Kim Jong-un's Secret Billions

      March 12, 2013 13:06

      North Korean leader Kim Jong-un has stashed away some US$4-5 billion in bank accounts in other people's names in Austria, China, Lichtenstein, Luxembourg, Russia, Singapore and Switzerland, intelligence agencies believe.

      "Since the launch of the Lee Myung-bak administration in February of 2008, South Korea and the U.S. have been tracking more than 200 North Korean accounts that appear to be linked weapons of mass destruction and export of drugs, counterfeit money and cigarettes," a diplomatic source said on Monday.

      ◆ Bank Accounts

      After the U.S. froze the accounts of former North Korean leader Kim Jong-il at Banco Delta Asia in Macau in 2005, the North dispersed its funds into many overseas accounts in different banks. North Korea opened accounts under aliases in Asia, Europe and Central America.

      "The regime uses minor banks that are relatively less stringent in screening their account holders or opening accounts using the names of foreigners or companies," said another source. In the past, North Korea preferred to use European banks but it recently began favoring Chinese ones.

      ◆ Sources of Income

      Intelligence agencies believe most of the money belongs to Kim Jong-un and is used to buy luxury goods either for himself or to buy the loyalty of high-ranking officials. "North Korea's economy is divided into its official economy, military economy and an imperial economy involving the Kim dynasty," a government official here said. "The slush funds are also emergency cash reserves in case of a regime collapse or other crisis," another source here said.

      Most of Kim's slush funds are foreign-currency revenues generated by North Korean businesses attached to the military or other government entities. Some of the money comes from legitimate activities, such as sales of agricultural and fisheries products or minerals and North Korean laborers working abroad. But the bulk comes from illicit activities such as selling drugs, dealing in counterfeit money, cigarettes, liquor or exporting weapons.

      The North earned an estimated $200-300 million a year through illicit activities until the international community slapped sanctions on Pyongyang following a missile test in 2009 and the sinking of the South Korean Navy corvette Cheonan and shelling of Yeonpyeong Island in 2010.

      ◆ Russian Mafia Links

      It is unclear who manages the slush funds. Jon Il-chun, a key confidant of former leader Kim Jong-il, no longer heads the agency managing the leader's private coffers and a replacement has yet to surface. Some believe that they are now managed by Ri Chol, the former North Korean ambassador to Switzerland who used to manage Kim Jong-il's slush funds and tended to his children when they were studying abroad.

      Since high-ranking North Korean officials and state agencies have been banned from engaging in financial transactions overseas, Pyongyang is apparently relying on the Russian mafia to launder money and operate secret slush funds.

      "The North Korean embassy in Russia launders counterfeit money sent from Pyongyang," said one defector who used to be a high-ranking official in the North. "In 2008 alone, $30 million worth of counterfeit money was laundered."

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