For Kim Jong Il's birthday, North Korean insurance managers prepared a special gift.

In Singapore, they stuffed $20 million in cash into two heavy-duty bags and sent them, via Beijing, to their leader in Pyongyang, said Kim Kwang Jin, who worked as a manager for Korea National Insurance Corp., a state-owned monopoly.

Kim said he helped arrange the shipment and watched in February 2003 as the cash was packed. After the money arrived, Kim Jong Il sent a letter of thanks to the managers and arranged for some of them to receive gifts that included oranges, apples, DVD players and blankets, Kim said.

"It was a great celebration," he said.

The $20 million birthday present and the gratitude of its recipient, who is known as the Dear Leader, were annual highlights of a sophisticated global insurance fraud that North Korea has concocted to provide its communist leadership with hard currency, said Kim, who spent five years as an executive of the state insurance company in Pyongyang and worked for a year at its banking subsidiary in Singapore before defecting to South Korea.

"This money helps keep Kim Jong Il in power at a time he is engaged in nuclear brinksmanship," said David L. Asher, who supervised a State Department unit that attempted to track various illegal activities by North Korea during the Bush administration. "This is the gift that keeps on giving. It has become one of the North's largest illicit revenue generators."

In interviews and court documents, Western insurers, U.S. officials and defectors such as Kim said the impoverished and isolated North Korean government has collected hundreds of millions of dollars from some of the world's largest insurance companies on large and suspicious claims for transportation accidents, factory fires, flood damage and other alleged disasters. Still, recent attempts by international insurers to overturn North Korea's claims have failed in British courts.

For years, the U.S. government and law enforcement agencies around the world have documented what they describe as state-sponsored criminality in North Korea. They have linked the North to illegal manufacturing and trafficking of drugs ranging from heroin to Viagra, as well as to expert counterfeiting of $100 bills and the production of high-quality counterfeit cigarettes.

Much less has been disclosed about North Korea's international insurance claims, in part because they have been cloaked in legal settlements by firms with no interest in highlighting their losses.

"The exact scale of the fraud is hard to determine . . . because the insurance industry has been so gullible," Asher said. North Korean insurance fraud "was absolutely something I should have been looking into more when I was running the [State Department's] illicit activities initiative," he added.

Some details emerged in London last year when lawyers for German insurance giant Allianz Global Investors, Lloyd's of London and several other reinsurers disputed a North Korean reinsurance claim for the 2005 crash of a helicopter into a government-owned warehouse in Pyongyang. According to court documents, the companies alleged that the helicopter crash had been staged, that a North Korean court's decision to uphold the claim had been rigged and that the North Korean government routinely used insurance fraud to raise money for the personal use of Kim Jong Il.

A British appeals court allowed the case to go forward, but as it went to trial in December, the insurance companies agreed to a settlement that amounted to a nearly complete victory for the North Koreans: The insurers retracted all allegations of fraud against Korea National Insurance Corp. (KNIC) and paid out about $58 million, or 95 percent of the North Korean claim for the crash.