The Ira Bagman and Kim Jong Il's hot dollars

Sean Garland is legendary in Ireland for his violent republican past. But was he also a frontman for a counterfeiting scheme run by the communist regime of North Korea? America wants to extradite the Workers Party chief claiming he smuggled millions of dollars in fake $100 bills

It is a tale of codenames and counterfeiting, of the United States secret service, Russia and North Korea, of international political and criminal conspiracy and intrigue, of millions of dollars in illicit currency.

Kim Jong Il, the paranoid leader of the hermit state of North Korea, has a key role in it. Former IRA and ex-KGB operatives also have parts, along with the Russian mafia and underworld criminals in England and Ireland. Five-star hotels in Moscow feature in it: so too may Guantanamo Bay.

And it all centres on an Irish pensioner, who claims America is persecuting him because of his political beliefs and wants to put him in Guantanamo. But this is no ordinary pensioner. This is Sean Garland, legendary in Ireland for his republican and revolutionary life. At one time he tried to shoot the British out of Ireland; recently, his primary struggle has been against capitalism.

Reverential republican lore has it that he risked his life when, himself wounded by British bullets, he carried away a dying comrade following an abortive IRA attack on a security base in Northern Ireland.

Today, he is president of the left-wing Workers Party. He acknowledges his violent IRA past ­ he could hardly deny it, since it is the stuff of commemorative ballads ­ but says he is now involved only in political activity.

The latest act in his incident-packed career came last week when he jumped bail in Belfast, where he had been arrested. He has appeared in court several times on a US extradition warrant, but he has now fled south to his home. He is vociferously campaigning to remain in the Irish Republic, but the US Attorney General's Office has said it will issue a fresh extradition warrant. It is also seeking to have six other men ­ one of them reputedly a former KGB man ­ brought to the US.

The American case is that Garland and the others have been involved in a multimillion-dollar counterfeiting operation, run by the government of North Korea and encompassing more than a dozen countries worldwide.

The long and detailed indictment alleges that Garland ­ "aka The Man with the Hat" ­ has used trips to Pyongyang, the capital of North Korea, Russia and other countries for criminal purposes. The American assertion is supported by police in Moscow.

Travelling as president of the Workers Party, he is said by the US to have used the cover of his position in the party to organise the purchase, transportation and resale of forged dollar bill notes on a huge scale.

These are no ordinary banknotes. They are among the best forgeries in the world, a fact that causes the American authorities huge anxiety. Called "superdollars," they are of such exceptionally high quality that they often deceive banks and experts.

Superdollars so worried the US that in 1996 it brought in a series of new security measures, redesigning the $100 bill by changing the central portrait of Benjamin Franklin. Other intricate new safeguards included an enhanced embedded security thread, a security watermark, changed microprinting and the use of an optically variable ink.

To Washington's dismay, however, it took the North Koreans just a few years to come up with a sophisticated forgery based on the changed note, so that a new type of superdollar began to turn up. The US does not go so far as to say that North Korea is intent on undermining its entire economy. But it regards the operation as an unwanted instance of free enterprise that is undermining confidence in the dollar.

Garland played an important part in a network, the US claims, which included criminals based inBirmingham, gangsters in places including Moscow and Latvia, and Irish republicans linked to the small and secretive Official IRA, generally known as "the stickies".

The network, according to the US, criss-crossed Europe, operating in places such as Belarus, Poland, Denmark, the Czech Republic and Germany. It is said to refer to the forged notes as "jackets" and "paperwork" . A key connection was in Moscow, where Garland reportedly went to the North Korean embassy to collect bogus money. This had been brought out of North Korea, it was said, in diplomatic bags.

The pattern of the outfit's alleged activities has already been fleshed out by an investigation by the BBC Northern Ireland television programme Spotlight.

Korean defectors confirmed that the production of superdollars was a government operation. "We bought the best of everything, the best equipment and the best ink," said one. "We also had the very best people, people who had real expertise and knowledge in the field. When government officials or diplomats travelled to south-east Asia they distributed the counterfeit notes, mixed in with the real ones at a ratio of about 50-50."

In Moscow, General Vladimir Uskov of the Russian interior ministry police has confirmed that Garland and others have been under surveillance by special services. "Information we received showed that he was involved in the supply of counterfeit dollars," the general said.

"We registered his contacts with the North Korean embassy. He visited the embassy several times. Our information was that people working there may have been involved in the transportation of counterfeit dollars." One of Garland's most intriguing alleged associates was David Levin, an Armenian-born Russian citizen who once worked with the KGB and later moved to England, while keeping contact with the Moscow mafia.

The American indictment describes him as "aka David Batikovich Batikian, aka Gediminas Gotautas, aka Russian Dave". Investigators believe that through Russian contacts he arranged passports and visas for some of those involved.

In recent years Levin has had a particular run of bad luck, for in 2002 he was jailed for nine years in Britain at Worcester Crown Court for conspiring to import superdollars. Last year, the Court of Appeal in London rejected his appeal against a confiscation order for £789,000 after hearing he had made more than £1m from superdollars.

Levin, who was found to own a range of property in Birmingham and London, has to pay the money within two years or face an extra four years behind bars.

Two of the other men sought by the US were also jailed along with him. One of them, Terence Silcock, was given six years after admitting conspiring to distribute the fake notes. Described by police as a lifelong professional criminal in the Birmingham area, he was said to have personally dealt with more than $4m worth of forged notes.

Garland, who was not charged with Levin and the two Englishmen, freely acknowledges on his own website that his past contains much violence. He is one of the last of the flinty old IRA generation that waged a failed campaign in the 1950s. Originally a traditionalist, he joined the internal IRA faction which by the 1960s subscribed to Marxism and Stalinism. Known as a man of iron ideology and self-belief, even the fall of the Berlin wall did not deflect him from his commitment to Communism.

Few believe that anything in his colourful career has been motivated by personal gain, regarding him as one of the keepers of the Communist flame. Although in Moscow staff at the five-star Metropol hotel say he regularly stayed there, his decades-long reputation for devotion to his causes means no one thinks he was indulging in luxury for its own sake.

In the 1950s he joined the IRA, who then instructed him to infiltrate the British Army to procure arms. He carried out his mission successfully, the IRA seizing guns from an Army barracks with his inside help.

In his own words, he was "actively involved in organising and participating in a number of major operations from 1955-56". The most famous of these was when he led an IRA squad that attacked a police station in County Fermanagh where two IRA militiamen, Sean South and Fergal O'Hanlon, were shot dead. A republican song acclaims, "Another martyr for old Ireland, Sean South from Garryowen". Garland was seriously wounded in the incident. In the years that followed, he was imprisoned on various occasions in both parts of Ireland for IRA activities.

When the organisation split into traditional and Marxist factions in the late 1960s he opposed the "narrow nationalism" of the Provisionals, and pursued a left-wing political path as one of the leaders of what was known as the Official IRA. That faction announced a ceasefire in 1972, but for years remained intermittently involved in violence. In particular, it was embroiled in a series of often lethal feuds with the mainstream IRA and other republican splinter groups.

There were many killings, especially during the 1970s, as the Official IRA suffered fatalities and killed opponents. The feuds were made all the more vicious by the fact that many of those involved were former colleagues who knew each other well.

Today, the Official IRA shuns publicity, but rumours occasionally crop up that members are involved in robberies, forgery activities and in running drinking clubs. In one 1975 incident, Garland was almost killed in a feud when he was reputedly shot by rival republicans. Undeterred, he has over the years remained active in the Workers Party, which he heads and dominates.

The party clings to the hope that Protestants and Catholics in Northern Ireland will unite to overthrow the capitalist system. This has not worked, attracting no appreciable Protestant support while holding diminishing appeal for Catholics. The Workers Party once held a number of seats in the Irish parliament, but its strength has been greatly reduced. It contests elections, but it receives less than 1 per cent of the vote on either side of the border.

Its approach is marked domestically by opposition to Sinn Fein and traditional republicanism, and abroad by its links with surviving Communist and Socialist elements. The party is an implacable opponent of US foreign policy which, it asserts, "has inflicted great suffering, repression and untold deaths". Garland says this is why the US is after him.

He denies any current involvement in the Official IRA and has denied " any involvement in any criminal activity" and knowledge of superdollars. He did not answer bail, he says, because extradition arrangements between the US and the UK mean there is no possibility of his being able to face allegations "in an open and fair court".

He argues that coverage of the affair has been "sensationalised". Garland's return to the Republic points to a lengthy extradition process. The long-running affair of the dodgy superdollars seems set to run for a long time yet.