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Cablegate: Reply to Blue Lantern Post-Shipment Check 050106146

VZCZCXYZ0000
RR RUEHWEB

DE RUEHMD #1028 2931538
ZNR UUUUU ZZH
R 201538Z OCT 09
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1358
INFO RUEHJA/AMEMBASSY JAKARTA 0051

UNCLAS MADRID 001028

SIPDIS

PM/DTCC - BLUE LANTERN COORDINATOR MEREDITH SUNDLOF
STACIE ZERDECKI EUR/WE

E.O. 12958: N/A
TAGS: ETTC KOMC SP ID
SUBJECT: REPLY TO BLUE LANTERN POST-SHIPMENT CHECK 050106146

REF: A. STATE 92584
B. 9/9/09 SUNDLOF-MURRAY FAX
C. 2008 MADRID 408

1. SUMMARY: Post has previously confirmed the bona fides of
Spanish aerospace and defense leader European Aeronautic
Defense and Space (EADS) CASA as a responsible recipient of
United States Munitions List items (ref C). Post contacted
the Spanish Air Force as well as EADS CASA regarding the
post-shipment check requested (ref A). David de Teran, Head
of Export Compliance for EADS CASA, informed Madrid ODC and
Pol-Mil officer October 7 that the cables and cable
assemblies for C-295 aircraft included in license 050106146
were not/not intended for the Spanish Air Force, had
therefore not been received by Spain, and further, remain in
Indonesian Aerospace facilities in Bandung. EADS CASA
questioned whether the cables fall under International
Traffic in Arms Regulations (ITAR - see para 3) but undertook
to inform its Indonesian partners and U.S. suppliers of
related limitations and provisos. EADS CASA will submit a
General Correspondence to the Department in order to modify
the actual end-user once known and seek permission to
re-export the cables to the authorized end user. END SUMMARY.

//Background on the "Unusual Routing"//

2. EADS CASA worked together with Indonesia on the
development and production of the CN-235 aircraft. De Teran
elaborated that EADS CASA had subcontracted a work package
for the C295 to Indonesian Aerospace (the foreign
intermediate consignee listed in reftel A). The work package
was only for C295 aircraft but did not include a specific
end-user of said aircraft. According to de Teran, Indonesian
Aerospace purchased the cables described (ref A) from P&R
Trading, Inc. in 2008 for the fulfillment of the work
package. In doing so, Indonesian Aerospace officials did not
inform EADS CASA that the items ordered were subject to ITAR,
necessitating the submission of a DSP5. The company
nonetheless contacted Fulgencio Fernandez Perez, EADS CASA's
technical representative in Indonesia, asking that he sign
the End-Use Certification (ref B) in March 2008 and
specifying that an end user had to be included. De Teran
held that Fernandez did not know the end-use statement was
for a DSP5 or any other U.S. export license and was
furthermore unaware of the terms, conditions, provisos, and
limitations of the DSP5. Under pressure from Hadi Djumhana
of Indonesian Aerospace to list an end-user, Fernandez
allegedly included the Spanish Air Force (a current customer
of the C295) as a "potential" end-user.

//ITAR Regulations//

3. EADS CASA's lead buyer for this type of cable maintains
that none of its suppliers have ever informed the company
that the items on the license fall under ITAR. De Teran
clarified that EADS CASA does not normally purchase from P&R
Trading, Inc. but has experience with a Texas-based supplier
called Polygon. De Teran planned to contact P&R Trading to
ask why the supplier felt the need to submit a DSP5 at all if
the items included were not subject to ITAR.

//Next Steps//

4. EADS CASA confirms that the cables and cable assemblies
are still in Indonesian Aerospace's facility. De Teran said
EADS had informed Indonesian Aerospace that they were not to
move the cables to other locations, including EADS CASA's
facility, without the prior written approval and notice of
EADS CASA. In response to the confusion occasioned by this
order and the above signature process, EADS CASA has
instituted a policy stating that all end-use statements,
end-user certificates, DSP83s, and any other documents in
support of U.S. export licenses will require the signature of
the Head of Procurement or Head of Program as well as de
Teran's signature as head of Export Compliance. In the case
of signature of a TAA, de Teran said EADS would enforce the
same internal control procedures. De Teran said EADS CASA
would plan to submit a General Correspondence to the State
Department (presumably via DS-6004) in order to modify the
end-user listed on the DSP5, once a concrete end-user is
known. Once EADS receives the Department's eventual
approval, EADS will retrieve the cables from Indonesian
Aerospace and re-export same to the end-user authorized by
the State Department.
CHACON

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