The Panamanian-flagged KOTI vessel, which was seized off the west coast of South Korea in late December, is operated by a company linked to several known Chinese weapons smugglers, an investigation by NK News can reveal.

South Korean officials are holding the 5100-tonne tanker in Pyeongtaek-Dangjin port after deciding against releasing the vessel on December 21 – the second such seizure in recent months.

Based out of the same Dalian room as two known Chinese nationals linked to instances of DPRK weapons proliferation, the vessel’s manager lists contact details for both men online.

The company’s owner also connects, through another business, to a third suspect individual.

Changqing Dong, Tiehe Lu, and Mintian Fan are long-running Dalian-based business partners whose companies have made regular appearances in UN Panel of Experts (PoE) reports as a result of their alleged illicit activities.

Together, the three have owned and operated a number of companies and vessels often found at the forefront of North Korea’s smuggling networks.

Their links to the recently-seized vessel highlight how North Korea’s foreign partners reconfigure their business interests to circumvent evolving sanctions regimes.

“Foreign persons facilitating North Korea’s sanctions evasion are interested in making a profit, and working with Pyongyang-linked vessels is low risk,” Anthony Ruggiero, a Senior Fellow at the Foundation for the Defense of Democracies, told NK News.

NOW YOU SEA ME

The KOTI seizure follows warnings from both the U.S. Treasury Department and the UN Security Council (UNSC) that foreign oil tankers have been transferring fuel to their North Korean counterparts at sea.

Transfers in international waters avoid the scrutiny of port authorities and can be more easily conducted without switching on Automatic Identification System (AIS) transmitters, making the exchanges difficult to track using conventional methods.

In a recent resolution, the UNSC cited “concern that the DPRK is… obtaining petroleum illegally through ship-to-ship transfers, while previous measures from September banned the practice.”

“Member States shall prohibit their nationals, persons subject to their jurisdiction, entities incorporated in their territory or subject to their jurisdiction, and vessels flying their flag, from facilitating or engaging in ship-to-ship transfers to or from DPRK-flagged vessels of any goods,” paragraph 11 of Resolution 2375, approved in September, reads.

While neither the UN or the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) have cited Chinese involvement, the tankers seized by South Korea were operated by companies registered in Guangzhou and Dalian.

China’s foreign ministry on Tuesday dismissed the reports, pointing to KOTI’s registration in Panama.

“According to what I know, the ship is Panama-flagged,” foreign ministry spokesperson Geng Shuang said at a regular press briefing in Beijing.

“China’s attitude is very clear, and we have always stood for the comprehensive and strict implementation of all the DPRK-related resolutions adopted by the Security Council.”

But North Korea and its network of trusted foreign nationals have long used foreign jurisdictions, flag registries, and paper companies abroad to evade sanctions and international scrutiny.

TOTAL HARMONY

The seized KOTI vessel was acquired in late July last year by the Panamanian-registered Koti Corp, which also gives a care of address back to the ship’s operator, Harmonized Resources Shipping Management Co Ltd in Hong Kong, a common practice among shell companies hoping to obfuscate ultimate ownership of a vessel.

Image credit: Tokyo MOU

Another oil tanker named the KOYA – also Panamanian-flagged and acquired on the same day in July – is listed as being operated by Harmonized Resources Shipping and owned by Koya Corp.

Both ships list Dalian Grand Ocean Shipping Management as their International Safety Manager (ISM) – a term in shipping referring to the body responsible for ensuring a vessel meets international standards.

Owned by an individual called Ma Gui Xian, company documents show the Dalian branch of Harmonized Resources Shipping is addressed at the same office in Dalian as that used by Changqing Dong and Tiehe Lu.

Meanwhile, Chinese language advertisements for Harmonized Resources Shipping list one of Lu’s emails addresses and Dong’s phone number as contact points.

Ma’s ownership of Harmonized Resources Hong Kong and Dalian address | Image credit: Hong Kong company registry

Several other companies in North Korea’s weapons proliferation networks have also been based out of the same building, including CM Chartering, Jie Shun Shipping, and Liaoning Foreign Trade Foodstuffs Shipping.  

A previous investigation by NK News found that, from this office, Dong and Lu offered shipping and flagging services to foreign vessels as official representatives of the Sierra Leone Maritime Administration (SLMARAD).

Lu, Dong, and Harmonized Resources share an address, email and phone number | Image credit: SLMARAD website

The SLMARAD case echoed earlier instances of North Korean intermediaries owning or managing sometimes-obscure shipping registries.

In the early 2000s, several Singaporean nationals played a critical role in “managing registries for key flags of convenience” that provided services to the DPRK, Andrea Berger, Senior Research Associate at the James Martin Center for Nonproliferation Studies (CNS), wrote in 2015.

Lu, Dong, and Harmonized Resources share an address, email and phone number.

Meanwhile, at least two vessels managed by Harmonized Resources Shipping were previously administered by Dong, Lu, and Fan’s network of companies.

Both the Harmony Source and the Safe Way vessel have been regular visitors to North Korea, according to the NK Pro Ship Tracker.

FAN SERVICE

The owner of Harmonized Resources Shipping, Ma Gui Xian was also the business partner of Fan Mintian, a Chinese national whose name has been frequently tied to instances of North Korean sanctions evasions.

Fan was identified by the PoE as a key operator in the Jie Shun incident, an interdicted vessel which sailed from the DPRK loaded with thousands of North Korean rocket-propelled grenades hidden under a cargo of sanctioned limonite.

According to the PoE, Fan was the holder of the Jie Shun vessel’s document of compliance.

On being contacted by the Panel, Fan admitted he had been a “consultant” for the Jie Shun vessel while corresponding from the e-mail address of Dalian Sea Glory – another company involved in a suspected instance of weapons proliferation.

However, Chinese company documents show that Ma Gui Xian was also a former shareholder of Dalian Sea Star Ship Technology Co., Ltd.

This company was partly owned by Fan Mintian and appears to be a sister company of the Hong Kong-registered Sea Star Ships, in which Fan, Dong, and Lu were all shareholders.

Both Ma Gui Xian and Fan Mintian are listed on Dalian Sea Star Ship Technology Co | Source: http://www.qixin.com

Dalian Sea Star Ship Technology and Sea Star Ships are both registered to room M09 of the Chengda Building in central Dalian, adjacent to the Dalian customs building.

Dong, Fan, and Lu have also all previously listed this location as a residential address in Hong Kong corporate filings.

GOOD NEIGHBORS

The third company involved with the KOTI tanker is Dalian Sea Glory Shipping, the vessel’s International Safety Manager. Shipping records show the company is addressed to room 1206 of the Anda Business Building at 32 Wuwu Lu, Dalian.

Located next door to Harmonized Resources, the Anda building is also the former address of North Korea’s Ocean Maritime Management (OMM), a weapons smuggler which has been linked to Fan and his business partners.

The address is also home to several other companies involved in the Jie Shun case. One of these, according to the PoE, connected “multiple companies linked to the Democratic People’s Republic of Korea and vessels associated with the Ocean Maritime Management Company”.

The discovery shows how networks run by Chinese nationals use various techniques and addresses to keep ahead of new sanctions regimes while hindering enforcement agencies.

“Key trusted individuals continue to operate multiple companies at different addresses, allocating each company to trade in a specific type of business,” the PoE wrote in their 2017 report.

“The Panel’s investigations have found widespread evidence that designated entities and/or entities involved in prohibited activities have also traded in minerals listed in the resolutions, a lucrative business which also draws in more clients to facilitate their business dealings.”

While the South Korean government did not release information on the KOTI’s movements before its seizure, tracking services show that its sister vessel appeared in South Korea’s Busan port on October 16.

The vessels’ Panamanian registration and layers of separation from DPRK entities provide a potential template for how tankers could load South Korean or Japanese oil products for delivery to North Korea, in likely breach of UN resolutions, local legislation, and maritime laws.

Edited by Oliver Hotham

Featured Image: Galveston Sunrise by Woody H1 on 2011-11-10 18:40:22