North Korea's Macau-based trading venture opens its doors to deny reports of espionage and shady deals

PUBLISHED : Sunday, 03 September, 2000, 12:00am
UPDATED : Sunday, 03 September, 2000, 12:00am

A SECRET door to the closed world of North Korea opened last week when a senior official discussed activities of the mysterious Zokwang trading company in Macau, providing a revealing insight into the Stalinist nation's activities on the South China coast.

Over cups of Chinese tea, poured while he talked beneath portraits of his nation's late Great Leader, Kim Il-sung, and the current Dear Leader, Kim Jong-il, vice-general managing director Han Myong-chol outlined his company's links to Pyongyang.

The interview with the South China Morning Post was remarkably free of any ideology or rhetoric. Mr Han also spoke of his hopes that the two Koreas could reunite.

It was clear that Kim Jong-il's overtures to the international community and Seoul over the past six months had allowed the wooden door to swing open to the austere offices on the fifth floor of an anonymous-looking building at 25 Avenida De Sidonio Pais in a residential district of downtown Macau, near the Guia lighthouse.

After enduring years of allegations by intelligence agents and reports in the international media that North Korean companies in Macau were engaging in illegal activities such as laundering forged currency and supplying luxury goods to the ruling elite, Mr Han said he wanted to set the record straight.

Pyongyang's diplomats have been accused of drug trafficking, gun running and conducting abductions around the world to earn foreign currency for the regime. Sinister crimes and conspiracies are said to have been hatched in Macau. North Korean agent Kim Hyon-hui, dubbed the 'virgin terrorist', claimed she had spent several months training there before blowing up a Korean Airlines jet with 115 people on board in 1987.

'It is all nonsense; it is all fabricated; it is not true. I think the South China Morning Post does not have a positive attitude to our country,' said Mr Han, when asked why he had agreed to the interview after years of silence. He has been stationed in Macau since 1992.

Mr Han is the second-most senior North Korean official there. The most senior is Zokwang managing director Pak Ja-byong.

Diplomatic sources said it was interesting that Mr Han appeared to have the authority to speak to foreign media, speculating that he had a powerful patron in the Pyongyang ruling elite. 'I think news reportage should have a fair attitude. I am meeting you and I want to explain my opinions,' he said.

He nodded when told that until recently it had been impossible for media organisations to get Pyongyang's side of the story because officials had previously refused to speak with reporters or were not available. The only sources often available were official press releases from the Korean Central News Agency. Mr Han offered details of the company's Pyongyang ties and trading activities which have long been sought by North Korea watchers, including intelligence analysts and diplomats.

Zokwang has been closely watched since it was established in Macau in 1974. The former Portuguese enclave, dubbed the Casablanca of Asia for many years because of the shady business deals and spying operations carried out there, has long acted as North Korea's window on the world. About 50 North Koreans working for seven or eight companies lived in Macau, said Mr Han.

Now, its role is changing as Kim Jong-il opens his hermit nation to the international community, establishes diplomatic relations with Western and Asian nations and joins transnational organisations.

North Korea's opening is likely to mean Macau companies such as Banco Delta Asia, which has provided financial services to the Central Bank of the Democratic People's Republic of Korea for 20 years, will face growing international competition for such business, according to sources in the enclave.

Zokwang traded with East Asia, mainland China, Southeast Asia and Taiwan, said Mr Han. It handled much of the barter trade between North Korea and the mainland before Deng Xiaoping's economic reforms opened up the country and made direct business easier.

The company handles the export of industrial products such as heavy metals, zinc and light-industry products such as garments. It imports materials for light industry, as well as food from the mainland, and electronic products. Electronic and consumer products have long been said by experts to be purchased for the elite leadership in Pyongyang, including Dear Leader Mr Kim.

Macau officials tell of monthly Air Koryo flights to North Korea being largely empty of passengers but filled with video players, televisions and other electronic products as well as food delicacies.

But Mr Han denied the luxury products sent to Pyongyang by his company were destined for the nation's leadership. The goods were for foreigners living in Pyongyang, he insisted, and would be sold in North Korea's versions of China's Friendship Stores, which were the source of imported goods on the mainland prior to the introduction of economic reforms.

'Our leaders have the same living standards as our people and we won't buy luxury goods for them. We have a very high respect for our leaders and when we hear these things it makes me very angry.'

He denied South Korean media reports that Mr Kim had purchased a luxury flat in Macau during the mid-1990s.

Mr Han said the Zokwang Trading Company was part of the Daesong Trading Corporation, a subsidiary of the Daesong Economic Group. 'It is government controlled and under the Cabinet,' said Mr Han, who, speaking in fluent Putonghua, said he was a Daesong employee. While declining directly to say which branch of the North Korean Government controlled his group of companies, he hinted at the Foreign Trade Ministry.

But diplomats believe Daesong is a front for the Korean Worker's Party - the nation's communist party. Mr Han did not deny this, and said that the people's organ gave directions to the government.

High-ranking North Korean defectors say Daesong is under the direct control of the party's shadowy Bureau Number 39, the body charged with taking care of Mr Kim's private wealth, according to the British periodical Jane's Intelligence Review.

Pyongyang has long been accused by Western intelligence agencies of encouraging its officials based overseas to engage in illicit activities such as counterfeiting. According to a Washington Post report, it is also suspected of having laundered counterfeit cash to pay for last year's celebrations for the 50th anniversary of the nation's founding.

And Mr Han did acknowledge - without being directly asked - a 1994 incident in which five Zokwang officials were investigated over the alleged trafficking of fake US$100 bills. He raised the case when asked what effect Macau's return to Chinese sovereignty in 1999 had on Zokwang and North Korean activities.

'It doesn't affect anything. We have the same job as before,' he said. 'Our nation has more friendly relations with China. Compared with the previous Portuguese government, it is easier for us to stay here, do business and apply for documents.'

Even though Portugal had diplomatic relations with North and South Korea, Pyongyang never opened a consulate in Macau. Mr Han said Portuguese authorities had given 'us some trouble'.

He was referring to the counterfeit allegations which led to the arrest of Mr Pak and other officials. The case is believed to have been dropped. It arose when staff at Banco Delta Asia discovered that US$100 bills deposited by a North Korean were fake.

'At the time, the Judiciary Police asked some of our colleagues to go to talk with them and discuss the situation. After an investigation was made, they discovered nothing.'

Sources familiar with the case said it was believed Zokwang would not have been involved with the circulation of fake bank notes as it had such a high profile and it would have been easier to launder money on the mainland rather than in Macau.

'We are real merchants and we are only trading in legitimate goods,' said Mr Han.

The Macau companies are the third leg of North Korea's southern China presence. A Foreign Trade Ministry office operates in Guangzhou and a Consulate-General was opened in Hong Kong in February after Britain had for years resisted approaches from Pyongyang to open a trade office in the colony.

The 1997 handover allowed Beijing to grant permission to open a mission to its ally despite opposition from the United States and South Korea and the misgivings of SAR officials aware of Pyongyang's international track record.

As to whether he was a member of the Korean Worker's Party, as most senior officials are believed to be, Mr Han, who was wearing a red shirt pin of Great Leader Kim Il-sung, laughed and said: 'Maybe.'

When asked whether it was hard to remain a committed communist in capitalist Macau with all its temptations, he said he did not visit casinos and did not like gambling. He lived according to personal and political principles. 'I have my own principles for living . . . Gambling, prostitution and fast money can't affect my life.'

Glenn Schloss ([email protected]) is a staff writer for the Post's Editorial Pages