VZCZCXYZ0004
PP RUEHWEB

DE RUEHHK #0190/01 0321018
ZNR UUUUU ZZH
P 011018Z FEB 10
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC PRIORITY 9525
INFO RHMFIUU/HQ BICE INTEL WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUETIAA/DIRNSA FT GEORGE G MEADE MD
RHMCSUU/FBI WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUCPDOC/USDOC WASHDC

UNCLAS HONG KONG 000190 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR PM/DTCC - BLUE LANTERN COORDINATOR 
 
E.O. 12958: N/A 
TAGS: ETTC KOMC HK
SUBJECT: BLUE LANTERN LEVEL 3: POST-LICENSE/PRE-SHIPMENT 
END-USE CHECK ON LICENSE 050207857 
 
REF: SECSTATE 1592 
 
¶1. (SBU) Per reftel request, Post conducted 
post-license/pre-shipment check on license 050207857 for the 
export of grenade and grenade launchers to Hong Kong.  After 
meeting with the parties to this license (Props Co. Ltd. and 
Hong Kong Special Administrative Region Immigration 
Department), Post's Blue Lantern Coordinator (BLC) and 
Economic Officer established the bona fides of this 
transaction and assessed the Hong Kong Immigration Department 
as a reliable recipient of reftel items. 
 
Props Co. Ltd. 
-------------- 
 
¶2. (SBU) On January 20, BLC and EconOff visited Props Co. 
Ltd. (Props) and met with its Managing Director, Eddie Ho 
Ying-Hang.  Established in 1987, Ho's current principals are 
Mr. Ho, Ho's spouse (Agnes Seto Yiu Nin; Canadian), and Ho's 
mother (Tam Suk Chun; Australian).  Props currently has six 
employees. 
 
¶3. (SBU) Props serves three types of clients: (1) the movie 
filming industry in Southeast Asia; (2) Hong Kong Government 
(HKG) security and law enforcement agencies (disciplined 
services); (3) and civilian sport shooters in Hong Kong. 
 
 - i. Props provides a wide selection of special-effect 
(deactivated) firearms, secure weapons storage, movie props, 
as well as "on-the-set" professional weapons handling skills 
training to the movie filming industry. 
 
 - ii. Props advises, assists in drafting documentation, and 
procures weapons and ammunition on behalf of HKG's 
disciplined services, including the Hong Kong Police Force 
(HKPF), the Correctional Services Department (CSD), Hong Kong 
Customs and Excise Department (HKCED), and the Hong Kong 
Immigration Department (ID). 
 
 - iii. Props also provides secure weapons storage to 
HKG-licensed civilian sport shooters.  Hong Kong's strict 
legislation on weapons and ammunition bans all non-HKG law 
enforcement personnel from storing weapons and/or ammunition 
anywhere other than at HKPF-authorized venues such as Props. 
 
¶4. (SBU) Props' sales of U.S.-origin defense articles depend 
on the operational equipment needs of Hong Kong's disciplined 
services and are prompted by government tenders.  Average 
annual sales range from US$1-1.5 million.  Past products for 
the HKG have included Smith and Wesson pistols, carbines, and 
ammunition.  Ho said Props had never sold U.S.-origin defense 
articles to customers outside of Hong Kong.  However, Ho 
disclosed Props had sold non-U.S. law enforcement equipment 
to the Macau SAR Government.  Ho demonstrated to us his 
knowledge of regulations governing the sale of U.S.-origin 
defense articles to nearby jurisdictions, including mainland 
China and Macau.  For example, when Macau law enforcement 
officials approached him for the procurement of firearms, he 
supplied them with articles from Brazil which were not 
subject to U.S. export rules, he said. 
 
¶5. (SBU) Props is a procurement "middle-man" in reftel 
transaction.  The U.S. exporter will ship the items directly 
to the end-user, the Hong Kong Immigration Department (ID). 
Props will not take physical possession of the items, 
although it will arrange transportation within Hong Kong. 
Props will receive a commission from the manufacturer, Ho 
said.  He provided copies of: the End-User Certificate from 
the Immigration Department; the DSP-83 Non-transfer and Use 
Certificate; the Purchase Order from the ID; and the 
HKG-issued Import Certificate. 
 
¶6. (SBU) Props maintains a very low profile, operating out of 
the basement of the business center where it has its office. 
Its facilities appear very secure.  CCTV cameras cover the 
office's entrance, lobby area, and interior.  Personnel 
maintain controlled access at the front, lobby, and interior 
doors.  The office houses a safe for explosives and 
ammunition as well as a larger two-section vault for weapons 
storage.  The outer vault section has a combination-locked 
heavy-duty door.  Props stores decommissioned weapons for 
movies within this first section of the vault.  Inside, a 
second combination-locked door secures the live-weapons 
 
storage section of the vault.  Ho said the HKPF and HKCED 
conducted monthly site inspections of his premises. 
Furthermore, the Police's Forensics Firearms Examination 
Bureau inspected each decommissioned weapon every three years 
to ensure the weapons remained inactive and mechanically safe. 
 
¶7. (SBU) Ho showed familiarity with the regulations governing 
the import of U.S.-origin defense articles, including 
restrictions on unauthorized re-transfer or re-export.  Ho 
was less familiar, however, with the regulations governing 
brokers and the requirement for brokers to register with the 
U.S. Department of State (i.e., he was uncertain if he was 
considered a broker and unaware of the procedures for 
registering).  BLC provided Ho with contact information for 
the Department's Directorate of Defense Trate Controls (DDTC) 
Response Team and encouraged him to seek clarification on the 
matter. 
 
Hong Kong SAR Immigration Department (ID) 
----------------------------------------- 
 
¶8. (SBU) On January 26, Post's BLC and EconOff met with Ms. 
Yu Mei-kow, Chief Immigration Officer for Service Support, 
and Mr. Yuen Wai-leuk, Assistant Quartermaster and Senior 
Immigration Officer for Service Support, at the Hong Kong 
Immigration Tower.  Ms. Yu confirmed that the ID had ordered 
the defense articles listed on the license.  Ms. Yu and Mr. 
Yuen also provided copies of the transaction's purchase order 
and the DSP-83. 
 
¶9. (SBU) Ms. Yu verified the exact types and quantities of 
defense articles ordered based on the ID's purchase order. 
She explained the ID selected the items for riot suppression 
with "minimum force" and "minimum harm."  The ID planned to 
use the items at Hong Kong's Castle Peak Bay Immigration 
Centre (CIC), a detention facility housing adult offenders 
who have violated Hong Kong's Immigration Ordinance, awaiting 
repatriation, removal, or deportation.  The Correctional 
Services Department (CSD) has operated the CIC since 2005 but 
will relinquish management and operations responsibilities to 
the ID in April 2010.  In preparation, approximately 130 
immigration officers have received training from CSD, 
including use of reftel items.  ID also relied on CSD for the 
selection of reftel items.  CSD maintains similar items in 
its operational inventory. 
 
¶10. (SBU) Reftel items will be stored at the CIC's armory, 
currently utilized by CSD.  We note reftel request did not 
include the CIC address: 84 Castle Peak Road, Tuen Mun; CIC 
points of contact are WS Poon, phone: (852) 3693-8352, and 
Ms. Yu, phone (852) 2829-3919.  BLC encouraged Ms. Yu to 
contact the DDTC Response Team and notify them that the ID 
would store and use reftel items at the CIC, rather than the 
Immigration Tower. 
 
¶11. (SBU) Although the ID purchased the articles from Props, 
Props will only handle documentation and delivery 
formalities.  Props will not take physical possession of the 
items.  Should the items arrive at the CIC before the ID 
takes over operations, then CSD would assume temporary 
control of reftel items.  As explained above, CSD currently 
operates the CIC. 
 
Import/Export Authorities and Law Enforcement 
--------------------------------------------- 
 
¶12. (SBU) Hong Kong's Trade and Industry Department (TID), 
Strategic Trade Control Branch, is the HKG entity overseeing 
the import and export of controlled commodities and 
U.S.-origin defense items.  TID Trade Officer C. S. Lau 
informed EconOff on January 29 that Props Co. Ltd. was 
properly authorized to import, broker, and/or sell defense 
articles in Hong Kong.  Furthermore, Lau stated Props held a 
HKPF-issued arms dealer's license to "store, sell, procure, 
and repair arms and ammunition on the condition that services 
should only be provided to holders of a valid HKPF-issued 
firearm owner's permit."  Contacts from the HKPF further 
confirmed to EconOff on January 29 that they maintained a 
long-standing relationship with Props Co. Ltd. and described 
Props as a "highly reputable entity" for the procurement of 
the Force's weapons, ammunition, and non-lethal law 
enforcement equipment. 
 
Assessment 
---------- 
 
¶13. (SBU) Based on the site visits and personal interviews, 
Post established the bona fides of this transaction and the 
parties involved, and assessed the Hong Kong Immigration 
Department as a reliable recipient of reftel items. 
MARUT