When US Ambassador to South Korea
Alexander Vershbow recently called North Korea a
"criminal regime", he was not speaking
metaphorically. He was not talking about the
North's abysmal human-rights record, illegal
missile sales or efforts to acquire nuclear
No, he was talking about crime -
as in counterfeiting US banknotes and cigarette
packages, money-laundering and drug-trafficking.
These issues have suddenly risen to the forefront of
Washington's agenda and become
a major stumbling block in the renewal of the
six-party nuclear-disarmament talks.
September, Washington named Macau's second-largest
bank, Banco Delta Asia, as being "a willing pawn
for the North Korean government to engage in
corrupt financial activities through Macau". It
said senior bank officials were working with
Pyongyang "to accept large deposits of cash,
including counterfeit US currency, and agreeing to
place that currency into circulation".
mid-December, the US Treasury Department issued a
formal advisory concerning North Korea's illegal
activities and cautioned US financial institutions
to take "reasonable steps to guard against the
abuses of their financial services by North Korea,
which may be seeking to establish new or to
exploit existing account relationships".
It was reported this month that a
delegation of agents from the US Secret Service,
which is responsible for counter-counterfeiting as
well as protecting the life of the president, will
travel to Seoul to meet with South Korean
authorities over counterfeiting. Visits of this
nature are not usually broadcast in such a public
Meanwhile, Pyongyang says it
won't return to the six-party talks unless the US
lifts restrictions against its financial
institutions, including those directed at eight
state-owned trading companies that Washington
cited in October as being involved in weapons
trafficking, especially banned missile technology.
Rumors of North Korean counterfeiting and
drug-trafficking have been circulating in Asia for
years. Anyone who lived in Hong Kong for many
years has heard them from time to time. North
Korean companies have a long history of operating
in the former Portuguese enclave of Macau, which
for decades served the regime as a key window to
the outside world.
The Zokwang Trading Co
was considered Pyongyang's de facto consulate in
Macau, and the relationship between Zokwang and
Banco Delta Asia is no secret. As far back as 1994
the bank found thousands of bogus US$100 bills
allegedly deposited by a North Korean employee.
The director of the Zokwang Trading Co was held
and questioned, but no charges were pressed.
There have been several more recent
instances of alleged North Korean counterfeiting.
Last April, the Japanese media reported
that a hundred or so fake $100 bills were found
among a stack of used currency aboard a North
Korean freighter that called at a Japanese port in
Tottori prefecture. The captain was reported
telling police, "We were asked to bring the money
to Japan so that the money could be paid for cars
and other items."
Also in April, a large
stash of bogus notes was uncovered in South Korea.
The Chosun Ilbo, which reported the story, did not
say where or under what circumstances the money
was found, though it went into great detail over
the quality of the notes and quoted experts as
saying it was "highly likely" they came from North
In August, the Federal Bureau of
Investigation reported two "sting" operations in
the US, colorfully described as Operation Royal
Charm and Operation Smoking Dragon. The US
government indicted 59 people on charges related
to smuggling counterfeit US currency, drugs and
cigarettes into the country. The announcement did
not specify their origin, but other accounts have
speculated that they came from North Korea.
David Asher, head of the US
administration's North Korea Working Group,
published a lengthy essay in mid-November in which
he described what he called "an extensive criminal
network involving North Korean diplomats and
officials, Chinese gangsters and other organized
crime syndicates, prominent Asian banks, Irish
guerrillas and a KGB agent".
is the only government in the world today that can
be identified as being actively involved in
directing crime as a central part of its national
economic strategy and foreign policy ... in
essence North Korea has become the Sopranos state
- a government guided by [Korean] Workers Party
leaders, whose actions attitudes and affiliations
increasingly resemble those of an organized-crime
family more than a normal nation." The Sopranos
is a popular US television series about an
But why is
Washington suddenly pushing decades-old suspicions
at this particular time? In September, Christopher
Hill, the senior US negotiator at the six-party
talks, announced a breakthrough in the
negotiations. North Korea had agreed in principle
to disarm in exchange for recognition and aid.
That same month the Treasury Department issued a
warning against dealings with the Macau bank.
In October came the sanctions against the
eight North Korean trading companies. Also in
October, Vershbow arrived in South Korea, and the
new US ambassador quickly developed a reputation
for making provocative statements. In November,
the six-party talks quickly foundered on
Pyongyang's demands to lift sanctions.
doubt American officials would solemnly swear they
are motivated by a desire to protect the integrity
of the US currency and nothing else. But even if
the allegations are substantially true, which
probably is the case, isn't this really penny-ante
stuff set against the much larger issue of North
Korea's nuclear-weapons program?
the other participants in the six-party talks has
expressed any public concern about Pyongyang's
crimes. That includes Japan, which not only is
supposedly the target of counterfeit money but
also is on the receiving end of drugs manufactured
in North Korea. (Japanese estimate that nearly
half of the country's illegal drug imports
originate from there.) Yet it has said nothing.
Last week, the Chinese Foreign Ministry
was forced to deny a report printed in the South
Korean media that its government had found
evidence of North Korean money-laundering in
Macau. "China has never indicated that the
government had confirmed North Koreans using Macau
for money-laundering," the ministry statement
Vershbow has likened North Korea to
Nazi Germany as being only the second
state-sponsored counterfeiter. He was referring to
an operation whereby concentration-camp inmates
forged millions of US dollars and British pounds
to disperse in England in an effort to ignite
inflation there and harm their enemies' economies.
Yet the highest figure I have seen for the
North Korean counterfeiting is the $45 million
(over a decade) reported in the Washington Times,
which is nothing set against the vast sums of
dollars sloshing around Asia. Indeed, I've never
heard even a whisper that North Korean
counterfeits were affecting world currency markets
or the value of the dollar in the slightest way.
It's hard not to believe that the US
administration is again listening to more hardline
elements after a brief ascendancy of the
"realists" in the State Department. Their purpose
is to neutralize the talks (how does a nation
negotiate with a criminal gang, after all?) and
shift the issue away from nuclear disarmament back
to the nature of the regime - with the ultimate
objective of toppling that regime.