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North Korea’s Hall of Mirrors: Fake Global Network of Shell Companies Key to Illicit Arms Exports

31 May

North Korea’s Global Hall of Mirrors: Shadowy front companies crucial to banned Pyongyang arms exports

Investigation reveals complex web of false shell corporations spanning the world enabling DPRK arms exports

By Nate Thayer
NK News
May 30, 2013

(See entire story at NK News http://www.nknews.org/2013/05/the-front-companies-facilitating-north-korean-arms-exports/ )
Four years after an aircraft was seized in Bangkok with a cargo of illicit weapons being sent from North Korea to Iran, the UN and other governments have concluded an investigation revealing new details of a sophisticated worldwide criminal network to circumvent UN sanctions designed to halt the proliferation of nuclear, missile, and other technologies to some of the world’s most volatile conflicts.

Dozens of shell companies involving at least 16 countries were created in the weeks before the aircraft was seized – paper industries designed to disguise the shadowy players behind the 2009 arms shipment that almost evaded international law enforcement.

On the night of December 11, 2009, the U.S. Ambassador to Thailand called the Prime Minister with an important request: U.S. intelligence had information a cargo plane had departed Pyongyang smuggling 35 tons of clandestine arms and was scheduled to land in Bangkok to refuel. The U.S. wanted the Thai army to seize the aircraft and its cargo, banned under international laws mandated by United Nations sanctions.

But when the aircraft was seized at 4.00pm the next day, the international intricate web of shell companies simply vanished into thin air.

In reality, they never existed except on paper.

The companies were all mail drops hurriedly established in obscure offices spanning the globe. They were all creations of other legal companies that exploited loopholes in national laws from New Zealand to Hong Kong to Ukraine to London – established to hide the true identities of the owners.

The officers listed on company registration papers were “nominee” directors with no power or knowledge over company operations. They received their instructions from the real owners whose true identities, nationalities, and locations they did not know.

Like an optical illusion, the complex global network was a hall of mirrors and the real identities of the powers behind the operation vanished immediately when the cargo was seized.

The only people that proved quickly identifiable were the airplane crew:–one Belarusian and four Ukrainians–who had no idea who they were working for, what cargo they were transporting, who their cache of goods was being delivered to, or even to where it was destined.

But the illicit weapons cache did yield a gold mine of documents that paint a vivid portrait of the complex global network used to evade international and national laws.

Leaked UN reports two weeks ago said their four year investigation into the Bangkok seizure had been concluded, and named three individuals who were part of the intricate web of deceit.

AN INTRICATE WEB

The 52-page confidential report by the Panel of Experts on sanctions against the DPRK named two Ukrainian citizens, Yuri Lunov and Igor Karev-Popov, and one citizen of Kazakhstan, Aleksandr Viktorovich Zykov, for their involvement in the North Korea arms cache seized in Bangkok.

Kazakh Aleksandr Viktorovich Zykov was an international arms trafficker whose company, then registered in the United Arab Emirates, owned the Russian made cargo plane until just months prior to it being used to transport the North Korean arms shipment.

Ukrainian Yuriy Lunov owned the Georgian company, Air West, who held the operating license to the aircraft, and hired the crew to fly the cargo plane.

Ukrainian Igor Karev-Popov was the mysterious figure who was “a UK based European” who controlled the New Zealand registered shell company, SP Trading, which from the shadows leased the aircraft from Air West from SP Trading’s shell mail-drop office in Kiev, Ukraine.

Upon leasing the plane, SP Trading signed an agreement with a just created Hong Kong registered front company, Union Top Management (UTM), which chartered the aircraft.

Four days later the aircraft departed Azerbaijan for a circuitous trip around the globe to Pyongyang.

From shell offices that included Kiev, Ukraine, Auckland, New Zealand, Hong Kong, and a mysterious company registered in London, SP Trading and UTM choreographed the operation. The cargo, which included 35 surface-to-air missiles that could theoretically shoot down a passenger plane, originated in Pyongyang and were destined for Hezbollah via distributers in Iran and Syria.

The real beneficial owners of the New Zealand shell company, SP Trading, ltd., and the Hong registered UTM were in real control of getting the weapons from North Korea to Tehran, where they would subsequently have gone to the Palestinian guerrilla army, Hezbollah, via Syria.

The four year UN investigation by the Panel of Experts, in cooperation with a number of law enforcement, aviation, and financial investigators and intelligence agencies, notably New Zealand, uncovered a jigsaw puzzle that has revealed remarkable details of how international criminal syndicated transport illicit commodities under the radar of international and national laws.

A PORTRAIT EMERGES

While North Korea can mask operations within its own borders, there are many national and international laws to abide by in order to operate globally – particularly in shipping, international flight operations, financial systems and company registration. This is compounded within the national borders of countries that are more sensitive to operating within the parameters of international laws and regulations.

Aircraft ownership, operator licenses, safety requirements, cargo manifests, international flight plans, etc, all required documentation – documentation that was found aboard the seized aircraft in 2009, and provided a paper trail that sparked 4 years of international investigation.

“New Zealand authorities investigated the beneficiaries of SP Trading and passed information to the (UN) Sanctions committee,” a New Zealand Ministry of Foreign Affairs spokesperson told NK News, confirming their ongoing investigation into who was behind the New Zealand-registered companies linked to the seized plane.

“New Zealand legislation will shortly be passed that will close the loophole for non-resident directors,” the New Zealand government added.

IGOR KAREV-POPOV

The “non-resident director” and beneficiary of SP Trading was Igor Karev-Popov, – the same Igor Karev-Popov identified as sanctioned by the UN Panel of Experts this May, and said to be the most important power behind the network revealed so far.

But while Karev-Popov had never previously been publicly identified by name, the New Zealand government has been aware of his identity since at least 2010.

He is is the mysterious unnamed “UK based client” who was the person behind the creation of the two key paper companies, SP Trading and UTM, who controlled decisions to lease the aircraft, create the flight plan, pay those involved, and, most importantly, approve the cargo manifest that, ultimately contained the 35 tons of proscribed armaments.

The real and beneficial owners of SP Trading and UTM were in control of getting the weapons from North Korea to Iran.

Those involved in the actual transport of the proscribed cargo and who set up the web of front companies, knew very little, if anything, about the scheme they played various compartmentalized roles in. It is routine, in fact, for flight crews to have no knowledge of the specifics of the cargo they are hauling, arms trafficking investigators say…….(See entire story at NK News http://www.nknews.org/2013/05/the-front-companies-facilitating-north-korean-arms-exports/ )

Artist with “Strange Watch” Charged with “Possessing an Explosive Device” at U.S. Airport: Cite “watch itself was on incorrect time.”

17 Nov

Artist with “Strange Watch” Charged with “Possessing an Explosive Device” at U.S. Airport: Cite “watch itself was on incorrect time.”

Police officials said that no actual explosives were found but “McGann was carrying potentially dangerous materials and appeared to have made alterations to his boots which were unusually large and stuffed with layers of insoles.”

Mug Shot of accused Terrorist Plotter Artist Geoff McGann

Authorities also said their suspicions were aroused because McGann had no checked bag, carried a backpack that contained no clothes, was wearing a military-style shirt with a tourniquet band built into each sleeve, was wearing shoes two sizes too big, and his shoes had homemade inserts with cavities that could be used to hide explosives. Except they didn’t hide anything, he was on a day long business trip, and he contended his shoes were designed to make him look taller.

“When you add it all up, it didn’t add up,” Police spokesman Nelson said.

Nelson said McGann had “all the components” to make an “improvised explosive device.” That is except for anything that actually could explode.

By Nate Thayer

Geoff McGann had a very bad day Friday. The California artist was arrested after trying to board an airplane in Oakland with what appears to be a uniquely modified Timex and now stands accused of being a terrorist.

McGann placed his “ornate” watch in the plastic bin while going through airport security on a return flight to his home near Los Angeles, which U.S. Transportation Safety Agency officers determined “could be used to make a timing device for a bomb.” McGann, 49, of Rancho Palos Verdes was taken into custody Thursday night after his watch was inspected and said to have “switches, wires and fuses”, according to Sgt. J.D. Nelson, of the Alameda County Sheriff’s Department, even though a bomb squad, which arrived within five minutes, determined there were no explosive materials in the watch. He attracted the attention of authorities after placing a coat and his watch in a plastic bin bound for the screening machine. The watch included a toggle switch, wires and a circuit board, said Sgt. J.D. Nelson of the Alameda County Sheriff’s Department.

And the clincher? According to the police spokesman “the watch itself was on incorrect time.”

Advertising Creative Director, Artist and accused Terrorist Geoff McGann

McGann told Transportation Security Administration officers that he’s an artist and the watch is art, Nelson said.

McGann was charged with possessing materials to make an explosive device, sheriff’s officials said, and taken to Santa Rita Jail where he remains in custody on $250,000 bond.

Police officials said that no actual explosives were found but “McGann was carrying potentially dangerous materials and appeared to have made alterations to his boots which were unusually large and stuffed with layers of insoles.”

Nelson said McGann had “all the components” to make an “improvised explosive device.” That is except for anything that actually could explode.

Authorities also said their suspicions were aroused because McGann had no checked bag, carried a backpack that contained no clothes, was wearing a military-style shirt with a tourniquet band built into each sleeve, was wearing shoes two sizes too big, and his shoes had homemade inserts with cavities that could be used to hide explosives. Except they didn’t hide anything, he was on a day long business trip, and he contended his shoes were designed to make him look taller.

“When you add it all up, it didn’t add up,” Police spokesman Nelson said.

McGann said he’d been on a business day-trip in the Bay Area and was about to return to Los Angeles, that the watch was art and the shoes were altered to make him look taller.

The officials didn’t buy McGann’s story. “He does do art kind of stuff, but what reasonable person would bring a watch like that into an airport and think that’s OK?”  Nelson said. “You may have a toy gun as art, but would you bring it to the airport?”

Some of accused terrorist airplane bomber photographic art work

An officer arrested McGann on “suspicion of possession of materials that can be used to make a destructive device” and is being held on $150,000 bail, according to Alameda County records

.

But a cursory inspection of documents, online references, and social media of Geoph McGann’s profile does not exactly fit the profile of a terrorist. In fact it pretty much describes a good chunk of quite normal citizens with a dash of free spirited quirkiness. Or pretty much a spot on profile of an average artist.

McGann, according to various biographies, his Face book page, his Linked In profile, and numerous news stories is an accomplished artist, photographer, advertising creative director and martial artist. Among other accomplishments is what is reported to be his key contribution to creating the Nike sneaker company advertising campaign “Just do it.”

He graduated with a Bachelors of Fine Arts and Visual Communication Design from the Art College of Design in Pasadena California in 1987 and worked for a Seattle Washington advertising firm as their creative director in the 1990’s.

 

Jailed advertising exec and artist and accused Terrorist at a gallery show of his artwork

He currently is Managing/Creative Director of a Los Angeles company, Locomotus which focuses on “Diversity Training Program/ Advertising/Design.” One biography says “Geoff is one of the country’s top creative educators, with over twenty years experience as a Creative Director, Writer/Director, Photographer, Fine-Arts Designer and Teacher” and another biography says “Geoff has held ECD positions at Public Interest, a non-profit advertising agency/production company dedicated solely to cause-marketing initiatives, funded by The Gates Foundation (Amnesty, AIDS-AID, Partnership for a Drug-Free America, Wounded Warriors). He also founded and supervised EDO the branded-content entertainment division at Ogilvy in Los Angeles” and “Geoff has held the Program Director position at 72U, the in-house advertising and communications school at 72andSunny, and currently, he is the Managing Creative Director at Generator, a creative portfolio development program in Los Angeles.”

 

Ad executive accused of using lefts in his shoes he contends were to add the appearance of height to hide explosives, none of which were found on his possession when checking in at airport for flight home

In 2006, McGann “signed on as Creative Director with Public Interest, a nonprofit advertising agency dedicated to producing high impact public service advertising and messaging for social change. The addition of McGann – an award-winning creative, director, and photographer – reflects a growth and independence experienced by the agency over the past several months. “Geoff’s arrival marks the beginning of a new era for Public Interest,” said President and Executive Creative Director Michael Franzini. “He is one of the great creative thinkers in advertising, and I see his enthusiasm for our work as a sure sign that we’re doing something right. I’m excited about the great things we will do together.” McGann comes to Public Interest with a versatile creative portfolio that spans the ad agency, photography, and commercial production arenas.”

 

Among major advertising companies, McGann is listed as having worked as a Creative Director “for industry leaders Wieden + Kennedy, Portland and Ogilvy & Mather, Los Angeles, among others. His work for clients including Nike, Miller Beer, and MTV won awards in every major advertising show.” McGann is quoted in a news release by San Francisco based Public Interest as saying: “After doing this for over fifteen years, the notion of working with a non-profit organization that does marketing and creative for worthy causes is exciting.”

McGann’s Linked In and other online sites list his interests as “Photography/HD Videography/Poetry/Jiu Jitsu”, that he belongs to the Directors Guild of America, and has won honors and awards which include Cannes film festival Gold Lion, The One Show Gold, Communication Arts, Pan American Jiu Jitsu Gold Medal 2009, US Open Jiu Jitsu Gold 2007, 2008, and 2009, and the American National Jiu Jitsu Gold in 2007, 2008, and 2009.

 

Artist accused explosives terrorist

From January 2007 until now, he has worked as Co-Founder/owner of company, specializing in all types of video and film production in all media, with special emphasis in On-Line content development.

Nelson adds, “as a triggering device, absolutely, absolutely. It absolutely could have been a triggering device. Obviously he was missing a couple of things along the way.”

A Southern California resident is in custody after authorities say he tried to board a plane in Oakland with a watch modified by materials that could have been part of a bomb.

Experience

He has held positions as Executive Creative Director/Producer since 1987 for several major advertising firms including in the Creative Director/Entertainment Division Los Angeles Office  of Ogilvy & Mather, Writer, Creative Director on multiple accounts (primarily NIKE), all media, and Executive Producer on special On-Line film/video content at Wieden + Kennedy including Writer and Creative Director on the Nike “Just Do It” account “from inception” as well as Miller Lite, MTV, Subaru, and the Gap.

His artwork and photography has won acclaim and been shown at gallery exhibitions, adding “It is not uncommon for an artist to find a day job necessary to help support their art, but McGann creates art to help support his day job. As Creative director for Public Interest, a 501(C) 3 non profit, he receives a modest salary in exchange for the pleasure of doing work he is passionate about, creating public service ads for an array of prevalent causes. Public Interest works with big name foundations such as the Elton John AIDS Foundation, the Bill and Melinda Gates Foundation and the American Film Institute, creating public awareness to affect social change.  The agency is also involved with the Wounded Warrior Project, which helps support injured troops when they return home.”

He certainly doesn’t fit the profile of your average terrorist. The news article on a recent art gallery show cited “stand-out pieces included a series of ethereal images suggestive of angels and Hindu Goddesses where women were draped in blurred twinkling lights posed against black backgrounds. Alongside were a serene black and white landscape and several portraits that expressed a blend of glossy sophistication and decadence. “Riders”, a surfer-themed series, used light and shadow to depict this well-known Southern California icon with a slightly ominous undertone. This was Geoff’s first major exhibition and he was surrounded by friends, family and admirers. Geoff’s daughter Skylar, dressed in a pink princess outfit, pointed out her favorite photo, a portrait of a glamorously pensive woman in an open button down shirt and unraveled tie.“ adding “McGann’s background in advertising and commercial direction is apparent. Some of his photos could easily be imagined as print ads; particularly the series entitled “Starters” that features athletes at the ready, toned limbs glistening.  Using an exaggerated sense of perspective to create a sense of impending action, these are some of his best photos. Prices ranged from $350 to $1,400, with twenty percent of all profits donated to Public Interest. “

But none of these details seemed to sway the TSA or local California terrorist task forces who arrested McGann “after airport security found him wearing a watch that looked like a timing device for an explosive,” they said. The fact that the bomb squad was called to the checkpoint and determined there was no explosive device connected to the watch didn’t seem to diffuse the concern of the TSA terrorist detectors.

Photo art of accused terrorist McGann arrested fro wearing an unusual watch and shoes too big for his feet

A Seattle Times article describing McGann’s work at the Seattle based advertising firm paints a portrait of a highly successful if quirky advertising genius, referring to the company as “off the beaten track but still on the mark” and the “Portland-based advertising agency whose commercials for Nike have bewitched an entire generation into believing that “Just Do It” referred to exercise, not sex. Most advertising agencies are stress factories built on hustle, schmooze and art. The secret to W&K’s success isn’t witchcraft, but something equally alien to American industry: creativity” and “encourages folks to rope in brainstorms wherever they occur. Geoff McGann knows this. While other feet spend their workday stuck under a desk, McGann’s feet skip over the chilly Willamette River behind a water-ski boat. Some of his best ideas come while he’s water-skiing. One day early last fall, the 26-year-old copywriter was thinking about how to best capture Nike’s new Air Flight basketball shoes. He dropped into the water, swam back to the boat and reached for the tape recorder he had installed for brainstorms such as this. He spoke only two words: “Twilight Zone.” The article describes a business meeting at the company as including “Geoff McGann is, predictably, barefoot. His colleagues tease that they don’t give him back his shoes until 5, or else he’ll sneak out early. Everyone helps himself to jelly beans from a giant candy jar Wieden keeps in his office….McGann returns to his office and rests his feet atop the Fred Meyer shopping cart someone has deposited there and which he plans to keep. (“In case I get kicked out of my house, I’ll have someplace to go.”)

McGann, who was hired when he was 24 years old, is portrayed as a quirky genius. “That’s young even by advertising standards, but his bold style fits in well here. If he feels strongly about an idea, he’s given the freedom to try it out, even if the bosses are skeptical.”If you’re happy, you do your best work,” he says. “And I’m happy here.”

That quite clearly is not what Geoff McGann is feeling tonight, locked up in a jail cell and charged with plotting to blow up an airplane because he designed a watch and war “suspicious clothes and shoes with lifts in them.

I am purely guessing, but I suspect that Mr. McGann will have all charges dropped soon and the Transportation Security Administration and the Alameda County Sherriff’s Office will have considerable explaining to be. This appears strongly to be a case of Arrested for being an artist, where the TSA has effectively made quirky creativity, even those who have demonstrated their success at the pinnacle of corporate America, to be crimes that fall within the category of terrorist plotting.

North Korean Officials Implicated in Scores of Drug Trafficking Incidents

23 Sep

North Korean Officials Implicated in Scores of Drug Trafficking Incidents

By Nate Thayer

North Korea has categorically denied state sponsored criminal syndicates of drug trafficking, trafficking of counterfeit U.S. currency, and other smuggling-for- profit activities by North Korean military, intelligence, and diplomatic officials since 1976.

But the evidence solidly suggests otherwise. The Kim family dynastic government has been linked to hundreds of verifiable incidents involving drug seizures in at least 30 countries involving arrest or detention of North Korean diplomats or officials.

For example, in May 1976, 400 kg hashish were seized from a North Korean (DPRK) diplomat in Egypt.

In July94, Chinese officials arrested a Chinese national on charges of smuggling

6 kg. of North Korean produced heroin through the DPRK Embassy in China

In August 1994, a DPRK intelligence agent was arrested by Russian authorities for trying to sell heroin to Russian mafia group

In January 1995, Chinese officials in Shanghai seize 6 kg. of heroin and

arrested two DPRK nationals, one with a diplomatic passport

In July, 1998, a DPRK. Diplomat was arrested in Egypt with 500,000 tablets of rohypnol — the “date rape” drug.

In January 1998, Russian officials arrested two DPRK diplomats in Moscow with 35 kg. of cocaine smuggled through Mexico.

In October 1998, German officials arrested a DPRK diplomat in Berlin seizing heroin made in North Korea.

On February 12, 1999, an employee of the DPRK consulate in Shenyang, China, was caught attempting to illicitly sell 9 kilograms of opium.

On April 3, 1999, Japanese police caught Yakuza gang members attempting to smuggle 100 kilograms of methamphetamine into Japan on a Chinese ship.\

In April 1999, authorities at the Prague airport detained a DPRK diplomat stationed in Bulgaria attempting to smuggle 55 kilograms of the “date rape” drug rohypnol from Bulgaria.

On May 3, 1999, Taiwanese police apprehended four members of a Taiwanese drug organization attempting to smuggle 157 kilograms of DPRK produced methamphetamine.

On October 3, 1999, Japanese authorities seized 564 kilograms of DPRK methamphetamine from the Taiwanese ship “Xin Sheng Ho”; 250 kilograms of DPRK made methamphetamine were also seized by Japanese authorities on February 5, 2000 leading to arrests of members of a Japanese Crime group and members of a North Korean run trading company.

During October through November 2001, Filipino authorities detained a ship twice in their territorial waters which had received first 500 kilograms and then 300 kilograms of methamphetamine from a North Korean ship.

On December 22, 2001, Japanese patrol boats, in a skirmish, sank a North Korean vessel believed to be carrying drugs to Japan —the same vessel had been photographed in 1998 smuggling drugs into Japan.

On January 6, 2002, Japanese authorities seized 150 kilograms of DPRK methamphetamine from a Chinese ship in Japanese territorial waters that had earlier rendezvoused with a DPRK vessel for the drug transfer.

In July 2002, Taiwanese authorities confiscated 79 kilograms of heroin which a local crime group had received from a North Korean battleship.

In November and December 2002, packages containing 500 pounds of methamphetamine from the DPRK floated ashore in Japan.

On April 20, 2003, Australian police seized the DPRK ship, the “Pong Su”, which had attempted to smuggle 125 kilograms of heroin through Singapore into the territorial waters of Australia. Arrested North Koreans included a Korean Workers Party “political officer.” The ship had no other cargo.

In June 2004, two North Korean diplomats working at the North Korean Embassy in Egypt were detained for smuggling 150,000 tablets of Clonazipam, an anti-anxiety drug.

In December 2004, Turkish authorities arrested two North Korean diplomats suspected of smuggling the synthetic drug Captagon to Arab markets. The diplomats, assigned to North Korea’s Embassy in Bulgaria, were found to be carrying over half a million Captagon tablets, with an estimated street value of over $7 million.

And that is only a cursory sampling of the arrest, detention, or expulsion of North Korean officials for smuggling narcotics.

In April 1998 Russian police reported arresting Kil Chae Kyong, the personal secretary in charge of secret funds for Kim Jong Il on charges of trying to sell $30,000 in counterfeit U.S. currency, but that is another story.

A similar litany of official North Korean government officials detained or arrested for trying to smuggle and launder counterfeit U.S. dollars requires another article.

 

The Spy Sub, A Poisoned Diplomat in Russia, and a Naked, Drunk American Preacher in Pyongyang

19 Sep

The North Korean Spy Sub, a Poisoned Diplomat in Vladivostok, and the Naked, Drunk American Preacher  in Pyongyang

The 1996 secret mission that caused tremors from Washington to Seoul to Vladivostok

By Nate Thayer#north Kore

On a lonely stretch of coastal highway on September 18, 1996, South Korean cab driver Lee Jin Gyu noticed a strange gathering of men, all well-groomed and dressed alike, standing conspicuously out-of-place between the road and the ocean in the pre dawn hours .

After dropping off his fare he slowed at the spot on his return trip, but the men were gone. He stopped, got out of his cab and walked down to the beach. As he scanned the horizon, he noticed what looked like the outline of a submarine idly rocking in the waves 20 meters from shore. He called the police.

Authorities arrived to find inside the abandoned underwater spy ship a machine gun, an AK-47 assault rifle, and a hand scrawled message: “We must accomplish our mission.”

40,000 South Korean troops immediately mobilized and the hunt was on.

North Korean Spy submarine that ran aground as it infiltrated 26 commandos into the South in September 1996

Thus began a more than month saga of high tension on the Korean peninsula involving the mobilization of tens of thousands of soldier, armed spies on the run, man hunts, the assassination of a diplomat in Russia, the capture of a naked, drunk American preacher accused of being a spy by North Korea, several stabbing deaths of civilians caught in the dragnet, a lone soldier strangled to death in the night, numerous firefights, a group suicide, and a night playing video games at a ski resort.

The taxi driver did not know what he had stumbled into, nor that he was igniting a fire that would spread through the region and beyond, at times dangerously out of control. He had inadvertently encountered a North Korean Shark class submarine with a crew of 26 Special Operations soldiers of North Korea’s General Reconnaissance Bureau on a secret mission to infiltrate the South.

South Koreans were on edge looking over their shoulders for what seemed like forever as the drama unfolded.

Over the next months, a trail of mayhem and intrigue left 24 North Korean spies shot dead, one captured, 16 South Korean civilians murdered, 13 South Korean soldiers shot dead, including a Colonel, and five others wounded, an off-duty South Korean soldier strangled by the escaping infiltrators, a South Korean diplomat in Vladivostok, Russia assassinated, an intoxicated American Christian preacher held as a spy in a North Korean prison, and the two Korean governments teetering on an outbreak of war.

By the time the dust settled 49 days later, one North Korean spy remained unaccounted for, probably having slipped across the DMZ through the most heavily mined patch of land on earth back to the safety of DPRK territory.

A “Shark” class North Korean spy submarine

As the confrontation unfolded, North Korea responded with signature indignation to the public exposure of the plot, insisting the submarine was on a routine patrol, had experienced mechanical problems, and inadvertently drifted off course, and demanded the immediate return of the now missing crew, threatening the South as tensions spiked.

“It is self-evident that we the victims cannot show self-restraint any longer,” Pyongyang official Korean Central News Agency said as the incident splashed across headlines and the manhunt began. “We have the right to retaliate on the offenders.”

Within 2 days one of the North Korean infiltrators was seized after a farmer saw him in his fields.

At first the captured operative contended the vessel was forced by strong currents into South Korean waters, but after his South Korean interrogators brought out Korean rice vodka, he confessed that they had been on a spy mission to gather intelligence on military facilities.

Soon afterwards, South Korean military forces, who by now were scouring the country, discovered 11 dead bodies with single bullet holes in their heads lying symmetrically alongside one another only a few miles from the site of the grounded submarine.

They included the deputy director of the Maritime Bureau of the General Reconnaissance Bureau, North Korea’s top spy agency in charge of covert foreign operations, including assassination and infiltration squads targeting South Korea; the captain of the submarine; and eight members of the special operations infiltration team.

Kim Hyon-hui, the former North Korean spy convicted of bombing a Seoul-bound Korean Air flight in 1987 in which all 115 crew and civilian passengers were killed when the plane exploded in mid-air over the Bay of Bengal after she was captured in the UAE. She said she was commanded by Kim Jong Il personally and trained by kidnapped former Tokyo waitress Yaeko Taguchi to speak and act Japanese. Disguised as a Japanese tourist, she and a male companion planted a bomb, and departed the plane on a stopover. She and her companion both took poison as they were about to be arrested but she survived, later sentenced to death by a Seoul court, and received a presidential pardon in 1990. She said the North’s leaders had ordered the attack on the plane to discourage foreign countries from sending athletes to the 1988 Seoul Olympics.

The head of the General Reconnaissance Bureau Maritime Division lay a few meters askew, his weapon still by his side. The spy team chose a group suicide rather than to be captured by the enemy.

Over the next days’ numerous firefights broke out around South Korea as tens of thousands of mobilized troops began to close the circle on the remaining spies who had no intention of surrendering without a fight. Within two weeks, 11 more of the commandos were killed in separate clashes as the commandos broke into smaller units and went in different directions across the South, choosing to go down fighting rather than the indignity of capture.

By early October, only three of the original 26 member team remained at large.

All the while, North Korea ratcheted up hits threatening rhetoric, denied any hostile intent, and warned of “serious consequences” if their vessel or crew were harmed.

North Korean officers delivered a warning to American military officials at an October 1 meeting at at the truce village of Panmunjom, near the demarcation line that separates the two Korea’s, after the first commandos were killed. A senior North Korean official tried to pass a note to the Americans that read “serious consequences, which would be announced, would occur as a result of the deaths of their soldiers,” the U.S. said in a statement. U.S. officers read the note but refused to accept it.

American missionary Evan Hunziker swam across the Yalu River without a passport and was captured by North Korea security forces, detained for 90 days and charged with being a spy for South Korea. North Koreans, wanted $100,000 paid for his release.

Days later, a South Korean diplomat was assassinated in Vladivostok, Russia by a poisoned hypodermic needle. He was walking up the stairwell to his seventh floor flat when he was attacked.  His diplomatic passport and over $1000 in cash were left untouched in his pocket. There were two pencil-sized holes in his torso which suggested injection of a foreign substance into his body. Tests later confirmed that he had poison in his bloodstream of the same type as that carried by the special operation commandos on the North Korean submarine.

The South Korean government ordered stepped-up security for its diplomats around the world and sent a team of investigators to Russia.

Russian police investigators said it was the work of a team of two or more professional assassins. The diplomat was responsible for monitoring North Korean activities in the area. South Korean officials said the wounds in the stomach were caused by a hypodermic needle. Russian police began searching for two men with Asian complexions who were seen in the stairway shortly before the attack by a Russian woman who lived in the building.

On October 3, Rodong Sinmun, the official paper of the North Korean ruling Korean Worker’s Party and broadcast by Radio Pyongyang, said “South Korea is framing a despicable plot to link our country to the murder.”

In response to Pyongyang’s threats of retaliation for the deaths of by then 22 North Korean infiltrators from the submarine, South Korea ordered security tightened at airports, warned residents that North Korea may strike again, and said diplomatic missions faced possible terrorist attacks.

Prime Minister Lee met security officials and authorities decided to beef up protection of 395 key facilities, including airports, communication centers, ports, and power plants.

Meanwhile, American Evan Carl Hunziker, who had swum, drunk and naked, from China into North Korea “to preach the gospel” on August 24 was seized by North Korean border guards.  On October 6 North Korea announced they had captured an “American spy”, and began an effort to use the Christian missionary as leverage in exchange for the return of their remaining crew still being hunted down in the South.

Analysts noted that the North Koreans said they caught the 26-year-old American, who was working as a missionary in Beijing, on August 24 as he swam across the river marking the border between China and North Korea, but did not announce his arrest as a spy until more than six weeks later after the submarine incident unfolded and three days after South Korea announced their broad security crackdown.

U.S. officials said there would be no negotiations to exchange the imprisoned American preacher for the remaining spy team. ”It would be outrageous and indefensible, should the North Koreans try to link the submarine incident with this unfortunate young man who has been arrested, because the North Koreans were the aggressor and the clear violator of international agreements in sending that submarine down the South Korean coast,” Mr. Burns said. ”So we reject any linkage.”

It would be another month before Seoul authorities would track down the other members of the infiltration team still on the loose.

Mounting popular alarm over the spies on the loose led to South Korean President Kim Young Sam firing Defense Minister Lee Yang Ho on October 17th and the resignation of the Foreign Minister.

The submarine affair had even broader consequences.

Secretary of State Albright with kim Jong Il after signing one of many since abrogated agreements to try and stem WMD development programs

Security and spot checks were increased at important domestic facilities, including airports, subway stations, department stores, harbors, bus terminals and power plants. Security at South Korean embassies and trade missions abroad was stepped up and increased measures were taken to protect high-ranking officials.

South Korea halted all aid programs to the North, and banned South Koreans from engaging in commerce with Pyongyang.

A delicate process of wooing North Korea from its isolation, a newly inked landmark 1994 accord under which Pyongyang agreed to give up its nuclear weapons program, and international efforts to ease a famine underway that would claim more than a million lives were all threatened by the new tensions.

Seoul said they would delay signing a $4-billion energy agreement of an international consortium with the United States, Japan and North Korea that was part of the delicate negotiations to get Pyongyang to scrap its nuclear weapons program. The program was at the time hailed by U.S. president Clinton as a showcase of multinational problem-solving.

And with three remaining commandos still on the loose, the cost of the incident mounted.

Two months after the vessel went aground, the Korean peninsula saw a surge in tensions, growing fears of escalated military confrontation, a worsening famine that remained unaddressed, the scuttling of progress for improved inter-Korean relations, and, importantly even a new rift created between South Korea and its most important ally, the U.S.

South Korea was angered by the U.S. response to the submarine infiltration after Secretary of State Warren Christopher called for restraint from ”all parties.”

South Korean military commanders suggested the purpose of the spy mission was more than to collect data on military bases. ”We think that North Korea will make large or small-scale military provocations,” said Lieut. Gen. Park Yong Ok, the Assistant Defense Minister. ”We’re preparing.”  He said the mission of the commandos may have been to create armed rear bases in the mountains of South Korea in preparation for future large-scale actions. ”It was not purely an intelligence mission,” he said.

North Korea has approximately 100,000 Special Forces operatives trained to infiltrate rear areas of South Korea at the beginning of an invasion.

So with the failure to capture all of the commandos, there was a wave of popular South Korean discontent among civilians, undermining the stability of the South Korean government.

49 days after the vessel landed on the beach, two of the commandos, who now were disguised dressed in South Korean military uniforms and armed with South Korean M-16 assault rifles and grenades, were killed in a last stand firefight.

The violent confrontation, which was only a few miles from the DMZ as the spies attempted to exfiltrate back to the North, left a South Korean Colonel and two soldiers dead, and 14 more soldiers wounded.

Evidence found on the bodies of the two North Koreans told of the sometimes arduous and sometimes peculiar twists of their journey over the previous two months.

For the first days, the commandos had hidden in underground bunkers, and then broke into remote farmhouses to steal food. Despite the intense nationwide manhunt and the loss of the rest of their crew, the two spies continued to pursue their original mission. Film found on their bodies revealed pictures of South Korean military facilities.

And, in a still unexplained detour, the two commandos spent one evening playing video games at a holiday ski resort, where they spent the night.

During their 7 week journey, they killed three South Korean civilians with a knife and strangled a South Korean soldier who had the misfortune to cross the hunted spy operatives path.

The remaining single unaccounted for member of the original 26 man commando unit disappeared. It is believed he slipped across the DMZ back into North Korea.

Throughout the two month period, Pyongyang maintained a posture of high decibel threatening rhetoric, vowing retaliation, denying any nefarious intentions, and demanding the return of the crew and their submarine. South Korea demanded an apology before they would return the remains of the crew or resume negotiations or badly needed food assistance to the famine now fully underway in the North that would cause more than a million deaths in coming months.

Finally, at the end of December, North Korea did something it rarely does. It issued a statement saying they had “deep regret” over the incident which had spiraled by this time far beyond the mission purpose of a covert infiltration to gather military intelligence. But it was not an apology.

“The Ministry of Foreign Affairs of the Democratic People’s Republic of Korea is authorized to express deep regret for the submarine incident in the coastal waters of Kangrung, South Korea, in September, 1996 that caused the tragic loss of human life.  The DPRK will make efforts to insure that such an incident will not recur

South Korea promptly returned the now 25 accumulated bodies of the spies that the two month confrontation had left in its wake.

After the bodies were returned, North Korea reverted to their usual hubris over state radio by saying “the South Korean authorities admitted and apologized for their inhuman crimes.”

Tycoon Says He Financed Hun Sen Coup

24 Jul

Tycoon Says He Financed Hun Sen

Coup; $1 Million Underwrote

Cambodian Takeover

The Washington Post
July 24, 1997
By Nate Thayer

A powerful Cambodian businessman and suspected drug kingpin says he gave more than $1 million in cash and gold to co-prime minister Hun Sen and his allies to fund a coup that ousted rival government leader Prince Norodom Ranariddh this month.

Theng Bunma, reputedly Cambodia’s wealthiest man and a staunch supporter of Hun Sen, told Western journalists in an interview in Phnom Penh last week that he had called Hun Sen during the July 5-6 coup to offer his support. Among those present at the interview was an Australian television news crew, which made a tape available to The Washington Post.

“I gave him {Hun Sen} $1 million to do whatever to control the situation,” Bunma told the reporters. “He asked me if I had the money in Cambodia. I said no, but I would send 100 kilograms {220 pounds} of gold in a plane into Cambodia.” That amount of gold is worth about $860,000.

Bunma, who is president of the Cambodian Chamber of Commerce and owns holdings worth an estimated $400 million in Cambodia, also said he paid three renegade members of Ranariddh’s Funcinpec party $50,000 each to support Hun Sen’s coup.

The tycoon made it clear that he saw the takeover as good for his business interests, but he did not explain why he was revealing a role in bankrolling it. The U.S. government believes that Bunma, in addition to owning a hotel, a bank and an import-export company in Cambodia, is the country’s biggest heroin trafficker.

In the interview, Bunma reiterated his previous denials of involvement in drug trafficking. “I was accused of being a drug trafficker, and I am telling you, drug trafficking, I really hate that,” he said. “I have never done it.”

In a briefing in Washington Tuesday, however, State Department spokesman Nicholas Burns said, “We have reliable reporting that he {Theng Bunma} is closely and heavily involved in drug trafficking in Cambodia.”

He said the United States “does not have evidence that links Hun Sen himself, personally, to these accusations of narcotics trafficking” but that “we think the Cambodian government can do a lot more to purge itself of obvious corruption in the government, of obvious linkages between . . . members of the government and narco-traffickers.”

In an interview with The Washington Post in Bangkok Saturday, Ranariddh charged that Bunma and another wealthy suspected drug trafficker, Mong Rethy, have long been bankrolling Hun Sen. “He gets money from them, and they are drug traffickers,” Ranariddh said. “I ask now that President Clinton . . . make public the investigation of the {Drug Enforcement Administration} on drug trafficking in Cambodia,” Ranariddh added. “The DEA knows clearly.” “The mafia is now in charge in Cambodia,” Ranariddh declared, saying he was referring to “people like Theng Bunma, who is very, very powerful.”

During the coup, more than 300 of Hun Sen’s troops, backed by tanks, were dispatched to protect Bunma’s property. In the interview last week, Bunma expressed appreciation for that action and support for Ranariddh’s ouster. “I say what {Hun Sen} did was correct,” Bunma said. “Why? One reason. Take the example of my hotel.” Ranariddh’s troops wanted to destroy it, he said, but Hun Sen “put three tanks and soldiers around to protect it.”

Bunma said that he gave $50,000 each to three Funcinpec politicians opposed to Ranariddh — provincial governors Toan Chhay and Duong Khem and minister of state Ung Phan — to “encourage them” and cement their support for Hun Sen’s coup.

According to Western military sources in Phnom Penh, Bunma also has provided Hun Sen in recent days with Russian-made Mi-26 transport helicopters to ferry troops to front-line positions in northwestern Cambodia to battle Funcinpec loyalists. The helicopters are owned by Bunma and piloted by hired Russian crews. Intelligence sources say the helicopters also have been used to carry Southeast Asian heroin to Cambodian ports as part of international smuggling operations.

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Drug Suspects Bankroll Cambodian Coup Leader

22 Jul

Drug Suspects Bankroll Cambodian Coup Leader; Narcotics Traffic Booms as Loans, Gifts Flow

Washington Post
July 22, 1997

By Nate Thayer

When a prominent businessman and senior adviser to Cambodian co-prime minister Hun Sen was implicated in an attempt to smuggle seven tons of marijuana out of the country recently, a top official in the government’s royalist faction vowed to seek his arrest.

“The court is preparing documents to arrest him now,” Ho Sok, the secretary of state for the interior, said of the businessman, Mong Rethy. Hun Sen responded with a blunt warning: Anyone trying to arrest Mong Rethy, who had contributed more than $45 million to Hun Sen’s development projects, should “wear a steel helmet,” he said.

The warning turned out to be prophetic. During a coup two weeks ago in which Hun Sen ousted his rival co-prime minister, Prince Norodom Ranariddh, Ho Sok was hunted down by Hun Sen’s forces and killed with a bullet to the head.

According to Western anti-narcotics officials and Cambodian sources, Hun Sen has surrounded himself with suspected drug traffickers who bankroll his projects, lavish gifts on him and other leaders and seem bent on turning this country of 10 million people into an Asian narco-state.

In recent years, Cambodia has grown into a major transshipment center for Southeast Asian heroin, a significant exporter of home-grown marijuana and a haven for money laundering. At least 120 tons of Cambodian marijuana were seized in Europe last year, and hundreds of tons more are believed to have gotten through, anti-narcotics agents say.

Cambodia has become “the single fastest-growing narcotics transshipment point in the world,” three U.S. senators complained in a letter to Secretary of State Madeleine K. Albright last month. Calling the drug trade a “critical threat” to Cambodia’s government, people and future development, they said Phnom Penh “must take decisive action to halt the flow of narcotics through its borders and prosecute all government officials involved in narcotics trafficking.”

So far, however, the traffickers and corrupt officials have operated in Cambodia with near impunity.

Of particular concern to the United States lately have been the activities of Theng Bunma, Cambodia’s most powerful tycoon and president of its Chamber of Commerce. His Cambodian investments, which include a bank, hotel and import-export business, are estimated to be worth more than $400 million. He also owns a major holding company in neighboring Thailand, the Thai Boon Rong Group.

Bunma has showered Cambodia’s leaders with cash and gifts, including black Mercedes limousines, an airplane and helicopters used by Hun Sen and other top officials. And, according to a confidential U.S. government document, Washington believes Bunma is also involved in drug trafficking and has banned him from entering the United States. Bunma denies any such involvement.

In a recent interview with Fortune magazine, he challenged accusers to produce evidence and arrest him. He also warned that he is a man of his word. “If I say I will shoot you, I’ll really shoot you!” the magazine quoted him as saying.

Mong Rethy also denies being a drug trafficker. “Many people have tried to harm me in this way before,” he said. “They have alleged I and Theng Bunma have provided {Hun Sen} funds to construct schools, temples, roads and bridges through smuggling of drugs. This is untrue.” He added, however, that he was sure he would not be arrested, because then “the school construction couldn’t be finished.”

In an interview with The Washington Post on Saturday, Ranariddh said Hun Sen gets “millions of dollars” from Bunma and Mong Rethy. “They are drug traffickers,” he asserted. “The Americans know well. Now the administration doesn’t seem to care.”

A close ally and financier of Hun Sen, whom he often accompanies on trips abroad, Bunma travels on a diplomatic passport and holds the title of economic adviser to Chea Sim, the acting head of state and chairman of the ruling Cambodian People’s Party. In 1994,

Bunma gave $3 million in no-interest “loans” to the government to pay for military expenditures, according to Finance Ministry documents. He has funded the repair of Mao Zedong Boulevard, one of the capital’s main thoroughfares, and has paid the salaries of much of the Cambodian armed forces since early 1997, diplomats and Cambodian officials say.

A 1995 U.S. State Department report on Cambodia said: “There are indications that some high-level military officials and powerful businessmen who give financial support to politicians are involved in heroin smuggling.” A U.S. official familiar with that report said it referred to Bunma. “We consider him a major trafficker,” said another senior U.S. anti-narcotics official, “We have followed him for a long time.”

But despite State Department warnings that drug-corrupted governments would have “difficult relations” with Washington, the U.S. government has appeared ambivalent about confronting Cambodian authorities on their relationship with drug syndicates. In February 1994, then-U.S. ambassador Charles Twining warned a Cambodian cabinet minister that Bunma was a drug trafficker and asked that the government distance itself from the tycoon, Cambodian officials said.

The same month, however, the U.S. Embassy issued Bunma a visa to attend the National Prayer Breakfast in Washington, an event organized at Congress and presided over by President Clinton. Mother Teresa was the keynote speaker. After hearing Clinton’s speech, Bunma was granted a meeting with U.S. officials at the Pentagon.

In May 1995, Bunma was again issued a U.S. visa as a member of Chea Sim’s delegation on an official visit to Washington. Bunma paid the large delegation’s bills at the posh Willard Hotel, according to hotel sources and Cambodian diplomats.

Since then, Bunma has been barred from returning to the United States, but he seems to have grown even more influential in Cambodia. On Jan. 7, 1996, at the dedication of a new “Hun Sen Park” that the tycoon financed in Phnom Penh, Hun Sen declared that he would “never abandon” Bunma, “who has helped our party.” On the VIP dais to observe the ceremony were both Bunma and the U.S. Embassy’s charge d’affaires.

Var Huoth, Cambodia’s ambassador in Washington and an ally of Hun Sen, called Bunma “a big trader in Cambodia” but someone about whom “nobody knows” very much. He acknowledged rumors about Bunma’s involvement in drug-running, but declined to respond to the allegation. “We are the victim of trafficking from abroad,” he said.

In a report to Congress in March, the State Department praised Cambodia for “significant efforts in 1996 toward addressing its drug trafficking and transit problems.” The report certified the Cambodian government as “fully cooperating” on counter-narcotics efforts. But according to Interpol documents, the seizure by foreign law enforcement authorities of drugs originating in Cambodia increased in 1996 by more than 1,000 percent over 1995.

Foreign authorities are especially concerned about large shipments of heroin that cross from Laos and Thailand to Cambodia’s long seacoast. The traffickers “are using government planes, helicopters, military trucks, navy boats and soldiers to transport heroin,” said a U.S. official who tracks the Cambodian drug trade.

“There are definitely more drugs coming through Cambodia this year than before, but what can I do?” said Police Gen. Skadavy M. Ly Roun, who heads Cambodia’s national anti-drug force. He said serious enforcement is next to impossible because of political infighting, corruption and the involvement of powerful figures.

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