26 July 2006

The web of the supernote

My thanks to Austin Bay for his article on supernotes (superdollars) which is a quick look at a NYT Sunday Magazine (23 JUL 2006) article on same. It appears that North Korea, in its infinite joy of bollixing up anything it can think of, has decided to counterfeit US $100 bank notes. If you were wondering *why* the US dollar changed in composition, you can finger NoKo for this as they have decided that destabilizing the USD in small Nations and making the paper dollar untrustworthy would diminish the stance of the United States as a whole. Now, synthesizing a bit with the past work on Transnational Terrorism and it's interconnectivity, we can start to piece together the directly known and highly suspected pieces and see what that leads to, if anything.

First is the Known Source: North Korea. They purchased the necessary presses and new variable printing dye technology about the same time as other Nations did. They bought an ink-type that changes from green to magenta while the US one goes from green to black. As a personal note in this, beyond the fact that a dark magenta can do a quick tomfoolery on the eye and look black, as noted elsewhere, a chemical analysis of the ink and its structure should also allow a nefarious Nation with spare time and manpower on its hands to figure out how to do a slight rework so that it goes from green to black. And the notes are actually *too* perfect, as the article explains, actually having higher definition on background items than the REAL dollar bill, thus giving a warning that the Treasury Department will have to make its game significantly more complex to defeat the forgers. The duplicates use the same paper and mix and anti-counterfeit strand mix as the real notes, the same processing techniques, the same drying techniques and duplicate the printing cycle of these notes. Needless to say, North Korea has denied doing this.

The distribution methodology is various and dispersed.

The first source being North Korean diplomats who get a 50/50 mix of real and forged notes for their foreign travels. Thus these notes have a wide, but limited distribution and are at a low level. So if you have ever seen North Korean diplomats and such out at a party passing out $100 bills, the chances are half of them are forged. And only an expert can tell the difference, and then often only with forensic tools. So the first evidence of these things were just one here, then another there, but no cumulative effort made at wide-spread distribution. Just a way to make the NoKo diplomats get a simple pay raise with no effort, I guess.

One of the first noticed individuals (though not appearing on the US Treasury's designated nationals and blocked persons list) in this is Sean Garland of the Official IRA which is yet another IRA offspring.

As in my previous offering it is time to look at the connections of the OIRA:
USSR/Russia - Defector Vasili Mitrokhin alleges that the OIRA sought arms from the KGB (approximately 70 rifles, some handguns and explosives). Some of this may have found its way to the Aldershot Bombing.

Now, where did Mr. Garland meet up with the North Koreans? Why in Moscow where he went to their Embassy. So lets scribble out that *suspected* link to the KGB purported by Mr. Mitrokhin and put in *highly likely* if not *quite certain*. He had then planned to exchange these notes for real ones in Dublin and Birmingham for either pounds or authentic dollars. This does add North Korea into the previous Template of Terror posting and gives a valid reasoning for considering them to be a backer of Transnational Terrorism directly via this route. This also gives a clear indication of linkage between the KGB and North Korea, as it is very, very, very unlikely that the KGB would not know of supernotes being distributed by North Korea.

Second up is the supernotes turning up in the Bekaa Valley in 2000. At that point it was under Syrian control, although Hezbollah operated there and is a direct link to Iran. Iran was the first Nation suspected of forging these notes, but the limited activity made that of questionable import. And at this point that makes the Bekaa Valley only a distribution point for the supernotes, not a true source (although recent events may prove a technology transfer). Iran, though easily suspected, actually has little need for this sort of thing, and anything that would start to make folks in the region uneasy about how they paid their bills would not look good to Iran. Thus we are left with Syria, which was left high and dry after the demise of the Soviet Union, having few natural resources to exploit and being, basically, cash strapped. Now, how does one help to fund a terrorist organization and one's military at the same time? Why, pay the terrorists with FORGED notes! While this is *not* confirmatory, it does form a reasonable supposition that Syria and North Korea conspired, each for their own reasons, to do this.

This would be one of the hardest links between Syria and North Korea made for the supernote trade, if proven to be true. Although what North Korea got out of it is unknown, save that Iran had been working on upgrading long range missiles they got from China. So a bit of triangular trade with Iran giving plans to Syria, Syria exchanging plans to North Korea in exchange for counterfeit supernotes and then paying off Hezbollah as proxy for Iran, thus satisfying all parties. This may be re-enforced by the US Treasury Department's look at Commercial Bank of Syria (CBS), along with its subsidiary Syrian Lebanese Commercial Bank for trafficking with terrorists a via the UN Oil For Food scandal and one wonders if the Syrians were using their own banks for laundering supernotes.

The US looked at Chinese banking, which is natural given Chinese support of North Korea. Eventually one bank, Banco Delta Asia, came up on the prohibition listing from the Treasury Department. And here is where that bank operates:

“Banco Delta Asia is located and licensed in the Macau Special Administrative Region, China. The bank operates eight branches in Macau, including a branch at a casino, and is served by a representative office in Japan. In addition, Banco Delta Asia maintains correspondent accounts in Europe, Asia, Australia, Canada, and the United States.”
This fine establishment has been serving North Korea for banking purposes for 20 years and have given little or no oversight to the dealings of North Korea as it is one of their largest if not THE largest customer they have. Further, senior officials of the bank are working with North Korea in counterfeit operations. A North Korean front company makes near exclusive use of the bank and that company has been cited for being involved with the international narcotics trade and uses the bank for money laundering operations. So the banking realm of State sponsored terrorism is to be included, as well as front companies compromising legitimate banking transactions to launder this money.

Looking further afield into the criminal side of things we have testimony from William Bach from the State Department's Director, Office of Asian, African and European Affairs, to the Senate committee on Governmental Affairs Subcommittee on Financial Management, the Budget and International Security on 20 MAY 2003 on the doings of North Korea. NoKo has been involved with the trade of : methamphetamines, endangered species, heroin, counterfeit cigarettes, and the supernote. There is a laundry list of Nations involved as end points for these activities: Japan, Taiwan, Australia, South Korea, Russia, and China to name a few. The testimony then goes on with:
“North Korean traffickers have links to Russian, Japanese, Taiwanese, China-Hong Kong, and Thai organized crime elements. In all cases, the relationship began as one of "wholesaler" with "retailer." North Koreans with large quantities of drugs to sell have sold them to criminal groups with the retail network necessary to move the drugs to consumers. It appears that some organized crime elements (e.g., Yakuza, Triads) approached the North Koreans because they knew that the North Koreans had drugs to sell.

This "wholesaler-retailer" relationship seems to have evolved in recent years. Incidents such as the Pong Su arrests, for example, demonstrate that North Korean traffickers are becoming involved farther down the trafficking chain.”
All of which the good North Koreans attribute to 'plot breeding' by the CIA and Japan.

A bit further afield is the Council on Foreign Relations which has a nice little page on North Korea and its connections to other terrorist States and its own terrorist activities, which would allow yet another means to unaccountably launder this money via another illegal trafficking setup different from mere criminal networks. This list includes: Iran, Syria and Libya as well as Pakistan and Yemen. From this we can show the definitive connections necessary for North Korea to infiltrate its supernotes into the banking system as a whole.

So the basic routes of this are: North Korean diplomats and other individuals doing deals with North Korea, pay off on information and other things to other Nations involved with terrorism and illegal drugs with this money thus putting them into the hands of the criminal underworld and terrorists (who might not like the fact that their money is proven worthless unless they can further launder it through their own banks), use legitimate banks and front companies to launder the supernotes.

Now they may only have a few $10's Million in circulation, but your average AK-47 is $300-$800 with a bit of fanciness to get you up to the high class $1,000 models. And your average RPG-7 launcher costs about $100-$500 each with each anti-tank warhead about $50-$100 each. So even $10,000 is enough to get a few folks started on the road to cheap jihad. This stuff is damned cheap, courtesy of the global armaments and export market, and the fact the AK-47 is so easy to manufacture that village blacksmiths can easily make spare parts and even whole weapons using a single original as a template. Those low-end, hand made in a village ones are on the low end of cost and reliability, but they still get the job done.

Some suppositional dot connecting -

  • So, one series of 'dots' leads this way: North Korea - Syria - Hezbollah - Bekaa Valley, with Iran as part of a triangular trade.
  • Another series of 'dots' leads this way: North Korean diplomats - Official IRA - UK Banks for money laundering.
  • A third series of 'dots' could lead to: North Korea - Pakistan (most likely its Secret Service) - then to the Taliban/ Kashmiri separatists/ al Qaeda.
  • Another series of 'dots': North Korea - Pakistan (AQ Khan nuclear weapons, equipment and information exchange) - then to Taliban/ Kashmiri separatists/ al Qaeda. Note that this one gets North Korea validated nuclear designs for warheads, as well as processing techniques and information.
  • Another series of 'dots': North Korea - Libya (nuclear information and components) - AQ Khan network. In this case the supernotes would be circulating back into the underground nuclear market.
  • And a fun series of 'dots' building off of the Template of Terror work: North Korea diplomats - Soviet KGB - Aum Shinrikyo. This uses the KGB as a filtration service to get work on anthrax, sarin and other capabilities developed by Aum. Now, this is backed up by this article, which points to these connections, but does not take into account that what Aum was buying was manufacturing blueprints and such, and very little in the way of actual components and weapons. Aum wanted to *manufacture* these things, not buy them off the shelf. What Aum offered was high level technical expertise which points to their own, homegrown, anthrax production methodology which actually did produce weaponized anthrax spores. That could have been the back play into North Korea to improve its already existing capabilities. And North Korea was able to get at least one individual sympathetic to it within Aum which would serve as another conduit for information.
  • Another set of 'dots' starts elsewhere: Iraq under Saddam - terrorist connections to al Qaeda and the Taliban - Pakistan (Secret Service) - North Korea. Here the passage is Iraqi chemical and bio weapons manuals being shifting and North Korea using the AQ Khan compromise of the Pakistani Secret Service to get at this material. They could also get their hands on generalized training documents and counter-espionage capability that Saddam was providing to both the Taliban and al Qaeda.

What this brings into focus is that even though these are 'suppositional' dot connections, they are *not* outside the realm of possibility nor even unreasonable. North Korea, by having a limited, but high class manufacturing sector can produce extremely pure drugs for illegal sale (heroin, methamphetamines, viagra) which is far more pure than what can be done by criminal organizations. This capability also gives North Korea the ability to manufacture supernotes and equipment to the highest of technical standards. Their main limitation is the lack of a real industrial base, and so they seek to leverage their extremely limited capabilities as much as possible and create enough currency flow to build their illegal trade. As a source point for high capability industrial techniques North Korea is a menace in the State sponsored terrorism business.

The main problem with Transnational Terrorism is not the actual terrorism... it is the web that fosters it and allows it to grow unaccountably outside the realm of legitimate State control and oversight. One can play 'whack-a-mole' with al Qaeda, Islamic Jihad, PLO, Hezbollah, Hamas, etc., but until this interconnected network of illicit trade sponsored by outlaw States is *ended* that is all the Civilized world will be doing.

Cutting off the top of the weed and *not* getting at its root system.

To kill the roots one must have real Goals in the Global War on Terror, and be willing to use the most powerful assymetric warfare tool available to the United States. Until the roots of this problem are squarely addressed and the internetworking between terrorists and States eliminated, the World will ALWAYS be in 9/10.


Sticky Notes said...

A masterpiece here. Well done "dot" work and intriguing web. Makes my work on the topic look like the note cards to your final "research paper". (But note cards aren't all bad.)

Well done.

Sticky Notes

A Jacksonian said...

johnnie - My pleasure!

I had heard of the supernote trade before Austin Bay brought that article to attention on his site, and I realized that it bonused off of the already interconnected network of terrorist organizations and their supporters. The hard part is tracking down the links between them. They don't want those publicized and so reasoned supposition must suffice.