Cablegate: Extrancheck: Post-Shipment Verification: Shoghi

VZCZCXYZ0020
RR RUEHWEB

DE RUEHNE #3613/01 2201220
ZNR UUUUU ZZH
R 081220Z AUG 07
FM AMEMBASSY NEW DELHI
TO RUCPDOC/USDOC WASHDC
RUEAHLC/HQ ICE IAO WASHINGTON DC
INFO RUEHC/SECSTATE WASHDC 7404

UNCLAS NEW DELHI 003613

SIPDIS

SIPDIS

USDOC FOR 532/OEA/M. NICKSON-D/KGAINES/JAY HATFIELD
USDOC FOR 3131/USFCS/OIO/ANESA/KREISSL
USDOC FOR 4530/MAC/ANESA/OSA
ICE HQ FOR STRATEGIC INVESTIGATIONS
STATE FOR EB/ESP

E.O. 12958: N/A
TAGS: ETTC ETRD BEXP IN
SUBJECT: EXTRANCHECK: POST-SHIPMENT VERIFICATION: SHOGHI
COMMUNICATION LTD., NEW DELHI

REF: USDOC 05594

1. Unauthorized disclosure of the information provided below is
prohibited by Section 12(c) of the Export Administration Act.

2. Export Control Officer (ECO) Paul Cushman and BIS FSN Prem
Narayan conducted a Post-shipment Verification (PSV) at Shoghi
Communication Ltd. (SCL), New Delhi, on July 26, 2007.

3. BIS requested a PSV at SCL, a private sector company. SCL's
marketing office is located at: 707, Ansal Bhavan, 16 Kasturba
Gandhi Marg, New Delhi 110001, Tel: 91-11-2335-1302, Fax:
91-11-2335-1303, email: shoghi@nde.vsnl.net.in. Website:
www.shoghi.co.in. SCL was listed as the Ultimate Consignee for a
telephonic switching apparatus, Cornet MACX PCU Matrix Switch
consisting of the following: one chassis, two power modules, one
cross-connect card, two controller cards, one CORSCAN software, two
power cables, two Ethernet cables and two documentation manuals.
The exporter was Cornet Technology Inc. (Cornet), Springfield,
Virginia. Export License Number: No License Required (NLR). ECCN:
5A991.

4. ECO and FSN Narayan met with Anant Bindal (Bindal), Director of
Marketing, SCL. Reftel requested BIS New Delhi conduct the PSV at
SCL's manufacturing facility in Shimla, Himachal Pradesh. However,
in response to ECO's letter requesting the PSV at SCL Shimla, Bindal
responded and stated that the equipment was no longer in SCL's
possession. In fact, it had been sold to the Government of India's
Cabinet Secretariat. Therefore, the PSV was conducted at SCL's
marketing office in New Delhi. The Cabinet Secretariat - under the
direct control of the Indian Prime Minister - is responsible for
ensuring smooth coordination between the various GOI ministries and
departments.

5. Bindal stated that they regularly deal with U.S. State Department
export licenses and that he was aware of certain BIS regulations.
Bindal stated this was the first visit to SCL by any USG officials.
He was very cooperative and forthcoming, providing copies of the SCL
Purchase Order, Cornet Invoice, Cornet Beneficiary Certificate
(advising that Cornet would cover the cost of installation,
training, service, and maintenance during the warranty period), and
a letter from SCL informing the Cabinet Secretariat about the
training syllabus and obtaining appropriate security clearance for
the Cornet training team.

6. In addition, Bindal presented the Cabinet Secretariat Purchase
Order issued in favor of SCL for ECO and Narayan to review. ECO
determined that the items listed on the purchase order matched the
products listed in reftel. Bindal declined to provide a copy of the
purchase order because it was a GOI document. ECO also requested
that Bindal provide a copy of the Cabinet Secretariat receipt for
the equipment. Again, he declined. Bindal later received the
necessary permissions and forwarded both documents to BIS New Delhi
via facsimile machine.

7. Bindal stated that since the Cornet matrix switch and its
accessories were not licensed commodities, SCL did not request an
end-use statement from the Cabinet Secretariat. Following delivery
of this equipment, two Cornet engineers traveled from the U.S. to
install it and provide appropriate training. Bindal described the
application of the matrix switch as an upgrade of the Cabinet
Secretariat's fixed-line telephone system. Bindal stated that it

SIPDIS
was integrated into the EPABX (Electronic Private Automatic Branch
Exchange) board, enabling it to convert analog signal to digital
signal. He stated that the EPABX receives all incoming calls as
analog signals. These are converted to digital signals in order to
make the telephone system more efficient and cost-effective.

8. Bindal explained that SCL supplies encryption products and
technology to GOI agencies, primarily military and paramilitary
forces. These products are often customized with the integration of
imported components. Bindal stated that since they supply products
to defense agencies, SCL is monitored and regularly audited by the
Indian Department of Defence Research and Development (DDRD). DDRD
and the Director General of Foreign Trade (DGFT) clear all of SCL's
export orders. Bindal asserted that SCL exercises proper due
diligence and complies with all required procedures in order to
ensure compliance with Indian export control laws. He stated that
SCL is not allowed to export to countries such as North Korea, Cuba,
Sudan, and Iran.

9. Established in 1996, SCL is an engineering and systems
integration company. SCL delivers solutions in the fields of
strategic electronics, encryption technologies (including
code-breaking technology), analysis and surveillance. SCL's product

range includes communication security, communication jamming,
communication intelligence, signals intelligence, systems
engineering, research & development, and software development. Of
their total production, 70 percent is supplied to GOI agencies. The
remaining 30 percent is exported to foreign governments with DDRD
and DGFT oversight. Foreign customers include Malaysia,
Philippines, Indonesia, South Africa, and a few European and Latin
American countries. SCL regularly imports products from the United
States and a few European countries. SCL employs 280 personnel, all
of whom benefit from a profit-sharing plan. SCL is privately owned
and its original founders remain in control of the company. In FY
2006, SCL's sales turnover exceeded 50 million USD.

10. Recommendation: Based on the interview and inspection of
documents provided, SCL business operations appear to be legitimate.
However, because a physical inspection of the listed items could
not be accomplished, the PSV for this transaction remains
inconclusive.
WHITE

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