EXTRANCHECK: POST-SHIPMENT VERIFICATION: SHOGHI

UNCLAS NEW DELHI 003613 SIPDIS SIPDIS USDOC FOR 532/OEA/M. NICKSON-D/KGAINES/JAY HATFIELD USDOC FOR 3131/USFCS/OIO/ANESA/KREISSL USDOC FOR 4530/MAC/ANESA/OSA ICE HQ FOR STRATEGIC INVESTIGATIONS STATE FOR EB/ESP E.O. 12958: N/A TAGS: ETTC ETRD BEXP IN SUBJECT: EXTRANCHECK: POST-SHIPMENT VERIFICATION: SHOGHI COMMUNICATION LTD., NEW DELHI REF: USDOC 05594 ¶1. Unauthorized disclosure of the information provided below is prohibited by Section 12(c) of the Export Administration Act. ¶2. Export Control Officer (ECO) Paul Cushman and BIS FSN Prem Narayan conducted a Post-shipment Verification (PSV) at Shoghi Communication Ltd. (SCL),New Delhi, on July 26, 2007. ¶3. BIS requested a PSV at SCL, a private sector company. SCL's marketing office is located at: 707, Ansal Bhavan, 16 Kasturba Gandhi Marg, New Delhi 110001, Tel: 91-11-2335-1302, Fax: 91-11-2335-1303, email: shoghi@nde.vsnl.net.in. Website: www.shoghi.co.in. SCL was listed as the Ultimate Consignee for a telephonic switching apparatus, Cornet MACX PCU Matrix Switch consisting of the following: one chassis, two power modules, one cross-connect card, two controller cards, one CORSCAN software, two power cables, two Ethernet cables and two documentation manuals. The exporter was Cornet Technology Inc. (Cornet),Springfield, Virginia. Export License Number: No License Required (NLR). ECCN: 5A991. ¶4. ECO and FSN Narayan met with Anant Bindal (Bindal),Director of Marketing, SCL. Reftel requested BIS New Delhi conduct the PSV at SCL's manufacturing facility in Shimla, Himachal Pradesh. However, in response to ECO's letter requesting the PSV at SCL Shimla, Bindal responded and stated that the equipment was no longer in SCL's possession. In fact, it had been sold to the Government of India's Cabinet Secretariat. Therefore, the PSV was conducted at SCL's marketing office in New Delhi. The Cabinet Secretariat - under the direct control of the Indian Prime Minister - is responsible for ensuring smooth coordination between the various GOI ministries and departments. ¶5. Bindal stated that they regularly deal with U.S. State Department export licenses and that he was aware of certain BIS regulations. Bindal stated this was the first visit to SCL by any USG officials. He was very cooperative and forthcoming, providing copies of the SCL Purchase Order, Cornet Invoice, Cornet Beneficiary Certificate (advising that Cornet would cover the cost of installation, training, service, and maintenance during the warranty period),and �A;a letter from SCL informing the Cabinet Secretariat about the training syllabus and obtaining appropriate security clearance for the Cornet training team. ¶6. In addition, Bindal presented the Cabinet Secretariat Purchase Order issued in favor of SCL for ECO and Narayan to review. ECO determined that the items listed on the purchase order matched the products listed in reftel. Bindal declined to provide a copy of the purchase order because it was a GOI document. ECO also requested that Bindal provide a copy of the Cabinet Secretariat receipt for the equipment. Again, he declined. Bindal later received the necessary permissions and forwarded both documents to BIS New Delhi via facsimile machine. ¶7. Bindal stated that since the Cornet matrix switch and its accessories were not licensed commodities, SCL did not request an end-use statement from the Cabinet Secretariat. Following delivery of this equipment, two Cornet engineers traveled from the U.S. to install it and provide appropriate training. Bindal described the application of the matrix switch as an upgrade of the Cabinet Secretariat's fixed-line telephone system. Bindal stated that it SIPDIS was integrated into the EPABX (Electronic Private Automatic Branch Exchange) board, enabling it to convert analog signal to digital signal. He stated that the EPABX receives all incoming calls as analog signals. These are converted to digital signals in order to make the telephone system more efficient and cost-effective. ¶8. Bindal explained that SCL supplies encryption products and technology to GOI agencies, primarily military and paramilitary forces. These products are often customized with the integration of imported components. Bindal stated that since they supply products to defense agencies, SCL is monitored and regularly audited by the Indian Department of Defence Research and Development (DDRD). DDRD and the Director General of Foreign Trade (DGFT) clear all of SCL's export orders. Bindal asserted that SCL exercises proper due diligence and complies with all required procedures in order to ensure compliance with Indian export control laws. He stated that SCL is not allowed to export to countries such as North Korea, Cuba, Sudan, and Iran. ¶9. Established in 1996, SCL is an engineering and systems integration company. SCL delivers solutions in the fields of strategic electronics, encryption technologies (including code-breaking technology),analysis and surveillance. SCL's product range includes communication security, communication jamming, communication intelligence, signals intelligence, systems engineering, research & development, and software development. Of their total production, 70 percent is supplied to GOI agencies. The remaining 30 percent is exported to foreign governments with DDRD and DGFT oversight. Foreign customers include Malaysia, Philippines, Indonesia, South Africa, and a few European and Latin American countries. SCL regularly imports products from the United States and a few European countries. SCL employs 280 personnel, all of whom benefit from a profit-sharing plan. SCL is privately owned and its original founders remain in control of the company. In FY 2006, SCL's sales turnover exceeded 50 million USD. ¶10. Recommendation: Based on the interview and inspection of documents provided, SCL business operations appear to be legitimate. However, because a physical inspection of the listed items could not be accomplished, the PSV for this transaction remains inconclusive. WHITE