Interesting Article in Today's WSJ re: Chinese Companies Evading US Sanctions on Iran

From Today's Wall Street Journal
Text By PETER FRITSCH
Chinese companies banned from doing business in the U.S. for allegedly selling missile technology to Iran continue to do a brisk trade with American companies, according to an analysis of shipping records.

A unit of state-owned China Precision Machinery Import-Export Corp., for example, has made nearly 300 illegal shipments to U.S. firms since a ban was imposed on CPMIEC and its affiliates in mid-2006, according to an analysis of shipping records by the Wisconsin Project on Nuclear Arms Control, a nonprofit proliferation watchdog.

A Wall Street Journal review of the records and interviews with officials at some of the American companies indicate that the U.S. firms likely were unaware they were doing business with banned entities, and in many cases were tripped up by altered company names.

The CPMIEC shipments, worth millions of dollars, include everything from anchors and drilling equipment to automobile parts and toys. In many cases, CPMIEC acted as a shipping intermediary -- activity also banned under a 2006 presidential order.

The ability of CPMIEC and other foreign companies to continue doing business in the U.S. despite the sanctions comes as the Obama administration considers fresh economic sanctions against Iran. The illegal shipments suggest that U.S. sanctions have become so numerous and complex that they have become difficult to enforce.

More
Iran Plans Large-Scale War Games "We spend a lot of time convincing other countries that we need tighter sanctions on Iran when we need to better enforce our own laws already on the books," says Wisconsin Project director Gary Milhollin, a former consultant to the Pentagon on nuclear-proliferation matters.

Responsibility for enforcing sanctions falls to the Treasury Department's Office of Foreign Assets Control, or OFAC, an office with 69 investigators and a 2009 budget of $29 million. OFAC is responsible for enforcing more than 20 sanctions programs targeting everything from nuclear proliferators and terror financiers to illegal imports of Cuban cigars.

OFAC hasn't fined any U.S. companies for trading with CPMIEC or other Chinese companies banned in 2006. In response to inquiries from the Journal, Treasury Department officials investigated CPMIEC and its subsidiaries further. On Thursday, OFAC added one CPMIEC unit to its list of banned companies.

"If we see U.S. companies that are knowingly engaging in transactions with a proliferation target or front company, or that those targets are attempting to circumvent U.S. sanctions, we pursue those cases aggressively," says OFAC Director Adam Szubin in an interview. Overall, he says, the sanctions program makes it difficult for nuclear proliferators to do business in the U.S.