No proof Kaesong cash funded North Korea arms programmes: South Korea expert panel

A South Korean security guard stands on an empty road which leads to the Kaesong Industrial Complex (KIC).
A South Korean security guard stands on an empty road which leads to the Kaesong Industrial Complex (KIC).PHOTO: REUTERS

SEOUL (REUTERS) - There was no evidence North Korea diverted wages paid to its workers by South Korean firms in a now-closed border industrial park to bankroll its weapons programmes, an expert panel appointed by Seoul's Ministry of Unification said on Thursday (Dec 28).

The investigation by the panel reversed the contention by the previous South Korean government that most of the cash that flowed into the jointly run Kaesong complex was diverted to North Korea's nuclear and missile programmes.

South Korea laid the claim when it pulled out of the joint venture in response to the North's launch of a long-range missile last year.

But in July, two months after liberal President Moon Jae In was elected, a South Korean government official said there was no hard evidence to back up the assertion.

About 120 South Korean companies paid about double the US$70 a month minimum wage in North Korea for each of the 55,000 workers hired in Kaesong.

The project resulted from the first inter-Korean summit meeting in 2000, when leaders of the two Koreas vowed reconciliation and cooperation.

Until its closure last year, it was the last remaining symbol of inter-Korean rapprochement amid frosty cross-border ties.

The decision to suspend the Kaesong project was"unilaterally and verbally" made by Moon's predecessor one day after the missile test, without any formal discussions within the administration, the panel said.

"The presidential office inserted the wage-diversion argument as major grounds, yet without concrete information, sufficient evidence and consultations with related agencies, mainly citing defector testimonies that lack objectivity and credibility," Kim Jong Soo, a priest who heads the panel, told a news conference.

"This impairs the decision's legitimacy and could constrain our ground over a future restart of the complex, while hampering the companies' rights to protect their assets due to the hasty pullout process."

Moon has pledged to reopen the industrial park if there is progress on the North's denuclearisation, but political tensions and Pyongyang's aloofness have tied the president's hands.