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Cablegate: Blue Lantern Level 3: Pre-License End-Use Check

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RR RUEHWEB

DE RUEHC #8013 0531524
ZNR UUUUU ZZH
R 221520Z FEB 08
FM SECSTATE WASHDC
TO RUEHLM/AMEMBASSY COLOMBO 0000
INFO RUEAIIA/CIA WASHINGTON DC 0000
RUCPDOC/USDOC WASHINGTON DC 0000
RUEKJCS/SECDEF WASHINGTON DC
RHMCSUU/FBI WASHINGTON DC 0000
RUEPINS/HQ BICE INTEL WASHINGTON DC 0000

UNCLAS STATE 018013

SIPDIS

SIPDIS
COLOMBO FOR BLUE LANTERN POC
COLOMBO FOR ROBERT GABOR
ECON
COLOMBO FOR MICHAEL DETAR
POL

E.O. 12958: N/A
TAGS: ETTC KOMC CE
SUBJECT: BLUE LANTERN LEVEL 3: PRE-LICENSE END-USE CHECK
ON APPLICATIONS 050087594, 050087851, AND 050087858

REF: BLUE LANTERN GUIDEBOOK 2006

1. This is an Action Request. See paragraphs 2-4.

2. The Department's Office of Defense Trade Controls
Compliance (PM/DTCC) requests post's assistance in conducting
a pre-license check on applications 050087594, 050087851, and
050087858 for the export of night vision goggles (NVGs) to
Sri Lanka. Post is requested to complete this Blue Lantern
check within 30 days. Lack of response to a Blue Lantern
check will affect pending and future applications involving
parties to this license.

3. Reason for request: end-users' irregular licensing
history, need to verify end-use, and possible unauthorized
brokering activity. Pursuant to Section 699G(a) of the FY
2008 Foreign Operations Appropriations Act, it is Department
policy to deny licenses for the export of defense articles
and services to Sri Lanka unless it meets the exception in
the statute for maritime and air surveillance and
communications. Post should make appropriate inquiries to
confirm the legitimacy of the proposed transactions and to
verify that they meet the carve-out described above. PM/DTCC
has approved four previous licenses during 2007 for the
export of a total of 124 night vision goggles to Sri Lanka
for maritime and air surveillance. The supporting
documentation for these new, pending applications includes
relatively old and perhaps duplicate purchase orders and
end-use statements. It is unclear how many night vision
goggles Sri Lanka legitimately needs in order to conduct
maritime and air surveillance. In addition to these issues,
foreign intermediate consignee LCW Holdings (PVT) Ltd.
appears to be acting as a broker in these proposed
transactions. However, the company is not registered with
the Department's Directorate of Defense Trade Controls
(PM/DDTC) as a broker of United States Munitions List (USML)
parts, as required by U.S. law. LCW Holdings has appeared on
only four previous license applications (all involving the
Sri Lankan MOD), and its bona fides have never been verified
by a Blue Lantern check.

4. Post should make appropriate inquiries to confirm the
legitimacy of the proposed transaction and to verify that
these proposed transactions meet the carve-out described
above. In addition, post should make appropriate inquiries
to verify the bona fides of LCW Holdings, to determine
whether the company is acting as a broker in this proposed
transaction, and to determine whether the company is aware
that U.S. law requires brokers of USML items to register with
PM/DDTC. The following questions are provided as suggested
guidance:

For the Sri Lanka Navy/Air Force:

--Did you order from LCW Holdings the exact type and quantity
of items listed on these applications?

--For what end-use will the night vision goggles (NVGs) be
used?

--How many NVGs does the Sri Lanka Navy/Air Force need in
order to conduct maritime/air surveillance?

--Has the Sri Lanka Navy placed five different orders for
M963 NVGs during the last half year (four orders for 50 NVGs
and one order for 20 NVGs)? If so, why were separate orders
placed instead of one larger order? Is this common practice?

--Is LCW Holdings an official supplier/contractor for the Sri
Lankan MOD? Does the Sri Lankan MOD have any other contracts
with the company?

For LCW Holdings:

--Please describe your role in this proposed transaction.

--Does the company have proper supporting documentation,
including a contract from the Sri Lanka Navy/Air Force, for
this proposed transaction?

--Does the company understand the restrictions on United
States Munitions List (USML) items, especially the
prohibition against unauthorized re-transfers and re-exports?
Does the company understand that USML items may be used only
for the specific purpose stated on the export license?

--If serving as a broker in this proposed transaction, are
you aware that U.S. law requires brokers of USML items to
register with the State Department and to obtain prior
authorization for many brokered transactions?

--Will the company be handling or storing the items listed on
the application? If so, does it have secure facilities and
proper accounting and security procedures for handling these
sensitive USML items?

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

--What types of organizations are among its typical customers
and where are the customers located?

5. For background, the following details of the license in
question are provided:

A.

DTC Case: 050087594

QUANTITY/COMMODITY:

5 M949 Gen III Aviators Night Vision Goggles with
standard accessories and test data sheets - FOM less than 1250

License Value: USD 55,000.00

SELLER:

Nightline, Inc.
10705 SW 104 St
Miami, FL 33176
Company contact: Cris Bartolomeo, tel. 423-727-5900

FOREIGN INTERMEDIATE CONSIGNEE:

LCW Holdings (Pvt) Ltd.
108B Maya Avenue
Colombo 06
Sri Lanka
Tel.: 0094 11 2597062
Fax: 0094 112597061
E-mail: lcwek@sltnet.lk
(COMMENT: According to the license application, the company
is placing the order with Nightline. They will not receive
the goods. Items will ship directly to end user. END
COMMENT.)

FOREIGN CONSIGNEE:

Commander of Sri Lanka Air Force
Air Force Headquarters Chitthapalam A Gardiner Mawatha
Colombo 02
Sri Lanka

FOREIGN END-USER:

Same as Foreign Consignee

PURPOSE:

To support and enhance air surveillance of the Sri Lankan Air
Force

B.

DTC Case: 050087851

QUANTITY/COMMODITY:

50 M963 Gen III Single Tube Night Vision Goggle AN/PVS-7B
with standard accessories and test data sheets - FOM not to
exceed 1250

License Value: USD 136,750.00

SELLER:

Nightline, Inc.
10705 SW 104 St
Miami, FL 33176
Company contact: Cris Bartolomeo, tel. 423-727-5900

FOREIGN INTERMEDIATE CONSIGNEE:

LCW Holdings (Pvt) Ltd.
108B Maya Avenue
Colombo 06
Sri Lanka
Tel.: 0094 11 2597062
Fax: 0094 112597061
E-mail: lcwek@sltnet.lk
(COMMENT: According to the license application, the company
is placing the order with Nightline. Goods will be shipped
directly to end user. END COMMENT.)

FOREIGN CONSIGNEE:

Sri Lanka Commander of the Navy
Naval Headquarters Upper Chatham Street
Colombo 01
Sri Lanka

FOREIGN END-USER:

Same as Foreign Consignee

PURPOSE:

To support and enhance the maritime surveillance capabilities
of Sri Lanka

C.

DTC Case: 050087858

QUANTITY/COMMODITY:

50 M963 Gen III Single Tube Night Vision Goggle AN/PVS-7B
with standard accessories and test data sheets - FOM not to
exceed 1250

License Value: USD 136,750.00

SELLER:

Nightline, Inc.
10705 SW 104 St
Miami, FL 33176
Company contact: Cris Bartolomeo, tel. 423-727-5900

FOREIGN INTERMEDIATE CONSIGNEE:

LCW Holdings (Pvt) Ltd.
108B Maya Avenue
Colombo 06
Sri Lanka
Tel.: 0094 11 2597062
Fax: 0094 112597061
E-mail: lcwek@sltnet.lk
(COMMENT: According to the license application, the company
is placing the order with Nightline. Goods will be shipped
directly to end user. END COMMENT.)

FOREIGN CONSIGNEE:

Sri Lanka Commander of the Navy
Naval Headquarters Upper Chatham Street
Colombo 01
Sri Lanka

FOREIGN END-USER:

Same as Foreign Consignee

PURPOSE:

To support and enhance the maritime surveillance capabilities
of Sri Lanka

6. Submitted in support of the license application were the
following documents (PM/DTCC can fax documentation to post
upon request):

A.

--Nontransfer and Use Certificate (Form DSP-83), signed by
L.C.W. Ekanayake, Managing Director, LCW Holdings, dated 20
Nov 2007; signed by Air Cdr. Tatfw Gunanardana, dated
26/11/2007; and signed by Major General W.P.P. Fernando USP,
psc, Military Liaison Officer, Ministry of Defense, dated
26/12/2007

--End User Certification Form from Sri Lanka Air Force
Headquarters concerning contract/purchase order number
KA-5021 dated 05 October 2007, signed by TLW Dissanayake,
Director Logistics, undated

--Purchase order no. KA-5021 (revised) from LCW Holdings to
Nightline, signed by Lt. Col. L.C.W. Ekanayake, Managing
Director, undated

--Product brochure, including photographs and technical
specifications

B.

--Nontransfer and Use Certificate (Form DSP-83), signed by
L.C.W. Ekanayake, Managing Director, LCW Holdings, dated
27/12/2007; signed by (illegible), dated 04/01/2008; and
signed by Major General W.P.P. Fernando USP, psc, Military
Liaison Officer, Ministry of Defense, dated 10/01/2008

--End User Certification Form from Sri Lanka Navy
Headquarters concerning contract/purchase order number
DPC/1352/07/FP dated 30 November 2007, signed by D. Perera,
Commander (S) SLN, dated 28 December 2007

--Purchase order no. DPC/1352/07/FP from LCW Holdings to
Nightline, signed by Lt. Col. L.C.W. Ekanayake, Managing
Director, undated

--Product brochure, including photographs and technical
specifications

C.

--Nontransfer and Use Certificate (Form DSP-83), signed by
L.C.W. Ekanayake, Managing Director, LCW Holdings, dated 12
April 2007; signed by (illegible), dated 04/01/2008; and
signed by Major General W.P.P. Fernando USP, psc, Military
Liaison Officer, Ministry of Defense, dated 10/01/2008

--End User Certification Form from Sri Lanka Navy
Headquarters concerning contract/purchase order number
DPC/1373/07/FP dated 30 November 2007, signed by D. Perera,
Commander (S) SLN, dated 28 December 2007

--Purchase order no. DPC/1373/07/FP from LCW Holdings to
Nightline, signed by Lt. Col. L.C.W. Ekanayake, Managing
Director, undated

--Product brochure, including photographs and technical
specifications


7. Please slug reply for PM/DTCC - BLUE LANTERN COORDINATOR
and include the words "Blue Lantern" and the case number in
the subject line. POC is Judd Stitziel, PM/DTCC, Phone:
202-663-3455; email: StitzielJD@state.gov; SIPRNET:
StitzielJD@state.sgov.gov. The Blue Lantern Guidebook (ref)
is available as a PDF file in the Bunche Library's Electronic
Library collection on the DOS Intranet:
http://virtuallibrary.state.gov/
BlueLanternGuidebook2006%2520 final .pdf

8. Department is grateful for post's assistance in this
matter.
RICE

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