March 28, 2019
Shea Cotton
Also read part 1 of this series:
Judge Juche: How Russian Courts Penalize North Korean Cash Smuggling
The following is an excerpt published by NK News.
This article is the second of a series produced by the James Martin Center for Nonproliferation Studies (CNS) at the Middlebury Institute of International Studies exclusively for NK News. For this series, we’ve chosen to focus on the legal (mis)adventures of North Korean entities and individuals overseas.
This entry in our series takes us to Uganda. Here, we look at a failed construction project from 2011, a few attempts at insurance fraud, and the four lawsuits (at least one of which is still unfolding) that resulted when everything went wrong.
Our key players in this story are Malaysia-Korea Partners (MKP) and the Ugandan National Housing and Construction Company (NHCC). […]
Events began on July 15, 2011, when the NHCC formally awarded a contract valued at $18,138,812 for the construction of 312 condo units in a suburb of Kampala to a company called NH-MKP Builders Ltd. According to the UN Panel of Experts, NH-MKP is a joint venture whose ownership is split between the NHCC and MKP. In an interesting move, court documents state that, after having received the condo construction contract, this joint venture proceeded to subcontract 100 percent of construction to MKP Builders SDN BHD Ltd for the price of $17,959,220; a difference of $179,592 is curiously unaccounted for.
According to court records, MKP was unwilling to begin work on the project without receiving some of the funds up front. So, both parties negotiated an advanced payment of $3,627,762 (20 percent of the total contract value) from the NHCC. To ensure MKP did not take the money and run, it was agreed they would take out a few insurance policies to be paid to the Ugandan government if MKP failed to deliver. Court documents indicate there were at least three such insurance policies in place.
[…]There are a few elements of this that feel wrong. First, the nested structure in which the contract was awarded to MKP feels like it was designed to create ambiguities, obscure accountability, and appears to have resulted in at least $179,592 going missing.
[…]Second, and more alarming, is the over–insurance of the first stage of the project. Though court documents indicate the Ugandan government paid out some $3.6 million to MKP, it had insurance companies on the hook for at least $5.4 million (not counting the HI Fund policy, the details of which remain unknown).
Things only got worse as events unfolded. Though the NHCC paid out the advanced payment to MKP, work at the job site appears to have been almost non-existent.
Continue reading at NK News.
