By Ian J. Stewart, Andrea Stricker, and David Albright.
Project Alpha at King’s College Londonand ISIS have collaborated on a case study of a highly important topic: the continued sale or diversion of controlled and dual-use goods through China to Iran’s nuclear program. This case involving a scheme to sell pressure transducers, usable in gas centrifuge plants, through a Chinese subsidiary of an American company is even more relevant in light of yesterday’s sanctioning by the U.S. government of several Chinese companies associated with serial missile goods and materials proliferator Karl Li. China must act now to stem the flow of these goods to proliferant states and enforce its trade controls and international sanctions resolutions.
On April 4, 2014, the United States District Court in the District of Massachusetts unsealed ten-count charges against Sihai Cheng, a resident of Shanghai, for allegedly operating as a middleman seeking U.S. made pressure transducers on behalf of Iran’s nuclear program. Cheng allegedly carried out this activity from 2009 to 2012, using his trading company Sohi Technology Co. Ltd and its locations in Shanghai and Hong Kong. He was arrested by British authorities in February 2014 pursuant to a U.S. arrest request and authorities are seeking his extradition from the United Kingdom. Three other Iran-based companies and individuals who were involved in the illicit procurement scheme are named in the indictment.
The arrest of Cheng marks the second arrest of Chinese middlemen involved with several “rogue salespeople” employed by subsidiaries of MKS Instruments Ltd in China. A related case involved the illegal sale of MKS pressure transducers by the same unnamed MKS Shanghai salespeople. Another Chinese middleman, Qiang Hu, schemed during 2007 to 2012 to facilitate the purchase of pressure transducers likely for Iran’s and other countries’ nuclear programs. Hu was arrested in the United States in 2012 by U.S. enforcement officials.
This may be the end of what may have been one of the more damaging insider proliferation cases in recent times. This case, and likely the Hu case, positively links the diversion of thousands of MKS pressure transducers to entities associated with Iran’s gas centrifuge program, providing unique insights into the operation of Iran’s illicit procurement efforts and of the techniques and drivers of Chinese middlemen who are major facilitators of proliferation. Until China takes action, these types of cases will remain persistent problems for Western suppliers with subsidiaries in China. Iran must also be prevented from conducting this illicit activity in the future as part of a comprehensive agreement over its nuclear program.
Read the full case study at: Chinese Citizen’s Involvement in the Supply of MKS Pressure Transducers to Iran: Preventing a Reoccurrence