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Cablegate: Extrancheck: Post Shipment Verification: Victory Wave

VZCZCXYZ0004
RR RUEHWEB

DE RUEHHK #0001/01 0020323
ZNR UUUUU ZZH
R 020323Z JAN 08
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 3773
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS HONG KONG 000001

SIPDIS

USDOC FOR 532/OEA/LHINES/DFARROW
USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR WILLIAM ZARIT
BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS

SIPDIS

E.O. 12958: N/A
TAGS: BMGT BEXP HK ETRD ETTC
SUBJECT: EXTRANCHECK: POST SHIPMENT VERIFICATION: VICTORY WAVE
HOLDINGS

REF: A) USDOC 09765 B) HK 02563 C) HK 03094

1. Unauthorized disclosure of the information provided below is
prohibited by Section 12C of the Export Administration Act.

2. As per reftel A request and at the direction of the Office of
Enforcement Analysis (OEA) of the USDOC Bureau of Industry and
Security (BIS), Export Control Officer Philip Ankel (ECO), conducted
a post shipment verification (PSV) at Victory Wave Holdings, Unit
2401A Park-In Commercial Centre, 56 Dundas Street, Kowloon, Hong
Kong (Victory Wave). The items in question are isolators exported to
Victory Wave on or about September 27, 2007 and collectively valued
at approximately USD 9,600. The items are likely not on the
Commerce Control List (EAR99) and are therefore likely only
controlled to restricted destinations and to restricted
end-users/uses. Mica Microwave of Manteca, California was the
exporter.

3. As further detailed in reftel B, Victory Wave is related to Hong
Kong company Centre Bright. Centre Bright is included in the BIS
Unverified List of companies where the U.S. government has been
unable to complete a PSV or pre-license check (PLC) for reasons
outside of the control of the U.S. government. Victory Wave is
further related to Exodus Microelectronics Company Limited, Echelon
Microsystems Limited and Omniway Technology Limited. In particular,
Hong Kong resident, Wong, Yung Fai is a director of Victory Wave,
Exodus, Echelon and Omniway. As further noted in reftel B, the
registered addresses of Victory Wave, Exodus, Omniway and Echelon
are all locations of SBC International, a business registration
services provider.

4. On November 30, 2007, the ECO, accompanied by Commercial
Assistant Carrie Chan, met with Mr. Wong at the Victory Wave
registered address (which is also one of the offices of SBC
International). The meeting occurred in a small conference room of
SBC. ECO surmises that Mr. Wong does not have an office at this
address but rather uses the services of SBC for corporate
registration purposes and to hold meetings, when a meeting space is
needed. Mr. Wong stated that he did not have a business card to
exchange with the ECO.

5. Mr. Wong stated that Victory Wave is a new company established
in 2007. It is involved in various communications projects. Some
of those projects are in Shanghai. He stated that he has two
partners in this company, both of whom are located in the mainland.
The Hong Kong office operates only as a procurement base for the
projects in the mainland. He stated that some procurement is also
conducted from Shanghai. Mr. Wong further stated that the SBC
premises are his offices and when he is in Hong Kong, he uses these
premises to conduct his business.

6. With respect to this particular shipment, Mr. Wong stated that
Victory Wave procured these items on behalf of a Shenzhen company,
Shenzhen Hongdu Industry Co. Victory Wave's Shanghai partners had
referred that company to him. The items were for use in what he
described as a communication project. Mr. Wong declined to provide
any additional information about the end use.

7. As noted in reftel C, Mainland Chinese entity Hongtu Group is
the holding company for a range of companies with similar names to
Shenzhen Hongdu Industry Co. including Shenzhen Hongtu Hangyang
Technology Co. Ltd. Those companies are involved in a range of
activities including the distribution of hard to find and military
electronic components and ICs.

8. When asked about Centre Bright, Mr. Wong stated that he is aware
of the company and that it is also a sourcing company. He stated
that he has no direct contact with this company. When asked whether
he is familiar with Exodus, Omniway and Echelon, Mr. Wong stated
that he knows nothing about these companies. He stated that Victory
Wave is his only company in Hong Kong. When the ECO presented Mr.
Wong with Hong Kong Company Registry printouts showing that he is
the director of each of these companies, Mr. Wong conceded that he
is the director of these companies. He stated that these companies
are the companies of his friends. He further stated that they are
not related to Centre Bright.

9. When asked to explain why he is the director of several
companies in Hong Kong, Mr. Wong stated that each of the companies
is set up to support different projects with different partners.
When asked to describe those projects, Mr. Wong would only state
that the projects involved system integration and refused to provide
further details.

10. Mr. Wong stated that his mainland partners send customers to
him that he services through the Hong Kong companies. He stated
that Hong Kong has a reputation for quality with mainland Chinese
buyers and he therefore sells product into mainland China through


Hong Kong. He further stated that Victory Wave is the primary
vehicle for sourcing items outside of China. With respect to the
additional companies, Mr. Wong stated that those companies source
items in mainland China for resale into mainland China. He further
stated that those companies never source items from the United
States. Note: In fact, based on information provided by OEA, it is
clear that at least Exodus also sources various components from the
United States.

11. In light of the recent registration and business practices of
Victory Wave, Exodus, Echelon and Omniway, ECO strongly suspects
that these companies have been established to circumvent the listing
of Centre Bright on the BIS Unverified List. ECO recommends that
OEA conduct a thorough review of shipments to these companies as
well as shipments to the addresses of those companies. ECO further
recommends that OEA consider a review of shipments to all of the
Hong Kong addresses of SBC International as ECO suspects that
additional procurement entities may be using SBC addresses as their
business premises (www.sbc.com.hk). ECO also recommends that
Victory Wave, Exodus, Echelon and Omniway be added to the Unverified
List.


Cunningham

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