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How North Korea's Kim gets his luxury cars

Use is in open defiance of UN sanctions intended to ban luxury goods from N Korea

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Mr Kim frequently uses top-of-the-line Mercedes-Benzes such as the Maybach S62 and Maybach S600 Pullman Guard, which cost US$500,000 to US$1.6 million each.

Washington

THE armoured black limousines appear everywhere with Kim Jong Un, sleek Western chariots for the young dictator of North Korea.

Flown in from the North Korean capital of Pyongyang on a cargo plane, the sedans carried Mr Kim through the streets of Singapore; Hanoi, Vietnam; and Vladivostok, Russia, during summit meetings with US President Donald Trump and Russian President Vladimir Putin. Sometimes a phalanx of bodyguards jogs beside them.

The cars are top-of-the-line Mercedes-Benzes popular with world leaders - the Maybach S62 and Maybach S600 Pullman Guard, which cost US$500,000 to US$1.6 million each. And Mr Kim is using them in open defiance of United Nations sanctions intended to ban luxury goods from North Korea.

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High-end Western goods are making their way to North Korea's elite through a complex system of port transfers, secret high-seas shipping and shadowy front companies, according to research by the Center for Advanced Defense Studies (a nonprofit Washington group that looks at smuggling networks) and an investigation by The New York Times.

The evasions point to potential limits of sanctions as a tool for the Trump administration to pressure Pyongyang into serious negotiations to end its nuclear weapons programme. US officials said that their only real leverage with North Korea is tough sanctions. During the failed summit in Hanoi in February, Mr Kim's main demand of Mr Trump was to lift major sanctions, which have been tightened since late 2016.

At the request of President George W Bush's administration, the United Nations imposed sanctions in 2006 to keep luxury goods out of North Korea.

But from 2015 to 2017, as many as 90 countries served as the sources of luxury goods for North Koreans, according to a report released on Tuesday by the Center for Advanced Defense Studies. Moreover, the networks and supply chains run through the territories of some UN Security Council member nations and US allies - China, Russia, Japan and South Korea among them.

Both President Xi Jinping of China and President Moon Jae-in of South Korea rode with Mr Kim in Mercedes- Benz sedans on recent visits to Pyongyang.

For officials seeking to enforce the sanctions, it is important to track the smuggling of luxury goods - especially of rare items such as armoured cars - because North Korea uses similar techniques to obtain dual-use technology for its nuclear weapons programme, sanctions experts said. Analysts said that North Korea continues to enrich uranium to increase its arsenal of an estimated 30 to 60 warheads.

"When it comes to sanctions evasions, North Korea relies on a sophisticated but small group of trusted individuals that move any goods required by the state, whether it's luxury goods or components for missiles, or whether it's arranging for trade of resources," Neil Watts, a maritime expert and former member of the UN panel on North Korea sanctions enforcement, said, speaking generally about patterns of illicit trade into the country.

The UN panel noted in its annual report this year the appearance of limousines made by Mercedes-Benz and Rolls-Royce in Pyongyang. In October, in Pyongyang, Mr Kim got out of a Rolls-Royce Phantom limousine to greet Secretary of State Mike Pompeo.

The journey taken by a pair of armored Mercedes Maybach S600 sedans from Europe to East Asia illustrates how one of the luxury-goods transportation networks operated. The Center for Advanced Defense Studies and NYT traced their path through five countries using open-source material, including shipping records and satellite images.

Interviews with officials and business executives confirmed some of the details of the network. In February, South Korean officials seized a Russian-owned ship that had transported the cars.

The globe-spanning voyage began in the port of Rotterdam, the Netherlands. In June 2018, two sealed containers, each holding a Mercedes worth US$500,000, were brought by truck into a shipping terminal, according to cargo tracking records. They were in the custody of China Cosco Shipping Corp. It was unclear who had first purchased the cars. Daimler, the parent company of Mercedes, said that Mercedes runs background checks on potential buyers of the vehicles to ensure that the company is not selling to sanctions violators.

The cars travelled by ship for 41 days to Dalian, in north-east China. The containers were offloaded after the ship's arrival July 31. They remained in the port until Aug 26. They were then put on a ship for Osaka, Japan. From there, they were put on a vessel for a three-day voyage to Busan, South Korea, where they arrived on Sept 30.

Then came the most mysterious part of the passage. The containers were transferred within one day of arrival to the DN5505, a cargo ship sailing under the flag of Togo, a West African nation, and bound for the port of Nakhodka in the far east of Russia. At this point, the cars were consigned to Do Young Shipping, a company registered in the Marshall Islands that owns the DN5505 and one other ship, the Panama-flagged oil tanker Katrin.

Do Young's ownership is not clear from its registration but appears to be tied to a Russian businessman, Danil Kazachuk, documents and interviews showed. Executives at Han Trade and AIP Korea, the South Korean shipping agencies that worked with the two ships, said that Mr Kazachuk was the ships' owner. Documents obtained by the Center for Advanced Defense Studies show that Mr Kazachuk was listed as the owner of the Katrin for about one month in 2018.

The ship with the cars, the DN5505, was originally called Xiang Jin, but it was renamed DN5505 and its ownership transferred from a Hong Kong-registered company to Do Young on July 27, just days before the two sedans arrived in Dalian.

After leaving Busan on Oct 1 with the sedans, the ship went dark - its automatic identification system stopped transmitting a signal. That is common practice among ships evading sanctions.

The signal stayed off for 18 days. When it came back on again, the ship was in South Korean waters. Now it was on a return trip to Busan, but laden with 2,588 tonnes of coal, which it later unloaded in another South Korean port, Pohang. Customs records in South Korea showed that the ship had taken on the coal in Nakhodka, the report from the Center for Advanced Defense Studies said.

That port city is next to Vladivostok, where Mr Kazachuk is based. Ship traffic data and shipping agency executives said that the ship had reported Nakhodka as its destination after leaving Busan with the cars.

The centre's report did not say with certainty what happened there with the sedans. But the researchers said that the cars might have been flown from Russia to North Korea. On Oct 7, three cargo jets from Air Koryo, North Korea's state-run airline, arrived in Vladivostok, according to a video online and flight tracking data. (That happened to be the same day that Mr Kim drove in a Rolls-Royce through Pyongyang to meet with Mr Pompeo.) It is rare for North Korean cargo planes to fly to Vladivostok. The jets are the exact same airplanes used to transport Mr Kim's vehicles outside North Korea, according to tail numbers.

"Given the heavy lift cargo capacity of the planes and their role in transporting Kim Jong Un's armoured limousines, it is possible that the cargo jets could have loaded the Mercedes," the report said.

Four months later, on Jan 31, 2019, the same model of Mercedes drove through the streets of Pyongyang to the headquarters of the central committee of the Workers' Party of Korea, according to video footage analysed by NK Pro. The sedans also appeared that day alongside Mr Kim in a photo session with an art delegation.

In a telephone interview, Mr Kazachuk acknowledged that he was responsible for the DN5505, but declined to give details about the shipment of the cars or say how or whether he had transferred them to North Korea. "This is my company's business secret," he said. "Why do I need to tell everybody where I bought these cars and to whom I sold the cars?"

There is no evidence tying Mr Kazachuk to the movement of military technology or goods to North Korea, but international sanctions experts said that the Russian far east is a common transit point for smuggled goods going to and from North Korea.

In February, South Korean authorities seized the DN5505 and the Katrin in separate actions because of suspected sanctions violations. The DN5505 had docked in Pohang, South Korea, carrying more than 3,200 tonnes of coal after sailing from Nakhodka. Officials told employees of the South Korea shipping agency handling the ship that it was being investigated for carrying North Korean coal. The other ship, the Katrin, was accused of bringing petroleum products to North Korea.

Mr Kazachuk said that he, as a shipowner, was not responsible for what the ships carried. He also said that South Korean authorities were engaged in a "state racket" and might have planted evidence on the ships. "The South Korean police spit from a high bell tower on basic human rights," he said. NYTIMES