A British banker has ties to a company with links to North Korea's nuclear programme, according to further analysis of the 'Panama Papers' data leak.
Mossack Fonseca, the Panamanian law firm which facilitating hundreds of tax avoidance and money laundering schemes, has worked with clients placed under international sanctions. While Mossack Fonseca worked with some of the businesses before the sanctions were imposed, it continued to deal with several even after the sanctions were launched.
Among the 33 clients blacklisted by the US Treasury is DCB Finance - set up in 2006, it was based in North Korea's capital Pyongyang. The company's owners were a North Korean official, Kim Chol Sam, and a British banker, Nigel Cowie, who was also CEO of North Korea's first international bank - Daedong Credit Bank - which was also under sanctions.
DCB Finance has since been placed under sanctions by the US Treasury for allegedly raising funds for the North Korean government and its links to a bank accused of helping to finance the country's nuclear programme. The US Treasury said that since “at least 2006, Daedong Credit Bank had used its front company, DCB Finance Limited, to carry out international financial transactions as a means to avoid scrutiny by financial institutions avoiding business with North Korea”. Nigel Cowie was not sanctioned.
Cowie spent two decades in North Korea from 1995, having previously worked at HSBC in Hong Kong. He claims DCB Finance was used for legitimate business and says he wasn't unaware of any illegal transactions.
He registered DCB Finance in the British Virgin Islands, giving his own address as the International House of Culture in Pyongyang, which didn't send alarm bells ringing.
However, Mossack Fonseca claims it didn't notice that Cowie listed his address in Pyongyang, until it was contacted by authorities in the British Virgin Islands in 2010. Mossack Fonseca ended its relationship with DCB shortly after. And around a year later, Cowie sold his take in the company to a Chinese consortium.
In an email to the BVI authorities dated 9 August 2013, Mossack Fonseca said: "We have not yet addressed the reason we maintained a relationship with DCB Finance when we knew or ought to have known from incorporation in 2006, that the country, North Korea was on the black list."
It added: "We should have identified from the onset that this was a high risk company."
Cowie's lawyers stressed that he did not know of any unlawful activity, and that he left the company in 2011. His lawyers said: “My client was a shareholder in DCB Finance Ltd, a company set up to enable DCB to continue to operate after correspondent banks had closed its accounts. The name was specifically chosen in order to reflect the historical connection with DCB. DCB Finance Ltd was used for legitimate business. My client was, and still is to this day, unaware of any transactions being made with any sanctioned organisation or for any sanctioned purpose, during his tenure.”