EXTRNCHECK: PRE-LICENSE CHECK: C.A.D. (HK) LIMITED

UNCLAS HONG KONG 003089 SIPDIS USDOC FOR 532/OEA/LHINES/JSONDERMAN USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR WILLIAM ZARIT BICE FOR OFFICE OF STATEGIC INVESTIGATIONS SIPDIS E.O. 12958: N/A TAGS: BMGT BEXP HK ETRD ETTC SUBJECT: EXTRNCHECK: PRE-LICENSE CHECK: C.A.D. (HK) LIMITED RF: A) USDOC 10573 B) D388272 ¶1. Unauthorized dislosure of the information provided below is prohbited by Section 12C of the Export Administration ct. ¶2. As per reftel A request and at the direcion of the Office of Enforcement Analysis (OEA) of the USDOC Bureau of Industry and Security (BIS),Export Control Officer Philip Ankel (ECO),conducted a pre-license check at C.A.D. (HK) Limited (C.A.D. HK),Room 2209, 22F, Mega Trade Centre, 1 Mei Wan Street, Tsuen wan, N.T., Hong Kong. The purpose of the visit was to determine the suitability of C.A.D. to be a recipient of conductive nickel spheres (CNSs) that are the subject of export license application D388272. The items (ECCN 1C240) are valued at USD $34,000 and are controlled for nuclear nonproliferation reasons (NP). The license applicant is Novamet Specialty Products of Wyckoff, New Jersey. ¶3. A Hong Kong Companies Registry check of C.A.D. reveals that there are two C.A.D. companies registered in Hong Kong. They are C.A.D. HK and C.A.D. International Company Limited (C.A.D. International). C.A.D. HK has no paid-up share capital and its sole director is listed as Trump China Investment Inc., a BVI registered company. C.A.D. HK was registered in January 2007. C.A.D. International has the Hong Kong equivalent of USD 1,200 in share capital and lists Hong Kong residents Chan, Kam Kwan, Wo, Kwing Ho and Wu, Kwing Yan as directors. Those individuals are not listed as directors in any other companies in Hong Kong. ¶4. On December 20, 2007, ECO, accompanied by Commercial Assistant, Carrie Chan, visited C.A.D. at the address listed above and met with Mr. Wu, Kwing Yan, Marketing Manager (also a director of C.A.D. International). The office was clearly quite recently occupied and there was no signage reflecting C.A.D. at the entrance of the offices or in the building lobby. According to Mr. Wu, C.A.D. HK is affiliated with Zhongshan Light Time Company in Zhongshan China. A certificate on the wall of Mr. Wu's office states that both C.A.D. HK and Zhongshan Light Time Company have been certified as ISO 9001 and ISO 14,001 qualified. ¶5. As explained by Mr. Wu, the beneficial owners of both the factory in China and C.A.D. HK are the same although the companies are run as separate entities. ECO suspects that such an arrangement exists for tax optimization purposes. C.A.D. HK's mainland factory produces heat seal connectors and zebra connectors for use in LCD monitors and other electronic applications. In this particular instance, Mr. Wu stated that C.A.D. HK is purchasing these particular CNSs because they are superior to the larger size CNSs they presently use (and which they procure in mainland China). Mr. Wu noted that the company also uses CNSs made from silver but these are quite a bit more expensive that those made of nickel. ¶6. When asked about the existence of C.A.D. International, Mr. Wu replied that this company is no longer in existence and that the new C.A.D. HK had been created as part of a restructuring of C.A.D.'s international operations. More specifically, C.A.D. has entered into a marketing agreement with an agent in Malaysia (Radysis Asia) and the name C.A.D. HK is meant to avoid confusion about the geographic focus of the Hong Kong operation. ECO subsequently visited the office address of C.A.D. International and verified that C.A.D. International no longer occupies that location. ¶7. The ECO found Mr. Wu's explanations credible and generally consistent with information independently obtained by the ECO. ECO is not in a position to make any conclusions about the mainland factory, however. Cunningham