Ships Exporting DPRK Coal Owned by UK Companies
Two cargo vessels with ties to companies Sanctioned by the United States for shipping coal from the Democratic People’s Republic of Korea (DPRK) are owned by companies based in the United Kingdom, a Sayari investigation has found. New evidence suggests both vessels continue to visit a DPRK port known to be a major coal trading hub.
The apparent continuation of illicit activity by the two vessels demonstrates the importance of investigating the broader networks of companies and individuals associated with sanctioned entities. For financial institutions or multinational corporations, failure to investigate the networks of customers or suppliers could result in increased exposure to sanctions risk. For governments, effective enforcement of sanctions is only possible by assessing networks of companies associated with known illicit actors.
In February 2018, the U.S. Department of the Treasury sanctioned Chinese companies Weihai World-Shipping Freight and Hong Kong company Huaxin Shipping Hongkong Ltd for managing vessels used to export coal from the DPRK—a direct violation of United Nations sanctions.
The U.S. Department of the Treasury also sanctioned the two cargo vessels in question, the Xin Guang Hai and the Asia Bridge 1, as part of the measure.
Commercial shipping vessels often have a ship manager—a company responsible for the day-to-day management of a vessel and its crew. It is usually different from a ship’s owner.
Weihai World-Shipping Freight is the ship manager of the Xin Guang Hai, according to ship registry records. The database lists the owner of the Xin Guang Hai as Ascending Enterprise LTD—a company with a care of address at Weihai World-Shipping Freight Agency Co Ltd.
Huaxin Shipping is the ship manager of the Asia Bridge 1. Similarly to the Xin Guang Hai, the database lists the owner of the Asia Bridge 1 as World Shipping Marine LTD, this time with a care of address at Huaxin Shipping (Hongkong) Ltd.
There remain several entities in this network that escaped U.S. sanctions, however. The sole shareholder of the two sanctioned companies—identified in public records as Tan Xiujun, a Chinese national— was not sanctioned. Two cargo ships managed by the sanctioned companies at the time they were designated, the Lucky Star and the Asia Bridge (different from the sanctioned Asia Bridge 1), also were not sanctioned.
Both the Lucky Star and the Asia Bridge are owned by companies registered in the UK, according to ship registry records.
What’s up with the Lucky Star?
At the time Weihai World Shipping Freight was sanctioned in February 2018, it was listed as the Lucky Star’s ship manager. Within two months of being sanctioned, the company cut ties with the Lucky Star. Since April 2018, the vessel’s ship manager is another Chinese company, Weihai Huijiang Trade Co Ltd.
However, Chinese corporate records indicate that Weihai World-Shipping may not have fully severed ties with the Lucky Star. Weihai Huijiang Trade, the vessel’s new manager, is located at the same address as Weihai World-Shipping. In addition, the sole shareholder of Weihai World-Shipping, Tan Xiujun, also serves as an officer of Weihai Huijiang Trade.
This is a relatively common practice for sanctioned entities. They frequently pursue efforts to make it appear they have ended relationships with other companies or assets, when in fact those relationships continue.
Lucky Star is no longer officially managed by a U.S.-sanctioned entity, but its activities are still in violation of UN sanctions. The UN Panel of Experts on DPRK sanctions published evidence earlier this year that the vessel was used to export coal from the DPRK in October 2018 (see Fig. 1). The export of coal from the DPRK is explicitly banned under UN Security Council Resolution 2371.
Further, ship registry data indicates that it has been owned by Always Smooth Limited—a company that is registered in the United Kingdom—since December 2017.
The Asia Bridge Visits the DPRK
Huaxin Shipping Hongkong was sanctioned in February 2018 along with Asia Bridge 1.
But ship registry data reveals that at the time it was sanctioned, Huaxin Shipping Hongkong was also the ship manager of another ship with a similar name, the Asia Bridge (IMO No. 9010022).
In April 2018, around the same time that Weihai Huijiang Trade took over management of the Lucky Star, it also began managing the Asia Bridge.
We don’t have explicit evidence that the Asia Bridge has been used to violate UN sanctions. But as recently as June 25, 2019, the vessel reported its location as the port of Nampo, a major DPRK shipping hub located to the southwest of Pyongyang. Nampo is just 25 miles down the Taedong River from Songnim, where the Lucky Star was photographed loading coal in October 2018.
Like the Lucky Star, the Asia Bridge is also currently owned by a company in the United Kingdom—Good Siblings Ltd.
UN Ban on Coal Export
The export of coal from the DPRK was banned by UN Security Council Resolution 2371 on August 5, 2017. Resolution 2371 states that “the DPRK shall not supply, sell or transfer, directly or indirectly, from its territory or by its nationals or using its flag vessels or aircraft, coal … and that all States shall prohibit the procurement of such material from the DPRK by their nationals.”
Given the UN’s strict prohibition on DPRK coal exports, the activities of the Lucky Star and the Asia Bridge merit further monitoring. Their past connections to sanctioned entities, as well as their ownership by UK companies, are noteworthy.
The Lucky Star and the Asia Bridge are prime examples of the importance of identifying the networks of companies and individuals associated with illicit actors. While neither vessel has yet to face sanctions, there’s clear evidence that the Lucky Star—and circumstantial evidence for the Asia Bridge—has violated UN prohibitions on exporting coal from the DPRK.
Without conducting a full assessment of the networks surrounding sanctioned entities like Weihai World-Shipping, companies trying to comply with sanctions might not be aware of its ties to the Lucky Star. As a result, they might overlook the vessel’s sanctions violations, accidentally exposing themselves to significant sanctions risk.
The public records data used to power this research is available through Sayari Search! If you’re curious how this data could drive insights for your team, please reach out here.
Photo credit: Shafquat Towheed
The post Ships Exporting DPRK Coal Owned by UK Companies appeared first on Sayari.