Li Fang Wei has been attracting the attention of the US government for years and has a $5 million FBI bounty on him—but he won't stop selling equipment to Iran that could be used in missiles.
They just don't make weapons of mass destruction dealers like they used to.
Back in the 1980s, men like Pakistani scientist Abdul Qadeer Khan and Canadian artillery expert Gerald Bull set the benchmark for how much unfettered, globe-shaking damage can be done when engineers go rogue. Khan sold nuclear weapon blueprints to Muammar Gaddafi and centrifuges to Iran and North Korea through a network of flabby white-collar criminals from Germany and South Africa. Bull tried to build Saddam Hussein a "supergun" capable of lobbing large projectiles into orbit before being shot in the back of the skull by assassins as he fumbled for his apartment keys in Brussels.
Those two particular malfeasants exemplified the zero-morals glamour to which most arms dealers must surely aspire. When Pakistani authorities finally caught up with Khan in the early 2000s, he was placed under house arrest in one of his Islamabad villas. Echoing some sort of Bond villain, Bull's pre‑Saddam days reportedly involved setting up an experimental artillery piece on the tropical island of Barbados.
The WMD proliferation scene these days doesn't quite have the same level of intrigue. In fact, the closest there is today to an active WMD proliferators' hall of famer is a slightly pudgy Chinese businessman named Li Fang Wei (also known as Karl Lee) who's been irking the US government for much of the past decade.
At first glance, Li could well pass as one of the world's most boring people: He's believed to trade vegetable oil and graphite from a nondescript office block in the smoggy Chinese city of Dalian, and his most distinguishing feature, according to the FBI, is a mole on his upper lip.
Li's side gig is what makes him interesting: For the past ten years, he's allegedly supplemented his income by selling millions of dollars' worth of embargoed goods to Iran's UN-outlawed ballistic missile program. Pick any Iranian missile at random and open it up, and there's a good chance you'll find a part inside that was supplied by Li Fang Wei. From high-strength metals to gyroscopes, the dude supplies it all—and thanks to a weak Chinese legal system and the fact that his goods theoretically could be used legally, it's tough to envision Li going down any time soon.
On Motherboard: The Obsessive World of China's Amateur "Sherlock" Subtitlers
Despite his alleged role in keeping Iranian missiles flying—New York prosecutor Preet Bharara's office has described him as a "principal contributor" to Iran's missile program—Li's exact whereabouts remain a mystery. Indeed, he has kept a lower profile than AQ Khan or Gerald Bull ever did. As Matthew Cottee, a research associate at the International Institute for Strategic Studies, told VICE, "Li is well known in nonproliferation circles for his chameleonic qualities. Despite sanctions restrictions and a significant bounty on his head, he has managed to adapt and continue supplying ballistic missile parts—a sensitive issue in the current Iran deal."
Li's sales to Iran have caused no end of annoyance in Washington. Various tentacles of the US government have taken increasingly aggressive measures to try to stop the guy from doing business with Tehran. The US State Department has added several Li-affiliated companies—as well as Li himself—to its sanctions lists. The Treasury Department has seized millions of dollars from Li's bank accounts and outlawed him from doing business with US companies. US diplomats have made a number of appeals to Beijing to demand that Chinese authorities investigate Li's companies and their alleged violations of US export control laws.
Last April, the FBI raised the stakes, putting an unprecedented $5 million reward on Li's head. That's the most significant bounty ever offered for the capture of a WMD proliferator, according to Cottee. An arrest warrant was issued after Li was indicted, the feds charging him with one count of conspiracy to violate the International Emergency Economic Powers Act, two counts of actually violating the Act, one count of conspiracy to commit money laundering, one count of conspiracy to commit wire and bank fraud, and two counts of wire fraud.
Apparently unfazed by those measures, Li has taken the legitimate side of his manufacturing business online. Delve into the world of Chinese e-commerce sites and you'll find that Li-affiliated companies are openly advertising many of the commodities like graphite that his Dalian factories churn out. Last year, e-commerce giant Alibaba.com swiftly removed one of these listings after it was discovered by researchers. Several other e-commerce sites, though, have been more reluctant, and VICE emailed one of them—GongChang—to find out why they continued to host a Li-affiliated company. A spokesperson replied via email, "We cannot consider the company [to be] illicit...the contact person is not Mr Li Fang Wei. Their products are not illegal too."
That's one of the brilliant things about the Li business model—his products don't scream illegal in the same way an AK-47 or a bag of MDMA might. Li specializes in trading "dual-use goods," which are things that could plausibly be used both by the public and by the armed forces (and are generally thought to carry military-grade price tags for shady buyers in Iran). Conveniently, they can be explained away as intended for boring industrial purposes if an e-commerce site ever asks any questions, or if the authorities come knocking. Li has long been believed to be the owner of a large Dalian factory that produces graphite, a material in hot demand in China's aluminum smelters that can also be used to make missile jet vanes, which help steer a missile by altering its thrust.
Aping the profit-maximizing methods of AQ Khan, Li has apparently moved into the even more lucrative business of developing and manufacturing his own high-tech missile parts. Researchers at King's College London (disclosure: one of us co-authored the report) have discovered that a business associated with Li, Dalian Xinhang Electromechanical Equipment Company, appears to be producing fiber optic gyroscopes, highly advanced components used in aerospace and missile guidance systems. These difficult-to-manufacture devices would be extremely sought after by Iranian missile-makers. After all, leaked cables show that Iran's missile industry has been sourcing gyroscopes from abroad for years, and fiber optic versions are some of the best available.
There is additional, anecdotal evidence that this gyroscope biz may be expanding. VICE has come across job advertisements for engineers with fiber optic-winding expertise that have been listed online by Li-affiliated companies over the past year. There are also indications that the US government may have already tried to take action to thwart this potential proliferation threat: in April 2014, the US Commerce Department blacklisted a Chinese scientist specializing in fiber optic gyroscope design, apparently on the grounds of his ties to Li Fang Wei.
Beijing's stated position on Li Fang Wei, unsurprisingly, is that it "resolutely opposes the US citing domestic laws to unilaterally impose sanctions on Chinese companies or individuals." US officials think that Beijing has not done enough to investigate Li, and therefore is not taking seriously its nonproliferation commitments. Chinese officials in turn resent what they think is Washington's heavy‑handed approach to the issue, and allege that the information the US has provided them about Li is incorrect or incomplete.
The fact that Li is still in business has led to allegations that he's being protected by the Chinese government, or else is exploiting Communist Party connections to stay afloat. "That's the biggest puzzle of what's left in the case," according to one Chinese-speaking analyst based in London who has been closely following Li's activities and is skeptical of the idea that he's working for paymasters in Beijing. "Li's operational security is so bad. Li leaves so many traces online that the idea that he might be working for the Chinese government is inconceivable."
A 2008 leaked US cable suggests that he may be a former government official. Newsweek has suggested he enjoys good family connections, with his grandfather reportedly having been a "legendary colonel" in the People's Liberation Army during the Korean War.
The most likely explanation for why Li remains free, however, is that his actions—despite being in breach of UN resolutions and US law—fall into a legal gray area in China. At least from the information available on the public record, it is not clear that Li's purported activities have crossed any Chinese laws, as opposed to US ones. The Chinese legal system is still coming to grips with cases involving exports of dual-use goods, and might not yet have the tools in place to prosecute someone like Li. A senior US State Department official hinted as much at a May hearing, where he said that the US and China's longstanding dialogue on Li has involved seeking to "understand better each other's information and the capabilities in our legal system—for example, why we are able to indict him in the United States and whether the Chinese would be able to do something similar in China." And Li is well-placed to exploit these legal loopholes—as another official stated bluntly at the same hearing, "Mr. Li has money and lawyers."
In any case, if Chinese authorities ever had gone after Li in earnest, he would likely have tied their investigations into knots with his tricky business practices. In an ongoing game of whack-a-mole, nearly every time the US government puts one of Li's companies on its sanctions lists, it seems like he registers a new one. A look at Chinese commercial and tax databases suggests that when these companies are not held under Li's name—or one of his many aliases—they been held under the name of his presumed siblings, and even his deceased mother.
For now, Li most likely remains in Dalian, building his business empire and taking advantage of the limits of American power. Unless he decides to take a holiday in Miami—or starts testing missile components in Barbados, Gerald Bull–style—there is little that the United States can do to punish him. One Chinese official rather hopefully suggested to VICE that Li has fled to South America, where presumably he would be living the lifestyle of some sort of 1950s Nazi fugitive. Unfortunately for China, though, Li isn't a character from a Tom Clancy novel, and Beijing retains the responsibility to deal with him.
Li cannot escape justice forever. As his business interests get more expansive and more audacious he will continue to attract attention from authorities around the world. The past has a habit of eventually catching up with these serial proliferators—and some, like Gerald Bull, don't always see it coming.