North Korean shipping: How the United Nations punished the Hao Fan 6
Then the Hao Fan 6 disappeared.
The Hao Fan 6 was one of four ships the UN slapped with global port bans.
“Shipping is the area that is in the most trouble now given the squeeze by the sanctions,” said George Lopez, a former member of the UN Panel of Experts on North Korea who now teaches at the University of Notre Dame. “Once you’re in a situation like you are in now, when there’s virtually no exports allowed, then you get a chance to really interdict virtually everything.”
The sanctions dovetail with US President Donald Trump’s plan to quash North Korea’s nuclear march by putting together a global coalition dedicated to cutting off North Korea’s cashflow. The hope is to eventually get the hermit nation’s leader, Kim Jong Un, to relinquish his nuclear arsenal in exchange for sanctions relief.
The US Treasury Department has gone even further than the UN, sanctioning 59 vessels for their dealings with North Korea. But independent North Korea watchers have identified as many as 180 ships connected to the hermit state, which begs the question: How many North Korean ships like the Hao Fan 6 are still roaming the high seas, bringing in cash for the Kim regime?
A ship crosses dry land
The Hao Fan 6’s journeys in the weeks before the ban show the massive ship, which can transport 8,343 tons of cargo, appearing to travel on land across large swaths of South Korea.
These aren’t errors. They’re clues.
Turn it off and a ship can hide from prying eyes or potential threats. Once turned back on, tracking data will show a big and unusual jump.
“There is little that can be done to prevent captains independently switching them off,” Andrea Berger, a senior research associate who specializes in North Korea’s weapons programs and sanctions at the Middlebury Institute of International Studies, told CNN.
After going silent on October 10, the Hao Fan 6 didn’t turn on its transponder for the rest of the month.
Berger said it’s common for North Korean-linked vessels engaging in illegal behavior to turn off their transponders for periods of their voyage.
Experts say transponders are usually shut off if a ship is being threatened, often due to piracy.
Three trips to North Korea
The Hao Fan 6’s historical data shows three visits to North Korea in 2016 and activity on traditional coal shipping routes.
Twice in the fall it was tracked near a North Korean port city, Nampo. The first time was September 27.
The Hao Fan 6 next pinged on October 17. It was near Lanshan, a coastal city in China with a port and coal terminal. Tracking data shows the ship then headed back to Nampo. It was off the North Korean coast again on October 20. Then it went silent for days.
CNN asked Hugh Griffiths, the coordinator of the UN Panel of Experts on North Korea — the body charged with monitoring the enforcement and efficacy of sanctions on the hermit nation — about the possibility the Hao Fan 6 was moving coal. He did not comment, but said it’s vital that UN members fully implement Security Council resolutions.
“Part of that is very much paying close attention to vessels delivering coal,” Griffiths said.
Coal has provided a crucial economic lifeline for Pyongyang. In 2015, coal exports netted nearly a billion dollars of revenue, according to UN data. Chinese companies were big buyers, as North Korean coal is close by and cheap.
Marshall Billingslea, the assistant secretary for terrorist financing at the US Treasury Department, in his testimony to the US Senate in September, used satellite imagery and AIS data to show three ships transporting illicit North Korean coal — and turning off their AIS transponders while doing so — while traveling between China and Russia.
More recently, Nikki Haley, the US ambassador to the United Nations, called for the global community to do more to crack down on North Korean sanctions violations.
“This Council has banned coal exports from North Korea. And yet, we have reports of the regime continuing to smuggle coal into neighboring Asian countries using deceptive tactics to mask the coal’s origins,” Haley told the United Nations shortly after the November North Korean missile test.
Two offices in Hong Kong
On paper, the Hao Fan 6 is owned by a Hong Kong-based company — Trendy Sunshine Hong Kong Limited. The company’s address is listed as the 10th floor of Hong Kong’s Billion Centre, according to Equasis — a shipping information database developed by European Union and French Authorities — and publicly available corporate records provided to the Hong Kong government.
When CNN visited the building, Trendy Sunshine was not there. Instead, the office, with its gleaming marble foyer and glass walls overlooking Hong Kong’s iconic Victoria Harbor, is the headquarters for SBC International, Trendy Sunshine’s company secretary.
In Hong Kong, it’s not illegal for companies to share an address with their company secretary. Hong Kong requires companies to have both a director and company secretary, but only the director has to be an actual person. Companies based outside Hong Kong that do business in the city do it in order to avoid incurring the cost of a new office.
The Hao Fan 6’s operator, Shen Zhong International Shipping, also shares an address with one of SBC International’s four offices in Hong Kong. While a ship’s operator doesn’t own the vessel, it is in charge of managing the day-to-day operations, and hiring a captain and crew.
SBC’s sharing of addresses with Trendy Sunshine and Shen Zhong isn’t a sign of wrongdoing in itself. But they are red flags.
“This is not what I would expect to see from a normal ship. This is more along the lines of what I would expect to see in a case where we already know something strange is going on,” said Jessica Knight, the director of analysis at Sayari Analytics, a Washington-based firm that analyzes connections between businesses across the globe.
Trendy Sunshine has one sole owner and shareholder: Yue Diangang. According to Hong Kong corporate records, he is based in Rongcheng City in China’s Shandong province. Knight and the Sayari Analytics team were only able to find one individual with that name in all of Shandong — a cement trader.
It’s odd that a cement trader is listed as the owner of a ship, instead of a person in the logistics or shipping industry.
“That is really weird,” Knight said. “We’re not seeing people behind these companies that I would expect to be behind these companies.”
One former owner
Trendy Sunshine took control of the Hao Fan 6 from a company called Zhejiang Haofan Shipping on February 24, 2017, Equasis records show.
That same day, Zhejiang Haofan Shipping transferred ownership of a different ship in its fleet, the Hao Fan 2, to a company called Advance Superstar (Hong Kong) Limited. Like Trendy Sunshine, Advance Superstar shares an address with a branch of SBC International.
Equasis records show Zhejiang Haofan currently owns only one ship: Hao Fan 3.
Like the Hao Fan 6, the Hao Fan 3’s AIS data shows it making massive jumps — it can be seen crossing land on South Korea and Japan, a sign its transponder was turned off.
Though the Hao Fan 2 and 3 have not been caught doing anything wrong and have not been sanctioned by the United Nations or United States, both ships have been turning off their AIS transponders and sailing in the same areas as the Hao Fan 6 — which Knight says is enough to warrant monitoring.
“You have the UN taking action against this vessel (the Hao Fan 6), saying that it’s been engaged in this unacceptable behavior on behalf of North Korea, and at the same time there are two other vessels controlled by the same people that are still active,” Knight said.
“You can show not only are they controlled by the same people but the people are not engaged in what appears to be normal commercial structures and normal activities,” she said.
CNN texted Griffiths at the United Nations if his team was aware of the Hao Fan 2 and 3’s potentially suspicious activity, but did not receive a reply.
Going in circles
More than a month after it went dark on October 10, the Hao Fan 6’s signal pinged in the East China Sea. It was hundreds of kilometers away from its last location.
Then it went in circles for more than two weeks.
This could be a way to distract investigators, according to Lopez, the former Panel of Experts member. He said he had not seen anything like this before, though the panel was not as focused on North Korean shipping when he was a member.
If the Hao Fan 6 tries to enter a law-abiding port, authorities would likely look at the ship manifest and route history before it requests to dock. Sketchy or incomplete traffic data would be a red flag, and the ship would likely run into problems with customs.
With nowhere to go, no port to call home and traveling with no apparent direction, the Hao Fan 6 now seems to be a drifter.
It’s still going in circles.
Edited by Marc Lourdes, Steve George and Emma Lacey-Bordeaux.
CNN’s Yazhou Sun and news assistants Kinnie Li and Naira Oberoi contributed to this report.