Sunday, September 18, 2005

U.S. Focuses on a Macau Bank In Probe Into North Korea Ties

September 16, 2005; Page A4

The U.S. government's accusation that a small bank in the Chinese enclave of Macau was laundering money for North Korea triggered a run by depositors and appeals for calm by the government there.

The developments came after Secretary of State Condoleezza Rice linked such U.S. enforcement efforts to ongoing talks in Beijing over dismantling North Korea's nuclear program. The talks deadlocked soon after they started earlier this week, with North Korea insisting that the U.S. and others provide a nuclear reactor to generate electricity before it will give up its atomic-weapons programs, a demand Washington has flatly rejected.

The U.S. move this week against the Macau bank, Banco Delta Asia Ltd. is part of a broader investigation disclosed last week in The Wall Street Journal into banks Washington suspects of aiding North Korea. The U.S. suspects the banks of aiding North Korean ventures that include counterfeiting and narcotics and allegedly helping to finance North Korea's nuclear program. "We're not sitting still," Ms. Rice said during an interview with the New York Post. "We're working on anti-proliferation measures that help to protect us," she said, citing the possibility of freezing assets.

The Macau government said it was setting up a special team to investigate the U.S. allegations, which could put Banco Delta Asia on a blacklist as an entity of "primary money laundering concern." The U.S. Treasury Department called the bank a "willing pawn" of North Korea and is proposing to bar U.S. financial institutions from doing business with it.

On Friday, more than $5 million was withdrawn by depositors of the bank, which has about $420 million in assets, Reuters reported. The Special Administrative Region of Macau called on its citizens "to keep calm, do not easily listen to ungrounded rumours, [and] have faith and confidence in the financial system of Macao." It said its banks were well-regulated.

In the nuclear talks, China tried to break the impasse by floating a new draft of a joint statement meant to serve as a blueprint for a final settlement. To placate Pyongyang, Beijing added a paragraph that noted North Korea's assertion of its right to peaceful use of atomic energy and said the parties would further discuss the country's desire for a so-called light water reactor, according to a U.S. official. (See related article.)

The U.S. official said that initial feedback from North Korean delegates, in a "very brief, informal" exchange yesterday, indicated that they weren't satisfied with the changes. The Americans aren't completely happy with the new language either.

The U.S. delegation huddled inside the American embassy late into the evening Friday. "We got some proposals today. We've been discussing them," said Christopher Hill, the chief U.S. negotiator said, returning to his hotel after midnight. "We'll see where we are tomorrow." China asked all of the countries at the talks, which also include Japan, Russia and South Korea, to respond to its proposed draft by Saturday afternoon.


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