Four companies registered in Hong Kong have turned up in a United Nations Security Council expert group’s report alleging illegal transfers of refined petroleum to North Korea.

They were directly linked to five ships under investigation for helping the isolated country evade international sanctions that forbade the export of more than 500,000 barrels of oil a year, with all shipments reported to the Security Council.

Checks in Hong Kong showed the companies were headed by mainland Chinese directors or individuals with links to the mainland.

They included two directors who registered their businesses using addresses claiming they were from far-flung, mountainous parts of China. The UN panel suggested that some might be mere figureheads.

The UN experts’ report, aimed at keeping a close watch on North Korea’s nuclear capabilities and whether businesses and member states complied with sanctions, was released last month and reported by South Korean media last weekend.

There has been heightened tension in the region, with Pyongyang since January having conducted a record 29 missile tests, 23 of which were ballistic ones, triggering recent joint military drills by the United States and South Korea. In an escalated response, North Korea launched a “simulation” of a nuclear attack on the south over the weekend.

Associate professor James Fry, who specialises in international law at the University of Hong Kong, told the Post that at this stage, neither China nor Hong Kong was obliged to act on the report although they could signal their international commitment by taking pre-emptive action.

The expert panel’s probe would take more time before it passed the case to a sanctions committee to decide on penalties, he said, so it was unlikely that the companies would face immediate penalties for their alleged actions.

But Victor Cha, senior vice-president and Korea chair at US-based think tank the Centre for Strategic and International Studies, said the report showed there had been violations and the companies involved should be shut down.

Pyongyang’s activities to evade sanctions weakened the effectiveness of the Security Council’s measures and helped it to advance its missile technology, he added.

The four companies named by the UN panel were Hong Yao International Trading and Heng Chen Rong (Hong Kong) Marine in Sheung Wan, Joffa Trade International in Wan Chai, and Nuwanni International Ship Management, which has been dissolved.

They were linked to oil tankers Heng Xing and Joffa, as well as three fishing boats, which were all allegedly involved in supplying oil illegally to North Korea.

The first Hong Kong company, Hong Yao International Trading, came up when the UN experts accused a Taiwanese firm, Cheng Chiun Shipping Agency, of using its own vessel Jan Victoria, formerly known as Sky Venus, to supply oil to Pyongyang.

Denying the allegation, the Taiwanese firm said while it was aware three fishing boats had picked up oil from the Jan Victoria, the transaction was organised by a Mr Liu, director of Hong Yao International Trading. The UN experts have challenged the Taiwanese firm’s version.

Hong Kong company records show Hong Yao International Trading is owned by Liu Zebang, from remote Hongxing village in a hilly area of Guizhou, a landlocked province in southwest China.

The second Hong Kong company, Heng Chen Rong (Hong Kong) Marine, was said to own the Heng Xing, which was registered in Sierra Leone until November 2021.

The report said the vessel was spotted in March this year near an oil terminal in Nampo, a port city near Pyongyang, when foreign ships were barred because of the Covid-19 pandemic. Its presence raised suspicions that its registration might have been changed to North Korea.

The third Hong Kong company, Joffa Trade International, owned Joffa, a Sierra Leone-flagged oil tanker that transferred oil from the then Sky Venus to New Konk, a vessel that went to North Korea between December last year and February.

Company records listed Li Xiaoliang, director of Joffa Trade International, as living at an address in the mountainous inland tourist city of Lijiang, in Yunnan province.

Scrapped in April this year, the Joffa’s previous technical manager was the fourth Hong Kong company, Nuwanni International Ship Management.

The Post also found that both Hong Yao International Trading and Heng Chen Rong (Hong Kong) Marine used Galaxy Company Secretarial Services, in Sheung Wan, as their corporate secretary.

The UN panel’s report said Joffa Trade International also had the same company secretary as other overseas entities suspected of illicit activities.

The four companies were linked to several ships that were suspected of illegally bringing oil to North Korea.

This is not the first time that Hong Kong firms have been implicated in UN investigations, as at least four were put on a UN sanctions list between 2013 and 2018 for helping to supply oil to Pyongyang.

Aaron Arnold, a senior associate fellow at Britain-based defence and security think tank the Royal United Services Institute, said North Korea continued to use Hong Kong as a haven to evade sanctions because of the city’s banking secrecy laws, which protect information regarding the identities of company owners and other types of data.

Arnold, a former member of the UN Security Council panel of experts on North Korea sanctions, said: “Hong Kong and the Chinese authorities should work to make their corporate registration process more transparent, including allowing public access to beneficial ownership information.”

A spokesman for Hong Kong’s Commerce and Economic Development Bureau said it would not discuss individual cases, but stressed that the city was serious about implementing UN sanctions and had passed the United Nations Sanctions (Democratic People’s Republic of Korea) Regulation for that purpose.

Under the law, those who supply prohibited items to North Korea without a licence granted by the city’s chief executive, may be fined and jailed for up to seven years.

“Our law enforcement agencies follow up on suspected violations vigorously, without fear or favour,” the bureau spokesman said.