North Korean House of Cards

General Trading Corporation, then affiliated with the Ministry of
Finance, to the Administrative Section.
In the lead up to the first inter-Korean summit in 2000, the KWP OGD was
embedded even deeper in the Royal Economy when Kim Jong-il began to employ it to
manage part of the “revolutionary funds.” This practice reportedly began with a bribe
of roughly $500 million that Kim Jong-il received from the Kim Dae-Jung administration
through the Hyundai Corporation in order to secure the inter-Korean summit. 422,
423
This money was allegedly turned over to Jang Song-taek for distribution. Of the
$500 million, $100 million was used to repair the economy and over $400 million was
allocated to the military—$200 million of which was earmarked for the munitions
industry. 424 From this decision, the OGD established a relationship with the North
East Asia Bank (NEAB) in order to manage a number of special “revolutionary funds”
accounts, also known as NEAB 611 accounts. 425 As the decade progressed, these
accounts, as well as other Royal Economy funding streams, became vital to ensuring
the viability of critical North Korean defense systems, such as the nuclear and missile
programs. They were used to top off or supplement the already substantial funding
coming into the regime through weapons sales by the KWP MID channels. 426
Jang’s power, and that of the Administrative Section of the KWP OGD,
continued to grow in the early 2000s, largely drawing on the revenue from the
Royal Economy. This access to resources and funds allowed Jang to not only successfully
engage in politics with other elements of the regime, but it also afforded him
the opportunity to push back against his rivals within the OGD, namely First Vice
Directors Ri Yong-chol and Ri Je-gang.
Just as Jang was firmly establishing himself among the close aides around
Kim Jong-il, he overreached. Soon after becoming Premier in 2003, Pak Pong-ju
tapped into Jang Song-taek’s patronage network to appoint Sin Il-nam, a Vice
Minister of the MPS, as Vice Premier and Chairman of the Capital Construction
Committee. Sin Il-nam very likely saw this as a demotion, given the lack of status
surrounding the Cabinet. He maintained his close ties to Jang and ignored orders
from the Premier. When he refused Pak Pong-ju’s order to deliver materials in
422 Kim Kwang-jin, op. cit.
423 Sung-Yoon Lee, “Engaging North Korea: The Clouded Legacy of South Korea’s Sunshine
Policy,” American Enterprise Institute, April 19, 2010.
424 Kim Kwang-jin, op. cit.
425 Ibid.
426 Ibid. According to Kim Kwang-jin, the cost of a single missile test could cost nearly $340
million, while a single nuclear test costs close to $400 million.
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