UK universities under scrutiny over China ties

FT.com

High-tech collaboration between British universities and China’s aerospace sector is under scrutiny as US authorities investigate links between Beijing’s biggest military aircraft manufacturer and Iran’s ballistic missile programme.

Beijing Aeronautical Manufacturing Technology Research Institute (Bamtri), a subsidiary of Chinese state aerospace group Avic, was placed on a watch list by the US Department of Commerce last year because of alleged dealings with companies owned by Li Fangwei, also known as Karl Lee, a Chinese national wanted by the US for selling missile technology to Tehran.

Imperial College, London and Birmingham University are among a number of western organisations and companies that have signed research agreements with Avic and Bamtri, covering aerospace technologies, mainly the development of lighter, stronger materials. Birmingham’s research programme, undertaken with western aerospace companies such as Airbus and EADS, ended before Bamtri’s inclusion on the US watchlist.

The questions over Bamtri underline the potential pitfalls of the UK government’s rapid expansion of trade and investment with China, which has recently invested in sensitive British industries such as nuclear power and telecoms. They also highlight the difficulty in carrying out due diligence given the opaque nature of many of the companies concerned.

Imperial confirmed it was collaborating with Bamtri on two research centres that opened in 2012. Its website says the project, with funding of £2.5m, is aimed at “forming lighter and stronger aircraft components” along with advanced computer modelling to improve manufacturing processes.

Asked about the programme’s future given Bamtri’s inclusion on the US watch list, the university said the collaboration “supports fundamental, non-classified research into new materials and manufacturing methods which could help develop lighter, safer and more efficient commercial aircraft”.

While there is no evidence technology supplied by either university reached Iran or that they supplied militarily sensitive items or know-how, a study by Project Alpha, a research institute at King College London specialising in proliferation matters, says there are few practical ways to prevent such leakage.

“Avic’s business model is dual-use,” said Nick Gillard, a Project Alpha analyst. “They are a civilian aircraft maker and a military aircraft maker and distinguishing between the two sides of their business is difficult, even for experts.”

He added that Bamtri has a “level of opacity which could cause concern”, and has made no effort to explain its alleged links to Mr Li.

Bamtri was founded in 1957 and according to its website was cleared for highly secret weapons development in 2011. Bamtri and Avic declined interview requests and did not respond to faxed questions.
"Avic’s business model is dual-use. They are a civilian aircraft maker and a military aircraft maker and distinguishing between the two sides of their business is difficult, even for experts"

- Nick Gillard, Project Alpha analyst

In 2006, according to a 2009 US State Department cable published by WikiLeaks, US officials said they suspected Bamtri’s export unit of involvement in attempts by Pakistan to obtain precision machinery for its Shaheen missile project.

US and UK experts have in the past criticised China for lax enforcement of non-proliferation sanctions against Iran, a signatory of several UN arms control treaties but not the Missile Technology Control Regime, signed by 34 western countries.

The US did not give a detailed explanation for why Bamtri was among nine entities placed on the commerce department’s Entity List in April 2014, according to a US statement, “for their roles in supplying Iran’s ballistic missile programme through the Chinese proliferator Li Fangwei”.

US businesses require a specific licence to export certain goods to companies on the Entity List.

Imperial said it had conducted due diligence of Avic before signing the research agreements and had liaised with the UK’s Export Control Organisation on the project’s compliance. ECO confirmed that Imperial had consulted with it in 2012, and said it had given “factual advice”.

Imperial said it would “continue to monitor the situation and to liaise with the ECO on its relationship with Avic and Bamtri”.

Mr Gillard said the episode highlighted the potential risks of sharing research and technology with foreign partners, particularly in China.

“This is the compliance landscape that western universities now find themselves in,” he said. “Many of the physical sciences can be misused for WMD [weapons of mass destruction] purposes and universities and academics must be aware of associated risks, particularly when conducting applied research in partnership with companies with imperfect compliance records.”
"This is the compliance landscape that western universities now find themselves in. Many of the physical sciences can be misused for WMD purposes"

- Nick Gillard

Mr Li operates from Dalian, near the North Korean border. Last year, the US Federal Bureau of Investigation put out a reward of $5m for information leading to his arrest but he appears able to conduct normal business in China.

Asked about Mr Li’s alleged trading with Iran, Chinese officials respond that they are only able to enforce the law — and many of the companies and front companies linked to Mr Li have not violated Chinese export controls.

A string of front companies linked to Mr Li has supplied items to Iran such as fibre-optic gyroscopes, guidance systems and hard to obtain alloys, according to a US indictment against Mr Li from 2009. Iran is believed to be manufacturing many items for its ballistic missile programme domestically but experts say foreign help is critical to the effort.

Mr Li was last interviewed in 2013 by Reuters, when he said he had long since ceased to engage in trade with Iran.