Investing in North Korea: The Queensway Group

Stephan Haggard (PIIE) and Marcus Noland (PIIE)
July 6, 2015 6:30 AM

Last week, behind its paywall, the Financial Times ran a story reported by Tom Burgis that speaks to who is investing in North Korea and how. Much of the article is taken up with the usual, uninformative boilerplate--isolated regime, Kim family, atrocities—but it proves an interesting piece of investigative journalism in the end. It leads with a revealing story about the appearance of a new fleet of taxis in Pyongyang operating under the moniker KKG. The implication of the story is that KKG quickly managed to squeeze out other operators, ferrying passengers for foreign exchange only. According to the story the KKG logo has also been sighted on 4x4’s and a billboard advertising a riverside property development.

KKG is not registered anywhere that the FT could find. But according to both unnamed and named sources in the story, the KKG venture involves the Korea Daesong Trading Company (currently under both US and EU sanction)—and through it Office 39—and the Hong Kong-based Queensway (or 88 Queensway) Group and an individual known as Sam Pa.

In another recent report, this one from Le Monde Diplomatique (in French), Sébastien Le Belzic provides an overview of Queensway through an interview with J.R. Mailey that gives more detail than the FT piece (Le Belzic specializes in China-Africa relations at ChinaAfrica and Mailey is a Research Associate at the DoD's Africa Center for Strategic Studies); it confirms longer dossiers done by the US-China Economic and Security Review Commission in 2009 and complements an even more comprehensive report published by J.R. Mailey in May of this year. The latter is particularly well-done, running to over 100 pages and including mind-boggling case studies of predatory investment in Africa.

According to a profile published in the FT last year, Sam Pa –who maintains at least seven aliases--is one of the founders of Queensway. He has reputedly been working for the external arm of Chinese intelligence since the 1980s, involved primarily in Africa in a nexus of arms, oil, diamonds, and Chinese state-owned enterprises.

Pa and his associates preside over a group of enterprises in a half dozen countries, which in turn control a portfolio of tens of billions of dollars of investments in sectors ranging from oil and mines, to infrastructure, aviation and real estate. The group’s modus operandi focuses on rogue regimes; formed in the early 2000s, it has been “present at the creation” following coups or political crises in places like Zimbabwe, Guinea, Niger and Madagascar. It also makes connections to significant Chinese enterprises, including Sinopec, and although the relationship with the PRC is not straightforward, was believed to have links to the Ministries of State and Public Security and possibly other government officials.

Not surprisingly, the pieces by Le Belzic and Burgis, Demetri Sevastopol, and Cynthia O’Murchu, as well as a report by the respected NGO, Global Witness, argue that the group has been involved in arms trafficking, blood diamonds and corruption; the Mailey report notes ample use of offshore tax havens such as the Cayman Islands. Since April 2014 Pa has been designated by Treasury for corruption involving Zimbabwean officials. According to Global Witness, Pa was providing the Zimbabwean security service Central Intelligence Organization “off-budget financing,” in effect funding a parallel government, in exchange for access to the infamous Marange diamond field where military-controlled production includes the use of child labor under virtually slave-like conditions.

Having perfected the model of penetrating elite networks in highly corrupt African countries, Queensway is diversifying regionally. The North Korean taxi venture apparently began in 2006 in the wake of the BDA case when Pa struck a deal with Daesong on a range of projects; Burgis got some handle on these transactions as a result of details about payments in a decision issued by the High Court in Hong Kong in the wake of a business dispute that involved a Queensway firm as a party. This brief itself is worth scanning for the complex layering of companies engaged. The property development did not take off, despite pictures of gleaming high rises; maybe Pa met his match. But a core of the Queensway portfolio is investment in raw materials extraction and oil, which Burgis speculates is the real target in North Korea as well. The title of the Mailey report is The Anatomy of the Resource Curse: Predatory Investment in Africa’s Extractive Industries. Mailey is strongly motivated by the growing international effort to clamp down on predatory investment that provides links between such regimes and Fortune 500 banks and corporations. Mailey’s concern is the way Queensway strengthens weak regimes in failed states. But the logic holds in North Korea as well, which as we have documented is coming to have features of an extractive state as well (here and here). Viewed over the long run, “reform and opening” in North Korea is no doubt a good thing. But this recent reporting is a reminder that in a state like North Korea, it is hard to identify trade and investment that is purely commercial and outside the direct control of the state.

Corrected August 10: an earlier version of this post mistakenly identified the piece by Sebastien Le Belzic as a summary of his own reporting; in fact, it was an interview with J.R. Mailey. 



Hi this is a little off topic, but what do you make of the supposed NK defector with information about NK bio-weapons.

Ian McDonald

You're probably aware of this piece, but just in case, J.R. Mailey wrote an excellent article on this topic last year for 38north:


Missed that one; thanks for the heads up.

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Stephan Haggard Senior Research Staff
Marcus Noland Senior Research Staff

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