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“All the federales say, They could have had him any day, They only let him slip away, Out of kindness I suppose.”
--Townes Van Zandt, "Pancho and Lefty"
You may remember Park Il-woo, aka Steve Park, from earlier posts. Back in 2011, the Pyongyang Soju importer announced that he had signed an MOU with the North Korean government to re-open the Mt. Kumgang tourism project, which would have amounted to seizing the property of Hyundai Asan and would have required a US Treasury Office of Foreign Asset Control (OFAC) waiver. I expressed my skepticism about this venture in colorful terms and Steph Haggard wrote that the whole episode should be consigned to “not satire.”
The whole story seemed bizarre, even at the time. Park was an unlikely investor: in 2007 he had pled guilty to repeatedly lying to the FBI about contacts with South Korean intelligence, though he was not formally charged with espionage in the case. According to a story by Hunter Walker, “The three counts of making false statements carried a maximum sentence of 15 years in prison with maximum fines of about $250,000 and three years of "supervised release." He was subsequently sentenced to 18 months' probation and ordered to pay $300 in "criminal monetary penalties," on April 18, 2008.”
Yet over the objection of the prosecutor, Park was allowed to continue to travel to North Korea and China even while on probation. In 2011, according to reporting by Radio Free Asia (in Korean), he successfully registered as a foreign agent under the Foreign Agents Registration Act and was granted a license from OFAC to import beer. In light of the slap on the wrist penalty, the permission for Park to continue travel to China and North Korea, and the granting by OFAC (which is reputed to coordinate closely with the US intelligence community) of the trade license, and then the Mt. Kumgang announcement, one wonders if US counter-espionage or intel authorities had managed to turn him.
His moment in the sun was short-lived however, and in July 2012 his company was dissolved by the State of New York for failure to file returns or pay taxes.
Well, Park Il-woo is back in the news. According to Elizabeth Shim at UPI, the Department of Justice has now stripped him of his foreign agent registration and prohibited him from representing Pyongyang over failure to file paperwork or pay taxes going back to 2008.
So there are at least two non-mutually exclusive hypotheses that can explain these developments. The first is that Park, like many Koreans of his generation (he must be around 70 years old) is just not big on paperwork or paying taxes. So the weird pattern of the US government in effect ignoring repeated violations of the law, is simply testimony to the bureaucratic incompetence of the federal government; for example one part of the Treasury Department (the Internal Revenue Service) not talking to another (OFAC).
The "gang that couldn't shoot straight" explanation is not implausible: as I observed in an earlier post, the US government may not be as rigorous in the implementation of sanctions as it could be, appearing to ignore evidence developed by other governments on sanctions-evading entities and individuals. And, as I wrote in an earlier post, the US Treasury risked granting North Korea $3 billion in debt relief by killing the market for defaulted North Korean bank loans, and hence depriving market participants any incentive to maintain time-bound legal judgment's against the issuers. As I wrote at the time, “OFAC could remedy this situation by granting a license clarifying the legality of trading in the defaulted loans as distinct from entering into contemporaneous transactions with the FTB [North Korean Foreign Trade Bank]. This was done previously in the case of Libya. But in the current political climate I wouldn’t hold my breath. Nevertheless, it would be a shame if the Treasury harmed investors… and in essence rewarded North Korean bad behavior just because doing the smart thing at first glance did not look like doing the tough thing.” In the event, a US holder of this paper petitioned OFAC for a general license to trade, was denied, and we are on a glide path toward allowing North Korea to walk away from its obligations Scot free.
If you buy this explanation, then maybe the folks at OFAC should just put post-it notes on their desktop monitors, reading: “If Steve Kim walks in the door wanting a license, just say 'no.'”
The other hypothesis is that someone in the US government regarded Park as an intelligence asset, and let him do his thing, possibly aware of his failure to pay taxes and letting it slide, knowing that the legal issue could be used against him whenever convenient. Or, as I wonder in my more cynical moments, if it was all part of the deal. And now time has come to put Park Il-woo to pasture.
Yesterday, Townes Van Zandt’s “Pancho and Lefty” popped up in that new iTunes “For You” thing:
“All the federales say, They could have had him any day, They only let him hang around, Out of kindness I suppose.”
I wonder if Steve Park is left-handed.
