Macao Image Makeover

For decades, this former Portuguese colony was famous for being a favorite destination for counterfeiters, druggers and spies, where the Bakara factory, filled with gravel sidewalks and smoke, would have been more interesting than any script.

South Korean banks handled millions of dollars on behalf of North Korea’s isolated communist government, which has long been accused by the U.S. of selling illegal drugs to raise foreign currency. North Korea’s founder, Kim Il-sung, and his son, the current leader, Kim Jong-il, maintained unfair advantage in Macau. And a North Korean terrorist confessed to plotting to blow up a South Korean airliner in 1987 at a hotel here overlooking the sparkling waters of the South China Sea.

But now the welcome mat has been lifted, and North Koreans who had few friends from the start have clearly found themselves not welcome in this self-governing Chinese territory.

In February, Macau’s banking regulator froze $25 million worth of North Korean accounts in Banco Delta Asia, a bank the Treasury Department accused in September of helping the North Korean regime launder money and circulate counterfeit U.S. currency.

Long considered a frontline in illegal activity, North Korean company Zhao Guang Trading has closed its headquarters on the fifth floor of an office building near the bank. Most of its workforce has moved to Zhuhai in mainland China, just across the border, according to local business sources.

“You would always wear the Kim Il Sung badge and see North Koreans around here, but all of a sudden they disappeared,” said Seok Young-chong, a Korean businessman who lives here. He says their number has dropped from more than 100 to just a few. “They have caused too much trouble for the Macau government.”

Local businesspeople say that North Korea’s presence here has been a fan at a critical time. The regime is not as popular internationally as it has ever been in pursuit of nuclear weapons. At the same time, China is trying to develop Macau as a gambling place to fight Las Vegas.

After Macau returned to Chinese control in 1999, Beijing toppled a casino monopoly controlled by Stanley Ho, a longtime friend of the North Korean regime and billionaire who owns a casino in Pyongyang.

Sands Macau, the first U.S.-owned casino, opened in 2004, and its $1.2 billion casino, run by Steve Wynn, will open in September. Even Stanley Ho’s family (he handed over much of his casino profits to his daughter Fancy) signed a contract with MGM Mirage for another new casino.

“Today, the people here want to do business with the Americans, not the North Koreans,” said Jose Rocca Dinis, director of the Gornal Tribunal de Macao, a Portuguese-language newspaper. “When they seek investment from outside, they cannot stand in the way of the North Koreans.”

Macao, an hour’s high-speed ferry ride from Hong Kong, still has a waxy and daring feeling. But Americans have more modern concepts of transparency and accounting, as well as the glamour of Las Vegas. 에볼루션 바카라사이트

“Macao had to clean up the action,” says David Asher, a former State Department official who is one of the people who devised the action against Macao banks. “Every year, $5 billion in gaming revenue is at stake. They have to work with the United States.”

Banco Delta Asia’s $25 million freeze has been especially hard hit for the regime to survive due to a lack of hard currency. North Korean banks kept a large amount of money in Macau banks. Now, North Korea is largely cut off from international trade, with its accounts suspended and other banks terrified by the Treasury’s action.

“The impact is severe,” said Nigel Cowie, a Pyongyang-based British banker who is the general manager of Daedong Credit Bank, which works mostly for small foreign communities in the North Korean capital.

Kowi said North Korea is almost exclusively doing cash transactions because it has no credit and its banking system is weak, which might seem like money laundering when it doesn’t.

“I can’t say what everyone was doing, but in our case I can say a lot of legitimate businesses have been hit,” Cowie said.

North Koreans blame the U.S. for their plight in Macao. Regan, a senior North Korean diplomat, visited Washington last month for what appeared to be a futile attempt to lift the Macao freeze. He became angry and declared that North Korea would refuse to negotiate on its nuclear program until the banking situation was resolved.

“Under continued pressure from the United States, we cannot return to the negotiating table,” Li said.

U.S. officials loudly protest that the crackdown in Macau has nothing to do with the protracted struggle over nuclear weapons. In a press release released in response to the North Korean accusations, the Treasury Department said it wanted to make clear that their actions against Banco Delta Asia were “to protect American institutions and not to act as sanctions against North Korea.”

Despite the denial, the Bush administration has struggled with ways to put pressure on North Korea without seeking full-fledged U.N. sanctions since it withdrew from the Nuclear Nonproliferation Treaty in 2002. Sanctions are almost certain to be opposed by long-time communist allies of China and Russia. Until now, China has firmly refused to put any pressure on North Korea.

What’s happening in Macau is the result of delicate diplomatic dance moves by the governments of the United States, China, and Macau, designated as Hong Kong, a special autonomous region.

Panicked bank customers lined up in front of Silver Facade headquarters in downtown Macau. It withdrew $133 million out of $390 million in deposits in six days. The Macau government intervened and took control of the bank.

However, the financial authorities in Macau have reacted very aggressively since then. They came up with a new money laundering law. They froze 50 interest-free accounts of North Korean banks, trading companies, and individuals.

According to a letter sent by lawyers to the Treasury Department this year, if a Macau court determines the account was involved in illegal activities, there will likely be a criminal investigation into the bank and the money will be seized.

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