How China let a ship banned for ferrying North Korean coal go rogue
The Washington Post March 31, 2023
When the United Nations in 2017 placed a port ban on a Chinese-owned ship that had been ferrying North Korean coal to China, that should have been a death sentence, dooming the vessel to the scrapheap or to the limbo of a "flying Dutchman" - sailing the seas forever without docking.
The dark-blue cargo ship, a little longer than a football field, sat paralyzed in frigid Chinese waters for months, its small crew abandoned in unsanitary living quarters and running short of supplies. As sheets of ice slowly enveloped the vessel in late 2018, its fate seemed sealed.
But the Petrel 8 would get a reprieve.
With the help of Chinese courts, the Petrel 8 would not only survive its near-shipwreck, but be resold, repaired and returned to open waters in breach of sanctions. United Nations reports show that China has increasingly turned a blind eye to illicit North Korean activity, but the Petrel 8 is a rare, detailed example of exactly how that happens. Ships like these provide a vital lifeline for Pyongyang's isolated regime, illicitly ferrying coal to foreign ports and often returning with goods and supplies the regime seeks.
Official court documents reviewed by The Washington Post and information from independent researchers show that not only did Chinese authorities know the Petrel 8 was under sanction, but allowed it to be auctioned off and dock illicitly in multiple ports - at times using fraudulent identities.
China was among the 15 U.N. Security Council members that voted unanimously in 2016 and 2017 to impose a comprehensive set of sanctions aimed at curtailing North Korea's nuclear program. The resolutions included a global port ban on ships that have been caught transporting North Korean coal, a major source of revenue for Pyongyang's nuclear activities. Once a ship is sanctioned, the only way to get it off the banned list is by consensus of the U.N. 1718 Committee, which oversees North Korean sanctions.
For a brief period during President Donald Trump's maximum pressure campaign on Pyongyang, China and Russia were willing to enforce the sanctions. But that cooperation ended by 2018. Today, both countries, but particularly China - which is by far North Korea's largest trading partner and has enormous influence over its neighbor - are ignoring the sanctions, experts say.
"When you don't have any pressure, there is zero reason for North Korea to stop what they are doing," said Sue Mi Terry, director of the Asia Program at the Wilson Center.
Last year, North Korea launched a record number of missiles, including several into the Sea of Japan. In November, it tested the Hwasong-17, the world's largest liquid-fueled intercontinental ballistic missile - capable of carrying multiple warheads and hitting the east coast of the United States. In December, it tested a solid fuel rocket engine, a crucial new capability that is harder to detect and preempt.
"China has provided multiple points of relief for North Korea to escape the pressure of sanctions," said Andrew Boling, an analyst with C4ADS, a nonprofit research group focused on transnational criminal activity that has tracked the Petrel 8 and provided location data to The Post. "The sanctions regime can't work until China fully enforces the rules it agreed to."
A United Nations Panel of Experts is probing the case. "The panel is well aware of the Petrel 8, and our investigations into its activity and the changing ownership networks behind it continue," the panel's coordinator, Eric Penton-Voak, said in a statement. The investigation is confidential until its findings are published in the panel's next report, due out in April.
Queries to the Chinese courts, maritime authority and mission to the United Nations went unanswered.
For the first few years of its life, the Petrel 8 appeared to operate as a normal cargo vessel. Then, in January 2017, its Indian owners sold it to Li Quan Shipping Co., a Hong Kong-based firm that according to the United Nations has been involved in other illicit activity in violation of North Korea sanctions.
The ship was registered under a new flag by the small Indian Ocean state of Comoros, which is so lax in its standards for shipping safety it has been blacklisted by the port authorities of the European Union.
That year, the ship made three illicit coal runs to North Korea, according to researchers. In July, on its third run, a U.N. member state tipped the Panel of Experts that the vessel had been spotted loading coal at Taean, North Korea, some 160 miles south of Pyongyang.
The panel's then-maritime expert, Neil Watts, began gathering evidence, reconstructing all three voyages, using specialized databases that tracked ship movements and using satellite imagery. All three followed the same general pattern, he said.
The ship would sail from China to North Korea, make a stop in Russia, and return to China. The Russia port call was to make it appear the coal was loaded there.
Along the way, the Petrel 8 made moves typical of sanction-skirting ships. As it entered North Korean waters, it would go "dark," turning off its automated identification system or AIS, a box that transmits signals indicating the ship's position, identification number and other information. It would turn it on again when it was in the Yellow Sea on its way to Russia, said Watts.
AIS signals, which are mandated by the International Maritime Organization for ships larger than 300 tons, are used by vessels to avoid collisions and by ports to manage maritime traffic. They are also useful for tracking changes in the ship's weight.
On one voyage in late May 2017, after the ship's signals went dark and then reappeared in the Yellow Sea near the Korean Peninsula, something curious happened. The ship transmitted an increase in the "draft" - the distance between the keel and the water line - of 2.5 meters, or just over eight feet, indicating it was sitting lower in the water.
"I immediately knew that they'd taken on a cargo," recalled Watts.
A few days later it entered Nakhodka harbor in Russia. There it sat for a day, on a "decoy port visit," as Watts put it. Then it sailed back to China, entering Tangshan port on June 14. A day later it left again, reporting a draft decrease of 2.7 meters or almost nine feet. The ship had discharged its cargo in China.
Watts, a former South African Navy captain, wrote up his findings on the Petrel 8 in a larger 2018 U.N. report on North Korean sanctions violations. Satellite images confirmed the cargo: It was "all black," he said. "It was coal."
On Oct. 3, 2017, the United Nations Security Council voted unanimously to sanction the Petrel 8, barring it from entering any port. That month, Comoros deflagged the ship, according to the IMO, which registers all ships in the world, assigning each a unique number, and keeps a public database of the registry.
"It's like being without a passport," Watts said, adding that no state may reflag the ship without violating the sanctions regime.
Shortly after the ban was imposed, the Petrel 8 sailed out of northeastern China, now unable to legally make port again. It headed south on a brief trip through the Chinese portion of the Yellow Sea, before settling in open waters near Yingkou Port, not far from where it had set sail. According to satellite imagery, it sat idle in the bay as winter drew near and the waters around it froze into vast ice floes.
The crew were stranded on the ship for almost three months, its owners having abandoned the vessel, according to Chinese court records. Chinese authorities ashore grew concerned that the ship would capsize or collide with other ships. In dire need of fuel and food, the crew finally sent up a distress signal.
"The crew's safety was in danger," said a report from the Maritime Affairs Court of Dalian, one of Liaoning province's largest cities, which has jurisdiction over maritime civil and criminal disputes in the region.
On Jan. 13, 2018, a search and rescue team retrieved the crew. Nine days later, it sent out an icebreaker to cut through the blocks of ice and tow the ship back to Yingkou port.
The U.N. allows an exception to the port entry ban for ships in distress. But the U.N. has no record of such a waiver being requested. As such the ship should have been seized at the port, said a U.N. official. Instead, the Petrel 8 sat in Yingkou port under court custody for more than two years, according to China's maritime court records.
Then in mid-2021, the Petrel 8 was listed for auction on a Chinese court auction website, advertised under a Chinese translation of its name, Haiyan 8. The government listing acknowledged the ship's sanctioned status, even including a warning to prospective bidders.
"The Haiyan 8 is included in the list of vessels prohibited from entering the port designated by the United Nations Security Council," said the court notice. "The buyer should fully understand the consequences of Haiyan 8 being sanctioned by the United Nations. Participating in the auction is deemed to accept the Haiyan 8 being sanctioned. The relevant adverse consequences arising from the sanction of the ship shall be borne by the buyer."
During the June 25, 2021, court auction, just one buyer bid on Petrel 8, taking the vessel for a mere $950,000 - a bargain basement price which reflected that the ship's sanctioned status and expired safety certificates made it essentially uninsurable. The auction site listed the buyer only as an individual with a Chinese name, Ge Baohong.
In December that year, according to satellite imagery, the ship left Yingkou and put in at Caofeidian port some 230 miles south. That entry violated the U.N. ban.
"The People's Republic of China allowed the ship to violate the ban," said Hugh Griffiths, a former coordinator of the U.N. Panel of Experts, who also worked on the Petrel 8 designation. "They are failing to uphold resolutions that they themselves co-authored."
Three months later, in March 2022, the Petrel 8 sailed again, this time 1,000 miles down the coastline to Fuan Matou shipyard in China's southeastern Fujian Province. That entry, too, breached the ban. Satellite imagery shows the Petrel 8 was moved onto a dry dock where it likely underwent repairs.
According to 2022 and 2021 reports from the U.N. panel, shipyards in the Baima River where the Petrel 8 entered have a documented history of servicing suspect vessels linked to North Korean trade. Just a few months ago, a large bulk carrier sold to North Korea was retrofitted at Fuan Matou, and has since started moving sanctioned coal, according to the Royal United Services Institute, a defense-focused think tank. Next door to Fuan Matou is another shipyard, Fujian Yihe, which is notorious for housing ships known to violate U.N. sanctions, said James Byrne, RUSI's director of open source intelligence and analysis.
"Shipyards such as these appear to play a key role in servicing vessels engaged in U.N. sanctions busting and appear to do so with little concern about the possible consequences of violating sanctions," he said.
In May 2022, a Japanese ship broker named Hiroyuki Takahashi, working on behalf of Ge Baohong, and operating as president of Uyo Co. Ltd., sold the Petrel 8 for some $3.8 million, netting Ge more than $2.8 million, according to a western diplomat, who spoke on the condition of anonymity because of the matter's sensitivity. The buyer, an Indonesian freight shipping firm named P.T. Lintas Bahari Nusantara, did not know the ship was under sanction, according to claims it later made to Western diplomats.
Takahashi is also president of Toei Shipping, according to corporate records. Its address, in an industrial zone of Tokyo, is the same as that of Uyo, according to information provided by an Indonesian port authority. A Washington Post reporter visited the address listed on the bill of sale and did not find the company there. Business registry records for the ward found no company by that name listed.
Takahashi did not respond to a request for comment.
Three years earlier, in January 2019, Toei purchased a ship - the Rui Hong 916 - that was refurbished in Fujian Yihe and then went on to conduct a ship-to-ship transfer of North Korean petroleum. The Panel of Experts recommended the Rui Hong 916 be sanctioned, but the proposal was blocked by China.
After P.T. Lintas bought the Petrel 8, it reflagged it with the small South Pacific island country of Niue - like Comoros, a state known for lax flagging standards. This, too, was a violation of sanctions.
And soon enough, AIS signals showed the ship was once again on the move.
Last June, the Petrel 8 slipped out of Fujian province and sailed through the South China Sea. Along the way it transmitted signals under a false ship name - Dong Hong Hang 1 - alternated flag countries of origin and made a strange loop-de-loop, where it switched up its identification number, eventually docking in a shipyard in western Java on July 3.
On July 8, the port authority conducted an inspection and found that the ship had again changed its name - from Dong Hong Hang 1 to LBN 10, according to Doni Rinaldi, a spokesman for the Banten Port Authority. It was now registered under the flag of Mongolia, he said.
"To me that looks like ship laundering," said Watts, now a sanctions consultant at Compliance and Capacity Skills International.
According to a State Department official, the U.S. Embassy in Jakarta learned that the ship entered Indonesia in July 2022 and informed the government that the ship was on the U.N. sanctions list. The official said that shortly thereafter the ship was "impounded."
A diplomat familiar with the matter said the Indonesian government has asked the U.N. 1718 Committee to remove the ship from the sanctions list, though no action has yet been taken. The Indonesian Mission to the United Nations would say only that the mission has been in touch with the committee.
The ship is currently at the shipyard in western Java, "under close supervision of the government," the mission said in a statement. "Rest assured of Indonesia's continued support to assist the work of the Security Council in this regard."
The Petrel 8 is one of about 60 vessels designated between 2016 and 2018 for violating the North Korean sanctions regime that barred the transport or transfer to another ship of coal, petroleum or weapons.
The last vessels were designated in March 2018, after which China and Russia, both permanent members of the Security Council, stopped agreeing to new designations, effectively blocking every attempt to ban ships doing illicit business on behalf of North Korea.
Instead the two countries began to work purposefully to lift the sanctions regime. In 2019 and in 2021, Russia and China proposed lifting of sanctions on North Korea related to, for instance, export of seafood and textiles. Facing opposition, they withdrew the proposals. Last May, following a spate of North Korean missile launches, 13 of the 15 members of the Security Council voted to impose additional sanctions. Russia and China vetoed the resolution, arguing that additional sanctions were not justified and would prevent a resolution of Korean Peninsula issues.
Meanwhile, the Chinese government has allowed illicit shipping networks to flourish.
Annual reports from the U.N. Panel of Experts describe a thriving network of vessels engaging in illicit ship-to-ship transfers of sanctioned North Korea commodities in Chinese waters. One popular zone for such trade is the Ningbo-Zhoushan area off China's east coast. A report released in March last year provided evidence that at least 16 vessels conducted trades in the area in 2021, including a vessel called Northern Luck, which is linked to the same shipping network that oversaw Petrel 8's illicit trades in 2017.
Li Quan, the company that owned Petrel 8, and Dalian Longgang Shipping Co., which managed the vessel's operation while it was illicitly transporting North Korean coal, also owned and managed the Northern Luck between 2013 and 2016, according to IHS Markit, a shipping data firm. In that period, the ship made some 30 trips to North Korea, according to C4ADS.
The two companies, which have a history of trade with North Korea and links to Pyongyang-based shipping firms, transferred ownership of Northern Luck to a North Korean company in 2016 after the U.N. Security Council limited export of North Korean coal - a sanction expanded the following year to a full ban. The ship then continued the trades illicitly, as shown in the 2022 U.N. report.
"This is a good example of how North Korea is able to outwit the sanctions regime using overseas facilitators," said Boling. "Ultimately, how vulnerable Chinese companies are to U.N. sanctions comes down to the Chinese government's willingness to enforce them."
China and Russia's obstruction of sanctions enforcement has made it difficult to say whether the measures would have had impact, The Wilson Center's Sue Mi Terry said. "It can only possibly work if they're implemented," she said.
The Biden administration has said it's willing to engage in talks with North Korea, but its leader, Kim Jong Un, has shown no inclination to do so. Any hopes that Beijing might nudge Kim in that direction have faded as relations between Washington and Beijing remain frosty.
As for the Chinese, "they increasingly see North Korea as an ally," said a senior administration official, who spoke on the condition of anonymity because of the matter's sensitivity. "They're less interested in trying to get them to disarm than in thinking about North Korea as part of an alliance of the aggrieved: Russia, Iran, North Korea, Pakistan."
The Washington Post's Julia Mio Inuma and Cate Brown contributed to this report.