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Viewing cable 08TOKYO689, GOJ RESPONSE ON BLUE LANTERN LEVEL 3:

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Reference ID Created Released Classification Origin
08TOKYO689 2008-03-14 04:38 2011-08-25 00:00 UNCLASSIFIED Embassy Tokyo
VZCZCXYZ0000
RR RUEHWEB

DE RUEHKO #0689/01 0740438
ZNR UUUUU ZZH
R 140438Z MAR 08
FM AMEMBASSY TOKYO
TO SECSTATE WASHDC 2556
UNCLAS TOKYO 000689 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR DTCC - BLUE LANTERN COORDINATOR 
 
E.O. 12958: N/A 
TAGS: ETTC JA KOMC
SUBJECT: GOJ RESPONSE ON BLUE LANTERN LEVEL 3: 
POST-SHIPMENT END-USE CHECK  ON LICENSES 050055671, 
050040344, 050027799, 050046738 
 
REF: STATE 09478 
 
1.  (SBU) Summary:  Post was unable to determine definitively 
that the end user for the parts in the reftel is the Ministry 
of Defense (MOD) because the end user has no inventory. 
Trading company officials told us they stock parts for future 
contracts to aviod fines on late delivery.  Company 
executives and MOD officials refused to provide copies of 
contracts to verify their commercial relationship. End 
Summary. 
 
2. (SBU) Post contacted Japanese Maritime Self Defense Force 
(JMSDF) Staff Officer Lt Commander Koshu Nagayama concerning 
the Ministry of Defense receipt of SH-60 helicopter parts. 
On February 19, Nagayama told us the JMSDF does not have 
inventories against which to verify the receipt of the parts 
in reftel.  As the unit has no inventory, Nagayama contacted 
the trading companies and reported back the following 
information: 
 
DTC Case: 05002779 
Some of the shipment has not been delivered.  The delivery is 
being coordinated between Mitsubishi Heavy Industry (MHI) and 
foreign consignee, Daicel Chemical Industries.  JMSDF reports 
this is their first purchase via Daicel Chemical.  However, 
Nagayama believes Daicel has sold to the Japanese Ground Self 
Defense Force (JGSDF) and Japan Air Self Defense Force 
(JASDF) in the past. 
 
DTC Case: 050040344 
The good have not arrived yet.  They are scheduled to be 
delivered in seven shipments between March 6, 2008 and July 
9, 2009.  JMSDF reports they have purchased from foreign 
consignee Ishikawajima Harima Heavy Industries (IHI) in the 
past.  The previous purchase was a T-700 engine and its parts. 
 
DTC Case: 050046738 
The goods have not arrived yet.  MHI ordered FCRS (Flight 
Control Reference System) via Mitsubishi Precision on March 
29, 2007 with delivery due July 8, 2009. 
 
Site Visits 
----------- 
 
2.  (SBU) Because JMSDF had no record of their own parts or 
of ordered and incoming parts, Post conducted site surveys of 
both HMI and Ishikawajima Harima Heavy Industries, Ltd. (IHI) 
to determine the movement of helicopter parts with greater 
clarity than our MOD contacts were able to provide. 
 
3.  (SBU) On February 27, we met with Mitsubishi Heavy 
Industries (MHI) Defense Aircraft Manager Nobuhiro Kawahara, 
who said he was nervous; no one from the Embassy had ever 
visited the company before on a Blue Lantern check.  Kawahara 
explained the MHI function for these licenses is the assembly 
of completed helicopters for delivery to MOD, along with the 
delivery of some spare parts.  We asked MHI to provide us a 
copy of the contract to confirm definitively the end user of 
all parts on these licenses, but Kawahara said he would have 
to check with MOD for permission.  As other companies have 
provided copies of contracts, this request would seem 
perfunctory.  However, on March 11, Kawahara told us, per 
MOD's advice, the contracts would not be provided. 
 
4.  (SBU) On February 29, we met with IHI executives led by 
General Manager Masato Kawaguchi.  Kawaguchi explained IHI's 
role in this series of cases is to machine the products 
provided by U.S.-based companies and provide them to HMI. 
That company then builds the SH-60 helicopters for delivery 
to MOD.  IHI also specializes in testing and refurbishing 
engines.  The end user for the parts from IHI is HMI.  After 
HMI receives the parts from IHI, they assemble them and 
deliver the final product to MOD.  As such, IHI's 
relationship is with HMI, not MOD. 
 
5.  (SBU) On February 29 in relation to DTC Case 050055671, 
Tamagawa Seiki Company Manager Toshimi Kajita told us that 
sometimes their company orders parts in advance with no MOD 
contract.  Some of the advanced ordered parts are stocked in 
his company, but not all are listed as "stock," because some 
are "defective," so they need to order replacements.  For 
example, they ordered and received two shipments of 20, a 
total of 40 gear bevels P/N 1050201, of which 24 will be used 
for the contract with MOD.  The remaining parts are simply in 
stock.  This information was forwarded as an email attachment 
(DTC D) to defense trade controls on March 11, subject line: 
0500727799: Blue Lantern SH-60 Helicopter Parts. 
 
6.  (SBU) Daicel also told us they routinely order parts in 
advance without MOD contracts to support them.  In attachment 
 
 
DTC A of the aforementioned email, it shows how items for the 
current contract were filled with products obtained via 
previous licenses, shipped and held in stock.  Note: Japanese 
trading companies are most likely stocking USML items because 
MOD charges high penalties for any delays in delivery.  End 
Note. 
 
 
7.  (SBU)  Comment: Given MOD does not have an inventory, 
Post is unable to make a final determination in this case. 
 
SCHIEFFER