North Korea spy agency runs arms operation out of Malaysia, U.N. says

It is in Kuala Lumpur's "Little India" neighbourhood, behind an unmarked door on the second floor of a rundown building, where a military equipment company called Glocom says it has its office.

Glocom is a front company run by North Korean intelligence agents that sells battlefield radio equipment in violation of United Nations sanctions, according to a United Nations report drafted for the Security Council seen by Reuters.

Reuters found that Glocom advertises over 30 radio systems for "military and paramilitary" organisations on its Malaysian website, glocom.com.my.

Glocom’s website, which was taken down late last year, listed the Little India address in its contacts section. No one answers the door there and the mailbox outside is stuffed with unopened letters.

In fact, no company by that name exists in Malaysia. But two Malaysian companies controlled by North Korean shareholders and directors registered Glocom's website in 2009, according to website and company registration documents.

And it does have a business, the draft U.N. report says. Last July, an air shipment of North Korean military communications equipment, sent from China and bound for Eritrea, was intercepted in an unnamed country. The seized equipment included 45 boxes of battlefield radios and accessories labelled "Glocom", short for Global Communications Co.

Glocom is controlled by the Reconnaissance General Bureau, the North Korean intelligence agency tasked with overseas operations and weapons procurement, the report says, citing undisclosed information it obtained.

A spokesman for North Korea's mission at the U.N. told Reuters he had no information about Glocom.

U.N. resolution 1874, adopted in 2009, expanded the arms embargo against North Korea to include military equipment and all "related materiel".

But implementation of the sanctions "remains insufficient and highly inconsistent" among member countries, the U.N. report says, and North Korea is using "evasion techniques that are increasing in scale, scope and sophistication.”

Malaysia is one of the few countries in the world which had strong ties with North Korea. Their citizens can travel to each other’s countries without visas. But those ties have begun to sour after North Korean leader Kim Jong Un’s estranged half-brother was murdered at Kuala Lumpur’s international airport on Feb 13.

PAN SYSTEMS

According to the "WHOIS" database, which discloses website ownership, Glocom.com.my was registered in 2009 by an entity called International Global System using the "Little India" address. A similarly named company, International Golden Services is listed as the contact point on Glocom's website.

Glocom is operated by the Pyongyang branch of a Singapore-based company called Pan Systems, the draft U.N. report says, citing an invoice and other information it obtained.

Louis Low, managing director of Pan Systems in Singapore said his company used to have an office in Pyongyang from 1996 but officially ended relations with North Korea in 2010 and was no longer in control of any business there.

"They use (the) Pan Systems (name) and say it's a foreign company, but they operate everything by themselves," Low told Reuters referring to the North Koreans at the Pyongyang office.

Pan Systems Pyongyang utilised bank accounts, front companies and agents mostly based in China and Malaysia to buy components and sell completed radio systems, the U.N. report says. Pan Systems Pyongyang could not be reached for comment.

One of the directors of Pan Systems Pyongyang is Ryang Su Nyo. According to a source with direct knowledge of her background, Ryang reports to "Liaison Office 519”, a department in the Reconnaissance General Bureau. Ryang is also listed as a shareholder of International Global System, the company that registered Glocom's website.

Reuters has not been able to contact Ryang.

SMUGGLING CASH

Ryang frequently travelled to Singapore and Malaysia to meet with Pan Systems representatives, the draft U.N. report says.

On one such trip in February 2014, she and two other North Koreans were detained in Malaysia for attempting to smuggle $450,000 through customs at Kuala Lumpur's budget airport terminal, two sources with direct knowledge of the situation told Reuters.

The North Korean trio told Malaysian authorities they all worked for Pan Systems and the cash belonged to the North Korean embassy in Kuala Lumpur, according to the two sources.

The Malaysian Attorney General decided not to press charges because of insufficient evidence. A week later, the trio was allowed to travel, and the North Korean embassy claimed the cash, the sources said. All three had passports assigned to government officials, the sources said.

Malaysia's Customs Department and the Attorney General's office did not respond to requests for comment over the weekend.

The Pan Systems representative in Kuala Lumpur is a North Korean by the name of Kim Chang Hyok, the U.N. report says.

Kim, who also goes by James Kim, was a founding director of International Golden Services, the company listed in the contacts section of the Glocom website. Kim is director and shareholder of four other companies in Malaysia operating in the fields of IT and trade, according to the Malaysian company registry.

He did not respond to requests for comment by mail or email.

The United Nations panel, which prepared the draft report, asked the Malaysian government if it would expel Kim and freeze the assets of International Golden Services and International Global System to comply with U.N. sanctions. The U.N. did not say when it made the request.

"The panel has yet to receive an answer," the report said.

Reuters has not received a response from the Malaysian government to repeated requests for comment about Glocom.