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Cablegate: Goj Response On Blue Lantern Level 3:

VZCZCXYZ0000
RR RUEHWEB

DE RUEHKO #0689/01 0740438
ZNR UUUUU ZZH
R 140438Z MAR 08
FM AMEMBASSY TOKYO
TO SECSTATE WASHDC 2556

UNCLAS TOKYO 000689

SIPDIS

SIPDIS

DEPARTMENT FOR DTCC - BLUE LANTERN COORDINATOR

E.O. 12958: N/A
TAGS: ETTC JA KOMC
SUBJECT: GOJ RESPONSE ON BLUE LANTERN LEVEL 3:
POST-SHIPMENT END-USE CHECK ON LICENSES 050055671,
050040344, 050027799, 050046738

REF: STATE 09478

1. (SBU) Summary: Post was unable to determine definitively
that the end user for the parts in the reftel is the Ministry
of Defense (MOD) because the end user has no inventory.
Trading company officials told us they stock parts for future
contracts to aviod fines on late delivery. Company
executives and MOD officials refused to provide copies of
contracts to verify their commercial relationship. End
Summary.

2. (SBU) Post contacted Japanese Maritime Self Defense Force
(JMSDF) Staff Officer Lt Commander Koshu Nagayama concerning
the Ministry of Defense receipt of SH-60 helicopter parts.
On February 19, Nagayama told us the JMSDF does not have
inventories against which to verify the receipt of the parts
in reftel. As the unit has no inventory, Nagayama contacted
the trading companies and reported back the following
information:

DTC Case: 05002779
Some of the shipment has not been delivered. The delivery is
being coordinated between Mitsubishi Heavy Industry (MHI) and
foreign consignee, Daicel Chemical Industries. JMSDF reports
this is their first purchase via Daicel Chemical. However,
Nagayama believes Daicel has sold to the Japanese Ground Self
Defense Force (JGSDF) and Japan Air Self Defense Force
(JASDF) in the past.

DTC Case: 050040344
The good have not arrived yet. They are scheduled to be
delivered in seven shipments between March 6, 2008 and July
9, 2009. JMSDF reports they have purchased from foreign
consignee Ishikawajima Harima Heavy Industries (IHI) in the
past. The previous purchase was a T-700 engine and its parts.

DTC Case: 050046738
The goods have not arrived yet. MHI ordered FCRS (Flight
Control Reference System) via Mitsubishi Precision on March
29, 2007 with delivery due July 8, 2009.

Site Visits
-----------

2. (SBU) Because JMSDF had no record of their own parts or
of ordered and incoming parts, Post conducted site surveys of
both HMI and Ishikawajima Harima Heavy Industries, Ltd. (IHI)
to determine the movement of helicopter parts with greater
clarity than our MOD contacts were able to provide.

3. (SBU) On February 27, we met with Mitsubishi Heavy
Industries (MHI) Defense Aircraft Manager Nobuhiro Kawahara,
who said he was nervous; no one from the Embassy had ever
visited the company before on a Blue Lantern check. Kawahara
explained the MHI function for these licenses is the assembly
of completed helicopters for delivery to MOD, along with the
delivery of some spare parts. We asked MHI to provide us a
copy of the contract to confirm definitively the end user of
all parts on these licenses, but Kawahara said he would have
to check with MOD for permission. As other companies have
provided copies of contracts, this request would seem
perfunctory. However, on March 11, Kawahara told us, per
MOD's advice, the contracts would not be provided.

4. (SBU) On February 29, we met with IHI executives led by
General Manager Masato Kawaguchi. Kawaguchi explained IHI's
role in this series of cases is to machine the products
provided by U.S.-based companies and provide them to HMI.
That company then builds the SH-60 helicopters for delivery
to MOD. IHI also specializes in testing and refurbishing
engines. The end user for the parts from IHI is HMI. After
HMI receives the parts from IHI, they assemble them and
deliver the final product to MOD. As such, IHI's
relationship is with HMI, not MOD.

5. (SBU) On February 29 in relation to DTC Case 050055671,
Tamagawa Seiki Company Manager Toshimi Kajita told us that
sometimes their company orders parts in advance with no MOD
contract. Some of the advanced ordered parts are stocked in
his company, but not all are listed as "stock," because some
are "defective," so they need to order replacements. For
example, they ordered and received two shipments of 20, a
total of 40 gear bevels P/N 1050201, of which 24 will be used
for the contract with MOD. The remaining parts are simply in
stock. This information was forwarded as an email attachment
(DTC D) to defense trade controls on March 11, subject line:
0500727799: Blue Lantern SH-60 Helicopter Parts.

6. (SBU) Daicel also told us they routinely order parts in
advance without MOD contracts to support them. In attachment


DTC A of the aforementioned email, it shows how items for the
current contract were filled with products obtained via
previous licenses, shipped and held in stock. Note: Japanese
trading companies are most likely stocking USML items because
MOD charges high penalties for any delays in delivery. End
Note.


7. (SBU) Comment: Given MOD does not have an inventory,
Post is unable to make a final determination in this case.

SCHIEFFER

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