How Macau Became North Korea’s Base of Operations

How Macau Became North Korea’s Base of Operations


– [Kento] I’m Kento Bento.
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Kuala Lumpur, Malaysia.
February 13th, 2017.
A frantic Korean man approached
an airport receptionist
in the departure hall of Terminal 2,
in Kuala Lumpur International Airport.
He claimed someone had
grabbed him from behind
and splashed a mysterious
liquid on his face,
and he was now in some discomfort.
The receptionist sent him to
the airport’s medical clinic
to be looked at by doctors,
but it wasn’t long until
he became unresponsive.
Less than 20 minutes later, he was dead.
The liquid that was smeared on his face
turned out to be VX nerve agent,
a chemical weapon categorized
as a weapon of mass destruction.
The victim was Kim Jong-nam,
the half-brother of North
Korea’s Supreme Leader,
Kim Jong-un, who likely gave the order.
Before his untimely death,
Nam was set to return home to Macau
after a business trip in Kuala Lumpur.
Macau was where he had lived anonymously
with his family the past two decades.
But while he never made it back,
the aftermath of his assassination
brought a great deal of unwanted attention
to the Chinese city he lived in,
for the long-standing
secretive relationship
between Macau and North Korea
was now in the limelight.
Macau is a city on the western side
of the Pearl River
Estuary, in Southern China,
about 2,200 kilometers or
1,400 miles from the Hermit Kingdom.
It is known for being many things,
the most densely populated
region in the world;
a former colony of the Portuguese Empire;
one of only two special
administrative regions of China;
and, what most may know it
as, the Las Vegas of Asia.
But there’s one more title,
because for the past five decades,
it has also been North Korea’s
International Base of Operations.
Since the 1950s, the United States,
along with a number of other countries,
had imposed numerous
sanctions on North Korea,
affecting their financial
assets and banking transactions.
This led to the Kim Regime
pursuing other avenues to
connect with the outside world.
Now, in the late 1950s,
a small group of North
Koreans close to Kim Il-sung,
grandfather to Kim Jong-un and
the first in the Kim dynasty,
arrived in Macau and Hong Kong.
Both cities were attractive to the regime
due to the multitude
of international banks,
and the relative ease in which
they could engage in illicit activities,
remember back then Macau was
still a Portuguese colony,
and Hong Kong a British one.
Both cities provided a
favorable environment
for the North Koreans, but it was Macau,
in particular, that had
the distinct advantage.
You see the Chinese authorities
had always exercised more control
and influence over the smaller territory,
which meant for the North Koreans
it was a much better place
for their shady businesses
and clandestine operations.
In the Korean War, China,
along with the Soviet Union,
had supported the communist North,
and since then had maintained
close diplomatic relations.
Hong Kong was also under British rule,
and the British were allied
with the imperialist Americans
who they had just fought
in the Korean War,
so that option was certainly less ideal.
Macau, on the other hand,
was ruled by the Portuguese
who had remained neutral
in world affairs keeping
out of foreign conflicts.
So it seemed clear Macau
was the way forward.
In the decades that followed,
North Korea went on to establish
Macau as a financial and logistical hub,
acting as their point of
contact with foreign markets.
Indeed there were illicit activities,
but many were legitimate
involving property investments,
restaurant startups,
and the purchasing of
various standard goods.
During this early period,
economic growth in North Korea
was actually higher than in South Korea,
but as we all know, this didn’t last.
The 1970s and ’80s saw mismanagement
by the government leading
to economic stagnation.
Things got worse with the
fall of the Berlin Wall
and the collapse of the Soviet Union
where a significant portion of
aid to the Hermit Kingdom was halted.
By this point, North Korea
was in dire need of money,
and their illegal endeavors
seemed a viable way out.
And so from the ’90s onwards,
Macau gained an even more important role
in their global strategy
to finance the regime.
The North Koreans
increased their activities
in the city with more black market trade,
drug trafficking, the
passing of counterfeit money,
counterfeit goods and the
procurement of weapons systems.
Now much of this made its way through
a secret department of the
North Korean government
based in Macau, called the
Zokwang Trading Company;
which officially dealt with machinery
and textiles trade, pretty ordinary stuff,
but in reality functioned as
a sort of criminal enterprise.
It is said to be the most
potent overseas tool
of the North
Korean government.
Of course, Zokwang and
North Korea deny this
but many sources have backed this up,
including Ok Hwa, a
former North Korean agent
who claimed to have
spent six months training
at the offices of the
Zokwang Trading Company.
She was assigned to live in
Macau and to learn Cantonese
in order to impersonate
local Chinese residents,
which came in useful when sent
on one of her many overseas missions.
The most infamous being the
bombing of Korean Air Flight 858 in 1987,
which killed 115 people.
Speaking of, the Zokwang
offices was allegedly
the planning base of many terrorist acts
over the years, including
the deadly Rangoon Bombing
in Burma, present-day Myanmar,
with an assassination attempt
of then-South Korean
President Chun Doo-hwan.
But it doesn’t end there, because in 1995,
a new opportunity arose for the regime
when Macau opened their
very first airport,
the Macau International Airport.
North Korea’s state-owned
airline, Air Koryo,
sought to open a branch in the city,
which led to the launch of a new flight
between Pyongyang and Bangkok
with a stopover in Macau.
The thing about the flight
though was that the frequency
was irregular, sometimes
weekly, sometimes monthly,
and it carried basically no passengers.
But that didn’t matter,
because for them it was
really all about the cargo,
luxury items for the elites like whisky,
brandy and cigars rather made the journey,
as well as contraband goods
such as counterfeit cigarettes,
weaponry, heroin and crystal meth,
all helping to finance the regime.
Now the Portuguese authorities in Macau
did try to stem the
North Korean activities
but their efforts were
somewhat ineffective,
which isn’t too surprising
considering their inability
to control even the local triads.
The turf wars got pretty crazy.
But regardless, the Portuguese
still gave them pushback,
which is why, in 1999,
when Portugal handed Macau back to China
to be ruled as a special
administrative region,
just like Hong Kong was two
years earlier from the British,
it was a huge win for North Korea,
as it gave them an even greater boost.
As the managing director
of Zokwang himself put it,
“Our nation has more friendly
relations with China.
Compared with the previous
Portuguese government,
it is easier for us to stay here,
do business and apply for documents.”
He, of course, was referring
to their legal ventures,
but it’s a statement that likely
extends to all their activities.
Now around this time
was when Kim Jong-nam,
the half-brother, known
to his friends as Johnny,
made his way to Macau.
He had previously served as North Korea’s Ministry of Public Security in Pyongyang,
and was the heir apparent
to his father Kim Jong-il.
But then, after an embarrassing incident
where he was arrested
for using a fake passport
to visit Tokyo Disneyland, he lost favor,
and his younger brother
Kim Jong-un became leader.
Regardless, Johnny Kim still
maintained a relationship
with the regime and now, based in Macau,
was said to have fulfilled the
role of a kind of middleman
in dealings between North
Korea and the outside world.
But the outside world was
about to change everything,
because in January 2002,
the American president,
George W. Bush, coined
the term Axis of Evil
to describe foreign governments
that sponsored terrorism
and who had sought weapons
of mass destruction,
and he listed three culprits,
Iran, Iraq, and North Korea.
This was the turning point.
As a result, North
Korean activity in Macau
was placed under heavy surveillance,
as the presence of American
intelligence was strengthened.
In 2005, the United
States Treasury Department
accused a particular bank in
Macau, the Delta Asia Bank,
of being “a willing pawn for
the North Korean government
“to engage in corrupt financial
activities through Macau.”
Note, North Korean authorities
had no access to the
international banking system,
so banks that agreed to
act as intermediaries
played a crucial role in
helping them evade sanctions.
As such U.S. companies
and financial institutions
were ordered to cut ties
with the Delta Asia Bank,
which led to about $25 million
worth of North Korean funds being frozen.
North Korea was not happy with this,
and tried desperately
to retrieve the money.
Now the truth of the matter
is that the Delta Asia Bank
wasn’t actually the only bank in Macau
that worked with North Korea.
In fact, nearly all banks in Macau
had handled North Korean
funds including larger banks
like the Bank of China.
So the question is why was
only one bank targeted,
and a relatively small bank at that?
Well, Delta Asia was really
just a symbolic target.
U.S. regulators singled them out
because the shutdown of a smaller bank
would create less financial
disruption to the system,
while still getting the message across.
It acted as a deterrence to
other banks, and it worked.
Foreign businesses and
banks became unwilling
to engage with North Korea
as they didn’t want to be associated
with the regime’s illegal activities,
as well as fearing exclusion
from the American banking system.
This created a sort of informal
financial embargo of North Korea.
Now there was also another reason
for targeting only one bank,
and that was to avoid an
all-out clash with China,
while still sending a very
clear message to them.
Remember North Korea’s survival in general
depends mostly on China,
and both parties are aware of this,
which is actually why many believe
that Kim Jong-un extended
a courtesy to China
by assassinating his brother
Kim Jong-nam in Malaysia,
rather than where he lived
in Macau, a Chinese city.
It would have been a mess
for China to deal with,
and this could be seen
as a sign of respect.
With the spotlight now on
their activities in Macau
and further economic restrictions
being placed by the
international community,
the North Koreans decided to pull back,
and over time moved
many of their operations
further north to Zhuhai,
a mainland Chinese city.
This meant the Zokwang Trading Company
too had to relocate across the border.
Now, fast forward to today,
the North Korean presence in Macau
and even in Zhuhai has dwindled.
Yes, Macau is still a prominent base,
and the regime’s financial
networks in China,
forged over decades, are
still well-established today,
but they’ve since smartly
expanded their core operations
to other regions like Central Asia,
Southeast Asia, and Africa.
If we look back, all their decisions,
from setting up a base in Macau,
to now diversifying
their channels worldwide,
can be traced back to obviously Pyongyang,
but more specifically
a secret organization
in Pyongyang, called Room 39.
This Room 39’s objective has always been
to seek as many ways to
earn foreign currency
for the Kim family, through
illicit economic activities.
It is critical for their continued power,
enabling them to buy political support
and helping fund their
nuclear weapons program.
Macau has been one of
their primary focuses
throughout the years, but
more recently their approach
has centered around hacking
and malicious cyber activities,
working alongside another
government group, Bureau 121,
which is North Korea’s
premier cyberwarfare unit.
Together they’re a lethal combination
said to have robbed multiple banks
around the world including, most famously,
that of the Bangladesh Bank back in 2016,
with a one billion dollar heist attempt.
But nation states
governments like North Korea
are not the only ones
stealing people’s money
and taking advantage of their
poor cybersecurity practices
because the UN estimates
80% of these breaches
are actually from highly organized
and ultra sophisticated criminal gangs,
targeting everyday people like you and I.
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know where this is going,
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Finally, big thanks and shout
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for supporting this channel.
(upbeat music)

100 thoughts on “How Macau Became North Korea’s Base of Operations”

  1. Coincidentally, Joseph from RealLifeLore just did a Macau video too, and it's a good complimentary watch to explain why certain activities are prohibited in China but not in Macau: https://youtu.be/etACV_yP4L8

    Help us with subtitles in your language! http://www.youtube.com/timedtext_video?v=BQ5x8riJ6SA&ref=share

  2. Residents of Macau or Hong Kong, what is it like to live in such a densely populated city right on China's doorstep? I'm curious to know what it's like because of the recent protests in Hong Kong.

  3. 5:39

    Well, Air Koryo have just had a direct flight schedule to Macau, the furthest destination from Pyongyang.

  4. Can you please give me the link to the music that started playing at the end when you began to talk about Dashlane?
    Please…?

  5. Kim jong nam was supposed to be next in line for the Kim dynasty but because of the Tokyo Disneyland Incident I chose Kim jong un instead

  6. The girl in the information counter: is Islam
    All the doctor and nurses: is Islam

    Chinese and India Malaysians: am I a joke to you?

  7. So dashlane would have all our password and information hell no. I would rather write my info on a paper then an app

  8. What if America did it? What if they wanted to take over North Korea just like they did with other dictators?

  9. South Korea: The United States is the father, and North Korea is the thief.
    USA: Yes.
    USA: Can I raise your wife?
    Korea: Yes.
    USA: Your army will let me use it. Are you sure?
    Korea: America and I are fathers and sons. How can I be upset?
    Korea: Father's majesty is like God. Of course, Korea should bear in mind.
    USA: Yes, yes, my Korea is a good son.
    USA: I want you to pay tribute to tens of thousands of cattle and sheep, 3000 beautiful women, 10,000 slaves and 10,000 kilograms of gold every year. Would you like to?
    Korea: Of course my son would.
    America: If you do this every year, aren't you afraid of being insulted?
    Korea: What my father did was God's truth. Why not obey?
    America: I'm happy for my son. I'm very happy.
    Korea: Father's kindness, please accept my son's thousands of kneeling worship.

  10. 2:19 reusing a drawing from a previous video (the bin laden doll one) here, that's resourceful and smart. Great video by the way, you mentioned Kim Jong Nam being assassinated in one of your other NK vids (the how to take down NK one I think?) and never went into depth about it, but the beginning of this video finally answered that question and I am thoroughly satisfied, keep it comin' I love your content!

  11. I'm a rabid Disney fan too…I can understand why he tried what he did. I doubt he thought he'd be killed over it though.
    Love your videos btw. Your voiceovers and graphics very clearly explain what's going on.

  12. Dashlane system gets hacked
    People who use it: :♡ suprised pikachu face

    This is a joke btw but can happen 🙂

  13. I am from Malaysia, dayum the effort that goes into the videos! The ladies in hijab (islamic headscarves) are so reflective of our nation! Good on you, you earned a sub! Keep the great videos coming

  14. I am a Malaysian. Thee weird part is that the NK didn't send anyone here to check if that's King Jong Nam. The only ones that came were his "supposedly" family members and then claimed that he died because of heart attack. Like wtf? Really? You send no doctors to check and straight up call it a heart attack?

    The worst part is when they actually hold up our civilians in NK as hostage while we have all the suspects in our hands. It didn't seem like a hostage situation on the surface because most of the talkings are done off media. I am sure it's tense and a hard situation to choose which one. Keeping the suspects or risk your own people.

    Now I know that back in 2017, we still have our government until 2018. I blame everything on the previous government but have to give credit for them to go through this.

  15. How do i know that dashlane isnt a secret operation by north korea, or it has been hacked by them ? What if this video is a hidden way to get people to use it in order to steal banking information for north korea ?
    Haha jokes…
    Unless ?

  16. Well if you use dashlane if they get hacked your accounts are open to leaking. But they have very complex security systems.

    edit: Wellll kentobento explained so now i understand

  17. Time traveller: Hey what are you watching?
    Me: How Macau was invaded by North Korea
    Time traveller: Have you watch the video about how North Korea took over the world?
    Me: Say sike right now

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