North Korean House of Cards

Choe Sung-chol, who managed the 2007 summit with President Roh Moo-Hyun,
was relieved of his official duties. However, it was the less publicized investigation
into Office 39, presumably led by the KWP Administrative Department, that had
the greatest implications for the Royal Economy.
While evidence is lacking, some sources suggest that this purge was part of
a move by Jang Song-taek to not only reestablish his ties to valuable hard currency
channels, but to also put in motion a plan to increasingly exert control over parts
of the Royal Economy. Following the investigation, Kim Jong-il dismissed several
officials handling secret funds deposited in Macau and economic projects involving
cooperation with South Korean officials: 433
• The President of the Daesong Trading Company, 434 operating under the
supervision of KWP Office 39, was fired for embezzling $1.4 million.
• National Economic Cooperation Council President, Chong Un-op, who
provided overall supervision of economic cooperation projects with South
Korea in the private sector, was accused of embezzling funds and arrested.
• Chongsaeng General Trading Company President, Kim Chol, was
arrested for illegally selling pig iron to South Korea and reportedly died
while in custody. 435
These purges increased surveillance of the officials involved in hard currency
operations, especially those who worked directly in service of the Royal Economy. It
may have convinced Kim Jong-il of the need for greater supervision of these sources
of revenue vital to the stability of the regime and his leadership.
If these rumors are to be believed, Jang did not gain access to the control levers
of the Royal Economy until 2008, following Kim Jong-il’s stroke in August. While
key members of the NDC, such as Jo Myong-rok and Kim Yong-chun, as well as SPA
Presidium President, Kim Yong-nam, were the faces of the regime at major Party and
military functions, behind the scenes, Kim Kyong-hui, Jang Song-taek, and Kim Ok,
433 “North Korea Purging Senior Officials Dealing With ROK?,” NK Focus, February 16, 2008.
434 Kim Ah-Young, “Targeting Pyongyang’s drug trade addiction,” Asia Times, June 18, 2003.
According to a 2003 article, the Daesong Trading Company coordinated opium trafficking through
its trading corporation, Daesong Sangsa, which had twenty overseas branches at the time. North Korea
reportedly produced more than forty tons of opium a year. Estimates of revenue earned ranged from a
low of $48 million to as much as $1 billion annually, if all illegal drugs, such as heroin, cocaine, and
methamphetamines were included. The other major trade organization dealing in opium was the Aesung
Trading Company. Both companies were part of the Office 39 apparatus.
435 The Chongsaeng General Trading Company was located at the Kim Chaek Steel Plant in
Chongjin City, North Hamgyong Province. It sold pig iron, hot-rolled steel, and scrap iron. Its ties to the
Royal Economy are unclear.
Ken E. Gause
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