28 September, 2014

Alibaba's compliance challenge: missile proliferator Karl Lee a "gold supplier"

Written by 


A Chinese graphite factory owned by notorious missile proliferator Li Fangwei (Karl Lee) and sanctioned by the US Treasury is listed as a "Gold Supplier" on alibaba.com, Project Alpha has discovered.

Karl Lee on alibaba

On 29 April, the US designated the graphite factory - Sinotech (Dalian) Carbon & Graphite Manufacturing Corporation - as a front company in Li's China-based missile component sales network, which has sold more than $10 million worth of prohibited goods to Iran.

Alibaba has quickly removed other listings belonging to sanctioned entities when notified. An advert belonging to Machine Sazi Arak, an Iranian company sanctioned by the EU and US for its role in Iran's heavy water reactor programme, has apparently been taken down after being highlighted in the Financial Times' recent article on Alibaba's proliferation problem. 

But the appearance on alibaba.com of Li Fangwei's graphite factory five months after the factory was publicly designated by the US highlights the need for alibaba to bolster its compliance processes. As Project Alpha has recommended, alibaba's first step should be to introduce proactive screening mechanisms to prevent sanctioned entities from listing on the company's various sites.

UPDATE: As of 9 October, Sinotech (Dalian) Carbon & Graphite Manufacturing Corporation remains on alibaba.com.

UPDATE: As of 4 November, Sinotech (Dalian) Carbon & Graphite Manufacturing Corporation is still listed on alibaba.com.

UPDATE: As of 12 November, Sinotech (Dalian) Carbon & Graphite Manufacturing Corporation is NO LONGER LISTED on alibaba.com.  

Sectoral Guidance