Singaporean man jailed over his role in illegal supply of gasoil to North Korea; company fined

SINGAPORE: The founder of a company was involved in a ploy with others to illegally supply petroleum products to North Korea.

Across three occasions, Justin Low Eng Yeow, 56, sourced gasoil from suppliers, including now-defunct Hin Leong Trading, and provided it to business associates, knowing that the gasoil was bound for North Korea. 

On Friday (Mar 21), Low was sentenced to one year and three weeks' jail, while his company ISA Energy (Asia) was fined S$280,000 (US$209,700).

Low and ISA Energy each pleaded guilty to three charges. Low's charges are for indirectly transferring financial assets that may contribute to a prohibited activity - by transferring money to suppliers for the purchase of gasoil, knowing that this would contribute to the transfer of refined petroleum products to North Korea.

The transactions were to Hin Leong Trading for US$900,000, and to B B Energy for separate sums of US$876,000 and US$1 million.

ISA Energy's charges mirror Low, but specify a direct transfer. Each also had six charges of a similar nature taken into consideration for sentencing. 

As a member state of the United Nations (UN), Singapore is obliged to implement UN Security Council sanctions and resolutions in respect of North Korea to counter its nuclear weapons programme.

As part of regulations, entities are prohibited from the direct or indirect supply, sale or transfer of designated items, including refined petroleum products, to any person in North Korea, regardless of whether the item originated in Singapore. 

Refined petroleum products are considered an essential resource that support North Korea's weapons of mass destruction and ballistic missile programs. In March last year, the US Department of State reiterated that the hermit kingdom's ability to illicitly procure refined petroleum “directly contributes to (its) military readiness and the development of its weapons programmes”, court documents stated. 

FOUNDER AND DIRECTOR OF ISA ENERGY

Before the offences, Low was a general manager at an oil and petroleum trading company from 2010 to 2018. While there, he founded ISA Energy.

In March 2019, co-accused Kwek Kee Seng and several Taiwanese individuals, Huang Zong Wei and Chen Shih-Huan conspired to arrange for the illegal supply of petroleum products to North Korea 

While in Taiwan, the group discussed an upcoming gasoil transaction and formalised Low's engagement as the "supplier" or broker of gasoil. 

Kwek would liaise with Chen and Huang, while Low, also the director at ISA Energy, would purchase gasoil at Kwek's instructions. 

As part of the arrangement, the gasoil from Low would be moved from an oil terminal in Singapore or South Korea, loaded onto a vessel and then transferred to another vessel. One of the transfers would take place in the South China Sea.  

The gasoil would then be transferred to a North Korea-flagged vessel and discharged at Nampo port. 

At the end of the meeting, Kwek confirmed to Low that Chen and Huang were selling gasoil to North Korea. 

Despite knowing it was illegal, Low agreed as he wanted to "make some money" for ISA Energy, court documents stated. On his part, Kwek assured Low that he would not be implicated if things went wrong. 

Low supplied gasoil on three occasions, earning a profit of S$50,264.73 for ISA Energy. 

The petroleum that Low provided included a form of automotive gasoline that can be used to power automobiles or as an alternative aviation fuel. The other type of gasoil he provided could be used in a variety of ways - including power generation, construction and manufacturing. 

As part of the arrangement, Low generated fake contracts using ISA Energy's letterhead to portray the transactions as legitimate. The contract even included a sanctions clause which declared that the buyer would not transfer or sell gasoil to sanctioned entities. 

In total, Low transferred about US$5.6 million to Hin Leong Trading and B B Energy to buy gasoil. 

The gasoil he supplied reached unidentified end users in North Korea.

Low and ISA Energy were represented by lawyer Lee Teck Leng, who said that Low only harboured a suspicion of the gasoil's final destination after his first meeting with the Taiwanese individuals. 

He only verified his suspicion with Kwek upon return to their hotel. Kwek's case is pending before the courts. 

"When Justin first knew that the cargo ... was headed for (North Korea), he had already contracted with Hin Leong Trading for the said cargo on Jul, 24, 2019. If he were to cancel that contract, ISA Energy would be in breach of contract and ISA Energy would have to pay damages to Hin Leong Trading," said Mr Lee. 

"Justin found himself stuck with that deal. He felt that he had no choice but to proceed with it in order to avoid paying damages to Hin Leong Trading for breach of contract. At that material time, ISA Energy did not have the money to pay damages as ISA Energy had just started operations and Justin was just trying to make ends meet."

The lawyer said that in Low's case, the refined petroleum products did not contribute towards North Korea's nuclear and missile programmes, as targeted by sanctions. 

Refined petroleum products could be regarded as necessities for the civilian population, he said. 

He compared his client's case to an earlier case, where a director of three companies had supplied prohibited luxury goods to North Korea, and said that refined petroleum products should not be treated more seriously than luxury goods. In that case, the accused Chong Hock Yen, was eventually sentenced to six weeks' jail. 

Mr Lee noted that the prosecution's proposed sentence for his client was much higher than Chong's and said it was not warranted.

In sentencing Low, District Judge Koo Zhi Xuan noted how the central dispute between prosecution and defence was the assessment of harm caused by Low's actions. 

The judge found that the harm caused in Low's case was "far more severe" than in Chong's case, as refined petroleum products could be used for military purposes, unlike luxury goods. He also considered how the value of the goods Low helped to supply was higher than in Chong's case.

"The impact on Singapore’s reputation or standing is therefore more detrimental when such materials are supplied," said the judge. He rejected the defence's argument that refined petroleum products should not be treated as material that could directly or indirectly contribute towards North Korea's military activities based on its categorisation within regulations. 

District Judge Koo said that public interest would not be served for the total sentence imposed to be further reduced. 

"As evidenced from the discussion above on the issue of harm, the accused’s offences are not offences where the harm or moral wrongdoing of the acts in question can be appreciated or recognised easily, unlike offences such as cheating or criminal breach of trust where it would likely be clearer to the offender who the victim is and how much loss would be caused to the victim.

"This is because the primary harm involved in a breach of the (regulations) is the damage caused to Singapore’s reputation or standing," said the judge, adding that this idea of harm may not always be obvious to those driven by monetary gains.

However the harm caused is "significant and long-lasting", negatively impacting Singapore's economic reputation and competitiveness over time, he said.