SINGAPORE: Two Singapore-based companies have violated UN sanctions by supplying luxury goods to North Korea, according to a BBC article published on Tuesday morning (Mar 13) citing a leaked draft of a United Nations (UN) report.
The two firms under investigation - OCN and T Specialist - are sister companies and share the same director, BBC said.
The leaked draft alleges that the two companies supplied a range of luxury goods to North Korea, including wine and spirits, until as recently as July 2017, BBC added.
The UN report added that "transactions valued at more than US$2 million (S$2.62 million)" between 2011 and 2014 flowed from an account that the two companies set up in a North Korean bank, Daedong Credit Bank, to T Specialist's bank accounts in Singapore. The transactions were allegedly proceeds from the sale of goods in North Korea, BBC said.
The final UN report, which has been submitted to the UN Security Council, is likely to be published later this week, BBC added.
Under UN sanctions, it is illegal to directly or indirectly supply luxury goods to North Korea.
Website NK News first reported in July 2017 that Singapore based company OCN had been providing luxury goods for sale in North Korea, in possible contravention of international sanctions.
Citing several anonymous sources, the report alleged that OCN formed joint ventures to run two small high-end department stores in Pyongyang. The stores sell a variety of high-end products, including cosmetics, handbags, watches and liquor from well-known international brands.
The director of OCN (Singapore) Ng Kheng Wah told Channel NewsAsia in a phone interview in July 2017 that the allegations made against him were "baseless" and "fake".
He said the company pulled out of North Korea five years ago and has never been involved in the trading of luxury goods.
Mr Ng added that OCN was no longer involved in the trading business and mainly acts as the holding company of three properties. Apart from rental revenue, its core business is Malay bridal company Lagun Sari, which is handled by Mr Ng’s twin daughters.
ACRA records had showed that Mr Ng was also the shareholder of another Singapore-based company T Specialist International, which had taken over the lion's share of OCN's trading businesses.
Mr Ng said that T Specialist used to focus on the wholesale tile business but after being hit hard by the Asian Financial Crisis in 1997, the company diversified into other areas. As of July 2017, T Specialist was a distributor of Pokka canned drinks in China, and dealt with other consumer goods such as instant noodles.
In response to queries from Channel NewsAsia, a spokesperson from the Monetary Authority of Singapore (MAS) said the authority "notes the mention of Singapore individuals and entities" in media reports citing the leaked report from the UN Panel of Experts.
"Singapore is working closely with the UN Panel on these cases. Where there is credible information of offences committed by individuals or entities under Singapore law, the Singapore authorities will act expeditiously and undertake investigations,” the spokesperson said.
The authority added that with the tightening of UN sanctions against North Korea, it has stepped up its supervision of financial institutions to focus on the prohibited North Korean-activities.
"MAS is making a series of onsite supervisory visits to banks that have been identified through intelligence received or through sweeps by MAS of suspicious transactions," the spokesperson added.
MAS added that it requires financial institutions operating in Singapore to remain vigilant against proliferation financing risks. It expects the institution's controls to take into account the increasingly prevalent use by proliferation networksof sophisticated techniques to evade sanctions.
Such techniques include the use of multi-jurisdictional front companies, shell companies, joint ventures and complex or opaque ownership structures, the spokesperson said.
MAS stressed that it will take action against any financial institutions in breach of regulations relating to proliferation financing.
Speaking to Channel NewsAsia on the phone, the companies’ lawyer, Mr Edmond Pereira, confirmed that the firms are under investigation by local authorities.
While he noted that the “winding down takes a bit of time”, Mr Pereira said OCN and T Specialist no longer have business or financial links in North Korea after pulling out of the isolated state in 2012.
He added that claims in the leaked UN report about transaction flows between the companies' account in a North Korean bank and T Specialist’s bank accounts in Singapore from 2011 to 2014 are “not correct”.
Mr Pereira told Channel NewsAsia that the UN first requested for documents from the companies last November. The UN’s latest request for additional documents came earlier this month but these documents, which include details of the firms' previous business transactions in North Korea, are now “in the custody of the Singapore authorities”.
"The UN asked for further documents and we have informed them that these additional documents that they are requesting are in the custody of the Singapore authorities and we cannot render any further assistance on these documents because they are with the Singapore authorities," he said.
Channel NewsAsia has contacted the Ministry of Foreign Affairs for more information on the leaked draft of the UN report.