Investigative journalist Claudia Rosett, who covered the Tienanmen Massacre and exposed the U.N. Oil-for-Food scandal, has written an extensive report about the operations of Iran’s Bank Mellat in Seoul during the administrations of Roh Moo-Hyun and Lee Myung-Bak:
In a cable dated March 20, State asked its embassy in Seoul to tell the South Korean government that “Bank Mellat has facilitated the movement of millions of dollars for Iran’s nuclear program since at least 2003.”
Four days later, State followed up with a cable asking its embassy to “Inform Seoul that the U.S. views Bank Mellat’s Seoul branch as a key node for facilitation of proliferation-related activities.” That same cable included a list of U.S. allegations regarding specific transactions of Bank Mellat in Seoul. For example, State alleged that in 2007 Bank Mellat in Seoul had served as an intermediary for a Hong Kong company that was “almost certainly a front company for Tanchon Bank (North Korea’s primary weapons trade bank)” and that Bank Mellat in Seoul had played a role in financial transactions related to Iran’s ballistic missile program, purchase of a surface-to-air missile system, and illicit nuclear procurement networks in China.
Tanchon is a front for KOMID, the Korea Mining Development Trading Corporation, a notorious proliferator for North Korea. Treasury designated KOMID under Executive Order 13,382 in 2005, and the U.N. designated it in 2009. Treasury designated Tanchon Bank under the same Executive Order in 2009.
E.O. 13,382 is an authority that allows the blocking of the dollar-denominated assets of entities involved in the proliferation of weapons of mass destruction.
South Korean officials thanked the U.S. for this demarche, and reaffirmed their commitment to investigating Bank Mellat’s branch in Seoul.
A few months later, in June, 2008, U.S. authorities, in turn, thanked Seoul, and urged them, consistent with U.N. sanctions on Iran, to “establish reporting and/or licensing requirements for all transactions executed by Bank Mellat Seoul.” The U.S. also suggested that South Korea, “once its investigation is complete, explore options for closing Bank Mellat Seoul.”
So while 28,500 Americans were in South Korea, defending it from North Korea’s growing WMD threat, South Korea let an Iranian bank front for a North Korean proliferator … admittedly one that Treasury itself has not yet designated.
Still, you’d think that Seoul would be especially sensitive to violations of U.N. Security Council Resolutions 1695 and 1718, which prohibited North Korea’s missile programs, and sales or purchases of major weapons systems. Those resolutions were largely U.S. initiatives to protect South Korea’s security, meaning that South Korea ate our sugar from one end and shat it right out the other.
I’ll just let that be your kachi kapshida image for that day. (Update: No, I won’t. Not this day. See the next post.)
Two more years went by, during which the U.S. continued to prod South Korea to take action. In June, 2010 the U.N. Security Council passed its fourth sanctions resolution on Iran. This resolution included, in an annex, the statement that “Over the last seven years, Bank Mellat has facilitated hundreds of millions of dollars in transactions for Iranian nuclear, missile and defense entities.”
… and by this time, the U.N. Security Council had also passed UNSCR 1874, further tightening the restrictions on North Korea’s arms trade.
Even then, it took three more months, and a visit from the State Department’s then-serving special advisor for nonproliferation and arms control, Robert Einhorn, before South Korea in Sept. 2010 worked around to blacklisting Bank Mellat’s branch in Seoul. [Claudia Rosett, Forbes]
Although Rosett makes a strong case that South Korean regulators turned a blind eye to Treasury’s pleas for years, Treasury itself was slow to act against Bank Mellat. Bank Mellat is not listed as a Primary Money Laundering Concern by Treasury, and Treasury did not designate Bank Mellat under Executive Order 13,382 until 2011. To an extent, I can understand the South Koreans’ slow reaction: why should they take action against Bank Mellat when not even Treasury itself had done so? You would think that South Korea’s own security interest in the success of the global nonproliferation system would answer that question, but that sort of logic does not match the prevailing point of view in South Korea then or now.
In any event, the chronology you see illustrated here is a combination of financial diplomacy and enforcement that this administration would take against a target in which it shows genuine interest. That’s exactly what you won’t see with respect to North Korea.