PROVIDING ADDITIONAL INFORMATION TO THE GOS ON

S E C R E T SECTION 01 OF 02 STATE 132055

SIPDIS

E.O. 12958: DECL: 12/17/2033
TAGS: PARM MTCRE PREL MNUC ETTC SZ IR AE
SUBJECT: PROVIDING ADDITIONAL INFORMATION TO THE GOS ON
ACTIVITIES OF THE SWISS FIRM QUARTZCOM (S)

REF: A. STATE 101519

B. BERN 514

C. STATE 122304

D. BERN 594

Classified By: ISN/MTR DIRECTOR PAM DURHAM FOR REASONS 1.4
(B),(C),AND (D).


1. (U) This is an action request. Embassy Bern,
please see paragraph 4.


2. (S) Background: In late September 2008, we shared
with the Swiss government information indicating that
the Malaysian-based procurement firm Evertop Services
was working to acquire crystal oscillators from
Switzerland's Quartzcom AG on behalf of the Iranian
firm Farezeh Tajhiz Gostar Co. Ltd., a firm affiliated
with Evertop's Iran-based parent company, the Farazeh
Equipment Distributor Company (FEDCO) (Refs A & B).
Although located in Malaysia, Evertop Services is an
Iranian-run firm that has facilitated many transactions
on behalf of Iranian end-users of proliferation
concern, including entities affiliated with Iran's
ballistic missile and unmanned aerial vehicle programs.
In mid-November, we advised Swiss officials that
Quartzcom and Evertop - probably in response to GOS
measures to restrict sales to Evertop - were discussing
the use of alternative intermediaries in order to
circumvent Swiss export controls (Ref C). In response,
Swiss officials requested additional information on
Quartzcom's complicity in these efforts to skirt Swiss
export restrictions, and also asked if we knew of any
other intermediaries or shipping addresses that might
be used by Iranian entities of concern to procure goods
from Quartzcom (Ref D).


3. (S) In response, we want to reiterate and confirm
the information we previously provided to Swiss
officials, which indicated that Quartzcom and Evertop
were exploring ways of getting around Swiss export
laws, and to assure the GOS that we will try to share
any additional information that becomes available on
this subject. We also want to share new information
indicating that in late October/early November, FEDCO
had procured approximately $150,000 worth of products -
including crystal oscillators - from Quartzcom via
FEDCO's newest front company, the United Arab Emirates-
based Alkaen Equipment and Industrial Supplies LLC. We
are unable to confirm or dismiss the possibility that
Quartzcom was witting of the identity of the actual
end-user of these items.


4. (S) Action Request: Request Embassy Bern approach
appropriate Swiss authorities to deliver talking
points/non-paper in paragraph 5 below and report
response. Talking points also may be provided as a
non-paper. Some of this information will also be
shared with the UAEG.


5. (S) Begin talking points/non-paper:

(SECRET//REL SWITZERLAND)

-- We would like to follow-up with you on a matter of
proliferation concern and request your government's
continued assistance in investigating this activity.

-- We recently discussed with you information
indicating that the Malaysia-based, Iranian-run
procurement firm Evertop Services Sdn Bhd had sought a
large quantity of crystal oscillators from the Swiss
firm Quartzcom AG on behalf of the Iranian firm Farezeh
Tajhiz Gostar Co. Ltd. Farezeh Tajhiz is affiliated
with Evertop's Iran-based parent company, the Farazeh
Equipment Distributor Company (FEDCO).

-- During these discussions, you advised us that you
had temporarily halted a shipment of crystal
oscillators that Quartzcom was preparing for shipment
to Evertop, and that an investigation was underway.

-- You also indicated that Quartzcom has been placed on
an internal "watch list," and that SECO has imposed
catch-all licensing requirements for any Quartzcom
exports to Malaysia or Iran.

STATE 00132055 002 OF 002


-- In addition, you asked if we had any information
indicating that Quartzcom was complicit in efforts to
circumvent Swiss export controls, and if we knew of any
other intermediaries or shipping addresses that might
be used by Iranian entities of concern to procure goods
from Quartzcom.

-- We appreciate your excellent cooperation on this
issue, and want to offer the following information:

-- We do in fact have information indicating that
Quartzcom has discussed with Evertop the use of Asia-
based intermediaries in order to circumvent Swiss
export controls, likely in response to restrictions
your government had put in place on sales to Evertop.

-- We will share additional information on this subject
when it becomes available.

-- We also want to inform you of the following new
information related to this matter:

-- Specifically, we understand that as of early
November 2008, FEDCO had procured approximately
$150,000 worth of products - including crystal
oscillators - from Quartzcom.

-- This equipment was delivered by air from Switzerland
to FEDCO's newest front company, the United Arab
Emirates-based Alkaen Equipment and Industrial Supplies
LLC in late October/early November.

-- Alkaen, in turn, transshipped the goods to FEDCO in
Iran.

-- We believe that Alkaen was used in order to disguise
the fact that the goods were actually destined for an
Iranian end-user.

-- As we have discussed with you previously, firms
affiliated with FEDCO, such as Evertop, have acted as
brokers for Iran's ballistic missile and unmanned
aerial vehicle programs.

-- We will soon be sharing some of the above
information with the government of the United Arab
Emirates.

-- We greatly appreciate your continued support and
look forward to hearing of any actions your government
takes in response to this information.

End talking points/non-paper.


6. (U) Please contact ISN/MTR's John Paul Herrmann
with any questions or follow-up issues related to this
case (202-647-1430 - herrmannjp@state.sgov.gov) and
slug reporting on this issue for ISN/MTR.


7. (U) A word version file of this document will be
posted at www.state.sgov.gov/demarche.
RICE