Front companies, embassies mask N.Korean weapons trade – U.N.
BY JAMES PEARSON
SEOUL Wed Mar 12, 2014 7:36am IST
(Reuters) – North Korea has developed sophisticated ways to circumvent
United Nations sanctions, including the suspected use of its embassies
to facilitate an illegal trade in weapons, a United Nations report
issued on Tuesday said.
It said North Korea was also making use of more complicated financial
countermeasures and techniques “pioneered by drug-trafficking
organisations” that made tracking the isolated state’s purchase of
prohibited goods more difficult.
The report, compiled by a panel of eight U.N. experts, is part of an
annual accounting of North Korea’s compliance with layers of U.N.
sanctions imposed in response to Pyongyang’s banned nuclear weapons and
missile programmes. The panel reports to the U.N. Security Council.
“From the incidents analysed in the period under review, the panel has
found that (North Korea) makes increasing use of multiple and tiered
circumvention techniques,” a summary of the 127-page report said.
China, North Korea’s main trading partner and diplomatic ally, appeared
to have complied with most of the panel’s requests for information.
Some independent experts and Western countries question how far Beijing
has gone in implementing sanctions, although the report did not
specifically address that issue.
Beijing has said it wants sanctions enforced.
Much of the report focused on North Korea’s overseas trade networks,
rather than its relationship with China.
The panel said it found a relatively complex “corporate ecosystem” of
foreign-based firms and individuals that helped North Korea evade
scrutiny of its assets as well as its financial and trade dealings.
Several U.N. Security Council diplomats said the North Korean sanctions
committee was still weighing the report.
They also described it as a detailed but unsurprising report that
offered confirmation of Pyongyang’s well-known methods of skirting
However, two diplomats said the council was unlikely to take any action
in the immediate future based on the report’s findings.
EMBASSIES UNDER SCRUTINY
North Korea’s embassies abroad play a key role in aiding and abetting
these shadowy companies, the report said, confirming long-held
suspicions of the international community.
In some of the most comprehensive evidence presented publicly against
Pyongyang’s embassies, the report said the missions in Cuba and
Singapore were suspected of organising an illegal shipment of Cuban
fighter jets and missile parts that were seized on a North Korean
container ship in Panama last July.
It included secret North Korean documents addressed to the ship’s
captain which offered detailed instructions on how to load and conceal
the illegal weapons shipment, and make a false declaration to customs
officers in Panama.
“Load the containers first and load the 10,000 tons of sugar (at the
next port) over them so that the containers cannot be seen,” said the
document, translated from Korean.
Panama seized the ship, named the Chong Chon Gang, for smuggling
Soviet-era arms, including two MiG-21 jet fighters, under thousands of
tonnes of sugar. After the discovery, Cuba said it was sending
“obsolete” Soviet-era weapons to be repaired in North Korea and returned
Chinpo Shipping, a firm that the report said was “co-located” with the
North Korean Embassy in Singapore, acted as the agent for a
Pyongyang-based company that operated the vessel, and North Korean
diplomatic personnel in Cuba arranged the shipping of the concealed cargo.
Singapore’s Foreign Ministry said its policy is to fully implement
United Nations sanctions, adding that it has been cooperating with the
U.N. experts ever since learning in January that a Singapore-registered
company was implicated in the case.
“The government of Singapore immediately launched an investigation of
this case,” a ministry spokesman said. “We are unable to share any
further information at this juncture as our investigations are ongoing.”
A North Korean Embassy official, reached by telephone, denied the
Singapore Mission had engaged in any wrongdoing. The embassy had
recently moved from the address listed in the report, added the
official, who declined to give his name.
A Reuters reporter who visited the address could not find the embassy,
just Chinpo Shipping. A receptionist said the head of the firm was not
available to comment.
It was after work hours in Cuba when the report was released.
North Korea has gone to great lengths to mask the origin of its merchant
shipping fleet by reflagging and renaming ships, the report said,
particularly after the introduction of tightened U.N. sanctions in early
2013 that followed the country’s third nuclear test.
Most of the registered owners of the ships are small companies that
rarely own more than five vessels, meaning Pyongyang is able to keep its
fleet running if a ship or shipping company is seized or has its assets
Under the myriad U.N. sanctions, North Korea is banned from shipping and
receiving cargo related to its nuclear and missile programmes. The
importation of some luxury goods is also banned, along with the illicit
transfer of bulk cash.
North Korea has fostered a complicated corporate network outside the
international financial system that it uses to buy both banned and
permitted goods, the report added.
The panel cited an example of an “unusually complex” transaction
involving a contract by Air Koryo, the North’s national carrier, to
purchase new aircraft in 2012.
It said 109 payments were structured through eight Hong Kong-registered
companies which asserted they were trading partners of Air Koryo and
were wiring funds they owed it.
The purchase of civilian aircraft is not prohibited under U.N.
sanctions, but some of the companies appeared to have been recently
formed shell entities, the report said, and suggested such activity
could be used as a test-run for illegal transactions.
North Korea is also still dependent on foreign suppliers for its missile
programmes, the report said, referring to a long-range rocket salvaged
by South Korea that contained parts originating from China, the United
States, the former Soviet Union, South Korea, the United Kingdom and
Switzerland. The rocket was fired out to sea in December 2012.
A shipment of missile components sent from China and seized by South
Korea in 2012 was destined for Syria, an investigation by the panel also
The panel said it had also investigated reports that Myanmar, Eritrea,
Tanzania, Ethiopia, Somalia and Iran might have bought North Korean weapons.
(Additional reporting by Rujun Shen in Singapore and Louis Charbonneau
in New York; editing by Dean Yates and G Crosse)
Source: Front companies, embassies mask N.Korean weapons trade – U.N. |