Cablegate: Finmeccanica Seeks Usg Views On Proposed

VZCZCXYZ0000
OO RUEHWEB

DE RUEHRO #1824 1711107
ZNR UUUUU ZZH
O 201107Z JUN 06
FM AMEMBASSY ROME
TO SECSTATE WASHDC IMMEDIATE 5148

UNCLAS ROME 001824

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ETTC ETRD IR IT
SUBJECT: FINMECCANICA SEEKS USG VIEWS ON PROPOSED
INVESTMENT IN IRAN

Sensitive but unclassified. Not for Internet distribution.

1. (U) This is an action request. Please see paragraph 6.

2. (SBU) Summary. On June 15, A/Ecmin met with Simone
Bemporad, Finmeccanica Senior Vice President for Media
Relations and International Affairs, and Camillo Pirozzi,
Head of Public Affairs in Finmeccanica's Institutional
Relations Department. Bemporad and Pirozzi requested the
meeting to inform the USG of Finmeccanica's interest in
bidding on a contract to provide communications equipment to
two city police forces in Iran. The Finmeccanica
representatives said they requested the urgent meeting to
preclude any misunderstanding with the USG -- given the
sensitivities of dealing with Iran at this time -- and to
ensure their business interests in the United States are not
adversely affected by possible Finmeccanica investment in
Iran. The Finmeccanica representatives also gave a breakdown
of current Finmeccanica activities in Iran. End summary.

Finmeccanica Interested in Contract for Police Radios
--------------------------------------------- --------

3. (SBU) Bemporad told A/Ecmin Finmeccanica subsidiary Selex
Communications is interested in bidding on a contract to
provide secure communications equipment to the city police
forces of Isfahan and Mashhad, Iran. The contract, worth
approximately 6.5 million euros (about USD 8.2 million), is
being tendered through the Iranian Ministry of the Interior.
Bids on the contract must be received by June 19. Bemporad
noted that it is Finmeccanica policy seek USG approval before
pursuing investments in Iran or other states of concern.

4. (SBU) Pirozzi said the contract Finmeccanica/Selex wants
to bid on is for the provision of two terrestrial trunked
radio (TETRA) systems for secure communications, and noted
that Selex already provides similar technology to the
Ministry of Interior in Tehran, oil companies, and civil
authorities under contracts entered into prior to
Finmeccanica's 2002 purchase of Selex. (Note. Prior to
2002, Selex was owned by BAE and was named Marconi. End
note.) To the best of Finmeccanica's knowledge, the
equipment involved has no defense-related purpose and is
intended solely for police communications. In a subsequent
e-mail, Pirozzi confirmed that Italian law does not require
an export license for the export of TETRA radio systems and
that "the TETRA system is not 'dual use' technology, nor
included in the ammunition list. Therefore, the export is
not subject to any license or restriction." During the
meeting, Pirozzi noted other European companies are competing
for this contract.

5. (SBU) Given the June 19 deadline, Bemporad said
Finmeccanica is prepared to tender a bid on the contract, if
the bid is non-binding and they can back out of a commitment,
should the USG disapprove of the venture. If the Iranian
tender requires a binding commitment, Finmeccanica is willing
to drop out of the competition. Bemporad emphasized that
Finmeccanica recognizes the tremendous value of its business
relationship with the USG and does not want to jeopardize it
through activities in Iran. If the USG disapproves of
Finmeccanica pursuing the TETRA radio contracts, Finmeccanica
will not pursue it.

6. (SBU) Action requested: Embassy Rome requests guidance
for Finmeccanica regarding the provision of "secure" TETRA
radio systems to city police forces in Isfahan and Mashhad
Iran, through a contract being tendered by the Iranian
Ministry of the Interior. We request as speedy a reply as
possible to provide Finmeccanica with a USG position in the
spirit of cooperation with which they approached us on the
matter. End action requested.

Current Finmeccanica Activities in Iran
---------------------------------------

7. (SBU) Bemporad and Pirozzi said Finmeccanica currently
has two contracts in Iran. The first is to provide
conventional energy turbines to an unnamed Iranian power
company. This contract is worth approximately 300 million
euros and is in its final stages. In the second contract,
Finmeccanica subsidiary Fata Engineering provides engineering
services related to the operation of an aluminum plant. This
contract is also worth about 300 million euros. Both
Bemporad and Pirozzi emphasized that Finmeccanica and its
subsidiaries are not engaged in any contracts related to
Iranian military activities.
SPOGLI

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