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Ri Jong Ho was a senior economic official who served under all three generations of North Korea’s Kim Dynasty. In his most recent post, he was stationed in China to lead a trading corporation under the control of Office 39, a clandestine group formed in the 1970s to manage slush funds for the North Korean leadership.
But in 2014, shortly after the current leader Kim Jong Un began purging his political rivals, including his own uncle Jang Song Thaek, Ri decided to defect to South Korea, taking his family with him. After two years there, they moved to the United States and currently reside in Virginia.
Ri is now a contributor to a weekly radio program for RFA Korean. In an interview with RFA Korean’s Noh Jung Min, he revealed some of the inner workings of Office 39, including how the organization is able to get around international sanctions aimed at depriving Pyongyang of cash and resources that could be funneled into its nuclear and missile programs. The interview has been edited for length and clarity.
RFA: Mr. Ri, You were a high-ranking official in North Korea. Could you briefly tell us what you did in North Korea and why you left?
Ri: Yes, I worked in North Korea’s central agency for about 30 years. In the meantime, I founded the Daehung Shipping Company and served as the president of the company. I also served as director of trade management of the Daehung General Bureau, North Korea’s largest trade agency. For this, I received the Hero of Labor award.
Then, in 2013 and 2014, my thoughts changed 180 degrees as I witnessed the horrific barbarities committed by the young dictator Kim Jong Un, who took power and brutally executed his uncle, Jang Song Thaek, and hundreds of other senior officials. At that time, Pyongyang turned into a city of bloody fear. I had to witness the brutal execution of my close colleagues. North Korea was no longer a safe land for me, and my patriotism turned into hatred. I decided that this oppressive system must be changed, so in October 2014, I went into asylum with my family.
RFA: North Korea’s state-run media revealed a uranium enrichment facility for the first time on Sept. 13. Then a short-range ballistic missile was launched on Sept. 18. North Korea’s development of nuclear missiles and provocations continue despite the international community’s sanctions against it. Now that the pandemic is over, the government’s ability to generate foreign currency income is not the same as before, so I am curious about where the funds for nuclear development are coming from.
Ri: The strong sanctions against North Korea by the United Nations and the United States are believed to have effectively blocked North Korea’s major exports such as coal, minerals and textile products. However, China and Russia did not properly implement sanctions against North Korea regarding the income earned by approximately 100,000 workers and thousands of IT technicians dispatched overseas.
The uranium enrichment facility was completed in the early 2000s by (Kim Jong Un’s father and predecessor) Kim Jong Il, who received support from the South Korean government and invested that support intensively by importing centrifuges and other special equipment. At that time, North Korea also imported a lot of cutting-edge computer systems. I know this because my colleagues at that time worked on importing them.
In October 2002, North Korea disclosed the operation of the uranium enrichment program during a visit by James A. Kelly, assistant U.S. secretary of state for East Asian and Pacific Affairs. I believe the facility has been in operation since then. Since North Korea was not subject to strong sanctions until 2016, it steadily strengthened the material and technological foundation of its nuclear missile production base since the Kim Jong Il era up until then. In other words, I believe that the uranium enrichment facility did not suddenly appear but was completed beforehand.
RFA: Renovation is still going on at the sites of these nuclear facilities, and an astronomical amount of money continues to be spent to maintain them and manufacture and launch missiles. Is there a department responsible for this cost? How do they raise funds?
Ri: No specific department in Office 39 is responsible for costs. Many organizations are mobilized to make money, and the money is collected in the finance department of Office 39. Then, Kim Jong Un can spend it as he pleases. The Kim Jong Un regime secures funds through domestic resource development, including gold production.
Also, the net profit earned by the 100,000 workers overseas and the thousands of IT technicians is estimated to be about US$300 million every year. I know this well because I have been calculating how much the overseas workers earn each month and how much the country collected during the time I was in North Korea.
Most of this money is deposited into Kim Jong Un’s revolutionary fund and is used by him to develop nuclear missiles or to purchase luxury goods. Also, it is used to provide a luxurious lifestyle for him and his family. There are rumors that the country is strengthening its nuclear force with the money it earned through selling weapons to Russia.
RFA: Could you be more specific about the breakdown to get to the $300 million figure?
Ri: The monthly salary of workers dispatched to China is around 2,000 to 2,500 Chinese yuan. That is about $300. $200 of that is paid to the government and the remaining $100 is paid to workers. However, managers sometimes give the workers less. So that would come out to $240 to $250 million. There are about 2,000 to 3,000 IT engineers working in China and Russia. They reportedly earn between $50 to 100 million every year. I think this number is relatively accurate. American experts even told me the numbers were probably correct. The person who oversees all this is Jo Yong Won, secretary for organizational affairs. He is close to Kim Jong Un.
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RFA: After sanctions against North Korea and the coronavirus pandemic, North Korea’s foreign currency earnings are way down. Circumstances have been detected in which North Korea is committing various illegal acts to raise funds. For example, through cyber hacking. Are there many concerns within North Korea about raising funds like this?
Ri: North Korea has always made detours when faced with sanctions. When the international community comes up with a policy toward North Korea, North Korea comes up with a plan. Since 2017, when Kim Jong Un’s money flow was blocked due to sanctions, he (ordered) cyber hacking crimes targeting the international financial system and cryptocurrency exchanges, stealing hundreds of millions of dollars every year. This is an important source of funds for the Kim Jong Un regime, which goes into its nuclear and missile programs.
North Korea’s hacker group is a state-level criminal force that targets financial networks and cryptocurrency exchanges around the world like a pirate group under the direct instruction of Kim Jong Un. They hack the financial system using professional and meticulous tactics and steal large amounts of funds. The anonymity of cryptocurrencies is being used to launder and move funds around global financial watchdogs. I think we need a strong response to this and the sanctions against the Kim Jong Un regime should be increased further.
RFA: Do you think the international community’s sanctions against North Korea are effective?
Ri: There were reports that the Mercedes-Benz Maybach luxury car used by Kim Jong Un was imported into North Korea despite sanctions. This leads some to question their effectiveness. Electronic equipment used in missiles and parts for mobile missile launch vehicles are also smuggled into North Korea. I believe this is because China has relaxed (enforcement of) sanctions.
Luxury goods can be transported ship-to-ship at sea, as they move in a few containers. I’ve seen this before. Unless the Chinese customs authorities monitor closely, it is difficult to crack down on it. Nevertheless, the effects of sanctions cannot be ignored. They cause difficulties for North Korea and isolate it internationally.
The effect of the UN sanctions announced against North Korea in 2017 was enormous. It included a complete ban on North Korea’s major exports of coal, minerals, marine products and textiles, and a ban on joint ventures with North Korea. These sanctions are still strong. I looked at the data, North Korea’s exports amount in 2013 was $4.1 billion, but the export amount in 2023 was only $290 million.
As the coronavirus broke out, the order for all U.N. member states to repatriate North Korean workers to their home country was not carried out well. Many of these people remain abroad even five years later, and I believe this is becoming a major source of income flowing into Kim Jong Un’s slush fund.
RFA: We often hear from our sources in North Korea that residents express their dissatisfaction, with resources being diverted to the nuclear program. They say things like, ‘Wouldn’t it be great if the money used to develop nuclear missiles was used to buy food?’ Are the high-ranking officials aware of these complaints from residents?
Ri: Of course. Wouldn't it be great if the money used for nuclear development were used to purchase food for North Korean residents? Regarding nuclear development, North Korean officials also had a strong opinion that economic development should be a priority, with the second nuclear test in 2009.
Jang Song Thaek also opposed the third nuclear test in 2012 and said, “Let’s focus on the economy,” then he fell out with Kim Jong Un. In 2014, an official stationed overseas expressed dissatisfaction, saying ‘Food does not come from nuclear weapons, so why are we subjecting ourselves to sanctions by conducting nuclear tests and not developing the economy?’ This is the feeling of most North Korean officials.
In 2014, a Cabinet official complained to me, saying, “If the money spent on national defense were used to import fertilizers, we wouldn’t have to worry about farming.” As he said, I believe that if Kim Jong Un had used the money spent on building up nuclear weapons for purchasing food and fertilizer, the North Korean people would be free from hunger and suffering.
In 2013, when Kim Jong Un was in the early days of taking power, he said, “If we have nuclear weapons, we can protect peace, the prosperity of the country, and the happy lives of the people.”
However, the more that North Korea’s nuclear capabilities increased, the more severe that sanctions against the country became. The deepening international isolation caused the economy to collapse and the lives of the people to become even more difficult. Even now, there are many people dying of starvation in North Korea, just like during the (1990s famine). Nowadays, no one believes that having nuclear weapons will lead to a better life. The people are being sacrificed for Kim Jong Un’s personal maintenance of power and stability.
Translated by Claire S. Lee and Leejin J. Chung. Edited by Eugene Whong.