Nate Thayer

All of Kim Jong-eun's men By Nate Thayer

WASHINGTON - The top managers of North Korea's clandestine nuclear and ballistic missile program have been methodically promoted and now dominate the inner circle of Kim Jong-eun's new government, confidential foreign government documents and official media reports from Pyongyang show.

The shadowy group of power brokers in the world's most secretive nation emerged in the first military promotions prominently unveiled during recent high-profile ceremonies as the official mourning period for the death of former dictator Kim Jong-il concluded last week.

These same senior officials are known to be behind Pyongyang's missile test launch - scheduled for the middle of April - which has rattled regional nerves and sabotaged a short-lived agreement withWashington designed to slow North Korea's steady march towards a nuclear weaponized state. The United Nations and United States have charged the "earth observation satellite" launch is a thinly disguised cover for testing capabilities for a nuclear armed long-range ballistic missile.

At least 10 senior North Korean officials, now prominent at the core of power behind 29-year-old hereditary successor Kim Jong-eun, have been named by several foreign intelligence services as in charge of Pyongyang's nuclear and ballistic missile development and export program, including enrichment of uranium to weapons grade strength.

They have also been implicated in selling nuclear and missile technology to Iran and Syria, dispatching special operation teams to attack South Korea and assassinate political opponents, coordinating an international criminal network involved in drug trafficking, counterfeit money laundering, and establishing front companies and banks to raise more than a billion US dollars per year to bankroll the privileged lifestyles of the regime's elite.

The 10 are among North Korean officials and government agencies named by at least 31 governments as part of a network that has imported, sold and developed components and technology for weapons of mass destruction (WMD). They have had their assets frozen, been banned from travel outside of North Korea and forbidden from engaging in business with the countries' nationals or companies, according to official documents.

In the first leadership reshuffle following Kim Jong-il's death and in one of his first public acts as the Korean People's Army Supreme Commander, Kim Jong-eun promoted four key officials to the rank of general at ceremonies marking his deceased father's 70th birthday on February 15.

Pak To-chun, Ju Kyu-chang and Paek Se-bong, previously seen only in civilian dress, were never known to have military rank before being made senior generals. Pyongyang's top spy, Kim Yong-chol, was also recently promoted to four-star general rank. In January, another key powerbroker, Kim Jong-eun's uncle Jang Song-thaek, who appeared for the first time in military uniform at the December funeral ceremonies for Kim Jong-il, was appointed to the rank of four-star general.

All five men are named by the United Nations, the US, the European Union (EU) and other government documents as key managers of Pyongyang's illicit ballistic and nuclear development and export programs.

Nuclear aides
Ju Kyu-chang has been at the center of Pyongyang's clandestine nuclear and missile development policies for more than two decades. He "oversees the development of North Korea's ballistic missile and nuclear programs", according to a December 19, 2011 EU document listing North Korean officials designated on its sanction list.

Ju Kyu-chang is also director of the Korean Workers' Party (KWP) Machine-Building Industry Department, former head of the KWP Second Economic Committee and past head of the National Academy of Natural Sciences. All three government agencies are named by US, UN, EU and other governments as deeply involved in covert nuclear and ballistic missile production, research and export.

According to a May 2010 confidential report to the United Nations Security Council, "Ju served as the overall supervisor for North Korea's missile development, including oversight of the April 5, 2009 Taepo Dong-2 (TD-2) missile launch and the failed July 2006 TD-2 launch."

Those two missile launches were the predecessors to the upcoming launch this month of an "earth observation satellite". Both ballistic missile launches immediately preceded Pyongyang's two underground nuclear explosions.

Daniel Pinkston, an analyst with the International Crisis Group (ICG), said Ju Kyu-chang has "technical expertise regarding the SLV [space launch vehicle] and satellite programs and the nuclear weapons program". In its June 2009 report "North Korea's nuclear and missile programs", ICG said Ju Kyu-chang "is believed to be in charge of an independent entity with custody of North Korea's nuclear bombs" and "was in charge of the August 1998 attempted satellite launch and the 2009 launch".

"I would equate Ju with General Leslie Groves, who headed the US Manhattan Project that produced atomic bombs during World War II," said Larry Niksch, a senior associate with the Washington-based Center for Strategic and International Studies and former Asian affairs specialist for 43 years with the non-partisan Congressional Research Service. "Ju runs the day-to-day programs to develop missiles and probably nuclear weapons," he said in an e-mail this week.

Niksch wrote that Pyongyang reacted to international sanctions by "fashioning an alternative based on illicit programs: counterfeiting of US currency and products, narcotics smuggling, and selling missiles and other weapons to other 'rogue' nations like Syria, Pakistan, and Iran, and terrorist groups like Hezbollah ... I estimate that North Korean earnings from various forms of collaboration with Iran earns Pyongyang upwards of $2 billion annually. Kim Jong-il distributed much of these earnings to his military and communist elite to keep them satisfied and loyal."

Paek Se-bong is chairman of the government's Second Economic Committee (SEC). A classified May 2010 UN "Report to the Security Council from the Panel of Experts" said, "It is broadly believed that the Second Economic Committee of the National Defense Commission plays the largest and most prominent role in nuclear, other WMD and missile-related development programs as well as in arranging and conducting arms-related exports."

According to 2010 US government documents "The US has reason to believe ... [the Second Economic Committee] has been used for North Korea-Iran proliferation-related transactions." A 2009 UN report to the Security Council said the SEC "is a national-level organization responsible for research and development of North Korea's advanced weapons systems, including missiles and probably nuclear weapons". The same UN report said, "Paek is the chief operating officer of the DPRK's [Democratic People's Republic of Korea's] military industry, the country's largest employer and economic consumer."

Paek Se-bong personifies the mysterious grouping of figures in charge of North Korea's illicit weapons program. Very little biographical data exists on Paek Se-bong, who emerged from obscurity in 2003 when he was appointed to head the SEC and made a member of the National Defense Commission (NDC), the supreme ruling body of the DPRK.

After 2003, Paek Se-bong did not appear for eight years in official North Korean media until April 9, 2009 - four days after the highly publicized launch of the last North Korean "satellite". He was at that time reappointed publicly to his position as head of the SEC and a member of the NDC.

That long-range rocket test scuttled ongoing talks over its nuclear program and was followed weeks later by an underground explosion testing a nuclear bomb, which resulted in harsh UN sanctions. It was shortly thereafter that Paek Se-bong's name was placed on international sanction lists.

His name translates to the "Three peaks of Mt Paektu", a term used in official propaganda to refer to Kim Jong-il and his parents. (It is purported to be the mythical birthplace of Kim Jong-il, but he is known to have been born in a village in Siberia where his parents were in exile during World War II.)

Illicit exports
Pak To-chun was placed under international sanction on December 19, 2011, the same day Kim Jong-il's death was announced. According to the EU, "He is in charge of the arms industry. It is reported that he commands the office for nuclear energy. This institution is decisive for [North Korea's] nuclear and rocket launcher program."


An image of a national report meeting held on February 15, 2012, highlighted are Pak To-chun (2nd row, left), Ju Kyu-chang (2nd row, 2nd left) and Kim Yong-chol (3rd row, right), all of whom were given military promotions on the occasion of Kim Jong-il's recent birthday celebration. (Photo: KBS screen grab)

Pak To-chun, also a member of the powerful NDC, is director of the Military Arms Production Department. According to the May 2010 UN report to the Security Council: "The Military Arms Production Department of the Korea Workers' Party oversees the matters related to the Yongbyon nuclear plant and its nuclear weapons programs."

He succeeded Jon Pyong-ho as head of North Korea's military industries in 2010. Jon Pyong-ho was the primary manager since the 1980s of North Korea's clandestine international network tasked with covertly acquiring components and technology to build a nuclear bomb. He was in charge of trading ballistic missile and nuclear technology with Pakistan's Abdul Qadeer Khan network to build Pyongyang's nuclear and other weapons arsenal.

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AN ATOL INVESTIGATION
All of Kim Jong-eun's men
By Nate Thayer

In 2008, a secret delegation of Myanmar military generals traveled to North Korea on a weapons and technology purchasing trip. A leaked detailed report, complete with pictures, showed Jon Pyong-ho hosting Myanmar military officials, including on a tour of a missile factory.

Jon Pyong-ho continues to serve on the powerful NDC and is named on international sanction lists for running a worldwide network trafficking in nuclear material with Iran, Libya, Pakistan and Syria.

"[He] is in charge of nuclear weapons development," according to a 2009 UN report issued after Pyongyang detonated a second underground nuclear explosion. According to a December 21, 2011 EU report ordering new sanctions, the Machine Building 

Industries Department he headed is "responsible for overseeing activities of North Korea's military industries" including "the development of North Korea's ballistic missile and nuclear programs".

In April 2009, Jon Pyong-ho was one of only two officials named as accompanying Kim Jong-il to witness the purported peaceful "space launch" that scuttled earlier bilateral agreements to halt ballistic and nuclear testing, according to photographs and statements from the official Korean Central News Agency archives. The other was Ju Kyu Chang, who was promoted to four-star general during this year's February ceremonies for the deceased Kim Jong-il. Jon Pyong-ho was given special prominence at the recent mourning period closing ceremonies on 25 March.

Kim Yong-chol, a former bodyguard turned head of North Korea's spy agency, also received his fourth star during the recent Kim Jong-il birthday celebrations. Kim heads the Reconnaissance General Bureau (RGB). Both he and the RGB are named in UN, US, EU and other international sanctions for their involvement in banned sales of sophisticated weapons systems, including to Iran and Syria, and have been implicated in launching recent military attacks on South Korea.

Kim Yong-chol and the RGB "specializes in the production of maritime military craft and armaments, such as submarines, military boats and missile systems, and has exported torpedoes and technical assistance to Iranian defense-related firms", according to December 2011 United Kingdom and EU sanctions documents.

The same documents name the RGB as "responsible for approximately half of the arms and related material exported by North Korea" and name RGB front companies that in 2007 and 2008 "facilitated transactions involving ... designated Iranian financial institutions, including Bank Melli and Bank Sepah ... for the benefit of North Korea's Reconnaissance General Bureau's (RGB) weapons program."

Kim Yong-chol was first implicated by intelligence agencies in 2010. In August 2010, US President Barack Obama cited the "unprovoked attack that resulted in the sinking of the Republic of Korea Navy ship Cheonan and the deaths of 46 sailors in March 2010" when issuing Executive Order 13551 that placed US sanctions on a single North Korean official, General Kim Yong-chol, the RGB he commanded, and the Green Pine Associated Corporation, a North Korean front company the US and others have identified as acting on the RGB's behalf to sell prohibited arms, including to Iran and Syria.

The day before Kim Yong-chol was promoted to full general, Pyongyang announced the creation of a new medal, the "Order of Kim Jong-il," awarded for services in building a "thriving socialist nation" and for the military defense of the country. The first recipients of the award included Kim Yong-chol.

Kim Yong-chol's direct superior, General O Kuk-ryol, vice chairman of the National Defense Commission, is another prominent figure in the new regime's inner circle. The UN described O Kuk-ryol as "supervising the acquisition abroad of advanced technology for nuclear and ballistics programs" in a list of sanctioned North Korean officials he was placed on in 2009. The EU added him to its list in December of last year.

At this year's March 25 ceremonies closing Kim Jong-il's 100-day mourning period, Minister of People's Armed Forces and Vice-Marshal Kim Yong-chun delivered the keynote speech which said that Kim Jong-eun "has turned North Korea into an invincible country which nobody dares to attack".

United Nations and US documents from 2011 placed Kim Yong-chun, identified as "special adviser to Kim Jong-il on nuclear strategy" on a sanction list that froze his assets and imposed a travel ban. He currently serves as Pyongyang's de facto defense minister and was one of only eight leaders to walk with Kim Jong-eun alongside the hearse during Kim Jong-il's recent funeral procession.

Analysts say that the decision to name Kim Jong-eun as successor to his father was made by early 2009 and subsequent reshuffles made within the party and military have paved the way for a smooth transition. In February 2009, O Kuk-ryol was appointed vice chairman of the NDC and Kim Yong-chun was appointed minister of the People's Armed Forces.

Top commanders
In April 2009, Kim Yong-chun, O Kuk-ryol, Jon Pyong-ho, Paek Se-bong, Jang Song-thaek and Ju Kyu-chang were all elected to North Korea's highest body, the National Defense Commission. All six are also named as key figures in Pyongyang's nuclear and missile program by the UN, US and other governments, and have all been prominent in public appearances with Kim Jong-eun in recent weeks.

Second Economy Commission chairman Paek Se-bong (circled) applauds at the start of a national report meeting for Kim Jong-il's birthday on February 15, 2012. He was given the rank of colonel general (sangjang) in a military promotions list issued on the occasion of Kim Jong-il's 70th birthday. At past national events, Paek Se-bong had been observed wearing business suits (Photo: KCNA-Yonhap)

Prior to the current diplomatic scuffle over the upcoming supposed satellite launch, North Korea was accused of creating nearly identical crises in 2009 when it launched a long-range, multi-stage rocket it referred to as a space satellite. The move was in defiance of a UN ban, broke off then six-nation nuclear disarmament talks and set the stage for a new underground nuclear test, the country's second.

The following year saw North Korea launch an artillery attack on South Korea that claimed the lives of 46 South Koreans and stoked international fears that the Koreas were near war.

In recent weeks, the same North Korean officials known to command these provocative events have been given high-profile promotions as Pyongyang unveils the new core of leaders behind Kim Jong-eun's new regime. In addition to the 10, other senior officials have also been named as key figures in North Korea's illicit nuclear and ballistic missile program.

Pak Jae-gyong and Hyon Chol-hae, both of the Korean People's Army's political department, are named as "military adviser to Kim Jong-il" in UN and other sanctions lists. Head of the Academy of Science, Pyon Yong-rip, is also named as "involved in WMD-related biological research". All three played prominent roles in the ceremonies that followed the death of Kim Jong-il in the carefully orchestrated succession process to crown Kim Jong-eun as North Korea's new dictator.

Several other powerful figures who are not named in international sanctions also play key roles in the new inner power circle. Korean People's Army chief of staff Ri Yong-ho and two NDC members, Generals U Dong-guk and Kim Jong-gak, are also known to be in Kim Jong-eun's inner circle. 

 
Vice Marshal Kim Jong-gak (2nd right) seen at a March 25, 2012, rally ending the 100 days of mourning Kim Jong-il's death. He nominated Kim Jong-eun as one of the Korean People's Army's delegates to the 4th Party Conference in April 2012. Ministry of State Security's General U Tong-chuk (3rd right).

U Dong-guk heads the State Security Department responsible for domestic intelligence while Kim Jong-gak is in charge of ensuring loyalty to the new leader within the armed forces and party. Kim Ki-nam, meanwhile, leads the formidable propaganda operation in charge of molding Kim Jong-eun's image. Another prominent figure is Choe Tae-bok who is involved in Pyongyang's scientific and technological development which concentrates mainly on efforts to build a sophisticated military state.

The coming weeks will see the further unveiling of top advisers who hold the real power in the new regime, say analysts. The 100th anniversary of the birth of the founder of the North Korean state, Kim Il-sung, will take place on April 15. State media have touted the date for several years as a major national turning point, marking the regime's promise to create "a mighty and prosperous nation".

The official Korean Central News Agency said on Monday that a rare Workers' Party conference will be held on April 11, shortly before Kim Il-sung's birthday celebration. At that event, his grandson, Kim Jong-eun, is expected to be named the secretary general of the KWP, the title previously held by his father Kim Jong-il. Kim Il-sung still retains the title of president in death.

North Korea's parliament, the Supreme People's Assembly, is set to hold its annual session on April 13. It is expected Kim Jong-eun will also be promoted to chairman of the NDC, another post held by his now deceased father. Coincident with these transitional events, Pyongyang informed international maritime and space organizations that it will launch its ballistic missile into orbit between April 12 and 16.

Nate Thayer, former Southeast Asia correspondent for the Far Eastern Economic Review, is an investigative reporter specializing in conflict, transnational crime, and Asian affairs. He is currently based in Washington DC and may be reached at [email protected]

(Copyright 2012 Nate Thayer.)

North Korea: A Glimpse at a Simple Criminal Syndicate Posing as a Government By Nate Thayer

North Korea: A Glimpse at a Simple Criminal Syndicate Posing as a Government   

By Nate Thayer

(Copyright Nate Thayer. No republication in part or in whole allowed without prior wirtten permission of the author)      

        After a decade of failed Clinton era diplomacy, the United Nations and both the Bush and Obama administrations shifted to a more confrontational policy regarding the PDRK,  from negotiations on stopping the North Korean program for nuclear and missile development, to increased confrontation over their state sponsored criminal activity and financial sanctions directed to punish the North Koreans for weapons development. This evolved to a collapse of all diplomatic negotiations whatsoever in 2009.      

        The US and its allies have essentially been left bewildered and have little strategic policy towards the PDRK at all. International policy towards North Korea currently is labelled one of "Strategic Patience", a euphamism, after exhausting all obvious paths, since 1985, of engaging the worlds most stark threat to regional and international peace, which has left the world community at a loss of what to do next. And currently having no strategic policy at all.

         Since President Clinton left office in January 2001 until the present, there has been a marked escalation of hostility between the two sides that has reached a complete breakdown in diplomatic negotiations over the development of the PDRK nuclear and other military program. The U.S. and the United Nations, South Korea, Japan, the European Union and a number of other countries have created laws, resolutions, and Presidential Executive Orders to mitigate the effectiveness of some of the North Korean international criminal network and its military programs of acquiring nuclear weapons and exporting sophisticated weapons.

          In September 2005, the Bush administration used provisions of the Patriot Act, which was made law in the wake of the 2001 terrorist attack in the United States, and provisions of the Bank Secrecy Act, an amendment to the Patriot Act, to sanction and seize assets of financial institutions linked with North Korean illegal activities in Macau.

         The North Koreans responded by exploding a nuclear bomb in a test demonstration of its nuclear capablity.

          In October 2006 UN security Council passed unanimously resolution 1718 imposing a series of harsh economic and commercial sanctions on North Korea after the DPRK  conducted tests of a nuclear bomb earlier that month. The UN resolution demanded the DPRK halt its nuclear program and ballistic missile program, authorized the boarding and inspection of all DPRK cargo ships for weapons of mass destruction, banned imports and exports of a wide range of military equipment, deemed that all North Korean companies and individuals engaged in banned DPRK weapons programmers could have their assets frozen, and called for the “return immediately  to the six-party talks without precondition”

          North Korea released an official statement contending it’s   “nuclear test was entirely attributable to the US nuclear threat, sanctions and pressure,” and “was compelled to substantially prove its possession of nukes to protect its sovereignty.” North Korea’s UN Ambassador, Pak Gil Yon, said in reaction “If the United States increases pressure on the Democratic People Republic of Korea, the DPRK will continue to take physical counter measures considering it as an act of war.”

          In June of 2008, Bush declared “a national emergency” saying North Korea threatened U.S. security and interests and issued an executive order based on provisions of the Trading with the Enemy Act and the Patriot Act.  He cited  "the proliferation of weapons usable fissionable material on the Korean peninsula constitute an unusual and extraordinary threat to the national security and foreign policy of the United States.”

          In September of 2005 the Financial Crimes Enforcement Network, an interagency task force under the Department of the Treasury was created to combat DPRK illicit international activities.

          In June of 2009, after North Korea’s long range missile tests and another underground nuclear tests earlier that year, the United Nations Security Council issued more sanctions on the DPRK which “bans all arms transfers from North Korea. The resolution “ targeted not only North Korean financial institutions, but key individuals associated with nuclear, ballistic missile, and other WMD related programs.”

          President Obama’s 2010 executive order was specific and direct saying it  “targets the government of North Korea’s continued involvement in a wide range of proliferation and other illicit activities…for sanction individuals and entities facilitating North Korean Trafficking in arms…and engagement in illicit economic activities, such as money laundering, the counterfeiting of goods and currency, bulk cash smuggling and narcotics trafficking. This new executive order supplements existing sanctions targeting proliferation of weapons of mass destruction (WMD) and those who support them, under which North Korean entities have been designated to date.”

          The Congressional Research Service has said US policy can help reverse the DPRK dependence on its illicit economy by “balancing US interest where foreign policy goals may conflict with anti crime activities. Congress may also be asked to provide funding for energy and food assistance as part of the resolution to the DPRKs weapons program, because some contend that additional supplies of energy and food could reduce the need to rely on illicit activities in some North Korean quarters.”

Here is a glimpse of what the PDRK has been doing concommitently to the international diplomatic effort;

Drug Trafficking

            Profit estimates vary widely for the North Korean drug trade. Estimates range from 100 million dollars to nearly a billion dollars from the combined production, manufacture, and sale of opium, heroin, and methamphetamines. In 2004, more sober estimates were 200 million dollars from the combined heroin and methamphetamine trade, in addition to 500 million dollars from other criminal organized crime. Lower figures can reach 71 million dollars----59 million for heroin and opium and 12 million from amphetamine.  Counterfeit brand name cigarettes are estimated to have a retail value of between 560 and 720 million dollars annually from their manufacture and export  And some U.S. government figures estimate they make more than 500 million dollars a year in the export of weapons systems and components, including the transfer of nuclear technology and expertise. 

          However, it appears that the extraordinary high profile of DPRK official involvement in narcotics trafficking, particularly with the arrest, detention, and expulsion of diplomatic, military, and intelligence officers and officials connected to the government, has led the North Koreans to seek out middlemen in private organized crime syndicates to help distribute the illicit products. These include Japanese, Chinese, other Asian, Russian, and European crime syndicates that distribute their illicit narcotics, cigarettes, counterfeit currency and pharmaceuticals, and even weapons. 

          For at least the last 35 years, officials of the DPRK and other North Korean government operatives have been apprehended for trafficking in narcotics. Since 1976 there have been at least 50 arrests and drug seizures involving North Korean officials in more than 20 countries around the world, said  William Bach, a U.S State Department official,  in May 2003, “And more recently there have been very clear indications especially in the form of methamphetamine seizures in Japan that North Koreans traffic and probably manufacture methamphetamine drugs.”

          The State Department’s annual International Narcotics Country Report released March, 2003 concludes that ”for years during the 1970s 1980s and 1990s, citizens of the DPRK, many of them diplomatic employees of the government were apprehended abroad while trafficking in narcotics……more recently, police investigation of suspects apprehended making large illicit shipments of heroin and methamphetamine to Taiwan and Japan have revealed a North Korean connection to the drugs."

 

Suspects arrested in several countries revealed to authorities direct links with North Korean officials, military vessels and personnel in drug and other illicit trafficking. Defector accounts also confirm government control over opium production, and the manufacture of heroin and methamphetamine by PDRK state entities. “ The most profitable means of state sponsored illegal business remains drug trafficking, gold smuggling, illegal sale and distribution of endangered species, trafficking in counterfeit us currency, and rare metals,” said Raphael Pearl of the independent Congressional Research Service in 2006, “North Korean officials appear to be increasing their involvement in financing  (these activities)”

          Methamphetamine production in North Korea was said to have started in the mid 1990’s. In the late 1990’s North Korea tried to purchase between 20 and 50 tons of ephedrine—the precursor drug for methamphetamines—from several countries, including an Indian pharmaceutical company. That is enough to treat 135 million colds for a country with a population of 23.9 million people. 

          North Korean officials have been directly linked to possessing or selling heroin, methamphetamines, opium, cocaine, hashish, and Ryhopnol (the ‘date rape drug’) in countries as far afield as Venezeula,  Japan, China, Russia, Taiwan, Egypt, the Czech Republic, Bulgaria, India, and Turkey. 

          Japan has been a particular target for North Korean drugs. In 1999, two separate seizure of 100 kilograms and 564 kilograms of methamphetamine was seized. In 2000, 250 kilograms of methamphetamine seized, in 2001 a North Korean military ship was sunk by a Japanese patrol boat suspected of attempting to smuggle in drugs, and in 2002 separate seizures of 150 kilograms and two packages containing 500 pounds of methamphetamine said to be from North Korea discovered floating onshore. And in 2003 the Australian authorities seized a North Korean ship near the coast off Melbourne with 125 kilograms of heroin and arrested it’s North Korean crew. The ship tried to flee Australian navel vessels for four days and was holding no other cargo. Included onboard was a Korean Worker’s Party “political officer” with no  maritime function.

           In Egypt North Korean diplomats have been expelled repeatedly for smuggling large quantaties of drugs over three decades. In 1976 diplomats were expelled for having 400 kilograms of hashish in their luggage, in 1998 diplomats were expelled with a half million tablets of Rohypnol—the so-called ‘date rape’ drug, and in2004, two diplomats in Egypt were expelled with 150,000 tablets of Clonazipam, an anti anxiety drug.  These are just a random list of the broad range of official involvement in narcotics smuggling worldwide.

          The contraband is often smuggled by land from North Korea through China and Russia or by ship to markets in Europe, Asia and the Middle East through private trading companies controlled by Bureau 39, diplomatic pouch, and hidden in cargo labeled legitimate material.

          But North Korea’s state sponsored criminal syndicates have shifted priorities of the type of smuggled goods and the tactics used to transport and deliver them over the last 35 years, seeking to maximize profits and mask the source of origin as they have faced increasing international scrutiny. They have shifted from counterfeit dollars and opium and heroin in the 1970’s and 80’s to a sharp rise in methamphetamine in the 90’s to counterfeit cigarettes and pharmaceuticals and illegal weapons transfers in the last decade. They also have been involved in smuggling illicit elephant ivory, rhinocerous horns, conflict gemstones, fake postage stamps, untaxed liquor, CD’s, cigarettes, gold, vehicles, often through diplomatic pouched declared as innocuous goods. They have smuggled internationally controlled precursor chemicals for drug manufacture, and nuclear and weapons components, through front companies and organized crime groups. And they have increasingly shifted from direct retail delivery, through use of diplomats and state front companies, to wholesalers selling to organized crime syndicates who distribute the illicit goods worldwide. They have created a maze of changing front companies and bank accounts located worldwide, to stifle international scrutiny and disguise violations of national laws and international sanctions that can be directly linked to the North Korean regime. So as seizures of particular commodities ebb and flow, and distribution networks change, their commitment to controlling a worldwide criminal syndicate remains a central feature of state policy and aggregate revenues from illegal goods has remained consistent or increased. One marked shift is partnering with established criminal syndicates to transport and distribute illegal goods. “ DPRK linked illicit trading networks exist on every continent today – increasingly in partnership with organized crime groups,” said David Asher, a former senior U.S. government official in charge of counter North Korean criminal operations until 2005, citing a 2005 indictment of 87 people throughout the United States, “…an expansive network in the US linked to North Korea and Chinese criminal partners was documented. This network, as the unsealed indictments show, was engaged in selling tens of millions of dollars per year of contraband – everything from counterfeit US currency, counterfeit US postage stamps, counterfeit US branded cigarettes and state tax stamps, counterfeit Viagra, ecstasy, methamphetamine, heroin, AK-47s, and even attempting to sell shoulder fired missiles (manpads) and rocket propelled grenades (RPGs) into the US.”

William Newcomb, a former senior U.S. State Department official and North Korea specialist remarked in March 2011 that,” On the other hand, the continuing large-scale traffic in counterfeit cigarettes from DPRK territory suggests that enforcement against notorious organized criminality is lax. It is also possible that a lucrative counterfeit cigarette trade has replaced a riskier drug trafficking business as a generator of revenue for the DPRK state”

          The lower profile, if indeed diminishing involvement, in narcotics trafficking by the North Koreans could be a reflection of the negative consequences of the very high profile criminal seizures, arrests, detentions, and expulsions incontrovertibly linking the regime to state sponsored illegal narcotics smuggling over 30 years since 1976. They have long had dealings with private organized crime from China, Russia, and Japan and appear to have expanded these networks worldwide—along with an estimated 120 shell front corporations—the PDRK increasingly acting as a wholesaler, using them as middlemen for distribution outside the country.

 

Shipping

 

          Dozens of ships linked to North Korea have been seized with counterfeit US dollars and narcotics, as well as weapons,  and cigarette paper, among other things. This exposed the highly unusual arrangement North Korea had entered into with the Cambodian Government to operate a “Flag of Convenience” office in Singapore, controlled and staffed by  North Koreans, for a reportable bribe of millions of dollars and the promise that 30 North Korean ships could be registered under the Cambodian flag.

          The company, the Cambodian Shipping Company, was established in 1994 by a long time North Korean diplomat who had served in Cambodia, and finally shut down under international pressure in 2002 after having numerous ships seized for illegal activity, including those originating from North Korea.

         “Of most concern to the US and indeed to South Korea was the clear evidence that North Korean freighters flying the Cambodian flag or on the Cambodian register were moving ballistic missiles to clients in the Middle East and Africa,” , said Michael Richardson, author of the book “A Time Bomb for Global Trade: Maritime Related Terrorism in the Age of Weapons of Mass Destruction”.

          In 2001 Irish customs found 20 million smuggled cigarettes on a Cambodian-registered ship that arrived from Estonia, its manifest claiming it had timber. The cigarettes concealed in the centre of bales of timber, were liable to tax amounting to about three million Irish pounds. It was the largest seizure of tobacco in Irish history.  Irish officials said they were destined for a terrorist faction called the Real IRA, whose leader Shawn Garland was later indicted by the United States for laundering millions of dollars of counterfeit U.S. dollars he received at the North Korean embassies in Moscow and Minsk, Belarus and distributed throughout Europe. The 2001 cigarette bust was also said to originate in North Korea.

          Spain seized a ship, tracked by U.S. intelligence departing from North Korea in November 2002 allegedly carrying cement to Yemen. In December 2002 it was seized in the Indian Ocean by Spanish and American military vessels. The So San was a Cambodian registered vessel said to be loaded with cement “but an examination revealed 15 Scud missiles with 15 conventional warheads, 23 tanks of nitric acid rocket propellant and 85 drums of unidentified chemicals all hidden beneath the bags of cement.” It was allowed to continue at the time. It’s cargo was later determined to have ended up in Libya. An embarrassed State Department spokesman responded: "At first we couldn't verify the nationality of the ship because the ship's name and the indications on the hull and the funnel were obscured. It was flying no flag." 

       Lloyd’s List, a shipping industry newspaper, said dozens of North Korean ships flew the Cambodian flag. 

       Also in 2002, the French seized the Cambodian registered ship the Winter after a firefight.   They seized one ton of cocaine worth over 100 million dollars. The cargo was registered as scrap destined for Spain.  Greek, French, and Spanish authorities had tracked the vessel.                   

          David Cockroft,  head of the International Transport Workers’ Federation  said: "As long as governments and the UN turn a blind eye to the way FOCs allow criminals to operate anonymously, ships will be used to transport everything from drugs and illegal immigrants to the supplies used by the al-Qaida men who blew up the US embassies in Kenya and Tanzania," Adding "The world should join us in demanding that Cambodia shut down this sleazy and pestilent offshore registration."

         Lim In-Yong, a senior North Korean diplomat who had been stationed in Cambodia, owned the CSC , which was awarded the contract as the exclusive Cambodian government representative to register flags of convenience  vessels in 1994. He was, on paper in partnership with the son in law of Cambodian King Norodom Sihanouk, Kek Vandy, married to the King’s eldest daughter.  The CSC quickly gained a reputation as a rogue operation.

         The Company, operating under the legal representative of the Cambodian government but operated by North Koreans, rapidly became notorious for illegal activities of the ships it registered. Aside from the above mentioned cases, they were implicated in smuggling oil out of Iraq during the embargo, smuggling cigarettes to Albania and Crete, human trafficking and prostitution to Japan and Crete, as well as other hauling contraband from weapons to drugs.  Intelligence officials suspected North Korea was using CSC vessels to ship ballistic missile technology to Iran, Iraq, and Pakistan.  Under Flags of Convenience vessels, it is difficult to identify who is the real owner of a ship.

          By 2002 the company had registered ships of which 25 had shipwrecked, 41 crashed, nine fires and 45 arrests. Nine CRC registered ships were banned from entering European ports as unfit to sail.

 A Cambodian government official, Ahamed Yahya ,  responded to the public inquiries. “We don’t know or care who owns the ships or whether they’re doing ‘white’ or ‘black’ business … it is not our concern.”

          Under growing international complaints, the Cambodian government withdrew its license to the North Korean controlled CSC. But there are 40 nations that offer flags of convenience services, making it easy to disguise the origin and cargo for the transport of illegal goods.  And making sanctions against interdicting North Korean illicit cargo much harder. “Arms smuggling, the ability to conceal large sums of money, trafficking in goods and people, and other illegal activities can also thrive in the unregulated havens which the flag of convenience system provides,” said Nick Winchester, an analyst in the Seafarers' International Research Centre at Cardiff University in Wales.

Cigarettes

          Since at least the mid-1990s, the DPRK has engaged in the manufacture of counterfeit cigarettes along with packaging and tobacco revenue stamps of various countries. Taiwan law enforcement  seized  20 shipping containers of fake cigarette wrappers destined for North Korea. According to a report from a private investigation launched by a consortium of Tobacco companies targeted by North Korean counterfeiters, “the seized materials could have been used to package cigarettes with a retail value of $1 billion.”

          It reportedly hosts similar foreign-operated counterfeit cigarette ventures. Tobacco industry investigations concluded in 2005 that North Korea operated 10-to-12 active plants and determined that the DPRK military and the “internal security service” operated at least one plant each.

Tobacco industry investigators estimated North Korea could gross between $520 million and $720 million annually. 

Made in North Korea ” counterfeit cigarettes are marketed throughout Asia, especially Taiwan and Indonesia, and in the United States. More recently, North Korea began making counterfeit pharmaceuticals, in particular Viagra, for foreign distribution, mostly Japan and South Korea.

          North Korean factories are reckoned to produce 41 billion fake cigarettes a year, for sale in China, Japan and the US,” according to testimony in front of the U.S. Congress.

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North Korea: A Mafia Crime State By Nate Thayer

North Korea: The World's Only Mafia Crime State

How North Korea Funds their Army, Nuclear Weapons Programme. and Small Group of Elite Cadre in Control

(Excerpts from an unpublished study of the criminal syndicates run by Kim Jong Il as central State policy)

(Copyright Nate Thayer (No republication in full or in part without express written permission of the author)

By Nate Thayer

       North Korea is the only nation where it is central government policy to operate as a systematic criminal syndicate through a myriad of state controlled illicit activities. According to evidence compiled over a recent six month investigation, the North Korean government has, since at least 1974, run a worldwide network of diplomats, intelligence operatives, military, and other government officials, as well as state controlled front companies that use the rights and powers of a sovereign state to manage illegal operations worldwide.

          North Korean government operatives have intentionally violated laws in at least 106 countries in over 500 incidents as it has repeatedly evaded and ignored a series of  multi lateral agreements and increasingly stricter sanctions imposed by the United Nations, as well as the laws of sovereign nations around the world.

         Together these criminal activities, strictly controlled and coordinated by the ruling Korean Workers Party of the Democratic Peoples Republic of Korea (DPRK), have used thousands of North Koreans from school children to some of an estimated 200,000 political prisoners as forced labor in the opium poppy fields, to workers in the manufacturing plants processing heroin, methamphetamine, fake pharmaceuticals, counterfeit US currency, counterfeit foreign cigarettes, as well as a sophisticated secret weapons systems and nuclear weapons development program. To oversee the production, manufacture, transport, and export of these products, they have employed the full apparatus of state institutions. These have included the use of military vessels, intelligence officials, diplomats, their foreign embassies, and a complex web of more than a hundred state controlled front companies with networks around the world,

           Increasingly, after years of international scrutiny of North Korean officials abroad and hundreds of seizures in dozens of countries, they are partnering with established international criminal syndicates in China, other Asian countries, Russia, the Middle East, Europe, and the United States to distribute these illicit commodities around the globe. Since at least 1976, dozens of government operatives on official missions out of North Korea, many travelling on formal diplomatic status, have  been apprehended for possession and smuggling of counterfeit cigarettes, counterfeit pharmaceuticals, counterfeit U.S. dollars, narcotics including heroin, hashish, opium, methamphetamine, and cocaine, and large quantities of controlled pharmaceuticals. In addition North Korean diplomats have been arrested, detained, or expelled from numerous countries for other lucrative crimes such as smuggling of endangered species parts, African ivory, counterfeit CD’s, and large amounts of untaxed alcohol and cigarettes hidden in diplomatic pouches, among other illicit goods. The products and their proceeds from these global operations have often moved around the world using officials travelling with diplomatic passports, who, under the Geneva accords of 1961, enjoy immunity from search, arrest, or prosecution.

            As well, North Korean officials, and government controlled front corporations who operate internationally, and international crime syndicates working with the DPRK government, have been implicated in many countries as they  distribute the goods and try to launder the proceeds from their illicit syndicates through international banking systems. Dozens of diplomats have been detained and expelled, some quietly, from countries in Africa, Asia, Russia, China, Europe, and South America. The activities of these state sponsored criminal enterprises have been identified in at least 106 countries on all continents except Antarctica, from 1976 through 2011, according to data compiled.

            Revenue from this network in turn funds the elite of the Korean Workers Party, a repressive regime at home that defies U.S. and UN sanctions as it pursues a hostile foreign policy producing and exporting nuclear and sophisticated military technology that destabilizes countries and regions worldwide.

            North Korea has been formally rebuked repeatedly by unanimous votes of the United Nations Security Council, the United States, and other affected countries for covertly evading a number of international prohibitions imposed on the isolated and secretive nation for developing and exporting sophisticated ballistic missile systems and nuclear technology. Some of the recipient nations, which are also banned from receiving such military technology, include Burma, Libya, Iran, and Syria. As well, North Korea has been exposed for violating repeated U.N sanctions prohibiting them from importing products for use in their programs of developing long range ballistic missiles, and weapons of mass destruction including the purchase of components for building chemical, biological and nuclear weapons systems. 

            It is believed that a substantial amount of the proceeds from their state sponsored criminal syndicates, which are under the direct control of the ruling Korean Workers Party and do not get distributed through the formal government budget, are used to covertly fund their nuclear and military programs . Since the late 1980's, they denied pursueing or possessing such technology, but more recently flaunt these capabilities, threatening to use them against declared enemies such as South Korea and the United States.

          The proceeds from these illicit activities are estimated to equal 35-40% of the total revenue earned by the DPRK. Some estimate the illicit revenue to exceed 1 billion dollars a year. A significant portion of the revenue is  suspected to fund the regimes banned nuclear weapons production and a sophisticated ballistic weapons systems.  It is suspected that the proceeds, which by now may exceed $5 billion in reserves, have been variously shifted between banks in China, Singapore, Macau, Switzerland, Luxembourg, and Austria, among other international accounts. 

The criminal enterprises and the North Korean government agencies and officials who carry them out are coordinated by a highly secret unit, Bureau 39, (sometimes translated as ‘Office’ or ‘Room’ 39)  under the authority of the ruling Korean Workers Party that reports directly to Kim Jung Il.  The Bureau was created in 1974 specifically to raise hard currency to fund covert activities and as a source to reward elite party loyalists for continuing allegiance. It has offices throughout North Korea and more than 120 international front companies. It has 17 offices outside the DPRK, including China, Moscow, Macau, and Hong Kong. It’s primary purpose is to coordinate production and distribution of a worldwide network of illegal products and collect the revenue for Kim Jung Il.

          In recent years international organizations and sovereign states, particularly the United Nations and the U.S., have passed resolutions, laws, and executive orders to try to undermine the ability of North Korea to operate its global criminal enterprise, but to little avail.

          It has been argued that aggressively confronting North Korea for it’s criminal conduct as a mafia-like state, while trying to balance the pursuit of the higher international priorities of eliminating their capabilities to become a nuclear weapons power and supplier of nuclear technology, as well as exporter of sophisticated long range missile systems to dubious regimes around the globe, has created a conundrum for international negotiators, who fear that focusing on North Korean criminal enterprises will undermine the greater priority of securing military stability in one of the worlds most volatile and certainly most isolated and impenetrable nations.

          For nearly two decades a series of established negotiating bodies served as a diplomatic forum engaging North Korea with other affected and concerned  nations to provide a diplomatic solution to the threat of nuclear and sophisticated weapons development and proliferation. Although they were repeatedly met with broken promises and slow progress over a myriad of contentious issues, they maintained a dialogue and resulted in channels of verification that many analysts saw as essential in thwarting North Korea’s desires for a nuclear weaponized military capability.

           Those diplomatic efforts came to an abrupt halt in 2001, as the Bush adminstration chose a new course in confronting and pressuring the North Korean government.

          In April 2005, North Korean Vice Minister Kim Kye-gwan warned, “[The United States] should consider the danger that we could transfer nuclear weapons to terrorists, that we have the ability to do so.”  Formal diplomatic talks deteriorated since 2001, coming to a complete halt in 2009. Diplomatic negotiations have been dormant  since, the parties engaged in increasingly hostile and aggressive actions towards each other.

          By 2011, international law enforcement in scores of nations, key affected countries such as the United States, Japan and South Korea, and International bodies such as the United Nations have repeatedly imposed sanctions, held diplomatic negotiations, and passed laws and mandated resolutions attempting to halt North Korea’s role as a destabilizing force in the region and the world. The DPRK reaction has been to continue its illicit covert schemes and ratchet up an aggressive military posture. But the threat of a rogue state, now possessing nuclear weapons capability as well as an aggressive manufacturer and exporter of sophisticated ballistic missile technology, funded by a vast network of covert production and export of illegal goods, has only expanded.

Overview of Illegal Activities

          Among the oldest, key criminal activities controlled by Bureau 39 is the production distribution and laundering of the world’s highest quality counterfeit United States currency. In addition the bureau has managed the production and distribution of opium, heroin, and methamphetamine, billions of counterfeit brand name cigarettes, counterfeit pharmaceuticals, long range ballistic missiles, and the transfer of nuclear technology and expertise to other regimes, and building a nuclear weapons arsenal. Other illicit activities include state sponsored insurance fraud, money laundering, gold smuggling, taxable items smuggled through diplomatic officials, and the trade in protected species such as elephant ivory and Rhinoceros tusks.

          On more than 100 occasions, all of these materials have been seized in the possession of North Korean diplomats or shown to have occurred. They are facilitated by government officials, government controlled ships, planes, and international trading companies that are front organizations controlled by North Korean government clandestine offices. They have resulted in the seizure, detention, expulsion, or arrest of North Korean government officials, or their associates, often using diplomatic passports, or these activities have been verified as occurring in at least 106 countries from 1976 through 2011.

          Revenues from illicit state sponsored organized crime are, by their very nature, speculative at best. Annual revenues from counterfeit US currency are estimated at between 15 and 100 million US dollars, illegal drug manufacture and sale of heroin, opium, and methamphetamine have carried estimates as high as between 100 million to one billion dollars, counterfeit cigarette manufacture and sale at between 560 and 720 million dollars, and weapons, military components, nuclear technology, and missile sales at as much as 560 million dollars.

          In 1976, two years after the creation of  Bureau  39,  North Korean officials began being apprehended around the world for engaging in criminal activity. Sweden, Norway, and Denmark expelled 17 North Korean diplomats, including the entire Norwegian diplomatic staff and two ambassadors, for the sale of drugs, untaxed alcohol and cigarettes. 

          In North Korea, where virtually all economic activity is controlled by the state, Bureau 39 handles all hard currency transactions, including some legal projects such as export of mushrooms, ginseng and proceeds from the handful of hotels where foreign visitors must stay in Pyongyang.

          Travelling mainly under diplomatic passports, their illicit cargo has been seized in dozens of countries at an escalating rate that peaked in the late 1990’s.  Scores of North Korean government  officials have been arrested, detained and expelled, illicit  goods seized 

in hundreds of incidents, occurring on every continent except Antartica for the last 35 years. Such criminal activity directly linked to the North Korean government has been documented in at least 57 countries since 1976.

          Reports from numerous cases of North Korean state sponsored involvement in production, manufacture and distribution of illicit products began in the mid 1970’s and gained momentum into an overwhelming pattern of a DPRK controlled government criminal conspiracy by the late 1990’s. Arguably the most isolated, secretive, and impenetrable nation in the world, firm evidence has proven difficult to gather and more difficult to prove.

          Operating outside the formal government structure, Bureau 39 is an office technically under the structure of the ruling Korean Workers Party Secretariat, which reports to the Central Committee of the Party. Its establishment to operate illicit activities included the purpose of funding the cash starved nation’s military and nuclear development programs.

          “ North Korea’s Central Committee Bureau 39 is an active participant in the criminal economy of the region with tentacles extending well beyond Asia,” according to a study published in March 2010 by the Strategic Studies Institute of the U.S. Army War College. The PDRK operates what “is essentially criminal sovereignty whereby it organizes its illegitimate activities behind the shield of non-intervention while using the tools of the state to perpetrate these schemes abroad."

          While outside the government structure Bureau 39 fully uses the state apparatus including the diplomatic services, intelligence agencies, military, shipping vessels and aircraft, and an estimated 120 foreign front companies, which themselves are constantly renamed or dissolved and their function replaced by another shell company. These companies are used to covertly launder the proceeds from illicit transactions through foreign bank accounts variously reported to be located in China, Macau, Switzerland, Austria, Luxembourg, and Singapore, according to several studies, including Congressional testimony in March 2011. 

           Its most powerful entity is the Deasung General Bureau, which controls scores of foreign trading front companies and banks, and reports to the ruling KWP Organization and Guidance Department. They, in turn, report to Bureau 39.

          In November 2010 the US Treasury Department imposed sanctions on Deasung General Bureau stating it “was owned or controlled by Office 39 of the Korean Workers Party. Office 39 is a secretive Branch of the government of the Democratic People’s Republic of Korea that provides critical support to North Korean leadership through engaging in illicit economic activities and managing slush funds and generating revenue for the leadership.”

          The U.S. Department of Treasury Department determined that the Korean Daesong General Trading Corporation was “ facilitating North Korean trafficking in arms and related materiel; procurement of luxury goods; and engagement in certain illicit economic activities, such as money laundering, the counterfeiting of goods and currency, bulk cash smuggling and narcotics trafficking."

          A confidential November 2010 UN Security Council Panel of Experts report, ordered to study North Korean compliance with UN Security Council resolutions responding to North Korean long range ballistic missile and nuclear bomb testing, had banned, among other things, North Korea from the export or import of nuclear technology and any weapons systems. The secret report was leaked in December 2010.

          The 47 page document said  “The Democratic People’s Republic of Korea maintains a wide network of trade offices that work in close conjunction with its diplomatic missions overseas. These offices are charged with both procurement and developing select trade opportunities of interest to the Democratic People’s Republic of Korea’s leadership, including arranging and handling its illicit trade and covert acquisitions,” said the UN confidential report dated 10 November 2010. It continued: “While much of the country’s illicit or covert acquisition activities are handled by these offices, the Democratic People’s Republic of Korea has also established links with overseas criminal networks to carry out these activities, including the transportation and distribution of illicit and smuggled cargoes. This may also include weapons of mass destruction, sensitive goods and arms and related materiel smuggling.”

          All figures and statistics on the DPRK are highly speculative and are often derived from teams of international and US law enforcement and intelligence analysts and technology. Some information comes from North Korean defectors. Other data has been compiled through the seizure of illicit goods in dozens of countries around the world. And still more evidence is provided by anecdotal press reports from various incidents involving law enforcement in nations spanning the globe. The United States and South Korea have taken the most active role in deciphering what transpires in what is arguably the most isolated, secretive, and impenetrable nation in the world. It is reported to use proceeds of the state sponsored criminal syndicate in its nuclear development program. 

          The North Korean government, through Bureau 39, are increasingly assisted and coordinate with established organized crime syndicates from China, Japan, and Russia, elsewhere in Asia, the United States, and Europe. They have cooperated with non-state terrorist organizations including the IRA, Hezbollah, and insurgencies in Sri Lanka and Nepal. And they have laundered proceeds from illicit activities through banking systems worldwide, including  Macau, China, Switzerland, Austria, Hong Kong, Luxembourg and Singapore, according to US government, United Nations, other governments, and press reports.  

          In 2011, North Korea again faces severe food shortages. An estimated more than one million people died from famine in the 1990’s. United Nations humanitarian agencies report that millions are suffering from malnutrition in 2011. The government provides minimal services to the population, controls all sectors of the economy and is ranked 179th in the world—dead last—in the Index of Economic Freedom, and regularly ranked as having one of the world’s most egregious human rights records. It has refused to meet long standing international debt obligations, and together with sanctions imposed by the United Nations, finds it difficult to meet minimal standards to trade through normal international financial structures. While publicly appealing for international funds to stem another famine, with a population of only 23.9 million people, North Korea finances and maintains the 4th largest standing army in the world, with more than one million active duty soldiers and 4.6 million in reserve.

          Throughout the 1990’s until the US began imposing increasingly harsh sanctions in 2005, Macau served as a hub of laundering criminal proceeds through a series of North Korean front companies and cooperative banks and lax financial security in the gambling Mecca.

Counterfeit U.S. Money

          In 1994, officials from a North Korean front company, Zokwang trading company, a direct subsidiary of  Bureau 39,  travelling on diplomatic passports, attempted to deposit 250,000 dollars in fake US dollars in a Macau bank and were arrested and expelled. It was one of many incidents that led to a September 2005 US Treasury Department action naming and freezing the assets of North Korean front companies, Macau banks, and North Korean officials.

          Kim Jung Il, in his capacity as head of Bureau 39, first ordered counterfeit 100 dollar bills be produced in the 1970’s through bleaching U.S. one dollar bills. The first counterfeit notes paid for covert terror campaigns against South Korea, such as the bomb explosion on a South Korean commercial  plane killing all 155 civilian passengers  in 1987 and the bombing of senior officials of  South Korea, including President Chun Doo-Hwan in Burma in 1983 that killed four cabinet members and 13 other South Koreans .

          The first detection of the North Korean “super note” was by a suspicious bank teller in the Philippines in 1989. 

        Since then hundreds of millions of dollars of the bills have appeared in dozens of countries around the world. Many North Korean officials have been seized in possession of the bills.

In South Korea counterfeit bills have increased there since North Korean fake U.S. dollars appeared in Hong Kong in early 2006.  Days later China ordered banks to “increase vigilance” for fake U.S. bills.

          By the late 1980’s, as the economic crisis in the communist states imploded with the collapse of the Soviet Union, North Korea increased the production and sophistication of its counterfeit dollars.

Since the first counterfeit bills were manufactured, US government officials have documented 19 versions of the “super note”, all they allege are improvements that are produced in the PDRK.  It was in the late 1970’s that North Korea purchased its intaglio printing presses from a Swiss company that sells strictly to governments. 

          They also bought special ink from the same Swiss company used by the U.S. Bureau of Engraving and Printing nearly exactly the same color used by the US . As well, paper with a nearly identical percentage of cotton fiber as that used on U.S. notes is used in North Korean supernotes. 

          In 2004, a North Korean defector, interviewed by the BBC in South Korea, said.  “We bought the best of everything - the best equipment and the best ink. But 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 one’s, at a ratio of about 50-50.”

          In October that year the FBI seizure of 300,000 dollars in super notes hidden among cargo on a ship originating in China arrived at the Newark, New Jersey port, marked the first evidence of US fake dollars from North Korea smuggled into the United States.

          In 2005, the US launched a series of countermeasures against North Korea targeting the counterfeit program, money laundering related to drug trafficking and other illicit activities, including criminal indictments in the U.S. and sanctions against North Korean front companies and foreign banks operating in other countries. 

          It signified a change in US policy to avoid public condemnation of North Korea’s government operated criminal syndicates for fear it would thwart the larger national interests of negotiating with the DPRK to halt it’s production, distribution, and export of nuclear technology and sophisticated weaponry that was the ongoing focus priority of US foreign policy for more than a decade.

          In September of 2005, the US imposed sanctions against North Korean front companies, individuals, and a bank in Macau for laundering counterfeit dollars and other proceeds from North Korean criminal enterprises.

           A March 2006 study by the independent Congressional Research Service made a connection between revenues from counterfeit money and other illicit proceeds and the fueling of nuclear proliferation. “The earnings from counterfeiting also could be significant to Pyongyang, and may be used to purchase weapons technology….or even underwrite the DPRK’s nuclear program.” 

          The next month, April 2006, the U.S State Department made public accusations against the DPRK regime that their illicit trade was operating increasingly with networks of international organized crime. North Korean’s “have been apprehended trafficking in narcotics and engaged in other forms of criminal behavior,” concluded the International Narcotics Control Strategy Report released in March 2006, “including passing counterfeit U.S. currency.” 

          That same month a Congressional Research Services report on North Korean Counterfeiting stated: ”These have been carried out in league with criminal organizations around the world."

          It added that revenue from criminal syndicates were essential to keeping the regime in power.

       The United Nations and both the Bush and Obama administrations have shifted to a more confrontational policy regarding the PDRK,  from negotiations on stopping the North Korean program for nuclear and missile development programs, to increased confrontation over their state sponsored criminal activity and financial sanctions directed to punish the North Koreans for weapons development .

       Since President Clinton left office in January 2001 until the present, there has been a marked escalation of hostility between the two sides that has reached a complete breakdown in diplomatic negotiations over the development of the PDRK nuclear and other military program. The U.S. and the United Nations have since created laws, resolutions, and Presidential Executive Orders to mitigate the effectiveness of some of the North Korean international criminal network and its military programs of acquiring nuclear weapons and exporting sophisticated weapons......TO BE CONTINUED

 

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