Exclusive - 'Dollars and euros': How a Malaysian firm helped fund North Korea's leadership
Over the past two decades, North Korean-born Han Hun Il, the founding chief executive of a Malaysian conglomerate, funneled money to the leadership in Pyongyang, a North Korean defector, speaking out for the first time, told Reuters.
Han’s conglomerate, Malaysia Korea Partners (MKP), worked in partnership with Jang Song Thaek, according to Lee Chol Ho, who worked as a trader for Han for nine years until he defected to Seoul in 2010. Jang, the uncle of North Korea's ruler Kim Jong Un, was considered one of North Korea's most powerful men until he was executed for treason in 2013.
Reuters was unable to independently confirm Lee's account of Han's relationship with North Korea's leadership, including his assertion that money was funneled to North Korea's leadership body, the central committee of the ruling Workers' Party.
Reuters also couldn't determine how the central committee, which controls North Korea's highly sanctioned nuclear and weapons program, used the funds from Han or if the payments are continuing.
The new disclosures come at a time when United Nations sanctions monitors are intensifying scrutiny of both Han and MKP.
A February report by experts monitoring U.N. sanctions on North Korea says MKP's bank subsidiary in Pyongyang is a particular focus. A 2013 U.N. resolution bars foreign companies or foreign joint ventures with a North Korean company from having a financial subsidiary in North Korea.
The U.N. report says the bank, called International Consortium Bank, was established as a joint venture between MKP and Jang's Sungri Economic Group. The bank is licensed by North Korea's central bank and registered with the Pyongyang Municipal People's Committee, it said.
If the U.N. experts find sanctions have been violated, they could recommend the U.N. Security Council blacklist MKP, its executives or one or more of its subsidiaries, subjecting them to a global travel ban and asset freeze.
STRAINED TIES
Han, also known as Dr. Edward Hahn, hung up the phone and blocked a Reuters reporter on his messaging app when contacted for comment.
MKP did not respond to requests for comment on Lee’s assertions. The company issued a statement dated March 23 saying MKP had “no reason to hide the fact” that Han is North Korean. It denied owning ICB or any other North Korean bank and said nobody from the United Nations has contacted the company.
The U.N. said it does not comment on its ongoing investigations.
Lee's description of how MKP operated appears to shed fresh light on the close ties between Malaysia and North Korea, which have come under strain following the assassination of Kim Jong Nam, the elder half-brother of North Korea’s ruler, with the highly toxic VX nerve agent in February.
Reuters reported in February that North Korea’s spy agency was running an arms export operation out of Malaysia.
Malaysia's foreign ministry did not respond to Reuters’ requests for comment.
PYONGYANG BANK
MKP, which Han formed in 1996 with his Malaysian partner, Yong Kok Yeap, operates in 20 countries in Asia, Africa and the Middle East, piling up contracts worth at least $350 million, an MKP corporate video and promotional brochures shows.
Yong declined requests to be interviewed.
MKP's main business is construction, but it is also involved in a number of other activities, including financial services and coal trading, according to U.N. reports, company sources, registration documents and MKP promotional material.
ICB is among several banks the U.N. is currently investigating for possible breaches of various U.N. Security Council resolutions. These include one from 2013 calling on members states to prohibit financial service companies where there are “reasonable grounds to believe that such financial services could contribute to [North Korea’s] nuclear or ballistic weapons programs.”
In its March 23 statement, MKP said its website had been “hacked” to insert ICB under its list of service companies and place a “doctored photograph” of “MKP personnel”, including Yong, visiting ICB’s office in Pyongyang.
A search of archive.org, a database of old websites, shows ICB has been listed on MKP’s website since 2009, including under its earlier name, Sungri Hi-Fund International Bank. As of April 10, ICB was still listed on the website.
In its February report, the U.N. said it had inquired with Malaysia and MKP about ICB and had “yet to receive a reply.”
'CONTROL TOWER'
Lee said Han had used MKP as the “control tower” of a vast business empire, making him one of the isolated country’s richest men. He said Han began his career in Africa with North Korea's Reconnaissance Bureau, its premier spy agency.
“When people from the Central Committee visited Malaysia, they only met with Han,” Lee said. “They didn’t even bother to see the ambassador.”
The Central Committee directs the development and financing of North Korea’s nuclear and missile programs, said Michael Madden, a North Korea expert at Johns Hopkins University’s 38 North website.
Once a year, Lee said, high-ranking Pyongyang officials traveled to Kuala Lumpur to meet Han and instruct him to wire money to North Korea via banks in Malaysia.
“It was all dollars and euros,” said Lee.
Lee said Han was part of Jang's overseas network of businessmen.
Two current company sources said MKP’s fortunes - with the exception of its African businesses - declined after 2013 and Han became an infrequent visitor to Malaysia. They said they didn't know whether the downturn was related to Jang’s demise.
China's nuclear envoy in South Korea amid talk of Trump action against North Korea
A Chinese envoy arrives in South Korea on Monday to discuss North Korea's increasingly defiant weapons program as a U.S. Navy strike group heads to the region amid concerns Pyongyang may be readying a fresh nuclear test.
North Korea marks several major anniversaries this month and often marks the occasions with major tests of military hardware.
The possibility of U.S. military action against North Korea in response to such a test emerged as an option following last week's U.S. strikes against Syria. It was further fueled by comments from U.S. President Donald Trump's top aides on the weekend.
In Tokyo, the feasibility of U.S. military action was downplayed, while South Korea said the focus remained on deterrence and readiness.
“It probably is not realistic for the U.S. to attack North Korea," a Japanese defense ministry source said. "If America says it is going to attack, both Japan and South Korea will probably put a stop to it," said the source who declined to be identified.
U.S. Secretary of State Rex Tillerson said the U.S. military strike against Syria over its alleged use of chemical weapons was a warning to other countries including North Korea that "a response is likely" if they pose a danger.
"(Chinese) President Xi (Jinping) clearly understands, and I think agrees, that the situation has intensified and has reached a certain level of threat that action has to be taken," Tillerson said on CBS's Face the Nation.
China's Special Representative for Korean Peninsula Affairs Wu Dawei is expected to discuss the North's nuclear issue with his South Korean counterpart, according to the South Korean foreign ministry.
Wu's trip comes after Trump and Xi met in Florida, where Trump pressed his counterpart to do more to curb North Korea's nuclear program.
SHOW OF FORCE
The U.S. Navy strike group Carl Vinson canceled a planned trip to Australia and is moving toward the western Pacific Ocean near the Korean peninsula as a show of force, a U.S. official told Reuters over the weekend. "We feel the increased presence is necessary," the official said.
South Korean and U.S. forces are also involved in annual joint military drills that run until the end of April. The North calls the drills preparations for war against it.
Several North Korean anniversaries in April could be opportunity for Pyongyang to conduct nuclear or missile tests, South Korean defense ministry spokesman Moon Sang-kyun said.
North Korea has invited a large number of foreign media representatives to Pyongyang this week, likely to cover the so-called "Day of the Sun" birth anniversary on April 15 of the state founder Kim Il Sung.
Moon did not directly respond to a question about the possibility of a U.S. military strike against the North.
"Considering the possibility of North Korea's strategic provocations such as a nuclear test and missile launches, we have in place deterrence to the North's provocation and all readiness against them," he told a briefing on Monday.
Senior envoys of South Korea, Japan and the United State on the North Korea nuclear program will soon meet to discuss their coordinated response, the South's foreign ministry said.
North Korea sounded a note of defiance on Saturday calling the U.S. strikes against Syria "an unforgivable act of aggression" that showed its decision to develop nuclear weapons was "the right choice."
North Korea launched a ballistic missile on Wednesday that flew a short distance before spinning out of control and crashing into the sea, the latest of a number of missile tests defying U.N. sanctions.
The North is also seen to be ready to conduct its sixth nuclear test at any time, with movements detected by satellites at its Punggye-ri nuclear test site.
North Korea missiles: US warships deployed to Korean peninsula
The US military has ordered a navy strike group to move towards the Korean peninsula, amid growing concerns about North Korea's missile programme.
The Carl Vinson Strike Group comprises an aircraft carrier and other warships.
US Pacific Command described the deployment - now heading towards the western Pacific - as a prudent measure to maintain readiness in the region.
President Trump has said the US is prepared to act alone to deal with the nuclear threat from North Korea.
"The number one threat in the region continues to be North Korea, due to its reckless, irresponsible and destabilising programme of missile tests and pursuit of a nuclear weapons capability," US Pacific Command spokesman Dave Benham said.
What is being deployed?
The strike group comprises the Nimitz-class aircraft carrier USS Carl Vinson, two guided-missile destroyers and a guided-missile cruiser.
As well as massive striking power, the carrier group - headed by Admiral Nora Tyson - has the capability to intercept ballistic missiles.
It was originally due to make port calls in Australia but instead has been diverted from Singapore to the west Pacific - where it recently conducted exercises with the South Korean Navy.
North Korea's missiles
North Korea has carried out several nuclear tests and experts predict more could be in the offing as it moves closer towards developing a nuclear warhead that could reach the US.
There have been indications from North Korea that it may test an intercontinental missile, even though it is banned from any tests under UN resolutions (restrictions it has consistently ignored).
On Wednesday, it test-fired a medium-range ballistic missile from its eastern port of Sinpo into the Sea of Japan. That test came a month after four ballistic missiles were fired towards the Sea of Japan, moves that provoked a furious reaction by Japan.
On its part, North Korea says it is provoked by military exercises between the US and South Korea, which it sees as preparation for an invasion.
Syria
North Korea has also been closely watching how US President Donald Trump has been responding in Syria.
Early on Friday, the US military launched air strikes against the Syrian government, in retaliation for a reported chemical attack.
North Korea called it an "intolerable act of aggression against a sovereign state", and said the strike showed it was justified in bolstering its own defences.
What are the moves behind the scenes?
The most recent test - condemned by Japan and South Korea - came on the eve of a visit by China's President Xi Jinping to the US to meet President Trump.
The two leaders discussed how to rein in North Korea's nuclear and missile programmes as the US steps up the pressure on China, a historic ally of Pyongyang, to help reduce tension.
China has, however, been reluctant to isolate its neighbour and ally, fearing its collapse could spawn a refugee crisis and bring the US military to its doorstep.
China has long been North Korea's closest diplomatic ally and trading partner, but the relationship has become increasingly strained over Pyongyang's refusal to halt nuclear and missile testing.
Mr Trump said in a recent interview that Washington was ready to act without Beijing's co-operation: "If China is not going to solve North Korea, we will."
The US Treasury recently slapped sanctions on 11 North Korean business representatives and one company, while US politicians overwhelmingly backed a bill relisting the North as a state sponsor of terror.
North Korea responded by warning that it will retaliate if the international community steps up sanctions, saying the US was forcing the situation "to the brink of war".
Han’s conglomerate, Malaysia Korea Partners (MKP), worked in partnership with Jang Song Thaek, according to Lee Chol Ho, who worked as a trader for Han for nine years until he defected to Seoul in 2010. Jang, the uncle of North Korea's ruler Kim Jong Un, was considered one of North Korea's most powerful men until he was executed for treason in 2013.
Reuters was unable to independently confirm Lee's account of Han's relationship with North Korea's leadership, including his assertion that money was funneled to North Korea's leadership body, the central committee of the ruling Workers' Party.
Reuters also couldn't determine how the central committee, which controls North Korea's highly sanctioned nuclear and weapons program, used the funds from Han or if the payments are continuing.
The new disclosures come at a time when United Nations sanctions monitors are intensifying scrutiny of both Han and MKP.
A February report by experts monitoring U.N. sanctions on North Korea says MKP's bank subsidiary in Pyongyang is a particular focus. A 2013 U.N. resolution bars foreign companies or foreign joint ventures with a North Korean company from having a financial subsidiary in North Korea.
The U.N. report says the bank, called International Consortium Bank, was established as a joint venture between MKP and Jang's Sungri Economic Group. The bank is licensed by North Korea's central bank and registered with the Pyongyang Municipal People's Committee, it said.
If the U.N. experts find sanctions have been violated, they could recommend the U.N. Security Council blacklist MKP, its executives or one or more of its subsidiaries, subjecting them to a global travel ban and asset freeze.
STRAINED TIES
Han, also known as Dr. Edward Hahn, hung up the phone and blocked a Reuters reporter on his messaging app when contacted for comment.
MKP did not respond to requests for comment on Lee’s assertions. The company issued a statement dated March 23 saying MKP had “no reason to hide the fact” that Han is North Korean. It denied owning ICB or any other North Korean bank and said nobody from the United Nations has contacted the company.
The U.N. said it does not comment on its ongoing investigations.
Lee's description of how MKP operated appears to shed fresh light on the close ties between Malaysia and North Korea, which have come under strain following the assassination of Kim Jong Nam, the elder half-brother of North Korea’s ruler, with the highly toxic VX nerve agent in February.
Reuters reported in February that North Korea’s spy agency was running an arms export operation out of Malaysia.
Malaysia's foreign ministry did not respond to Reuters’ requests for comment.
PYONGYANG BANK
MKP, which Han formed in 1996 with his Malaysian partner, Yong Kok Yeap, operates in 20 countries in Asia, Africa and the Middle East, piling up contracts worth at least $350 million, an MKP corporate video and promotional brochures shows.
Yong declined requests to be interviewed.
MKP's main business is construction, but it is also involved in a number of other activities, including financial services and coal trading, according to U.N. reports, company sources, registration documents and MKP promotional material.
ICB is among several banks the U.N. is currently investigating for possible breaches of various U.N. Security Council resolutions. These include one from 2013 calling on members states to prohibit financial service companies where there are “reasonable grounds to believe that such financial services could contribute to [North Korea’s] nuclear or ballistic weapons programs.”
In its March 23 statement, MKP said its website had been “hacked” to insert ICB under its list of service companies and place a “doctored photograph” of “MKP personnel”, including Yong, visiting ICB’s office in Pyongyang.
A search of archive.org, a database of old websites, shows ICB has been listed on MKP’s website since 2009, including under its earlier name, Sungri Hi-Fund International Bank. As of April 10, ICB was still listed on the website.
In its February report, the U.N. said it had inquired with Malaysia and MKP about ICB and had “yet to receive a reply.”
'CONTROL TOWER'
Lee said Han had used MKP as the “control tower” of a vast business empire, making him one of the isolated country’s richest men. He said Han began his career in Africa with North Korea's Reconnaissance Bureau, its premier spy agency.
“When people from the Central Committee visited Malaysia, they only met with Han,” Lee said. “They didn’t even bother to see the ambassador.”
The Central Committee directs the development and financing of North Korea’s nuclear and missile programs, said Michael Madden, a North Korea expert at Johns Hopkins University’s 38 North website.
Once a year, Lee said, high-ranking Pyongyang officials traveled to Kuala Lumpur to meet Han and instruct him to wire money to North Korea via banks in Malaysia.
“It was all dollars and euros,” said Lee.
Lee said Han was part of Jang's overseas network of businessmen.
Two current company sources said MKP’s fortunes - with the exception of its African businesses - declined after 2013 and Han became an infrequent visitor to Malaysia. They said they didn't know whether the downturn was related to Jang’s demise.
 |
| A general view of the Malaysia-Korea Partners (MKP) Holdings headquarters in Kuala Lumpur, Malaysia March 22, 2017. REUTERS/James Pearson |
China's nuclear envoy in South Korea amid talk of Trump action against North Korea
A Chinese envoy arrives in South Korea on Monday to discuss North Korea's increasingly defiant weapons program as a U.S. Navy strike group heads to the region amid concerns Pyongyang may be readying a fresh nuclear test.
North Korea marks several major anniversaries this month and often marks the occasions with major tests of military hardware.
The possibility of U.S. military action against North Korea in response to such a test emerged as an option following last week's U.S. strikes against Syria. It was further fueled by comments from U.S. President Donald Trump's top aides on the weekend.
In Tokyo, the feasibility of U.S. military action was downplayed, while South Korea said the focus remained on deterrence and readiness.
“It probably is not realistic for the U.S. to attack North Korea," a Japanese defense ministry source said. "If America says it is going to attack, both Japan and South Korea will probably put a stop to it," said the source who declined to be identified.
U.S. Secretary of State Rex Tillerson said the U.S. military strike against Syria over its alleged use of chemical weapons was a warning to other countries including North Korea that "a response is likely" if they pose a danger.
"(Chinese) President Xi (Jinping) clearly understands, and I think agrees, that the situation has intensified and has reached a certain level of threat that action has to be taken," Tillerson said on CBS's Face the Nation.
China's Special Representative for Korean Peninsula Affairs Wu Dawei is expected to discuss the North's nuclear issue with his South Korean counterpart, according to the South Korean foreign ministry.
Wu's trip comes after Trump and Xi met in Florida, where Trump pressed his counterpart to do more to curb North Korea's nuclear program.
SHOW OF FORCE
The U.S. Navy strike group Carl Vinson canceled a planned trip to Australia and is moving toward the western Pacific Ocean near the Korean peninsula as a show of force, a U.S. official told Reuters over the weekend. "We feel the increased presence is necessary," the official said.
South Korean and U.S. forces are also involved in annual joint military drills that run until the end of April. The North calls the drills preparations for war against it.
Several North Korean anniversaries in April could be opportunity for Pyongyang to conduct nuclear or missile tests, South Korean defense ministry spokesman Moon Sang-kyun said.
North Korea has invited a large number of foreign media representatives to Pyongyang this week, likely to cover the so-called "Day of the Sun" birth anniversary on April 15 of the state founder Kim Il Sung.
Moon did not directly respond to a question about the possibility of a U.S. military strike against the North.
"Considering the possibility of North Korea's strategic provocations such as a nuclear test and missile launches, we have in place deterrence to the North's provocation and all readiness against them," he told a briefing on Monday.
Senior envoys of South Korea, Japan and the United State on the North Korea nuclear program will soon meet to discuss their coordinated response, the South's foreign ministry said.
North Korea sounded a note of defiance on Saturday calling the U.S. strikes against Syria "an unforgivable act of aggression" that showed its decision to develop nuclear weapons was "the right choice."
North Korea launched a ballistic missile on Wednesday that flew a short distance before spinning out of control and crashing into the sea, the latest of a number of missile tests defying U.N. sanctions.
The North is also seen to be ready to conduct its sixth nuclear test at any time, with movements detected by satellites at its Punggye-ri nuclear test site.
North Korea missiles: US warships deployed to Korean peninsula
The US military has ordered a navy strike group to move towards the Korean peninsula, amid growing concerns about North Korea's missile programme.
The Carl Vinson Strike Group comprises an aircraft carrier and other warships.
US Pacific Command described the deployment - now heading towards the western Pacific - as a prudent measure to maintain readiness in the region.
President Trump has said the US is prepared to act alone to deal with the nuclear threat from North Korea.
"The number one threat in the region continues to be North Korea, due to its reckless, irresponsible and destabilising programme of missile tests and pursuit of a nuclear weapons capability," US Pacific Command spokesman Dave Benham said.
What is being deployed?
The strike group comprises the Nimitz-class aircraft carrier USS Carl Vinson, two guided-missile destroyers and a guided-missile cruiser.
As well as massive striking power, the carrier group - headed by Admiral Nora Tyson - has the capability to intercept ballistic missiles.
It was originally due to make port calls in Australia but instead has been diverted from Singapore to the west Pacific - where it recently conducted exercises with the South Korean Navy.
North Korea's missiles
North Korea has carried out several nuclear tests and experts predict more could be in the offing as it moves closer towards developing a nuclear warhead that could reach the US.
There have been indications from North Korea that it may test an intercontinental missile, even though it is banned from any tests under UN resolutions (restrictions it has consistently ignored).
On Wednesday, it test-fired a medium-range ballistic missile from its eastern port of Sinpo into the Sea of Japan. That test came a month after four ballistic missiles were fired towards the Sea of Japan, moves that provoked a furious reaction by Japan.
On its part, North Korea says it is provoked by military exercises between the US and South Korea, which it sees as preparation for an invasion.
Syria
North Korea has also been closely watching how US President Donald Trump has been responding in Syria.
Early on Friday, the US military launched air strikes against the Syrian government, in retaliation for a reported chemical attack.
North Korea called it an "intolerable act of aggression against a sovereign state", and said the strike showed it was justified in bolstering its own defences.
What are the moves behind the scenes?
The most recent test - condemned by Japan and South Korea - came on the eve of a visit by China's President Xi Jinping to the US to meet President Trump.
The two leaders discussed how to rein in North Korea's nuclear and missile programmes as the US steps up the pressure on China, a historic ally of Pyongyang, to help reduce tension.
China has, however, been reluctant to isolate its neighbour and ally, fearing its collapse could spawn a refugee crisis and bring the US military to its doorstep.
China has long been North Korea's closest diplomatic ally and trading partner, but the relationship has become increasingly strained over Pyongyang's refusal to halt nuclear and missile testing.
Mr Trump said in a recent interview that Washington was ready to act without Beijing's co-operation: "If China is not going to solve North Korea, we will."
The US Treasury recently slapped sanctions on 11 North Korean business representatives and one company, while US politicians overwhelmingly backed a bill relisting the North as a state sponsor of terror.
North Korea responded by warning that it will retaliate if the international community steps up sanctions, saying the US was forcing the situation "to the brink of war".
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