MALAYSIAN-BASED IRANIAN PROCUREMENT ENTITY

S E C R E T STATE 082250

SIPDIS

E.O. 12958: DECL: 08/07/2034
TAGS: MTCRE PARM PREL MNUC ETTC KSCA HK IR
SUBJECT: MALAYSIAN-BASED IRANIAN PROCUREMENT ENTITY
SEEKING ELECTRONIC COMPONENTS FROM HONG KONG FIRM

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


1. (U) This is an action request. Consulate Hong Kong,
please see paragraph 3.


2. (S) Background: The United States has information that
throughout the first half of 2009, the Malaysia-based firm
Elite Advanced Solutions sought crystal filters and crystal
oscillators from the Hong Kong firm Precision Devices
Limited. Elite Advanced Solutions is a front company for
Farazeh Equipment Distributor Company (FEDCO),an Iranian
entity that procures equipment and technology on behalf of
Iranian end-users of proliferation concern. Elite and FEDCO
worked together in the past to obtain goods for Iran's UAV
and ballistic missile programs. Crystal filters and
oscillators are general purpose electronics and not
controlled by the Missile Technology Control Regime (MTCR),
but they can be used in aerospace applications. Moreover, we
believe that Elite provided Precision Devices with an
inaccurate description of the end-use of the materials in
order to circumvent possible export restrictions. We want to
bring this information to the attention of Hong Kong
authorities and urge them to take measures
to ensure that Precision Devices is not acting as a supplier
to Iranian entities of proliferation concern or their
affiliates.


3. (S) Action Request: Request Consulate Hong Kong approach
appropriate host government officials to deliver talking
points/non-paper in paragraph 4 below and report response.
Talking points also may be provided as a non-paper.


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

(SECRET//REL HONG KONG)

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

--We have information indicating that through the first half
of 2009, the Malaysia-based firm Elite Advanced Solutions was
seeking crystal filters and crystal oscillators from the Hong
Kong firm Precision Devices Limited.

--Although Elite Advanced Solutions is located in Malaysia,
it is actually an Iranian-run front company for the Farazeh
Equipment Distributor Company (FEDCO). FEDCO is an Iranian
entity that acts as a purchaser of equipment and technology
to support Iranian end-users of proliferation concern.

--Although crystal filters and crystal oscillators are
general purpose electronics and are not controlled by the
Missile Technology Control Regime (MTCR),they can be used in
aerospace applications.

--A representative of Elite Advanced Solutions advised
Precision Devices Limited that the filters and oscillators
would be used in telecommunications in Malaysia.

--However, given that Elite is a front company for Iran's
FEDCO, we believe the representative likely was providing an
inaccurate description of where these items would be used in
order to circumvent possible export restrictions.

--Elite and FEDCO previously procured goods on behalf of
Iran's UAV and ballistic missile programs. We therefore are
concerned that these items may be intended for a
missile-related end-use in Iran.

--We request that you investigate this information, and take
measures to ensure that Precision Devices is not acting as a
supplier to Iran's missile program through exports to Elite
Advanced Solutions or other entities affiliated with FEDCO,
including Malaysia's Evertop Services and Singapore's Opto
Electronics and Microsun Electronics.

--We look forward to continued cooperation on export control
and nonproliferation issues and would appreciate hearing of
the actions you take in response to this information at the
earliest possible time.


End talking points/non-paper


5. (U) Washington POC is ISN/MTR John Paul Herrmann (Phone:
202-647-1430). Please slug any reporting on this issue for
ISN/MTR and EAP/CM.
CLINTON