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N. Korea used complex network to evade sanctions: U.N. report

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(Globalpost/GlobalPost)

North Korea went to great lengths to defy sanctions by using a global network, including companies based in China and Singapore, to evade detection of a cargo ship that was discovered to be smuggling weapons last summer in waters off Panama, an unpublished U.N. report showed.

"The employment of so many role-players in support of the trip suggests a network of entities centrally managed working together to deflect scrutiny in order to evade sanctions by minimizing the DPRK's visibility in transactions," according to the 59 page annual report by the Panel of Experts that was seen Wednesday by Kyodo News.

The DPRK is an acronym for the Democratic People's Republic of Korea, the official name of North Korea.

While Chongchongang Shipping Co. is listed as the owner-operator of the vessel, the panel found that the actual operator-manager was Ocean Maritime Management Co., which is headquartered in Pyongyang, but also has offices in Vladivostok, Russia, and Dalian, China.

The company "played a key role" in arranging for the shipment of the concealed cargo of arms and related materiel, according to the report.

According to the report, OMM also made use of the Singapore based Chinpo Shipping Company Pte. Ltd. for payments of costs related to the voyage. The company shared the address with the North Korean Embassy in Singapore.

Last July Panamanian authorities were notified about the North Korea vessel Chong Chon Gang, which was initially stopped on suspicions of carrying drugs.

However, it later turned out to be carrying banned items, such as anti-aircraft missile complexes, missiles in parts and spares, two Mig-21 fighter jets and motors for that type of airplane, which were loaded in Cuba, and 10,000 tons of sugar, according to the Cuban Foreign Ministry.

Some members of the Panel of Experts travelled to Panama to inspect the contents of the ship and also visited Cuba to further investigate the allegations.

Havana had officially claimed that the shipment involved "obsolete defensive weapons" that were to be "repaired and returned."

The panel recently turned over the report to the U.N. committee that is charged with overseeing the implementation of Security Council sanctions imposed on North Korea, since it conducted underground nuclear tests in 2006, 2009 and most recently in 2013.

It was determined that both the shipment and the transaction between Cuba and North Korea constituted "sanctions violations."

Evidence found aboard the ship also pointed to the involvement of the North Korean staff in Cuba. Documents from the vessel indicate that the consignor of the sugar was Cubazucar and the consignee, Korean Central Marketing and Trading Corp.

While Cuba confirmed the arrangement, it declined to give the panel copies of the agreements citing confidentiality clauses in the contracts.

According to the report, the ship sailed around the western side of Cuba and docked in Havana from June 4-9 when it unloaded its cargo. After leaving the capital city, it spent time drifting north of Cuba and docked in the port of Mariel on the 20th, where it took on the arms and related materiel. On the 22nd it then sailed to Puerto Padre and later docked there to load the sugar. On July 5 it left Cuban waters, heading towards Nampo, North Korea.

The panel also determined that there was a "comprehensive planned strategy to conceal the existence and nature of the cargo."

Among other things there was a "concealment and disguise" of the ship's position as the automatic identification system was turned off to hide its location. While the logs showed multiple ports of call, they omitted the stop in Mariel.

North Korea is also making an "increasing use of multiple and tiered circumvention techniques," and through the first hand first time investigation of a North Korean ship the panel benefited by gaining an "unrivaled insight" into some circumvention techniques.

"Another aspect of this is that it probably makes both legitimate and illegitimate commerce for them (North Korea) to be even more difficult because one has to expect that shipping insurance rates for cargoes involving North Korea have gone up even further since then," Marcus Noland, executive vice president and director of studies at the Peterson Institute for International Economics, told Kyodo News in a phone interview.

"I mean shippers don't want to get involved in this kind of stuff...North Koreans increasingly have to rely on non-North Korean flagged ships to engage in both legitimate commerce and these smuggling activities," he said.

While the bulk of the report focused on the Chong Con Gang, it also contained information of other potential violations, including those related to bans on luxury goods, which have been widely reported in the media. Unlike past years no member states reported luxury goods violations.

As an example the panel was looking into Dennis Rodman, the former basketball star, who visited the country's young leader, Kim Jung Un, in September and December of last year and most recently in January and "may have taken luxury items as gifts."

There are questions about the presents he brought that included sporting goods, five bottles of vodka, one bottle of Irish whisky, two Irish whisky glasses and a decanter, and a Mulberry handbag.

The Panel of Experts, which is comprised of eight members, was initially formed in 2009. There are representatives from the five permanent members of the Security Council--Britain, China, France, Russia and the United States, as well as members from Japan, South Korea and South Africa.

Sources expect that the report will be made public next month.

==Kyodo

http://www.globalpost.com/dispatch/news/kyodo-news-international/140212/n-korea-used-complex-network-evade-sanctions-un-report