North Korea's $25 Million and Banco Delta Asia
[Opinion] Another abuse under the U.S. Patriot Act (2001)
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A little known provision in the U.S. Patriot Act (2001) has been used by the Bush administration against North Korea to freeze $25 million dollars of its funds and to deny it access to the international banking system and to hard currency. Actions under this provision of the Patriot Act effectively stymied progress in disarmament talks between the U.S., North Korea, South Korea, China, Russia and Japan for over 18 months. North Korea says that only when the seized $25 million and access to the international banking system are restored is it willing to continue negotiations under the six-party-agreement concerning security and denuclearization of the Korean peninsula.

The little known provision of the Patriot Act 2001 is Section 311. It is also known as the "International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001."(1)

The original purpose was allegedly related to the prevention, detection and prosecution of money laundering connected to the financing of terrorism. The law has rarely been used for its original purpose. Instead it has been used by the Bush administration as a means of unchecked political power against financial institutions like the Banco Delta Asia. This case has an impact on those nations or institutions who used the bank, like North Korea.

Two other sections of the Patriot Act currently under scrutiny, the use of the Patriot Act to illegally obtain personal information on U.S. citizens, and the use of a provision in the Patriot Act to replace U.S. Attorneys, have been identified as being used by the Bush administration for expanding and abusing Executive Power. Section 311 provides another means for sidestepping international and national legal practices and substituting an ad hoc set of processes that leave the victims with no means of due process or defense.

Section 311 has been called by its supporters "a diplomatic sledgehammer that gets results" and by its critics a provision that denies the accused "due process and presumes guilt."

This provision gives the U.S. Treasury the ability to use an Executive Branch administrative procedure rather than a legal proceeding as a way to accuse a financial institution that is part of another nation's regulatory system of wrong doing, and then to find them guilty. Under this provision of the Patriot Act, the accused is denied knowledge of the evidence against them and is denied the right to speak in their own defense.

Section 311 of the Patriot Act (2001) was used against the BDA, a small bank in Macau, to freeze substantial financial assets of North Korea and also to deny North Korea access to the international banking system. (2) The case against the BDA was instituted in September 2005 just after the U.S. had signed the six-party agreement. The accused under Section 311 are presumed to be guilty and the burden falls on them to prove their innocence without being able to know the evidence or charges. (3)

Invoking Section 311 against the BDA effectively sabotaged the implementation of the six-party-agreement of September 2005 for 18 months as BDA did not have a process to challenge the Treasury Department action, nor did those whose accounts at the bank had been frozen, like North Korea. It was only after North Korea conducted a missile test in July 2006 and the test of a nuclear device in October 2006, that the Bush administration was willing to agree to negotiations over the Treasury action.

Negotiations in Berlin between the U.S. government and North Korea in January 2007 and then in Beijing in February 2007 with the U.S., South Korea, China, Russia and Japan, resulted in the six-party-agreement announced on Feb. 13, 2007.

The difference that most analysts point to in comparing the Feb. 13 2007 six-party agreement with the six-party agreement of September 2005 is that more recent agreements includes a series of processes and a time table. The critical difference that has been overlooked, however, is that a requirement of the Feb. 13 agreement was that the U.S. restore the funds that were frozen by the actions of the U.S. Treasury Department. Also North Korea's access to the international financial system was to be restored.

These requirements caused "intense friction" in Washington between officials in the State Department and "officials in the Treasury Department and in the Office of Vice President Dick Cheney who were said to favor maintaining maximum pressure" on North Korea.(4) There were reports of urgent telephone calls between officials in the State Department and the Treasury. Assistant Secretary of State John Negroponte finally got a decision from the Treasury Department by Friday, March 16. The Treasury Department had ruled against the BDA. U.S. banks would not be allowed to do business with it. The U.S. government announcement said that it would be up to the Macau authorities to decide if they would unfreeze and restore some or all of North Korea's funds.

By the weekend of March 17, a behind the scenes drama continued to unfold. China announced that it regretted the U.S. action. The owner of the Macao bank said he would go to court to attempt to challenge the decision. Getting off the plane in Beijing on Saturday to attend the next stage of six-party talks, Kim Kye-gwan, North Korea's lead negotiator for the six-party talks, told reporters that all of the $25 million had to be returned if North Korea was to go to the next step of the six-party talks.

Hill announced that he would explain the settlement to the Chinese and North Korean negotiators. China announced that a settlement had been reached but that the details of it couldn't yet be revealed. Subsequently, there was an announcement that all of the $25 million in funds would be returned to North Korea and deposited in China in an account held by the North Korea's Foreign Trade Bank at the Bank of China in Beijing. U.S. Treasury Secretary Daniel Glaser, in a press conference held with Hill, confirmed the U.S. government decision. It was unknown he said, when the funds would actually be put in the North Korean bank account.

Subsequently, diplomats who were in Beijing to continue the six-party-talks told reporters that North Korean diplomats said the funds had to be in the bank account for them to continue with negotiations.

Critics say that this provision of the Patriot Act applies U.S. law to the financial institutions of other countries. In a proceeding under Section 311 of the Patriot Act (2001) the U.S. Treasury Department acts as accuser and judge, in international jurisdictions. Also, often the evidence used by the Treasury Department is classified and thus not available for examination by the accused so that it can't be refuted.

Though there have been many newspaper articles reporting the standoff in the six-party-talks caused by the dispute over the use of Section 311 against North Korea, few of the articles provide an understanding of the underlying issues involved. A commentator on BBC, for example, demonstrating a serious lack of understanding of the use of Section 311 and the abuse of power it represents said this is an example of the high price that North Korea will extract for its cooperation in the talks.

It is not without cause then, that in describing the process of the six-party talks Hill compared the process to a video game. He warned: "This process, not unlike a video game gets more and more difficult as you get to different levels."(5)


(2)"Treasury Casts a Wide Net Under Patriot Act"

(3)"The U.S. government has never publicly detailed evidence behind its charges. Nor has it sought to initiate legal action, relying instead on Section 311 of the Patriot Act, which critics say extends U.S. laws to cover other countries."
"Bush Administration Plan May Unfreeze North Korean Funds"

(4)"Administration Reconsiders Some North Korea Restrictions"

(5)"U.S., North Korea Move to Open Ties"

2007/03/21 오후 2:16
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