A Japanese court has blocked a Mongolia-based company’s bid to buy the Tokyo headquarters of the main pro-North Korea organization in Japan, Chongryon.

After months of screening, the Tokyo District Court announced on Thursday that due to purchase irregularities it would not allow the Ulan Bator-based Avar Limited Liability Company to purchase the property, which still serves as the headquarters for Japan’s main pro-North Korea organization.

The Mongolian firm, which had previously won an October 2013 auction for the building with a 5.01 billion yen (U.S. $48 million bid) bid, was rejected by the court because a certificate it submitted to support the purchase appeared to be a color photocopy and did not bear the official seal of the Mongolian government.

“It is a company on paper,” Hideshi Takesada, an expert on regional security at Takushoku University in Tokyo, told NK News on Thursday.

“With the bid tendering highly unlikely to be successful, Chongryon will be able to stay at the headquarters building and use the land. In a sense, the Japanese government is doing a favor for North Korea,” Takesada said. Takesada is a former executive director of the National Institute for Defense Studies in Tokyo, the Japanese Ministry of Defense’s think-tank.

Since Pyongyang has no diplomatic relations with Tokyo, the Chongryon headquarters have for decades virtually served as North Korea’s de facto embassy in Japan.

North Korea is therefore interested in keeping the headquarters active and buyers sympathetic with the Chongryon’s activities are more likely to allow the group to continue using the building as a headquarters.

“There is nothing we can say,” a spokesman at Chongryon told NK News on Thursday when asked about the blocked purchase.

SALE PROBLEMS

In March 2013 the property was put up for auction by the Tokyo District Court to pay off huge debts of the Chogin Credit Association, a failed credit union affiliated with Chongryon.

But the Tokyo District Court decided to postpone approval of the Mongolian company purchase on October 22 and asked the Ulan Bator government to cooperate in conducting background checks on the company.

The Chongryon originally planned to rent the property from a winning pro-North Korea bidder, but the sale has been mired in complications.

A chief priest of a Japanese Buddhist temple who won the March 2013 auction was forced to cancel his purchase due to financial difficulties. The priest, Ekan Ikeguchi, leader of Saifuku temple in Kagoshima Prefecture, said he could not complete the purchase because he had been unable to raise the 4.5 billion yen to pay for the building on deadline. Ikeguchi explained that many Japanese banks hesitated to lend money to him.

It was subsequently decided to make a second sale attempt, leading to the auction that the Mongolian company won in October 2013.

In face of the Tokyo District Court’s decision to halt the sale, the Mongolian company can file an appeal against the court’s decision within one week. But if the appeal is rejected, the auction will become void, prompting a potential third round of auction.

UNCERTAIN FUTURE

With the Tokyo court’s latest decision, experts have expressed uncertainty about the future of Japan-North Korea relations, especially in light of the longstanding issue of North Korean abductions of Japanese nationals.

“North Korea must be unhappy at today’s court decision,” said Mitsuhiro Suganuma, a former officer of the Public Security Intelligence Agency. “But the Shinzo Abe administration is trying to find clues as to how to resolve the two countries’ various problems, most notably the abduction issue”.

In relative terms, Suganuma said the two nations’ ties have recently been improving, evidenced most recently by Pyongyang’s outreach to Tokyo.

One example of this outreach, Suganuma pointed out, was that North Korea officially used a recent meeting with Upper House member and former professional wrestler Antonio Inoki to invite Japanese lawmakers to Pyongyang to discuss the abduction of Japanese nationals and normalization of relations.

“Because of the execution of Jang Song Thaek, relations between North Korea and China are becoming worse. This is a very favorable situation for Japan,” Suganuma said.

CHONGRYON IMPACT ON PRESIDENTIAL VISIT?

Earlier this month, a Russian source familiar with Korean affairs told NK News that he learned Kim Jong Un had provided money to a Mongolian company to help a Japanese Buddhist group buy the Chongryon’s headquarters.

But the source said the Mongolian company stole the money, explaining why Kim Jong Un chose not to meet Mongolian President Tsakhiagiin Elbegdorj when he visited Pyongyang in October.

Not all agree, however, and Public Security Intelligence Agency officer Mitsuhiro Suganuma flatly rejected the claim, describing it as nothing more than propaganda spread by a South Korean government keen to spike any North Korea-related bid to purchase the headquarter building. In Japan Chongryon and pro-South Korean Mindan have had a strong rivalry for decades, dividing the Korean community in Japan into two.

But Lee Young-hwa, an economics professor at Kansai University and third-generation Korean resident in Japan, said Kim Jong Un cancelled the meeting for reasons unrelated to the Chongryon headquarters.

In particular, Lee said Kim shunned the meeting with President Elbegdorj because Mongolia, serving as the go-between of Tokyo and Pyongyang, unilaterally negotiated with Japan on the abduction issue, connecting its own economic development aid from Japan to the return of Japanese citizens.

“The Mongolian government might calculate how much money it can get from the Japanese government per person whenever a kidnapped Japanese can return home from Pyongyang,” Lee said.

Takesada at Takushoku University said North Korea is now relying more on Mongolia to diversify its previously heavy dependence on China and Russia. Pyongyang and Ulan Bator have been discussing cooperation on development of natural resources. Meanwhile, Japan and Mongolian ties are also improving due to Japan’s Official Development Assistance (ODA), he said.

Takesada said all of these factors have been raising expectations of the role of Mongolia as a reconciliatory nation between Japan and North Korea.

Picture: Eric Lafforgue