North Korean House of Cards

Following the creation of Office 39, Kim Jong-il quickly expanded its
apparatus. In May 1974, he removed the Daesong Guidance Bureau from the
Ministry of Trade and placed it under the new Party body. 389 A small outfit
dedicated to procuring building material for the Kim Il-sung idolization campaign,
as well as goods for the Kim family’s own consumption and to use as gifts
for loyalists. 390 The Daesong Guidance Bureau soon became the largest trading
company in North Korea. It generated an annual net revenue in the tens of
millions of dollars. 391
By the late 1970s, the foreign currency coming into the regime through
this channel had grown to such an extent that Office 39 required its own bank. In
November 1978, Kim Jong-il turned to the Ministry of Trade once again, removing
a small department that until that time had managed his personal funds. This
department was then placed under Office 39 and renamed the Korea Daesong Bank.
In addition to handling the funding streams of the various entities under Office 39,
it also conducted foreign exchange transactions. 392 It managed funds in the tens of
millions of dollars.
Chart 5: Foreign Transactions via the Korea Daesong Bank
Portion of funds rerouted
to secret accounts
Kim Jong-il
Office 39
General
Bureau 73
Funds brought
into North
Korea
Foreign Banks
in Europe,
Asia
Funds deposited into foreign
accounts controlled by Daesong Bank
Third Floor
Foreign
Operations
Funds
Daesong Group
Daesong Bank
389 Andrei Lankov, “The Shadowy World of North Korea’s Palace Economy,” Al Jazeera, September
3, 2014. Daesong means “great prosperity.” Since the late 1970s, the Daesong Group has become the face
of Office 39. As such, the group enjoys a number of significant privileges, such as monopoly rights on
gold mining and export.
390 Kim Kwang-jin, op. cit. Goods and services for the Kim family are normally preceded in the
North Korean lexicon by the designation “No. 1.” According to one defector source, domestically produced
goods are sometimes preceded by the designation “No. 8” or “No. 9.” Foreign imports sometimes carry
the designation “No. 88.”
391 Ibid.
392 Ibid. The Korea Daesong Bank was the first Party-operated foreign exchange bank independent
of Cabinet control. Until other similar Party banks were established, the Korea Daesong Bank was
responsible for the banking services tied to the various entities of Kim Jong-il’s apparatus, including the
Guard Command.
Committee for Human Rights in North Korea
180