President Roh Moo-Hyun's office confirmed newspaper reports of the meeting and said it was held in Beijing on October 20.

Roh sent a former aide, An Hee-Jong, to meet state councillor Lee Ho-Nam following intelligence reports that the North still wanted disarmament talks and was eager for a meeting with Seoul, according to Lee Ho-Chul, a presidential aide for information.

"President Roh and his chief of staff received the report and gave an instruction to verify its reliability and what North Korea was thinking of," Lee told Yonhap news agency late Wednesday.

Lee said the North Koreans only wanted to discuss Seoul's suspension of rice and fertiliser aid "and little progress was made" at the Beijing talks.

But in a surprise move, North Korea on October 31 agreed to return to six-party talks on scrapping its nuclear programme.

Last month it pledged to shut down and seal its plutonium-producing Yongbyon reactor and other plants by April 14 in exchange for energy aid.

Dong-A Ilbo newspaper, which broke the news of the Beijing meeting, on Thursday accused Roh of violating his government's pledge to make its North Korea policy transparent.

It alleged that An had violated national security laws by meeting the North Korean without approval from the unification ministry.

Conservative media and political opponents suspect Roh is trying to arrange an inter-Korean summit this year, to improve the prospects of his preferred candidate in the December presidential election.

The government says the time is not yet ripe for a meeting with North Korean leader Kim Jong-Il.

Other news reports have suggested the Beijing meeting last October was to prepare the ground for a summit. Lee, the presidential aide, denied this.

"We were not in a state of proposing a summit at that time when tensions ran extremely high on the Korean peninsula right after North Korea's October 9 test," he said.

He said the main topic was whether North Korea was really willing to return to six-party talks and possible denuclearisation of the Korean peninsula.

earlier related report
Macau account holder casts doubt on NKorea money transfer
Beijing (AFP) March 29 - A Macau bank account holder at the centre of a US-North Korea financial row indicated on Thursday steps were being taken that could cast doubt on a deal to halt Pyongyang's nuclear arms programmes.

The owner of Pyongyang-based Daedong Credit Bank said the Macau Monetary Authority has guaranteed that its accounts in the Chinese territory would not be handed over to North Korea's government.

Daedong's funds are among the roughly 25 million dollars frozen in Macau's Banco Delta Asia that North Korea is demanding be returned to Pyongyang before it will honour a commitment made in February to scrap its nuclear programme, the International Herald Tribune reported this week.

"The funds belonging to Daedong's customers in its account at (Banco Delta Asia) are fully safeguarded," said Colin McAskill, head of the UK-based Chosun Fund, which has purchased Daedong Credit Bank, in an emailed statment received by AFP.

The Tribune had reported Daedong has about 7 million dollars tied up because of the row.

The Macau Monetary Authority could not be reached for comment and McAskill said he would make no further statements until the dispute is fully resolved.

A US Treasury Department delegation arrived in Beijing this week for talks with Chinese and North Korean officials on the funds, which were frozen in Banco Delta Asia in 2005 by US sanctions.

The sanctions were triggered by suspicions the bank was laundering money and handling counterfeiting for North Korea.

The US recently agreed to allow the transfer of the funds to North Korea but the plan hit a snag when no bank was willing to handle the transaction, causing Pyongyang's envoy to walk out of a fresh round of nuclear talks last week.

The transfer was further complicated by objections from McAskill, who insists Daedong's funds belong to legitimate businesses, the International Herald Tribune reported.

McAskill's statement said Daedong's funds would remain in Macau until the Beijing negotiations reach a conclusion.

No information on the talks has been released yet.

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