Donnerstag, 29. September 2016

Office 39....

...gone? In the last weeks a few media reports describe the disappearance of Office 39 and 38. The name of the office would be State Affairs Commission (SAC). It is the old game with North Korea: What is real and what are rumours?

One of my favourite intelligence disciplines is RUMINT. In his book Historical Dictionary of Russian and Soviet Intelligence  Robert W. Pringle wrote:

Also important was RUMINT (rumor intelligence or gossip) about the leadership of the Soviet Union and East Germany gathered from the talk of Soviet general officers in Berlin with their colleagues and families in Moscow.

Many of the books and papers about North Korea are dealing with RUMINT and even my article in Janes Intelligence Review from 2014 might have been RUMINT, when I mentioned there the rumours that Office 39 and 38 were merged into one new office named Moranbong Bureau.

Dandong Hongxiang Industrial Development Co., Ltd - some notions

The current news coverage about Dandong Hongxiang Industrial Development Co., Ltd shows remarkable details about the discreet operations of North Korean agencies. Beside the role of Hong Kong one must come to the conclusion to look deeper into the business networks in Dandong in China, near to the North Korean border. This is definitely one of the places where North Korean procurement agents and traders are active.

Dandong is not only a place where Muslims, living in North Korea, can buy halal  meat – as a Twitter user explains, showing this picture:

Obviously the business of Dandong Hongxiang Industrial Development Co., Ltd was more focused on the non-muslim parts of the North Korean society, especially the Kim clan and his network of loyal agencies. Comparing two adresses in Dandong it seems that both participants of this special business didn't have a long distance to walk when it comes to chatting about money and deals. The following shows the official contact adress of Dandong Hongxiang Industrial Development Co., Ltd:
The North Koreans in Dandong are sitting here:

Perfect conditions for doing business. And there are others sitting around Jiadi Square: Ever heard about SINO-KOREAN FRONTIER TRADE CITY Co., Ltd?
More or less a Joint Venture it had set up the "Pyongyang Carry Cargo Autodumper Manufacturing Factory". Their website says about their office in North Korea: "The Pyongyang office’s establishment is in the strong assistance of Committee of External Economic Cooperation (CPEEC) of the leaders, it is among a select group of offices that have established by China’s governmental and business firm in North Korea." The adress in Dandong is:

The "Liaison Person" is not so unknown in the Chinese-North Korean business network. Drew Thompson writes in his 2011 study "Silent partners":
Another Chinese investor in North Korea, Wang Yuangang, CEO of China-North Korea Border Trade City, started out in business in the 1980s making garments in Dandong for the domestic market. In 1999, he opened a street market with stalls for vendors to sell items to North Koreans right on the Chinese side of the bridge crossing the Yalu river. The city razed the market for a street improvement a few years later. In 2002, Mr. Wang set up a barter-trade market in Pyongyang and worked closely with Yang Bin, the Dutch-Chinese businessman who was named head of the Siniuju Special Administrative Region but was subsequently arrested and jailed by Chinese authorities for tax evasion before he could take up the post. At that time, most trade was by barter and the market was ultimately unsuccessful because of policy restrictions in North Korea.
 The company mentioned above produces e.g. this:

A rotary encoder may not be necessary for a nuclear fuel cycle, but this is something only experts can evaluate. Even the other products look somehow suspicious - for an ordinary person like me:

In 2012 the US Director of National Intelligence (DNI) published a report, titled: "North Korea - Characeristics of Joint Ventures With Foreign Partners, 2004 - 2011". In this report they are listed as well:

The funny thing is, that this report already speaks about "Sino - DPRK" and not "Sino - Korean" - but means the same company. On many pages similar collaborations are listed and Dandong is certainly one of the main regions:

The North Korean partner produces vehicles which reminds me on some old East Bloc movies:

Anyway: Coming back to Dandong Hongxiang Industrial Development Co., Ltd: For observers of the North Korean system and their efforts to generate profits this company was not so under the radar as some people argue today. Already in 2010 the former "DPRK Business Monthly" (Volume 1, Number 2, March 2010) wrote about a bridge, linking Dandong with Sinuiju:

Ma Xiaohong, director of the Dandong Hongxiang Development Co. Ltd, a leading Sino-DPRK trade company, welcomed the project. "Currently, we have a long waiting time to cross the old bridge," she told the China Daily. "The new bridge will greatly increase trade volume and improve transportation."

In 2013 the responsible Chinese ministry mentioned the company in a register of companies with a special export license, here in the category "Border Trade":

"China Commodities", a category of the Chinese Ministry of Commerce (MOFCOM) database, still says about those bad guys: 

It was obviously an intensive, extended investigation and maybe some data breaches or leaks helped in this case: Beside other front companies and banks  the US indictment describes the role of "Fully Max Trading" - an entity which can be found in the Panama Papers: