Team America to launder $24m North Korean cash through Russia
From Casino Pyongyang with love
"He likes to gamble, feast on Korean food and take late-night tipples of cognac with his friends. He is also said to spend hours rejuvenating from his nocturnal adventures in the city's saunas." The Asia Times, on North Korean dauphin Kim Jong Nam
After hearing a report on NPR last week that a potential solution to the North Korean nuclear crisis brokered by the State Department involved laundering - er, transferring - $24m in frozen North Korean cash through an unnamed Vegas casino, I couldn't help but wonder how the fates of the shady gambling mecca of and the hermetic communist regime seemed to have become inextricably linked.
On a working vacation in Boston, walking back to my hotel from Fenway Park, I had, out of curiosity, up on tiny Beacon Hill, passed by Coburn's Gaming House, a one-time private gentleman's gambling house dating from before the Civil War. The privacy of the membership was both a mark of exclusivity and an implicit acknowledgment that gambling reveals certain unpleasant truths about who we are. We all take calculated risks of varying degree every day, whether it's crossing a busy street or investing in hedge funds or insurance, and separating certain behaviors from others allows us to maintain a kind of faith in the productive moral fabric of our society. We are hypocrites.
That seems to be true in spades for the ruling class of North Koreans. Whether the long-standing ties between the gangster-ridden former Portuguese colony and this most anachronistic of contemporary governments, the so-called Hermit Kingdom, is more marriage of necessity than warm embrace is difficult to ascertain. This is due to both the inherent corruption of the regime and the social and financial isolation in which it exists. For the North Koreans, hard currency can be hard to come by, and the government has traditionally used Macau financial institutions, casinos and otherwise, to move both counterfeit and hard currency between North Korea and the rest of the world.
The ties between legendary Macau casino kingpin Stanley Ho and the North Korean regime are extensive and well documented, extending even to a Ho-connected casino development in the North Korean capital known as the Casino Pyongyang - yet another source of foreign currency.
Although one Ho-connected bank in Macau found itself under investigation in 2005 for involvement with North Korean money laundering and counterfeiting, Ho's famed political connections seem to have saved him; another family run bank, the Banco Delta Asia, took the fall for facilitating a highly sophisticated North Korean counterfeiting operation that allegedly financed the North Korean nuclear program. The US froze the bank out of the international financial system, with $24m still in North Korean accounts. North Korea responded by pulling out of the six-party talks, and only tentatively agreed to return this week after a murky funds transfer orchestrated by the State Department allegedly paved the way to return the disputed money to the North Korean government.
The Asia Times has reported that the point man for the money laundering, counterfeiting, drug running and other hard currency operations of the regime in Macau was none other than Macau resident Kim Jong Nam, the eldest son of supreme leader Kim Jong Il. He previously worked in the Ministry of Public Security, the country's intelligence organization, as well as in the Korea Computer Center where he helped develop cyber warfare technology.
The debauchery of the North Korean elite is legendary, and Kim Jong Nam - who travels the world on fake passports with suitcases full of cash - is no exception. His most famous indiscretion involved getting arrested at Narita International Airport trying to sneak into Japan on a fake Dominican Republic passport, loaded with cash, using a Chinese alias - Pang Xiong, or "fat bear". Despite this surreal attempt to visit Tokyo Disneyland, his tastes are rumored to veer toward the carnal.
As the Wikipedia entry on the North Korean dauphin notes,
According to the Japanese magazine Shukan Shincho, Kim had made three previous clandestine visits to Japan, and had spent most of his time consorting with prostitutes in expensive bathhouses in Tokyo's Yoshiwara district. This aspect of the incident prompted commentators to point out the contrast between the situation in the DPRK, where many people are starving, with the self-indulgent lifestyles of its ruling elite.
With the North Koreans demanding their money back before returning to the bargaining table, and no legitimate financial institution daring to have anything to do with the pariah Banco Delta Asia, the State Department has had to resort to increasingly creative financing schemes to get the North Koreans back to the bargaining table. In an effort to secure a lucrative and scarce Macau gaming license, an unnamed Las Vegas casino offered to purchase the Banco Delta Asia and perform the transfer itself.
More recent reports have the money going through the Russians- clearly a disappointing development for a gaming correspondent. As of this report, however, the funds had still not been moved and the North Koreans had yet to return to the bargaining table. Until the money's in the bag, here's to Vegas - doing its part for world peace.®
Burke Hansen, attorney at large, heads a San Francisco law office