End Summary.


2. (C) NORINCO officials were very pleased with the United
States' decision to waive permanently the missile sanctions
against NORINCO, which confirmed for the firm that it had
made the right decision to forgo sales to Iran, China Arms
Control and Disarmament Association (CACDA) Secretary General
Li Genxin told Poloff at a meeting (that Li, who advises
NORINCO, requested). Li said the firm wondered why the
Federal Register notice announcing the waiver did not mention
that the decision was based on actions that NORINCO was
taking, such as implementing an internal compliance program.
Mentioning this in the Federal Register would have greatly
encouraged NORINCO to continue pushing forward with its
internal reforms, Li maintained.


3. (C) Li claimed that NORINCO has now quelled internal
dissent about the firm's decision to forgo sales to Iran.
According to Li, a NORINCO employee responsible for the
firm's sales to Iran, angry to see his bonuses disappearing,
was "causing lots of trouble" for NORINCO. Li did not
provide details, saying only that NORINCO's president stepped
in and reaffirmed the company's strategy of forgoing sales to
Iran.


4. (C) Li told us that NORINCO officials would like to brief
emboffs on the steps the company has taken to implement its
internal compliance program. When asked if the firm still
operates an office in Iran, Li said he was not certain, but
he thought that the office was either closed or would be
closed in the future. NORINCO employees could respond to
such questions, Li said, if a meeting between emboffs and
NORINCO officials could be arranged. He noted as well that
NORINCO officials could provide emboffs with the dollar
amount of sales the firm has forgone in Iran.


5. (C) Li told Poloff that the decision to permanently waive
NORINCO's sanctions has emboldened CACDA to press forward
with its export control initiatives. According to Li, CACDA
is planning "extremely large" export control outreach
programs aimed at Chinese firms and will dispatch its deputy
director to the Monterrey Institute for a two-month export
control training program this summer.
RANDT


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