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11/17/2003: Nauru

Operation Weasel

"In recruiting Nauru into the war on terror, the US also went after a bigger
target: North Korea"

Click on the More link for the full text of the Australian article.

In the Pacific Ocean, somewhat near Australia, lies Nauru, the world's smallest republic. In the late 1970s, Nauru had the highest per capita income in the world due to the mining of phosphate deposits in the center of the island. By the 1990s, these deposits were used up. Nauruans have to import water and food from off-island, and the contact with processed food has made much of the population diabetic. In order to make some cash, the government allowed people to take advantage of their lax passport and finance laws. They also agreed to take refugees from Afghanistan and Iraq that the Australians didn't want. In late 2002, a storm knocked out communication with the outside world, and the last thing that anyone heard was that the government had collapsed.

Then things began to get really strange...

Please read our previous Nauru articles:

Copyright 2003 Nationwide News Pty Limited
The Weekend Australian

April 19, 2003 Saturday All-round Country Edition

LENGTH: 3655 words
BYLINE: Cameron Stewart, Martin Chulov
BODY:In recruiting Nauru into the war on terror, the US also went after a bigger
target, North Korea. Cameron Stewart and Martin Chulov report

THEY knew Oliver North, the soldier at the centre of Ronald Reagan's
Iran-Contra deal. They had silky links to the Bush administration and its
intelligence apparatus.

They were driven by a noble and single-minded quest: to undermine North
Korea's Stalinist regime by facilitating the defection of nuclear scientists and
senior military officers to the West. And they have succeeded. Inquirer
understands that up to 20 high-level defectors have been spirited out of North
Korea under the operation codenamed "Weasel".

This plan, secretly hatched in Washington in early 2002 by a high-powered
group of Americans operating at arms' length from their government, was as bold
as any in the US-led war on terrorism.

But there was a catch. To extract defectors from Pyongyang, the Americans
needed third countries -- volunteers -- to execute the operation to quarantine
Washington from the diplomatic fallout should the high-stakes scheme be
uncovered. To qualify, these countries had to be small enough not to attract
undue suspicion and have diplomatic ties with China, whose territory would be
used to smuggle the defectors.

Rene Harris, then president of Nauru, was in a hospital bed in Melbourne
last October when he received the strangest invitation of his life. His
impoverished Pacific Island had been the target of opportunists since its
phosphate reserves dwindled, robbing its 12,000 people of their only reliable
source of income. Nauru's strange bedfellows had ranged from the Russian mafia
and terrorist groups eager to exploit its lax banking laws, to Australia, which
asked Nauru to harbour asylum-seekers in exchange for aid under the Pacific

But even Harris was unprepared for the proposal read out to him as he was
recovering from diabetes-related surgery.

"It all seemed incredible to me at the time," he tells Inquirer. "Why would
they want Nauru to help move refugees from North Korea?"

This speck in the Pacific was about to be co-opted by "the big boys" -- as
Harris puts it -- as a front for a secret diplomatic mission of global

The story of the North Korean operation and the daring plan to recruit Nauru
to help smuggle defectors to the West has been pieced together by Inquirer from
confidential documents and through face-to-face interviews with the key players
in Australia and Washington.

Sources directly involved in the operation -- which was shut down this month
-- claim Nauru was just one of 11 countries involved in assisting senior North
Korean defectors once they had escaped

Continued -- Page 20

From Page 15

across the border into China. The scheme was run out of Washington at a
discreet distance from the US Government. It is also believed to have included
New Zealand, the Philippines, Spain and Thailand.

These countries did not physically sneak the defectors out of North Korea;
that was arranged by dedicated agents in several ways, including by using
smuggled short-wave radios. Some escaped with false passports, some made river
crossings and others were ushered through with the help of bribed border

According to those close to the operation, some of the defectors were
initially housed in or around the border town of Yanjin, a Korean-Chinese-speaking area that is haunted by North Korean agents.

The role of participating countries was to provide consular support to
defectors once they were in China. Some might also have become a transit stop
before the defectors were debriefed. It was sometimes as simple as providing
consular cars and shelter within an embassy.

Sources say the targets were senior military, scientific and industrial
officials. They say the operation succeeded in smuggling as many as 20 defectors
to the West. One is believed to be Kyong Won Ha, a Canada-educated nuclear
scientist who was instrumental in the 1984 commissioning of reactor No1 at the
controversial Yongbyon facility.


THE UN High Commissioner for Refugees estimates there are 30,000 North Korean
defectors in China; however, Operation Weasel targeted only top officials.
China's official position is that foreign missions must not harbour North Korean
defectors; any who are caught must be sent back home.

Although the planning for the North Korean operation began in Washington in
early 2002, Nauru did not learn of its possible involvement until last October,
when Harris was bedridden in Melbourne. The request was delivered informally in
a confidential letter written to Harris by Washington-based lawyer Philip

As Inquirer revealed on April 5, Gagner represented the company running
Nauru's controversial passports-for-sale scheme. He was also well connected in
Washington and, until early this year, assumed the informal role of Nauru's
messenger in the US capital.

On the evening of October 12 -- as the world came to grips with the Bali
bombings -- Gagner was summoned to a meeting with "officials of the US
Government" and with two men who were to oversee Nauru's involvement in
Operation Weasel -- an American named Steven Ray and a New Zealander whom
Inquirer has agreed not to identify and will call John Smith.

Straight after this meeting, Gagner sent a letter marked "Most Sensitive"
informing Harris that the US was demanding Nauru reform its dodgy offshore
banking system, which was believed to be providing a financial safe haven for

It was a message that signalled the beginning of an aggressive
behind-the-scenes campaign to bring Nauru in from the cold. However, Gagner's
letter of October 12 also contained a sensitive kicker. This final message, he
wrote, was "the most sensitive and the most urgent".

"Some of the governments involved, including governments in the Pacific and
the US Government, would like to have the assistance of the Nauru Government in
a diplomatic matter of great sensitivity," he wrote. "[This] involves a country
-- not Iraq -- which may have acquired weapons of primary concern to other
governments and other countries in the region and the world. This is a matter of
sufficient concern that the Government of the US would likely recommend removing
Nauru from the FATF list of non-cooperative countries. [FATF is the multilateral
body that imposes sanctions on countries that do not crack down on money

"This would be a principal and immediate benefit to Nauru as well as a major
domestic political victory for your Government in Nauru. It is my strong
recommendation to Nauru and to your Government that you should consider this
matter most seriously and keep it as private as possible within as small a group
of people as possible."

The lawyer ended with: "I have verified at the highest levels of the US
Government that these persons are serious persons who are authorised to speak
for their respective governments and that this is a matter of great concern to
the US as well as the other governments."


THE contents of Gagner's letter were so remarkable that Harris dispatched a
delegation to Washington to learn more. But when the Nauruans arrived in DC,
they were greeted by a group of people who had more on their mind than banking

One was Smith, described fondly by one Nauru minister as "a maverick
red-haired Kiwi" who lived in Beijing, spoke fluent Chinese and was "an expert
in traditional Chinese kung fu". Another was Ray, the strong-willed,
well-connected American who, along with Smith, would open doors for the Nauruans
in Washington.

But their primary task was to help set up Nauru's involvement in the North
Korean operation. It was a laudable aim, but one that was to prove difficult
with a country as erratic and corrupt as Nauru.

Inquirer has confirmed that the Nauru side of the operation was to be run by
Americans and New Zealanders who do not claim any formal links with their
respective governments.

"The US and the Government of New Zealand wanted Nauru to assist with a
request for assistance with certain refugees related to certain countries which
were believed to be developing weapons," Gagner wrote to Harris's successor,
Bernard Dowiyogo, on January 29. (Dowiyogo died in March.) "The details of this
issue must be explained in person and are too sensitive to write down in a
briefing paper like this one. The issue was urged by the US as extremely

Neither the US State Department nor the office of NZ Prime Minister Helen
Clark will comment on the North Korean operation or Nauru's involvement in it.

"The US cannot comment on any alleged asylum or intelligence matters," a
State Department spokeswoman says.

But in an interview in a bar overlooking the Melbourne Cricket Ground this
week, one member of the Nauru delegation, Kinza Clodumar, recalled how the New
Zealander Smith described the operation to him during the Washington visit last

"[He] said we were going to get a [North Korean] nuclear scientist and his
family from a farm in China and then take them in a Nauru consulate car to an
embassy. They were going to give Nauru $1 million for transporting this family."

Clodumar, a former finance minister, says Smith told him that a car with
Nauruan flags would be arranged for the operation and that these ensigns had
been especially made in Washington.


SPEAKING in his 49th-floor office at Melbourne's Nauru House, Nauruan
Education Minister Tony Audoa recalls how former finance minister Ali Amwano
whispered details of the operation to him in the members' room of the parliament
earlier this year.

"He said that the Beijing embassy was opened using these people and that
they will get two scientists out by putting them in a car with a Nauru flag and
taking them to an embassy."

Most of the Nauruans interviewed by The Weekend Australian say they believe
both Smith and Ray are senior intelligence agents for their respective
countries. The two men decline to discuss their backgrounds but emphatically
deny Nauru's claims, with Ray describing them as "actionable".

Clodumar claims Ray told him he had "a direct line to [US Vice-President]
Dick Cheney". Both men also claim to be friends with North, a poster boy for the
US Right since he ran the secret Iran-Contra deal to sell military hardware to
Iran in exchange for the release of US hostages.

North is understood to have offered to help out on the Nauru issue. An
unsigned letter written last year to a senior Nauruan minister talks of how
"Oliver North would be able to interview you on Radio America and we could plan
topics and arrange callers to phone in with positive comments."

Nauruan Finance Minister Remy Namaduk admits that North has invited him to
speak on radio, while Clodumar says Smith and Ray told him they could get North
to sign a copy of his new book if he wanted.

While Ray and Smith were primarily responsible for overseeing Nauru's
involvement in Weasel, it is understood that others in Washington were involved
in managing the overall defector operation. The Nauruans who visited Washington
in October found themselves sitting face-to-face with some high-powered figures,
including Michael Horowitz, former adviser to Reagan. Gagner says Horowitz was
brought in to help with the North Korean issue.

Horowitz declined to speak to this newspaper but in an article published
earlier this year in The Wall Street Journal he called on US President George W.
Bush to "give priority status to the plight of North Korean refugees and senior
level defectors".

Horowitz wrote that this could be achieved by "discreetly but actively
encouraging senior level defections by senior North Korean officials by ...
offering financial support and amnesty for key defectors".

Sources in Washington say those assisting the North Korean operation have
close links to Freedom House, a group chaired by former CIA director James
Woolsey and founded by Eleanor Roosevelt as a global lobby group for democracy
and human rights.

Ray and Smith told the Nauruans they planned to establish a consulate in
Washington and an embassy in Beijing but -- mysteriously -- they also said that
neither Nauru, the US or China would fund these new missions. Instead funding
would come from the independent not-for-profit International Law Centre in
Washington and from other private institutions. The Americans and New Zealanders
were creating -- at their own expense -- the diplomatic cover needed to run
Nauru's involvement in the North Korean operation.

Gagner later recounted how Smith told the Nauruans that "the embassy in
China would have responsibility for North Korea as well and that the benefit to
the US and to New Zealand would be assistance from Nauru to normalise and
stabilise relations with North Korea". The Nauruan delegation returned home in
late October with no illusions -- and no apparent complaints -- about what was
happening. The confidential cabinet report on the Washington visit states that
Nauru was asked to help "normalise relationships between North Korea and the US"
by "providing assistance with certain refugees".

But by early January the North Korean plan was the last thing on the minds
of Nauru's leaders as the island descended into political chaos. On January 8
Harris lost his presidency to Dowiyogo. When the new leader asked Gagner for an
update of events, it was clear that the plans for Nauru and North Korea were
well advanced.

"Nauru is a participant in a significant refugee project involving a country
other than Afghanistan," Gagner wrote to the incoming president. "This project,
when finished, is likely to bring Nauru very high prestige and the gratitude of
both the US and China governments." Gagner told Dowiyogo that Nauru had set up
an embassy in Beijing and a consulate in Washington on a cost-free basis for the
next two years and that staff had been found. But neither mission was to be run
by Nauruans.

Instead, Gagner told the president of three appointments the US wanted to
make to the Beijing embassy -- two New Zealanders and an American.

Meanwhile he said Ray had been appointed -- at Ray's request -- as Nauru's
honorary consul in Washington. Harris now says that the reason for choosing only
Americans and New Zealanders was that these diplomatic missions were "phantom
embassies" created specifically to manage Nauru's involvement in the North
Korean operation.

"The real reason for having the Beijing embassy was to expedite the movement
of these very important refugees," he says.

This is also alluded to in Gagner's letter to Dowiyogo: "The appointment of
Steven Ray and the location of the consulate at the International Law Institute
were both understood by the Nauruan delegation and by President Harris to be
temporary appointments for the particular purpose of this [North Korean]

But these so-called temporary appointments have still not been made. The
official website of the Nauru Government states that Nauru has diplomatic
missions in Beijing and Washington and that Ray is honorary consul designate in
Washington. But the truth is somewhat different.

Nauru's honorary consulate in Washington has not been recognised by the US
State Department, which also maintains Ray had not been accredited or even
nominated as honorary consul.

Similarly, a spokesman for the Chinese Foreign Ministry said this week that
Nauru's embassy in Beijing "has not been officially set up" -- although China
hoped it would be established soon. Minutes later, the spokesman called back to
say that while China and Nauru had agreed in principle to set up the embassy,
"we have some different opinions on the nominees for the head of the office".

It seems China is questioning Nauru's unusual nomination of a New Zealander
to head its embassy.

Clodumar -- along with most of Nauru's cabinet -- believes Ray and his group
answer directly to senior figures in the US Government. But Inquirer has been
unable to find evidence to back Nauruan claims that Ray and his group are
directly funded by the US Government.

However, this group -- operating at arm's length from their government --
has moved to exert greater control over Nauru's economic and political affairs
because of the chaotic state of its economy and its Government.

When president Dowiyogo signed a landmark executive order in Washington in
late February abolishing offshore banking, he also anointed Ray as
consul-general in Washington, made Canadian lawyer Thomas Richards his legal
counsel and approved the Beijing appointments.

Not everyone is happy about this. Nauru's ambassador to the UN, Vinci
Clodumar (Kinza's brother), last month recorded his displeasure about having
these three non-Nauruans forced on his Government. "I have doubts if all members
of the cabinet have any idea who [Smith] and Thomas Richards are," he wrote in a
confidential letter to incumbent President Derog Gioura.

But none of the Nauruans interviewed for this article opposed the purpose of
Operation Weasel and the potential it had for weakening a rogue nuclear weapons
state. "I support the whole thing because North Korea now has less scientists
than it did before," Kinza Clodumar says.

The irony is that the extensive investment the Americans and New Zealanders
have made to bring Nauru into the North Korean operation appears to have been

Sources say that for various reasons Nauru was not used as planned to remove
any refugees from North Korea, partly because of its chronic political
instability. Even so, senior Nauruans would like to learn more. "These people
are like phantoms," says Education Minister Audoa. "They are ghosts who walk."

Nauru reform push has come from elsewhere

DURING some of the most turbulent months in Nauru's history, its former
master, Australia, has been conspicuous by its absence.

During the past six months Nauru, which won independence in 1968, has been
brought in from the cold by a bold behind-the-scenes campaign to induce it to
reform its dodgy offshore banking and passport schemes.

But this campaign -- which will potentially alter the destiny of the island
nation -- was run by the US, not Australia, which traditionally plays a leading
role in Pacific affairs.

Similarly, Australia also appears to have been left out of the extraordinary
campaign to recruit Nauru into a scheme to help North Korean defectors escape to
the West.

Those involved say the campaign was run by Americans and New Zealanders, and
that no Australians took part.

This seems unusual for a nation that has taken a fatherly interest in
Nauru's affairs for decades and which hosts the "second home" of its government
in Melbourne's Nauru House.

Has Australia gone soft on Nauru, as Opposition foreign affairs spokesman
Kevin Rudd claims, because it is grateful for Nauru's willingness to harbour
asylum-seekers as part of the so-called Pacific Solution?

The Howard Government strongly denies that. It says Australia has worked
hard through multilateral bodies to encourage Nauru to scrap its offshore
banking and passport schemes, which were believed to be providing a financial
safe haven for terrorists.

"The Government absolutely rejects any Opposition suggestion that it is not
doing enough to discourage money-laundering and terrorism," a spokesman for
Foreign Minister Alexander Downer has said.

But, in recent months, many Nauruans might be tempted to ask the question:
where has Australia gone?

Cameron Stewart and

Martin Chulov

The players

OPERATION Weasel has been the work of many people -- most of whom want to
remain anonymous. However, there are at least five key players involved, four of
whom were behind the Nauru connection.

Steven Ray: A US citizen with powerful connections. Helped the Nauruan
ambassador to the UN prepare a plea for an aid package that has not yet been
delivered. Involved with the North Korean operation through non-government

Kyong Won Ha: Possibly the highest profile target to have defected so far.
The leader of North Korea's nuclear program, specialising in spherical
detonation at the Yongbyon Reactor No1. Canadian-educated and considered a
linchpin of Pyongyang's capabilities.

Michael Horowitz: Former adviser to US president Ronald Reagan and director
of US organisation Freedom House, along with former CIA chief James Woolsey and
former George Bush snr adviser Zbigniew Brzezinski. Is said to have played a
co-ordinating role in the operation.

Philip Gagner: Washington-based lawyer who last October asked Nauru to join
the refugee program at the behest of interested parties. Had dealt with the
Nauruans via a client called Trans Pacific Development Corporation. Has since
fallen out of favour with Ray.

Rene Harris: Nauru's prime minister until January. He received the first
approach about the North Korean operation while in a hospital bed. Knew little
about it from then on because he lost office to Bernard Dowiyigo, who died in

Martin Chulov and

Cameron Stewart

The reporters

SENIOR reporters Cameron Stewart and Martin Chulov spent months confirming
the existence of the "Nauru solution" before breaking the story in The Weekend
Australian on April 5.

They knew of the North Korea link at the time, but further work was needed
to confirm it and today's exclusive articles are the result of that

Melbourne-based Stewart, a former New York correspondent, specialises in
defence and foreign affairs issues. He won the 2002 Melbourne Press Club Quill
award for best print feature for an inside story on Australia's $14 billion
decision to purchase the new Joint Strike Fighter from the US.

Sydney-based Chulov is The Australian's national police correspondent. He
led the newspaper's coverage of the October 2002 Bali bombings, for which he was
short-listed as Journalist of the Year.

LOAD-DATE: April 18, 2003