Any deal emerging from the Iran nuclear talks is supposed to block all Iran’s pathways to the bomb, or so promises President Obama. So, what does the Obama administration propose to do about such conduits as Chinese businessman and alleged serial proliferator to Iran, Li Fangwei?
Also known as Karl Lee, Li Fangwei over the years has acquired a reputation as a maestro of illicit traffic, a comprador based in China for Iran’s illicit nuclear and ballistic missile programs.
For more than a decade, American authorities have been trying to shut down Li’s network, starting with his metallurgical manufacturing outfit, the LIMMT Economic and Trade Company, and proceeding to the network of alleged front companies with which U.S. officials say Li has tried to evade sanctions. With increasing urgency, the U.S. has more recently been seeking to apprehend Li himself. Since April, 2014, the State Department has been offering a reward of up to $5 million for “information leading to the arrest and/or conviction of Chinese weapons proliferator Li Fangwei, also known as Karl Lee.”
The Federal Bureau of Investigation provides a blurry photo of Li on its “Wanted” list, showing him with a shock of dark hair, and describing him as 5’7”, with a mole on his upper lip. The FBI notes that Li is a Chinese citizen, speaks Mandarin and English and was “previously sanctioned by the United States for his alleged role as a principal supplier to Iran’s ballistic missile program.”
U.S. court documents provide a street address for Li’s LIMMT company, in China’s northeast port city of Dalian. LIMMT was placed under sanctions in 2004 by the State Department, and in 2006 the U.S. Treasury added LIMMT to its blacklist of Specially Designated Nationals and Blocked Persons (the SDN list), barring LIMMT from engaging in transactions through or with the U.S. financial system.
In April, 2009, former Manhattan District Attorney Robert Morgenthau announced that both Li and his company, LIMMT, had been indicted, in absentia
Li carried on with business. In April, 2009, former Manhattan District Attorney Robert Morgenthau announced that both Li and his company, LIMMT, had been indicted, in absentia, in the Supreme Court of the State of New York, on 118 counts “relating to the misuse of Manhattan banks and the proliferation of illicit missile and nuclear technology to the Government of Iran.” The indictment described a network of companies fronting for LIMMT, with names such as Blue Sky Industry Corporation and Wealthy Ocean Enterprises, involved in globe-girdling deals in countries ranging from South Africa to Brazil, Chile, Poland and Sweden.
In tandem with that 2009 indictment, Treasury designated Li, describing him as the “commercial manager” of the already-designated LIMMT. Treasury also identified what it alleged were “eight aliases” used by LIMMT to evade sanctions.
In May, 2009, Morgenthau testified to the Senate Committee on Foreign Relations that despite U.S. sanctions on LIMMT, the company had “used its aliases to continue sending banned missile, nuclear and so-called dual-use materials” to Iranian military-related organizations producing “high-tech weapons systems.” Morgenthau added: “Mr. Li has supplied the Iranian military with weapons material for years while scoffing at international agreements restricting such trade. For Mr. Li and his co-conspirators, ‘business as usual‘ meant violating the law and providing materials for weapons of mass destruction to a dangerous regime.”
Morgenthau noted that there was no extradition treaty between the U.S. and China, “so that if Mr. Li is to face justice, it will be before a Chinese tribunal for his violations of Chinese law.”
Five years later, Li was still in business. On April 29, 2014, he was charged, in absentia, in a Manhattan federal court with what the Southern District Attorney’s press release described as “using a web of front companies to evade U.S. sanctions.” The U.S. Attorney alleged that Li had “built an outsized network of China-based front companies,” doing “millions of dollars of business with Iran” — including the sale of metallurgical goods and related components which the United Nations forbids selling to Iran because they are of “nuclear-related dual use.”
That same day, Treasury designated “eight China-based front companies acting for or on behalf of Karl Lee.” U.S. authorities seized $6.895 million in funds held by U.S. banks doing correspondent business with Chinese banks allegedly used by Li Fangwei’s network. And State announced its bounty of up to $5 million.
Today, Li remains on the lam
In a paper published May 19, 2014 by Project Alpha of Britain’s King’s College Centre for Science and Security Studies, authors Daniel Salisbury and Ian J. Stewart describe Li as “one of the most prolific ‘serial proliferators’ seen in recent years.” Referring to Pakistan’s notorious A.Q. Khan nuclear proliferation network, the authors state, “not since A.Q. Khan has a manufacturer of proliferation-sensitive technologies so brazenly and repeatedly sold their goods for use in prohibited programmes despite ongoing attention from national and international authorities.”
Today, Li remains on the lam. When I contacted China’s Mission to the United Nations this week, asking for comment for this article, they did not respond. This January the Congressional Research Service reported that a House Armed Services subcommittee which inquired last year into the Li Case had found “China has made little apparent effort to respond to his activities.”
In March, 2013, Reuters reported having contacted Li for an article on fresh allegations by anonymous security officials that he was still doing millions worth of illicit business with Iran. According to Reuters, Li denied any wrong-doing or deception, saying he no longer responded to calls from Iranian clients, and “Sure, we did business with Iran, but we did not export the goods they said we did, missiles or whatever.”
How does it work, that China, a country known for tracking its democratic dissidents around the clock, has not apprehended metallurgical manufacturer and alleged serial proliferator Li Fangwei?
State Department officials refused my requests for comment on the Li case. A Justice Department spokesman went only so far as to confirm that Li “remains a fugitive.” But secret State Department cables from the period 2006-2009, released online by Wikileaks, provide some insights on U.S.-China interactions over Li and his LIMMT network. There are many cables on the topic, spanning the late Bush and early Obama administrations. Here’s a sampling:
In June, 2006, a U.S. diplomat in Beijing informed a Chinese foreign ministry official of the U.S. decision to designate four Chinese companies, including Li’s LIMMT, for supporting Iranian missile proliferation. “China shocked,” was the caption on the resulting cable. The Chinese official urged the U.S. to “stop the designations,” which would “violate trust and undermine existing U.S.-China cooperation on nonproliferation and export controls.”
U.S. diplomats in Beijing continued to provide China’s authorities, on numerous occasions, with information on LIMMT’s alleged illicit proliferation sales to Iran
U.S. diplomats in Beijing continued to provide China’s authorities, on numerous occasions, with information on LIMMT’s alleged illicit proliferation sales to Iran. These encounters included a demarche delivered on August 9, 2007 by the U.S. ambassador. That was followed by a meeting in which a U.S. political officer “stressed the exacting details and prodigious volume of LIMMT-related information” which the U.S. had passed to China during the preceding 18 months, covering LIMMT’s “prolific sales” of dual-use items to U.N.-sanctioned entities in Iran. China’s official reply was that its investigation was continuing, that LIMMT had already been punished, and LIMMT’s “license has been revoked.”
In Feb. 2008, a U.S. diplomat in Beijing met with a Chinese foreign ministry official to cite evidence of LIMMT’s continuing shipments of controlled materials to Iran. The Chinese official “emphasized that investigations of such sensitive and complex issues take time.”
In March, 2008, another State Department cable reported that according to yet another Chinese official, China had imposed “administrative measures” since 2003 on LIMMT and Li, and continued to “monitor” him. But according to this Chinese official, there were complications because under Chinese law some of Li’s dual-use exports fell into a “gray area,” in which Li, being “clever and smart,” knew how to maneuver.
This time, China’s official word was that as of June, 2006 — two years earlier — LIMMT “no longer existed.”
The U.S. continued to press the case. In response, in June, 2008, a Chinese official briefed a number of U.S. embassy officials on China’s investigation into Li and his LIMMT network. This time, China’s official word was that as of June, 2006 — two years earlier — LIMMT “no longer existed.”
This was followed in Jan. 2009, during the first week of the Obama administration, by the Chinese foreign ministry summoning a U.S. embassy official in Beijing, to complain about “unacceptable” and “unilateral” U.S. sanctions on LIMMT and another company. China hoped the U.S. would “correct these errors.”
Three months later, in April, 2009, a U.S. diplomat in Beijing delivered a demarche notifying China that Treasury had designated Li and half a dozen alleged LIMMT fronts, and urging China to stop their “proliferation-related activities.” A Chinese official responded: “China’s business is its own business”
Soon after that, the Wikileaks window closes. But China struck a similar note in public last year, protesting when U.S. federal prosecutors announced charges against Li for alleged sanctions violations “from 2006 through the present” — including procurement for Iran of dual-use items that could be used to produce or deliver “weapons of mass destruction.”
“The Chinese side is firmly opposed to the United States’ unilateral sanctions.”
As quoted by China’s state-controlled Xinhua News Agency, a Chinese foreign ministry spokesman responded that: “The Chinese side is firmly opposed to the United States’ unilateral sanctions.”
But isn’t China supposed to be also firmly opposed to proliferation to Iran? China has been one of the five world powers partnering with the U.S. at the Vienna bargaining table, along with Russia, France, Britain and Germany. Officially, China has for years been part of the international effort to prevent Iran getting nuclear weapons, or — as the U.N. Security Council would also have it — ballistic missiles to deliver them. China holds a permanent veto-wielding seat on the U.N. Security Council, which passed binding sanctions resolutions on Iran in 2006, 2007, 2008 and 2010. Apparently, none of that sufficed for China to shut down Li and his LIMMT network.
Much of the haggling at the Iran nuclear talks has focused on how to monitor activity inside Iran itself. But Iran has a prolific history of deception, including the building of secret nuclear facilities, and webs of illicit suppliers abroad, eager to profit from its oil wealth. If a nuclear deal is struck, in which even the inconvenience of sanctions is removed, what then persuades China to stop Li, or his ilk?
