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Cablegate: Blue Lantern: Post-Shipment End-Use Check On

VZCZCXYZ0012
PP RUEHWEB

DE RUEHEG #2341 3560828
ZNR UUUUU ZZH
P 220828Z DEC 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 4513
INFO RUEAIIA/CIA WASHINGTON DC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUCNFB/FBI WASHINGTON DC PRIORITY

UNCLAS CAIRO 002341

SENSITIVE
SIPDIS

PM/DTCC - BLUE LANTERN

E.O. 12958: N/A
TAGS: PREL ETTC MASS EG
SUBJECT: BLUE LANTERN: POST-SHIPMENT END-USE CHECK ON
LICENSES 050073373 AND 050120640

REF: STATE 119552

1. (SBU) In response to reftel request, Pol Off met with
Mohamed Fathallah of the Fathallah Arms Company at his Cairo
retail store on December 16. Fathallah confirmed that he
received all of the weapons listed on the licenses 050073373
and 050120640 from RSR Group of Winterpark, Florida.
Fathallah did not have the sales records available during the
meeting, but he subsequently provided the names of the buyers
for all the weapons sold (approximately 25 percent of the
total shipment). According to the list he provided, the
weapon bearing serial number BJM3308 was sold to a Colonel
Ahmed Saleh el Sayed Ahmed. Fathallah promised to provide
copies of the monthly reports he sends to the Ministry of
Interior, which lists the details of each sale.

2. (SBU) Fathallah said that he imports between $100,000 and
$120,000 worth of U.S. weapons every year. His only U.S.
supplier is the RSR Group. He only sells weapons to
individuals that have a valid weapons license issued by the
Ministry of Interior and does not sell weapons outside of
Egypt. Fathallah does sell weapons to other dealers, but
could not say if those dealers have clients outside Egypt.
Fathallah operates two retail stores in Alexandria and Cairo.
The Alexandria store has been operated by the Fathallah
family for over 100 years.

3. (SBU) He said he was familiar with U.S. restrictions on
the re-export of weapons, noting that U.S. and Italian
restrictions were the tightest, while German and Turkish
regulations were not as strict. Fathallah said that his
profit margin for U.S. manufactured weapons was high. For
example, he said he purchases a Smith and Wesson 9V gun from
the U.S. dealer for $600, then sells it in Egypt for $4000,
which includes a 40 percent import tax and a 10 percent sales
tax. He said he does not order a larger quantity of U.S.
weapons because the process from ordering to delivery can
take up to one year.

4. (SBU) Post will continue to follow up with Mr. Fathallah
and provide details of each weapon sold once received.
Scobey

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