By Kim Young-jin
Kim Kwang-jin, like others close to the inner circle of North Korea, knows a lot about high-end watches ㅡ the bling was how the late despot Kim Jong-il bought loyalty from officials.
"I know a lot of types of Omega watches because of that," said Kim, a former financier for the regime.
The defector also knows the shadowy methods the North uses to raise cash for such lavishness ㅡ he helped bring $20 million annually by scavenging off international insurance companies.
The best way to pressure the new regime of Kim Jong-un, he believes, is to target the under-the-radar action.
"It is a very serious problem for the regime when they have trouble making use of the (international) financial system," Kim said in a speech this week organized by the Network for North Korean Democracy and Human Rights.
Kim says the North has operated the largely invisible system to raise money for the ruling Kim family to pay for the costly work of maintaining its personality cult.
The "Royal Court Economy," as he dubs it, took root in the 1970s when Kim Jong-il began consolidating his power. To do so, he needed to build monuments to idolize his father, then-leader Kim Il-sung, and line the pockets of his support base. He established Office 39, the mysterious lynchpin of the fundraising.
As a "revolution fund manager" for the powerful Organization and Guidance Department of the ruling Worker's Party, Kim helped manage contracts with international reinsurers.
His boss was Jang Song-thaek, the powerful official now the regent to new leader Kim Jong-un.
"Whenever there was an accident, a disaster, storm, fire, a machine breakdown, we made claims to the reinsurers and made foreign cash," he said, adding that due to severe devaluation of the local won, actual victims never saw any compensation. "Every year, we gave the money to Kim Jong-il on his birthday."
Kim says the North constantly works to expand its insurance network and on many occasions, its claims are complete fabrications.
Other activities to draw in cash reportedly include counterfeiting cigarettes, medicine and money.
All told, Kim estimates the private financial network produces two hundred times more in foreign cash revenue than the central government.
Kim traveled extensively on the job. But when stationed in Singapore, his office came under suspicion of leaking classified information.
Wary of being blamed for the violation, his family defected.
Since then, he has worked as a researcher at the Institute of National Security Strategy in Seoul and served as a visiting scholar at the Committee for Human Rights in North Korea in Washington.
The defector said neither engagement nor a hard line from Seoul had compelled the North to change and that stamping out the North's accounts abroad was the best way to pressure the regime.
"We can find accounts everywhere," he said. "As (former U.S. nuclear negotiator) Christopher Hill said: we can travel to the moon to find and close the accounts."
He added that helping North Korean defectors settle in the South and elsewhere would also bring pressure to and possibly help topple the regime.
Though Kim Jong-un has brought stylistic changes to the regime ㅡ and is rumored to have closed down Office 39 ㅡ Kim Kwang-jin said no "big change" had been detected in the North's system.
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| Kim Kwang-jin, a former financier for the North Korean regime, gives a speech in Seoul, Wednesday. / Courtesy of Kwak In-goo |
"I know a lot of types of Omega watches because of that," said Kim, a former financier for the regime.
The defector also knows the shadowy methods the North uses to raise cash for such lavishness ㅡ he helped bring $20 million annually by scavenging off international insurance companies.
The best way to pressure the new regime of Kim Jong-un, he believes, is to target the under-the-radar action.
"It is a very serious problem for the regime when they have trouble making use of the (international) financial system," Kim said in a speech this week organized by the Network for North Korean Democracy and Human Rights.
Kim says the North has operated the largely invisible system to raise money for the ruling Kim family to pay for the costly work of maintaining its personality cult.
The "Royal Court Economy," as he dubs it, took root in the 1970s when Kim Jong-il began consolidating his power. To do so, he needed to build monuments to idolize his father, then-leader Kim Il-sung, and line the pockets of his support base. He established Office 39, the mysterious lynchpin of the fundraising.
As a "revolution fund manager" for the powerful Organization and Guidance Department of the ruling Worker's Party, Kim helped manage contracts with international reinsurers.
His boss was Jang Song-thaek, the powerful official now the regent to new leader Kim Jong-un.
"Whenever there was an accident, a disaster, storm, fire, a machine breakdown, we made claims to the reinsurers and made foreign cash," he said, adding that due to severe devaluation of the local won, actual victims never saw any compensation. "Every year, we gave the money to Kim Jong-il on his birthday."
Kim says the North constantly works to expand its insurance network and on many occasions, its claims are complete fabrications.
Other activities to draw in cash reportedly include counterfeiting cigarettes, medicine and money.
All told, Kim estimates the private financial network produces two hundred times more in foreign cash revenue than the central government.
Kim traveled extensively on the job. But when stationed in Singapore, his office came under suspicion of leaking classified information.
Wary of being blamed for the violation, his family defected.
Since then, he has worked as a researcher at the Institute of National Security Strategy in Seoul and served as a visiting scholar at the Committee for Human Rights in North Korea in Washington.
The defector said neither engagement nor a hard line from Seoul had compelled the North to change and that stamping out the North's accounts abroad was the best way to pressure the regime.
"We can find accounts everywhere," he said. "As (former U.S. nuclear negotiator) Christopher Hill said: we can travel to the moon to find and close the accounts."
He added that helping North Korean defectors settle in the South and elsewhere would also bring pressure to and possibly help topple the regime.
Though Kim Jong-un has brought stylistic changes to the regime ㅡ and is rumored to have closed down Office 39 ㅡ Kim Kwang-jin said no "big change" had been detected in the North's system.
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