SEOUL (Reuters) — North Korea has
developed sophisticated ways to circumvent United Nations sanctions,
including the suspected use of its embassies to facilitate an illegal
trade in weapons, a United Nations report issued on Tuesday said.
It said North Korea was also making use of more complicated
financial countermeasures and techniques "pioneered by
drug-trafficking organizations" that made tracking the isolated
state's purchase of prohibited goods more difficult.
The report, compiled by a panel of eight U.N. experts, is part of an
annual accounting of North Korea's compliance with layers of U.N.
sanctions imposed in response to Pyongyang's banned nuclear weapons
and missile programs. The panel reports to the U.N. Security
"From the incidents analyzed in the period under review, the panel
has found that (North Korea) makes increasing use of multiple and
tiered circumvention techniques," a summary of the 127-page report
China, North Korea's main trading partner and diplomatic ally,
appeared to have complied with most of the panel's requests for
Some independent experts and Western countries question how far
Beijing has gone in implementing sanctions, although the report did
not specifically address that issue.
Beijing has said it wants sanctions enforced.
Much of the report focused on North Korea's overseas trade networks,
rather than its relationship with China.
The panel said it found a relatively complex "corporate ecosystem"
of foreign-based firms and individuals that helped North Korea evade
scrutiny of its assets as well as its financial and trade dealings.
Several U.N. Security Council diplomats said the North Korean
sanctions committee was still weighing the report.
They also described it as a detailed but unsurprising report that
offered confirmation of Pyongyang's well-known methods of skirting
However, two diplomats said the council was unlikely to take any
action in the immediate future based on the report's findings.
EMBASSIES UNDER SCRUTINY
North Korea's embassies abroad play a key role in aiding and
abetting these shadowy companies, the report said, confirming
long-held suspicions of the international community.
In some of the most comprehensive evidence presented publicly
against Pyongyang's embassies, the report said the missions in Cuba
and Singapore were suspected of organizing an illegal shipment of
Cuban fighter jets and missile parts that were seized on a North
Korean container ship in Panama last July.
It included secret North Korean documents addressed to the ship's
captain which offered detailed instructions on how to load and
conceal the illegal weapons shipment, and make a false declaration
to customs officers in Panama.
"Load the containers first and load the 10,000 tons of sugar (at the
next port) over them so that the containers cannot be seen," said
the document, translated from Korean.
Panama seized the ship, named the Chong Chon Gang, for smuggling
Soviet-era arms, including two MiG-21 jet fighters, under thousands
of tonnes of sugar. After the discovery, Cuba said it was sending
"obsolete" Soviet-era weapons to be repaired in North Korea and
returned to Cuba.
Chinpo Shipping, a firm that the report said was "co-located" with
the North Korean Embassy in Singapore, acted as the agent for a
Pyongyang-based company that operated the vessel, and North Korean
diplomatic personnel in Cuba arranged the shipping of the concealed
Singapore's Foreign Ministry said its policy is to fully implement
United Nations sanctions, adding that it has been cooperating with
the U.N. experts ever since learning in January that a
Singapore-registered company was implicated in the case.
"The government of Singapore immediately launched an investigation
of this case," a ministry spokesman said. "We are unable to share
any further information at this juncture as our investigations are
A North Korean Embassy official, reached by telephone, denied the
Singapore Mission had engaged in any wrongdoing. The embassy had
recently moved from the address listed in the report, added the
official, who declined to give his name.
A Reuters reporter who
visited the address could not find the embassy, just Chinpo
Shipping. A receptionist said the head of the firm was not available
It was after work hours in Cuba when the report was released.
North Korea has gone to great lengths to mask the origin of its
merchant shipping fleet by reflagging and renaming ships, the report
said, particularly after the introduction of tightened U.N.
sanctions in early 2013 that followed the country's third nuclear
Most of the registered owners of the ships are small companies that
rarely own more than five vessels, meaning Pyongyang is able to keep
its fleet running if a ship or shipping company is seized or has its
Under the myriad U.N. sanctions, North Korea is banned from shipping
and receiving cargo related to its nuclear and missile programs. The
importation of some luxury goods is also banned, along with the
illicit transfer of bulk cash.
North Korea has fostered a complicated corporate network outside the
international financial system that it uses to buy both banned and
permitted goods, the report added.
The panel cited an example of an "unusually complex" transaction
involving a contract by Air Koryo, the North's national carrier, to
purchase new aircraft in 2012.
It said 109 payments were structured through eight Hong
Kong-registered companies which asserted they were trading partners
of Air Koryo and were wiring funds they owed it.
The purchase of civilian aircraft is not prohibited under U.N.
sanctions, but some of the companies appeared to have been recently
formed shell entities, the report said, and suggested such activity
could be used as a test-run for illegal transactions.
North Korea is also still dependent on foreign suppliers for its
missile programs, the report said, referring to a long-range rocket
salvaged by South Korea that contained parts originating from China,
the United States, the former Soviet Union, South Korea, the United
Kingdom and Switzerland. The rocket was fired out to sea in December
A shipment of missile components sent from China and seized by South
Korea in 2012 was destined for Syria, an investigation by the panel
The panel said it had also investigated reports that Myanmar,
Eritrea, Tanzania, Ethiopia, Somalia and Iran might have bought
North Korean weapons.
(Additional reporting by Rujun Shen in Singapore and Louis
Charbonneau in New York; editing by Dean Yates and G. Crosse)