GUATEMALAN RESPONSE ON POTENTIAL SALE OF

UNCLAS GUATEMALA 000482

SIPDIS

SIPDIS

DEPT FOR PM/DTCC J. STITZIEL AND K. BALLARD

E.O. 12958: N/A
TAGS: ETTC KOMC GT
SUBJECT: GUATEMALAN RESPONSE ON POTENTIAL SALE OF
MAP-ORIGIN FIREARMS

REF: A. STATE 32825

B. GAUTEMALA 2042


1. SUMMARY: On April 10, PM/DDTC representatives Judd
Stitziel and Kyle Ballard, and Embassy officers conducted
meetings requested Ref A to explore the sale of MAP-origin
firearms by the Guatemalan Ministry of Defense (MOD) to U.S.
firearms dealer Century Arms via Guatemalan company GIR SA in

2007. Prior to the meetings post delivered the specific
questions provided Reftel to the MOD, and on April 11
provided written follow-up questions to the MOD that arose
from the April 10 meetings. MOD representatives acknowledge
that mistakes had been made by the prior military leadership
and promised full cooperation and disclosure regarding the
MOD's business relationship with Century Arms and GIR SA.
Stitziel, Ballard, and Embassy officers also met with the
owner of GIR SA, Ori Zoller, who discussed his company's role
in the Century Arms deal. His version of events, including
the role played by GIR SA and the actual chain of custody of
the weapons, do not totally correspond with other versions
received by Embassy Officers. The visit of Stitziel and
Ballard afforded post an opportunity to reinforce to MOD
officials the importance that the USG places on weapons
accountability, re-transfer, and end-use monitoring issues.
END SUMMARY


2. On April 9 and 10, PM/DDTC representatives Judd Stitziel
and Kyle Ballard accompanied Embassy officers to meetings
with Government officials and the owner of GIR SA (Ori
Zoller, see para. 7) to discuss the sale of MAP-origin
firearms by the MOD to U.S. company Century Arms in 2007.
Prior to the meetings post delivered to MOD officials Reftel
questions regarding the MOD's commercial relationship with
Guatemalan intermediary GIR SA and Century Arms, and had
raised the issue with the current Minister of Defense on
several occasions. Embassy officials who have followed the
Century Arms deal provided background information to Stitziel
and Ballard prior to the external meetings, and detailed the
positive role members of the Guatemalan military played in
bringing the Century Arms weapons transaction to Embassy
attention.


3. On April 10, Stitziel, Ballard, Polmil officer, and the
MILGRP Commander met with the chief of the MOD's Judicial
Office, Colonel Jorge Contreras, and the Commanders of the
MOD's Logistics Office and Military Armaments Office.
Guatemalan military officers present have been in their
current positions less than three months and apologized for
not having firsthand knowledge of the Century Arms case.
They also promised to provide answers to all Reftel questions
following searches of their respective records and interviews
of officers who had been working in their offices at the time
of the sale. Contreras requested that post submit another
request for written responses outlining the additional
questions raised during the meeting and asked for an
additional two weeks to prepare the MOD response. Stitziel
agreed to the extension and suggested that it would be
helpful if the MOD could provide information on how the MOD
has changed or will change its inventory control and
re-transfer procedures to ensure that all future arms sales
comply with Guatemala's bilateral agreements with the U.S.
(Comment: The MOD representatives appeared genuinely
committed to providing full disclosure relating to the sale
of arms to Century Arms. The officers currently occupying
the positions involved in inventory control and arms
import/export issues have little firsthand knowledge of the
sale, but are under orders of the Minister of Defense to
fully cooperate with the USG on this issue. The officers
Qfully cooperate with the USG on this issue. The officers
noted that many of the most important questions listed in
Reftel could be answered only by representatives of the
MOD,s Finance Office, who did not to attend the meeting.
End Comment.)


4. On April 10, Stitziel, Ballard, and Embassy officers met
with GIR SA owner Ori Zoller regarding his company's
involvement in the Reftel arms sale (Ref B). Zoller provided
copies of documentation and his recollection of the events.
According to Zoller, the MOD owed money to the Israeli arms
company IMI for the refurbishment of Galil assault rifles and
parts. GIR SA is IMI,s representative in Guatemala. Zoller
stated that when the MOD was unable to pay, the then-MOD
leadership offered to sell weapons from its existing stock to
cancel the debt. Zoller stated that he agreed to arrange
such a transaction, but only if the weapons were exported to
the U.S. He stated that by shipping the weapons to the U.S.,
he hoped to avoid any possibility that the weapons could be
diverted to an inappropriate end-user. He asserted that he
approached Century Arms with the idea, and that Century Arms
sent representatives to select what weapons they wished to
purchase. He added that he took no steps to formalize the
deal until Century Arms and the MOD had agreed on the list of

weapons, and Century Arms had obtained the necessary
permission from U.S. officials to import the weapons into the
U.S. He stressed that after receiving approval from both the
GOG and the USG he took ownership of the weapons only "on
paper," and that Century Arms sent representatives to
Guatemala to handle the actual shipment. Zoller was very
clear that he at no time took physical possession of the
weapons, and that Century Arms representatives physically
traveled to a military warehouse in Guatemala with a shipping
container rented by Century Arms and proceeded to inventory
and pack the weapons. Zoller added that Century Arms had
sole custody of the weapons from the time that they left the
military warehouse until they were shipped out of the
country, and that he was not present at these events.



5. Even though the MOD representatives were not ready to
respond to Ref A questions during the April 10 interview,
they did offer interesting insights into events that differ
from Zoller's account. The major area of disparity arose
when the officers were questioned about the physical chain of
custody of the weapons. Although none of the officers
present was involved in the transaction, the current
commander of the MOD's Logistics Office was working for the
Guatemalan Military Inspector General's office at the time
and recalls the event. He stated that he and fellow officers
went to the military warehouse to observe the transfer, but
upon arrival found the weapons already loaded into a sealed
GIR SA truck. He suggested that there was little oversight
and accountability procedures involved in loading the GIR SA
truck, which was performed by just a few men. He added that
he did not have the authority to order the trucks opened and
that the trucks left the military warehouse in the sole
custody of GIR SA, which took them to a GIR SA facility for
packing and loading into a shipping container. These
statements, confirmed by a junior officer also present in the
meeting, are in direct contradiction to Zoller's statements,
and suggest that GIR SA may have played a lrger role in the
transaction than Zoller admitte.


6. Comment: The visit of Stitziel and Ballard enabled post
to emphasize to MOD officials the importance that the USG
places on weapons accountability, re-transfer, and end-use
monitoring issues. Given the extra time agreed upon, we
expect the MOD to make a good faith effort to fully and
transparently answer all questions posed regarding the
Century Arms deal. Given the lack of any representation by
the MOD,s Finance Office at the meeting, it is unclear how
willing and able this important office will be to provide
some of the most important requested information. The MOD is
also working closely with post's MILGRP Commander to improve
both its end-use monitoring and inventory control systems to
ensure that all future arms sales comply with Guatemala's
bilateral obligations with the U.S. Post will continue to
stay engaged on this issue and will forward the MOD's written
response when it becomes available. End Comment.



7. GIR SA's verbal responses to Reftel questions during the
April 10 meeting are as follows: (Note: GIR SA's answers
have not been corroborated or verified by post. End Note)

-- Question: What is the nature of GIR SA's business and
who are your clients? GIR SA response: GIR SA is an arms
sales company founded in 1996 to represent the Israeli arms
company IMI in Guatemala and other Central American
countries. Although GIR SA handles arms purchases between
the governments of several Central American countries and
Qthe governments of several Central American countries and
IMI, the bulk of its business is the commercial importation
of handguns from IMI. GIR SA owner Ori Zoller stated that
GIR SA has one retail store, but also sells wholesale to 120
other gun stores. He put annual sales at between 8,000 and
10,000 IMI handguns a year.

-- Question: What is GIR's relationship to the Guatemalan
MOD? GIR SA response: As a result of a prohibition on U.S.
and European arms sales to Guatemala, Guatemala adopted the
Israeli-made Galil assault rifle as its primary combat
weapon. As IMI's representative in Guatemala, GIR SA has
maintained a close working relationship with the Guatemalan
MOD since 1996.

-- Question: In what capacity was GIR SA involved in the
firearms re-export transaction? GIR SA response: GIR SA was
technically the owner of the weapons, having taken "paper"
ownership of them to cancel a debt owed by the MOD to Israeli
arms company IMI. However, at no point in time did GIR SA
have physical custody of the weapons.

-- Question: What is your company's relationship with US
company Century Arms? GIR SA response: GIR SA has done

successful business with Century Arms since approximately

1997. While Century Arms recently approached GIR SA about
new business deals, GIR SA will not do business with them
again until the issues relating to Ref A arms sale are
resolved.

-- Question: What entity or individual first approached GIR
SA regarding this transaction? GIR SA response: The
Guatemalan MOD approached GIR SA in hopes of exchanging old
equipment to pay an outstanding debt. GIR SA then asked
Century Arms if it would be interested in buying the weapons.

-- Question: What firearms were obtained from the GOG
through GIR SA? GIR SA response: (Zoller provided Stitziel
with lists of weapons reportedly transferred to Century Arms
as part of the sale.)

-- Question: What fee was levied by GIR SA for its role in
the transaction? GIR SA response: Zoller stated that he
made money on the transaction, but did not provide a specific
dollar amount regarding how much he earned on the sale. He
stressed that GIR SA,s transaction with the MOD was a
"barter deal"; there was no exchange of money between GIR SA
and the MOD. GIR SA, however, did receive cash from Century
Arms for the weapons. Zoller claimed that the MOD is not
allowed to receive cash payments on its own behalf. Zoller
explained that the money GIR SA received from Century Arms
was used for several purposes: for resolution of the GOG,s
debt to IMI for the refurbished Galil rifles, for GIR SA,s
profits, and for several "projects" performed by GIR SA for
the MOD. These "projects" included supplying equipment and
performing services related to a military hotel. (Comment:
Stitziel asked Zoller for documents that detail the financial
arrangement and title transfer between GIR SA and the MOD.
Zoller produced GOG documents that referred to the arms
transfer but said he could not locate any documents that
outlined the deal in detail. Instead, he provided the record
locator number of a MOD Military Armaments document which he
claimed contained the requested information. Post has asked
the MOD to provide a copy of this document. End comment.)

-- Question: Did GIR SA have formal custody of the firearms
listed in GC-0321-07? GIR SA response: Zoller was very
clear that while GIR SA was the owner of the weapons listed
in GC-0321-07 "on paper," his company "never had physical
possession of the weapons."

-- Was the company aware of the complete content of the
final shipment to Century Arms in the United States? GIR SA
response: Zoller provided packing lists of the complete
shipments, but stressed that Century Arms, not his company,
packed and shipped the weapons to the United States.

-- Would GIR SA produce appropriate packing and shipping
documentation to indicate the content of the final shipment?
GIR SA response: Zoller provided a packet of documents
relating to the sale in question during the meeting, and also
provided Polmil officer with additional documents 24 hours
after the meeting. Stitziel took all documents to Washington
for evaluation, but a first reading indicated that not all
requested documents were in fact provided.


8. This message was cleared by PM/DTCC J. Stitziel prior to
transmission.

Derham