BLUE LANTERN LEVEL 2: PRE-LICENSE END-USE CHECK

UNCLAS STATE 148187

SIPDIS

SENSITIVE
SIPDIS
THE HAGUE FOR JASON HEUNG
ECON

E.O. 12958: N/A
TAGS: ETTC KOMC NL
SUBJECT: BLUE LANTERN LEVEL 2: PRE-LICENSE END-USE CHECK
ON APPLICATION 610001190

REF: BLUE LANTERN GUIDEBOOK 2006


1. (U) This is an Action Request. See paragraphs 2-6.


2. (U) The Department's Office of Defense Trade Controls
Compliance (PM/DTCC) requests post's assistance in conducting
a pre-license check on application 610001190 for the
re-transfer of M113 armored vehicle parts from the
Netherlands to Colombia. Post is requested to complete this
Blue Lantern check within 30 days. Lack of response to a
Blue Lantern check will affect pending and future
applications involving parties to this license.


3. (SBU) Reason for request: possible unauthorized
possession of United States Munitions List (USML) items and
an improper re-transfer request by an unfamiliar foreign
consignee/end-user whose bona fides have never been verified
by a Blue Lantern check. U.S. applicant International Parts
Supply Corporation submitted to the Department a Form DSP-61
to request the temporary import of M113 armored vehicle parts
from private company Reomie in the Netherlands.
International Parts Supply Corp. also seeks to then
permanently export the components from the U.S. -- without
modifying them in any way -- to private company IMCOA
Importadora y Comercializadora in Colombia for upgrading
M113A1 vehicles to M113A2 vehicles for the Colombian Army.
These two transactions normally would require two separate
authorizations: one for a permanent (vice temporary) import,
which would be subject to U.S. import tariffs, and another
authorization for a permanent export authorized via a Form
DSP-5.


4. (SBU) Besides these procedural improprieties, PM/DTCC has
significant concerns about this proposed transaction, which
appears to indicate a larger pattern of potential violations
of the International Traffic in Arms Regulations (ITAR) by
both Reomie and International Parts Supply Corporation.
During the last several years, Reomie has been listed as the
foreign consignee on more than a dozen DSP-61 and DSP-5
applications that have requested the export and re-transfer
of parts for M113 and other types of armored vehicles to and
from the Netherlands and several other third countries.
(COMMENT: Re-transfer requests are normally submitted and
authorized via a general correspondence (GC),not via a Form
DSP-61. END COMMENT.)


5. (SBU) These DSP-61 and DSP-5 licenses and this DSP-61
application (610001190) suggest that Reomie may be
stockpiling USML defense articles and/or have improper
procurement, accountability, and re-transfer procedures.
(COMMENT: In order to stockpile USML items, a company must
be party to an authorized warehousing and distribution
agreement. Reomie does not appear to have received such
authorization. END COMMENT.) Normally, re-transfer requests
are made by the foreign end-user, not the foreign consignee.
A request made by a foreign consignee suggests that the
defense articles never reached the end-user indicated on the
license. Furthermore, according to PM/DDTC's records,
International Parts Supply Corp. has submitted dozens of
improper requests via DSP-61s to re-transfer USML items from
Reomie and other private companies to third countries.
Although PM/DDTC mistakenly authorized many of these
re-transfers, we hope this Blue Lantern check will be help
identify and correct this improper practice.


6. (SBU) Post should make appropriate inquiries to verify the
bona fides of Reomie; to determine how the firm acquired the
USML items listed on this application; to assess the firm's
procurement, inventory, and re-transfer procedures; to
determine why this re-transfer request is being made by
Reomie, the foreign consignee, via a Form DSP-61 rather than
by the end-user via a GC; and finally, to assess the firm's
understanding of the ITAR and restrictions placed on USML
items. The following questions are provided as suggested
guidance:

--How did the company acquire the items listed on this
application?

--How did this proposed transaction come about?

--Were the items in fact manufactured by FMC Corporation of
San Jose, California, as stated on the license application?

--If the items are of U.S. origin, under what
authorization(s) were the items exported from the U.S. and
who were the authorized foreign consignee(s),end-user(s),
and end-use(s)?

--What companies and individuals have had access to these
items?

--Where have the items been stored and where are they
currently stored? Are these facilities secure?

--Reomie has been listed as the foreign consignee or foreign
intermediate consignee on several export licenses and
re-transfer authorizations involving M113 parts and other
USML items. Are the company's record-keeping procedures
adequate to track all these transactions and keep them
separate?

--Does Reomie maintain stocks of M113 parts and/or other USML
items? How does Reomie acquire these items? To whom does it
sell the items? What authorization(s) does it receive in
order to acquire, store, and/or re-transfer such items?

--When was Reomie established and who are its principals?

--What is the nature of its business -- what types of items
does it handle, does it serve as a broker?

--What types of organizations are among its typical customers
and where are the customers located? Does the company have
an established customer base?

--Does the company understand the restrictions on United
States Munitions List (USML) items, especially the
prohibition against unauthorized re-transfers and re-exports?


7. (U) Department requests that post conduct a site visit to
the company in order to provide Department with an assessment
of its business operations and on-site security. If a site
visit is not possible, please inform PM/DTCC case officer.
Finally, post is asked to assess whether the company appears
to be a reliable recipient of USML items. End action.


8. (SBU) For background, the following details of the license
in question are provided:

DTC Case: 610001190

QUANTITY/COMMODITY:

23 Cooling System Kit P/N 12253697 NSN 2930-01-075-4978.
Parts used on M113A2 armored personnel carriers
23 External Fuel Tank P/N 12268866 Parts used on M113A2
armored personnel carriers

License Value: USD 142,600.00

SELLER:

International Parts Supply Corp.
7220 Ohms Lane
Minneapolis, MN 55439
Company contact: Dan Everson, tel.: 952-832-0707

FOREIGN OWNER/END-USER IN COUNTRY FROM WHICH SHIPPED:

REOMIE
Erlecomsedam 34
NL-6576 JW Ooij
Netherlands

MANUFACTURER OF COMMODITY:

FMC Corporation
1125 Coleman Ave.
San Jose, CA 95110
USA

FOREIGN CONSIGNOR IN COUNTRY FROM WHICH SHIPPED:

Same as Foreign Owner/End-User

U.S. INTERMEDIATE CONSIGNEE:

International Parts Supply Corp.
7220 Ohms Lane
Minneapolis, MN 55439

FOREIGN CONSIGNEE IN COUNTRY OF ULTIMATE DESTINATION:

IMCOA - Importadora y Comercializadora
Avenida Sexta No. 29-05
Bogota
Colombia

PURPOSE:

For transshipment to Colombia for ultimate use on Colombian
Army vehicles. Parts will be used for upgrading and repair
of M113A1 vehicles to M113A2 vehicles.


9. (U) Submitted in support of the license application were
the following documents (PM/DTCC can fax documentation to
post upon request):

--Unnumbered purchase order from Imcoa to International Parts
Supply Corp, signed by Carlos Arturo Rojas Beltran., General
Manager, Imcoa Ltda., and by Ken Everson, President,
International Parts Supply, dated 31 July 2007


10. (U) Please slug reply for PM/DTCC - BLUE LANTERN
COORDINATOR and include the words "Blue Lantern" and the case
number in the subject line. POC is Judd Stitziel, PM/DTCC,
Phone: 202-663-3455; email: StitzielJD@state.gov; SIPRNET:
StitzielJD@state.sgov.gov. The Blue Lantern Guidebook (ref)
is available as a PDF file in the Bunche Library's Electronic
Library collection on the DOS Intranet:
http://virtuallibrary.state.gov/
BlueLanternGuidebook2006%2520 final .pdf


11. (U) Department is grateful for post's assistance in this
matter.
RICE