I have blogged previously that some Chinese companies are clandestinely supplying critical technology to the North Koreans for their nuclear weapons program. The U.S. is working to identify those companies and impose sanctions on them to discourage their support of N.K. Now the U.S. has brought a lawsuit against a Chinese businessman who has major ties to North Korean trade.
Chi Yupeng has a network of companies that has imported over seven hundred million tons of N.K. coal into China. In return for the N.K. coal, Chi’s companies exported a variety of product to N.K. including cell phones, sugar and luxury items. But that is not all that N.K. received from Chi. According to the U.S. lawsuit, Chi also exported components for missiles and nuclear devices.
Chi’s companies have been involved with almost ten percent of the trade between China and N.K. One of his companies, named Dandong Zhicheng Metallic Material (DZMM) imported more N.K. coal than any other Chinese company. In 2016 alone, this trade was worth two hundred and thirty four million dollars.
The N.K. government has a special department known as “Office 39” that is responsible for a reserve of money under the control of Kim. Coal exports to China have played a major role in the expansion of the N.K. nuclear weapons program. A defector from N.K. says that the N.K. military has control of the quantity of coal that is produced and exported by N.K. He also said that Kim dedicates over ninety five percent of the revenues from coal exports in to the N.K. military nuclear weapons program. The defector went on to say that Chi was one of a small circle of foreigners that N.K. relies upon for access to global financial services.
Trade sanctions against N.K. imposed by the U.S. and the U.N. Security Council have been increasing since 2006. The international media would have you believe that N.K. has been effectively isolated from world trade. China announced the official end of their coal trade with N.K. last February but it turns out that DZMM coal trade with N.K. continued up until June of this year.
With the help of informants and defectors, the U.S. has documented the abuse of the sanctions by Chi and has filed suit seeking the direct forfeiture of four million dollars held in U.S. bank accounts and a hundred million dollars in penalties.
Chi used a variety of methods to evade sanctions. Some of the transactions involved moving money around but those were vulnerable to scrutiny by investigators. So in other cases, Chi used barter, sending consumer goods and weapon and missile components back to N.K. in direct exchange for shipments of coal with no money involved. Chi also used front companies to evade sanctions. In this way, Chi could carry out sanctioned transactions through the international financial system because the companies doing the business had different names.
This new U.S. lawsuit against a major supporter to the N.K. weapons program may finally have a major impact on the expansion of that program.
