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Viewing cable 09HONGKONG1074, EXTRANCHECK: POST SHIPMENT VERIFICATION:
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Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
09HONGKONG1074 | 2009-06-12 08:01 | 2011-08-23 00:00 | UNCLASSIFIED | Consulate Hong Kong |
VZCZCXYZ0018
RR RUEHWEB
DE RUEHHK #1074/01 1630801
ZNR UUUUU ZZH
R 120801Z JUN 09
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 7830
RHMFIUU/HQ BICE WASHINGTON DC
UNCLAS HONG KONG 001074
USDOC FOR 532/OEA/MCANNER/MHAMES
USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR PATRICK SANTILLO
BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS
SIPDIS
E.O. 12958: N/A
TAGS: BMGT BEXP HK ETRD ETTC
SUBJECT: EXTRANCHECK: POST SHIPMENT VERIFICATION:
ADDCOM SOLUTIONS LIMITED
REF: A) BIS EUC request e-mail dated May 15, 2009; B) HK 01982
(2007) Concord Carnival/Addcom; C) HK 00966 Free Components(2008)
D)HK 02289 (2007) Hope Sea
¶1. Unauthorized disclosure of the information provided below is
prohibited by Section 12C of the Export Administration Act.
¶2. As per reftel A request and at the direction of the Office of
Enforcement Analysis (OEA) of the USDOC Bureau of Industry and
Security (BIS), Export Control Officer Philip Ankel (ECO) conducted
a post shipment-verification (PSV) Addcom Solution Ltd., Unit B7,
7/F, Shatin Industrial Building, 22-28 Wo Shui Street, Fo Tan, Hong
Kong (Addcom). The PSV concerned twelve exports to Addcom from U.S.
exporter Austin Semiconductor of Austin, Texas as well as two
proposed exports that are the subject of pending BIS license
applications. The items in question include multiple shipments of
integrated microcircuits and other electronic components. On the
applicable order documentation, most of the items are classified
under export control classification number (ECCN) 3A001 and, if
properly classified, would be controlled for national security (NS)
reasons. Based on documentation provided by the exporters, in some
instances, it appears that the applicable items are of the class
that may be exported license free to Hong Kong, but would require a
license for export or reexport to mainland China because of their
ability to function at extreme temperatures (ECCN 3A001a2c). Since
all of the items in the various shipments were resold to different
buyers, those buyers (and related consignees) are described below.
¶3. Addcom was the proposed intermediate consignee in a previous
unfavorable pre license check (PLC) of Hong Kong buyer Concord
Carnival. That PLC is described in reftel B.
¶4. BACKGROUND OF ADDCOM: Addcom is a Singapore based electronics
distributor with offices in Singapore, Hong Kong, Shenzhen,
Malaysia, Thailand, and the Philippines. The company does not
appear to have a web site. According to the Hong Kong Companies
Registry, Addcom was registered in Hong Kong in 2004. It has the
Hong Kong equivalent of USD 6500 in share capital. Its directors
are Singapore nationals Tan, Lee Kim Alison (S6811627I) and Tan, Yew
Mui Calvin (S1619129I). The company's facility in Hong Kong is
comprised of a one room office located in a converted warehouse
building. ECO met with Addcom representatives Ailey So, and Anthony
Chan, Account Manager, on two occasions (May 29, 2009 and June 8,
2009). Ms. So provided documentation about the particular orders
while Mr. Chan provided greater background detail on the buyers and
his interaction with them. It is worth noting that for all
transactions involving items subject to Hong Kong strategic
commodities licensing requirements, Ms. So obtained and provided to
ECO Hong Kong licenses for the import into Hong Kong of those items.
In addition, Ms. So provided declarations from the Hong Kong buyers
in which they state that they will not reexport the items from Hong
Kong. Mr. Chan is the account manager for all of the transactions
described below.
¶5. FREE COMPONENTS: Some of the shipments in question were
destined for Free Components in Hong Kong. Free Components and a
series of related companies including Xing Hang Yuan, Surlink, CTC
International, Hongtu Hangyuan and others are of particular
diversion concern as more fully detailed in reftel C.
¶6. FREE COMPONENTS TRANSACTIONS: Three transactions are at issue
here and are grouped under Addcom purchase order numbers:
ADS312131, ADS316690, and ADS317158. According to documentation
made available to ECO by Addcom, ADS316690 was delivered to Free
Components at its 1702 Grand City Plaza address. The order
documentation lists Hazel Liu as the contact person at contact
numbers 86 755 882 65085 and 8675588265080 and email address
hazel@xhy-ic.com (www.xhy-ic.com is the web domain of Xing Hang
Yuan, a company of diversion concern referenced above). Order
ADS317158 was likewise delivered to the Grand City Plaza address but
contact numbers are now listed as 852 3426 2188 and 852 3426 4778.
According to the Free Components purchase order for this
transaction, the confirmation fax number is listed as mainland
number 86 755 882 65080. Order ADS 312131 lists a ship-to address
as the Grand City Plaza address noted above. The contact person is
listed as Hazel and the e-mail address for Hazel is listed as
Hazel@xhy-ic.com.
¶7. FREE COMPONENTS CONCLUSIONS: Despite repeated attempts,
Commercial Assistant Carrie Chan was unable to arrange a meeting
with Free Components. When asked, Addcom's Anthony Chan stated that
he was aware that Xing Hang Yuan (XHY) is related to Free Components
(as indicated by Hazel's e-mail address). Chan also stressed that
his orders from Free Components were always received from the Hong
Kong company although he conceded that he had never visited the Hong
Kong address. Ms. So stated that at the time of an order, if the
purchaser states that the item is for Hong Kong use, then she is
prepared to accept that assertion. If the buyer (subsequently)
intends to reexport the items, Ms. So asserted that she informs
those buyers that they must obtain a Hong Kong export license. It
is clear to ECO that Addcom is aware that its customers are not
using products they purchase from Addcom in Hong Kong. However,
Addcom is prepared to fulfill orders on the buyer's mere assertion
that they are for use in Hong Kong. Mr. Chan stated that he does
not inform the exporter (Austin Semiconductor) that the items will
almost certainly be reexported to mainland China. One of these
shipments destined for Free Components appears to include items that
may be shipped BIS license free to Hong Kong but would, in almost
all circumstances, require a license for export/reexport to mainland
China.
¶8. PROGRESS STEP INTERNATIONAL: As detailed below, Progress Step
appears to be the latest iteration of the Xing Hang Yuan and Free
Components group of companies in Hong Kong. According to the Hong
Kong Companies Registry, Progress Step International was registered
in November 2006 and has the Hong Kong equivalent of USD 1300 in
paid up share capital. Its sole director (appointed in September
2008) is mainland Chinese national Zhang Haiyun (with mainland ID
number 412823196208057270 suggesting a birth date of August 5,
1962). The company is located at the offices of SBC International,
a company secretarial service that has been used by a range of
companies that have been the subject of unfavorable end use checks.
The SBC address in this case is 21/F, New World Tower 1, 18 Queens
Road Central, Hong Kong.
¶9. PROGRESS STEP TRANSACTIONS: Three shipments to Addcom were
destined for Progress Step International (Addcom purchase orders
ADS318582, ADS319195 and ADS321379). At least two of these
shipments appear to include items that may be shipped BIS license
free to Hong Kong but would, in almost all circumstances, require a
license for export/reexport to mainland China. As to ADS319195 and
ADS318582, order documentation shows Hazel Liu as a contact person
(vice Hazel Lau on the end user statement provided to Austin). In
these cases, Hazel's e-mail address is listed as Buyer1@ctc-ic.com
(www.ctc-ic.com is the web domain of mainland company of diversion
concern CTC International which is referenced above). As to order
ADS321379, Hazel is again listed as the contact person. According
to Addcom's Anthony Chan and Austin Semiconductor, this order is now
the subject of an Austin export license pending before BIS.
¶10. PROGRESS STEP CONCLUSIONS: Repeated attempts to set up an
appointment with Progress Step in Hong Kong were unsuccessful. It
is apparent that Progress Step is simply another iteration of Free
Components. ECO surmised that Hazel Liu (apparently her real name)
signed Progress Step end user statements as Hazel Lau to give the
appearance (to Austin Semiconductor) that Free Components and
Progress Step are distinct. Mr. Chan stated that he simply knows
this individual as Hazel and he did not focus on the signatures on
the forms. When asked by ECO whether he had visited Progress Step,
Mr. Chan replied that he had visited Progress Step's offices in
Shenzhen (but not Hong Kong). He stated that those offices were
quite large. When asked whether payment for these orders was made
from mainland China, Mr. Chan insisted that payment had been made
from Hong Kong, consistent with the fact that this was a Hong Kong
sale. ECO did not find Mr. Chan and Ms. So's answers to questions
regarding these transactions to be credible, in particular,
statements about whether they were aware that the items were
destined for mainland China. It is clear to ECO that the
transactions described in this cable are structured in attempt to
allow Addcom to plausibly assert that it is only selling to Hong
Kong customers.
¶11. BRILLIANCE TECHNOLOGY LIMITED: According to the Hong Kong
Companies Registry, Brilliance was registered in 2006 and has the
Hong Kong equivalent of USD 12 in share capital. Its sole director
is Chinese mainland national Wang, Xuanhui (with mainland ID number
513031197502236072 suggesting a birth date of February 23, 1975).
Two addresses are available for this company, namely Rm 110A, 6/F,
Grosvenor Mansion, 110 Austin Rd, Hong Kong (the registered address)
and Flat A, 8/F, Adolfo Mansion, 114-116 Austin Road, Hong Kong (the
address listed on the applicable end user statements provided by
Addcom).
¶12. BRILLIANCE TRANSACTIONS: Five Addcom orders involved
Brilliance, namely ADS318360, ADS321559, ADS320784, ADS320108 and
ADS318856. In all cases, Brilliance contact persons were listed as
Derek Chiu and Mr. Wang (with various phone and fax contact numbers
such as 852 6876 5919, 852 3020 6598, 852 9012 4193 and 852 2155
0335). Mr. Wang's contact e-mail is listed as
jasonw@brilliance.net.cn. In each case, Addcom's Ailey So provided
Brilliance declarations that it would not reexport the items from
Hong Kong. Except for ADS318360/ADS318856 (which are mirror
transactions involving a returned shipment to the U.S., and
ADS321559 (which is the subject of a pending license applications)
all of the items were shipped to Brilliance in Hong Kong. Items
actually shipped to Brilliance are of the category of items that may
be shipped BIS license free to Hong Kong but would, in virtually all
circumstances, require a BIS license for shipment to mainland China.
According to Ms. So, Brilliance is not related to Free
Components/Progress Step.
¶13. BRILLIANCE CONCLUSIONS: When Commercial Assistant Carrie Chan
attempted to call Brilliance to set up a meeting, the phone number
(6876 5919) appeared to roll to a mainland phone. The person who
answered the phone stated that the phone number was the Brilliance
phone number (although he would not identify himself as a Brilliance
representative). This individual stated that all relevant
information is located in Hong Kong and asked Ms. Chan to call Derek
Chiu (9012 4193) in Hong Kong (referenced above). Mr. Chiu stated
that Brilliance does not have an office in Hong Kong but only a
warehouse. He further stated that the items had been reexported to
mainland China. When Ms. Chan asked for a meeting, Mr. Chiu stated
that the documents were not available for review in Hong Kong and
that he would check with the Brilliance office in China. When
subsequently asked again for a meeting, Mr. Chiu requested
additional time. ECO does not expect that Mr. Chiu will be
available to meet in the foreseeable future. ECO surmises that the
items shipped to Brilliance in Hong Kong have been reexported to
mainland China.
¶14. MAXDRAGON (HONG KONG) LIMITED: According to the Hong Kong
Companies Registry, Maxdragon was registered in 2006. Hong Kong
Resident Hong, Nga Song (HKID H449217(1)) is listed as director.
The company's registered (and operating) address is Flat A, 13/F,
Excellente Commercial Building, 456-458 Jaffe Road, Hong Kong. As
noted below, an additional company associated with this order,
namely Citic Technology Company, is located at Rm D, 3/F, Thomson
Commercial Building, 8 Thomson Road, Hong Kong. Ms. Hong, Nga Song
also owns this company (a sole proprietorship).
¶15. MAXDRAGON TRANSACTION: Addcom order ADS318712 was destined for
Maxdragon. The items in question may be shipped BIS license free to
Hong Kong but would, in virtually all circumstances, require a
license to mainland China. Maxdragon representative Candy Hong
signed a declaration (provided to ECO by Addcom) stating that
Maxdragon would not reexport the items.
¶16. MAXDRAGON CONCLUSIONS: ECO was eventually able to meet Ms.
Candy Hong of Maxdragon at the company's Excellente Commercial
Building address on June 2, 2009. The offices are no more than 300
square feet in size and are located in a small older office
building. Ms. Hong stated that she had acquired the items and then
had reexported them to mainland China using another company she
owns, namely Citic Technology (referenced above). When asked whether
she had applied for a Hong Kong export license, Ms. Hong stated that
she could not recall (ECO expects that she did not). Ms. Hong
stated that she had shipped the items to her affiliate in Guangzhou,
namely Maxdragon (S.Z.) Biochem Ltd., Rm. 30513 Guangxinguan Bldg,
number 18, 20th st. South Siyou, Yozxiuzongz, Guangzhou (telephone
number 20-87383772). Ms. Hong stated that the items would be used
as part of a new venture to manufacture cameras for cars. When
asked why such a project would require high temperature range
electronic components, Ms. Hong stated that it is quite cold in the
north of China in the winter so high temperature range products are
required. Web research reveals that the purported partner for
Maxdragon is Lantuo Electronics Co, Ltd. which bills itself on its
web site as a distributor of electronic components (more information
at www.szlantuo.com).
¶17. CHITRON ELECTRONICS COMPANY LIMITED: According to the Hong
Kong Companies Registry, Chitron was registered in 2005 and has the
Hong Kong equivalent of USD 6.5 million in share capital. Directors
include mainland Chinese nationals, Ni, Hai Nan (passport number
610125680301121), Wu, Zhen Zhou (ID 110104196403173111 with
corresponding birth date of March 17, 1964), Zha, Jun (ID
352102197803240019 with corresponding birth date of March 24, 2978)
and Hong Kong resident Zhang, Zing (wit HKID R249769). Wu, Zhen
Zhou was arrested in te United States in December 2008 for export
contrl violations related to the activities of a Chitro affiliate
(Chitron-U.S.).
¶18. CHITRON TRANSCTION: Addcom order ADS318213 was destined for
Chitron and subsequently for Hengsai Electronics Ltd. in Hefei city,
Anhui Province. These items appear to be classified as EAR99,
meaning that they may be shipped to virtually all destinations, end
users/uses worldwide. The Chitron purchase order lists the bill to
address as Room 06, 26/F, Modern Warehouse, No 6 Shing Yip Street
and the contact person as Ms. Linda Liu (86 755 82116111 and 86 755
8211 6462) with e-mail address linda@chitron.com. The shipping
address is the same but the contact person is listed as Roc Jiang
(852 31060791 and 852 31060792) with e-mail address
jiangpeng@chitron.com. The purchase order header address is listed
as 2127 Sungang East Road, Suite 1916, Shenzhen 518001 (86 755 8211
6111 and 86 755 8211 5452).
¶19. CHITRON CONCLUSIONS: As these items are EAR99, no apparent
export control violation has occurred in respect of this shipment.
¶20. XIAN RIRONIC/HOPE SEA IMPORT AND EXPORT: Xian Rironic is a
mainland company that was the intermediate consignee listed in BIS
export license D408497. Delivery in this transaction was made to
Hope Sea Import and Export in Hong Kong. Hope Sea was the subject
of an unfavorable end use check detailed in reftel D.
¶21. XIAN RIRONIC/HOPE SEA IMPORT AND EXPORT TRANSACTIONS: Addcom
order ADS 319752 was destined for Xian Rironic. ECO reviewed the
underlying Xian Rironic purchase order for this transaction. It is
not on letterhead and includes only the name "Ferry" as the contact
person. Separate documentation provided by Addcom shows that Xian
Rironic certified that it would not reexport the items from Hong
Kong. Addcom obtained a Hong Kong export license listing as end
user, China Petroleum Logging Company Ltd. Delivery was made to
Hope Sea Import & Export, Unit 12-16, 20F, No 1 Hung To Rd (attn.
Ms. Yeung).
¶22. XIAN RIRONIC/HOPE SEA IMPORT AND EXPORT CONCLUSIONS: As noted
earlier, Hope Sea was the subject of a prior unfavorable PSV in
¶2007. ECO assumes that all of this information as available to BIS
licensing officers as well as additional information Addcom's
Anthony Chan claimed to have presented to Austin Semiconductor
during the BIS licensing process. Nonetheless, the Purchase Order's
style and the involvement of Hope Sea is of concern to ECO.
¶23. A range of consignees listed herein (including Addcom,
Maxdragon, Progress Step, Brilliance, Chitron and Hopesea) are
unsuitable recipients of U.S. origin controlled technology. ECO
recommends that BIS conduct a thorough review of all shipments
listing any of these consignees. ECO also recommends that BIS have
further discussions with the exporter, Austin Semiconductor, to
better understand whether it knew about the true final destination
of these shipments.