Car chase leads to Pyongyang's super-forgers

With the air of a practised magician, Yoshihide Matsumura, counterfeit buster, goes through his routine. Fanned out on the table in his Tokyo office are half-a-dozen $100 bills; beside them is a squat white box bearing rows of lights. The notes are well thumbed, but indistinguishable - the familiar green and black design, dominated by the bald dome and Mona Lisa smile of Benjamin Franklin. One by one, Mr Matsumura feeds them into his box; one by one, with a whir and a beep, they slide out the other side as the glowing numbers count them off - $100, $200, $300, $400.

But the fifth note - serial number I00659794A - is rejected. An alarm sounds, and a coded message on the display gives the reason. Minuscule discrepancies in the design - a patch of shading on Benjamin Franklin's upper lip, a tiny line in the drapery below the portrait - have been detected, and reveal the note to be a highly sophisticated fake. Mr Matsumura, inventor and manufacturer of the Matsumura Electronics Co US Dollar Counterfeit Detector, holds it up with a flourish. "This is the one that all the papers have been talking about - the one they call Super-K."

Bill number I00659794A is the Holy Grail of counterfeiting, a forgery undetectable except to the most sophisticated equipment and a handful of experts. For years, the existence of "Super-K", so-called for its supposed origin in North Korea, had been rumoured. Now, an extraordinary sequence of events, culminating in a trial in Thailand next week, have brought Super-K out into the open - to reveal what may be the first case of state- sponsored counterfeiting since the Second World War.

The note came to light in January this year in the Thai resort of Pattaya. Local police were approached by a shopkeeper and black-market moneychanger who overcame his aversion to the authorities after unwittingly buying $9,000 worth of suspicious bills. The fakes had been passed off by five Thai men, who claimed that they originated with a Japanese businessman, operating out of the Cambodian capital Phnom Penh.

Forgery is a perennial problem in south-east Asia, but most of the dollar counterfeits in circulation are crude efforts easily spotted by shop keepers and bank clerks. Two things made Thai and US Secret Service investigators assigned to the case take this one seriously. One was the quality of the fakes; the second was the identity of the man to whom the bills were traced.

Known as Kazunori Hayashi, he had been quietly in Phnom Penh living for several years, but to the agents he was strangely familiar. Photographic evidence was confirmed by the suspect's frequent visits to the North Korean embassy: Hayashi's real name was Yoshimi Tanaka, and he was notorious, not as a forger, but as one of the most successful hijackers in history.

In 1970, Tanaka and a group of student members of Japan's far left Red Army Faction successfully seized a Japan Air Lines jet and flew it from Tokyo to the North Korean capital, Pyongyang. There they were welcomed as heroes by the late dictator, Kim Il Sung. Several have since died or disappeared; one was extradited to Tokyo yesterday for a terrorist attack after turning up in Peru. Of Tanaka, almost nothing had been heard for 26 years.

For supplying the notes passed off to the Pattaya shopkeeper, Tanaka goes on trial in Thailand next week. Japanese police are pressing for their own extradition order to prosecute him for the notorious hijacking. But the people with the most pressing questions of all are the US Secret Service, guardians of the nation's currency. For Tanaka's capture appears to offer the final link in the chain directly linking Super-K dollars with the North Korean government.

The arrest of Tanaka was sensational in itself. Apparently aware that he was being trailed, he disappeared at the end of March into the North Korean embassy in Phnom Penh. Two days later, a black Mercedes with darkened windows and diplomatic plates left the compound for the Vietnamese border. The pursuing Cambodian police car got a flat tyre, but caught up with the limo at a border post where its occupants were frantically pressing bundles of dollar bills onto the bemused guards. Escorted back to the capital, the car once again made a break for freedom, but it was finally cornered. Inside were three North Korean diplomats, $30,000 in (genuine) cash and Yoshimi Tanaka.

The drive to the Vietnamese border appears to have been the return journey of a highly organised counterfeit money-laundering operation based in the heart of Pyongyang. It is said to produce phony passports and foreign driving licences, as well as up to $10m in fake bills every year. Embassy staff carry the bills out in diplomatically protected suitcases and launder the money in Africa, the Middle East and Asia. Having passed through multiple banks and portfolios, the money - by this time transmuted into real dollars - is carried back to Pyongyang the same way it left.

Understandably, the US government plays down the extent to which its currency has been corrupted: according to official sums, little more than $200m, or one in 2,000 of the $380bn in circulation are fakes. But by Mr Matsumura's reckoning the bogus rate is closer to one dollar in 50 worldwide, and one in 10 in Russia and south-east Asia.

With the growing sophistication of computers, capable of scanning thousands of notes to come up with a near perfect image for printing, forgery is getting easier. Mr Matsumura has identified an "ultra-super-note", undetectable even to his machine, which has nonetheless won three years of advance orders from all over the world, at $2,000 a time.

The US Federal Reserve is in the process of replacing the old $100 bill with a new design, incorporating a watermark, inlaid thread and microprinting. "The Americans are very confident about their new note, but when it came out I predicted there would be a new fake in a matter of months. Actually, they have already appeared."