This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 PARIS 002722 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR PM/DTCC - BLUE LANTERN COORDINATOR 
 
E.O. 12958:  N/A 
TAGS: ETTC KOMC FR
SUBJECT:  FRANCE: BLUE LANTERN LEVEL 1: LICENSE NOS. 883933, 
901272, AND 915708 END-USE CHECK ON MINIATURE INTEGRATED GPS/INS 
SYSTEMS DELIVERY TO FRENCH FIRM "M.C.E." 
 
REF: (A) 05 STATE 45595 
 
     (B) 05 PARIS 242 
     (C) 04 STATE 155368 
     (D) various Belon/Dade emails July-November 2004 
 
¶1. (SBU) As requested in ref A, post provides the following 
overall review as documentation concerning MCE's behavior in the 
Systron Donner C-MIGITS export of integrated robotic systems. 
Much of this information has already been sent to PM/DTCC in e- 
mail format.  PM/DTCC should note that following coordination at 
post between Blue Lantern Coordinator and ICE agent in November 
2004, an ICE/Paris case file was opened (file number PA-03-TV-05- 
PA-0001 Blue Lantern License Check Case) and ICE/Paris has since 
been in contact with French Customs, which is actively 
investigating the case.  (See also para 19 below.)  With respect 
to the Blue Lantern license check, this report should serve as a 
final reporting cable on the history of this Blue Lantern case, 
as was suggested ref A. 
 
¶2. (SBU) Post has been in contact with French firm "MCE" on 
numerous occasions, as was mentioned in ref B.  Company 
executives were courteous, but generally uncooperative in 
providing details requested and refused to arrange any site 
visit to view the miniature integrated GPS/INS systems in 
question.  Following is a chronological description of our 
contacts with MCE company executives: 
 
¶3. (SBU) Following receipt of ref C on July 16, 2004, and as 
reported ref D, acting Blue Lantern action officer contacted the 
company to be told that the units in question were still the 
property of MCE, but were currently in the immediate possession 
of clients for testing and so were not available for viewing at 
MCE facilities.  EmbOff spoke by phone with MCE manager Albert 
Charie in an effort to arrange a quick visit to the MCE company 
site, which is about four hours south of Paris, near Bordeaux. 
Charie said that three sets of three units each were used in 
each of the systems that were with clients for testing (i.e. 
nine units out for testing in three systems).  The tenth unit 
was broken and was to be returned to BEI Systron, the U.S. 
supplier, for repair "within the next few days."  He further 
said that of the three systems that were with clients, two of 
the clients were in France and one was in Spain with a French 
company.  When EmbOff asked for the names of these client 
companies testing the systems, Charie politely declined saying 
that he had been "burned" in the past, notably by U.S. 
companies, by sharing his client list and having his clients 
stolen from him.  When asked why he had allowed one of the units 
to be taken to Spain, Charie said that he sends them for trials 
only to clients within the European Union.  Being the beginning 
of summer vacation season in France, Charie advised that he 
would be away for the following two weeks, but follow-up 
questions could be addressed to another company representative. 
 
¶4. (SBU) On July 22, 2004, PM/DTCC requested by e-mail that post 
try to get the names of those three clients, "either from him 
(Charie) directly or wait until he comes back from vacation." 
PM/DTCC explained that the potential diversion issue concerned a 
non-European country and they were relieved to learn that the 
units were (reportedly) still in Europe.  However, PM/DTCC 
further informed post that Charie's claim that he could not 
reveal his client list for fear of losing to a competitor was 
not applicable here, as he would be sharing the information with 
the USG, which cannot take privileged business information from 
one firm and pass it to another. 
 
¶5. (SBU) In mid-August 2004, post Blue Lantern action officer 
spoke by phone to Mr. Charie again.  He again resisted giving 
the names and addresses of his clients, where the equipment was 
still being held for testing.  Emboff tried to assure him that 
the USG would not share sensitive business information -- 
including client names -- obtained from one company with any 
other company, but he still refused.  Charie was worried that 
the USG would tell his supplier, BEI Systron, the names of his 
clients and they might attempt to cut him out of the business to 
deal directly with his clients. 
 
¶6. (SBU) At this point, Charie admitted that he was attempting 
to resell the equipment, but he assured Emboff that he would not 
resell to anyone on the USG list of "prohibited countries", 
which he said he had gotten from the internet.  He said that he 
was talking with only one potential buyer outside of Europe. 
Responding that it was unclear which list he meant, Emboff 
emphasized that such verbal assurances were not good enough. 
Emboff reminded Charie that he had signed an export license, 
which clearly stated (1) non-transfer was a condition of the 
sale and (2) approved end-use was not resale but rather research 
and development by MCE.  Charie then said that it was always his 
intent to resell the equipment and that he had never hid that 
fact.  Emboff offered to make inquiries to Washington to ask 
what was the proper procedure for requesting permission to 
resell these controlled items. 
 
¶7. (SBU) In the meantime, in lieu of visiting MCE's clients to 
view the equipment, Emboff suggested -- and Charie grudgingly 
agreed -- that MCE collect all of the equipment back at the MCE 
facility so that Emboff could make a site visit to view the 
items there.  Like many French firms, MCE was closed for the 
entire month of August, but Charie implied that a site visit 
could be arranged within a month or so.  Emboff promised to get 
back to MCE in early September 2004 with information on the 
procedure to request resale permission and/or change of intended 
end-use and to schedule a site visit. 
 
¶8. (U) In late August, PM/DTCC requested by e-mail that Emboff 
arrange to view all ten BEI Systron Donner items back at the MCE 
plant in September.  PM/DTCC explained that it was not uncommon 
for foreign parties to "change-up", and do something different 
with the U.S.-licensed goods, once they have arrived in country, 
and were incorporated into another defense item or -- as in the 
MCE case -- into a quasi-defense robotic item.  This is not a 
violation of USG rules and regulations, unless they retransfer 
the item without informing the USG of the change of ownership. 
If MCE were to propose a third party sale, it must wait for a 
written decision by return correspondence from the USG. 
 
¶9. (SBU) On September 14, EmbOff again spoke with Mr. Charie to 
explain procedures for retransfer requests as detailed by 
PM/DTCC.  Emboff made the call believing that her side of the 
bargain was to find and relay this information, while his was to 
facilitate a site visit to view all ten miniature integrated 
GPS/INS systems back at the MCE facility, as agreed earlier. 
However, at this point, Charie said that he did not think it 
would be possible for an Embassy representative to view the 
equipment at the MCE site, as the equipment was still with 
clients.  He still refused to give out the names or addresses of 
those clients with whom he was actively negotiating the 
potential resale of the equipment.  Charie claimed that all ten 
systems were in France, but with various clients for testing and 
evaluation. 
 
¶10. (SBU) Charie then explained in general terms the status of 
the ten systems:  One was destroyed by a client in transit, when 
a truck that was carrying it allegedly ran off a cliff in 
central France.  He considered trying to have it repaired, but 
the client said that it was too badly damaged.  Emboff warned 
that U.S. officials would view the disappearance of one of the 
units as suspicious, noting that, without proof, it was 
difficult to be sure the unit was not in the hands of a country 
of concern.  In response, Charie said that he would try to 
retrieve the damaged system.  The other nine systems were 
integrated (three each) into three MCE systems, two of which 
will likely be resold to clients outside of France (he would not 
say to which countries) and he is negotiating with the French 
Army for purchase of the third.  (Note:  At one point, Charie 
used the past tense, as if two of the units had already been 
"sold", but then he back-tracked and said "will likely be sold" 
after Emboff told him that reselling was illegal without USG 
permission.  End note.) 
 
¶11. (SBU) Emboff explained to Charie at this point that he must 
get written approval from the USG before any units can legally 
be resold and gave him the website address and ITAR Section 
123.9(c) reference.  Charie seemed to be in a rush to resell the 
units and gave Emboff the sense that he would perhaps not wait 
for a license review process that he felt would take well over a 
month.  Emboff suspected that he may have already sold two of 
the robotic units with three BEI Systron systems each and 
immediately reported her suspicions to PM/DTCC.  Charie 
mentioned that he wrote to the USG in 2003 asking the general 
question if these units could be resold and still had not heard 
back.  Emboff asked for a copy of that letter, in order to 
expedite/track a response.  Charie promised to fax it, but he 
has never produced the letter.  Since Charie was becoming 
increasingly uncooperative, Emboff suggested to PM/DTCC the 
possibility of raising the case with GOF officials and gaining 
their trust and cooperation by sharing as many details as 
possible about the case. 
 
¶12. (SBU) A short time later, EmbOff received a phone message 
from Charie's Paris-based business associate, Mr. Rouvet, who 
spoke English and offered to be the primary interlocutor for MCE 
with respect to procedural steps to obtain USG agreement for 
resale of the equipment.  Emboff emailed Rouvet detailed 
information about applicable USG laws and procedures, including 
citations from ITAR Section 123.9(c) which delineated how to 
request USG permission to retransfer licensed items.  In the 
meantime, PM/DTCC asked EmbOff to wait before contacting the GOF 
until the bureau could produce talking points. 
 
¶13. (SBU) On October 7, 2004, after confirming that no 
retransfer request had been received at PM/DTCC, Emboff called 
MCE's intermediary in Paris.  Mr. Rouvet explained that Mr. 
Charie was on vacation in Portugal, but before Charie had left 
he had told Rouvet that he would be sending the retransfer 
paperwork.  When Emboff told him that Washington still had not 
received anything, Rouvet put in a call to Charie's secretary, 
who confirmed that nothing had been sent out.  At that point, 
Rouvet promised to urge Charie to send in the required 
paperwork.  Emboff also raised the issue of the long-overdue 
site visit.  Rouvet said that he had spoken to Charie about our 
request to view the items.  He repeated Charie's concern about 
revealing his client list and said it would be impossible or 
nearly impossible for an Embassy official to view the items, 
since they would have to be "repatriated" to MCE.  Rouvet's 
choice of words left considerable room for the possibility that 
the items were no longer in France.  However, he refused to say 
where they were, due to Charie's oft-repeated concerns. 
 
¶14. (SBU) Emboff contacted PM/DTCC in early November 2004 to ask 
if any formal request had been received from MCE.  PM/DTCC found 
that MCE still had not submitted any paperwork as of November 4. 
PM/DTCC suggested by e-mail that post approach the GOF to ask 
whether there had been any export record from MCE for any 
integrated robotic systems that they allegedly manufacture. 
PM/DTCC also noted, however, that such integrated robotic 
systems may not require licenses for export from France. 
 
¶15. (SBU) In mid-November 2004, per PM/DTCC request, post Blue 
Lantern action officer gave details of the case to post ICE 
representative, who contacted French customs to attempt to track 
any such shipments from France. 
 
¶16. (U) In December 2004, Emboff received a letter from MCE 
company manager Albert Charie, which was transmitted to PM/DTCC 
by fax and translated in ref B. 
 
¶17. (U) On January 26, 2005, Mr. Charie called post Blue Lantern 
action officer to ask if his letter had been received.  She 
confirmed that it had and told him that his letter was referred 
to PM/DTCC officials in Washington, whom he could contact 
directly. 
 
¶18. (SBU) Since January 2005 and absent further PM/DTCC 
requests, post has had no further contact with Mr. Charie, Mr. 
Rouvet, or any other MCE official. 
 
¶19. (SBU) On April 14, 2005, ICE/Paris agent spoke with a French 
customs agent to inquire about the case.  French customs 
confirmed that they have an active "global" investigation of MCE 
on-going.  After their initial investigation into possible 
export of integrated and/or robotic systems by MCE revealed 
evidence of fraud, French customs expanded the scope of their 
investigation into the company's business.  Their investigation 
is broad (they used the term "global" which implied that they 
are looking at all MCE activities) and on-going.  ICE/Paris has 
informed ICE headquarters in Washington of the case.  However, 
ICE/Paris requests that Washington agencies note that a case 
file (number PA-03-TV-05-PA-0001) has already been opened and a 
formal referral to DHS/ICS, as suggested in ref A, would be 
redundant. 
 
Leach