Room 39: North Korea's Secret Coffer

North Korean leader, Kim Jong-un, is known for his over-the-top lifestyle, from owning a private island to spending millions on lingerie for his 'pleasure squad', a personal harem of thousands of women. Private jets, a fleet of Mercedes cars, luxury yachts, Rolex watches, a string of mansions; Kim has got it all. But where does he get all this money from?

The answer lies behind the door of Room 39 – a specified office located in the government headquarters in Pyongyang. Room 39 is an organization meant to get foreign currency for the leader through any means necessary. The agents would manufacture drugs, counterfeit notes, deal arms, and traffic children to fund their supreme leader's lavish lifestyle. They hire chemists to produce amphetamines and opioids, which are then smuggled to Japan, China, and across Asia. In 2003, Australia seized a North Korean shipment of heroin worth $27m. The mysterious organization is estimated to bring Kim Jong-un between $500 million and $1 billion per year, enabling him to buy political support and fund nuclear programs. With the revenue from Room 39, the tyrant never goes hungry. While his people starve to death, Kim enjoys decadent dishes like foie gras, lobster, and caviar.

Room 39 was established by the nation's forefather, Kim Il-sung, as a personal slush fund in the late 1970s. At the time, North Korea was a leading industrial power in Asia, alongside Japan. While not an official member, the country greatly benefited from the Soviet-led Council for Mutual Economic Assistance – an economic union between Soviet states. However, everything collapsed in the 1990s, following the collapse of the Soviet Union. Russia stopped supplying oil to North Korea, causing a severe oil shortage. The agricultural sector went downhill due to overdependence on fertilizers and a series of natural disasters. The country also suffered from electricity shortages, which became an excuse for Kim Jong-Il to develop nuclear power. Following Pyongyang's first nuclear test in 2006, the U.N. Security Council placed heavy economic sanctions on North Korea. Its currency had soon lost its value, forcing the regime to seek foreign currency in the black market. Since then, Room 39 became a vital source of income for the Hermit Kingdom.

For nearly two decades, U.S. intelligence officials have been trying to uncover Office 39's secrets. They cracked down an attempt to smuggle two Italian yachts worth more than $15 million into North Korea after new sanctions blocked the country's flow of luxury goods. It was meant to punish the country's ruling elite for living large while impoverishing their people. They discovered North Korea's counterfeit $100 bills – known as "supernotes." The notes were considered one of the world's most accurate forgeries. According to the American University report, the country circulated $114m in fake bills in 2001, with an estimated return of $27m a year. The U.S. redesigned its $100 bill to tackle the problem. The C.I.A also found out that North Korea was stamping goods with a fake "Made in China" label to escape the tough sanctions imposed on its exports. It is reported that the country's products were sold in France, Italy, and South Korea after being shipped through Chinese provinces to mask their true origin. The North Korean goods included 27 tons of fake eyelashes, eyebrows, and beards, and counterfeit Viagra pills.

The route into China also helps to accommodate the illegal sale of gold, mined in North Korea but passed off as Chinese. A defector, who worked in a trading company that sells ginseng, gemstones, and gold across Asia, explained, "We exported whatever we could – gold, jewelry, farming produce – everything we sold to get money." They would change company names and have branches in other countries. Since 2006, North Korea has been banned from the lucrative arms trade that brings up to $450m annual revenue. Room 39, however, found a smart solution and started trafficking arms through its embassies, using diplomatic immunity. A U.N. report claimed North Korea sells its weapons to Syria, Myanmar, Eritrea, Tanzania, Ethiopia, Somalia, and Iran. In 2013, Panama caught a North Korean ship carrying weapons and missile parts. Three years later, U.S. authorities tracked a vessel sailing under Cambodia's flag with a North Korean crew. They were sailing to Egypt carrying $20million worth of weapons, including 24,000 rocket-propelled grenades.

With the world becoming aware of Room 39's existence, the North Koreans are facing increasing hardships in carrying out illegal trade. Thus, the organization is turning its attention to cybercrime. In 2016, its hackers came close to stealing £1billlion from New York Federal Reserve. They were caught in the middle when authorities spotted that the withdrawal request had misspelled foundation as "fandation". North Korea was also thought to be the perpetrator of the "Wannacry" ransomware attack that briefly crippled Britain's National Health Service before being shut down by a British hacker. Cybercriminals from Room 39 have also hacked the South Korean military's computers and stole its secret warplane designs.

Last month, South Korea made international headlines when they announced that North Korea's acting ambassador to Kuwait defected to their country. Kuwait is a critical source of foreign currency for Pyongyang, which sent thousands of laborers there, mostly for construction projects. The ambassador was a son-in-law of Jon Il-Chun, who once oversaw Room 39. His escape may have been due to unreasonable demands from Pyongyang to secure funds. The diplomats are allegedly sent abroad with fundraising quotas from the illicit dealings. If they fail in their mission, the regime sends their whole family to a labor camp. It might have also been prompted by Kim Jong-Un's tight grip on power. Since Kim came to leadership, he tightened his family's control over Room 39. He placed his sister Kim Yo-Jong in charge of its operations and married her to someone linked to the office. The defector's father-in-law, Jon Il-Chun, had mysteriously disappeared with his family after being released from his post.

There is no doubt that the sanctions on North Korea have affected its economy. But we can't deny that Kim still has access to the same luxury goods. He will take anything that made money in North Korea and monopolize it. With the help of Room 39, the Kim family may continue to fill in their coffers.