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Macao: Another front in the war on terror

People talk about Iraq as a central front on terror, but theres another war going on quietly behind the scenes. One of the places where there have been signifigant gains by the US against the North Koreans is in the money laundering captial of Macao. Since the US shut down Banco Delta Asia and froze over 25 million in assets, the changes in Macao have been substantial.

The original post from the LA Times can be found here.

snip...

"Today people here want to do business with the Americans, not the North Koreans," said Jose Rocha Dinis, director of the Jornal Tribunal de Macau, a Portuguese-language newspaper, as he drove along a waterfront cluttered with construction cranes. "When they are seeking investment from the outside, they can't let the North Koreans get in the way."

A North Korean company, Jokwang Trading Co., long believed to be a front for illicit activities, closed its headquarters on the fifth floor of an office building near the bank. Most of its personnel have relocated to Zhuhai, just across the border in China proper, business sources here say.

"You used to see the North Koreans around here all the time with their Kim Il Sung badges, but suddenly they're gone," said Seok Yeong Chong, a South Korean businessman living here. He said their numbers had dropped from more than 100 to only a handful. "They gave the Macao government too much of a headache."

Businesspeople here say the North Korean presence became a liability at a sensitive time. The North Korean government in Pyongyang is more unpopular than ever internationally because of its pursuit of nuclear weapons. At the same time, China is trying to develop Macao into a gambling destination to rival Las Vegas.

The freezing of the $25 million in the Banco Delta Asia has been a particularly big blow for a government scraping by for lack of hard currency. North Korean banks kept large sums of money in the Macao bank. Now, with those accounts suspended and other banks frightened off by the Treasury Department action, North Korea has been largely cut off from international trade.

"The impact is severe," said Nigel Cowie, a British banker based in Pyongyang who is general manager of the Daedong Credit Bank, serving mostly the tiny foreign community in the North Korean capital.

In a telephone interview from Pyongyang, Cowie said that North Korea, because it had no credit and a weak banking system, dealt almost exclusively in cash, which might have created the appearance that it was laundering money when it was not.

"I can't speak for what everybody was doing, but I can say that in our case, a lot of legitimate business has been hurt," Cowie said.

The North Koreans blame the U.S. for their woes in Macao. A senior North Korean diplomat, Li Gun, visited Washington last month on what appeared to have been a futile attempt to get the Macao freeze lifted. He left angry, declaring that North Korea would boycott negotiations on its nuclear program until the banking situation was resolved. "Under this continuing U.S. pressure, we can't go back to the negotiation table" Li said.

Here's another report on the crackdown that is clearly causing some pain (original post here)

snip...
"It is true we are having great difficulties but they cannot kill us," said Jon Sung-hun, president of Pugang Corporation, one of the North Korean companies whose assets have been frozen in the crackdown.
"Because of the US's terrible sanctions, all bank transfers are impossible and we are also not able to carry cash between countries.. but we are finding other ways," Mr Jon told the Financial Times, denying his company had been involved in wrongdoing.

"These days the world is multinational but they think they can catch us this way because our country is a closed society, but they are just not clever enough."

Mr Jon declined to elaborate to avoid tipping off American authorities.

So know you know why your 10 dollar bill looks like Canadian money...

Posted @ April 06, 2006 08:52 AM | Current Affairs