By Ian J. Stewart, Andrea Stricker, and David Albright.

Project Alpha at King’s College Londonand ISIS have collaborated on a case study of a highly important topic: the continued sale or diversion of controlled and dual-use goods through China to Iran’s nuclear program.  This case involving a scheme to sell pressure transducers, usable in gas centrifuge plants, through a Chinese subsidiary of an American company is even more relevant in light of yesterday’s sanctioning by the U.S. government of several Chinese companies associated with serial missile goods and materials proliferator Karl Li.  China must act now to stem the flow of these goods to proliferant states and enforce its trade controls and international sanctions resolutions.

Several media outlets including the BBC are reporting that a Chinese man was arrested at Heathrow in February on charges issued by the US authorities related to the export of thousands of pressure transducers to Iran. It is understood that the pressure transducers originated from MKS instruments and were shipped on to supposedly legitimate customers in China before being diverted to Iran.

Alpha has been investigating the proliferation challenges of the vacuum market since the project was established in 2011, and Ian Stewart from Alpha co-authored a paper with the head of compliance at MKS last year.

While the charges in this case relate primarily to the period 2009-2011, the case nonetheless highlights the importance of technology holders exercising effective controls over their technology. Alpha commends the efforts of MKS to introduce its “controlled delivery” compliance system in recent years and encourages all manufacturers and exporters of sensitive goods to become “Partners Against Proliferation”.

On 24th November 2013, Iran and the P5+1 (representatives of the US, UK, France, Russia, China and Germany) reached interim agreement regarding a pathway to resolving the country’s outstanding nuclear issues. This initial ‘interim agreement’ is likely to be followed by further negotiations with the intention of reaching a lasting deal over the coming months. The purpose of this article is to set out what the agreement means for businesses.

As a leading manufacturer of capacitance manometers, an item used to measure near-vacuum pressures in semiconductor, pharmaceutical or advanced coating processes, MKS products are perhaps the best example of a dual-use ‘chokepoint technology’ - an item without which some forms of gaseous uranium enrichment could falter or even be set back. This paper describes one logistical technique referred to by MKS as the “Controlled Delivery” model (or Direct Factory Shipment Program, DFSP) for reducing the systemic risk of sensitive dual-use technologies being diverted to proliferation programmes of concern through illicit trade. The adoption of this voluntary approach by MKS is an example of “Anti-proliferation” in practice – the concept of resilience to proliferation in companies’ supply chains. Click HERE to visit the publications page. 


The Khaki-Yi case involved the illicit procurement, and attempted illicit procurement, of goods that were sanctioned by the United States Government and potentially intended for use in the Iranian uranium enrichment programme. The goods sought and, in some cases, procured, were largely those suited to use in gas centrifuge plants. The perpetrator, Parviz Khaki, was also accused of having attempted to procure radioactive source materials for customers in Iran from the US.ii The procurement efforts began in around October 2008 and lasted until around January 2011. They were sustained by numerous actors of various nationalities who were located in: diverse locations within the USA; the People’s Republic of China; the Philippines; and Sweden. Some of these were witting conspirators; others were targets of procurement efforts.

A PDF of the full case study can be accessed below.

Bank Mellat is one of the largest banks, and the largest privately owned bank, in Iran. It has allegedly been involved in providing financial services that have enabled procurement in some areas of Iran’s nuclear programme. Sanctions were imposed on Bank Mellat by the US and the EU in 2007 and 2010.

More recently, Bank Mellat has been disputing the grounds on which these sanctions were imposed and seeking legal proceedings to bring about their removal. They have recently had some success on this front with a UK Supreme Court ruling that the UK sanctions were unlawful in June 2013, following a similar ruling by the EU General Court in January and lifting of the designation of the bank’s Chairman by the EU in 2012. However, EU sanctions remain in place whilst the EU appeals the ruling at the European Court of Justice. This case study explores the Bank Mellat case and some of the issues surrounding it.  

The panel of experts set up to monitor the implementation of UN sanctions on Iran has released its annual report. The report highlights Iran’s continued non-compliance with its international obligations and its continued defiance of UN Security Council orders to suspend the country’s controversial nuclear and missile programme and to halt procurement of sensitive technologies that could support these programmes.


  • Iranian company MITEC attempted to procure hundreds of valves for Iran’s Arak heavy water reactor from companies in Germany and India using false front companies in Azerbaijan and Turkey;
  • German authorities issued a licence for some of the exports despite warnings from the US of proliferation risks;
  • There is confusion surrounding whether the Indian government issued a license for the export;
  • Many of the valves and related components were either radiation hardened or bellows-sealed - tell-tale signs of nuclear end uses;
  • An Iranian national, Tanideh, acted as a middle man or broker, facilitating the deal between Iranian entities that had been designated for involvement in Iran’s nuclear program and the valve suppliers;
  • Four individuals involved were found guilty in late 2013, while Tanideh – the middleman – is currently awaiting trial in Turkey.


On the 5th June 2013, the UN Security Council extended the mandate of the expert panel established to monitor the implementation of Security Council sanctions on the Islamic Republic of Iran, following its failure to cooperate with the International Atomic Energy Agency (IAEA) about its nuclear programme. Dr. Jonathan Brewer, a visiting professor of the Centre for Science and Security Studies in King’s College London, has been a member of the panel since 2010. The new resolution extends the committee’s mandate for one year, through 9 July 2014. A description of the panel’s work can be accessed on this page.

While Iran insists its nuclear program is peaceful in nature, following the discovery in 2003 that Iran had been concealing aspects of its nuclear programme which should have been declared to the IAEA, and subsequent information of involvement in nuclear activities which appeared to have a military dimension, a number of countries have suspected Iran of harbouring intentions to develop nuclear weapons. The Security Council has enforced sanctions on Iran since 2006, including a ban on items which could contribute to its prohibited nuclear programmes and ballistic missile programmes, on arms sales to and from Iran, and a freeze of assets of designated individuals and entities. 

Li Fang Wei and LIMMT


In 2009, Li Fang Wei and his Dalian (China) based LIMMT trading company were indicted by a court in New York (USA) on 118 counts of falsifying business records in order to use US financial institutions to receive payments for proliferation-sensitive goods transferred to Iran and other locations. This procurement case study seeks to provide industry with a concise example of the forms that illicit procurement can take. In particular, this example highlights the concern surrounding China as a possible diversion point and the deceptive and fraudulent methods used by those seeking sensitive technology.


Key Points


·        The case of Li Fang Wei and LIMMT highlights that there is concern about the potential for Chinese companies (not to be confused with the Chinese state) to divert materials and technologies to Iran and other states seeking WMD.


·        Even when those trying to illicitly procure sensitive technologies use false company names, there can be other ways to identify suspicious enquires.


o  Enquires may feature addresses that are post office boxes, as did one of Li Fang Wei’s alleged Iranian customers Aban Commercial and Industrial Co.


o  It can be helpful to cross-check addresses and telephone numbers for similarities. The post office box used by Aban Commercial and Industrial Co. was also used by Electro Sanam Co., an Iranian entity designated as a front company for Iranian ballistic missile programme entities by the United Nations in 2008.


o  It can also be helpful to check that products requested fall within traditional product lines. Li Fang Wei’s attempt to procure gyroscopes should have raised suspicions given LIMMT’s background in metals.


Illicit shipments from LIMMT


Li Fang Wei and LIMMT are alleged to have shipped a variety of materials to entities in Iran linked to the country’s nuclear and missile programmes. The table below details the materials alleged to have been shipped, the international control regimes these materials are listed under and their possible WMD-related applications.


Li Fang Wei’s alleged shipments to Iran

Material [i]

Controls [ii]

Possible applications

Tungsten-Copper Alloy plates (400 pieces / 30,000kg +)

MTCR; Wassenaar

Missile:Materials can be used to make jet vanes and to insulate other components.

Hollow Tungsten-Copper cylinders (200 pieces)

Tungsten Powder (2,000kg+15,000kg)

Purity 99.7%

Particle size 5.5-6.5µm


Missile:The powder can be melted down and cast to make nose cones; nozzle throat inserts; missile jet vanes.

Steel plates (8 pieces)

Type unspecified in media reports

Maraging steel rods (24,500kg)

NSG (Maraging steel also controlled under MTCR)

Nuclear:Can be used to make components for gas centrifuges

Missile:Can be used in missile fuselages and solid rocket motorcases, propellant tanks, and interstages.

High strength aluminium alloys (15,000kg)


NSG (some alloys also controlled under Wassenaar)

Nuclear:Can be used to make components for use in gas centrifuges.

Missile:Can be used to make motor cases for use in solid fuelled missiles, propellant tanks and rocket inter-stages.

Graphite cylinders for use in Electrical Discharge Machines (EDM-15), (200 pieces / 1,700kg)

Electrical Discharge Machines are listed by the NSG.

Nuclear and Missile:Full machines can be used to cut parts with high accuracy.

High power graphite electrodes (200 metric tonnes)

Graphite of certain purities is controlled by the NSG


Furnace electrodes with 4TPI nipples (450 metric tonnes)




Sourcing other sensitive technologies


There are additional allegations, which go beyond the indictment issued by the New York Court, that Li Fang Wei and LIMMT were also involved in sourcing other controlled goods which fell beyond LIMMT’s metal and mineral business area.


Further allegations [iii]

Product / Material


Further details

Possible applications

Computer Numerically Controlled (CNC) Flow Forming Machines

NSG, MTCR, Wassenaar

Allegedly these were procured and transferred to Iran

Missile:capable of manufacturing re-entry vehicle shells and solid rocket motor cases;

Nuclear:of use in the manufacture of centrifuges

Gyroscopes (400)


Although not mentioned in the indictment, alleged that Li Fang Wei was ‘engaged in negotiations’ to send [iv]

Missile:can be used in missile guidance systems

Accelerometers (600)

Tantalum (100 pieces)


Missile:Can be used in high-strength alloys;

Nuclear: used in crucibles resistant to liquid actinides.

Also allegedly of use in roadside bombs

Co-rotating screw extenders


Alleged that LIMMT attempted to acquire from a German firm. There is still uncertainty surrounding success. [v]


Metering gear pumps


Missile:Use in a missile propellant pumping system.


Li Fang Wei and LIMMT are alleged to have used highly deceptive and fraudulent means to supply Iranian entities and circumvent US sanctions. Both the individual and his company used a large number of aliases when attempting to avoid Denied Party Screening systems. After Li Fang Wei and LIMMT were added to the US ‘List of Specially Designated Nationals and Blocked Persons’, a conscious effort - logged in published email correspondence - was made to avoid detection by repeatedly changing the company name and bank accounts. [vi]


Lei Fang Wei

Variations on the LIMMT company name

Aliases used by LIMMT

Karl Li


Sunny Bai

K. Lee


David Li

F. W. Li

Li Fangwei















Because the fabricated company names were being used for the first time, denied party screening software was unable to recognise the entities as denied parties. As a result, six large US banks have been named as having processed transactions on behalf of Li Fang Wei and LIMMT. While screening all new customers against those on the various lists is a core element of compliance, it is clear that lists struggle to keep up with new front companies and suspicious commercial entities.


While many of the aliases used by Li Fang Wei and LIMMT were completely fabricated, the orders and invoices used were well-produced and professional-looking. The indictment details that Li Fang Wei and LIMMT used five different types of letter head beyond those featuring the LIMMT company name. This shows that, while documents may look authentic, this does not mean that companies are engaged in legitimate business.



[i] Details of materials taken from Indictment, available from and Morgenthau testimony, available from


[ii] Derived from the relevant control lists


[iii] ISIS, Wikileaks Cables, testimony  


[iv] Morgenthau testimony


[v] Allegation seen in US State Department Cable released by Wikileaks, available here.

[vi] These can all be read in the original indictment text

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