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Illicit activities of North Korea

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The alleged illicit activities of the North Korean state extend to the manufacture and sale of illegal drugs, the manufacture and sale of counterfeit goods, human trafficking, arms trafficking, counterfeiting currency (especially the United States dollar and Chinese yuan), and other areas.[1][2] Many of these activities are undertaken at the direction and under the control of, the North Korean government and the ruling Korean Workers' Party, with their proceeds going towards advancing the country's nuclear and conventional arms production, funding the lifestyles of the country's elite, and propping up the national economy.[3]

Unlike criminal syndicates, the extensive nature of these illegal endeavors, and the fact that they are directed and sanctioned by the highest levels of government,[3]: p1  has led to the nature of the North Korean state being defined as a form of "criminal sovereignty" by foreign policy experts such as Paul Rexton Kan and Bruce Bechtol.[3]: p3 

However, there are questions remaining about the level of government involvement in each of the criminal enterprises. There is little doubt that the North Korean state has been behind counterfeiting currency, human trafficking, the arms trade etc., but the level to which it has been involved in the drug trade after the collapse of the Public Distribution System in the 1990s is not clear as semi-private and private black markets have arisen since then and some high-ranking officials may only be engaged in illicit trade for personal benefit.[4]: p6 

Drug trade

See also: Pong Su incident

North Korea's illegal drug trade dates back to the 1970s and includes the manufacturing, selling, and trafficking of illicit drugs, as well as counterfeit otherwise legal pharmaceuticals.[5] Production began in the mountainous Hamkyung and Yangkang Provinces, particularly in the village of Yonsah, where Kim Il-sung sanctioned the creation of an opium farm.[4]: p20 

In order to provide a cover of legitimacy, the North Korean government uses front companies, like the Ryugyong Corporation under the control of the Korean Workers Party's Foreign Relations Department, to conduct clandestine activities.[6] The company also holds large tracts of land within the country for the sole purpose of growing opium[1] and each year the company sent tens of thousands of dollars in hard currency to Kim Jong-il for his use. Unlike most companies, Ryugyong Corporation has no import or export quota restrictions.[6]

According to defector Yoon Yong Sol, during the famine "[t]here were some complaints that during the famine we should be growing grain, not poppies, but the instruction from the central government was that if we grow poppies we can sell the product for 10 times as much to buy grain. ... The only way to earn hard currency is by drugs."[4]: p22 

Reports of methamphetamine (known as "ice drug" in North Korea) use in the country surfaced in the late 1990s.[7] According to Isaac Stone Fish writing in Foreign Policy, the production of methamphetamine in North Korea is done by chemists and other underemployed scientists.[7] Methamphetamine is given as a medication within North Korea, which has helped to fuel its spread. As the production and sale of opium declined in the mid-2000s, methamphetamine became more pervasive.[7] To bring in much needed cash, the international methamphetamine trade began, spreading first to China, and with the drug being made in state-run laboratories.[8] However, Isaac Stone Fish admitted with regard to his report: "I have no idea what is actually happening inside North Korea".[9]

China officially admitted to the drug problem stemming from North Korea in 2004, with Jilin Province being the most important transshipment point from North Korea.[10] The production, storage, financing, and sale of the North Korea's methamphetamine trade reaches multiple countries from the Philippines, the United States, Hong Kong, Thailand, western Africa and others.[5] In 2010, five foreign nationals were prosecuted as part of a conspiracy involving North Korea to smuggle 40 pounds of methamphetamine into the United States and to sell it for $30,000 a pound.[7]

In 2001, income from illegal drugs amounted to between $500 million and $1 billion.[1] In a 2013 Washington Post article, annual revenues from methamphetamine sales are estimated at $100 million to $200 million.[11]

Between 1977 and 2003, more than twenty North Korean diplomats, agents, and trade officials have been implicated, detained, or arrested in drug-smuggling operations in more than a dozen countries.[1] In 2004, two North Korean embassy employees were caught smuggling 150,000 tablets of Clonazepam in Egypt, and in that same year, embassy employees from Bulgaria were arrested in Turkey in possession of over 500,000 tablets of Captagon (the brand name for the synthetic stimulant fenethylline, or phenethylline), with an estimated street value of $7 million.[4]: p37  The government of North Korea has only admitted that such acts were undertaken by individuals, and not at the direction of the state.[4]: p17 

According to the Committee for Human Rights in North Korea, since 2001 drug trafficking operations by diplomats had ceased, with the focus then becoming the production of drugs to be smuggled by other criminal organizations.[4]: p18 

Counterfeiting

Currency

See also: Superdollar

Counterfeiting currency is alleged to have begun in the 1970s under Kim Jong-il's direction; however, the notes produced at the time were not of high quality.[2] Since then, and within the jurisdiction of Room 39, the North Korean government has counterfeited $50 and $100 United States banknotes using increasingly sophisticated techniques. In 1994, authorities in Hong Kong and Macao apprehended five North Korean diplomats and trade-mission members carrying around $430,000 in bills that turned out to be "supernote" counterfeits.[12]

There have been two primary reasons for counterfeiting: the first is to wage economic warfare against the United States,[2] and secondly, to help ease North Korea's domestic economic problems.[12]

According to a report by Dr. Balbina Hwang of American University, North Korea circulated $100 million in counterfeit currency in 2001.[1] The revenues from this are estimated at between $15 million and $25 million annually.[13] In 2013, the United States released its newly redesigned 100 dollar bill. The primary purpose of the redesign was to fight against counterfeiting and prevent the recurrence of the "supernotes" which were produced by North Korea.[13]

The International Convention for the Suppression of Counterfeiting Currency is the primary treaty whereby states agree to criminalize acts of currency counterfeiting. The Democratic People's Republic of Korea is not a party to the treaty.[14]

There have been a few cases of North Korea being implicated in the production of counterfeit Viagra. These include: a 2004 arrest in Seoul, South Korea of a man with 4,000 counterfeit Viagra pills; and a 2005 report from Japan that North Korea was producing fake Viagra pills in factories in Chongjin, which were then sold in Hong Kong to customers of other Southeast-Asian countries (including China), and the Middle East.[4]: p38 

Counterfeit cigarettes

Counterfeit cigarettes have been a lucrative item for the country. The trade is believed to have begun in the 1990s and greatly increased in 2002 after Chinese authorities shut down many counterfeit operations in China, which then provided added incentive, knowledge, and capacity which could be relocated to North Korea.[4]: p32  The major factories for cigarette production were reportedly based in Rajin, though defectors also mentioned a factory in Pyongyang.[4]: p33 

In 1995, Taiwan stopped a ship and confiscated 20 containers of counterfeit cigarette packaging, which is enough to make 2 million cartons of popular Japanese and British brands.[4]: p32  In 2004, authorities in Vietnam, Taiwan, the Philippines, and Singapore also impounded containers filled with counterfeit cigarettes.[4]: p33  Official congressional testimony in 2006 revealed that North Korea-sourced Marlboro brand cigarettes had been identified in 1,300 incidents across the United States.[4]: p35  Revenues from counterfeit cigarettes are estimated at between $80 million and $160 million a year.[4]: p36 

Human trafficking

Main article: Human trafficking in North Korea

North Korea is a "Tier 3" country (those who do not comply with human trafficking laws) as listed by the U.S. Department of State and has retained this ranking since 2007.[15] The country is a source country of men, women, and children for sex trafficking and forced labor. Forced labor is used both internally and externally. Countries which have North Korean forced laborers include Russia, China, Mongolia, and other places in Central Asia, Europe, Africa, and the Middle East.[15]

While the North Korean government claims these are "contract workers", reports claim that they are actually subjected to forced labor, that their movements and communications are subjected to strict surveillance, and that workers sent overseas do not have a choice in the type of work they will be doing nor do they receive pay for their work.[15]

It is estimated that there are thousands of North Koreans working in logging, construction, and agriculture industries in Russia. These workers reportedly only receive two days of rest each year and face punishment if they fail to meet quotas.[15]

North Korea is not a party to the 2000 UN TIP Protocol.[16]

International abductions

Between 1977 and 1983, North Korea abducted several Japanese citizens.[17] North Korea has admitted to abducting 13 Japanese citizens,[18] and Japan lists 17 as having been abducted.[19] There are also testimonies which list nine Europeans as being abducted by North Korea.[20]

The purposes of abduction ranges from using the abductees as translators/teachers,[21] to become wives,[22] and to obtain identities for other clandestine operations. During the Korean War North Korea abducted an estimated 82,959 South Koreans, and in the post-war period South Korea claims that a further 489 South Koreans have been abducted by North Korea.[23]

Arms trade

During the 1980s, North Korea emerged as a legal arms trader to primarily Third World countries, exporting relatively inexpensive, technically unsophisticated, but reliable weapons.[24] During the Iran–Iraq War, some 90% of arms exports from North Korea went to Iran, and between 1981 and 1989, North Korea earned an estimated $4 billion from arms sales.[24]

North Korea has a known track record in proliferating nuclear and missile technology and in 2001, missile sales came to $560 million.[1] Following its 2006 nuclear test, international sanctions have sought to limit or prevent North Korea from exporting various types of arms, materials, and technology.[25] Prior to UN sanctions however, countries such as Japan and the United States took unilateral steps to curb such activities.[1]

UN sanctions now ban all arms, including small arms and light weapons.[26]: 14  North Korea has developed an extensive and complicated arms trade network in an attempt to circumvent sanctions and uses front companies and embassies to traffic weapons.[27] In a 2014 UN report, Syria, Myanmar, Eritrea, Tanzania, Ethiopia, Somalia and Iran were all suspected to have bought weapons from North Korea.[27]

Incidents

Though trade in banned small arms and ammunition is relatively insignificant, recent reports include: imports totaling $45,500 by Brazil in 2007, of $3.1 million by the United Arab Emirates in 2006, and $364,400 by Ethiopia in 2005, and $121,400 by Mexico in 2005.[26]: 14 

In 2009, three vessels were intercepted which were carrying North Korean weapons. Western and Israeli intelligence officials believed the weapons were destined for Hezbollah and Hamas.[26]: 7 

In December 2009, Thailand intercepted a charter jet from Pyongyang carrying 35 tons of conventional weapons, including surface-to-air missiles.[25]

In 2012, the U.N. reported that 445 North Korean-made graphite cylinders (which can be used to produce ballistic missiles) were seized from a Chinese freighter at the South Korean port of Busan on their way to Syria.[25]

In 2013, a North Korean cargo ship seizure in Panama (carrying Cuban weapons) took place.

Room 39

Main article: Room 39

Room 39 (or Office 39) is the primary government organization that seeks ways to maintain the foreign currency slush fund of North Korea's leader.[28] Room 39 oversees many of the government's illegal activities (although the military also has its own illegal activity division) such as counterfeiting and drug production. In 2010, the department was reported to have had 17 overseas branches, 100 trading companies and banks under its control.[29] By 2009, the office allegedly had upwards of $5 billion in assets, much of which was spread in banks throughout Macau, Hong Kong, and Europe.[30]

In August 2014, Yun Tae Hyong, a senior representative of North Korea's Korea Daesong Bank, which is suspected of being under control of Room 39,[31] was reported to have defected to Russia taking $5 million with him.[32]

In 2015, the European Union placed the Korean National Insurance Company (KNIC) under sanctions and added that the KNIC had links to Office 39. [33] The KNIC (which had offices in Hamburg, Germany and London, UK) was reported to have had assets of UK£ 787 million in 2014 and had been involved in scamming insurance markets and making investments in property and foreign exchange.[34][35]

International responses

The United Nations Security Council has passed multiple resolutions against North Korea and its weapons program including, UNSC Resolution 825 (May 1993), UNSC Resolution 1695 (July 2006), UNSC 1874 (June 2009) and most recently UNSC Resolution 2094 (March 2013). Were the international community to fully enforce UNSC 1874, it is estimated that North Korea would lose between $1.5 and $3.7 billion.[26]: 4 

Since 1950, the United States has maintained an embargo against North Korea for their role in starting the Korean War. The embargo and related sanctions have been extended to combat North Korea's various illicit activities and continued aggression.

North Korea was also added to the State Sponsors of Terrorism list in 1988 for supplying terrorist groups with weapons and for their role in the Rangoon bombing and the bombing of Korean Air Flight 858.[36] However, in 2008 President George W. Bush agreed to remove the DPRK from the list after North Korea met their obligations to provide access to their nuclear program and the resumption of disabling of their nuclear facilities.[37]

In 2005, under US PATRIOT Act section 311, $25 million of North Korea's cash was frozen at Macau-based Banco Delta Asia, which the US Treasury said the DPRK used for illicit activities.[26]: 13 

In 2010, US President Barack Obama signed Executive Order 13551, which "targets North Korea’s importation and exportation of arms, importation of luxury goods, and other illicit activities, including money laundering, the counterfeiting of goods and currency, bulk cash smuggling, and narcotics trafficking."[38]

Critical assessment of allegations

The British academic, Hazel Smith, has argued that the allegations have a weak foundation, being largely based on the claims of a few US officials and North Korean defectors. She has pointed out that there have been very few criminal convictions. She has queried the assumption that all the activities are directly by North Korea's government.[39]

See also

General:

References

  1. ^ a b c d e f g Balbina Hwang (August 25, 2003). "DPRK Briefing Book : Curtailing North Korea's Illicit Activities". Heritage Foundation. Archived from the original on 4 Sep 2014. Retrieved April 8, 2014. {{cite web}}: Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  2. ^ a b c Stephen Mihm (July 23, 2006). "No Ordinary Counterfeit". New York Times. Archived from the original on 4 Sep 2014. Retrieved April 9, 2014. {{cite web}}: Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  3. ^ a b c Kan,Paul; Bechton,Bruce; Collins,Robert (2010). Criminal Sovereignty: Understanding North Korea's Illicit International Activities. Strategic Studies Institute. ISBN 9781584874324.: p2 
  4. ^ a b c d e f g h i j k l m Greitens, Sheena (2014). Illicit: North Korea’s Evolving Operations to Earn Hard Currency, Committee for Human Rights in North Korea. ISBN 978-0-9856480-2-2. Archived from the original (PDF) on 4 Sep 2014. {{cite book}}: Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  5. ^ a b Keegan Hamilton (April 4, 2014). "North Korea's Huge Role In Global Meth Trade Revealed In Insane Criminal Case". Business Insider. Retrieved April 8, 2014.
  6. ^ a b Staff (August 18, 2012). "The DPRK is capitalist when it wants to be: the story of Drugs Incorporated". New Focus International. Retrieved April 26, 2014.
  7. ^ a b c d Issac Stone Fish (November 21, 2013). "Inside North Korea's Crystal Meth Trade". Foreign Policy. Retrieved September 3, 2014.
  8. ^ Max Fisher (August 21, 2013). "How North Korea got itself hooked on meth". Washington Post. Retrieved September 3, 2014.
  9. ^ Stone Fish, Isaac (8 August 2011). "The Black Hole of North Korea". New York Times. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  10. ^ Yong-an Zhang (December 3, 2010). "Drug Trafficking from North Korea: Implications for Chinese Policy". Brookings Institution. Retrieved September 3, 2014.
  11. ^ Max Fisher (March 22, 2013). "Report: North Korea ordered its foreign diplomats to become drug dealers". Washington Post. Retrieved September 3, 2014.
  12. ^ a b Stephen Mihm (July 23, 2006). "No Ordinary Counterfeit". New York Times. Retrieved April 9, 2014.
  13. ^ a b Mike Eckel (October 8, 2013). "New $100 bill: why North Korea won't be very happy". Christian Science Monitor. Retrieved April 8, 2014.
  14. ^ "International Convention for the Suppression of Counterfeiting Currency". United Nations. Retrieved April 9, 2014.
  15. ^ a b c d "Trafficking in Persons Report 2014: KOREA, DEMOCRATIC PEOPLE'S REPUBLIC OF" (PDF). U.S. Department of State. 2014. pp. 231–232. Retrieved September 4, 2014.
  16. ^ "Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children". United Nations. April 9, 2014. Retrieved September 4, 2014.
  17. ^ "ABDUCTION - An Unforgivable Crime". Japanese Government Internet TV. January 23, 2009. Retrieved September 4, 2014.
  18. ^ "North Korea rejects DNA link to Megumi Yokota abduction case". Associated Press. Retrieved 2006-05-01.
  19. ^ "Individual Cases - 17 Abductees Identified by the Government of Japan". Japanese Government Headquarters for the Abduction Issue. May 2011. Retrieved September 4, 2014.
  20. ^ "Les captives étrangèresde la Corée du Nord". 21 April 2008 – via Le Figaro.
  21. ^ McCurry, Justin (October 16, 2002). "North Korea's kidnap victims return home after 25 years". The Guardian. London. Retrieved 2006-05-01.
  22. ^ Brendan Koerner (August 27, 2003). "Why North Koreans Were Kidnappers". Slate.com. Retrieved September 4, 2014.
  23. ^ "North Korean Abduction Victims Worldwide". National Association for the Rescue of Japanese Kidnapped by North Korea. December 2006. Retrieved September 4, 2014.
  24. ^ a b "North Korea: The Foundations for Military Strength - Chapter 3A". Defense Intelligence Agency. October 1991. Retrieved September 3, 2014.
  25. ^ a b c Foster Klug (July 17, 2013). "North Korea's Weapons Trade: A Look At A Global Business". Huffington Post. Retrieved September 3, 2014.
  26. ^ a b c d e Mary Beth Nitkin (April 15, 2010). "North Korea's Second Nuclear Test: Implications of U.N. Security Council Resolution 1874" (PDF). Congressional Research Service. Retrieved September 3, 2014.
  27. ^ a b James Pearson (March 11, 2014). "Front companies, embassies mask North Korean weapons trade - U.N". Reuters. Retrieved September 3, 2014.
  28. ^ David Rose (August 5, 2009). "North Korea's Dollar Store". Vanity Fair. Retrieved September 4, 2014.
  29. ^ Kim Yong Hun (August 30, 2010). "What Is the No.39 Department?". DailyNK. Retrieved September 4, 2014.
  30. ^ Adam Taylor (March 13, 2013). "Kim Jong-un Estimated To Have Up To $5 Billion In Secret Overseas Accounts". Business Insider. Retrieved September 4, 2014.
  31. ^ "Treasury Designates Key Nodes of the Illicit Financing Network of North Korea's Office 39". U.S. Department of the Treasury. November 18, 2010. Retrieved September 3, 2014.
  32. ^ "North Korean leader's money manager defects in Russia". Reuters. August 29, 2014. Retrieved September 3, 2014. {{cite web}}: Unknown parameter |authors= ignored (help)
  33. ^ Booth, Robert (2017-04-23). "UK freezes assets of North Korean company based in south London". The Guardian. ISSN 0261-3077. Retrieved 2017-04-23.
  34. ^ Gadher, Dipesh (2017-04-23). "Kim cooked up 'nuclear cash' in the suburbs". The Sunday Times. Retrieved 2017-04-23. {{cite news}}: Cite has empty unknown parameter: |dead-url= (help); Unknown parameter |subscription= ignored (|url-access= suggested) (help); no-break space character in |title= at position 36 (help)
  35. ^ Gadher, Dispesh (2017-04-23). "Secrets of Kim's little house in the suburbs". The Sunday Times. Retrieved 2017-04-23. {{cite news}}: Cite has empty unknown parameter: |dead-url= (help); Unknown parameter |subscription= ignored (|url-access= suggested) (help)
  36. ^ Vikaas Sharma (June 28, 2008). "State Sponsors: North Korea". Council on Foreign Relations. Retrieved September 4, 2014.
  37. ^ "N Korea taken off US terror list". BBC News. October 11, 2008. Retrieved April 9, 2014.
  38. ^ "Treasury Designates Financial Institution Involved in Facilitating North Korea's Illicit Activities". U.S. Department of the Treasury. April 19, 2011. Retrieved September 3, 2014.
  39. ^ Smith, Hazel (27 April 2015). "Dangerous, isolated and primed for war? North Korean clichés debunked". The Guardian.
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