VZCZCXYZ0002
RR RUEHWEB

DE RUEHUL #2441/01 3540352
ZNR UUUUU ZZH
R 190352Z DEC 08
FM AMEMBASSY SEOUL
TO RUEHC/SECSTATE WASHDC 2706
INFO RUCPDOC/USDOC WASHDC 7924
RUEKJCS/SECDEF WASHINGTON DC
RUEPINS/HQ BICE INTEL WASHINGTON DC

UNCLAS SEOUL 002441 
 
SIPDIS 
 
STATE FOR PM/DTCC-BLUE LANTERN COORDINATOR 
 
E.O. 12958: N/A 
TAGS: ETTC KOMC KS
SUBJECT: BLUE LANTERN LEVEL 3: POST-SHIPMENT END-USE CHECK ON 
LICENSE 050108473 
 
REF: STATE 120155 
 
¶1.  Per reftel request, Econoff contacted the Defense Acquisition 
Program Administration (DAPA) by phone to verify the transaction 
involving fiber optic inverters exported by Schott North America 
Inc.  Econoff also conducted a site visit of EO Systems to verify 
the bona fides of the firm. 
 
¶2.  Major Kim Chang-soon at DAPA confirmed to Econoff that DAPA has 
placed an order with EO Systems for 2,060 sets of Night Monocular 
Scope (NMS) and 1,248 sets of Day and Night Sight (DNS). DAPA has 
ordered a total of 3,308 sets from EO Systems.  The purchase order 
was signed on July 22, 2008.  The subject items will be assembled 
into 500 of the 2,060 NMS. Copies of supporting documents will be 
separately sent by email. 
 
¶3.  EO Systems confirmed that the company has received a total of 
479 Image Intensifying Tubes (II Tubes) that contain the US made 
fiber optic inverters.  EO Systems said that each fiber optic 
inverter has been assembled into a single II Tube, except for the 
remaining 21 II Tubes that have not been delivered from Photonis. 
EO Systems reported that until it was contacted by Econoff regarding 
the II Tubes, it was unaware that the tubes contained fiber optics 
from the United States.  EO Systems promptly contacted Photonis and 
confirmed that the II Tubes contain U.S.-fiber optic inverters. 
 
¶4.  EO Systems has completed the delivery of 218 sets of NMS 
integrated with 218 II Tubes to ROK Army and the remaining 261 sets 
of NMS will be delivered to ROK Army by December 26, 2008. The 
outstanding 21 fiber optic inverters will also be delivered to the 
ROK Army once they are received and incorporated into the NMS by EO 
Systems. 
 
¶5.  EO Systems was established in 1979 as Optechs Korea, then 
registered as a DAPA official supplier in 1984 under the name of 
Defense Industrial Corporation.  In 1998 it was renamed as Prominent 
Corporation until 2000, when the company was renamed EO Systems 
Corporation.  It is not unusual for South Korean companies to change 
their names frequently in an attempt to promote a specific corporate 
image. 
 
¶6.  On December 2, 2008 post conducted an on-site visit to EO 
Systems.  Although access to the company was very restricted because 
of the sensitive munitions items it handles, the company granted 
Post full cooperation and access to its warehouses.  Access to the 
EO Systems warehouses is restricted to only EO Systems-designated 
staff.  All components including all USML items were carefully kept 
in separate tightly secured warehouses. Pictures of the EO Systems 
warehouse will be sent separately by email.  A DAPA-dispatched 
inspector is stationed at the EO Systems facilities during 
operations.  The DAPA inspector is responsible for verifying the 
security of all items handled by EO Systems.  For three consecutive 
years beginning in 2006, EO Systems has received an "excellent" 
rating by the ROKG for its handling of USML security measures. 
 
¶7.  Mr. Lee Won-seung, President and CEO of EO Systems spent more 
than 20 years at Gold Star Cable and Fiber Optic Communications, a 
conglomerate in South Korea, until he took his current position at 
EO Systems.  Lee is also vice chairman of Korea Defense Industry 
Association.  Mr. Kim Tae-young, Vice President of EO Systems 
Business and Marketing Division has been with the company for more 
than 20 years. 
 
¶8.  EO Systems is an official supplier of Night Monocular Scope, Day 
and Night Sight, Night Drivers' Viewer that are installed in armored 
vehicles for the Korean Army and Marine Corps under the Ministry of 
National Defense.  EO Systems also produces periscopes for defense 
purposes primarily for the ROK Marine Corps.  Its typical customers 
include the South Korean Marine Corps and Army. 
 
¶9.  EO Systems is fully aware of the USML items restrictions.  EO 
Systems informed Post that five designated staff including Messrs. 
Kim Hong-duk, Purchasing Team Director and Bae Kyu-yong, Purchasing 
Team Manager have received ITAR and EAR training provided by the 
Korea Strategic Trade Institute (KOSTI), a quasi-official agency 
funded by the ROKG to train employees with South Korean companies 
trade in strategic materials.  In the mid-1990s, EO Systems invited 
a U.S. ITAR expert to provide training and guidance to the company 
to ensure the company meets U.S. regulations. In November 2008, the 
EO Systems staff attended a seminar on the U.S. EAR organized by 
KOSTI and received certificates for their participation.  Copies of 
the KOSTI certificates will be sent by email. 
 
¶10.  EO Systems' President Lee raised concerns that delays in the 
U.S. export licensing system have prevented the company from 
expanding its business with U.S. suppliers of the core parts it 
needs, such as the IR module and II tube.  The company has attempted 
to source the core parts from the United States but it has faced 
 
frequent difficulties in receiving on-time shipments of U.S. items 
due to delays in obtaining U.S. export licenses. 
 
STEPHENS