• Reuters


North Korea has developed sophisticated ways to circumvent United Nations sanctions, including the suspected use of its embassies to facilitate an illegal trade in weapons, a United Nations report issued Tuesday said.

The report claimed that North Korea is also using more complicated financial countermeasures and techniques “pioneered by drug-trafficking organizations” to make tracking its purchases of prohibited goods more difficult.

The report, compiled by a panel of eight U.N. experts, is part of an annual accounting of North Korea’s compliance with U.N. sanctions imposed in response to Pyongyang’s banned nuclear weapons and missile programs. The panel reports to the U.N. Security Council.

“From the incidents analyzed in the period under review, the panel has found that (North Korea) makes increasing use of multiple and tiered circumvention techniques,” a summary of the 127-page report said.

China, North Korea’s main trading partner and diplomatic ally, appeared to have complied with most of the panel’s requests for information.

Some independent experts and Western countries question how far Beijing has gone in implementing sanctions, although the report did not specifically address that issue.

Beijing has said it wants sanctions enforced.

Much of the report focused on North Korea’s overseas trade networks, rather than its relationship with China.

The panel said it found a relatively complex “corporate ecosystem” of foreign-based firms and individuals that helped North Korea evade scrutiny of its assets as well as its financial and trade dealings.

Several U.N. Security Council diplomats said the North Korean sanctions committee was still weighing the findings. They described it as a detailed but unsurprising report that offered confirmation of Pyongyang’s well-known methods of skirting sanctions.Two diplomats said the council was unlikely to take any action in the immediate future based on the report’s findings.

North Korea’s embassies abroad play a key role in aiding and abetting these shadowy companies, the report said, confirming suspicions long held by the international community.

In some of the most comprehensive evidence presented publicly against Pyongyang’s embassies, the report said the missions in Cuba and Singapore were suspected of organizing an illegal shipment of Cuban fighter jets and missile parts that were seized on a North Korean containership in Panama last July.

It included secret North Korean documents addressed to the ship’s captain that offered detailed instructions on how to load and conceal the illegal weapons shipment and make a false declaration to customs officers in Panama. “Load the containers first and load the 10,000 tons of sugar (at the next port) over them so that the containers cannot be seen,” said the document, translated from Korean.

Panama seized the ship, the Chong Chon Gang, for smuggling Soviet-era arms, including two MiG-21 jet fighters, under thousands of tons of sugar. After the discovery, Cuba said it was sending “obsolete” Soviet-era weapons to be repaired in North Korea and returned to Cuba.

Chinpo Shipping, a firm that the report said was “co-located” with the North Korean Embassy in Singapore, acted as the agent for a Pyongyang-based company that operated the vessel, and North Korean diplomatic personnel in Cuba arranged the shipping of the concealed cargo.

North Korea has gone to great lengths to mask the origin of its merchant shipping fleet by reflagging and renaming ships, the report said, particularly after the introduction of tightened U.N. sanctions in early 2013 that followed the country’s third nuclear weapons test.

Most of the registered owners of the ships are small companies that rarely own more than five vessels, meaning Pyongyang is able to keep its fleet running if a ship or shipping company is seized or has its assets frozen.

Under the myriad U.N. sanctions, North Korea is banned from shipping and receiving cargo related to its nuclear arms and missile programs. The importation of some luxury goods is also banned, along with the illicit transfer of bulk cash.

North Korea has fostered a complicated corporate network outside the international financial system that it uses to buy both banned and permitted goods, the report added.

The panel cited an example of an “unusually complex” transaction involving a contract by Air Koryo, the North’s national carrier, to purchase new aircraft in 2012. It said payments were structured through eight Hong Kong-registered companies that asserted they were trading partners of Air Koryo and were wiring funds they owed it.

The purchase of civilian aircraft is not prohibited under U.N. sanctions, but some of the companies appeared to have been recently formed shell entities.

North Korea is also still dependent on foreign suppliers for its missile programs, the report said, referring to a long-range rocket salvaged by South Korea that contained parts originating from China, the United States, the former Soviet Union, South Korea, the United Kingdom and Switzerland. The rocket was fired out to sea in December 2012.

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