BOSNIA: BLUE LANTERN BROKER INQUIRY - CASE NO.

UNCLAS SARAJEVO 001334 SIPDIS STATE FOR PM/DTCC E.O. 12958: N/A TAGS: ETTC KOMC BK SUBJECT: BOSNIA: BLUE LANTERN BROKER INQUIRY - CASE NO. K-2420 REF: STATE 99504 ¶1. Summary: Per reftel request, we conducted a site visit to the company referenced in Blue Lantern case number K-2420, PD Igman DD in Konjic, Bosnia and Herzegovina. We spoke with Igman General Manager Djahid Muratbegovic, and Operations Manager Mirsada Kadic. According to the two Igman representatives, the company's intent in acquiring a broker license was not to actually conduct transfers of U.S. technology to a third party, but rather to export its own products -- ammunition -- to the U.S. We recommend PM follow-up with Igman to ensure that the company's broker license is being used in accordance with ITAR regulations and to determine whether a different registration would not be a better fit for the company's purpose. End summary. ¶2. We visited PD Igman, a subsidiary of UNIS Group, a majority Federation government-owned conglomerate that manufactures ammunition for the military defense industry and hunting. Igman applied to register as a broker of U.S. defense articles and services in 2008 for the purpose of exporting its own ammunition to the U.S. Although the company could technically serve as a broker for a third party with this license, the owners have no intention of doing so. ¶3. PD Igman was established in 1950 and was one of the biggest producers of small arms ammunition between 5.56 mm and 12.7 mm caliber in Europe. Igman's principals are General Manager Dahid Muratbegovic, Executive Director for Production Serif Coric, Executive Director for Quality Assurance Miroslav Sain, and Executive Director for Marketing, Finance and Legal Affairs Emir Hadzizukic. Igman produces a variety of eastern and western-manufactured ammunition, including armor piercing, armor piercing incendiary, armor piercing incendiary tracer, and other combinations. Igman has exported its products to more than 60 countries. Igman currently has 700 employees with an annual production capacity of seven million pieces of 12.7 caliber and 70 million pieces of 5.56 x 45 mm - 7.9 mm caliber. Igman's typical clients include the military defense industries of other countries and third-party brokers including: Igman International Ltd - UK, Saltech AG - Switzerland, MLM - US, Banzai spol.s.r.o. - Costa Rica, Caina-Longbranch Defense Systems Canada - Canada, and EMCO Ltd. - Bulgaria. 4.PD Igman, as an ammunition manufacturer and government company, must obtain approval from the BiH Ministry of Foreign Trade and Economic Relations (MOFTER) in advance of exporting ammunition to an international client. In 2003, Igman had an order of ammunition destined for Venezuela, which was on a list of prohibited countries for defense articles at that time. On orders from MOFTER, with support from the U.S. Embassy, Igman was directed to cancel the order to Venezuela. Post has discovered no derogatory or criminal information about the company, or information about other attempts to export its ammunition to proscribed entities. 5.We surveyed Igman's on-site security and storage facilities. The site is large, with more than five acres of buildings, although most are now empty. The manufacturing facility is located underground in a secure facility. However, the company's storage buildings are located in an isolated area of the complex with no security cameras and one deadbolt lock securing the finished ammunition. There is a small gate and one security guard on 24-hour duty who monitors the entire, five-acre complex. We believe Igman's existing security profile is insufficient for proper handling and storage of sensitive US munitions list items. 6.In spite of our assessment that the company's security is inadequate, we recommend that PM contact Igman to discuss the company's registration as a broker, since it clearly does not intend to act as a broker and does not maintain adequate security procedures for this registration. ENGLISH