North Korean embassies host proms and sell cows for cash

Earning money is a necessity for the embassies - North Korea does not fund them. Instead, they are expected to support themselves and send home any surplus.
Earning money is a necessity for the embassies - North Korea does not fund them. Instead, they are expected to support themselves and send home any surplus. PHOTO: NYTIMES

SOFIA, Bulgaria (NYTIMES) - While the embassies of most countries promote the interests of companies back home, North Korea's are in business for themselves.

A series of tough sanctions by the United Nations and an executive order recently signed by US President Donald Trump have sought to economically isolate the nuclear-armed regime of Mr Kim Jong Un. But Pyongyang has held on to an array of profit-making ventures, some of which operate in the roughly 40 embassies of the hermit kingdom.

Many of these enterprises are hard to trace, but at least one is impossible to miss.

For years, neighbours have complained about the noise coming from a large, fenced-in building in a southern section of Bulgaria's capital city. It hosts parties a few times a week, many of them capped off with a late-night flurry of fireworks, shot from the roof.

"It isn't loud now," one neighbour Bonka Nikolova said as a parade of wedding guests filed into the building. "But if they paid for fireworks, there will be fireworks."

Ms Nikolova had called the police before, but there was not much they could do.

The building, filled with gilded halls that can be rented for events, enjoys a kind of diplomatic immunity courtesy of its owner: the government of North Korea.

North Korean embassies have spent decades running cash-raising schemes, nearly all them illicit under current international law. Diplomats and their underlings have brokered deals for weapons and drugs and more mundane products such as machine tools and cows. They have also smuggled liquor, cigarettes, luxury cars and anything else that can be imported duty free and then sold at a gain.

"My late father-in-law was an ambassador," said Mr Marcus Noland, who studies North Korea and is executive vice-president of the Peterson Institute for International Economics. "He told me that in India, years ago, it was known within the diplomatic corps that if you wanted to buy beef, you could knock on the backdoor of the North Korean Embassy in Delhi. They ran an abattoir in the basement," said Mr Noland.

Earning money is a necessity for the embassies - North Korea does not fund them. Instead, they are expected to support themselves and send home any surplus.

Despite the sanctions it is under, North Korea did US$6.5 billion (S$8.9 billion) in trade last year. Analysts estimate that embassy revenues represent a small sum compared with the country's other low-profile foreign ventures.

Those included cadres of bodyguards leased to dictators who do not trust their own citizens, labourers dispatched to work sites around the world who must remit their wages, and state-owned companies that export ballistic missiles and other arms to countries such as Syria.

In some cases, diplomats get involved with weapons deals.

The third private secretary of the North Korean Embassy in Beijing doubled as an employee of Haegeumgang Trading. The company, according to a United Nations report, supplied surface-to-air missiles and radar systems to Mozambique. Haegeumgang also sold machine tools, and an ad in 2014 for those products on a Chinese website listed the company headquarters at the same address as the North Korean Embassy in Beijing.

China's Ministry of Foreign Affairs did not respond to faxed questions.

Diplomats for the country have been ad hoc entrepreneurs since at least 1976. That year, Norway's police found through surveillance that every member of the North Korean Embassy in Oslo was involved in the import and sale of as many as 10,000 bottles of spirits and 100,000 cigarettes.

Today, sanctions have forced many embassies to curb their ambitions, with some intent on keeping the lowest possible profile.

The North Korean Embassy in London sits unobtrusively in Ealing, a suburblike section of London, just another brick house in a row of them. The difference is a small sign, barely visible from outside the wrought iron fence: "Residence and office, embassy of D.P.R. Korea".

Aside from black luxury sedans in the driveway, there are rarely signs of life in the building, even to neighbours.

"I've never seen anyone go in or out of there," said Mr Ali Wiseman, a student who lives in a group house two doors down. "And I've been here a year."

His roommate Rupert Thomson has seen people there. "I once saw three women working on the lawn out front, and they did everything to not look at me," Mr Thomson said.

The way that the London embassy sustains itself is a mystery. One theory comes from Mr Kim Joo Il, a former member of the North Korean military who defected and moved to London in 2007. He said he often saw embassy employees at a type of Sunday flea market called a car-boot sale.

"They are always there buying secondhand electronics, toys, dolls, kitchen goods," Mr Kim said through an interpreter, seated at a restaurant he owns in a London suburb. "Some of these things they are cleaning up and fixing to resell, others they are sending home to North Korea."

North Korean embassies in the former Eastern Bloc, where the missions were long ago granted generous square footage, have a more lucrative stratagem.

In Poland, 40 businesses are listed at the address of the North Korean Embassy in Warsaw, including a pharmaceutical company, several advertising agencies and a yacht club. How many of these businesses are actually staffed there is unclear.

In Sofia, the embassy owns a number of buildings on two properties. One is a complex that includes the embassy itself. Passers-by can pause at a glass display case - standard issue for embassies in the city - filled with photographs. One captures the Supreme Leader beaming at a crowd, others were of missiles that had just been launched.

The event space, known as Terra Residence, is a 15-minute walk east. It is the former home of the North Korean ambassador, built in the 1980s with dazzle instead of comfort in mind.

Photos on Terra's promotional website show an interior that is essentially a communist take on Versailles - a series of huge and austere halls with chandeliers, gold curtains and paintings of ballerinas.

Terra rents out the space for magazine photo sessions, music videos and television ads, including a handful for national banks and one for the Bulgarian version of "Celebrity Apprentice". Its main business is weddings, proms and corporate events.

Few attendees, it seems, realise they are spending the evening on North Korean property.

"I knew it was a former embassy building, but I had no idea it was owned by North Korea," said Ms Bilyana Dimitrova, who attended a friend's wedding at Terra in September. "The atmosphere was very pleasant."

A spokesman for Terra, Ms Anelia Baklova, wrote in an e-mail that the company has had a long-term lease with the Embassy of North Korea that predates the imposition of economic sanctions.

When the United Nations approved stricter sanctions, this year and last, Terra "froze" its payments, she said. The company has not been evicted, she wrote, because of the "considerable amount of money" it had spent on renovations and upkeep.

E-mail messages to the embassy were not returned.

Some countries have succeeded in shutting down businesses that rent from North Korea. In May, Germany closed a youth hostel that was operating in what was originally North Korean diplomatic quarters.

The governments of Poland and Bulgaria have been unable to end the ancillary activities. A spokesman for the Bulgarian Ministry of Foreign Affairs said it had repeatedly raised the issue of renting out space with North Korean officials here, urging them to "use properties in Sofia solely for diplomatic and consular activities".

Terra, unlike its landlord, has tried to become a more agreeable neighbour. People who live across the street say that notices are now taped on the doors of their apartment building a day before there will be fireworks, giving a heads up and promising that the show will end by 10pm.

Surprisingly, residents did not seem particularly vexed about living near an enterprise that has pumped money into the world's most repressive and notorious regime. But that may say more about Bulgaria's government than the dangers of North Korea.

"When you live in a place where it's so difficult to get even trivial stuff done, it's hard to worry about World War III," said Ms Nikolova.