Cablegate: Blue Lantern Broker Inquiry -- Case No. K-2400

VZCZCXYZ0802
OO RUEHWEB

DE RUEHTV #2202/01 2800801
ZNR UUUUU ZZH
O 070801Z OCT 09
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3707
INFO RUCPDOC/USDOC WASHINGTON DC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUCNFB/FBI WASHDC PRIORITY
RUETIAA/DIRNSA FORT GEORGE G MEADE MD PRIORITY
RUEAIIA/CIA WASHDC PRIORITY

UNCLAS TEL AVIV 002202

SIPDIS
SENSITIVE

STATE FOR PM/DTTC

E.O. 12958: N/A
TAGS: ETTC KOMC IS
SUBJECT: BLUE LANTERN BROKER INQUIRY -- CASE NO. K-2400

REF: STATE 100105

1. (SBU) Summary: FMS Aerospace is a two-person intermediary
in the field of aerospace and defense favorably known to
Post. According to owner Tal Barak, FMS Aerospace has no
interest in handling nor possesses the facilities to store
U.S. Munitions List (USML) controlled items. Barak
acknowledged limited knowledge of U.S. export control
regulations, no contact with the MOD Defense Export Control
Directorate, and little interest in pursuing business
ventures requiring export licenses. Barak did not understand
why a principal -- L3 Communications -- requested FMS
Aerospace obtain a U.S. brokering license. He acknowledged
payment difficulties with the license application, and had
all but abandoned the application until contacted by emboffs.
Barak was willing to resume the application process via
alternate payment methods, but has several additional
questions regarding his application. End summary.

2. (SBU) Per reftel, Polmiloff and FSC senior commercial
specialist met with Mr. Tal Barak, owner of FMS Aerospace
LTD, at his offices located at 12 Kehilat Venezia Street, Tel
Aviv on October 6. Barak's FMS Aerospace LTD is favorably
known to Embassy Tel Aviv's Commercial Section; Post does not
possess any information of criminal or derogatory background
regarding the company. Barak said he formed FMS Aerospace in
2002 after several years working as an independent
consultant. According to Barak, FMS Aerospace currently has
two employees -- including himself -- who rely exclusively on
their electronics expertise resulting from university and
military service.

3. (SBU) Barak said that FMS Aerospace deals exclusively as
an intermediary in the field of aerospace and defense with
U.S. or Western European principals -- "not from Eastern
Europe or Russia," he added. He explained that 40 percent of
FMS Aerospace's business derived from Israel Aerospace
Industries' business jet division, which has since been
canceled out following the recent economic downturn. Barak
said FMS Aerospace deals exclusively with commercial aspects
of any business venture, and has no interest in handling or
storing controlled defense items. He noted that FMS
Aerospace possesses no secure facilities to store such items;
as an intermediary, FMS Aerospace simply facilitates contact
between suppliers and buyers.

4. (SBU) Barak claimed little knowledge of U.S. defense
export control regulations or restrictions involving USML
controlled items. He noted that one of his principals -- L3
Communications -- had requested he obtain a U.S. brokering
license. Barak said he has had no contact with the MOD's
Defense Export Control Directorate, nor has he attended any
training seminars on defense export control regulations
sponsored by the MOD. Barak said that he has applied for
export control licenses in the past, but only encounters one
or two cases per year requiring export licenses.

5. (SBU) Barak acknowledged that it was not clear to him why
L3 Communications had asked him to obtain a brokering
license; he was not aware, for example, that his company
could appear on export licenses as an intermediary, although
he claimed to have obtained export licenses in the past for
tactical radio equipment. Barak stated categorically that he
would just assume conduct business deals that did not require
export licenses.

6. (SBU) Barak was surprised to hear from the embassy
regarding his brokering license; he said he had "all but
given up" the application process after experiencing payment
difficulties. He provided copies of letters received from
DTTC, noting that the checks he had sent from his Israeli
bank would not clear. Barak did not think to contact his
bank to determine whether it might possess U.S. subsidiaries,
and prior to contact from the embassy, had opted to abandon
his brokering application.

7. (SBU) Following the meeting with emboffs, Barak appeared
willing to contact his bank regarding payment possibilities,
or potentially to utilize an alternate bank with U.S.
subsidiaries. However, he had several questions regarding
FMS Aerospace's brokering application. In an August 16, 2009
letter, DTTC noted FMS Aerospace must pay USD 2,250 by
September 30, 2009. A subsequent letter from DTTC dated
August 26 indicated continued problems clearing FMS
Aerospace's check from an Israeli bank, and requested it pay
USD 1,750 via a U.S. bank by September 30. Barak asked about
the application fee discrepancy, whether this fee was
one-time or annual, and if it was still possible to pursue
the application given the fact that the deadline had already
expired. He stated, however, that he would not likely
continue to pursue the application without a guarantee that
the application would be approved.
CUNNINGHAM

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