Salmon sold at Walmart, ALDI may have subsidized North Korea

HUNCHUN, China (AP) - The workers wake up each morning on metal bunk beds in fluorescent-lit Chinese dormitories, North Koreans outsourced by their government to process seafood that ends up in American stores and homes.

Privacy is forbidden. They cannot leave their compounds without permission. They must take the few steps to the factories in pairs or groups, with North Korean minders ensuring no one strays. They have no access to telephones or email. And they are paid a fraction of their salaries, while the rest - as much as 70 percent - is taken by North Korea's government.

This means Americans buying salmon for dinner at Walmart or ALDI may inadvertently have subsidized the North Korean government as it builds its nuclear weapons program, an AP investigation has found. Their purchases may also have supported what the United States calls "modern day slavery" - even if the jobs are highly coveted by North Koreans.

At a time when North Korea faces sanctions on many exports, the government is sending tens of thousands of workers worldwide, bringing in revenue estimated at anywhere from $200 million to $500 million a year. That could account for a sizable portion of North Korea's nuclear weapons and missile programs, which South Korea says have cost more than $1 billion.

While the presence of North Korean workers overseas has been documented, the AP investigation reveals for the first time that some products they make go to the United States, which is now a federal crime. AP also tracked the products made by North Korean workers to Canada, Germany and elsewhere in the European Union.

Besides seafood, AP found North Korean laborers making wood flooring and sewing garments in factories in Hunchun. Those industries also export to the U.S. from Hunchun, but AP did not track specific shipments except for seafood.

American companies are not allowed to import products made by North Korean workers anywhere in the world, under a law signed by President Donald Trump in early August. Importers or company officials could face criminal charges for using North Korean workers or materially benefiting from their work, according to the law.

Every Western company involved that responded to AP's requests for comment said forced labor and potential support for North Korea's weapons program were unacceptable in their supply chains. Many said they were going to investigate, and some said they had already cut off ties with suppliers.

John Connelly, president of the National Fisheries Institute, the largest seafood trade association in the U.S., said his group was urging all of its companies to immediately re-examine their supply chains "to ensure that wages go to the workers, and are not siphoned off to support a dangerous dictator."

"While we understand that hiring North Korean workers may be legal in China," said Connelly, "we are deeply concerned that any seafood companies could be inadvertently propping up the despotic regime."

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EXPORTING LABOR

North Koreans overseas work in construction in the Gulf states, shipbuilding in Poland, logging in Russia. In Uruguay, authorities told AP, about 90 North Koreans crewed fishing boats last year. U.N. sanctions now bar countries from authorizing new work permits for North Korean workers but do not target those already abroad.

Roughly 3,000 North Koreans are believed to work in Hunchun, a far northeast Chinese industrial hub just a few miles from the borders of both North Korea and Russia. Signs in this mercantile city are in Chinese, Korean and Russian. Korean restaurants advertise cold noodles, a Northern favorite, and Russian truckers stop into nightclubs with black bread on the menu.

In an effort to boost the local economy, China and North Korea agreed several years ago to allow factories to contract for groups of North Korean workers, establishing an industrial zone with bargain-priced labor. Since then dozens of fish processing companies have opened in Hunchun, along with other manufacturers. Using North Korean workers is legal in China, and not considered forced labor.

It's unknown what conditions are like in all factories in the region, but AP reporters saw North Koreans living and working in several of the Hunchun facilities under the watchful eye of their overseers. The workers are not allowed to speak to reporters. However, the AP identified them as North Korean in numerous ways: the portraits of North Korea's late leaders they have in their rooms, their distinctive accents, interviews with multiple Hunchun businesspeople. The AP also reviewed North Korean laborer documents, including copies of a North Korean passport, a Chinese work permit and a contract with a Hunchun company.

When a reporter approached a group of North Koreans - women in tight, bright polyester clothes preparing their food at a Hunchun garment factory - one confirmed that she and some others were from Pyongyang, the North Korean capital. Then a minder arrived, ordering the workers to be silent: "Don't talk to him!"

Their contracts are typically for two or three years, and they are not allowed to go home early. The restrictions they work under make them very valuable employees. North Korean laborers are "more stable" than Chinese workers, said Li Shasha, a sales manager at Yanbian Shenghai Industry and Trade Co., a major Hunchun seafood processor.

Chinese workers have job protections that give them the right to take time off, while North Korean workers complete their contracts with few complaints, rare sick days and almost no turnover.

"They won't take a leave for some personal reason," said Li, whose company shipped containers of squid and snow crab to the U.S and Canada in July and August.

They are also often considered cheaper. Li said that at the Yanbian Shenghai factory, the North Koreans' salary is the same as for the Chinese, roughly $300 to $385 per month. But others say North Koreans are routinely paid about $300 a month compared to up to $540 for Chinese.

Either way, the North Korean government of Kim Jong Un keeps anywhere from half to 70 percent of their pay, according to scholars who have surveyed former laborers. It passes on to the workers as little as $90 per month - or roughly 46 cents per hour.

The work can be exhausting, with shifts lasting up to 12 hours and most workers getting just one day off each week. At some factories, laborers work hunched over tables as North Korean political slogans are blasted from waist-high loudspeakers.

Through dozens of interviews, observation, trade records and other public and confidential documents, AP identified three seafood processors that employ North Koreans and export to the U.S.: Joint venture Hunchun Dongyang Seafood Industry & Trade Co. Ltd. & Hunchun Pagoda Industry Co. Ltd. distributed globally by Ocean One Enterprise; Yantai Dachen Hunchun Seafood Products, and Yanbian Shenghai Industry & Trade Co. Ltd.

They're getting their seafood from China, Russia and, in some cases like snow crab, Alaska. Although AP saw North Korean workers at Hunchun Dongyang, manager Zhu Qizhen said they don't hire North Korean workers any more and refused to give details. The other Chinese companies didn't respond to repeated requests for comment.

Shipping records seen by the AP show more than 100 cargo containers of seafood, more than 2,000 tons, were sent to the U.S. and Canada this year from the factories where North Koreans were working in China.

Packages of snow crab, salmon fillets, squid rings and more were imported by American distributors, including Sea-Trek Enterprises in Rhode Island, and The Fishin' Company in Pennsylvania. Sea-Trek exports seafood to Europe, Australia, Asia, Central America and the Caribbean. The Fishin' Company supplies retailers and food service companies, as well as supermarkets.

The Fishin' Company said it cut its ties with Hunchun processors and got its last shipment this summer, but seafood can remain in the supply chain for more than a year. Owners of both companies said they were very concerned about the North Korean laborers, and planned to investigate.

Often the seafood arrives in generic packaging, but some was already branded in China with familiar names like Walmart or Sea Queen, a seafood brand sold exclusively at ALDI supermarkets, which has 1,600 stores across 35 states. There's no way to say where a particular package ends up, nor what percentage of the factories' products wind up in the U.S.

Walmart spokeswoman Marilee McInnis said company officials learned in an audit a year ago that there were potential labor problems at a Hunchun factory, and that they had banned their suppliers, including The Fishin' Company, from getting seafood processed there. She said The Fishin' Company had "responded constructively" but did not specify how.

Some U.S. brands and companies had indirect ties to the North Korean laborers in Hunchun, including Chicken of the Sea, owned by Thai Union. Trade records show shipments came from a sister company of the Hunchun factory in another part of China, where Thai Union spokeswoman Whitney Small says labor standards are being met and the employees are all Chinese. Small said the sister companies should not be penalized.

Shipments also went to two Canadian importers, Morgan Foods and Alliance Seafood, which did not respond to requests for comment.

Boxes at the factories had markings from several major German supermarket chains and brands - All-Fish distributors, REWE and Penny grocers and Icewind brand. REWE Group, which also owns the Penny chain, said that they used to do business with Hunchun Dongyang but the contract has expired. All the companies that responded said their suppliers were forbidden to use forced labor.

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HIDDEN LIVES

North Korean workers in China are under much more intense surveillance than those in Russia and the Middle East, experts say. That's likely because Pyongyang fears they could follow in the footsteps of tens of thousands of their countrymen who escaped to China, or they could interact with South Koreans living in China.

"If a North Korean wants to go overseas, China is his or her least favorable option," said Andrei Lankov, a North Korea expert at Kookmin University in South Korea. "Because in China, (factories) have essentially prison-like conditions."

The vast majority of the workers in Hunchun are women in their 20s. Most are thought to be hired back home by labor brokers, who often demand bribes for overseas jobs. The laborers arrive in China already divided into work teams, each led by a North Korean overseer, and remain isolated even from their own employers.

"They're not allowed to mingle with the Chinese," said a senior manager at a Hunchun company that employs many North Koreans. He spoke on condition he not be identified, fearing repercussions on his business. "We can only communicate with their team leaders."

In a sense, the North Korean workers in China remain in North Korea, under constant surveillance.

"They only talk about what they need to," said a medical worker who confirmed their nationality and had cared for some, and also spoke on condition of anonymity out of concern for angering Chinese authorities. "They don't talk about what they might be thinking."

They live crowded into rooms often above or next door to the factories, in a world awash in North Korean rituals.

"Let's Follow the Ideas!" of North Korea's leaders, urges a poster at the workers' dormitory at Hunchun Pagoda. Portraits of the country's first two rulers, worshipped as god-like in the deeply isolated nation, gaze down from otherwise-bare walls. Laundry is often hanging up to dry and potted plants - mostly what appear to be herbs, though one room at Hunchun Pagoda has bright yellow carnations - sit on many windowsills.

It's a world of concrete. The factory buildings and dormitories at Hunchun Pagoda are grey slabs of unpainted concrete. The yard where the women play volleyball in their free time is concrete. The street outside the front gate is concrete.

At most factories the women prepare their own food and make tubs of their own kimchi, the spicy cabbage dish beloved in both Koreas. Their televisions cannot tune in Chinese programming, and they organize their own sports and singing contests on their days off.

Nearly every compound has a workers' garden. There are a half dozen rows of corn at Hunchun Pagoda, and kidney beans and melons at Yantai.

A booming Chinese economy means money has come even to cities like Hunchun, where six-lane roads and factories bump up against cornfields that, a year later, often make way for yet another factory. Mercedes are now regular sights on the road and 30-foot billboards at malls show bone-thin models in fur coats.

But when the North Koreans are allowed to leave their compounds, they go to the city's working-class street markets, where vendors set their wares on plastic sheets or folding tables, or sell directly from the backs of trucks.

Chinese merchants say most North Koreans are very careful about their finances. For instance, while they splurge on expensive spices imported from South Korea, they also buy Chinese noodles that cost less than half of the South Korean brands.

On a recent morning, a group of about 70 North Korean women walked to a Hunchun street market from the nearby Hong Chao Zhi Yi garment factory. They asked about prices for watermelons and plums, browsed through cheap pantyhose and bought steamed corn-on-the-cob for 1 Chinese yuan (about 16 cents) apiece.

As the late summer chill set in one evening, a dozen or so women from Hunchun Pagoda played volleyball in the quiet road in front of the compound's gate, scrimmaging in the pool of light thrown by the street lamp.

A train horn blew. The women shouted to one another while they played. As a car with a foreigner drove by, one laughingly called out: "Bye-bye!"

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PROPPING UP NORTH KOREA

Estimates vary on how many North Koreans work overseas and how much money they bring in.

South Korea's intelligence agency estimated in 2014 that 50,000 to 60,000 work in about 50 countries, most in China and Russia. That number may now be up to 100,000, according to Lim Eul Chul, a scholar at South Korea's Kyungnam University who has interviewed numerous former laborers. Estimates that their labor brings in revenue of $200 million to $500 million annually to the North Korean government come from scholars, who base their findings on academic research papers, South Korean intelligence reports and sources in the Chinese business community.

That has made the workers a significant and reliable source of revenue for the North Korean regime as it struggles beneath the weight of increasing UN sanctions, which the U.S. estimates could cost Pyongyang upwards of $1.5 billion each year in lost export revenues. In the last month alone, China has said it's cracking down on North Korean exports, businesses and joint ventures, but it has a long history of not enforcing sanctions in practice.

Despite the pay and restrictions, these are highly sought-after jobs in North Korea, a chance to move up a rickety economic ladder and see a bit of the world beyond the closed-in nation.

Their monthly earnings in China are far more than many would earn in North Korea today, where official salaries often equal $1 per month. Experts estimate most families live on about $40-$60 a month, with much of their earnings coming from trading in the growing network of unofficial markets.

And there are plenty of benefits to working overseas. The laborers can use their earnings to start businesses in these markets, and can buy the status symbols of the slowly-growing middle class - Chinese rice cookers, watches, TVs, tableware - selling them back home or using them as bribes. Simply going abroad is so rare that returning workers can find themselves highly sought-after when it comes time to marry.

Lim Il, a North Korean refugee, bribed a series of officials - with 20 bottles of liquor, 30 packs of cigarettes and restaurant gift cards - to get a job as a construction worker in Kuwait City in the late 1990s, when North Korea was still suffering through a horrific famine.

"I felt like I had won the lottery," he said. "People fantasized about getting overseas labor jobs."

Lim, a man in his late 40s who fled to South Korea in 1997 and now writes novels about the North, said that even though he was never paid his $120-a-month salary, he was happy to simply get beef soup and rice every day.

"Unless you were an idiot, you wouldn't give up such an opportunity," he said. While he never thought of himself as a slave, looking back he says that is the right description: "These North Korean workers (today) still don't know they are slaves."

The new law in the U.S. labels all North Korean workers both overseas and inside the country as engaging in forced labor. (While U.S. law generally forbids Americans from conducting business in North Korea, the AP employs a small number of support staff in its Pyongyang bureau, operating under a waiver granted by the U.S. government to allow the flow of news and information.)

"There are not many countries that, at a government level, export their own citizens as a commodity to be exploited," said an official at Immigration and Customs Enforcement, who spoke on condition of anonymity because he wasn't authorized to speak to the media.

For years the State Department has blacklisted North Korea in its human trafficking reports, saying the overseas laborers and their families could face reprisals if the workers complain or try to escape, and criticizing Pyongyang for keeping much of the workers' earnings. China, Russia and other countries hosting North Korean labor are all members of the United Nations International Labor Organization, which requires workers to receive their full salaries.

Luis CdeBaca, former U.S. ambassador-at-large for human trafficking issues, said both federal law enforcement agents and importers should be making sure workers are treated fairly. U.S. Customs and Border Protection, responsible for enforcing the law that bans imports that are products of forced labor, did not respond to repeated requests for comment.

"If you think about a company like Walmart, which is spending a lot of money, time and effort to clean up its supply chain, sending auditors and inspectors to factories, working with suppliers, all of that is thrown out the window if they are importing products made with exploited North Korean labor," said CdeBaca. "It contradicts everything they are doing."

CdeBaca conceded the North Korean workers might like their jobs.

"The question is not, 'Are you happy?' " he said. "The question is, 'Are you free to leave?'"

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Associated Press journalists Leonardo Haberkorn in Uruguay, Han Guan Ng and researcher Fu Ting in China, Kelvin K. Chan in Hong Kong, Frank Jordans in Germany and Jon Gambrell in United Arab Emirates contributed to this report. Mendoza reported from California.