VZCZCXYZ0012
RR RUEHWEB

DE RUEHIN #1816/01 2220846
ZNR UUUUU ZZH
R 100846Z AUG 07
FM AIT TAIPEI
TO SECSTATE WASHDC 6335

UNCLAS AIT TAIPEI 001816 
 
SIPDIS 
 
SENSITIVE, SIPDIS 
 
STATE FOR EAP/TC, ISN/ECC AND ISN/MTR 
STATE PASS TO AIT/W, AIT/K 
 
E.O. 12958: N/A 
TAGS: ETTC KOMC TW
SUBJECT: TAIWAN: INVESTIGATIONS ON ILLEGAL EXPORTS TO NORTH KOREA 
AND ATTEMPTED EXPORT TO IRAN 
 
¶1. (SBU) SUMMARY. In recent conversations with AIT, officials at the 
Ministry of Economic Affairs Bureau of Foreign Trade (BOFT) 
confirmed local press reports on the investigation of a Taiwan 
trading company and an Iranian businessman in Taiwan for export 
control violations.  The case involving the trading company, Royal 
Team Corporation, for unauthorized exports of machine tools and 
computer parts to North Korea has been referred to the prosecutors' 
office and the case involving an Iranian businessman for attempted 
export of drilling machines to Iran has concluded after a NTD 20,000 
(approximately USD 606) fine was imposed against the businessman. 
END SUMMARY. 
 
¶2. (SBU) In the first case, BOFT officials confirmed that Royal Team 
Corporation was investigated for exporting precision machine tools 
and industrial computers to North Korea without authorization. 
According to BOFT, the company claimed that the items were being 
exported to mainland China when, in fact, the ultimate destination 
was North Korea.  The machine tools can be used to manufacture 
military weapons and bullet shells.  The machine tools and 
industrial computers were on Taiwan's list of sensitive commodities 
requiring licenses for exports to Iran and North Korea that went 
into effect in June 2006. 
 
¶3. (SBU) In a separate case, BOFT officials stated that an Iranian 
businessman in Taiwan was fined NTD 20,000 (approximately USD 606) 
for attempted export (note: not export as incorrectly reported in 
the local press) numerically controlled drilling machines to Iran. 
BOFT officials emphasized that this case shows the attention Taiwan 
pays to visiting Iranian and North Korean nationals and their 
activities during their stay in Taiwan. 
 
¶4.  (SBU) The following text is our translation of the original 
Chinese-language news article on the cases which appeared in the 
August 4, 2007 China Times: 
Royal Team Corporation directly sold to North Korea precision 
machine tools and industrial computers, which can be used to 
manufacture military weapons and bullet shells, but falsely claimed 
they were being sold to mainland China.  The case was uncovered 
through joint efforts by a foreign intelligence station and the 
Investigation Bureau.  This second counter proliferation case 
involving military trade between Taiwan and restricted countries and 
it has received international attention. 
Taiwan's government has adopted trade sanctions in response to North 
Korea's test firing of missiles and in order to cooperate with 
international export controls and the July 2005 UN Security Council 
Resolution 1695.  In May last year the Bureau of Foreign Trade, 
MOEA, promulgated the "Sensitive Commodity List for Items Being 
Exported to North Korea and Iran" that lists over 400 items which 
may not be exported to North Korea or Iran and which took effect on 
1 June. 
The Investigation Bureau discovered that Royal Team has been trading 
with North Korea for over ten years.  Within the last year, the 
company has purchased computer components, precision industrial 
machine tools, sharpening machines, etc. from a certain company in 
Taipei and Taichung counties, which can be used to manufacture 
weapons such as gun barrels and missile components.  The total price 
amounted to approximately NT$10 million and the items were separated 
into 14 orders with customs declarations listing the mainland as the 
destination.  In actuality, the items were shipped directly to North 
Korea by air, or to the mainland by sea where they were then sold to 
North Korea. 
These tools and computers are among those listed in the MOEA's 
"Sensitive Commodity List for Items Being Exported to North Korea 
and Iran," and the company did not apply to the Bureau of Foreign 
Trade for export permit for strategic high technology commodities 
(SHTC).  By comparing labels, container numbers, numbers of items, 
weights, and export ship names, personnel from the Marine Affairs 
Field Office confirmed that these items have already been directly 
exported to North Korea. 
The Marine Affairs Field Office then requested that Taipei District 
Prosecutor Chang Shu-hua lead the investigation and summon over 10 
people for questioning, including Royal Team chairman Liu K'o-hua, 
actual person in charge Liu Chen-yi, and sales manager Liu 
Tung-jung.  They verified that Liu Chen-yi met several times with 
North Korean trade officials and representatives, and possessed 
photos of those meetings. 
Relevant personnel discovered that last year personnel from a North 
Korean government office came to Taiwan via the mainland in order to 
make purchases and last year an official from a state-run North 
Korean unit visited Taipei.  The Marine Affairs Field Office has 
submitted the case for prosecution based on violations of the 
Foreign Trade Act, Articles 13 and 21. 
Separately, the Investigation Bureau found that an Iranian 
businessman in Taiwan named Hsia Mo-sen [transliteration of the 
Chinese] exported SHTC numerically controlled drilling machines to 
Iran without a permit.  He was sent to the Taipei District 
Prosecutor's Office on charges of violating the Foreign Trade Act. 
Prosecutors determined that Hsia Mo-sen frankly confessed his crime 
and therefore deferred prosecution and imposed a fine of NT$20,000 
on Hsia Mo-sen to be paid to the national treasury. 
 
¶5.  (SBU) COMMENT. The press coverage of the two investigations 
appears to be part of Taiwan's effort to showcase its commitment to 
enforce export control laws and to fully participate in United 
Nations Security Council Resolutions related to Iran and North 
Korea.  AIT understands that these investigations received press 
coverage in Japan as well.  We plan to follow the Royal Team 
Corporation case and will provide information on the outcome.  END 
COMMENT. 
 
 
 
YOUNG