It is not acceptable for subsidiaries in major international transport companies to claim that they did not know what they were transporting when the case involves illegal products from nations under a UN arms embargo such as North Korea, New York-based Enrico Carisch tells ShippingWatch.
Carisch has for years served as UN sanctions monitor and is now advising member states and companies on more effective sanctions implementation practices.
His comment relates to a Maersk-owned company's transport of components for long-range missiles from North Korea.
Using the term machine parts is the oldest trick in the book of arms smugglers. Without further specifications these parts could be for anything – from a toaster to ballistic missiles"
Several reports from 2016 and 2017 compiled by a special Panel of Experts under the UN Security Council list a Chinese company (New Times International Transport Service, NTS) under the Maersk Group logistics company Damco as responsible for a shipment of missile components as part of an illegal arms deal between North Korea and Egypt back in 2013.
A total of 11 parcels were sent from Beijing to Cairo on board a plane, and the seller was the North Korean regime, while the buyer was the Egyptian military. The transaction was halted when authorities in an unnamed country got suspicious and seized the cargo en route.
Freight documents list the sender of 11 parcels with its address registered at the North Korean embassy in Chinese capital Beijing and identify the contents with "Machine spare parts/Relay" without further details added.
Company remained silent
"There are really two aspects of this case which are troubling. It appears that whatever due diligence was performed it was not effective, and two, the company has remained completely silent rather than taking proactive steps and being transparent about the circumstances of the case," says Enrico Carisch:
"Using the term machine parts is the oldest trick in the book of arms smugglers. Without further specifications these parts could be for anything – from a toaster to ballistic missiles. Freight Forwarders and many international transporters do face very difficult due diligence challenges because they must trust their clients' information about the content of the shipments. Understandably, not every package can be inspected – leaving always a residual risk that the Forwarder inadvertently assists with sanctions violations, or other criminal activities."
He notes that companies as well as the international community need to find more effective compliance mechanisms to reduce these risks as much as possible.
"This is not, for now, a matter of punishing a company, but a matter of learning from past experiences, so that gaps in security and procedures can be closed. No company should accept the risk of being caught transporting spare components for embargoed North Korean missiles. Not only is there a clear violation of UN sanctions. It could also expose the industry under much more intense scrutiny by the UN Security Council," says Enrico Carisch.
Coordinator at the UN Panel of Experts and co-author of the reports describing the specific case in question, Hugh Griffiths, tells ShippingWatch that the very fact that the sender has an address registered at a North Korean embassy should make transport companies act with extreme caution.
"It's a significant risk factor for all transport companies if a cargo is shipped from, or comes from, a North Korean embassy. In these cases companies should be on highest alert," he says.
According to Hugh Griffiths, there are previous examples of North Korea using major liner companies to transport sanctioned products. He does not believe that the companies have developed solutions to address these problems, and he notes that the North Koreans are exploiting this weakness.
In 2016 we provided information to the UN Panel of Experts on a Damco related shipment. The UN Panel of Experts informed us that Damco, and its subsidiary NTS, acted diligently"
ShippingWatch has asked Maersk to respond to Carisch's comments and criticism. Maersk opted to resend the response they sent for the first article about the UN report, which was published Tuesday this week, with a few additions, highlighted in bold.
"In 2016 we provided information to the UN Panel of Experts on a Damco related shipment. The UN Panel of Experts informed us that Damco, and its subsidiary NTS, acted diligently":
"Damco is committed to conduct our business in a responsible and lawful manner. This has always been integral to the way we do business and we demand the same principles in our relationships with customers, suppliers and other business partners. We have guidelines and processes in place to ensure we comply with sanctions and trade controls, e.g. in order to detect any North Korea related bookings from other locations, and will cooperate with all relevant authorities such as UN in their crime fighting efforts," wrote Damco.
English Edit: Daniel Logan Berg-Munch