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

VZCZCXYZ0010
RR RUEHWEB

DE RUEHPG #0726 3251310
ZNR UUUUU ZZH
R 201310Z NOV 08
FM AMEMBASSY PRAGUE
TO RUEHC/SECSTATE WASHDC 0851
INFO RUEKJCS/SECDEF WASHDC

UNCLAS PRAGUE 000726

SENSITIVE
SIPDIS

DEPARTMENT FOR PM/DDTC AND EUR/CE

E.O. 12958: N/A
TAGS: KOMC ETTC EZ
SUBJECT: BLUE LANTERN LEVEL 3: POST-SHIPMENT END-USE CHECK
ON LICENSE NO. 05-050091548

REF: SECSTATE 91448

1.(SBU) Summary and Comment: In response to reftel, Poloff
and PM/DDTC team conducted a site visit at Lom Praha S. P.
(LP) in order to verify its relationship with the Czech
Republic,s Ministry of Defense (MOD) and establishes the
bona fides of this export involving communication and
navigation equipment for the Mi-171 helicopter. On September
9, 2008, the team met with the following LP representatives:
Director of Aircraft Division Miroslav Komarek, Security
Director Dusan Franko, and Modernization Project Manager
Martin Jilek. LP is working to modify Czech Mi-171
helicopters with U.S. parts and avionics in preparation for
their deployment to Afghanistan in 2009. Despite some
possible concerns over the periodic visits of Russian
technical inspectors at the Mi-171 work site (required to
certify the work in order to maintain aircraft
warrantees/certification), the blue lantern team views LP as
a reliable recipient of U.S.-origin defense articles and
technology. Embassy team's site visit confirms the bona fides
of the transaction; LP,s relationship to the Czech
Republic's MOD and establishes LP as a generally reliable
recipient of USML articles. End Summary and Comment.

2.(SBU) LP presented the Embassy team with an end-user
statement provided by the Czech Republic MOD signed by Acting
Director Mgr. Jiri Stanek on 19 February 2008; confirming
that the navigation component parts would be used for testing
on the Czech Air Force Mi-171Sh helicopter. The document
stated further that the goods will remain Czech property and
not be resold or re-transferred. Post sought to determine
LP,s familiarity with the International Traffic in Arms
Regulations (ITAR) and its restrictions on the unauthorized
retransfer and re-export of United States Munitions List
(USML) items. The team stressed in particular the
restrictions regarding the unauthorized third-party transfer
of associated technical data. LP exhibited familiarity with
ITAR regulations and provided assurances against the
unauthorized transfer of the component parts and associated
technical data. Embassy team,s overall impression was that
LP,s staff appeared organized, disciplined and generally
knowledgeable regarding ITAR regulations/restrictions.

3.(SBU) The Blue Lantern team received assurances regarding
the status of Russian technicians who plan to visit LP at
certain pre-approved times, in order to review status of work
on the Mi-171 helicopters. In order for the Czech Air Force
to maintain factory-provided airworthiness certificates
issued by the Mi Helicopter Design Bureau in Russia, the Mi
Design Bureau must certify all modifications made to the
Czech,s Mi-171 helicopter fleet. (Note: The Czechs paid an
annual fee of $8 million for this service. End Note) Given
the potential presence of Russian technicians, the Blue
Lantern team raised concerns that technical data related to
U.S.-origin navigation and communication systems could be
re-transferred to Russia. LP explained that the role of the
Russian technicians would be limited to the installation of
larger systems into the aircraft. LP provided assurances
that Russian entities would not have access to U.S.-origin
technology or technical data.

4.(SBU) LP,s physical location consists of an office
building and a series of warehouses large enough to house
aircraft. Security Director Franko indicated that all USML
items received by LP are stored under lock and key in the
warehouse facilities. Embassy team confirmed their general
security level while performing an inspection of a warehouse
and the Mi-171Sh helicopter in which the navigation test
equipment would be installed. Inside the warehouse the
helicopters were cordoned off by a several-foot high opaque
fence disallowing access to those who would not be working on
the project. Mr. Franko indicated that there would also be a
sign-in roster outside of the warehouse/project entrance
which would be checked frequently ensuring access to
authorized personnel only.
Graber

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