A New Zealand aircraft manufacturer has been fined nearly $75,000 after indirectly, but knowingly, exporting plane parts to North Korea, breaking strict United Nations sanctions imposed against the rogue nuclear state.
New details about what the Hamilton company knew about its plane in North Korea can also now be revealed by the Herald.
Pacific Aerospace pleaded guilty in August last year to three breaches of UN sanctions against North Korea and one charge under the Customs and Excise Act.
The charges stemmed from a Customs investigation after one of the company's PAC P-750 XSTOL aircraft was seen and filmed at a North Korean airshow in the city of Wonson, displaying the hermit state's colours during September 2016.
It was North Korea's first-ever public airshow and featured fighter jets and military helicopters.
A UN panel of experts also conducted an investigation.
Earlier this year, a sentencing hearing was heard for Pacific Aerospace before Judge John Bergseng in the Manukau District Court.
Judge Bergseng fined Pacific Aerospace $74,805 in his reserved judgment on May 29, which was released today.
He described the breaches as "reckless".
A victim impact statement from the Ministry of Foreign Affairs and Trade said Pacific Aerospace's failure to notify the Government of its plane being in North Korea had diminished New Zealand's credibility and ability to manage the impact on its international reputation.
The case was the first of its kind in New Zealand and one of only two worldwide of a similar nature, Customs prosecutor Jasper Rhodes said at the hearing.
He asked Judge Bergseng to impose a denunciatory sentence "that goes above and beyond" to send a strong message of deterrence.
The maximum fine available to the court was $100,000 for each breach of the sanctions.
The UN laws against North Korea ban a wide range of exports and services to the isolationist nation in response to its nuclear weapons programme.
Court documents obtained by the Herald show that in 2014 Pacific Aerospace started a joint venture enterprise in China with Beijing General Aviation Company (Beijing Aviation).
The P-750 was sold to Beijing Aviation on June 16, 2015, before being exported from New Zealand on September 12, 2015, and arriving in China on September 18, 2015.
However, the plane was on-sold to another company, Beijing Freesky Aviation Co. Ltd (Freesky), in November 2015.
Then, on Christmas Day that year, the P-750 was the flown into North Korea airspace, where it has remained ever since.
But Pacific Aerospace later knew its plane was in the possession of the secret state.
On January 6, 2016, Beijing Aviation notified Pacific Aerospace that its aircraft was now North Korea's, court documents read.
Pacific Aerospace also installed tracking data to the plane, which was turned on at all times, and were able to locate the whereabouts of the P-750.
A UN Security Council report and a chain of emails further suggests the New Zealand company knew its plane was in North Korea and had been contacted by the Chinese company for parts and training.
Beijing Aviation emailed Pacific Airspace about parts and requested that North Korean operators should be "trained ASAP for this aircraft operating".
Pacific Aerospace replied that they would co-ordinate training in China.
"[Name redacted] departs for China tomorrow and will co-ordinate with you to deliver the training in how to replace the flat motor," an email read.
The P-750's configuration can be changed and the aircraft used in a range of roles, including passenger/cargo; freight; agriculture, solid and liquid; fire-fighting; survey, geophysical and photographic; medical evacuation; skydiving; and ISR (intelligence, surveillance and reconnaissance).
Pacific Aerospace also made an erroneous declaration about accessories that were sent inside the aircraft, which included two medevac stretcher bases and a floor plug designed to attach survey equipment to, court documents show.
Rhodes said during the hearing that Pacific Aerospace's offending came through a commercial motivation to honour a warranty.
The warranty provision in the contract with Beijing Aviation placed an obligation on Pacific Aerospace to repair or replace defective parts within 500 hours' flying time or two years from the China delivery date.
On three occasions Pacific Aerospace exported aircraft parts to Beijing Aviation, knowing the parts - including an ejector, flap parts, and a flight instrument which displays propeller speed - would then be sent to repair the plane in North Korea.
Exporting offences, Rhodes said, ranged from the top end, weapons of mass destruction, to arms and then a list of luxury goods.
The aircraft parts come under luxury goods, Rhodes said, but were "near the most serious, if not the most serious on that list".
Pacific Aerospace's counsel Emmeline Rushbrook said the company recognised the seriousness of the offence and negative affect on New Zealand's global trade reputation.
But, Rushbrook continued there was nothing covert or undercover, or some "hidden scheme", to export the plane to North Korea through China.
Pacific Aerospace, which, dating back to its foundation companies, has been making small aircraft for more than 60 years, implemented changes to its corporate structure to ensure such a breach does not happen again.
Its chief executive is Damian Camp, who was not present at the hearing but has been at previous court appearances during the case.
Pacific Aerospace has been selling aircraft in China since late 2015 and in August the following year Camp announced the company had won a US$13 million order for five skydive aircraft to a Chinese Government sports agency.
In a statement from Pacific Aerospace today, the company said it understood that because the aircraft would be owned and operated by a Chinese company and remain on the CAAC aircraft register it would not breach the UN sanctions by being in North Korea.
The Waikato company said the supply of four replacement parts while the aircraft was in North Korea "most likely breached UN sanctions".
"We made a voluntary disclosure to Customs, fully co-operated with their investigation," the statement read.
"At all times our primary motivation in supplying the parts was to ensure that the aircraft was safe to operate and passengers and crew were not put at risk and we did so without the knowledge that we were in breach of UN sanctions.
"As an aircraft manufacturer we are legally obligated to ensure the on-going airworthiness of the aircraft that we produce. Unfortunately, in this circumstance fulfilling our safety obligations was in conflict with UN sanctions."
The company said it received no financial benefit in supplying the parts.
"We now better appreciate the complex sanctions issues associated with the export of aircraft and their parts, including in respect of indirect export provisions. We accept the sentence handed down by the court and we have put in place a number of policy and procedural checks to mitigate the risk of this happening again."
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