Brokers Without Borders

On 11 December 2009 a 35 ton cache of conventional weapons left North Korea bound for Iran. The following day the arms were intercepted and seized by authorities in Thailand. In an unexpected twist it was soon discovered that the plane chartered to carry out this illegal transfer was leased by a New Zealand registered shell company. To date those who arranged the transfer have not been held accountable.

The case demonstrates that the existing international arms control system is not adequately combating illicit brokering. Illicit arms brokers continue to use global networks of companies and individuals to exploit regulatory gaps between jurisdictions to carry out their transactions with relative impunity. An effective Arms Trade Treaty, supported by robust national legislation and regional cooperation, will provide solutions to closing these gaps and stopping the irresponsible trade in deadly weapons.

Since 2006, more than 2,000 people each day have died as a result of armed violence, and thousands more have had their human rights violated and their livelihoods undermined by the irresponsible trade and use of deadly weapons. The current international arms control system is failing to adequately regulate the arms trade and hold arms brokers and dealers accountable for their actions. As a result weapons continue to be transferred into environments where they are undermining development and fuelling human rights abuses.

Oxfam has produced this report to examine publically available information about one specific case of illicit arms brokering. Through an analysis of the case and the enabling factors that allowed this illicit transfer to occur, the report identifies key lessons about how states can work together at the domestic, regional and international level to find solutions for the problem of illicit brokering.

Oxfam recommends the New Zealand Government:

• Implement the recommendations of the recent inquiry into New Zealand’s company registration requirements and introduce appropriate legislation to enhance transparency and accountability.
• Tighten company registration requirements to ensure that detailed information on the beneficial ownership and control of legal persons is readily available to the competent authorities in a timely manner.
• Amend regulations that implement UN Security Council Sanctions to extend their application to companies registered in New Zealand and the off-shore activities of such companies.
• Develop and implement stand-alone export controls legislation, including express controls on arms brokering activities, including third country brokering.
• Launch a full investigation into the alleged violation of UN Sanctions Regulation 2006/382, especially in relation to the role of SP Trading as charterer of the aircraft. Full investigation in this case will provide a strong deterrent to possible future misuse of New Zealand companies by unscrupulous arms brokers.