BLUE LANTERN LEVEL 3: PRE-LICENSE CHECK ON

UNCLAS MOSCOW 004189 SIPDIS SIPDIS E.O. 12958: N/A TAGS: ETTC KOMC RS SUBJECT: BLUE LANTERN LEVEL 3: PRE-LICENSE CHECK ON APPLICATION 050052700 REF: SECSTATE 104411 ¶1. (U) Reftel requested a pre-license check to confirm the bona fides of the World of Arms company, the foreign consignee listed in the license applications detailed in the DTC Case 050052700. The commodities in question are 30 Model 597 Semi Auto rifles, .22 cal W/Scope and 20 Model 700 Bolt Action rifles, .17-.458 cal W/Scope, valued at USD 17,990.00. ¶2. (U) On August 16, 2007, we visited the headquarters and showroom of World of Arms located at 24a Kotelnicheskava, 140000 Lubertsy, Russia. The team met with Mr. Vladimir L. Nosikov, First Deputy General Director of Kolchuga Limited and Sergey Frolenkov, General Director of World of Arms. ¶3. (U) Kolchuga was founded in 1993 as a hunting and shooting sports retailer, and has since added two additional locations in the Moscow area and a network of 50 independent distributors throughout Russia. In addition, Kolchuga has its own taxidermy specialty service, a security company, and a realty company. Kolchuga's stores sell approximately 750 rifles and shotguns per month, plus it sells approximately 300 rifles and shotguns a month to its network of distributors. Kolchuga also sells ammunition for rifles and shotguns and a wide range of hunting and shooting accessories. Kolchuga is owned by Mr. Mikhail Khubutia and Mr. Rafael Etoumyan, though operations are managed by the General Director, Mr. Alexander Nikolayich Elysiev. Mr. Nosikov described Kolchuga's typical customer as male, 25-45 years old, and "well off" financially. The hunting and shooting sports market in Russia is well established. ¶4. (U) World of Arms is a wholly owned subsidiary of Kolchuga, founded in 2006 as part of the company reorganization. World of Arms will be responsible for warehousing and distribution of firearms, ammunition, knives, and other sporting goods and accessories for the Kolchuga stores and 280 associated dealerships throughout Russia. World of Arms employs around 200 people at their premises in Lubertsy. Prior to 2006, Kolchuga had been utilizing long-term storage made available by the Ministry of Emergency Situations in downtown Moscow, but was unable to continue the arrangement due to the Ministry's operational needs. Kolchuga's facility includes several large high-security rooms for firearms and ammunition. In addition, Kolchuga has a small showroom and shop at the location. ¶5. (U) Kolchuga and World of Arms are familiar with the requirements of U.S. export control licenses, as they have been the recipient of both State Department and Commerce Department licenses. The sale of firearms and ammunition requires special permits from the Government of Russia (GOR), and requires the seller to keep records of sales. The records are kept both in hand-written bound logbooks and a computerized database maintained by Kolchuga for the purpose of printing monthly reports for the Ministry of Internal Affairs. The data include date of purchase, purchaser's name and permit number, model and serial number for firearms, type and quantity of ammunition purchased, and the buyer's signature. Individuals may own only five firearms (rifles or shotguns, handguns are limited to security or police use), and may purchase only ammunition of a type corresponding to firearms they own. Buyers are limited to 400 rounds of ammunition per visit. ¶6. (U) Firearms and ammunition are stored in locked cabinets within the World of Arms showroom. The showroom has armed security during business hours provided both by Kolchuga's own security company and a police officer on detail. The facility has an electronic security system linked to the police, heavy reinforced doors, and all exterior windows in the storage area are barred on both sides. Burns