RESPONSE TO BLUE LANTERN PRE-LICENSE END-USE

S E C R E T TEL AVIV 002655 SIPDIS PM/DTCC - BLUE LANTERN COORDINATOR E.O. 12958: DECL: 12/07/2017 TAGS: ETTC KOMC TO IS SUBJECT: RESPONSE TO BLUE LANTERN PRE-LICENSE END-USE CHECK, LICENSES 050190991 AND 050192065 REF: A. STATE 102684 ¶B. FBI IIR 4212078210 Classified By: Deputy Political Counselor Jan Levin, reasons 1.4 (b),(d ) ¶1. (S) Summary: Representatives from M. Paz Logistics and Global Law Enforcement and Security confirmed that they are for the first time working together to provide night vision devices and rifles to the Togolese Armed Forces. However, the company representatives' accounts of the potential transaction do not entirely match. According to M. Paz Logistics President Ofir Paz, Global Law Enforcement and Security approached Paz Logistics regarding the transaction. Paz said Global has significant experience working in Togo, and will not take into physical possession the night vision devices or rifles. Global Law Enforcement and Security CEO David Tsur was reluctant to provide many details regarding this transaction or any other business ventures. According to Tsur, this is the first time his company has worked on a contract with the Togolese; he was uncertain whether Global would take into physical possession the night vision devices and rifles. Embassy Tel Aviv country team agencies possess no local derogatory information on either company, although the Legal Attache's office notes several FBI reports on M. Paz Logistics president Ofir Paz. End summary. ¶2. (SBU) Per ref A, Poloff and FCS senior commercial specialist met on October 15 with M. Paz Logistics President Ofir Paz and Vice President for Operations Anat Paz-Zarmi at the company's offices in Kfar Sava, Israel. Paz Logistics was established in 1983; its core business involves representation and consultancy to foreign (mainly U.S.) Original Equipment Manufacturers (OEMs) of defense and homeland security systems. The company's main customer base is the IDF, Israel National Police (INP),and GOI. Its product line includes land-based warfare systems, weapons systems and ammunition, electro-optical and electronic equipment, armored vehicles, and satellite communication and navigation systems. ¶3. (SBU) Paz, who employs 11 persons at that office, appeared at ease with the process and questioning -- he "does things by the book." Paz explained that he was one of the first Israeli brokers registered with the State Department, having obtained his license three or four years ago. He claims that ;the license gives his company prestige, which helps pull in more business. ¶4. (SBU) Paz said that his company works with suppliers to find products on behalf of other companies. He added that finding the goods, plus handling all of the logistical details -- taxes, customs, licensing -- is the service his company provides. According to Paz, in the last two to three years, M. Paz Logistics has started brokering international defense deals in addition to deals with U.S. companies. Paz said this is a relatively new function for his business, but it now accounts for over 40 percent of company revenue. He noted that the rest of his business involves representing companies to the Israel Defense Force. ¶5. (SBU) Paz said his company is not looking to expand to the international market where he would deal directly with customers, but he made passing reference to the seemingly frequent overseas visits where he works "in support of his suppliers." He mentioned a number of countries, including Georgia, Kazakhstan, Azerbaijan, Ukraine, Poland, the Czech Republic, and Cyprus. When asked if M. Paz maintained any other offices, Paz explained that he has a company in the British Virgin Islands. He said that the company tried to obtain a broker's license but was rejected. Paz added that the company does not engage in any weapons sales, nor does it do business with the United States. ¶6. (SBU) According to Paz, Global Law Enforcement and Security approached M. Paz Logistics with a request for a "long list of products" -- primarily not defense-related -- to be delivered to the Togolese. Paz said that Global works with Togo "all the time." He averred that Global came to Paz because of M. Paz's reputation as a supplier. Global had previously requested price quotes from Paz, but this was the first transaction between the two -- though Paz added that he was hopeful that a second contract would be signed soon. ¶7. (SBU) Paz said that Global will not take into possession any of the goods slated for delivery to Togo, and that M. Paz Logistics would send the goods directly to Togo while working through the MOD's Directorate for Defense Exports. He added that the contract total was approximately USD 240,000, which represents the cost of the items, plus commission, mark-up, and shipping costs which are passed along without mark-up to the customer. Paz possessed documentation in support of the license application. ¶7. (SBU) On December 3, poloff spoke by phone to Global Law Enforcement and Security CEO David Tsur, who was overseas on a business trip. Poloff attempted to arrange a site visit to Global Law Enforcement and Security on multiple occasions, but was told by company representatives that a visit was not possible due to the fact that Tsur was abroad. Tsur said that Global Law Enforcement and Security was established in 2008, and is a subsidiary of Global CST and the Mikal Group, with offices located in Petah Tikvah. ¶8. (SBU) According to Tsur, Global does not sell products -- "we sell know-how." He described Global as a consulting firm for primarily countries' law enforcement agencies. Tsur said his company also consults on large events, such as the Olympics and soccer games. Tsur declined to name specific countries, noting that he works in Eastern Europe, South America, and Africa -- he did mention Nigeria as one of his clients. ¶9. (SBU) When asked about his relationship with M. Paz Logistics, Tsur declined to give information regarding the terms of the agreement between the two companies. He confirmed that this was the first time the two had done business together, but he had known about M. Paz Logistics when he worked for the Israel National Police (INP). Tsur described this latest venture with M. Paz as "okay," and that the M. Paz's contract bid was acceptable -- he acknowledged that this transaction served as a test to determine if M. Paz was a reliable partner. He confirmed that M. Paz was responsible for "buying and shipping everything." ¶10. (SBU) When asked about his relationship with the Togolese Armed Forces, Tsur said he "does not get involved." He noted that he has a subcontractor who works directly with the Togolese, but he declined to mention the name of the company. According to Tsur, this was the first time his company had worked on a contract involving the Togolese. Since the conversation was by phone, Tsur could not provide documentation in support of the license application. ¶11. (SBU) Tsur acknowledged that Global is paying M. Paz a commission for its services in the transaction. He said he did not know if Global would ever take physical possession of the night vision devices and rifles. Tsur claimed some familiarity with regulations governing the import and brokering of U.S.-origin defense articles, but acknowledged that he relies upon the Israeli MOD to inform him of any obligations. ¶12. (S) Embassy Tel Aviv country team members possessed no local derogatory information on these companies. However, Embassy Tel Aviv Legal Attache's office noted that the FBI had recently sent a note (072/09) to the INP with supplemental information on Ofir Paz in an effort to assist the INP in its determination whether an investigation on Paz be initiated in Israel. Further, an FBI IIR (ref B) notes that Paz brokered a deal in which defective M-4s were sold to Georgia. CUNNINGHAM