China cuts off Kim's accounts

The outlook just got a little worse for Kim Jong-un as a major Chinese bank has refused to do business with one of his financial institutions. Picture: AFP Source: AFP

ONE of China's biggest banks has halted business with a North Korean bank accused by the US of financing Pyongyang's missile and nuclear programs in the latest sign of Beijing's displeasure with its estranged ally.

The state-run Bank of China Ltd has notified the Foreign Trade Bank of North Korea that its account or accounts were being closed and all financial transactions suspended, said a bank spokeswoman, reading a brief statement.

The spokeswoman for the Beijing-based bank did not identify the number of accounts closed or provide further details.

The move comes after the Chinese leadership, installed last year, has shown growing frustration with North Korea's young leader, Kim Jong-un, and the nuclear and missile tests his government has conducted, aggravating regional tensions.

In recent months, Beijing has displayed willingness to work with Washington to apply pressure, from signing on to UN sanctions to issuing a statement with US Secretary of State John Kerry last month urging North Korea to abandon its nuclear programs.

China is North Korea's economic lifeline, providing nearly all of its fuel and most of its trade. North Korea's economic dependence on China is rising, following a standoff with South Korea that effectively shut an industrial park that was an important source of hard currency.

As North Korea warns foreign residents to leave South Korea for safety -- a mixed reaction in Seoul and China. Deborah Lutterbeck reports.

The Bank of China's suspension of business further complicates the ability of the Foreign Trade Bank, North Korea's main foreign exchange bank, to access a key financial market.

In March, the US Treasury Department imposed sanctions against the Foreign Trade Bank, effectively cutting it off from the US financial system and urged Beijing to do the same.

The department called the bank a "key financial node" in North Korea's programs to develop weapons of mass destruction.

It said the Foreign Trade Bank had financed other banks and companies already targeted by sanctions, including assisting in millions of dollars in transactions for the Korean Mining Development Corp., a major arms dealer.
 

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Auditor tags Elders Rural's accounts

ELDERS Rural Holdings, the unprofitable rural services company, has had its annual accounts tagged by its auditor because of uncertainties including its ability to continue to rely on financial support of 50 per cent owner Elders Ltd.

The net loss narrowed to $NZ5.89 million ($A4.80 million) in the 12 months ended September 30, from a loss of $NZ10 million ($A8.15 million) a year earlier, the Auckland-based company's annual report shows.

Sales fell to $NZ121 million ($A98.65 million) from $NZ132 million ($A107.62 million).

Notes to the accounts say that based on cashflow forecasts, the company is dependent on continued financial support from ASX-listed Elders Ltd, its ultimate controlling company.

The Adelaide-based company has undertaken to provide that support for 12 months though it "has also incurred losses and is dependent on continued support from its bank to continue as a going concern," the notes say.

"This creates some doubt as to the ultimate parent's ability to provide support to the group."

Adding to the uncertainty, Elders put its entire Rural Services division, which includes the Elders Rural group in New Zealand, up for sale last October.

Directors of the New Zealand business made the judgment that a new owner would provide continued support, the notes say.

Auditor Ernst & Young listed three fundamental uncertainties when it signed off on Elders Rural's latest accounts, including the uncertainty of continued support from the parent, its ability to recover $NZ6.29 million ($A5.13 million) of deferred tax assets if a sale goes ahead and the ability of the parent to recover $NZ48.9 million ($A39.87 million) in receivables from subsidiaries.

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