Glocom and DPRK Fronts

James Pearson 0:02

Is Glocom the only North Korean company with flashy branding hiding in plain sight?

Andrea Berger 0:15

Arms Control Wong podcast, the leading podcast on arms control, disarmament, and non-proliferation. I'm Andrea Berger, and I've recently joined CNS at the Middlebury Institute of International Studies as a senior research associate. And I've totally commentated this podcast from Jeffrey and Aaron today to have a chat with our guest, James Pearson. James is a correspondent at Reuters based in their Seoul office, and I've been helping him out with a really interesting Case for about the past nine months now, which relates to a North Korean military communications technology company trying to sell their goods around the world via some front operations in Southeast Asia.

James, welcome.

James 1:01

Hi, thanks for having me.

Andrea 1:02

So, James, tell me a little bit about this case. The company in question here is called Pan Systems. They run a company that doesn't really exist actually on paper in terms of any corporate registry. Called Glocom, but give me a flavor of what this case is like, because it's a pretty movie-worthy one.

James 1:22

It is. You know, on the outside, you look at this company, Glocom, or rather, we should call it a brand, Glocom, because there is no Glocom in any company registry anywhere in the world, at least that we could find, that relates to this. And what it is, is basically a pretty sophisticated military radio manufacturer that markets its stuff very openly.

They displayed it at defense exhibitions. They have a very flashy website, certainly by North Korean standards at least, and a very large portfolio of catalogs which have an extensive description of the products that these guys are making. And for all intents and purposes, were you to pick up one of those catalogs, were you to pick up one of these products, You would think it's just made by a fairly run-of-the-mill but nonetheless competent military radio provider.

But the entire thing, as you and I worked out over between six and nine long months, is a front for North Korean military exports and is completely illegal.

Andrea 2:27

So tell the listeners a little bit about how you actually came to take an interest in pen systems. What piqued your interest in the first place?

James 2:36

Well, Pan Systems, the name Pan Systems, was on this banking list which somebody had handed to me in about 2012. And I'd never been able to make sense of it. It was this long list of North Korean companies and bank account numbers or companies which were fronts for North Korean things. Some of them were known. Some of them appeared on UN sanctions lists.

Others were just... Had no obvious connection and pan systems was one of them now what pan systems is is actually a singapore based company they exported mainly ibm equipment they used to be pretty big in the 1970s and in fact the u.s government in a wiki leaks cable actually recommends pan systems as a company which would be good for u.s companies to to partner up with but this pan systems is When we saw that, I remember seeing that and thinking that was incredible.

But this Pan Systems, Pan Systems Pyongyang, is a version of Pan Systems which has kind of gone rogue. And when we spoke to the guy who actually runs Pan Systems out of Singapore, he essentially denies any control whatsoever over Pan Systems Pyongyang, which for all intents and purposes is just an office of Pan Systems inside North Korea.

Now, this over a period of a long time sort of never really came back. When I first saw Pan Systems on that list, it just sort of stayed in my mind. I remember checking with a few sources saying, hey, who are these Pan Systems people? Why are they of interest to whoever produced this list? And nobody I spoke to was able to make sense of it.

And I basically forgot about it. And then last March, I think it was, one of the UN reports, panel of expert reports came out. And it had a tiny little section in there where it said that the UN panel of experts pursuant to UN resolution 1874 against North Korea was looking into the possible brokering, quote unquote, of North Korea.

Military communications equipment in Malaysia. And they had a screenshot of a Glocom catalog in the corner of which was a Glocom, a Malaysian Glocom email address. And from there, we basically started following the rabbit trail all the way To Pyongyang, Pan Systems crops up and the network of front companies and really interesting characters behind the whole thing slowly started to unfold over a period of several months during which it began to become evident that the UN was also really pursuing this investigation as they'd said in their last report in 2016.

Andrea 5:10

Let's talk a little bit. We'll get to kind of the people involved and the network, because I think that's one of the most interesting parts of this case. And we'll talk about some of the evasion tactics as well. But let's first talk about the nature of what PAN systems and GLOCOM were doing. So what was the nature of their business?

And you mentioned that it was military radios. I think it's worth talking a little bit about what was in that brochure. And we'll put this up on the Arms Control Wonk Slack channel so that our listeners can have a look exactly at what we're talking about here. But we've basically got two brochures now, right? So we've got one from the 2016 and earlier period, and we've got a brand new one.

So let's talk about both of those.

James 5:59

Yeah, so these brochures, which look like the kind of things I think they were probably handing out at some of the arms shows that they exhibited at, detail the kind of systems which Glocom has been marketing. And this ranges from simple handheld military radios designed for soldiers in the field to To vehicle-based radios, to radio systems for helicopters and ships and control centers.

And even in some of the most recent stuff we've seen, you've got telemetry systems for missiles as well, which was really interesting. And it was a shame that we didn't spot that a little bit sooner. So, yeah, when you look at these Glocom products and when you see how they're marketed, they look like normal military radios. And in fact, Glocom themselves say that they, at least in their marketing material, they say they've been selling these things to paramilitaries, to secret service organizations, to the police, to people all over the world.

Now, whether or not that is hyperbole or just North Korean marketing, we don't know. But they are slick looking radios. Professional alternatives to the kind of stuff you'd get from tails or other, other sort of major military radio manufacturers, that the kind of countries that North Korea would want to sell to, or would be in a position to sell to, would not have a very good access to.

And I think, you know, my understanding is one of the things that you and I talked about earlier on, Andrea, when we first got into this was that, you know, this is this is a classic, you Part of the North Korean market for them to open up somewhere where in this case battlefield radios there is a market dominated by fairly large allied states with which North Korea has no trading relationship

Andrea 7:36

That's right. And I think this is a really good niche area for the North Koreans at a time when a lot of scrutiny is being exerted on the more obviously North Korean goods and services that are being sold overseas. Here we've got a case where, you know, they fairly successfully camouflage themselves as not being North Korean products.

And they're the type of products that aren't, you know, They're not off-the-shelf weapons. And therefore, if you're a country that doesn't know or care all that much about the sanctions regime, you might not immediately think that buying a radio from a company, even if it might be North Korean, would be a violation of your international obligations. It's a pretty good niche area for the North.

And because so many conventional and non-conventional weapon systems need communications, command and control technology to go with it, This is a potential big earner for them. And whether or not you believe the latest brochure that Glowcom's put out, you know, they say at the end of that brochure that they make 10 million US dollars in revenue and over 50 markets.

Now, like you say, take that with a grain of salt, but it's really suggesting that actually they've still got business going on, whether it's that substantial or not. Yeah.

James 9:02

Yeah, and something really extraordinary about that is that, you know, the Glocom Malaysian website, I think, was one of the main things that for us really unlocked the entire case, because it was behind that, that we had who is records, which pointed towards certain companies, phone numbers, addresses and individuals. But then, just as the story was coming out, we then discovered that there was a new Glocom website, which had been completely scrubbed of any links to Malaysia, had all this new equipment on it, had gone up in mid-January, which was during the period we were still investigating them, and I think they were probably pretty sure by then that we were onto them.

So... That too, I think, underlines a level of confidence that the guys behind this back in Pyongyang have about this product, that even though the UN and a big media organization was investigating and essentially exposing them, they set up a new website, which is still live right now, advertising North Korean-made military equipment.

Andrea 9:57

It also suggests that actually there is some Fixation and reliance on the Glowcom brand now, which from a sanctions perspective is interesting because it means they can't as easily just, you know, shut down that facade and create a new one. Now they might do that after repeated attempts where we've spotted them, but obviously they didn't shut down the first Glowcom website and You know, put something together with an entirely new name, they seem to have some kind of reliance on the Glocom marketing that they've worked with for so many years.

James 10:34

I think that's, I think that's a really good point. And maybe that speaks a little bit to obviously, you know, we've not really been able to put a figure on how much money Glocom has made for the North Korean state, but Very early on into looking into this. And, you know, I obviously knew nothing about military radios before this case.

But when I spoke to a few people who did, the thing that they pointed out was that, yeah, if you want to fit out a battalion with a sophisticated ultra high frequency or very high frequency military radio system like this, you're talking millions of dollars per battalion. So it's clearly been a nice little earner for them. But we just don't know to what extent.

Andrea 11:10

Yeah. And we know from Having looked into the supply chain a little bit, which we'll talk about in a few minutes, that actually the probable cost of putting together some of those systems is relatively low compared to what they were selling them for. So on a per unit basis, they had a pretty substantial markup, which means that they were likely generating some important revenue for the North Koreans.

James 11:34

Exactly, yeah. And, you know, the system seems to be that, you know, using this, I would say, you know, fake front of Pan Systems, Pyongyang, so pretending to be a foreign company in Pyongyang, they're importing their parts from all over Asia, from mainly through China, I think we found. They're bringing them into North Korea where they're manufacturing them and on their...

On their website and in their material, they actually show the inside of the Glocom factory. And that was one of the things we were able to use to actually identify that it was North Korean. And then they're exporting it through this front, which was sent to Malaysia. So it's a really good business plan for North Korea, whereby you can fairly cheaply import a lot of these parts, especially in the scale of which they must have been doing it.

And on top of that, you pay basically no labor costs inside North Korea. You know, factory workers, even if they're paid according to the North Korean market rate, which is not widely used, at least not officially, it still costs next to nothing to actually manufacture anything. So, yeah, they're getting some cut price military radios and presumably making very high profit in the process.

Andrea 12:40

You talked about the photos of the supposed Glocom factory as being one of the things that led us to conclude that actually this brochure definitely was North Korean. Let's talk about some of the other ones, because those I think were also really fun to find. I remember when we were looking through some of the images on the brochure, and I'd encourage our listeners to go have a look to see what we're talking about.

You know, once you look hard enough at this, there's some really North Korean things that leap off the page. One of them, which I thought was great, was they've got a photo of one of the sort of command rooms with, you know, no one sitting in the chairs, room is empty, but there's images on the screen. And I was looking at those images and there's a logo in the Top corners of them.

And I thought, that's a really familiar logo. Then I realized that that was the logo of the UK SAS, so Special Forces here. And I thought, well, why on earth would that be on the screen? And called over one of my very geeky colleagues at the Royal United Services Institute and And he took a look and he's like, oh, that's great.

I love that game. And it was one of the mission command screens from Call of Duty 4, which I just thought was great.

James 13:56

Yeah, I mean, you don't have to pretend it was somebody else who plays that game secretly, Andrea. But yeah, I mean... That was one of the many, the many things where, like, you say, it was it was a bit of a eureka moment, but also kind of amusing. I mean, that one sort of had hints of North Korea in the sense that, you know, we know that North Korean propaganda has used footage from that exact game, Call of Duty: Modern Warfare, Modern Warfare 4, in its propaganda. but there were some more specific things. So, going back to the factory photos, for example I remember looking at one of them.

And I was actually showing it to your very own Joshua Pollock. And he was saying, you know, he and I look at photos together of the inside of North Korean factories quite a lot because we're interested in some of the CNC machines there. And I pointed this one out to him and said, hey, Josh, you know, what do you think this is?

And he's like, hmm, this, well... In the background there, on top of this, there was a sort of radio signal testing machine that this Glocom factory worker was using. He says, in the background there, there's a sort of a North Korean-looking shield or emblem. I can't quite make it out. And I had a look at it and thought, gosh, you're right.

I hadn't even noticed it. So I passed that on to a defector friend here in South Korea who's working at the NIS's think tank where you have a lot of these sort of higher level defectors who come from all sorts of different levels of the North Korean state. And I said, hey, what is this little plaque which is attached to this factory machine?

He said, oh, well, the machines won the number 26 model machine lathe award. Now, what that was is that the number 26 lathe was this sort of mythical machine Part of North Korean propaganda and folklore, whereby when Kim Jong Il was a young student, and he was working in the Pyongyang textile mill, he made lathe number 26 production go through the roof, according to the, you know, the state media version of events.

And so, you know, in the spirit of the way that a lot of these Internal awards and medals work in North Korea, when you are working in a factory and a particular machine has a very, very high productive output, it wins this kind of award. And so there was this picture of the inside of what looked like a very North Korean factory, but we just at the time couldn't prove it.

And there you have a machine that's won a uniquely North Korean award. There's no other place in the world that would award a machine like that, the number 26 Leith Award. So That was one of them. Going back to the catalogs as well, some more interesting ones. There was a sort of a mock-up of a battlefield showing how the radio system would connect soldiers to each other.

And it had a sort of small mountain, and on one side it had little dots that said friendlies, and on the other side it said hostiles. And I remember looking at that, zooming in on it, and thinking, you know, this... View somehow feels Korean in some way. I live in South Korea and, you know, there's this, it just, it somehow felt familiar.

So I cropped it, I put it into Photoshop. I took away the hostile and friendliest things because at the time we were, you know, working in total secret on this. And I just tweeted it and said in Korean, hey, does anybody know where this is? And over the next several days, I was inundated with... Some pretty wrong coordinates, but eventually someone said, oh, yeah, that's that's just near, which is just south of Seoul, and actually the road there is the road to IKEA in South Korea. So it was basically they were, they were, they were showing a mock-up battlefield just outside IKEA. another one which I thought was pretty, pretty interesting, and frankly quite sloppy, was.

They were demonstrating an Envis antenna, which is one of the sort of large, it looks like a roof rack style grid antenna, which is designed to be mounted on top of a vehicle. And in most of the catalogs, they'd showed a sort of a CG mock-up of that on top of a Humvee. But in one picture, they had put it on a Pyonghwa Motors SUV.

Now, Pyonghwa Motors is a very unique, again, a very unique North Korean thing. That is a A car brand of mainly Fiat, which are manufactured under license in Pyongyang. And it used to be a joint North-South Korean venture, which was set up by the Unification Church in South Korea, that is the Moonies. So you had this Mooney-made car in the picture, a uniquely North Korean car, wearing this big Glocom-made antenna.

And just in one little corner of the picture there, you could just see the Korean Cha, which is like a Korean character where you put after Cha. Just like in North and South Korea, you'll have certain Korean characters which you put after the numbers to identify a car on its license plate. So that was another one of those moments where It seemed like they'd been surprisingly sloppy.

Because there were also other bits in the catalogue where they had clearly tried to hide the North Korean origins. I remember in one, there's a picture of some soldiers who had gathered around a sort of command screen thing. And they kind of looked like they could be North Koreans, or at least they looked like they could be Korean.

But their faces have been changed. They've been swapped out with Middle Eastern faces instead. It has a sort of really odd look to them. And in another picture where it was showing a targeting system, you could just see where there was a sort of what looked like an HUD over another one of these Google Earth maps. And you could just see where they'd kind of blacked out the text, but it was pretty obvious.

It was pretty obvious, at least to a Korean speaker, that the thing they were censoring was Korean text. There was enough left over there to make it out. And then lastly, on the maps, going back to Google Earth, and this one was in the most recent catalogue and is perhaps one of the more overt examples of this, they had a sort of zoomed-out satellite view of a battlefield, and it's very, very clearly Seoul.

Andrea 19:43

Yeah, I mean, this is all a perfect comparison Case in point for why OSINT is awesome, because it allows you to get a fairly conclusive sense of exactly who and what you're dealing with when you're doing these sort of investigations. Just before we turn to the people who are really, really important in the pan-systems I think it's worth mentioning that one of the interesting things that came out of the UN panel report about this particular network was that they discovered, well, basically they seized some Glocom radios on their way to Eritrea.

So we know that at minimum there's one customer of Glocom products in recent years in Africa. When I was writing a A monograph on North Korean arms sales overseas, I put Eritrea in the category of what I called reluctant customers of North Korea because they were primarily seem to be calling in the North Koreans to maintain and upgrade old systems from the Cold War period where there are a few other potential suppliers for that stuff now.

But the Glocom purchase makes me kind of put a question mark behind the The way I characterize that relationship between North Korea and Eritrea. So it's something that's given me pause for thought and will make me do some more digging on this to see actually if we really do have a more resilient North Korean consumer of

James 21:23

Military goods here on our, on our, yeah, I mean, and in the UN report they said they, they, the interdiction was of something like 40 boxes of Glocom radios, and they've got a few images in there, and I encourage everyone to go and download that report, which is now public, to have a look. And you know, when I first saw this, one of the things that was most striking to me was that even the cardboard box the Glocom radio comes in is all branded like.

Like a radio box would be, you know, it's cardboard and just, you know, the black logo stamped on it. It's just, you know, there's a model number for the Glocom radio. It's a slick looking thing. It looks totally normal. It's not, you know, often when you read about these interdictions in the UN, it's like, you know, some AK-47s in a crate hidden under sugar or coal or, you know, the MIG parts in Panama.

But here you're talking about Hiding in plain sight, using what looks like a pretty harmless radio brand. Nobody would ever pick up one of these Glocom radios and use it or feel it or look at it and straight away think, oh, this is a North Korean product. And one of the other things that was interesting too is what they had actually shipped the Glocom radios with.

It'd come with some rucksacks, which they actually advertise in the catalog, which are designed to carry the radios. But inside those rucksacks, they'd actually packed them full of the Kangjin North Korean cigarettes. So this is a photo in the report. You can see there's a member of the panel who's sort of pulling open one of these rucksacks.

And there it is. It's just absolutely stuffed with North Korean cigarettes. So You know, again, that's a strange thing to have done, given the, you know, why go to those extraordinary lengths to brand Glowcom as a normal looking thing and yet package it with a bunch of very obviously North Korean products like that.

Andrea 23:10

Right. So the people. Let's go into that a bit. And I think we should probably start with the Reconnaissance General Bureau folk involved in PAN systems and Glowcom operations, because From the research and digging that we did, we concluded that this was an operation run by the Reconnaissance General Bureau, and the lady that helped us reach that conclusion is

James 23:37

Called Riang Suno. Tell me a little bit about her. Yeah, so she is, I think, one of the most, there are many interesting characters in this whole story, but she has got to be one of the most interesting, or certainly one of the most formidable. Riang Sunyo belongs to, according to a source I spoke to, and I can't go into how this source knows this, but it's very interesting.

According to this source, Rangs Junior basically works for a little outfit called Liaison Office 519. And Liaison Office 519, again, when this source told me this, they didn't even know what Liaison Office 519 was. I went back to the same defector source who had told me about the number 26 Model A, the Ward, and I said, does Liaison 519 Office work?

Ring a bell to you? What does that mean? And straight away he said, oh, yeah, that's Reconnaissance General Bureau. And I did a bit of digging, looking at some older reporting in South Korean media, and sure enough, there is, there is an office 509, or the 509 Ronaksoid is in Korean which special, specializes in the training of spies and espionage for the Reconnaissance General Bureau. So that was our big sort of smoking gun link that sort of puts.

Tied Glocom to the Reconnaissance General Bureau. Now, the reason that we could tie Yang Sunyong to Glocom was that she was one of the shareholders of International Global System. And International Global System is the company which registered the Glocom website in Malaysia. And even as I say this, I can remember when we were trying to work order this out, you know, it is so deliberately complicated and so much crossholding that, you know, it's very, very hard to follow the thread.

And it was a nightmare for both me and my editors to try and actually write this whole thing out. And another interesting thing about Yang Sunyong. Is that she's the one who, along with two other guys, were basically busted in Kuala Lumpur Airport in 2014, carrying bags of almost half a million dollars in cash. And they tried to go through customs and they got held.

They said that they didn't know that they were supposed to declare the cash unlawful. They got detained for a while. The Attorney General in Malaysia decided that they couldn't press charges and they released them. And then meanwhile, the North Korean embassy claimed the cash and said it belonged to them. The North Korean embassy in Malaysia, that is.

So you've got this incredibly interesting Lady Yang. Who, according to that Malaysia source, the airport incident was also travelling on an official service passport, which makes her some kind of government official, which is obviously in the North Korean context is a very loose and complicated term, but nonetheless puts her in an official capacity, who is all at once Telling the people that held her in Malaysia that she works for Pan Systems, and yet is a shareholder of International Global System, which bought the Glocom website, and now we know is also working for Liaison Office 519.

So she's somebody who really ties the entire thing together. And time and time again, when you and I were looking through this case, one thing that really struck me is that I just think, In all the cases of sanctions busting or looking at the North Korean companies operating illegally overseas, I can't remember when there's been so much transparency into the people and the companies and who they were and what they were thinking and the patterns that they then undertook.

Andrea 26:55

Yeah, that's right. And she's a good example because she was also on some of the paperwork. So You're able to put together the pieces of this a little bit more. And one of the other people that we were able to do that with is the guy that we've since concluded is probably in terms of the boots on the ground in Malaysia, the ringmaster or the puppet master here.

And that is a guy called Kim Chang Hyuk. And we think he's a pretty interesting character. And So let's go into that one a little bit, because I think he's especially worth talking about from the perspective of what might be the grander typology coming out of this particular case study.

James 27:35

Yeah, I think so. I mean, Kim Chang-hyuk, aka James Kim, aka James Jin, Jin being the Mandarin rendering of Kim, is a super interesting character. And, you know, I think if Rang is the one who is sort of Moving cash around between Malaysia, between Pyongyang, which even crops up in Singapore, Beijing, and doing that sort of thing for Glocom, then Kim Jong-hyuk, at least to us, kind of looked like the guy who was at the center of it all on the Malaysian side, because he's the one...

Who forges the local connections. He's the one who forges the connections with a guy called Mustafa Yaqub, a local Malaysian, who's actually the head of the Veterans Association within the UMNO ruling party, as in not military veterans, but veterans of the political party. So, you know, a high-ranking guy in Malaysia with a lot of influence. He's the one, Kim Chang-hyuk is the one who brings that guy on board in order to be able to set up one of the businesses in Malaysia.

He is the one who actually uses his name alongside International Global System to register glocom.com.my.

Andrea 28:43

And a lot of the other companies as well. So he's got this little network of companies that he's built around him that He seems to periodically shut down and create new ones as well. And he's usually on that paperwork, which I find from a corporate investigations perspective quite unusual because often we're now seeing the name of North Koreans involved not on the paperwork anymore, but rather just the local national facilitators.

But in this case, actually. You see Kim Chang Hyuk's name either as a director or shareholder on a lot of the documentation that we were looking at for some of the companies.

James 29:19

Yeah, I mean, in terms of Kim Chang Hyuk's business involvement in Malaysia, Glocom kind of reads like the tip of the iceberg because he, for starters, on International Golden Services, so this is the other of the two similarly initialed IGS companies which were set up. International Golden Services has Kim Chang Hyuk as both director and shareholder. And he, you know, he puts his passport number on there.

He puts his address in Malaysia on there, which we traced to a kind of a fairly nice gated compound somewhere in a fairly upscale part of town where actually where a lot of Korean expats live, which is interesting. And he also there's another Korean name alongside his that that is also a director there. Who I can only presume is his wife.

And it's a feminine-sounding North Korean name. I mean, I'm not entirely sure why she's on there. But looking into some of his other stuff, I mean, you know, in the Reuters story that came out off the back of this, we didn't really have space to get into it, but... You and I, going through those Malaysian records, we found a real treasure trove of other companies which Kim Jong-il could set up, including others which appeared to be in the field of communication as well, which was very interesting, which indicated he was maybe diversifying his Malaysian partners away from his main guy, which seems to have been Mustafa Yacoub, who I should say, of course, denies knowing anything about Malaysia.

About the, the, what this going on now? He says that he's not been in business with him for a while, and that he, as soon as he found out that it was sanctioned, he stopped doing it. but there were some other companies he set up. There was one which was importing foodstuffs, which was quite interesting. and when we found somebody who was working with him, another local Malaysian.

At that company Young Senior's name cropped up again, so that was kind of raised a few questions, like, you know, are they, are they, are there's a lot of foods, Malaysian food stuff trade between Malaysia and North Korea, or at least there, there was until things started to go a bit pear-shaped. But you know, if you, if you walk around Pyongyang, go to some of the department stores, there, a lot of the stuff on, on the shelves, especially food, comes from Malaysia, so dried snacks, even booze and cigarettes and things.

So that did raise an interesting question of like, you know, are they using the shipping of that to move some other things around as well? And then there was this other company which is set up using some of the same people called Adnet, which seemed to be an IT company. They had a website. We spoke to somebody who had worked with Kim Chang-hyuk, who knew him as James Kim, who Whom had actually had their ID stolen by Kim Jong-il and the guys at Adnet, or at least this is what it looks like, to give a local face to what they were advertising, which was basically computer programming, things like even iPhone apps, which was extraordinary.

So the idea that, I mean, we never got to the bottom of this, and it's still worthy of exploration, but the idea that And, you know, obviously, I can't possibly confirm this until we dig more into it. But the idea that there is this, you know, there was this little North Korean IT company running out of Malaysia.

And they were bringing their IT experts to Malaysia to do what they advertised, which was to make iPhone apps and small computer applications. Now, you know, given North Korea's history and background in cyber activities, that raises all sorts of other questions, too.

Andrea 32:41

Exactly. And for me, that's one of the big questions here with this network going forward. So the IT part of the business seems to be one of the newer parts of what the Pan Systems Kim Chang Hyuk enterprise has gotten into. And while we're aware of the fact that North Koreans often embed in IT companies in China, for example, and offer labor services there, It's not something that had really been on our radar with regards to Malaysia.

And here we've in the span of just a few weeks had, you know, much more of this come to light. The Malaysians held a guy in relation to the Kim Jong Nam investigation that was supposedly working in a. IT branch of a Malaysian company. Here we have a set of North Korean-controlled, presumably, companies that are providing IT services, including the things that have an obvious cybersecurity angle, like creating VPNs and purportedly secure systems for what I would guess are also Malaysian customers.

So there's got to be A major cybersecurity risk here in having North Koreans perform those services.

James 33:58

And one of the really, I think, really interesting things that came out in the report that we certainly didn't know about was that, you know, by the time the UN investigation going on behind the scenes has established Kim Jong-hyuk as the kind of one of the guys at the center of all this, The UN says in paragraph 84 of its report that they asked Malaysia whether it intends to expel Kim Jong-il from his territory to repatriate him to North Korea, which is in accordance to one of the UN resolutions, and then freeze the assets and resources of International Golden Services, which is the The company that he was director and shareholder of, and International Global Systems.

So the two companies behind Glocom, basically. And the last little sentence in that paragraph says, the panel has yet to receive an answer. So... You know, that is a very interesting exercise to imagine, you know, given what's happened in the last couple of weeks between Malaysia and North Korea, where they've gone from best of friends to where clearly that, you know, a case like the Glocom case shows how easily, if you consider they had the visa waiver agreement, they have many hundreds and hundreds of North Koreans working out of Malaysia.

One wonders that if this is all going up in claims. Yeah. Would they react in the same sort of way? Now that this has all been exposed, now that this is all at the forefront of everybody's mind, would you have a situation whereby, as it says in the report in paragraph 84, Malaysia hasn't even responded to demands from the panel to – well, the question that the panel had to expel Kim Jong-il?

Andrea 35:32

Yeah, and particularly – Given that if he's in a very lavish apartment and living this sort of lifestyle and running this sort of business network, it might be reasonable to ask the question about who he's connected to back in Pyongyang. And this is one of the things that we talked about a lot as well, because there's also some press reporting to suggest that a fellow with the same name is part of what's called the Torch Group, which is Group of younger, well I say younger, elite members of North Korean society with prominent parents who get up to a lot of shenanigans overseas and Kim Chang-hak or someone by that name is mentioned as having been involved in some activity with them and who is purportedly a son of Kim Chang-sop who's I think now last I looked into it, head of the State Security Political Bureau in North Korea.

James 36:38

Yeah, he's somewhere high up in what they call the boy boot. So that's the, aka the SSD, which is the sort of Stasi-like North Korean security organization, of which Kim Won-hyung, its former leader, had just been dismissed. I mean, that's a conversation for another day. There's a lot to be said about the boy boot. They are one of the most feared and interesting parts of the North Korean state.

But Yeah, I mean, you know, we've never been able to establish, is our Kim Jong-hyuk here the same Kim Jong-hyuk that's been reported in South Korean media? However, there are some really interesting things. I mean, just, you know, rewinding a little bit, looking back at our Kim Jong-hyuk, you're talking about somebody who we, you know, we have...

The paperwork, which puts him in the same address in Malaysia for years and years and years, he was able to establish a very strong foothold in Malaysia as a resident from which he's conducted legal business. That much is absolutely clear. He's also there with his family. And as you know, you know, if you are in North Korea and you're overseas with your family, that usually means you are in a position of some kind of privilege.

And Tae Yong-ho, of course, whom I interviewed not so long ago, said one of the reasons he was able to defect is he had all of his family with him when he was still deputy ambassador in London. So, you know, we don't know if this is the same Kim Chang-hyuk, but... Looking at the other Kim Jong Hyuk, the one who's been reported as the son of this deputy director of the Boi Bu, he was in, as you say, the torch group.

And the torch group was this, yeah, you say young, it's like, you know, they're in the sort of 40s and 50s, which by the, you know, octogenarian standards of North Korea is pretty young. And the reporting here in South Korea, and it's a few years old now, was saying things like, yeah, this torch group, the Ponghwacho, they call it in Korean, was basically...

Group of these guys going mainly in Southeast Asia which was what was really interesting and up in Beijing and that sort of rang a little bell for me because obviously our Kim Chang Hyuk goes by a Chinese surname sometimes and we spoke to people who said that he goes between Beijing and Malaysia But anyway, this other Kim Jong-il, and let's say for legal purposes that it is another Kim Jong-il for now, was based up in, was rumored to have been based in Beijing for a long time and even done things like, you know, drug running for Kim Jong-il at the time when there was a bit of that smuggling going on.

Now, of course, you know, take this. As it comes, this is defector-based sourcing in South Korea, which is subject to controversy sometimes. But, you know, nonetheless, it does point to this kind of network existing overseas. One of the other things that they said they're responsible for was helping Kim Jong-chol. So Kim Jong-un's elder brother come out and sort of party in places like Macau and Singapore and that sort of thing too.

So there is, you know, even if they're not the same kind of Kim Jong-hyuk, what we may have uncovered here, at least, is the kind of network that those kind of people might be involved in.

Andrea 39:39

And that exists in Southeast Asia. I think that's right. So evasion. This is really the way that... The Pan Systems Glocom network managed to, to continue to operate for so long in Southeast Asia, and, and to do business around the world. And when we were looking at this case, it really struck me that they pretty much used every trick in the book in terms of evasive patterns, setting up elaborate, elaborate networks of front companies to the point where it's hard to, you know, write the story, as you said to, for a general audience to make them understand actually that these are.

Still quite conclusive links, to work with local nationals, to reroute finance in a complicated fashion, having bulk cash carried out of the country. All this sort of stuff was really what they went through. We even looked at companies where in Hong Kong they were registering themselves as South Koreans, and that's a question of how they managed to do that.

But that's another great evasive tactic is Maybe you just write Korea on the form and hope that the administrator looking at that just assumes automatically you must be South Korean and you then get recorded as such.

James 40:55

I mean, briefly on that, when we looked into some of these Hong Kong companies that were connected to this network, as you say, when they were filling in their company registration documents, they were putting things like PY City instead of Pyongyang as their address. And they were writing things like Korea Republic or Republic of Korea. Taking advantage...

Well, apparently at least, taking advantage of the similarities in names. And you know, I remember once looking at I was, I was trying to work out the extent of trade between Vietnam and North Korea a while ago, and noticed that for some reason Vietnam had imported hundreds of thousands of mobile phones from North Korea, and I couldn't work this out. So there's no way that North Korean mobile phone exports are that good, or you know, or that they export them at all.

And when we contacted the Vietnamese customs, they said, oh, yeah, you know, we got the wrong Korea. So, you know, they really took advantage of that in those company registration documents.

Andrea 41:49

And I've seen that North Koreans do that before. For example, when I was looking into a North Korean network that had benefited from passports of convenience in Cambodia, when the North Koreans would basically apply for their naturalization status, they would put PYCity Korea on their application. And that's what would get reported in the Cambodian Royal decrees for their naturalization approval.

So, you know, again playing with the fact that people either often just assume it's South Korea or record it automatically as such just by default. So we really had a lot of tricks with being used by this network to evade detection. The supply chain is another one that is super interesting. And here's where open source again helped us out a lot because the photos in the brochures that are there are of sufficient quality to allow you to zoom in enough to the subcomponents to check out some of the logos.

And through that, we were able to look back at actually where some of the product components were coming from. Yeah.

James 43:03

In one case, when I'd done that, I managed to actually get a China-based manufacturer, which was making the cases for these, to actually send me photographs of the cases. And I contacted them. I did explain I was a journalist. I think that sort of slipped by. And they said, oh, yeah, we'll have to go and find them.

I don't know where they are. And they dug around in their warehouse. And then they found they took these pictures of these really dusty looking Glocom cases. And it was exactly the same sort of man-packed system we'd seen from the catalogs. It was extraordinary. And then, yeah, in another case, when we actually were able to identify the manufacturer of one of these pieces and we contacted them.

They came back at us and, you know, can't say what the name of the company, but what had basically happened to them is that one of their official resellers had sold these parts to Glocom. Rather now, what you would think would happen is that they'd sell these parts to, say, International Global System, International Golden Services, or Pan Systems, right?

So one of the three companies which... We've seen our paper trail shows is behind Glocom. But what this supplier actually said happened, and they showed me the actual remittance slip to prove it. What came in on their end after they'd done this deal, and it was for about $15,000 or so, showed that a Hong Kong-based company, which we hadn't even seen before in any of this network, had actually made the payment.

And they'd done it via a bank account in America. So if you are a supplier of electrical components or radio parts or whatever, and you get approached by somebody calling themselves James Kim, saying they're a radio company, here's my website, here's Glowcom, I'm in Malaysia, or whatever... Or even if they don't do that, when you look back at the paper trail after you haven't even met the person, you've sent off your product and you have your remittance advice, you still wouldn't know that you had just broken sanctions and sold to North Korea.

And I thought that was absolutely extraordinary.

Andrea 45:05

Yeah, and that's a nice segue actually talking about the bank accounts there and the financial evasion piece because... The UN report, again, has some fantastic detail on this front in relation to Glocom, where they've revealed that, as we saw with Yang Sun-ho, there's bulk cash transfer that regularly happened where there were bulk cash deposits into the Pan Systems account in Pyongyang, where we also saw North Korean consulates in China regularly transferring into the accounts where There were transactions related to Comid, that's North Korea's primary arms dealer, and Green Pine, which is another one of the arms trading firms that actually sits under the Reconnaissance General Bureau.

So both of those entities were being transacted with, according to the UN. This is really actually quite fascinating because it shows you a little bit about how these guys managed to use strange routes through companies that may not Immediately look like they're North Korean linked in order to do their business quite frequently with North Korea. Yeah.

James 46:17

Yeah, I mean, I think the stuff on the money trail is just absolutely fascinating. Now, we can't go into this in much detail in terms of what we did in the story. A lot of it seems to be here in the UN report. One interesting thing I would add is that, you know, there must be somebody sitting in Pyongyang who is not Yang Sun-yeol, who is not Kim Chang-hyuk, who is somebody else who has a bigger overview of how this financial network actually works.

You know, if the money is being cleared by a By other companies, or in the case of one piece of evidence I saw, there were two companies, and these two companies are actually back on that list from 2012. So again, this banking list kept coming back to haunt me throughout this entire thing, who both basically made remittances back to Pyongyang on the same day.

But if you look at those two companies, they're not necessarily connected. But the amount of money that they sent was split between them at the same time came to about a million dollars or so. So you're, you know, somebody must be sitting in Pyongyang looking at this entire network, say, okay, you send a bit over there, you send a bit over there.

You know, this, I think that, yeah, you know, this, even the UN report, even I think probably only just scratches the surface on how sophisticated and how incredibly intricate this network clearly is.

Andrea 47:38

Another really interesting detail here was from what actually an interview with one of the directors from Pan System Singapore revealed, which was that the North Koreans had reportedly needed to have a foreign company in order to open a bank account in North Korea that could process transactions in foreign currency. Because according to him, A North Korean company with a North Korean bank account can't transact in foreign currencies.

James 48:10

I ran that by a few sources to see if that was the case, and it does seem to be the case. If you are a North Korean company, even a North Korean trading company, you need to have some kind of foreign partner in order to have a joint bank account. As a joint venture, which means that you can send and receive foreign currency.

And I thought that was absolutely fascinating because, of course, all of this raises the question of, you know, what do you do? Look at somebody like Pan Systems, which, as you said at the beginning of the podcast, was a company that at one point was recommended by the United States as a good company to do business with.

And they have, over the years, they've got a little bit smaller, they've diversified, they've opened up their offices, and then they've ended up with Pan Systems Pyongyang. And as soon as they've got into bed with the North Korean business and financial system, their name has effectively been dragged through the mud. They have given up an awful lot by, as the director of Pan System said, by letting the North Korean side set up an office under the name.

And there is, in fact, even a, and this is one of the things I thought was fascinating, there is a, in room 818 of the Potonggang Hotel in Pyongyang, There is the Pan Systems office. There's even a little plaque outside which says Pan Systems. And we've recently spoken to the head of the real Pan Systems in Singapore who had said, yeah, they asked, can they set up an office?

They said it's completely normal. This is how they do business. This is how they have to do it in their country. And so he allowed it. And it really does raise a question. There is an ongoing debate of whether or not foreign investment in North Korea is good or bad, or is it worth the risks? In one sense, more money going to North Korea can actually help to accelerate some of the economic changes that North Korea desperately, desperately would benefit from.

But yet on the other side, who is going to invest in North Korea when you run the risk of ending up in a UN panel report?

Andrea 50:06

Yeah. And this brings us back actually to what the broader typology is with this case, because this is definitely, at least from my experience, not a one-off. It's not something that you see just in the Glocom context. There's a lot of other cases that use these type of patterns that benefit from those relationships with foreign facilitators who may not know very much about the business that they're signing on to at all.

And so the typology here, if you can call it that, seems to me to be, you know, you get North Korean based organization. In this case, the RGB says we need to start marketing these things abroad. You get a North Korean puppet master set up in a foreign country who's creating that elaborate front company network, but putting a lot of local nationals in.

On paper in order to facilitate that and to create the kind of cover that you need to open bank accounts that don't obviously look North Korean and to, you know, exhibit at Defense Services Asia and put ads in magazines and that sort of thing.

James 51:15

Yeah, and you touch on two things there which we have to quickly address. One is that as, you know, hiding in plain sight, Glocom took out an advert in 2012 saying, In Asian Military Review, basically advertising one of their radio systems. And, you know, it's like a third of the page. It's right there. Great, big, shiny Glocom advert.

I mean, that makes me wonder, you know, is Glocom the only North Korean company with flashy branding hiding in plain sight? You know, what else... And then secondly, on the Defence Services Asia thing, that was extraordinary. They had these photographs of their booth at Defence Services Asia from 2012, where they were displaying all of their wares. And I think this...

One particular photo drew me to the point of insanity. There's a picture of a Thai general who's signing the Glocom visitor book or whatever it is at the booth. Because I was desperately trying to work out, you know, how did they end up with this little slot at DSA 2012? Because if you look at the exhibitor list... And they weren't on the exhibitor's list.

They're not there. And I mean, Jeremy, you and I went through like several years of DSA exhibitor lists trying to desperately work out, you know, who were they with? How did they get in? There is no Glocom anywhere. There's no international global system. There's no international golden services. There's no pan systems. But the giveaway was that in the very, very corner of this photograph of the Thai general writing his name down was a pillar that had a kind of unusual footprint.

And then a sign next to it saying, you know, Hall 4. And I think it was then toilets or something like that. And then main DSA organizer's office. That was it. And that was enough to... I mean, it sounds simple, but I think I spent about two days on this. My office looked like a scene from The Beautiful Mind.

But that was enough to basically work out looking at the floor plan of the building itself in Kuala Lumpur, where it was actually held. So actually looking at the actual blueprints and then looking at the maps which they gave out in the program for DSA 2012 to narrow that booth down. Based on the unique... Which pillar could it be?

Yeah, of where exactly it was. And I think we narrowed it down to two or three companies. And we contacted all of them. And one of them came back. And this is the guy at the very end of the Reuters story saying, yeah, they paid me to use it. Malaysian Special Branch has been asking me questions about it.

And then he even says that they did it last year in 2000. And they paid him about $450 again to just last year use his booth at DSA 2016.

Andrea 54:05

So, you know, you touched there on Malaysia and special branch. One of the broader takeaways right now of this case is that Malaysia is just not having a good time with the North Koreans. How do you think this fits into the bigger discussion that Malaysia is having right now with what its relationship with North Korea should look like?

James 54:24

I think it's really interesting. You know, like one thing I didn't realize until doing this is that a lot of that relationship was driven by the political links between the Workers' Party in North Korea and the ruling UMNO party in Malaysia. And, you know, some of that is evident in the story because we're talking to Mustafa Yacoub, who was the international global system guy.

He, by the way, is the guy who has his little office in Little India in Kuala Lumpur where all these companies get registered to. So he was one of the local facilitators for this organization. Whether he meant to be or not. But he was also the one who in the 1990s, had forged all these links, he says, with with Libya, Iran, North Korea, as a representative of him now.

And going, as I mentioned before, looking into the report, looking at the basically the the The lack of a response on certain things from Malaysia to the UN about this specific thing was pretty interesting. Now, what I wonder is, you know, had North Korea not, as the case appears to be, used a weapon of mass destruction in Kuala Lumpur to kill Kim Jong-nam and sort of...

This massive can of worms, then I don't know necessarily if it would have had the same effect. I mean, I'm obviously very biased in favour of the fact that our story is great and we're really, really proud of what we've done. I do sort of wonder if the timing of it Coming out, which was completely not deliberate, totally accidental, came out in the midst of this quite incredible spat, may have in some ways been the kind of final straw which broke the camel's back for North Korea-Malaysia relations.

You know, there's obviously the very vocal sort of stuff going on between ambassadors keeping each other's citizens from leaving, but the really interesting thing was that they The day after the report came out, they cancelled the visa-free agreement, saying that one of the reasons they'd done this was North Korea had been able to conduct illegal activities in Malaysia.

And this was, I think, it was within roughly the same news cycle that the Malaysian chief of police had come out and said, the company is behind Glocom, referring to A report in international media, that was our report, are being struck off the register. So, you know, there's been for Malaysia this kind of perfect storm of every single kind of problem you can imagine they might have with their, what's been a relatively open relationship with North Korea has just, as you say, resulted in not having a very good time with them.

Andrea 56:54

I think that's an excellent way to describe it. This is the alignment of a whole bunch of really bad press reports For Malaysia that relates to North Korean illicit activity on its territory. And I still believe, and it's a question of degrees, that to some extent, how often North Korea was able to freely act on Malaysian territory and how long North Korea was able to act in that way with relatively little scrutiny helped enable some of the type of activity that we're talking about And, you know, I think that's been pretty embarrassing for Malaysia.

Now they've got to make sure that in the next panel report, you know, they are giving responses because otherwise it's just going to look like a lot of bluster and rhetoric in the news cycle and not very much action actually to curb the type of things that they're complaining about. So it's a really, really interesting time in Malaysia.

It certainly is. We'll see if this has a spillover effect, too. Well, hey, James, thank you so much for joining me on the podcast. It's been fantastic working with you on this case and really good to be able to talk through it now that it's all published. And thank you to our listeners for tuning in. If you like the podcast, think about heading over to iTunes and leaving us a review.

And if you really, really like the podcast, then head on over to Patreon and make a small donation to keep us all going. For just $3 a month, you can also get access to our Slack channel where we discuss these sort of things in greater detail and where we're going to post a whole bunch of the documents that James and I have been talking about in the past hour.

James 58:43

So with that, thanks for listening.