NZ firm that breached UN sanctions waits for fine

A Hamilton-based aircraft company that has admitted breaching UN sanctions by exporting replacement parts to North Korea will have to wait to learn how much it has been fined.

Pacific Aerospace Limited sold a 10-seater plane worth over $1 million to a Chinese firm, FreeSky Aviation, in 2015.

It was later spotted at an air show in North Korea, painted in military colours.

The company has admitted three breaches of the United Nations sanctions against North Korea when it sent three replacement parts to China, knowing the plane was in North Korea at the time.

It now faces a maximum fine of $100,000 per charge.

It's the first time a company has been prosecuted for UN sanctions breaches in New Zealand.

Customs prosecutor Jasper Rhodes told the court the company knew the three replacement parts sent to China were going to be sent on to North Korea.

He said at all times the company was able to track the plane and knew it was in North Korea. It also refused to send staff to fit the parts, citing international sanctions against North Korea.

He said the sanctions were in place to prevent military goods and luxury items being exported to North Korea. Included in the list of luxury items are fountain pens, caviar, and honey.

But Mr Rhodes said aircraft and aircraft parts would be at the top of the list.

He said the plane, known as XL-199, had an American navigation system on-board.

"The concern and the reason for preventing such things being sent to the DPRK is to prevent these types of things getting into their hands and prevent them from being used for any purposes and particularly military purposes."

'There was nothing covert'

However, the company's lawyer Emmeline Rushbrook said it believed the plane was temporarily in North Korea for tourism purposes and there was no deliberate breach.

There was no evidence the plane or the parts were to be used for a military purpose, she said.

Judge Bergseng challenged that: "Isn't there an inference to be drawn in the fact that it's painted with the North Korea flag being flown at a military air show?"

Ms Rushbrook said she was unable to comment on what the plane was doing in the airshow.

Pacific Aerospace knew the sanctions existed but not that there were regulations against indirect exports.

Ms Rushbrook said the parts were covered by a warranty and they believed the plane was being operated by a Chinese company and was registered in China.

"There was nothing covert or hidden about how Pacific Aerospace exported the parts to China."

Ms Rushbrook said the company co-operated with the United Nations, pleaded guilty at an early point and had since made changes to make sure no further breaches would take place.

Judge Bergseng has reserved his decision.

What happened when

• June 2015: Pacific Aerospace plane XL-199 sold to Beijing General Aviation Company with a warranty on defective parts to be replaced inside 500 hours flying time or with two years - which ever happened first.
• September 2015: The plane, XL-199, exported from New Zealand to China.
• November 2015: The plane was onsold to Chinese company Beijing Freesky Aviation Co and taken to North Korea for "tourism purposes".
• December 2015: The plane is flown to North Korea.
• January 2016: Pacific Aerospace informed the plane was in North Korea and has not left since. Later that month Pacific Aerospace shipped the first replacement part (a flap actuator) to China. A flap actuator is a small mechanical assembly essential to the flap system used in take-off and landing.
• May 2016: Pacific Aerospace sent the second package to China that included a Digital NP Indicator and an ejector. A Digital NP Indicator is a cockpit instrument that indicates propeller speed. An ejector is part of the aircraft fuel system that delivers fuel to the system.
• June 2016: The third package was sent to China containing a Digital NP RPM Indicator 2-1/4, which is a cockpit instrument that indicates propeller speed.
• September 2016: Widely reported in the media that a plane manufactured by Pacific Aerospace Limited was spotted at the North Korean air-show.