NORINCO VP EAGERLY ACCEPTS MEETING PROPOSAL

S E C R E T BEIJING 006640


DEPARTMENT FOR ISN AND EAP

E.O. 12958: DECL: 10/12/2023
TAGS: PREL CH ETTC PARM

SUBJECT: NORINCO VP EAGERLY ACCEPTS MEETING PROPOSAL

REF: A. STATE 142523

B. PICCUTA-HE 26 SEPTEMBER LETTER

Classified By: Political Minister Counselor Aubrey Carlson.
Reasons 1.4 (B) and (D).


1. (S) Summary. China North Industries Corporation (NORINCO)
Vice President He Xiaodong eagerly accepted reftel invitation
to meet in Washington the week of 29 October - 2 November.
VP He understands the meeting is only for NORINCO executives
and not for outside consultants. VP He stated that as proof
of NORINCO's commitment to effective export controls, NORINCO
has had no conventional arms business with Iran since March
2007 and has recently refused arms contracts with both Syria
and Pakistan. Claiming the Government of Iraq owes NORINCO
4.75 billion USD and still has several outstanding oil
contracts with NORINCO, VP He noted several times his
interest in doing more business in Iraq. VP He claims
NORINCO's new business plan and Internal Compliance Program
(ICP) embrace "both the letter and the spirit of law." End
Summary.

NORINCO VP EAGERLY ACCEPTS INVITATION
--------------


2. (S) Poloff presented reftel invitation to He Xiaodong,
Vice President of NORINCO, to meet with USG officials in
Washington, DC, during the week of October 29 - November 2.
Poloff outlined that, among other issues, USG would like to
talk about NORINCO's business model and strategic plan, ICP
process, the nature of existing business with Iran and other
countries of concern, and efforts taken in response to
UNSCRs. Poloff stressed that the meeting is only for Senior
NORINCO executives and not for outside consultants.


3. (S) VP He immediately and eagerly accepted the meeting
invitation. Noting his travel plans were initially set to
leave the United States on October 28, he agreed to move his
departure to the following week to make time for the meeting.
He produced an undated letter addressed to Poloff requesting
such a meeting. (Note: Poloff sent a scan copy of that letter
on the unclassified email system to reftel paragraph 9 POCs.)

NORINCO REFUSES CONTRACTS IN IRAN, SYRIA, PAKISTAN
-------------- --------------


4. (S) VP He noted that NORINCO has had no conventional
exports to Iran and has had no contact with Iranian defense
customers since March 2007. Poloff asked for clarification
of what "conventional exports" means. VP He clarified that
NORINCO continues to execute a contract for subway
construction in Iran and has no plans to abandon that
project. He also said NORINCO refused a Syrian request for
an order for a "large number" of rockets in May 2007, as well
as a Pakistani request for an order of pistols. He said
NORINCO refused the order by the Pakistani entity because
NORINCO was "not sure of the end-user."

CLAIMS IRAQ OWES NORINCO 4.75 BILLION USD
--------------


5. (S) VP He claims that the Government of Iraq owes NORINCO
4.75 billion USD from business completed prior to the Iraq
war. He says NORINCO is beginning to pursue a "Paris Club
rules" agreement to relieve eight percent of this debt, yet
still seeks some sort of arrangement for payment of the
remainder. He also said NORINCO has several pre-war oil
field contracts with Iraq and is "open" to U.S. cooperation
in pursuing these contracts. Poloff asked if NORINCO had any
part of the 100 million USD contract recently reported in the
press for equipment and arms for the Iraqi police. He said
NORINCO did not have any part of that contract and does not
know which Chinese company or companies do.

PROMISES NORINCO FINALLY UNDERSTANDS EXPORT CONTROLS
-------------- --------------


6. (S) VP He offered an unprompted review of NORINCO's new
policies regarding export controls. He said NORINCO
"understands now" what export controls and ICP mean, and
claims that NORINCO's policies embrace "not just the letter
of the law, but also the spirit." He said NORINCO's export
practices are in keeping with all international laws and
regimes and Chinese law, and would like to also follow all
U.S. laws, specifically saying he would like to get a copy of
General Electric's data base of sensitive entities to link to
NORINCO's ICP.


7. (S) VP He noted that he is looking forward to meeting
with Embassy officials in November to follow up on his
Washington, DC, discussions (ref B). He will be carrying his
PRC cell phone while traveling in the United States,

13901103382.
Piccuta


NNNN




End Cable Text