N. Ko­rea’s ‘Sin­ga­pore shops’ ex­pose sanc­tions weak­ness

Stamford Advocate (Sunday) - - Sunday Business -

De­spite the un­wanted pub­lic­ity of a crim­i­nal trial for one of their main sup­pli­ers, busi­ness is boom­ing at Py­ongyang’s “Sin­ga­pore shops,” which sell ev­ery­thing from Ukrainian vodka to brand-name knock-offs from China. The stores stock many of the very things United Na­tions’ sanc­tions ban­ning trade in lux­ury goods are in­tended to block and pro­vide a nag­ging re­minder that not all po­ten­tial trade part­ners are lin­ing up be­hind the U.N.’s pro­nounce­ments or the Trump ad­min­is­tra­tion’s pol­icy of max­i­mum pres­sure on the North.

Es­pe­cially when there’s a buck — or a few mil­lion bucks — to be made.

The stores are any­thing but se­cret.

They are well marked, open to walk-ins and dis­trib­ute their own mem­ber­ship cards to re­ward reg­u­lar cus­tomers. Un­til re­cently, the name of their Sin­ga­porean part­ner, the OCN Group, was printed on the Bugsae shop’s plas­tic shop­ping bags. And while be­ing the fo­cus of the court case that could land OCN’s for­mer di­rec­tor in prison for a very long time, they con­tinue to un­abashedly spe­cial­ize in im­ported prod­ucts — per­fumes, fine jew­elry, wines, cloth­ing and cos­met­ics — that would ap­pear to bla­tantly vi­o­late U.N. re­stric­tions.

For­mally known as the Po­tong­gang Ryu­gy­ong Shop and the Bugsae Shop, the stores are a fix­ture of the up­scale shop­ping scene in Py­ongyang, cater­ing to the cap­i­tal’s elites, Chi­nese busi­ness­men and mem­bers of the diplo­matic corps. Pur­chases can be made in dol­lars, eu­ros and Chi­nese yuan. The price in each is dis­played dig­i­tally on the cash regis­ter.

Both stores have been sub­stan­tially ren­o­vated since last sum­mer.

The Ryu­gy­ong store now has a cof­fee shop be­hind the im­ported shoe sec­tion on its sec­ond floor. The Bugsae shop has in­stalled dark wood pan­el­ing and glass cas­ing for its wines and spir­its cor­ner, which was re­cently dom­i­nated by vod­kas from the Ukraine. It has sep­a­rate dis­play ar­eas for snacks and soft drinks from Ja­pan, Malaysia and China, a row ded­i­cated to fancy sham­poos, and a sec­tion in the rear for im­ported elec­tronic ap­pli­ances and house­hold goods.

The well-stocked shelves be­lie the hit sup­plies must have taken with the ar­rest of their for­mer Sin­ga­porean trad­ing part­ner.

Ng Kheng Wah, 56, faces 80 charges of vi­o­lat­ing United Na­tions sanc­tions for al­legedly sup­ply­ing $6 mil­lion worth of lux­ury goods to the Bugsae Shop from 2010 to 2017. This in­cludes watches “clad with a pre­cious metal,” jew­elry, mu­si­cal in­stru­ments and wine. While OCN is not men­tioned, the charges ac­cuse Ng of try­ing to de­fraud banks through an­other of his com­pa­nies, T Spe­cial­ist In­ter­na­tional.

Ng, who stepped down as an OCN di­rec­tor in March, also faces 81 charges for work­ing with a part­ner iden­ti­fied as Wang Zhi Guo to de­ceive DBS, the Oversea-Chi­nese Bank­ing Corp. Ltd and Malayan Bank­ing Ber­had to carry out his deals, is­su­ing false in­voices for the sale of Watari In­stant Noo­dles to T Spe­cial­ist, most amount­ing to hun­dreds of thou­sands of dol­lars.

Ng was charged on July 18 and granted bail of $364,645.

A pre­trial con­fer­ence is sched­uled for Jan. 17. For each of­fense un­der the U.N. sanc­tions act, Ng faces a max­i­mum sen­tence of five years in jail and a $72,929 fine. Each cheat­ing charge comes with an ad­di­tional max­i­mum jail term of 10

years and an un­spec­i­fied fine.

Sin­ga­pore au­thor­i­ties have ac­cused an­other Sin­ga­porean and a North Korean man of help­ing to sup­ply lux­ury goods to Py­ongyang. They are also in­ves­ti­gat­ing a Sin­ga­porean busi­ness­man who is fac­ing crim­i­nal charges in the United States for al­legedly vi­o­lat­ing sanc­tions against North Ko­rea.

Ng de­nied any wrong­do­ing in an in­ter­view with the Sin­ga­porean news­pa­per The Straits Times shortly af­ter re­ports of pos­si­ble vi­o­la­tions be­came pub­lic. He said OCN was the sole dis­trib­u­tor of the pop­u­lar Ja­panese Pokka brand canned drinks in North Ko­rea from 2000 and 2012, but claimed OCN dropped that when Ja­pan im­posed sanc­tions ban­ning such ex­ports. Doc­u­ments pre­sented in court show that in early 2014 his other busi­ness, T Spe­cial­ist In­ter­na­tional, pre­sented a bo­gus in­voice to a bank from which it was seek­ing a loan, claim­ing it had re­ceived $522,410 for Pokka sales.

The case hints at an un­com­fort­able truth that has long ham­strung ef­forts to make sanc­tions en­force­ment re­ally bite: en­gag­ing the North is not as uni­formly taboo with po­ten­tial trad­ing part­ners as Wash­ing­ton might like.

China has long been Py­ongyang’s big­gest pipe­line. With Ng on trial, it’s al­most cer­tainly where most of the Sin­ga­pore shops’ good­ies come from, even if they orig­i­nate else­where. The two coun­tries have a long bor­der, a rail con­nec­tion, and al­most­daily

flights be­tween their capi­tals that al­low for the trans­port of a sig­nif­i­cant amount of goods. Rus­sia is an­other im­por­tant trader. So have been in­ter­ests in coun­tries like Egypt, which helped fund and set up the North’s mo­bile phone sys­tem, and HB Oil of Mon­go­lia, which was in­volved in a 2013 deal to build gas sta­tions in Py­ongyang.

Sin­ga­pore, which in June hosted the sum­mit be­tween Pres­i­dent Don­ald Trump and North Korean leader Kim Jong Un, has rel­a­tively close ties with the North. North Ko­rea runs an em­bassy in Sin­ga­pore, though Sin­ga­pore does not have an em­bassy in Py­ongyang.

The two also have a long his­tory of do­ing busi­ness.

While ru­mors swirled about how the Trump sum­mit might lead to the North get­ting its first McDon­alds, a trio of Sin­ga­porean busi­ness­men had al­ready got­ten the jump on the Py­ongyang burger mar­ket, in 2009. Burg­ers hot off the grill of the chain of fast food res­tau­rants started by Patrick Soh, Quek Cher Lan and Tim­o­thy Tan called “Sam­taesong,” or Three Big Stars, are al­most re­quired eat­ing at an amuse­ment park next to Kim Il Sung Sta­dium.

The menu at an­other some­what fancier Sam­taesong out­let has a wide se­lec­tion of cof­fee, smooth­ies, fried chicken and even “Sausage, Egg and Cheese McGrid­dles” on its menu.

Soh, also speak­ing to The Straits Times, claims to cur­rently re­ceive no in­come from the res­tau­rants and says he has cut back his travel to Py­ongyang.

As­so­ci­ated Press

A North Korean woman walks out­side Bugsae Shop, also known as the “Sin­ga­pore Shop,” in Py­ongyang, North Ko­rea, ear­lier this month.

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