A Chinese language oil dealer whose actions have been uncovered by a Monetary Instances investigation has been arrested in South Korea on suspicion of organising unlawful transfers of diesel to North Korea.

The dealer is suspected of arranging greater than 35 transfers amounting to 18,000 tonnes of diesel, in offers valued by the South Korean coastguard at Won18bn ($14.6mn).

Investigators from the South Korean coastguard stated the agent organized for a Russian oil tanker operated by a South Korean oil firm to conduct ship-to-ship gasoline transfers with a Chinese language vessel within the South China Sea. The Chinese language ship then carried out ship-to-ship transfers with North Korean vessels, a violation of UN sanctions.

Final month, a joint investigation by the FT and the Royal United Companies Institute think-tank tracked a supply of marine oil final yr from South Korea’s south-east coast into North Korea’s unique financial zone.

The investigation revealed that an unnamed Chinese language transport agent had brokered a deal between a South Korean firm known as Jap Pec and a Shanghai-based firm known as Met Ocean Co to conduct a gasoline switch within the South China Sea.

The marine oil was transferred from South Korea to a gathering level by Jap Pec utilizing a Russian oil tanker known as the Mercury, which it had chartered from an organization based mostly in Vladivostok. The cargo was then transferred to a Chinese language ship known as the Shundlli, which was operated by Met Ocean.

In a “letter of assure” seen by the FT, Met Ocean promised Jap Pec to not ship the cargo to North Korea. However satellite tv for pc imagery and monitoring knowledge present the Shundlli happening to conduct an obvious switch with a second ship within the North Korean EEZ.

The coastguard confirmed that the agent arrested late on Monday, who’s a naturalised South Korean nationwide, was the identical one who brokered the deal between Jap Pec and Met Ocean. Authorities took motion amid fears that the agent may turn out to be a flight threat after his actions have been revealed.

The dealer was detained on costs regarding shipments carried out between October 2021 and January 2022, which don’t contain the Mercury, the Shundlli or Jap Pec, in line with authorities. Investigations into the operation uncovered by the FT are ongoing, they added.

“The FT report helped us broaden our investigation, enabling us to ask the dealer about different offers that he was concerned in,” stated a Korean coastguard official. “We’re additionally investigating his different actions involving the Mercury and Jap Pec.”

Jap Pec has stated that the operation revealed by the FT was the primary time it had labored with the dealer.

The UN Safety Council imposed a cap on permitted oil transfers to North Korea in 2017 after Pyongyang’s sixth and most up-to-date nuclear check. The ceiling of 500,000 barrels a yr is much under the power wants of the North Korean economic system.

All such oil transfers should be reported to a UN sanctions committee, however in apply, solely a fraction are. An unreported switch constitutes a violation of the sanctions.

Go Myong-hyun, a sanctions skilled on the Asan Institute for Coverage Research in Seoul, stated that the transfers helped prop up North Korea’s shattered economic system, in addition to Pyongyang’s capability to coach and area its armed forces and maintain its weapons improvement programmes.

“Irrespective of how giant or small, what this reveals is that the South Korean authorities have to determine these operations and crack down on them laborious,” he stated.

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