Panama Papers: N Korea shell companies funding nuclear weapons surface
A North Korean front company used to help fund the country’s nuclear weapons programme was among the clients of the Panamanian law firm at the centre of a massive data leak, reports said on Tuesday.panama papers Updated: Apr 05, 2016 14:42 IST
A North Korean front company used to help fund the country’s nuclear weapons programme was among the clients of the Panamanian law firm at the centre of a massive data leak, reports said on Tuesday.
With a Pyongyang-based address, DCB Finance Ltd was registered in the British Virgin Islands (BVI) in 2006, and leaked papers show that the Panama firm, Mossack Fonseca, legally incorporated the company, the Guardian newspaper and BBC reported.
The same year saw North Korea conduct its first nuclear test, triggering the first of numerous US Security Council resolutions imposing sanctions on Pyongyang.
DCB Finance Ltd was registered by North Korean official Kim Chol-Sam and Nigel Cowie, a British banker who had moved to North Korea in 1995 and went on to head its first foreign bank, Daedong Credit Bank – of which DCB Finance was an offshoot.
Leaked papers suggest that, despite the Pyongyang address, Mossack Fonseca failed to notice DCB’s link with North Korea until the BVI’s Financial Investigation Agency sent it a letter in 2010 asking for details of the company.
It was only then that the law firm resigned as DCB’s agent.
The following year Cowie, who says he was unaware of any unlawful transactions, sold the share he had brought in Daedong Credit Bank to a Chinese consortium.
Both the bank and DCB – as well as official Kim Chol-Sam – were targeted by US sanctions in June, 2013 on the grounds that they had, since 2006, provided financial services to two North Korean entities with a “central role” in developing the North’s nuclear and ballistic missile programmes.
The US Treasury said DCB Finance had been used to “carry out international financial transactions as a means to avoid scrutiny by financial institutions avoiding business with North Korea.”
A leaked e-mail from Mossack Fonseca’s compliance department in August 2013 appeared to acknowledge a lack of due diligence on the part of the law firm.
“We have not yet addressed the reason we maintained a relationship with DCB Finance when we knew or ought to have known from incorporation in 2006, that the country, North Korea was on the black list,” the e-mail said.
“We should have identified from the onset that this was a high risk company,” it added.
The scandal erupted on Sunday when media groups began revealing the results of a year-long investigation into a trove of 11.5 million documents from the Panamanian law firm Mossack Fonseca, which specialises in creating offshore shell companies. The expose was spearheaded by the International Consortium of Investigative Journalists (ICIJ) which received the documents from German daily Sueddeutsche Zeitung, who in turn received them from an anonymous source.
First Published: Apr 05, 2016 11:42 IST