Tax haven funds seen linked to N.K.

A number of individuals with suspected connections to North Korea are operating ghost companies in international tax havens, a group of independent journalists announced Thursday.

Although their connection with Pyongyang or its rulers has not been verified, observers say that it cannot be ruled out that the companies are tools for managing the slush funds of the Kim family that has held power for more than 60 years.

According to the Korea Center for Investigative Journalism, a British Virgin Islands-based paper company by the name of Larivader Solutions was registered to one Mun Kwang-nam, whose address was given as “2 Kin Mal Dong, Mao Lang Bong District Pyong Yang Republic of Korea.” The company was established in 2004, and is thought to have existed at least until October 2009.

In addition to Larivader Solutions, documents on three other companies set up in the region ― Chollima, Chosun and Koryo Telecom ― showed an individual named Lim Jong-ju as their director. In addition to Lim, the name Wong Yuk-kwan appears in all three companies as a director.

“Lim Jong-ju and Wong Yuk-kwan are thought to be businessmen who took part in North Korea’s mobile telecom project,” Korea Center for Investigative Journalism said in a statement.

“Lim Jong-ju does not appear to be North Korean, but it can be deduced that the companies are linked to North Korea as the companies’ names are in North Korean style and because there are signs that their directors have been involved in North Korea-linked projects.”

The revelation comes as Pyongyang is struggling with increasingly tight international sanctions, even from its closest ally China, under Kim Jong-un.

In May, Bank of China shut down the account of North Korea’s Foreign Trade Bank, which was hit with U.S. sanctions in March after Washington accused it of helping finance Pyongyang’s nuclear weapons program.

Seoul officials assessed the development as “a very significant and effective measure,” saying that the North Korean foreign exchange bank was its de facto channel to settle financial trade dealings with China.

The closure was the first openly acknowledged move by an institution in China against North Korean interests in the current stand-off. Since Pyongyang’s third atomic test in February, inter-Korean relations have been highly strained, resulting in the shut down of Gaeseong Industrial Complex.

Aside from the companies suspected of having connections to Pyongyang, the Korea Center for Investigative Journalism also disclosed further information regarding those set up by Chun Jae-kook, the eldest son of former President Chun Doo-hwan.

The younger Chun’s name was included in the list of Koreans who have paper companies in tax havens released on Monday. Although Chun denied that the company was set up to evade taxes, the revelation sparked speculation that the Chuns may have used the British Virgin Islands-based company to siphon off the former president’s assets.

The elder Chun was ordered to pay 220.5 billion won in penalties for leading an insurrection and accepting bribes while he was in power. But he has paid only 53.3 billion won over the past 17 years, leaving 167.2 billion unpaid.

By Choi He-suk (cheesuk@heraldcorp.com)