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.

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BACKGROUND/SUMMARY
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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.


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OBJECTIVES/ACTION REQUEST
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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.

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REPORTING DEADLINE
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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.

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POINT OF CONTACT
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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