North Korea’s Blood Gold

Question: How can a banker and investor in overseas gold mines get sympathetic innocent-victim treatment from the International Herald Tribune?

Answer: Go into business with this man.

That’s the upshot of this IHT story on Colin McAskill, successor to Nigel Cowie as the new primary foreign stakeholder in the Pyongyang-based Daedong Credit Bank. Reporter Donald Greenless writes that among McAskill’s other functions, he is “helping to operate North Korea’s foreign gold sales.” McAskill offers “dossiers” of proof to disprove any connections between his bank and illegal activity, and like Nigel Cowie, insists that all of DCB’s activities are “legitimate.” Greenlees then commits journalistic malpractice by failing to ask McAskill the questions that were obvious even to a pajama-clad blogger with a day job. So I found McAskill’s e-mail address and asked him myself:

• Which of North Korea’s gold mines have you personally visited? What observations can you offer about working conditions in those mines?
• Given that gold is a fungible commodity, can you vouch for where the gold you sell is mined? If possible, can you give a specific breakdown?
• Can you offer any information about working conditions in the Unsan District mines, or other mines from which you, DCB, or The Chosun Fund purchase gold?
• What are the North Korean companies and entities for which you are selling gold?
• Can you state with any degree of certainty that the gold you sell is not mined with forced labor, or in any of the camps I name here?

That was last Sunday. I told McAskill that I would publish the post, with or without his reponses, “in a few days.” McAskill never did respond. Now, I will explain why I asked those questions: because at least three of North Korea’s gold mines are also concentration camps.

North Korea has mined its rich gold deposits for centuries. Robert Neff, who sometimes guest-blogs at the Marmot’s Hole, wrote an interesting piece at OhMyNews on the history of North Korea’s gold mines, originally developed by Americans, Europeans, and of course, Japanese. That history ends with the Korean War, after which many of those mines came under the control of the North Korean regime’s slave labor system.

Today, at least three of North Korea’s gold mines are slave-labor camps, surrounded by ten-foot wire fences and guard posts: Camp 77, near Tancheon; Camp 3, near Sinuiju; and the infamous Camp 15, near Yodok. According to the few living survivors of Kim Jong Il’s concentration camps, the mines are the gulag within the gulag. The descriptions of working conditions there are so horrific as to compare to the quarries of the Nazi death camp at Mauthausen. They are also a substantial source of income for North Korea today. The Times of London reports that in the 1980’s, North Korea sold about a “tonne” of gold per month — about $24 million worth, or $288 million each year — on the London exchanges.

Many of the kwan-li-so involve mining for coal, iron deposits, gold, or various other ores, or logging and wood-cutting in the adjacent mountains. Prisoners undertake farm labor during planting and harvesting seasons. This back-breaking labor is often performed twelve or more hours per day, seven days per week, with time off only for national holidays (such as New Year’s Day and Kim Il Sung’s and Kim Jong Il’s birthdays, for example).

Kang Chol Hwan recalls how the prisoners at Camp 15, Yodok, dreaded work in the camp’s mines as a near death sentence:

According to Kang Chol Hwan, labor operations at the Knup-ri section of Yodok included a gypsum quarry and a re-opened gold mine (which was originally opened during the Japanese occupation of Korea), where some 800 men worked in groups of five. Assignments in these mines were considered the worst form of labor because of the frequency of work accidents there. [….]

You can see satellite photographs of Yodok here. Yodok, of course, was the camp that Kang made infamous in his book, “The Aquariums of Pyongyang.”

Former Prisoner #6, Kyo-hwa-so No. 77 Former Prisoner #6 was … sentenced for two years to Kyo-hwa-so No. 77 near Danchun, South Hamgyong Province, a gold-mining labor camp where some 2,000 out of roughly 7,000 to 8,000 prisoners died from mining accidents, malnutrition, and malnutrition-related diseases during the two years Former Prisoner #6 was imprisoned there, in the late 1980s. [….]

Most prisoners at Kyo-hwa-so No. 77 mined gold. Some of the mine-shafts dated back to the early days of the Japanese occupation of Korea in the early 1900s. Accessing the veins of mineable gold required descending and, later, ascending a wooden staircase 500 meters (1,640 feet) in length, using gas lanterns for light. Deaths from mining accidents were a daily occurrence, including multiple deaths resulting from the partial collapse of mineshafts.

Huge numbers of prisoners were so severely malnourished that after a short period of hard labor, they could no longer work in the mines and were sent to the clinic or “hospital” section of the prison camp. At times, this section would hold up to 1,000 prisoners. Some prisoners intentionally injured themselves to get out of the mines. Prisoners stayed at the clinic from one to six months, but the clinic was mostly a place to await death. During the detention of Former Prisoner #6, nearly a third of the prisoners died within their first month at the clinic. Sometimes, if a prisoner was near death, he would be released to die at home, in an effort to reduce the extremely high number of deaths under detention. Thirty to fifty new prisoners were brought in every week to keep the mine going. [….]

The third known slave gold mine is in North Pyongan Province:

As of the early 1990s, some 2,500 male prisoners were being held in Kyo-hwa-so No. 3 in Sinuiju, North Pyong-an Province, a city on the North Korean border with China recently in the news as the cite of a future “free-enterprise zone. The inmates made prison uniforms and mined stones and gold.

Finally, according to this Asia Times article, the largest of North Korea’s gold mines is in the same province, but near Unsan. I could find no evidence that there is a forced labor camp in that district, or that the Unsan mines are operated with forced labor. Nor do I have no information that they aren’t. In fact, I know nothing whatsoever about the working conditions there. I wish McAskill would have told us. According to the previous link, the U.N. contracted for an Australian firm to assess the mine’s potential value in 2001, which I presume included a visit. I cannot find the report, however, to see whether it says anything about the working conditions there.

(That last link, by the way, has plenty more interesting information about North Korea’s cultivation of financial links to Thailand, just as North Korean refugees began to make Thailand the main destination on their underground railroad.)

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Kim Jong Il is now mining and selling gold as if his survival depends on it, and until our State Department decided to preserve his rule for a few more eternal years, it just might have. According to this industry site, North Korea accelerated its sales of gold on the international market as the full force of U.S. financial measures began to tell:

North Korea sold 1.3 tonnes of gold bullion, valued at $28 million to Thailand in two shipments delivered in April and May 2006, according to the Thai Customs Department website. Thai Foreign Ministry spokesman Kitti Wasinondh told Reuters that importing unwrought or semi-manufactured gold from North Korea did not violate the UN sanctions, despite a ban on the sales of luxury items to the country.

The Times also suggests that Kim Jong Il and his partners have paved the way for increased sales through the London Bullion Market Association as a way to evade the financial restrictions of UNSCR 1718. McAskill and the Chosun Fund, in which he is an officer, claim to be directly involved in efforts to increase North Korea’s gold production.

North Korean goldmining aspirations are being assisted by foreign investors who see opportunities there. Colin McAskill, the chairman of Koryo Asia and investment adviser to the Chosun Development & Investment Fund, which was established last year to invest in North Korea, said: “One of the priorities of the fund is to redevelop the goldmining and other mineral industries and bring the product back through London.

(I know this will shock you, by the way, but another one of the Chosun Fund’s officers, Lynn Turk, is a former career Foreign Service Officer with U.S. State Department who once negotiated with the North Koreans and then became their business partner. In case were were wondering, this was probably legal.)

This raises questions about how closely McAskill and the Chosun Fund are involved in the mines’ operations. Would any serious investor invest in a mine property without seeing it and having professional consultants assess its production capacity? I don’t claim to be a mining expert, but I’ve worked in and studied mining enough to doubt that. Most investors would want their own detailed survey of a mine’s reserves, production, equipment, and yes, its labor force; those things determine a mine’s value. It’s just possible, but unlikely, that non-slave-worked mines can be proven to have mined every ounce of the gold McAskill is selling. McAskill’s silence doesn’t inspire confidence. And then there are the convenient ambiguities: gold mined by slaves isn’t distinguishable from gold mined by union labor, and more fundamentally, what counts as “free” labor in a society like North Korea’s?

Roger Barrett, who runs the Beijing-based Korea Business Consultants, a firm that assists foreign enterprises in the North, said that he had helped to facilitate a goldmining deal between Singaporean investors and North Korea in 2002. The Chinese are also thought to be considering investments in the North Korean mining sector.

However, gold producers cannot sell in London without attaining good-delivery status. North Korea held that distinction from 1976 to the early 1990s, when floods and mine collapses are thought to have shut down production there. Having regained the status, the country will be able to sell into the London market as soon as it can generate a regular supply of metal.

The good news is that this may not work. According to this piece, banks are unlikely to take the risk of trading with North Korea as long as it lies under the twin threats of UN sanctions and the watchful eye of the U.S. Treasury Department.

So if you’re reading this, Mr. McAskill, my comments are open.