Prosecutors also charged the Singaporean man who bought the vessel in U.S. dollars
By Samuel Rubenfeld, Priscilla Kim and Edmund Xu
Tuesday, April 27, 2021
The U.S. government seized the Courageous, an oil products tanker allegedly used to breach international sanctions against North Korea, prosecutors announced on Friday.
Prosecutors also filed a criminal complaint against Kwek Kee Seng, a Singaporean national, who allegedly had bought and operated the Courageous to make illicit deliveries of petroleum products through ship-to-ship transfers with North Korean vessels and shipments to the port of Nampo. Kwek, who is at large, bought the vessel in July 2019 for about USD 580,000 using a China-based shell company called New Eastern Shipping, the criminal complaint said.
The Courageous engaged in a series of activities seen under U.S. advisories as indicators of potential sanctions evasion, including shutoffs of its location (AIS) transponder, ship-to-ship transfers and concealment, according to a 47-page civil-asset forfeiture complaint.
“The seizure of the Courageous is another step in sinking North Korea’s efforts to circumvent sanctions on the high seas,” said Assistant Attorney General John Demers, in a statement.
The U.S. move marks its second seizure of a vessel involved in North Korea-related sanctions violations: In May 2019, the U.S. seized a cargo vessel, the Wise Honest, alleging it was part of a broader evasion scheme conducted by the government in Pyongyang. The Wise Honest departed U.S. waters in October 2019 after it was sold at auction; it was later scrapped.
The Courageous is listed on maritime records as being owned and operated by New Eastern Shipping, though the U.S. civil forfeiture complaint cited an individual as saying the ownership structure could be rearranged to make the Belize-based Courage Maritime S.A. a “front owner” of the vessel. Maritime data, as of April 2021, lists Courage Maritime S.A. as an operator of the Courageous. Kwek used Courage Maritime, New Eastern Shipping and other companies to obscure his activity, the criminal complaint said. The purchase of the vessel was made in a series of nine separate U.S.-dollar transactions in July 2019, the complaints said. Kwek also paid thousands of dollars for additional services related to the Courageous, including registration fees, ship materials and salaries for members of the crew, according to prosecutors.
Kwek currently owns and directs two Singapore-based companies, and Swanseas Maritime, a third Singaporean company tied to him, has been dissolved since April 2020, according to a review of corporate records by Kharon.
The Courageous conducted at least four ship-to-ship transfers in 2019, according to multiple investigations by a United Nations Panel of Experts (POE). Ship-to-ship transfers are a principal method of North Korean sanctions evasion, the U.N. has said. Cambodian authorities seized the Courageous in March 2020 and had held the tanker under a U.S. warrant, prosecutors said.
For a four-month period between August and December 2019, the Courageous had turned off its AIS in an attempt to conceal information about its location, course and speed, the complaints said. One of the ship-to-ship transfers investigated by the U.N. was cited in the forfeiture and the criminal complaint against Kwek: In September 2019, the Courageous conducted a transfer with the Saebyol, a North Korean vessel sanctioned by the U.S. and the U.N. in 2016.
During the period of the ship-to-ship transfer with the Saebyol, the Courageous was a stateless vessel; its registration in St. Kitts and Nevis was terminated in August 2019 and it wasn’t registered with another flag until November of that year, according to the forfeiture complaint. North Korea exploits vulnerabilities in flag registries to evade U.N. sanctions, Kharon reported in November 2019.
The transfer by the Courageous with the Saebyol occurred “with the alleged involvement” of T-Energy International Co. Ltd., a Taiwanese firm, the most recent U.N. panel report said. T-Energy International was cited as having been involved in several additional ship-to-ship transfers with vessels that have ties to North Korea, including several by the Courageous: Two in August 2019 with the Sam Jong 1 and Kum Jin Gang 2, and the other a month later with the Paek Ma. The Sam Jong 1 and Paek Ma were both sanctioned by the U.S. and U.N. in 2018.
In November 2019, weeks after the oil transfer and during the period in which the Courageous had shut off its AIS, the vessel was seen in satellite photos close to the petroleum piers at Nampo, a North Korean port, according to the forfeiture and criminal complaints. The U.N. has said Nampo serves as a “hub for suspected illegal activity,” including for ship-to-ship transfers.
Kwek, who bought the Courageous, was also involved in North Korea-related maritime activity prior to purchasing the vessel, according to the criminal complaint filed against him.
In 2018, Swanseas Port Services, a Singaporean company 50 percent owned by Kwek, had made U.S.-dollar payments related to the Viet Tin 1 and directed the Vietnamese vessel to travel to the port of Nampo, the complaint said.
An August 2019 U.N. panel report cited in the criminal complaint had said the Viet Tin 01 made a port call in Singapore, and then sailed to Nampo about a month later. The report also said an individual by the name of “Kwek K.S.,” the initials for Kwek Kee Seng, was the broker for the North Korean petroleum shipment conducted by the Viet Tin 01. Kwek denied the allegations at the time, however, saying he only provided “translation services.”
A hand-drawn map from Kwek for the voyage had included instructions to switch off the AIS, and to turn it on daily only at specific times to receive email and transmit locations to the map’s user, according to the U.S. criminal complaint. Swanseas Port Services was also used to make additional payments in 2019 and 2020, the complaint said.
Vietnamese authorities are investigating the Viet Tin 1 matter, though the probe has been hampered by a number of challenges, including the COVID-19 pandemic, according to the most-recent U.N. panel’s report. The company that owns the Viet Tin 1 is under financial distress and is unable to repair the vessel, which lies in atrophy in the area for unusable ships at a Malaysian port, the U.N. report said.
Latest on Kharon