Satellite photographs and other intelligence gathered by U.S. officials provide what they say is detailed evidence of at least six Chinese-owned or -operated cargo ships violating United Nations sanctions against North Korea.
The U.S. compiled the information from Asian waters as part of the Trump administration’s strategy to pressure North Korea into giving up its nuclear weapons and long-range missiles.
The effort identified the ships by name and tracked their movements. The ships either entered ports in North Korea and transported what U.S. officials concluded was illicit cargo to Russia and Vietnam or made ship-to-ship transfers at sea.
According to the U.S., which presented the information to a U.N. sanctions committee, the ships also made extensive maneuvers designed to disguise their violations of the U.N. sanctions. In August, the Security Council banned North Korean exports of coal, iron ore, lead and seafood, which have generated an estimated $1 billion a year in hard currency for North Korea.
A review by The Wall Street Journal of corporate records and shipping databases shows that the six vessels identified by the U.S. are owned or managed by Chinese companies or firms that are registered in Hong Kong and have shareholders who are Chinese nationals and have used addresses in mainland China.
In December, the U.S. asked the sanctions committee to formally designate the six ships as sanctions violators. China resisted that request but allowed four other vessels with no apparent links to Chinese companies to be blacklisted. The names of the four blacklisted ships were announced by the U.N., but the other six weren’t.
China’s foreign ministry said Beijing abides fully with Security Council resolutions and deals with violations in accordance with the law. “Any measure taken by the Security Council should be based upon conclusive evidence and facts,” the ministry told the Journal in a written statement.
The foreign ministry didn’t respond to questions about the six Chinese-owned or -operated cargo ships that were dropped from the blacklist.
The Chinese delegation to the U.N. provided the committee with no formal explanation of why China was willing to allow some ships to go on the list but not others. Some U.S. officials believe the goal was to avoid the embarrassment of ships with Chinese ties being found in breach of sanctions.
Chinese officials have investigated at least four of the six vessels, and several shipowners and managers have been questioned by officials from China’s state-security and foreign ministries, as well as local customs and maritime agencies, according to some of the people questioned.
At least one cargo-ship manager has been detained as part of a criminal investigation, said the manager’s son, a lawyer and the ship’s owner. They said the manager’s detention is likely due to involvement in trade with North Korea.
The ship’s manager hasn’t been formally charged with wrongdoing, the lawyer said. China’s foreign ministry and customs agency didn’t respond to questions about the matter.
Declassified intelligence reports, photos and maps shared with the U.N. by American officials asserted multiple instances of Chinese ships violating Security Council resolutions banning North Korean coal exports and ship-to-ship transfers of refined petroleum bound for North Korea. The Journal reviewed much of that evidence.
The U.S. said the Chinese-owned Glory Hope 1 was violating the U.N.’s complete ban on North Korean coal exports within days after it was passed in August.
The vessel crossed the Yellow Sea near North Korea under a Panamanian flag, entered North Korea’s Taedong River and then turned into the North Korean port of Songnim, according to the information presented to the U.N.
While approaching North Korean waters, the Glory Hope 1 turned off its Automatic Identification System, or AIS, a transmission device that discloses a ship’s position to other ships, satellites and land-based tracking systems.
Turning off AIS can increase the risk of collision at sea, though international maritime guidelines say ship captains may do so in case of pirates but must turn the device back on as soon the danger passes. A shipowner or operator could give an instruction to shut off the device and would likely know if it had been, according to shipping and sanctions experts.
“When AIS is off in a vast sea, you are basically invisible,” said Ioannis Sgouras, a veteran Greek captain of crude-oil carriers. “You can still be picked up by other ships on radar if you are in range, but they can’t tell the ship’s name, cargo or destination.”
U.S. intelligence officials used satellite photos to monitor the Glory Hope 1 as it took on a load of North Korean coal Aug. 7. The ship then proceeded toward the coast of China, with its AIS turned off.
Just as switching off the AIS beacon can disguise a ship’s movements, a vessel can advertise its location by switching on the transmission device, much like turning on a flashlight in a darkened room. Both techniques were essential for the Glory Hope 1 as it carried out its mission, according to the analysis submitted by the U.S. to the U.N. sanctions committee.
The ship’s crew activated the AIS tracking device as the Glory Hope 1 approached the Chinese port of Lianyungang on Aug. 15. Instead of entering the port, the vessel “loitered” offshore, information provided to the U.N. shows.
The U.S. suggested the stop was meant to make it look as if the Glory Hope 1 had gone there to take on Chinese cargo. For more than a week, the ship hugged the Chinese coast until it approached Cam Pha, Vietnam, where its tracker was turned off again.
A U.S. satellite photo provided to the U.N. sanctions committee shows the ship anchored and being unloaded Aug. 26 near the Vietnamese port.
The Glory Hope 1 is owned by a Chinese company and operated by Hong Kong-registered Glory Hope Trade Co., shipping databases and corporate records reviewed by the Journal show. Glory Hope Trade’s two shareholders are Chinese nationals with addresses in the eastern Chinese city of Nantong.
One of the shareholders, Lu Yuliang, has been detained by local authorities since late August, according to the vessel’s owner and Mr. Lu’s son, Lyu Cong. Mr. Lu hasn’t appeared in court, his son said.
“I think it is the coal from North Korea,” said Mr. Lyu, who called his father a scapegoat. A spokesman for the provincial government said authorities weren’t aware of the case and haven’t found any alleged sanctions violations. The ship’s other shareholder couldn’t be reached.
North Korea needs hard currency to sustain its military machine, maintain a privileged lifestyle for its elite and other forms of financial aid. U.S. officials say the regime’s revenue sources include cybercrime, remittances from workers abroad and illicit exports of North Korean anthracite coal, some of the purest in Asia.
“For many years, coal has been the center of gravity for North Korea’s revenue generation,” Marshall S. Billingslea, the assistant Treasury secretary for terrorist financing, told the House Foreign Affairs Committee in September.
A cargo ship of the Glory Hope 1’s size typically could carry as much as 5,500 tons of coal, which could be worth $1.5 million at market rates. North Korean coal hauled by the vessel almost certainly would have been sold at a discount. Ships that dare to transport illicit coal would likely get paid a substantial premium to standard shipping rates.
On Aug. 31, the Chinese-owned vessel Kai Xiang picked up its load of coal at Nampo, North Korea, with its tracking beacon off, according to the declassified intelligence provided to the U.N. sanctions committee. The ship then proceeded toward the Chinese coast and activated its AIS system on Sept. 4.
Two days later, the Kai Xiang stopped in Hong Kong and then went to Cam Pha, where American satellite photos show the ship being unloaded in anchorage at the Vietnamese port.
A senior executive at a Chinese contractor that handled safety management for the Kai Xiang said in an interview that the same ship also delivered North Korean coal to Vietnam in June 2017.
Because of the shipment, the company terminated its contract with the Kai Xiang in July, the executive said. At the time, the U.N. had capped North Korean coal exports at $400 million a year, or 7.5 million metric tons, whichever was lower. The Kai Xiang’s owner and shareholders couldn’t be reached.
U.S. officials said one Chinese-registered ship journeyed to the Russian port city of Vladivostok to create the impression that the vessel was hauling Russian coal.
The Xin Sheng Hai set sail from China around Aug. 10, went around the Korean Peninsula and then loitered off the Russian coast Aug. 18 and 19 in anchorage with its tracking device on, according to the U.S. officials. The ship didn’t enter the port.
After two days, the Xin Sheng Hai turned off its beacon and proceeded to the North Korean port of Nampo, where it was photographed Aug. 31 taking on a coal shipment, the U.S. said. The coal was delivered to Vietnam in late September.
The vessel’s owner said it didn’t take part in illicit trade with North Korea. Russian officials at the U.N. and in Washington didn’t respond to requests for comment. Vietnam’s embassy in Washington referred questions to the foreign ministry, which didn’t respond.
Another cargo ship, the Yu Yuan, was loaded with coal at Wonsan, North Korea, on Aug. 12 and then loitered outside the Russian port of Nakhodka for six days without making a delivery there, according to the U.S. A Sept. 5 photo shows the Yu Yuan delivering its coal to the port of Kholmsk on Russia’s Sakhalin Island.
The details were part of the ammunition used by American officials to seek the blacklisting of 10 ships by the U.N.
Six of the 10 ships were registered with mainland Chinese or Hong Kong ownership, including the Glory Hope 1, Kai Xiang, Xin Sheng Hai and Yu Yuan.
U.S. officials said the remaining two, the Lighthouse Winmore and Sam Jong 2, made a ship-to-ship transfer in October of refined petroleum bound for North Korea. Transfers to North Korean-flagged vessels such as the Sam Jong 2 were banned by the U.N. in September.
Formally designating the ships as sanctions violators would require all U.N. members to ban the ships from entering their ports.
China, a permanent member of the Security Council, had voted in favor of a series of sanctions resolutions last year to punish North Korea for tests of nuclear weapons or missile-based delivery systems.
In December, though, China twice delayed its response to the sanctions committee and then asked for the removal of the six Chinese-owned or -operated vessels from the proposed blacklist, according to diplomats familiar with China’s communications. The sanctions committee includes all 15 members of the Security Council and operates by consensus, which means China essentially has veto power over committee decisions.
American officials say the smuggling problems seem to be getting worse. South Korean authorities impounded in late December the Koti, a Panamanian-flagged vessel accused of transporting oil to North Korea. That ship wasn’t among the 10 on the U.S.’s proposed blacklist.
Photos taken by the U.S. show the ship transferring oil in the East China Sea to the North Korean tanker Kum Un San 3. The tanker has sought to hide its identity by painting over its name and displaying a false name on its stern, according to the U.S.’s analysis.
Shipping databases show the vessel is linked to companies in Hong Kong. The companies couldn’t be reached for comment. China’s foreign ministry said the Koti docked at a Chinese port Dec. 18 and then left empty.
H.R. McMaster, President Donald Trump’s national security adviser, has warned of severe reprisals for ships that violate sanctions.
At a conference hosted last month by the Policy Exchange, a British think tank, Lt. Gen. McMaster said: “A company whose ships would engage in that activity ought to be on notice that that might be the last delivery of anything they do for a long time, anywhere.”
