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Exploring the use of ‘third countries’ in proliferation networks: the case of Malaysia

  • Daniel Salisbury (a1)
Abstract

‘Third countries’ are frequently exploited by those involved in networks to transfer proliferation-sensitive technologies, allowing procurement agents to obscure the end user or vendor located in the proliferating state, and to deceive industry, export licensing officials, and intelligence services. While ‘third countries’ frequently feature in illicit transactions, the academic literature exploring the roles played by entities in these jurisdictions is limited. Building on the sanctions busting literature, this article proposes a loose typology considering the ways in which third countries can be exploited by proliferation networks. The typology is illustrated using three cases involving entities based in Malaysia – A. Q. Khan’s nuclear black market network, and Iran and North Korea’s efforts to procure and market WMD-related and military goods. These cases are used to generate insights into proliferators’ selection of ‘third country’ hubs. The article argues that while exploitation of third countries by proliferation networks is a similar, but distinct phenomenon to trade-based sanctions busting, hubs of both activities share characteristics. Furthermore, the article argues that other factors beyond the lax regulatory environment, such as level of development, and personal connections, are often as important in driving the decisions of proliferation networks. The article concludes with implications for nonproliferation policy.

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Corresponding author
*Corresponding author. Email: daniel.b.salisbury@kcl.ac.uk
References
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1 Early, Bryan, Busted Sanctions: Explaining Why Economic Sanctions Fail (Stanford, CA: Stanford University Press, 2015).

2 For example, a 2017 UN report noted North Korean efforts to evade sanctions of ‘increasing in scale, scope and sophistication’. UN Security Council, S/2017/150, Report of the Panel of Experts Established Pursuant to Resolution 1874 (2009) (27 February 2017).

3 ‘Sender’ and ‘target’ state used in Hufbauer et al., Economic Sanctions Reconsidered (3rd edn, Washington, DC: Peterson Institute for International Economics, 2007), p. 2; Early, Busted Sanctions, p. 18.

4 See, for example, ‘Transshipment and Diversion: Are U.S. Trading partners Doing Enough to Prevent the Spread of Dangerous Technologies?’, Hearing before the Subcommittee on Terrorism, Nonproliferation and Trade of the Committee on Foreign Affairs, House of Representatives, 111th Congress, 2nd Session (22 July 2010), available at: {https://www.gpo.gov/fdsys/pkg/CHRG-111hhrg57609/html/CHRG-111hhrg57609.htm} accessed 17 May 2018; David Albright, Andrea Stricker, and Houston Wood, ‘Future World of Illicit Nuclear Trade: Mitigating the Threat’, ISIS Report (29 July 2013), available at: {http://isis-online.org/uploads/isis-reports/documents/Full_Report_DTRA-PASCC_29July2013-FINAL.pdf} accessed 17 May 2018.

5 See, for example, Braun, Chaim and Chyba, Christopher F., ‘Proliferation rings: New challenges to the nuclear nonproliferation regime’, International Security, 29:2 (autumn 2004), p. 15 ; Albright, David, Brannan, Paul, and Scheel Stricker, Andrea, ‘Detecting and disrupting illicit nuclear trade after A. Q. Khan’, Washington Quarterly, 33:2 (2010), p. 89 .

6 Montgomery, Alexander, ‘Ringing in proliferation: How to dismantle an atomic bomb network’, International Security, 30:2 (autumn 2005), pp. 172173 .

7 Salisbury, Daniel, ‘Why do entities get involved in proliferation? Exploring the criminology of illicit WMD-related trade’, Nonproliferation Review, 24:3–4 (2017), pp. 297314 ; Arnold, Aaron, ‘A resilience framework for understanding illicit nuclear procurement networks’, Strategic Trade Review, 3:4 (spring 2017), pp. 323 ; Anderson, Glenn, ‘Points of deception: Exploring how proliferators evade controls to obtain dual-use goods’, Strategic Trade Review, 2:2 (2016), pp. 424 .

8 Salisbury, ‘Why do entities get involved in proliferation?’.

9 For discussion of ‘witting actors’ – those aware their goods are destined for a WMD programme – and ‘unwitting actors’ – those that are not – see Stewart, Ian J. and Salisbury, Daniel, ‘Non-state actors as proliferators: Preventing their involvement’, Strategic Trade Review, 2:3 (2016), pp. 526 .

10 Hastings, Justin V., ‘The geography of nuclear proliferation networks: the Khan network’, Nonproliferation Review, 19:3 (2012), p. 431 .

11 Ibid.

12 Ibid., p. 440.

13 Lieggi, Stephanie, ‘Correspondence: Technology, not geography, drives current nuclear trafficking decision making’, Nonproliferation Review, 20:1 (2013), p. 10 .

14 Hufbauer et al., Economic Sanctions Reconsidered, p. 8.

15 Early, Busted Sanctions, pp. 18–19.

16 ‘Aid-based’ sanctions busting is largely directed by governments, support could include transfers of ‘developmental assistance, concessional loans or trade subsidies, grants, or military assistance’. Early, Busted Sanctions, pp. 18–19. State authorised transfers undertaken using state prerogatives and resources are more likely, as Hastings notes, to avoid use of commercial third country hubs. Hastings, ‘The geography of nuclear proliferation networks’, p. 431.

17 On Dubai, see, for example, Early, Busted Sanctions, pp. 88–158; Naylor, R. T., Patriots and Profiteers: Economic Warfare, Embargo Busting, and State-Sponsored Crime (Kingston, ON: McGill-Queen’s University Press, 2008); And on other cases, see Andreas, Peter, ‘Criminalizing consequences of sanctions: Embargo busting and its legacy’, International Studies Quarterly, 49 (2005), pp. 335360 .

18 This contrasts with Hastings’s passing consideration of multiple hubs in the single, but interconnected, Khan case. Hastings, ‘The geography of nuclear proliferation networks’.

19 For example the Iranian cases involve transfers of an ‘emergency floatation system’.

20 This is a more unusual phenomenon seen in the Khan network, for example, in Malaysia (explored below); and in the Turkish ‘mini-hub’, where importing parts from Europe were assembled into centrifuge motors and frequency converters. See International Institute for Strategic Studies, Nuclear Black Markets: Pakistan, A. Q. Khan and the Rise of Proliferation Networks: A Net Assessment (London: Routledge, 2007), p. 81 . Others have noted the potential for such a role, for example through manufacturing operations in ‘free zones’. See Viski, Andrea and Michel, Quentin, ‘Free Trade Zones and strategic trade controls’, Strategic Trade Review, 2:3 (2016), p. 28 .

21 For a discussion of ‘witting’ and ‘unwitting actors’, see Stewart and Salisbury, ‘Non-state actors as proliferators’.

22 Transshipment occurs when goods do not enter the third country’s customs area (for example, being moved from ship-to-ship at a port, or briefly warehoused and repacked at a Free Trade Zone (FTZ) taking advantage of the definition of transshipment in the third country’s relevant legislation, typically for lesser licensing requirements). In re-export goods enter and exit the jurisdiction’s customs area.

23 Imprecise reporting can make it difficult to make the distinction between transshipment and transit.

24 This article has adapted the term ‘footprint’ from the business literature, where it usually refers to physical space. See Law, Jonathan (ed.), A Dictionary of Business and Management (6th edn, Oxford: Oxford University Press, 2016).

25 For example, in the SCOPE case explored below, the number of people with full knowledge of the end use of the goods the factory was producing was heavily limited. See Royal Malaysia Police, ‘Press Release By Inspector-General of Police in Relation to Investigation on the Alleged Production of Components for Libya’s Uranium Centrifuge Programme’ (February 2004), available at: {http://isis-online.org/uploads/iaea-reports/documents/Malaysian_Police_Report.pdf} accessed 17 May 2018.

26 See, for example, networks with state resources or prerogatives in Hastings, ‘The geography of nuclear proliferation networks’.

27 Anderson only alludes in passing to the use of third or ‘intermediary’ countries as ‘deception points’. See Anderson, ‘Points of deception’, p. 8.

28 Williams, Phil, ‘Transnational criminal networks’, in John Arquilla and David Ronfeldt (eds), Networks and Netwars (Santa Monica, CA: RAND, 2001), p. 71 .

29 Radden Keefe, Patrick, ‘The geography of badness’, in Michael Miklaucic and Jacqueline Brewer (eds), Convergence: Illicit Networks and National Security in the Age of Globalization (Washington, DC: National Defense University Press, 2013), p. 100 .

30 Albright, David, Peddling Peril: How the Secret Nuclear Trade Arms America’s Enemies (US: Free Press, 2010), p. 120 .

31 ‘Sdn Bhd’ indicates that the organisation is a private limited company in Malaysia.

32 Frantz, Douglas and Collins, Catherine, The Nuclear Jihadist: The True Story of the Man Who Sold the World’s Most Dangerous Secrets … and How We Could Have Stopped Him (New York: Twelve, 2007), p. 299 .

33 Ibid.

34 The initial deal was for five thousand centrifuges, but later expanded to ten thousand. Albright, Peddling Peril, p. 122; for the one million figure, see p. 130.

35 Frantz and Collins, The Nuclear Jihadist, p. 235.

36 Ibid., p. 241.

37 Ibid.

38 Ibid., p. 261.

39 Ibid., pp. 261, 272.

40 Royal Malaysia Police, ‘Press Release by Inspector-General of Police’.

41 Albright, Peddling Peril, p. 134.

42 Royal Malaysia Police, ‘Press Release by Inspector-General of Police’.

43 Frantz and Collins, The Nuclear Jihadist, p. 261.

44 Albright, Peddling Peril, p. 134.

45 Correra, Gordon, Shopping for Bombs: Nuclear Proliferation, Global Insecurity, and the Rise and Fall of the A. Q. Khan Network (Oxford: Oxford University Press, 2006), p. 113 .

46 Collins and Frantz, The Nuclear Jihadist, p. 109.

47 Ibid., p. 46.

48 Albright, Peddling Peril, p. 135. According to the Malaysian company registry the company was renamed SCOPE from ‘Prisma Wibawa Sdn Bhd’ in December 2001.

49 Open sources do not suggest that the network’s move was precipitated by the CIA. Albright, Peddling Peril, p. 135.

50 Collins, Catherine and Frantz, Douglas, Fallout: The True Story of the CIA’s Secret War on Nuclear Trafficking (New York: Free Press, 2011), p. 47 .

51 ‘Transactions of Scomi Precision Engineering and Bikar Metal Asia, 2001–2002’ (n.d.), available at: {http://isis-online.org/uploads/isis-reports/documents/Transactions_of_Scomi_Precision_Engineering_and_Bikar_Metal_Asia_2001_to_2002.pdf} accessed 28 November 2017.

52 Albright, Peddling Peril, p. 135.

53 Royal Malaysia Police, ‘Press Release by Inspector-General of Police’.

54 Frantz and Collins, The Nuclear Jihadist, pp. 261–2.

55 Hastings, ‘The geography of proliferation networks’, pp. 429–50.

56 Ibid.

57 Ibid., p. 443.

58 Collins and Frantz, Fallout, pp. 87–9; Frantz and Collins, The Nuclear Jihadist, p. 335.

59 ‘Note verbale dated 26 October 2004 from the Permanent Mission of Malaysia to the United Nations addressed to the Chairman of the Committee’, S/AC.44/2004/(02)/35 (4 November 2004), available at: {https://documents-dds-ny.un.org/doc/UNDOC/GEN/N04/594/24/PDF/N0459424.pdf?OpenElement} accessed 28 November 2017.

60 Government Accountability Office, Report Number GAO-10-375, ‘Iran Sanctions: Complete and Timely Licensing Data Needed to Strengthen Enforcement of Export Restrictions’ (March 2010), p. 16.

61 Ibid., p. 17.

62 Three cases in Malaysia and two in ‘Malaysia and Singapore’ of 122 considered – Malaysia was much less prominent than China (38), UAE (13), and fewer cases than the US (6), Austria (5), and Spain (4). See Ian Stewart and Nick Gillard, Project Alpha Report, ‘Iran’s Illicit Procurement Activities: Past, Present and Future’ (24 July 2015), available at: {http://projectalpha.eu/wp-content/uploads/sites/21/2015/07/20150724_-_Iran_Illicit_trade_past_present_future_FINAL.pdf} accessed 28 November 2017.

63 With at least two exceptions – an unnamed Malaysian firm was implicated in efforts to procure Nuclear Suppliers Group controlled Russian-origin neutron generators. US Secretary of State, Cable No. 08STATE52481_a, ‘NIAG 8064: Iran Seeks Russian-Origin Neutron Generators through Malaysia’ (16 May 2008), available at: {https://wikileaks.org/plusd/cables/08STATE52481_a.html} accessed 17 May 2018. In 2014, Nicholas Kaiga, in a US court, also plead guilty of transshipping aluminum tubes (potentially of use in the manufacture of centrifuges) to Iran through Malaysia. US Immigration and Customs enforcement, ‘ICE Deports Belgian Man Convicted in Chicago of Attempting to Illegally Export Controlled Nuclear Non-Proliferation Items Ultimately Destined for Iran’ (8 July 2015), available at: {https://www.ice.gov/news/releases/ice-deports-belgian-man-convicted-chicago-attempting-illegally-export-controlled} accessed 28 November 2017.

64 United States District Court, Southern District of Florida, United States v. Ali Akbar Yahya, F. N.

Yaghmaei, Mayrow General Trading et al. All US court documents from Pacer, available at: {https://www.pacer.gov/} accessed 17 May 2018.

65 David Albright, Paul Brannan, and Andrea Scheel, ISIS Report, ‘Iranian Entities’ Illicit Military Procurement Networks’ (12 January 2009), available at: {http://isis-online.org/uploads/isis-reports/documents/IranMilitaryProcurement.pdf} accessed 28 November 2017.

66 United States District Court, Southern District of Florida, United States v. Ali Akbar Yahya, F. N. Yaghmaei, Mayrow General Trading et al., September 2008, pp. 37, 40.

67 UN Security Council 1737, S/RES/1737, 27 December 2006. This would be followed in 2010 by a full UN arms embargo. However, the overlap between goods of use in missile and aerospace programmes, and broader US efforts to prevent Iran from obtaining US technology since the Iranian revolution, meant the US government expressed concern about Iranian illicit procurement much earlier.

68 According to leaked US State Department cables – by no means a complete dataset, yet providing a snapshot. Only seven of the ten companies listed in the leaked cables were legally registered in the Malaysian company registry.

69 Evidence from the cables – and United States District Court, Northern District of California, United States v. Majid Kakavand, April 2009, pp. 9–10.

70 MTCR refers to the Missile Technology Control Regime, a group of missile technology holding states that have harmonised export controls and exchange information on missile proliferation trends. US Secretary of State, ‘Missile Technology Control Regime (MTCR): Missile Proliferation Trends’, Cable No. 09STATE98749_a (23 September 2009), available at: {https://wikileaks.org/plusd/cables/09STATE98749_a.html} accessed 17 May 2018.

71 Drawing on leaked cables, US court documents and other sources. There will likely have been other Iranian controlled entities and networks operating in Malaysia. The linkage between the two clusters is suggested in a cable that suggests that firms from both were both seeking the same UAV technology from a Japanese company – possibly working together or in competition. US Secretary of State, Cable No. 08STATE109147_a, ‘Iranian UAV Program Seeking Japanese-Origin Items via Malaysian Broker (S)’ (10 October 2008), available at: {https://wikileaks.org/plusd/cables/08STATE109147_a.html} accessed 17 May 2018.

72 US Secretary of State, Cable No. 09STATE87162_a, ‘Iran’s FEDCO Continues Efforts to Procure French Connectors from German Firm (S)’ (21 August 2009), available at: {https://wikileaks.org/plusd/cables/09STATE87162_a.html} accessed 17 May 2018.

73 See, for example, US Secretary of State, Cable No. 08STATE101519_a, ‘(S) Malaysian-Based Supplier to Iran Seeks Crystal Oscillators From Swiss Firm’ (23 September 2008), available at: {https://wikileaks.org/plusd/cables/08STATE101519_a.html} accessed 17 May 2018; US Secretary of State, Cable No. 09STATE19370_a, ‘New Information on Iranian Procurement Network’s Efforts to Acquire German-Origin Items for Iran’s Ballistic Missile Program (S)’ (3 March 2009), available at: {https://wikileaks.org/plusd/cables/09STATE19370_a.html} accessed 17 May 2018.

74 US Secretary of State, Cable No. 09STATE20617_a, ‘Iranian Procurement Firm Continues Efforts to Purchase Belgian Data Acquisition Systems via Malaysia-Based Entities (S)’ (5 March 2009), available at: {https://wikileaks.org/plusd/cables/09STATE20617_a.html} accessed 17 May 2018.

75 United States District Court, Northern District of California, United States v. Majid Kakavand, April 2009, p. 11.

76 Ibid., p. 7.

77 Clif Burns, ‘Malaysia fast becoming a diversion destination for exports to Iran’, ExportLaw blog (15 September 2009), available at: {http://www.exportlawblog.com/archives/566} accessed 28 November 2017.

78 United States District Court, Northern District of California, United States v. Majid Kakavand, April 2009, p. 9

79 United States District Court, Northern District of California, United States of America v. Evertop Services SND BHD, Amir Ghasemi, Majid Kakavand, and Alex Ramzi, 2009, p. 6.

80 Ibid., pp. 8, 11.

81 Ibid., p. 15.

82 Viski and Michel, ‘Free zones and strategic trade controls’.

83 These names were Vertex Technology Sdn Bhd; Zenith Technology Sdn Bhd; Summit Technology Sdn Bhd; and Microsun Technology Sdn Bhd.

84 United States District Court, Northern District of California, United States v. Majid Kakavand, April 2009, p. 23.

85 Data from the Malaysian corporate registry.

86 US Secretary of State, Cable No.09STATE115166_a, ‘Malaysia-Based Procurement Entity Continues to Seek German-Origin Rotary Swaging Machine (S)’ (6 November 2009), available at: {https://wikileaks.org/plusd/cables/09STATE115166_a.html} accessed 17 May 2018. The cables suggest these entities share an address. Searches of the Malaysian corporate registry did not reflect this.

87 US Secretary of State, Cable No. 09STATE104467_a, ‘Malaysian-Based Front Company for Iranian Procurement Agent Seeks U.S.-Origin Equipment from South Korean Firm (S)’ (7 October 2009), available at: {https://wikileaks.org/plusd/cables/09STATE104467_a.html} accessed 17 May 2018.

88 US Secretary of State, Cable No. 08STATE109147_a, ‘Iranian UAV Program Seeking Japanese-Origin Items via Malaysian Broker (S)’ (10 October 2008), available at: {https://wikileaks.org/plusd/cables/08STATE109147_a.html} accessed 17 May 2018.

89 United States District Court, District of Columbia, United States of America v. Mac Aviation Group et al., 2009.

90 Levick was indicted in 2011, but not extradited to the US. He was declared a fugitive in 2012, likely because of extradition difficulties.

91 Paul Maley, ‘Sanctions? What sanctions? Aussie accused of exporting goods to Iran’, The Australian (2 March 2012).

92 A list is provided in the indictment: United States District Court, District of Columbia, United States of America v. David Levick and ICM Components, Inc., 2011, p. 7.

93 Ibid., p. 13.

94 ‘Affidavit in Support of a Criminal Complaint and Arrest Warrant, Hossein Ali Khoshnevisrad’ (August 2008). Confirmed in the Malaysian corporate registry.

95 Ibid., p. 3; United States District Court, District of Columbia, United States of America v. Mac Aviation Group et al., 2009.

96 ‘Affidavit in Support of a Criminal Complaint and Arrest Warrant, Hossein Ali Khoshnevisrad’ (August 2008), p. 7.

97 Data from the Malaysian corporate registry.

98 The indictment lists the flight number as IR841 – United States District Court, District of Columbia, United States of America v. Mac Aviation Group et al., 2009, p. 22.

99 US Embassy Kuala Lumpur, Cable No. 09KUALALUMPUR917_a, ‘Malaysia: Special Advisor on Nonproliferation and Arms Control Robert Einhorn’s Meeting with Senior Officials at MITI, Central Bank, and Atomic Energy Licensing Board, November 3–4, 2009’ (13 November 2009), available at: {https://wikileaks.org/plusd/cables/09KUALALUMPUR917_a.html} accessed 17 May 2018.

100 Kareem, M. S. A., ‘Implementation and enforcement of strategic trade controls in Malaysia’, Strategic Trade Review, 2:2 (2016), pp. 104117 .

101 Ibid.

102 Ibid.

103 Karim Sadjadpour, ‘The Battle of Dubai: the United Arab Emirates and the U.S.-Iran Cold War’, Carnegie Paper (July 2011), p. 2, available at: {http://carnegieendowment.org/files/dubai_iran.pdf} accessed 28 November 2017.

104 Mahan Air also flew to Bangkok. ‘Air Iran Route Map’ (October 2002), available at: {https://web.archive.org/web/20110515085921/http://airchive.com:80/html/timetable-and-route-maps/eurasia-middle-east/iran-air-october-27-2002/6659} accessed 28 November 2017.

105 A 2013 UN report suggested that British arms dealer Michael Ranger had held business meetings in Malaysia with North Korean dealers an unstated number of times since 2004. UN Security Council, S/2013/337, Report of the Panel of Experts Established Pursuant to Resolution 1874 (2009) (11 June 2013). US officials travelled to Kuala Lumpur to warn banks that North Korean arms companies had Malaysian accounts in 2009. US Embassy Kuala Lumpur, Cable No. 09KUALALUMPUR549_a, ‘Goldberg Delegation’s Meetings with Malaysian Central Bank and Financial Institutions Re Implementation of UNSCR 1874’ (8 July 2009), available at: {https://wikileaks.org/plusd/cables/09KUALALUMPUR549_a.html} accessed 17 May 2018; A 2016 UN report also listed Malaysia as one country of a handful that KOMID (Korea Mining and Development Trading corporation, North Korea’s primary arms dealing company) officials had travelled to between 2012 and 2015. UN Security Council, S/2016/157, Report of the Panel of Experts Established Pursuant to Resolution 1874 (2009) (24 February 2016).

106 UN Security Council, S/2017/150, Report of the Panel of Experts Established Pursuant to Resolution 1874 (2009) (27 February 2017); James Pearson and Roszanna Latiff, ‘North Korea spy agency runs arms operation out of Malaysia, U.N. says’, Reuters (26 February 2017), available at: {http://www.reuters.com/article/us-northkorea-malaysia-arms-insight-idUSKBN1650YE} accessed 28 November 2017.

107 UN Security Council, S/2017/150, Report of the Panel of Experts Established Pursuant to Resolution 1874 (2009) (27 February 2017), p. 34.

108 Ibid., pp. 35, 155. ‘.my’ is the internet country code top level domain for Malaysia.

109 ‘Malaysia says intercepted North Korean arms shipment to Thailand in 2011’, Reuters (20 March 2017), available at: {http://www.reuters.com/article/us-northkorea-malaysia-arms-idUSKBN16R11U} accessed 28 November 2017.

110 UN Security Council, S/2018/171, Report of the Panel of Experts Established Pursuant to Resolution 1874 (2009) (5 March 2018), p. 64.

111 James Pearson and Roszanna Latiff, ‘North Korea spy agency runs arms operation out of Malaysia, U.N. says’, Reuters (26 February 2017), available at: {http://www.reuters.com/article/us-northkorea-malaysia-arms-insight-idUSKBN1650YE} accessed 28 November 2017.

112 ‘Glocom and DPRK fronts’, Armscontrolwonk podcast (10 March 2017), available at: {http://hwcdn.libsyn.com/p/9/0/6/906c3bf2ff3638e1/28.mp3?c_id=14476329&destination_id=228079&expiration=1500073227&hwt=58d46fb71bc5104af347016a346f398c} accessed 17 May 2018.

113 Daniel Salisbury, ‘A Malaysian shipyard with North Korean connections’, Armscontrolwonk (18 May 2017), available at: {http://www.armscontrolwonk.com/archive/1203180/daniel-salisbury-a-malaysian-shipyard-with-north-korean-connections/} accessed 28 November 2017.

114 ‘Boatbuilder Kay Marine gets more foreign orders’, The Star Online (5 November 2006), available at: {http://www.thestar.com.my/business/business-news/2006/11/05/boatbuilder-kaymarine-gets-more-foreign-orders/#0wqmxpO2gHYx3253.99} accessed 28 November 2017; ‘Seven more marine dept boats to provide services’, Bernama (5 March 2007).

115 Early, Busted Sanctions, pp. 65–71, 77–9.

116 Project Alpha, ‘Countries That Have Prosecuted WMD Export Control Violators’, available at: {https://public.tableau.com/profile/project.alpha#!/vizhome/GlobalWMDExportControlProsecutions/Dashboard1} accessed 28 November 2017.

117 Although evidence is far from complete, all three cases explored above showed signs of government reluctance or inability to act – from legislative overhaul taking six years following the Khan revelations; limited enforcement action taken against the Iranian networks; and lack of evidence of investigation and action after the US government sanctioned Kay Marine.

118 Financial Action Task Force, Mutual Evaluation Report, ‘Anti-Money Laundering and Counter-Terrorist Financing Measures Malaysia’ (September 2015), available at: {http://www.fatf-gafi.org/media/fatf/documents/reports/mer4/Mutual-Evaluation-Report-Malaysia-2015.pdf} accessed 17 May 2018.

119 Rosana Latiff, ‘Malaysia says North Korean firms linked to arms trade being deactivated’, Reuters (27 February 2017), available at: {https://www.reuters.com/article/us-northkorea-malaysia-arms/malaysia-says-north-korean-firms-linked-to-arms-trade-being-deactivated-idUSKBN167067?il=0} accessed 22 March 2018.

120 Andrea Berger, ‘The Chinpo shipping case implodes’, Armscontrolwonk (15 May 2017), available at: {http://www.armscontrolwonk.com/archive/1203164/guest-post-the-chinpo-shipping-case-implodes/} accessed 28 November 2017.

121 Williams, ‘Transnational criminal networks’, p. 71.

122 For example, US representatives noted ‘Front companies and intermediaries involved in missile-related procurement often operate in countries with weak export control oversight and enforcement.’ US Secretary of State, Cable No. 09STATE98749_a, ‘Missile Technology Control Regime (MTCR): Missile Proliferation Trends’ (23 September 2009), available at: {https://wikileaks.org/plusd/cables/09STATE98749_a.html} accessed 17 May 2018.

123 Albright, Peddling Peril, p. 201.

124 It should be noted this doesn’t necessarily indicate difficulty in establishing companies.

125 The country was ranked 111th of 190, compared to 24th for general ease of doing business. See World Bank, ‘Economy Rankings’ (2017), available at: {http://www.doingbusiness.org/rankings} accessed 27 November 2017.

126 Koen, V. et al., Malaysia’s Economic Success Story and Challenges (Paris, OECD Publishing: 2017).

127 Rasiah, Rajah, ‘Free Trade Zones and industrial development in Malaysia’, in K. S. Jomo (ed.), Industrializing Malaysia: Policy, Performance, Prospects (London: Routledge, 1993).

128 Michael Richardson, ‘Malaysia aims to become a key Southeast Asian shipping hub: Singapore faces a rival next door’, New York Times (1 February 2002).

129 UN Security Council 1737, S/RES/1737 (27 December 2006).

130 ‘Minister: Malaysia to assist Iran in normalizing position in global community’, Bernama (8 November 2007).

131 For example ‘heat exchangers, pressure vessels, switchgears, electrical and electronic goods’. ‘Malaysian companies seek to increase exports to Iran’, Bernama (17 October 2008).

132 ‘Boatbuilder Kay Marine gets more foreign orders’, The Star Online.

133 UN Security Council 2270, S/RES/2270 (2 March 2016).

134 ‘Malaysia eyes boosting trade with North Korea’, The Star (2 December 2016).

135 US Embassy Kuala Lumpur, Cable No. 08KUALALUMPUR213_a, ‘Malaysia Scenesetter for A/S O’Brien: Financial Controls’ (26 March 2008), available at: {https://wikileaks.org/plusd/cables/08KUALALUMPUR213_a.html} accessed 17 May 2018.

136 Chapter VII allows the UN Security Council to place legally binding measures on all member states. Malaysia was speaking on behalf of the Non Aligned Movement. Rastam Mohd Isa, S/PV.4950, Statement to the UN Security Council (Resumption 1), available at: {http://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/1540%20SPV%204950%20R1.pdf} accessed 28 November 2017.

137 ‘Minister: Malaysia to assist Iran in normalizing position in global community’, Bernama (8 November 2007).

138 Joshua R. Johnson, ‘Cooperation and pragmatism: Malaysian foreign policy under Najib’, Asia Pacific Bulletin, 63 (3 June 2010).

139 Kareem, ‘Implementation and enforcement of strategic trade controls in Malaysia’.

140 For example, a visiting delegation in 2000 reported: ‘Malaysia was largely dependent on its trade, and was afraid that a comprehensive [export] control system would run counter to its commercial interest, which were Malaysia’s principle source of income.’ US Embassy The Hague, Cable No. 00THEHAGUE1863_a, ‘Readout on MTCR Dutch Chair Visit to Southeast Asia’ (22 June 2000), available at: {https://wikileaks.org/plusd/cables/00THEHAGUE1863_a.html} accessed 17 May 2018.

141 US Embassy Kuala Lumpur, Cable No.10KUALALUMPUR68_a, ‘AA/S Van Diepen’s Meetings in Kuala Lumpur on Non-Pro and Export Control Issues’ (5 February 2010), available at: {https://wikileaks.org/plusd/cables/10KUALALUMPUR68_a.html} accessed 17 May 2018.

142 The lack of concern/awareness expressed by these entities regarding regulation may be a reason they were caught or had their activities uncovered; or its importance in the choice of Malaysia may be obvious to those involved, and therefore not explicitly stated.

143 For a discussion of the limits of the rational actor model, see Salisbury, ‘Why do entities get involved in proliferation?’, pp. 306–08.

144 Stephanie Lieggi and Richard Sabatini, ‘Malaysia’s Export Control Law: A Step Forward, But How Big?’ (10 May 2010), available at: {http://www.nti.org/analysis/articles/malaysias-export-control-law/} accessed 28 November 2017.

145 The index includes categories such as ‘getting electricity’ and ‘trading across borders’, alongside ‘paying taxes’ and ‘enforcing contracts’. See World Bank, ‘Economy Rankings’ (2017), available at: {http://www.doingbusiness.org/rankings} accessed 27 November 2017.

146 For example, in 2017 Malaysia was ranked 24th globally of 190 countries, and 4th regionally behind Singapore, Hong Kong, and Taiwan. Ibid.

147 According to the Reuters reporting cited above, a prominent member of the UMNO Malaysian ruling party was listed as the director of one of the companies in the Glocom case; Kay Marine had a number of contracts with Malaysian government bodies, including for a research vessel funded by the Prime Minister’s Department’s Economic Planning Unit. Pathama Subramaniam, ‘PAC wants graft probe on university’s “ailing” research vessel project’, MalayMailOnline (27 October 2014), available at: {http://www.themalaymailonline.com/malaysia/article/pac-wants-graft-probe-on-universitys-ailing-research-vessel-project} accessed 28 November 2017.

148 Bunn, Matthew, ‘Corruption and nuclear proliferation’, in Robert I. Rotberg (ed.), Corruption, Global Security and World Order (Washington, DC: Brookings Institution Press, 2009), p. 136 .

149 Early, Busted Sanctions, pp. 68–9, 106, 122.

150 Ibid., pp. 77, 106, 122.

151 See, for example, ‘circuitous routing provided an alibi and made countermeasures more difficult’ in Naylor, Patriots and Profiteers, p. 238; ‘the sensitive nature of such transactions increases the value of discretion and/or opacity provided by particular third-party venues above the logistical advantages they offer’ in Early, Busted Sanctions, p. 102.

152 See Early, Busted Sanctions, pp. 120–2; John Park and Jim Walsh, ‘Stopping North Korea, Inc.: Sanctions Effectiveness and Unintended Consequences’, MIT Security Studies Program Report (August 2016), available at: {https://www.brookings.edu/events/stopping-north-korea-inc/} accessed 27 November 2017.

153 Radden Keefe, ‘The geography of badness’, pp. 99, 107.

154 See, for example, Park and Walsh, ‘North Korea Inc.’.

155 For an example of this approach, see David Albright et al., ‘Peddling Peril Index (PPI) for 2017’, ISIS Report (31 January 2018), available at: {http://isis-online.org/isis-reports/detail/peddling-peril-index-ppi-for-2017} accessed 17 May 2018.

156 See, for example, Aaron Arnold and Daniel Salisbury, ‘When Cooperative Counterproliferation Fails: Disrupting Overseas Illicit WMD Procurement Networks’, forthcoming report (autumn 2018).

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European Journal of International Security
  • ISSN: 2057-5637
  • EISSN: 2057-5645
  • URL: /core/journals/european-journal-of-international-security
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