70% of cash sent to Kaesong was used on weapons

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70% of cash sent to Kaesong was used on weapons

The South Korean government has determined that 70 percent of the cash that flowed into the Kaesong Industrial Complex was diverted to help finance the country’s nuclear and missile development programs, Minister of Unification Hong Yong-pyo said Sunday.

The South Korean minister charged with North Korea issues said on a KBS TV program, “The U.S. dollars [for wages] are not paid directly to the North Korean workers at Kaesong; it goes first to the North Korean government.”

Hong had said last week that about $120 million in cash was sent to the complex last year, with a total of $560 million being sent since it began operations more than a decade ago.

The incoming foreign currency is then transferred to the Workers’ Party, which funnels it toward its nuclear and missile programs or to purchase luxury goods, he explained.

“When the party, government or military brings in U.S. cash, it goes to the party’s clerk division or its Office 39, and is used for weapons development or its own projects,” Hong said.

Office 39 is a secretive bureau in charge of managing the ruling Kim family’s foreign currency slush funds and generating revenue for the leadership.

While Hong said that he could not reveal further information because it is confidential government data, he added, “I am explaining why [the Kaesong project] had to be halted at this grave time.”

His remarks came after South Korea shut down the last vestige of inter-Korean cooperation Wednesday in a strong response to North Korea’s long-range missile launch on Feb. 7 and fourth nuclear test on Jan. 6.

In retaliation against the shutdown, the North ejected the remaining South Korean nationals at the complex on Thursday and seized company assets left behind, declaring the factory park a “military control zone.”

In addition, President Park Geun-hye requested Saturday evening to deliver an address to the National Assembly on Tuesday on bolstering national security following North Korea’s recent actions that violated United Nations resolutions and threaten peace on the Korean Peninsula.

Presidential spokesman Kim Sung-woo said Sunday that Park will emphasize the constitutional responsibility of the president to protect the people, especially in face of North Korea’s provocations, and plans to request the cooperation of the National Assembly on passing several pending bills on counterterrorism, labor reform and North Korean human rights.

The Kaesong Industrial Complex, a symbol of reconciliation, was created after the first inter-Korean summit in June 2000, and 124 South Korean companies there employed about 55,000 North Korean workers, who produced everything from clothes to electronic parts.

Minister Hong said Sunday that “the international community has recognized the significance and effect of the inter-Korean Kaesong Industrial Complex” in the past, so it had continued to run despite North Korea’s previous nuclear tests.

“But a lot of money is flowing in and none of our worries are being alleviated,” he said, which led to the decision to shut down the complex “as a stern measure to alleviate the worries of the people.”

He added that the international community did not ask South Korea to shut down Kaesong, amid talks of stronger sanctions against Pyongyang in the United Nations Security Council.

“It’s a decision that our government reached on its own,” Hong said, noting that China and other neighboring countries had shown interest in the process.

On North Korea’s response including the freezing of assets, Hong said, “It is something we of course predicted,” adding that they had reviewed various scenarios. “North Korea unilaterally freezing our assets is not in accordance with international norms.”

He added that companies in Kaesong can no longer continue their businesses because of the shutdown, so they will be eligible for insurance coverage.

Hong also said that resuming operations would depend on North Korea’s actions. “Fundamentally, North Korea will have to correct its wrongful actions.”

BY SARAH KIM [kim.sarah@joongang.co.kr]
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