Tuesday, 13 March 2007

The elusive truth

The key reason why North Korea walked out on the September 2005 agreement reached at the six-party talks in Beijing was the economic fallout from accusations that a Macau-based bank was helping to launder and provide a safe haven for the ill-gotten gains of the Pyongyang regime. Legitimate businesses in the North Korean capital, many of them owned and operated by Europeans, vigorously protested the freezing of their accounts after the U.S. Treasury blacklisted the bank.

As part of the latest Beijing Agreement reached on Feb. 13, the U.S. Treasury promised to resolve the Banco Delta Asia issue once and for all. There has been widespread speculation that an official announcement will be made this week ahead of the next round of six-party talks in Beijing on Monday, 19th March. But while the North may get its money back, they may remain completely isolated economically.

"The U.S. Treasury Department will apparently cut the Macau-based Banco Delta Asia off from the U.S. financial system on Thursday. The Macau bank has been under suspicion of being a money-laundering channel for North Korea. The Treasury will announce final results of its investigation of North Korea’s US$24 million accounts with the BDA 18 months after it froze them in 2005."
(Full report: http://english.chosun.com/w21data/html/news/200703/200703130032.html)

The reported intention of the U.S. Treasury to continue punishing the Banco Delta Asia appears to be out of sync with the findings of numerous independent investigations. Except of course, the unpublished findings of the Treasury's own investigation.

"The U.S. Treasury has alleged that over many years Banco Delta Asia laundered money from North Korean weapons proliferation, cigarette counterfeiting and drug trafficking, and dealt in counterfeit U.S. dollars printed by North Korea.
After a recent visit to Macao, a senior U.S. Treasury official said the investigation, which reviewed about 300,000 documents, had "confirmed our suspicions" about the bank's activities.
But the results of separate investigations in Macao, which were forwarded to the Treasury last year, do not support the U.S. charges against the bank, according to the bank's lawyers. One of those investigations was conducted by the accounting firm Ernst & Young on the orders of the Macao government within days of the Treasury's declaration against Banco Delta Asia."

(Full report: http://www.iht.com/articles/2007/03/12/news/bank.php)

The lengthy blacklising of the BDA, plus the extensive pressure applied by the United States on other banks around the world to sever their links with North Korea has left Pyongyang economically isolated. If the Banco Delta Asia is forced to close, even after being found blameless by the Macau government's own investigations, then it will only exacerbate Pyongyang's isolation.

Whatever is said at the working group meetings between parties to the six-way talks on energy aid and economic cooperation this week in Beijing, the fate of the BDA will still send a clear message to banks around the world that it probably still is not worth the risk of dealing with North Korea.

Washington's designation of the bank as a money laundering concern could so easily be interpreted by Pyongyang as nothing more than an act of spite. Expect Washington to act surprised if North Korea responds in kind.

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