U.S. Sanctions Chinese Firm and Chief Executive for Buying Iranian Oil

Secretary of State Mike Pompeo speaks to members of the media at the State Department, Monday, June 10, 2019. (AP Photo/Pablo Martinez Monsivais)
AP Photo/Pablo Martinez Monsivais

Secretary of State Mike Pompeo announced on Tuesday that sanctions will be imposed on China’s Zhuhai Zhenrong Company and chief executive Youmin Li for purchasing Iranian oil in defiance of U.S. sanctions.

“We said we would fully enforce our sanctions, and we are backing this up with real action,” Pompeo said. “The announcement today will help deny the regime critical income to fund terror around the world, engage in foreign conflicts, and advance its ballistic missile development. The Iranian regime must cease these destabilizing activities.”

According to the secretary’s statement, Zhuhai Zhenrong Company Ltd. knowingly purchased a significant amount of Iranian oil after the expiration of China’s temporary waiver from Iran sanctions on May 2. 

The U.S. response will block “all property and interests in property of Zhuhai Zhenrong Company Limited that are in the United States or within the possession or control of a U.S. person, and provides that such property and interests in property may not be transferred, paid, exported, withdrawn, or otherwise dealt in.”

Furthermore, chief executive officer Youmin Li will suffer several personal restrictions, including a ban on entry into the United States.

“Any entity considering evading our sanctions should take notice of this action today. It underscores our commitment to enforcement and to holding the Iranian regime accountable,” Pompeo said.

“All entities must do their diligence and stay well clear of sanctioned Iranian entities and sectors. No company or nation should be willing to expose itself to the possibility of supporting Iran’s Islamic Revolutionary Guard Corps or the regime’s regional proxies,” he advised.

Bloomberg News profiled Zhuhai Zhenrong and its “mysterious” management on Tuesday, noting it has Chinese military ties and a long history of doing business with Iran:

The company was set up in the mid-1990s by a legendary Chinese trader, Yang Qinglong, with support from the Chinese military. The armed forces were still receiving shipments from the Islamic Republic at the time as payment for weapons during the 1980-1988 Iran-Iraq war.

In early-2012, when the Obama administration placed a previous round of sanctions on Iran, Zhenrong was targeted because of its involvement in a gasoline sale to the Persian Gulf nation.

Zhenrong continued to import Iranian crude and fuel oil, despite the sanctions, ignoring efforts by the U.S. to restrict dealings with the OPEC producer and isolate the country over its nuclear ambitions.

Zhenrong has a corporate website, but it does not work, and no one answers the phones at the company’s nominal headquarters in Beijing, but it rakes in billions of dollars in revenue and was listed as one of China’s top 500 companies as recently as 2016, after which information about its activities became hard to come by.

Youmin Li is even more enigmatic than her company, with little known about her except that she joined Zhenrong soon after graduating from the China Europe International Business School of Shanghai. She declined Bloomberg’s invitation to comment on the sanctions.

The New York Times anticipated the Trump administration’s first sanctions against a Chinese company for doing business with Iran will increase tensions with both Beijing and Tehran. A previous example of the U.S. pursuing a Chinese executive for violating Obama-era sanctions against Iran led to an ongoing diplomatic and economic crisis when Canada arrested Huawei’s Meng Wanzhou and began proceedings to extradite her to the United States for trial.

The Chinese Foreign Ministry has denounced what it described as “U.S. unilateral sanctions” but it has also been taking some care to put vast quantities of Iranian oil in bonded storage so it does not technically violate those sanctions. Some skeptics, notably including Sen. Marco Rubio (R-FL), think China is putting on a show by stuffing millions of barrels of Iranian oil into storage facilities and that show will soon end.

The Chinese Foreign Ministry denounced the sanctions on Zhenrong on Tuesday and threatened retaliation.

“We are opposed to the US bullying behavior of wantonly cracking down, suppressing and sanctioning Chinese companies and individuals based on U.S. domestic law. We are firmly opposed to it and strongly condemn it,” said Foreign Ministry spokeswoman Hua Chunying.

“We strongly urge the US to immediately rectify its wrong behavior, and stop imposing illegal sanctions against Chinese companies and individuals. China will take all necessary measures to firmly preserve the legitimate rights and interests of Chinese companies and individuals,” Hua said.

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