BLUE LANTERN LEVEL 3: PRE-LICENSE END-USE CHECK

UNCLAS STATE 158200 SIPDIS SENSITIVE SIPDIS BANGKOK FOR THOMAS HINES POL-MIL E.O. 12958: N/A TAGS: ETTC KOMC TH SUBJECT: BLUE LANTERN LEVEL 3: PRE-LICENSE END-USE CHECK ON APPLICATION 610001321 REF: A. 01 BANGKOK 1861 ¶B. 00 BANGKOK 7745 ¶C. 99 BANGKOK 10552 ¶D. 97 BANGKOK 1331 ¶E. BLUE LANTERN GUIDEBOOK 2006 ¶1. (U) This is an Action Request. Please see paragraphs 3-6. ¶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 610001321 for the temporary import (form DSP-61) to the U.S. of M113 armored personnel carrier components from Thailand. 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 and/or distribution of United States Munitions List (USML) items by a private foreign consignee/end-user. In recent years, Chaiseri Metal & Rubber Co. has been the subject of several Blue Lantern checks (refs A-D). While confirming the company's bona fides as a recognized supplier of the Thai MOD, these checks also have identified irregularities in the firm's importation, distribution, and possible unauthorized re-transfer of USML armored vehicle components, including the types listed on this application. ¶4. (SBU) The proposed temporary import in question appears to indicate a larger pattern of potential violations of the International Traffic in Arms Regulations (ITAR) by Chaiseri. During the last several years, Chaiseri has received hundreds of thousands of dollars worth of M113 parts as a foreign consignee on behalf of the Thai MOD. This DSP-61 application (610001321) suggests that Chaiseri may be stockpiling USML defense articles and/or have improper procurement, accountability, and re-transfer procedures. (COMMENT: In order to stock USML items, a company must be party to an authorized warehousing and distribution agreement. According to PM/DTCC's records, Chaiseri is not a party to either a warehousing and distribution agreement or a manufacturing licensing agreement. END COMMENT.) ¶5. (SBU) Post should make appropriate inquiries to verify the bona fides of Chaiseri; to determine how the firm acquired the USML items listed on this application; to assess the firm's procurement, inventory, and re-transfer procedures; 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 Chaiseri, as stated on the license application? If so, under what authorization is Chaiseri manufacturing these USML defense articles? --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)? --Chaiseri has been listed as the foreign consignee or foreign intermediate consignee on several export 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 Chaiseri maintain stocks of M113 parts and/or other USML items? How does Chaiseri 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? --What is the nature of Chaiseri's business -- what types of items does it handle, does it serve as a broker? --What types of organizations are among Chaiseri's typical customers and where are the customers located? Does the company have an established customer base? --Does the company understand the restrictions on USML items, especially the prohibition against unauthorized re-transfers and re-exports? ¶6. (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. ¶7. (SBU) Background: U.S. applicant International Parts Supply Corporation (IPS) submitted to the Department this Form DSP-61 to request the temporary import to the U.S. of M113 armored vehicle components from Chaiseri. IPS then intends to permanently export the components from the U.S. -- without modifying them in any way -- to private company IMCOA Importadora y Comercializadora in Colombia, where they will be used in the maintenance of M113A2 vehicles for the Colombian Army. These two transactions normally would require two separate authorizations: one for a permanent (vice temporary) import to the U.S., which would be subject to U.S. import tariffs, and another authorization for a permanent export to Colombia (Form DSP-5). (COMMENT: Re-transfer requests are normally submitted and authorized via a general correspondence (GC),not via a Form DSP-61. END COMMENT.) Furthermore, according to PM/DDTC's records, IPS has submitted dozens of improper requests via DSP-61s to re-transfer USML items from Chaiseri 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. ¶8. (SBU) For additional background, the following details of the application in question are provided: DTC Case: 610001321 QUANTITY/COMMODITY: 3,097 Track Shoe Assy P/N 1167798-6 NSN 2530-00-078-2908 Components used on M113A2 armored personnel carriers 469 Road Wheel (aluminum) P/N 11678270 NSN 2530-00-334-5877 Components used on M113 armored personnel carriers License Value: USD 187,947.00 SELLER: International Parts Supply Corp. 7220 Ohms Lane Minneapolis, MN 55439 POC: Dan Everson, tel.: 952-832-0707 FOREIGN OWNER/END-USER IN COUNTRY FROM WHICH SHIPPED: Chaiseri Metal & Rubber Co. 59 Moo 6 Pathum-Banglen Road Kubangluang, Ladlumkaen Pathumtanee 12140 Thailand MANUFACTURER OF COMMODITY: Same as foreign owner/end-user in country from which shipped FOREIGN CONSIGNOR IN COUNTRY FROM WHICH SHIPPED: Same as foreign owner/end-user in country from which shipped 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 Ltda Avenida Sexta No. 29-05 Bogota Colombia END USER IN FOREIGN COUNTRY OF ULTIMATE DESTINATION: Army of the Republic of Colombia Bogota Colombia PURPOSE: For transshipment to Colombia for end-use by the Colombian Army. Material is used for maintenance of M113A2 armored tracked vehicles. ¶9. (U) Submitted in support of the license application were the following documents (PM/DTCC can fax documentation to post upon request): --Purchase order # 004-2007 from IMCOA to International Parts Supply Corp., signed by Carlos Arturo Rojas Beltran, General Manager, dated October 9, 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