EXTRANCHECK: POST-SHIPMENT VERIFICATION: FABRICATORS

UNCLAS HONG KONG 000837

USDOC FOR 532/OEA/LHINES/ADYSON
USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR WILLIAM ZARIT
BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS

SIPDIS

E.O. 12958: N/A
TAGS: BMGT BEXP HK ETRD ETTC
SUBJECT: EXTRANCHECK: POST-SHIPMENT VERIFICATION: FABRICATORS
INTERNATIONAL LIMITED

REF: A) USDOC 01527


1. Unauthorized disclosure of the information provided below is
prohibited by Section 12C of the Export Administration Act.


2. As per reftel A request and at the direction of the Office of
Enforcement Analysis (OEA) of the USDOC Bureau of Industry and
Security (BIS),Export Control Officer Philip Ankel (ECO) was
requested to conduct a post-shipment verification (PSV) at
Fabricators International Limited (Fabricators),Unit 2509,
Metropole Square, 2 On Yiu, Shatin, Hong Kong (Fabricators). The
items in question are 4000 un-mounted chips exported to Fabricators
on or about August 23, 2007 and valued at approximately USD 2,900.
The items are classified under Export Control Classification Number
(ECCN) 3A001. This ECCN is controlled for National Security (NS)
and Anti-Terrorism (AT) reasons. The exporter was Global Access
Unlimited, Inc. of Largo, Florida.


3. A review of Hong Kong Companies Registry reveals that Fabricators
was registered in 1976 and has registered capital of the Hong Kong
equivalent of USD 40,000. Its directors are U.S. nationals James L.
Gaza, Stephen Morris McClure, Stuard Burr Oakes, John Paul Petrillo
and Hong Kong resident Wong, Wai Man.


4. Fabricators is part of the International Components Corporation
group of companies. International Components Corporation (ICC)
designs and manufactures power supplies, battery solutions and
chargers (more information on the company may be found at
www.iccus.com). Elpac Power Systems (Elpac) (the bill-to company on
the Global Access Unlimited invoice provided to ECO by OEA) is also
a subsidiary of International Components Corporation. In sum, all
of the parties to the transaction that is the subject of this PSV
are corporate affiliates of each other.


5. On April 28, 2008, ECO and Commercial Assistant Carrie Chan
visited Fabricators and met with Mr. Ice L.K. Chan, Assistant
Administrator and Personnel Officer. She stated that Fabricators in
Hong Kong has no manufacturing capacity but acts merely as a
shipping logistics center for the mainland China production
facilities of International Components Corporation (including
Elpac). She further stated that neither Fabricators nor Elpac sell
any of the components they receive, as components. Rather, they act
as contract manufacturers. It is typically the contracting company
that designates the input suppliers for the company's end products.
She further stated that Fabricators will likely reduce its presence
in Hong Kong and only retain its warehouse there. She is due to be
laid off shortly.


6. When asked about the shipment in question, Ms. Chan stated that
she was unable to locate the shipment based on the information
provided by the ECO (including an invoice and information about the
date of shipment). She showed the ECO documentation from other
similar shipments that included the airway bill. ECO was informed
by OEA that the exporter was unable to locate the applicable airway
bill and therefore could not provide that information to the ECO.
As a result, ECO was unable to verify the shipment. Based on a
totality of the circumstances, ECO believes these items most likely
ended up at Fabricators's mainland production affiliate.


7. Ms. Chan conceded that Fabricators does not obtain Hong Kong
import and export licenses for the applicable items. If classified
correctly by the exporter, these items would likely require a
license for import into and reexport from Hong Kong. ECO requests
that OEA conduct a commodity classification of the items to
determine whether the exporter classified these items properly. If
so, ECO may reach out to Hong Kong authorities regarding this
apparent violation of Hong Kong law.


8. In addition, ECO recommends that the BIS Office of Export
Enforcement conduct an outreach to the exporter to determine why it
failed to retain the appropriate records of the export as required
by the Export Administration Regulations. Also, ECO recommends that
OEA determine whether the items qualify for license free shipment to
mainland China since some subparagraphs of ECCN 3A001 would require
such a license if exported to mainland China in this way.

Cunningham