North Korea Storms Out of Economic Talks

Chin Dong-soo, left, who leads the South's government delegation to North Korea, receives a bouquet of flowers from a North Korean woman upon his arrival at Pyongyang airport in Pyongyang, North Korea, Wednesday, April 18, 2007. A South Korean delegation arrived in North Korea to discuss possible aid despite North Korea's failure to make progress on an international agreement to dismantle its nuclear programs. (AP Photo/Park Min-kue, Korea Pool) (Park Min-kue - AP)

Seoul has agreed to discuss the North's request for 400,000 tons of rice at this week's talks _ the 13th such session _ but it was not clear if it would go ahead with shipping the food due to the lack of progress on the disarmament agreement.

Following the February nuclear deal, South Korea restarted most aid shipments to the North that had been suspended amid tensions over the North's missile and nuclear tests last year.

But Seoul has continued to withhold food assistance in a symbolic gesture to put pressure on the North to carry through with its nuclear obligations.

The North has said it is waiting for a separate financial dispute to be resolved involving $25 million in funds frozen in a Macau bank that Washington blacklisted for alleged complicity in North Korean money laundering and counterfeiting.

At the economic talks, Ju proposed setting up a branch of a North Korean bank in an industrial zone jointly run with South Korea in the North's border city of Kaesong. Twenty-two South Korean firms operate factories in the enclave, funneling $740,000 to the communist regime every month in unmonitored transactions that could be potentially diverted to weapons programs.

On Wednesday, South Korean President Roh Moo-hyun said the delay in moving on the nuclear agreement had been due to a "technical glitch" but that the problem was almost solved.

A Japanese news report Thursday said North Korea has begun transferring some of its funds from Macau to an unidentified bank in Southeast Asia.

The Yomiuri newspaper said it would take more than a month for the transfer of all 52 accounts to be completed. The paper quoted unidentified officials related to North Korean banks holding accounts in the Macau bank, Banco Delta Asia.

A Banco Delta Asia spokesman did not immediately return a reporter's call. Spokeswoman Wendy Au at the Monetary Authority of Macau declined comment.

The Macau bank had among its clients a North Korean bank blacklisted in June 2005 by the U.S. Treasury as a "weapons of mass destruction proliferator and supporter," an audit report by the accounting firm Ernst & Young said. The name of the North Korean bank was blacked out in the audit, a copy of which was obtained by The Associated Press.

The North Korean bank's account at Banco Delta Asia was closed in September 2005.

In a response included in the audit report, the Macau bank said it didn't take action against the client because it didn't know it was on a blacklist.

The audit, which covers Banco Delta Asia's activities from Jan. 1, 2002, to Sept. 17, 2005, also said the bank did not keep sufficient records of business with its North Korean clients and did not follow anti-money laundering guidelines issued by Macau monetary authorities.

Banco Delta Asia said in the audit that it trusted its North Korean customers were legitimate because the government had total control in the country.

The report said the bank bought gold from North Korean clients, helped handle foreign exchange margin trading for them and provided them with letters of credit.