The Restoration of Office #38

22 Jun

Office #39 (top right) in Central District, Pyongyang

Office #38, one of the bureaus that manages Kim Jong Il’s finances (as well as an owner-operator of Korean restaurants and hotels in the country and abroad), was “restored” in March, 2010, after reportedly being merged with Office #39 in the fall of 2009.  If this report is accurate, the merger occurred around the same as Jon Il Chun, Deputy Director of Office #39, publicly appeared with Kim Jong Il as the implicit replacement for incumbent director, Kim Tong Un.  Because currency-earning offices/bureaus are carved out of the CC KWP Finance and Accounting Department, are submerged into and overlap with KJI’s Personal Secretariat and other Party organs and institutions, the term Third Floor may be more precise.

Chosun Ilbo reports:

North Korea in March restored a special department in the Workers Party codenamed Room 38 which manages leader Kim Jong-il’s coffers and personal slush funds, it emerged Monday. The North last fall merged Room 38 with Room 39, which manages party slush funds.

“Rooms 38 and 39 were merged to simplify Kim Jong-il’s slush funds,” said a North Korean source. “But when it became difficult to secure hard currency due to international sanctions, Room 38 seems to have been restored because there was a feeling that Room 39 alone can’t meet the need.”

Room 38 is reportedly led by Kim Tong-il, who heads three regional departments in charge of earning hard currency.

Room 39 tries to maximize earnings from gold and zinc mining and farming and fisheries. It also manages stores and hotels exclusively for foreigners in Pyongyang. Room 39 seems to have suffered badly due to the recent suspension of inter-Korean trade. “Taesong Bank and Zokwang Trading, which received remittances from Mt. Kumgang tourism, are both controlled by Room 39, and is also in charge of the exports of agricultural and fisheries products,” said a government source.

Kim Jong-il needs dollars to maintain the party elite’s loyalty to him and his heir presumptive. He is said to have told party bigwigs in February, “From now on I will judge your loyalty based on the amount you contribute to the fund.” His son Jong-un is also said to be amassing separate slush funds for his own use.

Jon Il Chun

Daily NK‘s Kim Yong Hun reports that some of the so-called Party Funds are derived from the country’s overseas building activities in Africa.  Jon Il Chun has served as the Vice Chairman of the DPRK-Rwanda Friendship Association (although that may have had more to do with missile sales than monument construction and war dioramas).

A Daily NK source in China revealed on the 18th, “Since 2000, North Korea has been earning colossal quantities of dollars through contracts for the Mansudae Overseas Project Group of Companies under the Mansudae Art Institute to construct sculptures.”

Mansudae Art Institute is an organization primarily dedicated to the idolization of Kim Il Sung and Kim Jong Il through public works, one whose construction of edifices such as the Juche Tower and Arch of Triumph in Pyongyang has added to the status of the country.

It has also been building revolutionary monuments in African countries such as Ethiopia since the 1970s in order to maintain cordial relations with socialist states, but in the early 2000s started doing work in African countries to earn foreign currency as well.

According to the source, North Korea has earned $66.03 million from Namibia alone thanks to the construction of the Presidential Palace ($49 million); the Cemetery of National Heroes ($5.23 million); a military museum ($1.8 million); and Independence Hall ($10 million).

It has also earned almost $55 million from Angola via the António Agostinho Neto culture center ($40 million); Cabinda Park ($13 million); and the Peace Monument ($1.5 million).

Additionally, the North has constructed a basketball stadium ($14.4 million) and an athlete academic center ($4.8 million) in the Congo, earning almost $20 million dollars in total.

Thanks to the Monument to the African Renaissance in Senegal, the North has made another $12 million dollars.

Several statue projects in the Congo (Photo: Daily NK)

Part of the Third Floor’s revenue derives or has derived from the counterfeiting and sale of cigarettes, Marlboros among them.  So one might wonder, with this new rumor of Kim Jong Il indulging his tobacco habit, if this industry is allowed to contribute in-kind, in lieu of presenting Party Funds.  KJI was filmed puffing a cigarette during a 2009 guidance tour of a tobacco factory, and has been photographed on several occasions seated next to what appears to be an ashtray.

North Korean leader Kim Jong-il has apparently taken up smoking again after kicking the habit following a massive stroke in August 2008, South Korean government sources say.

An ashtray sits at Kim’s right hand in a Korean Central News Agency photograph showing the dictator at a football stadium in North Pyongan Province on Saturday. “If a stroke patient smokes again, the chances of a relapse increase,” said one neurologist. And for diabetics like Kim “smoking can cause heart disease by damaging blood vessels,” he added. Kim apparently underwent heart surgery around May 2007.

“Kim Jong-il apparently smoked Marlboro cigarettes and drank pink champagne at dinner with Hyundai Group chairwoman Hyun Jeong-eun in August last year,” said one government official. “It looks like Kim Jong-il started smoking again around the first half of last year.”

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3 Responses to “The Restoration of Office #38”

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  1. Tweets that mention The Restoration of Office #38 « North Korea Leadership Watch -- Topsy.com - 06/23/2010

    […] This post was mentioned on Twitter by DPRK News Line, Joseph J. Steinberg. Joseph J. Steinberg said: The Restoration of Office #38 http://shar.es/mEvng […]

  2. The Restoration of Office #38 | NKNews.org – North Korea News & Information Resource - 06/23/2010

    […] Office #38, one of the bureaus that manages Kim Jong Il’s finances (as well as an owner-operator of Korean restaurants and hotels in the country and abroad), was “restored” in March, 2010, after reportedly being merged with Office #39 in the fall of 2009.  If this report is accurate, the merger occurred around the same as Jon Il Chun, Deputy Director of Office #39, publicly appeared with Kim Jong Il as the implicit replacement for incumbent director, Kim Tong Un.  Because currency-earning offices/bureaus are carved out of the CC KWP Finance and Accounting Department are submerged into, and overlap with, KJI’s Personal Secretariat and other Party organs and institutions, the term Third Floor may be more precise. (NK Leadership Watch) http://nkleadershipwatch.wordpress.com/2010/06/22/the-restoration-of-office-38/ […]

  3. North Korean Economy Watch » Blog Archive » Room (Bureau) 38 allegedly restored - 06/23/2010

    […] NK Leadership Watch has more.  […]

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