Saturday, 24 March 2007

Is Washington messing with Pyongyang's head?

"It was quite a rude awakening to hear on the news that my money was going to be used for charity," the holder of an account with the Macau-based Banco Delta Asia told me on the condition that I didn't reveal his identity.
He was referring to the announcement last weekend that a deal had been struck to release some $25 million dollars in North Korea related accounts held at the small family-run lender. The cash had been frozen by the Macau Monetary Authority after the U.S. Treasury Department accused the bank of being a money laundering concern back in September, 2005.
Under the deal, the money would be transferred to an account with the Bank of China in Beijing, and then disbursed for humanitarian and educational programs to help the people of North Korea.
"What needs to be understood," he said, "is that not all the funds belong to the North Korean government, but that a substantial amount belongs to private customers."
Colin McAskill, chairman of the London-based fund Koryo Asia Ltd was a little more direct. He told Bloomberg News, "Transferring all the money to a single North Korean Government-owned account would violate the rights of private parties."
Bloomberg quoted McAskill as saying he contacted the Macau Monetary Authority warning them that the money held by private businesses based in Pyongyang did not belong to the North Korean government and must not be included in the proposed transfer to settle the 18-month dispute between the North and the U.S. Treasury.

It has been a general misrepresentation by the authorities in Washington, and repeated by the media, that the $25 million dollars were in some way a secret slush fund operated by the North Koreans.
"Constant references to 'North Korean funds' have led many to make this mistaken assumption," said my anonymous account holder.
Another mistaken assumption is that the U.S. Treasury and the State Department are singing from the same hymn sheet. In several published interviews conducted with foreign businessmen with interests in Pyongyang, it has become obvious that Treasury and State are following quite different agendas. And these agendas are not complimentary. But then again, the heads of both these government bodies ultimately report to the Oval Office, so perhaps....

"President Roh suggested Treasury and State were playing a cunning three handed "go-stop" - a Korean card game - in which these two conspirators were secretly ganging up on their mark to gain the upper hand.The timing of the Treasury's move on the BDA was just too convenient to be a coincidence. Convenient that is if you wanted to sink the September Agreement and still give the impression of being reasonable, of holding the high moral ground."
(CG, The Korea Herald, Dec. 29 2006)

The following from a New York Times article reproduced in the Houston Chronicle suggest that others may also be getting a little suspicious of what games Washington is playing. Commenting on the North Koreans' boycott of this week's talks in Beijing over the failure to release the funds:

"The impasse has puzzled and frustrated people involved in the North Korea negotiations, and some public comments in the past week have led to an appearance of finger-pointing between the State and Treasury Departments. They deny they are blaming each other, but their comments suggest a difference of perspective."
(Full report

The Bank of China has reportedly refused to accept the transfer because it is concerned about the harm to its reputation if it is perceived to be handling "dirty money" from a bank that has been blacklisted by the U.S. Treasury. Let's face it, you can hardly blame them.

"The White House spokesman Tony Snow told his daily briefing that the Treasury action against the BDA has been completed and the bank's days as a front for illegal activities are over. I think, perhaps, these constant references to illegal activities might be upsetting more than a few people. It is worth repeating, the Macau and Beijing authorities say they have found no evidence of criminal activity at the bank. And the U.S. decision to ban any American financial institution from doing business with the BDA – effectively closing it off from the global financial system – has also struck a nasty chord."
(CG, Riding Home, Tuesday 20 March)

"Now since the Treasury has imposed a ban on any American financial institutions doing business with the BDA, and the funds are in U.S. dollars that will ultimately have to be cleared through a U.S. bank, that could be the “technical problem” the South Korean envoy is talking about. But I am sure the U.S. Treasury would have anticipated such a “technical problem” when they announced the ban on U.S. banks dealing with the BDA and then authorizing the release of the funds."
(CG, Riding Home, Wednesday, 21 March)

After 18-months, multiple investigations, and some of the allegedly finest financial minds in Washington focusing their entire attention on this one issue, you really would have thought they would have anticipated this. Wouldn't you?

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Jon Allen said...

very interesting background. If all the money does not belong to the NK government why do they care what happens to it?
and why is it such a stumbling block in the negotiations?

Why can't the legitmate owners of the funds make themselves known to the US / Chinese authorities and make arranagements to have it moved to their own account?

These two questions lead me to believe there must be something 'funny' going on behind the scenes that the like of you and me are never going to hear about.
But then again its only 25million?

FFS the amount of time and money this saga has cost for such a small sum is beyond belief!

Chris Gelken said...

Actually, account holders that I have been in contact with over the past 18-months have been extremely vocal in Washington and elsewhere.
Why does the North Korean government care? Again, people close to the actual events have told me it isn't really about the money, its about building trust. The funds became a symbol, if you like, taking on a far greater importance than the monetary value of the accounts would normally warrant.