MALAYSIA-BASED PROCUREMENT ENTITY CONTINUES TO

S E C R E T STATE 115166

SIPDIS

E.O. 12958: DECL: 11/06/2034
TAGS: MTCRE PARM PREL MNUC ETTC KSCA GE IR MY
SUBJECT: MALAYSIA-BASED PROCUREMENT ENTITY CONTINUES TO
SEEK GERMAN-ORIGIN ROTARY SWAGING MACHINE (S)

REF: A. STATE 15844

B. BERLIN 00829

Classified By: ISN/MTR DIRECTOR PAM DURHAM FOR REASON 1.4 (C).


1. (U) This is an action request. Embassy Berlin, please see
paragraph 4.


2. (S) In July 2009, we shared with German officials
information indicating that the Malaysian-based, Iranian-
controlled entity, Skylife Worldwide Sdn Bhd, was working to
acquire a model R5-4 rotary swaging machine from the German
firm Heinrich Mueller Maschinenfabrik GmbH (HMP) (Refs A &
B).
As we noted, rotary swaging machines are not controlled by the
Missile Technology Control Regime, but can be used to
manufacture turbopump and plumbing components found in liquid-
fueled ballistic missiles. Skylife was procuring this
equipment on behalf of Microset Systems Sdn Bhd, which is
another problematic Malaysian-based, Iranian-run entity.
Skylife and Microset are co-located, work closely with one
another, and have acted as brokers for numerous Iranian
entities of proliferation concern, including liquid-propellant
ballistic missile developer Shahid Hemmat Industrial Group,
and tactical missile developer Ya Mahdi Industries.


3. (S) We now understand that in August 2009, Skylife
representatives informed Microset that Microset would receive
the rotary swaging machine at the end of the month. However,
we do not know if Skylife was already in possession of the
equipment at the time it provided this information to
Microset, or if the machine was actually still in Germany and
Skylife was simply anticipating a pending shipment from HMP.
If the latter, then it still may be possible to prevent the
transfer of this machine. We therefore want to advise German
officials that - as of August - Skylife representatives were
still expecting that they would be able to supply the
equipment to Microset. We also want to urge Berlin to
follow-up on this information and take all appropriate
measures to prevent this shipment - if it has not already
occurred.


4. Action Request: Request Embassy Berlin approach
appropriate host government officials to deliver talking
points/non-paper in paragraph 5 below and report response.
Talking points also may be provided as a non-paper.


5. (S) Begin talking points/non-paper:

(SECRET//REL GERMANY)

-- We would like to alert you to information of proliferation
oncern and request your assistance in investigating this
activity.

-- In July, we shared with you information indicating that in
August 2008, the Malaysian-based entity Skylife Worldwide Sdn
Bhd had been working to purchase a model R5-4 rotary swaging
machine from the German firm Heinrich Mueller Maschinenfabrik
GmbH (HMP).

--As we noted, rotary swaging machines are not controlled by
the Missile Technology Control Regime (MTCR),but can be used
in the manufacture of turbopumps and plumbing components found
in liquid-propellant ballistic missiles.

-- We also informed you that in December 2008, Skylife had
advised HMP's Elmar Pischel that EUR 100,000 - representing
half the cost of the machine - had been transferred to
Pischel's account.

-- Skylife was acting on behalf of another Malaysian-based
firm Microset Systems Sdn Bhd.

-- Both of these firms are Iranian-run procurement companies
and have acted as brokers for numerous Iranian entities of
proliferation concern, including Shahid Hemmat Industrial
Group (SHIG) and Ya Mahdi Industries.

-- We now understand that in August 2009, Skylife
representatives informed Microset that Microset would receive
the rotary swaging machine at the end of August.

-- We do not know if Skylife was already in possession of the
rotary swaging machine at the time it provided this
information to Microset.

-- If not, there may still be an opportunity to prevent the
transfer of this machine to Malaysia, and ultimately, Iran -
the likely location of the intended end-user.

-- We urge you to take all available measures to prevent the
shipment of this equipment to Skylife - if it has not already
occurred.

-- We look forward to continuing our excellent cooperation on
nonproliferation matters and to hearing of any updates on the
progress of your investigation of this case.


6. (U) Washington POC is ISN/MTR John Paul Herrmann (Phone:
202-647-1430). Please slug any reporting on this issue for
ISN/MTR, EAP/MTS, EUR/CE, and EUR/PRA.


7. (U) A word version of this document will be posted at
www.state.sgov.gov/demarche.
CLINTON