Room 39

Room 39 (officially Central Committee Bureau 39 of the Workers' Party of Korea,[1] also referred to as Bureau 39, Division 39, or Office 39[2]) is a secretive North Korean party organization that seeks ways to maintain the foreign currency slush fund for the country's leaders.[3]

For the Royal Navy intelligence organization, see Room 39 (Royal Navy).

Room 39
Agency overview
FormedLate 1970s
HeadquartersPyongyang, North Korea
Parent agencyCentral Committee of the Workers' Party of Korea
Room 39
Chosŏn'gŭl
Hancha
Revised RomanizationSamsipgu-hosil
McCune–ReischauerSamsipku-hosil

The organization is estimated to bring in between $500 million and $1 billion per year or more[4] and may be involved in illegal activities, such as counterfeiting $100 bills, producing controlled substances (including the synthesis of methamphetamine and the conversion of morphine-containing opium into more potent opiates like heroin), and international insurance fraud.[3][5]

Although the seclusion of the North Korean state makes it difficult to evaluate this kind of information, many claim that Room 39 is critical to the Kim family's continued power, enabling them to buy political support and help fund North Korea's nuclear weapons program.

Room 39 is the largest of three influential so-called Third Floor offices along with Office 35 tasked with intelligence and Office 38 which handles legal financial activities.[6] Room 39 is believed to be located inside a ruling Workers' Party building in Pyongyang,[7] not far from one of the North Korean leader's residences.[2] All three Offices were initially housed on the third floor of the building where Kim Jong-il's office used to be, hence the moniker "Third Floor".[6]

History

Room 39 was established by Kim Il-sung in the late 1970s. It has been described as the linchpin of the North's so-called "court economy" centered on the dynastic Kim family.[8]

According to Kim Kwang-jin, in 1972, Kim Jong-il created the central party department called "Office No. 39", which was named after the arbitrary office number where it began operations.[9] Initially the Office was under the Finance and Accounting Department of the Central Committee of the Workers' Party of Korea.[10]

In early 2010, South Korea's Yonhap news agency reported that Kim Dong-un, head of the department, was replaced by his deputy, Jon Il-chun.[11]

The Chosun Ilbo reported that Room 38, led by Kim Jong-il, was merged into Room 39 in late 2009, but the two were split again in 2010 due to difficulties in obtaining foreign currency.[12] Room 38 handles funds of the Kim family in legal businesses and acts as a front organization for Room 39.[6]

In July 2017, Chon Il-chun, first vice department director of the party's Central Committee and a former classmate of Kim Jong-il was leader of the office.[13]

Purpose and activities

Room 39 is also involved in the management of foreign currency earnings from foreigners' hotels in Pyongyang, gold and zinc mining, and agricultural and fisheries exports. They are believed to run networks of illegal and legal companies that often change names.[14] The number of companies, at one point, reportedly up to 120 in number ,[10] believed to be controlled by Room 39 include Zokwang Trading and Taesong Bank.[12] Many of the $500 million worth of textiles North Korea exports each year have phony "made in China" labels attached to them and the wages of the estimated 50,000 North Korean workers sent abroad to work are reported to have added $500 million to $2 billion a year to Room 39's income.[14]

A 2007 report published by the Millennium Project of the World Federation of United Nations Associations said North Korea makes an estimated $500 million to $1 billion annually from illegal enterprises.[15] Criminal operations reported to be run by Room 39 include trafficking fake US dollars, peddling bogus Viagra, exporting the recreational drug N-methylamphetamine and obtaining Russian oil using dealers in Singapore.[14] At some point, transactions and trade by Office 39 reached 25 to 50% of the total of North Korea.[10]

In 2009, a Washington Post report outlined a global insurance fraud scheme by the North Korean government. The state-owned Korea National Insurance Corp (KNIC) sought reinsurance contracts with international reinsurers and then submitted fraudulent claims; the contracts were governed by North Korean law and legal challenges were fruitless.[5] Document forgeries are also reported.[16]

Room 39 is also believed to be operating the overseas North Korean restaurant chain called Pyongyang.[17]

In 2015, the European Union placed the Korea National Insurance Corporation (KNIC) under sanctions and added that the KNIC had links to Office 39.[18] The KNIC (which had offices in Hamburg, Germany and London, UK) was reported to have had assets of UK £787 million in 2014 and had been involved in scamming insurance markets and making investments in property and foreign exchange.[19] Thae Yong-ho, a North Korean diplomat who defected in 2016, said that North Korea earned each year "tens of millions of dollars" with insurance fraud.[20]

Ri Jong-ho was a senior official in the Room 39 organisation for about 30 years. He defected to South Korea in 2014 and to the United States in 2016. Ri was chairman of the Korea Kumgang Group that formed a joint venture with a Chinese businessman to run a taxi company in Pyongyang,[21] the president of a North Korean shipping company and head of a Chinese branch of Daeheung, a North Korean trading company involved in seafood, coal, shipping and oil. In a 2017 newspaper article Ri described how he evaded sanctions by transferring cash from China to North Korea by ship and by train.[22]

A 2020 review by the National Intelligence Service found that the Korea Kaesong Koryo Insam Trading Corporation was likely a front for Room 39.[23]

See also

References
  1. Rosett, Claudia (15 April 2010). "Kim Jong Il's 'Cashbox'". Forbes. Retrieved 9 July 2015.
  2. Landler, Mark (30 August 2010). "New U.S. Sanctions Aim at North Korean Elite". The New York Times.
  3. David Rose (5 August 2009). "North Korea's Dollar Store". Vanity Fair.
  4. Rose, David (September 2009). "North Korea's Dollar Store". Vanity Fair. Retrieved 9 June 2015.
  5. "Global Insurance Fraud By North Korea Outlined". Washington Post. 18 June 2009.
  6. Fischer 2016, p. 178.
  7. Kelly Olsen (11 June 2009). "New sanctions could hit North Korea's fundraising". The Guardian.
  8. "North Korea fires head of secret bureau 'Room 39'". CTV News. 4 February 2010. Archived from the original on 23 July 2012.
  9. Kim Kwang Jin. "The Defector's Tale: Inside North Korea's Secret Economy". World Affairs. Retrieved 12 September 2017.
  10. Fischer 2016, p. 179.
  11. "Report: NKorea Fires Director of Kim's Finances". AP. 4 February 2010.
  12. "Kim Jong-il Restores Special Department to Swell Coffers". Chosun Ilbo. 22 June 2010.
  13. Benjamin Katzeff Silberstein. "Ri Jong Ho, high-level defector and former official in Office 39, says North Korea gets much more oil from Russia than previously known". Archive for the ‘Daesung Trading Company’ Category -. Retrieved 13 September 2017.
  14. Sherwell, Philip (6 August 2017). "'Hotel of Doom' takes Kim's illusion-building sky high". The Times. Retrieved 6 August 2017.
  15. Olsen, Kelly (11 June 2009). "North Korea's secret: Room 39".
  16. Fischer 2016, p. 180.
  17. Strangio, Sebastian (22 March 2010). "Kingdom Kim's Culinary Outposts: Inside the bizarre world of Asia's North Korean restaurant chain". Slate.
  18. Booth, Robert (23 April 2017). "UK freezes assets of North Korean company based in south London". The Guardian. ISSN 0261-3077. Retrieved 23 April 2017.
  19. Gadher, Dipesh (23 April 2017). "Kim cooked up 'nuclear cash' in the suburbs". The Sunday Times. Retrieved 23 April 2017.
  20. Gadher, Dipesh (23 April 2017). "Secrets of Kim's little house in the suburbs". The Sunday Times. Retrieved 23 April 2017.
  21. Pearson, James (19 October 2015). "Taxis parade once-empty streets of North Korean capital". Reuters. Retrieved 13 July 2017.
  22. Fifield, Anna (13 July 2017). "He ran North Korea's secret moneymaking operation. Now he lives in Virginia". The Washington Post. Retrieved 13 July 2017.
  23. "Sugar-for-liquor trade deal with North scrapped due to possible sanctions violation". Korea JoongAng Daily. 24 August 2020. Archived from the original on 24 August 2020. Not much is known about the Korea Kaesong Koryo Insam Trading Corporation, as is the case with most of North Korea’s business operations, but the NIS believes the firm is a front for Pyongyang’s so-called Room 39, an organization in the regime responsible for generating foreign currency for its leaders.

Works cited
  • Fischer, Paul (2016). A Kim Jong-Il Production: Kidnap, Torture, Murder... Making Movies North Korean-Style. London: Penguin Books. ISBN 978-0-241-97000-3.CS1 maint: ref=harv (link)

Further reading
  • Jay Solomon and Hae Won Choi (14 July 2003). "Money Trail: In North Korea, Secret Cash Hoard Props Up Regime". The Wall Street Journal.
  • Michael Breen (January 2004). Kim Jong-il: North Korea's Dear Leader. John Wiley and Sons. ISBN 0-470-82131-0.
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