SANCTIONS NOTIFICATION: DESIGNATION OF KARL LEE,

S E C R E T STATE 034795 SIPDIS E.O. 12958: DECL: 04/09/2019 TAGS: PARM MTCRE PREL ETTC CH IR SUBJECT: SANCTIONS NOTIFICATION: DESIGNATION OF KARL LEE, RELATED ENTITIES, AND NEW LIMMT ALIASES UNDER E.O. 13382 REF: A. A. BEIJING 728 ¶B. B. STATE 25689 ¶C. C. BEIJING 207 ¶D. D. BEIJING 154 ¶E. E. STATE 4887 ¶F. AND PREVIOUS Classified By: Classified by: EAP DAS John Norris for reasons 1.4 (b) and (d). ¶1. (U) This is an action request. Embassy Beijing please see paragraph 4. -------------- BACKGROUND/SUMMARY -------------- ¶2. (U) Summary: On April 7, 2009, the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") designated Karl Lee, the commercial manager of LIMMT ECONOMIC AND TRADE COMPANY, LTD. ("LIMMT"),and six other entities under Executive Order ("E.O.") 13382, an authority aimed at freezing the assets of WMD proliferators and those who support them. Additionally, OFAC identified eight aliases used by LIMMT. LIMMT was designated under E.O. 13382 on June 13, 2006, for its provision of material support to Iran's missile program. These OFAC designations were also made in conjunction with legal action taken against Karl Lee by the State of New York. We would like to inform appropriate officials in the Chinese government of these designations and ask them to take actions against LIMMT and other proliferators. ¶3. (U) Background: Since February 2006, we have repeatedly discussed with China our concerns regarding the proliferation-related trading activities of the Chinese firm LIMMT and its extensive assistance to Iran's ballistic missile program (Reftels). On February 2, 2009, the U.S. imposed sanctions against LIMMT under the U.S. missile sanctions law and Executive Order 12938 ("Proliferation of Weapons of Mass Destruction"). ¶4. (U) Background (cont'd) The April 7 designations were made in conjunction with legal action taken against Karl Lee by the Manhattan District Attorney. Since late 2008, the New York County District Attorney's Office (DANY) has conducted an investigation into the activities of Karl Lee and his efforts to sell military and dual-use items (such as graphite and tungsten) to Iran's Defense Industries Organization (DIO). The investigation has also uncovered the use of fraud and deceit to gain access to the U.S. financial system through the use of undesignated front or cover names for LIMMT. On April 7, the DANY unsealed an indictment against Karl Lee and LIMMT on New York State charges of falsification of documents and conspiracy. -------------- OBJECTIVES/ACTION REQUEST -------------- ¶5. (S) We would like to notify host government officials about these measures. Washington requests Embassy Beijing inform appropriate host government officials at the earliest available opportunity of the designation of Karl Lee and related entities, the publication of eight new LIMMT aliases, and the unsealed indictment in the State of New York by drawing from the following objectives. Post should also consult the Department of the Treasury's press release, which can be found at: http://http://treasury.gov/press/releases/tg8 4.htm; the Manhattan District Attorney's press release: http://manhattanda.org/whatsnew/press/2009-04 -07; and the copy of the indictment: http://manhattanda.org/whatsnew/press/2009-04 -07/ Indictment%20LFW%20and%20Limmt%20%20FINAL.pdf . -- Note that we have discussed with the PRC on multiple occasions our long-standing concerns regarding the proliferation-related trading activities of LIMMT Economic and Trade Company Ltd.(LIMMT). -- Reiterate that we also advised the PRC several times that LIMMT's trade with Iran's missile program could potentially result in the imposition of measures under U.S. legal authorities. -- Inform appropriate host government officials that the actions of Karl Lee and LIMMT now include alleged violations of U.S. law, including the creation of front companies for the express purpose of evading U.S. sanctions and laws. -- Urge host government officials to ensure that Karl Lee and LIMMT do not continue to engage in proliferation-related activities and take additional actions as appropriate. -------------- REPORTING DEADLINE -------------- ¶6. (U) Post should report results within seven business days of receipt of this cable. Please slug replies for ISN, T, EAP, EUR, TREASURY, and NEA. Please use the caption SIPDIS in all replies. -------------- POINT OF CONTACT -------------- ¶7. (U) Washington point of contact for follow-up information is Kevin McGeehan, ISN/CPI, (202) 647-5408. ¶8. (U) Department thanks Post for its assistance. CLINTON