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Cablegate: Czech Republic: Blue Lantern Pre-License Check On

VZCZCXYZ0019
PP RUEHWEB

DE RUEHPG #0928 2211426
ZNR UUUUU ZZH
P 091426Z AUG 07
FM AMEMBASSY PRAGUE
TO RUEHC/SECSTATE WASHDC PRIORITY 9469
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RHMFIUU/FBI WASHINGTON DC PRIORITY

UNCLAS PRAGUE 000928

SIPDIS

SIPDIS

STATE FOR PM/DTCC - BLUE LANTERN COORDINATOR

E.O. 12958: N/A
TAGS: ETTC LO EZ
SUBJECT: CZECH REPUBLIC: BLUE LANTERN PRE-LICENSE CHECK ON
APPLICATION 050055717

REF: STATE 106760

1. SUMMARY AND COMMENT: Emboffs visited Banzai, Ltd. General
Sales Manager Lukas Trachta at his office August 8 to conduct
a pre-license check on the purchase of M-60 machine gun parts
for the Czech 601st Special Forces Group (601st). Trachta
said his firm is acting as a broker for the 601st, and will
receive the parts from the U.S. supplier and then ship them
to the Czech unit within a few days. DAO confirmed that the
601st had placed the order and will use the M-60 parts
itself. Banzai appears to be a small, 12-employee military
article importer/exporter with limited experience importing
military articles from the United States. From the site
visit, discussion with Trachta and Banzai's prior business
involving USML articles, the company appears to be a reliable
broker for imports of this size. End summary and comment.

2. Emboffs visited Banzai's business office located in a
lower-income residential and commercial district of Prague.
The office is located on the second floor of a large
apartment building, which does not appear to be designed for
storage of military items. The business office did not have
a visible security system, and a number of the workspaces had
large glass windows that faced directly onto a
publicly-accessible walkway. Emboffs noted a number of
military items in the office space, including grenade
launchers, rifles, and pistols. Most of these items appeared
to be demonstration or non-working display models. Trachta
told Emboff that Banzai's warehouses are equipped with all
security features (alarms, locks) required under Czech law,
and noted that one of their warehouses is currently storing
thousands of automatic rifles. The warehouses are not
co-located with Banzai's business office, but Trachta said it
would not be a problem to show the warehouse and security
arrangements to USG representatives, if requested.

3. According to Trachta, Banzai was formed in 1991 as a
limited trading company with two partners, himself and Mr.
Vaclav Siroky. The company currently has ten employees and
deals with three areas of business: export of new arms from
the Czech Republic, import of new arms to the Czech Republic,
and wholesale within the Czech Republic to civilian and state
buyers. The majority of their income and profit comes from
export of surplus military articles, although Trachta noted
that the surplus business is very cyclical and that Banzai
has had some difficult years financially. Within the Czech
Republic, the company distributes arms to 40-50 retailers.
Banzai is an authorized distributor of CZ, Smith & Wesson and
Mossberg arms.

4. Trachta said Banzai's export business began in the Baltic
states, and the company continues to work in Estonia,
Lithuania and Latvia. Their recent customers have been
located in Russia, Slovakia, Hungary, Bulgaria, Georgia and
Khazakstan. Trachta provided Emboffs with a copy of Banzai's
Czech license to operate an arms import/export business,
which listed 129 countries as their territory of operation.
Trachta understands the restrictions on USML articles and he
noted that they have been involved in importing of these
articles in the past. He specifically mentioned an export
deal to Georgia in 2005 which involved Banzai, U.S. firm
General Dynamics, and Office of Defense Cooperation. He
stated that Banzai has the proper firearms license and import
permit for the M-60 parts listed on the license application.

5. Trachta explained Banzai will act as a broker for the
Czech 601st and will receive the machine gun parts from U.S.
Ordnance and then store them in one of their warehouses.
Banzai expects to ship the parts to the 601st two to three
days after receipt. DAO representatives confirmed in a
conversation with 601st that the Czech unit had ordered the
machine gun parts for their end use.
GRABER

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