North Korean House of Cards

Jang’s Channel to China
The Korea Daepung International Investment Group was reportedly
established in January 2010 in order to attract foreign investment. At
the heart of its operations was an agreement with a Chinese bank to
create a fund worth $10 billion, a figure many international monetary
experts dispute. Three months later (in March 2010), the Korea State
Development Bank was established to oversee the Daepung Group
and its assets. Jon Il-chun, the head of Office 39, was appointed
Director General of the State Development Bank.
Foreign monetary officials continued to be highly doubtful about the
amount of investment. Instead, they argued that, based on the timing,
North Korea was feigning this investment from China. In actuality,
North Korea was laundering their secret funds in China to return
them to North Korea. Although Daepung is registered in Hong
Kong as a corporation, it is actually no more than a paper company.
Ever since financial sanctions were imposed by the United States in
August 2010, Hong Kong authorities closely watched the movements
of Daepung and related funds. 442
In 2013, the South Korean Ministry of Unification announced that
North Korea had dissolved Daepung Group due to its unsatisfactory
performance. In hindsight, this may have been an early indication of
Jang Song-taek’s fall from power.
The evolving processes that allowed Jang to use his network to task other
parts of the Royal Economy leaked out as part of a 2010 Japanese investigation
into illegal exports to North Korea. 443 The investigation focused on Om
442 “Tracing the Whereabouts of Kim Jong-il’s ‘Secret Funds’ –Kim Jong-un Inherits Huge
Amount of Money Together with the Transfer of Power,” Bessatsu Takarajima, op. cit.
443 “Austrian convicted for yacht sale to North Korean leader,” Reuters, December 7, 2010. See also
“Wirepuller Kwon Yong-rok Behind Purchase of Luxury Yachts for Kim Jong-il,” Uin Hatsu “Konfidensharu,”
July 28, 2009. North Korean acquisition operations in Europe reportedly continued to rely heavily
on Third Floor operatives via the Jang Song-taek network. According to Austrian court documents tied
to a failed business transaction involving a local businessman, a North Korean operative made the initial
approach to the Austrian company with instructions to purchase two yachts and eight Mercedes Benz automobiles.
This operative was reportedly Kwon Yong-rok, a Deputy Director of Office 39. Then, a Chinese
front company made the down payment, which led to suspicion and investigation by the authorities. The
items were believed to be birthday presents for Kim Jong-il.
Committee for Human Rights in North Korea
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