Over the last few months, many news outlets have reported on the strange sight of hundreds of rubbish-filled balloons falling over South Korea. This petty act was not the work of a school child, but the activity of a nation’s government – North Korea. These balloons were filled with rubbish including household waste, manure and cigarette butts. It’s these cigarette butts that are often gathered by North Koreans after large public events to sell to garment-makers, according to Radio Free Asia. Ironically, before they end up in balloons or being foraged by desperate North Koreans, cigarette butts are integral to one of North Korea’s most valuable industries – tobacco.

The importance of tobacco

The DPRK’s tobacco industry is hugely important to the regime, with companies such as the North Korean General Tobacco Corporation (NKGTC) owned by the state. It is believed that 2.3% of North Korea’s arable land is devoted to growth of tobacco – the 4th highest percentage of arable land dedicated to tobacco in the world! This clearly undermines the regime’s attempts to appear responsible by introducing tougher legislation on smoking in public spaces and persuading citizens to quit their habits. Despite this, tobacco products are still viewed as a status product in North Korea and is valued as a luxury product.

Here at Pyongyang Papers we have investigated and written a number of articles highlighting sanctioned luxury goods dealings between DPRK and other nations supplying such goods. One such luxury item that we have reported on previously is tobacco. Just last year, British American Tobacco was fined $635m after a subsidiary admitted selling cigarettes to North Korea in violation of US sanctions. According to the United Nations Security Council, tobacco is the fourth largest import into the country, so losing a supply of tobacco on this scale is sure to lead to Kim Jong Un, a lifelong smoker, and the regime looking for other suppliers of this valuable commodity.

Ponyong Tobacco trading Corporation & G-EM Aromatics Ltd

Pyongyang Papers understand that North Korean Ponyong Tobacco Trading Corporation is working on a deal to purchase tobacco and additives from a Bulgarian tobacco flavoring company “G-EM Aromatics”, a company based in Sofia, Bulgaria with Manolis Gkoulgkountinas listed as the Director according to his LinkedIn profile. Surely this activity is in direct violation of UN and US sanctions? Yes. In typical fashion, to evade sanctions and hide dealings of North Korea, any deal will be facilitated by a Russian company as the buyer. The Russians are fully aware of their involvement, and we believe that it is highly likely that Ponyong branded cigarettes will find their way into the Russian market.

A selection of tobacco flavors on the G-EM website

Song In Su

It seems that Russian linked entities are playing an increasingly central role in North Korea’s tobacco related sanctions evasion. We have information that a DPRK official, based in Russia, Song In Su has aided a shipment of Brazilian cut tobacco to the DPRK entity Korea Ryugyong Corporation worth hundreds of thousands of dollars. Pyongyang Papers has written extensively about Ryugyong Corporation previously, highlighting how this state owned entity is pumping funds into the DPRK’s nuclear weapons program. As a result, this new business deal is particularly concerning. Further investigation has revealed that, in 2023, Song In Su aided shipments of tobacco to the previously mentioned DPRK entity – Ponyong Tobacco Company, again worth hundreds of thousands of dollars.

As for the seller of this Brazilian-cut tobacco, we have been made aware that a Hong Kong-based trading company named “The Honor Trading International Ltd” are acting as facilitators in this deal. We understand that this company is not new to enabling prohibited shipments to DPRK and may be a frequent supplier to the country. Their actions mean that they are essentially a regular investor into the nuclear weapons program of a dangerous regime. From what we have uncovered so far It is clear that sanctions alone are not stopping businesses from getting involved with North Korean activity, and more must be done to actively stop them.

If you have any information regarding the North Korea tobacco trade or any of our investigations please get in touch using the ‘contact us’ page.

Smoking and North Korea go hand in hand. According to a World Health Organization report in 2019, 46.1% of males above the age of 15 smoke tobacco, and the numbers have been high for years.

Tobacco was first introduced in Korea in the early 1600s from Japan, and until around the 1800s, both men and women smoked profusely. Today, smoking is still a frequent and expected activity for North Korean men, yet female smoking is now considered a taboo.

Although it may be unthinkable for females, Pyongyang have no objections with one of its local residents at the capital’s zoo lighting up a cigarette. Azalea (Korean name “Dallae”), a smoking chimpanzee, is the star attraction at the zoo and regularly has citizens roaring with laughter as she puffs away on a pack of cigarettes a day, despite outrage from several animal rights activists. This, another clear display of total disregard towards animal welfare and an appalling attitude towards a deadly habit that unfortunately we have come to expect from the DPRK.

Azalea, as seen in the image below, isn’t the only prominent figure in the DPRK with a cigarette always in hand, North Korean leader Kim Jong Un is regularly photographed smoking on his public outings, despite the many health concerns it entails.

Smoking is a leading cause of death in North Korea, and as of 2010 mortality figures indicated that 34% of men and 22% of women die due to smoking related causes. This is the highest smoking related mortality figures in the world and these figures have only continued to rise.

The numbers are so concerning that Pyongyang introduced the tobacco prohibition law in November 2020. The tobacco prohibition law prevents North Korean’s from smoking in public places and sets out rules to provide a ‘more cultured and hygienic’ environment for citizens. It has also apparently been introduced to tighten the legal and social controls on the production and sale of cigarettes.

We are yet to confirm if Kim Jong Un is leading by example and quitting the tobacco since introducing the prohibition law. However, here at Pyongyang Papers we can confirm that North Korea’s illicit tobacco trade with other member states continues to burn on.

Ryugyong Corporation

Pyongyang Papers have previously investigated the significant role that North Korean cigarette manufacturing company Ryugyong Corporation has played in the DPRK revenue generating machine. It is an arm of the central government, subordinate to the Korea Worker’s Party Finance and Accounting Department (Bureau 125), which handles budgetary and accounting matters for the regime.

Ryugyong Corporation may sit at the heart of the criminal global network but they do not operate alone. Our sources have informed us that Chinese tobacco company Poly Tobacco International Limited and Ryugyong Corporation have conducted business amounting to hundreds of tonnes of tobacco leaves and ancillaries worth millions of dollars. This contravenes the imposed UN Resolution which prohibits the importation and/or facilitation of luxury goods (like tobacco) into North Korea.

Poly Tobacco International Limited used Chang Myo’ng Sik, a Dalian-based representative of the Liaoning Pilot Free Trade Zone Manrong International Trade Co., Ltd as a third-party payee.

Dalian

This is not the first time Dalian (a port city in Northeast China, close to North Korea) has been linked with involvement of the illicit tobacco trade. In 2016, Nikkei Asia published an article which detailed how two shipping containers with cartons of legitimate North Korean cigarettes concealed packs of pirated Marlboro’s. The Manila shipment, seized in October 2013, included 8.79 million counterfeit Marlboro s in 439,000 packs; the shipment in Malta in June 2014 held 8.16 million sticks in 413,999 packs. A source put the street value of the two shipments at $4.2 million to $8.4 million.

According to shipping documents, the sender for both shipments was Dalian based company ‘Sun Moon Star Trading‘.

Naxiades

As previously reported by Pyongyang Papers, Ryugyong has also had dealings with Greek trading house Zafiris Naxiades (ΖΑΦΕΙΡΙΟΣ ΖΑΞΙΑΔΗΣ), based in Thessaloniki. Despite our previous investigation exposing their illegal activity we can confirm Naxiades continues to facilitate the sale of tobacco and flavorings to North Korea.

Pyongyang Papers have been informed Zafiris Naxiades also hosted a North Korean tobacco delegation at the Hotel Panorama in Thessaloniki in October 2019, shown below.

Funding the nukes and the DPRK elites

The regime relies on unlawful activities (such as the manufacture and sale of illegal drugs, counterfeit consumer goods, human trafficking, arms trafficking, wildlife trafficking, counterfeit currency and terrorism) and willing co-conspirators to continue to provide a steady source of income for its nuclear weapon program and to maintain the lifestyle of the countries elite. Clearly the citizens who do not form part of Pyongyang’s elite are not deemed worthy of this funding, as they continue to battle the ongoing humanitarian and health crisis that has plagued North Korea since the early 1900s.

Compared with drugs, smuggling tobacco is low-risk and high reward. The illicit tobacco trade is one of the most lucrative revenue streams for the Kim regime, an industry worth tens of billions of dollars worldwide since the product can be sold without the high taxes that exist in many wealthy countries.

Whilst many North Korean factories appear to have been hit hard by sanctions, it appears the tobacco factories and nuclear weapon funds are still thriving. As always, Pyongyang Papers pledges to continue to expose those who choose to collaborate and profit from the DPRK’s sanction breaking behavior and campaign for the human rights of the oblivious nationals held captive by the relentless Kim dynasty.

Unless you are a brave smoker of cut-price North Korean cigarettes, you’ve probably never heard of the Ryugyong Corporation.

We hadn’t heard of it either. But a new Pyongyang Papers investigation can reveal that this state-controlled company sits at the heart of an illicit global network of North Korean sanctions evaders, generating funds for the DPRK regime. This network includes Turkish and Greek tobacco suppliers, Cambodian front companies, shady North Korean middlemen and Chinese freight forwarders. As sanctions cut off North Korea’s other avenues for earning money, this tobacco network appears to be growing in importance as a way to finance Kim’s ballistic missile pet project and the lifestyles of North Korean elites. What more could an enthusiastic DPRK-watcher need?

Ryugyong Corporation Revenue Generation

As a company, the Ryugyong Corporation sits firmly at the center of the DPRKs revenue generating machine. It is an arm of the central government, subordinate to the Korea Worker’s Party Finance and Accounting Department (Bureau 125), which handles budget and accounting matters for the Kim regime.

Ryugyong imports leaf tobacco, filters and papers from suppliers, using a mix of cover companies and North Korean front-men, often working out of DPRK embassies overseas. These front-men source supplies from all over the world including Argentina, India, South Africa, Vietnam, the UAE, Zimbabwe and China. A recent NK News article highlighted the rise in tobacco imports from China. Once purchased, the tobacco products are typically routed through Dalian in China and onto Nampho port in North Korea.

Once the tobacco and papers have arrived in North Korea by sea, Ryugyong assembles the various components into cigarettes. They do this using cheap North Korea labor in large factories (one of the benefits of a slave labor economy?). Once produced, the cigarettes are sold in stores run by the Ryugyong on behalf of the state, where luxury goods like cigarettes and imported alcohol are provided for the wealthy and well connected in Pyongyang. Read Pyongyang Papers previous article on luxury goods here.

A selection of North Korean cigarettes on sale

Ryugyong’s main source of income comes from foreign rather than domestic sales. In addition to selling cigarettes to North Koreans, Ryugyong is also involved in a massive counterfeiting and cigarette export operation, generating large sums for the regime. They cover their cheap cigarettes with the names and colors of well known cigarette brands, package these up and ship them out of the country to unsuspecting smokers. Mostly, we suspect, in China.

Why is This a Problem?

Apart from the fact that this state-run counterfeiting operation puts a giant hole in the wallet of global tobacco brands (we have limited sympathy there) – why is this problem? Well the funds generated by selling these counterfeit cigarettes directly contribute to the DPRK’s nuclear and ballistic missile programs through Bureau 125. Importing or facilitating the import of luxury goods (like tobacco) into North Korea is also contrary to UN sanctions when it generates revenue for the regime. There’s also something of an ethical issue here. Without wanting to comment on the quality of North Korean cigarettes, we’d be surprised if these poorly made products weren’t also killing quite a few Chinese smokers at the same time.

Pyongyang Papers has looked into some specific parts of the Ryugyong import/export network that we’ve been unable to uncover thanks to a friendly contact in Dalian. Many of the threads we’ve unpicked through online research and ship tracking platforms seem to begin in Cambodia, where North Korean involvement in the tobacco trade has become well-known among the small network of suppliers there.

What Companies Are Involved?

A central hub of the Cambodia supply network is a particularly busy North Korean frontman called Myong Chol Min. Myong is the operations manager at a Cambodian company called Phal Eng Lim Import Export Co., Ltd (PELCO). Myong is also the managing director of a Thailand based company called MCM International Trading.

Pyongyang Papers believes that both PELCO and MCM are fronts for the Ryugyong Corporation, and that Myong is a key supplier of tobacco and cigarette products who works directly for the DPRK regime. According to company records, PELCO is registered at 91 Street, Sangkang Kampong Cham, Kampong Cham City, Cambodia. It’s also listed on www.tobacco1.com with the phone number+855966662595. We haven’t had any luck getting through thought!

Myong has reportedly been involved in hundreds of tobacco deals with PELCO and MCM over the years but we can highlight one in particular that illustrates the kind of activity that takes place. In September 2018, Myong used PELCO to set up and pay for a 50 tonne shipment of ML1-Grade tobacco leaf from the Sihanoukville in Cambodia, to Dalian, China. It appears that the containers were shipped from Cambodia on a Liberian-flagged freighter. From Dalian, as far as we can work out, this particular shipment was transported onwards towards North Korea on the DPRK flagged container vessel the Tong Myong 9.

Myong and PELCO have also been involved in deals for tobacco papers and filters worth hundreds of thousands of dollars. One of PELCO’s principle suppliers is a Turkish company called Tobacco Solutions Asia Limited (TSAL). Myong has had many dealings with TSAL and with Star Agritech International, its parent company, often liasing through a TSAL manager called Gokhan Akca. Acka’s colleague Afsaneh Gorbani, a sales supervisor at TSAL, has also had dealings with Myong and the North Koreans.

Myong’s globetrotting business dealings don’t end in Turkey and Cambodia. Another company that looks like it has suspect business dealings with Ryugyong is a Greek trading house called Zafiris Naxiades – Tobacco in Leaves – S.A. Naxiades, located in Thessaloniki, looks like it has a long history of trading tobacco and has an attractive image of their old warehouse on the website. Quite why such a venerable company has resorted to supplying the North Koreans with tobacco is unclear. We would guess that times are tough at Naxiades but Greece is one of the few European countries where the smoking ban hasn’t had much effect on cigarette consumption. They should be rolling in money!

Ryugyong is another symptom of a state that has lost its moral compass. We’re no longer surprised at the behavior of North Korean state companies – what is surprising is the number of international firms, like Naxiades and Star Agritech, that are willing to risk their reputations for what are, on the face of it, quite small deals. Given that these supply companies rely of a functioning international tobacco market to survive, it’s also surprising that they are willing to go against the interests of their industry to supply a company like Ryugyong, which has become infamous for the mass counterfeiting of cigarettes.