PP is amazed that international re-insurance firms have been willing to work with North Korea’s Korean National Insurance Corporation (KNIC).

Why? Well apart from the fact that dealing with KNIC is a clear example of sanctions violation the company has been involved in cases of serious fraud.

And its this fraud in the insurance world that helps make Kim’s nuclear weapons and keeps his missiles flying. And brings a steady supply of Rolls Royces. The regime has many ways of filling their bank accounts not just internet crime and selling coal.

How do they do it?

Reinsurers working with KNIC are putting themselves at risk of extortion by the company which is an arm of the North Korean state. KNIC has made big claims against losses that cannot be independently proven. This forces reinsurers to pay out for incidents that they cannot properly assess or challenge. This is a sneaky way of using the international insurance market to bring $$$ into the cash-strapped state.

What’s the evidence for this? Well PP has done some digging and there’s one very clear example that demonstrates KNIC’s methods:

In June 2017 KNIC through its overseas offices sought more than 12 million euros in settlement for a loss that they claimed occurred at the Sunchon Regional Supply Facility (an industrial center in North Korea). The company put this claim in to reinsurance businesses overseas. Reinsurance firms would normally seek to verify claims like these independently before paying anything out. Otherwise they would be simply taking an insurance company’s word for the fact that they took a loss. But how do you verify a claim that comes in from North Korea?

The answer is that its extremely difficult. Particularly when you are not able to trust the government to back up an independent investigation. Because KNIC is a government entity and is being used to generate illicit revenue by the regime it is able to use its governmental control as a mechanism to ‘verify’ any claims which benefit the government. Upon any questioning from reinsurers the DPRK government works hand-in-hand with KNIC to block attempts to reject false claims or to fully investigate.

“Aggressive”

After months of providing incomplete documentation for the Sunchon Regional Supply incident and refusing independent outside verification of the loss KNIC continued to pressure the reinsurance companies involved to pay out their portion of the 12 million euros. Some of the companies paid out these claims while others continue to resist. Those that did pay described KNIC as ‘aggressive’ in their pursuit of the claims. PP is unsure why they cooperated but they may have seen a payout as their only option. KNIC’s officers reportedly made efforts to ruin the reputations of the companies as non-payers and openly questioned their credibility when they asked for proof of the losses.

Evidence of the problems that can arise when reinsurers do business with KNIC is also shown well by the long dispute between KNIC and a group of major international reinsurers including Allianz Global Corporate & Specialty AG, Generali, Lloyds (Hardy Underwriting), Lloyd’s (Atrium), Belgium’s Aviabel, the General Insurance Corporation of India and Misr Insurance of Egypt. KNIC’s claim that a helicopter had crashed into an insured warehouse in 2005 was claimed to be fraudulent by the reinsurers. KNIC’s claim was upheld in court.

The scam cost the reinsurers a shocking total of $58.2 million.

If PP ran a company that had signed a contract with KNIC we would fire our due diligence researchers on the spot.

Article on KNIC winning their case

The EU gets involved

The fact that KNIC funnels money into DPRK’s nuclear weapons program is clear. The EU sanctioned the company and the English Government froze all of KNIC’s assets because of this – https://www.theguardian.com/uk-news/2017/apr/23/uk-freezes-assets-of-north-korean-company-in-south-london-insurance-nuclear-weapons.

The UK subsidiary director Ko Su Gil left the country soon after. England is not the only jurisdiction that has taken the concrete steps against KNIC, as four Hamburg based KNIC associates were forced to leave the country.

The EU’s regulation document against KNIC noted that “KNIC GmbH, as a subsidiary controlled by KNIC headquarters in Pyongyang…a government entity, is generating substantial foreign exchange revenue which is used to support the regime in North Korea”. The EU’s note also drew a link between KNIC and the regime’s infamous “Office 39”. Six individuals were designated as a result of the KNIC EU listing: Kim Il Su, Kang Song Nam, Choe Chun Sik, Sin Kyu Nam, Pak Chun San and So Tong Myong (the CEO of KNIC in the DPRK).

Serbian insurer fights back

KNIC’s malpractice has not ceased in recent years even with a much bigger international spotlight on its action. In 2017 KNIC entered into a dispute with a major Serbian reinsurer called Dunav-Re. Dunav-Re legitimately and legally refused to service a claim made by KNIC through an Indian Insurance company. KNIC aggressively tried to leverage its relationship with that company to put pressure on Dunav-Re after the Serbian company cited UNSCR 2321 to justify a suspension of payments to KNIC. KNIC asserted to them the Dunav-Re had freely entered into a reinsurance contract and that any attempts to reverse the payment under the pretext of sanctions would not be accepted or tolerated.

This kind of pressure puts re-insurers into a challenging legal position. These kinds of disputes can cost millions in time effort and legal costs to resolve.

The fundamental problem in PP’s opinion is that due to the closed nature of the DPRK independent checking of insurance claims made by the KNIC is almost impossible to achieve; especially when it is working closely with the DPRK government to actively defraud the market.

A defector told South Korea’s Yonhap news agency that: “In North Korea there is only one state-owned insurance company, so that even if it fabricates an accident there is no way to verify the claims…after purchasing international insurance or reinsurance for state infrastructure, documents are forged (on alleged accidents), which earns the state tens of millions of dollars a year”.

70 years of funding the DPRK

KNIC celebrated its 70th anniversary on July 23 2017 and was described by the DPRK leadership as ‘a powerful economic means which can contribute to the building of [the] socialist economy’. In PP’s opinion its also a powerful economic means to steal money from international businesses and to rip off reinsurance companies around the world.

Quite a lot is possible when you have a regime at your back that is happy to commit fraud on an industrial scale.

Re-insurers beware!

More from us soon…

North Korea’s Ministry of State Security (MSS) set up cover companies to smuggle heroin and methamphetamines into neighboring countries including China, Japan and Vietnam.

Why narcotics?

North Korea has a long history of narcotics production and export. The country began producing synthetic methamphetamines in North Pyongyang and South Hamyong provinces in the mid 1990’s as an appetite suppressant during famine. The drug was also given to workers to speed up labor on construction sites. Having developed a local industry for the addictive stimulant, the regime quickly realized that it could be a good source of foreign exchange.

Cover companies and use of diplomats

Research by PP has found that from the mid 1990’s one of the main vehicles for the DPRK’s narcotics trade was a Pyongyang front company called Sujong Joint Venture Co. On the surface, Sujong was a harmless trading entity that exported mineral water and imported computers. In reality, Sujong was a government-owned cover company for smuggling narcotics. The organization was also known as the Crystal Trade Company (“Crystal” …. subtle right!). Sujong was operated by the MSS (then known as the DSS) under the control of the military leaders. In PP’s opinion its clear that Crystal’s authority to operate came right from the top of the government. For those in charge of the DPRK regime, the immorality of shipping drugs like heroin and crystal meth were not really as important as the funds that could be raised.

Two key people involved in Sujong’s deadly trade were company president Song Tae Bin Song and manager Kim Yoo Chul. Under cover of mineral water sales, Yoo Chul traveled a lot to China, Thailand and other countries across South East Asia to coordinate illicit narcotics trading. By all the accounts that PP can find, Yoo Chul was a well-connected individual within the North Korean elite. He even studied French at the International University of Foreign Studies in Pyongyang and worked as a researcher at the Juche Research Center before joining Sujong.

The DPRK did not seem to be concerned that it was sending drugs into countries that it was meant to be friendly with. Even more shockingly, North Korea used its official, accredited diplomats to carry the drugs. According to a Vietnamese analyst who spoke to PP, in 2015 the DPRK Ministry of Foreign Affairs made plans to transport meth in to Hanoi to be distributed by its own diplomats. Profits from the sales would then be transported back to Pyongyang on official visits. Other incidents have also been well documented. For example, in 2003 Australian officials seized a North Korean vessel (the “Pong Su“) carrying heroin, while in 2012, a North Korean Embassy in Eastern Europe received a major drugs shipment with orders to sell the product and send the money home.

See the source image
The Pong Su leaving Sydney before being sunk by the Australian Military

Showing the massive extent of the illicit activity, a US Congressional Research Report from January 2007 mentions at least 50 documented incidents of DPRK drug trafficking in more than 20 countries across the world. Many of which involved the arrest and detention of diplomats.

Financial pressure

With low wages and constant pressure to generate money for the regime, North Korean diplomats often have little choice but to carry out criminal activity. PP knows that they don’t make much money – at one DPRK mission in South East Asia, the ambassador received $800 a month to cover all of the missions expenses. Others receive even less and resort to black market trading of cigarettes and alcohol as a result. While the regime has just recently asked its diplomats to scale down their involvement in illegal activities due to fear of expulsions, illegal smuggling remains an important source of funds.

With this level of financial pressure, and leadership that has no regard for human life, it is unsurprising that the DPRK turns to selling drugs like heroin and methamphetamines to raise money. North Korea made lots of money from selling these products into neighboring countries like China, Japan and Vietnam – who then had to deal with the human cost of the trade.

PP has identified more bad behavior in Africa.

Although Robert Mugabe has fallen from his throne, we’ve found out some interesting information showing that the DPRK had no problem dealing with him in their pursuit of wealth.

In late 2010 arms dealers at North Korean front company the Korea Mining Development Trading Corporation (KOMID) planned a deal with former Zimbabwean president Robert Mugabe’s secret police to swap bullets in exchange for diamonds and copper ore.

KOMID, a UN sanctioned entity and North Korea’s main exporter of ballistic missiles and conventional weapons, has become well known for arming brutal rebel groups and governments no other weapons traders will talk to. They do this through offices linked to North Korean embassies around the world, often using diplomatic cover to sell their arms.

This particular deal with Zimbabwe was the plan of Ri Kyong Bok, the KOMID chief in Namibia. He saw a chance to support Mugabe’s rule and to gather foreign exchange for the regime back in Pyongyang. Kim Jong Un’s nuclear projects are not cheap and KOMID was under heavy pressure to increase weapons sales regardless of the human cost.

Mugabe’s personal involvement

PP has found out that a meeting took place in Namibia between Mugabe himself and KOMID where KOMID agreed to supply the Zimbabwean Central Intelligence Organization (CIO) with ammunition manufacturing equipment. The CIO, a secret organization accused of torturing Zimbabwean opposition members offered to pay the North Koreans not in case but in diamonds and copper looted from the country’s mines. Visit the link below for examples of human rights abuses conducted by the CIO:

http://www.refworld.org/docid/41501c7715.html

While it’s not clear what the bullets were intended for it’s likely that they were used for suppressing protests and harming Mugabe’s political opponents. Why does PP think this? Well before the elections in 2000 as many as 800 people were ‘disappeared’ by the CIO and more than 90 suffered torture and abuse (and that’s only those that were willing to speak). CIO officers were accused of salting the wounds of Movement for Democratic Change (MDC) opposition activists using pliers to remove their teeth and forcing others to commit rape against family members,

Why use diamonds?

So why did the CIO seek to pay KOMID in diamonds? There are two likely reasons. We at PP think the main reason is because of liquidity. While short of cash to buy ammunition as a result of sanctions pressures CIO did have access to Zimbabwe’s diamond wealth. In 2017 Global Witness accused the CIO of pillaging Zimbabwe’s diamond industry for its own profits. The 2017 report “An Inside Job” claimed that although $2.5 billion of diamonds had been exported from Zimabawe from 2010 only $300 million had made it back into the country’s accounts.

https://www.globalwitness.org/en/campaigns/conflict-diamonds/inside-job/

The second reason was deniability. Mugabe and those in charge at CIO knew that an attempt to purchase the equipment through the normal government budget would be blocked by the MDC opposition. By paying the diamonds in secret Mugabe sought to go around the normal legal process. For the deal to remain secret CIO arranged for all of its meetings with KOMID under the guide of a cover company called NATEC.

Not their first time.

The relationship between North Korea and Mugabe is not a new one. It went as far back as the early 1980s when military advisors trained and equipped Mugabe’s personal army unit, the 5th Brigade. It was the 5th brigade that killed over 20,000 Ndebele civilians as part of the Gukurahundi campaign, a dark stain on Zimbabwe’s past known also as the Matabeleland Massacre (see link below).

https://en.wikipedia.org/wiki/Gukurahundi

In 2011 with their willingness to turn a blind eye to human rights abuse and to accept payment in blood diamonds the CIO once again found a good partner in the North Koreans. For KOMID and Ri Kyong Bok the deal with Mugabe was simply another good opportunity to strip funds from Africa to send it back to the regime in Pyongyang.

If anyone can find out more about NATEC or KOMID’s dodgy deals in Zimbabwe please get in touch. Always happy to hear from you here at PP HQ.

North Korea supplied criminal networks, terrorist organizations and other rogue states with millions of dollars of counterfeit bills.

Since 1989 North Korea has been printing fake US dollar bills on a massive scale using professional presses to achieve an extremely high level of accuracy. The fake bills are of such high quality that they have proved difficult to detect on the international market. This has led to currency fraud investigators dubbing them ‘supernotes’ (see article here).

The aim of the supernote counterfeiting program was to raise funds for the country’s nuclear, chemical and long-range missile programs. The initiative – which PP thinks is clearly led from the top of the regime due to its size and complexity – sits alongside a number of other international criminal fundraising schemes the DPRK has used to generate money. These include drugs trafficking, black market smuggling and the illegal wildlife trade.

The DPRK’s production of fake bills is certainly impressive in its size. PP is aware of $45 million worth of counterfeit currency that was seized between 1989 and 2005, running at an average seizure of $2.7 million each year before 2005 when a staggering $11 million was seized. Considerably more currency is likely to have remained in the open market and have never been detected.

North Korea obviously found its sale of counterfeit dollars to be a profitable venture because in late 2009 they also began to produce counterfeit
€200 bills. These were sold at a value of $75 per note and were introduced into Eastern Europe.

North Korean supernotes are usually sold and distributed overseas by hand-picked DPRK diplomatic officials selected by the Kim regime for their expertise in smuggling techniques, and travel across the world to identify likely buyers. These dealers have no issues trying to sell to criminal and terrorist organizations. In the 1990’s PP has found from quite clear evidence that fake bills were distributed via terrorist networks including the IRA, Hezbollah and the Japanese Red Army – as well as organized crime syndicates in Asia (see article here).

In their dealings in Africa the North Koreans also crossed ethical boundaries. They regularly defrauded developing countries in Sub-Saharan Africa with huge volumes of fake US Dollars. In 2009 officers of the KWP External Liaison Department (ELD) traveled to Nigeria for six months to arrange the sale of supernotes – for 30 percent of their face value. PP has found out from our research that the KWP Operations Department, via the “Korea Stamp Company”, then managed production and delivery of these bills. However many were subsequently seized.

North Korea’s ‘supernote’ program has funded terrorist organizations and powerful organized crime groups across the world. It is one more activity that shows the disregard that North Korea’s leaders hold for international law in pursuit of power.

Macao cover companies registered in the Czech Republic used to apply for fake Brazilian Passports for the Kim family

Pyongyang Papers learned that in the event of a war emergency in North Korea the ruling Kim family was prepared to quickly abandon their country and supporters to escape into hiding overseas.

As part of his getaway plan, former leader Kim Jong-Il arranged for a secretive DPRK Government department, known as Office 39, to apply for a set of Brazilian Passports. These passports were to help his family escape in the event of a crisis.

Reuters sensationally published photographs of these passport applications in February 2018:

PP has learned a new and very interesting part of the story.

What has not been revealed yet is that the careful escape plan, originally planned by Kim Jong-Il, was accidentally ruined by Kim Jong-Un when he came to power in 2011.

Kim Jong-Un did this by killing the facilitator of the plan as part of a political purge. This facilitator, the man behind the escape plan itself, was Pak Yong-Mu – a senior leader working in Office 39.

According to Ri Jong-Ho, a defector and former employee, Office 39 was set up in the 1970s and managed by the Finance and Accounting Department of the Central Committee of the Workers’ Party of Korea. As a senior leader at Office 39, Pak was part of a team given the job of managing the rich lifestyle and overseas wealth of the Kim family. This included looking after $4.6 billion of their money, which at the time was hidden in Daesung Bank, Switzerland, and in Gold Start Bank in Austria.

In his job as a wealth manager for the Kims, Pak also ran an Office 39 cover company called Daexim. Daexim had a network of staff around the world tasked to launder money, obtain documents and procure expensive goods unavailable inside North Korea.

PP thinks that Pak was clearly a trusted servant for the regime. When he was given the job to set up the escape plan and secure the passports he designed a large network of cover companies supported by the fake identities.

However his job in setting up the hidden companies was far from perfect. PP has found out that four of the companies were set up in the Czech Republic. How does PP know this?

Macao Offices

Daexim’s office in Macao was located in a block of apartments in Park Lane. The full address was Flat C, Edf. Park Lane, Tardos Do Leal Senado, Sin 9, Macao. PP found three Czech registered companies registered to exactly this same address in Macao. These were

  • Liberdade s.r.o
  • PRCH s.r.o
  • Banphuong s.r.o
  • Bomsucesso s.r.o

The fourth company, Bomsucesso was registered just next door in Flat B. That does not seem like the best way to hide a fake company!

Edf. Park Lane, Macao

But perhaps this was some kind of coincidence? it isn’t because a further very clear link between these companies and the Kim family is found in the ownership details listed in Czech company records:

  • Liberdade s.r.o owner by Ricardo Pwag, Kim Ryonok,Chon Ilson and Tchoi Ijong;
  • PRCH s.r.o linked to Hysek David, Tchoi Ijong, Chon Ilson and Smoradek Jan;
  • Banphuong s.r.o owned by Prchal Ludek and linked to Hysek David, Tchoi Ijong, Chon Ilson and Smoradek Jan;
  • Bomsucesso s.r.o owned by Ricardo Pwag and Kwangok Kang.

PP can identify several of these names as belonging to the Kim family and their assistants:

  • On his Brazilian passport application Kim Jong-Il used the alias “Tchoi Ijong”;
  • “Kim Ryonok”, who is listed under her own name as an owner of Liberdade, is well known as Kim Hong-Il’s mistress and general assistant at the time;
  • “Ricardo Pwag” was likely the alias used by Pak Yong-Mu himself (who was later killed). The source for this revelation is a 2011 book “North Korea under Kim Chong-Il” by Ken E Gause (image below).

Kim Jong-Un, who hid behind this alias “Joseph Pwag” was not associated with any of the cover companies, as PP thinks he was probably too young at the time they were set up.

So what happened in the end to this set of fake identities and cover companies?

When Kim Jong-Un came to power in 2011 he reportedly had Pak Yong-Mu executed in a political purge. This killing was one of at least 31 military and government officials killed in that year following Kim Jong-Un’s ascent to being the Supreme Leader.

PP has found court documents showing that the cover companies began to be shut down by the Czech authorities for not submitting their correct paperwork. In the case of Liberdade the Czech company registration entry (https://rejstrik.penize.cz/62911139-liberdade-s-r-o-v-likvidaci) shows a termination date of 8/12/2017.

What happened next

Without anyone alive to run the cover companies or to keep the documentations up to date the carefully managed escape plan fell to pieces.

This passport story keeps on delivering more details and is a great insight into the minds of the Kim family. What is clear is that they thought carefully about how to save themselves in the event of conflict or the political unrest. Their complex escape plan was hidden plan was hidden carefully from their supporters and from other ruling DPRK elites.

For PP this is really not a surprise. Nobody else in the country was given a free pass like a foreign passport and if they knew they may have felt differently about their leaders.

With Pak murdered and the Czech companies no longer in use and the $4.6 billion that Office 39 once held in Switzerland and Austria gone, the two key questions still to answer are “where is the Office 39 money now?” and “would Kim Jong-Un abandon the DPRK just like his father planned to?”.

PP is still digging around to find the answers to these questions. Please contact us if you have any more information.

PP has learned from a South African researcher that North Korean diplomats have reduced their buying and selling of ivory and rhino horns over the last year.

For a regime that has been involved in the slaughter and sale of African wildlife for over 30 years, this sudden change in behaviour appears strange. Kim Jong Un is happy to conduct poisonous nuclear tests, so its hard for PP to imagine that he’s suddenly developed an environmental conscience.

So what could be driving his change of mind?

It looks like a final effort to save the reputation of North Korea’s embassies overseas after its diplomats were caught in a series of embarrassing acts.

In September and October 2016 two North Korean diplomats were separately detained in Addis Ababa for smuggling ivory. In March 2016 a North Korean diplomat in Tanzania was kicked out for ivory and drug trafficking in Zambia and South Africa using a forged passport. Embarrasingly – and widely reported in the global media, in May 2015, Pak Chol-Jun and Kim Jong-Su, both North Korean diplomats based in Pretoria, were arrested with 4.5 kilograms of rhino horns in Maputo. (See article here.)

These are not isolated cases. For decades, the criminal trade in African wildlife has been a valuable source of income for the regime in Pyongyang. The Global Initiative Against Transactional Organised Crime reported in 2016 that North Korean diplomats have been caught smuggling horn and ivory at least 18 times since 1986. (See article here.) The extensive trade also ties in to the wider political destabilisation. For example, in 2009 North Korea provided arms and training to military groups in the DRC and Ethiopia in exchange for diamonds and ivory. These goods were smuggled out for resale to organised crime groups in Thailand.

With this long and negative history in Africa, is the DPRK going to stop its involvement in wildlife crime? It doesn’t seem likely to PP.

Indeed, the regime already appears to have lost control of the issue. PP has learned that in the last few months, middlemen in West Africa claimed that DPRK labourers in Africa were continuing to smuggle ivory for their own personal profit. North Korean workers are a source of cheap labour in poorly managed mining projects in the forests of West and Central Africa. Forced to hand over all of their wages to Kim Jong Un’s nuclear pet project, PP doesn’t think that they will stop exploiting Africa’s wildlife to make some money on the side.

North Korean involvement in wildlife crime looks likely to continue. African governments must unite to stop these criminal acts. Pyongyang’s diplomats overseas must not be allowed to continue destroying Africa’s natural wealth for their own benefit.

North Korea continues to pressure its overseas workers to produce revenue with little regard for their wellbeing – slavery?

PP found reports that according to a Mauritius investigative journalist, a North Korean fishing crew based in the country was refused the permission to access medical treatment by the DPRK regime – in spite of severe illness that left the members of the crew unable to work. The North Korea government refused permission for the sick workers to even leave Mauritius despite warnings about a severe threat to life and wellbeing.

The problems of North Korean fishing crews has made headlines before, as the isolated country’s desperate economic situation forces them into waters further and further from the North Korean coast. In January this year, three members of a twelve-man crew were found dead after their boat capsized in the Sea of Japan. Four more bodies were found in a separate boat nearby. (See article here.)

Fishing is not the only dangerous industry that DPRK laborers are forced into by the regime. North Korean workers have been killed in industrial accidents all around the world, including three miners that burned to death in an explosion at a coal mine in Malaysia in November 2014. (See article here.) Construction workers building the World Cup stadium in Qatar were taking home approximately 10% of the salary they were supposed to earn, with the rest being sent straight to the regime. The amounted to approximately $100/month in pay left over for the workers to live on – less than $3.50 per day.

It is clear to PP that higher pressure on fisherman shows that ‘maximum pressure’ sanctions are having a major impact on North Korea’s economy. Since the United Nations Security Council Resolution 2371 in September last year, pressure has really increased against the state and its overseas business ventures. 2371, which bans the member states from accepting additional workers from North Korea, has been strongly implemented by some of DPRK’s previous international allies.

For example, Angola, traditionally a North Korean ally, expelled 154 North Korean construction workers in November 2017; Sudan announced the stop of all their trade and military and the U.A.E. agreed to suspend any new visas from October 2017. The pressure is only increasing!

This should all be good news for North Korea’s overseas workforce, which has long labored under a form of slavery in support of the repressive government. However, reports from human rights activists suggests to PP that North Korea continues to send workers overseas in contravention of UN sanctions and the dangerous working conditions they are facing. The numbers are unclear but between 50,000 and 80,000 North Koreans are believed to be laboring overseas, with most of them based in Russia and China. (see article here.) There are still reports of construction workers earning less than $2 an hour, a figure which looks even more worrying if the workers only actually receive 10% of their earnings.

North Korea continues to make the case for more work permits for laborers based in Russia, as well as seeking to send more workers to other countries including Uganda , Belarus and Nigeria. Former US Secretary of State Rex Tillerson’s call for African nations to end economic ties with North Korea suggests to PP that this activity remains a concern, in spite of the extensive sanctions in place. North Korea’s continued human rights abuses against its own citizens, at home and abroad, must stimulate other countries to stick firmly to UN resolutions.

The outlook for North Korean workers overseas remains difficult. Showing just how close to slavery this employment is, PP hears reports that workers have had their mobile phones confiscated to limit their access to information and to prevent defections. To get around this, the regime chooses workers who have wives and children in the DPRK so they are less likely to defect.

Without more international pressure to stop this form of modern day slavery, North Korean citizens will continue to die in unsafe mines, fishing vessels and construction sites around the world.

In a blind response to the effect of international sanctions, the North Korean regime elites continue to channel funds towards luxury goods as its people suffer

PyongyangPapers learned this week that North Korea continues to import huge amounts of luxury goods for its leaders and elites, including expensive watches and branded spirits, while its people struggle with the malnourishment due to heavy rationing of food.

In the first quarter of 2018, North Korean brokers overseas sourced cars, champagne, brandy, and Mont Blanc wristwatches to import into the isolated nation. Favorites for the wealthy elite include brandy,  scotch whiskies and the Western cigarette brands. These actions cheat tough UN sanctions on the import of luxury goods.

At the same time, inside North Korea, citizens are facing what is being spoken of as the next “arduous march” – the terrible famines of the mid-1990s when over three million North Koreans died of hunger.

Fuel shortages have had a strong impact on North Korea. The authorities demanded last year that ordinary citizens abandon their motorized vehicles in favor of the ox carts, even while shipping in luxury goods for the elites. In February, in a demonstration of how serious the shortages have become, the captain of the North Korean ManGyongBong ferry put out a mayday call (see article) after his boat ran out of fuel and low on food supplies!

Fuel shortages are also limiting the coal mines from operating at their highest capacity, causing regular power cuts and a lack of heating for many houses. PP hears that the price of electricity increased by 11% in the last two weeks of November 2017 – a devastating increase in price as winter temperatures began to move into the minus numbers.

The lack of fuel is also hurting the availability of food. PP hears that rations are now cut by half, with the white rice almost impossible to get hold of in places and cooking oil short as well. Even the army, the regime’s most important source of support, has not been spared rationing, and soldiers have complained of malnourishment. This supports recent studies on the health of North Korean military military defectors, with many found to be suffering from chronic hunger, diseases and very serious infections of the parasites and worms.

See article on defectors and parasites

The outlook for the rest of 2018 does not show much improvement. PP has learned that the North Korean Ministry of Agriculture was told by senior leadership that no fuel would be available to plough rice paddies for the rest of the year. This means fields will have to be turned by hands or by hands or by simple ox plows – greatly reducing the amount of food each farmer can produce.

With the possibility of famine approaching, the decision of North Korea’s elites to continue shipping in expensive whisky, cars and watches shows just how out of touch the regime has become, and how little they care for the ordinary people in rural areas outside of Pyongyang.