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DPRK defector discussed financial flows

Friday, July 3rd, 2009

Last week we mentioned the curious case of Kim Kwang Jin, a high-ranking defector who helped raise money for the North Korean government who is spending a year here in DC at the Committee for Human Rights in North Korea. This week he spoke to Fox News and painted a broad picture of the DPRK’s financial strategy:

Trim and sharply dressed, his bushy head of hair dyed jet black, the 42-year-old Kim, once an English professor at a computer college in Pyongyang, speaks polite and fluent English, albeit in a halting style and with a heavy accent.

An interview with FOX News in late June marked Kim’s first with an American TV news channel. Kim recounted his extraordinary experiences working for the Northeast Asia Bank and Korea National Insurance Corporation, where he handled accounts worth hundreds of million of dollars.

He described two economies in North Korea: one administered by the North Korean Cabinet and nominally oriented toward serving the needs of the people; and a “Royal Court economy,” financed by illicit enterprises worldwide and providing the stream of hard currency that keeps Kim Jong Il, and his cronies, ensconsed in power and luxury.

“Kim [Jong Il] himself enjoys a lavish lifestyle,” said Kim Kwang Jin. “He is giving gifts to his associates: the Mercedes-Benz[es] and whiskeys, first-class room and [air]fare from Japan. Everything’s provided to his aides….Kim Jong Il himself is now ruling the country with [the] dollar, hard currency….Without hard currency they cannot rule the country.”

Kim Kwang Jin described a society in which bankers demand bribes from clients, doctors from patients, professors and teachers from students.

“Everybody tries to make use of their position, their authority…to survive,” Kim said.

The former banker said the regime’s largest source of hard currency comes from the clandestine manufacture and sale of weapons of mass destruction. After that comes the regime’s multibillion-dollar insurance fraud business, in which the authorities stage arson and bogus accidents to collect multimillion-dollar payouts from international banks and insurers.

“The state — Kim Jong Il himself — controls all these funds,” said Kim Kwang Jin. “It is funneled to him. And then he’s using all these revenues according to his regime’s priorities, which are now the missile program and nuclear weapons development.”

Kim Kwang Jin believes the North Korean government has never negotiated in good faith with the United States and its allies at the Six-Party nuclear disarmament talks.

“The North Koreans are coming to the table not for negotiation; they are there for winning, for implementing their strategy,” he said. To grant meaningful concessions at such negotiations, or to enact meaningful internal reforms toward democratization, would, Kim says, be tantamount to “suicide to the regime.”

Yet Kim also believes financial sanctions can compel better behavior from Pyongyang, and cites as an example the Treasury Department’s targeting from 2005 to 2008 of Banco Delta Asia: a bank in Macau, also known as “BDA,” through which the North Korean regime once transferred large sums. It was during this period, when Banco Delta Asia faced international restrictions, that the North made its most far-reaching concessions in the Six-Party Talks, only to renege on them once the sanctions were lifted.

“The BDA case was a frightening thing to the regime,” Kim said. “It was a blow to [Kim Jong Il’s] personal funding, to the economic sector which is now supporting the regime. And even the national economy, the people’s economy run by [the] Cabinet, is influenced by this BDA case.

Here is his interview on Fox News via YouTube.

Read the full story here:
North Korean Defector Describes Inner Workings of Isolated Regime
Fox News
James Rosen
7/2/2009

Posted in Banking, Finance, Insurance, Korea National Insurance Corporation | 1 Comment »

UN, US, ROK, sanction DPRK arms companies–and partners

Tuesday, June 30th, 2009

On January 21, the day after the Obama administration took office, the White House approved certain trade sanctions–initiated by the Bush administration–to be printed in the Federal Register. These sanctions targeted specific Chinese, Iranian, and North Korean companies that the US believes were/are violating arms export regulations governing missile technology and other proliferation activities. [Read more, including Federal Register text, here]

After North Korea conducted a long-range missile test in April, the US pushed the UN Security Council to adopt a presidential statement which blacklists several additional North Korean firms. [Read more here].

After North Korea conducted a second nuclear test, in violation of UNSC resolution, the UNSC adopted a resolution which tightened sanctions on the DPRK. [Read more here]

In June, the South Korean government imposed sanctions on these DPRK companies for the first time [Read more here]

The US followed up the UNSC resolution by announcing an inter-agency team that will focus exclusively on enforcing DPRK sanctions [Read more here]

Today, the US Treasury Department announced it was targeting Hong Kong Electronics (Kish Island, Iran) [from where a former FBI agent is still missing] for supporting the balcklisted North Korean organizations. According to Market Watch:

The Treasury Department said Tuesday that it has targeted another player in North Korea’s missile proliferation network. The agency designated Hong Kong Electronics, located in Kish Island, Iran, for providing support to North Korea’s Tanchon Commercial Bank and Korea Mining Development Trading Corp. Those two firms have been targeted by the U.S. and the United Nations as part of North Korea’s nuclear proliferation network. “Today’s action is a part of our overall effort to prevent North Korea from misusing the international financial system to advance its nuclear and missile programs and to sell dangerous technology around the world,” said Stuart Levy, Treasury under-secretary for terrorism.

What does this mean? It means that any bank accounts or other financial assets found in the United States belonging to the company must be frozen. Americans also are forbidden from doing business with the firm. This probably does not amount to much economically, but is probably intended to discourage banks outside of the US from doing business with these firms.

UPDATE 1: It looks like the State Departmet is also going after a North Korean company believe to be involved in weapons proliferation today. According to a statement by the Treasury Department:

The U.S. Department of the Treasury today targeted North Korea’s missile proliferation network by designating Hong Kong Electronics under Executive Order 13382. E.O. 13382 freezes the assets of designated proliferators of weapons of mass destruction and their supporters and prohibits U.S. persons from engaging in any transactions with them, thereby isolating them from the U.S. financial and commercial systems. Hong Kong Electronics, located in Kish Island, Iran, has been designated for providing support to North Korea’s Tanchon Commercial Bank (Tanchon) and Korea Mining Development Trading Corporation (KOMID).

Tanchon and KOMID have also been designated by the United States under E.O. 13382 and the UN Security Council under Resolution 1718. The Department of State also today targeted North Korea’s nuclear proliferation network by designating Namchongang Trading Corporation (NCG), a North Korean nuclear-related company in Pyongyang, under E.O. 13382.

“North Korea uses front companies like Hong Kong Electronics and a range of other deceptive practices to obscure the true nature of its financial dealings, making it nearly impossible for responsible banks and governments to distinguish legitimate from illegitimate North Korean transactions,” said Stuart Levey, Under Secretary for Terrorism and Financial Intelligence. “Today’s action is a part of our overall effort to prevent North Korea from misusing the international financial system to advance its nuclear and missile programs and to sell dangerous technology around the world.”

Since 2007, Hong Kong Electronics has transferred millions of dollars of proliferation- related funds on behalf of Tanchon and KOMID. Hong Kong Electronics has also facilitated the movement of money from Iran to North Korea on behalf of KOMID. Tanchon, a commercial bank based in Pyongyang, North Korea, is the financial arm for KOMID – North Korea’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons.

Tanchon plays a key role in financing the sales of ballistic missiles for KOMID. Tanchon has also been involved in financing ballistic missile sales from KOMID to Iran’s Shahid Hemmat Industrial Group (SHIG), which is the Iranian organization responsible for developing liquid-fueled missiles. SHIG has been designated under E.O. 13382 and sanctioned by the United Nations under UN Security Council Resolution (UNSCR) 1737. Since 2005, Tanchon has maintained an active relationship with various branches of Iran’s Bank Sepah, an entity designated under E.O. 13382 and sanctioned by the United Nations under UNSCR 1747, for providing financial services to Iran’s missile program. The U.S. has reason to believe that the Tanchon-Bank Sepah relationship has been used for North Korea-Iran proliferation-related transactions.

Here is the press release by the State Department:

The U.S. Department of State today targeted North Korea’s nuclear proliferation network by designating Namchongang Trading Corporation (NCG) under Executive Order 13382. E.O. 13382 is an authority aimed at freezing the assets of proliferators of weapons of mass destruction and their supporters, and at isolating them from the U.S. financial and commercial systems. Entities designated under E.O. 13382 are prohibited from engaging in all transactions with any U.S. person and are subject to a U.S. asset freeze.

NCG is a North Korean nuclear-related company in Pyongyang. It has been involved in the purchase of aluminum tubes and other equipment specifically suitable for a uranium enrichment program since the late 1990s.

The Department of the Treasury also today designated Hong Kong Electronics, located in Kish Island, Iran, for providing support to North Korea’s Tanchon Commercial Bank (Tanchon) and Korea Mining Development Trading Corporation (KOMID). Tanchon and KOMID were designated by the United States under E.O. 13382 on June 28, 2005 and the UN Security Council under Resolution 1718 on April 24, 2009.

North Korea’s April 5, 2009 launch of a Taepo Dong-2 (TD-2) missile and May 25, 2009 nuclear test demonstrate a need for continued vigilance with respect to North Korea’s activities of proliferation concern. The designations add to continuing U.S. efforts to prevent North Korean entities of proliferation concern from accessing financial and commercial markets that could aid the regime’s efforts to develop nuclear weapons and the missiles capable of delivering them.

McClatchy has more here.

Posted in International trade, Iran, Korea Mining Development Trading Corporation (aka Kapmun Tosong, KOMID), Namchongang Trading Corporation, Tanchon Commercial Bank, UN, UN Security Council, USA | 1 Comment »

White House forms DPRK sanctions team

Sunday, June 28th, 2009

According to the Washington Post:

The White House is ramping up its efforts to enforce sanctions against North Korea by forming a new interagency team to coordinate U.S. actions with other nations, senior administration officials said today.

The new team will be led by former ambassador to Bolivia Philip S. Goldberg, who is slated to leave for China in the near future as the U.S seeks concerted action to stop the North Korean regime from developing nuclear weapons.

“There is a broad consensus about the need to have a focused and engaged effort to see that these sanctions are implemented … and that we’re sharing information with each other,” one official said, speaking on background.

U.S. officials described the new group as a way to focus the administration more squarely on implementation of the latest sanctions, which were approved by the United Nations in the wake of North Korea’s nuclear test last month.

The officials said they are hoping the group — with representatives from the State Department, the White House, the National Security Agency, Treasury and others — will help “shine a spotlight” on the actions of the regime.

“We wanted somebody who woke up every morning and thought about nothing but sanctions implementation,” one official said. “It’s a huge difference when you have somebody who isn’t worried about any of the other aspects of this.”

The White House also announced a renewed effort to use the authority of the U.N. resolution to take financial actions against the North Korean regime in an effort to choke off the money flowing from small arms trade and other activity.

Treasury officials have issued a public memorandum to private financial institutions reminding them of the global condemnation and other risks of doing business with the North Korean regime.

The letter warns that North Korean banks and institutions often use deceptive techniques to engage in financial transactions that could place legitimate financial firms at risk.

“Financial institutions should apply enhanced scrutiny to any such correspondent accounts they maintain, including with respect to transaction monitoring,” the letter states.

One senior official said the U.S. is confident that the financial sanctions will over time help to further isolate North Korea and pressure its leaders to abandon its nuclear program.

“It’s going to take time to have a bite,” he conceded. “But we’re trying to get out of the box quickly.”

The Bush administration also had a sustained effort to implement United Nations sanctions after North Korea first tested a nuclear weapon in 2006.

The Counterproliferation Directorate of the White House National Security Council coordinated the effort, while the State Department and Treasury also co-chaired an interagency effort to examine specific cases that eventually worked their way up the chain for approval.

A team of senior officials, led by the undersecretary of State for arms control, traveled to Asia to work closely with allies. But the effort was dropped after Bush shifted course and decided to pursue diplomacy with North Korea.

Their first stops: China then Malaysia.

Citations:
New North Korea Sanctions Team Formed
Washington Post
Michael D. Shear and Glenn Kessler
6/26/2009

U.S. North Korea sanctions team to visit Malaysia
Reuters UK
7/2/2009

Posted in Banking, Finance, Fiscal & monetary policy, International trade, Korea Ryongbong General Corp, USA | 1 Comment »

DPRK reinsurance update

Sunday, June 21st, 2009

In December 2008 this blog discussed how the DPRK’s Korea National Insurance Corporation (KNIC) received USD$58 million from several European reinsurance companies in a legal settlement.

Well, the Washington Post offers an update on how the money is being moved and even highlights the story of a defector who claims to be involved in the DPRK’s insurance racket:

For Kim Jong Il’s birthday, North Korean insurance managers prepared a special gift.

In Singapore, they stuffed $20 million in cash into two heavy-duty bags and sent them, via Beijing, to their leader in Pyongyang, said Kim Kwang Jin, who worked as a manager for Korea National Insurance Corp., a state-owned monopoly.

Kim said he helped arrange the shipment and watched in February 2003 as the cash was packed. After the money arrived, Kim Jong Il sent a letter of thanks to the managers and arranged for some of them to receive gifts that included oranges, apples, DVD players and blankets, Kim said.

“It was a great celebration,” he said.

The $20 million birthday present and the gratitude of its recipient, who is known as the Dear Leader, were annual highlights of a sophisticated global insurance fraud that North Korea has concocted to provide its communist leadership with hard currency, said Kim, who spent five years as an executive of the state insurance company in Pyongyang and worked for a year at its banking subsidiary in Singapore before defecting to South Korea.

The British court ruled the way it did [NKeconWatch: this might be an error as the court did not rule on the case–it was settled] because the reinsurance companies contractually agreed to be bound by the North Korean court system (which to nobody’s surprise systematically rules in favor of domestic agencies and firms). Since the western reinsurance firms could not prove that the DPRK was committing fraud, they had to pay up.

And how does this program work?

While working for North Korea’s insurance monopoly, Kim Kwang Jin said, he and other managers had a tightly focused mission: to find reinsurance companies and brokers in different parts of the world who would accept high premiums to reinsure KNIC’s policies.

Those policies, he said, usually covered losses from common North Korean disasters such as mining accidents, industrial fires, transportation crashes and crop losses due to floods.

“The major point of the reinsurance operation is that they are banking on disaster,” he said. “Whenever there is a disaster, it becomes a source of hard currency.”

According to Kim, KNIC would target a different potential disaster and a different reinsurance company each year. “We pass it around,” he said. “One year, it might be Lloyd’s; the next year, it might be Swiss Re; and the next, Munich Re.”

In London, the expert on the insurance industry familiar with the helicopter case echoed Kim’s assessment of how KNIC operated. He spoke on the condition of anonymity because he was not authorized by reinsurers to talk about the case.

“They pay good premiums, and they are very sophisticated, very clever,” he said. “They would divvy business up into very small bites and use different brokers in different places. The division of losses was such that it would never be apparent to a prospective reinsurer just how bad the business was.”

The North Koreans were known in the reinsurance industry for their capacity to prepare meticulously documented claims, speed them through puppet courts in Pyongyang and demand quick payment from international reinsurers. The North sometimes restricts the ability of reinsurers to dispatch investigators to verify claims.

The North Korean insurance monopoly sometimes took advantage of the geographical and political ignorance of brokers and reinsurers, according to the London-based insurance expert. Some brokers and companies, he said, thought they were dealing with a company from South Korea, while others were unaware that North Korea is a secretive totalitarian state with one of the world’s worst human rights records.

…

When he worked at KNIC, Kim said, annual revenue from North Korea’s reinsurance claims was about $50 million to $60 million. Most of that money, he said, was used to scout out potential disasters inside North Korea, to buy more reinsurance on the global market and to pay premiums.

“The remaining hard currency should have been used to help people recover from disasters and accidents, but it was not used that way,” Kim said. “It is just going into the pocket of Kim Jong Il.”

He said cash shipments of $20 million arrived yearly in Pyongyang, usually in the week before Feb. 16, which is Kim Jong Il’s birthday and a national holiday. In his six years at KNIC, Kim said, bags of cash arrived in Pyongyang from Singapore, Switzerland, France and Austria.

The money, he added, was delivered to an entity called Bureau 39 of the Korean Workers’ Party Central Committee. It was created by Kim Jong Il in the 1970s to collect hard currency and give him an independent power base, according to defectors, Seoul-based analysts and published reports. These sources agree that Bureau 39 spends foreign currency on luxury goods for the North Korean elite, components for missiles and other weapons programs.

With Bureau 39 skimming off hard-currency earnings returned to North Korea by KNIC’s global operation, Kim said, claims to disaster victims had to be paid in won, North Korea’s currency.

“That money is nearly worthless at present, because the economy has collapsed,” he said. “This means that little is done to help people recover from fires or whatever.”

But Kim Jong Il has been pleased with the state insurance company, Kim said.

“It brings him large amounts of hard currency,” Kim said. “Working in insurance is one of the best professions in North Korea. Many people want to do it.”

Mr. Kim is working in the Washington DC area this year with the Committee for Human Rights in North Korea.

Read the full artocle here:
Global Insurance Fraud By North Korea Outlined
Washington Post
Blane Harden
6/18/2009

Posted in Bureau 39, Finance, Insurance, Korea National Insurance Corporation, Minjok Insurance General Company | 5 Comments »

Tunnels, Guns and Kimchi: North Korea’s Quest for Dollars – Part II

Thursday, June 11th, 2009

Yale Global
Bertil Linter
6/11/2009

BANGKOK: The global economic meltdown has claimed an unexpected victim: North Korea’s chain of restaurants in Southeast Asia. Over the past few months, most of them have been closed down “due to the current economic situation,” as an Asian diplomat in the Thai capital Bangkok put it. This could mean that Bureau 39, the international money-making arm of the ruling North Korean Workers’ Party – which runs the restaurants and a host of other, more clandestine front companies in the region – is acutely short of funds. Even if those enterprises were set up to launder money, operational costs and a healthy cash-flow are still vital for their survival. And, as for the restaurants, their main customers were South Korean tourists looking for a somewhat rare, comfort food from the isolated North of the country. The waitresses, all of them carefully selected young, North Korean women dressed in traditional Korean clothing, also entertained the guests with music and dance.

But thanks to the global economic crisis, not only has the tourist traffic from South Korea slowed, the fall in the value of won has also reduced their buying power. The South Korean won plummeted to 1,506 to the US dollar in February, down from 942 in January 2008. No detailed statistics are available, but South Korean arrivals in Thailand – which is also the gateway to neighboring Cambodia and Laos – are down by at least 25 percent.

Though staunchly socialist at home, the North Korean government has been quite successful in running capitalist enterprises abroad, ensuring a steady flow of foreign currency to the coffers in Pyongyang. North Korea runs trading companies in Thailand, Hong Kong, Macau and Cambodia, which export North Korean goods – mostly clothing, plastics and minerals such as copper – to the region. At the same time, they import various kinds of foodstuffs, light machinery, electronic goods, and, in the past, dual-purpose chemicals, which have civilian as well as military applications. Those companies were – and still are – run by the powerful Daesong group of companies, the overt arm of the more secretive Bureau 39.

North Korea embarked on its capitalist ventures when, in the late 1980s and early 1990s, the country was hit by a severe crisis caused by the disruption in trading ties with former communist allies. More devastatingly, both the former Soviet Union in 1990 and China in 1993 began to demand that North Korea pay standard international prices for goods, and that too in hard currency rather than with barter goods. According to a Bangkok-based Western diplomat who follows development in North Korea, the country’s embassies abroad were mobilized to raise badly needed foreign exchange. “How they raised money is immaterial,” the diplomat says. “It can be done by legal or illegal means. And it’s often done by abusing diplomatic privilege.”

North Korea’s two main front companies in Thailand, Star Bravo and Kosun Import-Export, are still in operation. In the early 2000s, Thailand actually emerged as North Korea’s third largest foreign trading partner after China and South Korea.

Bangkok developed as a center for such commercial activities and Western intelligence officers based there became aware of the import and sale of luxury cars, liquor and cigarettes, which were brought into the country duty-free by North Korean diplomats. In a more novel enterprise, the North Koreans in Bangkok were reported to be buying second-hand mobile phones – and sending them in diplomatic pouches to Bangladesh, where they were resold to customers who could not afford new ones. In early 2001, high-quality fake US$100 notes also turned up in Bangkok and the police said at the time that the North Korean embassy was responsible as some of its diplomats were caught trying to deposit the forgeries in local banks. The North Korean diplomats were warned not to try it again.

The restaurants were used to earn additional money for the government in Pyongyang – at the same time, they were suspected of laundering proceeds from North Korea’s more unsavory commercial activities. Restaurants and other cash-intensive enterprises are commonly used as conduits for wads of bills, which banks otherwise would not accept as deposits.

For years, there have been various North Korean-themed restaurants in Beijing, Shanghai and other Chinese cities. But the first in Southeast Asia opened only in 2002 in the Cambodian town of Siem Reap. It became an instant success – especially with the thousands of South Korean tourists who flocked to see the ancient ruins of Angkor Wat. It was so successful that Pyongyang decided to open a second venue in the capital Phnom Penh in December 2003. A fairly large restaurant in the capital’s Boulevard Monivong, which offered indifferent Korean staple kimchi and other dishes and live entertainment by North Korean waitresses, closed earlier this year for lack of business.

In 2006, yet another Pyongyang Restaurant – as the eateries were called – opened for business in Bangkok. It was housed in an impressive, purpose-built structure down a side alley in the city’s gritty Pattanakarn suburb, far away from areas usually frequented by Western visitors but close to the North Korean embassy and the offices of its front companies in the Thai capital. This was followed by an even grander restaurant in Thailand’s most popular beach resort, Pattaya, which was also housed in a separate building with a big parking lot outside for tour buses. A much smaller Pyongyang restaurant opened in Laos’s sleepy capital Vientiane, but that one became popular not with South Korean tourists, but with Chinese guest workers and technicians. The Vientiane restaurant may be the only North Korean eatery that is still in operation.

After years of watching North Korea’s counterfeiting and smuggling operations, the United States began tightening the screws on Pyongyang’s finances in September 2005. This occurred after Banco Delta Asia, a local bank in Macau, was designated as a “financial institution of primary money-laundering concern.” The bank almost collapsed, and North Korea’s assets were frozen. The money was eventually released as part of an incentive for North Korea’s concession in the Six-Party talks and returned to North Korea via a bank in the Russian Far East. But, coupled with UN sanctions, the damage to North Korea’s overseas financial network was done – including the ability of Pyongyang’s many overseas front companies to operate freely. For example, the two-way trade between Thailand and North Korea peaked at US$343 million in 2006 – but then began to decline. It was down to US$100 million in 2007, and US$70.8 million in 2008.

Now with North Korea conducting a second nuclear test and firing off missiles, Washington has raised the possibility of the re-listing of North Korea as a state that supports terrorism. If that were to happen, many private companies would become hesitant to deal with Pyongyang and its enterprises for fear of being blacklisted by the US Treasury.

With its various money-making enterprises coming unstuck, Pyongyang is increasingly under pressure. The worldwide financial crisis has already put North Korea in a tight corner. There was never anything to suggest that the money earned by North Korea’s economic ventures abroad were to be used for social development at home, or to be spent on basic necessities such as putting food on the tables of the country’s undernourished people. Now, there won’t even be food for sale to South Korean tourists in the region.

Posted in Bureau 39, Cell phones, Counterfeiting, Drug smuggling, International trade, Kosun Import-Export, Restaurants, Star Bravo, Thailand | Comments Closed

South Korea sanctions DPRK firms

Tuesday, June 9th, 2009

Earlier this year the UN Security Council issued a Presidential Statement in response to the DPRK’s April rocket (missile) test. In the Presidential Statement, three North Korean firms were blacklisted–Korea Mining Development Trading Corporation, Tanchon Commercial Bank, and Korea Ryongbong General Corporation–all of whom are suspected of having ties with the North’s missile and nuclear programs.

According to Yonhap, the South Korean government has also blacklisted these firms, though no South Korean firms have realtions with any of them:

This is the first time that South Korea has imposed financial sanctions on a North Korean company in relation to Pyongyang’s ballistic activity, the ministry said.

The ministry said that it will consider taking additional measures if the U.N. comes up with separate actions against the North for conducting its second nuclear test on May 25.

Read the full sotry here:
Seoul slaps sanctions on N. Korean firms for missile test
Yonhap
Koh Byung-joon
6/9/2009

Posted in Korea Mining Development Trading Corporation (aka Kapmun Tosong, KOMID), Korea Ryongbong General Corp, South Korea, Tanchon Commercial Bank | 2 Comments »

UNSC blacklists three DPRK companies

Friday, April 24th, 2009

In response to the DPRK’s rocket launch, the UN Security Council issued a presidential statement containing the following:

The Security Council reiterates that the DPRK must comply fully with its obligations under Security Council resolution 1718 (2006).

The Security Council demands that the DPRK not conduct any further launch.

The Security Council also calls upon all Member States to comply fully with their obligations under resolution 1718 (2006).

The Security Council agrees to adjust the measures imposed by paragraph 8 of resolution 1718 (2006) through the designation of entities and goods, and directs the Committee established pursuant to resolution 1718 (2006) to undertake its tasks to this effect and to report to the Security Council by 24 April 2009, and further agrees that, if the Committee has not acted, then the Security Council will complete action to adjust the measures by 30 April 2009.

(Read the full text of the statement here)

Today the Security Council followed up this statement (and resolution 1718) by voting to blacklist three North Korean companies. According to Reuters (via the Washington Post):

The North Korea sanctions committee met a Friday deadline set by the Security Council on April 13 to produce a list of goods and North Korean entities to be blacklisted under Security Council resolution 1718, passed after Pyongyang’s October 2006 nuclear test.

The three companies put on the list are Korea Mining Development Trading Corp., Korea Ryongbong General Corp. and Tranchon (Tanchon) Commercial Bank, according to a copy of the committee’s decision obtained by Reuters.

The decision said the three companies were linked to the military and active in procuring equipment and financing for North Korea’s ballistic missile and other weapons programs.

The blacklisting prohibits companies and nations around the world from doing business with the three firms, but the impact of the action might be largely symbolic.

One Western diplomat said the three blacklisted firms had subsidiaries that also would be subject to U.N. sanctions.

Committee members also decided to ban the import and export of items on an internationally recognized list of sensitive technologies used to build long-range missiles capable of delivering weapons of mass destruction.

The US imposed sanctions on three North Korean companies in the Federal Register earlier this year. Of these three companies, one has made the UNSC list: the Korea Mining and Development Corporation. I can only speculate as to the fate of the other two mentioned in the US Federal Register, Mokong Trading Corporation and the Sino-Ki company.

Read more below:
UNSC Presidential Statement

U.N. committee puts 3 North Korea firms on blacklist
Reuters (via the Washington Post)
Louis Charbonneau
4/24/2009

Posted in Korea Mining Development Trading Corporation (aka Kapmun Tosong, KOMID), Korea Ryongbong General Corp, Mokong Trading Corporation, Sino-Ki, Tanchon Commercial Bank, UN, UN Security Council | 2 Comments »

Art in the DPRK

Wednesday, April 22nd, 2009

The Art Newspaper published an interesting piece on how artists are trained and art is produced in the DPRK.

On artistic training:

All DPRK artists are members of state-run studio complexes where the art is actually created, and every artist has a formal ranking. These start at level C, move up through B and A, followed by “Merited Artists”, then “People’s Artist”. There are around 50 “Merited Artists” still working today and perhaps 20 “People’s Artists”, the best known being Son U Yong, Kim Chun Jon, Jong Chang Mo, Li Chang and Li Gyong Nam. Almost all artists working in oil and brush-and-ink are men but there are exceptions—for example Kim Song Hui, well known for her brush-and-ink work, is also a People’s Artist. There is also the Kim Il Sung Prize but artists normally have to be at least over 50 to receive this highest accolade, the most famous recipient being Jong Yong Man.

The top art institute is the Pyongyang University of Fine Art with various sections: brush-and-ink, oil, sculpture, ceramics, mural painting and industrial arts. Young artists are selected from around the country and if they are judged sufficiently skilled they will study here. Pyongyang University requires a minimum of five years study: at the moment there are 7-10 students studying oil painting and around 20 studying Korean brush-and-ink painting. In total there are around 150 students a year in the fine art department. Students enjoy class outings to local factories and much time is devoted to object and life drawing although not with nude models but, for example, girls in swimming costumes.

After finishing university the students are selected by various art studios—the Paekho or Central Art Studio, the Songhwa established in 1997 for retired artists, and the most active studio-compound, the Mansudae in Pyongyang.

On artistic style:

The art itself looks like classic Social Realist propaganda, that Beaux Arts technical tradition received through Russia, maintained by the Soviet Union and now, with the transformation of China, only being practised in North Korea, unchanged for more than 50 years. Abstract painting does not exist as it is deemed bourgeois and anti-revolutionary, and if some representational art can be purely aesthetic without political overtones, many landscapes do portray places of the revolution or of political significance.

Obedience to the ideology and excellence in its clear communication to others are what matter rather than any individual glory. This ensures an anonymity to much DPRK production that only its cognoscenti can penetrate. Experts can not only assign an artist’s name to a work, they can also determine whether it is an “original” or one of endless “copies” of an image.

Ever since the founding of the state in 1948, certain themes have maintained their place in the officially approved iconography of the “Fatherland” and it is hard to establish which artist first produced a specific image and when. These same images can be reproduced countless times over the decades. Thus much detective work is required to trace the origin of an image, the only real source being the annual “Yearbook” cataloguing official production.

As [Nick] Bonner explains: “The skill level is very high in academic drawing and painting, but the production is massive and it’s hard to find ‘pure’ pieces, you have to know the provenance or where things were first found.” Indeed, even the museums display copies, ostensibly to “preserve” the quality of the originals kept in storage.

More information on the Mansudae Art Company:

Here visitors, especially foreign tourists, are welcome to see the artists working in their small studios, watch the instructional video on the operation of the company, and buy some work from the large gift shop. Prices at the very top end for a “People’s Artist” can reach as high as €15,000, the favoured currency for all foreign transactions.

Woodblocks are a North Korean speciality, though nowadays they have been almost entirely replaced by lino prints with an attractive rich ink finish. The first ever exhibition of such prints in the United States, loaned from Bonner’s collection, opened last year at New York’s Korea Society, which is currently touring through the country. Initial editions are often very small, less than ten, but if the image proves popular the lino is either re-cut by the same artist or by a “copy” artist and signed by him.

At Mansudae there are also small-scale ceramic sculptures available, naturally of a propagandist nature, as well as more classical ceramics. There is even a startlingly realistic sculpture, reminiscent of Duane Hanson, of North Korea’s most famous ceramicist Uchi Soun (1919-2003) and examples of his widely-exhibited work for as much as €10,000 a pot. There are also striking large-scale figurative watercolours on paper and the highest-quality work, local ink paintings called “Chosonhwa”, some of which will be “thematic art” on revolutionary themes, as each artist will produce at least one a year for the state to show his support for the country. Mansudae employs some 150 of these ink-artists, compared with perhaps 60 oil painters. With some 1,000 members Mansudae produces at least 4,000 top level original works a year, though it also has a factory-style section producing copies for western hotels. Employees, who work a five day eight-hour week, are paid, dependent on level, at a similar rate to the national average, €35 a month for a worker and €70 for a technician.

More information on art in the DPRK:

1. The Paekho Art Studio has partnered with Felix Abt to sell their art internationally. Their web page is here. The Mansudae Art Studio also launched a web page (click here).

2. Nick Bonner has a huge collection of North Korean art. I have seen quite a bit of it, and it is impressive. He also sells North Korean art through the Pyongyang Art Studio.

3. There are a couple of books on North Korean Art. They are very different: North Korean Posters: The David Heather Collection and Art Under Control in North Korea.

4. (h/t Werner) The Mansudae Overseas Development Group, which has been building monuments and buildings across the developing world (mostly in Africa) is part of the Mansudae Art Studio.

Read more below:
Inside the Democratic People’s Republic of North Korea
The Art newspaper
Adrian Dannatt
3/18/2009

Posted in Art, Koryo Tours, Mansudae creative Company (art studio), Mansudae Overseas Development Group | 2 Comments »

European insurers and LinkedIn nervous about the Swiss

Friday, March 20th, 2009

Over the last few years, the European Union has pursued an engagement policy with North Korea. MEP Glyn Ford makes regular trips to Pyongyang to facilitate diplomatic progress; the German Freidrich Naumann Foundation runs economic education courses; European donors founded the Pyongyang Business School; and a small group of European ex-pat businessmen formed a de facto chamber of commerce, the European Business Association in Pyongyang. Although European companies have experienced mixed success in the DPRK they continue to look for new opportunities.

This morning, however, Felix Abt, a Swiss director of the PyongSu Pharmaceutical Joint Venture Co. in Pyongyang informs me that his life insurance policy (purchased from a European company) has been cancelled.

“A European life insurance company cancelled my life insurance because I am a dangerous person living in a dangerous country. Credit card organisations cancel credit cards for such persons in such countries, health insurance companies come up with other reservations and limitations and the latest organisation that has just expelled me is LinkedIn with a very curious explanation.”

I am unsure how the cancellation of life insurance policies could impact other Europen investments in the DPRK, but the marginal effect cannot be positive. Mr. Abt has been a resident of Pyongyang for years where he manufactures Western-quality pharmaceuticals. Needless to say, the DPRK is very much in need of his services, so it is a shame that after all this time he is now considered a liability by his insurer.

Mr. Abt also forwarded his rejection from the business networking site LinkedIn, which is posted below:

Apparently LinkedIn‘s legal department considers logging into the server as “receiving goods of US origin” (the software I presume), and so it prohibits account holders, or even logging in, from Cuba, Iran, North Korea, Sudan and Syria—even if they are Swiss.

Posted in Economic reform, EU, European Business Association, Foreign direct investment, GPI Consultancy, Health care, Manufacturing, Pharmaceuticals, PyongSu Pharma, USA | 6 Comments »

North Korea Google Earth

Wednesday, March 11th, 2009

North Korea Uncovered v.16
Download it here

The most recent version of North Korea Uncovered (North Korea Google Earth) has been published. Since being launched, this project has been continuously expanded and to date has been downloaded over 32,000 times.

Pictured to the left is a statue of Laurent Kabila of the Democratic Republic of Congo. This statue, as well as many others identified in this version of the project, was built by the North Koreans. According to a visitor:

From the neck down, the Kabila monument looks strangely like Kim Jong Il: baggy uniform, creased pants, the raised arm, a little book in his left hand. From the neck up, the statue is the thick, grim bald mug of Laurent Kabila (his son Joseph is the current president). “The body was made in North Korea,” explains my driver Felix. In other words, the body is Kim Jong Il’s, but with a fat, scowling Kabila head simply welded on.

This is particularly interesting because there are no known pictures of a Kim Jong il statue. The only KJI statue that is reported to exist is in front of the National Security Agency in Pyongyang. If a Kim Jong il statue does in fact exist, it might look something like this.

Thanks again to the anonymous contributors, readers, and fans of this project for your helpful advice and location information. This project would not be successful without your contributions.

Version 16 contains the following additions: Rakwon Machine Complex, Sinuiju Cosmetics Factory, Manpo Restaurant, Worker’s Party No. 3 Building (including Central Committee and Guidance Dept.), Pukchang Aluminum Factory, Pusan-ri Aluminum Factory, Pukchung Machine Complex, Mirim Block Factory, Pyongyang General Textile Factory, Chonnae Cement Factory, Pyongsu Rx Joint Venture, Tongbong Cooperative Farm, Chusang Cooperative Farm, Hoeryong Essential Foodstuff Factory, Kim Ki-song Hoeryong First Middle School , Mirim War University, electricity grid expansion, Tonghae Satellite Launching Ground (TSLG)” is also known as the “Musudan-ri Launching Station,” rebuilt electricity grid, Kumchang-ri suspected underground nuclear site, Wangjaesan Grand Monument, Phothae Revolutionary Site, Naedong Revolutionary Site, Kunja Revolutionary Site, Junggang Revolutionary Site, Phophyong Revolutionary Site, Samdung Revolutionary Site, Phyongsan Granite Mine, Songjin Iron and Steel Complex (Kimchaek), Swedish, German and British embassy building, Taehongdan Potato Processing Factory, Pyongyang Muyseum of Film and Theatrical Arts, Overseas Monuments built by DPRK: Rice Museum (Muzium Padi) in Malaysia, Statue de Patrice Lumumba (Kinshasa, DR Congo), National Heroes Acre (Windhoek, Namibia), Derg Monument (Addis Ababa, Ethiopia), National Heroes Acre (Harare, Zimbabwe), New State House (Windhoek, Namibia), Three Dikgosi (Chiefs) Monument (Gaborone, Botswana), 1st of May Square Statue of Agostinho Neto (Luanda, Angola), Momunment Heroinas Angolas (Luanda, Angola), Monument to the Martyrs of Kifangondo Battle (Luanda, Angola), Place de l’étoile rouge, (Porto Novo, Benin), Statue of King Béhanzin (Abomey, Benin), Monument to the African Renaissance (Dakar, Senegal), Monument to Laurent Kabila [pictured above] (Kinshasa, DR Congo).

Posted in Agriculture, Architecture, Art, Automobiles, Aviation, Banking, Coal, Communications, Computing/IT, Construction, Dams/hydro, Education, Electricity, Energy, Environmental protection, Figure skating, Film, Finance, Fiscal & monetary policy, Food, Football (soccer), Forestry, Gambling, Gasoline, General markets (FMR: Farmers Market), Golf, Google Earth, Health care, Hoteling, Hwanggumphyong and Wihwado Economic Zones (Sinuiju), Intranet, Kaesong Industrial Complex (KIC), Leisure, Library, Light Industry, Mansudae Overseas Development Group, Manufacturing, Mass games, Military, Mining/Minerals, Mt. Kumgang Tourist Special Zone, Music, Nuclear, Oil, Pyongyang Metro, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Real estate, Religion, Restaurants, Sea shipping, Special Economic Zones (Established before 2013), Sports, Telephones, Television, Tourism, Transportation, Water, Wind | 10 Comments »

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