BLUE LANTERN: VERIFYING BONA FIDES OF REGISTERED

UNCLAS STATE 092963

SIPDIS
PRAGUE FOR PATRICK ELLSWORTH

E.O. 12958: N/A
TAGS: ETTC KOMC CZ
SUBJECT: BLUE LANTERN: VERIFYING BONA FIDES OF REGISTERED
BROKER LUKAS TRACHTA - CASE NO. K-2022

REF: A. SECTION 38(B)(1)(A)(II) OF THE ARMS EXPORT
CONTROL ACT (AECA)

B. (22 U.S.C. 2778)


1. This is an Action Request. See paragraphs 3-4.


2. U.S. embassies have frequently inquired about the
legitimacy
of arms export transactions involving U.S. contractors and
host-country partners in support of U.S. efforts in Iraq and
Afghanistan, or other U.S. government programs. The
Department's
Office of Defense Trade Controls Compliance (PM/DTCC) wishes
to
inform Post that U.S. or foreign persons who are involved in
brokering U.S. defense articles or services, or any defense
articles
or services pursuant to U.S. procurement contracts for Iraq
and
Afghanistan or other destinations under USG auspices, must be
registered with PM/DTCC and obtain Department's approval for
their
brokering activities.


3. ACTION: PM/DTCC requests Post's assistance in conducting
an inquiry into the brokering activities of the U.S.
registered
broker listed below to substantiate its bona fides.
Department
requests that Post conduct a site visit to the company in
order
to assess its business operations, on-site security, and
reliability as a broker/recipient of United States Munitions
List (USML) items. If a site visit is not possible, please
inform the PM/DTCC case officer. Post is requested to
complete
this inquiry within 60 days:

LUKAS TRACHTA, GENERAL MANAGER, OWNER
BANZAI SPOL. S.R.O.
BLAHOSLAVOVA 10/293
130 00 PRAHA 3
CZECH REPUBLIC


4. The following questions provide guidance:

-- Confirm that this entity is in the business of brokering
defense articles and defense services at the location(s)
indicated under its legal name(s);

-- Determine whether this entity is authorized to conduct
such activities in its home country, whether the entity has
any criminal or other derogatory background, and whether post
has any information on its broker activities that may involve
proscribed entities such as countries under U.S. or
international sanctions, or designated state sponsors of
terrorism;

-- Will the brokering firm be handling or storing USML items
on behalf of its clients? If so, does it have secure
facilities
and proper accounting and security procedures for handling
sensitive USML items?

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

-- What is the nature of its business and what other types of
items does it handle?

-- What types of organizations are among its typical clients
and in what countries are they located?

-- Does the company understand the restrictions on USML
items, especially the prohibition against unauthorized
re-transfers and re-exports?


END ACTION.

-------------- --------------
BACKGROUND ON BROKERING REGISTRATION AND LICENSE APPROVAL
-------------- --------------


5. PM/DTCC provides the following background information on
the requirements for registration and obtaining prior
approvals for brokering activities:

The requirements for Registration and Obtaining Prior
Approvals for Brokering Activities are based in the Arms
Export
Control Act (AECA). The Brokering Requirements are
administered by PM/DTCC.

Section 38(b)(1)(A)(II) of the AECA requires registration
for any person "who engages in the business of brokering
activities with respect to the manufacture, export, import,
or transfer of any defense article or defense service".

According to the International Traffic in Arms Regulations
(ITAR) Section 129.2(a),a broker is defined as:

"any agent for others in negotiating or arranging contracts,
purchases, sales or transfers of defense articles or defense
services in return for a fee, commission, or other
consideration."

Additionally, ITAR Section 129.2(b) states that "brokering
activities
means acting as a broker as defined (above),and includes
financing,
transportation, freight forwarding, or taking of any other
action
that facilitates the manufacture, export or import of a
defense article
or defense service, irrespective of its origin."

Authorization is typically required for brokering activity.
However,
some activities are exempt from these requirements depending
on the
commodity, the countries involved, and the existence of
previous authorization. Because of these complexities, it is
recommended that any questions about specific cases be
directed to
this office to the attention of Deborah Carroll, Chief,
Compliance & Registration. Telephone: 202-663-2809;
SIPRNET: carrolld@state.sgov.gov.

End background on brokering registration and license approval.


6. Please slug reply for PM/DTCC and include the words
"Blue Lantern Broker Inquiry" and the case number in the
Subject
line. POC is Rachael-Therese S. Joubert-Lin, Phone:
202-663-2950;
Email: JoubertLinRS@state.gov; SIPRNET:
JoubertLinRS@state.sgov.gov.
The Blue Lantern Guidebook is available as a PDF file at
http://www.intelink.sgov.gov/wiki/Blue Lantern End-Use
Monitoring Program.


7. Department is grateful for Post's assistance in this
matter.
CLINTON