VZCZCXYZ0000
RR RUEHWEB

DE RUEHNE #3148/01 3500839
ZNR UUUUU ZZH
R 150839Z DEC 08
FM AMEMBASSY NEW DELHI
TO RUCPDOC/USDOC WASHDC
RUEAHLC/HQ ICE IAO WASHINGTON DC
INFO RUEHC/SECSTATE WASHDC 4696

UNCLAS NEW DELHI 003148 
 
SIPDIS 
 
USDOC FOR 532/OEA/WILLIS/HOLLAND 
USDOC FOR 532/OEA/NICKSON/SALCIDO 
USDOC FOR 3131/USFCS/OIO/ANESA/KREISSL 
USDOC FOR 4530/MAC/ANESA/OSA 
ICE HQ FOR STRATEGIC INVESTIGATIONS 
STATE FOR EB/ESP 
 
E.O. 12958: N/A 
TAGS: BEXP ETRD ETTC IN
SUBJECT: EXTRANCHECK: POST-SHIPMENT VERIFICATION: ENTERYSYS 
CORPORATION, SECUNDERABAD, INDIA 
 
REF: USDOC 06315 
     USDOC 06316 
 
¶1. Unauthorized disclosure of the information provided below is 
prohibited by Section 12(c) of the Export Administration Act. 
 
¶2. On November 19, 2008, Export Control Officer (ECO) Paul Cushman 
and FSN Shailendra Srivastava conducted a Post-Shipment Verification 
(PSV) at Enterysys Corporation (ENTERYSYS) in Secunderabad. 
 
¶3. BIS requested a PSV at ENTERYSYS, located at Public Sector 
Employee Colony, New Bowenpally, Secunderabad (Suburb of Hyderabad). 
 ENTERYSYS was listed as the ultimate consignee for 2 USB to GPIB 
interface/converters, 100 clock drivers, 50 power amplifiers, 100 
relay drivers, 132 active filters, and 288 low pass filters.  Export 
License: No License Required. 
 
¶4. ECO and FSN Srivastava met with Mr. Shekhar Babu, Director, 
ENTERYSYS (USA).  Initially, Babu resisted scheduling this meeting. 
He explained that he was traveling to California on this date.  When 
pressed, he conceded that his flight was in the evening and a 
meeting would be possible. 
 
¶5. Babu was familiar with BIS regulations.  In August 2008, the BIS 
team conducted six PSVs at ENTERYSYS.  This meeting was again held 
at ENTERYSYS which occupies the ground floor of a dwelling in a 
residential neighborhood. 
 
¶6. Babu claimed that he is a visiting professor at Amrita University 
in Bangalore.  He said he uses the USB to GPIB interface/converters 
when demonstrating the use of various laboratory testing equipment 
to engineering students.  Babu stated that he taught three seminars 
in 2007 but so far, none in 2008.  He was unable to provide any 
documentation establishing his relationship with the university. 
Babu denied that the actual intended end-user was GOI's Solid State 
Physics Laboratory (SSPL) which falls under the Ministry of Defence. 
 He asserted that ENTERYSYS has never done business with SSPL.  Babu 
provided copies of the following documents relating to this 
transaction: Purchase Order, Invoice, and Packing List.  ECO 
physically verified the interface/converter serial numbers as 
122E869 and 122E96D. 
 
¶7. Babu stated that the importation of the clock drivers, power 
amplifiers, relay drivers, active filters and low pass filters was 
made on behalf of GOI's Naval Physical and Oceanographic Laboratory 
(NPOL).  He explained that NPOL required these items for research 
and development purposes (NFI).  The transfer to NPOL in Kochi took 
place in 2006.  Babu provided the following documents supporting 
this transaction: Purchase Order, End-Use Certificate, Customs Duty 
Exemption Certificate, and the Delivery Challan.  When challenged 
about the authenticity of the unsigned End-Use Certificate, Babu 
admitted that he forged it because he had misplaced the original. 
The Delivery Challan was also unsigned. 
 
¶8. During the previous visit, ECO inspected and photographed 20 
square meters of purported "waste material" imported by ENTERYSYS 
from the USA and valued at $200.  In actuality, this material is 
believed to be NICALON ceramic cloth with a value of $15,460. 
NICALON ceramic cloth is controlled by BIS under ECCN: 1C010 and 
therefore, would have required an export license.  On this visit, 
ECO requested permission to remove a small swatch from the bolt. 
Babu hesitated momentarily and then stated that the material had 
been moved to a storage cell in Bangalore.  He explained that he has 
an informal arrangement with a friend and fellow entrepreneur, 
Shammanay Chowdhuri, to store certain items in his storage cell free 
of charge.  In return, Babu allows Chowdhuri to store supplies in 
his storage locker in Secunderabad.  Chowdhuri owns and operates a 
catering business based in Bangalore.  Babu claimed that he moved 
the bolt of fabric on November 16, 2008 because he was short of 
space in Secunderabad.  Babu could not provide the name or address 
of the storage facility.  When asked, Babu stated that Chowdhuri 
would not be able to provide ECO access to the storage cell because 
it is partitioned and Babu has the only key to his portion of the 
cell. 
 
¶9. Established in 2000, ENTERYSYS began as an Indian distributor of 
American products.  It has since evolved into a value-added service 
provider, specializing in project solutions.  A second company named 
ASTER is run out of the ENTERYSYS USA facility in Milpitas, 
California.  It is also owned and operated by Shekar and P.N. Babu. 
During the August meeting, Babu explained to ECO that ASTER focuses 
on products while ENTERYSYS USA focuses on services. 
 
¶10. Recommendation: At the time of this visit, Enterysys Corporation 
 
did not appear to be a reliable recipient of controlled technology. 
Although some of the items on check were physically verified, much 
of the information provided by the company's director was 
nonsensical and his behavior was highly suspicious. 
MULFORD