Will sanctions target Kim’s Room 39?

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Will sanctions target Kim’s Room 39?

As the world waits for new U.S. sanctions on North Korea, local experts are interested in whether they will put the squeeze on Room 39, the secret bureau Kim Jong-il uses as his foreign currency slush fund.

Also referred to as Bureau 39 or Division 39, the unit has international bank accounts, gold mines and around 100 North Korean trading companies under its control.

“Kim Jong-il is increasingly concerned about the management of his dollar-denominated assets,” said a South Korean intelligence source, “and he even promoted his schoolmate Jon Il-chun to be head of Room 39.” The source said Jon also serves as the head of a state-run development bank the North established earlier this year to attract foreign capital.

Intelligence authorities in Seoul and Washington estimate Kim has funds overseas worth $4 billion.

Observers say a financial services blacklist of individuals to be announced in the new sanctions will likely include O Kuk-ryol, vice head of North Korea’s National Defense Commission, which is led by Kim Jong-il and his family. O is known to be managing a company that tries to attract foreign investment to the North.

The Washington Times, quoting a U.S. intelligence source, reported last September that O and his family had key roles in the manufacturing and distribution of counterfeit $100 bills, known as “super notes” for their quality. The newspaper also reported that O’s son, O Se-won, was working with his father as one of the key officials involved in counterfeiting.

Robert Einhorn, the U.S. State Department’s special adviser for nonproliferation and arms control, said in Seoul on Monday that the U.S. will announce a list of North Korean entities and individuals subject to the expanded sanctions within weeks.

UN Security Council Resolutions 1718 and 1874 put sanctions on eight North Korean organizations, including the Korea Mining Development and Trading Corporation, Korea Ryonbong General Corporation and Tanchon Commercial Bank. The sanctions also targeted five North Korean individuals, including Yun Ho-jin, director of Namchongang Trading Corporation and Ri Je-son, director of the General Bureau of Atomic Energy. U.S. Executive Order 13382, through which the U.S. has slapped additional sanctions on the North, is targeting 22 other organizations. Data from the Bank for International Settlements released last month showed that North Korean deposits at banks around the world stood at $670 million as of the end of March.


By Lee Young-jong [joe@joongang.co.kr]

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