You may recall that in this post and in this piece for Front Page Magazine, I suggested that our own State Deparment’s attempts to return $25 million to the North Korean regime — much or most of it proceeds of crime — could violate U.S. money laundering laws, as well as two U.N. resolutions the United States successfully lobbied for less than a year ago. As it turns out, great minds think alike.
Now, with Russia about to step up to facilitate this faustian transaction, six House GOP foreign policy heavyweights have signed a letter asking the General Accountability Office to determine whether it’s legal. The letter cites the very same sections of the criminal code I’d cited in the pieces linked above (cool!). Among the members is Ileana Ros-Lehtinen, the Ranking Member of the House Foreign Affairs Committee.
Here’s the text; my deepest appreciation to both of the readers who forwarded it:
The Honorable David M. Walker
Comptroller General of the United States
U.S. Government Accountability Office
441 G Street, N.W.
Washington, D.C. 20548Dear Mr. Walker:
A number of us who presently serve, or who have served in the past, on the Committee on Foreign Affairs have been concerned about recent reports that U.S. government officials may have been engaged in efforts to expedite the transfer of North Korean funds held in Macau-based Banco Delta Asia. According to past U.S. Treasury Department statements, a sizable portion of the $25 million being held in North Korean accounts in the Macau bank has been derived from illicit activities ““ including missile and arms sales to rogue regimes, drug smuggling and counterfeiting of U.S. currency.
A September 15, 2005 press release noted in part: “The U.S. Treasury Department today designated Banco Delta Asia as a “˜primary money laundering concern’ under Section 311 of the USA Patriot Act because it represents an unacceptable risk of money laundering and other financial crimes. Banco Delta Asia has been a willing pawn for the North Korean government to engage in corrupt financial activities through Macau, a region that needs significant improvement in its money laundering controls. The Treasury Department further noted in a March 19, 2007 statement released in Beijing that “the events of the past eighteen months demonstrate our lack of tolerance for illicit activity conducted in the global financial system. Financial institutions that facilitate weapons proliferation, terrorist financing, narcotics trafficking, and other illicit financial activity should be on notice of the significant consequences they face.
Daniel Glaser, the Treasury Department’s Deputy Assistant Secretary for Terrorist Financing and Financial Crimes, remained in Beijing for several days in March to seek to facilitate the resolution of the Banco Delta Asia issue with Chinese authorities. Pyongyang has successfully linked transfer of the funds to fulfillment of its commitment to denuclearization made in the February 13th Six-Party Joint Statement ““ although the Statement makes no mention of the Banco Delta Asia funds.
There have been repeated press reports in recent weeks that Administration officials have been actively engaged in efforts to secure the transfer of these formerly frozen North Korean funds to banking institutions in China , Russia , or Western Europe . The Washington Post carried a report on May 17th that the State Department had even made a request to an American financial institution, Wachovia Bank, to transfer the funds, despite Banco Delta Asia being blacklisted earlier by the Treasury Department. Assistant Secretary of State Christopher Hill was quoted as stating at a Korea Society event that “I can assure you”¦we are not going to allow $25 million or even $26 million to get between us and a deal that will finally do something about nuclear weapons on the Korean peninsula.
We find the above set of circumstances to be disturbing. We would note that the funds in Banco Delta Asia were frozen by Macau authorities only after the U.S. Government had cited Patriot Act concerns about both the bank’s operations and, specifically, the North Korean accounts. We therefore request that GAO evaluate whether State Department and Treasury Department actions undertaken to facilitate the transfer of North Korean funds are fully consistent with the enforcement of Section 311 of the Patriot Act and with the sanctions regime imposed under UN Security Council Resolution 1718, which our Government actively supported in its vote on October 14, 2006. We would also request that GAO evaluate whether all U.S. official actions undertaken in connection with support for the transfer of North Korean funds held in Banco Delta Asia accounts are in keeping with the prohibitions regarding money laundering and counterfeiting as stipulated in the U.S. Criminal Code, Title 18, sections 1956 and 1957.
[…] Republicans Rebel on N. Korea Policy, Demand GAO Money Laundering Inquiry […]
These people are far from being heavyweights.
Do some basic research into them, eg wiki, and you will see that they are a very sorry bunch indeed.
wrt to Bolton weighing in, aside from the fact that he still clings to the idea that Iraq is a noble cause (funny that for a man who dodged the Vietnam draft claiming it was unwinnable), which makes his views on any international issue highly suspect, he makes the fundamental error of stating that the $25M is tainted.
Clearly he doesn’t read very much, as it has been stated that at least $12M is from legitimate sources and belongs to legitimate third party companies.
The treasury has kicked the GAO proposal into touch, quite rightly so. This proposal is nothing more than the dying screams of the ravaged corpse of the neo cons.
Johnson, I think you’re the one who makes a “fundamental error.” The $25M is tainted, and there’s very extensive evidence for that:
http://www.fincen.gov/bda_final_rule.pdf
Clearly, YOU haven’t read much about this subject, though that doesn’t stop you from being so strident in your claims that everyone else is wrong, misinformed, or ignorant.
The rest of your argument is fairly simplistic ad hominem, so I’m confident that the readers can spot the real lightweight in this discussion. Good day, sir.
It’s interesting to read the debunking of a neo-con (Bolton) by pointing out he wouldn’t fight in Vietnam because he felt it was unwinable while using said opinion to call into question anything he has to say about anything….
The gymnastics involved are Olympic-caliber….
Joshua,
Thank you, I have read it already.
Where in the UST ruling does it say that the enitire $25M is “tainted”?
In the interest of broadening your mind here is something for you to read
http://www.nautilus.org/fora/security/07044Hauben.html
Poor BDA, so misunderstood and treated so unfairly.
Arrogance and ignorance is a dangerous mix, DJ.
Whether the entire $25M was tainted or not, there is no doubt that a portion of it was criminally derived (at least 50% due to various public reports). That the US government has “facilitated†the transfer of these criminal proceeds to its criminal bearer in direct contravention of various statutes of the US Criminal Code, Section 311 of the Patriot Act, and UNSC Resolution 1718 raises long-term questions about US credibility—particularly with respect to credibility on any future questioning of North Korea’s illicit activity. It’s not as if the US has “facilitated†the transfer of refugees or hostage to a third country. This is money-laundering. Political expediency—or sleeping with the enemy—is fine in the short-term if it works, although in the long-term acts like this tend to come back to haunt you.
With the removal of this BDA “sticking point,†North Korea may now make some token gestures like shutting down its Yongbyon reactor and allowing back in IAEA inspectors, who, themselves, will be the ones actually “monitored.†Neither will be a new act of good faith on the part of the North Korean regime, although idealists harboring illusions of a happy marriage between a Chollima and a unicorn will cast their loving gazes as if such an old act is revelatory. In no time a new set of “sticking points†will pop up, e.g., insistence on “facilitation†of future financial transactions through the same banks involved in this sordid affair, or demanding talks on a “peace treaty†or a “multilateral security framework†for Northeast Asia or general “disarmament†of the Korean peninsula to go in tandem with the six-party talks. These are time-old ploys with the ultimate goal of evicting US forces from South Korea, but the general public will come to believe these as genuine new “sticking points†to be resolved by the US, as it did when North Korea used the following “sticking points†as an excuse for blaming the US for the impasse or refusing to return to the six-party talks. The root cause of any ‘sticking point†is North Korea’s relentless and systematic pursuit of nuclear weapons over the past four decades rather than any of the following: “axis of evil†(aka “hostile US policyâ€), wait-n’-see who is elected in November 2004; see who is in charge of the new North Korea policy (end of 2004); see if President Bush says anything negative about North Korea in the 2005 State of the Union address; protest hurt feelings at Secretary Rice’s “outpost of tyranny†remark, etc.
It might be a good idea to remind ourselves from time to time what the six-party talks are about, now into its “6th round†with several “phases†in between, totaling nearly a dozen meetings. The purpose of the six-party talks—short of renaming it to the “six-party talks on aid relief for North Koreaâ€â€”is the denuclearization of North Korea, not to gather around and come up with ever-new means to provide blandishments for the destitute regime. There is a forum for just that, and it’s called the “North-South Ministerial-level Talks,†now into its 21st futile round. As broke and broken as North Korea is, the BDA issue was never about $25M, but the unfettered continuation of North Korea’s criminal activity through the international financial order. Anyone who believes that it was truly a sticking point for North Korea’s denuclearization—well, there’s this fabulous bridge in Brooklyn that I could give you a fabulous deal on.
States that develop nuclear weapons do so to possess them, not to bargain them away, unless there is a regime change and a new political will to abolish the old way of doing things (South Africa, 1989-91, with the end of the apartheid regime, and Ukraine, Kazakhstan, and Belarus, 1990-94, with the dissolution of the USSR). In the absence of a regime change, not a single state that had developed nuclear weapons has bargained them away. Imagine trying to negotiate with any of the de facto nuclear powers—the US or China or Russia, etc.—to give up completely their nuclear weapons for short-term rewards. It would be a laughable proposition. It cannot be done. As former Swedish Prime Minister Olof Palme said in 1896, “Apartheid cannot be reformed; it has to be eliminated.†Likewise, Kim Jong Il’s North Korea cannot be reformed. It must be eliminated it there is to be any meaningful resolution to the nuclear or human rights issues.
Some may ask because North Korea is so aid-dependent, wouldn’t it be more prone to giving away its nukes for rewards? Well, somebody please explain to me this: After the rewards dry up and the nuclear threat is gone, just why in the world would anyone care to continue to give generously to such a brutal, small, resource-poor, investment-hostile, moribund dictatorship? For the sake of philanthropy?
The notion that it is possible to persuade North Korea to give up its nuclear weapons and programs if only there is the political will on the part of the US seems to be grounded in an overly patronizing view of the North Korean regime—as despicable a regime as it is—presuming that it has no mind or strategic plans of its own and merely reacts to propositions put forth by the US. Or perhaps it’s grounded in an inflated sense of one’s own proselytizing powers, or in inadequate knowledge of the conditions on the Korean peninsula. Those charged with the duty of continuing the six-party charade are not to be blamed necessarily, as they are merely doing their job. The blame for this latest cave-in lies, as the North Koreans and the rest of the world like to point out on all matters of sticking point related to North Korea, on President Bush, who is now racing against time and burdened with Iraq and a challenging domestic political environment. What a perfect time for North Korea to come up with a new set of outrageous demands.
Mea culpa: of the PM of Sweden, “1986,” not “1896”
Reread the post, Johnson. I said that much or most of the money was criminally derived, and even that depends on which statement you hear. Hell, we don’t even know whose money a substantial percentage of it is. We know that some appears to be criminally derived and that most of the rest found its way into BDA under suspicious circumstances, such as carried in in bundles of cash. Maybe if State had let Treasury complete its investigation we’d have learned where all of this money came from and whose it really is.
So I’m trying to determine where you’re coming from here:
a. You think “some” counterfeiting, money laundering, and dope dealing is OK, as long as the proceeds are mixed with some that might possibly be legitimate (which laundered money almost always is).
b. You believe in politicizing law enforcement for the sake of diplomacy whose results speak for themselves.
c. You think everyone should give the North Koreans the benefit of the doubt but disbelieve everything the Treasury Department says.
d. You have an emotional, logic-defying attachment to every anti-American thug and tyrant, a condition that can only be explained by a mental health professional.
My vote is with d.
e. Clinton is out of the White House and Neo-Cons are in.
It seems the money went through thanks to the US. Fine.
Helping NK get this money will do about as much public good as pardoning Mark Rich…
Oh, those evil neo-cons. The neo-cons seem to be a catch-all scapegoat for every dogmatic believer in ‘let’s talk with our enemies and convince them to do what we want.’ Anything those dreaded neo-cons did, just do the opposite and it’ll work, right?
The Norks aren’t going to be giving up their nukes no matter how much cash we or the South send to them. Even today, they threatened to up the ante yet again, claiming that the US push to put in missile defense systems will require an equal upgrading on their part. What do the fools who believe in bending over for KJI truly expect to accomplish in handing back 1/4, 1/3, 1/2, 2/3, 3/4, 7/8 or whatever amount of tainted cash to the Norks? We are being played for suckers, yet again.
All snow said – and the fact that – one of those supposed neo-cons just went through a process of both having NK treat us like its bitch (which is SK’s role) and having us smile and say like a co-dependant, “Thanks, may I have another?” while we facilitate its money laundering (for at least this once)….
Where is one to turn????
[…] I also highly recommend you read other views on this matter over at DPRK Studies and One Free Korea.  Also make sure you read this Front Page Magazine piece from notable Korean author and journalist Gordon Cucullu and OFK’s very own Joshua Stanton. A great read and highly recommended. […]
That would have been one hell of a prescient Swedish PM to prognosticate on Apartheid before the conclusion of the Boer Wars! 😉
My abject apologies, Janus. In a similar vein (and with your ability to see both the past and the future), guess which National Security Adviser once said this: “Truly evil regimes will never be reformed . . . such regimes must be confronted, not coddled”?
Hans Blix?
More likely Neville Chamberlain. Seriously, guess who.
Kissinger?
Sec. Rice?
OK. I cheated and googled it. Have to do that with student papers that seem surprisingly elegant in their language….
http://www.usatoday.com/news/washington/2002/07/05/usat-korea.htm
I was thinking Clinton-era 1998 limited strikes against Iraq and Sudan…
Anyway, Rice is in State now….
So, to quote another world famous government leader:
“Little more…….little more…..”
(Can’t google that quote…..most should know it, however….)
Condi.
[…] Standing next to this, it’s almost insignificant that this transaction appears to violate a section of the criminal code prohibiting transactions in “criminally derived property.” Although an uncharactically uncritical press has said little about it, several of this President’s co-partisans in Congress have just demanded a GAO inquiry into whether this transaction was itself money laundering (Here’s the full text of their letter to the GAO).  How much of this money did Kim Jong Il collect by counterfeiting U.S. currency or trafficking in narcotics? The State Department won the bureaucratic struggle before Treasury completed its investigation, but just last fall, a “senior administration official” said of Kim Jong Il’s deposits in BDA, ”It is all one big criminal enterprise. You can’t separate it out.”  Treasury’s final report on BDA’s North Korean deposits described their criminal connections and suspicious history in exhaustive detail. […]
Yes, Dr. Rice, April 2002, VOA. Further, writing in early 2000 in Foreign Affairs, she advocated the following for the new administration to be elected later that year: “to deal decisively with the threat of rogue regimes and hostile powers, which is increasingly taking the forms of the potential for terrorism and the development of weapons of mass destruction.”
Using the word, “coddled” is what made it memorable.
Either she was lying, has changed her mind, or does not know what the words “truly evil” mean. All signs indicate that Condi is at the heart of everything that’s wrong with our Korea policy.
[…] The latest refutation of this whopper of diplomatic mendacity is an extensive new investigative report on North Korea’s criminal enterprises from Time (thanks to a reader for forwarding). The report suggests that our State Department’s incomprehensible decision to return $25 million of Kim Jong Il’s criminally derived funds, now under GAO investigation as a possible violation of our own money laundering laws, has reprieved a beleagured criminal enterprise run directly by the North Korean government out of a well-guarded building in downtown Pyongyang. New readers and seasoned North Korea-watchers alike will find much of interest in it, including a few things to keep you awake when you’re not worrying about al-Qaeda “chatter:” According to [former Illicit Activities Initiative head David] Asher, the big worry among U.S. and Asian intelligence officials is that “the [North]’s growing ties to organized-crime groups and illicit shipping networks could be used to facilitate weapons-of-mass-destruction shipments.” Later this year, the U.S. is expected to go to trial in New Jersey on a case targeting alleged members of a Chinese organized-crime gang accused of moving counterfeit currency, illegal narcotics and contraband cigarettes from North Korea into the U.S.–in addition to at least $1 million in illegal weapons such as pistols, machine guns and rocket launchers. The question that worries officials from Washington to Tokyo to Seoul is, Asher says, “What could be next?” [Time, Bill Powell and Adam Zagorin] […]
[…] When I say that North Korea will inevitably invent some reason to stall or renege on any inconvenient obligation, the dismantling of the crime syndicate known as Chongryon is a perfect example of just such a contrived provocation.  To Pyongyang, the state’s right to kidnap the citizens of other nations off the streets of their home towns is unalienable. Ditto the right to counterfeit our currency and have us launder the proceeds.  But of course, handing over kidnapped Japanese, Thais, Lebanese, Dutch, Chinese, Italians, Romanians, French, or South Koreans wouldn’t really cost North Korea anything.  For Japan, however, getting its people back looks like it will cost plenty: Japan will court “disaster’’ if it continues to demand an accounting of its abducted citizens, North Korea’s top nuclear negotiator said today. […]
[…] I assume that like drunken Irish wakes, blogs are places where one’s true feelings about the deceased can be spoken. Mine are that although this is a lost opportunity in many ways, I’m still glad this particular FTA deal failed. First, remember that this deal could have passed, even in this Congress, had it been more even-handed and had “outward processing zones” (read: Kaesong) not been sitting there in Annex 22-C screaming “slave labor!“ I should say that well-informed friends tell me that this would never happen, and that Annex 22-C was just token language we agreed to to shut the South Koreans up. I answer them by saying that none of us thought we’d ever launder $25 million in Kim Jong Il’s drug and counterfeiting money for him this time last year. I know what the law says about importing slave-made goods, but I’ve lost my trust in this administration (or future ones) not to exempt North Korea from every law of God or man. Second, after Roh’s miserable stewardship of these negotiations — and, for that matter, the entire U.S.-ROK relationship — this is not a deal he deserved to bring home. Like Rudy Guiliani, I don’t believe that anti-Americanism should be cost-free, and that when self-described allies encourage or fail to respond to it, we shouldn’t reward them, treat them like allies, or help them argue to their voters that theirs is the most profitable way of dealing with America. […]
[…] To say that North Korea is not producing and pushing drugs when all of the evidence we have suggests that it is is quite simply a lie — a dirty, expedient, political lie that only shows Pyongyang that we will embrace its lies as our own. It rewards crime and mendacity, and thus invites more of it. Does this bode well for an honest process of disarmament? Or, for that matter, our national drug policy? The Administration is simply playing politics with the inconvenient fact of North Korea’s dope dealing, the same way it played politics with its money laundering, the same way it played politics with its illegal arms dealing, the same way it wants to play politics with the list of state sponsors of terrorism.  Each case demonstrates a new low in disregard for law and truth for the sake of a dubious objective. There are even signs we’re willing to ignore just the latest exposure of North Korea’s proliferation. So just how thorough does anyone suppose our inspection and verification regime will be? […]
[…] So why would the Bush Administration tolerate a risk this grave, a leap this profound across the storied Red Line? Set your Wayback Machine for July 16th. On that day, three months behind schedule, and after getting the Federal Reserve to launder $25 million of its drug and counterfeiting money, North Korea finally shut down its worn-out plutonium reactor at Yongbyon, moments before it would have collapsed from age and overuse. Now do this Google search: “Bush and ’rare diplomatic success.’” […]