US moves on Iran nuclear trade

[FT News]

New York prosecutors joined the Obama administration to shut downa Chinese-based network that allegedly supplied Iran's nuclear and missile programmes with the unwitting aid of some of Wall Street's biggest banks.

The action is likely to prove a test of the administration’s relationship with Beijing, which to date has been unenthusiastic about sanctions on Tehran. The move came as US Vice-President Joe Biden warned Israel not to strike Iran and as Washington sought to win time for possible negotiations with the Islamic Republic by slowing down Tehran’s progress towards nuclear weapons capability.

Robert Morgenthau, Manhattan district attorney, unsealed an 118-count indictment, accusing Li Fang Wei, a Chinese national, of setting up front companies to disguise the illegal sales.

The indictment claims that Mr Li, also known as Karl Lee, used different names and front companies to access the US bank system, using at least six big banks, including Citigroup, JPMorgan and Bank of America. The US Treasury banned individuals and companies from doing business with Mr Li, eight front companies and six allegedly connected Iranian groups.

In comments that highlight Washington’s hope that sanctions and diplomatic engagement, rather than military action, will convince Iran to rein in its programme, Mr Biden said Benjamin Netanyahu, Israel’s new prime minister, should not attack Iranian nuclear facilities. “I don’t believe that prime minister Netanyahu would do that,” he told CNN. “He would be ill-advised to do that.”

According to Tuesday’s indictment, New York banks were used to provide dollar financing for sales of components to Iran, in a complex chain that involved payments by Iranian banks in euros and dollar transactions by Chinese institutions.

“Our banks have high standards and sophisticated systems to stop these transactions, but this conduct was specifically designed to defeat their systems,” said Mr Morgenthau. “We want the public and the leadership in Washington to understand the extent of the efforts by Iran to buy these banned materials.”

He said he would seek Mr Li’s extradition and did not know whether China’s government was aware of the alleged scheme. The Chinese embassy in Washington did not immediately respond to a request for comment.

More...