North Korea company in barter deal found to be under sanctions

Aug. 24 (UPI) -- A North Korean firm contracted to exchange alcohol for South Korean sugar was found to be under U.S. and international sanctions.

North Korea's Kaesong Koryo Ginseng Trading Co. had signed an agreement with the South's Inter-Korean Agricultural Cooperative Federation in June. The two sides had planned to barter the South's sugar for North Korean liquor imports, including soju.

The firm has been identified as a department of Room 39, or Office 39, a highly confidential organization that manages Kim Jong Un's foreign currency reserves through illicit activities, The Asia Business Daily reported Monday.

Revelations about the trading company have prompted criticism among South Korean lawmakers across party lines of new Unification Minister Lee In-young, according to Money Today.

Earlier in the month, Lee had stressed the need for economic exchange between the two Koreas and had endorsed the barter.

"The giving and receiving of [North Korean] water from Mount Kumgang and Paektu, [North Korean] liquor produced by the Taedong River, [in exchange for South Korea's] rice and medicines, may begin on a small scale but could develop into something greater," Lee had said immediately after his appointment.

Lawmaker Ha Tae-kyung of the main opposition United Future Party said Monday the unification ministry failed to adequately confirm the status of the North Korean company with the National Intelligence Service.

"We should consider the project to be completely canceled," Ha said. Ruling party lawmaker Kim Byung-kee also said the deal should not be valid, according to Money Today.

On Monday, the unification ministry said there are no plans to reverse the policy.

"We never used the term 'cancel'," the ministry said in statement amid reports of the agency oversight. "It is inappropriate to use the term when matters are still under review."

The National Assembly's intelligence committee also suggested miscommunication between the unification ministry and the NIS was responsible for the lack of preparedness for the overflow of the Hwanggang Dam in North Korea.

In August, North Korea opened the floodgates of the border dam without notifying Seoul.