Dancing and fireworks

Music

00:00

Jolley: In a spectacle to rival a Disney fantasy - North Koreans pay homage to their Great Leader, Kim Il Sung.

00:15

Music

Jolley: The most secret of societies, this is the image it showcases, but not far beneath the silk and smiles lies the sinister reality.

Out of step with the rest of the world, North Korea is destitute. Its only means of survival, a vast network of criminality.

00:29

Vickers: Well, the hard reality is it’s essentially a criminal regime.

Steve Vickers

Drugs, narcotics, amphetamines, kidnapping, counterfeit documents, bank notes -- you name it they’re doing it.

00:58

Perl

Perl: The evidence is almost uncontrovertible (sic) that the North Korean government is involved in the production and trafficking of illicit narcotics.

01:05

Pong Su being chased

Music

Jolley: This is the story behind the dramatic capture, off Australia’s coast last year, of the North Korean ship, the Pong Su.

Who sent this ship and who organised its suspected cargo of heroin?

We trace its movements back to shadowy figures in Macau and Singapore.

01:20

Music

Policeman: Slow your vessel and alter your course back to Eden Port.

01:42

Jolley: It’s far more than a detective story - for under other circumstances this would have caused a major diplomatic incident. Has Australia decided that a simple drug shipment isn’t worth provoking a dangerous nuclear state?

01:45

Picturesque shots of Wye River

Andrew

Andrew: We just saw it come past the point and we said, that ship’s in close, you know, ridiculously close. Woo!

02:11

Andrew and friends at outdoor table

Jolley: For the locals of the Victorian seaside hideaway of Wye River, the

15^th of April 2003 isn’t a day they’re likely to forget.

02:17

Caroline with photos

Caroline: It just was different, so I took the photo.

So it sort of looked lost in the morning, you know, it just didn’t know what to do.

02:25

Andrew

And we joked, you know, it might be dropping off boat people or drugs or something, you know, and laughed.

Jolley: But it wasn’t a joke. The AFP --

02:33

View of water from cafe

Australian Federal Police -- allege North Korea’s Pong Su was carrying, 150 kilograms of heroin, worth some over $100 million on the street.

02:41

Steve Batson

Steve: Well it was a huge boat with two towers sitting off it.

02:52

Photos Pong Su at night

Really well lit up and you could see the movement on the deck. You couldn’t actually make out people, but you could certainly see people moving around.

02:58

Jolley and Steve

Jolley: Steve Batson and his mates saw the boat at about 12.30 a.m. when they stopped on the way home from work. For them there was an added surprise.

03:08

Steve

Steve: Basically the ship was directly out there. We were parked there and there was also a little blue car parked along there which we found out later had the heroin in the back seat.

03:16

Night time - AFP night vision of Pong Su and night shots at Wye River

Music

03:30

Jolley: According to the Australian Federal Police, two Malaysians and a Singaporean waited on land while two men from the Pong Su brought the heroin ashore. A stormy night, it would have taken several trips -- one man drowned and 25 kilograms of heroin was lost overboard.

0:36

What’s particularly intriguing about all this is that earlier in the evening 50 Australian Federal Police and customs agents were sent to the area to follow two cars they suspected were about to receive a large haul of heroin. Many of them admit to seeing the Pong Su only a couple of hundred metres offshore and brightly lit. But not one of them 50 saw the heroin leave the ship.

03:58

Faris. Super:

Peter Faris

Crew lawyer, former Head NCA

Faris: How they could not see it happen is extraordinary. This case raises more questions than it answers.

04:22

Pong Su chase

Jolley: Peter Faris, former head of the National Crime Authority, is the lawyer representing the Pong Su crew.

Faris: Here they have no evidence of the ship landing the heroin as they’ve alleged

04:35

Faris

It is very strange – it’s a very strange case this.

04:48

Pong Su chase

Music

Policeman: Motor vessel Pong Su, this is Australian warship. Sir, what was the last port you visited? Over.

04:57

Chase

Jolley: Having failed to detain the Pong Su at Wye River, for four days, Australian defence forces chased the ship up the New South Wales coast before it was finally seized off Port Stephens. But where were our defence forces when the Pong Su was sailing down the west coast and across the Great Australian Bight, and why weren’t they deployed earlier?

05:12

Richardson. Super:

Michael Richardson

Institute of S. E. Asian Studies, Singapore

Richardson: I think the Americans were tracking it and were keeping, and the Japanese knew about it, and the Australian authorities were also completely informed.

05:39

Richardson in office

Jolley: Based in Singapore at the South East Asian Research Centre, Michael Richardson is an expert on maritime related terrorism.

Richardson: Japan’s had been on the receiving end of methamphetamine stimulant shipments from North Korea for many years, and also some heroin as well.

05:51

Richardson

I’d be amazed if that ship was not under more or less constant surveillance.

06:11

Pong Su chase

With ample time to clear the decks of evidence during the chase, the Pong Su was forced into Sydney Harbour.

06:24

Crew being taken off the ship

Faris: When they got there the whole of the crew, the captain and the whole of the crew, 30 people, were all arrested

06:36

Faris

and without any investigation and they weren’t even interviewed and they were then sent back to Victoria They effectively had no evidence against them, except that they were on the ship.

06:42

Australian Federal Police video. Super: AFP Video

Policewoman: You did import into Australia on the vessel pong Su…a commercial quantity of heroin.

06:58

AFP tape

Jolley: The AFP tapes, that Foreign Correspondent has seen, show the crew faced little questioning before being charged – not what you’d expect given the seriousness of the crime.

Policewoman: Shortly you’ll be taken to a police station…

Jolley: The objective seemed to be to process them as fast as possible.

Policewoman: I need to show you the property that we have seized.

Jolley: Little hard evidence was gathered, but the total loyalty of the crew was revealed when the badge of their Great Leader was confiscated.

07:08

Policewoman: One badge red that is red, with a face on it.

Crew member via translator: This portrait is like my heart.

Policewoman: Okay, okay, we will respect that.

07:38

Door stop with North Korean Ambassador

Jolley: Australia is one of the few countries with diplomatic relations with North Korea, and its Ambassador in Canberra was called to explain.

08:03

North Korean Ambassador

Jolley: Have you been expelled from Australia?

Ambassador: Why?

Jolley: Was your government involved in drug smuggling into Australia?

Ambassador: No.

Jolley: Not at all?

Ambassador: Not at all.

08:14

Michael Richardson

Richardson: Of course, the North Korean government, as soon as the Pong Su was seized, said we have nothing whatever to do with this; drug trafficking, drug use in North Korea is outlawed. Well, of course, they would say that, wouldn’t they?

08:24

Water

Jolley: The Australian Government trod a fine line – venting anger, but pulling-up short of accusing the North Korean government of blatant criminality.

08:44

Alexander Downer. Super:

May 2003

Of course, criminal elements do this from all over the world. But if there was proof that another government, or the political party which is the governing party of another country, which is involved in the drug trafficking that would be a matter of complete outrage.

08:53

Crew being put onto plane

Jolley: The crew and three man shore party were all charged with aiding and abetting the importation of heroin.

09:12

Court room re-enactment with voices and transcript

During a month long committal hearing, Federal Police frequently refused to answer lawyers’ questions, claiming public interest immunity.

But there was a rare exception - the revelation, the AFP had evidence the heroin was loaded onto the Pong Su at the North Korean port of Nampo.

09:27

Court room

Yet the AFP officers told the court that the Pong Su was a South East Asian organised crime operation, independent of Kim Jong Il’s totalitarian regime.

09:50

Music

Joen

It’s nonsense. North Korea doesn’t allow individuals to own assets. Everything is owned by the State. For Australians to understand, they’d have to change their view 360 degrees.

10:13

Pong Su in harbour

Joen Yong Bok is a rare breed, a North Korean defector living in Australia. When he heard the AFP declare the Pong Su a privately owned enterprise, he felt they were reacting to government pressure and wanted to set them straight.

10:34

Joen

The first thing they said, was “this is a political matter” -- so they hinted that I should not get involved.

10:55

The government made a mistake. They didn’t put in 100% effort. They were only going to briefly investigate. That’s where the problem arises.

Courtroom

Jolley: At the end of the committal hearing, 27 of the 30 crew, including the senior Communist Party official, had their charges dismissed and were sent to Baxter detention centre to await deportation.

11:21

Perl. Super:

Raphael Perl

U.S. Congress Terrorist & Narcotics Advisor

Perl: Well I think I can say fairly clearly that there was disappointment in Washington that this was not further pursued.

11:38

Perl in office

Raphael Perl, senior terrorist and narcotics advisor to American Congress was staggered by the acquittal of most of the Pong Su crew.

Perl: When you have a ship that belongs

11:51

Perl

to a North Korean trading company, when you have a political secretary on board, and when you have a history of North Korean, high North Korean government officials being involved in these types of transactions, it would be hard pressed for a reasonable person not to come to this conclusion that it is the North Korean government.

12:01

North Korean military parade

Jolley: For those who live under the regime, the government is all – a former North Korean policeman, Joen Yong Bok, knows the control it wields.

12:32

Joen: We were brainwashed with the ways of communism -- raised in that environment from a very young age. It’s not that I felt I was forced to be loyal, but as I was growing up that’s all I saw and heard.

12:43

Joen

I never had the slightest doubt.

13:00

Jolley: North Koreans do what they’re told – for some that means cultivating drugs.

Joen: Every city has a department that allocates farms.

13:08

Joen

At harvest time, police surround the farms and monitor the people. The farmers slit the pods and extract the sap – then the police take it away.

13:20

Defector in silhouette

Jolley: Joen is not a lone voice. We can’t name this defector, but his story of trafficking drugs is well documented.

13:33

Defector

Defector: All the drugs manufactured in North Korea are controlled by the nation directly -- and the production, the sales, and the revenue are under the central government Right up until I escaped North Korea, I was ordered by the government to trade drugs to China, Japan, Macau and Hong Kong.

13:42

Alleged heroin recipients arrest

Jolley: When the Australian Federal Police arrested the alleged recipients of the Pong Su drop, they found heroin packaged as if it came from the Golden Triangle, but subsequent tests proved it wasn’t from South East Asia.

While the AFP can’t pinpoint its origin, our defector has no doubt where it’s from.

14:23

Defector

Defector: The North Korean government secretly hired nine professional drug manufacturers from Thailand.

Looking at those drugs on TV that were discovered in Australia, I’m certain that they were manufactured in North Korea. I personally used to handle those drugs so it’s 100% sure.

Perl: I have no doubt that

14:49

Perl

if you were to ask me, does the drug trade bring $100million a year to North Korea – no question about it. $200 million – very likely. $500 million – a good chance. $1 billion – maybe.

15:39

Defector

Defector: The foreign currencies from trading drugs go directly to Kim Jong Il. No one can touch a cent of it.

15:58

North Korean military parade

Music

Jolley: Kim Jong Il raises foreign currency through a secret government department, Bureau 39. Established in the mid-seventies, it’s the lifeblood of the dictatorship -- buying the leader political support and loyalty, and funding his nuclear and missile program.

Perl: It was organised for the sole purpose of bringing foreign currency to North Korea and that the primary way of doing this was through criminal activity.

16:23

Perl

Anything that brings in money is fair game for Bureau 39.

16:56

Richardson. Super:

Michael Richardson

Institute of S. E. Asian Studies, Singapore

Richardson: Division 39 of the Korean Workers’ Party, that has the overall supervision of these kinds of extracurricular money making activities, and it would not at least surprise me if the Pong Su operation came under the surveillance of that same organisation.

17:02

Macau

Jolley: Following the trail of the Pong Su drug smuggling operation we headed to Macau. A former Portuguese colony, it’s now part of China -- North Korea’s greatest ally.

17:30

Music

Macau casinos

Jolley: It’s been called the Casablanca of Asia. Notorious as a centre for organised crime, triads gambling and murder, but what’s perhaps less well known about Macau is that for decades it’s been the centre of North Korean illicit activity. On the night the Pong Su allegedly dropped off the heroin, the accused smugglers made 18 calls to a Macau mobile phone.

17:53

Vickers and Jolley walk

Vickers: Macau was the only window out, really, for the North Koreans, so they set up….

18:20

Jolley: Steve Vickers is the former head of Hong Kong police intelligence.

Vickers: A lot of their clandestine operations had a Macau end to them. But primarily banking, funding, particularly trading companies were established here, and of course the proximity to the casinos and, frankly, to the ability to launder money has always been a factor.

18:29

Music

Hidden camera sequence

Macau police monitor highly secretive North Korean companies.

High on their list - Zokwang Trading, a direct arm of the infamous Bureau 39.

Vickers: Zokwang Trading --

18:51

Vickers

again a front for an external service, the intelligence service of the North Koreans.

19:04

Documents

Jolley: Confidential police documents reveal Zokwang personnel actually work for the North Korean government and boast diplomatic passports.

When the Chinese took over in 1999, Zokwang suspended its operations, but three years later it was back in business.

19:12

Perl. Super:

Raphael Perl

U.S. Congress Terrorist & Narcotics Advisor

Perl: If you have a state run entity that trades all over the world, this is a very good cover and a very good opportunity for a foreign drug trafficking organisation to piggyback on.

19:30

Hidden camera sequence

Jolley: They’re here, but they’re not open.

Jolley: In the same building we went looking for Pak Ja Byong - Zokwang’s chief representative. Macau police list this apartment as his home address.

19:42

Photographs

Arrested in 1994 for trying to deposit USD 250,000 in fake notes into a Macau bank, he was released because of diplomatic immunity.

19:56

Talking with ‘Mr Pak’

The man at home, who looks remarkably like the photograph of Mr Pak, claimed to know nothing of Zokwang or its staff.

‘Mr Pak’: No, this isn’t the place -- it’s a residential area.

Jolley: Seems that when you’re talking to people in Macau about North Korean companies here, that

20:10

Vickers. Super:

Steve Vickers

Fmr Head, Hong Kong Police Intelligence

they’re very scared to actually tell you anything much. Why is that the case?

Vickers: Well as I said earlier, it’s a criminal regime, it’s organised crime, it operates on a big scale, they’re violent people, I think it makes commonsense that people would not want to cross these syndicates, like anywhere else in the world.

20:30

Rangoon assassination attempt

Korean airliner bombing

For more than a quarter of a century, Zokwang Trading Company has been linked to crime and terrorist acts.

The 1983 attempted assassination of the South Korean president in Rangoon that killed 21 people

The 1987 bombing of a Korean airliner – 115 people died

Numerous smuggling operations -- cigarettes, drugs and counterfeit money.

20:52

Vickers

Vickers: The danger is that we focus on the ones that are well known and forget about the ones that aren’t.

21:21

Macau

Jolley: Zokwang may have the profile, but Macau police say at least 16 other North Korean enterprises also operate here.

21:28

Vickers

Vickers: We probably can’t see all the other companies that they’ve got registered, which would probably change names on a case by case basis to deal with any given program.

21:40

Macau airport

Jolley: From Macau, it’s an easy hop to Pyongyang. North Korea’s own airline, Air Koryo, flies in and out.

Scheduled twice a week, but arriving whenever, the flights have a history of carrying illicit goods, money and gold.

Vickers: When I was former head of criminal intelligence, we were interested in what was on those flights and what was coming in and out. I suspect that the Great Leaders expensive bottles of scotch and other items

21:55

Vickers

may also have been shipped in and out through these means. Certainly, it’s something that people keep an eye on, but my fear is that the real big issues are all by sea.

22:23

Singapore harbour

Music

Jolley: Kim Jong Il’s regime goes to extraordinary lengths to hide its involvement in shady ventures.

Singapore -- one of the world’s busiest harbours – it was here that the Pong Su swapped the North Korean flag for one from the Pacific nation of Tuvalu.

22:39

Michael Richardson

Richardson: North Korean owned ships have been placed on foreign flags of convenience registers, all I suspect for the same reason, it helps camouflage the North Korean connection in cases where the North Korean government finds it politic to do that.

23:00

Eugene Tay

Tay: I don’t think it’s a disguise -- I should say they are trying to make more convenient to do it.

23:22

Eugene walking along Singapore quay

Jolley: Eugene Tay is a Singapore shipping agent with strong ties to North Korea - when the Pong Su was looking for a new flag, he recommended the Tuvalu flag.

Jolley: Why did they want to register under another flag?

Tay: That’s very simple because Australian government do not have any ties with North Korea.

23:27

Tay

Tay: If they’re going to sail an N.K. most likely the Australian government would not allow them to come in.

23:47

Ensign

Jolley: But Australia does have diplomatic relations with North Korea, and North Korean ships are permitted in Australian waters providing they have a legitimate reason and announce their arrival -- the Pong Su failed on both counts.

To understand the real reason why the Pong Su opted for a Tuvalu flag, you need to look at who controls the flag.

23:56

Graphics

A Singapore based company, International Ship Registries, has a license to sell the Tuvalu flag. But this Singapore company is managed by Sovereign Ventures. Sovereign Ventures has substantial mining interests in North Korea, and, coincidentally, is Eugene Tay’s former employer.

24:24

Richardson. Super:

Michael Richardson

Institute of S. E. Asian Studies, Singapore

Richardson: They would be approved by the North Korean government as both their agent for shipping and also given privileged access to explore for oil in North Korea.

24:46

Singapore harbour

Jolley: Sovereign Ventures has a history of camouflaging North Korean ships. For almost a decade it ran the notorious Cambodian shipping registry.

25:09

In December 2002, scud missiles were found hidden aboard the North Korean vessel, the Sosun, registered in Cambodia, heading to Yemen.

Richardson: The North Koreans, it is thought, used their ships on the Cambodian register,

25:22

Michael Richardson

flying the Cambodian flag, to smuggle missiles and other arms shipments abroad.

25:38

Pong Su in Sydney Harbour

Music

Jolley: Back in Australia, the Pong Su stands as the most blatant example of North Korean drug running.

More than a year since it was seized, the vessel sits idle, at huge public expense, in Sydney Harbour.

As for the ship’s crew, almost all spent months in total isolation in a detention centre and were interrogated by the Australian Crime Commission.

Faris: The police had presented their evidence, the magistrate had heard it. He said this was not sufficient evidence for them to stand trial.

25:52

Faris. Super:

Peter Faris

Crew lawyer, former Head NCA

So we then had the unprecedented step of these people being seized by the crime commission to ask them about the same thing.

26:21

Pong Su in Sydney Harbour

Jolley: What further evidence they gleaned from the questioning, we don’t know. In the two months we’ve been tracking the story, the Australian Crime Commission and the Australian Federal police have been refused our repeated requests for interviews.

What we do know, though, is they have charged again the Communist party official, Choi Dong Song, and he along with three of his fellow crew members are now in prison waiting to stand trial on drug trafficking charges.

26:32

Federal Police Video

An alleged crew member arrested on shore faces more serious charges of importing a commercial quantity of heroin.

The other 26 crew have been returned to their homeland.

But the question remains, who were they actually working for.

27:03

Kim Jong Il waving/Pong Su

As we’ve seen, the Pong Su’s links to Kim Jong Il’s regime are undeniable.

The Pong Su sailed under a Tuvalu flag issued by a company intimate with the regime.

On the night of the heroin drop, 18 calls were made to Macau, a centre for North Korean criminal activity.

North Korean state sanctioned drug trafficking is well documented and the AFP claim the Pong Su’s heroin was loaded at the North Korean port of Nampo.

27:23

Vickers. Super:

Steve Vickers

Fmr Head, Hong Kong Police Intelligence

Vickers: It’s difficult for the AFP. They’ve got some guys in custody, they’ve got a case to prosecute and I think if I was them, I would make it as simple as I can to get some solid convictions without getting into the realms of James Bond. The reality of it is, though, is that this is a state, as I say this is a criminal regime, that runs drugs for money, that runs drugs as an ordinary part of its course of business, I doubt that a ship on this scale could have been engaged in this without official connivance.

28:02

Embassy

Jolley: Yet in April this year, when Australia sent ambassador, Alan Thomas, to North Korea to present his credentials, the Pong Su incident wasn’t raised.

28:32

Thomas. Super:

Alan Thomas

Australian Ambassador to China

Thomas: The nuclear issue itself, of course, was the major topic of discussion and looking at ways of encouraging the North Koreans to engage in that process.

28:43

Embassy car/Party talks

Jolley: Based in Beijing, Ambassador Thomas is referring to the six party talks aimed at dismantling North Korea’s nuclear program. When pressed on the North Korean government’s role in the Pong Su case he trod carefully.

Thomas: I’ve seen American reports

28:59

Thomas

and our government has said on a number of occasions that we would be very concerned if there was any official connection with any of these sort of activities, especially in Australia’s part of the world. But, as I say, the current case is going through the courts and is really concerned with the actions of individuals, it’s not looking at whether the North Korean government per se is involved.

Perl: The Pong Su is very, very important for Australia.

29:14

Perl

But if we look at the broader strategic picture, the question is what can we do about it. So how can we balance out desire to curb the drug activity and how do we prioritise it vis a vis how not to have the world blown up by a nuclear holocaust.

29:40

Vickers

Vickers: Diplomatically perhaps a softly softly approach right now may have been something that’s been decided upon.

30:00

Pong Su

Jolley: Yet despite the diplomacy, North Korea’s strategy of nuclear blackmail continues. When will Australia and the international community move to rein in North Korea’s deadly trade in drugs?

30:11

Credits

Reporter: Mary Ann Jolley

Camera: Geoffrey Lye

Jun Mutsuzono

Sound: Kate McCure

Editor: Garth Thomas

Additional Interviews: Janet E. Silver and John Taylor

Producer: Mavourneen Dineen