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.