Cho Kuk, North Korea’s Coal Shipping, and Sanctions Against North Korea
2019-9-19, Tara O
President Moon Jae-in appointed Cho Kuk (조국) as the Justice Minister on September 9, 2019, despite numerous allegations of unethical and illegal activities, including corruption, abuse of power, and subversive activities against the state. Cho Kuk’s wife and nephew have been charged and the prosecutor has so far searched and seized over 30 locations in the course of the investigation.
One of Cho Kuk’s many scandals is his family’s investment in the private equity fund at Co-Link Private Equity (PE) firm, which is owned by Cho Kuk’s nephew, Cho Beom-dong (조범동). Cho Beom-dong and all of the other employees of Co-Link immediately left the country soon after the scandal broke, but Cho returned to South Korea and was arrested at the airport on September 14, 2019. Cho Beom-dong has been charged with a variety of illegal activities, including embezzlement and destruction of evidence. See here for details on the Cho Kuk scandal.
Cho Kuk’s wife Jeong Kyung-sim (정경심), Cho and Jeong’s adult daughter and adult son signed an agreement to invest up to ₩7.455 billion ($7 million), which is more than Cho Kuk’s reported wealth of about $ 5 million, in the “Blue Core ValueUp Private Equity Fund” (블루코어밸류업1호 사모펀드) on July 31, 2017. This occurred about two months after Cho Kuk became the Senior Secretary for Civil Affairs and Justice at the Blue House under Moon Jae-in, who won the special presidential election in 2017. Three additional people invested in the fund; they are Cho Kuk’s wife’s brother Jeong Kwang-bo (정광보) and his two sons.
Cho Kuk’s wife also lent her brother Jeong Kwang-bo ₩300 million ($262,000) on February 28, 2017, after which Jeong Kwang-bo bought 250 shares of Co-Link Private Equity worth ₩500 million ($345,000) on March 9, 2017. Co-Link and China’s Jiangsu Province Huakun Science and Technology Development (public) Corporation (장쑤성 화군과학기술발전유한공사와) also signed an agreement on April 28, 2016 to invest ₩600 billion ($525 million) in Co-Link.
Jeong Kwang-bo, was also the managing director of Bona Systems Company [(주)보나시스템]. One of Bona Systems’ subsidiaries is Dongchin Shipping (동친해운), which is suspected of being involved in transporting North Korean coal. The office of National Assemblyman Joo Kwang-deok (주광덕), Liberty Korea Party, provided further information on Dongchin Shipping and the ship as follows.
In June 2017, Dongchin Shipping sold the Dongchin Shanghai (동친상하이) ship to a Chinese shipping company, and the ship was renamed Xin Sheng Hai (New Shanghai, 신성하이) under a Belize flag. The UN confirmed that this ship transported coal from Nampo Port in North Korea to China and Vietnam during July-August 2017. At that time, the ship kept the South Korean registry. Apparently, the ship’s automatic identification system (AIS) was turned off every time it entered North Korea. Turning the AIS off is risky, because that act can void the maritime insurance of the ship.
After visiting North Korea, the Xin Sheng Hai ship visited the South Korean ports of Incheon, Busan, Pohang, and Yeosu during October-November 2017, despite South Korean sanctions against North Korea stating any ship that visited North Korea cannot enter South Korean ports for one year. The ship also entered the port of Kunsan on January 20, 2018 after changing its name to Talent Ace.
After the ship was highlighted as violating UN sanctions, the company renamed Xin Sheng Hai as Talent Ace, reflagged it to Togo, and changed its registration number with the International Maritime Organization (IMO). For more information on the ship, see here.
Despite these measures to hide the ship’s identity, both the IMO and the Korean Register of Shipping confirmed that Talent Ace is the same ship using the same engine identification number as Xin Sheng Hai, which is registered with the Korean Register of Shipping. Since its entrance to Kunsan in 2018 and the discovery that Talent Ace is actually Xin Sheng Hai, the ship is in the process of being scrapped.
Dongchin Shipping, the owner of the ship prior to its sale, was a small shipping company. In August 2017, however, it was able to participate as a member of the Korea Shipping Association (한국해운연합), whose members are much larger national container carriers, which has raised more suspicions of favoritism and nepotism.
Cho Kuk’s scandal is getting bigger everyday. Cho’s family’s linkage to a ship suspected of violating sanctions is the latest matter that should be examined carefully.
