August 5, 2011 4:12 pm
Online games trap Korean from North and South in currency scam
By Christian Oliver in Seoul
Pyongyang’s cash-strapped totalitarian regime has found a novel source of foreign currency revenue – digital weapons and wizardry acquired through illegal computer game scams.
Police in neighbouring South Korea said they closed down an elaborate fraud in which graduates from the North’s top universities collaborated with racketeers in the South to swindle Seoul’s $3bn online gaming industry.
The North Korean scam involved hugely popular games such as Lineage, an online fantasy world of medieval knights and elves, and Dungeon Fighter, which involves slaying hordes of monsters.
In the games, created by companies such as NCSoft and Nexon, players advance by accumulating equipment such as swords, wands and potions. In some cases they have to buy the items for sums as high as Won1m ($936).
The North Koreans devised illegal software packages that played the games automatically to acquire a stash of these magic accoutrements.
South Korean brokers then sold on these programmes, enabling players to save time and costs by taking an easier route to higher stages of the game and obtaining greater magic powers. As many as 30 per cent of South Koreans visit gaming sites.
South Korea said it had arrested five of its own citizens in connection with peddling the illegal programmes, devised by North Korean computer experts based in China but working for one of Pyongyang’s state trading companies.
Seoul police said the North Koreans channelled money back to Pyongyang’s shadowy Bureau 39, which handles the country’s earnings from international transactions, ranging from illegal arms to ginseng. There was no immediate comment on how the arrested South Koreans would plead.
The scam earned a profit of Won6.4bn ($6m) over the past 18 months. The North Koreans, who are looking to bypass sanctions imposed on their nuclear weapons programme, received both proceeds and living expenses, the police said.
“North Korea judged auto-programming could be a source of hard currency,” the police said. “This has only been a rumour in the past, but we found that North Koreans really were raising hard currency under the veil of state trading companies.”
North Korea has faced increasingly successful international crackdowns against its narcotics and counterfeiting operations, restricting its foreign earnings.
The case also reveals the rigour of North Korea’s scientific education, however. Foreign investors use companies in Pyongyang for cheap website design and computer programming, while Kim Jong-il, the country’s dictator, styles himself a web genius – even though almost all his people are denied internet access.
South Korea also accuses the North of cyber attacks on government institutions and banks, but Pyongyang denies responsibility.
Additional reporting by Kang Buseong
Copyright The Financial Times Limited 2011.