Lawmakers Push Trump for More North Korea Sanctions With Scores of Firms Untouched

By Ian Talley Features Dow Jones Newswires

U.S. lawmakers are dialing up pressure on the Trump administration to expand sanctions aimed at North Korea to dozens of businesses described by U.S. and United Nations officials as components of North Korea's illicit financing networks.

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A panel of experts assembled by the U.N. to examine North Korean sanctions evasion has identified nearly four dozen Chinese, Malaysian and North Korean companies they say have helped Pyongyang evade sanctions, finance its military and fund a nuclear weapons program, which haven't yet been added to the U.S. Treasury's sanctions list.

Meanwhile, U.S. lawmakers and Treasury officials have named more than a dozen other firms and ships they say are also helping fund the Kim regime or abetting in sanctions evasion, but haven't added them to their sanctions list.

The lists include networks of banks, shipping companies, importers, arms-sellers and other firms operating largely in mainland China, but also out of Hong Kong, Malaysia, Singapore and West Africa.

The Trump administration has been careful about moving against Chinese firms, in part because it is trying to persuade Beijing to shut down Pyongyang's trade and finance networks. But the administration is under growing pressure from Congress to widen its net.

"We haven't taken the most aggressive steps possible, and this is as serious a threat as I can plausibly imagine," Sen. Pat Toomey, (R., Pa.) said at a Senate Banking subcommittee hearing on North Korea last week. Mr. Toomey, along with another lawmaker on the committee, Sen. Chris Van Hollen, (D., Md.), is advancing bipartisan legislation that would require mandatory sanctions against all foreign banks financing North Korea. Sen. Cory Gardner (R., Colo.), meanwhile, is advancing legislation targeting the 10 largest Chinese importers of North Korean goods.

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"It's past time for us to name and shame them," said Sen. Van Hollen told The Wall Street Journal. The administration's new sanction powers are a positive step forward, but those actions are only as useful as their enforcement, he said. "Without teeth, Chinese banks and other firms will continue to evade these sanctions and do business with North Korea."

The Trump administration says it is mounting a major pressure campaign against North Korea and its foreign facilitators in China and other nations. Late last month, President Donald Trump issued a new executive order directing Treasury to sanction any firm or bank doing business with North Korea, though the Treasury hasn't fully implemented that order.

Some U.S. lawmakers say the administration is being too lenient and not applying sanctions stringently enough, especially on China, which accounts for roughly 90% of North Korea's trade. Several have pointed out that only one Chinese bank has been targeted for U.S. market exclusion. Former senior U.S. officials say the current constrictions are far smaller than the actions taken against Iran before Washington forced the country to negotiate a nuclear accord in 2015.

"Is there any reason why we shouldn't throw the kitchen sink at them, economically, hit them with as much as we can, as fast as we can, as hard as we can?" Arkansas Republican Sen. Tom Cotton, who sits on the intelligence and banking committees, pressed two top administration officials late last week.

"That's exactly what we're doing," said Sigal Mandelker, Treasury's undersecretary for terrorism and financial intelligence told the Senate banking panel.

Treasury officials declined to comment on specific companies named by the U.N., saying they won't prognosticate next steps. But the administration has signaled that it will escalate its sanctions, including banning Chinese banks from U.S. markets, if Beijing doesn't shut down the networks.

Out of a list of 57 companies accused by U.N. investigators of aiding North Korea, 43 of them haven't been sanctioned by Treasury.

One of them is Glocom, a firm also known as Pan Systems Pyongyang Branch, a North Korean company based in Malaysia that investigators say uses a series of front companies and agents to procure components and sell communications systems in violation of U.N. sanctions. Pan Systems and another associated firm, Wonbang Trading Co., are operated by North Korea's intelligence service, the Reconnaissance General Bureau, the U.N. says. Wonbang has also been one of the largest shippers of North Korea coal and Glocom has been investigated for arms shipments. Glocom, which maintains a website, didn't respond to repeated requests for comment on the allegations.

Another network cited by the U.N. is a transport firm named Vast Win Trading, whose ship, the Jie Shun, was seized in Egypt last year with 30,000 rocket-propelled grenades. The owner of that ship, Chinese national Sun Sidong, has business ties to a network owned by Chinese national Chi Yupeng through a shared email address in China's business registry, according to the nonprofit group, C4ADS, that monitors global threats. U.S. Attorneys and Treasury have already targeted the Chi Yupeng network with sanctions and seized funds. Mr. Sun's network of companies has remained so far untouched. In August, Mr. Sun sold his $1.3 million home in Great Neck, N.Y., for cash, according to his real-estate agent. Mr. Sun couldn't be reached through his U.S.- and U.K.-based companies or through an individual identified as his lawyer in New York property records.

One of his companies, Dandong Dongyuan Industrial Co. Ltd., is the largest exporter of what's called "dual use" equipment that can include navigation systems and guidance devices that can be used for ballistic missiles, according to C4ADS. Mr. Sun is also the CEO of Dongyuan Enterprise, a Flushing, N.Y., firm.

U.N. investigators named several banks in North Korea that were established, managed or owned by Chinese firms. First Eastern Bank in Rason, North Korea, owned by Unaforte Hong Kong, was set up to provide loans to Chinese individuals and companies, for example.

"The bank is fully independent and does not require proof of identity," the company said in its promotional material, adding that it is not subject to Chinese or North Korean jurisdiction. Neither Unaforte's corporate secretary nor one its three registered owners, Brian Hee Kee who maintains an address in Hawaii, responded to several requests for comment.

Chinese officials, in response to U.N. queries, said Chinese companies don't have authorization to establish banks in North Korea. U.N. investigators said they hadn't heard whether Chinese authorities had made any efforts to shut down those operations. China's central bank issued a directive last month to the financial industry to comply with U.N. sanctions. But China's record on compliance has been spotty, U.N. and U.S. officials say.

China's recent moves to back a partial oil-sale ban to North Korea, ban coal imports and the financial directive have brought praise from the Trump administration, though many officials still express wariness about Beijing's commitment to enforce U.N. sanctions.

"Our task now is to hold China and others to these internationally binding obligations and to convince China's leaders to more fully exert their decisive leverage over North Korea," Ms. Mandelker said. If China and others fail to move decisively, "We will not hesitate to act," the sanctions chief said.

Treasury has signaled it plans to focus on the shipping networks that carry banned goods and cash in and out of the North Korea. Marshall Billingslea, assistant secretary for terrorist financing, last month showed lawmakers intelligence maps and images of Chinese-owned ships evading sanctions in June and July. The owners or the parent companies of the cargo ships -- Bai Mai 8, Sun Union and Great Spring -- didn't respond to requests for comment. None have been added to Treasury's sanctions list.

Public naming-and-shaming, even if Mr. Gardner's bill doesn't make it into law, puts pressure both on the administration to act, but also on the companies.

China Dawn Garment Co., which conducts a broad range of trade with North Korea, promised in August to wind down its imports from the country. And China's Rizhao Steel said it won't import any more goods or services from North Korea without Beijing's permission.

But it is unclear yet whether the other top importers of North Korean goods into China, such as Dandong Hao Du Trading Co., Hunchun Xin Times and Shandong Yun Hill Mines, are planning to cut ties. The firms didn't respond to requests for comment.

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Xiao Xiao

in Beijing contributed to this article.

Write to Ian Talley at ian.talley@wsj.com

(END) Dow Jones Newswires

October 06, 2017 05:44 ET (09:44 GMT)