illicit Chinese Exports to Iran
April 8, 2009
Yesterday, prosecutors in New York revealed that during the past three years, a Chinese firm sold Iran materials useful for making nuclear weapons and long-range missiles. The revelations were the product of an extensive investigation into suspicious transactions by the Manhattan District Attorney’s office. The Wisconsin Project on Nuclear Arms Control is proud to have aided in this investigation.
The Chinese firm, LIMMT Economic and Trade Company, used front companies and aliases to deceive New York banks in order to carry out a number of transactions in which weapon-useable items were sold to Iranian entities linked to Iran’s Ministry of Defense and, in some cases, to entities sanctioned by the United States and the United Nations for their proliferation activities.
Although it is uncertain what Iran actually produced with the materials it imported, Iran’s active nuclear and missile programs make the sales alarming. Many of the materials are controlled for export internationally by the Missile Technology Control Regime (MTCR) and the Nuclear Suppliers Group (NSG), which maintain lists of sensitive nuclear and missile items. A series of U.N. Security Council resolutions, beginning in December 2006, prohibit Iran from importing almost all such items. Even more alarming is the fact that these transactions took place between 2006 and 2008 – at a time when Iran’s nuclear and missile activities were supposedly under international scrutiny.
Prosecutors indicted the LIMMT company and its manager, Li Fang Wei. LIMMT was already well known. It had been sanctioned repeatedly by the United States since 2004 for engaging in proliferation activities with Iran, and was designated as a proliferator by the U.S. Department of the Treasury’s Office of Foreign Assets Control in June 2006. According to Treasury, the company had been busy supplying or attempting to supply “controlled items” to “Iran's military and missile organizations.”
The indictment also names the Iranian companies in these illicit deals. Shahid Sayyade Shirazi Industries, Yazd Metallurgy Industries and Khorasan Metallurgy are all subsidiaries of the Ammunition Industries Group (AMIG), which is affiliated with Iran’s Ministry of Defense. AMIG is also the largest industrial group of Iran’s Defense Industries Organization (DIO). Both DIO and AMIG (along with entities they own or control, or those acting on their behalf or at their direction) have been sanctioned by the U.N. Security Council, the European Union and the United States for their links to proliferation. Some DIO subordinates have been “involved in Iran's centrifuge program making components,” and in Iran’s missile program, according to the U.N. Security Council. In fact, Khorasan itself has been sanctioned by the United Nations for its role in centrifuge production.
Another Iranian importing firm described in the indictment, Amin Industrial Complex, shares contact information with Khorasan, including two addresses, a telephone number and a fax number. And Aban Commercial and Industrial Co., another Iranian importer, shares an address with Electro Sanam Co., a front company for Aerospace Industries Organization, Iran’s main missile manufacturer.
In a move coordinated with the District Attorney’s Office, Treasury today froze the assets of Khorasan Metallurgy Industries, Amin Industrial Complex, Yazd Metallurgy Industries and Shahid Sayyade Shirazi Industries along with several of LIMMT’s aliases and Li Fang Wei – all for activities related to mass destruction weapon proliferation.
The transactions summarized below are based on information in today’s indictment and on research by the Wisconsin Project:
- LIMMT sold tungsten powder to Aban Commercial and Industrial Co. This material is controlled for export by the MTCR because it can be poured into molds and sintered to make missile parts, including nose cones, nozzle throat inserts, and jet vanes (which steer the missile engine exhaust and thus guide the missile).
- Liaoning Industry and Trade Co. Ltd. (an alias for LIMMT) sold Iran graphite cylinders stated to be for electrical discharge machines. The buyer in Iran was Aban Commercial and Industrial Co. Graphite is controlled for export as a material by the MTCR if it meets certain specifications that make it suitable for being manufactured into rocket nozzles and re-entry vehicle nose tips. The graphite exported to Iran met those specifications. Electrical discharge machines are themselves controlled for export by the NSG because they are capable of making, with high accuracy, parts with complex forms. Such parts include explosive, hemispherical components for nuclear weapons, end caps for gas centrifuges used to enrich uranium to nuclear weapon grade or reactor grade, and crucibles for casting liquid uranium or plutonium for nuclear weapon cores.
- Aban also ordered from Liaoning high-strength aluminum. Some of this aluminum was of a strength sufficient to make components for gas centrifuges that enrich uranium to nuclear weapon grade or reactor grade, although considerable machining would be required to make such components. The form of this material – blocks, rather than tubes or cylinders – is not controlled for export by the NSG. This aluminum was, however, strong enough to be on the Wassenaar Arrangement control list, related to military items.
- SC (Dalian) Industry and Trade Co., Ltd. (another alias used by LIMMT) sold Iran about 25 tons of maraging steel that appears to be controlled for export by the NSG. Because of its high tensile strength, maraging steel is one of the few materials strong enough to be used to make gas centrifuge parts. Gas centrifuges are, as stated above, used to enrich uranium. The buyer in this transaction was the Amin Industrial Complex. Maraging steel can also be used to make motor cases for solid-fueled rockets, rocket propellant tanks, and rocket interstages. However, the maraging steel rods involved in this transaction were not in a form subject to control by the MTCR.