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Cablegate: Extrancheck: Post-Shipment Verification: Nikko Tech.

VZCZCXYZ0010
RR RUEHWEB

DE RUEHHK #0859/01 1340305
ZNR UUUUU ZZH
R 130305Z MAY 08
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 4844
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS HONG KONG 000859

USDOC FOR 532/OEA/LHINES/SSILVER
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: NIKKO TECH.
INDUSTRIAL LTD, HONG KONG

REF: A) USDOC 02559 B) USDOC 02557 C) USDOC 02562 D) USDOC 02561 E)
USDOC 02560 F) USDOC 02558 G) USDOC 02556

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 series of post-shipment verifications (PSVs) at Nikko Tech.
Industrial Ltd., Hong Kong, Flat 7, 13/F Wah Yiu Ind. Ctr., 30-32 Au
Pui Wan St., Shatin, Hong Kong (Nikko Tech). The items in question
are various high value shipments of industrial lubricating oil
exported to Nikko Tech on various dates from 2005 to 2008. The
exporter classified the items as EAR99. EAR99 items may be exported
or reexported to most destinations and to most end-users/end-uses
worldwide license free. The exporter was Inland Vacuum Industries
of Churchville, New York.

3. A review of Hong Kong Companies Registry reveals that Nikko Tech
was registered in 2004 and has paid-up capital totaling the Hong
Kong equivalent of USD 1. Its directors are Hong Kong Residents Ip,
Shui Shuen and Wong, Fung Lin Sally. The Hong Kong Companies
Registry lists neither individual as a director in any other Hong
Kong company.

4. According to its website (www.nikkotech.com.hk), the company was
founded in 2001 and its primary area of business is in sales of
Printed Circuit Board (PCB) manufacturing equipment and related
parts and components. Most of Nikko Tech's customers are located in
southern China. Nikko Tech also has an affiliate located in
Shenzhen, mainland China. Nikko Tech is the authorized distributor
of March Plasma Systems, Inc. and Sumitomo Heavy Industries, Ltd.

5. On May 8, 2008, ECO, accompanied by Commercial Assistant Carrie
Chan visited the company at the address note above and met with Ms.
Sally F.L. Wong, Marketing Manager. The offices are modest (one
large room split into several sub-offices) and Ms. Wong was the only
person present at the company. Her business card lists a Zhuhai
address and contact details as well. According to Ms. Wong, the
Zhuhai office includes the company's sales and maintenance staff.

6. According to Ms. Wong, Nikko Tech is a trading company that
deals primarily in PCB manufacturing machinery and related parts and
equipment. Its customers are located in mainland China and include
Multek Hk. Ltd., Viasystems Kalex Printed Circuit board Limited,
Oriental Printed Circuits Limited and Elec and Eltek Multilayer PCB
Ltd. According to Ms. Wong, the lubricating oil that is the subject
of the PSVs is used in pumps that are part of PCB manufacturing
machinery. Those machines are quite expensive (USD 125,000 each)
and require lubricating oil of a very specific grade and character.
Nikko Tech sells the underlying machinery and is therefore the
authorized supplier of the lubricating oil for that machinery.
Nikko Tech does not sell any of the lubricating oil outside of Hong
Kong and mainland China. It does not sell the oil to other trading
companies in Hong Kong or mainland China. Other PCB factories may
find other, cheaper, alternatives in mainland China but Nikko Tech
supplies this oil in support of machines it has already sold.

7. When asked about specific shipments, Ms. Wong provided the ECO
with access to the applicable documentation regarding those
shipments as detailed below. The company's records were well
maintained and ECO was able to see the logbook of shipments for the
company. ECO notes that all shipments in that logbook were destined
to the customers noted in paragraph six above. Ms. Wong confirmed
that all shipments for Nikko Tech come first to Nikko Tech's offices
and are subsequently transferred to customers.

8. Shipment referenced in Reftel A: Ms. Wong was unable to locate
this shipment by reference to the date of shipment and items listed
in Reftel A. However, a closer review of the Commercial Invoice
(No. 021049) provided to ECO by OEA reveals that this shipment was
actually sent to Nikko Tech on or about April 11, 2007 not March 17,
2008 as listed in Reftel A. Mr. Wong provided documentation
confirming two deliveries (one on April 25, 2007 and one on May 25,
2007) of Halovac 190 to Viasystems Kalex PCB Limited (Viasystems) in
Hong Kong. The amounts delivered to Viasystems correspond to the
amounts delivered to Nikko Tech.

9. Shipment referenced in Reftel B: According to documentation
provided by OEA, the U.S. exporter shipped eleven kilograms of
Fomblin Y25/6 to Nikko Tech in October 2005. Ms. Wong provided
documentation confirming delivery of ten kilograms of Fomblin Y25/6
to Multek Electronics on November 15, 2005. She further stated that
the larger order placed with the U.S. exporter had been placed on
behalf of more than one buyer. Ms. Wong stated that, given that the
transaction occurred some time ago, she was unable to locate the
delivery document for the remaining one kilogram of Fomblin Y25/6.

ECO also reviewed the underlying purchase order from Multek and
related Hong Kong import clearance document for this shipment.

10. Shipment referenced in Reftel C: Ms. Wong provided
documentation confirming delivery of one five gallon container of
Halovac 190 to Viasystems in Hong Kong on September 29, 2006. The
amounts delivered to Viasystems correspond to the amounts delivered
to Nikko Tech by the U.S. exporter. ECO also reviewed the
underlying purchase order from Viasystems for this shipment and
related Hong Kong import clearance document for this shipment.

11. Shipment referenced in Reftel D: According to documentation
provided by OEA, the U.S. exporter exported five gallons of Fomblin
Y25/6 and 10 kilograms of Halovac 190 to Nikko Tech on or about
August 8, 2007. Ms. Wong provided documentation confirming delivery
of five gallons of Fombcinoil and ten one kilogram units of Halovac
190 oil to Viasystems on August 29, 2007. The ECO also reviewed the
underlying purchase order from Viasystems for this shipment and
related Hong Kong import clearance document. ECO notes that Ms.
Wong stated that the five gallons of Fombcinoil in her delivery note
corresponds to the item entitled Fomblin Y25/6 in the export
documentation from the United States.

12. Shipment referenced in Reftel E: Ms. Wong provided
documentation confirming delivery of ten gallons of Halovac 190 and
five gallons of Fomblin Y25/6 to Viasystems. The amounts delivered
to Viasystems correspond to the amounts delivered to Nikko Tech by
the U.S. exporter. ECO also reviewed the underlying purchase order
from Viasystems for this shipment and related Hong Kong import
clearance document.

13. Shipment referenced in Reftel F: Ms. Wong provided
documentation confirming delivery of 10 gallons of Fomblin Y25/6 oil
to Viasystems on March 20, 2008. The amounts delivered to
Viasystems correspond to the amounts delivered to Nikko Tech by the
U.S. exporter. ECO also reviewed the underlying purchase order from
Viasystems for this shipment and related Hong Kong import clearance
document.

14. Shipment referenced in Reftel G: Ms. Wong provided
documentation confirming delivery of five gallons of Halovac 190 to
Viasystems on February 22, 2008. The amounts delivered to
Viasystems correspond to the amounts delivered to Nikko Tech by the
U.S. exporter. ECO also reviewed the underlying purchase order from
Viasystems for this shipment and related Hong Kong import clearance
document.

15. ECO found Ms. Wong answers to ECO's question to be credible and
she provided virtually all applicable documents for review that were
requested by the ECO. Based on a review of the underlying documents
and interview with Ms. Wong, ECO finds no evidence that the items
that were the subject to these PSVs have been diverted to centrifuge
or other programs of concern in Iran or elsewhere.

Cunningham

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