Banking,  Economy,  North Korea

What Is Korean for Caveat Emptor?


Rungna Island, Pyongyang c. 1910 (when there was concrete). Copyright Kernbeisser.
Rungna Island, Pyongyang c. 1910 (when there was concrete). Copyright Kernbeisser.

Still reeling at the thought of execution-by-steamroller in North Korea, my mind turned to more cheerful thoughts: such as there being people out there who think there is any honour in doing business with a medieval kingdom with the dustiest trappings of modernity.

Yonhap reports that the District Court of New York has ruled against the Foreign Trade Bank of Korea over its failure to repay a $7 millions loan taken-out in 2001 with the Mega International Commercial Bank in Taiwan.

Founded in 1959, when the economies north and south of the 38th Parallel arguably were on level pegging, the FTB has become one of the principal piggy-banks for the DPRK’s diplomat capitalists who would have made Tiny Rowland blanch. In the intervening half century, of course, the economy and living standards of the RoK have gone in leaps and bounds whilst those of the DPRK have stagnated somewhat; much, no doubt, to Tony Benn’s consternation considering which was and was not occupied by American troops.

Although the loan was taken out prior to the passing of UNSCR 1874 (binding) which imposed economic sanctions against the DPRK following subterranean nuclear tests, the trustworthiness of DPRK economic reps has been doubted for decades. Tim Worstall once recounted pulling the plug on a deal by his company when his counterparts, with State backing, were unable to secure a letter of credit for a measly $250,000.

MICB could, therefore, be assumed to have acted out of either doe-eyed naivety usually seen in Icelandic banks, or complete disregard for the consequences as long as a profit would be returned: or a bit of both. There is an upturn in construction activity in Pyongyang (even if there is a shortage of that rare commodity, cement) and more saps business ventures from Western companies, so the DPRK should have have the money to repay: yet, in what I assume was plain spite, FTB reps did not even appear at the District Court hearing.

I have not laughed so much since the RoK’s very own Diues, Roh Jeong-ho lamented being shafted and forced into bankruptcy over a barbed-wire sale to the DPRK.

The chances of the FTB actually coughing-up following a ruling from Imperialist courts are as likely as a Jehovah Witness being welcomed in Pyongyang. All the same, with this ruling, the MICB could petition for the seizure of DPRK assets in the USA (although this would not include Pyongyang Soju snake whisky which has been withdrawn from distribution).

The message to any other company considering doing business with DPRK is, if you really must, take Tim Worstall’s advice.