BLUE LANTERN CHECK ON DENIED LICENSE APPLICATION

S E C R E T STATE 081473 NOFORN SENSITIVE SIPDIS FOR POL E. STROTHER MURRAY E.O. 12958: DECL: 25X1-HUMAN TAGS: BB EC ETTC KOMC SP UK SUBJECT: BLUE LANTERN CHECK ON DENIED LICENSE APPLICATION 050128842 (U) REF: A. STATE 868 ¶B. IIR 1 786 0059 90/IBERIAN GREY ARMS ACTIVITIES (U) APR 90 ¶C. IIR 6 889 0033 92/TWO CROATIANS ARRESTED IN SPAIN FOR ATTEMPTED ARMS PURCHASES (U) OCT 91 ¶D. IIR 6 016 2067 95/GREY ARMS FIRMS ASSOCIATED BANKS AND THEIR ACCOUNT NUMBERS (C) MAY 95 ¶E. IIR 6 807 0029 96/PROLIFERATION-THE GRAY ARMS MARKET IN BELGIUM (U) NOV 95 ¶F. IIR 7 100 0083 96/NORTH KOREA TO SELL AMMUNITION TO CAMBODIA (U) MAR 96 ¶G. IIR 7 100 0201 96/GREY ARMS COMPANY SEEKS ARTILLERY MUNITIONS (U) JUL 96 ¶H. IIR 7 300 0347 96/IRAN PLANS TO MANUFACTURE FUZES IN BURMA (U) AUG 96 ¶I. IIR 7 100 0227 96/SERBIA TO BUY SA-7 MISSILES (U) AUG 96 ¶J. IIR 7 730 8156 98/SUDAN SEEKS TO REPLACE WEAPONRY WHICH WAS PREVIOUSLY SEIZED (U) MAR 98 ¶K. IIR 7 730 8157 98/CENTRAL AFRICAN REPUBLIC SEEKS TO PURCHASE WEAPONS AND AMMUNITION ON THE INTERNATIONAL GRAY ARMS MARKET (U) MAR 98 ¶L. IIR 6 886 0056 00/SISCO INTERNATIONAL LTD IN THE GRAY ARMS MARKET (U) JAN 00 Classified By: MULTIPLE SOURCES ¶1. (U) This is an action message. See paragraphs 2-8. ¶2. (U) The Department's Office of Defense Trade Controls Compliance (PM/DTCC) requests post assistance regarding follow-up to the denial of license application 050128842. ¶3. (U) Reason for request: license application 050128842, a proposed export of torpedo parts to the Ecuador Navy, was denied on 26 November 2008 by the Office of Defense Trade Controls Licensing (PM/DTCL) because of involvement in the transaction by Spanish company Commerce International Group Ltd. (CIG Ltd.). CIG was listed as the Foreign Intermediate Consignee on the license application. ¶4. (U) Based upon multiple sources, the Department concluded that CIG Ltd. is not a reliable recipient of United States Munitions List (USML) items and may not be a party to any defense trade transaction subject to control under the International Traffic in Arms Regulations (ITAR). Ref. A was the Department's January 2009 unclassified Blue Lantern cable which informed the government of Ecuador about the denial, citing the reason given above. The government of Ecuador was also informed that another license application for the same commodities would be favorably considered minus the involvement of CIG Ltd. ¶5. (U) In June 2009, CIG Ltd. contacted the Department regarding the license denial. CIG representative, Robert Edward Lloyd, stated that the company was "anxious to clarify why CIG was determined not to be eligible and to take any measures required to correct the situation." Mr. Lloyd also stated that CIG would be "making contact with the United States Embassy in Madrid to see if they can assist." ¶6. (U) The Department responded to CIG on July 21st with the following statement: The Office of Defense Trade Controls Compliance reviewed DSP-5 license application 050128842, which included Commerce International Group (CIG),Spain, as a foreign intermediate consignee. The review employed information obtained from various sources, both public and non-public. Our assessment and recommendation to deny the license application due to the inclusion of CIG was derived from non-public sources. We therefore cannot provide any further information on the determination. Should our determination regarding CIG change, we will inform you. ¶7. (S//NF) There exists a significant body of classified reporting, e.g., refs. B-L, which demonstrates that Commerce International Group Ltd. (a/k/a CIG Ltd., CIG International, Military Ordnance Defence, East/West Engineering, Response Sales, and Pentastar) is a gray arms firm that has operated for many years, involving numerous transactions with multiple countries and proscribed parties, including Burma, Iran, North Korea, and Sudan. CIG's principle owner is UK citizen Paul Richard Cradock (also seen as Craddock). Other associates include the aforementioned Robert Lloyd, and Michele J.S. Rooman. CIG was established by Paul Cradock's father, Frank Cradock. CIG has operated in Spain since at least the 1990s, with alias companies registered (perhaps in name only) in the UK, Cyprus, and Barbados. ¶8. (U) ACTION: request that post inform PM/DTCC if contacted by CIG Ltd. If CIG requests post for assistance in these matters, post should inform CIG that they should contact PM/DTCC. END ACTION. ¶9. (U) License Information: DDTC Case Number 050128842 QUANTITY/COMMODITY: 11 Alignment Pin, P/N 2526871 03 Clamp Cable, P/N MS9024-11 06 Sea Water Pump Assembly, NSN 1355-01-042-1056 06 Cylinder Barrel, P/N 1568887 17 Pad Shock, NSN 5310-00-835-1720 06 Retainer Pad, NSN 1355-00-975-0893 LICENSE VALUE: USD 47,618.00 APPLICANT/SOURCE: Ordnance Technology Service Inc. 7895 Unit A Division Drive Mentor, Ohio 44060 USA FOREIGN INTERMEDIATE CONSIGNEE: Commerce International Group Ltd. 5 Avenida Marques Del Duero s/n Edificio Atlantico E-29670 S.P. de Alcantara PO Box 65 29680 Estepona (Malaga) SPAIN FOREIGN CONSIGNEE/FOREIGN END USER: Armada del Ecuador Direccion de Abastecimientos de la Armada Direccion General de Material Base Naval Sur, Guayaquil ECUADOR STATEMENT OF PURPOSE: Spare parts of MK 46 Mod 2 torpedoes. ¶10. (U) Additional documentation submitted in support of license application: A) CIG Ltd. Purchase Order Number 020/2008, dated 04 September 2008, signed by Paul R. Cradock, Managing Director. B) Armada del Ecuador, Direccion de Mantenimiento y Recuperacion de Unidades Navales, End User Certificate No. 004, dated 26 August 2008, signed by Fernando Aguiar Villagomez, Capitan de Navio-EM, Director de Mantenimiento y Recuperacion. C) U.S. Department of State DDTC DSP-83 Non-Transfer and Use Certificate, signed by Fernando Aguiar Villagomez (dated 08-26-2008),Director Mantenimiento y Recuperacion Unidades. ¶11. (U) Please slug reply for PM/DTCC - BLUE LANTERN COORDINATOR and include the words "Blue Lantern" and the DDTC Case Number in the subject line. POC on this case is Peter Sabatini, PM/DTCC, phone: 202-663-2819; ClassNet email: sabtinipj@state.sgov.gov; OpenNet email: sabatinipj@state.gov The most current Blue Lantern Guide Book is available on OpenNet at http://fsi.state.gov/fsi/spas/default.asp?ID= 1588 Department thanks Post for its assistance in this matter. CLINTON