Discussing Frozen North Korea Funds

Monday, March 26th 2007, 6:47 am

By: News On 6

BEIJING (AP) _ A senior U.S. Treasury Department official held talks in China on Monday as part of efforts to untangle a dispute over North Korean funds frozen in a Macau bank that led to a breakdown in talks over Pyongyang's nuclear program.

Daniel Glaser, deputy assistant secretary for terrorist financing and financial crimes, met officials from China's Ministry of Foreign Affairs to discuss the money held at Banco Delta Asia, a lender in the Chinese territory of Macau, said Glaser's spokeswoman Molly Millerwise.

North Korea walked out of six-nation disarmament talks last week because of a holdup in the release of the $25 million.

Glaser's meeting was ``positive and cordial,'' with officials focused on ``solutions to the implementation matters and our common interest in addressing this issue as quickly as possible,'' Millerwise said in an e-mail.

She said other U.S. officials in the talks included Jim Wilkinson, Treasury's chief of staff, and Jim Freis, Treasury's deputy assistant general counsel and incoming director of the Treasury's financial crimes enforcement network. She gave no other details.

The U.S. agreed to let the money be transferred to a North Korean account at the Bank of China in Beijing, but the release was delayed by the Chinese bank's concerns about accepting money that had been linked to counterfeiting and money laundering.

Authorities in Macau and China ``have made clear that they want to ensure implementation of the agreement is consistent with their own laws and with their international obligations,'' Glaser said.

Foreign Minister Li Zhaoxing spoke with Secretary of State Condoleezza Rice by telephone on Sunday to discuss bilateral relations ``and progress of the six-party talks,'' a statement on the Chinese Foreign Ministry Web site said, without giving additional details.

Last week's talks were aimed at fine-tuning a Feb. 13 agreement under which North Korea would dismantle its nuclear programs in exchange for energy aid and political concessions, but they never got off the ground because of the drawn-out dispute over the money transfer.

North Korea refused to attend the talks, leading China to announce a recess on Thursday. No new start date was given, but the U.S. envoy, Christopher Hill, said it was ``quite possible'' the talks could start again within a week or two once the financial issue had been cleared up.

The U.S. first took action against Banco Delta Asia in 2005, putting it on a money-laundering blacklist for what the department determined were lax money-laundering controls. As a result, Macau regulators froze North Korean assets held by the bank.

That so angered Pyongyang that it refused to participate in six-nation nuclear arms talks for over a year, during which time it first test a nuclear weapon. The North returned to the talks in December, and the mid-February deal was struck in part because of an agreement to resolve the funds dispute within 30 days.

Wilkinson, Treasury Secretary Henry Paulson's top administrative aide, is a former close adviser to Rice, and a longtime Republican political operative in Washington. His participation is intended to assure Chinese banking authorities that Washington will not punish them for handling the North Korean assets, and to send a signal to all sides that the U.S. government is united in seeking a deal.

The Treasury and State departments have sometimes been at odds as they pursued separate goals with regard to North Korea. The Treasury inquiry into Banco Delta Asia preceded a landmark 2005 nuclear disarmament deal reached by U.S. State Department negotiators, and Treasury officials have viewed their concern over financial issues as a separate law enforcement matter.