Published: Friday, 24 Jul 2009 | 3:39 AM ET

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Italy has blocked the nearly 13-million euro ($18-million) sale of two luxury yachts believed to have been bound for the impoverished nation of North Korea in violation of international sanctions, authorities said Thursday.

The 95-foot and 105-foot Italian-made seafaring vessels were ordered from the Azimut-Benetti maker of luxury yachts by an Austrian company, and a Chinese firm stepped in later to complete the purchase, the Economic Development Ministry said.

An investigation determined that the yachts ultimately were bound for the reclusive communist nation in violation of international sanctions barring sale of luxury goods to North Korea, the ministry said.

The impoverished nation relies on foreign aid to feed its 24 million people. At the same time, its leader Kim Jong Il, now said to be gravely ill, is known to own yachts, limousines and thoroughbred horses.

A person answering the phone at the North Korean Embassy in Rome said no one was available to comment.

The United Nations has placed trade, travel and other sanctions, including the sale of luxury items, on North Korea to pressure Pyongyang to abandon its nuclear program.

Azimut, based outside of Turin in northern Italy, has not been accused of any wrongdoing, and the company said in a statement that it had been the victim of "contractual fraud."

"Behind an apparently normal operation, the buyers in reality were hiding an attempt to violate international embargo against North Korea, the real destination of the two vessels," Azimut said.

AP North Korean leader Kim Jong Il

Azimut spokeswoman Danila Sabella said the initial order and down payment for the two vessels — one with four cabins, the other with five, and both finished with cherry wood interiors — came from an Austrian firm, which then ceded the purchase to a Chinese company.

"There was nothing particularly strange," Sabella said. The Chinese firm said the yachts were destined for China, which also was not unusual, Sabella noted.

Azimut has a sales office in Shanghai and "we have sold other boats in the area where they were destined," she said.

"In the meantime, the financial police began an investigation and there emerged this international intrigue. In the end, the rogues were unmasked, and boats sequestered," Sabella said.

It was not clear how authorities connected the yachts to North Korea or to whom they were being shipped. The Austrian and Chinese companies were not named. It was also not clear if the incident would result in charges.

The yachts, which were built at a shipyard in Viareggio in Tuscany, were held for about a month, then returned to Azimut, which is free to sell them, Sabella said.

Authorities also returned to Azimut the 13 million euros paid for the boats that it had seized, but Azimut will turn over any proceeds from an eventual sale to authorities.

The step was taken to prevent Azimut from suffering financial consequences, the company said in a statement.

Sabella said she doubted that the boats, which also have a sunning terrace and a hot tub, would fetch the original sale price given the global economic crisis, which has hit also luxury boatmakers.

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