The wiseguy regime
North Korea has embarked on a global crime spree
By DAVID E. KAPLAN: US NEWS & WORLD REPORT:
Feb. 15, 1999
That episode last July the largest seizure of Rohypnol on
record is just one in a long string of drug incidents, counterfeiting
cases, and other alleged crimes involving North Korean officials. Isolated,
beset by famine, and desperate for hard currency, North Korea has in effect
turned into a vast criminal enterprise, U.S. experts say. "It's the mafia
masquerading as a government," contends James Przystup of the National
Defense University in Washington, D.C. Says another international crime
analyst: "If North Korea were not a nation, you could indict it as a
continuing criminal enterprise."
Cases of North Korean officials engaged in smuggling and drug
trafficking began to surface in the 1970s, but law enforcement analysts have
noted a disturbing jump in the past five years. Using data from the Drug
Enforcement Administration, Japanese and South Korean police, and foreign press
reports, U.S. News has compiled a record of criminal complaints against North
Korean diplomats in 16 countries since 1994. Interviews with law enforcement
officials, intelligence analysts, and North Korean defectors suggest that the
regime is now dramatically expanding its narcotics production and that much of
the criminal activity is controlled at the highest levels of government.
How much of the profiteering goes to prop up the world's last Stalinist
state and how much lines the pockets of corrupt officials is impossible to
know. But it is clear that the worldwide network of North Korean embassies,
coupled with the use of diplomatic pouches and immunity, offers the ideal cover
for a criminal enterprise. 'We've rarely seen a state use organized crime in
this way,", says Phil Williams, a University of Pittsburgh professor and
editor of the journal Transnational Organized Crime. "This is a criminal
state not because it's been captured by criminals but because the state has
taken over crime."
Among the evidence:
* Authorities in at least nine countries have nabbed North Korean diplomats
with a virtual pharmacy of illegal drugs: opium, heroin, cocaine, hashish.
Investigators have traced orders for 50 tons of ephedrine the base for
methamphetamine to North Korean front companies; that quantity is 20 times
as much as the nation's legitimate needs.
*
North Korean officials have been caught distributing counterfeit $100 bills in
Cambodia, Russia, Macao, and Mongolia. The regime is believed to produce some
of the world's best bogus currency with the same model press used by the U.S.
Bureau of Engraving and Printing.
*
North Korean officials in countries from Romania to Zambia are accused of using
embassies and front companies to smuggle a mind-boggling array of goods,
including untaxed cigarettes, bootleg CDs, fake antiques, and endangered
species parts. North Koreans also have been tied to kidnappings and terrorism.
Behind much of this criminal activity lies North Korea's desperate need for
cash. With the end of Soviet patronage, and with Koreans in Japan sending less
money home, North Korea has lost two key sources of hard currency. Drug dealing
and smuggling offer a lucrative alternative and are believed to bring into the
nation's crippled economy more than $100 million each year. Just one North
Korean methamphetamine shipment, seized in August by Japanese officials, had a
street value of $170 million. By comparison, North Korea's legitimate exports
plunged last year to a mere $520 million, while the nation spends an estimated
$200 million annually on its nuclear program.
Some analysts suspect that drug profits may, in fact, be going into that
program. Since 1994, Washington has pursued a policy of engagement, offering
billions of dollars in Western aid if North Korea gives up its nuclear weapons
development and missile exports. But the policy has produced a frustrating
stalemate, and U.S. intelligence officials say new satellite photos indicate
the North Koreans are rapidly expanding a suspected underground nuclear site.
Meanwhile, the North Korean Army -the world's fifth largest- remains
a potent threat to South Korea and Japan. "I can hardly overstate my
concern about North Korea , " CIA Director George Tenet told Congress last
week.
Congressional report. Concern over North Korea's illicit activity is
bound to be fueled by a Congressional Research Service report due this week.
The study, U.S. News has learned, cites at least 30 incidents that tie North
Korea to drug trafficking. The CRS report suggests not only that drug profits
could be funding the nuclear program but that U.S. food aid to the
regime over $77 million worth this year may be needed in part because
farm acreage is used to grow poppies for opium.
North Korea made its entry into the narcotics trade in the 1970s by
purchasing drugs for resale, according to a U.S. intelligence report. At the
time, the country had defaulted on international loans and, as now, was in dire
need of cash. In 1976, four Scandinavian countries kicked out 17 North Korean
diplomats after claiming to have found evidence that they were illegally
selling narcotics, cigarettes, and alcohol. Among the officials were two
ambassadors and the entire staff of the North Korean Embassy in Norway.
(Diplomats, when caught, are rarely prosecuted.)
By the mid 1980s, North Korean farmers began cultivating opium
poppies, allegedly under orders from leader Kim Il Sung. The processed opium
and heroin were then sold overseas. With the cutoff of Soviet aid in the 1990s,
Kim's son and successor, Kim Jong Il, ordered a major expansion of the
drugs for export program, U.S. officials say. Based on data from
defectors and other intelligence sources, U.S. and South Korean narcotics
analysts believe that up to 17,000 acres now produce at least 44 tons of opium
annually. If true, that would approach the output of Colombia, the largest
supplier of heroin to the United States.
Despite repeated requests, North Korean officials declined an interview
with U.S. News. In the past, however, North Korean spokesmen have branded
accusations of drug dealing and other crimes as "smear campaigns"
orchestrated by South Korea. The nation's opium production, they say, is
strictly for medicinal purposes and is being stockpiled for use in war.
Moreover, some drug control officials remain skeptical that North Korea is a
major drug producer, among them Herbert Schaepe, secretary of the United
Nations International Narcotics Control Board in Vienna. "If those
production figures are correct, we would see seizures everywhere'' he says.
"But we just haven't seen the evidence.' U.S. law enforcement officials
counter that they are seeing large seizures and that the growing number of
smuggling incidents as well as mounting testimony by defectors cannot
be explained away as propaganda from Seoul. More conclusive evidence could come
from U.S. spy satellites; one satellite was recently tasked to photograph North
Korea's opium fields, intelligence sources say, but the day was cloudy and
officials have been unable to get the satellite retasked.
Defectors say that drug trafficking is, indeed, a state run
industry. One defector interviewed by U.S. News, Bae In Su, says he worked for
three years as a driver for the Communist Party's Foreign Currency Earnings
Department, ferrying opium and heroin to port for export. At least twice a
month, Bae says, he would deliver a van full of opium packed by the
kilogram in plastic bags to Japanese ships or to a local pharmaceutical plant
that refined it into heroin. The entire process, he adds, was controlled by
high-ranking party officials. "They talked about opium being gold;' Bae
says. Another defector, pharmacist Ho Chang Gol, has claimed that the
government ran more than 10 poppy farms to export opium.
Given the tight control wielded by North Korea's security apparatus,
U.S. analysts say that such large scale production of illegal drugs could
not exist without sponsorship by authorities in Pyongyang, the capital.
Intelligence reports say that the trade is handled by Office 39, a party organ
under the direct control of Kim Jong I1, which oversees production and then
doles out the drugs to trading companies and diplomatic posts. U.S. officials
believe the profits are funneled into a private slush fund controlled by Kim
and used to hand out favors, bankroll intelligence operations, and buy military
hardware.
The North Koreans have not targeted their drugs at the U.S. market,
although at times their shipments have ended up here. One of Hong Kong's most
notorious drug lords, Lai King man, started out peddling heroin from North
Korea, says Catherine Palmer, a former assistant U.S. attorney who successfully
prosecuted Lai in 1990. Palmer believes that 100 to 200 pounds were smuggled
into the United States and that most of it ended up on the streets of New York.
Mexico to Moscow. Recent arrests suggest that the North Koreans are now
exploring European markets. One year ago, Russian officials arrested two North
Korean diplomats for smuggling 77 pounds of cocaine enough to fetch $4
million on the street from Mexico City to Moscow. In their pockets were
round trip tickets to Frankfurt. And last October, German police
investigated the deputy ambassador at the embassy in Berlin for ties to a
heroin and weapons smuggling ring. But hardest hit are North
Korea's neighbors. In the early 1990s, Russian officials noticed opium being sold
by North Korean loggers in Siberia. The sellers, they found, dissolved opium
and morphine into “medicines” with names like Roots of the White Bell and
peddled them in local markets. But it took a 1994 sting operation to uncover
the full scope of North Korean official involvement. Russian undercover cops
agreed to buy nearly 18 pounds of heroin from two dealers who turned out to be
North Korean state security agents. The deal was meant as a first installment
for over 2 tons of the drug and the Koreans boasted that nearly 8 tons were
available.
Still, the drug of the future for North Korea is likely to be
methamphetamine. The Koreans are moving quickly into industrial scale
production of "meth;" the drug of choice in much of East Asia, say
law enforcement officials. U.N. drug control officials are tracking 50 tons of
ephedrine base allegedly ordered by North Korea in the past year. The drug is
used as a cold remedy, but the nation's legitimate annual needs are 2.5 tons.
"They must have a lot of stuffy noses." quips one drug control agent.
The target for this appears to be Japan, where the nation's 500,000
users pay handsomely for high quality crystal meth. Most of Japan's speed
in recent years has come from China, but Tokyo cops got a surprise in April 1997,
in a small port in southern Japan. There a lone customs inspector wondered
about the 12 large cans of honey that crew members hand carried from a
North Korean freighter. It seemed strange, the inspector thought, that North
Korea was exporting food in the midst of a famine. A check found the cans
crammed with 130 pounds of meth. Then, last August, Japanese police traced a
660 pound meth shipment, worth $335 million on the street, to a North
Korean boat disguised as a Japanese vessel. Investigators have tied both cases
to the yakuza -Japanese crime syndicates- many of whose members are
ethnic Korean. Japanese police are alarmed: In two years the North Koreans have
come to supply nearly 20 percent of Japan's multibillion-dollar meth market.
North Korean-printed U.S. dollars are also showing up with troubling
frequency: Authorities have seized Pyongyang’s bad bills in at least nine
countries, from Mongolia to Germany. Last April, for in stance, a North Korean
trade attache' in Vladivostok, Russia, was caught passing $30,000 in fake
hundreds. In 1994, police in Macao traced $600,000 of the bogus bills to a
North Korean trading company. Any doubts of official complicity were erased in
1996, when Yoshimi Tanaka, a former Japanese Red Army member wanted for hijacking,
was arrested in Cambodia and tied to $200,000 in counterfeit money. Tanaka held
a North Korean diplomatic passport, traveled in a North Korean Embassy car, and
was accompanied by North Korean officials.
“Supernotes.” The Korean $100 bills have been dubbed “supernotes”;
they are so good they helped push the United States to issue redesigned
currency in 1996. The old style bills are cranked out on a $10 million
intaglio press similar to those employed by the U.S. Bureau of Engraving and Printing,
officials say. North Korean defectors claim the notes come from a
high security plant in Pyongyang. Kim Jeong Min, a former top North Korean
intelligence official, told U.S. News that he had been ordered to find the
paper used to print U.S. currency but couldn't. "Instead, I obtained many
$1 notes and bleached the ink out of them,” he says. “The size of the bill was
what mattered, not the denomination:”
South Korea's intelligence agency estimates that the North turns out
some $15 million in counterfeit U.S. money each year; American officials
believe that figure is high. But even that amount would not constitute a threat
to the stability of the greenback ($480 billion in US. currency is circulated
worldwide).
Defector Kim says his career was not limited to counterfeiting. He
boasts that before he left in 1988 he smuggled gems and Western currency out of
Africa. Cramming French francs, U.S. dollars, and South African diamonds into
his suitcases, he ventured overseas as often as five times a month during the
1980s. Protected by diplomatic immunity, Kim claims he cleared a profit of $80
million during that time, both for the regime and for himself. "I was
immune from any laws," he says.
Authorities in numerous countries have stopped North Korean diplomats from
smuggling vehicles, alcohol, fake antiques, electronic goods, weapons, and
more. Other reports deeply implicate officials in the endangered species
trade. Since 1996, at least six North Korean diplomats have been forced to
leave Africa after attempts to smuggle elephant tusks and rhinoceros horns.
Such efforts seem partly driven by the dismal funding of North Korea's
embassies. Lacking cash, North Korea closed at least 14 embassies last year and
reportedly told those remaining to become “self sufficient.” Still other
diplomatic smuggling incidents involve cigarettes, allegedly sold tax free on
the black market, and pirated CDs. Two diplomats crossing into Romania from
Bulgaria last year were found to have crammed 12,000 bootleg CDs in the trunk
of their car. Truly inventive at times, North Koreans even counterfeit
name brand cigarettes, which contain their own cheap tobacco. In 1995,
Taiwanese authorities seized 20 ship containers of counterfeit cigarette
packaging bound for North Korea. It was enough to make 2 million fake cartons
of best-selling Japanese and British brands.
North Korea's criminal reach extends beyond smuggling and
counterfeiting, U.S. officials say. Japan has accused North Korea of kidnapping
at least 19 of its citizens so that the regimes spies could learn Japanese and
assume their victims' identities. The nation also appears on the State
Department's short list of countries sponsoring terrorism. Its agents are
suspected of the bombing of a 1987 South Korean flight and a 1983 bombing that
killed South Korean officials in Burma. Some policy makers argue that the best
strategy is to isolate North Korea and wait for it to fall. But the regime has
proved surprisingly resilient, and the key levers of power - the security
forces and the Communist Party - remain under the firm control of the reclusive
Kim Jong I1. South Korean President Kim Dae Jung and other allies argue that
lifting U.S. sanctions and further engaging the regime is the best way. Whatever the course ahead, at least the time has passed
when North Korea's criminality could be ignored by policy makers. “It wasn't
even on the radarscope," says one surprised U.S. analyst. "It's a classic case of hear no evil, see no
evil, respond to no evil.”
With Steven Butler in Seoul and Mark Madden
Sources; CIA, World Almanac, U.N. World Food Program