Exclusive: Sanctions delay North Korea's atom bomb work, U.N. report says

By Louis Charbonneau and Michelle Nichols

UNITED NATIONS (Reuters) - Increasingly tough financial sanctions, an arms embargo and other international restrictions on trade with North Korea have significantly delayed expansion of Pyongyang's illicit nuclear arms program, according to a confidential report by a U.N. panel of experts seen by Reuters on Tuesday.

"While the imposition of sanctions has not halted the development of nuclear and ballistic missile programs, it has in all likelihood considerably delayed (North Korea's) timetable and, through the imposition of financial sanctions and the bans on the trade in weapons, has choked off significant funding which would have been channeled into its prohibited activities," the 52-page report said.

In the report to the U.N. Security Council's North Korea sanctions committee, the panel also recommended sanctioning three North Korean entities and 12 individuals. It will be up to the 15-nation council whether or not it follows the recommendations.

The three entities the panel said should be blacklisted are the newly created Ministry of Atomic Energy Industry, the Munitions Industry Department of the Central Committee of the Korean Workers Party (KWP), and the State Space Development Bureau.

The individuals the panel wants sanctioned include the atomic energy industry minister, once he is nominated, and four senior officials at the KWP Munitions Industry Department.

It also recommends the blacklisting of one national from Kazakhstan, Aleksandr Viktorovich Zykov, and two from Ukraine, Iurii Lunov and Igor Karev-Popov, for their involvement in North Korea-related arms deals.

"The DPRK (North Korea) has continued to defy the international community in a series of actions which have heightened concern about its intentions," it said.

The panel listed North Korea's February nuclear test and its rocket launches as examples of violations that have increased international concerns about Pyongyang. It was North Korea's third nuclear test since 2006.

Pyongyang is under U.N., U.S., European Union and other sanctions, including a U.N. ban on all arms exports, due to its nuclear weapons program.

IMPORT-EXPORT

Among potential violations the panel listed were the seizure by a U.N. member state of aluminum alloys suspected to be nuclear-related in August 2012 and the seizure of missile-related items bound for Syria in May 2012.

Previous breaches included shipments of arms-related material to Syria in November 2010 and rocket fuses for Iran in 2008, the panel report said.

"The DPRK has continued its efforts to import and export items relevant to missile and nuclear programs and arms," it said. "There was no major change in either the number or nature of the incidents investigated by the panel over the reporting period."

The panel said countries should be on the lookout for North Korean attempts to procure the following key items for Pyongyang's nuclear program - maraging steel, frequency changers, high-strength aluminum alloy, fibrous or filiamentary materials, filament winding machines, ring magnets, semi-hard magnetic alloys in thin strip form and other items.

U.N. diplomats said that China, North Korea's principal ally and trading partner, continues to play a key role in enabling Pyongyang to skirt sanctions, though this is not discussed explicitly in the panel's report.

Beijing has vowed to push for full implementation of the latest round of U.N. sanctions adopted by the council in March, though it remains unclear how much China was keeping that promise.

Recently Bank of China Ltd shut the account of North Korea's main foreign exchange bank, the state-run Foreign Trade Bank, which was hit with U.S. sanctions in March after Washington accused it of helping finance Pyongyang's nuclear weapons program.

That closure was the first significant, publicly announced step taken by a Chinese firm to curb dealings with North Korea.

TARGETING BANKS

The U.N. financial restrictions are working, the panel said.

"The panel is highly confident that financial measures of the resolutions in general are being effectively implemented by major banks," the experts wrote.

"It has concerns, however, about the ability of banks in states with less effective regulators and those unable to afford effective compliance to detect and prevent illicit DPRK transfers," said the report, citing a case involving the Bank of Congo in the Republic of Congo.

It said the Bank of Congo processed a wire transfer linked with an attempted arms shipment in 2009 to an account in the name of a diplomat at North Korea's embassy in Beijing, but Banque de France refused to accept the transfer.

"This case illustrates how the DPRK makes use of its diplomatic officials in the conduct of prohibited activities ... and in the using bank accounts to shield illicit fund transfers from bank's due diligence procedures," the experts said.

The report also said a diplomat at the North Korean embassy in the Republic of Congo has been actively involved in negotiating the contracts for the arms shipments.

The panel said that since May 2012 Japan has reported nine cases of suspected violations of the ban involving luxury goods including alcohol, tobacco, electronic items, automobiles and cosmetics.

The Security Council sanctions resolution adopted in March drew attention to North Korean bulk cash deliveries, an issue the expert panel also touched on in its report. [ID:nL1N0BZ6V1] U.N. envoys say such transfers are often carried out by North Korean diplomatic personnel.

The panel report referred to North Korea's "trade-based money-laundering via front companies and agents to pay for illicit procurements and to transfer proceeds of sales of weapons and WMD-related items."

"It (North Korea) uses company formation agents to establish firms off-shore in locales where laws make it difficult or impossible to determine beneficial ownership," the panel said. "It may often conduct its banking under a similar name in a different country."

The panel also said North Korea continues to violate the Security Council ban on luxury goods.

"The DPRK circumvented sanctions using ... false shipping and customs declarations and the use of intermediaries to make payments either through hand carrying or wire transfers. In at least two instances the end users were falsely declared as a diplomatic mission in Pyongyang," it said.

It said the panel had also requested information from China on six earlier luxury goods cases. "China's customs officials told the panel that goods covered by the panel's 2012 report were not considered luxury goods," the experts wrote.

(Reporting by Louis Charbonneau and Michelle Nichols. Editing by Christopher Wilson and Xavier Briand)

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Lebanon's new premier says election delay likely

By Dominic Evans and Laila Bassam

BEIRUT (Reuters) - Lebanon's June election faces a possible delay, prime minister-designate Tammam Salam said, as he prepared to form a government which aims to resolve months of dispute over the vote and shield the country from war in neighboring Syria.

Salam, a moderate who won broad political support to become premier, said he would try to bring all of Lebanon's rival factions into a government whose main priority was paving the way for the parliamentary election.

But with most political blocs opposed to the existing electoral law - including the powerful Iran-backed Hezbollah movement and its Saudi- and Western-backed March 14 opponents - Salam said reaching agreement on a new system would take time.

"There is a possibility of a technical delay while a new electoral law is decided," Salam told Reuters in his Ottoman-style mansion in Beirut on Sunday, a day after President Michel Suleiman asked him to form a new government.

The alternative of extending the existing parliament's life by a year or two was constitutionally risky, said Salam, while the worst-case scenario of a political "vacuum" would be a step towards the catastrophic conflict underway in Syria and suffered by Lebanon in its own 1975-1990 civil war.

"We experimented with this in the past when politics turned into political battles outside the democratic institutions and we paid a very heavy price, as others are paying today," the 67-year-old former culture minister said.

Salam, from a prominent Sunni Muslim family, is close to the March 14 coalition of former prime minister Saad al-Hariri - despite tensions between the two political dynasties in previous elections - but his nomination also won the backing of the rival March 8 bloc which includes Hezbollah and its allies.

March 14 groups mainly Sunni and Christian parties which pushed, with U.S. and European support, for Syria to end nearly three decades of military presence in Lebanon in 2005.

Political tensions have risen sharply since the outbreak in 2011 of the Syrian uprising, which March 14 strongly supports while March 8 has backed President Bashar al-Assad. But the rival camps bridged their differences, perhaps briefly, to give Salam the backing of 124 out of parliament's 128 members.

Asked if he would try to form a government representing all of Lebanon's political factions, including Shi'ite Hezbollah, Salam said: "As long as everyone took part in (my) nomination, everyone should be involved in forming the government too."

SYRIAN DANGERS

Salam's elevation follows the resignation last month of Prime Minister Najib Mikati, whose two years in office were marked by efforts to contain sectarian rifts, street battles and economic fallout from the Syrian civil war.

Mikati tried to maintain a policy of "dissociation" from Syria's turmoil, knowing that any clear stance on the conflict would antagonize some among Lebanon's factions.

But he sometimes found himself at odds with own foreign minister, who vocally criticized the Arab League for suspending Syria and appeared reluctant to convey government protests over Syrian army cross-border shelling or air strikes.

Dissociation "was a good title, but it was not properly implemented and it witnessed some downfalls now and then", Salam said, adding that Lebanon needed to stand up more clearly for its sovereignty and promising to tighten border security.

That step would also aim to prevent fighters from Lebanon - both supporters of the rebels and of Assad - from crossing the border to join the fight, he said.

A Sunni Muslim, as all prime ministers must be under Lebanon's confessional distribution of power - Salam studied business administration in Britain after school in Beirut.

His guiding philosophy, he said, was "moderation, in a country which has been governed by moderation for many, many years, and has suffered from extremism in other times".

Salam's mother Tamima, now in her 90s, is from a prominent Damascus family while his later father Saeb served six times as Lebanese prime minister between 1952 and 1973. A black and white portrait of the elder Salam, a white rose in his suit lapel, looked down on his son as he spoke during the interview.

His grandfather was a parliamentary deputy in the last years of the Ottoman empire and campaigned against French colonial authorities who ruled Lebanon until independence in 1943.

"Historically we have lived in Lebanon in a very precarious situation ... affected by Arab and regional and international developments, and also internally by the different religious factions that form the country," he said.

"(Now) there is a minimum of stability in the country, a minimum of law and order. But it is still enough to preserve Lebanon and (for us) to exercise our democratic functions."

(Writing by Dominic Evans; editing by David Stamp)

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Lawyers win delay for teen accused of killing girl

GOLDEN, Colo. (AP) — Lawyers for a Colorado teen who allegedly told police he wanted to plead guilty to killing a 10-year-old girl asked a judge on Tuesday for more time to study possible defenses.

Judge Stephen Munsinger granted the request and postponed the arraignment of Austin Sigg until April 12.

The 18-year-old suspect is charged with the murder, kidnapping and sexual assault of Jessica Ridgeway. The fifth-grader's disappearance last fall sparked a massive manhunt and fear among residents of Denver's west suburbs.

Police have said Sigg acknowledged during questioning that he strangled Jessica then dismembered her body in a bathtub at his mother's home. The child's remains were found in a park and in a crawl space at the home.

On Tuesday, defense attorney Katherine Spengler said Sigg's legal team also needed to study the massive amount of evidence in the case and analyze his mental state at the time of the crime.

"A race to justice really is no justice at all," Spengler told the judge.

Sigg wore an orange jumpsuit in court, where he flashed a tight smile and talked with his attorneys before the hearing.

Jessica's mother, Sarah Ridgeway, and other supporters in the audience wore purple — Jessica's favorite color — at the hearing.

Police have said Sigg vehemently denied sexually assaulting Jessica.

Jessica lived in suburban Westminster with her mother, about a mile from Sigg's home. Her father, Jeremiah Bryant, lives in the Kansas City suburb of Independence, Mo.

Jessica disappeared Oct. 5 while walking to meet a friend just two blocks away on their way to school.

Her body was found on Oct. 10 along a remote road in a park. Police scoured her neighborhood and even collected cheek swabs for DNA from some residents.

Authorities asked the public to keep an eye out for people exhibiting unusual behavior such as leaving town unexpectedly, missing appointments or changing their appearance.

On Oct. 23, Sigg's mother, Mindy Sigg, called 911 to say her son wanted to turn himself in. When the dispatcher asked what her son had said, she replied, "That he did it, and he gave me details, and her remains are in my house."

Her son then spoke with the dispatcher.

"I don't exactly get why you're asking me these questions. I murdered Jessica Ridgeway. I have proof that I did it," Austin Sigg said, according to a police recording of the call.

Westminster police Detective Michael Lynch testified at a preliminary hearing that Sigg told his mother that he kidnapped Jessica as she walked past his car, bound her arms and her legs, and took her to his house.

Former classmates said the 5-foot-6, 160-pound Sigg was intelligent, often wore black, and would stay late sometimes to work on computers. He was interested in mortuary science and was taking forensics classes, they said.

Sigg left Standley Lake High School in July after finishing the 11th grade and later earned a GED. School officials said they didn't know why he left. One former classmate, Sarah Morevec, said he had been bullied for having a high voice.

Sigg cannot face the death penalty because he was 17 at the time of the slaying. If convicted, he could face life in prison with the possibility of parole after 40 years.

He also faces an attempted kidnapping charge involving an attack on a 22-year-old woman who was running near the elementary school attended by Jessica.

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Associated Press writer P. Solomon Banda contributed to this report.

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