N Korea Still Owes Bangladesh $11.62m for Goods Bought in 1994

The Democratic People's Republic of Korea still owes Sonali Bank at least $11.62 million for goods imported under a barter agreement 26 years ago.  

Under the Barter 5 agreement, North Korea bought goods worth $6.14 million from Bangladesh, but it did not pay for the purchase. The absolute arrears of Barter 5 were then transferred to Barter 6, which was signed on September 12, 1994, standing at $6.26 million.

On March 31, 1995, the Barter 6 agreement expired without any transactions.

Since then, the Bangladeshi embassy in Beijing has contacted the North Korean embassy in China many times to ask them to pay the payments, but no response has been received.

The state-owned Sonali Bank has now sought the help of the Financial Institutions Division (FID) to take effective steps to protect the bill through the Ministry of Commerce.

When asked, Sonali Bank Managing Director and CEO Ataur Rahman Prodhan told The Business Standard on Saturday, "It is a very old incident and I do not properly recall the information about this at the moment."

However, other reports from Sonali Bank and the Ministry of Commerce announced that the first Barter Agreement between Bangladesh and North Korea had been concluded on 12 August 1977.

Within the deal, Sonali Bank was appointed on behalf of Bangladesh and the Foreign Trade Bank was designated on behalf of North Korea for banking operations.

Both banks also signed an agreement to perform banking functions on behalf of their respective nations after the signing of Barter 6 in 1994. This interbank agreement included a provision of charging interest at the three months USD LIBOR rate.

In a letter to the FID, Ataur Rahman Prodhan wrote that, after numerous pleadings, the North Korean Foreign Trade Bank reported Sonali Bank 's debt of $10.04 million on 30 June 2012 via a SWIFT post.

Although the North Korean bank has been repeatedly been asked to pay the dues, they are not paying at all, he added in the letter.

By 2014, the debt had increased to $11.62 million. That year, the Ministry of Commerce sent a letter to the commercial counselor of the Bangladeshi embassy in China to take proper initiatives so that Sonali Bank could get its dues.

After that, the Bangladeshi embassy wrote a letter to the North Korean embassy in China demanding payment of the bill in vain.

Sonali Bank was not in a position to compensate for the full balance of the debt owed by the Democratic People's Republic of Korea.

Under the barter agreements, North Korea imported: rice, cement, jute and jute goods, urea fertilizer, tea, animal hide and skin, leather and leather goods, soap, detergent, toiletries, plus glycerin from Bangladesh.