North Korea flouting sanctions with illegal arms trade, report finds

Story highlights

  • Malaysian company Glocom said to be a front for North Korea
  • UN report claims the firm breached sanctions against Pyongyang

Hong Kong (CNN)If North Korea was indeed behind the public killing of Kim Jong Nam with the highly toxic VX nerve agent, it was a blatant breach of international law on chemical weapons.

However, according to new United Nations report the murder in Malaysia would be just the tip of the iceberg of a huge criminal network set up by Pyongyang to bypass international sanctions.
Through a network of front companies North Korea is "flouting sanctions through trade in prohibited goods, with evasion techniques that are increasing in scale, scope and sophistication," according to a report prepared for the UN Security Council and acquired by CNN.
The report said it would be published as a Security Council document by 22 February "in the absence of any objection," but it has not yet been made public.
UN investigators have documented trade in "hitherto unreported items such as encrypted military communications, man-portable air defense systems, air defense systems and satellite-guided missiles" in Asia, Africa and the Middle East.
The UN criticized member states for failing to fully enforce sanctions.
A flag flies over the North Korean embassy in Kuala Lumpur.

Sanctions

Under Resolution 1874, passed in 2009, the UN expanded sanctions against North Korea to include all arms, including "armored combat vehicles, large caliber artillery systems, attack helicopters, warships and missiles and spare parts."
North Korea is also prohibited from trading in small arms and light weapons ammunition, and certain minerals and metals. The UN encourages member states to destroy any materials suspected of breaching violations.
However, according to the new report, Pyongyang has been bypassing these restrictions for years, via numerous front companies and international facilitators, paid for in cash or gold.
"Diplomats, missions and trade representatives of (North Korea) systematically play key roles in prohibited sales, procurement, finance and logistics," the report said.
"Despite strengthened financial sanctions in 2016, the country's networks are adapting by using greater ingenuity in accessing formal banking channels, as well as bulk cash and gold transfers."
North Korea's embassies to the United Nations and Malaysia did not respond to multiple requests for comment.

Arms smuggling

In August last year, Egyptian officials intercepted a North Korean ship, the Jie Shun, en route to the Suez Canal.
Underneath several large tarpaulins piled with iron ore, they found a huge secret cargo of ammunition, including around 30,000 PG-7 rocket-propelled grenades and related equipment, the UN report said.
Markings on the weapons and crates indicated they had been manufactured in North Korea, and then disguised as "assembly parts (for an) underwater pump," it added.
The ship was also transporting minerals banned under UN resolution 2270. A North Korean economist told CNN in February that export of specialist raw materials -- such as magnesite and graphite, used in smartphone production -- was a big part of the country's trade.
The report compared the Jie Shun seizure to the Chong Chon Gang, another North Korean vessel stopped in Panama in 2013 found to be transporting anti-aircraft missile systems, MIG jets and other equipment from Cuba to North Korea.
A MIG-21 jets found inside the North Korean Chong Chon Gang vessel seized in July 2013.
In July 2016, a shipment of goods were seized en route from North Korea to Eritrea, the tiny east African nation which is also subject to stringent UN arms sanctions.
Around 45 boxes of military communications equipment sent from China to Eritrea were seized. All bore labels from "Glocom," a shadowy company purportedly based in Malaysia which specializes in radios and other gear for "military and para-military organizations," the UN report said.
Ties between North Korea and Malaysia are relatively strong. Malaysia is one of fewer than 30 countries to have an embassy in Pyongyang, and it's also the only country whose citizens can enter North Korea without a visa.
A screenshot of Glocom's Malaysian website, alongside registration details tying the domain to International Global Systems.

Glocom

On a cached version of its website, Glocom, or Global Communications Co, said it was founded in 1996 and has been "always in the black" ever since.
As of 2014, the company claimed it employed more than 50 engineers and other staff members from its headquarters in Kuala Lumpur's Brickfields area, known for its Indian food and Buddhist temples.
But a visit by CNN to the company's offices ended at an unmarked, locked black door in a shabby, poorly-maintained corridor.
Malaysian police said Tuesday that "no company by the name of Glocom exists." The company's website was registered by International Global Systems (IGS), which police said was in the process of being struck off the Malaysian business register, along with sister firm International Golden Services.
The Malaysian Foreign Ministry did not respond to requests for comment regarding North Korean companies operating in the country.
The supposed headquarters of Glocom, a Malaysia-based firm specializing in equipment for "military and para-military organizations" which claims more than 50 employees.

Pan Systems

IGS and Glocom, the UN said, are fronts for Pan Systems Pyongyang, a North Korean firm engaged in procuring and marketing arms-related material.
Pan Systems Pyongyang used an extensive network of agents, companies and offshore bank accounts in China, Indonesia, Malaysia, Singapore and the Middle East to bypass sanctions, according to the report.
The report claimed Pan Systems Pyongyang is operated by the Reconnaissance General Bureau, North Korea's "premier intelligence agency."
Pan Systems, Glocom and IGS did not respond to requests for comment.
A representative for Pan Systems in Singapore denied that their organization had any association with the Pyongyang firm.
"They use (the) Pan Systems (name) and say it's a foreign company, but they operate everything by themselves," Louis Low, managing director of Pan Systems, told Reuters.
Three North Koreans arrested in 2014 and accused of attempting to smuggle around $450,000 in cash out of Malaysia "identified themselves as representatives of Pan Systems Pyongyang" and claimed the money belonged to the North Korean embassy in Kuala Lumpur, according to the report.
Malaysia's Attorney General eventually chose not to press charges because of insufficient evidence.
"Stronger sanctions have led networks of (North Korea) to employ greater ingenuity in using formal banking channels and bulk cash transfers to facilitate their illicit endeavors," the UN report said.
"Despite strengthened financial sanctions in 2016, the country's networks are adapting by using greater ingenuity in accessing formal banking channels, as well as bulk cash and gold transfers."
Investigators said both North Koreans and foreign agents were active in many countries, including top global financial centers.