Greedy and immoral

Greedy and immoral

Public trust in financial industry hits rock bottom Here is one more reason Koreans should attend colleges at all cost: banks charge far higher lending rates to high-school graduates. As snobbish and despicable as this practice of credentialism in making decisions about loans is, it is but one of many diverse malpractices, ranging from the unethical to the downright illegal, used by Korea’s largest banks to squeeze their clients and maximize profits. KB Kookmin Bank, for instance, advanced loans’ maturity without obtaining consent from borrowers by falsifying expiry dates. The nation’s largest bank says its forgery of documents was to ``save clients’ trouble.” The No. 2 Shinhan Bank, which gave four times higher credit points to degree holders than to high-school graduates, excuses itself by offering that it was a ``new but short-lived experiment” in deciding borrowers’ credit grades. Financial consumers have long wondered, and complained, why the banks don’t lower lending rates even if the Bank of Korea reduces its benchmark interest rate. As it turned out, the branch heads of banks arbitrarily raised the spread on borrowers with poor credit records to keep the central bank’s move from denting their bottom lines. Finally, the nation’s nine major banks and 10 brokerage houses are suspected of colluding to rig the rates on certificates of deposit (CDs), the basis for a variety of loans, in the Korean version of the ``Libor con.” These licensed fraudsters and modern-day Shylocks must have completely forgotten why people call them financial ``institutions” instead of companies and use the expression of ``extending credit” instead of lending money. Public duty and credibility are two pillars of the financial industry, but can no longer be seen in Korea’s financial sector today, in which the only ``P-word” they are concerned about is profitability. This also explains why financial regulators have been looking the other way while the banks, brokerages and underwriters were making all these irregularities. Little wonder then that it was neither the Financial Services Commission nor the Financial Supervisory Service but the Board of Audit and Inspection that ferreted out the domestic industry’s unlawful and unethical business practices. These regulating agencies, which live on fees paid by these financial service firms, didn’t mind who’s scalping whom as long as they remain healthy, not morally but financially. At a time when economists at home and abroad warn against the danger of Korea’s snowballing household debts, the bankers and regulators alike were busy increasing the burden on debtors while lining their pockets. And by the year’s end, they will be celebrating another year of record revenue by throwing big bonus parties. The greed and immorality of the financial industry seems to have become a universal phenomenon. But that should be no reason for law enforcement authorities here to sit idle. Irresponsible risk taking and the undue pursuit of bonuses are one thing, rigging interest rates is quite another. The financial authorities must get to the bottom of the CD rate-manipulation scandal and mete out due justice. It’s long past time for the nation to also come up with legislation to make it easier for people to file class actions and drastically enhance the role of an agency to protect financial consumers. Reregulation, not deregulation, is the keyword now.

One more apology

One more apology

How many Koreans would sympathize with Lee? After dragging his feet, President Lee Myung-bak apologized Tuesday for corruption scandals implicating his relatives and key aides. In his sixth ― and second concerning irregularities of behavior by the people around him ― public apology, President Lee used far stronger expressions of self-reflection than before, and bowed deeply not once but twice. But that was all. All other elements, such as the content of Lee’s speech, the way he one-sidedly delivered the four-minute address, and the suspicion about reasons for the hurriedly-arranged press meeting, kept the public from feeling sympathy for their leader. Lee coundn’t put off making the apology any more if he had wanted to. Only 18 percent of Koreans say the President is doing his job well, and some in the ruling Saenuri Party are seeking to force the unpopular chief executive to leave the party to minimize negative effects on the Dec. 19 presidential election. Lee didn’t receive even a single courtesy applause during his parliamentary speech last month. Still, one can’t help but wonder why he arranged the much-delayed event to coincide with the TV debate among his party’s presidential contenders. Only one news-only cable channel could broadcast it live. Most Cheong Wa Dae correspondents and even many of Lee’s own aides were reportedly notified of the news conference with little more than an hour to go. Certainly, it was hardly a proud moment but the President’s behavior was not that of one showing genuine repentance. A far more serious problem was the wording of the speech. He described the illegal receipt of bribes as ``unsavory acts” committed by his aides and relatives. A more apt term for such activities is crimes. The President, who used to boast his administration was ``morally perfect,” neither cited specific aides or relatives and what they have done wrong in detail nor explained why he failed to prevent its ``perfect moral collapse.” Lee said all these development ``crushed his heart,” insinuating the President himself was also a victim, albeit of his own mismanagement of the people around him. But it was hardly the expression to be used by a leader who crushed the hearts of so many of the voters who had elected him. We can try to understand Lee’s omission of scandals the President himself is involved in, such as the abortive property purchase for building his post-retirement home and his government employees’ unlawful surveillance of privatize citizens critical of the chief executive, as major parties have agreed to conduct parliamentary hearings. But never to be understood is the President’s failure to make the pledge to have law enforcement authorities conduct thorough investigations into all these scandals he was apologizing for. Given the Korean prosecution’s blind loyalty to ``live power,” no one can rule out the possibility of controversy behind the slipshod probes and undeserving leniency. In the long run, the imperial presidential system itself should change to become a more decentralized one, and the prosecution needs to be free from the President’s control. More urgent now, however, is for President Lee to instruct thorough probes leaving no sanctuary. Otherwise, no one can say Tuesday’s apology will be Lee’s last, or that Lee will be the last president to apologize to his people.

Apple profit jumps to $8.8 billion, but below forecasts

People queue up to purchase the New iPad at an Apple Store in Shanghai, China, Friday. (Xinhua-Yonhap News)

SAN FRANCISCO (AFP) ― Apple on Tuesday reported a rise in its quarterly profit to $8.8 billion on hot iPad sales but missed lofty Wall Street expectations due, in part, to iPhone lovers waiting for a rumored new model.

The profit in the fiscal quarter to June was up 20.5 percent from a year earlier, but short of analyst forecasts. Revenues rose 22.5 percent to $35 billion, also below expectations of more than $37 billion.

In a conference call, Apple chief financial officer Peter Oppenheimer said that revenue in the quarter was hampered by weak sales in Europe, a strengthened US dollar, and rumor of a new iPhone poised for release.

“Our weekly iPhone sales continue to be impacted by rumors and speculation about new products,” Oppenheimer said.

Apple factored a “product transition” in September into financial guidance for the current quarter, fueling wild talk of a next-generation iPhone on the horizon.

“We try very hard to keep our product roadmap secret and confidential,” Apple chief Tim Cook said during the call.

“I’m not going to put any energy into stopping people from speculating,” he added. “I’m glad that people want the next thing; I’m super happy about it.”

With Apple’s rare miss of analyst forecasts, shares slid more than five percent in after-hours trade to $567.80.

Apple said it was pleased with the results, including sales of 17 million iPads, a year-over-year rise of 84 percent.

Cook said that none of the iPad competitors fielded in the past year has gained “any level of traction at all.”

“I still think that most customers feel they are not looking for a tablet, they are looking for an iPad,” Cook said.

While iPad sales sizzled, the introduction of a model with a relatively low price tag of $399 in the line trimmed how much profit Apple made.

Apple also did not release the new iPad in mainland China until Friday, after resolving a trademark dispute there over ownership of the tablet’s name.

“We remain confident about our plans and very excited about our opportunities in China,” Cook said.

The company also sold 26 million iPhones in the quarter, up 28 percent, and four million Macs, a two percent unit increase despite overall computer industry sales inching down a percent in the quarter.

Apple highlighted its recent revamp of the MacBook line and the release on Wednesday of a new Mountain Lion operating system for the Apple computers.

A next-generation iOS operating system for Apple mobile gadgets will be released by the end of the year and the Cupertino, California-based company has “amazing new products” on the way, Cook said.

Some analysts were upbeat, saying that Apple could get a lift if rumors prove true and a new-generation iPhone 5 smartphone debuts later this year.

Reports have said Apple may also release a smaller version of its iPad tablet, which dominates the market.

Peter Misek at Jefferies & Co. said the disappointing results came from a “pre-iPhone 5 inventory adjustment” and advised buying the company’s stock.

Barclays Capital analyst Ben Reitzes was similarly optimistic about Apple.

“We still believe that Apple is perhaps the most disruptive company in tech and is poised to gain more share in smartphones, tablets and PCs, but we will be watching the developing situation closely,” he said in a note to clients.

Apple saw a 177 percent jump, year over year, in sales of its Apple TV device for routing entertainment content from the Internet to home screens, according to Cook.

“It’s still at a level where we would call it a hobby but we continue to pull strings to see where it takes us,” Cook said. “We don’t keep around products that we don’t believe in.”

Apple declared a cash dividend of $2.65 per share of common stock and announced that in November it will commence a three-year plan to buy back $10 billion in stock.

The earnings news comes with Apple battling in the courts over patents, mainly with South Korean archrival Samsung.

A trial is set to begin Monday in a case in which Apple accused Samsung of infringing on copyrights by copying certain features of the iPad and iPhone in rival devices powered by Google-backed Android software.

Apple is seeking $2.5 billion in the case in a federal court in California.

Apple and Samsung are fighting patent battles in more than half a dozen countries.

Each company accuses the other of infringing on patented technology in smartphones or tablets.

Japan posts record trade deficit in first half

TOKYO (AFP) ― Japan Wednesday posted a record trade deficit of about $37.3 billion in the first half of the year as soaring energy costs weighed on the world’s third-largest economy and exports to key markets slumped.

The finance ministry said the country saw a shortfall of about 2.9 trillion yen ($37.3 billion) in the first six months of 2012.

The huge trade deficit stemmed largely from energy costs, with the resource-poor nation seeing a nearly 50 percent jump in purchases of liquefied natural gas and a 16 percent increase in crude oil shipments, the data showed.

Japan has struggled to meet its energy needs and turned to pricey fossil fuel alternatives after its nuclear reactors were switched off in the wake of last year’s atomic crisis at the Fukushima Daiichi plant.

Two reactors have since been restarted.

“Japan’s trade balance continues to show a trend of weak exports and extreme sensitivity to import prices, such as those of crude oil,” said RBS Securities chief Japan economist Junko Nishioka.

“The crisis in Europe is posing a growing risk to Japan’s economic recovery scenario.”

In the first half, Japan’s imports rose 7.4 percent on-year, while exports grew just 1.5 percent.

Japan’s trade surplus with the European Union during the first half was at a record low, according to the ministry.

Europe is a major market for Japanese products and Tokyo has repeatedly warned that the continent’s economic woes would directly impact Japan’s recovery.

“While exports to Europe and China were already weak, we now see that export (growth) to the U.S. may also be declining,” Hideki Matsumura, economist at Japan Research Institute, told Dow Jones Newswires.

“I believe Japan will post another annual trade deficit. We’re already in the red looking at the last six months, and it’s too late to regain our losses.”

The month of June alone offered a somewhat brighter picture with Japan posting a better-than-expected trade surplus of 61.7 billion yen instead of the market forecast for a 135 billion yen deficit, the official data showed.

It was the first surplus in four months, with the exports of vehicles and auto parts rising, the data showed.

But some analysts said even the June data was less than encouraging.

“The trade deficit in the first half came from a larger scale of imports, but in June we are seeing something more fundamentally worrying,” said Taro Saito, a senior economist at NLI Research Institute.

“Exports are weakening, in particular with the United States,” he said.

“The trade surplus is only temporary. The economy will start logging a deficit from next month.”

In June, exports to the United States, namely cars and auto parts, rose 15 percent from a year ago, well down from previous months.

“The U.S. was the only driver for growth in the global economy, but it is now losing steam,” Saito said.

North Korea confirms Kim is married

North Korea ended weeks of speculation Wednesday by confirming that the mystery woman beside young leader Kim Jong Un at recent public events is indeed his wife, “comrade Ri Sol Ju.”

The news was buried in a state TV report about Kim's tour of a new amusement park, delivered casually by a newscaster who gave no details about Ri, including how long she and Kim have been married.

This photo released on July 25, 2012 by KCNA, State media of the Democratic People's Republic of Korea (DPRK), shows Kim Jong Un, accompanied by his wife Ri Sol Ju, inspects an amusement park in Pyongyang, capital of DPRK. (Yonhap News)

(Yonhap News)

(Yonhap News)

Kim, who inherited rule of North Korea from his father, Kim Jong Il, seven months ago, has been seen with Ri at a concert, a kindergarten visit and other events recently, but state media did not mention her before now, fueling widespread speculation about her identity.

Analysts said the announcement was a calculated move by Kim and his advisers as they forge the image of the 20-something leader who took power following the December death of Kim Jong Il.

“Kim Jong Un is breaking with his father's secrecy-shrouded leadership,” said Lim Eul-chul, a North Korea expert at South Korea's Kyungnam University. “The revelation of his wife is a sign that Kim wants to show a more open leadership.”

The couple's public appearances and Wednesday's brief marriage announcement are a striking contrast to Kim Jong Il's style. His 17-year rule was known for its secrecy, and his companions and children were rarely discussed. That includes Kim Jong Un, who was virtually unknown outside North Korea before his formal introduction to the world in late 2010.

North Korean media showed Kim and Ri smiling broadly, Kim leaning slightly toward her, as they inspected the newly opened Rungna People's Pleasure Ground.

The new leader's methods are considered more similar to his grandfather, North Korea founder Kim Il Sung, who was often shown alongside his wife, Kim Jong Suk, and with children in his arms.

Ahn Chan-il, a political scientist at the World Institute for North Korea Studies in South Korea, said the marriage revelation suggests Kim is inching toward “more Western-style” leadership; it also helps ordinary North Koreans feel that their new ruler is an average guy, not an eccentric.

There have been other changes during Kim Jong Un's rule, including his promotion of younger officials and, most recently, his surprise dismissal of former military chief Ri Yong Ho, once seen as a key mentor during Kim's rise to power.

Daniel Pinkston, a Seoul-based analyst with the International Crisis Group, played down the possibility that recent signs of Western influence in North Korea mean real reform is coming soon.

Still, he said that Kim Jong Un's decision to publicize the woman's presence shows a leadership quality distinct from his guarded father. Marriage, Pinkston said, would ease worries among Kim's people and the much older officials serving under him “about the youth question.”

South Koreans have closely followed the bits and pieces North Korea has released about Kim Jong Un and his companion, including their attendance at a concert where Mickey Mouse and other Disney characters performed, at a memorial for Kim Il Sung and at inspections of various North Korean sites.

The reports on those earlier events never identified her, though there was speculation that she was North Korea's first lady because of her poised demeanor and her habit of standing near Kim and apart from other officials.

The speculation about Kim Jong Un's private life has coincided with high tension on the Korean Peninsula following a North Korean long-range rocket launch in April and repeated threats by Pyongyang to attack the South.

A push by the United States and its allies for North Korea to abandon its nuclear weapons program is stalled. North Korea, meanwhile, struggles to feed its people. A recent U.N. report said two-thirds of its 24 million people face chronic food shortages, and access to clean water, regular electricity and medicine is still remote for most of those living in the underdeveloped countryside. A U.S.-based rights group also estimates tens of thousands of prisoners remain held in Soviet-style penal camps. (AP)