High-Level Defector Suggests North Korea Employs State-Sponsored Schemes to Elude Sanctions
By Baik Sung-won July 13, 2019
A high-level North Korean defector who delivered millions of dollars to Pyongyang's elite as a trusted, overseas trader, suggests the Kim regime is employing state-sponsored strategies to elude international sanctions on oil needed to maintain its military and economy.
Ri Jong Ho defected to South Korea with his family in 2014, soon after North Korean leader Kim Jong Un executed his own uncle Jang Song Thaek in 2013.
Before defecting, Ri worked in Office 39, a North Korean bureau responsible for securing foreign income and hard currency for the country's leaders and senior officials in North Korea's ruling Workers' Party. The U.S. government has accused Office 39 of engaging in "illicit economic activities" to support the regime and its nuclear and missile programs.
Ri contends that North Korea is employing highly secret state-sponsored illicit schemes such as ship-to-ship transfers in its desperate attempt to get oil.
U.N. Security Council (UNSC) Resolution 2397, issued in December 2017 in response to North Korea's launch of an intercontinental ballistic missile, bans North Korea from importing more than 500,000 barrels of refined petroleum annually.
"The allowable imports are less than 25% of what North Korea used to import before the sanctions on oil cap were imposed. The amount of oil now allowed is so small, the normal activities of North Korean economy and its military may be curtailed," Ri said.
Ri, the onetime head of the Korea Daehung Trading Corporation in Dalian, China, last week told VOA's Korean Service that North Korea may be exploiting loopholes in international efforts to block illicit ship-to-ship transfers of desperately needed oil.
Almost all ships are linked to an automatic, identification system (AIS) that transmits the vessel's identification and its whereabouts at sea to nearby ports. The International Convention for the Safety of Life at Sea (SOLAS) requires every ship making an international voyage to keep its AIS tracker on at all times.
Nevertheless, North Korean ships are known to turn off their AIS transponders, according to the U.S. Treasury, which called the practice "deceptive" in a March 2019 advisory.
Ri said the U.S. and its allies should step up efforts to fill a gap created by a loophole in international efforts to stop Pyongyang's sanctions evasion.
"Inspecting ships is very simple and straightforward," Ri said.
"A ship always has several documents that show the records of when and where the ship sailed and for what purpose, to whom, how and why it made voyages," he continued. "It keeps records in the captain's room, navigation room and engine room as well as on the deck. The records such as which port the ship docked and for how long are also shown on sailors' identifications. The records on all documents can't disappear even if one or two documents were fabricated."
The U.S. Treasury said North Korea "received at least 263 tanker deliveries of refined petroleum procured from U.N.-prohibited ship-to-ship transfers" in 2018, according to the advisory.
The tanker deliveries were equivalent to 3.78 million barrels of oil, which is more than 7½ times the amount permissible under U.N. Security Council (UNSC) Resolution 2397, according to the advisory.
Last month, the U.S. and its allies submitted a letter of complaint to the UNSC North Korea sanctions committee, accusing Pyongyang of illegally importing more than the allowable annual cap of refined petroleum, particularly through transfers between ships at sea.
"It is hard to believe that shipping companies would have acted alone," facing high risks and high costs, "to illegally transship oil to North Korea 263 times," Ri said.
Ri's suggestion that Pyongyang is directly exploiting loopholes revolves around the deliberate obscuring of the location of North Korean ships in the East China Sea, waters often used by Pyongyang for ship-to-ship transfers of oil. And it involves the Lunis, the first South Korean ship the U.S. Treasury Department put on a list of vessels suspected of carrying out illegal ship-to-ship transfers with the North.
Records show the Lunis left South Korea ports 27 times between 2017 and April 2019, carrying 1654,000 tons of refined oil, according to VOA's Korean Service.
Since April 2018, the Lunis apparently headed to Singapore 12 times from South Korea. Singapore's Maritime and Port Authority said that the ship has not arrived in its waters since April 2018.
But the Lunis was repeatedly spotted near Zhoushan Island and in other locations in the East China Sea, where the U.S. Treasury believes illegal ship-to-ship transfers occur.
Other ships involved
Authorities suspect other ships of evading sanctions. The South Korean-owned P-Pioneer was recently released after being held in the South Korean port of Busan where it was detained in October. It was suspected of supplying diesel to North Korea through two ship-to-ship transfers in September 2017 in the East China Sea.
Two North Korean vessels, the Kum Un San and the Yu Son, received the diesel, according to Yonhap, the South Korean news agency. Both are "North Korean vessels capable of engaging in ship-to-ship transfers of petroleum," according to the U.S. Treasury's March advisory.
Troy Stangarone, a senior director at the Korea Economic Institute, said, "Efforts to stop sanctioned activity should take place regardless of the country involved."
He continued, "South Korea may need to work to increase awareness among South Korean ship owners."
On July 2, South Korea released the P-Pioneer along with another ship suspected of illegal transfers, the Hong Kong-flagged Lighthouse Winmore.
A U.N. panel approved the release after a South Korean investigation found the ships had not deliberately evaded sanctions on North Korea. Two more suspect ships remain in detention.
The release was approved based on language in UNSC Resolution 2397 that permits ships to be returned if measures are taken to prevent further sanctions violations. The operator of the P-Pioneer agreed to keep the ship's tracking device on at all times. The Lighthouse Winmore was released on the same grounds.
Since April, South Korean prosecutors have been examining whether to indict the P-Pioneer's captain and management company for violating maritime laws and sanctions on North Korea, according to a coast guard official.
The U.S. seized North Korean cargo vessel Wise Honest in May for violating the U.S. and U.N. sanctions after Indonesia detained it for over a year for suspect activities. It was the first time the U.S. seized a North Korean vessel.
Fred and Cindy Warmbier, parents of Otto Warmbier who died shortly after release from a North Korean prison in 2017, have filed a claim for the ship as part of a $500 million judgment they received in a U.S. court against Pyongyang for their son's death.
Christy Lee contributed to this report, which originated on VOA's Korean Service.
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