This unaltered story [1] was originally published on OpenDemocracy.org.
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Sanction-busting UK shell company exported coal from North Korea
By: []
Date: 2021-12
A British shell corporation was used to export North Korean coal, breaking United Nations sanctions, openDemocracy can reveal.
The firm, a limited liability partnership called Solgan Invest, shipped three consignments of anthracite, also known as hard coal, from the pariah state toRussia.
The anthracite was seized by customs officials on the far-eastern Russian island of Sakhalin in September 2017 – weeks after the UN imposed a trade ban on North Korean exports of coal, iron, lead and seafood.
The role of Solgan Invest has emerged only after a long civil litigation between the port where the coal was landed and Russian federal authorities over who was responsible for the cost of storing the confiscated fuel.
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However, revelations of a British corporate entity buying North Korean coal will ring alarm bells among UK officials.
Experts are increasingly concerned that throwaway British shell corporations – already linked to corruption and money-laundering around the world – may be used to finance the spread of weapons of mass destruction.
Tom Keatinge, of defence think tank Royal United Services Institute (RUSI), told openDemocracy that reforming Britain’s corporate system should be a “domestic and foreign policy priority”.
In 2019, The Times revealed that four ships entering North Korean harbours to get coal, which had been spotted on satellite, were owned by UK-registered corporate entities.
North Korea has rich reserves of anthracite, which it is widely suspected of mining with forced labour.
The country was banned from selling coal – previously one of its biggest exports – in August 2017 under UN Resolution 2371, which was introduced in response to missile tests carried out earlier that summer.
Diplomats fear the anthracite was being sold to pay for nuclear weapons and missiles programmes.
Since the ban, some coal has still been exported from North Korea, usually thanks to complex ship-to-ship transfers. This trade remains hidden and is carried out through front companies and ships that chop and change their “flags of convenience” – whereby ships fly flags of countries other than where their company is registered.
However, the Sakhalin case involving Solgan Invest dates from the very beginning of the outright prohibition of coal sales in August 2017. There had previously been severe restrictions on the trade.
According to Russian civil court papers, Solgan Invest was the official recipient of around 10,000 tonnes of anthracite shipped from Taean near Pyongyang, North Korea’s capital, to Kholmsk on the west coast of Sakhalin.
The coal was to be imported under a contract signed in June 2017, but its delivery was made illegal by Resolution 2371.
Because the coal had been shipped in breach of sanctions it was seized and stored at the port, which sued Russian federal authorities for incurred costs.
However, successive Russian courts found Solgan Invest, not the government, responsible for picking up the bill for storing the fuel.
A final legal bid by Kholmsk Port’s operating company for state cash failed on 25 December 2019, when Russia’s Fifth Arbitration Appellate Court upheld previous decisions.
By then Solgan Invest had been dissolved by compulsory strike-off in the UK, after being deemed inactive due to it not filing any annual accounts, without it or its beneficiaries facing any criminal charges.
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