Washington Post: A Manhattan grand jury on Tuesday indicted a Chinese executive and his company on charges of covertly using New York banks to finance the sale of tons of restricted materials to Iran, potentially supporting Tehran's ballistic missile and nuclear programs in violation of U.N. sanctions.
The Washington Post
By Colum Lynch
Washington Post Staff Writer
Wednesday, April 8, 2009; A09
NEW YORK, April 7 — A Manhattan grand jury on Tuesday indicted a Chinese executive and his company on charges of covertly using New York banks to finance the sale of tons of restricted materials to Iran, potentially supporting Tehran's ballistic missile and nuclear programs in violation of U.N. sanctions.
The indictment, announced by Manhattan District Attorney Robert M. Morgenthau, accused Li Fang Wei and his company, LIMMT Economic and Trade Co., of selling high-strength metals with military applications to subsidiaries of an Iranian military agency. Many of the items are on international control lists designed to restrict the export to select countries of technologies that can be used for military programs.
The case exposed a major gap in China's enforcement of a web of international export controls and U.N. resolutions designed to prevent Iran from acquiring raw materials for its nuclear and ballistic missile programs, according to arms-control experts.
The indictment charged Li and his company with 118 criminal counts of falsifying business records, saying the company "engaged in deception and fraud" and used "alias names and shell companies to deceive U.S. financial institutions into processing its international payments."
"Sanctions are effective only if they are enforced," said Morgenthau, who noted that Li is at large in China. "We may not be able to shut down Li's factories, but we can shine a light on his conduct and the conduct of foreign banks that permit these types of operations to flourish."
The Treasury Department sanctioned LIMMT in June 2006 for its alleged role in selling prohibited weapons parts and banned it from carrying out transactions within the U.S. financial system. Li's customers included a number of subsidiaries of the Iranian Defense Industries Organization. The indictment describes several Iranian transactions involving those firms, including a June 2008 deal to sell 27 tons of extremely high-strength "maraging" steel rods to Amin Industrial Group for about $1.8 million. Li secretly channeled payments to customers through several American banks, including Bank of America, Citibank and J.P. Morgan Chase, according to the indictment.
David Albright, a nuclear weapons expert who assisted in the prosecution, said that it is impossible to say how Iran used the raw materials it acquired. But he said the steel can be used to fortify missile bodies, and another acquisition, tungsten copper plates, can be used in the manufacture of engine nozzles that shield a missile body from the intense heat of flames.