THALES PRELIMINARY RESPONSE TO BLUE LANTERN END USE CHECK

UNCLAS PARIS 001325

SENSITIVE
SIPDIS

STATE FOR PM/DTCC - BLUE LANTERN COORDINATOR

E.O. 12958: N/A
TAGS: ETTC KOMC FR
SUBJECT: THALES PRELIMINARY RESPONSE TO BLUE LANTERN END USE CHECK
ON SATELLITE COMPONENTS

REF: SECSTATE 049721


1. (SBU) On July 10, Thales Alenia Space President/CEO Reynald
Seznec and Thales Group Senior VP for EU and NATO cooperation met
with Econ Mincouns and Econoff in response to Embassy's letter
relaying DTCC request for information (reftel). They previewed
their pending written response, leaving a summary memorandum of
their key points(para 2). They stated that Thales Alenia Space is
assembling a report on the disposition of previously licensed
satellite components and technology that will be ready in "a few
weeks." They will also provide "a broad description" of the three
commercial telecommunications satellites sold to Chinese and Hong
Kong companies but say they are constrained by both French law and
commercial secrecy considerations from providing the detailed
specifications and parts/components list, requested reftel. They
will also provide the USG with the findings of a recent outside
audit of Thales's export control compliance practices, including for
its "ITAR-free" operations. They indicated that Thales Alenia Space
executives and technical experts are prepared to travel to
Washington to discuss this matter at DTTC's convenience.


2. (SBU) Text of Memorandum left by CEO Seznec:

Thales Alenia Space compliance with ITAR
--------------

Thales Alenia Space (TAS) received, on 16 June 2009, a letter dated
3 June from the US Embassy in Paris requesting information about
items licensed under ITAR for use in the Spacebus 4000 programme and
further details concerning three "ITAR-free" telecommunications
satellites launched in China (Apstar 6, Chinasat 6B and Chinasat 9).
TAS has been advised that this letter constitutes a "Blue Lantern"
post-shipment check carried out in accordance with section 40A of
the US Arms Control Export Act. Specifically, the letter asks for:

-- a detailed report on the use and whereabouts of ITAR-controlled
components supplied for the Spacebus 4000 programme;
-- the specifications of Apstar 6, Chinasat 6B and Chinasat 9; and
-- a detailed list of the component parts of these satellites.

The letter warns that TAS's response will have a bearing on its
future licence applications.

TAS is gathering the information requested in respect of
ITAR-controlled components supplied for the Spacebus 4000 programme.
It has an extensive export compliance process, backed by strong
management commitment, to ensure that such items are properly
tracked and safeguarded. The requested information is being collated
and will be communicated as soon as the work is complete.

As regards the specifications of the satellites concerned and lists
of their components, there are difficulties in providing this
information, related to commercial confidentiality and French law:

-- commercial confidentiality exists on account of customer/supplier
rights and the strong competition in the market for
telecommunications satellites.

-- French law n0 80-538 of July 16, 1980 concerning communication of
economical, commercial or technical documents and information to
foreign individuals or legal entities forbids persons to request, to
look for or to communicate, in writing or orally, or in any other
form, economical, commercial, industrial, financial or technical
documents or information which could constitute evidence in foreign
judicial or administrative proceedings or within the framework of
such proceedings. It requires companies and individuals receiving
requests for information of this nature to immediately inform the
appropriate Minister.

Following consultation with the French authorities, TAS will not
include in its reply to your letter the information requested
concerning the specifications of the satellites and their
components. TAS will however provide a broad description of the
three satellites, which it is hoped will be sufficient to satisfy
the US authorities that these are normal commercial products.

TAS will also communicate to State Department the results of an
external review of the processes and procedures used in TAS to
ensure that its ITAR-free satellites are compliant with respect to
US ITAR. This review, carried out by an eminent US law firm, has
just recently been completed. While confirming that TAS has a
detailed and well-implemented export compliance programme, that the
process for tracking parts and equipment appears strong, and that
there is a high level of confidence that ITAR controlled parts are
stored and selected for use properly, it also identifies some issues
which need to be addressed and makes a number of recommendations for

improvement. TAS will implement these recommendations. Full details
of the findings and recommendations of the review will be made
available to State Department.

Based on the results of the external review and the steps which TAS
will immediately put in place to implement its recommendations, TAS
hopes that the US authorities will accept that it is a responsible
custodian of US ITAR-controlled items and that accordingly its
future licence applications will be dealt with normally.

Thales Alenia Space
9 July 2009

Attachment: Courtesy Translation of French Law 80-538

Act n0 80-538 dated July 16, 1980 concerning the communication of
economical, commercial or technical documents and information to
foreign individuals or legal entities.

The French National Assembly and Senate have adopted,
The President of the French Republic promulgates the following act:


Art. 1. The title of act n0 68-678 dated July 26, 1968 concerning
the communication of documents and information to foreign
authorities in the field of maritime commerce is modified as
follows:

"Act concerning the communication of economical, commercial,
industrial, financial or technical documents and information to
foreign individuals or legal entities."

Art. 2.


I. - Article 1 of act n0 68-678 dated July 26, 1968 referred to
above reads as follows:

"Art. 1. - Subject to international treaties or agreements, it is
forbidden for all physical persons of French nationality, or who
usually reside on the French territory, as well as all executives,
representatives, agents or employees of legal persons having their
head office, or an establishment, in France, to communicate to
foreign public authorities, in writing, orally or under any other
form, in any place, economical, commercial, industrial, financial or
technical documents or information, the communication of which would
cause prejudice to the sovereignty, to the security, to the
essential economic interests of France or to public order as
specified by the administrative authority where necessary."

II Article 1 bis has been inserted after article 1 of act n0 68-67 8
of July 26, 1968 referred to above, and reads as follows:
"Art. 1. bis. Subject to international treaties or agreements and
laws and regulations in force, it is forbidden for any person to
request, to look for or to communicate, in writing or orally, or in
any other form, economical, commercial, industrial, financial or
technical documents or information which could constitute evidence
in foreign judicial or administrative proceedings or within the
framework of such proceedings."

Art. 3. Article 2 of the above mentioned act n0 68-678 dated July
26, 1968 is modified as follows:

"Art. 2. The persons mentioned in articles 1 and 1 bis must
immediately inform the appropriate minister f they receive a demand
concerning such communication."

STAPLETON