China opens probe into North Korean bank

Chinese authorities have begun investigating executives of the Dandong branch of North Korea’s Kwangson Banking Corporation, along with other North Korean employees residing in China and Chinese trade-related officials, according to sources.

“The Dandong branch of Kwangson Bank in March was pinpointed as an entity to be closed down under the UN Security Council Resolution 2270 but until recently moved offices and continued to secretly operate without a signboard,” one source well-informed on North Korea affairs told the JoongAng Ilbo on Saturday. “The head of the branch, Ri Il-ho, temporarily returned to North Korea, so the deputy executive is being investigated. “
It was revealed last week that Chinese authorities began a probe into the Dandong-based trading conglomerate Liaoning Hongxiang Group, which has been accused of illicit trade activities with North Korea that may support its nuclear weapons program.

The Korean Kwangson Banking Corporation (KKBC) is an affiliate of North Korea’s state-run Foreign Trade Bank, the country’s primary foreign exchange bank. It was designated by the U.S. Treasury in 2009 for financing entities supplying dual-use equipment to Pyongyang.

KKBC was also listed as a target of sanctions under the UN Security Council Resolution 2270 implemented unanimously in March after Pyongyang’s fourth nuclear test.

Kwangson’s Dandong branch was said to have operated on the 13th floor of a building also occupied by Hongxiang Group in Dandong, Liaoning Province, in northeastern China.

Chinese authorities, upon communication with U.S. officials, were revealed to have begun a probe into Hongxiang Group, a Dandong-based Chinese trading conglomerate that is suspected of having shipped to North Korea “dual-use” materials, which can have both civilian and nuclear-weapons development uses.

The company’s chairwoman, Ma Xiaohong, was arrested last month.

“A Dandong customs official, as well as other Dandong city officials who were charged with granting favors to Hongxiang’s Ma, are also being investigated in a group,” according to a Chinese source knowledgeable about relations between Beijing and Pyongyang. “There are over 20 of them being investigated.”

Chairwoman Ma’s family members, including three siblings that also oversaw Hongxiang Group affairs, were also investigated by authorities.

Ma was said to be close with North Korean leader Kim Jong-un’s late uncle, Jang Song-thaek, once the second-in-command in the country. But even after Jang was executed in December 2013 by his nephew, Hongxiang Group is said to have prospered even more.

But despite foreign leaders and diplomats pressuring Pyongyang for its nuclear and missile provocations over the past week, North Korean Foreign Minister Ri Yong-ho, as he addressed the UN General Assembly on Friday, insisted nuclear weapons are “self-defense” measures against the United States, and also criticized the Security Council and its resolution.

BY YEH YOUNG-JUNE, SARAH KIM [kim.sarah@joongang.co.kr]