US Targeting More China Firms For N Korea-Linked Trade: Press

     BEIJING (MNI) - U.S. prosecutors are building legal cases against a series

of Chinese firms they say are key financial conduits for the North Korean

government, the Wall Street Journal reported Tuesday. 

     Funds for the Chinese companies that are processed through U.S. banks have

already been frozen, the report said, quoting people familiar with the matter.

If broader cases are built against the firms showing clear linkages between them

and the North Korean government, the funds could be seized, the people said. 

     The report comes as the U.S. seeks to ratchet up pressure on Pyongyang to

stop its nuclear weapons and missile programs, amid concern China is not doing

enough on its own to pressure the North Korean regime. 

     Washington had sanctioned a Chinese company and two Chinese individuals in

June over their financial connections with North Korea, and also accused a

Chinese bank of laundering money for North Korea. The sanctions against the

company -- Dalian Global Unity Shipping -- stopped it from doing business with

U.S.-tied companies.

     Although the U.S. said at the time that it was working with China on the

issue, China's Foreign Ministry responded that it was opposed to any unilateral

sanctions imposed outside the framework of U.N. resolutions. "We strongly urge

the United States to immediately correct its relevant wrong moves to avoid

affecting bilateral cooperation on the relevant issue," Chinese Foreign Ministry

Spokesman Lu Kang said of the Dalian Global sanctions. 

     Among the companies being targeted in the current case are Dandong

Zhicheng, which U.S. prosecutors say bought North Korean coal with U.S. dollars,

with eight banks in the United States allegedly involved in processing

transactions for Dandong Zhicheng and four related front companies, the Wall

Street Journal report said. 

     Dandong Zhicheng is based in the northeastern Chinese city of Dandong,

close to the North Korean border. 

     The report said other companies in Dandong are also under the scope of U.S.

prosecutors, who are expected to announce further action against the companies

in coming days.

     If prosecutors file a formal case against Dandong Zhicheng, the assets of

the company -- and Dandong Zhicheng's front companies -- could be seized.

     If Dandong Zhicheng is buying coal from North Korea, it would be in

contravention of China's ban on coal, iron and seafood imports from North Korea,

which Beijing implemented in line with the U.N. sanctions recently passed after

Pyongyang conducted two tests of intercontinental ballistic missiles. 

     The Wall Street Journal report said U.S. officials had also filed a $1.9

million lawsuit against the Chinese company Mingzheng International Trading

Ltd., charging that it had been created to move U.S. dollars for Pyongyang. The

report did not say what the result of the lawsuit was.

     The report quoted a former senior U.S. Treasury official as saying that

Chinese banks and the Chinese government are either complicit in facilitating

North Korea financing, "or making a choice not do anything about shutting down

these networks." 

     The report also said the U.S. had asked for China's help in cracking down

on 10 other Chinese companies the U.S. says are helping finance North Korea's

nuclear weapons program, but that China has taken no action against the firms. 

     Dandong Zhicheng did not respond to requests for comment, and Mingzheng

International Trading could not be reached for comment, the report said. 

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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