Sanctions Busters Smuggled North Korean Coal, Iron to the South via Russia
10 August 2018 - 12:31PM
Dow Jones News
By Andrew Jeong
DAEJEON, South Korea--Three South Koreans illegally imported
North Korean coal and iron via Russia in violation of sanctions,
South Korean customs officials said, exposing a crack in the
U.S.-led campaign to cut off trade with the Pyongyang regime.
Using forged customs documents and facilitating payments through
a shell company in Hong Kong, the individuals brought in over
35,000 tons of coal and pig iron worth almost $6 million from North
Korea between April and October last year, South Korean customs
authorities told reporters Friday.
The suspects appeared to have tried to profit by selling the
cheaper North Korean products at much higher prices in South Korea,
the officials said, without identifying the companies or
individuals involved. The customs agency said it would recommend
indicting three individuals and their companies--two coal importers
and one transportation firm--on charges of smuggling, illicit
importation, and forgery.
As North Korea's expanding nuclear program increased tensions
last year, the U.S. led a global push to isolate the regime through
economic sanctions intended to cut off its trade in raw materials
such as coal, oil, iron and lead.
But the sanctions imposed by the United Nations Security Council
haven't been watertight. Aerial surveillance and satellite imagery
have found North Korean vessels receiving oil via ship-to-ship
transfers on the high seas, while ships believed to be aiding North
Korea have been seen delivering coal to ports in Russia and
Vietnam.
Friday's announcement came after a 10-month investigation by
South Korean authorities that began when they received what a
senior customs official said was U.S. intelligence information.
The coal and iron were delivered through seven shipments on
vessels that now bear the flags of North Korea, Belize, Kiribati,
and Hong Kong, according to MarineTraffic, a ship-tracking
website.
The coal was loaded at the North Korean ports of Songlim,
Wonsan, Chongjin, and Daean, and shipped to the Russian ports of
Nakhodka, Vladivostok, and Kholmsk, investigators found. It was
then shipped to five different South Korean ports.
Cargo bills uncovered in raids on the companies provided
evidence of the shipments from North Korea to Russian ports, the
South Korean authorities said, adding that one of the suspects
later acknowledged the coal and iron was sent on to South
Korea.
Some of the imported coal was consumed by Korea South-East Power
Co., a subsidiary of the country's largest utility company,
according to customs officials. But authorities said they wouldn't
press charges on the company, as it appears the government-run
firm, known as KOEN, consumed the North Korean coal
unknowingly.
When reached for comment, a spokesman for KOEN referred to
customs officials' earlier findings that the company had committed
no illegal act.
The episode shows how North Korea has sought to evade sanctions
through transshipments of raw materials that could provide a
much-needed financial lifeline to the regime of leader Kim Jong
Un.
The sanctions are thought to have contributed to the largest
contraction in North Korea's gross domestic product in two decades,
according to a recent South Korean central bank analysis.
A thaw in relations between North and South in recent months,
though, has prompted calls in some quarters for an easing of
pressure.
President Moon Jae-in of South Korea has sought to revive
economic projects with North Korea, such as reconnecting rail lines
and roads, and reopening factories and a tourist attraction north
of the border. But officials have said those moves are unlikely to
make progress while sanctions remain in place.
Write to Andrew Jeong at andrew.jeong@wsj.com
(END) Dow Jones Newswires
August 10, 2018 06:16 ET (10:16 GMT)
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