Archive for the ‘Ryonha Machine Tool Factory (JV Company)’ Category

UN report explains sanctions decisions

Friday, August 6th, 2010

According to the Daily NK:

The 1718 Committee of the UN Security Council has published the final version of its “Report to the Security Council from the Panel of Experts established Pursuant to Resolution 1874,”

In the report, of which the Daily NK has obtained a copy, the 1718 Committee revealed North Korean overseas accounts which had likely been used for North Korea’s illicit activities such as conventional weapons transactions and luxury goods, and the names of entities and individuals involved in those activities. The lists were submitted by UN member states.

The report singles out 17 North Korean officials thought likely to violate UN Resolutions 1718 and 1874, and outlines the reasons why they were designated by the UN member states.

They are Jang Sung Taek, Vice-chairman of the National Defense Commission and the closest associate of Kim Jong Il, Vice-chairman of the National Defense Commission Oh Keuk Ryul, Kim Young Chun, the Minister for the People’s Armed Forces, Director of No. 39 Department Kim Dong Woon, Military Supplies Secretary in the Central Committee of the Party Jeon Byung Ho, former Yongbyon technical director Jeon Chi Bu, First Vice-director of the Ministry of the Munitions Industry Chu Kyu Chang, Standing Vice-director of the People’s Army’s General Political Department Hyun Cheul Hae, President of the Tanchon Commercial Bank Kim Dong Myung, Member of the National Defence Commission Baek Se Bong, Deputy Director of the General Political Department of the People’s Armed Forces Park Jae Kyung, President of the Academy of Science Byeon Youong Rip, Director of the General Bureau of Atomic Energy Ryeom Young, Head of the Department of Nuclear Physics of Kim Il Sung University Seo Sang Il, President of Kohas AG Jacop Steiger and Alex H.T. Tsai, who is known to have provided financial, technological and other support for KOMID, and his wife, Su Lu-chi.

It also released a list of autonomous designations provided by member states, covering 19 North Korean entities. That list was made based on information collected as of April 30th this year.

They are Amroggang Development Banking Corporation, Global Interface Company Inc., Hesong Trading Corporation, Korea Complex Equipment Import Corporation, Kohas AG, Korea International Chemical Joint Venture Company, Korea Kwangson Banking Corp, Korea Kwangsong Trading Corporation, Korea Pugang Trading Corporation, Korea Pugang Mining and Machinery Corporation ltd., Korea Ryongwang Trading Corporation, Korea Ryonha Machinery Joint Venture Corporation, Korea Tonghae Shipping Company, Ponghwa Hospital, Pyongyang Informatics Centre, Sobaeku United Corp., Tosong Technology Trading Corporation, Trans Merits Co. Ltd., and Yongbyon Nuclear Research Centre.

13 out of the 19 have direct or indirect links to Tanchon Commercial Bank and Korea Mining Development Trading Corporation (KOMID).

Amroggang Development Banking Corporation is the financial arm of KOMID and related to Tanchon Commercial Bank, which has also been designated by the 1718 Committee. Additionally, Global Interface Company Inc. is owned by Alex Tsai, who is thought to have provided, or attempted to provide, support to KOMID.

Sobaeku United Corp. is involved in activities related to natural graphite, producing graphite blocks that can be used in missiles.

The report points out, “North Korea has established a highly sophisticated international network for the acquisition, marketing and sale of arms and military equipment, and arms exports have become one of the country’s principal sources for obtaining foreign exchange,” and goes on to say, “Agencies under the National Defense Commission (NDC), the Workers’ Party of Korea (WPK) and the Korean People’s Army (KPA) are most active in this regard.”

The report explains, “The Second Economic Committee of the National Defense Commission plays the largest and most prominent role in nuclear, other WMD and missile-related development programs as well as in arranging and conducting arms-related exports.”

It adds, “The General Bureau of Surveillance of the Korean People’s Army is involved in the production and sale of conventional armaments.”

The report points out that North Korea has opened 39 accounts with 18 overseas banks in 14 countries. 17 of which are held with Chinese banks.

Besides China, 11 banks in eight European and former Soviet countries (Russia, Switzerland, Denmark, Hungary, Poland, Italy, German, Belarus and Kazakhstan) hold 18 North Korean accounts. There is one account in Malaysia.

“The DPRK also employs a broad range of techniques to mask its financial transactions, including the use of overseas entities, shell companies, informal transfer mechanisms, cash couriers and barter arrangements,” the report notes.

According to experts on North Korea, since North Korean overseas illegal activities are all led by the loyal group surrounding Kim Jong Il, U.S. financial sanctions in accordance with UN Security Council resolutions 1817 and 1874 and also U.S. Executive Order (E.O.) 13382 have the potential to be a great pressure on the Kim Jong Il regime.

The Panel of Experts, which was appointed by the UN Secretary-General on 12 August 2009 to author the report, are David J. Birch (United Kingdom of Great Britain and Northern Ireland, coordinator), Masahiko Asada (Japan), Victor D. Comras (United States of America), Erik Marzolf (France), Young Wan Song (Republic of Korea), Alexander Vilnin (Russian Federation), and Xiaodong Xue (People’s Republic of China).

Read the full story here:
Report Explains Sanctions Decisions
Daily NK
Kim Yong Hun


CNC – Juche’s industry power

Wednesday, June 30th, 2010

For those of you who have recently visited the DPRK or who spend too much time perusing or reading KCNA, you are undoubtedly aware of the DPRK’s recent emphasis on something called “CNC”.  I had no idea what CNC was, so I began collecting as much information as I could find on the net and I have posted it below.

Here is the Wikipedia page for CNC.  For those of you in China, here is what it says:

Numerical control (NC) refers to the automation of machine tools that are operated by abstractly programmed commands encoded on a storage medium, as opposed to manually controlled via handwheels or levers, or mechanically automated via cams alone. The first NC machines were built in the 1940s and ’50s, based on existing tools that were modified with motors that moved the controls to follow points fed into the system on paper tape. These early servomechanisms were rapidly augmented with analog and digital computers, creating the modern computed numerically controlled (CNC) machine tools that have revolutionized the design process.

In modern CNC systems, end-to-end component design is highly automated using CAD/CAM programs. The programs produce a computer file that is interpreted to extract the commands needed to operate a particular machine via a post processor, and then loaded into the CNC machines for production. Since any particular component might require the use of a number of different tools—drills, saws, etc.—modern machines often combine multiple tools into a single “cell”. In other cases, a number of different machines are used with an external controller and human or robotic operators that move the component from machine to machine. In either case, the complex series of steps needed to produce any part is highly automated and produces a part that closely matches the original CAD design.

That description is not nearly as helpful as this video on CNC: Click here (Might not work for readers in China).

The Asia Times ran a story which included a short history of CNC in the DPRK:

The name of the game is CNC – Computer Numerical Control – machine tools that have revolutionized the design process and said to be developed in the DPRK and already exported, for example, to China. Top exponents are the Korea Ryonha Machine Tool Corporation and the Taean Heavy Machine Complex. CNC billboards are all over Pyongyang. Inevitably CNC has its own dedicated patriotic song (no music video yet). Here are the lyrics, as translated by Andray Abrahamian, a doctoral candidate at the University of Ulsan in South Korea:

If you set your heart on anything
We follow the program making the Songun era machine technology’s pride
Our style CNC technology


CNC – Juche industry’s power!
CNC – an example of self-strength and reliance!
Following the General’s leading path
Breakthrough the cutting edge

Arirang! Arirang! The people’s pride is high
Let’s build a science-technology great power
Happiness rolls over us like a wave

So the narrative of building a “socialist paradise” is now being supplanted by the narrative of developing and producing state-of-the-art technology to, as the Pyongyang Times indelibly put it, “improve the people’s living standard on the word level”. This is how the DPRK is mobilizing its people to “open the gate to a thriving nation in 2012”. South Korea, watch out.

By way of luck, I managed to obtain a copy of the DPRK’s CNC song. You can download the MP3 by right clicking here.

UPDATE: A reader did find this DPRK karaoke version of the CNC song complete with lyrics (in Korean).  Watch it here.

UPDATE 2: A reader also sends in this acoustic version of the CNC song (YouTube).

If you are itching to know what the DPRK’s CNC machines look like, here is one display at the Three Revolutions Museum in Pyongyang:

cnc1-thumb.jpg cnc2-thumb.jpg cnc3-thumb.jpg

Click images for larger versions

And here is some CNC propaganda that has appeared around Pyongyang:

cnc-prop-1.jpg cnc-prop-2.jpg cnc-prop-3.jpg cnc-prop-4.jpg

Click images for larger versions

UPDATE: here is an additional photo taken by an anonymous tourist:



UPDATE: Here are some CNC postage stamps:



UPDATE: And CNC made part of the 2010 Mass Games (You Tube at the 1:25 mark). See a photo here.

KCNA has published plenty of news stories about CNC.  You can see them here courtesy of the Stalin Search Engine. CNC was first first mentioned on January 15, 2002 (KCNA) .  One phrase that is frequently mentioned is that thanks to innovations like CNC the DPRK is “Pushing back the frontiers of science”.  Indeed North Korean economic policy seems hell-bent to do just that.  Hopefully we will soon see them change their policies to “push back the frontiers of ignorance”.

CNC machines are produced by the Ryonha Machine [Tool] Factory (KCNA) and they have been widely promoted in the official media (here, here, here, here, and here for example).  It appears also that the Ryonha Machine Tool Factory has partnered up (with someone) to form a JV company which focuses on international trade, the Ryonha Machinery Joint Venture Corporation. Here is a PDF flyer of their products taken from the KFA web page, and some of the items they are selling can be seen here and here.

They Ryonha Machine Joint Venture Company, however, seems to have a history that might scare away many potential customers.  According to the US Treasury Department:

The U.S. Department of the Treasury today designated eight North Korean entities pursuant to Executive Order 13382, an authority aimed at freezing the assets of proliferators of weapons of mass destruction (WMD) and their delivery vehicles.  Today’s action prohibits all transactions between the designated entities and any U.S. person and freezes any assets the entities may have under U.S. jurisdiction.

“Proliferators of WMD often rely on front companies to mask their illicit activities and cover their tracks,” said Stuart Levey, the Treasury’s Under Secretary for Terrorism and Financial Intelligence (TFI).  “Today’s action turns a spotlight on eight firms involved in WMD proliferation out of North Korea.  We will continue to expose and designate these dangerous actors.”

Today’s action builds on President Bush’s issuance of E.O. 13382 on June 29, 2005.  The Order carried with it an annex that designated eight entities – operating in North Korea, Iran, and Syria – for their support of WMD proliferation.  The President at that time also authorized the Secretaries of Treasury and State to designate additional entities and individuals proliferating WMD and the missiles that carry them.

Korea Mining Development Corporation (KOMID), which was designated in the annex of E.O. 13382, is the parent company of two of the Pyongyang-based entities designated today, Hesong Trading Corporation and Tosong Technology Trading Corporation.  These direct associations meet the criteria for designation because the entities are owned or controlled by, or act or purport to act for or on behalf of KOMID.

Korea Ryonbong General Corporation, also named in the annex, is the parent company of the remaining six Pyongyang-based entities designated today.  These entities include Korea Complex Equipment Import Corporation, Korea International Chemical Joint Venture Company, Korea Kwangsong Trading Corporation, Korea Pugang Trading Corporation, Korea Ryongwang Trading Corporation, and Korea Ryonha Machinery Joint Venture Corporation.

As subsidiaries of KOMID and Korea Ryonbong General Corporation, many of these entities have engaged in proliferation-related transactions.

I have been unable to locate the Ryonha Machine Tool Factory on Google Earth. If anyone has any pointers, please let me know.

Here is a list of factories the DPRK claims to be using CNC technology:

Amnokgang Daily Necessities Factory (KCNA)
Amnokgang Gauge and Instrument General Factory (KCNA)
Cholima Steel Complex (KCNA, Naenara)
Chonma Electrical Machine Plant (KCNA)
Feb 8 Vinalon Complex (KCNA)
Hamhung Wood Processing (KCNA)
Huichon Machine Tool Plant (KCNA)
Kangdong Weak Current Apparatus Factory (KCNA)
Kanggye General Tractor Plant (KCNA) (Underground)
Kanggye Knitted Goods Factory (KCNA)
Kanggye Wine Factory (KCNA)
KimChaek Iron and Steel Complex (KCNA)
Kusong Machine Tool Factory (KCNA)
Kwanmobong Machine Building Plant (KCNA)
October 10 Factory (KCNA)
Pukjung Machine Complex (KCNA)
Pyongyang Cornstarch Factory (KCNA)
Rakwon Machine Complex (KCNA)
Ryongsong Machine Complex (KCNA)
Sinuiju Spinning Machine Factory (KCNA)
Suphung Bearing Factory (KCNA)
Sungri Motor complex (KCNA)
Taean Heavy Machine Complex (KCNA)
Taedonggang Brewery (KCNA)
Tahungsan Machine Plant (KCNA)
Unsan Machine Tool Factory (KCNA)

I know the locations of many of these factories but not all.  If anyone has any information on their coordinates, please let me know.


Smoke signals from BAT’s North Korea venture

Wednesday, February 8th, 2006

Asia Times
Lora Saalman

On January 10, North Korean leader Kim Jong-il traveled in a luxury train to China’s Guangdong province to sample socialist-flavored capitalism. Just a few months earlier, the North Korean Workers Party introduced reform measures granting foreign investors tax cuts and allowing them to sell goods produced in North Korea without tariffs.

For an economy that ostensibly issued halting economic reforms in 1984, these new measures constitute a revolution, albeit one with Chinese characteristics. In accordance with its giant neighbor’s model, North Korean economic reform is predicated as an alternative to the instability of political liberalization. Unforeseen social and political shifts are to be cushioned by financial solvency to keep the regime intact. With China’s assistance and unofficial aid, sustainable growth may one day be achieved in North Korea. Yet a darker side to North Korea’s economic awakening remains.

Kim Jong-il’s visit comes on the heels of accounts of North Korean money-laundering in Macau and the US decision last June and again in October to freeze the assets of various North Korean companies and financial institutions. While many of these firms are beyond the reach of US sanctions, implied misconduct has already led to runs on the North Korean-affiliated financial institution Banco Delta Asia in Macau.

As allegations swirl of money-laundering through counterfeit cigarettes and currency, a less-known story has emerged on British American Tobacco’s previously undisclosed four-year-old joint venture in North Korea. It presents the dilemma of doing business in a country in desperate need of revenue but with a poor track record of allocating resources to its people. This cautionary tale begs the question as to where exactly Pyongyang’s joint-venture profits are going.

For North Korea, which lacks many of the basic laws for financial transparency and good governance, capital investments are more than economically precarious. Shared contact information and dubious management practices among North Korean companies are ubiquitous.

Daesong-BAT is one of a handful of Western joint ventures in North Korea. The far-reaching tentacles of its North Korean partner illustrate the complexity of verifying the background and connections of any North Korean entity. Like many of its compatriots, North Korea’s Sogyong General Trading Corp (Sogyong) boasts circuitous and often indirect ties to entities engaged in proliferation, international trade, shipping, and money-laundering. These indicators point to larger concerns as to whether joint ventures, particularly Western ones, can be manipulated by North Korea for illicit financing of the regime or even to sustain its alleged WMD (weapons of mass destruction) programs.

Joint ventures and front companies
In establishing Daesong-BAT, British American Tobacco teamed up with Sogyong General Trading Corp, a Pyongyang-based state trader best known for its carpet exports. Sogyong, however, also exports such products as handicrafts, furniture and agricultural produce, while importing machinery, electronics, fishing tackle, chemicals and fertilizer. It is not uncommon for North Korean state-run enterprises to deal in everything from machinery to fishing tackle. Yet eclectic product lists make trade in illicit drugs and weapons all the more difficult to track. Cigarettes are just one more product in the Sogyong export-import pantheon.

North Korean company product lists also rarely convey their full range of trade. Seemingly innocuous industries are often manipulated as front companies. Last year, for example, Japan’s Ministry of Economy, Trade and Industry (METI) listed what appeared to be an innocuous North Korean food manufacturer, Sosong Food Factory, for its participation in nuclear, missile, chemical and biological-weapons proliferation. Cigarettes, like food, have been used at times to mask the real objects being transferred. In one case, Japan in 2002 seized a Chinese vessel and found that the declared store of cigarettes on board actually contained drugs thought to have come from North Korea.

While not as licentious as drug or human trafficking, even the black-market trade of cigarettes could have a tangible impact on North Korea’s financing, as seen in Eastern European illegal cigarette rings. These factors highlight the danger of taking a North Korean food or even carpet manufacturer at face value.

North Korea’s network
Among the elements of obfuscation, the company name Daesong-BAT merits attention. Rather than combining or modifying the titles of the two partner companies to form Sogyong-BAT, Daesong-BAT combines British American Tobacco’s acronym with a name that could either point to North Korea’s Daesong district or Daesong General Trading Corp (Daesong). If it turns out to be the latter, Japan and other governments have prominently featured Daesong for its ties to missile and nuclear proliferation.

Incidentally, Daesong maintains one of the most extensive and convoluted North Korean networks, with more than 10 subsidiaries. It also is suspected of falling under Bureau 39, which earns foreign currency for North Korea. A direct connection between Daesong-BAT and the sinewy Daesong franchise has yet to be established but, as illustrated below, nothing is clear cut in North Korean business relations.

Because of the lack of transparency and convoluted nature of North Korean companies, contact information often serves as the first stencil for tracing overlap between industries. In the case of Daesong, the US Central Intelligence Agency’s Open Source Center follows the use of the same fax number to establish potential business and branch linkages. If the same logic is applied to Sogyong, another pattern emerges. Sogyong shares common fax numbers with at least two companies, Korea Foodstuffs Trading Corp (Foodstuffs) and Korea Kwail Trading Corp (Kwail). These companies in turn share fax numbers with nearly 100 companies in North Korea.

Among North Korean firms sharing contact information with Sogyong-linked entities, Japan’s METI and official European export monitors have listed at least six as end-users associated with North Korean WMD programs. In October, the US government targeted one in particular, Korea Ryonha Machinery Joint Venture Corp (Ryonha), freezing its assets under US jurisdiction and placing it on the US Specially Designated Nationals and Blocked Persons list. Ryonha is a prime example of the complex web of North Korean subsidiaries. Last June, the US Treasury Department also targeted the assets of its parent company Korea Ryonbong General Corp, formerly known as Lyongaksan, which heads five other US-designated entities.

Ryonha is not an aberration among companies converging with Sogyong. Among other Foodstuffs and Kwail-connected entities, Korean company databases list Korea Pyongyang Trading Corp as a distributor of methane gas derived from animal excrement. Apparently, effluent is not its only fetid source of income. The Japanese government has listed the very same company, along with subsidiaries of two other firms tracing back to Sogyong, namely Korea Ryonhap Trading Corp and Korea Jangsu Trading Corp, for nuclear, missile, chemical and biological weapons proliferation.

Proliferation networks may not be the only mechanisms at Sogyong’s fingertips. Contact information also links the two Sogyong-connected associates with at least four North Korean financial institutions. Among these, Koryo Bank and Korea Joint Bank have alleged ties to the now-infamous Banco Delta Asia in Macau. Banco Delta Asia’s own purported involvement in counterfeit-currency distribution and counterfeit-cigarette smuggling does not bode well for Daesong-BAT, no matter how convoluted their connections. Banco Delta Asia may have three degrees of separation between it and Sogyong, but in North Korea’s fishbowl of finance this does not preclude cooperation.

Banco Delta Asia is also reported to maintain a close business relationship with Macau-based Zokwang Trading, which its own vice general managing director claims is a part of North Korea’s Daesong General Trading Corp. Daesong, as mentioned earlier, has a pervasive proliferation record. It also has reported links to Changgwang Sinyong Corp (Changgwang), which has been repeatedly sanctioned by the United States for its missile-proliferation activities and sales to Iran and Pakistan. Zokwang in turn deals in missiles and nuclear-power-plant components, all the while maintaining a partnership with the notorious Changgwang. Combined with Sogyong’s branch in the joint \-venture hub Shenyang, China, even indirect ties to Macau suggest that Sogyong has the ability to tap into proliferation, industrial and financial networks in China and beyond.

Proliferation, industry and finance mean little without the means to transport goods and technology. Sogyong-associated entities Foodstuffs and Kwail share fax numbers with North Korea’s national airline Air Koryo, which has also been cited by official European monitors for proliferation. A 2003 Far Eastern Economic Review article even named Air Koryo as the transportation mechanism for Daesong’s suspected military assistance to Myanmar. Sogyong’s own shipping vessels Sogyong 1 and 2, which were detained in Japan on safety violations in December 2004 and January 2005, complete the final leg of the contact-linked proliferation, financing and shipment triangle. This network belies a much more intricate set of alliances than the domestic-consumption-based joint venture touted by British American Tobacco and Sogyong General Trading Corp.

Standards of business conduct
British American Tobacco’s website advocates transparency in international business and laudably eschews bribery, corruption, illicit trade, and money-laundering. In October, BAT executives further contended in The Guardian that the company’s North Korean cigarette joint venture fuels only domestic consumption, not exports to China or elsewhere. In spite of these reassurances, BAT is no stranger to the dangers of black-market cigarette production and transshipment. A February 2000 article in The Guardian even accuses BAT of complicity, by knowingly allowing illicit smuggling of its cigarettes to occur.

In the case of Daesong-BAT, British American Tobacco officials have admitted to knowing little of the company’s North Korean joint-venture operations. Ominously, BAT has stated that an unnamed Singapore division controls its North Korean joint venture. Lack of oversight combined with a dubious North Korean offshore mechanism for managing an ostensibly domestic industry raises significant warning signs. The incestuous relationship between state-run North Korean entities that share fax numbers of companies and banks listed for WMD procurement and money-laundering through counterfeit tobacco should also elicit concern. These are not simply dilemmas for British American Tobacco, but pose challenges to any companies forming joint ventures in North Korea.

Economic integration, as in China’s case, may bring North Korea more into step with international norms and standards. Ironically, engagement that is likely to lead to greater future transparency may also be manipulated for North Korea’s short-term illicit gains.

In 2003, the British government pressured BAT to close down its cigarette factory operations in the military dictatorship of Myanmar because of concerns over that country’s lack of human rights. Given the legion of obstacles impeding transparency in North Korea, BAT and other Western firms could be contributing to the worsening of more than human rights. They could be aiding and abetting illicit North Korean financing that is alleged to fuel Kim Jong-il’s slush fund and WMD programs.