ASUNCION RESPONSE - BLUE LANTERN DTC CASE 050139000

S E C R E T ASUNCION 000214

SIPDIS

PM/DTCC KBALLARD, WHA/BSC MDASCHBACH

E.O. 12958: DECL: 04/01/2029
TAGS: ETTC KOMC PA
SUBJECT: ASUNCION RESPONSE - BLUE LANTERN DTC CASE 050139000

REF: A. SECSTATE 11875

B. 08 ASUNCION 151

Classified By: A/DCM Joan P. Shaker; reasons 1.4 (b) and (d).

1.(C) Per reftel, Post completed a pre-license check on
license 050139000 to establish the end-user bonifides of a
transaction to export ammunition to Paraguay. Econoff met in
February with retired police officer, owner and General
Manager of TSB Sport Hunting-Fishing-Munitions (TSB) Dalmacio

R. Marengo. Marengo confirmed that the ammunition listed in
the license is intended only for commercial resale in
Paraguay. He observed that strict controls reduce the risk of
illegally re-exporting legally purchased ammunition, but
noted that porous borders with Brazil, Argentina and Bolivia
remain a concern.

2.(C) Marengo explained that TSB is a national wholesaler of
arms and ammunitions, and sells to the private and public
sector. TSB private sector clients, according to Marengo,
include small-and-medium-sized regional arms and ammunition
shops, sporting and hunting organizations, private social
clubs, and individuals. The public sector clients include the
Paraguayan National Police and Military. Marengo said most of
TSB customers reside in or close to Asuncion, with a smaller
percentage in the departments of Alto Parana, Chaco and
Itapua. With regard to caliber .22 rounds, Marengo stated
that buyers wanted it for shooting practice not for hunting,
and U.S.-origin caliber is in demand for its quality.

3.(C) Marengo said the large ammunition license with several
different calibers covers his estimated two to three years
total demand. The diverse and large license is intended,
Marengo explained, as an &umbrella" authorization to reduce
procurement time by eliminating the need for additional
licenses requests throughout the year, while increasing the
availability of stock with a broader offering. Marengo stated
that TSB can sell about USD 200,000 worth of U.S.-origin
ammunition per year, and he is likely to sell that amount per
year under the requested license.
4.(C) Marengo also owns Safari Sport S.A., a hunting goods
store that sell hunting weapons and accessories. Marengo said
he is aware, understands, and applies the regulations
governing the import of U.S.-origin ammunition.

5.(C) The Armed Force's Director of War Material (DIMABEL)
Colonel Caballero accompanied by Lieutenant Colonel Oscar
Gomez, who signed the import authorization order, confirmed
to Econoff in April that TSB intends to use the license for
commercial resale in Paraguay. Colonel Caballero explained
that TSB has in the past supplied DIMABEL with ammunition
under open bid contracts. Gomez explained that the large size
of the request was justified by TSB as a means to better
manage its stock, and reduce procurement time, as the import
process can take up to 9-12 months. Caballero confirmed that
caliber .22 is mostly used for shooting practice.

6.(S) In the course of conducting a name check on Marengo,
Post discovered that in 2005 Marengo imported weapons and
ammunition that were linked to drug trafficking. A 2005 DEA
report indicates that Marengo imported weapons and ammunition
that were smuggled to Colombia and reportedly provided to the
FARC in exchange for cocaine.


7. C) COMMENT Marengo is not a bonafide end-user. Post
recommends that the license be rejected. Trafficking in arms
is a serious concern for the USG in Paraguay. Weak border
controls and corruption compound the problem. There is a high
probability that legally imported arms and ammunition are
diverted to domestic or transnational crime syndicates
(reftel B). END COMMENT.


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