How North Korea’s merchant ships became a target for UN sanctions

A North Korea-flagged ship interdicted in Panama three years ago gave a glimpse into Pyongyang’s efforts to build up its military and nuclear capacity. Intelligence from the ship transformed how UN member nations are policing North Korea.

Focus

At a Cuban port in June 2013, the Chong Chon Gang took on secret cargo: some 240 tons of Soviet-era weapons.

Later, under the direction of diplomatic staff stationed in Cuba, the ship’s crew of 32 North Koreans layered thousands of bags of raw sugar over the weapons, concealing them from sight.

Many of the crew were employees of the state, according to a 2016 United Nations report, with salaries paid by a marine ministry in Pyongyang. They were tasked with smuggling home the load of arms by piloting the nearly 40-year-old merchant ship through the Panama Canal, where the ship’s officers had been instructed to declare only the sugar.

Acting on guidance from US officials, Panamanian authorities raided the ship as it waited at the canal’s mouth, arresting the crew and touching off multiple minor diplomatic crises.

The interdiction was a watershed moment for UN investigators, putting them on the trail of how North Korea used its shipping operations to support its weapons programs. Intelligence produced from the ship’s capture also transformed how UN member nations are policing North Korea, narrowing a once-significant channel for state smuggling.

In March of this year, tough new sanctions effectively instituted a worldwide stop-and-frisk of North Korean ships, requiring members to inspect all cargo passing to or from there, regardless of the vessel’s flag. In practice, that can mean seizing a ship and deporting its crew, as in an incident in the Philippines coming days after the sanctions were announced. 

“It was like shining a flashlight very brightly for a few seconds,” says a person familiar with UN investigations into North Korea’s arms programs. “It was massive, key.”

New details about how US intelligence agencies took notice of the ship and apprehended it, and a deeper look at how the UN refocused its efforts in subsequent years, underscore why the interdiction was viewed as a watershed moment. And it gives a glimpse of the serious labors behind the West's containing of a state whose sporadic missile tests and bombast are often shrugged off by many Americans.

The case of the Chong Chon Gang exposed the imbalance of power between North Korea and its international adversaries. Not all the weapons seized from the ship were dilapidated, according to experts consulted by the Monitor, but even those still in their packaging dated back to the Soviet years – more like museum pieces than the stuff of a modern military.

Still, North Korean leaders have continued to forge ahead with weapons development in spite of such sanctions. On August 24, North Korea's military fired a ballistic missile into Japanese waters for the second time in a month, compelling South Korean president Park Geun-hye to say that the North's "nuclear and missile threats are not imaginary threats any longer."

Some say that the ship’s cargo was linked to the state’s nuclear ambitions, pointing to indications that surface-to-air missile systems found on board were designed to defend its fledgling nuclear program.

“A nuclear weapons capability has to be viewed from a complete system perspective,” explains Graham Ong-Webb, research fellow at the S. Rajaratnam School of International Studies in Singapore. “In order to have a full-fledged capability, you have to have real system to protect assets.”

Dr. Ong-Webb served as an expert witness in a 2015 case stemming from the ship’s interdiction. In that case, Singapore-based Chinpo Shipping Company, Ltd. was fined $180,000 for transferring tens of thousands of dollars on behalf of the Chong Chon Gang’s North Korean operator. 

Two surface-to-air missile systems recovered from Chong Chon Gang, the SA-2 and SA-3, could have been used by North Korea to guard nuclear production, storage, and missile sites, he testified then. 

“The role of the SA-2 and SA-3 is very simple: to take down incoming fighter aircraft that can strafe and destroy these sites or bomb them,” he says. 

“As it stands, North Korea has a significant number currently deployed to protect a range of critical infrastructure. It’s not a stretch to make this suggestion, because any government with nuclear weapons would want to protect them from being taken out by an adversary.”

The decades-old missiles "are not as dependable as newer systems. There are more misfires," he explains. "But one can imagine that Pyongyang would want to get hold of these missiles, because they’re relatively cheap. They will get the job done.”

The same could apply, he suggests, for two MiG-21s fighter planes also found on the ship. "They were training models, but we know through precedent that the MiGs on the vessel could be armed to take down other planes."

How the smugglers were caught

The Chong Chon Gang’s undoing may have been the proximity of its route to the US's heavily monitored underbelly. One person with direct knowledge of the incident, who did not wish to be identified because of sensitivities around intelligence in the case, said that the ship had been tracked by the Joint Interagency Task Force South (JIATF), a surveillance unit based in Key West, Fla., and composed of staff from more than a dozen different law enforcement agencies.

“That was North Korea’s big mistake, doing this in the US’s backyard,” says the source.

The ship first came under suspicion by the Drug Enforcement Administration (DEA) as a potential drug trafficking case, the source adds. 

While the Chong Chon Gang sat in a Cuban port, JIATF called a meeting to discuss intelligence on the ship, says Dan Scott, a retired special agent for the DEA who was a member of the task force.

“I believe an initial informant told the DEA about a load of dope that was on the boat,” he says. A North Korea-flagged boat in Cuba was far from the agency’s profile of a typical drug-smuggling case, though. “The info didn’t get to JIATF until after it was suspected to be something else – that there were nefarious items on the vessel."

JIATF reached out to authorities in Panama, he recalls. “We asked the Panamanians, ‘Do you guys see this?’ ”

When the Chong Chon Gang reached the mouth of the Panama Canal, it lined up behind other vessels at the Port of Cristobál, near where the UN Office on Drugs and Crime kept an office.  As it waited for its turn to pass, authorities from a Panamanian anti-drug unit asked the crew to let them aboard. 

The crew panicked, cutting the electrical lines of the on-board crane so that the bags of sugar would have to be unloaded one by one, according to an account from the Panamanian security minister. After Panamanian anti-drug authorities pushed their way aboard past a resistant crew and uncovered containers of arms beneath a layer of sugar, the captain tried to commit suicide, possibly to avoid punishment, an expert later speculated. The captain and other members of the crew were eventually detained. Charges were brought against the three officers aboard, who were later determined to be the only sailors fully briefed on the mission.

Law and disorder

With Panama's favor to the US already done, authorities there may have wanted the courts to tread lightly with the sailors, so as not to inflame tempers in Pyongyang. 

The three officers were initially convicted of arms-trafficking charges. A circuit court judge in Colón later struck down the verdict and ordered their release from a Panama City prison. 

Roberto Moreno Obando, a prosecutor in the Panamanian organized crime unit who was assigned to the trial, says he filed an appeal shortly after the conviction was overturned, as well as a request to keep the three officers from leaving the country. But by the time the appeals court ruled, the three men had flown home. A year later, the captain and first mate were re-sentenced, in absentia, to 12 years in prison. 

“This was not an issue to deal with in a small court in Panama,” says Mr. Obando.  “Asylum or the human rights question [of their treatment upon returning to North Korea] was not discussed. They weren’t deported, they just left. They were free men.”

The boat's interdiction created diplomatic difficulties for the Cubans, too, revealing an ongoing barter agreement between Cuba and North Korea, under which their respective militaries would repair arms and swap items – in violation of sanctions, the UN later concluded.

Andrea Berger, deputy director of the Proliferation and Nuclear Policy program at the Royal United Services Institute, says the sugar used to hide the arms was also probably a form of payment for North Korean railway parts dropped off in Cuba by the ship upon docking.

“Meaning, the weapons and related parts had to be paid for,” says Ms. Berger. “There would’ve been something else that had to be negotiated.” 

That squared with what a 2014 UN report had earlier concluded about North Korea’s prominence in the global black-market arms trade.

“Since 2009, the Panel has gathered evidence showing that [North Korea] is active in the refurbishment of arms produced in the former Soviet Union in the 1960s and 1970s,” according to the report. Customers tended to be authoritarian or rogue states, including Eritrea, Uganda, Tanzania, Myanmar, and Iran. North Korea's position in the market was “advantageous” because its prices were lower and its competitors fewer, concluded the eight experts who authored the report.

The UN experts also noted that North Korea sometimes turned to merchant ships, with their veneer of legitimacy, for illegal transactions. In March 2013, Japan seized five aluminum alloy rods from a Singapore-flagged ship, suspecting that they may have had application in nuclear centrifuges. Authorities in China later concluded that the rods had come from North Korea.

But documents recovered from the Chong Chon Gang in the aftermath of the Panama interdiction allowed investigators to peel away the layers of front companies under which Pyongyang's merchant ships were registered. They traced the companies – some corresponding to a single ship – to their operator, Ocean Maritime Management, which oversaw ships from offices based in China, Russia, Singapore, and even Brazil.

To avoid being tracked, investigators found, companies frequently changed their names. So did vessels, which also had the habit of periodically turning off their AIS signal, which is used by international maritime organizations to track ships.

The direct link to North Korea’s government came to light in late 2015, when Chinpo Shipping was fined by Singapore for facilitating payments for the Chong Chon Gang.

A representative of Ocean Maritime Management’s Singapore office told prosecutors that he had been appointed to the branch by the North Korean Ministry of Land and Marine Transport, adding that he “reported directly” to superiors in Pyongyang, according to the 2016 UN report.

“Ocean Maritime Management was a shell company for the North Korean government,” says Sandy Baggett, a prosecutor in that case who is now in private practice. “If a North Korean ship was going to carry freight from Russia to Sweden, or wherever, the person who wanted to ship the goods couldn’t pay North Korea directly, so OMM would instruct them to send the payment to Chinpo,” she says.

The high seas are a notoriously lawless place, and UN inspections requirements for North Korea-flagged ships may often go unheeded or partially enforced in some countries.

Still, sanctions likely caused North Korea to cut back on relying on its merchant fleet for military smuggling, says Ms. Baggett. “It’s become much, much harder for them to do what they did with the Chong Chon Gang, simply because their ships don’t have as much free access to ports anymore.”