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Canada Slaps New Sanctions on 'Office 39,' North Korea’s Slush Fund for Kim Jong-un

Canada is finally taking aim at the shadowy wing of the North Korean government that exports methamphetamines, imports yachts, and keeps the Pyongyang ruling class happy.
Justin Ling
Montreal, CA
Photo via the Associated Press/Ng Han Guan

Read and watch more about North Korea in "March Madness," a VICE News special section on the Hermit Kingdom.

The United Nations is taking new steps to choke off the flow of luxury goods to North Korea's ruling class, and Canada is signing up to help.

Until recently, Canada had neglected to slap trade restrictions on Pyongyang's infamous "Office 39," the secretive cabal that acts as the investment fund for leader Kim Jong-un's wealth, and which procures luxury goods for the ruling class of the Hermit Kingdom.

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But thanks to the recent UN Security Council sanctions, Canada is joining the US, United Kingdom, and European Union — which all listed the clandestine government body more than five years ago — in putting new restrictions on Kim's personal slush fund.

The new sanctions were added on March 2, 2016 and, according to a government spokesperson, Canada is "currently taking steps" to implement those new sanctions in domestic law.

"Canada stands ready to support additional measures in response to any further provocations," reads one of the talking points supplied by the Department of Foreign Affairs. The government would not comment on specific sanctions.

Office 39 — which also goes by Central Committee Bureau 39, Third Floor, Division 39, Room 39, among other code names that refer to its offices on the third floor of a government building in Pyongyang — is believed to have blended a legitimate import/export business with counterfeiting and drug trafficking, including the production and sale of methamphetamines. It's said to control funds worth more than $1 billion.

"Office 39 has also been involved in the attempted procurement and transfer to North Korea of luxury goods," reads a summary of the body from the European Union. "Office 39 figures among the most important organisations assigned with currency and merchandise acquisition.

"To the outside Office 39 changes name and appearance regularly," the EU directive notes.

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One such guise may be the Chongchongang Shipping Company — also added to Canada's sanction regime this month — which, according to Ottawa, "attempted to directly import the illicit shipment of conventional weapons and arms to the [Democratic People's Republic of Korea]."

While direct export of luxury goods to North Korea has long been banned in Canada, targeting the secretive organization could be useful in countering Pyongyang's attempt to quietly procure Canadian goods.

In 2014, pictures showed a new Ski-Doo snowmobile made by Quebec-based company Bombardier gliding around a North Korean ski resort.

One UN sanctions expert told the site NK News that the snowmobile should obviously be considered "luxury," adding, "if they are not on the banned list of the relevant exporting country, they should be."

When the snowmobiles were imported, they weren't explicitly forbidden under the UN's sanction list. That's been remedied in the most recent round of trade restrictions, however, which expressly forbid the sale of any snowmobiles worth more than $2,000.

If Canadian goods are making it to North Korea, they're likely going through China first. While some deals between China's Communist government and Office 39 have been uncovered and cancelled, it's likely that others are slipping through the cracks — giving the autocratic regime in Pyongyang access to foreign currency and luxury goods in order to keep its economic and military elite plied with amenities.

One deal, which would have sold Italian-made yachts to the North Korean regime for some $15 million, was ultimately nixed by Italian authorities.

In 2015, a Financial Times investigation found that Office 39 had developed business ties with a Hong Kong-based network of Chinese-owned business, referred to as the Queensway Group, which helped the regime bring in foreign cash.