North Korea Investigates Finances of Foreign Trade Companies in China

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North Korean imitation bills are sold for souvenirs near the Yalu River Bridge in Liaoning Province, China.
North Korean imitation bills are sold for souvenirs near the Yalu River Bridge in Liaoning Province, China.
Yonhap News

North Korea’s National Security Agency is secretly tracing the foreign accounts of its citizens working as trading company officials in China, sources say. North Korean workers must report their income and give a large portion of their pay to the regime.

The North Korean Central Committee has mandated that it is treasonous to have secret accounts and said businessmen found with slush funds will be punished with the same severity as defectors.

“[Officials from] the National Security Agency are staying in the Dandong and Dalian areas of [China’s Liaoning province, which borders North Korea] and are gathering information on North Korean trading company officials [to assess their loyalty],” said a North Korean trade worker from Dalian in an interview with RFA’s Korean Service.

“They are also looking into the [foreign] partners that the officials conduct business with,” the source said.

The source explained the committee has been scouring over Chinese bank account records of the trade representatives.

“[They started doing this] right after Kim Jong Un returned to Pyongyang, following the unsuccessful second summit between North Korea and the United States.”

The Feb. 27 and 28 summit in Hanoi  abruptly ended when Kim and U.S. President Donald Trump could not agree on sanctions relief or the pace of North Korean denuclearization.

While China’s northeast region contains the highest concentrations of North Koreans, the scope of the agency’s investigation is much larger.

“[They] aren’t just looking at trade workers in [China’s] three northeastern provinces. They are checking trade representatives running large-scale trading operations out of Hong Kong and Macao too.”

The information gathering process is extensive, with the agency pouring over countless records including reports made to the North Korean government, remittance statements and other financial records.

“They compare to see if the reports match the amount the trade representatives sent to a third country through a Chinese bank,” said the source.

The source said that what the agency is most concerned about are secret slush funds opened by North Koreans using borrowed Chinese names.

“[North Korean businessmen] are extremely fearful because the Central Committee is going to punish everyone with secret personal funds. Regardless of whether the account is big or small, they are going to be treated as if they have betrayed the state in the same manner as defectors,” the source said.

Meanwhile, another source, from North Korea’s North Pyongan province, said, “The Central Committee made a big fuss last year about how they were eliminating corruption among executives of the military-affiliated Pyongyang Trade Company [but they really didn’t do anything].”

“It was a huge power struggle. Nothing has changed in terms the national trade industry in reality. If they want to organize trade companies, they need to get rid of the loyalty offering system that every trade company is burdened with, rather than putting everyone under repeated scrutiny,” the source said.

The loyalty offering system refers to state mandated “loyalty payments” that must be made by North Koreans working abroad.

The source said authorities had to do much more in order to properly reign in corruption.

“A trade company’s foreign currency accounts should be scrutinized by inspections from the Foreign Trade Bank of the DPRK, an official agency that handles foreign currency in North Korea. Only then can they control corruption in the trading industry and they could then straighten the economy,” the source said.

The source was critical of this investigative effort, saying it amounted to little than scare tactics.

“Ever since Kim Jong Un came to power the National Security Agency has been taking the lead in all these [corruption investigations.] But they’re nothing more than an attempt to scare traders into maintaining the state’s system,” said the source.

Reported by  Hyemin Son for RFA’s Korean Service. Translated by Leejin Jun. Written in English by Eugene Whong.





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