FICRY

Uncirculated Banknotes from North Korea

Writing for the Washington Post Foreign Service, Blaine Harden reports that for Kim Jong Il’s birthday, North Korean insurance managers delivered “$20 million in cash into two heavy-duty bags and sent them, via Beijing.” The cash was given to Korean insurance managers by their international counterparts. The money is reimbursements for fraudulent claims.

This incident highlights the global insurance scams that keep the North Korean government afloat by providing them with foreign cash. David L. Asher, who supervised a State Department unit that attempted to track various illegal activities by North Korea during the Bush administration says that, foreign money keeps Kim Jong Il in power and reimbursements are paid-out even now, at a time when North Korea has incurred the wrath of the international community for engaging in nuclear brinksmanship.

The mechanisms of fraud, which put hard-currency into the hands of Korea’s despot-in-Chief, are mostly unknown. However, details emerged in London, last year, when lawyers for German Allianz Global Investors, Lloyd’s of London and several insurers received a suspicious claim, filed by Jong Il’s government. According to Harden, international insurers received a request for reimbursement for a 2005 crash of a helicopter into a “government-owned warehouse in Pyongyang.” Insurers argued that the crash was staged. Many international insurers now believe that the North Korean government routinely uses insurance fraud to “raise money for the personal use of Kim Jong Il.”

Despite its economy policy of isolation, Harden maintains, North Korea is not only guilty of insurance fraud but also of illegally “manufacturing and trafficking of drugs ranging from heroin to Viagra, as well as to expert counterfeiting of $100 bills,” and the production of high-quality counterfeit items to be sold on the international market. 

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Cora Weiss, Editor-in-Chief, FICRY.com