Cablegate: Blue Lantern Level 3: Post-Shipment End-Use Check for On

VZCZCXRO9739
RR RUEHNZ
DE RUEHWL #0291 2750426
ZNR UUUUU ZZH
R 020426Z OCT 09
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 0159
INFO RUEHNZ/AMCONSUL AUCKLAND 0039

UNCLAS WELLINGTON 000291

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ETTC KOMC NZ
SUBJECT: BLUE LANTERN LEVEL 3: POST-SHIPMENT END-USE CHECK FOR ON
LICENSES 050130278 AND 050181912

REF: STATE 85078

1. (SBU) In response to reftel, Econoff met with Outdoor Brands
Managing Director Andy Mercer on September 28 to check the bona
fides of the company and its annual sales. The company is a
legally registered company in New Zealand and has the necessary New
Zealand permits to legally import and sell firearms. Econoff
witnessed a current business license, valid Notice of Importation
of Firearms/Restricted Weapons/Parts issued by the New Zealand
Police (Permit Number LVSC/9910), and valid permit to sell firearms
in New Zealand (Dealer License T1547932, issued 17 October, 2008).

2. (SBU) The company was established in September 2008, and the
main shareholder and director is Andy Mercer (age 42), who is a
citizen of New Zealand. The company has 3 employees, one of which
is Mercer's wife. According to Mercer, the company is a wholesaler
of sporting goods to approximately 120 sporting goods shops located
throughout New Zealand. It does not sell to any companies outside
of New Zealand. The company imports sporting goods including
firearms and spare parts, ammunition, clothing and equipment from
several different countries, including China, and sells them
throughout New Zealand on a wholesale basis only. Most of the end
users are located in rural areas of New Zealand. Mercer said
that, according to New Zealand law, he checks the firearms sales
licenses and business licenses for each of the retail outlets that
purchase his products. According to Mercer, the company's annual
sales of U.S.-origin firearms, which accounts for the bulk of the
business, totals NZD 2.5 million (approximately USD 1.75 million).

3. (SBU) Mercer confirmed that he fully understood the regulations
governing the import of U.S.-origin defense articles, including
restrictions on re-transfer or re-export. To the best of Mercer's
knowledge, no firearms that were imported through his company have
been re-exported.

4. (SBU) Outdoor Brands, located at 6 Botha Road in Auckland, is
situated in a commercial/industrial area in the suburban area of
Penrose. It is in an unmarked building, which Mercer explained is
for security purposes. The imported firearms are stored on-site
in a locked shipping container, which is inside a concrete
building. The building has iron-barred windows and reinforced
locks. The building also has an alarm system that is monitored
off-site by a security company. Econoff personally witnessed the
aforementioned security measures. According to Mercer, Police are
dispatched immediately (because of the sensitive nature of the
warehouse) if alarms are tripped and there is no immediate response
from company employees.

5. (SBU) There was nothing during the meeting or tour of the
facility that would lead us to question the reliability of Outdoor
Brands. Andy Mercer and his employees were very open and
cooperative during the visit. It appeared that Outdoor Brands has
taken all prudent measures to secure the firearms. Mercer
explained that although licenses 050130278 and 050181912 are for
relatively large amounts of firearms, the company only imports a
small percentage. He said the biggest issue he faces is the
unavailability of firearms he would like to purchase from the U.S.
He showed one recent order in which only 36 of the 746 ordered
rifles were available.

6. (SBU) Comment: Hunting is a very popular year-round sport in
New Zealand with no limits on what New Zealand considers "invasive
species" of rabbits, possums, wild pigs, and deer. The peak sales
season for rifles occurs in April, during the fall migratory season
and from October to December during the run-up to Christmas.
Mercer's business model and sales patterns were consistent with
hunting norms in New Zealand.
CLARKE

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