Assuming OFAC someday lifts the trade sanctions, and business between American companies and North Korea becomes legally possible, what does the initial due diligence look like?
No country in the world raises more red flags.
On the Corruption Perceptions Index, North Korea ranks near the bottom at 171.
“To do business in North Korea, regardless of legality, requires paying off officials with bribes and a cut of the profits in order to ensure political protection,” according to Justin Hastings, an associate professor at the University of Sydney.
“Those officials, who have to exploit their positions and engage in side businesses to survive themselves, in turn pay off their own superiors, and so on up the chain to Kim and his associates,” Hastings wrote in Foreign Policy magazine in 2017.
On the 2018 Index of Economic Freedom from the Heritage Foundation, North Korea ranks last (180).
“Bribery is pervasive and corruption is endemic at every level of the state and economy,” Heritage said.
As for the rule of law: “A functioning, modern, and independent judiciary does not exist.”
“No effective tax system is in place. The government commands almost every part of the economy and directs all significant economic activity.”
The latest assessment from Amnesty International is bleak. “Up to 120,000 people continued to be arbitrarily detained in political prison camps, where conditions fell far short of international standards.”
“Workers sent abroad suffered harsh working conditions,” Amnesty International said.
About those workers sent abroad. It’s more accurate to call it slavery, child labor, and sex trafficking.
According to the CIA World Factbook,
North Korea is a source country for men, women, and children who are subjected to forced labor and sex trafficking; many North Korean workers recruited to work abroad under bilateral contracts with foreign governments, most often Russia and China, are subjected to forced labor and do not have a choice in the work the government assigns them, are not free to change jobs, and face government reprisals if they try to escape or complain to outsiders. . .
What to expect on a business trip to North Korea?
Online access is rare, according to Freedom House.
“Global internet access is still limited to a handful of high-level officials who have received state approval, though increasing numbers of academic scientists and students are also permitted controlled internet access,” Freedom House said.
What’s in your pocket or on your wrist? Here’s a warning from the UK Foreign Office:
Any technology incorporating Global Positioning Systems must be left with North Korean customs on entry into the country and collected on departure. Foreign mobile phones can be brought into the country but must be registered at the airport. They can only be used in North Korea by purchasing a North Korean SIM card.
More advice for travellers, again from the UK Foreign Office:
“Insults or jokes about the North Korean political system and its leadership are severely frowned upon. Foreigners have sometimes found themselves in trouble for not paying what was deemed to be a sufficient level of respect — including not treating images of the leader with care.”
Countries can change. They can clean up and go straight. Singapore did it in the 1960s, and the benefits are still flowing. Kim Jong-un saw that for himself this week.
For the sake of its 25 million people, let’s hope North Korea is ready to leave its broken past behind.
Richard L. Cassin is the publisher and editor of the FCPA Blog.