TOKYO, Jan. 10 (UPI) — Japan announced Friday it will tighten its monitoring of a Tokyo-based bank that caters largely to Korean nationals living in the country, in an apparent bid to crackdown on the flow of funds from Japan to North Korea.
The Hana Credit Union was created last year after five credit unions that catered to Korean nationals and Japanese of Korean descent collapsed.
The Japanese government pumped more than $3.3 billion last year to keep Hana afloat because the bankrupt credit unions collectively lost billions of dollars as a result of illegal remittances to North Korea through them.
The credit unions were: Chogin Kanto Credit Union, Chogin Niigata Credit Union, Chogin Chiba Credit Union, Chogin Tokyo Credit Union and Chogin Nagano Credit Union. Chogin is the Japanese abbreviation for a Korean bank.
Critics say North Korean sympathizers in the country used false names and financed illegal activities through their accounts in the credit unions.
“The government stresses that the Chogin credit unions are domestic financial institutions … but one of the reasons for their collapse was because they provided illegal funding and loans to North Korea,” said Yukio Edano, an influential member of the opposition Democratic Party.
Some Japanese news organizations estimate there are between 56,000 and 90,000 Koreans, mostly from the north of the divided peninsula, actively involved in supporting North Korean leader Kim Jong Il’s regime. Some of them are alleged to have been actively involved in facilitating the abduction of Japanese nationals to North Korea.
In light of heightened tensions between North Korea and Japan, there had been considerable opposition to providing public funding to Hana, and the latest announcement the government will tighten its grip on the credit union is widely expected to fan the flames of opposition still further.
“As we continue to grapple with the abduction issue, (continued government support for Hana Credit Union) is something that cannot be taken for granted, especially from the perspective of the Japanese public,” Edano said.
Given that Japan’s Financial Services Agency rarely makes efforts to increase surveillance of one financial institution in particular, many financial analysts say Hana Credit Union could potentially play a pivotal role in propping up Kim’s government.
Hana’s primary role is to provide financial services to Korean nationals and Korean businesses operating in Japan. Koreans can open bank accounts and obtain loans from Japanese banks, but the Korean credit unions provided them with more favorable terms and had Korean staff.
The Korean population in Japan is relatively small, but is the single largest foreign national group and ethnic minority in the country. Koreans have complained of being discriminated by the Japanese government and the general public.
The government argued it had to treat the Korean credit unions just like other Japanese banks, regardless of what illegal activities it had been involved in. Many innocent depositors, as well as businesses which used the unions as their principal bank, would be badly hurt if the unions collapsed.
Critics say the government measure to protect Korean depositors is a political move to preserve Korean support for Japan. Ties between the two countries have been historically tense. Several Koreans were forcibly brought over to Japan as laborers during World War II when Japan occupied the undivided Korean peninsula.
Many Koreans chose to stay on in Japan after the war, but until Japan resumed diplomatic ties with North Korea in 1997, those originally from the north of the peninsula were caught in the middle. They lived in Japan and often had family and relatives in North Korea, which was out of bounds for Japanese nationals.
The Japanese government’s Friday decision has been criticized.
“Public funds should not be given readily,” Edano said.
The FSA said Friday it will scrutinize Hana Credit Union’s activities by inspecting its transactions on a daily basis, which it said is a condition for Hana to continue receiving government funding. Deposits in bank accounts held under fictitious names will be forwarded to the Resolution and Collection Corp., a government-funded body that buys bad loans from banks and attempts to recoup some of their value.
The government decision came the day North Korea announced it had withdrawn from the Nuclear Non-Proliferation Treaty. Pyongyang has alarmed the international community by announcing it will continue pursuing nuclear weapons.
Copyright 2003 by United Press International. All rights reserved.