Yonhap
4/27/2007
South Korea’s state debt-restructuring agency may take over Banco Delta Asia (BDA), which is now virtually facing bankruptcy over accusations of engaging in money laundering for North Korea, diplomatic sources here said Friday.
Last month, the U.S. Treasury Department ordered all U.S. banks and companies to sever ties with the BDA, putting the Macao-based lender at risk of closing its business as global banks and companies are reluctant to do financial transactions with it.
“It is difficult for the U.S. to lift the sanctions on the BDA….so an option to let South Korea’s state-run agency take over the lender is now being reviewed,” a diplomatic source said.
According to the source, a way for the Korea Asset Management Corp. (KAMCO) — which buys bad debts from financial companies and turns them around — to purchase bad loans from the BDA is being studied, thus preventing the lender from going bankrupt.
KAMCO has been seeking to make inroads into overseas countries by taking over bad debts from troubled financial institutions.
North Korean funds frozen at the BDA, estimated at US$25 million, have not been transferred to the communist state so far, holding up progress in a landmark agreement over the North’s denuclearization.
Pyongyang said it will not implement the first 60-day denuclearization measures unless the funds are transferred to another bank, so the North can confirm the free transfer of its funds in the international financial system, upon which the U.S. Treasury Department has a strong influence.
North Korea has said that it will take the first steps toward nuclear dismantlement as soon as it confirms the release of its funds, which have been frozen at Banco Delta Asia since September 2005.
Under the Feb. 13 agreement, North Korea pledged to shut down its main nuclear reactor and allow U.N. inspectors back into the country within 60 days. In return, North Korea would receive aid equal to 50,000 tons of heavy fuel oil from South Korea.
