BLUE LANTERN RESPONSE ON PRE-LICENSE END-USE CHECK

UNCLAS KUALA LUMPUR 000275 SIPDIS PM/DTCC - BLUE LANTERN COORDINATOR E.O. 12958: N/A TAGS: ETTC KOMC MY SUBJECT: BLUE LANTERN RESPONSE ON PRE-LICENSE END-USE CHECK ON APPLICATION 050151602 REF: SECSTATE 30163 ¶1. Pursuant to reftel request, Econoff and Econ FSN on the morning of 10 April 2009 visited the office of Delta Masis Sdn Bhd to establish the bona fides of the company and determine if reftel proposed sale appeared legitimate. Early during the week of 5 April, Delta was amenable to a visit but requested that a meeting be delayed until the 10th so that two senior Delta officials who were traveling would be available for the meeting. Three Delta officials received Econoff and FSN at their office building, which is a three story office within a Malaysian office building containing other businesses. Delta's main office was on the top floor, with the middle floor reserved as a training area; the bottom floor is not occupied but will probably be rented out. Delta's offices were modern and, according to Delta, have been occupied for the past two-and-a-half years. Scattered throughout the office were miscellaneous defense-related paraphernalia, such as models of aircraft and naval vessels, plus several copies of defense magazines. Econoff spotted three other people who appeared to be employees. ¶2. The two officials who had recently returned from traveling greeted Econoff. They were Masri Muhammad (Director of Business Development for Delta) and who was the team lead for Delta; Wan Zulkifli Wan Ishak (Director of Contracts and Business Operations),who was the second-highest ranking officer present; and Moh'd Affis Mohamad (Project Manager),who was relatively quiet throughout the meeting but knowledgeable about many defense deals. All of the Delta officials were knowledgeable of the reftel proposed deal and were very cooperative. Masri and Wan said that they have been dealing for almost seven years with the U.S. company cited in reftel -- Harris Corporation -- and had traveled to Harris's corporate offices in Rochester, NY. ¶3. Regarding reftel proposed sale, the Delta officials said that the company wished to purchase the four SPR Advanced Multiband Team Tactical Radio Systems and that the PASKAL (Malaysian Naval Special Forces) was the intended recipient. Delta Masis was established on 11 May 1994 and has four primary divisions: a) Armament Systems Division (including munitions and weapons accessories); b) Information Systems Division (including signal monitoring systems, sensors, and 
cameras); c) Electro-Optical Systems Division (including night vision goggles and mini-monoculars); and the Specialized Mobility Platforms Division (including military radios and tactical repeaters). Delta's core customers are mainly the Malaysian military and other government agencies, such as the Royal Malaysian Army, Royal Malaysian Navy, and Royal Malaysian Air Force The primary procurement office for these services is located at Kementerian Pertahanan Malaysia, Wisma Pertahanan, Jalan Padang Tembak, 50634 Kuala Lumpur, Malaysia. Another leading customer is the Defense Technology Research Center located at 17-19 Jalan Syeksyen 3/6, Taman Kayang Utama, 43000 Kajang, Selangor Darul Ehsan, Malaysia. A third leading customer is the Ministry of Home Affairs (including the Royal Malaysian Police),located at Block D1 and D2, Kompleks D, Pusat Pentadbiran Kerajaan Persekutan 62546 Putrajaya, Malaysia. A fourth customer is the Ministry of Finance (including Customs) located at No. 3, Persiaran Perdana, Precint 2, 62596, Putrajaya. Other customers include shipbuilders and engineering companies, including Mara Shipyard and Engineering (Terengganu, Malaysia),Kay Marine Sdn Bhd (Terengganu),and Lumut Naval Dockyard (Lumut, Perak, Malaysia). All three Delta officials said that they were familiar with the unauthorized re-export or re-transfer of U.S.-origin defense equipment. ¶4. Masri and Wan also said they have traveled relatively extensively throughout the U.S., including Florida, Arizona, and Louisiana. Masri and Wan said that Delta is licensed by the Government of Malaysia (GOM) to buy and sell defense-related equipment. The officials cited a previous deal in April 2007 completed with Harris which was worth $2.5 million USD on military radios. The officials also described a deal in transferring a stock of approximately 13,500 U.S.-manufactured M-16 rifles back to the U.S. Masri and Wan said that the M-16s had originally been purchased by the GOM "years ago" and had never been used but, by today's standards -- such as the U.S. M-4 rifle -- these M-16s represented an older generation and were considered obsolete. Delta apparently served as the transfer point between the rifles and their transfer back to the USG. Masri and Wan said that both the USG and Colt Firearms were involved in this transfer, but had been officially approved by the USG in February 2009. They said that Harris representatives, who are based at Harris's southeast Asia office in Manila, occasionally traveled to Kuala Lumpur to meet with Delta Masis. ¶5. All of the officials had business cards and welcomed follow-on contact. All three officials spoke excellent English, and were helpful, knowledgeable, and familiar with U.S. laws and regulations. We believe that Delta Masis is a legitimate Malaysian company, and it has been one of the most cooperative companies to date. We recommend approval of the reftel proposed sale. KEITH