VZCZCXYZ0004
RR RUEHWEB

DE RUEHPG #0609 2890842
ZNR UUUUU ZZH
R 160842Z OCT 09
FM AMEMBASSY PRAGUE
TO RUEHC/SECSTATE WASHDC 1829
INFO RUEHRL/AMEMBASSY BERLIN 0536
RUEAIIA/CIA WASHDC
RHMFIUU/FBI WASHINGTON DC
RUEKJCS/SECDEF WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS PRAGUE 000609 
 
SENSITIVE 
SIPDIS 
 
PM/DTCC - BLUE LANTERN COORDINATOR 
 
E.O. 12958: N/A 
TAGS: ETTC EZ GM KOMC
SUBJECT: BLUE LANTERN LEVEL 3: POST SHIPMENT END-USE CHECK 
ON LICENSE 050171972 
 
REF: STATE 67206 
 
¶1. (SBU) In response to reftel, POLOFF conducted multiple 
interviews regarding the Czech firm Glomex MS to establish 
the bona fides of the firm in relation to its participation 
in the export of aviation equipment to the Czech Republic. 
In addition to an interview with the President of Glomex MS, 
Stepan Odvody, POLOFF also conducted interviews with 
representatives of the Czech Ministry of Defense and Ministry 
of Industry and Trade per reftel instructions. 
 
¶2.  (SBU) On 21 August 2009, POLOFF met with Stepan Odvody, 
the President of Glomex MS.  Glomex was originally 
established in 1998.  A separate military supply branch was 
created in 2002 and, in August 2008, Glomex MS was created as 
a separate entity from Glomex dealing exclusively with 
defense related materials.  Mr Odvody started the company 
with his partner, Martin Vyhnalek, who currently manages 
Glomex, handling non-defense related transactions. 
 
¶3.  (SBU) Until recently, Glomex MS's sole customer was the 
Czech Ministry of Defense.  This changed when the firm 
recently completed a transaction with the Slovak Ministry of 
Defense.  Glomex MS has no direct relationship with the U.S. 
firm Transaero, but does act as Transaero's representative in 
the Czech Republic.  Glomex MS cooperates with the German 
firm BHV in marketing Transaero's products and all purchases 
of Transaero products go through BHV.  All Transaero products 
are aviation related.  According to Mr. Odvody, BHV purchases 
directly from Transaero and resells to Glomex MS directly and 
without commission.  All parties in such transactions act 
individually.  Any profit is built into the cost of the 
transaction and there are no additional fees or commissions. 
Upon receipt of the products from suppliers or 
subcontractors, Glomex MS maintains possession until final 
transfer to the MOD.  Glomex MS is currently in the process 
of relocating its offices and warehouse.  Both the existing 
and future storage facility have a 24-hour security guard on 
duty as well as a series of four locks with Mr. Odvody being 
only person with the key to the fourth lock.  All items are 
inventoried by serial number.  Mr. Odvody was familiar with 
regulations governing the import of U.S.-origin defense 
articles as well as the restrictions on re-transfer or 
re-export. 
 
¶3.  (SBU) On 28 August 2009, POLOFF met with the director of 
the Ministry of Defense's National Armaments Division, Jiri 
Stanek and members of his staff.  Mr Stanek confirmed the 
order for all defense related articles contained in reftel 
and added that the materials were expected to be received by 
the MOD within the next several days.  According to Mr. 
Stanek, Glomex MS's role in this transaction was to negotiate 
the purchase of aviation breathing equipment.  In accordance 
with Czech law, the MOD put out a public tender for this 
transaction and accepted Glomex MS's bid.  The MOD did not 
pay any fee or commission to Glomex MS and Mr Stanek assumed 
that any profit for Glomex MS was likely derived from costs 
built into the final price of the transaction.  The MOD had 
no direct contact with the German firm BHV but was aware that 
they acted as a subcontractor to Glomex MS and were mostly 
involved in the installation of microphones into the 
breathing system.  The MOD has dealt with Glomex MS on 
multiple occasions in the past and had no reasons to suspect 
that Glomex MS was involved in any illegal dealings or 
engaged in any sort of behavior that would cause the MOD to 
stop doing business with Glomex MS. 
 
 
¶4.  (SBU) On 1 October 2009, POLOFF met with Petr Gilka, the 
Deputy Director of the Licensing Department at the Ministry 
of Industry and Trade and his assistant, Lenka Hrachovocova. 
According to Mr. Gilka, Glomex MS has a five-year 
authorization to act as a broker for the import of defense 
related materials to the Czech Republic.  Mr. Gilka added 
that he was unaware of any problems involving Glomex MS and 
noted that, to his knowledge, Glomex MS did not deal with 
countries prohibited from receiving defense related materials 
in accordance with Czech Republic law 3894 which governs such 
matters. 
Thompson-Jones