MALAYSIA-BASED IRANIAN PROCUREMENT ENTITY SEEKS

S E C R E T STATE 015844

SIPDIS

E.O. 12958: DECL: 02/13/2034
TAGS: MTCRE PARM PREL MNUC ETTC KSCA GE IR MY
SUBJECT: MALAYSIA-BASED IRANIAN PROCUREMENT ENTITY SEEKS
GERMAN-ORIGIN ROTARY SWAGING MACHINE (S)

REF: A. 2008 STATE 90515

B. 2008 BERLIN 1210

C. 2008 STATE 107113

D. 2008 BERLIN 1384

E. STATE 4159

F. BERLIN 92

G. STATE 7445

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


1. (U) This is an action request. Embassy Berlin,
please see paragraph 5.


2. (S) Since mid-2008, the U.S. has on several
occasions shared with Berlin information related to the
efforts of Malaysian-based entities to acquire German-
origin items on behalf of Iranian entities of
proliferation concern (Refs). A number of these
entities, including Toshi Electronics, Elite Advanced
Solutions, and Evertop Services, while based in
Malaysia, have been working on behalf of Iranian
procurement agents. For example, Evertop and Elite are
actually front companies for the Iranian firm Farazeh
Equipment Distributor Company (FEDCO).


3. (S) We now would like to share with German officials
information indicating that another Malaysian-based,
Iranian-controlled entity, Skylife Worldwide Sdn Bhd,
has been working to acquire a rotary swaging machine
from the German firm Heinrich Mueller Maschinenfabrik
GmbH (HMP). Specifically, we understand that in August
2008, HMP provided a quotation to Skylife for a model
R5-4 rotary swaging machine. As of late December,
Skylife had submitted a payment of nearly EUR 100,000 -
half the cost of the machine - to HMP. Although rotary
swaging machines are not controlled by the Missile
Technology Control Regime, they can be used to
manufacture turbopump and plumbing components found in
liquid-fueled ballistic missiles. Skylife is procuring
this equipment on behalf of Microset Systems Sdn Bhd,
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.


4. (S) Objective: We want to share this information
with German officials, and request that they
investigate and take all appropriate measures to
ensure that Heinrich Mueller Maschinenfabrik is not
acting as a supplier to Iranian entities of
proliferation concern.


5. Action Request: Request Embassy Berlin approach
appropriate host government officials to deliver
talking points/non-paper in paragraph 6 below and
report response. Talking points also may be provided
as a non-paper.


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

(SECRET//REL GERMANY)

-- We would like to raise with you a matter of
proliferation concern and request your assistance in
investigating this activity.

-- On several occasions since mid-2008, we have
discussed with you efforts by several Malaysia-based
procurement entities - including Toshi Electronics,
Evertop Services and Elite Advanced Solutions - to
acquire German-origin items on behalf of Iranian end-
users of proliferation concern.

-- We greatly appreciate your cooperation in
investigating the information we have provided you in
these cases, and in working to prevent these transfers.

-- We now want to share with you new information
indicating that the Malaysian-based entity Skylife
Worldwide Sdn Bhd has been working to purchase a rotary
swaging machine from the German firm Heinrich Mueller
Maschinenfabrik GmbH (HMP).

-- Specifically, we understand that in late August
2008, HMP officer Elmar Pischel provided a quotation to
Skylife for a model R5-4 rotary swaging machine.

-- In late December 2008, Skylife advised Pischel that
a payment of nearly EUR 100,000 - representing half the
cost of the machine - had been transferred to his
account.

-- Rotary swaging is a metal forming technique that
involves altering the dimensions of an item using
multiple dies that hammer a workpiece into a smaller
diameter.

-- Although not controlled by the Missile Technology
Control Regime, rotary swaging machines can be used to
manufacture turbopump and plumbing components found in
liquid-fueled ballistic missiles.

-- Skylife is procuring this equipment on behalf of
another Malaysia-based firm, Microset Systems Sdn Bhd.

-- Skylife and Microset are both Iranian-run
procurement entities 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.

-- Skylife and Microset work closely with one another
and are located in the same building in Kuala Lumpur.

-- We urge you to investigate this information and take
all appropriate measures to ensure that Heinrich
Mueller Maschinenfabrik is not acting - even
unwittingly - as a supplier to Iranian entities
of proliferation concern.

-- We look forward to hearing of any actions your
government takes in response to this information.


7. (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.


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