US moves against nuclear trading...

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New York prosecutors joined the Obama administration yesterday in shutting down a China-based network that allegedly supplied Iran's nuclear and missile programmes with the unwitting aid of some of Wall Street's biggest banks.

The move comes as Washington seeks to slow down Tehran's progress towards nuclear arms capability, and President Barack Obama tries to win time for possible negotiations with Iran. It may also prove a test of the administration's relationship with Beijing, which has so far been unenthusiastic about sanctions on Tehran.

Robert Morgenthau, the Manhattan district attorney, unsealed an 118-count indictment, accusing Li Fang Wei, a Chinese national, of setting up front companies to disguise the illegal sales.

The indictment claims that Mr Li, also known as Karl Lee, used different names and the front companies to access the US bank system, using at least six big banks, including Citigroup, JPMorgan and Bank of America. The US Treasury banned individuals and companies from doing business with Mr Li, eight front companies and six alleged connected Iranian groups.

New York banks were allegedly used to provide dollar financing for sales of components to Iran in a complex chain that involved payments by Iranian banks in euros and dollar transactions by Chinese institutions. Under changes instituted by the Bush administration, Iranian banks are themselves no longer able to access dollar financing.

"Our banks have high standards and sophisticated systems to stop these transactions, but this conduct was specifically designed to defeat their systems," said Mr Morgenthau. "We may not be able to shut down Mr Li's factories, but we can shine a spotlight on his conduct. We want the public and the [US] leadership to understand the extent of the efforts by Iran to buy these banned materials."

He said he would seek Mr Li's extradition and did not know whether China's government was aware of the alleged scheme. The Chinese embassy in Washington did not immediately respond to a request for comment.