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Citigroup Put Under NGO Observation

The Korea Times

January 23, 2006

By Na Jeong-ju

A civic group Monday began a drive to watch profit-making activities of Citigroup in South Korea, saying the U.S. banking group has become a public enemy by involving in dubious dealings and anti-labor activities against the public interest.

Spec Watch Korea, a Seoul-based non-profit organization, said it will join a global campaign led by civic groups in the United States to reveal what it called Citigroup's speculative activities in the financial sector. To that end, it will collaborate with the unions of WiniaMando, a refrigerator maker, and MagnaChip Semiconductor, a subcontractor for Hynix Semiconductor, the country's second largest memory chipmaker. CVC, an investment arm of Citigroup, owns WiniaMando and half of the manufacturing lines of MagnaChip's plant in Chongju, North Chungchong Province.

Citigroup has violated agreements with the unions to conduct unilateral restructuring. This shows Citigroup is only interested in making profits and doesn't care about the lives of its employees, Spec Watch Korea said during a press conference in front of the headquarters of Citibank Korea in downtown Seoul.

In one case, CVC has begun outsourcing some functions of WiniaMando as part of a restructuring since taking over the entire stake of the company in November last year, the group said in a statement.

The group alleged that Citigroup is seeking to maximize profits through massive lay-offs. In many occasions, Citigroup is reluctant to invest in productive sectors, let alone to make more jobs or maintain business for a long time, it said.

Citigroup officials said the group has no plan to respond to the claims.

Citigroup faces mounting challenges for its business in South Korea as its Korean banking unit, Citibank Korea, is under the scrutiny of financial regulators for alleged unfair dealings. It is also struggling with the union of KorAm Bank, which was acquired by Citibank in 2004, over what the union calls discriminatory policies against former KorAm employees. Citibank Korea was launched in November in 2004 in a merger between Citibank and KorAm, then the country's seventh-largest lender.

Citibank has delayed a plan to merge the banking systems of Citibank and KorAm due to the labor dispute, causing concern and inconvenience to its customers.

On Dec. 19 last year, the Financial Supervisory Service said it suspects the bank earned some 1.3 billion won in unfair interest gains from the sales of its housing collateral loans.

In July, the bank's labor union filed a complaint with the prosecution against the bank and a vice president, claiming that the management reaped about 7.4 billion won in irregular gains while conducting its mortgage loan businesses over the past few years. The company denied the claim first, but later admitted its wrongdoings and decided to return a total of 1.28 billion won to 15,000 customers who paid higher fixed interest rates on their mortgage loans than official rates.

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