VZCZCXYZ0019
OO RUEHWEB

DE RUEHTV #2654/01 3421323
ZNR UUUUU ZZH
O 081323Z DEC 09
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4516
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RUETIAA/DIRNSA FORT GEORGE G MEADE MD PRIORITY
RUCPDOC/USDOC WASHINGTON DC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY

UNCLAS TEL AVIV 002654 
 
SENSITIVE 
SIPDIS 
 
PM/DTCC - BLUE LANTERN COORDINATOR 
 
E.O. 12958: N/A 
TAGS: ETTC KOMC IS
SUBJECT: RESPONSE TO BLUE LANTERN LEVEL 1 PRE-LICENSE 
END-USE CHECK, GENERAL CORRESPONDENCE GC1964-09 
 
REF: STATE 102524 
 
¶1. (SBU)  Summary:  According to owner Zev Kaptowsky, Contact 
International is an GOI-authorized dealer registered with the 
Israel Ministry of Defense and Israel National Police (INP). 
Kaptowsky notes that Contact International answered an INP 
tender for 2,500 M-1 carbines with the provision that the 
carbines be re-sold and exported overseas within 100 days of 
the tender's award.  Kaptowsky claims he contacted Century 
Arms, Inc, and the two companies reached an agreement for the 
carbines.  According to Kaptowsky, however, Century Arms 
insists on paying the INP directly, despite the fact that 
INP's tender is with Contact International.  Kaptowsky was 
reluctant to provide any correspondence with Century Arms, 
and argues that a brokering license is not required for the 
transaction to Century Arms because he purchased the carbines 
directly from the INP.  Emboffs have been unable to verify 
Kaptowsky's account with the INP, despite repeated attempts. 
An INP letter passed on by Kaptowsky claims that the INP had 
the carbines in its possession for the last 30 years, and 
that the carbines were not obtained through a U.S. military 
assistance or sales program.  End summary. 
 
¶2. (SBU) Per reftel, senior FSC commercial specialist met 
with Contact International (Kalia) owner Zev Kaptowsky on 
October 28.  Kaptowsky said Contact International was 
established in 1979; the company's current owners are 
Kaptowsky (99 percent) and his spouse Naama (one percent). 
Kaptowsky said the company maintains offices in a 400 square 
meter warehouse in the Mishor Adumim Industrial Park.  He 
explained that he is a dual U.S.-Israeli citizen born in Los 
Angeles; he moved to Israel in the early 1970's. 
 
¶3. (SBU) Kaptowsky said Contact International's main business 
activity involves buying surplus goods from the Israel 
MOD/IDF and the Israel National Police (INP), and the 
re-selling them overseas.  According to Kaptowsky, 80-90 
percent of the surplus goods he buys are exported to the U.S. 
and EU commercial markets -- mainly to surplus stores. 
Approximately 10 percent of the goods are sold in Israel. 
Kaptowsky said Contact International is an authorized dealer 
registered with the MOD and INP -- as such, Contact receives 
notifications for each surplus goods tender issued by the MOD 
and INP. 
 
¶4. (SBU) According to Kaptowsky, this is the second 
transaction between Contact and Century Arms involving M-1 
carbines tendered out by the INP.  He explained that the 
first deal took place in 2007; at that time, the State 
Department questioned Century Arms regarding the purchase but 
ultimately issued the import license.  Kaptowsky said this 
transaction involves 2,500 carbines -- not 6,000 as reported 
reftel. 
 
¶5. (SBU) Kaptowsky said the INP tender requires the carbines 
to be re-sold and exported to a legitimate party outside of 
Israel within 100 days from the date of the tender award. 
Kaptowsky said Contact International approached Century Arms 
to inquire whether the U.S. company is interested in the 
carbines.  According to Kaptowsky, Century Arms confirmed its 
interest and the two companies reached a sales agreement. 
Kaptowsky was reluctant to present any correspondence between 
his company and Century Arms; he noted that his Century Arms 
points of contact are Brian and Michael Sucher. 
 
¶6. (SBU) According to Kaptowsky, Century Arms insists on 
transferring the total amount payable directly to an INP bank 
account -- rather than paying Contact International and 
leaving it to the Israeli company to transfer funds to the 
INP.  Kaptowsky said that according to the agreement between 
Contact International and Century Arms, the U.S. company will 
transfer the entire amount of the purchase to the INP, and 
transfer the "balance of payment" due to Contact 
International directly to the company.  As such, INP only has 
a contract with Contact International, Kaptowsky explained. 
 
¶7. (SBU) Kaptowsky said the MOD's Directorate for Defense 
Exports will not grant an export license to Contact 
International unless Contact can produce a valid import 
license issued to Century Arms.  He said that the INP has not 
provided Contact International with re-transfer or re-export 
authority for the carbines to the United States.  As 
documentation in support of the export license, Kaptowsky 
provided a copy of the original INP tender (in Hebrew), an 
INP declaration (in English) regarding the sale of the 
carbines to Contact International, and a copy of Contact 
 
International's export marketing license issued by the MOD's 
Directorate for Defense Exports. 
 
¶8. (SBU) Kaptowsky was well-versed in brokering regulations, 
and said he had discussed the nature of the transaction and 
the need for a broker's license with his legal advisor. 
According to Kaptowsky's lawyer, Contact International does 
not require a broker's license to sell the carbines to 
Century Arms for the following reasons: 
 
-- Contact International was awarded the INP tender that was 
issued to local companies only. 
 
-- The tender requires that the carbines be exported within 
100 days from the date of the award. 
 
-- This requirement made it necessary for Contact 
International to locate a foreign buyer prior to the tender 
bid. 
 
-- Although Century Arms insists on paying the INP directly, 
the agreement of resale was between Contact and Century Arms. 
 At no time did Century Arms have any business dealings with 
the INP. 
 
¶9. (SBU) According to the copy of the original INP police 
tender, the INP issued closed tender 64/2009 to licensed arms 
dealers on June 4, 2009.  The tender's listed bid deadline is 
July 28, 2009.  Per para 17.b.1-3, the tender stipulates that: 
 
-- The carbines may not be resold in Israel; 
 
-- The carbines may only be sold to Ministry of 
Interior-licensed Israeli arms dealers holding an MOD permit 
to export defense articles; 
 
-- The carbines will remain in an INP warehouse.  Upon 
receipt of a valid export license issued by the MOD's 
Directorate for Export Controls, the carbines will be 
released directly to the port under police supervision; and 
 
-- Payment will be transferred within ten days of the award. 
Within 20 days of the award, the awarded party will submit 
the list of terms to the Directorate for Export Controls. 
The winner will have up to 100 days from the date of the 
award to obtain the export license from the Directorate for 
Export Controls, and to arrange for transportation of the 
carbines directly from the port. 
 
¶10. (SBU) Emboffs attempted to contact the INP repeatedly for 
four weeks to verify Kaptowsky's account.  INP 
representatives finally contacted the FCS senior commercial 
specialist on December 3, and requested any inquiry into the 
transaction with Contact International be made in writing in 
Hebrew on embassy letterhead.  It is not clear how long this 
process will take; emboffs have not yet sent to the INP the 
written inquiry request.  According to the INP letter 
provided by Kaptowsky, the INP confirmed the sale of 2,500 
M-1 carbines including one 15 round magazine each to Contact 
International.  Additionally: 
 
-- The carbines were purchased by the INP for its own needs; 
 
-- The carbines were not received as a grant and were not 
transferred by the United States to the INP or GOI as part of 
an American military assistance program, and were not sold by 
the United States to the INP or GOI as part of a military 
sales program; and 
 
-- The carbines have been in the sole possession of the INP 
for the last 30 years. 
CUNNINGHAM