Pyongyang used ‘billions’ from joint factories for weapons, luxury goods for elites

North Korea channelled about 70 per cent of the money it received for workers at the now-shuttered Kaesong industrial park into its weapons programmes and to buy luxury goods for the impoverished nation’s tiny elite, South Korea said on Sunday.

The jointly run park, just outside the North Korean city of Kaesong and about 50km from Seoul, employed some 54,000 North Koreans who worked for over 120 South Korean companies, most of them small and medium-sized manufacturers. Seoul closed the park last week in retaliation for Pyongyang’s recent rocket launch.

In a statement issued on Sunday, South Korea’s Unification Ministry said that about 70 per cent of the 616 billion won (HK$4.02 billion) paid to the North since the park was established in 2004 was used to develop nuclear weapons, missiles and for the luxury goods.

It did not detail how it arrived at that percentage.

Pyongyang was able to divert the money because the workers in Kaesong were not paid directly. Instead, US dollars were paid to the North Korean government, which siphoned off most of the money and paid only what it wanted to the employees in North Korean currency and store vouchers, the statement said.

Pyongyang responded to Seoul’s closure by announcing a military takeover of the complex and seizing everything that the companies’ South Korean managers were forced to leave behind.