Wednesday, 13 June 2007

The BDA devil is in the banking details

The U.S. Treasury Department has confirmed that Washington is working with Moscow to resolve the long running North Korean banking dispute. The inability of North Korean based account holders to freely transfer their cash out of the beleaguered Banco Delta Asia in Macau prompted Pyongyang to put the brakes on the first stage implementation of the February denuclearization accord.
Over the past several months there have been just as many optimistic claims that a resolution, or a pathway, had been discovered to overcome what was originally described as technical difficulties preventing the transfer of the $25 million that had been frozen since September 2005.
On Monday a new deal emerged involving a Russian bank, and there is widespread optimism that the issue could see closure as early as the end of this week.
Treasury spokeswoman Molly Millerwise said the United States was cooperating with Russian and Macanese officials to facilitate the transfer of the funds.
The State Department, meanwhile, was tight lipped. Spokesman Mike McCormack cryptically told his daily press briefing, "Until it's done, that will be the sign of progress."
Is State less optimistic than Treasury? These two departments have been criticized for sometimes appearing to be at odds on how to best resolve the broader issue of North Korea's nuclear ambitions. It has been suggested several times that there is some sort of power struggle going on behind the scenes, with hard-line neocons over at Treasury actually working to undermine the more liberal diplomats in State.
A final resolution that is acceptable to all sides, and obviously that will have to include the private account holders of those funds, will allow the stalled February accord to move forward. South Korea's top nuclear negotiator, Chun Yung-woo, has been in Washington this week meeting with his U.S. counterpart, Christopher Hill, to discuss ways of moving the process forward, post-resolution of the funds issue. In the words of their press release, "to catch up for lost time."
The basis of the deal will involve a transfer of funds from Macau through the Federal Reserve Bank of New York to Russia's central bank and then to a commercial Russian bank from where withdrawals can be made.
According to unconfirmed reports citing anonymous sources, Moscow will get a guarantee from Washington that it will not be subject to any sanctions for handling the funds - something that has been a sticking point in the past.
Washington was apparently unable to offer those guarantees - or at least unable to convince correspondent banks that no action would be taken against them. This is widely believed to be the reason why the Bank of China originally refused to accept the fund transfer in March.
According to South Korea's foreign minister, Song Min-soon, using the U.S. Federal Reserve Bank is something of a masterstroke. He said it sidesteps the need for a private U.S. financial institution to get waivers to protect it from clause 311 of the Patriot Act - which bans American banks from dealing with institutions the Treasury has determined are guilty of financing terrorism, money laundering and other financial crimes.
Throughout the week there have been several unconfirmed reports citing those omnipresent anonymous sources as saying Treasury has been working with the Justice Department to arrange a temporary lifting of the ban on dealing with the BDA. Expressions such as a "short window of opportunity" or "bending the rules" have been used, saying this transfer will be a one off event. It all sounds very cloak and dagger, and not in keeping with transparent international banking procedures.
The reports also use the expression "from where the funds can be withdrawn" when referring to the Russian commercial bank.
Withdrawal has never been the issue, the account holders can freely withdraw their money from the BDA. They could do that today if they so wished.
The North Koreans have been insisting on the ability to move funds through the international banking system. They have accepted that their transfers will be subject to intense scrutiny, but the actual ability to conduct electronic transfers, rather than withdrawals with bags of cash, has always been their bottom line. And Washington is very much aware of this.
This latest deal, with its temporary lifting of bans and short windows of opportunity, hardly seems to meet the North's minimum requirements.
If the only thing that changes is that account holders have to visit Russia rather than Macau to physically pick up their cash, then as far as they are concerned, the money might just as well stay in the Banco Delta Asia. At least there they can have a decent lunch after making their withdrawal.

Korea Herald link:
https://www.koreaherald.co.kr/SITE/data/html_dir/2007/06/13/200706130061.asp

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Daejeon - It's not just about the ESL teachers

The recent Korea Herald article over those Daejeon banners offering rewards for information leading to the conviction of English teachers who conduct illegal private tutorials caused quite a stir. The letters are still arriving and contributors to internet message boards are still voicing their outrage.
Having said that, some people have questioned why The Korea Herald should have given up its front page to the story, and why we have devoted so many column inches to an issue that essentially affects so few people.
Well the simple answer to that is; we haven't. This isn't just about a few hundred foreign English teachers in Daejeon.
It has also been suggested that the stories were too sympathetic to foreigners, some of whom may in fact be among those who are illegally tutoring students.
Not true. The Korea Herald does not condone or encourage illegal behavior. But it is important that the law is even-handed and applied across the board, and not selectively where a particular group is frequently singled out for special attention.
It has been a fortnight since we first reported the banner issue, and a week since the front page story where one of the interview subjects actually admitted there were English-language hagwon in Daejeon who routinely ignore labor laws. If Daejeon hagwon are so blase about following the law, who is to say that hagwon throughout the Republic of Korea do not share this laissez-faire attitude. So we are not talking about a couple of dozen hagwon and a few hundred teachers.
According to sources, despite this admission, there has been no crackdown by the authorities. What does this tell us about the attitude of government officials in Daejeon?
Perhaps the immigration office in the city has already shared information with the tax, pension and national health insurance authorities, and they are now busily checking their records to see if every foreigner registered with immigration as a resident and employed in Daejeon is actually paying into the legally mandated system. Perhaps.
So it's not just about teachers, it's about the ability of local government officials to take the initiative and do the jobs they are paid to do. And if the local government workers in Daejeon are so ineffective, then would it be fair to say that officials in other cities are equally gripped by the same lethargy? This potentially has far-reaching consequences for every Korean citizen, and is not confined to the problems of a handful of migrant workers.
For example, Korea's aging society and low birthrate - coupled with the fact that the national pension is hemorrhaging cash - might suggest that pension collection authorities would demand employment information on every individual in Korea - foreign or not - and check their records to ensure that each and every one of those individuals was paying their dues. You would think so. But you would be wrong.
So again, this isn't just about English teachers, it's about the future financial security of retired Korean workers.
National health contributions help to provide better and more affordable health care for everyone, but not all those who should be paying into the system are doing so. That will make health care more expensive for everyone, not just for English teachers whose hagwon directors have decided to unilaterally "opt out" of the system.
The Labor Department, the Seoul Help Center and foreign embassies receive scores of telephone calls from foreign teachers every week, perhaps every day. They are complaining about every manner of abuse at the hands of unscrupulous hagwon directors.
It would be fair to assume that these unhappy individuals are distracted by their problems, and are not giving their full attention to their primary function, teaching the more than 11 million Korean youngsters who attend private education institutes.
So do you really think this is about a few hundred foreign teachers in Daejeon? Think again.

Korea Herald link:
https://www.koreaherald.co.kr/SITE/data/html_dir/2007/06/13/200706130058.asp

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Thursday, 7 June 2007

Have the Daejeon hagwon gone too far?

From The Korea Herald June 7, 2007

When the extracurricular education of children becomes a virtually unsupervised business worth $15 billion a year and rising, it is a safe bet that the actual educational element is possibly the last thing on the mind of at least some of the market participants.
The largely ineffective enforcement of existing regulations by concerned government departments, and their inability (or unwillingness) to coordinate efforts to bring order to a chaotic sector, is helping to feed the greed of the unscrupulous. And this situation is costing millions of middle and lower class Korean parents a fortune in wasted tuition fees, and Korea its reputation as a country governed by the rule of law and fair play.
Private education institutes, or hagwon, in the city of Daejeon recently launched what amounted to a vigilante campaign by offering cash rewards to informers who exposed foreign English-language instructors who illegally teach private classes. Many of those who witnessed the campaign firsthand described it as a witch-hunt, with fines, blacklisting, and deportation being the consequence of this frontier justice.
But what is particularly galling, they say, is the fact that the posse leading the hunt, the local hagwon association, are not consumed with a desire to enforce the law; on the contrary, they are simply driven by a desire to line their own pockets. In fact, when it comes to the law, the hagwon themselves are decidedly ambivalent.
The Korea Herald was the only mainstream media outlet that reported on the campaign led by the Daejeon Foreign Language Association (DFA) two weeks ago. Some 200 banners appeared outside hagwon and on the sides of hagwon school buses. The banners warned teachers that they were "being watched" and offered a $500 reward for information leading to the conviction, blacklisting and deportation of what the banners described as "unqualified" foreigners.
"We wanted to warn these teachers that what they are doing is illegal. Plus they can get a serious penalty," Mun Yei-seung, owner and director of the Yang-G ELS hagwon in Daejeon, told The Korea Herald. "The reason we are doing this is obvious - what they are doing is against the interest of our business. We need to protect the interest of our business."
Speaking on behalf of the DFA, Mun said: "I have met some of those foreign teachers, and they think so lightly about this. They think of this like it is just like violating a traffic law, but the fact is quite different. When they are caught the law states they can be fined up to 5 million won ($5,400), which means it's a serious violation."
Mun also accused public education institutes such as colleges and universities of not taking this problem seriously. "Colleges don't do anything about what their employees do, and obviously what they are doing is against the law. And it seems to us, they take what they do so lightly. All teachers, foreign and Korean, cannot do private lessons if they are working for a school. It is illegal."
Foreign-language instructors on an E-2 visa are indeed prohibited from teaching private classes outside the hagwon. However, foreign instructors on an F-visa can obtain permission to teach private, and they are particularly outraged that the Korean-language version of the banners declared that "all foreigners teaching private classes are illegal." They say this blanket claim is prejudicial to their interests and could be legally actionable.
Presented with the facts that F-visa holders can teach privately, Mun retracted his previous statement and acknowledged that perhaps the wording in the Korean-language version may have been misleading.
"To the people who have the right to get an apology, you will get our apology. The ones who are doing it legally might be offended, then yes, to those people we should make an apology, and I am willing to raise this with our association," Mun said.
How that apology would be made, however, wasn't immediately clear.
It is widely accepted that hagwon themselves are not above bending the rules, or breaking the law, to save money. This is evidenced by the huge number of claims made and won by foreign teachers at Labor Department offices around Korea.
There have been widespread accusations that many Daejeon hagwon, for example, do not pay national health insurance for their employees and do not make pension contributions as required by law. Mun said abiding by and enforcing government regulations is something his association should encourage its members to do. He admitted, however, the DFA does not currently have a written code of conduct.
"It is something we should develop, you have given me a good idea. Yes, we encourage our directors to follow the law, but to tell you the truth we have not made any guidelines, so we have seen some conflicts between directors in the association. And I have seen some sad things as well. Yes it's a good idea," Mun said.
Yang-G's director was emphatic that wrongdoers are not above the law. "My position is very clear. If the person has done something illegal they have to deal with the consequences, and if any school is mistreating their workers, either Korean staff or foreign staff, they also have to deal with the consequences."
When pressed, Mun acknowledged that some illegal activities do take place, even within his own association. But when asked if he would report these hagwon to the authorities he told The Korea Herald: "Me personally, I don't do anything. Because I am quite well known in this community, so if I do something, they will know it was me, and that is too much for me."
Mun explained that Daejeon is big, but not as big as Seoul. "We know each other quite well. But even though the competition is severe - it is not worth for me to cause trouble."
Mun outlined one of the scenarios where a school's actions might be in conflict with the law. "Health insurance-wise, in a lot of cases the directors and teachers can make a compromise. You know they have to pay a certain amount of money - but I know some schools do make a compromise with teachers.
"In our case, a lot of (our) parents are doctors, so when we take our teachers to the doctor the cost is so little - then you know, as long as the teacher is okay, as long as the teacher and director is happy, it is their business. If one side of them is not happy, they have to do things by the law - but if the two are happy, there is nothing to say."
In light of the recent DFA campaign against illegal private tutoring, one teacher said this is an unacceptable position. "If the DFA is going to support strict enforcement of immigration laws, they should also be ready to support stricter enforcement of labor laws," the teacher wrote to The Korea Herald.
The hagwon associations have demonstrated their inability to self-regulate their sector, and many teachers are calling for more oversight and stiffer penalties for schools that break the law.
Surely, many argue, it would not be beyond the ability of Korea's globally acknowledged expertise in information technology to devise a system where information could be shared between immigration, labor, pension and health authorities.
"Currently we do not share information with other agencies such as tax, pension or national health," said Lee Hyang-sook of the Daejeon Immigration Office. "If they request information on a particular individual we can supply it, but there is no automatic mechanism for sharing information."
She said a number of countries around the world do have advanced inter-agency cooperation, and acknowledged that such a system here would obviously prevent abuses by hagwon and other employers.
The wording and tone of the banners used in the campaign has been a source of widespread offense and has raised the hackles of many long-term foreign residents of Daejeon.
"The wording of the banner has racial overtones and from a Western point of view it is prejudicial - and it's a human rights thing. It goes beyond just identifying the illegality of private tutoring," Richard Slezak of the Daejeon-based Foreign Language Educators Association told The Korea Herald.
A significant number of Canadians work in Daejeon as teachers, and Slezak, who is a warden for the Canadian Embassy, said he consulted with diplomatic officers in Seoul regarding the banner campaign.
Jess Dutton, a counselor with the embassy told The Korea Herald, "The embassy is aware of the issue and we are monitoring the situation and working with our wardens in the area." He said there were no immediate plans to make an official statement.
Slezak, who has worked in Daejeon for more than a decade, said he is disappointed that many of the people he has grown to know and like would actually give the city such a poor reputation.
"A lot of people prefer Daejeon to Seoul or other big cities. Better air, better cost of living, it's a friendly town. This is the kind of town that really grows on you - there are perhaps 1,500 foreign teachers here in hagwon and universities, and we all know each other.
"We get involved in many activities as a group - it's a really good lifestyle here, and then for the hagwon association to put this damper on our parade, well, it's not cool. They are only shooting themselves in the foot. It's a real shame."
Slezak told The Korea Herald he is consulting with colleagues and local lawyers to determine the feasibility of launching legal action against the hagwon association and participating schools.
Initially, the hagwon association claimed they were actually acting on behalf of the local authorities, such as immigration, in an effort to crack down on illegal private classes, and complaints about the nature of the campaign should be directed to them and not the DFA.
A spokesman for the DFA, who identified himself only as Charles, originally told The Korea Herald that immigration initiated the campaign, and the association was only helping. But this assertion was contradicted by the immigration Department, which said the idea came from the DFA and they only gave their approval.
The head of Yang-G ELS confirmed the immigration statement: "(The campaign) was a decision we made during our regular meeting. We had been discussing this for about two months before we decided to go ahead with it and put up the banners."
Charles' earlier assertion that he was simply a "middleman" and had no direct links to the DFA were also later discredited when The Korea Herald discovered his true identity and that he is in fact the director of an English-language hagwon in Daejeon.
Charles made the mistake of putting his English name and mobile telephone number on the banners, and was deluged with calls from outraged teachers. He fielded the complaints, and initial inquiries from The Korea Herald, by saying he was a volunteer worker and was not directly linked to the hagwon sector.
Shocked at the unprecedented attention the banner campaign has generated and the possibility of a lawsuit, hagwon directors in the DFA are attempting to shift blame and responsibility, and the unfortunate Charles has positioned himself beautifully to take on the new role of scapegoat.

Link to The Korea Herald story:
https://www.koreaherald.co.kr/SITE/data/html_dir/2007/06/07/200706070069.asp

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