Identifier
Created
Classification
Origin
09HONGKONG1064
2009-06-11 08:58:00
UNCLASSIFIED
Consulate Hong Kong
Cable title:  

EXTRANCHECK: POST SHIPMENT VERIFICATION: SMITH ASSOCIATES

Tags:  BMGT BEXP HK ETRD ETTC 
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VZCZCXYZ0006
RR RUEHWEB

DE RUEHHK #1064 1620858
ZNR UUUUU ZZH
R 110858Z JUN 09
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 7821
RHMFIUU/HQ BICE WASHINGTON DC
UNCLAS HONG KONG 001064 

USDOC FOR 532/OEA/MHAMES/MCANNER
USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR PATRICK SANTILLO
BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS

SIPDIS

E.O. 12958: N/A
TAGS: BMGT BEXP HK ETRD ETTC
SUBJECT: EXTRANCHECK: POST SHIPMENT VERIFICATION: SMITH ASSOCIATES
ELECTRONICS LIMITED

REF: A) BIS e-mail request dated May 26, 2009

UNCLAS HONG KONG 001064

USDOC FOR 532/OEA/MHAMES/MCANNER
USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR PATRICK SANTILLO
BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS

SIPDIS

E.O. 12958: N/A
TAGS: BMGT BEXP HK ETRD ETTC
SUBJECT: EXTRANCHECK: POST SHIPMENT VERIFICATION: SMITH ASSOCIATES
ELECTRONICS LIMITED

REF: A) BIS e-mail request dated May 26, 2009


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) conducted
a post-shipment verification (PSV) at Smith Associates Far East,
7/F, West Wing, Warwick House, Taikoo Place, 979 King's Road, Hong
Kong (Smith Associates). The items in question for this PSV are two
shipments of semiconductors exported to Smith Associates on or about
July 7, 2007 and July 20, 2007. The applicable shippers export
declarations (SEDs) for these shipments do not include a
classification for the items meaning that they are likely EAR99 and
eligible for shipment to virtually all destinations and
end-uses/users worldwide. The exporter for both shipments was
Rochester Electronics LLC of Newburyport, Massachusetts.


3. According to the Hong Kong Companies Registry, Smith Associates
was registered in 1998 and has the Hong Kong equivalent of USD 1300
in paid up share capital. A range of U.S. nationals are listed as
directors of Smith Associates.


4. Web based research reveals that Smith & Associates
(www.smithweb.com)is a Houston-based worldwide independent
electronic components distributor. It has offices in a range of
locations including Europe, the United States, Hong Kong as well as
several locations in China. Annual sales are in excess of USD 500
million.


5. On June 3, 2009, ECO visited the company and met with Mr. Kellam
Kimbrough, Director of Operations, Asia and Ms. Terry Fu, Operations
Manager. Mr. Kimbrough provided an overview of Smith in Hong Kong.
He noted that while Smith may ship worldwide from its Hong Kong
location, the sales force in Hong Kong serves primarily the China
and U.S. markets. Mr. Kimbrough noted that the company is not a
distributor and does not represent manufacturers but rather acts as
a pure sourcing agent for a range of customers. Those customers
include OEMs and contract manufacturers as well as other brokers and
traders.


6. Mr. Kimbrough stated that Smith reviews its new customers by
review of their corporate and financial records. He also stated
that Smith also checks all customers against BIS and other denial
lists. Mr. Kimbrough stated that, for example, one name of the BIS
Entities List. Polar Star, is now operating under a new name. ECO
requested (and is still awaiting) details on this statement.


7. As to the particular shipments in question, Mr. Kimbrough and
Ms. Fu provided information confirming that the shipments had been
received by Smith and had subsequently been sold to Aurumtech
Electronics Co., Ltd., 17F-3, No 262, Jing Ping Road, Chung-Ho City,
Taipei Hsien, Taiwan. By subsequent e-mail, Mr. Kimbrough stated
that the items were used by Aurumtech to manufacture PC motherboards
for a client in Europe. Mr. Kimbrough stated that his salesperson
was unable to find a web presence for Aurumtech. ECO also
researched the company and could find no Taiwan web presence for the
company. However, the company is listed in the Taiwan companies
registry and its business activities include electronics
manufacturing and reselling.


8. The discussion next turned to the Rochester Electronics End Use
Statements purportedly completed by Andy Jang, the Smith and
Associates Korea buyer. ECO notes that it appears to be Rochester
practice to have its salespersons complete End Use Statements on
behalf of customers (based on information provided by those
customers). The End Use Statements for these shipments state that
the customer in question was Seminanchips Co. Ltd. in Korea and that
the end use was the production of a notebook computer. Mr.
Kimbrough stated that his sales person (Andy Jang) stated that he
did not know how Seminanchips came to be included on the End Use
Statement. He provided e-mail correspondence from Aurumtech to
Smith detailing the order. ECO has requested additional information
about the Polar Star matter (mentioned above) and on the End Use
Statements provided by Smith to Rochester (if any exist) and will
forward that to OEA on receipt.


9. Based on the information noted above, ECO believes Smith
Associates to be a suitable recipient of controlled U.S. origin
technology.