BLUE LANTERN LEVEL 2: PRE-LICENSE END-USE CHECK

UNCLAS STATE 119092

SENSITIVE
SIPDIS
SAN SALVADOR FOR BRENT CHRISTENSEN
MONTEVIDEO FOR ALFRED SCHANDLBAUER

E.O. 12958: N/A
TAGS: ETTC KOMC ES UY
SUBJECT: BLUE LANTERN LEVEL 2: PRE-LICENSE END-USE CHECK
ON LICENSE 050200117


1. (U) This is an Action Request. See paragraphs 4 and 5.


2. (U) The Department's Office of Defense Trade Controls
Compliance (PM/DTCC) requests Post's assistance in conducting
a pre-license check on license 050200117 for the export of
firearms to El Salvador. Post is requested to complete this
Blue Lantern check within 30 days. Lack of response to a
Blue Lantern check will affect pending and future licenses
involving parties to this license.


3. (SBU) Reason for Request: The purchase order from
Salvadoran company, Cosase S.A., was issued to Glock America
S.A. of Uruguay despite the latter not being listed on the
license application. Also, the document indicates that
Cosase S.A. will be paying for this shipment of firearms with
cash, which is common in money laundering activities.
Finally, the Government of Austria (GOA) has informed the USG
that under Austrian law, Glock Inc. of the United States is
limited to sales in North America only, and any sales to
third countries require re-export authorization from the GOA.
This check is to establish the bona fides of the Salvadoran
and Uruguayan companies and determine the structure of this
transaction.


4. (SBU) Action San Salvador: Post is requested to establish
the bona fides of end-user Cosase S.A. by making inquiries to
representatives of the company and appropriate authorities of
the Government of El Salvador. Post is also requested to
determine Cosase's relationship with Glock America S.A. of
Uruguay and inquire about the mechanics of this cash
transaction. The following points are included for guidance:

(To Cosase S.A. de C.V.)

--When was your company established and who are its
principals?

--What products and services does your company provide? Who
are your regular customers and where do they reside? Do you
sell firearms to customers that reside outside El Salvador?

--What are your annual sales of U.S.-origin firearms?

--Your purchase order (PO No. 01-2009) indicates that you
placed your order with Glock America S.A. based in
Montevideo, Uruguay. What role is Glock America S.A. playing
in this transaction? Did you have any direct contact with
Glock Inc. in the United States? If so, with what
individuals? Do you direct all your Glock purchase orders to
Glock America S.A.? Will the firearms be shipped directly to
El Salvador or will they come through Glock America S.A. in
Uruguay?

--The purchase order for these firearms lists the total value
of the order at $0 (zero dollars). It also indicates that
your company is paying for the shipment in cash. To whom
did/will you provide the cash? How and when will the cash be
delivered? Why did you decide to pay in cash? Is this a
normal business practice of your company? What is the total
value of this order?

--Are you familiar with the regulations governing the import
of U.S.-origin defense articles, including restrictions on
re-transfer or re-export?

(To Appropriate Import/Export and/or Law Enforcement
Authorities)

--Is Cosase S.A. legally permitted to import and sell
firearms in the El Salvador?

--Do you have any information on Cosase S.A. that would
question their reliability as a recipient of U.S. defense
articles?

In its reply, Post is encouraged to comment on any other
information pertinent to these transactions such as security
of facilities, end-use, and concerns about the entities
involved.


5. (SBU) Action Montevideo: Post is requested to establish
the bona fides of intermediary Glock America S.A. by making
inquiries to representatives of the company and appropriate
authorities of the Government of Uruguay. Post is also
requested to determine Glock America's relationship with
Glock Inc. of the United States and inquire about the
mechanics of this cash transaction. The following points are
included for guidance:

(To Glock America S.A.)

--When was your company established and who are its
principals?

--What products and services does your company provide? Who
are your regular customers and where do they reside?

--What is your relationship to Glock Inc. in the United
States? Glock in Austria? Are there any legal ties between
Glock America and other Glock business entities?

--Please describe the normal procedure for and your role in
facilitating a purchase of Glock firearms in South America.
What services do you perform in such transactions and how are
you compensated? What is your sales territory?

--The purchase order from Cosase S.A. of El Salvador (PO No.
01-2009) indicates that the company placed their order with
Glock America S.A. Will the firearms be shipped directly to
El Salvador or will they come through your company in
Uruguay? What services do you perform in this transaction
and how are you being compensated? Will you ever have
physical possession of these firearms?

--The purchase order from Cosase S.A. of El Salvador lists
the total value of this order as being $0 (zero dollars). It
also indicates that Cosase S.A. is paying for the shipment in
cash. To whom did/will Cosase S.A. provide the cash? How
and when will the cash be delivered? Did Glock America S.A.
receive any cash from Cosase S.A.? Did Glock America S.A.
facilitate the transfer of cash to Glock Inc. of the United
States? Is this a normal business practice of your company?
What is the total value of this order? What percentage of
the money received from Cosase will remain with Glock America
S.A. and how much is transferred to Glock Inc. of the United
States?

--Are you aware that the re-export of Glock firearms from the
United States to any third country requires authorization
from the Government of Austria?

--Are you familiar with the regulations governing the import
of U.S.-origin defense articles, including restrictions on
re-transfer or re-export? Are you familiar with regulations
governing the brokering of U.S.-origin defense articles,
including the requirement for all brokers of U.S. defense
articles to be registered with the U.S. Department of State?

(To Appropriate Import/Export and/or Law Enforcement
Authorities)

--Is Glock America S.A. legally permitted to import and sell
firearms in the Uruguay?

--Is Glock America S.A. legally permitted to broker the sales
of firearms in other countries?

--Do you have any information on Glock America S.A. that
would question their reliability as a recipient of U.S.
defense articles?

In its reply, Post is encouraged to comment on any other
information pertinent to these transactions such as security
of facilities, end-use, and concerns about the entities
involved.


6. (U) Details of license applications:

DTC Case: 050200117

QUANTITY/COMMODITY:

210 Glock Pistols

126 Glock Magazines

License Value: USD $78,973

SELLER:

Glock Inc.
6000 Highlands Parkway
Smyrna, GA 30082

FOREIGN INTERMEDIATE CONSIGNEE:

Glock America S.A.
Plaza Independencia 831, Office 802, 11100
Montevideo, Uruguay
Tel: 598-2902-2227
(NOTE: Not/not listed on the license application.)

FOREIGN END-USER:

Cosase S.A. de C.V.
Col. Y Av. Bernal Res. Montecarlo #21 S.S.
San Salvador, El Salvador
Tel: 0614-010791-103-9

PURPOSE:

For commercial resale in El Salvador


7. (U) Submitted in support of the license application were
the following documents (PM/DTCC will fax documentation to
Posts upon request):

DSP-83 signed by Carlos Guervara (Glock Inc. of he U.S.)
dated 11/06/2009 and Miguel Menendez Avelar (Cosase S.A.) not
dated

Import Authorization Nos. 1816, 1817, and 1832 issued by the
Ministry of National Defense signed by Jose Atilio Benitez
Parada, Vice-Minister of National Defense dated 20 July 2009

Purchase Order No. 01/2009 from Cosase S.A. to Glock America
S.A. signed by Miguel Menendez Avelar not dated

Purchase Order No. OC 2193 from Glock America S.A. to Glock
Inc. dated 06 August 2009


8. (U) Please slug reply for PM/DTCC - BLUE LANTERN
COORDINATOR and include the words "Blue Lantern" and the case
number in the subject line. POC is Kyle M. Ballard, Phone:
202-663-1929; Email: BallardKM@state.gov; SIPRNET:
BallardKM@state.sgov.gov. The Blue Lantern Guidebook (ref)
is available as a PDF file on Intellipedia:
http://www.intelink.gov/wiki/
Blue Lantern End-Use Monitoring Program


9. (U) Department is grateful for Post's assistance in this
matter.
CLINTON