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Report: China Investigating North Korean Bank

  • Associated Press

FILE - North Korea's leader Kim Jong Un watches a parade from a balcony at the Kim Il Sung Square in Pyongyang.

FILE - North Korea's leader Kim Jong Un watches a parade from a balcony at the Kim Il Sung Square in Pyongyang.

Chinese authorities are investigating a North Korean bank suspected of financing its government's imports of goods that might be used by the North's nuclear weapons program, a South Korean newspaper reported Monday.

Kwangson Banking Corp. was ordered closed under U.N. sanctions imposed in March in response to the North's nuclear tests but kept operating in secret in the border city of Dandong, Joongang Daily reported, citing unidentified sources.

Beijing has long been North Korea's main source of aid and diplomatic support but is showing growing frustration with Pyongyang's pursuit of nuclear weapons in defiance of foreign pressure.

Chinese authorities disclosed this month that they were investigating a company in Dandong that U.S. and South Korean researchers said sold the North materials with possible military uses.

China's Foreign Ministry and its bank regulator did not respond to requests for comment.

Kwangson Bank is an affiliate of North Korea's state-run Foreign Trade Bank, which was cited by the U.S. Treasury in 2009 for financing entities supplying equipment with possible military uses to Pyongyang, according to Joongang Daily.

The newspaper said Kwangson's Dandong branch operated on the 13th floor of a building occupied by Hongxiang Group, the Chinese company whose dealings with the North are under investigation.

Hongxiang is suspected of unspecified “serious economic crimes,” according to earlier announcements by police in Liaoning and China's Foreign Ministry.

They gave no details, but a report in August by the Center for Advanced Defense Studies in Washington and the Asan Institute for Policy Studies in Seoul said it supplied aluminum oxide and other materials that are used in processing nuclear bomb fuel.

The chairwoman of Hongxiang, Ma Xiaohong, was detained last month and three of her siblings are being investigated, Joongang Daily said.