Singaporean sister companies identified last year by NK Pro have been investigated for playing a role in helping Pyongyang evade international sanctions, an upcoming report from the United Nations Security Council’s (UNSC) Panel of Experts on North Korea (PoE) shows.

OCN Pte and T Specialist International Pte, which share the same director and address on Singapore’s Joo Chiat Road, exported sanctioned luxury goods to North Korea and established improper financial relationships in the country, says the forthcoming report, a copy of which was seen by NK Pro.

The PoE report further confirms close ties between OCN/T Specialist and several North Korean financial institutions, including a likely ownership stake in Ryugyong Commercial Bank and accounts with the Daedong Credit Bank (DCB), which has been under U.S. Treasury sanctions since 2013 for its links to North Korea’s nuclear weapons program.

“These cases show a continued pattern of joint ownership of DPRK financial institutions by foreign entities and individuals, directly supporting illicit DPRK activity through access to the international financial and trade systems,” says the report, which recommends subjecting two associates in OCN/T Specialist to sanctions designations.

When contacted previously by NK Pro with evidence of OCN/T Specialist’s business dealings in North Korea, lawyers for company director “Leo” Ng denied any wrongdoing on their client’s part, saying that OCN and its related entities complied with all applicable laws and regulations and unequivocally denied any allegations to the contrary.

Further attempts by NK Pro to contact Ng on Monday for comment about the Panel’s forthcoming report were unsuccessful.

PROHIBITED PRODUCTS AND BLACKLISTED BANKS

Banned luxury goods connected to OCN/T Specialist were regularly seen for sale at two so-called “hard currency stores” in Pyongyang, the Bugsae Shop and the Pothonggang Ryugyong Store, NK Pro reported in July and September 2017.

UN Security Council Resolutions and Singaporean customs rules have prohibited the export of a range of luxury goods to North Korea since 2006 and 2010, respectively.

The Panel report confirms that Ng has been doing business in North Korea since 1995 and has exported goods there since at least 2006, “in particular by supplying the Pyongyang Bugsae department stores with items for sale, including luxury goods.”

Despite this, as well as evidence made public last year by NK Pro, OCN/T Specialist continue to deny any role in the sale of goods to North Korea after 2012.

“Our clients have no knowledge of the authenticity of the sale of goods in DPRK as included in your letter and no knowledge of how any such goods ended up in DPRK,” OCN/T Specialist attorney Chern Yang See wrote to the Panel.

But prohibited products including high-end wines and spirits and luxury glassware from Singapore were spotted in Pyongyang’s Bugsae Shop with printed labels bearing the OCN logo, NK Pro showed last August.

The UN report cites private-label brands owned and distributed solely by OCN/T Specialist and spotted for sale at the Bugsae and Pothonggang Ryugyong stores as recently as August 2017 as evidence of an ongoing relationship with the stores.

Further, shipping documents seen by the Panel affirmatively place OCN in Pyongyang, with an address matching the one printed on OCN-branded plastic shopping bags seen by NK Pro at the Bugsae Shop.

FOLLOW THE MONEY

Multiple relationships between OCN and sanctioned North Korean banks are also revealed in the Panel’s report.

Although OCN insisted to the Panel that it never had a relationship of any kind with the Daedong Credit Bank (DCB), a Pyongyang bank under U.S. sanctions since 2013, the report says OCN was, in fact, one of DCB’s earliest customers, first opening an account with the blacklisted institution in March 1997, later changing the name on the account to T Specialist.

Maintaining a bank account in North Korea currently violates paragraphs 33 of UNSC Resolutions 2270 and 2321.

The DCB account “was used by both OCN and T Specialist starting in 2006 to transfer proceeds from items sold in the Bugsae Shop to T Specialist’s accounts at the Development Bank of Singapore in both Euros and dollars, almost always in even amounts.”

OCN/T Specialist’s banking relationship with DCB was maintained through a North Korean national under contract to OCN named Li Ik (Ri Ik), the company’s “office manager” in Pyongyang, the report adds, who made more than 37 trips in and out of Singapore over the past four years.

Banking records obtained by the Panel reveal more than 25 transfers of USD$100,000 to USD$350,000 “for payment for goods sold at the OCN Pyongyang Bugsae Shop” to a T Specialist account at the Development Bank of Singapore, between November 2011 and May 2014.

When the Panel asked OCN/T Specialist to explain the transactions, the company responded that they actually originated from Hongdae International Ltd in Hong Kong, not DCB in Pyongyang.

But, as the Panel’s report explains, “Hongdae was established by DCB’s representative in Dalian, China, Kim Chol Sam (aka Jin Tiesan, 金铁三 ), in order to undertake financial transactions on behalf of DCB.”

T Specialist then contended that the transfers were “for arrears in relation to amounts due and owing for goods sold” prior to October 2012, but never supplied any of the supporting documentation the Panel requested by the Panel.

Additionally, investigators also uncovered “repeated transfers” to T Specialist from an account at the Korea Kwangson Banking Corporation – designated by the U.S. Treasury since 2009 for its role in the DPRK’s proliferation network – belonging to the “Party Financial Management Department.”

Though OCN/T Specialist claimed no knowledge of these transfers, the Panel’s report identifies the transactions as payments for “goods supplied to Changgwang Foreigners’ Dormitory as well as payments to Chinese companies for various consumer goods, payments for foreign vessel port fees, hotel bills and payments for ‘OCN construction investment’ and cement.”

And a relatively minuscule 1,157 Euro transaction ($1,441 USD) from July 2011 uncovered by Panel investigators is nevertheless significant in that the funds were transferred to T Specialist by Pan Systems, a front company operated by the North Korean regime’s Reconnaissance General Bureau.

While the Panel’s report doesn’t give a reason for the transaction, it nevertheless demonstrates a “link between these two Singapore and DPRK entities and networks.”

AN ILLICIT JOINT VENTURE COMES INTO FOCUS

In a previous investigation, NK Pro found clues suggesting a possible ownership stake by OCN/T Specialist in Ryugyong Commercial Bank, a North Korean entity sanctioned by the U.S. Treasury Department in September 2017.

PoE investigators confirmed “longstanding close ties between OCN/T Specialist and Ryugyong Commercial Bank, including ownership ties”— a violation of paragraph 18 of UNSC Resolution 2375.

OCN/T Specialist purchased its shares in Ryugyong Commercial between 2012 and 2013, according to the report.

Three separate deposits of USD$499,970 each were transferred into a T Specialist account in Singapore by Pinnacle International, a Hong Kong company owned by Wang Zhi Guo, a Chinese national previously identified by NK Pro as a director of OCN Shipping Hong Kong and a shareholder in Lagun Sari, a Malay wedding hall in Singapore run by Leo Ng’s daughter, Trina.

An additional transfer from Mars Rock International Trading Co. Ltd. of Tianjin, China for $499,935 brought the total to USD$1,999,845.

“In addition to the provision of an ATM, these transactions were for the purchase of shares in Ryugyong Commercial Bank, facilitated by Ri Ik,” the report says, again identifying OCN’s Pyongyang office manager as a seemingly key node in North Korea’s illicit procurement network.

“Not only were the transactions sent to T Specialist’s bank account but a Member State separately confirmed to the Panel that OCN operated as a joint venture with Ryugyong Bank and Koryo Commercial Bank.” Koryo Commercial was sanctioned by the U.S. Treasury in September 2017, at the same time as Ryugyong Commercial.

In response, OCN/T Specialist told the Panel that it “was never our [….] intent to be the beneficial owner or interested party in the purchase,” then claimed it had only helped with Chinese-English translations between Ri and Wang when the Ryugyong deal was made.

Still, OCN never supplied documentation to support their claims, which the Panel said it found “implausible.”

INDIFFERENCE AND FAILURES, DENIALS AND ALIBIS

The PoE report will recommend that Wang and Ri be designated as sanctioned individuals.

Since financial institutions all over the world generally refuse to do business with people on the UN sanctions list, inclusion on it will make it extremely difficult for Wang and Ri to access the international banking system, should the Security Council support their designation.

The report also calls for proper due diligence and transaction monitoring at banks that cater to offshore clients, and for business registries to be aware of North Koreans passing themselves off as South Koreans.

William Newcomb, who served on the UN Panel of Experts on North Korea from 2011 to 2014, called the Panel’s investigation of the case as “the best and most explicit to date on North Korea’s evasion of international sanctions and the governments, organizations, firms and persons who make it possible through support, complicity, greed or indifference.”

The detailed evidence pointing to individuals and companies in Singapore helping North Korea evade sanctions raise questions about the dearth of official investigations by Singaporean authorities, who have previously been made aware of these very allegations, Newcomb told NK Pro.

“Indeed, the ‘permissive’ environment in Singapore is an open secret that helps explain why so many DPRK fronts and agents have set up shop there,” he said.

“International sanctions depend critically on accountability,” Newcomb continued. “Governments should stop papering over indifference and failures with denials and alibis and making false claims about tough sanctions implementation and enforcement.”

“The evidence of what States have and have not done is clear to those who look. It is not only the responsibility but the obligation of all Member States to make sanctions work, and it is past time they did so.”

Neither OCN’s Ng and Wang Zhi Guo or the Singapore’s Ministry of Foreign Affairs responded to repeated NK Pro requests for comment prior to publication.

Main picture: Street Directory.com