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No.514 2006.12.14 YMCA Seoul Citizens' Relay Station
Press Conference Held to Identify the Causes of, and Determine Measures to Deal with, the JU Scandal, a Super-scale Network Marketing Scam

Press Release No. 514, Issued on 14 Nov. 2006

YMCA Seoul Citizens' Relay Station

Press Conference Held to Identify the Causes of, and Determine Measures to Deal with, the JU Scandal, a Super-scale Network Marketing Scam

The Citizens' Relay Station of YMCA Seoul held a press conference at 11 am on December 11 (Monday) in the meeting room on the 2nd floor of the YMCA building to identify the causes of the super-scale illegal network marketing scam - the  so-called JU scandal - and explain what needs to be done in handling the scandal.

Media reports have been focused on the 350,000 victims and the vast scale of the damages, which are estimated to be in the region of 5 trillion won, and have featured attempts to track the prosecution's investigation into JU's slush funds, lobby list, and under-the-table deals with influential figures including politicians.

The prosecution's investigation tends to concentrate on searching for evidence that can prove criminal wrongdoing, so if a bank account opened under a false name is discovered in the process, it is important to trace the flow of money and to identify the person(s) involved. However, the primary focus has been on the race to unveil bank accounts opened under false identities, slush fund lists, and the names of the influential social figures and political forces that will likely be hurt by such findings. In the meantime, how serious the damages this unprecedented scam has caused to the lives of many citizens and society as a whole and how serious the current situation is seems to elude the public's attention.
The heart of the JU scandal does not, as the media reports tend to suggest, revolve around the extent of the slush funds raised by JU, or the quantity of money embezzled by chairman Ju Su-do, or the faces behind this scandal and the identity of the lobbyists.

In fact, the focus should be shifted onto the following questions: 1) How could this absurd scam ever happen in the first place? 2) Under what kind of policies and regulatory regime did this scam continue and what were the position, perception and role of the government and government officials who let this happen? 3) How could this clearly absurd fraud be allowed to spread, luring hundreds of thousands of innocent people into the scam? In other words, what are the causes, background and solutions to this problem?

Unless the background to and mechanism of this scam are clarified and those who are involved and responsible are identified, and if the laws are not urgently revised, then even if the investigation into slush funds continues and the list of names is disclosed for punishment, the same situation will be free to recur as long as the regulatory regime and social settings remain conducive to this kind of fraud. As evidenced by the fact that amid the controversy caused by the JU scandal, copy cat crimes involving quasi deposit-taking network marketing which have taken their cue from the JU case continue to victimize innocent citizens at this very moment, thus the possibility of recurrence will persist unless the regulatory regime and social settings are transformed.
In this context, we urge the parties concerned to provide a full account of how it happened and to identify the causes that can explain how this unprecedented fraud was able to expand unchecked. In addition, we also urge them to formulate and implement measures to address the problems.

* See the attached file for details of the press conference (Press Conference on the JU  Scandal.hwp)

▶ For more information, call Kim Hui-kyeong, head of the Policy Coordination Team, at 725-1400.



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