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(LEAD) Report: N. Korea ditches secret fund management agency
By Lee Chi-dong
WASHINGTON, Oct. 17 (Yonhap) -- North Korea's leadership has dissolved a key communist party organization tasked with managing slush funds for the ruling Kim family, a news report said Wednesday.

   Japan's Kyodo News Service reported Pyongyang has abolished the agency, code-named "Office 38," under the Workers' Party of Korea. It quoted unidentified "sources familiar with North Korean affairs."

   Kyodo's story has not been confirmed independently.

   It cited the sources as saying the North's move reflects efforts by the young leader Kim Jong-un to streamline entities involved in earning foreign currency and also increase the role of the cabinet.

   Office 38, created by the late leader Kim Jong-il, is known as a party bureau that manages the funds of the Kim family and ruling elites.

   Its main mission was to oversee transactions involving foreign currency, hotels and trade.

   Kyodo said such a role has been transfered to a new entity called the Moranbong Bureau, believed to belong to the cabinet.

   Office 38 was merged in 2009 with another party body, Office 39, which was in charge of illicit economic activity, such as drug smuggling and arms trading, to support the government, according to previous media reports.

   Pyongyang revived Office 38, however, in 2010, they added.

   Kyodo said the Kim leadership also disbanded Office 39 recently.

   A North Korean leadership specialist based in the U.S. was cautious about Pyongyang's reported move.

   "We could (see it as a good sign, if true), but we need to look more closely," said Ken Gause, a senior researcher at CNA Strategic Studies' International Affairs Group.

   "In the past, Office 38 has been folded into Office 39 only to be resurrected as a separate office. So we cannot take any organizational restructuring at face value," he added.