Investigating proliferation activities between China and Pakistan

+

Stephan BlanckeJens Rosenke

Februar 2018London, Berlin, Brussels

Foreword

On the basis of a few available data Jens Rosenke and I had the opportunity, to look into

what we see as a sometimes dodgy business between some players in China and

Pakistan. For this purpose, we evaluated in Summer 2017 a large number of original

sources and other information and tried to find a plausible connection between the various

indicators. This approach soon demonstrated the confusing and often disguised ways and

methods of individual actors to trade sensitive or security relevant technology.

In September 2017, Jane's Intelligence Review (Vol 29, Issue 09, pp. 42-47) published a

condensed version of our research entitled "Masters of Disguise: Tracking illicit trade

networks in Asia". Just in case we allow us to cite from the mentioned article the following

lines:

"The companies and agencies referenced in this feature with apparent connections to

Engineering Solutions Pvt were offered the opportunity to comment before publication, but

none did so. There is no suggestion that any of the other companies referenced in the

feature engaged in illicit activity."

The authors also want to point out that all named and represented persons below are not

necessarily involved in illegal acts.

The company Engineering Solutions Pvt. Ltd continues to be listed in the Entity List (EL) -

Bureau of Industry and Security as of today (20 February 2018).

We are responsibility for any errors one might find in our paper. Sorry for some formatting

problems: Changing from Linux to Windows to Mac and back is too much for a document

and our patience.

Inquiries can be made to jens.rosenke@web.de or stephan@blancke.de.

Table Of Contents

Introduction 4China-Pakistan Military and Security connections 5Brief estimation 7The development 8Weapons transfer and cooperation for conventional major arms 9China´s support of Pakistan’s Nuclear and missile Program 13Current military exercises/ maneuvers 14Some details about SUPARCO 15Some details about Engineering Solutions Pvt. Ltd. 16Some details about Hwa Create Co., Ltd. 24What was delivered? 25Difficulties in research 27In general 29Locating Engineering Solutions 31Something about CNC machines 38Michael Ma and Shandong Jinding Stainless Steel Tube Co. Ltd. 41Michael Ma and Tongyu Heavy Industry Co. Ltd. 44Michael Ma and Dezhou Sean CNC Equipment Co. Ltd. 46Locating Hwa Create 51Future Research 57Conclusion 58

Introduction

Doing research about proliferation is always a difficult issue when it comes to identifying

perpetrators. Already legal business in the security sector is a hard thing to research:

Involved companies or persons do not like to stand in the focus. The facilitation of

transport is often processed under changing flags and not all companies are registered in

a trade register – often due to simple tax reasons. This is almost the case with transparent

politico-economic systems as many Western countries are. Problems exist especially with

politicial systems which are either interested in doing more discreet business or which

have still a lack of experience in regulations, customs etc. Both are problems for

researchers and law enforcement authorities.

As for other researchers it is the same for Project Alpha1, which is using extensively open

sources; the researchers working there are conducting some kind of Open Source

Intelligence (OSINT) to find clues in a global proliferation network of very different actors

and interests. Our paper wants to show how we searched and gathered OSINT and – due

to our professional experience – tried to verify the extracted information. Overcoming the

difficulties in doing this research is also a problem of language and regional knowledge. In

many cases we had to translate websites or entries in social networks, which sometimes

but not always worked with a simple machine translated search. Another problem for the

research in this case is that Pakistan offers a lot of information on trade, databses on

commercial activities etc. Contrary to this China is still in a developing process when it

comes to those necessary details. This results in additional efforts to extract reliable

numbers or contact details.2

Because of the vast amount of raw data Project Alpha has the chance to examine, the

present paper continues with the research on relationship between Pakistan and China.3

Beside others based on this dataset the authors chose a few players: On the Pakistan side

one well known science institute, the Space and Upper Atmosphere Research

1 In 2017 Stephan Blancke worked for a few months at Project Alpha, based at the King‘s College in London.2 The name of Pakistani companies and their location sometimes leads into the wrong direction – due to the different spelling in Pakistan and the inexperience of Western researchers. Reports about alleged illegal procurements on behalf of Pakistani companies are therefore often rejected by officials in Pakistan (Pakistan source to the authors, Nov. 22, 2017). One must keep in mind that this problem can lead to unjustified allegations. We tried to verify any information we are proceeding in our report.3 http://projectalpha.eu/wp-content/uploads/sites/21/2016/11/20160803_-_DPRK_Pak_allegation_case_study_- _Project_Alpha.pdf (24.02.2017)

4

Steph

an B

lanc

ke

Jens

Ros

enke

Commission (SUPARCO)4, and one nearly unknown private company, titled Engineering

Solutions Pvt. Ltd., which obviously got no website. On the the Chinese side we chose a

also nearly unknown company named Hwa Create Technology Corporation Ltd.5

Focusing on security issues the present paper tries to go deeper into the connections

between the mentioned entities, their position and relevance for Sino-Pakistan relations.

Analysing their activities we will come further down to additional actors.

As in other papers of Project Alpha the same is with the present investigation: The mention

of any organisation, company, indvidual, business network or any other entity does not

necessarily imply a violation of any international agreement or any law. It is not the

intention of the authors or Project Alpha to construct any allegation, which is the task of

authorities.

China-Pakistan Military and Security connections

Before we describe our concrete research we have to become clear about the special

relationship between Pakistan and China, even regarding their role in the international

proliferation regime and the relevance of their decades old cooperation in security issues.

Most of the various events, which are described in the following, have to be seen in the

context of specific norms and rules of preventing the proliferation of nuclear technology,

ballistic missiles and all necessary key components including the expertise and special

knowledge, which can help to economise years of R&D. The area Pakistan and China are

working on includes not only the hardware as tanks and planes but also software, test and

production equipment, avionic equipment and many other components, which are listed in

the Equipment, Software and Technology Annex of the Missile Technology Control Regime

(MTCR).6

In our research we didn‘t find a proof for an illegal transfer of nuclear material or a ballistic

missile, but we found an ongoing cooperation between entities, which are in part target of

sanctions, which behave in a dodgy way or which show some kind of discreet and vague

behaviour in their trade activities. In the current example – Pakistan and China – this is

based on a trustful relationship, which is developing since many years and seems to keep 4 http://suparco.gov.pk/webroot/index.asp (25.12.2016)

5 http://www.hwacreate.com.cn/ (25.12.2016)

6 See e.g. German Federal Foreign Office, Nuclear Arms Control and Nonproliferation Division (Ed.): Preventing the Proliferation of Weapons of Mass Destruction. Key Documents, Berlin 2004.

5

Steph

an B

lanc

ke

Jens

Ros

enke

ongoing in very good conditions. It will need technological expertise to put the various

delivered technical parts into a bigger picture of a possible procurement cycle, which is

necessary for a country to push its own nuclear and missile development. The following

description shows the proven development of a cooperation, which is in function until

today and which is the fundament for all official or less official deals between both

countries. These deals are not all focused on nuclear technology, but the military trade has

to be seen in a broader strategic context which includes nuclear deterrent and the need for

selected technology to control or to transport nuclear weapons.

Pakistan and China are behaving due to their specific strategic situation, which is on one

side the consistent threat – here: between India and Pakistan, which „quest for nuclear

deterrent has been motivated largely by fears of domination by India, whose population,

economy, and military resources dwarf its own. Other factors that have also contributed to

Pakistan‘s bid for nuclear arms include its desire for leadership and status in the Islamic

world, popular nationalist sentiment, and political and bureaucratic pressures.“7 Here it is

important to mention that India and Pakistan never had been parties to the Non

Proliferation Treaty (NPT), both have steadily increased their number of nuclear weapons

between 2010 and 2016 and for both „there is no information, statement or analysis which

suggests any reduction of their nuclear weapons or capabilities.“8

On the other side in this specific strategic context we see the will of prosperous,

developing nations – here: Pakistan, India and China – to strengthen their position and to

underline their military and economic profile. For Pakistan China is the ideal partner,

because China needs a reliable partner against a strong, more US-related India. In the

past Pakistan sought to cooperate with many countries to build up its own weapon

arsenal9, but China proofs to be the one stable partner. Due to the enormous ressources

they spend on their R&D in ballistic and cruise missiles both countries, China and

Pakistan, found a prominent place in the current threat assessment of the US military.10

7 Joseph Cirincione et. al.: Deadly Arsenals. Nuclear, Biological, And Chemical Threats, Washington 2005 [Carnegie Endowment For International Peace], p. 240.

8 Center for the Promotion of Disarmament and Non-Proliferation. The Japan Institute of International Affairs: Hiroshima Report. Evaluation of Achievement in Nuclear Disarmament, Non-Proliferation and Nuclear Security in 2016 (2017 Edition), Hiroshima Prefecture, March 2017, p. 26

9 See e.g. Steve Weissman/Herbert Krosney: The Islamic Bomb, New York 1981.

10 Defense Intelligence Ballistic Missile Analysis Committee: Ballistic And Cruise Missile Threat, National Air and Space Intelligence Center (NASIC) in collaboration with the Defense Intelligence Ballistic Missile Analysis Committee

6

Steph

an B

lanc

ke

Jens

Ros

enke

In face of this we first have to describe this cooperation to understand the demand for

security related technology and the consequential behaviour and trade of suppliers, which

are - in part - target of international investigations.

Brief estimation

Pakistan and China have a long tradition of cooperation in military and security issues –

which sometimes involved other states as North Korea as well. This cooperation was

already in the eighties subject of various estimations by foreign intelligence agencies. The

fear of Pakistan's possible transfer of Western military technology to China stood in the

foreground. In September 1983 the CIA came to the following conclusion: „We believe

Pakistan will protect US arms technology as long as the US security relationship is

perceived in Islamabad as providing tangible benefits. Major strains in relations with the

United States over the nuclear issue or new disputes on arms agreements could

undermine Islamabad's confidence in the United States and threaten the security

relationship, possibly causing Pakistan to share US weapons or technology with China.

Even if US-Pakistani relations remain strong, however, there is a risk that China at some

point will gain access to Pakistan's US arms, given the intimacy of Pakistan's ties to

China.“11 This specific situation seems not to have become better today. Additionally

Pakistan is under steady threat from India and its ambitions, which can be labeled in some

cases as risky and provocative. The Indian nuclear tests on 11 and 13 May 1998 prompted

Pakistan to test their own nuclear device: Two bombs exploded on 28 May 1998 in

Balochistan. 2004 a new strategy was developed by India: The Cold Start Strategy, which

aims at „swift offensive operations to penetrate, isolate, and destroy Pakistan’s vital

defenses, such as its nuclear facilities.“12 In the present situation one can ask if it will be a

wise operation by India to deploy „about 464 newly ordered T-90MS main battle tanks

(MBTs) along India's western and northern borders with Pakistan.“13 Until today one can

observe a permanent competition between both countries, e.g. in missile technology. In

security networks, but especially in the intelligence communities of both countries exists a

deep mistrust – far away from the strongly needed cooperation when it comes to terrorism,(DIBMAC), June 2017.

11 Central Intelligence Agency, Directorate Of Intelligence: Pakistan-China-US: Arms Technology Transfers, 14 September 1983.

12 Marine Corps Intelligence Activity: Pakistan Cultural Intelligence Studies. Pakistan Military Culture, Product Number: MCIA-2420-PAK-001-12, November 2011, p. 9.

13 Rahul Bedi: India to deploy newly ordered T-90MS tanks along border with Pakistan, Jane's Defence Weekly, 19-Jan-2017.

7

Steph

an B

lanc

ke

Jens

Ros

enke

nuclear proliferation and organised crime.14 In contrast the intelligence cooperation

between Pakistan and China is much more productive and close – due to some common

important strategic objectives: „Accordingly, the Ministry of State Security maintains a

strong representation in Islamabad, collaborating with the Inter-Service Intelligence

organization to protect China's investment in Pakistan, which includes oil and gas

exploration, and to prevent Islamic radicalism from contaminating the Uighurs.“15

It is obvious that currently Pakistan is getting closer to its strong ally China and the

relatively new China Pakistan Economic Corridor (CPECP) results in new and closer

security cooperations and engagements between both countries. One example is the new

created Pakistan Special Security Division (SSD): „The Special Security Division has been

assigned with the duty of protecting projects under CPEC and Chinese workers working on

these projects. The Division will comprise nine army battalions and six civil wings having

13,700 personnel. According to an official of Planning Division after requisition from the

provinces, deployment order shall be issued by the Ministry of Interior. China has already

expressed satisfaction on the security arrangements during the recent sixth Joint

Cooperation Committee meeting held in Beijing.“16 For the record: ISI, the Pakistan

intelligence agency, is an outspoken adversary when it comes to the organisation and

protection of networks of all kinds. A researcher – whatever subject of research - have to

be aware of those circumstances.17

The development

Pakistan and the Peoples Republic of China (PRC) can look back on a long history of

cooperation in the fields of politics, economics and security. In 1950, Pakistan became the

third non-communist country to recognize the PRC. Since then, the two states have

established a strong long-term partnership, but now, the two countries are confronting an

entirely novel regional and international scenario. The PRC has become a new emerging

regional power and Pakistan is the new frontline state in the war against terrorism.18 For

14 E.g. Maloy Krishna Dhar: Fulcrum of Evil. ISI-CIA-Al Qaeda Nexus, Delhi 2016.

15 I.C. Smith/Nigel West: Historical Dictionary of Chinese Intelligence, Lanham 2012, p. 204.

16 http://dunyanews.tv/en/Pakistan/371562-Special-security-division-formed-for-CPECs-securi (12.02.2017)

17 E.g. Hein G. Kiessling: The ISI of Pakistan. Faith, Unity, Discipline, London 2016.

18 Haris Raqeeb Azeemi:55 Years of Pakistan-China Relationship in Pakistan HorizonVol. 60, No. 2, PAKISTAN'S FOREIGN POLICY ANALYSIS (April 2007), p 109.

8

Steph

an B

lanc

ke

Jens

Ros

enke

the PRC, Pakistan is an important ally in the region. It may be helping to stabilize China’s

Islamic northwestern region, Xinjiang, and it also provides access to the Central Eastern

economies. Today the PRC is constructing an economic corridor which will connect

Kashgar, Khunjerab, and Gwadar. The harbor in Gwadar will serve as a nerve center for

China because most of its international trade is to be carried out via the port of Gwadar.19

The administrative authority of the port of Gwadar has changed to the state-owned

Chinese Oversea Company.20

For its part, Pakistan is aware of China’s importance in pushing back against the Influence

of India and the USA and it is the common goal of the two states to contain the influence of

these two states in the region.

Weapons transfer and cooperation for conventional major arms

Against this background, both states have established intensive military cooperation.

Pakistan has been the beneficiary of the transfer and the development of major Chinese

weapon systems. Most of Pakistan’s modern weapons systems have their origin in China.

This strong military cooperation covers all branches of the Army. By 2015, China had

transferred 26 weapon systems to Pakistan, from anti-tank missiles of the type Red Arrow-

8 to Type-041 Yuan-class submarines. The two states are also cooperating on many

projects.

Pakistan’s Al-Khalid MBT is a further development of the Chinese Type 90 II A MBT, which

was developed by China North Industries Corporation (NORINCO), but not accepted into

service by the Peoples Liberation Army (PLA).21 Pakistan acquired the production license

in 2002.22 In the Pakistan Army 358 Al-Khalid MBT’s are now in service. Pakistan plans to

produce 600 more improved Al-Khalid MBTs.

19 The Express Tribune: Pak-China ties: Gawadar port one part of a larger plan, https://tribune.com.pk/story/589268/pak-china-ties-gawadar-port-one-part-of-a-larger-plan/ (13.08.2013)

20 Ibid.

21 http://www.military-today.com/tanks/al_khalid.htm (31.01.2017)

22 Ibid.

9

Steph

an B

lanc

ke

Jens

Ros

enke

Al Khalid MBT23 Type 9024

In 1999 the Chengdu Aircraft Industry Corporation (CAIC) and the Pakistan Aeronautical

Complex jointly developed a lightweight multirole combat fighter, the JF-17. The JF-17

fighter can accomplish both air-air and air-surface missions day and night.25 As a result of

the advanced composite materials which have been used for the JF-17, not only has its

body weight been reduced, but its stealth performance has been increased.26 Presently,

the Pakistani Air Force has more than 70 Jf-17 Block I and II fighter, which are in service

with five fighter units.27

Pakistan is also interested in buying China’s fourth generation stealth fighter, FC-31. Janes

reported on 12 November 2014 that the PAF was in talks with China to buy 30 to 40

Shenyang FC-31 stealth fighters displayed at Airshow China 2014 in Zhuhai.28 In late

November 2014 Pakistan’s Defense-Production Minister Rana Tanveer Hussian said that

the matter is still being discussed with the Chinese authorities.29

China has also developed and transferred air-to-air missiles, guided bombs, and rockets

for the JF-17 to Pakistan. In 2015, China transferred 40 C 802 anti-ship missiles, 506 PL-

5E short range anti-air missiles, and 400 LT-2, LS-3 and LT-6 -500 guided bombs to

Pakistan. The C802 anti-ship missile is a particularly effective weapon and target ships

23 http://www.military-today.com/tanks/al_khalid.htm

24 http://www.globalsecurity.org/military/world/china/type-90-pics.htm

25 Globalsecurity: C-1 "Chao Qi" / JF-17 Thunder http://www.globalsecurity.org/military/world/china/fc-1.htm (31.01.2017)

26 Ibid.

27 http://quwa.org/2017/03/20/pakistan-inches-closer-jf-17-block-iii/ (07.09.2017)

28 FC-31 / J-31 / F-60? Stealth Fighter: http://www.globalsecurity.org/military/world/pakistan/fc-31.htm (01.02.2017)

29 Ibid.

10

Steph

an B

lanc

ke

Jens

Ros

enke

have a very low success rate at intercepting the missile. Alongside the US Harpoon anti-

ship missile, it is considered to be one of the best anti-ship missiles there is.30

In 2015 China delivered 3 WZ-10 attack helicopters to Pakistan. The WZ-10 is a state-of-

the-art attack helicopter and comparable with early models of the US Apache and Cobra

Helicopters. The WZ-10 can carry eight HJ-10 anti-tank missiles and eight TY-90 anti-air

missiles.31 The status of these transfers is still unclear.

For China, the export of eight S-20 attack submarines to Pakistan was the largest arms

deal to ever have taken place between the two states. The deal is thought to have cost

between 4 billion and 5 billion USD.32 The S-20 is an export variant of the Type 041, a

diesel- powered attack submarine built by Wuchang Shipyard. Four of the eight

submarines will be built at Karachi Shipyard & Engineering Works. Pakistan is also

interested in acquiring a Chinese nuclear-powered attack submarine.33

In 2013 Pakistan procured three LY -80 (HQ-16) surface to air missiles from China for 223

million USD and eight IBIS radars for 40 million USD.34 In a 2014 follow-on deal, Pakistan

procured six LY-80’s for 373 million USD.35 The HQ-16 is a medium range anti-air missile

with a maximum intercept range of 40km.36 It can also engage cruise missiles at a range

of 3.5 to 18km. The HQ-16 is still the only medium range anti-air missile system in

Pakistan’s army inventory.

The A-100 is the state-of-the-art Multi-Launch-Rocket-System (MLRS) in Pakistan´s

artillery. It has an effective range of 40 to 100 km and is, therefore, the MLRS with the

30 Globalsecurity: C-802 / YJ-2 / Ying Ji-802 / CSS-C-8 / SACCADEC-8xx / YJ-22 / YJ-82 http://www.globalsecurity.org/military/world/china/c-802.htm (31.01.2017)

31 WZ-10 Attack Helicopter http://www.globalsecurity.org/military/world/china/wz-10.htm (31.01.2017)

32 Submarine exports to Pakistan officially confirmed: http://english.cri.cn/12394/2016/10/15/2281s942655.htm (01.02.2017)

33 Pakistan Likely To Acquire Chinese Nuclear Attack Submarines: NDTV Exclusive: http://www.ndtv.com/world-news/pakistan-likely-to-acquire-chinese-nuclear-attack-submarines-ndtv-exclusive-1647370 ( 01.02.2017)

34 SIPRI Arms Transfers Database: Pakistan China 2010-2015 http://www.sipri.org/contents/armstrad/at_data.html

35 http://quwa.org/2016/08/17/pakistans-hq-16-surface-air-missile-plans/ [23.01.2017 10:29:40]

36 Ibid.

11

Steph

an B

lanc

ke

Jens

Ros

enke

highest range in Pakistan´s artillery. China exported 48 MLRS’s to Pakistan in 2008. This

was the first time that China had sold the A 100 abroad.37

In 2008, Pakistan signed a 278 million USD contract with China Electronic Technology

Group Cooperation (CETC) for the joint development of four ZDK 03 AWACS for the

Pakistani Air Force. The ZDK 03 AWAC is an Airborne Warning and Control System based

on the Y-8, a Chinese copy of the AN-12 Antonov transport aircraft, but it is a new variant

specially designed for Pakistan.38 With its electronically controlled radar antenna, it can

scan the airspace in a 360° azimuth.

Pakistan was also the first country to become a partner in China’s Beidou satellite

navigation program. It is therefore no surprise that, in 2016, China had its own pavilion at

IDEAS, the biggest defense exhibition in Pakistan. Virtually all the significant companies in

the Chinese arms industry were represented.39 Also, a high-ranking Chinese delegation,

including Wu Shengli, Commander of the PLA Navy and Lt. Gen. Fang Fenghui, Chief of

General Staff and member of the Military Commission visited IDEAS.40

These few examples show that China´s transfer of weapon systems and the cooperation

of both countries in these areas has increased the capabilities of Pakistan’s Army

enormously. For China there are no barriers to the export of state-of-the-art weapons to

Pakistan. Thus, China has helped Pakistan to enhance its capabilities in air defense,

raised the long-range strike accuracy capacity of its artillery and helped it to develop a

capable air force especially in terms of its capabilities with respect to ground attack

targets. China has also given Pakistan a stealth attack capacity by transferring

conventional submarines to Pakistan´s Navy and an Early Warning System to protect

Pakistan’s airspace.

In his speech on the development of the ZDK-03, Wang Zhigang, former Chairman of the

CETC, emphasized the fact that China and Pakistan have formed a special all- weather 37 Type A100 / A200 / A300 http://www.globalsecurity.org/military/world/china/a100.htm (03.02.2017)

38 Capt Ravinder Singh Chhatwal: Pakistan´s Chinese AWAC ZDK-03 Karakoram Eagle. capsindia.org/files/documents/CAPS_Infocus_RS_21.pdf (04.02.2017) and Globalsecurity DK-03 Y8F-400AEW http://www.globalsecurity.org/military/world/china/y-8-aew.htm (04.02.2017)

39 http://www.ideaspakistan.gov.pk/floor_plan/hall3.jpg (13.02.2017)

40 http://ideaspakistan.gov.pk//download/IDEAS2016_List_of_All_Delegations.pdf (13.02.2017)

12

Steph

an B

lanc

ke

Jens

Ros

enke

strategic partnership. He went on to state that the cooperation between the two states is

based on a time-honored brotherhood which will not fade with the passage of time.41

China´s support of Pakistan’s Nuclear and missile Program

From Pakistan’s perspective, nuclear energy and weapons are vital for national security.

China is involved in both areas, and has supported Pakistan in the development of its

nuclear weapons and their delivery systems, particularly its missile program, but also in

the civilian use of nuclear energy, by planning and building nuclear power plants in

Pakistan.

Pakistan began working on its nuclear program in 1956. From 1970 Pakistan received

assistance from China in various areas such as warhead design, the provision of

centrifuge equipment, HEU components, and technical expertise.42 In February 1983,

China is reported to have handed over the design of a nuclear bomb, which it had tested in

Lop Nor, to Pakistan.43 China has also provided enriched Uranium to Pakistan.

Against this background, the civil nuclear cooperation between both states is very

important. To date, the China National Nuclear Cooperation (CNNC) has built three

reactors and is planning a fourth in Pakistan. All of them are located in Chasma, Punjab

province.

These include the pressurized water reactors, CHASNUPP-1 and CHASNUPP-2.

CHASNUPP-1 entered into commercial operation on 13 June 2000, while CHASNUPP- 2

entered into commercial operation on 20 May 2011.44 The reactors have a combined

capacity of 600 MW. On 28 December 2016, CHASNUPP -3 entered into commercial

service with a capacity of 340 MW. CHASSNUP-4, with a capacity of 340 MW, is still under

construction and will probably be connected to the Pakistan power grid in 2017.45

41 Globalsecurity DK-03 Y8F-400AEW http://www.globalsecurity.org/military/world/china/y-8-aew.htm (04.02.2017)

42 NTI, Pakistan Country report: http://www.nti.org/learn/countries/pakistan/nuclear/ (13.02.2017)

43 Times of India: CIA papers reveal China's nuclear free pass to Pakistan: http://timesofindia.indiatimes.com/world/china/cia-papers-reveal-chinas-nuclear-free-pass-to-pakistan/articleshow/56823259.cms (13.02.2017)

44 NTI, Pakistan Country Report: http://www.nti.org/learn/countries/pakistan/nuclear/ (13.02.2017)

45 VOA, Ayaz Gul:Pakistan Opens New Nuclear Plant Built With China's Help http://www.voanews.com/a/pakistan-nuclear-reactor/3653908.html (07.02.2017)

13

Steph

an B

lanc

ke

Jens

Ros

enke

Pakistan and China are still planning the construction of two nuclear power plants in the

southern port city of Karachi at a cost of 10 billion USD.46 Under this agreement, China

will also provide enriched uranium for fuel.47 China is the only country which is planning

reactors and selling them to Pakistan. When all four reactors are completed and in full

operation, the plutonium output will be an estimated 24 to 48 kg per year, with each reactor

producing 6 to 12 kg.48

Chinese support in nuclear weapons delivery systems

China also supported Pakistan in obtaining delivery Systems for nuclear weapons. China,

motivated by competition with India, agreed to sell missiles, launchers and support

equipment to Pakistan in 1988.49 SUPARCO were subsequently the destinations for

numerous illicit materials transfers.50

In November 1992 China sold 34 M-11 Missiles to Pakistan. China exported the M-11 or

Dong Feng (DF) 11 (Chinese designation) version as a single stage Short-Range Ballistic

Missile (SRBM) with a range of 120 to 295 km, carrying a 500kg warhead.51 In 1993, the

Clinton Administration imposed sanctions against SUPARCO and two Chinese companies

which were selling M-11 parts to Pakistan.52 These new sanctions weakened Chinese

support and Pakistan responded by turning to other sources.53 The M-11 is the basis for

Pakistan´s Shaheen Missile. The number of Shaheen SRBM in Pakistan´s inventory is still

unknown.

In 1991, Pakistan acquired an unknown number of Chinese M-9 missiles. The M-9 with the

Chinese designation DF-15 is a solid state single state missile, comparable with the

46 Ibid.

47 Ibid.

48 NTI, Pakistan Country Report: http://www.nti.org/learn/countries/pakistan/nuclear/ (13.02.2017)

49 Ibid.

50 Ibid.

51 Globalsecurity M11: http://www.globalsecurity.org/wmd/world/china/df11.Htm (13.02.2017)

52 NTI: http://www.nti.org/learn/countries/pakistan/delivery-systems/ (13.02.2017)

53 Ibid.

14

Steph

an B

lanc

ke

Jens

Ros

enke

American Pershing 1-A. It has a range of 200 to 600 km and can carry a single warhead of

500kg with a Circle of Equal Probability (CEP) of 280 m. The DF-15 is the basis of

Pakistan’s Shaheen I SRBM.

China has sold not only missiles systems but also a nuclear capable A-5M supersonic

ground attack fighter to Pakistan. Pakistan has acquired 60 A-5M.54 Some of them can

carry a single 5-20 kt nuclear bomb. In 2011 all of them were retired from service in

Pakistan´s air force. Pakistan´s Htf-VII Cruise Missile has some design similarities with

Chinese cruise missiles of Type DF-10 as well as American Tomahawk missiles, which

have previously crash-landed over Pakistan.55 China is the state which laid the

foundations of Pakistan´s missile program. Thanks to China, Pakistan may have

developed SRBMs which are capable of striking New Delhi. The entire extent of Chinese

influence in Pakistan´s missile program is not entirely clear.

Current military exercises/ maneuvers

Both states regularly carry out two maneuvers, YOUYI Friendship beginning in 2004 and

the Shaheen Air drill exercises from 2012. The YOUYI exercise (which literally translates

as friendship in Chinese) takes place almost every year and is primarily a military exercise

for the Special Forces of both states. China and Pakistan send 100 members of their

special forces to the exercise. The scenario of the exercise is an asymmetrical threat/ low-

intensity conflict scenario and not one against a conventional army. The opponent is

terrorists who are threatening the stability of the border region of both states. Terrorist

attacks are the main security problem in the border region of China and Pakistan. The first

YOUYI military exercise took place in Xinjiang in 2004. Both sides emphasize that the joint

action will enhance expertise in countering terrorism.

The Shaheen (Eagle) exercise is a joint air drill exercise which includes the training of air

defense, ground - attack missions of fighters and bombers, the engaging of early warning

aircraft and also the training of ground crews. China and Pakistan emphasize that is not

against a conventional enemy but it is a near real scenario and some observers see it as

an India-centric exercise.

54 FAS; A-5: https://fas.org/nuke/guide/pakistan/aircraft/a-5.htm (13.02.2017)

55 NTI: http://www.nti.org/learn/countries/pakistan/delivery-systems/ (13.02.2017)

15

Steph

an B

lanc

ke

Jens

Ros

enke

The military cooperation between China and Pakistan covers all fields and is of advantage

to both sides. Through it, Pakistan gets the equipment and the know-how of the Chinese

arms industry. Chinese weapon systems are still not as sophisticated as products

originating in the American arms industry but they are less expensive. Chinese support

enables Pakistani SRBMS development. For China, the economic corridor to Gwadar is

very important as a point of entry to the Persian Gulf and the Arabian states. China can

thereby avoid shipping routes to the Indian Ocean which are controlled by Indian Navy.

The stabilization of the border region is in the interest of both states.

Some details about SUPARCO

SUPARCO is international well known. Regarding their website, „the national space

agency, was established in 1961 as a Committee and was granted the status of a

Commission in 1981. SUPARCO is mandated to conduct R&D in space science, space

technology, and their peaceful applications in the country. It works towards developing

indigenous capabilities in space technology and promoting space applications for socio-

economic uplift of the country.“56

Due to the research focus of Project Alpha the authors are mainly looking into proliferation

issues and therefore it can be stated that SUPARCO, its employees were target of

presumably terrorist attacks in 2003, 2012 and at least 2016 - „police officials said the

incident was a robbery attempt gone awry“57 - , is a symbol for a Pakistan society, which

is proud of it's research and technological developments. SUPARCO plays an important

role in the political discussion about Pakistan's military strength, especially when it comes

to the main competitor India. Under the headline „Pakistan’s defence at risk? Today Indian

department of space has budget of round about one billion dollars, whereas SUPARCO’s

size in terms of monetary funds is 30.6 million dollars“58 the Pakistan Daily Times clarifies

the first and most important role of SUPARCO in this days – in competing with the

strategic-technological developments of Indian Indian Space Research Organisation

(ISRO) – before developing civilian technology as weather satellites etc.:

56 http://suparco.gov.pk/webroot/pages/intro.asp (25.12.2016)

57 https://www.thenews.com.pk/print/134371-Prayer-leader-among-two-dead-in-shooting-incidents (21.01.2017)

58 Ahsan Ali Zahid Hasan Ehtisham: Pakistan’s defence at risk?, http://dailytimes.com.pk/opinion/07-Jun-16/pakistans-defence-at-risk (21.01.2017)

16

Steph

an B

lanc

ke

Jens

Ros

enke

„Pakistan should also explore such avenues to create a platform so that SUPARCO can

also deliver indigenous navigational satellite system. For instance, Pakistan developed the

tactical nuclear weapons (TNWs) to successfully counter the so-called proactive strategy

of the Indian Cold Start Doctrine (CSD). We are proud of our scientists and engineers yet

the decision of its deployment and use is reserved with the National Command Authority.

By this mean, we will get an alternative way of shadowing Indian military strategy, troops

and assets deployment in case CSD is implemented, and we can also assure effective

maneuverability to deploy TNWs, ballistic and cruise missiles. Considerably, the civil uses

and benefits of the navigational system are huge, which will also improve our disaster

management expertise.“

It should, however, be added that Pakistan must react to Indian military operations – which

are largely based on SATINT (Satellite Intelligence) – to avoid the impression of

weakness and eternal tolerance: “The Indian Space Research Organization, ISRO,

confirmed on Sunday [September 2016] that the country’s military carried out an operation

in Kashmir (Pakistan) using imagery from their Cartosat-2C satellites. This is the first time

India has publicly disclosed the use of its geospatial intelligence capabilities as part of a

military operation.“59 Until it has developed its own capabilities Pakistan depends on

Chinese intelligence or commercial satellites – and in this field SUPARCO fulfills one of the

most important functions. It furthermore struggles with new challenges as launching of

satellites, broadening and financing the research of conventional and nuclear systems.

This is comprehensible and may explain why SUPARCO appears sporadically on various

sanctions lists and in indictments, which are engaged in proliferation cases or just in

connection to suspicious technology transfers:

On 17 July 1991 the United States sanctioned SUPARCO presumably for the first time

related to missile proliferation - beside two Chinese companies (China Great Wall

Industry Corporation (GWIC) and China Precision Machinery (CPM)).60

59 Paul Mutter: India shows off satellite intelligence over Kashmir Conflict, http://www.geektime.com/2016/10/04/india-shows-off-satellite-intelligence-over-kashmir-conflict/ (21.01.2017)

60 E.g. Pakistan Intelligence, Security Activities & Operations Handbook, International Business Publicatons 2013.

17

Steph

an B

lanc

ke

Jens

Ros

enke

In 1996 Taiwanese customs officials found out, that a vessel from the North Korean

Lyongaksan General Trading Corporation was bound for SUPARCO, shipping 15 tons

of ammonium chlorate.61

In March 2001 SUPARCO was also connected with A.Q. Khan.62

In September 2007 the University of Massachusetts at Lowell (UML) stood in the

focus of the US Department of Commerce, Bureau of Industry and Security: „On two

occasions, on or about September 1,2007, and on or about October 6, 2007, UML,

through its Center for Atmospheric Research, engaged in conduct prohibited by the

Regulations when it exported items subject to the Regulations from the United States to

the Pakistan Space and Upper Atmosphere Research Commission ("SUPARCO") without

the Department of Commerce license required by Section 744.11 and Supplement No.4 to

Part 744 of the Regulations.“63

In September and October 2007 the Vantec World Transport (USA), Inc. was „acting as

a freight forwarder, arranged for the export of items subject to the Regulations from the

United States to the Pakistan Space and Upper Atmosphere Research Commission

("SUPARCO"), an entity that is listed on BIS's Entity List set forth in Supplement No.4 to

Part 744 ofthe Regulations. Specifically, on or about September 1, 2007, Vantec arranged

for the export of antennae and cables valued at $12,480 and designated as 3EAR99 to

SUPARCO. On or about October 6, 2007, Vantec arranged for the export of an

atmospheric testing device valued at $191,870 and designated as EAR99 to SUPARCO.

SUPARCO was added to the Entity List in November 1998 through a rule published in the

61 http://www.wisconsinproject.org/countries/nkorea/north-korea-missile-milestones.html (24.02.2017)

62 A short chronology can be found here: http://defence.pk/threads/history-of-pakistan-missile-technology.432149/ (14.01.2017)

63 http://www.exportlawblog.com/archives/5070 (21.01.2017). This Blog further writes: „The atmospheric sensing deviceis likely the basis for this research paper (http://adsabs.harvard.edu/abs/2009AdSpR..43.1821A) titled “Study of maximum electron density NmF2 at Karachi and Islamabad during solar minimum (1996) and solar maximum (2000) andits comparison with IRI” and co-authored by employees of SUPARCO and a professor at the University. This paper raisesan interesting deemed export issue since transfer of technology, even EAR99 technology, would be a violation of the EAR unless the transferred technology was “publicly available” or if it qualifies as “fundamental research.” It is not alwayseasy to determine whether discussions with foreign persons on the Entity List fall within these exceptions, so cooperativeprojects with such persons by a university will always entail more than a modicum of risk.“

18

Steph

an B

lanc

ke

Jens

Ros

enke

Federal Register regarding certain entities in India and Pakistan, including SUPARCO, that

were "determined to be involved in nuclear or missile activities.“64

In October 2007 another person was detected by US agencies: Nadeem Akhtar, „a

Pakistani national and lawful permanent resident of the United States, was the owner of

Computer Communication USA (CC-USA, a/k/a CCI-USA), a company that he

incorporated in Maryland and falsely claimed to be a subsidiary of a Pakistani company

called Computer Communication International (CCI). The Defendant and his co-

conspirators utilized CCI/CC-USA to obtain nuclear-related commodities and materials in

the United States for subsequent export to restricted entities in Pakistan in contravention

of the prohibitions and licensing requirements of the Export Administration Regulations

(EAR) […] These restricted entities included [amongst others] Pakistan’s Space and Upper

Atmosphere Research Commission (SUPARCO).“65 Regarding official documents he

„caused the export of various Model 18 90 fixed coaxial attenuators from the United States

to SUPARCO without having obtained the requisite authorization from the Department of

Commerce […] On or about June 20, 2007, MALIK sent an e-mail to AKHTAR with two

end-user certificates attached, both of which alleged that the attenuators would be utilized

in a research project “related to RF applications.” One of the certificates, alleging that

SUPARCO would be the end-user, listed the name of an individual representing himself to

be SUPARCO’s “Chief Executive,” but whose name was identical to that of one of MALIK

’s NewTech employees in Karachi.“66

Another case was about Bilal Ahmed. In 2009 he shipped „carbon fiber ― Tenax-E

HTS40 F13 12K 800 tex ― to Pakistan’s Space and Upper Atmosphere Research

Commission (SUPARCO) […] Ahmed knew that two designated “dual use” goods required

a license from the Commerce Department to be exported and that no goods could be

shipped to certain entities, such as SUPARCO, without first receiving a U.S. export license

[…] Ahmed also admitted that in 2103, he shipped microwave laminate ― RT/duroid 5870

64 E.g. http://www.squirepattonboggs.com/~/media/files/insights/publications/2013/04/international-trade-and-technology-transfer-repo__/files/internationaltradeandtechnologytransferreportera__/fileattachment/internationaltradeandtechnologytransferreportera__.pdf (21.01.2017)

65 https://archives.fbi.gov/archives/baltimore/press-releases/2011/pakistani-national-indicted-in-scheme-to-illegally-export-restricted-goods-and-technologies-to-pakistan (14.01.2017)

66 http://isis-online.org/uploads/isis-reports/documents/AkhtarNadeemIndictment-Redacted1.pdf (21.01.2017)

19

Steph

an B

lanc

ke

Jens

Ros

enke

High Frequency Laminates ― to SUPARCO in Pakistan without applying for or obtaining

the required export license.“67

In August 2014 Spectrolab, Inc., of Sylmar, California, „so]d and transferred a Large Area

Pulsed Solar Simulator ("LAPSS II''), valued at $414,679 and designated under the

Regulations as EAR99, for export to Pakistan, knowing or with reason to know that the

intended end user was Pakistan's Space and Upper Atmosphere Research Commission

("SUPARCO"), that SUPARCO was listed on BIS's Entity List, that a license was required

to export the item to SUPARCO, and that no such export license had been obtained for

this export.“68

In January 10, 2017, SUPARCO is still listed in the Supplement No. 4 to Part 744 of the

US Export Administration Regulations Bureau of Industry and Security Entity List.69

Beside this SUPARCO is known for a lot of international academic events, meetings on

high levels and cooperations with many countries, most of them signatories to international

regulations regarding proliferation and other security aspects. One good example is the

2nd International Conference on Space 2016, which was held 20 – 22 September 2016 in

Islamabad. It shows first the good relationship between SUPARCO and other relevant

countries and second the overlapping with state-commercial interests. Here should be

mentioned the CGWIC, which was sanctioned for years due to proliferation issues:

On May 20, 2008, Patricia McNerney, the former Principal Deputy Assistant Secretary

(International Security and Nonproliferation), talking about proliferation issues with

Chinese companies, said in a statetment before the U.S.-China Economic and Security

Review Commission in Washington, DC, that „the response of NORINCO [another

notorious Chinese military related company – Author's statement]and CGWIC has been

very encouraging. Both companies have adopted comprehensive internal compliance

programs and are implementing policies to ensure that inadvertent transactions do not

occur.“70

67 https://www.fbi.gov/contact-us/field-offices/chicago/news/press-releases/bolingbrook-man-pleads-guilty-to-illegally-exporting-carbon-fiber-and-other-controlled-items-to-pakistan (14.01.2017)

68 https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2015/1075-e2472/file (21.01.2017)

69 https://www.bis.doc.gov/index.php/documents/regulation-docs/691-supplement-no-4-to-part-744-entity-list/file (21.01.2017)

70 https://2001-2009.state.gov/t/isn/rls/rm/105084.htm (13.01.2017)

20

Steph

an B

lanc

ke

Jens

Ros

enke

Only a few months later, October 2008, a cable from the Secretary of State, classified as

„Secret“, stated, that „several of China's state-owned enterprises - including entities such

as China North Industries Corporation (NORINCO), China Precision Machinery

Import/Export Corporation (CPMIEC), China Xinshidai Company, and China Great Wall

Industry Corporation (CGWIC), have curtailed ballistic missile-related sales to Iran.“71 And

in January 2009 another cable mentioned CGWIC related to an Ukrainian company named

Arsenal. According to that it was indicated, that „Arsenal was holding discussions with

officials from the China Great Wall Industry Corporation (CGWIC) concerning a

malfunctioning UGT-S high-accuracy gyrotheodolite previously sold by Arsenal to a

Chinese customer (Ref G). During the September 23-24, 2009 Nonproliferation Working

Group Talks in Kyiv, Ukrainian officials provided a non-paper confirming that Arsenal had

conducted negotiations with the CGWIC concerning the warranty repair of a UGT-S

gyrotheodolite previously sold to China.“72 Beside this strategically relevant cooperation

the conference offered SUPARCO a lot of opportunities for exchanging information with

other countries. Exemplary participants were Christa Baumstark-Khan from the German

Aerospace Center (DLR)73, Parviz Tarikhi from the Iranian Space Agency, Tian

Yulong from the China National Space Administration (CNSA) or Shufan Wu from the

Shanghai Engineering Centre for Microsatellites.

An additional brief look into platforms for professional networking and advertising as

LinkedIn underlines the important role SUPARCO and its staff are playing in the fields of

military and armamanent also as security issues in genera. In this case we were interested

in Pakistani with a SUPARCO background, now living and working in Germany. We did this

research with a free account and already this measure was enough to find more

information LinkedIn is willing to show. Searching information about business and

academic profiles can be become complicated when the target‘s profile details are

71 https://search.wikileaks.org/plusd/cables/08STATE105132_a.html (13.01.2017)

72 https://search.wikileaks.org/plusd/cables/09STATE128635_a.html (13.01.2017)

73 Marginalia: In January 2017 German prosecutors „ pressed charges against a 31-year-old Pakistani student who they believe targeted Social Democratic Party (SPD) politician Reinhold Robbe on behalf of the Iranian intelligence agency“. Mr. Robbe is the president of the German-Israeli Society (DIG). The Pakistani student worked at the DLR in Bremen, http://www.dw.com/en/report-pakistani-accused-of-spying-on-german-politician-for-iran/a-37044407 (16.01.2017).

21

Steph

an B

lanc

ke

Jens

Ros

enke

redacted. In this case there are various possibilities to unmask those details, beside others

a Google search with only few simple operators:

22

Steph

an B

lanc

ke

Jens

Ros

enke

Many members of their staff are working or worked in a correpondent market or research

segment in Pakistan or abroad:

Other profiles show a possible transfer of expertise and knowledge to SUPARCO and

Pakistan in general while studying and working at Western universities and institutions.

The following collection may exemplifies this assessment, it shows the current position of

former SUPARCO staff:

23

Steph

an B

lanc

ke

Jens

Ros

enke

Of course this does not mean immediately that those persons are working as spies or

pose as security threats, but every government should prepare itself for all future problems

and possible difficult developments, which might be connected to the presence of

employees coming from listed entities.

Some details about Solutions Pvt. Ltd.

In contrary to this Engineering Solutions Pvt. Ltd. seems to be one of the many smaller

Pakistan entities, based in Islamabad, which are somehow and often vaguely focused on

24

Steph

an B

lanc

ke

Jens

Ros

enke

electronics and computer technology. A lot of those smaller companies doing the same

thing as small start-ups in China or Western countries: One or two people working on and

repairing technical stuff in a small room for money. Many of those Chinese and Pakistan

companies do not have an own website, but a lot of them got a internet presentation on

trading platforms as the Chinese website Alibaba.74 Alibaba has its own „Pakistan

Channel“75, but also many business deals are going on via Facebook or other social

media networks.

The here mentioned Pakistan company was pretty difficult to do research about; the

occured problems will be explained in Chapter 5. For a start: Regarding to internet sources

Engineering Solutions Pvt. Ltd. was founded in 2004 and is engaged in the „engineering

services industry located in Islamabad“76.

On December 15, 2016, the US Government put Engineering Solutions Pvt. Ltd. on a

sanction list. It was stated, that – beside other Pakistan entities – the here described

company has been „involved in actions contrary to the national security or foreign policy

interests of the United States. These government, parastatal,and private entities in

Pakistan are determined to be involved in activities that are contrary to the national

security and/or foreign policy of the United States.“77

Some details about Hwa Create Co., Ltd.

The here investigated Chinese company, which was founded in 2001, is nearly unknown.

Based on commercial information „Hwa Create Co., Ltd. develops, manufactures, and

sells system simulation technologies and solutions. The Company's products include real

74 https://offer.alibaba.com/market/all3.html?tv=1&isFeature=true&imp=5b1aoq1b6blk4m394sd&xp=M0khcP18sbmyn6cK6jFT1yZAbpvfb1TNlaj9FoMG6RgwTYLkGDKUXrKmTHqBcWaPfZm2_43NafLz9g0DpNOsHwK-iEBET7RwJhOrAczEmhk&pid=48787_h31&td=cldlr&cv=2&aff_id=182850737&ct=2&size=300_250&cn=1&an=1000000016001&bm=cpa&tp1=x6HEinrNDdc5skiCQ5Qa1Mf68TUky2mUmGYrhLIFYhSLcltHUSP5FlIFrhFXLE51YVVPjR4O175MbXKRFfQ9PAU40RwAPS1Y_DkStVH1jSxn9t1KY2JL_A-J-m4C_AtHGzhUOaQ6WG9AhUCmusFNsq8hSU5UbIFdHJnxgtgMJeQQXWg639y_d2_vzigfMyI1FOYxpYXGSlyVVbo8HS9LmQ&src=saf (13.01.2017)

75 https://www.alibaba.com/countrysearch/PK-Pakistan.html (16.01.2017)

76 http://www.findthecompany.com/ (11.01.2017)

77 Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations, p. 90713.

25

Steph

an B

lanc

ke

Jens

Ros

enke

time test-and-control systems, projection system integration solutions, and visualization

simulation systems.“78

Regarding to a commercial company report Hwa Create Co., Ltd. „concentrates on R&D,

manufacturing and sale of computersimulation technology system and related equipments,

applied in national defense […] The company was granted GJB 90 0 1A-20 0 1 certificate

and Confidential Qualification of Manufacturer, Scientific Bodies in Military Equipments

certificate“ and the main products would be „Simulation of Electric Machine, Others,

Simulation of Radio Frequency, Simulation of Application, Other Income.“79

On trading platforms the company is listed in the industrial sector „Aerospace & Defense“

and described as operating „through the following divisions: Satellite Navigation, Signal

Processing, Simulation and Test, and Antenna Technology. It focuses on research and

development, manufacture and sale of technologies and products of satellite navigation,

radar and communication, navigation and communication antenna and embedded system

in electromechanical industries of aviation, aerospace, ship and emulation training.“80 It is

further stated, that it's products „are mainly used in national defense and military industry.

The Company offers emulational technological products and services for national defense

related universities and academies, which are involved in the research, development,

production and application of high technology equipment.“81

Obviously some example pictures of their products show their affiliation to the military

technology line:

78 https://www.bloomberg.com/quote/300045:CH (25.12.2016)

79 EMIS Business Report, generated on 07 January 2017, London, p. 3.

80 http://de.4-traders.com/HWA-CREATE-CO-LTD-7072795/unternehmen/ (19.01.2017)

81 http://www.researchinchina.com/Htmls/Company/2133.html (19.01.2017)

26

Steph

an B

lanc

ke

Jens

Ros

enke

http://www.hwacreate.com.cn/products_detail/productId=175.html (19.01.2017)

http://www.hwacreate.com.cn/products_detail/productId=174.html (19.01.2017)

What was delivered?

Regarding the dataset we analysed at Project Alpha the Chinese Hwa Create Technology

Corporation Ltd. Delivered – as mentioned in the beginning – a RPTR System to

Engineering Solutions Pvt. Ltd. and a GNSS Simulator to SUPARCO.

A RPTR (repeater) System is used in broadcasting technology and communication. It

seems to be especially important as a small, portable solution in the countryside and even

for military purposes.

27

Steph

an B

lanc

ke

Jens

Ros

enke

http://www.dl1zav.de/frame-13.html (12.02.2017)

http://www.dtic.mil/dtic/tr/fulltext/u2/a429236.pdf (12.02.2017)

Due to our knowledge about shipments from other companies to Engineering Solutions

Pvt. Ltd. - beside other e.g. hydraulic or generator technology – we assume that even the

delivery of a RPTR System must be seen in a broader security, maybe proliferation

context. This became clearer for us after a few chats with some former military radio

operator.

The Global Navigation Satellite System (GNSS) is based on the early developments of the

U.S. Navy and their Navy Navigation Satellite System. The technology to simulate a GNSS

„is an excellent way to validate the performance of GNSS receivers and systems for

28

Steph

an B

lanc

ke

Jens

Ros

enke

research and development, manufacturing and system integration testing. GNSS

simulators are used in approximately all applications, from aviation to civilian and military

use, and offer an advantage over live GNSS signals by enabling complete control over the

signals and conditions. This allows users to more accurately test GNSS systems before

they are used in a real-world setting.“82 Due to the broad role of SUPARCO in the above

mentioned fields is is obvious that this technology is used by their R&D departments or in

practical operations. Here it is important to highlight the following: „The goods that

Engineering Solutions and SUPARCO potentially received from Hwa Create may be

relevant in terms of proliferation. For example, GNSS components and corresponding

software are indexed in the current Wassenaar List of Dual-Use Goods and Technologies

and Munitions. This list is regularly updated by the Wassenaar Arrangement – a

multilateral export control regime comprising 41 participating states, of which China and

Pakistan are not members.“83

Difficulties in research

It is obvious that companies and state actors which are wittingly involved in proliferation

issues are interested in keeping a low profile. Contrary to naive and blank-faced working

entities they try to avoid any detection and of course they are not interested in becoming

subject of academic research and governmental investigation. At first glance information is

very limited, especially when one has to deal with sophisticated networks, which are

focused on more shady procurements. Therefore it is necessary to find as many data as

possible to come via a rigorous analysis to feasible information and maybe usable

intelligence.

Proliferation depends on logistics, because material or technology must be produced,

organised, transported, delivered and finally integrated into own R&D efforts or already

existing systems. The networks, which are responsible for this, can be small and local or

they may have a global scale – however they have to be analysed, regarding social

network analysis: knot by knot. Already during the cold war logistics were recognized as

important – when it came to military operations. When it comes to proliferation logistics all

participants must work perfectly together and so one can use the same rule, stating

82 https://work-microwave.com/satellite-navigation-gnss-applications-simulators/ (12.02.2017)

83 Stephan Blancke: Mastersof disguise. Tracking illicit trade networks in Asia, in: Jane's Intelligence Review, September 2017, Vol. 29, Issue 09, pp. 42-47.

29

Steph

an B

lanc

ke

Jens

Ros

enke

„Logistics Is the Queen of Battles“.84 It is true for proliferation logistics also, that „the scale

of the logistic preparation alone, provided it can be determined, thus may provide very

good clues as to how extensive the impending operation is likely to be.“85 Various

proliferation networks and their logistic parts try to „evade increasingly strict export

controls. This included compartmentalization of key activities, the use [of] front companies,

fraudulent end user certificates, and conducting business through corrupted banks.“86 In

other words: The participating actors – e.g. companies – try to obfuscate their business

amongst others with appearing not as a monolithic bloc but as a number of small,

unknown, not too relevant entities with not too much papertrail. The more bigger partner in

the network try to hide their involvement in the shady business. What Arnold and Malin call

„compartmentalization“ means nothing else as limiting the number of the people who know

details about the ongoing procurement logistics.87

Legal actions against ZTE, the Chinese telecommuniation giant – which accepted the

charge and payed a USD661-million fine tothe US Department of Commerce‘s Bureau of

Industry and Security – underline the necessity, to conduct intensive research even in all

possible OSINT sources: As the Wisconsin Project On Nuclear Arms Control described in

their report, ZTE dealed with a few disputable trade partners and used therefore a shady

network of front companies and various vessels. Documents show that – beside Iran –

ZTE „had contracts in Cuba, North Korea,Sudan, and Syria that included U.S.-origin

goods, indicating that ZTE was willing to risk potential penalties in order to trade with

sanctioned countries. While the settlement agreement is vague about ZTE's dealings in

these countries, Commerce reports that the company made 283 shipments to North

Korea; trade data indicates that direct shipments from ZTE to North Korea took place as

recently as 2015. And internal company documents describe how ZTE used a

"cooperating company" to trade with North Korea, in order to mask its involvement. The

documents describe the tactic as "fairly effective." … Employing third-party companies for

84 Grabo, Cynthia (with Jan Goldman): Handbook Of Warning Intelligence.Complete and declassified edition, Chpt. 16, p. 143, Lanham 2015.

85 Ibid, p. 146

86 Arnold, Aaron/Malin, Martin: Identifying Sources of Reslilience in Nuclear Procurement Networks, ConceptPaper, 25 June 2016, p. 2. The authors refer here to another publication: Jonathan H. C. Kelman: Sourcing the Mail Order Bomb: The Evolution of the A. Q. Khan Network and Its Implications, Contemporative Strategy 34, no. 1 (January 1, 2015), pp. 44-63.

87 Instead of „compartmentalization“ the right term in intelligence would be „compartmentation“.

30

Steph

an B

lanc

ke

Jens

Ros

enke

sanctions evasion is clearly a favored tactic of ZTE that must be countered.“88 In the

present report we describe the activities of far less known companies, but the procedure is

the exactly the same.

Locating Engineering Solutions

In the beginning the authors investigated parts of various Project Alpha data sets. We

found some clues which led us to the conclusion that Hwa Create delivered various items

to two buyers in Pakistan: SUPARCO and Engineering Solutions. While the first buyer,

SUPARCO, was well known for us, it was a different situation with Engineering Solutions.

Here is became obvious to be absolutely precise with the companies name, because in

Pakistan a lot of companies include the term „Engineering Solutions“ in their name.

Another confusing aspect for us was that we were diverted somehow in the beginning by

another small company named Your Engineering Solutions Pvt Ltd., which is also

focused on IT and is cooperating with Chinese staff in Islamabad.

In the beginning also the Chinese seller – Hwa Create – was an unknown entity for us,

somewhere in Mainland China, just as hundreds of them. We started on the Pakistan side

and finally we found one entry in a platform for business and commercial activities89:

We didn't found any additional entry in any phone number database and the number

seems not be connected with other companies. We also didn't find a profile in various

social networks as Facebook or LinkedIn. At least we were only able to investigate that the

number - +92 519267421 - is still working (01.10.2017).88 Jerrica Goodson/Valerie Lincy: Lesson Learned or Business as Usual? Record U.S. penalties imposed on ZTE may not be enough to deter the Chinese telecom giant and others from violating Iran sanctions, Iran Watch Report, April 4, 2017, Wisconsin Project On Nuclear Arms Control, p. 11.

89 http://listings.findthecompany.com/l/269669115/Engineering-Solutions-Private-Limited-in-Islamabad-Pakistan (28.01.2017)

31

Steph

an B

lanc

ke

Jens

Ros

enke

Better options for further research were given by the address 726, Ibn-E-Sina Road, which

is not completely displayed in the screenshot above. It was easy to find the complete

address on a form for ordering credit reports90:

For researching locations, which maybe connected to entities of interest, it is always

important to check the area, because sometimes the investigated company is located

inside a compound or an area where other relevant companies, institutions, state agencies

or laboratories show their presence. The specific area of a target sometimes allows to

come to further connections and a short physical distance on a geo map may be a short

distance in a network graph.

In the case of Engineering Solutions it was difficult to find the precise address on a map

and again it was clear, that the almighty Google Maps sometimes is not enough. We

checked various other online maps and sources for satellite pictures, stored and compared

them to look for suspicious construction activities. Using an Application Programming

Interface (API) interface we were able to check a lot of online sources for satellite maps.

Their explanatory power is different, but combining them was useful for us. Most of them

offered us different aspects and details of the area, because some maps as from

wikimapia or PeriscopeMap integrate and displaya bunch of commercial and public

entities, which sharpen the profile of the area.

90 http://www.icpcredit.com/Companies/Engineering_Solution_Pvt_Ltd/407848.company (28.01.2017)

32

Steph

an B

lanc

ke

Jens

Ros

enke

One satellite picture was especially valuable for us because – for what reasons ever – it

marked some places on the map which enabled us to narrow down the selected area and

approach the exact building:

33

Steph

an B

lanc

ke

Jens

Ros

enke

Two relevant institutions in the sorrounding area maybe a mosque and a building which is

described on the map as „Saudi Defence attache“ - which we didn't investigate further.

First of all we had to understand the Pakistan – or Islamabad? - system of numbering and

disposition in urban planning. The system of postal codes in Pakistan differ from Western

countries and very often the addresses are typed in various ways. We looked into some

documents and websites to find information as house numbers or telephone numbers

34

Steph

an B

lanc

ke

Jens

Ros

enke

which brought as near as possible to the investigated address. Doing this we found a few

entities, e.g. one address from Nucon Engineers91:

Another one was from a list of the Senate Secretariat Parliament House (May 2016).

Other hints as e.g. real estate advertisments92 or shareholder information leaded us

nearer to the requested address and delivered some information about persons and

institutions in the area:

91 http://nucon.com.pk/ (02.02.2017)

92 E.g. http://www.lamudi.pk/10-marla-house-sector-g-112-islamabad-for-rent-726581-16.html?location_region=26&location_city=649&location_area=11673&category=15&attribute_option=offer_type%3Arent&dir=desc

35

Steph

an B

lanc

ke

Jens

Ros

enke

Another governmental office seems also tob e very close to the address we were looking

for:

Using various maps of Islamabad93 and combining this with our knowledge about where

the Pakistan military prefers to install more discreet facilities helped us finally to find a map

with a precise description and allocation of the house number 726:

Finally we were able to locate the precise lat-long coordinates: 33.673111 – 72.990194.

We had come to know that sometimes – and even in this case – smaller facilities were

placed in more or less anonymous areas, sometimes occupied by non-Pakistanis. Another

source told us that the mostly inconspicuous houses were often rented by unsuspecting

intermediaries or middle-men of the military. In the end it was possible to obtain a picture

from a source on the ground:

93 E.g. http://manahilestate.com/maps/

36

Steph

an B

lanc

ke

Jens

Ros

enke

We were also informed about a permanent security patrol at this compound, which may be

a hint for the relevance of this location.

Once we found the location we tried to find some more information from individuals in the

area. A good choice to do so is grabbing and analysing the social feed, which is uploaded

in the area and which allows you to find interesting details about e.g. a building or a

special place. If one uploaded e.g. the picture of nearby industrial complex it is possible to

contact this person and to ask for a few more details. In the case of of the area around

„726, Ibn-e-Sina Rd, Islamabad, Pakistan“ we found only a few more or less irrelevant

Flickr pictures.

37

Steph

an B

lanc

ke

Jens

Ros

enke

Only one upload showed a nearby subject: presumably a mosque, pictured by somebody,

who was a student in Australia in 2016 – and maybe today as well. Examing his Flickr

account could leads to some further clues and offers the possibility to ask him about some

deeper knowlwdge about the area. Unfortunately the student didn‘t respond to an enquiry.

In addition, we found some videos that were produced by teenagers during a drive, giving

us an impression of the street and its architecture.

Something about CNC machines

In one next step we found an interesting and significant advertisement for – one or more –

CNC „plasma/flame cutting machine“ referring to the address mentioned above:

CNC stands for Computer Numeric Control and means „the automation of machine tools

that are operated by precisely programmed commands encoded on a storage medium

38

Steph

an B

lanc

ke

Jens

Ros

enke

(computer command module, usually located on the device) as opposed to controlled

manually by hands wheels or levers, or mechanically automated by cams alone. Most NC

today is computer (or computerized) numerical control (CNC), in which computers play an

integral part of the control.“94 It is important to think about those CNC machines in security

fields. Already in an older report of the Select Committee On U.S. National Security And

Military/Commercial Concerns With The People's Republic Of China one can read the

following statement: „Machine tools used in aircraft and defense manufacturing today are

generally numerically controlled (NC). More advanced equipment is computer numerically

controlled (CNC). CNC machine tools are essential to batch production of components for

modern weapon systems, and can reduce machining times for complex parts by up to 90

percent compared to conventional machine tools. In addition, these modern machines

require operators with less skill and experience and, when combined with computer-aided

design software, can reduce the manufacturing cycle of a product, from concept to

production, from months to days.“95 CNC machines are „controlled for national security

(NS), non-proliferation (NP), and anti-terrorism (AT) reasons“96 and are mentioned in

numerous reports about non-proliferation reports of the IAEA and other institutions. In the

paper „Indicators of Nuclear Programmes“ the IAEA listed – beside others - „CNC

equipment“ in the first place under the heading „Use of modern manufacturing

technologies that could be used“.97 Monitoring the current reporting and state propaganda

of various states one can regognized the important function of CNC machines for the

technology programmes of special states and their efforts in R&D, e.g. North Korea: On

February 7, 2017, the state controlled newspaper Rodong Sinmun reports in the category

„Supreme Leader's Activities“ that „Kim Jong Un Visits Kangdong Precision Machine

Plant“.98 It matters that he was in attendance of „Workers’ Party of Korea [WPK]

Organization Guidance Department Deputy Director Jo Yong Won (Cho Yo’ng-wo’n) and

WPK Munitions Industry Department Deputy Director Yu Jin (Yu Chin).“99

94 https://en.wikipedia.org/wiki/Numerical_control (05.02.2017)

95 Report of the Select Committee on U.S. National Security and Military/Commercial Concerns with the Peoples Republic of China, Volume I, Washington 1999, p. 85.

96 U.S. Department of Commerce, Office of Technology Evaluation, Bureau of Industry and Security: Critical Technology Assessment: Five Axis Simultaneous Control Machine Tools, July 2009, p. 3.

97 J. Arenas Carrasco: Indicators of Nucelar Programmes, IAEA-CN-184/289, p. 2.

98 http://rodong.rep.kp/en/index.php?strPageID=SF01_02_01&newsID=2017-02-07-0001 (10.02.2017)

99 https://nkleadershipwatch.wordpress.com/2017/02/06/kim-jong-un-visits-kangdong-precision-machine-plant/ (10.02.2017)

39

Steph

an B

lanc

ke

Jens

Ros

enke

In the 2005 „Addendums to the Comprehensive Report of the Special Advisor to the DCI

on Iraq’s WMD“ the relevance of this technology is described as follows: „Dual-use

equipment and materials as defined by the International Atomic Energy Agency’s (IAEA)

Transfers of Nuclear-Related Dual-Use Equipment, Material and Related Technology,

INFCIRC/254/Rev.5/Part 2 and Annex, are equipment or materials “that could make a

major contribution to a ‘nuclear explosive activity’”. Examples include:

• Computer-Numerically-Controlled (CNC) Multi-Axis Machine Tools (turning, milling,

grinding, or combination)—capable of producing high precision parts, such as for

enrichment centrifuges or even nuclear weapons parts.

• Computer or Numerically Controlled Multi-Axis Coordinate or Dimensional Measuring

Machines—apable of providing quality control for high-precision parts, such as for

enrichment centrifuges or even nuclear weapons parts.

• Computer or Numerically Controlled Multi-Axis Spin-Forming or Flow-Forming Machines

and precision Rotor Forming Mandrels—capable of producing high-precision cylindrical

rotors, such as for enrichment centrifuges.“100

Searching a Pakistan business directory - http://www.businessdirectory.pk – it is

impressive to find only for Islamabad, where the mentioned company is located, a lot of

entries which are all connected in a way to CNC machines101:

100 Addendums to the Comprehensive Report of the Special Advisor to the DCI on Iraq’s WMD, March 2005.

101 Accessed 10.02.2017.

40

Steph

an B

lanc

ke

Jens

Ros

enke

Related to the known address (Ibne-Sina-Road) three entries are shown, all related to the

identical company:

Michael Ma and Shandong Jinding Stainless Steel Tube Co. Ltd.

The advertisement also showed us some other details, which allowed us to find the

relevant connection to China: Telephone number (+86 534 7282066) and e-mail address

41

Steph

an B

lanc

ke

Jens

Ros

enke

(cnccuttingdesign@gmail.com). The telephone number refers to Michael Ma and the

Chinese company Shandong Jinding Stainless Steel Tube Co.,Ltd.

The screenshot shows the current contact details.102 A company presentation shows no

production line of CNC machines103, and even on their website is nothing to find about a

CNC machines production line,104 but this might be due to the structure of many Chinese

company websites which seems not to be complete.

102 http://www.jdpipecn.com/comcontent_detail3/&i=17&comContentId=17.html (10.02.2017)

103 http://de.slideshare.net/ssuserce458f/sdjd-stainless-steel-tube-coltd (10.02.2017)

104 http://www.jdpipecn.com/products_list/keyword=CNC&method=submit&searchType=1.html (10.02.2017)

42

Steph

an B

lanc

ke

Jens

Ros

enke

More interesting seems to be Michael Ma:

Regarding to his Facebook profile his current position is an „International Business

Manager“ at Shandong Jinding Stainless Steel Tube Co.,Ltd.105

For our research on Facebook we used a simple Facebook Graph search, which allows to

locate a target profile and to add different variables as working places, attended schools

or former and current places of residence. In this case we were interested in Pakistani

which are connected to the entities we were looking for. When it comes to a specific

company the poor result in numbers – regarding their current or former staff – is always

suspicious and provides an indication for a fake company or even for a front company. The

ongoing development shows that since July 2017 North Korea started to divide bigger

state-run trade companies, which are suffering under heavy sanctions, into smaller

„private“ companies with new names and a new ownership of individuals. One must

assume that this measure is taken by those countries, which are somehow associated with

proliferation, sanctions and illegal or shady procurement. Those new created companies

mostly show a minimum of information, but in return more colourable business activity.106105 https://www.facebook.com/michael.ma.9404/about?lst=100002583521820%3A729517451%3A1486729739 (10.02.2017)

106 E.g. Jieun Kim: North Korea‘s State-Run Firms Create `New`Smaller Entities to Evade UN Sanctions, http://www.rfa.org/english/news/korea/north-koreas-state-run-firms-create-new-smaller-entities-to-evade-un-sanctions-08212017155250.html (07.09.2017).

43

Steph

an B

lanc

ke

Jens

Ros

enke

Michael Ma and Tongyu Heavy Industry Co. Ltd.

But looking into his LinkedIn profile one can see another position at Tongyu Heavy

Industry Co.,Ltd., unfortunately with a slightly cutted business card as profile picture107:

In May 2016 Tongyu Heavy Industry signed a cooperation agreement with the well known

Nuclear Power Institute of China (NPIC),108 which is a subsidiary to China National

Nuclear Corporation (CNNC). NPIC claims to be “the only large-scale comprehensive

R&D base in China incorporating reactor engineering research, design, test, operation and

small batch production. Since its foundation in 1965, NPIC has established a complete

research and development system, including nuclear power engineering design,

equipment assembly and supply of NSSS, reactor operation and application research,

reactor engineering test and research, nuclear fuel and material research, isotope

production, nuclear technology application research and services, etc.“109 NPIC is

strongly involved in the Pakistan Karachi Nuclear Power Project (K2 and K3) – as some

other important Chinese players as well: „At the end of August 2013 contracts were signed

in Shanghai with CNNC, China Zhongyuan Engineering Co. Ltd. (CZEC), China Nuclear

Power Engineering Co. Ltd. (CNPE), Nuclear Power Institute of China (NPIC), and East

China Electric Power Designing Institute (ECEPDI).“110 The parent company CNNC writes

2016 on their website about NPIC, that „the Institute is a national strategic hi-tech

organization combining military and civilian interests, and was reputed to be the cradle of

107 https://www.linkedin.com/in/%E2%98%85-michael-ma-5a8661bb (10.02.2017)

108 http://www.reuters.com/finance/stocks/300185.SZ/key-developments/article/3383919 (11.02.2017)

109 http://en.npic.ac.cn/ (10.02.2017)

110 http://www.world-nuclear.org/information-library/country-profiles/countries-o-s/pakistan.aspx (11.02.2017)

44

Steph

an B

lanc

ke

Jens

Ros

enke

Chinese nuclear power engineering by former vice-premier Wu Bangguo.“111 In an U.S.

report from 2003 NPIC appears in a list of Major Producers and Distributors of

Radioactive Material Used to Manufacture Sealed Sources.112 Regarding their

website Tongyu Heavy Industry is – beside many other things - involved in military related

production. This division seems not to be too obvious and maybe it presents only a smaller

part of their business and even in their promotion video it is only presented for a

second113:

We believe that this ship shows the Canadian patrol frigate HMCS Regina114:

111 http://en.cnnc.com.cn/2016-02/04/c_49388.htm (11.02.2017)

112 United States General Accounting Office. GAO Report tothe Ranking Minority Members, Subcommittee on FinancialManagement, the Budget, and International Security, Committee on Governmental Affairs, U.S. Senate: Nuclear Nonproliferation. U.S. and International Assistance Efforts to Control Radioactive Sources Need Strengthening, May 2003, p. 83.

113 http://www.tongyuheavy.com/html/news/sp/, min 09:27 (11.02.2017)

114 https://commons.wikimedia.org/wiki/File:The_Canadian_patrol_frigate_HMCS_Regina_(FFH334)_navigates_off_the_coast_of_Hawaii_March_4,_2013,_prior_to_a_scheduled_port_visit_to_Joint_Base_Pearl_Harbor-Hickam_in_Hawaii_130304-N-WF272-048.jpg (25.02.2017)

45

Steph

an B

lanc

ke

Jens

Ros

enke

This could provide an indication for the application of Chinese technology in Western

military forces. This and the fact that they cannot give details about their military

productline due to confidentiality and even that Tongyu Heavy Industry – in their own

words - „has passed the US ASME nuclear-level MO certification [and] the Department of

the nuclear group of qualified suppliers“ should raise awareness that Michael Ma seems to

be somehow involved – as a middleman? – with them and the now sanctioned

Engineering Solutions Pvt. Ltd. For an ongoing research it would be necessary to check

the role of all subsidiaries of Tongyu Heavy Industry, which consist of „Yucheng Tongyu

New Energy Machinery Casting Co., Ltd., Yucheng Baoli Casting Co., Ltd., Shandong

letter Merchants Limited, Ltd., Changzhou Haifeng Metallurgical Machinery Manufacturing

Co., Ltd., Changzhou Dongfang Electromechanical Complete Sets Co., Ltd., Jinan

Metallurgical Science Research Institute Co., Ltd., Shandong Province Yu City Xinyuan

Thermal Power Co., Ltd. and many other subsidiaries.“115

Michael Ma and Dezhou Sean CNC Equipment Co. Ltd.

Another confusing detail of Michael Ma is that in his advertisement on the one hand the

telephone number refers to Shandong Jinding Stainless Steel Tube Co.,Ltd., but the email

address to another company: Dezhou Sean CNC Equipment Co., Ltd. In the follwing

there are the contact details from their Facebook account116:

115 http://tongyuheavy.com/html/about/ (11.02.2017)

116 https://www.facebook.com/cnccuttingmachine/about/ (10.02.2017)

46

Steph

an B

lanc

ke

Jens

Ros

enke

Michael Ma doesn't mention his connection to them nor does the company. Their LinkedIn

profile show the following details, beside others the email address from the advertisment

shown above:

47

Steph

an B

lanc

ke

Jens

Ros

enke

Their English Alibaba website doesn't exist any more, but it is possible to find an older

version of the Alibaba site:

Following their website http://www.cnczx.com/ one can find other contact details:

48

Steph

an B

lanc

ke

Jens

Ros

enke

Tracing the emailaddress leads to additional contact details:

Regarding their website the „company's main products are: inter-line cutting machine,

profiled pipe cutting machine, plasma cutting machine, flame cutting machine, desktop

cutting machine, laser cutting machine, infinite rotary groove cutting machine, flange

welding machine, Cutting machines, robotic automated tooling equipment.“ From the point

of view how important CNC machines are for proliferation topics this company could be

one of the important players in a Chinese network of facilitators. Due to the in parts

massive obfuscation when it comes to the structure, network and product line of smaller

Chinese companies there are mandatory rumors and considerations which might be unfair

– or not.

E.g. when it comes to the Facebook Profile of Dezhou Sean CNC Equipment Co., Ltd. It

looks somehow odd that Michael Ma seems to be the only one who is posting. His activity

on the side looks unreliable: February 1 he writes at 10:27 (which can be seen if the

cursor rolls over one part of the posting):

49

Steph

an B

lanc

ke

Jens

Ros

enke

The same day and one minute later he writes:

Of course this might be by accident or there might be a plausible reason for those two

postings, but it gives the impression of a fake.

In the end remains the question: How and why is Michael Ma connected with a Pakistan

company which is on a sanction list? For which Chinese company is he working and for

what purpose is he engaged in the business with CNC machines? What kind of machines

are used by Engineering Solutions Pvt. Ltd.? How are Chinese companies, which are

beside other things producing technology for nuclear facilities, connected with Engineering

Solutions Pvt. Ltd. and with whom is the latter cooperationg?

Where possible we tried to check it the presented contacts were still in function. We did

this on one hand with looking for current company and business reports, email and phone

directories, user groups and useful archives. On the other hand we tried this in a more

technical manner.

50

Steph

an B

lanc

ke

Jens

Ros

enke

Locating Hwa Create

Investigating Hwa Create led us to various details and slightly differing names. On their

website117 we find their contact details:

Regarding their LinkedIn profile118 they are located here:

Sometimes this company is listed as Hwa Create Corporation, sometimes as Hwa

Create Technology Corporation. In an extensive Chinese directory they are in the

category „Innovation, Research & Development“ with follwoing contact details:

Hwa Create Technology Corporation Ltd.

Yi. 18, No. 8 Dongbeiwang West Road, Haidian District Beijing,

100193 P.R. China

guiziy@163.com

117 http://en.hwacreate.com.cn/lxwm/FrontColumns_navigation01-1443165575521FirstColumnId=125.html (23.02.2017)

118 https://www.linkedin.com/company/hwa-create-corporation-ltd- (23.02.2017)

51

Steph

an B

lanc

ke

Jens

Ros

enke

Looking into official U.S. Federal Registries the company is mostly just named as HWA

Create. The U.S. Bureau of Industry and Security quotes five various addresses for Hwa

Create119:

Under the End-User Review Committee (ERC) Entity List Decisions it is described as

follows: „The ERC determined that […] HWA Create, located in China and Hong Kong, be

added to the Entity List on the basis of their attempts to procure items, including U.S.-

origin items, for activities contrary to the national security and foreign policy interests of the

United States.“120 The addresses in Hong Kong are there also listed and we found an

entry in the Hong Kong Gazette121 from June 2016:

Obviously the mentioned addresses does not accord with the actual contact detaislon the

company website, but the address is to be found in this description122:

119 http://apps.export.gov/csl-search#/?name=Hwa%20Create (23.02.2017)

120 https://www.federalregister.gov/documents/2014/06/26/2014-14935/addition-of-certain-persons-to-the-entity-list-and-removal-of-person-from-the-entity-list-based-on (23.02.2017)

121 www.gld.gov.hk (23.02.2017)

122 http://ishudita.webhost4life.com/productdescription.asp?V_sp=S&V_regno=30024436 (23.02.2017)

52

Steph

an B

lanc

ke

Jens

Ros

enke

Here one can find again the address from the ERC Entity List and their website – the latter

is still in function today.

In the Open Corporate Directory there are two entries for Hwa Create:

Due to the somehow confusing, if not to say obfuscating company labels and addresses

we had to look for a proof that the present Hwa Create, which is connected to many

relevant entities and products, is the same which is or was under suspicion that its

activities are „contrary to the national security and foreign policy interests ofthe United

States“. We obtained a Chinese list of their staff and finally we were able to extract some

information from the old and outdated website of Hwa Create:

53

Steph

an B

lanc

ke

Jens

Ros

enke

Here we see the same website and the address, mentioned in the ERC Entity List. On this

outdated website the company promoted much more bluntly their security and military

related products as they do today:

54

Steph

an B

lanc

ke

Jens

Ros

enke

The present English version of their website looks more civil today:

Compared to this even the Chinese version of their present website gives a little bit more

„aggressive“ impression of Hwa Create:

55

Steph

an B

lanc

ke

Jens

Ros

enke

Finally our main concern is the intransparency when it comes to Hwa Create and the fact

that they are doing business with a company in Pakistan, which is even more intransparent

and now finally blacklisted due to security reasons. On the basis of this it seems thought-

provoking, that Hwa Create is obviously a partner of a important European company which

is related to – beside others – Western defence projects.

A press release from the European NEXTEL AEROSPACE DEFENCE & SECURITY S.L.

(NADS), published in May 1, 2015, titled „Hwa Create will be a Simware’s Value Added

Reseller (VAR) in People’s Republic of China“, shows the cooperation between this

Chinese company with links to a now sanctioned Pakistan entity and a European

company, „that operates into military & aerospace global markets providing innovating

solutions of training & simulation, command & control and engineering support

services.“123 Regarding their website NADS it is well connected with the most relevant

European military and security companies – some of them working on very sensible

technology and systems in NATO military and intelligence:

http://nads.es/1/ (19.01.2017)

123 http://nads.es/1/ (19.01.2017)

56

Steph

an B

lanc

ke

Jens

Ros

enke

In 2003 Hwa Create was also a partner of an U.S. company named Khoral, which has – in

their own words - „gained worldwide acceptance among major companies and

organizations such as Lockheed Martin, Eastman Kodak, Sandia National Laboratory, 3M,

Dupont, Intel, the French Atomic Commission, and Raytheon.“124 In other words:

Companies and institutions which are engaged in military and nuclear issues.

Future research

During the research it became clear, how deep and proven the connections between

China and Pakistan really are. We realised, that the Chinese company Wuhan Sanjiang

Imp.& Exp. Co., Ltd. was a trading partner of Engineering Solutions Pvt. Ltd.as well – a

relationship, which asks for a intensive research by its own, underlined by only a few

keypoints: Wuhan Sanjiang Imp.& Exp. Co., Ltd. already aroused suspicion years ago,

when the company „shipped (on the Harmony Wish) four WS51200 vehicles from

Shanghai to North Korea in August 2011, marking them on a shipping document as “off-

road trucks.”“125 The WS51200, which appeared at a DPRK military parade, transporting

missiles. „was produced as a 122-ton vehicle by the Hubei Sanjiang Space Wanshan

Special Vehicle Company, which is a part of the China Space Sanjiang Group under

the China Aerospace Science and Industry Corporation (CASIC).“126 This special

relationship becomes more controversial if one looks into the products, Wuhan Sanjiang is

trading with or forwarding them to – beside others one from a German company, maybe

used for missile transportation. For good reasons Wuhan Sanjiang was „added on October

13, 2017 to the Specially Designated Nationals (SDN) list maintained by the U.S.

Department of the Treasury's Office of Foreign Assets Control (OFAC), freezing its assets

under U.S. jurisdiction and prohibiting transactions with U.S. parties, pursuant to Executive

Order 13382, which targets proliferators of weapons of mass destruction (WMD) and their

delivery systems; foreign parties facilitating transactions for the entity or otherwise

assisting the entity are subject to U.S. sanctions.“127

124 http://www.khoral.com/news/Oct_29_2003.html (23.02.2017)

125 Shirley A. Kan: China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues, Congressional Research Service, 7-5700, RL31555, January 5, 2015, p. 20.

126 Ibid.

127 http://www.iranwatch.org/suppliers/wuhan-sanjiang-import-export-co-ltd (20.02.2018)57

Steph

an B

lanc

ke

Jens

Ros

enke

Conclusion

During our research it became clear for us how widespread this special field for a

researcher in proliferation or just shady shipment issues can become. It was obviously a

bottomless pit to look into every small Chinese company, somewhere based in a

nameless building, surrounded by awesome websites without any serious content – or

only presented by an empty LinkedIn or Alibaba profile with a non-functioning email

address or a non-existent telephone number. This „looking for an unknown“128 became –

even in this smaller case – easier for us with using software and designing a network –

only to get and to keep a general idea of it. We cannot define how and if those distinctive

features are intended or even known by governmental offices, but sometimes it seemed

for us that

a lot of „business“ is going on – far away from the central government and the Chinese

Communist Party in Beijing. When it comes to Hwa Create one can doubt that nobody

knows about their connections because this company isn't a small one-man-show in a

suburb garage. It means that we have good reasons to say that we try to investigate a

network, which works under shady and opaque circumstances.

Current developments show the problems for the ongoing investigations: Companies,

which are trading in the interest of their governments – both SOEs or private – try of

course to evade investigations and sanctions. At present North Korea shows its efforts to

hide their trade by „giving them new names, and putting them under the nominal

ownership of individuals.“129

It would be unfair not to mention the Pakistan efforts to take some steps in nonproliferation

as e.g. in 2004 the adoption of a new export control legislation, which means issueing

special control lists for relevant technology.130 But after ups and downs – e.g. during the

A.Q. Khan crisis – it seems that the current development in proliferation issues has led to a

certain dissatisfaction in Western security circles.Additionally one has to be aware of the

strategic position of Pakistan for China. It seems that the former intention needs more time

to be realised in total, particularly „the Export Control on Goods, Technologies, Material

128 F. V. Pabian et. al.: Open Source Analysis in Support of Nonproliferation Monitoring and Verification Activities: Using the New Media to Derive Unknown New Information, European Commission, Joint Research Centre, 2014.

129 URL (28.08.2017)

130 See e.g. „Pakistan’s Response to the Proliferation Threat“ in Paul K. Kerr/Mary Beth Nikitin: Pakistan’s Nuclear Weapons, Congressional Research Service, 7-5700, RL34248, August 1, 2016, pp. 25-27.

58

Steph

an B

lanc

ke

Jens

Ros

enke

and Equipment related to Nuclear and Biological Weapons and their Delivery Systems Act,

2004“ which „extends to the whole of Pakistan“ and applies beside others to „every citizen

of Pakistan or a person in the service of Pakistan within and beyond Pakistan or any

Pakistani visiting or working abroad“.131

131 The Gazette of Pakistan, PART I, Acts, Ordinances, President's Orders and Regulations, REGISTERED No. M – 302, L.-7646, ISLAMABAD, MONDAY, SEPTEMBER 27, 2004, p. 112.

59

Steph

an B

lanc

ke

Jens

Ros

enke