The perils of dealing with North Korea (via a comment from Martin):
For weeks, North Korea and Hyundai Asan, Hyundai Group’s North Korean business arm, have been at odds over the dismissal of Kim Yoon Kyu, a Hyundai executive accused in August of embezzling money.
North Korea has demanded that Kim be reinstated. It argued that, whatever Hyundai had discovered about him, Kim should be Hyundai’s point man in North Korea because he has had the extremely rare privilege of meeting the North Korean leader, Kim Jong Il, on several occasions.
As the article notes, with some understatement, “the business mind-set of the Communist leaders is out of step with international norms.”
“The North Koreans are very good at talking big, but they seldom keep their promises,” said Chung Se Hyun, a former South Korean cabinet minister who spent most of his government career as a negotiator on North Korea.
“It’s amazing that they don’t seem to realize that what they are doing is damaging their international creditability.”
What’s perhaps more amazing is that a former South Korean cabinet minister still thinks that North Korea has any credibility left to damage – and that the South Koreans still persist in their Sunshine policy despite all the evidence of lack of good faith on the part of the DPRK.
After a gift of 1,001 heads of cattle, the donation of a 12,500-seat gymnasium in Pyongyang and a $500 million cash remittance, North Korea agreed in 2000 to let Hyundai build roads, railways, airports, power stations and dams as well as an industrial park where foreign investors can make use of the cheap labor.
In 1998, Hyundai began shipping South Korean visitors to scenic Diamond Mountain, just beyond the east-coast border of the two Koreas. North Korea has so far collected more than $400 million for admitting 1.1 million tourists.
But for Hyundai, not only were the tours a money-loser, but other projects promised by North Korea in the 2000 deal were slow to materialize, as the country used recurring tensions over its nuclear program as grounds for delaying or canceling contacts with foreign investors.
Only last year did Hyundai open an industrial park just north of the border on the western side of the Korean Peninsula, where 15 small South Korean companies now make lamps, watches and shoes.
Hyundai’s path to North Korea was paved with deals. In 2003, it was revealed by a government-appointed independent counsel that the company illegally sent $500 million to Pyongyang in 2000 to win business rights. Later that year, as prosecutors sought his arrest, Hyundai’s chairman, Chung Mong Hun, killed himself by leaping from his 12th-floor office window.
Kim Yoon Kyu, the former Hyundai executive who was Chung’s deputy, was let go in August after Hyun Jeong Eun, Chung’s widow, took over the company and pledged “transparent and honest management.”
Last Thursday, North Korea said that since the Hyundai executives who had signed the deals with it were no longer available, “there is no reason for us to remain bound” to the 2000 agreement.
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