North Korea is like Game of
Thrones but without the dragons. It’s an aristocratic society, and
it’s capitalist. And everything is geared to make sure that
there's as much cash for Kim as is possible. In capitalism, money is the lifeblood
flowing through the veins. It's no different in North Korea. Bureau 39 is involved in
everything that makes money for North Korea: Selling
arms, smuggling of drugs, counterfeiting of US bills. This
is about hundreds of millions of dollars a year. I, too, did everything.
All we were told was ? Make dollars! North Korea. A pariah state
largely isolated from the rest of the world. A dictatorship
shrouded in mystery. Every day, the country's state-run
media praise the heroic deeds of the Supreme Leader. Time seems to stand still here. In troop numbers, North Korea has the
fourth largest army in the world. For three generations, the Kim
family has ruled the country by divine right — and
with an iron fist. North Korea's military arsenal
is outdated — but contains nuclear weapons ? earning the
country severe sanctions. How does the regime
manage to survive? And how have the Kims
amassed enough money to threaten the world with the
most powerful weapon of all ?? On the other side of the world,
in the Netherlands, a history professor is working on
answers to these questions. Remco Breuker from the
University of Leiden has been studying the enigmatic country
and its rulers for years. He says our image of North
Korea is mistaken. North Korea isn’t what it tells
us it is. Just look how the country functions at the
highest level. What’s the main goal of the government, of the
regime I should say? It’s to make money. It’s to make cash for Kim.
What intrigues me personally is how North Korea
manages to make money. One of the questions we were stuck
with is: where does the money go? How much money
does North Korea make? For the leadership in
Pyongyang, questions like these are dangerous. The North Korean regime sent a
letter of indictment under my name to the Dutch government,
charging me with three capital crimes. The worst of the three
was the accusation that our research - my research because
it was in my name - damaged the supreme dignity of the
supreme leader. This sounds like a funny crime, right?
Damaging the supreme dignity of somebody. In North Korea
it carries the death penalty. A threat not to be taken lightly.
Remco Breuker’s investigations threaten to
disrupt North Korea’s sources of hard currency. The
country's first nuclear bomb tests in 2006 prompted its
international isolation. Without legal sources of
income, the regime took to raising money illegally. New York. The seat of the
United Nations. It's here that the UN has imposed nine
rounds of sanctions against North Korea — and also where
its global activities are monitored by an international
panel of experts. The group consists of eight
members, including former intelligence, military and
financial experts. For their own safety, they work
away from the public eye. Only the coordinator, Hugh
Griffiths, is willing to speak on camera. The sanctions have a
tremendous impact on one level on North Korea. It means
that their economy can’t flourish in a way it would if
they were able to sell their largest foreign currency
earning commodities legitimately. So, they can’t
ship coal legitimately; they can’t ship iron ore legitimately;
they can’t ship zinc legitimately. Foreign currency
is very important to any country, no matter how
autarkic its economy is. You need foreign currency to buy the
goods that are essential for your population or your elite group.
So foreign currency is pretty essential to North
Korea’s survival. The question is: what’s more important
to the North Korean leadership — developing their nuclear and
ballistic missile program or seeing their economy flourish? The regime opted to go for the bomb.
In 2005, it officially revealed that it had nuclear
weapons — as protection, it said, against attacks from
foreign powers — specifically, the United States. Pyongyang — home to the
government, and to the country's elite. Shiny new apartment blocks
line spotlessly clean showcase avenues. This is where
Pyongyang’s upper class resides. The city is home to 3
million people — but only those who are considered loyal to
the regime live here. Anyone wanting to enter the capital
from the outside needs a permit. Seong Kyun-chul works
at Pyongyang’s Economic Research Institute. He's
authorized to talk to journalists - about the sanctions, for example. It’s impossible to sanction a
country completely. Even now we trade and obtain foreign currency.
Sanction us as much as you like. We will advance
of our own accord. We will turn our competitiveness into a
sword through our sacrifices — and we will progress bravely. The sanctions that have
been put on North Korea are extremely strict. I mean,
there's probably not been a country that has been
sanctioned more diversely, more strictly. At the same time,
they're no longer working. There is a huge problem with
our North Korea policy and using sanctions to try and have
the regime modify its behavior, because we're not sanctioning
the one entity that earns most of this money that
keeps it afloat financially, that keeps it alive. Many high-ranking defectors
from North Korea talk about a secret government department
that’s said to administer the regime’s secret funds. Kim
Il-sung and his son Kim Jong-Il reportedly set it up in the
late 1970s and equipped it with wide ranging powers. Its
tasks: using clandestine hard- currency transactions to secure
an independent power base for the Kims, while also raising
money for the nuclear bomb ? and the leaders’ personal
luxury. Its name: Office 39. Only 200 kilometers to the
southeast: Seoul. South Korea’s hypermodern capital
— and one of the ten most expensive cities in the world.
Around 25 million people live in the metro area — about half
the population of South Korea. Among them, most of the
30,000 people who managed to flee from North Korea to
start a new and hopefully anonymous life in the megacity. Koh Young-hwan used to be a North
Korean diplomat. He escaped in 1991. He went on to become deputy
director of South Korea’s Institute for National Security
Strategy, which employs North Korean defectors to
gather valuable information. Few people know more about
the Kim dynasty's workings. Legend has it that when Kim
Jong-il came to power, he renamed the Finance
Department of the Worker’s Party Central Committee. It
was now called "Office 39", because it was located on floor
3 in room 9. Another story says that it was March 9 when
Kim Jong-il issued an order to set up such a bureau. Either way: to this day, Office
39 is the department that collects and manages the
Kim family's secret funds. Talk to any prominent North
Korean exile and they all tell you that Bureau 39 is
absolutely crucial in earning revenues for the North Korean regime.
It’s absolutely vital. Take it away, everything collapses. Here in New York, the United
Nations impose and monitor the sanctions against North Korea.
An entity as important as Office 39 surely ought to be at
the top of proscribed organizations. Office 39 is normally talked
about by North Korean defectors. We don't really see
Office 39 in our investigations. Instead, we're looking at the
North Korean banks and the shell companies that
traditionally operate overseas in third countries to generate
foreign currency. And then that money is sent
back to North Korea. Office 39 is never mentioned
in official documentation. But its money-raising
activities span the globe. Angkor Wat in Cambodia. A
World Heritage site. Over two and a half million people visit
the ancient Buddhist temple complex every year. Selfies for
the tourists, hard currency for Cambodia. Tourism is by
far the largest sector of the economy here. Angkor Wat’s
operating company earned more than 100 million dollars in 2018.
A lucrative business — and one that North Korea
is cashing in on. Right next to the entrance to
the temples is a museum that opened in 2015. At its heart
is a 3D painting depicting the history of the Khmer Empire
in monumental images. Throngs of tourists are guided
through here every day. The painters are from North Korea.
We had 63 painters. They took one year and
four months to paint it. Who constructed the museum?
Was it the Cambodians or the North Koreans as well? The North Koreans as well. The North
Koreans constructed the museum. Circumventing UN sanctions,
North Korea not only built the complex but also financed it.
In return, Pyongyang pockets all the takings for the first ten
years. After that, profits will be shared 50-50. The North
Korean director didn't want to appear on camera. But he did
tell us that the museum makes about 7 million dollars a year
in entrance fees — a figure he expects to treble in the near future. In the evening, after the
museum closes, the North Koreans throw another set of
doors open for the tourists. With cameras not welcome inside the
restaurant, we film in secret. Hello! Reservation? Yes, we made a reservation yesterday. The tables are almost
always fully booked. Can we sit near the stage? No, reserved. The menu boasts North Korean
specialties such as cold noodles and sea cucumber.
The prices are surprisingly high by Cambodian standards,
with main courses costing up to fifty dollars. The restaurant
is especially popular among tourists from China and South Korea.
Most of the young women who work here are art
students from Pyongyang. They live and sleep above the
restaurant — and in many cases are not allowed to leave
the premises for years. Every evening at the same time,
they change their outfits and get ready for the big show. There are 130 North Korean
restaurants like this worldwide - three of them in Cambodia.
They’re believed to make several million dollars a year.
But the waitresses don't get paid a cent. The big bucks —
western hard currency - flow directly into the
regime's secret coffers. Just one example of North
Korea's systematic exploitation of its
own population. North Korean workers are
deployed around the world. Even in the European Union —
such as here in Poland. We found North Korean work
brigades on a building site. They were promised good
wages and decent working conditions - only to be
treated like slaves. In the evening, after a 12-hour
shift, the workers are bussed back to their hostels. They’re monitored around the
clock by North Korean agents. One of them, however,
decided to talk to us. So no problem coming here on your own? No, on Sundays we can go out alone. What would happen if you got caught? They'd accuse me of this and
that, and I'd be interrogated by North Korean State
Security here in Poland. If they were not satisfied,
they'd send me back to Pyongyang for further interrogation.
And I might even get put in prison. So you have a job here? I came here to make money.
But no matter how hard I work, I can't make any money.
The working conditions are miserable. I
have no freedom. We have to spend our lives crammed
together in groups. You're probably aware that they keep
almost all of our wages. We only get a fraction. I'm in my thirties, and my
wife and daughter are at home. I earn next to nothing,
but I have to do this for them. I have no choice. Modern-day slavery ? as
North Korea sends well- trained workers to Poland to
toil away in shipyards and on construction sites. The
workers' families are effectively held hostage in
North Korea. If a worker flees, their relatives back home will
often face severe punishment. The workers are paid just 90
euros a month — the rest goes to the regime, as it
cashes in for Kim. Largely unnoticed by the
international community, North Korea has sent laborers all
over the world — believed to number up to 150,000 in all. About 40,000 of them are in
Russia, and up to 100,000 in China. North Koreans also
work in Kuwait, Malaysia, Cambodia, Mongolia, Oman,
Qatar, the United Arab Emirates and in a number of
African countries. The UN has become aware of this income
for Pyongyang — and is determined to drain the sources. Experts estimate that the
regime makes up to 1 billion dollars a year this way. How- and wherever money is
earned, it ends up at Office 39. It conducts money transactions
with absolute authority. Defectors say the office is
directly controlled by Kim Jong-un, and manages the
leadership’s secret accounts: what's called the "palace economy." But where exactly in
Pyongyang is Office 39 located? And just how many
millions flow into its coffers? When we ask the North
Korean official, he and his interpreter feign ignorance. I don't understand the question,
but perhaps you know more. Have you ever heard of “Floor 39”? ? 39th floor? Are we
talking about high-rises? Office 39 is one of the best-kept
secrets of the Kim regime. Only North Koreans who’ve escaped
are able to talk about it openly. Seoul. At a secret location,
we meet a man who used to work for the office. He was based in China.
His task: Smuggling foreign currency. Then he escaped.
His position was so important that the North
Korean regime has threatened to kill him. Afraid of being
identified, he had plastic surgery to alter his face. And
even then, he’s only willing to be filmed from behind. North Korea ostensibly has
a planned economy. This means that the state takes
care of supplying the population with food and other goods.
But in North Korea this system has been
largely abandoned. The supply of food and goods
for daily use has as such collapsed. As a result,
the majority of the North Korean population has to be
self-sufficient — and resort to the black market. To understand Office 39 and
the capitalist structures in place in North Korea, it’s
important to understand its history. In 1991 the world's
biggest communist country, the Soviet Union, was
dissolved — and North Korea lost one of its most
important trading partners. While many formerly
communist states now switched to a market economy,
the Kims continued to further isolate themselves. In 1994
- the year Kim Jong-Il succeeded his late father — a
devastating famine descended on the country. During the great famine in the
mid-90s many North Koreans starved to death. The public
distribution system collapsed. Witnesses described seeing
mountains of dead bodies in the streets. Anywhere between
one and three million North Koreans died. So, what
happened is that North Koreans now knew that if they
wanted to survive, they could no longer trust or rely on the state. And it was the rural population,
in particular, who had to be self-sufficient. Black markets
started to emerge — known as "Jangmadang". Today, there
are an unknown number of these markets throughout the country.
400 of them are even officially licensed, providing
tax income for the regime. Most of the buying, selling
and bartering here involves food and goods from China.
All manner of currencies are accepted, especially U-S
dollars and Chinese yuan. China and North Korea share
a border that is more than a thousand kilometers long.
But over 80 percent of that border is not even
secured with barbed wire. People in the border region
are subject to little control by the state — and they enjoy
substantial trade with China. This trade is the basis for the
black market in North Korea. The biggest beneficiaries
from the informal economy are government officials in Pyongyang.
Because of their loyalty, although mainly out of
financial self-interest, the regime permits them to trade.
And over the years, they’ve become wealthy. They sell
luxury goods, smuggle raw materials and invest in real estate.
They're called Donju — "masters of money" — and
enjoy the luxury and freedom afforded to them by the regime. But
that loyalty comes at a price. Many Donju hold senior
government positions, including at Office 39. Like this man, who's been
living in hiding in Seoul since he fled the north. While
growing up in the 90s, he capitalist structures. Before his
escape, he was responsible for exports — likely the office's
most profitable business. Fearing reprisals from the
regime, he likewise does not wish to be recognized. My position and rank within
the organization was “management employee”. I was
in charge of foreign trade. Were there departments that
did trade with Europe? Sure — a lot of them, in fact. Hamburg, Germany. Until a
few years ago, the North Korean state insurance
company KNIC had a branch in an innocuous-looking
apartment block in the city. From here, six North Korean
officials made deals with major European insurers. Office 39 has a department for
foreign insurance policies. This department conducts
insurance fraud. For example: they used to
re-insure Russian MI-8 helicopters that were nearing
the end of their operational lives. In concrete terms, this
department signed contracts with large European insurance firms.
Initially, they would pay the insurance
premiums of, say, five thousand dollars a month.
But eventually, the helicopters were blown up or
set on fire to collect the insurance sum. And that amounted
to maybe two million dollars. Just one case among many.
In 2015, the European Union added the KNIC to its
sanctions list — accusing the company of co-financing
Pyongyang's nuclear weapons program via Office 39. Experts
estimate that wrecked helicopters and similar tricks
helped the Kim regime rake in several hundred million dollars. North Korea uses its global
network of embassies to ferry money back to Pyongyang.
Government officials enjoying diplomatic immunity transport
the money in cash in their flight baggage — a simple but
efficient way of ensuring the funds keep on flowing. The North Korean embassies have
a diplomatic function, but that's often mainly ceremonial.
But their true function is financial. It's also illegal, mainly.
North Korean diplomats are basically cash
carriers for Kim. They are entrepreneurs, they are businessmen.
They may be drug lords, they may be
weapons smugglers, but they carry a diplomatic passport.
So you can’t touch them. Providing military supplies,
training, and much of that has been done through North Korea's
embassies, particularly in Africa and the Middle East.
So out of all the countries in the Middle East, currently the
Syrian Arab Republic has the greatest levels of prohibited
cooperation with North Korean military entities. Hafiz al-Assad, the father of the
current Syrian dictator, had been on friendly terms with
then North Korean leader Kim Il-sung since the 1960s.
Pyongyang supplied Syria with military personnel as well
as weapons and ammunition in its wars against Israel. An
important source of income — which exists to this day. Using tactics resembling those
of 18th century pirates, Office 39 operates cargo ships under
false flags and fake names. According to the UN, this has
enabled North Korea to send large quantities of weapons
and military equipment to Syria. Between 2012 and 2017, it
says, at least 40 shipments with prohibited cargo from
North Korea passed through the Suez Canal. But then, the
UN managed to have one of the deliveries intercepted. So, we found something, cargo
on its way to Syria. These were acid resistant tiles and
valves, which could be used in chemical weapons development.
But also, missile fuel is highly corrosive. And
such tiles could be used for ballistic missile programs as well.
The bill of lading clearly gave us an address in Syria, an
established front company for Syria's Scientific Studies
Research Center, the SSRC, which is responsible for both
Syria's ballistic missile and chemical weapons development program. The chemical weapons
produced in the SSRC’s labs have been used by Syrian
dictator Bashar al-Assad against his own people for years. One third of all buildings in
Syria have been destroyed. The regime in Damascus has
been planning for the time after the civil war ends — and
hopes to receive billions of dollars from international
donors for the country's reconstruction. The armies of
workers required are to come from North Korea — as
formally agreed by the two countries at a meeting in June
2019 ? Here, too, Pyongyang is looking forward to
a lucrative business. The money that's earned by
Office 39 goes straight into the coffers of the leadership. It
is used on one hand to provide luxury items; it is used to pay
for the Mercedes Benz cars that somehow found their way
into North Korea despite the sanctions. But it is also used,
and this is probably more important, to deliver the best
hackers you can train. As early as the mid-80s Kim Jong-Il
started training the most talented children in terms of
mathematical abilities and programming abilities to
become cyber hackers. They are also good money earners.
Ransomware, like the Wannacry virus for example, is
considered to come from the North Koreans. It is the biggest cyberattack the
world has ever seen. Hundreds of thousands of computers
around the world in about 150 countries rendered useless.
Now the US government is publicly placing the blame for
that cyber-assault, uniquely dubbed “Wannacry”, squarely
on Kim Jong-un's army of hackers. British intelligence
officials and Microsoft had previously concluded that
groups associated with the North Korean regime were
responsible for the Wannacry hack. In Seoul, IT specialists have
North Korean hackers squarely in their sights. Simon Choi
works as a consultant for South Korean intelligence agencies. We've been following the
activities of North Korean hackers for ten years now.
In the past, they’ve been primarily attacking the
South Korean Ministry of Defense and other
government agencies. But since around 2015, it's
become clear that their interest has shifted to
international banks. North Korea has limited access
to the internet — with only one thousand IP addresses available
to the country. Many are used by North Korean
computer specialists to attack other countries. Experts say
that between 600 and 1,300 hackers are at work for the regime. An estimated two billion
dollars may have been diverted by young, highly trained North
Korean hackers to fund the country's nuclear weapons program. North Korea is changing. An
impoverished communist state is now a country with a highly
flexible shadow economy. And as with commercial
companies, all that matters are American dollars — cash for Kim.
The workers here are now slaving away not for the
revolution, but for the wealth of their leader and his cronies — as
the gap between rich and poor widens. While the population in
Pyongyang enjoy constant growth in prosperity, the UN says that
40% of the rural population still suffer from malnutrition. In order
to control its people, the regime employs old-school
authoritarian rule. North Korea's underground economy,
on the other hand, is 21st Century capitalist. Dandong, China. North Korea's gateway to the
world — and a symbol of how futile the UN's efforts have been
to dry up Kim's sources of cash. The “Sino-Korean Friendship
Bridge” across the Yalu river has connected the two nations
since 1943. Every day, trucks queue up in front of the
customs checkpoint. It brings together smugglers,
traders, and also the agents and entrepreneurs of Office 39 —
all of them hoping to make a quick deal here. China is by far North Korea's
most important trading partner. According to economics
experts, it accounts for 90 percent of North Korea's export trade. Thousands of North Korean
women are believed to work for textile manufacturers
in the Dandong region. Posing as businessmen and
equipped with hidden cameras we film inside one such factory.
Chinese textile companies hire North Koreans
because their wages are lower than those of the domestic workforce.
These seamstresses work day and night, and
often sleep on the company premises. Many are effectively
locked up there for years, far away from their families. Together with a team of labor
lawyers, trade experts and data specialists, Remco Breuker has
been investigating whether European brands work with
Chinese companies that directly or indirectly
employ North Koreans. We found out different things.
One of the things we were actually hoping to establish
was the use of North Korean workers in Chinese factories.
But what we found, really to our surprise, is that, yes, we
do have North Korean workers, working under slave like
conditions in China, but more than that, Chinese factories
outsource to North Korean factories in North Korea.
We have managed to prove a significant amount of North
Korean slave labor in the supply chain of some of the world’s
leading clothing companies. Breuker's team took an
especially close look at one Chinese textile company with
the French name "Vent D'est" or "eastern wind". The firm's
own website states that it “relies on low labour cost and
abundant human resources". The list of customers
reads like a who's who of international fashion brands.
The Vent D'est website features this men's jacket —
described as "Korean imported". The buttons bear the words:
“Armani Jeans”. Using trade databases, Breuker's team
analyzed Vent d'Est’s business dealings between 2013 and 2019.
The databases use customs information, showing
which goods are sent back and forth between firms in
different countries. So, what happens is that China
sends the material to make certain types of clothes to
North Korea. One month later, they're shipped back in the
same container. And then you have finished clothes. Those
clothes are then shipped to, say, the Netherlands or to
Germany or to America. And from there they are
distributed to our stores. Between 2013 and December
2016, Vent d'Est sent around 10 million dollars’ worth of
fabrics and raw materials to North Korea. During the same
period, the company received finished garments worth almost
25 million dollars from North Korea. Customs classify
textiles by so-called Harmonized System codes. A
ladies' sweater, for example, will have a different HS Code
than a pair of men's jeans. We take a look at HS Code 6201. It
stands for men's anoraks and coats — including the Armani
jacket on the website. Between 2013 and December
2016, Vent d'Est imported products with this code worth
12 million dollars from North Korea. The same code is also
found with deliveries from Vent d'Est to Europe and the US.
Among the customers: Diesel and Armani. Armani jackets that look
exactly like the one on the Vent d'Est website can also
be bought in Europe. This one costs 219 euros. It’s
impossible to prove beyond doubt that garments like this
one are made in North Korea. But at the same time:
can it be ruled out? We asked the companies
implicated to comment. Armani's response? "We confirm
that Vent d’Est is one of our suppliers and as such is
regularly subject to checks and inspections — the result of
these checks being that no finished products are
manufactured in North Korea. Like all our suppliers, it is
also required to declare which subcontractors it uses and, where
these are concerned, it is also the case that none
are in North Korea." We also wrote to Vent d'Est.
The company offered no explanation as to why and on what
scale it trades with North Korea. One thing can be said for certain.
Big-name fashion brands have their goods
manufactured by a Chinese company that does business
with North Korea — a country where workers have no rights.
Where human life counts for little ? or nothing. And
Breuker's investigation shows that this is far from
an isolated case. Chinese firms use factories in
North Korea to produce goods worth hundreds of millions of dollars. For years and years, we've
heard testimonies from North Korean escapees who were in
concentration camps that they been forced there to produce
textiles for the export markets. For famous Western brands. And
I think for the first time I've been able to corroborate
that through an external source. So not through a testimony. In the same database, I've found the department, the
bureaucratic department, that is responsible for managing the
production of textiles for one of the concentration camps
outside Pyongyang. It means that we not only buy clothes
produced by forced laborers, maybe even slave laborers, we
may even buy clothes in the Netherlands, in Germany, all
through Europe, in America, that was made in concentration
camps by people who will never see the light of day again.
These are the kinds of camps that you don’t leave until
you’re dead. That is just too horrific to put in words.
And we are complicit. Hundreds of thousands of men
and women secretly ensure the survival of the Pyongyang regime.
Their futures are sacrificed for the luxurious
lifestyles of the powers that be — and also for western
consumerism and convenience. Kim Jong-un is perhaps not so
much an unhinged dictator as a coolly calculating
businessman who runs his country like a company. And Office 39 does plenty of
business: with everything and everyone - including us.
He has inherited the perfect pyramid scheme. Where all citizens in a whole country are included in the scheme.