North Korean House of Cards

In the late 1980s, Office 39 underwent reorganization in order to accommodate
the growing markets with ties to North Korea’s domestic resources. This led to
the creation of three new bureaus:
1. The Kumgang Guidance Bureau emerged as an independent agency
carved out of the Daesong General Trading Corporation. It handled
Office 39’s precious metals trade and external operations. In addition,
it oversaw the regime’s two major refineries: Munpyeong Refinery and
September 21 Refinery, both located in Gangwon Province. Over the
years, it has engaged in sales worth hundreds of millions of dollars.
2. The Daehung Guidance Bureau also emerged out of the Daesong
General Trading Corporation. It was placed in charge of trading
agricultural, seafood, and local products. Its focus has largely been on
exporting mushrooms and medicinal herbs, while procuring gas and fuel.
3. The Kyonghung Guidance Bureau was created in 1987 to oversee the
operation of a number of foreign currency shops and restaurants inside
North Korea. It engaged in the trade of a variety of food products, such
as sugar. Its network was mainly centered in Asia with specific ties to
China, especially Macau. 393
By the beginning of the 1990s, the Royal Economy apparatus was well
established and connected to a vast procurement and export network throughout Asia,
if not worldwide. However, exploitation of the available markets on the Korean
peninsula paled in comparison. South Korea was, in many respects, a harder target
to penetrate. In addition, it was a more politically sensitive target and, as such, was
already the focus of a number of intelligence organizations within the North Korean
regime. But, as power and responsibility for running the day-to-day operations
of the regime increasingly shifted to Kim Jong-il, his need for additional lines of
funding increased. As a consequence, on March 8, 1991, he reportedly signed the
instruction to create Office 38. 394
393 “Kim Jong Un’s Sister Put In Charge Of Regime’s Coffers,” op. cit. An additional guidance
bureau, the Rakwon Guidance Bureau, was presumably established during this period. Like the Kyonghung
Guidance Bureau, it oversaw restaurants and foreign exchange shops. By the 2000s, both guidance
bureaus were controlled by Kim Kyong-hui.
394 Kim Kwang-jin, op. cit.
Ken E. Gause
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