High-ranking officials in North Korea’s Workers’ Party, military, and administration are reportedly using dubious methods to take over foreign currency-earning enterprises. A common technique is to remove the head of an enterprise, accusing them of corruption or poor performance, and placing a family member in the top position.
“Administrative cadres from Pyongyang to the provinces are placing their family members in top positions at trading and foreign-currency earning enterprises. They exercise their administrative authority to place their partners or children in charge or second in line,” a source in South Pyongan Province told Daily NK on December 7.
“Those in charge of currency-earning enterprises can be removed using a number of measures, which include conducting an audit on the company and falsely blaming the company head for poor performance or corruption, using the state’s authority to replace the directors or simply confiscating the enterprise entirely.”
He added, “These officials traditionally protected company directors in exchange for bribes, but seem to have realized that taking direct control of the enterprise with a family member in charge is the most reliable and convenient way of earning money.”
According to the source, high-ranking officials are realizing the benefits of setting their children up for success, which ensures themselves a comfortable retirement. They are often placing their children in accounting or management positions at foreign-currency earning enterprises following their graduation from university.
While it was previously illegal in North Korea for family members of executives to work at state-run enterprises, this policy was withdrawn as part of the July 1 Measures introduced in 2002. The Kim Jong Un era has seen a greater emphasis on the notion of ‘self-help,’ which high-ranking officials are interpreting as tacit approval of their effective seizure of foreign currency-earning enterprises.
“The officials then support their family members operating the enterprise by using their position to provide assets like trading licenses or approval to engage with Chinese traders. Such efforts require little more than making a phone call. It is becoming more difficult for existing company heads without government-linked family members to maintain their positions. As the approval process for trade grows more convoluted and complicated, it confers power to those with government authority or the means to circumvent it,” a source in North Hamgyong Province said.
“Transportation-related enterprises, which have become popular these days due to power shortages, are mostly run by the wives or children of high-ranking officials. For example, ‘Chongjin Transportation and Logistics’ is being run by the wife (in her 60s) of the chairman of the Provincial People’s Committee in North Hamgyong Province, who is considered to be distantly related to Kim Jong Suk (Kim Il Sung’s first wife).'”