Archive for the ‘Sinheung Trade Company’ Category

DPRK abandons food rations, orders self-sufficiency

Thursday, June 17th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-06-17-1
As North Korea’s food shortages worsen and reports of starvation continue to grow, the Workers’ Party of Korea have acknowledged the failure of the central food ration program. Since the end of May, the Party has permitted the operation of 24-hour markets, and the regime has ordered the people of the North to provide for themselves.

The human rights organization Good Friends reported this move on June 14. According to Good Friends, the Workers’ Party organization and guidance bureau handed down an order on May 26 titled ‘Relating to Korea’s Current Food Situation’ that allowed markets to stay open and ordered North Koreans to purchase their own food. This order, recognizing that the food shortages in the North have continued to worsen over the last six months, since the failed attempts at currency reform, acknowledged the difficulty of providing government food rations. It calls on those who were receiving rations to now feed themselves, while also calling on the Party, Cabinet, security forces and other relevant government agencies to come up with necessary countermeasures. Now, authorities officially allow the 24-hour operation of markets, something that most had already tacitly permitted, and encourage individuals, even those not working in trading companies, to actively import goods from China.

It has been reported that government food rations to all regions and all classes of society, even to those in Pyongyang, were suspended in April. The last distribution of food was a 20-day supply provided to each North Korean on April 15, the anniversary of the birth of Kim Il Sung. Because of the difficulty of travelling to markets, the suspension of rations caused many in farming communities to starve to death. When Kim Jong Il’s recent visit to China failed to secure expected food aid, the Workers’ Party had no choice but to hand down the ‘May 26 Party Decree’. While the suspension of rations has considerably extended the economic independence of North Korean people, the regime has significantly stepped up other forms of control over society. Public security officers have begun confiscating knives, saws and other potential weapons over 9 centimeters long in an effort to stem murder and other violent crimes. Additionally, state security officials are cracking down on forcefully resettling some residents of the age most likely to defect, while sending to prison those thought to have contacted relatives in South Korea.

According to Daily NK, North Korean security officials are pushing trading companies to continue trading with China, while calling on Chinese businesses to provide food aid. It also appears that North Korean customs inspections along the Tumen River have been considerably eased, and there is no real attempt to identify the origin or intended use of food imported from China. Sinheung Trading Company has asked Chinese partners investing in the North to send flour, corn and other foodstuffs. The Sinheung Trading Company is operated by the Ministry of State Security, and is responsible for earning the ministry foreign capital. It appears that food acquisition is now a matter of national security, as North Korea is expecting South Korea and the rest of the international community to economically isolate the country.


The DailyNK Exclusive Verification of the North Korean “Super Note”

Tuesday, January 10th, 2006

Daily NK
Shin Ju Hyun

Korea Exchange Bank double Assurance

For the verification of the North Korean-made counterfeit dollars, the so-called “Super Note,” The DailyNK bought these counterfeit dollars and requested examination of them at the Korea Exchange Bank (KEB).

The above photos are of the “Super Note,” which the The DailyNK bought in Dandong, China. They were taken to the KEB on January 5th at 3 pm for examination and identified it as a “Super Note made in 2003.”

The following is the process of how The DailyNK obtained the counterfeit bills made in North Korea and requested examination of it at the KEB.

The DailyNK correspondent in Dandong, China, on January 2nd, was introduced to a businessman who does trade business between North Korea and China through an acquaintance. The DailyNK asked the businessman, Mr. Lee, working for K Trade Company to buy him some counterfeit dollar bills recently made in North Korea.

Mr. Lee smiled and said, “That is not a problem.” He said half a day would be enough for him to buy some counterfeit bills. The correspondent set an appointment with Mr. Lee for the next day.

The next day, the DailyNk was able to obtain the “goods.” From a wad of bills, he pulled out a $100 bill. It cost him $80. He said, “If you buy directly from a North Korean tradesman, it first costs $80 then drops down to $70 on the second call.”

“This is a dollar bill I got directly from a North Korean tradesman, and it is in good condition,” said Mr. Lee. “I was asked to do a favor to sell the dollar bills at $70 each.” According to Mr. Lee, if you meet the same North Korean tradesmen more than twice, they all ask you to do them the favor of selling counterfeit dollars.

Mr. Lee said in the areas where North Korean trade companies are located, such as Dandong, Changbai, and Tumen, daily counterfeit dollar exchanges are made. In Dandong, there is the Sinheung Trade Company run by North Korea’s National Security Agency and the ‘** base of 3000 Bureau (General Federation of Rear Services) run by the Ministry of the People’s Armed Forces.

Mr. Shim, who accompanied the meeting added, “Besides counterfeit dollar exchanges, it is a well known fact that fake (Chinese) Yuan bills are circulated as well.”

North Korean Tradesmen, First Deals for Counterfeit Dollars, Second for Drugs

“The Chinese government seems to know about this. If the counterfeit money becomes a problem between North Korea and the US, then China will also decide to take a hard-line policy against the North Korean counterfeit Yuan,” said Shim. “After deals for the counterfeit money are made, then comes deals for drugs. Drug deals are made much more carefully.”

The correspondent mailed the “Super Note” to The DailyNK headquarters in Seoul on January 4th. The DailyNK reporters in Seoul visited Korea Exchange Bank on January 5th for examination.

On the afternoon of January 5th, Suh Taek Seok at the financial office sales department at the KEB headquarters said, “It is certain that the bill is a sophisticated Super Note.”

“Some Super Notes made in 2001 are often circulated, but 2003 bills are very rarely found in South Korea,” he added.

After the close examination, “Although at the basic level, the quality of paper and print technique is very complicated, this Super Note bill could be considered one of the most sophisticated ones to be found,” explained Suh.

“The Super Note made in 2003 were circulated only from October 2005, thus some of the banks out there with detection machines still could fail to verify them.”

“Counterfeit Money from the Early 80s”

Suh said, “Without knowing where the Super Note bills came from, it is difficult to predict in which country the bills were produced. However, if it is true that if the bills were produced in North Korea, the problem could become quite a sensitive matter.”

“Apart from the quality of the paper, for the $100 bill, where it says ‘UNITED STATES’ on the left side of the Franklin portrait, there are white lines on the letter “N” and the picture of the grapes under the eagles is not so clearly printed. There are many more differences between real and fake bills.”

It seems the way the counterfeit bills are circulated also varies. Kim Chan Goo, researcher at the Institute for Far Eastern Studies of Kyungnam University who was devoted to relations with North Korea for a decade since 1989 testified, “Eleven years ago when I visited Pyongyang, the guide asked me if I would like to $100 bill for 30 dollars. I bought it as a souvenir, and asked for examination at the KEB when I came back to South Korea. It was verified that it was a counterfeit.”

Kim still kept the bill as a souvenir. “There were many cases of South Korean trade/businessmen who were asked to buy and sell as a broker between the consumers and the North Korean tradesmen in Dandung. Looking back, it can be deduced that North Korea started counterfeiting dollars in the early 80s.”


Tobacco firm has secret North Korea plant

Monday, October 17th, 2005

The Guardian
Ian Cobain and David Leigh

Firm with Tories’ Ken Clarke on payroll runs factory in country with grim human rights record

British American Tobacco, the world’s second largest cigarette company, has secretly been operating a factory in North Korea for the past four years, the Guardian has learned. The company opened the plant in a joint venture with a state owned corporation shortly before the regime was denounced by George Bush as a member of the “axis of evil”, and despite widespread concern over the country’s human rights record.

BAT has never mentioned the factory in its annual accounts, and it is thought that many shareholders are unaware of its links with the country.

The discovery of the secret factory comes two years after BAT was forced to pull out of Myanmar, formerly Burma, under pressure from the UK government and human rights campaigners. The human rights record of the communist regime in North Korea is widely regarded as even worse than that of the brutal military dictatorship in Burma.

The disclosure of the existence of the plant comes a day before the first ballot in the Conservative leadership election in which Ken Clarke, BAT’s non-executive deputy chairman, is a candidate.

BAT confirmed that Mr Clarke, who has been on the company’s payroll since 1998, was aware of the decision to invest in North Korea. The firm has also said that as chair of BAT’s corporate social responsibility audit committee, Mr Clarke “would oversee human rights reports on all countries where we operate”.

Mr Clarke declined to comment, although he has previously denied any impropriety in his role with BAT.

The anti-smoking group Ash said: “It seems that there is no regime so awful and no country so repressive that BAT does not want to do business there. It beggars belief that an MP like Ken Clarke could be taken seriously as a candidate to lead a major political party.”

Mr Clarke could face an investigation by the Commons health committee over accusations that he gave false evidence to parliament when he denied BAT was embroiled in international cigarette smuggling. Mr Clarke dismissed the smuggling claims as “nonsense” five days after BAT’s lawyers had confirmed that certain claims were true, in an internal letter which subsequently came to light in the US. Mr Clarke has denied giving false evidence.

BAT launched its business in North Korea in September 2001 after forming a joint venture company with a state-owned enterprise called the Korea Sogyong Trading Corporation, whose main interest had previously been exporting carpets. BAT made an initial investment of $7.1m in the enterprise, and owns 60% of the company they formed, which is known as Taesong-BAT. It has since increased its investment, but declines to say by how much. This company employs 200 people at its factory in Pyongyang, the capital, producing up to two billion cigarettes a year. It initially produced an inexpensive brand called Kumgansan, named after a mountain in the east of the country, and is now producing brands that are known as Craven A and Viceroy. Despite its previous involvement in smuggling, BAT denies that any of its cigarettes produced in North Korea are intended for the Chinese market, and insists that they are all for consumption in North Korea.

The company says that it has worked to improve the working conditions of its employees in Pyongyang, that it provides workers with free meals, and that they are “well paid”. When asked how much the employees were paid, however, the company said it did not know. BAT even said that it had “no idea” how much its cigarettes cost on the North Korean market as the operation was run by the company’s Singapore division.

Questioned about its apparent reluctance to disclose the existence of its North Korean operation, BAT said that it listed only its “principal subsidiaries” in its accounts, and added that it was not obliged to inform investors about an investment of that size.

“It is a very small entity within the BAT group and, therefore, does little to justify a mention,” a spokeswoman said.

The spokeswoman denied the factory was “a secret”, adding: “If we are asked about our investment there, we respond appropriately. The investor community know of it.” Asked about North Korea’s human rights record, a company spokeswoman said: “It is not for us to interfere with the way governments run countries.” She said BAT could “lead by example” and assist the country’s development by meeting internationally accepted standards of businesses practice and corporate social responsibility.

In launching its North Korean enterprise, however, BAT is quietly doing business in a country which is regarded by some as having the worst human rights record in the world. Even one of BAT’s own public relations officers, in Japan, was astonished when questioned about the joint venture company. “Business with North Korea?” he asked. “Where there are no human rights?” The depth of concern about the suffering of people in North Korea is expressed in a series of reports by the United Nations and human rights watchdogs.

Last August, in an excoriating report presented to the UN General Assembly, Vitit Muntabhorn, special rapporteur on North Korea for the UN’s Commission on Human Rights, pointed to the “myriad publications” detailing violence against detainees. He expressed “deep concern” about reported torture, the killing of political prisoners, the large number of prison camps and use of forced labour. Finally, he protested at the “all pervasive and severe restrictions on the freedom of thought, conscience, religion, opinion and expression, peaceful assembly and association and on access of everyone to information”.

In its latest report on the country, Amnesty International highlighted concerns about the torture and execution of detainees, and worries over the lack of basic political freedom. The charity said that millions of North Korean people were suffering hunger and malnutrition. It added that there had been reports of public executions of people convicted of economic crimes, and that Christians, whose churches have been driven underground, were reported to have been executed because of their faith.

According to human rights observers in South Korea, about 200,000 people are held in prison camps in the north.

Human Rights Watch, meanwhile, describes the Pyongyang regime as being “among the world’s most repressive governments”, adding that its leader, Kim Jong Il, “has ruled with an iron fist and a bizarre cult of personality” since the death of his father, Kim Il Sung, in 1994.

BAT carried on its business in Myanmar for four years, running a cigarette factory in a joint venture with that county’s military dictatorship. It pulled out only after the UK government had asked it to withdraw and after Mr Clarke had been forced to admit, at a shareholders’ meeting, that “Burma is not one of the world’s most attractive regimes”.

FAQ: BAT in North Korea

What’s wrong with investing in North Korea?
Britain says it will not officially support investment there because of North Korea’s nuclear ambitions. Others, such as Action on Smoking and Health (Ash), object to investment which props up a notoriously cruel communist regime.

What is BAT’s track record as a company?
BAT has refused to stop selling cigarettes around the world, despite proof that its product is addictive and bad for health. Instead, it has sought to increase profits despite western governments imposing more legal restrictions, by selling to unsophisticated consumers in the developing world.

What is Ken Clarke’s role in BAT?
He collects £170,000 a year in pay and perks, in return for the title of deputy chairman. As a former health secretary and chancellor, he gives BAT credibility and international connections.

Why has his behaviour caused controversy?
When the company was accused of being involved in the lucrative smuggling trade in China and Latin America, Mr Clarke falsely claimed to parliament the accusations were “nonsense”.