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Seizure of a tiny bank linked to N. Korea may soon end

MACAU—Within weeks, authorities in this Chinese enclave near Hong Kong may end the 18-month takeover of a tiny private bank that the Bush administration has accused of laundering money for North Korea and serving as a conduit for counterfeit cash.

Whether the government will return the bank to its original owner, a colorful gold trader with longstanding ties to North Korea, isn't clear. But regulators have told one of the bank's key clients that they'll soon release some frozen assets and end their seizure of the bank's operations.

Officials in Macau won't say whether the U.S.-instigated seizure of Banco Delta Asia turned up any evidence to substantiate Bush administration claims of illicit activity. (An Ernst & Young audit did not, according to the bank's lawyers.)

But signs are emerging that the government's seizure of the bank occurred in an irregular fashion, not following Macau's laws.

"Was there ever a court order? I've never seen one," said a Macau lawyer, who declined to give his name, fearing retribution. He noted that bank records can be released only under such orders and must be published in local newspapers.

Curiously, the bank's founder, Stanley Au, doesn't appear to have been tainted by the seizure. He's been in Beijing this week rubbing elbows with Chinese leaders as an honored delegate to an annual consultative meeting.

Friends say Au might regain control of the bank as soon as March 28, when the term of three government-appointed delegates overseeing the bank's operations ends.

At least one British client of Banco Delta Asia is angry and charges that the Bush administration pursued "trumped-up" allegations to pressure North Korea.

Colin McAskill, whose company is acquiring Daedong Credit Bank, a foreign-operated bank in Pyongyang, said the bank had more than $6 million frozen at Banco Delta Asia at the behest of the U.S. Treasury Department.

McAskill, speaking from London, said he proved to Macanese and U.S. officials that Daedong's deposits were from legitimate business dealings in North Korea.

"We believe we've broken the back of the accusations the Americans have made and that we should get the money back," McAskill said. He added that Herculano de Sousa, the Macau banker who's temporarily running Banco Delta Asia's business, told him at a Feb. 28 meeting that his assets would soon be freed and the bank intervention ended.

But McAskill said he's worried that U.S. officials may launch new volleys against North Korea, impairing the ability of his bank to do business.

"The main focus now has to be to get the U.S. Treasury to stop interfering—as it has been doing—to prevent (North Korea) from using the international banking system for its legal and legitimate business," McAskill said.

A free-wheeling territory that reverted from Portugal to China in 1999, Macau has long been a favored spot for North Korean agents and traders.

Au, who's in his 60s, saw opportunity with the North Koreans when he moved from Hong Kong to Macau in the 1970s and built a gold-trading business and a bank.

Ricardo Pinto, publisher of a Portuguese-language newspaper, Ponto Final, said Au "thinks he has the full support of Beijing."

In an extensive report last year, Pinto revealed that Au's bank had brokered gold transactions for North Korea from 2002 to 2005, selling 9.2 tons that amounted to North Korea's entire gold production.

Such business isn't illegal under Macau law, and no public official has provided evidence to back up the U.S. accusations of money laundering and trafficking in counterfeit currency.

McAskill, the British banker, said Daedong Credit Bank moved $49 million in cash through Banco Delta Asia in recent years and of that, "only three individual old $100 bills were labeled as suspect. Not counterfeit, only suspect."

In late January, Daniel Glaser, U.S. deputy assistant treasury secretary for terrorist financing and financial crimes, said his team had combed 300,000 pages of Banco Delta Asia records. The documents "confirm what we've been saying, that there's been a lot of troubling activity going on at that bank," he said.

Glaser declined to say under what authority he obtained the bank records.

Macau authorities haven't said how they'll dispose of the bank if they pull out as scheduled at the end of the month.

"The government doesn't want to give the bank back to Stanley Au," Pinto said.

But friends said Au craves for the bank to be returned to his control.

"He'll be able to say, `See, it's over and I have the bank back. And they should give me an apology,'" said one government official, who spoke on condition of anonymity because he wasn't authorized to speak on the record.

Au declined to speak about that prospect: "I will give you an interview after I have settled my differences with the U.S. Treasury," Au said in a written response to an e-mail query.

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(c) 2007, McClatchy-Tribune Information Services.

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