BLUE LANTERN LEVEL 3: PRE-LICENCE CHECK ON APPLICATION

UNCLAS SECTION 01 OF 02 MUNICH 000620

SIPDIS

SIPDIS

DEPT. FOR PM/DTTC - BLUE LANTERN COORDINATOR AND EUR/AGS

E.O. 12958: N/A
TAGS: ETTC KOMC GM
SUBJECT: BLUE LANTERN LEVEL 3: PRE-LICENCE CHECK ON APPLICATION
050070744

REFS: (A) STATE 150486; (B) MUNICH 347


1. As requested in (Ref A),ConGen Munich contacted the managing
directors of Cerberus, GmbH, Frank Satzinger and Matthias Hainich,
at their place of business located at Gewerbestrasse 4,
Obersoechering. Satzinger and Hainich confirmed they are also the
directors of Oberland Arms, OHG. They explained that Cerberus was
established in May of this year as a limited liability company set
up primarily to serve international customers.


2. They told the Consulate they intended to close Oberland Arms in
the coming months, as it is run as a partnership with unlimited
liability, and was set up to serve only the German market, which
they described as too limited. When asked about their refusal to
meet with ConGen Munich on applications 05-050040157 and
05-050042795 last spring (Ref B),Satzinger confided that the firm
had a contract at the time to provide specialized weapons to a
German federal security agency (which he did not name),and the
agency demanded confidentiality concerning specific aspects of its
contract. Satzinger said Oberland preferred at the time to not
pursue applications 05-050040157 and 05-050042795, rather than
opening their books to an outside entity such as the Consulate, and
potentially risk losing a lucrative contract with the German
government.


3. The order from the Royal Guard of Oman comprises 1,532 rifles
plus spare parts and accessories. Satzinger and Hainich were able
to produce three binders with supporting documentation. They
provided a photocopy of a document, which contained the signature of
the end-user, Major General Khalifa Bin Abdulllah Bin Said Al
Junaibi, the Commander of the Royal Guard of Oman, who signed the
document on behalf of the government of Oman. Satzinger explained
that the size of this order was a good fit for Cerberus, as larger
firms might find the order too small to deal with. He explained
that the weapons ordered by Oman were highly customized, largely
ceremonial pieces that would be green in color to match the uniforms
of the Royal Guard.


4. The Cerberus managers confirmed that they would be handling and
storing the Oman-destined weapons on-site in their Obersoechering
facility. They gave a tour of the facility, noting its security
features. All exterior windows of the concrete-block building are
secured with steel bars. Completed weapons are secured in a
separate room, secured by a heavy locked steel door with a second
"cage" type steel door secured with a padlock. The room has a
single interior (faces the interior of the building) window, secured
by bars inside and out. The managers said they would be installing
an advanced alarm system soon using radar motion detection.
According to Satzinger, Cerberus had one employee and was
considering hiring an additional one. Cerberus requires a police
background check on employees, and also requires a gun license,
which necessitates an additional background check by local
authorities.


5. Satzinger said Cerberus maintained detailed records of its sales
and its customers, as required by law. The firm's typical customers
are seeking customized weapons, usually in relatively small numbers.
All of Cerberus' customers are within the EU, with the exception of
Oman and the UAE.


6. Asked whether they understood the restrictions on USML items,
Satzinger and Hainich said they did, and Satzinger produced four
certificates, which showed that he participated in courses on export
control regulations. The certificates were issued by
"Aussenwirtschaftsakademie" (Academy on foreign trade issues),
located in Muenster Germany (website: www.awa-muenster.de). The
courses included: Export Controls; U.S. Export Control Law; the War
Weapons Control Act; and Anti-Terrorism Measures and Embargoes.
Satzinger showed us another document, which showed that he had
registered for a course on ITAR. Satzinger stressed that compliance
with U.S. law was only one issue for the firm, as it also had comply
with German and EU export controls.


7. The managers told us that a special permit from the German
government to import the components from Lewis Machine & Tool was
not required under German law. Cerberus' license as a weapons
retailer was sufficient to allow it to legally import these parts.


8. The barrels and receivers for use in this order are sourced in
Germany. Barrels are supplied by Lothar Walter Feinwerkzeugbau
GmbH, and receivers are supplied by Kenter Feinwerktechnik. Contact
information below:

Lothar Walther Feinwerkzeugbau GmbH
Paul-Reusch-Str. 34
89551 Knigsbronn
0049-89-7328-96300
www.lothar-walther.de

Kenter Feinwerktechnik

MUNICH 00000620 002 OF 002


Liebigstr. 9a
85551 Kirchheim
0049-89-991-5230


9. The Cerberus managers told us that they were working together
with a local Omani agent, the Shanfari Group, to facilitate the
transaction, as is customary in Oman. While the Shanfari Group
would handle the paperwork on the Oman end, it would never actually
see the weapons, they said.


10. While post cannot vouch for the veracity of Satzinger and
Hainich, both men appeared forthcoming and did not give any
indications of being disingenuous in our meeting. Every answer they
provided, including their response regarding their refusal to meet
with us last spring, appeared plausible to us. Based solely on our
visit, and not taking into account additional information Washington
may have at its disposal, we would judge Cerberus as a potentially
reliable recipient of USML items.


11. This report has been coordinated with Embassy Berlin.


12. Previous reporting from Munich is available on our SIPRNET
website at www.state.sgov.gov/p/eur/munich/ .

NELSON