By Sophia Yan, Senior foreign correspondent
China planned to send armed drones worth $1 billion to Libya using a UK-based shell company to skirt an international weapons ban, investigation can reveal.
The scheme aimed to deliver as many as 92 drones, capable of loading multiple missiles, from China to Libya disguised as coronavirus aid – and in direct violation of a United Nations arms embargo.
In exchange, Libya would unload barrels of crude oil to China at a discount, with the secret drone shipment part of the payment.
China hoped sending arms would end the country’s civil war quickly, allowing Beijing to gain influence and a foothold in future trade with the energy-rich north African country.
The details emerged in an ongoing inquiry in Canada, where investigators have identified three alleged co-conspirators who negotiated the deal while employed at the International Civil Aviation Organization (ICAO), a UN agency based in Montreal.
Emails discussing the plan between 2018 and 2021, reviewed by investigators and quoted in Canadian court documents, have been seen by The Telegraph. They describe using a web of shell companies registered in the UK, Egypt and Tunisia to conduct transactions.
The investigation highlights how UK-registered corporate entities may be used to avoid sanctions and bans by covering-up international payments and transfers.
“The Chinese government appears to have approved a strategy of assisting Libya in the procurement and shipment of military equipment through companies designated and approved by the Chinese government in order to obscure the direct involvement of government agencies,” the investigator wrote in the court documents.
“This scheme appears to be a deliberate attempt to circumvent UN sanctions that were in effect.”
Shanghai Gold Wing Aviation Technology, a company registered in the UK in May 2016 that lists a Chinese citizen as the director, was named in those messages as the project manager for the deal.
The company, which has a current address at London’s Southbank Tower, has not reported much business activity since incorporation, according to filings made to Companies House.
The unit listed is a residential apartment, as The Telegraph found when a reporter visited the address in late November.
A concierge told The Telegraph that neither Shanghai Gold Wing nor its director, Jingzhe Shi, 62, were listed at the London apartment.
A total of 2,333 firms have been registered at that address, according to Companies House records. All of the companies have officers with links to China. Thirty-seven percent, or 873 of those companies remain active.
Inside China, Shanghai Gold Wing appears to have had little to no activity.
An address in China listed for Mr Shi, the director, does not exist. A building in Shanghai that The Telegraph found with a listed address for Shanghai Gold Wing appears to be abandoned and not in use.
Shanghai Gold Wing was subject to a compulsory strike-off by Companies House – a forced removal from the registry, effective on Oct 29 – though it is not clear why. Companies House does not comment on individual firms.
Details of the drones-for-oil deal emerged as corruption was investigated at the ICAO. Police in Montreal charged two men in April on suspicion of participating in a conspiracy to sell Libyan oil, Chinese-made drones and military equipment in Libya.
Fathi Ben Ahmed Mhaouek, 61, was charged with being linked to the oil side of the alleged scheme and Mahmud Mohamed Elsuwaye Sayeh, 37, to the whole plan. Both men were working at the UN aviation agency at the time negotiations were said to have taken place with Kuang Chi Wan, who represented the Chinese side.
Andrew Barbacki, Mr Mhaoeuk’s lawyer, said his client maintained his innocence and that no plea had been entered as proceedings had not yet moved to the trial stage.
The role of Shanghai Gold Wings as a project manager was also included in draft contracts as the deal was being discussed, as seen in a message highlighted by Canadian investigators sent from Wan to the two other alleged co-conspirators.
Mr Wan appeared to have direct communications with the Chinese foreign ministry about the deal.
In a letter detailed in court documents, he noted a reluctance to use official Chinese government channels in talks with Libya, instead using two state-owned defence firms authorised to represent Beijing. At one point, a Chinese foreign ministry official also directly emailed Mr Sayeh.
Mr Wan also hinted that a Chinese firm interested in the deal was directly tied to the family of Xi Jinping, the country’s leader.
That company, China Raybo International, founded in 1985, specialises in a wide range of high-profile industries – including nuclear energy, aviation and aerospace, renewable energy, and finance – as described in a Chinese government statement from 2016.
That official statement insisted that Raybo was private and registered in Hong Kong. This made Raybo a rare private company in China working in areas that the government considers to be of national security interest.
All other companies in such industries are state-owned, which suggests that Raybo has high-level government backing.
China was interested in arming Libya in order to speed up a conclusion to the war, so that Beijing could reap economic benefits once fighting ended – “by using war as a means to quickly end the war”, according to the emails that investigators reviewed.
In return, Libya’s high-quality crude oil would shore-up China’s energy security, swelling its oil reserves at home as it rapidly expanded its footprint in Africa, with the long-term goal of shifting the balance of power.
“The idea is for this to be a first step in a longer-term mobilisation of Libya’s resources, economy and territory, and the corrupt way in which they’re being managed, to further Chinese interests, which are vast on the African continent,” said Alia Brahimi, a non-resident senior fellow at the Atlantic Council who specialises in the Middle East and North Africa.
She added that “corrupt and unrepresentative governments selling national resources to Russia and China at steep discounts in exchange for weapons that can be used against their people” is a “dystopian scenario” that risks becoming “normalised” by deals like this.
The Haftar family
For Khalifa Haftar, the Libyan warlord who controls the eastern and southern parts of the country, drones have become indispensable military equipment as he continues to jockey for greater control.
At the time the drones-for-oil deal was being discussed from 2018 to 2021, Haftar was attempting to wrest power from the UN-recognised government headed by prime minister Abdul Hamid Dbeiba, in a bloody war largely fought with drones.
Haftar lost his bid then, and has since been working to rebuild his arsenal.
“The Haftar family recognises that projecting strength serves its interests,” said Jalel Harchaoui, a North Africa expert at the Royal United Services Institute think tank in London.
“It has an incentive to acquire a greater deterrent against rival factions,” said Mr Harchaoui, adding that Haftar was “investing part of his resources into cultivating an aura of military might”.
Haftar is also said to control much of Libya’s key oil assets given his power over the country’s National Oil Corporation through close ties to its chairman, Farhat Bengdara – all of which empower the former to engage in illicit, corrupt deals with states like China.
Experts believe the deal under investigation in Canada is just one corner of wider plans between China and Libya to arm Haftar, who at 80 years old is believed to still harbour ambitions to control all of Libya with the support of his sons.
Other secret weapons deals?
The Libya deal alone involved as many as 92 drones – nearly one-fourth of the total public figure exported over the past decade, according to data from the Stockholm International Peace Research Institute, which tracks global arms transfers.
This suggests that Beijing, already the world’s largest exporter of drones, may be sending far more weapons abroad in secret.
Two other similar cases being investigated in Italy and Spain also indicate that there are likely to be more weapons shipments going from China to Libya.
In June, the Italian authorities seized Chinese drone parts that were disguised as wind turbine equipment bound for Libya, according to a statement from Italy’s customs police and customs agency.
After Canada charged suspects in the case, Mr Mhaouek, a Canadian citizen, was arrested. Mr Sayeh, a Libyan citizen, remains at large and is subject to an Interpol red notice, which requests law enforcement worldwide to locate and arrest him. The whereabouts of Mr Wan, a US citizen, remain unclear.
Haftar could not be reached for comment, and the Canadian police did not respond to a request for comment.
• Additional reporting by James Rothwell and Roland Oliphant | The Telegraph |
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