AFP: - North Korea 'used UN-linked accounts for weapons sales'

North Korea 'used UN-linked accounts for weapons sales'
Friday Jan 25 05:27 AEDT

Nuclear-armed North Korea used UN-linked bank accounts to secretly transfer funds in connection with alleged weapons sales, a US Senate probe showed Thursday.

It found that United Nations Development Program (UNDP) operations in North Korea did not adhere to standard policies and were "undermined by management and operational deficiencies," said Senator Carl Levin, head of a panel that conducted the inquiry.

Pyongyang had insisted that UNDP, one of the world's principal humanitarian agencies, conduct its financial transactions using the North Korean state-owned Foreign Trade Bank, he said. UNDP had no access to the account records.

UNDP was "surprised to learn" that Foreign Trade Bank had routed some outgoing UNDP funds through a Chinese company called International Finance and Trade Joint Company (IFTJ) linked to alleged weapons sales, Levin said at a Senate hearing Thursday on the UNDP operations in North Korea.

He said "two UN payments totalling some 50,000 dollars, that had been made by UNDP on behalf of other UN agencies, had gone to an entity that the State Department later linked to North Korean weapon sales."

The transaction was made through an IFTJ account in the Chinese enclave of Macao, a where a tiny bank was hit with US-led sanctions recently for allegedly acting as a clearing house for illicit North Korean financial dealings.

North Korean officials interviewed in the probe said their foreign affairs ministry "used the UNDP-related accounts as a secure channel for transferring its own funds, apparently because it was less likely to incur international scrutiny and be frozen," said Levin, a Democrat chairing a permanent Senate panel on investigations.

The probe was held following media reports last year about alleged mismanagement of UNDP operations. Some suggested that the UNDP might have supplied more than 100 million dollars in hard currency to North Korea and that 2.7 million dollars in UNDP money was transferred to the country's embassies abroad.

The UNDP took the unprecedented step of suspending its operations in North Korea in March 2007 and withdrew from the hardline communist country a month later after Pyongyang refused to allow the agency to impose tighter controls on its activities.