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Wednesday, February 28, 2024
WASHINGTON, Apr 20 1999 (IPS) - A strike by thousands of transport and industrial workers in South Korea this week is mainly in protest at mass layoffs that form part of reforms demanded by the International Monetary Fund (IMF).
But the unions also are angry at the crackdown on the Korean labour movement by the government of former dissident Kim Dae Jung and the arrest, during the past year, of trade union leaders suspected of leading illegal strikes.
Many of those arrests took place at the bankrupt Halla Group where restructuring and down sizing has been organized by Rothschild Inc. – a Wall Street investment bank that, ironically, also is a major custodian of retirement money earned by U.S. workers.
Adding insult to injury, the biggest investor in Rothschild’s Asia Recovery Fund is the California Public Employees’ Retirement System. Better known as “Calpers”, that fund is the largest public pension fund in the United States.
It is is run by a 13-member board of trustees that includes four U.S. union officials and therein lies an interesting tale of finance, politics and strange bedfellows.
The latest industrial action in South Korea began Monday when Seoul’s 9,000 subway workers walked off the job. More than 20,000 workers from 35 unions, most of them linked to the militant Korea Confederation of Trade Unions (KCTU), then staged sympathy strikes in support of the subway workers.
On Tuesday, workers at Daewoo Heavy Industries, one of the country’s largest shipyards, downed tools to protest Daewoo’s decision to sell the yard to Mitsui of Japan as part of its plan to scale down its assets and reduce debt.
The industrial action will culminate in a mass strike scheduled for April 26 and nation-wide mass rallies on May 1.
“The campaign is aimed at forcing a change in the overall orientation of the government’s restructuring policy,” a KCTU statement said.
“The ill-advised policy – perhaps aimed at appeasing the Wall Street neo-liberal zealots – was, last year, responsible for the dismissal of some 400,000 workers and the collapse of the domestic economy as a whole.”
That’s where Halla, the largest of South Korea’s “chaebol” to go bankrupt, enters the story.
When Halla went under, Wilbur Ross, a partner at Rothschild, sensed an opportunity. After going over Halla’s finances, he agreed to extend bridge loans that eventually reached over 1 billion dollars to help the chaebol restructure its assets and debts.
One of Halla’s most prized assets is Mando Machinery, Korea’s largest manufacturer of car parts and a big supplier to General Motors, Ford and other US-based multinationals.
Last summer, Rothschild ran into fierce labor opposition when thousands of workers organized a sit-down strike to protest Mando’s plans to fire one-fourth of the workforce.
Two weeks into the occupation, Ross faxed a letter to Mando’s CEO warning the strike was making his investors nervous. “I simply made it obvious to the company that, if the unrest continued, it would make Mando financially non-viable,” Ross told IPS.
The threat worked: a few days later, 10,000 riot policemen armed with clubs, pepper fog, tear gas and water cannons stormed Mando’s seven factories and arrested 1,800 workers; later 25 leaders of Mando’s trade union went to prison.
But the lay-off were completed and the remaining Mando workers went back to their jobs.
Rothschild’s parent company, Rothschild Assets Management, handles billions of dollars of investments for several U.S. pension funds, including the Joint Industry Board of the Electrical Industry and the International Brotherhood of Electrical Workers and public retirement funds in Baltimore and the states of Maryland, New Mexico and Vermont.
Last month, the union connection deepened Calpers’ board voted unanimously to invest another 100 million dollars in Rothschild’s Asian fund, raising its stake to 150 million dollars.
The new Asian venture presents “valuable investment opportunities to purchase securities at historically low prices,” declared Charles P. Valdes, chairman of Calpers’ investment committee. He also is a member of the International Executive Board of the Service Employees International Union, one of the most aggressive unions in the U.S. labor movement.
The investment has made Calpers and – indirectly, thousands of state workers from California to Maryland – partner in an action that left scores of Korean workers in jail and hundreds without jobs.
Adding to the irony is the fact that Calpers, a recognized leader in the world of socially-responsible investing, has won strong praise from the AFL-CIO for using its clout to influence U.S. corporations that have run afoul of U.S. unions.
In this case, Calpers’ labor trustees were caught flat-footed. “We didn’t know anything about it,” said a union official when asked about the Mando incident. “But we’re concerned about this sort of thing and want to get a better handle on it.”
A consultant who advises union pension trustees said the Halla story should serve as a wake-up call for unions. “People don’t feel comfortable dealing with entities when the right arm is making profits from their pension fund and the left arm is engaged in these kinds of practices,” he said.
Rothschild’s Ross rejects those arguments.
“The purpose of our fund is to make an investment return for its beneficiaries; it’s not an ideological instrument,” he said. Ross defended the layoffs at Mando Machinery, a major supplier to GM and Ford, saying: “Korean companies have too many workers.”
For unions, Calpers’ investment in Rothschild begs the question of international labour solidarity.
What happened at Mando is repeating itself as Asian workers continue to resist pressure to slash payrolls and throughout Asia, much of the restructuring is being organized by Wall Street banks that, like Rothschild, handle billions of dollars in U.S. pension funds.
Major players in the restructuring process in Thailand, Indonesia, South Korea and Japan include such financial behemoths as Morgan Stanley Dean Witter, GE Capital, J.P. Morgan, Lehman Brothers and Goldman Sachs.
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