From Bloomberg News:
Chinese Firm Indicted for Misusing Banks, Aiding Iran (Update3)
By Karen Freifeld
April 7 (Bloomberg) -- A Chinese company and one of its employees were charged with misusing U.S. banks and aiding Iran’s acquisition of missile and nuclear technology, Manhattan District Attorney Robert Morgenthau said.
Morgenthau filed a 118-count indictment today against LIMMT Economic and Trade Co., and Li Fang Wei, a manager at the Dalian, China-based company. LIMMT is a major supplier of banned weapons to the Iranian military, Morgenthau said.
Between November 2006 and September 2008, LIMMT sent and received dozens of illegal payments through U.S. banks by using aliases and shell companies, according to a statement from Morgenthau’s office. He said that because LIMMT was prohibited from dealing with U.S. banks, transfers in its name would be banned.
By using aliases, LIMMT fooled U.S. banks into processing dozens of illegal transactions, Morgenthau said. “Our banks have high standards and sophisticated systems to stop these transactions, but this conduct was specifically designed to defeat their systems,” he said.
Some of the U.S. banks involved were Bank of New York Mellon Corp., Bank of America Corp. and JPMorgan Chase & Co., Morgenthau said.
The U.S. Department of the Treasury’s Office of Foreign Assets Control sanctioned LIMMT in 2006 for its role in the proliferation of weapons of mass destruction to Iran, Morgenthau said.
In the three years since LIMMT was sanctioned, it used aliases to send banned missile, nuclear and other “dual use” materials to subsidiaries of the Iranian Defense Industries Organization, Morgenthau said. The organizations Iran set up to get and produce weapons included Amin Industrial Group, Khorasan Metallurgy Industries, Shahid Sayyade Shirazi Industries and Yazd Metallurgy Industries.
Among the materials shipped from LIMMT to the Iranian Defense Industries Organization were 15,000 kilograms of an aluminum alloy used almost exclusively to make long range missiles; more than 30,000 kilograms of tungsten-copper plates, and 1,700 kilograms of graphite cylinders used for banned electrical discharge machines, according to the indictment.
In January, Morgenthau announced a $350 million settlement with Lloyds TSB Bank Plc, which allowed Iran and other sanctioned countries illegal access to the U.S. financial system. The settlement was made with both New York and federal authorities. The LIMMT probe grew out of the investigation into Lloyds and other banks, Morgenthau said.
Prosecutors in January said they found evidence of Iranian interests trying to buy tungsten and other materials used in the guidance systems of long-range missiles. Lloyds wasn’t the bank involved in those attempts, prosecutors said.
At the time, Morgenthau said nine major foreign banks besides Lloyds were under investigation for using the same technique to disguise illegal money transfers. Credit Suisse Group AG and Barclays Plc have said they’re cooperating in the probe.
U.S. banks have software filters that look for entities barred from doing business in the country, prosecutors said. Lloyds stripped out identifying features on the wires so the filters wouldn't catch them. Credit Suisse and Barclays say they are among the banks that have been probed for their handling of money subject to sanctions.
In its New York agreement, Lloyds admitted that from 2001 to 2004 it allowed Iranian banks and their customers to move more than $300 million by stripping information. The Iranian banks included Bank Melli, Bank Saderat and Sepah Bank, according to a statement by Morgenthau.
U.S. laws bar the transfer of funds from Iran and other sanctioned countries without authorization by the U.S. Treasury Department.
To contact the reporter on this story: Karen Freifeld in New York at email@example.com.
Last Updated: April 7, 2009 11:44 EDT