Kim's Rackets — page 2

Indeed, as North Korean officials keep getting busted around the world, it's hard to point the finger elsewhere than their government. In a string of arrests and detentions dating back to 1977, more than 20 of the country's diplomats, agents and trade officials have been implicated in drug-smuggling operations in more than a dozen countries, among them Egypt, Venezuela, India, Germany, Nepal, Sweden, Zambia, Ethiopia and Laos. North Korean vessels now even appear to be shipping drugs between third-party states. Australian police in April staked out a spot near the sleepy tourist town of Lorne, shadowing three visitors from Southeast Asia believed to be waiting for a drug shipment when, to their amazement, they saw a dinghy hauling 50 kilos of heroin allegedly from a 4,000-ton cargo ship hugging the shoreline. The ship bore a Korean name, Pong Su. After a dramatic four-day chase, Australian special forces slid down ropes from a helicopter and arrested 30 North Korean crew members, one of whom is a member of Kim's Korean Workers' Party. On the beach near Lorne, police found a drowned crewman and a desperate North Korean snuffling around in the bushes—where 75 additional kilos of heroin had been hurriedly buried.

Australia hadn't encountered North Korean drug smuggling before. Its police say the heroin comes from Southeast Asia's Golden Triangle—suggesting that Kim, or one of his minions, sent a 4,000-ton freighter to the southernmost edge of Down Under to deliver someone else's smack.

That's how far—literally—he will go to keep his dirty dealings rolling. And to understand how Kim runs that business, you have to enter his weird world. There's no better place to start than at Bureau 39.

Central Committee Bureau 39 of the Korean Workers' Party is housed in a corner of a six-story, rectangular concrete building within a stiffly guarded Party compound in the heart of Pyongyang, not far from the Koryo Hotel, where many of North Korea's esteemed foreign guests stay. Kim Jong Il's office is in a nearby building. Established soon after the Stalinist regime started a drive in 1974 to raise foreign currency to further the glorious revolution, Bureau 39 is among the most secret sites in a battened-down land. It is the headquarters for almost all the North's foreign-exchange-earning businesses, from legal sales of exotic mushrooms and ginseng to drug running, car smuggling and counterfeiting.

Around the globe, Bureau 39's tentacles have such names as Daesung Chongguk—a trading company with nine overseas subsidiaries involved in legal trades in machinery and textiles—Golden Star Bank in Vienna, and Zokwang Trading Co. in Macau. Their earnings flow to Bureau 39, and hence, according to former North Korean officials, the money is at Kim's fingertips. "If you cut off Bureau 39," says Kim Dong Hun, a former North Korean business operative who defected in 1997, "you can kill Kim Jong Il. Kim can't exist as leader of North Korea without it."

Before he jumped ship, Kim Dong Hun was a senior official at Chosun Ongryook Trading Co., a North Korean importer-exporter of legitimate goods such as kitchen equipment. Friends at Bureau 39 approached him in the late 1980s and asked if he would trade drugs on the side. "They told me it was a secret and I couldn't leak a word of it," he recalls. They advised him to consider the drug trading "more important" than his regular job.

Kim soon found himself in hotel rooms accepting stacks of banknotes in black briefcases from members of the Japanese yakuza. He also took trains into China with a white powder, probably heroin, buried beneath dried squid in cardboard boxes. In all, Kim figures he earned the D.P.R.K. almost $1 million from drugs over six years, and he admits to skimming off a portion for himself to buy fancy cars. He knows exactly where the rest of the money went—to Bureau 39. "If it goes to Bureau 39," he says, "it is the same as sending it to Kim Jong Il."

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