RESPONSE TO BLUE LANTERN LEVEL 3 POST-SHIPMENT

UNCLAS TEL AVIV 000729

SENSITIVE
SIPDIS

FOR PM/DTCC - BLUE LANTERN COORDINATOR

E.O. 12958: N/A
TAGS: ETTC KOMCSG IS
SUBJECT: RESPONSE TO BLUE LANTERN LEVEL 3 POST-SHIPMENT
CHECK ON LICENSE 994633

REF: STATE 17025


1. (SBU) Summary: Per reftel, polmiloff and Foreign
Commercial Service (FCS) senior commercial specialist visited
A.D. Consultants, Ltd, on March 18 at its offices in Nes
Ziona, a small city approximately 15 miles south of Tel Aviv.
A.D Consultants President and CEO Gaby Peretz, his deputy
General Manager Max Abitbul, and Peretz's son Ori -- a
project manager for A.D. Consultants -- briefed on the
company's background and business activities. Kobi Fogler
from the Directorate of Security Defense Establishment
(MALMAB) attended on behalf of the Israeli MOD. Peretz was
relatively open regarding his company's business practices in
Africa, and possessed proper supporting documentation for
what appears to be a legitimate transaction with the
Senegalese Air Force. Additional background on A.D.
Consultants via FCS records is included in para 8. End
summary.


2. (SBU) Peretz began with a PowerPoint presentation
regarding A.D. Consultants (AD Con),which he owns and
founded in 1987. He said his family owns 14 different
companies located in Israel, France, Belgium, and Cyprus.
According to Peretz, AD Con specializes in consulting,
marketing supply, delivery, installation, training and
after-sales service in the military, communications,
computerization, and energy fields. He stated that AD Con
deals in military and security equipment under special
authorization from the Defense Export Control Directorate
(API) of the Israeli MOD and the U.S. Directorate of Defense
Trade Controls (Registrant Code K-2024). Peretz claimed AD
Con is the "exclusive worldwide agent" of several military
and security equipment suppliers, dealing with large
government and privately-owned companies thoughout the
world, including Bulgaria, Indonesia Romania, Russia,
Serbia, and Ukraine. Peretz nted that AD Con procures "very
little" in the Unied States, primarily due to cost. He said
most rocurement is made through suppliers in Eastern Euope,
where the prices are cheaper.


3. (SBU) Pretz listed Burkina Faso, Burundi, Cameroon, theRepublic of Central Africa, Chad, Gabon, Niger, Nigria,
Rwanda, and Senegal as his African clients. He added these
countries were not corrupt, and therefore the only ones with
which he would do business. Asked for an example of how his
business works, Peretz explained that he recently supplied
Burkina Faso with mobile multi-launch rocket vehicles, in
which the vehicles were procured in Russia, the rockets and
launchers from Romania, and the communications equipment from
the Czech Republic.


4. (SBU) Turning to reftel transaction with the Senegalese
Air Force, Peretz stated that AD Con operated on behalf of
Senegal. He noted that AD Con has participated in all of the
API's mandated technology transfer conferences, and has
appointed a compliance officer to ensure AD Con conforms to
necessary technology transfer regulations. While a brokering
law is not yet in force in Israel, Peretz stated that AD Con
registered as brokers and applied for a brokering license in
order to conform with U.S. laws. He added that AD Con has
appointed an ITAR expert (Karl W. Abendschein, 1101
Seventeenth Street, N.W., Suite 1100, Washington, D.C.,
20036-4798; tel: 202-293-5555) from Berliner, Corcoran &
Rowe, L.L.P., to represent AD Con on these matters.


5. (SBU) Peretz explained that AD Con procured for Senegal
three AN/ARC 182 (v) Radio sets from Columbia Electronics
International, Inc., in February 2006. The radio sets were
shipped to Senegal in June 2006. Peretz possessed the
purchase order, the invoice, the DSP 83 approved by the
Senegalese Ministry of Foreign Affairs, the export license
with an attached letter from the Directorate of Defense Trade
Controls containing limitations and provisos, and the air
waybill. Peretz also displayed digital photos of the
equipment installed on helicopters; he noted that the
Senegalese installed the equipment. He reported that one of
the sets of radio equipment had malfunctioned, and that AD
Con planned to return the set to Columbia Electronics, but
that it was "not a priority."


6. (SBU) When asked regarding AD Con's secure facilities and
security procedures for handling sensitive USML items, Peretz
stressed that AD Con at no point took possession of the U.S.
equipment. Rather, a local AD Con representative accompanied
a representative of the Senegalese Air Force to the airport

upon arrival of the shipment -- the Senegalese Air Force
representative took direct possession of the shipment, Peretz
said; AD Con acted only as an intermediary.


7. (SBU) Peretz was well aware of restrictions related to
USML items, including the prohibition of unauthorized
re-transfers and re-exports. He described the ITAR as
"complicated, but necessary." He cited two examples in which
AD Con had been offered business but had declined due to
concerns of violating U.S. export regulations. The first
example involved a request from Burkina Faso to procure U.S.
communications gear and 105 recoilless rifles from Libya,
which apparently had been supplied to Libya by the USG at
some point when relations between the two countries were more
amicable. Peretz said he turned the offer down. As a second
example, he noted that he was "close friends" with Mohammed
Nour Abdelkerim, the former Defense Minister of Chad.
Despite the personal relationship, Peretz said AD Con has
decided not to pursue business opportunities with Nour.


8. (SBU) FSC - Tel Aviv has the following information for A.D
Consultants, Ltd., on file following an industry visit by our
Senior Commercial Specialist on behalf of Derco Aerospance,
Inc., in November 2007:

-- AD Con was established in 1987, and registered as a
private limited company on August 2, 1987 under number
51-121613-7. All company shares are owned by Oforid
Holdings; AD Con has approximately 40-50 employees.

-- AD Con is a small service company involved in sales,
project development and turnkey projects in approximately 15
African countries. The projects cover a range of products,
ranging from real estate to power projects, and from military
uniforms, arms, and electronic equipment to naval ships and
helicopters. AD Con is a family business, and does not
represent any foreign firms.

-- AD Con is wholly owned by Oforid Holdings, Ltd., which in
turn is owned in equal shares by Gaby Peretz and his spouse
Ahuva Peretz. Gaby Peretz holds one hundred percent of the
management shares of AD Con. Oforid Holdings, Ltd., further
owns one hundred percent of the shares of Oforid Investments,
Ltd., established in 2003 to invest the family's profits from
their business activities. It also owns ninety percent of
Galint, Ltd., a company established in 1998 to develop
telecom-related projects. In addition, Mr. Peretz operates
two private companies in Belgium and France. These companies
are mainly involved in supplying equipment to African
governments in the framework of offset procurements required
by the French and Belgian governments in their foreign aid
programs.

-- AD Con's owner and CEO Gaby Peretz was born in Morocco,
and came to Israel with his parents at the age of five. In
1987, after a 19-year military career in the Israeli Air
Force (IAF),Mr. Peretz retired as a battalion commander with
the rank of Lt. Colonel. He established A.D. Consultants,
Ltd., with the intention of representing foreign defense
companies in Israel. However, after he was introduced to
Togo leadership through a chance meeting with the incoming
Togo Ambassador to Israel, he realized the potential of
business opportunities in Africa and began to focus his
activities there. AD Con gained the confidence of African
leaders and began to specialize in project development.
Peretz's ability to speak French contributed much to his
activities in Francophone Africa. Peretz is currently the
Honorary Consul of Burundi in Israel. In 2007, AD Con was
active in Togo, Burkina Faso, Gabon, Mali, Senegal, Sierra
Leone, Cameroon, Niger, Chad, Nigeria, Mauritania, the
Republic of Congo, Rwanda, Burundi, and the Democratic
Republic of Congo. The company's activities are
approximately 55 percent defense-related and 45 percent
civilian.

-- AD Con's government contacts -- as well as the leaders of
African countries in which the company is active -- inform it
about upcoming projects and business opportunities. Thus, if
a country desires to buy a certain defense system, AD Con
will be invited to learn the details of the required system
from the decision makers. The company then hires the
services of a consulting company to develop a technical and
commercial proposal, and submits its proposal to the decision
makers. If the proposal is accepted -- and a contract is
signed -- AD Con will then locate major defense manufacturers

in Eastern Europe, Russia, or South Africa, and hire a
subcontractor to manage the project. In many cases, the
contracts will be long-term and include training,
maintenance, and support services.

-- AD Con employs a staff of about ten people in Israel. Mr.
Max Abitboul, a former maintenance squadron commander at the
IAF with 27 years of service in the Israel Defense Forces
(IDF),joined AD Con in September 2004. Abitboul is Peretz's
deputy in the management of the company. Another 30-40
people are on AD Con's payroll in African countries for
maintenance services. The origin of the employees is
dependent on the source of the equipment. For example, if
the equipment is Russian-made, the maintenance staff for the
equipment will most likely be Russian.

-- AD Con occupies 600 square-meter rented office space in a
new commercial building located in Nes Ziona's Science Park.
New Ziona is a small city 15 miles south of Tel Aviv. The
company moved to its current location in September 2007.

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