By Jonathan Stempel
(Reuters) – A Chinese company, its owner and three managers have been indicted on charges of conspiring to evade U.S. sanctions meant to stop North Korean firms from helping Pyongyang to develop nuclear weapons and ballistic missiles, the U.S. Department of Justice said on Tuesday.
The indictment was announced as the White House pushes to restart stalled talks aimed at ending Pyongyang’s nuclear program, after an aborted February summit between President Donald Trump and North Korean leader Kim Jong Un.
A federal grand jury in Newark, New Jersey, charged Ma Xiaohong, her company Dandong Hongxiang Industrial Development Co, and the managers with sanctions violations, conspiracy to defraud the United States and conspiracy to launder money.
The indictment came nearly three years after the defendants were first charged with sanctions violations. All the individual defendants are Chinese nationals.
Prosecutors said Dandong Hongxiang, located on the border between China and North Korea, once handled more than 20% of all trading volume between the countries, and used more than 20 “front” companies to conceal some of its financial dealings.
The defendants “tried to defraud the United States by evading sanctions restrictions and doing business with proliferators of weapons of mass destruction,” U.S. Attorney Craig Carpenito in New Jersey said in a statement.
None of the defendants could immediately be located, and it was unclear if they have lawyers. Carpenito’s office did not immediately respond to requests for comment.
In Beijing on Wednesday, foreign ministry spokeswoman Hua Chunying said China opposed the long-arm jurisdiction of the United States on Chinese firms.
“Second, the head of Dandong Hongxiang is suspected of economic crimes and China’s judiciary is currently dealing with this matter according to its law,” she told a daily briefing.
“Third, I want to emphasize that China has always been committed to carry out its duty on the United Nations agreement on non-proliferation and export controls.”
Dandong Hongxiang, an industrial machinery and equipment wholesaler, was accused of enabling the illegal sale of goods to North Korea from December 2009 to September 2015.
Prosecutors said it used its front companies to hide transactions that involved Korea Kwangson Banking Corp, a North Korean bank subject to U.S. sanctions, from the American banking system.
According to the indictment, the front companies were set up in offshore jurisdictions such as Anguilla, the British Virgin Islands, Hong Kong, the Seychelles and Wales to hide Korea Kwangson’s role from U.S. “correspondent” banks, including a bank processing centre in Newark.
The U.S. treasury department’s Office of Foreign Assets Control imposed sanctions on Dandong Hongxiang when the charges were announced in September 2016, the first time Washington had taken such a step against a Chinese company.
Ma and the other individual defendants each face up to 20 years in prison on the most serious of the charges.
(Reporting by Jonathan Stempel in New York; Editing by Matthew Lewis and Clarence Fernandez)