The Tony Soprano of North Korea
(2 of 3)
According to several defectors who say they were involved in the narcotics trade, government trucks transport the opium harvested in North Hamgyong province to a factory outside Pyongyang run by Raemong Pharmaceuticals, a government-owned firm. A North Korean defector who claims he was a key middleman in the narcotics business alleges that Raemong is mainly a normal drug company. But, he says, it also converts opium into heroin headed abroad.
Related Articles
Has Kim Jong Il Come to His Senses?
Analysis: North Korea watchers are divided by the Dear Leader's promise to shut down a controversial nuclear reactor. Is Kim playing straight or still playing games?
How Kim Jong Il Lost Japanese Fans
Faced with the North's human rights abuses like the abduction of Japanese citizens, many Koreans living in Japan are turning their longtime support away from Pyongyang
North Korea has used several methods to get its drugs to market. According to Asher and other diplomats, those methods include having its diplomats carry drugs like crystal meth in their luggage as they head for overseas posts. (Asher says North Korea requires that its missions abroad be self-financing, meaning they need to earn enough money to stay afloat without help from Pyongyang.) In the case of heroin, say sources in law enforcement and intelligence, more traditional methods are typically used. Ships flying international flags head for nearby ports--in particular, Vladivostok in Russia's far east and Hong Kong--where organized-crime groups take over. A former senior law-enforcement source in Russia says the criminal groups "do business with agents of the North Korean government just as they would with any other criminal gang."
The North's neighbors are taking steps to root out the menace of North Korean drugs. In 2006 the Vice Minister for China's Public Security Bureau, Meng Hongwei, held a rare press conference to announce his "fierce determination" to combat North Korean drug rings operating in Jilin province in northeastern China. The North's drug dealings also extend to Japan, where in a four-year span, Japanese authorities seized 3,300 lbs. (1,500 kg) of crystal meth trafficked by North Korean gangs. And the Australian navy in 2003 boarded a North Korean vessel headed for the South Pacific and discovered it was packed with more than $45 million worth of high-grade heroin.
Despite such measures, there is little evidence that North Korea has been deterred from the drug business, particularly as demand rises in Russia and China. An East Asian intelligence source estimates that the trade is still worth "several hundred million dollars a year to the regime."
SMOKES AND MIRRORS
DURING THE COLD WAR, SUBIC BAY IN THE Philippines was a critical strategic base of the U.S. Navy. The Navy is long gone (the base closed in 1992), and Subic Bay's facilities are now used strictly for commercial purposes--including, according to a detailed private investigator's report produced for the international cigarette industry in 2005, the smuggling of contraband cigarettes from North Korea.
North Korea is not the only player in the game. (Until recently, China was by far the biggest source of phony brand-name cigarettes, industry executives say.) The private investigator's report for the cigarette industry found that 10 to 12 factories in North Korea produce a total of 41 billion contraband cigarettes a year, shipped out of the North on "deep-sea smuggling vessels." They are then off-loaded at sea to smaller, high-speed vessels that deliver the cigarettes to traffickers in East Asia. That allows the deep-sea smuggling ships to remain in international waters, beyond the reach of any country's law-enforcement authorities.
In late 2004, private investigators witnessed 6,000 master cases of cigarettes--each containing 10,000 smokes--being unloaded at Subic from a fishing vessel that routinely runs between Taiwan and North Korea. Since then, according to a North Korean defector intimately involved in the smuggling of phony cigarettes, "the business has only gotten bigger." This source, who did not want his name used for fear of reprisal in North Korea, where his immediate family lives, says export routes for contraband cigarettes--carrying popular name brands such as Marlboro, Benson & Hedges and Mild Seven, among others--are now multiple and varied.
North Korea's military- and internal-security services are "significant players" in the cigarette business, according to the source who used to be in the game. The North uses both homegrown and imported tobacco in these contraband businesses. A large source of phony cigarettes is the Dongyang Cigarette factory in Pyongyang, owned by a company called Kosanbong, which is controlled by North Korea's internal-security bureau, according to the 2005 private report and a defector interviewed by TIME. The North Koreans have been able to import equipment from Taiwan and mainland China to produce the cigarettes. Overall, the trade generates $80 million to $160 million in profit for the regime every year, the study claims. That cash is then spread among Pyongyang's élite to ensure loyalty to Kim, say multiple sources.
The illicit-cigarette business is a window into how North Korea arranges and moves its whole range of illegal products. The regime uses shipments of contraband cigarettes to export other goods, including narcotics and weapons. North Korea has successfully exported contraband cigarettes from its two major container ports using ships registered in other countries. Some of that material may have found its way to the U.S.--an indication of how easily weapons of mass destruction (WMD) from the North's arsenal could be smuggled to other countries if Kim were tempted to put them up for sale.
THE CASE OF THE SUPERNOTES
IN LATE SUMMER OF 2005, FEDERAL AGENTS involved in two elaborate undercover operations in California and New Jersey--code-named Royal Charm and Smoking Dragon--arrested several alleged members of Chinese organized-crime gangs known as triads. In addition to narcotics, phony brand-name cigarettes and bogus pharmaceuticals, the investigators found $4 million worth of unusually well-produced counterfeit $100 bills. "There's no way an ordinary bank teller in the United States, let alone overseas, is able to identify these notes [as forgeries]," says an American law-enforcement official. In the indictments that followed--the first trial is expected to start this summer--one of the people charged, Chao Tung Wu, a citizen of Taiwan, says the supernotes were produced by the "government of a country" identified in the indictment as "Country Two." That, sources in the U.S. and East Asia say, is North Korea.
According to U.S. and South Korean intelligence reports, the North has been producing the counterfeit bills at least since 1994. The South Korean intelligence service two years ago said it could confirm production only until 1998, but at least twice in recent years, claim U.S. and South Korean sources, the U.S. has presented the South Korean government with supernotes said to have been produced in 2001 and 2003.