ROME – Italy has blocked the sale of two luxury yachts which police say were destined for North Korean leader Kim Jong-il, in violation of international sanctions on his isolated communist state.

Financial police in the city of Lucca in central Italy said the vessels were worth nearly 13 million euros ($18 million) and had been purchased by an Austrian intermediary from the Azimut-Benetti boatyard, one of the world's leading yachtmakers.

The Austrian intermediary then ceded the contract to a Chinese company, which in turn paid a Hong Kong business to take delivery of the vessels, police said.

The difficulty was tracing it back to a violation of the sanctions, said Colonel Antonio Leone, the Finance Police's commander in Lucca. Asked if Kim was the intended final recipient of the vessels, he said: It is an irrefutable fact.

There has been a thorough investigation, partly in Austria, backed up by confessions and investigative breakthroughs.

The yachts were initially confiscated by Italy's Economic Development Ministry but have since been returned to the boatyard, which has been allowed to keep the deposit.

Azimut-Benetti is not accused of wrongdoing and has cooperated fully in the investigation, police said.

The sale of luxury goods to North Korea is banned under a U.N. resolution in retaliation for the country's nuclear testing program. The U.N. Security Council unanimously voted to widen its sanctions after North Korea's May 25 nuclear test.

Despite the poverty of his tightly-controlled country, Kim is said by intelligence sources to live a life of luxury. He reportedly uses yachts to host lavish receptions.

South Korean television said this month he had life-threatening pancreatic cancer, citing information gathered from Chinese and South Korean intelligence sources.

The report fueled speculation about the health of the 67-year-old, the future of his communist dynasty and who will make decisions about its nuclear programs.

(Additional reporting by Tim Castle in London; editing by Andrew Roche)

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