BLUE LANTERN CASE 050136184

UNCLAS SAO PAULO 000019

FOR PM/DTCC - BLUE LANTERN COORDINATOR

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: ETTC KOMC MY BR
SUBJECT: BLUE LANTERN CASE 050136184

REF: STATE 133964

SENSITIVE BUT UNCLASSIFIED--PLEASE PROTECT ACCORDINGLY


1. (SBU) SUMMARY: In response to reftel, Econoff visited AVIBRAS
munitions manufacturing site and met with company president Sami
Hassuani on January 8. The company appears to have adequate
security measures to protect sensitive USML items. Hassuani
provided copious documentation to support the transaction. END
SUMMARY.


2. (SBU) AVIBRAS's supporting documentation included an
approximately 1,000 page long sales contract from the Government of
Malaysia. It included detailed descriptions of the product,
including blueprints. A Principle Deputy Assistant Secretary level
representative of the Government of Malaysia (GoM) had signed the
contract and it contained the original seal of the GoM. Hassuani
also showed original documentation from a similar contract with the
GoM in 2000. Plaques, given as gifts to his company for its
services from various countries' militaries, decorated an entire
wall in his office. Hassuani even showed Econoff his Association of
the U.S. Army card, showing his membership since 1984.


3. (SBU) ABIBRAS has four sites, divided into munitions, armor and
plating, civilian, and administrative. The compounds themselves are
located some distance from the main road and protected by security
guards. The munitions facility is located about one mile off
kilometer 14 of the Tamoios highway, near the city of Sao Jose dos
Campos, Brazil. Upon arrival to the compound, the security guard
requested Econoff turn off his cell phone, even though there
appeared to be no reception available in the isolated compound.
AVIBRAS also retains a member of the Brazilian AIR FORCE to serve as
their security liaison. The liaison officer conducts background
investigations and grants security clearances to all AVIBRAS
employees and contractors, in addition to periodic reviews of
compound security.


4. (SBU) AVIBRAS principally manufactures the Artillery Saturation
Rocket System (ASTROS II). AVIBRAS also manufactures air-to-air
missile delivery systems for Embraer jet fighters, civilian
explosives, fuses, and the missiles themselves. They also have
developed an unmanned drone. AVIBRAS does not serve as a broker,
which Hassuani says is against Brazilian law. They import the parts
for their systems and then manufacture the delivery systems
themselves. After the product is complete, workers place it in a
container and a Government of Brazil (GoB) customs agent travels to
the factory to seal the container. The container is not opened
again until the end-user receives delivery of the unit.


5. (SBU) AVIBRAS sells exclusively to governments. According to
Hussuani, they have sold equipment to the following countries'
militaries: Brazil, Saudi Arabia, Qatar, Oman, Kuwait, Malaysia,
Brunei, Morocco, Angola, Columbia, Chile, and Ecuador. The GoB must
approve all transactions and it does deny sales to certain
countries. Hassuani showed Econoff a list of the denied countries,
which included Iran, Israel, and Ecuador.


6. (SBU) Joao Verde Leite founded AVIBRAS in 1961 and he was the
principal owner until he died in a helicopter crash last year. His
surviving family retains ownership of the company, administered by
his son, Joao Brasil Leite. Hassuani runs the day-to-day operations
of the AVIBRAS. The company at one time employed 6,000 people,
although today that number has fallen to 1,200.


7. (SBU) Hussuani assured Econoff that the company understood the
restrictions on USML items, as well as the prohibition against
unauthorized stockpiling. The company took Post's visit seriously,
brining out four ASTROS II units for display and Hassuani himself
accompanied Econoff on every portion of the tour.

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