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