He ran North Korea’s secret moneymaking operation. Now he lives in Virginia.
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North Korean defector tells how he secretly made millions for Kim regime
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For three decades, North Korean Ri Jong Ho was one of many men responsible for secretly sending millions of dollars back to Pyongyang. He worked for the shadowy "Office 39" before escaping with his family in 2014. He sat down with The Washington Post’s Anna Fifield to tell his story. (Video: Anna Fifield, Jason Aldag/Photo: Jahi Chikwendiu/The Washington Post)
By Anna Fifield July 13
Efforts to sanction North Korea into submission won’t work because there are too many ways around them, Ri Jong Ho says.
He should know.
For about three decades, Ri was a top moneymaker for the Kim regime, sending millions of dollars a year back to Pyongyang even as round after round of sanctions was imposed to try to punish North Korea for its nuclear defiance.
“We were never in pain or hurting in our trade business because of the sanctions. Instead, we conducted our first nuclear test in 2006,” Ri said in an interview near Tysons Corner.
The 59-year-old, whose job had been to raise money for the North Korean regime, and his family live in Northern Virginia, having defected to South Korea at the end of 2014 and moved to the United States last year.
“I used to be sanctioned, as a North Korean who led trade at the front line, but I never felt any pain from the sanctions. The sanctions were perfunctory,” Ri said.
He described being able to send millions of U.S. dollars to North Korea simply by handing a bag of cash to the captain of a ship leaving from the Chinese port city of Dalian, where he was based, to the North Korean port of Nampo, or by giving it to someone to take on the train across the border.
In first the nine months of 2014 — he defected in October that year — Ri said he sent about $10 million to Pyongyang this way.
[ Trump warns of ‘severe’ consequences for North Korea as Russia, China balk at tough U.S. talk ]
For more than two decades, the United States has been trying to convince North Korea to abandon its nuclear weapons program, alternating between inducements and punishments.
In both cases, American policy has relied on China, North Korea’s erstwhile patron, using its economic power over its cash-strapped neighbor. But Beijing’s implementation of sanctions, even those it backed through the United Nations, has been patchy at best. China’s overwhelming priority is ensuring stability in North Korea.
President Trump has repeatedly called on China to support his policy of putting “maximum pressure” on Pyongyang to stop its nuclear and missile programs.
Efforts have not changed North Korea’s behavior. This is partly because multilateral sanctions imposed through the United Nations must be watered down to avoid being vetoed by China or Russia, traditional backers of North Korea, and partly because other countries don’t implement the tougher but unilateral U.S. sanctions.
“Unless China, Russia and the United States cooperate fully to sanction North Korea, it will be impossible to hurt them,” Ri said.
China’s interest in North Korea is well known, but Russia’s role in supporting the former Soviet client state is often overlooked. Amid calls for China to limit oil exports to North Korea, Russia has dramatically increased the amount of oil it has sent — some reports suggest exports have quadrupled — to North Korea this year.
North Korea’s financial networks, moreover, are intentionally murky. The U.S. Treasury has sanctioned more and more North Koreans and North Korean companies by name to try to cut them off from the American financial system, but few, if any, have any exposure to the United States.
For this reason, Ri’s insights are widely sought after in Washington, where successive administrations have been trying to find North Korea’s pressure points.
[ The messy data behind China’s growing trade with North Korea ]
Ri worked for three decades in Office 39, the Workers’ Party operation responsible for raising money for the North Korean leader. The office has long been associated with both legal trade and illicit activity, including counterfeiting dollars and drug smuggling.
Ri said he worked as president of a shipping company and was chairman of Korea Kumgang Group, a company that formed a venture with Sam Pa, a Chinese businessman, to start a taxi company in Pyongyang. Ri suppled a photo of him and Pa aboard a jet to Pyongyang.
He was awarded the title “hero of labor” in 2002 for his efforts, and said he lived the good life in Pyongyang, with a color TV and a car. “I was very loyal to Kim Jong Il, so I was rewarded by him,” he said. “I was rich.”
His last position was running the Dalian branch of Daeheung, a trading company involved in shipping, coal and seafood exports, and oil imports. The company was given targets to meet in terms of profits, he said, declining to go into details.
But in 2014, Ri grew increasingly disillusioned after Kim Jong Un suddenly denounced his uncle, Jang Song Thaek, as a “traitor for all ages” and had him executed at the end of 2013.
Jang had been leading economic cooperation efforts with China, and dozens of people who worked for him were also purged at the time, Ri said. He worried that his family would be next. They escaped to South Korea before moving to the United States, where his two children, now in their 20s, plan to go to college.
Experts said Ri’s arrival in the United States could be a boon for American efforts to crack down on North Korea.
“It’s always useful when a defector, especially one that knows the internal operations of Office 39 — and my assumption is that he knows the external operations too — can help us,” said Anthony Ruggiero, who worked on sanctions at Treasury and is now with the Foundation for the Defense of Democracies.
The United States has been trying to understand how North Korea uses banks in China in particular to finance its activities. “I hope that the Treasury and some other organizations with ‘agency’ at the end of their name are talking to him,” Ruggiero said.
[ The secret to Kim’s success? Some experts see Russian echoes in North Korea’s missile advances ]
Ri said North Korea has repeatedly found ways to circumvent whatever sanctions are imposed on it.
“North Korea is a 100 percent state enterprise, so these companies just change their names the day after they’re sanctioned,” he said. “That way the company continues, but with a different name than the one on the sanctions list.”
Ri’s Chinese counterparts weren’t bothered, either, he said.
“My partners in China also want to make a profit, so they don't care much about sanctions,” he said. “When the Chinese government orders them to stop, they stop for a few days and then start up again.”
Growing impatient with Beijing, Washington is increasingly targeting Chinese companies that help North Korea with what are called “secondary sanctions.” At the end of last month, the Trump administration blacklisted the Bank of Dandong, located on the border between the two countries, for its dealings with North Korea.
But without knowing how to really hurt North Korea and teaming up to do it, it will be “impossible” to change Pyongyang’s calculus on the nuclear program, Ri said.
For that reason, the former money man advocates an approach that combines Trump’s “maximum pressure” with another idea that the president has at least flirted with: talks.
“I think there should be top-level talks between the U.S. and North Korea, so that they can both work together to solve the problem,” Ri said.
After last week’s intercontinental ballistic missile test and last month’s death of Otto Warmbier, the Ohio college student who returned from 17 months’ detention in North Korea in a coma, talks seem a long way off.
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But Trump, a businessman who prides himself on being a master negotiator, has said he would be “honored” to meet Kim, whom he called a “smart cookie.”
At unofficial talks in Oslo in May, a North Korean delegation signaled to American representatives Kim’s interest in talking, according to two people with knowledge of the discussions.
Previous diplomatic efforts to convince North Korea to give up its nuclear weapons have failed, and there is a great deal of skepticism in Washington about negotiations.
But that shouldn’t stop the current administration from trying, Ri said: “Like they say in politics, yesterday's enemy can be today’s friend.”
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Anna Fifield is The Post’s bureau chief in Tokyo, focusing on Japan and the Koreas. She previously reported for the Financial Times from Washington DC, Seoul, Sydney, London and from across the Middle
