RESPONSE TO BLUE LANTERN POST-SHIPMENT CHECK ON

UNCLAS TEL AVIV 000985

SIPDIS
SENSITIVE

STATE FOR PM/DTTC - BLUE LANTERN COORDINATOR

E.O. 12958: N/A
TAGS: ETTC KOMC IN IS
SUBJECT: RESPONSE TO BLUE LANTERN POST-SHIPMENT CHECK ON
LICENSE 050109444

REF: STATE 28191


1. (SBU) Summary: Representatives of Scope Metals Group,
Ltd., acknowledged contact by Indian company Sudarrshan
Technical Services regarding the provision of stud nuts to
the Indian Air Force. According to Scope Metals General
Counsel Stanley Frisch and Exports Department Chief Efrat
Benjamin, their company did not have the stud nuts in supply,
and contacted U.S. company ISO Group, Inc., as a possible
foreign intermediate consignee. Frisch and Benjamin said
Scope Metals was subsequently "bypassed" as the U.S. and
Indian companies chose to do business with each other
directly. They explained that Scope Metals Group has not
paid or received any fee or commission regarding the
transfer, and therefore contend that Scope Metals Group
should not appear on the export license. Frisch and Benjamin
confirmed that Scope Metals Group does not maintain any
offices in Bangalore. Polmiloff and Foreign Commercial
Service (FCS) senior commercial specialist visited Scope
Metals Group, Ltd., on April 30. End summary.


2. (SBU) Polmiloff and FCS senior commercial specialist
visited Scope Metals Group's headquarters and
industry/warehouse complex in Bene Ayish (approximately 45
minutes south of Tel Aviv) on April 30. According to Frisch,
Scope Metals Group employs approximately 650 persons -- 400
in Israel and the rest at locations around the world,
including China, the Czech Republic, Romania, and six
branches in the United States. Frisch said the company made
approximately 1.3 billion shekels in sales for 2008, 35
percent of which was derived from business outside Israel (12
percent from exports; 23 percent from foreign subsidiaries).
Frisch said until 1998, Scope Metals Group remained a
relatively small company of approximately 50 employees, but
has grown steadily since. He acknowledged that the company
will likely cut back some due to the recent economic crisis,
but not in a significant fashion.


3. (SBU) Benjamin said Scope Metals Group had been contacted
by Indian company Sudarrshan Technical Services in April 2008
regarding the provision of stud nuts to the Indian Air Force.
Scope Metals Group did not possess the stud nuts in supply,
and therefore contacted U.S. company ISO in May 2008 as a
possible foreign intermediate consignee. Benjamin explained
that Scope Metals sent its purchase order to ISO while
simultaneously pursuing an export license with Sudarrshan
Technical Services in order to expedite the transaction. She
provided as evidence copies of the original purchase order
from Sudarrshan Technical Services to Scope Metals, the
subsequent purchase order from Scope Metals to ISO, and an
unfinished export license from Scope Metals to Sudarrshan
Technical Services. Benjamin said her company did not hear
from either the U.S. or Indian companies for several months,
and subsequently contacted ISO in August 2008 -- wherein
Scope Metals Group learned that ISO had paid Sudarrshan
Technical Services directly for the stud nuts.


4. (SBU) Benjamin and Frisch stated that Scope Metals Group
had not paid or received any fee or commission for the
transaction -- nor did Scope Metals ever retain any physical
possession of the stud nuts. According to Benjamin and
Frisch, Scope Metals contacted Sudarrshan Technical Services
in September 2008 regarding a commission, but has not heard
any further word from the Indian company other than the
promise of "future business" with Scope Metals. Frisch
speculated that Sudarrshan Technical Services received a
"better deal" working directly with ISO, and cut Scope Metals
out of the transaction. He added that Scope Metals will not
pursue the issue of a commission any further with Sudarrshan
Technical Services.


5. (SBU) That said, Frisch and Benjamin contend that Scope
Metals Group should not appear on the export license between
ISO and Sudarrshan Technical Services. They confirmed that
Scope Metals does not maintain any offices in Bangalore, and
speculated that whoever had added Scope Metals to the export
license between ISO and Sudarrshan Technical Services likely
made a mistake. Given the fact that Scope Metals had pursued
an export license with Sudarrshan Technical Services, Frisch
suggested it was plausible such an error might be made given
the paperwork associated with the transaction. He noted that
Scope Metals is well-versed in U.S. regulations governing the

import of U.S.-origin defense articles, including the
restrictions on re-transfer and re-export. As such, Scope
Metals Group would appreciate an explanation why it was
included on the export license, Frisch added.

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