EXTRANCHECK: POST SHIPMENT VERIFICATION:

UNCLAS HONG KONG 002339 SIPDIS USDOC FOR 532/OEA/LHINES/ADYSON USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR WILLIAM ZARIT BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS SIPDIS E.O. 12958: N/A TAGS: BMGT BEXP HK ETRD ETTC SUBJECT: EXTRANCHECK: POST SHIPMENT VERIFICATION: HONG KONG DRAGON AIRLINES LTD. REF: A) USDOC 06988 B) EXP.LIC. D328589 C) HK 03591 D) HK 07053 E) HK 04648 ¶1. Unauthorized disclosure of the information provided below is prohibited by Section 12C of the Export Administration Act. ¶2. As per reftel A and at the direction of the Office of Enforcement Analysis (OEA) of the USDOC Bureau of Industry and Security (BIS),Export Control Officer Philip Ankel (ECO) was requested to conduct a post shipment verification (PSV) at Hong Kong Dragon Airlines Ltd, L2 Dragonair House, 11 Tund Fai Road, Hong Kong Int'l Airport, Lantau, Hong Kong (Dragonair). In fact, as further explained below, the PSV was conducted at Hong Kong Aircraft Engineering Company Limited (HAECO), 80 South Perimeter Road, Hong Kong International Airport, Lantau Island, Hong Kong (more information at www.haeco.com). The item in question is an inertial navigation system that is the subject of export license D328589. The export control classification number (ECCN) of the item is 7A103 and it is controlled for missile technology reasons (MT). The exporter was Intertrade (a Rockwell Collins, Inc. company) of Cedar Rapids, Iowa. ¶3. Dragonair is an affiliate of the Cathay Pacific Group of companies. Dragonair flies a range of planes throughout the Asia Pacific region including six Boeing 747s and 31 Airbus aircraft. HAECO provides a range of aeronautical engineering services to the Cathay Pacific Group. Parts for Dragonair aircraft are actually held (on Dragonair's behalf) at HAECO's facilities. Therefore, the PSV was conducted at HAECO. ¶4. HAECO is a longstanding Hong Kong company providing comprehensive aeronautical engineering services to airlines/operators since 1950. It was the subject of a favorable checks referenced in reftel C and E. Related company, Hong Kong Aero Engine Services Limited (HAESL),was the subject of a separate favorable check referenced in reftel ¶D. ¶5. On September 6, 2007, the ECO visited HAECO at the address above and met with Mr. Moon Chor Chan, Supplies Officer. Mr. Chan stated that Dragonair owns the item and it is dedicated to Dragonair planes. The item was actually in the warehouse on its way to be serviced and so was not installed in an aircraft. ECO inspected the item and notes that its product and serial numbers match those provided in Reftel A, namely 463001-8130-0413 and 1734 respectively. As noted in Reftel C and E, HAECO is quite familiar with the export control rules associated with such items. The exporter also made HAECO and Dragonair aware of the license conditions contained in license D328589, as required by this license. ¶6. HAECO and Dragonair appear to be suitable recipients of the subject controlled item since HAECO cooperated fully with the PSV and provided substantial information on Dragonair's use of the item in Hong Kong. In addition, Dragonair and HAECO operate lines of business that are consistent with the use of the item. The ECO recommends that this PSV be classified as Favorable. Cunningham