Asia Pacific

Defector alleges wage skimming at Koreas' joint industrial zone funding Kim Jong Un's arms quest

Kyodo

North Korea’s party organization funding the leadership siphoned nearly all dollars paid in cash by South Korean companies as salaries for the laborers over an economic cooperative project in the border city of Kaesong, a defector told Kyodo News.

Office 39 takes away the salaries of North Korean workers and earns up to $100 million in cash annually, 59-year-old Ri Jong Ho, a former senior official of the secretive office, said in a recent interview in the U.S. capital. The cash is likely to have been used for Pyongyang’s nuclear and missile development.

“The laborers are strictly supervised and do not get the pay. Senior officials (of the North Korean authority) there say that the workers are like slaves, exploited by South Korean companies,” Ri said.

Ri has long been involved in the operation of Office 39, which is said to have been established by the late leader Kim Jong Il in May 1974. It is subject to international sanctions as the United States and other Western countries believe it is engaged in illicit economic activities and the management of slush funds for the leadership.

The operation of the joint industrial zone at Kaesong is currently halted as South Korea’s previous administration of Park Geun-hye decided on its suspension in February last year in response to Pyongyang’s long-range rocket launch and a nuclear test.

New South Korean President Moon Jae-in, who indicated during his election campaign that he favors a softer approach toward North Korea than his conservative predecessors, said he will consider restarting the operation of the industrial park on condition that North Korea agrees to engage in talks to give up its nuclear ambitions.

But the administration of U.S. President Donald Trump is certain to object to such moves as it seeks to cut off the influx of foreign currency into North Korea to counter its nuclear and missile threats.

According to Ri, South Korean companies have handed over the salaries of North Korean laborers at a division under the United Front Department of the Workers’ Party of Korea, which is in charge of the industrial park from the North Korean side.

The department has then passed the money to the treasurer of Office 39.

Pak Nam Gi, a senior ruling party official in charge of financial planning, had said before being executed in 2010 that he was ordered to transfer such money under the instruction of Kim Jong Il, according to Ri.

The South Korean government said the average wage of the laborers was about $140 per month in 2014. But Ri said North Korean authorities did not give them the money but instead supplied them with daily necessities.

South Korea said in February last year that a total of about $560 million in cash went to North Korea through the industrial zone project and was partly used for nuclear development. The announcement may have been based on the information provided by Ri, who defected to South Korea with his family in October 2014.

Ri also said current North Korean leader Kim Jong Un established “Office 16” inside the ruling party around the latter half of 2012 to proceed with economic reforms. He tried to learn from examples of other countries but the attempt ended as a failure.

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