[Cankor] Report #248

[cankor at cankor.ca]

Dear subscriber,

Welcome to issue #248 of the CanKor Report.

The question about access to information within the DPRK has elicited 
another response to QUIDNUNC, this time by Sue Hickey, North and South Korea 
coordinator for Amnesty International Canadian Section (English Speaking) 
and director for AICS's national Executive Committee.

One CanKor reader made an online order of the book "Inside North Korea: 
Diary of a Mad Place," by Norbert Vollertsen. He received a reply from 
Amazon canceling the order, stating, "Although we'd expected to be able to 
send this item to you, we've since found it won't be released after all." 
Does anyone know why this book is not being released?

Send your replies to editor at CanKor.ca.

But also, if you have any questions that may stump or amuse or intrigue our 
many subscribers and contributors, we'd like to hear from you.

The CanKor team.

For articles not original to CanKor, direct links are available in the
Contents section, should you wish to consult the originals on the internet.

If the links no longer function, you may refer to the full text articles
appended to the issue.

For back issues, archives and other content, please visit our website:
http://www.cankor.ca
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CANADA-KOREA ELECTRONIC INFORMATION SERVICE

CanKor # 248

Friday, 12 May 2006
*************************************************

The United Nations' World Food Programme (WFP) reaches agreement with the 
DPRK to resume food aid, albeit on a much smaller scale.

The United Nations High Commissioner for Refugees (UNHCR) announces plans to 
step up efforts to "protect and support North Korean defectors in China and 
Mongolia".

This week's CanKor FOCUS examines fallout after the US Treasury Department 
published a notice designating Macao's Banco Delta Asia as a "primary 
money-laundering concern" under a section of the post-Sept. 11 law, the 
Patriot Act. Macao government takes control of Banco Delta Asia, a Swiss 
firm sees its assets frozen; the US dollar soars in the DPRK's black market; 
Japan exerts its own style of economic pressure and the DPRK warns outright 
sanctions constitute a declaration of war.

CanKor OPINION features a presentation by Nigel Cowie, General Manager of 
the majority foreign-owned joint-venture Daedong Credit Bank based in 
Pyongyang, in which he describes how the financial allegations have shifted 
the DPR Korean commercial landscape.
*************************************************

Contents:
1.   WFP REACHES AGREEMENT WITH DPRK
     http://select.nytimes.com/mem/tnt.html?emc=tnt&tntget=2006/05/11/world/asia/11north.html&tntemail1=y

2.   UNHCR WEIGHS IN ON DPRK REFUGEE-DEFECTORS
     http://english.donga.com/srv/service.php3?bicode=050000&biid=2006050833858

FOCUS: Repercussions of economic pressures on DPRK
3.   DOLLAR SOARS IN DPRK BLACK MARKET
     http://english.chosun.com/w21data/html/news/200604/200604040020.html

4.   USA PUNISHES SWISS FIRM FOR DPRK CONNECTION
     http://english.chosun.com/w21data/html/news/200603/200603310009.html

5.   JAPAN REVOKES TAX BREAKS FOR DPRK ORGANIZATIONS
     http://home.kyodo.co.jp/

6.   DPRK WARNS JAPAN AGAINST SANCTIONS
     http://www.kcna.co.jp/item/2006/200603/news03/29.htm#3

7.   NO MORE GAMBLING ON DPRK
     http://www.latimes.com/news/nationworld/world/la-fg-macao6apr06,0,3764749,full.story?coll=la-home-headlines

OPINION
8.   FINANCIAL ALLEGATIONS AND WHAT THEY MEAN
     Original article, copyright Nigel Cowie

QUIDNUNC: Readers ask and respond to common and uncommon questions
*************************************************

1.   WFP REACHES AGREEMENT WITH DPRK
     Associated Press (AP), 11 May 2006

The World Food Programme has reached agreement with North Korea to resume 
food aid, but the operation will be smaller than it was before its 
suspension in December, the agency said Thursday. The new programme will 
feed 1.9 million of the "most needy" people in the North, Tony Banbury, the 
agency's Asia regional director, said. That is much less than the 6.5 
million people the agency was feeding in past years. The World Food 
Programme suspended aid in December after the North Korean government asked 
the agency to shift its focus to economic development aid.
*************************************************

2.   UNHCR WEIGHS IN ON DPRK REFUGEE-DEFECTORS
     by Soon-Taek Kwon and Jong-Koo Yoon, Donga Ilbo, 8 May 2006

On May 5, the United Nations High Commissioner for Refugees (UNHCR) said 
that it will step up efforts to protect and support North Korean defectors 
in China and Mongolia this year. At a press conference held at the 
Washington National Press Club on that day, the UNHCR announced its 2006 
work plan. In particular, the UNHCR urged the Chinese government to prepare 
a proper law covering the refugee issue and strengthen its legal protection 
and aid for North Korean defectors applying for asylum.

High Commissioner Antonio Guterres said that although most of the defectors 
in China are illegal aliens who crossed the border not for political 
reasons, but for hunger and a better life, they shouldn't be repatriated to 
North Korea. Guterres further stated that the Korean government has agreed 
to accept all of defectors who initially wanted to head for the USA but were 
denied access in the status determination process by the US government. In 
an interview after the conference, Guterres said, "The Korean government and 
the UNHCR agreed to make sure no defectors in Southeast Asia are abandoned 
without protection."

In addition, US assistant secretary of state for population, refugees and 
migration Ellen Sauerbrey noted that the US has contacted the Chinese 
government in order to prevent defectors in China from being forcibly 
repatriated to North Korea. Sauerbrey added that the US is significantly 
concerned about women being trafficked to China and that North Korean women 
married to Chinese should be granted Chinese citizenship.

Meanwhile, regarding the UNHCR statement of the Korean government's decision 
to accommodate defectors who failed to get asylum status, the Ministry of 
Foreign Affairs and Trade (MOFAT) said yesterday that the government didn't 
agree with the UNHCR on that matter. In its reporting material, the MOFAT 
said, "The Korean government has been accepting all of defectors from the 
perspective of humanitarianism and brotherhood."

A MOFAT official remarked, "If a defector wants to come to Korea, he or she 
will be handled in accordance with the due process, no matter whether he or 
she has been disqualified from the US asylum determination process," and 
explained that the fact that a defector originally wanted to settle in the 
US but was rejected doesn't affect the decision process by Korean 
government. The official said that the precondition to accept defectors is 
their mindset and intentions, and that mentioning that Korea embraces all 
defectors denied access to the US can be misunderstood as saying that Korea 
will accept all of them regardless of their intentions.
*************************************************

FOCUS: Repercussions of economic pressures on DPRK

*************************************************

3.   DOLLAR SOARS IN DPRK BLACK MARKET
     Chosun Ilbo, 4 April 2006

While North Korea's closed economy may hide most of the effects of financial 
sanctions the US has imposed on the communist country since September, 
sources just back from the North say the black-market value of dollars is 
skyrocketing there. The official exchange rate in the North is W150 per 
dollar. But in the black market, the greenback had soared from around W2,000 
to W2,600 by late last year. "It varies from region to region, but the 
dollar now seems to have risen to W3,000 because of the financial 
sanctions," a South Korean official said.

A North Korean defector says in some black markets in Pyongyang and Shinuiju 
$1 will fetch W3,800-4,000 and rising. An expert on North Korea said rumor 
has it that some people are hoarding dollars in the expectation that their 
value will keep going up. Given that the average monthly income of North 
Korean workers is around W3,000, the surge has effectively reduced their 
wage to less than $1 a month.
*************************************************

4.   USA PUNISHES SWISS FIRM FOR DPRK CONNECTION
     Chosun Ilbo, 31 March 2006

The US has frozen the assets of a Swiss company it accuses of aiding North 
Korea in alleged "proliferation" of nuclear weapons technology. Washington 
on Thursday froze the accounts of Kohas AG and its president Jakob Striger. 
The measure, taken by executive decree, is based on a charge that Kohas had 
dealings with a North Korean company whose assets were frozen last year, 
Korea Ryonbong General Corp. This is the second time Washington has made 
good a threat to punish companies from third countries for their alleged 
involvement in a range of crimes the North is accused of. Last September, it 
banned all US firms from transacting with the Macau-based Banco Delta Asia 
in an effort to strangle the North's cash flow.

Meanwhile, the US has slammed China for repatriating a North Korean refugee 
using the pseudonym Kim Chun-hee. In an unusual move, the statement issued 
Thursday by President George W. Bush's staff from Cancun, Mexico reminded 
China of its obligation under international treaties not to return North 
Korean asylum-seekers without allowing them access to the UN High Commission 
for Refugees.

Washington's special envoy on human rights in North Korea, Jay Lefkowitz, 
earlier promised this year would be a "turning point" in the USA's own 
failure to grant asylum to a single North Korean refugee, saying 
"discussions are underway" to see if any can be admitted. On Thursday, 
Lefkowitz criticized the joint Korean Kaesong Industrial Complex, where he 
said North Korean labourers work without guaranteed rights for less than 
US$2 a day. He suggested an independent organization like the International 
Labour Organization should inspect the complex and report its findings to 
the UN.

A spokesman for South Korea's Unification Ministry, Lee Gwan-se, protested 
against the remarks on Friday. "The lowest monthly paycheck for labourers of 
the industrial complex stands at US$57.5 or around $2 a day, but that figure 
is far higher than what ordinary North Korean workers in other regions are 
paid," Lee said. He added working conditions in the Kaesong complex are in 
line with ILO standards.
*************************************************

5.   JAPAN REVOKES TAX BREAKS FOR DPRK ORGANIZATIONS
     Kyodo News Service, 3 April 2006

The government urged local authorities to review their tax breaks for 
facilities owned by pro-North Korean organizations in a written notice dated 
Saturday, Chief Cabinet Secretary Shinzo Abe said Monday. Following a court 
ruling in February against such preferential tax treatment, the internal 
affairs ministry has been promoting its policy to the local governments 
concerned and repeated it in writing at the April 1 start of fiscal 2006, 
Abe said in a press conference.

Of the 49 local governments hosting the head office or regional branches of 
the General Association of Korean Residents in Japan, 32 were offering 
reduced property tax rates on the grounds their facilities are akin to 
community centers or public assembly halls, according to a ministry survey 
conducted in January.

In a Feb. 2 ruling, the Fukuoka High Court denied preferential tax treatment 
for a hall, located in Kumamoto City, affiliated with the association, also 
known as Chongryon, saying the facility is not used enough for the benefit 
of the general public to be eligible for such treatment. The Kumamoto 
municipal government, which has extended the tax treatment for the hall, has 
filed an appeal.

The notice urged local governments to conduct thorough reviews to see how 
such facilities are used and make "appropriate responses," according to the 
Ministry of Internal Affairs and Communications. On the tax break issue, the 
governing Liberal Democratic Party has also stepped up pressure on the local 
governments involved in conducting reviews by asking its local chapters to 
influence assemblies.

The government is strengthening its law enforcement measures in an attempt 
to increase pressure on North Korea to help resolve the country's abductions 
of Japanese nationals and other human rights issues. Voices are growing 
particularly within the LDP calling for economic sanctions on North Korea, a 
step the government views as the ultimate means of pressuring Pyongyang.
*************************************************

6.   DPRK WARNS JAPAN AGAINST SANCTIONS
     Korean Central News Agency (KCNA), 28 March 2006

The Japanese ultra-right conservative forces are contemplating setting up 
two working departments for sanctions against the DPRK under the pretext of 
the "abduction issue" and presenting a "bill on sanctions against north 
Korea" to its Diet session. Rodong Sinmun Tuesday observes in a signed 
commentary in this regard: It is an invariable intention of the Japanese 
ultra-right conservatives to isolate and stifle the DPRK. They have long 
seriously ruffled the DPRK's feathers by crying out for pressure upon it 
over the "abduction issue" and the like.

To cite just a few examples, they released a statement to put sanctions upon 
the DPRK while setting out a five-phased "plan for economic sanctions 
against north Korea". They have kicked off a row after publishing and 
distributing even booklets on the "abduction issue". The above-said racket 
kicked off by them against such backdrop goes to clearly prove that their 
hostile moves against the DPRK have gone to extremes. This is nothing but an 
escalation of the anti-DPRK reckless hostile moves stepped up by the 
Japanese ultra-right conservatives in collusion with the USA, an indication 
of their frantic pursuance of its line.

The DPRK has clarified more than once that it will regard any sanctions 
against it as a declaration of war and take a corresponding measure for 
self-defence. The Korean people regard the country's sovereignty as their 
life and soul and will never allow anyone to infringe upon it even a bit. 
Japan would be well advised to bear in mind that the above-said behaviour of 
Japan will only lead to its self-destruction.
*************************************************

7.   NO MORE GAMBLING ON DPRK
     by Barbara Demick, Los Angeles Times, 6 April 2006

By the time financial authorities cracked down on North Korea's dealings 
here, it was like the classic moment of feigned ignorance in "Casablanca" 
when Capt. Louis Renault declares, "I'm shocked, shocked to find that 
gambling is going on in here." For decades, the former Portuguese colony was 
renowned as the favorite haunt of counterfeiters, drug runners and spies, a 
kind of real-life "Casablanca" whose old-world cobblestone sidewalks and 
smoke-filled baccarat parlors probably hatched more intrigues than any 
script could contain.

Banks here handled millions of dollars on behalf of North Korea's isolated 
communist government, which has been long accused by the United States of 
selling illegal drugs to raise hard currency. The nation's founder, Kim Il 
Sung, and his son, current leader Kim Jong Il, allegedly kept their 
ill-gotten gains in Macao. And a North Korean terrorist confessed to 
plotting the 1987 bombing of a South Korean airliner from a hotel here 
overlooking the South China Sea.

But now the welcome mat has been rolled up, and the North Koreans, who 
didn't have many friends to begin with, find themselves distinctly unwelcome 
in this autonomously governed Chinese territory. In February, Macao's 
banking regulators froze $25 million worth of North Korean accounts in the 
Banco Delta Asia, a bank the US Treasury Department had accused in September 
of helping the North Korean government launder money and distribute 
counterfeit US currency. A North Korean company, Jokwang Trading Co., long 
believed to be a front for illicit activities, closed its headquarters on 
the fifth floor of an office building near the bank. Most of its personnel 
have relocated to Zhuhai, just across the border in China proper, business 
sources here say.

"You used to see the North Koreans around here all the time with their Kim 
Il Sung badges, but suddenly they're gone," said Seok Yeong Chong, a South 
Korean businessman living here. He said their numbers had dropped from more 
than 100 to only a handful. "They gave the Macao government too much of a 
headache."

Businesspeople here say the North Korean presence became a liability at a 
sensitive time. The North Korean government in Pyongyang is more unpopular 
than ever internationally because of its pursuit of nuclear weapons. At the 
same time, China is trying to develop Macao into a gambling destination to 
rival Las Vegas. After Macao reverted to Chinese control in 1999, the 
Chinese government busted the casino monopoly of billionaire Stanley Ho, a 
long-standing friend of the North Korean government and the owner of a 
casino in Pyongyang.

The first US-owned casino in Macao, the Sands Macao, opened in 2004, and a 
$1.2-billion casino operated by Las Vegas mogul Steve Wynn is scheduled for 
a September opening. Even Ho's family - he has passed many of his casino 
interests to his daughter, Pansy - has struck a deal with MGM Mirage for 
another new casino.

"Today people here want to do business with the Americans, not the North 
Koreans," said Jose Rocha Dinis, director of the Jornal Tribunal de Macau, a 
Portuguese-language newspaper, as he drove along a waterfront cluttered with 
construction cranes. "When they are seeking investment from the outside, 
they can't let the North Koreans get in the way."

There is still a cloak-and-dagger feeling to Macao, an hour from Hong Kong 
by high-speed ferry. When you walk into the downtown Watson's, the local 
equivalent of a Rite Aid, prominently displayed for sale are paper 
shredders. At the pink colonial Club Militar, where members of the business 
establishment convene for multi-course lunches accompanied by red wine and 
cigars, one banker arriving for his Friday lunch explained, "We bankers in 
Macao are very busy, so we don't have time to ask questions about other 
people's business." But Americans are bringing with them not only Las Vegas 
glitz but also more modern notions about transparency and accounting.

"Macao had to clean up its act," said David L. Asher, a former State 
Department official who specialized in North Korea and was one of the 
architects of the action against the Macao bank. "There are $5 billion in 
annual gaming revenues at stake. They have to work with the United States."

The freezing of the $25 million in the Banco Delta Asia has been a 
particularly big blow for a government scraping by for lack of hard 
currency. North Korean banks kept large sums of money in the Macao bank. 
Now, with those accounts suspended and other banks frightened off by the 
Treasury Department action, North Korea has been largely cut off from 
international trade.

"The impact is severe," said Nigel Cowie, a British banker based in 
Pyongyang who is general manager of the Daedong Credit Bank, serving mostly 
the tiny foreign community in the North Korean capital. In a telephone 
interview from Pyongyang, Cowie said that North Korea, because it had no 
credit and a weak banking system, dealt almost exclusively in cash, which 
might have created the appearance that it was laundering money when it was 
not.

"I can't speak for what everybody was doing, but I can say that in our case, 
a lot of legitimate business has been hurt," Cowie said.

The North Koreans blame the US for their woes in Macao. A senior North 
Korean diplomat, Li Gun, visited Washington last month on what appeared to 
have been a futile attempt to get the Macao freeze lifted. He left angry, 
declaring that North Korea would boycott negotiations on its nuclear program 
until the banking situation was resolved.

"Under this continuing US pressure, we can't go back to the negotiation 
table," Li said.

US officials protest loudly that the crackdown in Macao is unrelated to the 
prolonged struggle over nuclear weapons. In a news release issued in 
response to the North Koreans' accusations, the Treasury Department said it 
wished to clarify that its actions against Banco Delta Asia were "intended 
to protect American institutions and not serve as sanctions against North 
Korea."

Denials notwithstanding, the Bush administration has been angling for ways 
to apply pressure without seeking full-fledged United Nations sanctions - 
which almost certainly would be opposed by North Korea's traditional allies 
in China and Russia, nations that have veto power - since Pyongyang pulled 
out of the Nuclear Nonproliferation Treaty in 2002. Until now, China has 
staunchly refused to apply any pressure to North Korea.

What's happening in Macao has been the result of a delicate diplomatic dance 
involving the United States, China and the government of Macao. US officials 
had been complaining to local authorities about North Korean activities in 
Macao and getting little response, people involved with the case say. Then 
last year, the Treasury Department decided to use the Patriot Act. In 
September, the department published a notice designating Banco Delta Asia as 
a "primary money-laundering concern" under a section of the post-Sept. 11 
law that is designed to cut off funding to groups that present a security 
risk.

Panicky banking customers lined up in front of the silver-facaded 
headquarters in downtown Macao. In a matter of six days, they had withdrawn 
$133 million out of $390 million in deposits. The Macao government 
intervened and took control of the bank. Victor Chan, the lead spokesman for 
the Macao government, said there wasn't much choice in the matter. "There 
was a withdrawal of such large proportions that it triggered a takeover of 
the bank," he said. However, Macao's financial authorities have reacted very 
aggressively since. They have drawn up new money-laundering laws. They have 
frozen without interest 50 accounts belonging to North Korean banks, trading 
companies and individuals.

According to a letter sent in February by their lawyers to the Treasury 
Department, there is likely to be a criminal investigation into the bank and 
the money will be confiscated if Macao courts determine the accounts were 
involved in illegal activities. Banco Delta Asia was a small, family-owned 
bank headed by a portly and colorful local politician, Stanley Au. 
Businesspeople who know him here say he was an easy target because he was 
not particularly well connected in Beijing and, unlike the better-known 
Stanley Ho, not vital to Macao's economy.

"It was just a shot across the bow to go after Banco Delta Asia," said David 
Green of the Macao office of PricewaterhouseCoopers, the auditing firm. 
"They could pick on a bank that had an obvious relationship with North Korea 
that everybody could afford to lose."
*************************************************

OPINION

*************************************************

8.   FINANCIAL ALLEGATIONS AND WHAT THEY MEAN
     by Nigel Cowie. General Manager, Daedong Credit Bank, 11 April 2006

My name is Nigel Cowie, I'm GM of DCB, and I'd like to take this opportunity 
to address with you the recent financial allegations and actions against the 
DPRK by the US Treasury. Where they have acted against specific companies, I 
can't make any comment, except perhaps that we have not seen any evidence of 
any wrongdoing by them, because I don't know anything about those cases, but 
I can tell you what they mean in the case of our bank and the budding 
legitimate foreign business community in the DPRK which we serve.

May I quickly first say a few words of introduction about me and about 
Daedong Credit Bank, our customers and their activities, before moving on to 
the US financial allegations and measures; and then address the use of cash 
in the DPRK, as this is important with regard to the financial allegations, 
then address the allegations themselves. I would also like to end by 
throwing in a few suggestions of our own.

DCB Daedong Credit Bank is a majority foreign-owned, and foreign-managed 
joint venture commercial bank, providing standard, high street banking 
services in foreign currency to foreign-owned or invested commercial 
business customers - current accounts, remittances, foreign exchange and 
lending. Most of our customers are importing goods, these may be the 
consumer goods on sale in the hard currency shops, or larger scale 
commodities, mainly food related; also raw materials, in the case of the 
joint venture companies. A very few are exporting, mainly perishable goods 
like seafood and agricultural products where they need to receive payment 
before goods arrive. However, we are not allowed to operate accounts for 
state-owned companies, and since these are the ones handling high value 
exports like minerals, most of our remittance business consists of outward 
remittances to pay for imports.

FINANCIAL MEASURES
On 15 September last year, the US Treasury announced the designation of 
Banco Delta Asia, Macau, as a "primary money laundering concern" in 
connection with transactions for DPRK customers, and proposed steps to deny 
the bank access to the US financial system. BDA immediately suspended all 
transactions with its DPRK customers and shortly thereafter voluntarily 
handed over management to the Macau Monetary Authority. The balances of 
these customers were transferred into special suspense accounts pending the 
outcome of various audit and other investigations. These investigations have 
now been completed, although the results have not been made public, and it 
is still not clear if and when the balances will be released. Subsequently, 
other overseas banks closed the accounts of their DPRK bank customers, after 
receiving warnings from the US Treasury.

When we asked them, one of our correspondent banks explained that 'This was 
an across-the-board policy decision due to external developments/factors, as 
you may be aware of, where present or future requirements may preclude us 
from our ability to service the accounts in an efficient manner'. However, 
US Treasury Department Under Secretary Stuart Levey is quoted in Newsweek 
last week as saying that as more business people and governments learn about 
the risks of dealing with the DPRK, the campaign will have a 'snowballing 
... avalanche effect'. In this regard, he would appear to be true. We have 
heard from foreign customers conducting legitimate business here, who have 
been told by their bankers overseas to stop receiving remittances from the 
DPRK, otherwise their accounts will be closed.

CASH -- A KEY POINT NOW
The way most of these customers get paid by local buyers is in cash. They 
bring the cash to the bank; we check the cash for counterfeits and credit it 
to their accounts with us. Then at the end of the month or whenever, we 
remit the funds out to their suppliers overseas. But because they are mainly 
importing, we tend to accumulate cash here in Pyongyang, and sometimes have 
to physically deliver it to banks overseas. There is nothing in any way 
tainted with this cash, and it is not counterfeit, it represents funds from 
legitimate business activities by legitimate customers, and the only reason 
it comes in cash is because of the peculiar circumstances in the DPRK. 
Irrespective of whether or not any illegal activities went on, other banks 
in the DPRK will have the same problem, whereby they have to make cash 
deposits overseas.

We have the most updated equipment, as well as highly experienced cashiers, 
for detecting counterfeit notes. While we do come cross them, they are not 
that common. And, contrary to many perceptions, it is possible to detect the 
so-called 'supernotes'. All the banks in the DPRK, so far as I am aware, 
view counterfeit notes as a nuisance, as, just like anywhere else, people 
have to have confidence in the cash they are handling. When the 'supernotes' 
first appeared, our staff worked closely with those of Daesong bank and the 
Foreign Trade Bank to find ways of detecting them. Banco Delta Asia DPRK 
banks have, as the Treasury announcement correctly observed, been using 
Banco Delta Asia for decades. One of the reasons for that is because they 
were prepared to provide banking services to DPRK customers, but also 
because they accepted cash transactions.

MONGOLIA STORY
One further incident occurred specifically to us, which I would like to 
relate, and you can draw your own conclusions. At the end of last year, we 
opened new accounts with Golomt Bank of Mongolia, in Ulaanbaatar. We 
discussed in detail with them procedures for handling cash transactions in a 
legally correct manner, as well as providing them with a copy of our 
anti-money laundering procedure manual, a manual that, incidentally had been 
accepted by our other correspondent banks.

On 21 February, our designated couriers transported a cash deposit to 
Mongolia, consisting of USD1 million and JPY20 million; the couriers were 
met, as previously agreed, by Golomt Bank officials together with local 
police at Ulaanbaatar International Airport. However, the couriers were then 
detained by Mongolian intelligence agents who took them, and the cash, to 
the Bank of Mongolia (central bank); the couriers were accused of importing 
counterfeit currency. DCB's couriers were detained outside the Bank of 
Mongolia for most of the night, whilst the intelligence agents claimed to be 
checking the authenticity of the cash. The next day they alleged that 
USD61,700 was suspected to be counterfeit; the alleged fakes were sent, 
together with two additional notes randomly taken from each remaining 
USD10,000 bundle of cash, for further examination at an unspecified 
location.

On 22 February the Mongolian press carried false reports, based on a leak, 
to the effect that "North Korean diplomats had been intercepted smuggling 
USD1 million and JPY200 million (not JPY20 million) into Mongolia". These 
reports were subsequently carried by international news agencies. Our 
Treasurer was dispatched to Mongolia, where he was subsequently joined by 
me, to protest this action and demand the return of its funds. On 7 March, 
after holding the cash for 14 days claiming they were still checking it, the 
intelligence officials in a meeting with us finally conceded that all the 
notes were genuine; the cash was released. The money was deposited with the 
Golomt Bank of Mongolia on 9 March, as had originally been intended.

By the way, I would like to add that this is not a complaint against the 
Mongolian authorities. All the meetings I attended were most cordial, and I 
had the impression that all the officials I met were just trying to do their 
job. At the final meeting with Mongolian intelligence, they appeared rather 
embarrassed that they had been given incorrect information.

EFFECTS OF THESE MOVES ON DCB
Once again, I can only speak for DCB, and don't know what Banco Delta Asia 
was doing with other customers. For our part, we are only conducting 
legitimate business, but have nonetheless been seriously affected by these 
measures. A large amount of our and our customers' money - not just in USD, 
but in all currencies - has effectively been seized, with no indication of 
when they'll give it back to us. This makes it more difficult to manage the 
bank's working capital, as well as that of those customers whose money was 
frozen. It has subsequently resulted in a sharp fall in turnover - more than 
50%, I estimate - as customers' own working capital is tied up, and they are 
reluctant to continue using the banking system in case something like this 
happens again. It has also obliged us to expend great efforts to find new 
bank accounts, and make our side of the story heard to protect our and our 
customers' business. It has also greatly increased the cost of operations as 
the banking transactions have become more complicated.

So, there is a clear effect on legitimate business. I can't speak about the 
illegitimate business, because we don't have any, but I would imagine that 
anyone conducting illegal business could find a way around this, because 
they don't have to comply with internally instituted procedures like we do. 
For example, I was approached by someone overseas offering to take cash 
deposits of any size we like, and have it re-sent on to wherever we want in 
consignments of less than $10,000 so that they are not spotted by overseas 
banks' money laundering detection procedures. I declined this offer because 
we are not about that sort of banking.

Which brings me to the point that there is a danger of legitimate businesses 
being squeezed into routes that are more normally used by real criminals, 
and the result of these actions against banks doing business with the DPRK 
being that criminal activities go underground and harder to trace, and 
legitimate businesses either give up, or end up appearing suspicious by 
being forced to use clandestine methods.

SUGGESTION
We and other EBA members are trying to make an infrastructure for 
normalizing economic relations with the outside world. This is not helping. 
During a March 7 interview with Arms Control Today, Michael Green, until 
recently President George W. Bush's National Security Council senior 
director for Asian affairs, stated that the United States will continue to 
take action against illegal North Korean activities regardless of the six- 
party talks' status. But he added that Washington thinks such measures 
complement the talks by forcing Pyongyang to turn to legitimate economic 
activities for revenue. Our point is that that may be impossible.

The US Treasury department's full report on Banco Delta Asia, as reproduced 
in the Federal Register (20 September 2005) states that "It is difficult to 
determine the extent to which Banco Delta Asia is used for legitimate 
purposes. Although Banco Delta Asia likely engages in some legitimate 
activity, the [Treasury] Secretary believes that any legitimate use of Banco 
Delta Asia is significantly outweighed by its use to promote or facilitate 
money laundering and other financial crimes."

I would far rather get everything out in the open, reporting full details of 
all our transactions to any monitoring authorities that need to know. That 
way there is nothing to hide, all parties are satisfied, and everything is 
legal, open, transparent and respectable. I am quite sure that the other 
DPRK banks would be willing to do the same. Indeed, at a meeting on 7 March 
between US Treasury officials and the DPRK's deputy Director-General for 
North America, Mr. Li Gun, Mr. Li proposed that the DPRK be allowed to open 
a USD bank account with a US bank - something we also would support.
*************************************************

QUIDNUNC
In this section of CanKor, we invite readers to send questions, answers, or 
responses. Answers should be under 150 words and may be edited for space.

*************************************************
HOW MANY PEOPLE IN NORTH KOREA HAVE UNFETTERED ACCESS TO INFORMATION ABOUT 
THE WORLD OUTSIDE THE DPRK?
*************************************************

At my last Amnesty International conference in Berlin we (the coordinators 
responsible for the DPRK) had a guest speaker, a German doctor who had 
worked with an aid agency for several months in the DPRK. He said that they 
didn't have very much access to "outside information." Radios are "soldered" 
so that you can't tune into anything except the Voice of Korea (which I get 
on my shortwave; it's an awful station! Except for the nice choirs, it's all 
speeches by and about the Dear Leader.) There was a documentary by Sunny Yi 
on CBC Radio a couple of years ago and her experience was that the average 
DPR Korean didn't have much contact with the outside world. She showed 
pictures of celebrities and they didn't know who they were.

Sue Hickey, North and South Korea coordinator for Amnesty International 
Canadian Section (English Speaking) and director for AICS's national 
Executive Committee
*************************************************

WHAT NOW?
A CanKor reader tried to order the book "Inside North Korea: Diary of a Mad 
Place," by Norbert Vollertsen online. He received a reply from Amazon 
canceling the order, stating, "Although we'd expected to be able to send 
this item to you, we've since found it won't be released after all." Does 
anyone know why?

[Answers should be e-mailed to: editor at CanKor.ca]
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End CanKor # 248

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