UPDATE 2-Chinese company, exec indicted in Iran missile case

Tue Apr 7, 2009 2:02pm EDT

* U.S. hits six Iranian companies hit with sanctions

* Chinese executive and his company indicted in New York

* Money channeled through U.S., European banks (Combines stories about indictment and sanctions)

By David Lawder and Edith Honan

WASHINGTON/NEW YORK, April 7 (Reuters) - The U.S. government on Tuesday slapped sanctions on a Chinese metals company and six Iranian companies suspected of collaborating on a scheme to transfer missile and nuclear technology from China to Iran.

A New York grand jury also indicted the Chinese metals company, LIMMT Economic and Trade Co Ltd, and its manager, Lee Fangwei, on 118 counts including suspicion of shipping 33,000 pounds (15,000 kg) of specialized aluminum alloy used for long-range missile production from China to Iran.

Lee was charged with the suspected misuse of Manhattan banks employed to transfer money between China and Iran by way of Europe and the United States.

The actions by the U.S. Treasury Department and a grand jury convened by the New York state prosecutor in Manhattan come as the United States has sought tougher U.N. sanctions against Iran to halt its nuclear program, which Western nations believe is designed for making weapons.

Tehran says the program is aimed at increasing its civilian power capacity.

China is bound by three U.N. Security Council sanctions resolutions forbidding support for or contact with individuals or companies linked to Iran's missile and nuclear programs.

China and Russia reluctantly backed all three resolutions and say they are complying with sanctions. But U.N. diplomats say a number of Chinese, Russian and Western firms have continued to try to skirt the restrictions on selling sensitive technology to Iran.

"Materials may be dual-use, but when they are sent to front companies set up by the Iranian military, and the defendants use false end-user certificates and dummy names, there's not much doubt that the use is for weapons," Manhattan District Attorney Robert Morgenthau told reporters.

Morgenthau also said he would request the arrest and extradition of Lee, also known as Karl Lee and by several other aliases, from the Chinese government. He is believed to be at large in China.

SUSPECTED FIRMS BLACKLISTED

The sanctions designate the firms and individuals as proliferators of weapons of mass destruction under an executive order and seek to freeze any assets they have under U.S. jurisdiction. They also prohibit Americans from doing any business with the firms and individuals.

The Treasury said it added Lee and eight aliases for LIMMT to its weapons proliferation blacklist. The company itself was put under Treasury sanctions in 2006.

The Treasury named the Iranian firms Khorasan Metallurgy Industries, Kaveh Cutting Tools Co, the Amin Industrial Complex, Yazd Metallurgy Industries and Shahid Sayyade Shirazi Industries for their connection to Iran's Defense Industries Organization (DIO).

The Niru Battery Manufacturing Co was named because of its connection to Iran's Ministry of Defense and Armed Forces Logistics (MODAFL).

The U.S. State Department has named DIO and MODAFL for having engaged in activities that materially contributed to the development of Iran's nuclear and missile programs.

The U.S. banks employed by Lee were innocent of any wrongdoing because Lee and other suspects had concealed their identities, Morgenthau said.

Morgenthau identified the U.S. banks as Citibank (C.N), JPMorgan Chase (JPM.N), Wachovia Bank/Wells Fargo Standard Centered Bank (WFC.N), Bank of America (BAC.N) and The Bank of New York Mellon (BK.N) but he declined to identify the European banks.

"We may not be able to shut down Mr. Lee's factories, but we can shine a spotlight on his conduct and the conduct of the foreign banks that permit these types of operations to flourish," Morgenthau said. (Writing by Daniel Trotta; Editing by Vicki Allen)

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