NO DEFINITIVE INFORMATION ON ITALIAN CMS

S E C R E T ROME 000962

SIPDIS

STATE FOR ISN/MTR
STATE FOR EUR/PRA

E.O. 12958: DECL: 08/18/2034
TAGS: ETTC IR IT KSCA MNUC MTCRE PARM PREL
SUBJECT: NO DEFINITIVE INFORMATION ON ITALIAN CMS
INDUSTRIES MACHINE TOOL SALES TO IRAN VIA TURKISH
INTERMEDIARY

REF: A. STATE 75910

B. 08 ROME 683

C. 08 STATE 55497

D. 08 STATE 75132

E. 08 ROME 910

Classified By: Econ Counselor William Meara for reasons 1.4 (b),(c) an
d
(d)


1. (S) Per Ref A, Post requested that Italian officials
provide an up-date on Italian machine tool manufacturer CMS
Industries proposed export of NSG and Wassenaar Arrangement
controlled machines tools to Iran. The export would have been
through a Turkish company called Ark Makina. On August 5,
Ministry of Economic Development Export License Official
Giovanni Zampa told us that his office had no records of
issuing a permit for CMS Industries to export machines to Art
Makina. Zampa said their records only show two cases of
export permits for CMS Industries sales to Turkey: one issued
in May 5, 2006 for a 5 axis CNC "machining centre" model
"Poseidon 30/60 Z2000, valued at 345,000 Euros, with
destination listed as "Atolye A.S., of Hasanaga Industry
Estate, city of Bursa Turkey; the other issued on June 20,
2007 for a "machine centre" model "Poseidon 38/75/20 - PX5,"
destination listed as "T.S.M.M. Ltd. Sti, address: Yukari
Karaman Koyu Duzlercami Mevkii, city of Antalya, Turkey.
Beyond this internal review, Zampa said that there was not
much more that the GOI could do as it has no direct evidence
that CMS exported controlled products to Art Makina, or that
it was intending to export such products to Iran.


2. (S) Zampa offered that if the USG suspects, or has
evidence, that the two prior CMS exports to the Turkish
companies cited above are related to the Art Makina case, the
GOI could ask the Italian Embassy in Turkey to verify that
the Turkish importers remain in possession of the machines.
Zampa said that the USG would have to make this request,
preferably in writing, to his Ministry. Zampa added that if
USG concerns remain over future CMS Industries exports to
Turkey, that the USG could also request that all CMS
Industries exports to Turkey be required to undergo a
periodic check to verify that the Turkish end-users remain in
possession of machines bought from CMS Industries.


3. (S) On August 17 Post also requested an up-date on this
case from Pierfrancesco de Cerchio of the Italian Ministry of
Foreign Affairs office responsible for export controls
matters. Post reminded De Cerchio that his Office Director,
Counselor Liotto, had told us in May 2008 (Ref B) that the
GOI would investigate this case, and that CMS Industries
could face criminal penalties if it was found to have misled
Italian export authorities. Post asked whether such
investigation had in fact taken place. De Cerchio said that
he was not familiar with the details of the case, but that he
would speak with Zampa to inquire further.


4. (S) Comment and Guidance Request: De Cerchio's MFA office
works closely in these matters with Zampa's office. Without
additional information from us, it is likely that the
information that Zampa provided is all that the GOI will be
able to provide at this point. The only two cases above for
which the GOI has a record of CMS Industries' exports to
Turkey appear to fit the description of the Ref A case of
export to Iran, particularly the first case of CMS export to
Turkish recipient Atolye A.S. We can not be certain, however,
as the Turkish companies that CMS listed as the final
consignees of those shipments are not the intermediary Art
Makina of Ref A concern. Post recommends that Washington
agencies assess whether there is a link between Art Makina
and the two other Turkish companies that received the
approved CMS exports, and determine if additional information
can be provided to the GOI in order to urge them to undertake
a more thorough investigation of this case. Post also
requests Department response to the Italian offer of
post-delivery verification of CMS exports to the Turkish
companies Atolye and T.S.M.M. End comment.
DIBBLE