VZCZCXRO8905
RR RUEHDE
DE RUEHDE #3675/01 1651313
ZNR UUUUU ZZH
R 141313Z JUN 06
FM AMCONSUL DUBAI
TO RUEHC/SECSTATE WASHDC 1430
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEFHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHAD/AMEMBASSY ABU DHABI 1534
RUEHDE/AMCONSUL DUBAI 4395

UNCLAS SECTION 01 OF 02 DUBAI 003675 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EAIR ETTC PGOV PINS SOCI KCRM LI AE
SUBJECT: SHARJAH AIRPORT - IRBIS FOLLOW-UP 
 
REF: A. 05 DUBAI 06284, B. ABU DHABI 00715 
 
1.(SBU) SUMMARY: Poleconoff visited Sharjah Airport in May to 
follow up on UAE assurances to Embassy that a UN designated air 
cargo charter company, Irbis, was shut down in February 2006, 
and found no evidence of continued operation during the visit. 
The company, however, remains listed on the airport's website. 
Poleconoff also met with Sharjah Airport International Free Zone 
(SAIFZ) officials to discuss Irbis, as well as general 
registration procedures. Registering a company in SAIFZ is 
simple and quick, with little scrutiny; however, aviation 
companies now require approval from the UAE aviation 
authorities. End Summary. 
 
 
No Signs of Irbis 
----------------- 
 
2.(SBU) On February 21, 2006, the UAEG notified Embassy that it 
had closed the office of Irbis, a UN designated front company 
for international arms trafficker Vicktor Bout (ref B).  Seeking 
to verify whether the operations were indeed closed, Poleconoff 
visited Sharjah airport's cargo areas and the Sharjah Airport 
International Free Zone (SAIFZ) in early May.  Poleconoff also 
looked for signs of continued operations of another 
UN-designated company, Prilom.  No evidence was found that Irbis 
or Prilom were still operating in Sharjah. Comment: Poleconoff 
has been unable to schedule a meeting with Sharjah airport 
officials until now.  An official visit to the airport is 
planned to follow-up on Irbis. End Comment. 
 
 
3.(SBU) Sharjah airport personnel working in the cargo area said 
that Irbis had changed names to Airbas; however, they didn't 
believe Irbis or Airbas had offices in the Sharjah Airport cargo 
areas. One airport worker said he thought Airbas might have 
moved its office to SAIFZ.  Another worker commented that Airbas 
was a Russian company that had used a number of different names 
prior to Airbas. None of the airport personnel recognized the 
name Prilom. Airbas, Irbis, or Prilom are not listed as 
registered companies on the SAIFZ website 
(http://www.saif-zone.com); however, Sharjah Airport's website 
(http://www.sharjahairport.ae) lists Irbis as a non-scheduled 
airline that flies into Sharjah airport. Comment: Presumably, 
the airport website has not been updated as no other evidence of 
Irbis' continued existence at Sharjah airport was found. End 
Comment. 
 
 
4.(SBU) Poleconoff met with Bassam Salim el-Kheshen, senior 
marketing and sales officer at Sharjah Airport International 
Free Zone (SAIFZ) on May 8.  In response to Poleconoff's 
inquiries about the UN designated companies, El-Kheshen said he 
heard that the UAEG forced one SAIFZ company to close, but 
claimed not to remember the name. He heard that the company had 
been accused of smuggling weapons in West Africa a few years ago 
but knew no other details. El-Kheshen believed the company had 
immediately stopped operating when ordered to close. He did not 
recognize the names Irbis, Airbas, or Prilom. Comment: The 
company el-Kheshen describes is probably Irbis. End Comment. 
 
 
Sharjah Airport International Free Zone 
--------------------------------------- 
 
5.(U) The Sharjah Airport International Free Zone (SAIFZ) 
executive provided an overview of the free zone and its 
operations.  The zone has over 2300 companies and continues to 
expand its facilities.  Initially, it catered to aviation 
related businesses, but the variety of businesses has increased 
and many of the aviation companies have closed. El-Kheshen said 
SAIFZ has the benefit of being close to Dubai without the costs 
of Dubai.  He markets SAIFZ as the "cost effective suburb." 
 
 
Tighter Regulation of Aviation Companies 
---------------------------------------- 
 
6.(SBU) El-Kheshen said that the UAE government was cracking 
down on aviation and aviation service companies.  Now, all 
aviation and aviation service companies are required to be 
certified by the UAE General Civil Aviation Authority in Abu 
Dhabi.  SAIFZ will only register aviation or aviation supply 
companies after they have received full approval from the UAE's 
aviation authorities.  Previously, a charter carrier could set 
 
DUBAI 00003675  002 OF 002 
 
 
up operations in SAIFZ if the company and its aircraft were 
certified and registered outside of the UAE.  A SAIFZ registered 
charter operator is prohibited from transporting passengers and 
cargo to or from Sharjah airport, except when the aircraft is 
under charter to an authorized carrier. 
 
 
7.(U) El-Kheshen commented that Sharjah Airport is Lufthansa's 
largest cargo hub after Frankfurt. The Russian company 
Volga-Dnepr is the largest aviation company in the free zone, 
and it performs maintenance and overhaul on the Antonovs, 
Ilyushins, and Tupolovs used by charter carriers throughout the 
Middle East, Africa, and Central Asia. 
 
 
SAIFZ Registration - Quick and Easy 
----------------------------------- 
 
8.(U) A Free Zone Establishment (FZE), with one principal, or a 
Free Zone Company (FZC), with more than one owner, can normally 
be registered in SAIFZ within 24 hours.  The applicants must 
complete an application, provide a one or two page project 
summary, provide the passports of the owners, and show proof of 
having AED 150,000.  El-Kheshen admitted that an applicant only 
needs to have AED 150,000 in a bank at the time of registration. 
 Branches of UAE or foreign companies are required to submit 
additional documents, e.g., articles of incorporation, when 
applying to open in SAIFZ.  Professionals, such as accountants 
and lawyers, seeking to register must submit proof of their 
qualifications from a recognized authority. 
 
 
Due Diligence - Not A Priority 
------------------------------ 
 
9.(U) El-Kheshen said that SAIFZ relies on the UAE Ministry of 
Interior (MoI) for due diligence.  If MoI rejects the visa 
application of a single owner FZE, the application will be 
rejected. For FZCs or branches of companies that list multiple 
owners, SAIFZ only requests the removal of names rejected by 
MoI. SAIFZ runs no other checks on companies applying to set up 
in the zone. 
 
 
Cost of Doing Business "Cleaning Up" SAIFZ 
------------------------------------------ 
 
10.(SBU) El-Kheshen asserted that the cost of doing business at 
SAIFZ is forcing questionable companies to move to cheaper 
locations. SAIFZ operates off of rents collected and every 
registered company is required to rent space in SAIFZ where the 
minimum annual rent is AED 29,900.  El-Kheshen claimed that the 
requirement to pay rent and registration fees has caused some of 
the companies to leave SAIFZ.  Smaller, less reputable companies 
look to less expensive free zones, particularly the Ras 
al-Khaimah Free Zone (reftel). 
 
 
11.(U) According to El-Kheshen, Indian nationals represent the 
largest number of investors in SAIFZ. They are followed by 
Iranians, GCC nationals, and nationals of the CIS, particularly 
Russia. 
 
 
Comment 
------- 
 
12.(SBU) Designation by the UN and pressure from the USG appears 
to have succeeded in shutting down Irbis at Sharjah Airport. 
Although the cost of doing business at SAIFZ might encourage 
smaller, "fly-by-night" companies to relocate, we doubt this 
would discourage all disreputable companies.  Companies that are 
engaged in trade involving proliferation or smuggling are more 
likely to avoid well-regulated jurisdictions, which does not 
appear to be the case in SAIFZ.BURNS