RESULTS of BLUE LANTERN LEVEL 3: PRE-LICENSE-USE CHECK ON

UNCLAS JAKARTA 001178 SIPDIS DEPT FOR EAP/IET, PM/DTCC/BLUE LANTERN COORDINATOR - JUDD STITZIEL E.O. 12958: N/A TAGS: KOMC ETTC ECON SN ID SUBJECT: RESULTS of BLUE LANTERN LEVEL 3: PRE-LICENSE-USE CHECK ON LICENSE 050155869 REF: A) STATE 58133 B) 06 SINGAPORE 3391 C) 06 JAKARTA 13362 ¶1. Summary: Embassy confirmed an order of spare parts consistent with the types in Ref A from the end-user, the Indonesian Air Force, via PT Mandira Jaya Abadi, the foreign consignee, from the U.S. supplier, Merex. Though the license value in Ref A is USD 1,000,000.00, the actual amount of the current order, according to foreign consignee is only USD 32,840.00. Both the end-user and the foreign consignee identified Singapore-based Master Logistics as an intermediary shipping/receiving company which is necessary because there are no direct flights from the U.S. to Indonesia. End Summary. ¶2. On July 7 the Embassy contacted PT Mandira Jaya Abadi (Mandira) Director Hariyanto Adipratomo to verify the order in Ref A. Hariyanto provided a copy of a purchase order and contract to supply four spare parts for maintenance of IAF's Northrop F-5 (J85 Engine) worth USD 32,840.00 (supporting documentation will be sent via email). The purchase order between Mandira and Merex Inc is dated March 3, 2009 and labeled No 0303/MJA/M/2009, Quote Number 804037 and 803869. The spare parts in the purchase order are: "Main Spray Bar" PN:5040T18P01 (9 pcs); "Roller Ven" PN:3017T93P01 (14 pcs); "AB Plug" PN:3011T93P05 (10 pcs); and "Main Plug" PN:4066T34P01 (7 pcs). The contract (number 183/1356/DA/DR/2005/AU, dated November 30, 2005 and amended December 2, 2008) between the Indonesian Air Force (IAF) and CV Bina Pratama (a sister company of Mandira) indicates that the aforementioned parts are requested in lieu of another originally stipulated part ("R/H Horizontal Stab Assy" PN 14-32000-6). The IAF amended the contract to substitute PN 14-32000-6 because the part was no longer in production and because the order had been idle for years. ¶3. Mandira, as a designated supplier for the IAF, ordered the spare parts directly from the U.S. seller, Merex Inc, as mentioned in Ref A, on behalf of the Indonesian Air Force. Master Logistic is an intermediary shipping/receiving company that has a relationship with Mandira. According to Hariyanto, Merex and Mandira requested a blanket export license with a total value of USD 1,000,000.00. The current transaction, however, is only for parts valued at USD 32,840.00. Mandira will use the same blanket export license in the future when the company receives other orders from IAF to procure spare parts from the U.S. company, Merex Inc. In addition, Hariyanto said that his company held another blanket export license worth USD 6,000,000.00 from December 18, 2006 for multiple orders from U.S. seller Aeromax Industries valid for 48 months. ¶4. PT. Mandira Jaya Abadi was established in 1982 as a publishing and general supply business in Semarang, Central Java. In 2005, Mandira expanded their business to supply spare parts to the IAF. Post checked and verified a transaction involving this company back in 2006 (Ref C) when Mandira received an order from IAF to supply spare parts for maintenance of the Indonesian Air Force's F-5 and OV-10 aircrafts. According to Mandira, their customers include the IAF and Ministry of Transportation, to whom they supply simulators. ¶5. According to Hariyanto, once Master Logistic receives the goods from the U.S. supplier, Master Logistic will forward the spare parts to Mandira's warehouse located at Jalan Tanjung Duren Barat V/44 in Jakarta (as listed in Ref A) before the company sends the spare parts to the end-user. Hariyanto noted that they usually store the goods for up to four working days while awaiting confirmation and coordination with the end-user for final delivery to the IAF. Hariyanto said that the company's Jakarta warehouse is protected by company staff who work there and a 24-hour security guard service. Hariyanto also noted that his company is aware of the restrictions on United States Munition List (USML) items, particularly the prohibition against unauthorized re-transfer and re-exports. ¶6. We contacted the Indonesian Air Force Procurement Division Major Dani Herdiana on July 10 to verify the transaction in Para 2 in accordance with Ref A. Major Dani confirmed that this transaction was part of their contract order to Mandira in 2005. In 2008, the end-user amended this long awaited procurement and contracted Mandira to purchase the items listed in para 2 (same items listed in purchase order). The original contract was to procure a horizontal stabilizer, however, since they waited for years with no item procured, the IAF decided to instead procure the aforementioned replacement items. According to Major Dani, both the Air Force and Mandira agreed that they will use Master Logistic, the Singaporean-based intermediary shipping company, since there is no direct flight from the U.S. to Indonesia. HUME