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ROK mitigates calls for additional sanctions-Japan in no hurry

Saturday, July 22nd, 2006

Lee opposes additional sanctions on N. Korea

South Korean Unification Minister Lee Jong-seok has taken another shot at the United States, saying that additional sanctions against North Korea were undesirable.

“The solution to the missile problem is for South Korea and the United States to collaborate and for China, Russia and other countries to cooperate […] We must think about whether what the United States does immediately equals to what the international community wants to do.”

Lee’s comments are in line with the South Korean government’s policy to expand sanctions against the communist regime and avoid creating further tension on the peninsula, government officials later explained.

Lee underscored the “South Korean government, as a valid member of the international community must make our own voice known as well.”

The Seoul government has been visibly cautious against slapping sanctions on North Korea, which test-fired a barrage of ballistic missiles July 5 despite international warnings.

“There must not be any more comments or actions that will heighten military tension on the Korean Peninsula,” Lee said.

He urged that it was most important to bring North Korea back to the negotiating table and not give it more time to further develop any weapons.

But inter-Korean relations continue to take on a sour note. Upon North Korea’s demand to halt the ongoing construction of a family reunion center in Mount Geumgang, most of the 150 South Korean workers were set to return home yesterday afternoon.

The United States, in the meantime, reportedly refused a visa application for Ri Gun, North Korea’s director-general of the North American Division at the Foreign Ministry.

Ri was set to attend a seminar hosted by Massachusetts Institute of Technology and Stanford University later this month.

The United States is stepping up pressure on the North through investigating its alleged money counterfeiting and by highlighting its human rights abuses.

Japan has also made moves to fortify its defense lineup against the possible threat from North Korea.

“To solve this, any form of dialogue must be accomplished (with the North),” Lee said. Seoul officials said bilateral talks between the United States and North Korea should be considered as a possibility.

Here is what the US has been up to: 6/22/2006 From the Joong Ang Daily:

U.S. and Japan press on with plans for sanctions

The recent visit to Seoul by a U.S. Treasury Department official and his stops in other regional capitals is a sign that Washington intends to tighten the financial noose around Pyongyang. After telling Korean officials that Washington might reinstate trade sanctions on North Korea that were lifted during the Clinton administration, Stuart Levey, the under secretary for terrorism and financial intelligence, moved on to Vietnam, Singapore and Japan. Sources in Seoul said yesterday that the main purpose of his trip was to search for bank accounts linked to illicit activities in which North Korea is engaged.

On Tuesday, the under secretary reportedly met with Vietnamese government and financial officials. A diplomat in Seoul said, “A bank account that is used by Hyundai Asan and North Korea has been under investigation there.”

Last autumn, Washington warned Banco Delta Asia in Macao of financial sanctions if it did not tighten its controls against money laundering; about 40 North Korean accounts there have reportedly been frozen. Hyundai Asan once sent its payments to North Korea to that bank; Pyongyang has directed the payments to other bank accounts in Austria and Vietnam since then.

After arriving in Tokyo on Thursday Mr. Levey reportedly gave officials there a list of persons and companies suspected of being linked to North Korea’s missile programs. The U.S. official also discussed with his hosts possible measures to block the flow of cash from ethnic Koreans in Japan to their homeland, a move Tokyo has said publicly it was considering.

In Singapore, at least one bank account has been linked to money sent by the Hyundai Group to North Korea before the 2000 inter-Korean summit between Kim Dae-jung of South Korea and Kim Jong-il. Ironically, Don Kirk, a reporter for the International Herald Tribune in Seoul, mentioned that account in an article he wrote shortly after the summit; Seoul reacted with fury and the matter lay dormant for some time. Prosecutors eventually announced in 2003 that $450 million had been sent to North Korea to induce Kim Jong-il to host the summit meeting.

As other nations study ways to step up pressure on North Korea, the Roh administration remains defiant in pursuing reconciliation. But even more important to North Korea than the South is China. Efforts to coordinate sanctions have centered on the North’s major ally and provider of food and energy; Beijing is seen internationally as having enough leverage to bring Pyongyang back to the six-nation nuclear negotiations.

But a senior Chinese general said Thursday there was little his government could do. Guo Boxiong, the vice chairman of China’s Central Military Commission, flatly told an audience at the National Defense University in Washington, D.C., that “China cannot possibly force the DPRK to do anything or not to do anything.”

Separately in Washington, the Bush administration is planning to implement the recent United Nations Security Council resolution on North Korean missiles and nuclear programs by enacting new legislation. Senator Sam Brownback, a Kansas Republican, told a news conference that a bill called the “North Korea Nonproliferation Act” is in the works. It would bar companies or individuals involved in North Korea’s mass weapons programs from doing any business with U.S. companies. The act is similar to legislation already in force, aimed at Iran in 2000 and then expanded to include Syria.

Defenses against missiles are also being given more attention. Washington and Tokyo are expected to sign an agreement on the operation of missile defense systems that includes commitments to more sharing of intelligence on North Korea. The Mainichi Shimbun, a Tokyo daily, added in an article yesterday that the agreement will allow Japan to receive U.S. satellite photos and data more quickly.

by Lee Chul-hee, Brian Lee

From the Associated Press (Via Korea Liberator)

Japan Won’t Rush Sanctions on North Korea
7/19/2006
Hiroko Tabuchi

Prime Minister Junichiro Koizumi said Wednesday Japan will not rush to impose more sanctions on North Korea, amid reports Tokyo may call for five-party talks on the sidelines of a regional security forum on the North’s nuclear ambitions.

Japan, meanwhile, plans to launch two spy satellites to monitor North Korean activity by the end of the year, a news report said.

Koizumi told reporters Wednesday Japan will wait for a further response from North Korea to a U.N. Security Council resolution and a Group of Eight summit statement condemning its missile test-launches.

“North Korea should take the resolution and the (G-8) chairman’s statement seriously. I think it’s better for us to wait and see,” Koizumi said.

He also urged Pyongyang to return to six-nation talks on its nuclear weapons program, which have stalled over the North’s anger at U.S. sanctions for alleged counterfeiting and money laundering activities.

Koizumi’s remarks seemed at odds with recent hardline remarks by Japan’s top government spokesman, as well as a report carried earlier Wednesday by Japan’s largest daily newspaper, the Yomiuri Shimbun.

Chief Cabinet Secretary Shinzo Abe suggested Tuesday that Tokyo had begun preparations to impose further economic sanctions on North Korea.

The Yomiuri said Wednesday Japan was considering banning cash remittances and freezing North Korean assets in Japan early next month. The newspaper did not say where it got the information.

Tokyo has so far imposed only limited sanctions — such as barring a North Korean trade ferry from Japanese ports — against North Korea in response to its missile tests.

A separate news report said Wednesday Japan has called for five-party talks, excluding Pyongyang, on the sidelines of the ASEAN Regional Forum next week to explore ways to resume stalled multilateral negotiations on the North’s nuclear ambitions.

It remained unclear whether the talks — potentially involving Japan, South Korea, Russia, China and the United States — would materialize, because Beijing hasn’t said whether it is willing to participate, Kyodo News agency reported. Kyodo did not say where it obtained the information.

Chun Young Woo, South Korea’s deputy foreign minister and chief South Korean delegate to the six-party talks, was slated to visit Japan for talks Thursday with Japanese counterpart Kenichiro Sasae.

Also Wednesday, Japan’s space agency, JAXA, said it would launch two more spy satellites using H-2A rockets, according to Kyodo. JAXA launched two spy satellites in March 2003 to monitor North Korea. JAXA officials couldn’t be reached for comment late Wednesday.

North Korea drew international condemnation this month after test firing seven missiles, including a long-range Taepodong-2 believed capable of reaching parts of the U.S.

On Saturday, the U.N. Security Council passed a resolution criticizing the missile tests and banning all U.N. member states from trading with Pyongyang in missile-related technology. The North has since rejected the resolution, warning of further repercussions.

Posted in Banking, Fiscal & monetary policy, Illicit activities, Japan, Ministry of foreign Affairs, South Korea, USA | Comments Closed

Are sanctions curbing DPRK illicit activities?

Friday, July 21st, 2006

From the Joong Ang Daily:

Experts say money squeeze on North is working

For 10 months, Washington has enforced a systematic plan to clamp down on cash going into North Korea. The measures are working, experts say.

Nam Sung-wook, a North Korea expert at Korea University, estimated yesterday that the recent measures have led to a 40 percent decline in North Korean leader Kim Jong-il’s income.

Since the 1980s, Kim Jong-il has regularly collected money from four sources: forged bank notes, arms sales, drug trafficking and money coming from ethnic Koreans living in Japan who acquire money by operating legal gambling casinos there.

Mr. Kim used the money to cement his hold on the North Korean elite, such as the military. Those in the right position received from the “Dear Leader” gifts ranging from German luxury cars to Japanese electronics.

However, since 2002, when the Bush administration started to tackle the issue with its North Korea Working Group, the situation changed and has squeezed the North. The U.S. group is composed of 14 government organizations, including the U.S. treasury department. Washington’s efforts against counterfeit money have yielded results: At the end of last year Irish national Sean Garland and six others were indicted for distributing North Korean-manufactured “supernotes.”

The North is believed to have produced annually $15 million to $25 million of forged money.

As a result of international pressure, one government official said it would be harder for the North to print new forged bank notes and circulate them.

The arms trade is also an important money maker for the North. However, since it sold 15 Scud-type missiles in December 2002 to Yemen, Pyongyang has not inked another arms deal. Sources said yesterday Pyongyang tried last year to sell missiles to African nations, but in light of Washington’s international call to prevent the transfer and sales of weapons of mass destruction, cautious African nations have distanced themselves from Pyongyang.

In the international arms market, Chinese-manufactured AK-47 assault rifles and other cheaper alternatives are being preferred over North Korean-made ones. The North’s drug trafficking is reportedly giving Pyongyang an annual income of $100 million. From 1998 to 2002 Japanese authorities seized 1,500 kilograms (3,300 pounds) of North Korea-manufactured philpone, a methamphetamine.

Nevertheless, a continued crackdown has narrowed the avenues of sales to organized crime groups such as the Japanese yakuza.

Money sent from the North Korea- backed Chongryon, the General Association of Korean Residents in Japan, amounted to 2 billion yen ($1.7 million) to 3 billion yen annually until 2002 with the money being shipped by a North Korean ferry.

However, since 2003, Tokyo has imposed regulations on the ferry, dropping the money flow to 1 billion yen per year. With the recent missile launch, Tokyo is now considering cutting off the money flow even more by strengthening the monitoring of insured postal parcels above a certain amount.

Posted in Arms shipment, Banking, Chongryun, Counterfeiting, Drug smuggling, Fiscal & monetary policy, Illicit activities, International Aid, Japan, Military, Political economy, South Korea, USA | Comments Closed

Macao bank contained personal accounts of DPRK elites

Thursday, July 20th, 2006

From the Korea Times:

US Ties Macau Bank to Kim Jong-il

WASHINGTON (Yonhap) _ The U.S. government has figured out most of North Korea’s transactions in a Macau bank and believes they were mostly personal dealings involving Pyongyang’s leadership, a diplomatic source said Wednesday.

Washington has studied North Korea’s transaction records with the Banco Delta Asia, where about $24 million in cash was deposited by North Korea, but frozen by U.S. sanctions.

The bank in the Chinese territory froze about 40 North Korean accounts last year after it came to the brink of bankruptcy as U.S. banks stopped their transactions with it in response to Washington’s claim that Pyongyang was laundering its illicitly earned money there.

The U.S. found that the bank has produced handwritten transaction data regarding North Korea in addition to official computer records, the source said on condition of anonymity. The bank seemed to have used written records of the North Korean transactions as a way to hide them from official view, the source said.

Posted in Illicit activities, USA | Comments Closed

“Good Friends” reports on DPRK real estate

Friday, June 16th, 2006

From the Daily NK:

‘Good Friends’, an organization for aiding North Korea, revealed on a newsletter of the 14th that, “The North Korean upper-class families usually live in the houses valued at from 27 million to 40 million won and have a bed valued at 300,000 won($100) and furniture at 800,000 won($267)”, and “some have housemaids in their houses”.

Furthermore, the upper-class families furnish with VCRs, vacuum cleaners and electronic heaters besides six home appliances (Refrigerators, sewing machines, TVs, washers, recording machines and electronic fans) that general North Koreans wish to have once in their lifetimes.

Plus, it added, “They spend 30,000 won in purchasing rice, pork, egg, Alaska pollack, various fruits and vegetables a month, and their total expenditure a month including other expenses amounts for more than one million won”.

It explained, “In the case of North Hamkyung province, their main sources of income are generally black market, drug traffics, curio dealing, wholesale carrying food and industrial products by car to Najin or Chonjin”, and “To get guaranteed, generally they closely connect with officials working at judicial authorities”.

According to the newsletter, however because most of the North Koreans maintain subsistence level, the gap between the rich and the poor are increasing.

It newsletter further explained that, “The gap between the rich and the poor varies according to areas, countries or cities”, and “This gap results from the distributional differences produced by productivities of each factory, operations, electronic situation, operational conditions of trains or cars, and demand difference of food, industrial products and necessities according to areas”.

Of the cities, Pyongyang is the most advanced city, Sariwon, Hamhung, Chongjin, Hoiryeong, Rajin, Shinuiju, Pyongsung are the second advanced cities, and the other cities are at the level of the subsistence.

In the case of North Hamkyung province, the upper middle class lives in houses valued at 1,500,000 won to 4 million won, and spend 100,000 won to 150,000 won in rice, pork, eggs, and some alcohol a month. Their main sources of income are some black markets, crossing a river, helps of relatives living in China, or business.

The low class can not even see rice, and generally lives on rice mixed with corns, corn noodles, vegetable soup. Their expenditure a month is around 30,000 won to 40,000 won.

Their main sources of income are trifling jobs such as vegetable sale, house repair or cleaning night soil. Although they want to do their own businesses, they have no money to do. Salaries are their only source to get some money, but they are not paid on time.

The lowest class of the elderly, the disable and Kotjebi(Street children) lives barely. They usually sleep in buildings, under bridges, garbage dumps, or riversides. Recently the people of the lowest class are increasing.

Posted in Illicit activities, Real estate | Comments Closed

Seoul may face fiscal challenge to future DPRK aid

Tuesday, May 23rd, 2006

From Yonhap:

By Lee Dong-min
WASHINGTON, May 22 (Yonhap) — South Korea is fiscally able to handle its economic aid to North Korea, but the situation may change in the future when it will be required to spend more on its social welfare system, a senior official at Moody’s suggested Monday.

Speaking at a symposium by the Institute for Corean-American Studies (ICAS), Thomas Byrne, vice president of the international credit rating agency, said he does agree that North Korea is headed to meaningful economic reforms.

South Korea is one of three nations whose geopolitical risks are considered in judging its credit rating. Israel and Taiwan are the others.

Divided since the end of the three-year Korean War in 1953, the Korean Peninsula remains tense and volatile as Pyongyang seeks nuclear weapons it claims it needs as a deterrent against possible U.S. attack.

According to Byrne, the situation keeps South Korea one notch below the credit rating it normally deserves.

In trying to ease the tension, Seoul has been trying to engage Pyongyang by providing food and other types of economic assistance. A recent project involves an industrial complex in the North Korean border city of Kaesong where South Korea’s smaller firms have built manufacturing plants to use North Korea’s cheap labor force to make their products more price-competitive.

Byrne said Moody’s assesses the fiscal implications of South Korea helping to keep North Korea’s debilitated economy afloat.

“In fact, the North Korean economy is more unstable now,” he said, citing hyperinflation, backfired currency reform efforts and minuscule international trade hovering at US$3 billion a year.

Seoul, along with Beijing, is a major donor to Pyongyang, but it may be pressured to think otherwise, according to the Moody’s official.

With its aging society and expected large expenditures in social welfare and health care, South Korea will need a larger domestic budget, he said.

“Domestic social welfare demands would compete with sunshine/co-prosperity policy if the latter continues to increase, or increase sharply in the future,” said Byrne.

Despite North Korean leader Kim Jong-il’s visits to China that many saw as his study of Beijing’s economic reform path, the Moody’s official didn’t see any significant signs.

“I don’t see any internally generated reform process,” he said. “North Koreans aren’t anywhere near the positions of embarking on policies of China… or Vietnam.”

Kaesong is, at least for now, more important for South Korea than North Korea and not enough to show that Pyongyang is changing, he said, “If there were five other Kaesongs in North Korea, then it may mean something to North Korea… then, maybe North Korea is changing,” Byrne said.

The tension over North Korea’s nuclear problem intensified with U.S. accusations that Pyongyang was counterfeiting American currency and dealing in contraband.

In September, the U.S. Treasury designated Macau’s Banco Delta Asia (BDA) a primary money laundering entity working for North Korea, saying the bank was abetting Pyongyang’s illicit financial activities.

Daniel Glaser, deputy assistant secretary of treasury, said there is “very little question” that North Korea was involved in counterfeiting U.S. dollars, mostly $100 notes commonly called “supernotes.”

“Every seizure of these notes has been linked to each other… all of them have involved distribution by North Korean diplomats,” he told the ICAS symposium.

He again denied that the action against BDA was in any way meant to affect the nuclear negotiations with North Korea.

“This is a new approach to U.S. national security,” Glaser said, emphasizing that it was under new laws and newly created offices that steps like those against BDA were coordinated.

Wendy Cutler, assistant U.S. trade representative, focused on upcoming free trade agreement (FTA) negotiations with South Korea that she hopes will have far-reaching effects beyond the two nations.

“This agreement will help underscore U.S. commitment to engage the Asian region … the U.S. is committed to developing robust trade relationships in Asia,” she told the symposium.

Seoul and Washington will hold their first formal FTA talks next month in Washington and hope to come up with a final draft by end of this year.

Cutler, who heads the U.S. side in the negotiations, noted that FTAs require political decisions that defy strong domestic opposition.

FTA opponents in South Korea plan to come to Washington to protest the launch of the negotiations, alarming law enforcement officials of both countries.

Cutler said despite press reports of such opposition, polls indicate general support.

“It’s important to know that the Roh (Moo-hyun) administration and the majority of the Korean population and business community support the FTA,” she said.

A U.S. trade official, reacting to reports of protesters coming to Washington, cited the same polls.

“You need to keep in mind that based on polls in Korea, overall sentiment in Korea is strong support for the FTA,” the official said.

Posted in Foreign direct investment, Illicit activities, International trade, Kaesong Industrial Complex (KIC), South Korea | Comments Closed

U.S. accuses DPRK of importing missle parts

Sunday, May 21st, 2006

From Yonhap:

North Korea continues to buy raw materials and components from various foreign sources for ballistic missiles despite announcing in 1998 that it would suspend missile tests, according to a recent U.S. intelligence document.

“North Korea is nearly self-sufficient in developing and producing ballistic missiles, yet continues to procure the required raw materials and components from various foreign sources,” the report said.

The “Report to Congress on the Acquisition of Technology relating to Weapons of Mass Destruction and Advanced Convention Munitions” was submitted by the office of the director of national intelligence to Congress earlier this month.

The report said that in 2004, North Korea continued to abide by its voluntary moratorium on flight tests adopted in 1998 and reaffirmed in May a pledge made in September 2002 to extend the moratorium beyond 2003.

The 15 intelligence services, including the Central Intelligence Agency (CIA), also expressed caution about the kind of sensitive material North Korea could potentially sell.

“We remain concerned about North Korea’s potential for exporting nuclear materials or technology. At the April 2003 trilateral talks in Beijing, North Korea privately threatened to export nuclear weapons. During the third round of six-party talks on the North Korean nuclear issue in June 2004, Pyongyang included a ban on nuclear transfers in its nuclear freeze proposal,” the report said.

It added that inspectors from the IAEA (International Atomic Energy Agency) recovered two tons of uranium hexaflouride from Libya in May 2004 that was linked to the North.

Posted in Arms shipment, International trade, Military | Comments Closed

Chinese-DPRK border update

Thursday, May 18th, 2006

Froom the Daily NK:
5/18/2006

Approximately one million crossed the DPRK/PRC border back and forth during the food shortage. Today, the border area is where most recent, accurate information about North Korea can be obtained.

China stationed soldiers from Shunyang military district to the North Korea-China border three years ago. The border line of North Korea including Yalu River and Tumen River is 1,376.5 km. North Korea-China border is 1,360km, and North Korea-Russia border line is 16.5km.

North Korea has 100-110 thousand strong ground forces on the border area in order to control the inflow of information from outside and the illegal smuggling and border transgression of North Korean defectors. It means that each soldier guards 14m.
Ground Forces on the border increased rapidly after the treaty of friendship between China and South Korea

The reinforcement of the border in the 1990s has much to do with the change in international politics including the demise of the Cold War the growth of friendship between China and South Korea. Until the early 1990s when North Korea sustained the “blood alliance” with USSR and China, North Korea only focused on increasing the military power on north of the 38ty parallel.

Kim Jong Il said in regards to the treaty of friendship between South Korea and China, “38th parallel is outpost for the military power, while the [chinese] border is outpost for the ideology”. North Korea reorganized the military to reinforce the border control.

In 1992, the Department of Military Mobilization in various parts of North Korea recruited high school and middle school students, office workers and farmers to organize the border control.

In 1992, the responsibility for border control and coastal defense was delegated from National Security Agency to Border Control Command under Ministry of People’s Armed Forces. The Coast Guard was assigned under military base under Ministry of People’s Armed Forces in each district. Border Control Command was located in Ganggye, Jagang Province, but was moved to Pyongyang in 2002.
The Military Force of the Border Control

A North Korea defector Heo Yong Sun (43) who used to be a border guard says there are 4 Brigades, including Division 10 (located at Baeksa dong) in ShinEuiJoo, Brigade 32 in Chongjin, Brigade 37 in Jagang Province, Brigade 44 in Yanggang Province. Division 10 at ShinEuijoo has 14 battalions, which is qualified for division.

Mr. Heo says the border control brigades have 11 battalions on average. One brigade operates 4,000-5,000 soldiers and one battalion has 350 soldiers. There are 3 companies of 100 soldiers under battalions, and companies cover platoons and guard posts of 30 soldiers.

Mr. Lee Chul Young (34) who used to be a commander of a military district of Border Control and entered South Korea in 2004 says, “There are cavalry brigade and tank brigade under the Border Control Command, and the military force amounts to over 10~30 thousand soldiers. Companies have 250~300 soldiers and one battalion has more than 1,000 soldiers, which shows that the scale of military force is different from other People’s Armed Forces.

The smallest unit of Border Control is a platoon. One platoon is in charge of 3km, and one platoon has 12 guard posts. Guard posts have round of inspections during the day, and at nights, 2~3 soldiers are on a stakeout. They are on guard in three shifts a day.

For night time guards, 3~4 soldiers are mobilized including the commander of the platoon, and one agent from National Security Agency is included. A post for the stakeout is a half-underground cave where the soldiers can have a 120 degree view on China.

Border guards are equipped with AK Automatic Rifle-58 and 68. A commander and high level soldiers are equipped with cartridge and low level soldiers are supplied with blank cartridge. On the border, gunfire is preferably restricted, and when someone wanted by the National Security Agency intrudes the border line, gunfire is allowed.

One advisor from National Security Agency was assigned for each platoon since 1999. However, the advisors encouraged illegal border transgressions with bribery, which caused the Ministry of People’s Armed Forces to assign one advisor at each company since May 2002.

Border guards aim to “Earn Three Hundred Thousand Won” causing costs to rise for transgressions.

The biggest wish for the border guards is to make money while in the military. They are on the lookout for border transgressors rather than protecting the border from intrusion of spies. Until 1990s, the soldiers tried to “earn thirty thousand Won”, but it changed to three hundred thousand won because the currency depreciated.

Border Control Command shifts around the border guards at Pyongan, Yanggang and Hamkyung Province every two years in order to prevent frequent corruption of the soldiers. It is understood that two years is enough time for the soldiers to get down to cooperating with the locals to receive briberies.

Mr. Lee Chul Young said, “On fortunate days, it is possible to earn couple hundred thousand won. Commanders are involved in smuggling through Foreign Currency Earning Organizations, and lower officials make small money through controlling the border transgressors”.

The cost for border transgression rose after the order to control the border. In 2004, the transgressions cost 300 Yuan($40), but it rose to 500 Yuan ($65) and to 800 Yuan ($120) now.

North Korean defectors who crossed the Tumen River recently said, “You have to pay 500~1,000 Yuan for lower officials and more than 1,000 Yuan for the Commanders (Generals)”.

Transgression in the winter is the cheapest. However, around March when the ice melts on the river, the border guards have to go through the difficulty of wearing rubber pants and helping the transgressors cross the river, which costs more than 1,000 Yuan.

Posted in China, Illicit activities, Military | Comments Closed

Caught smoking in the boys room?

Monday, May 15th, 2006

From the Joong Ang Daily:

During the last two years, Japanese maritime police officers have frequently caught foreign ships leaving North Korean ports trying to smuggle fake cigarettes, the Japanese newspaper Tokyo Shimbun reported.

Citing intelligence data from satellites, the newspaper said that the fake cigarettes were at times transferred onto other ships waiting in the South Korean port of Busan or near Taiwanese waters. The foreign ships were from Cambodia, Mongolia and Taiwan.

The top cigarette brand forged by North Korea was the American Marlboro. Japanese brands, such as Mild Seven and Seven Star, as well as British tobacco brands were also included in the list.

The Japanese newspaper said in its report over the weekend that North Korean manufactured cigarettes use high-quality wrapping paper, while the tobacco leaves used in the forged cigarettes are inferior to the genuine products.

Japanese authorities did not confiscate the goods because they were not intended to be smuggled into Japan. Nevertheless, authorities have notified foreign intelligence organizations. The Japanese Maritime Police is conducting security checks on all ships that pass through Japan’s exclusive economic zone.

Experts say a crackdown on forged cigarettes in China has led to an influx of machinery used for making those cigarettes into the North, which has started to manufacture them on a mass scale. Increased production of fake cigarettes by the North is said to make up for decreased profits from drug trafficking due to a crackdown by governments. Washington recently reported that the North earns more money selling fake cigarettes than it does on any of its illicit activities.

From the Donga:

North Korean imitations of Japanese cigarettes being transported to South Korea and Taiwan were verified by a foreign vessel inspection by the Japanese maritime security force.

The Japanese maritime security force did not confiscate the North Korean imitation cigarettes, however, since they were not being smuggled into Japan. Instead, they traded information with foreign authorities.

Two kinds of cigarettes from Japan, Mild Seven and Seven Star, and several more American and English cigarettes such as Marlboro were found aboard a ship sailing from North Korea. These cigarettes have different packaging, but consist of the same ingredients.

America has recently pointed out imitation cigarettes as North Korea’s biggest source of illegal profits. Japan’s maritime security force’s view is that as smuggling drugs or stimulants became difficult, North Korea chose imitation cigarettes as a new source to obtain foreign currency.

The maritime security force gave chase to a North Korean vessel in 2001, when it neglected orders to stop and fled in front of Kagoshima Island. After this incident, it has executed maritime inspections against foreign vessels sailing within its exclusive economic zone (EEZ).

According to the maritime security force, imitation cigarettes have been found on Cambodian, Taiwanese, and Mongolian ships sailing from North Korea since two years ago.

Information from reconnaissance satellites and sailors’ statements leads us to believe that imitation cigarette carriers load their goods at North Korea’s Wonsan, Cheongjin, or Najin harbors and transfer them to Taiwanese or Korean mafia vessels in the Taiwanese or Busan sea.

Hundreds of thousand of packs of cigarettes are loaded onto every ship, and these are sold at 60% of the price of authentic ones. The profit from these cigarettes, minus the cost of materials reaches up to tens of millions of yen.

A Japanese newspaper commented that due to the Japanese goods circulation system that uses vending machines at a fixed price, imitation cigarettes are not brought into Japan.

The Mild Seven series is a popular brand that was the most sought-after cigarette in Taiwan last year, and is among the five most popular cigarettes in Korea. Marlboro, which had the most loadage in imitation cigarettes, was exposed thirteen hundred times between 2002 and 2005.

Mass production of cigarettes supposedly began when China’s cigarette producing machines flew into North Korea as crackdowns on cigarettes in China became harsher.

Posted in Illicit activities, International trade, Tobacco | Comments Closed

South Korean, Japanese aiding DPRK smuggling

Monday, May 15th, 2006

From the Japanese Asahi:

A South Korean man with alleged connections to a sunken North Korean spy ship is suspected of masterminding the smuggling of nearly 1 ton of illegal drugs from North Korea, police said over the weekend.

The man, Woo Si Yun, 59, was arrested Friday and sent to prosecutors Sunday, along with gangster Katsuhiko Miyata, 58. Police also raided a North Korean freighter at Sakaiminato port in Tottori Prefecture.

Police suspect the two men smuggled hundreds of kilograms of stimulants in October 2002 by having plastic bags filled with drugs tossed from the freighter into waters off Matsue, Shimane Prefecture. The two prefectures are on the Sea of Japan coast, across from the Korean Peninsula.

The 54-year-old captain of a Japanese fishing vessel that allegedly picked up floating bundles of drugs was also sent to prosecutors Sunday on suspected violations of the Stimulant Drug Control Law.

Police suspect Woo carried out similar operations on two other occasions in 2002, for a total of almost 1 ton in smuggled drugs. The drugs, worth 60 billion yen on the streets, were most likely sold to gangs.

The total volume is 2.3 times more than the total stimulants confiscated in Japan in all of 2002. It amounts to about 33 million individual doses.

Woo’s bank accounts showed payments from known gangs dating back to 1998.

Similar smuggling attempts from North Korea, involving large quantities of drugs tossed into the sea to be picked up by accomplices, have grown since the 1990s, police said.

Friday’s arrests also confirmed a North Korean spy ship that sank off Kagoshima Prefecture on Dec. 22, 2001, after a gunbattle with the Japan Coast Guard, had ties to drug smugglers, police added.

A cellphone recovered from the salvaged ship had records of calls to Miyata’s gang office in Tokyo’s Itabashi Ward, they said. The prepaid phone also showed Woo was one of at least 10 contacts the crew had in Japan. Police suspect Miyata arranged the smuggling and sale of the drugs to underworld groups in Japan.

Before it sank, the ship’s crew were seen tossing sacks and drums overboard that police suspect contained drugs.

The spy ship is also believed to be the one used in a separate smuggling case in 1998, according to the coast guard.

Woo is believed to have traveled to Beijing and elsewhere about 40 times between 2001 and 2004.

Police suspect he may have entered North Korea via Beijing to arrange drug deals.

Besides three allegedly successful smuggling operations in 2002, Woo is also suspected of playing a role in another botched attempt. About 240 kilograms of stimulant drugs were found floating off Tottori Prefecture from November to December 2002.

Smugglers apparently failed to pick up the floating packs.

The same North Korean freighter Woo used reportedly was sighted in waters off Matsue around the same time, police said.

According to joint investigations by Tokyo and Tottori police, Woo received several bank transfers from gangs, thought to be payments for drugs.

In one case, a Fukuoka Prefecture-based gang paid Woo 8 million yen in December 1998, while a Saitama Prefecture group paid 10 million yen in August 2003, police said.

Woo was convicted of smuggling stolen cars in 2004 and served a prison term. He was recently released.(IHT/Asahi: May 15,2006)

Posted in Drug smuggling, Japan, South Korea | Comments Closed

DPRK claims that US sanctions not that effective

Friday, May 12th, 2006

From the joong ang:

WASHINGTON – North Korea’s deputy ambassador to the United Nations, Han Song-ryol, dismissed the effect of U.S. financial sanctions on his country, saying that it is cooperating economically with China and Russia. Mr. Han spoke with the Joong Ang Ilbo correspondent here by phone, and said Washington was simply patting itself on the back in claiming the sanctions were effective.
“We have endured sanctions by the United States for 50 years. More sanctions won’t bring any special changes,” Mr. Han said, repeating that North Korea would step up its nuclear deterrence.
Told that there was a perception here that the North’s external financial resources had been drained, Mr. Han replied with a reference to his country’s juche (self-reliance) philosophy. He said the North’s economy was not export-oriented, but was fully self-sufficient. If foreign banks stopped dealing with the North, he said, it wouldn’t matter much.
Washington has threatened to impose financial sanctions on a Macao bank it says has engaged in money laundering for North Korean drug and cigarette smuggling. The bank has frozen assets in some accounts linked to North Korea. And despite Mr. Han’s professed indifference to those sanctions, Pyongyang has refused to return to nuclear negotiations until they are lifted, and specifically until the reported $24 million at the Banco Delta Asia is returned.
Mr. Han said Washington was accusing the North of counterfeiting U.S. currency and imposing sanctions without proof. “The assertion that there are secret funds in Swiss bank accounts is also of the same substance. Hasn’t the Swiss government announced that Washington’s claim is groundless?” asked Mr. Han. (It has not gone that far publicly, but the Swiss ambassador in Seoul said recently that evidence of questionably obtained assets in Swiss banks would be required for authorities to act.)
He said that Washington was raising human rights issues and financial sanctions because it saw no chance of getting favorable results in the North Korean nuclear talks. Mr. Han said that the recent acceptance by Washington of six North Korean defectors was also a move to press Pyongyang.
When asked what he thought on Washington’s claim that photographs existed of North Korean diplomats exchanging counterfeit money, the deputy ambassador said that if that were the case, CNN would already have aired them. He said Pyongyang’s policies would not be affected even if U.S. officials favoring negotiations saw their influence weakened and hardliners gained the upper hand.