N. Korea gen­eral tied to forged $100 bills

The Washington Times Weekly - - National Security - BY BILL GERTZ

A North Korean gen­eral who is a con­fi­dant of the coun­try’s leader, Kim Jong-il, has been iden­ti­fied by U.S. and for­eign in­tel­li­gence agen­cies as a key fig­ure in the covert pro­duc­tion and dis­tri­bu­tion of high­qual­ity coun­ter­feit $100 bills called su­per­notes, ac­cord­ing to doc­u­ments and in­ter­views with in­tel­li­gence of­fi­cials.

North Korean Gen. O Kukryol, who was re­cently pro­moted to the coun­try’s pow­er­ful Na­tional De­fense Com­mis­sion, and sev­eral of his fam­ily mem­bers are said to be in charge of pro­duc­ing the fake $100 bills, which are so care­fully crafted that they are dif­fi­cult to tell apart from real U.S. ban­knotes, ac­cord­ing to U.S. gov­ern­ment and for­eign diplo­matic sources fa­mil­iar with classified in­tel­li­gence re­ports on the coun­ter­feit­ing.

A for­eign-gov­ern­ment re­port ob­tained by The Wash­ing­ton Times from a diplo­matic source in Wash­ing­ton said Gen. O has emerged in re­cent months as one of the most pow­er­ful mil­i­tary fig­ures in the North Korean regime and the per­son in charge of ar­rang­ing the suc­ces­sion of Mr. Kim by his third son, Kim Jong-un. Kim Jong-il suf­fered a stroke in Au­gust and has ap­peared in pub­lic re­cently looking thin and frail.

The in­for­ma­tion about the gen­eral in the re­port was con­firmed by a se­nior U.S. in­tel­li­gence of­fi­cial as well as by other cur­rent and for­mer of­fi­cials with knowl­edge of North Korean ac­tiv­i­ties. They asked not to be named be­cause of the sen­si­tiv­ity of the is­sue.

Al­though North Korea has been linked to coun­ter­feit­ing for many years, the re­port is un­usu­ally detailed in its ac­count of how North Korea is us­ing il­le­gal ac­tiv­i­ties to raise hard cur­rency for use by the regime and Mr. Kim. The new de­tails were dis­closed as the United Na­tions con­sid­ers ad­di­tional eco­nomic sanc­tions against North Korea for an un­der­ground test of a nu­clear weapon two weeks ago.

An as­sis­tant to North Korea’s am­bas­sador to the United Na­tions, Sin Son Ho, re­jected any al­le­ga­tion of coun­ter­feit­ing. “As far as I know, this has al­ready been, how to say, re­jected by my gov­ern­ment,” the as­sis­tant, who asked not to be named, said in New York. “We have noth­ing to do with coun­ter­feit­ing of Amer­i­can money. This was stated by my of­fi­cials sev­eral times.”

He said many Euro­pean na­tions, in­clud­ing Ger­many, have not found any truth to the North Korean coun­ter­feit­ing re­ports. “We have never been in­volved in il­le­gal ac­tiv­i­ties such as coun­ter­feit­ing. We lack the equip­ment,” he said.

The first North Korean coun­ter­feit su­per­note was found by a cashier in Manila in 1989, said U.S. Se­cret Ser­vice of­fi­cials who spoke on the con­di­tion of anonymity be­cause of the sen­si­tiv­ity of the sub­ject. In 1994, North Korean trad­ing com­pany of­fi­cials car­ry­ing diplo­matic pass­ports of North Korea were ar­rested af­ter de­posit­ing tion ob­tained by The Times.

The re­port nar­rowed the source of su­per­note print­ing to a plant called the Py­ong­song Trade­mark Print­ing Fac­tory. The plant is said to be un­der the con­trol of the op­er­a­tions depart­ment of the Korean Work­ers Party, which is headed by Gen. O.

Su­per­note cir­cu­la­tion has in­creased in re­cent months, the re­port said, in part to off­set rev­enue short­falls cre­ated by in­ter­na­tional sanc­tions against North

North Korean Gen. O Kuk-ryol, who was re­cently pro­moted to the coun­try’s pow­er­ful Na­tional De­fense Com­mis­sion, and sev­eral of his fam­ily mem­bers are said to be in charge of pro­duc­ing the fake $100 bills, which are so care­fully crafted that they are dif­fi­cult to tell apart from real U.S. ban­knotes, ac­cord­ing to U.S. gov­ern­ment and for­eign diplo­matic sources fa­mil­iar with classified in­tel­li­gence re­ports on the coun­ter­feit­ing.

$250,000 in su­per­notes in Banco Delta Asia in Ma­cao, the of­fi­cials added.

In the United States, North Korean su­per­notes have been traced to Las Ve­gas. In the case of Chen Chi­ang Liu, a Los An­ge­les res­i­dent who was con­victed in fed­eral court in Septem­ber of con­spir­acy to sell and pass coun­ter­feit cur­rency, the su­per­notes he used looked au­then­tic enough to trick bill val­ida­tors in casino slot ma­chines.

The most re­cent ev­i­dence of North Korean traf­fick­ing in su­per­notes sur­faced in Pu­san, South Korea, in Novem­ber when po­lice seized about $1 mil­lion in su­per­notes. Ac­cord­ing to the re­port, the case “shows that Py­ongyang is us­ing South Korea to cir­cu­late or laun­der su­per­notes.”

Se­cret Ser­vice of­fi­cials have said that North Korea pro­duced more than $45 mil­lion in su­per- notes in cir­cu­la­tion since 1989. The Se­cret Ser­vice, which is in charge of in­ves­ti­gat­ing coun­ter­feit cur­rency, has iden­ti­fied 19 vari­a­tions of the coun­ter­feit $100 bill, which U.S. of­fi­cials think was pro­duced on North Korea’s in­taglio-process off­set print­ing presses.

Ed Dono­van, a spokesman for the Se­cret Ser­vice, de­clined to com­ment on the new in­forma- Korea.

David Asher, for­mer State Depart­ment co­or­di­na­tor for tracking North Korean il­licit ac­tiv­i­ties, said in a speech in Fe­bru­ary that the Banco Delta Asia case in­volv­ing North Korean coun­ter­feit­ing was “the tip of the ice­berg” in Py­ongyang’s global mon­ey­mak­ing op­er­a­tions. Mr. Asher said un­der­cover FBI agents in Ma­cao doc­u­mented the ac­tiv­ity, in­clud­ing coun­ter­feit­ing, that in­volved “hun­dreds of mil­lions of dol­lars” un­til the bank was sanc­tioned.

“Banco Delta Asia was wash­ing mas­sive amounts of money,” he said, not­ing that more steps need to be taken to halt Py­ongyang’s il­licit ac­tiv­i­ties and arms traf­fick­ing.

The U.S. Trea­sury Depart­ment barred U.S. con­tacts with the bank in 2005, la­bel­ing it a “pri­mary money-laun­der­ing con­cern.” The bank froze about $25 mil­lion in North Korean funds but re­leased the money in 2007 un­der U.S. pres­sure to get North Korea to re­turn to diplo­matic talks about its nu­clear pro­gram.

Ac­cord­ing to the re­port, North Korea’s hard cur­rency in­come from traf­fick­ing in coun­ter­feit su­per­notes and drugs is used to buy lux­ury goods for Mr. Kim and to de­velop con­ven­tional arms and weapons of mass de­struc­tion.

Bob Hamer, a re­tired FBI agent who worked un­der­cover as part of an op­er­a­tion de­signed to ex­pose il­le­gal North Korean ac­tiv­i­ties, in­clud­ing su­per­note dis­tri­bu­tion, said Py­ongyang’s su­per­note pro­duc­tion re­mains a “ma­jor prob­lem.”

Gen. O’s son, O Se-won, works with his fa­ther as one of two key over­seas of­fi­cials in­volved in North Korean coun­ter­feit­ing, the re­port said. In ad­di­tion to O Se­won, an­other rel­a­tive of Gen. O, iden­ti­fied as Lee Il-nam, was a coun­cilor at the North Korean Em­bassy in Ethiopia and op­er­ated as a su­per­notes courier, mak­ing vis­its from Py­ongyang, to Bei­jing to Ethiopia and back from May 2003 to Septem­ber 2004, ac­cord­ing to the re­port.

The re­port says North Korea uses front com­pa­nies and shell com­pa­nies over­seas to fa­cil­i­tate the il­licit traf­fick­ing in su­per­notes. The use of fake com­pa­nies in­creased af­ter the Trea­sury Depart­ment barred U.S. com­pa­nies from work­ing with Banco Delta Asia.

To fur­ther hide the trans­ac­tions from in­ter­na­tional fi­nan­cial au­thor­i­ties, the North Korean party of­fice used a fi­nan­cial front com­pany, set up in China in 2006, to make pay­ments as part of the pur­chases, the re­port says. North Korea also set up a front com­pany in the Bri­tish Vir­gin Is­lands in the mid-2000s to take ad­van­tage of lax bank­ing reg­u­la­tions and tax laws there, it says, and other branches of the front com­pany were es­tab­lished for fi­nan­cial sup­port ac­tiv­i­ties in China, Rus­sia and South­east Asia.

One front com­pany bought lux­ury yachts, Mercedes-Benz cars and per­sonal he­li­copters for Mr. Kim and his fam­ily, the re­port said.

Betsy Pisik in New York con­trib­uted to this re­port.

AS­SO­CI­ATED PRESS

Made in Py­ongyang: A South Korean bank clerk walks be­hind the show case of coun­ter­feit U.S. dol­lar bills at a lo­cal bank in Seoul on Jan. 23, 2006.

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