BLUE LANTERN LEVEL 3: PRE-LICENSE END-USE CHECK

UNCLAS STATE 058133

SENSITIVE
SIPDIS
SINGAPORE FOR MATT EASTER
ECON
JAKARTA FOR PABLO VALDEZ
ECON

E.O. 12958: N/A
TAGS: ETTC KOMC SN ID
SUBJECT: BLUE LANTERN LEVEL 3: PRE-LICENSE END-USE CHECK
ON APPLICATION 050155869

REF: A. 06 SINGAPORE 3391

B. 06 JAKARTA 13362

C. BLUE LANTERN GUIDEBOOK 2006


1. (U) This is an Action Request. See paragraphs 2-5.


2. (U) The Department's Office of Defense Trade Controls
Compliance (PM/DTCC) requests post's assistance in conducting
a pre-license check on application 050155869 for the export
of aircraft spare parts to Indonesia via Singapore. 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 applications involving parties to this license.


3. (SBU) Reason for request: several irregularities and
questions raised by the application's supporting
documentation. A Blue Lantern check conducted in fall 2006
(refs A and B) confirmed relationships among foreign
consignees Master Logistics and PT Mandira Jaya Abadi and
foreign end-user the Indonesian Air Force. However, that
check also revealed several irregularities and a lack of
knowledge about U.S. export control laws and regulations by
the foreign parties. The documentation submitted in support
of this application, which is for a significantly larger
order of United States Munitions List (USML) items than in
previous licenses, suggests that many of these problems and
ignorance of legal requirements continues to exist. For
example, it is unclear why Singaporean consignee Master
Logistics is involved in this transaction if the Indonesian
Air Force is purportedly ordering the parts directly from
U.S. applicant Merex Inc.


4. (U) Posts should make appropriate inquiries with the
companies and with appropriate host government authorities to
determine the exact roles of the foreign consignees, to
verify their bona fides, and to confirm the legitimacy of the
proposed transaction. The following questions are provided
as suggested guidance.

EMBASSY JAKARTA

For the Indonesian Air Force:

--Can you confirm an order for the type and quantity of items
listed on this application? With whom was the order placed?

--What are the roles of Master Logistics Pte Ltd and PT
Mandira Jaya Abadi in this proposed transaction?

--Are Master Logistics and PT Mandira Jaya Abadi official
suppliers/contractors for the Indonesian Air Force? Does the
Indonesian Air Force have any other contracts with the
company?

--Do the subject aircraft parts have to be routed through
Master Logistics in Singapore? If so, why?

For PT Mandira Jaya Abadi:

--What is the company's role in this proposed transaction?
What is the company's relationship with PT Mandira Jaya Abadi
and with the Indonesian Air Force?

--Does the company have supporting documentation, including a
contract and/or purchase orders from the Indonesian Air
Force, for this proposed transaction?

--Who will be ordering the parts from Merex Inc., PT Mandira
Jaya Abadi, the Indonesian Air Force, or another entity?

--Will the company be handling or storing the items listed on
the application? If so, does it have secure facilities and
proper accounting and security procedures for handling these
sensitive USML items?

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

--What is the nature of its business -- what types of items
does it handle, does it serve as a broker?

--What types of organizations are among its typical customers
and where are the customers located?

--Does the company understand the restrictions on United
States Munitions List (USML) items, especially the
prohibition against unauthorized re-transfers and re-exports?

EMBASSY SINGAPORE

For Master Logistics Pte Ltd:

--What is the company's role in this proposed transaction?
What is the company's relationship with PT Mandira Jaya Abadi
and with the Indonesian Air Force?

--Does the company have supporting documentation, including a
contract and/or purchase orders from the Indonesian Air
Force, for this proposed transaction?

--Will the company be handling or storing the items listed on
the application? If so, does it have secure facilities and
proper accounting and security procedures for handling these
sensitive USML items?

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

--What is the nature of its business -- what types of items
does it handle, does it serve as a broker?

--What types of organizations are among its typical customers
and where are the customers located?

--Does the company understand the restrictions on United
States Munitions List (USML) items, especially the
prohibition against unauthorized re-transfers and re-exports?


5. (U) Department requests that Embassy Singapore conduct a
site visit to the company/companies in order to provide
Department with an assessment of its business operations and
on-site security. If a site visit is not possible, please
inform PM/DTCC case officer. Finally, post is asked to
assess whether the company appears to be a reliable recipient
of USML items. End action.


6. (SBU) For background, the following details of the license
in question are provided:

DTC Case: 050155869

QUANTITY/COMMODITY:

Lot Components and spares for the overhaul, repair and
support of related parts, components accessories for the
following aircraft/engines/helicopters: Beechcraft T-34, BAE
Hawk 109, 209, Douglas TA-4, A4, Bell 204, 412 (PT6 Engine),
Lockheed F-16, Northrop F-5 (J85 Engine),Rockwell OV-10
(PTE-331 Engine),Lockheed C-130 (T-46 Engine),CASA CN 235
(CT-7 Engine),Fokker F-27, Dehavilland DHC-5

License Value: USD 1,000,000.00

SELLER:

Merex Inc.
853 Via Alondra
Camarillo, CA 93012
POC: Julie Williams, tel.: 805-446-2700, ext. 30

FOREIGN CONSIGNEE:

Master Logistics Pte Ltd
QQ: PT Mandira Jaya Abadi
Block 1811 Geylang Bahru
#01-02 Kallang Distripark
Singapore 339714
Phone: (65) 63822806
Fax: (65) 63821068

PT. Mandira Jaya Abadi
Pusat:
Jl. Letjen MT Haryono 501
Semarang - 50241
Indonesia
Phone: 62-24-3519547
Fax: 62-24-3542189
E-mail: mjabadi@indosat.net.id
Cabang:
Jl. Tanjung Duren Barat V/44
Jakarta - 11470
Tel.: 62-21-5683815
Fax: 62-21-5685794
E-mail: mandirapt@cbn.net.id

FOREIGN END-USER:

Indonesian Air Force
Dinas Aeronautik a Mabes TNI-AU B2 Lt 5
Cilangkap-Jakarta
Indonesia

PURPOSE:

Components and spares for the overhaul, repair and support of
related parts, components accessories for the following
aircraft/engines/helicopters: Beechcraft T-34, BAE Hawk 109,
209, Douglas TA-4, A4, Bell 204, 412 (PT6 Engine),Lockheed
F-16, Northrop F-5 (J85 Engine),Rockwell OV-10 (PTE-331
Engine),Lockheed C-130 (T-46 Engine),CASA CN 235 (CT-7
Engine),Fokker F-27, Dehavilland DHC-5


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

--Nontransfer and Use Certificate (Form DSP-83),listing a
total parts value of $5 million, signed by Drs. Arismunandar,
Director PT Mandira Jaya Abadi, and by Anggoro, Head of
Procurement IAF, undated

--End User Statement / Letter of Intent number
B/801/III/2009/DIPADAAU from Tentara Nasional Indonesia,
Markas Besar Angkatan Udara, stating that the Indonesian Air
Force intends to order from Merex Inc. an estimated
$1,250,000 per year over a four-year period and that the
"intermediate consignee / shipment address" will be "Master
Logistics Pte Lte / QQ: PT. Mandira Jaya Abadi," signed by
Anggoro, Air First Marshal, Chief of the Procurement Service
for Vice Chief of Staff on behalf of the Chief of Staff of
the Indonesian Air Force, dated 4 March 2009

--Letter of Intent from PT. Mandira Jaya Abadi, certifying
that it is "an approved supplier for the Indonesian Air
Force" and intends to purchase from Merex Inc. aircraft parts
worth an estimated $1,250,000 per year over a four-year
period, signed by Drs. Arismunandar, Director, dated March 3,
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 Judd Stitziel, PM/DTCC,
Phone: 202-663-3455; email: StitzielJD@state.gov; SIPRNET:
StitzielJD@state.sgov.gov. The Blue Lantern Guidebook (ref
C) is available as a PDF file in the Bunche Library's
Electronic Library collection on the DOS Intranet:
http://virtuallibrary.state.gov/
BlueLanternGuidebook2006%2520 final .pdf


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