North Korea
July 24, 2019

Sanctioned Chinese Company, Executives Charged with North Korea-Related Evasion

By Samuel Rubenfeld and Edmund Xu

 

 

A Chinese company, its principal owner and three of its top executives, all of whom were previously sanctioned, were charged in a three-count indictment in New Jersey federal court with doing business with North Korean entities for years after they were designated, and obscuring the conduct through a series of front companies.

Dandong Hongxiang Industrial Development Co. Ltd. (DHID) is a Chinese company whose core business was trade with North Korea, according to the indictment. Ma Xiaohong, the principal owner of DHID, has been engaged in trade with, and on behalf of, North Korea from her base in Dandong since 1996, the indictment said. DHID, Ma and the other executives charged in the case were sanctioned in September 2016 by the Treasury Department over their links to North Korean weapons proliferation efforts. Ma used Liaoning Hongxiang Industrial Group, a company she formed, to operate a series of businesses, most of which, including DHID, used “Dandong Hongxiang” in their names, according to the indictment.

DHID had a trading value of USD 250 million in 2010, accounting for more than one-fifth of the total trading volume between China and North Korea at the time, according to a PowerPoint presentation cited in the indictment. The presentation identified North Korea as DHID’s primary customer.

DHID openly worked with North Korea-based Korea Kwangson Banking Corporation (KKBC) prior to KKBC’s designation, but it began to create or acquire almost two dozen front companies, some located in offshore jurisdictions known for their secrecy, to continue the conduct after KKBC was sanctioned, prosecutors said.

Kharon research

Log in for access to the latest updates and analysis on networks targeted by sanctions and sanctions-related risk. Don’t have an account? Click REQUEST AN ACCOUNT to receive information on how to get signed up.

Request an account or Log in