JAPAN DISPUTES DISCRIMINATORY TREATMENT OF CHOSEN

S E C R E T SECTION 01 OF 04 TOKYO 003347 SIPDIS SIPDIS E.O. 12958: DECL: 07/19/2017 TAGS: EFIN JA KN PGOV PREL SUBJECT: JAPAN DISPUTES DISCRIMINATORY TREATMENT OF CHOSEN SOREN REF: TOKYO 3216 Classified By: AMBASSADOR J. THOMAS SCHIEFFER, REASONS 1.4(B),(D). ¶1. (S) Summary: The DPRK is making Japan's actions in regard to the General Association of (North) Korean Residents in Japan into a major bilateral issue, MOFA Director General Sasae told visiting EAP Assistant Secretary Hill on July 13. Sasae insisted that the actions of the Japanese government against Chosen Soren were not a result of recent Japanese government dissatisfaction with the DPRK. Instead, he asserted that the actions were the result of Japanese government attempts to recover assets from insolvent Chosen Soren-related credit unions that began years ago. DG Sasae provided A/S Hill with a copy of Japan's letter to the UN Secretary General (UNSYG) responding to the DPRK's earlier SIPDIS letter to the UNSYG on this issue (para 6). End Summary. ¶2. (S) The DPRK is making Japan's recent seizure of the headquarters building of the General Association of Korean residents in Japan ("Chosen Soren" in Japanese; "Chongryon" in Korean) into a major bilateral issue, MOFA Director General Sasae told visiting EAP Assistant Secretary Hill on July 13. The DPRK is mobilizing demonstrations by Korean residents in Japan, and has written to the United Nations, accusing Japan of oppressing Korean residents in Japan. China has told the DPRK to stop escalating the issue and to not raise it at the upcoming Six-Party Talks Heads of Delegation meeting, but Sasae is not certain that will have any effect. Sasae suspects the DPRK will try to raise this issue at the 6-Party Talks on July 18, but believes that is not an appropriate venue. ¶3. (S) Sasae provided A/S Hill with a copy of Japan's response to the DPRK's earlier letter to the UN Secretary General (UNSYG),and provided his own brief summary. Japan's letter to the UNSYG first dismisses charges by the DPRK that Japan discriminated against Chosen Soren when it raided a subsidiary organization on April 25. According to Japan's letter, the search was conducted under a warrant, in connection with the suspected abduction of two siblings by DPRK agents in June 1974. ¶4. (S) The letter then takes up the petition by the Resolution Collection Corporation (RCC) to foreclose on the headquarters of Chosen Soren. The foreclosure is described as a nondiscriminatory action to collect against 16 bankrupt DPRK-related credit unions formerly located in Japan. The institutions declared bankruptcy between 1997 and 2001, in part because of a large number of non-performing loans granted to Chosen Soren. Japan pumped approximately USD 11 billion into those financial institutions over the course of several years, according to the letter, but was ultimately unsuccessful in staving off bankruptcy. The RCC, which eventually purchased the non-performing loans, is now trying to collect by auctioning off assets of the 16 credit unions, which include the Chosen Soren headquarters. ¶5. (S) Chosen Soren acknowledges owing the RCC approximately USD 530 million, but wants to settle for just USD 40 million and have all remaining debt erased. The Japanese government expects to earn approximately USD 70 million by auctioning the Chosen Soren headquarters, and will still be able to pursue additional funds as they become available. The RCC initiated legal proceedings against Chosen Soren in November ¶2005. The judgment was handed down in June 2007, and Chosen Soren did not appeal. The remainder of the letter discusses government efforts to eliminate discrimination against Korean residents in Japan. ¶6. (SBU) The full text of Japan Permanent Representative Oshima's letter follows: Begin Text. TOKYO 00003347 002 OF 004 (Provisional) Excellency, I am writing with reference to the letter dated 6 July 2007 from the Permanent Representative of the Democratic People's Republic of Korea addressed to Your Excellency, which gravely distorts the facts of the events that are its subject. I would like to express regret that such unilateral and groundless allegations should have been circulated. It should hardly be necessary to point out that fundamental human rights are guaranteed under the Japanese Constitution, and therefore there can be no discrimination against the General Association of Korean Residents in Japan (Chongryon) or any other organization in any civil or criminal procedure. I would like to offer the following response to the letter of the Permanent Representative of the DPRK. On 25 April 2007, Japanese police searched a subsidiary organization of the Chongryon located at the Korean Press Hall. Before the search was conducted, Japanese police obtained a search warrant from the appropriate court for collecting evidence related to the suspected abduction of two siblings by DPRK agents in June 1974. Japanese police searched the building legally and properly and took no illegal action. They engaged in no violence or threats. The headquarters of several subsidiary organization of Chongryon were located in the building that was searched, and it turned out that the person concerned for the suspected abduction was the member of those subsidiary organizations. Japanese policy have been taking strict measures against illegal acts on the basis of law and solid evidence, regardless of whether there was any connection with the DPRK or Chongryon. The police will continue to take strict measures against illegal acts, and actions of the policy will not be affected by the international situation surrounding the DPRK. The Government of Japan is aware that there were a number of reports in the Japanese press on the aforementioned case. However, freedom of speech is guaranteed by the Constitution of Japan, and it is not possible that the Government of Japan "set in motion" the release of those reports. Although the DPRK has condemned the petition by the Resolution and Collection Corporation (RCC),for the building and land owned by the Chongryon as "a wanton infringement upon the sovereignty of the Democratic People's Republic of Korea," such a stance is absolutely unreasonable. The DPRK-affiliated credit unions in Japan are domestic financial institutions established under Japanese law for the purpose of providing banking services to Korean residents in Japan. Between 1997 and 2001, 16 of those credit unions declared bankruptcy due to large numbers of non-performing loans that were made, inter-alia, to the Chongryon. At the time, after the collapse of Japan's "Bubble Economy," numerous financial institutions in Japan went bankrupt, and the DPRK-affiliated credit unions were unable to avoid the same fate. In order to protect bona fide depositors of those credit unions, Japanese government disbursed more than 1.3 trillion yen (approximately 11 billion dollars) in government funds and fully protected the assets of those depositors, as it did for all other bankrupt domestic financial institutions, on a non-discriminatory basis. The non-performing assets of the bankrupt DPRK-affiliated credit unions were purchased by the RCC using government funds. The RCC has been making its best effort to recover the enormous amount of government funds that we injected to the DPRK-affiliated credit unions. The RCC's debt-collection activities with regards to the Chongryon have been conducted as a part of the recovery efforts described above intended to minimize the burden on the people of Japan, and have been TOKYO 00003347 003 OF 004 undertaken in exactly the same manner as those pertaining to any other bankrupt domestic financial institution. Clearly, the RCC's collection activities with regard to the non-performing loans of the bankrupt DPRK-affiliated credit unions have not differed in any regards from its efforts directed at those of other bankrupt financial institutions. Among the non-performing assets of the bankrupt DPRK-affiliated credit unions, there were "loans to the Chongryon." The RCC requested the Chongryon to acknowledge the debt incurred by the loan contracts, and the total amount of the debt formally acknowledged by the Chongryon amounted to approximately 63 billion yen (approximately 530 million dollars). In November 2005, the FCC initiated a lawsuit against the Chongryon seeking repayment of the loans in the Tokyo District Court in the context of its debt recovery activities. In June 2007, the Court handed down a judgment calling for repayment of the approximately 63 billion yen loan. The Chongryon did not appeal this judgment to a higher court. Up to the time that the judgment was delivered, the RCC continued consultations with the Chongryon regarding payment of the debts, but the Chongryon indicated its intention to pay only a very small part of the debt. The RCC had no choice but to file a petition to auction the building and land belonging to the Chongryon with the Court in accordance with the required legal procedures on 25 June 2007. It is a regular practice for the RCC to file a petition to auction off real estate as a means of collecting non-performing loans which the RCC purchases from other bankrupt financial institutions in Japan. Indeed, the RCC filed approximately as much as 1,800 petitions to auction off real estate in the fiscal year of 2006. The petition to auction the building and land owned by the Chongryon was for the purpose of collecting debt, and it was never conducted with any political purpose with the Chongryon in mind, or with diplomatic intent of any kind. The RCC will continue to conduct its collection activities strictly based on the relevant laws, and on the basis of fairness and justice. The statement of the DPRK on this subject, therefore, constitutes a groundless insult against the perfectly legitimate activities of the RCC. Needless to say, the fault lies with the Chongryon, who has not repaid the outstanding debt. The Government of Japan has taken measures to enable Korean residents in Japan to lead stable lives, including granted them the appropriate legal status to remain in Japan and improving conditions that affect their lives. The Constitution of Japan guarantees equality before the law without discrimination of any kind. Based on this principle, Japan has been striving to realize a society free from all forms of discrimination, including racial and ethnic discrimination, in the sixty years since the end of World War II. For example, the Japanese government does not urge foreign residents in Japan to convert their names to Japanese names. That is also the case for residents in Japan applying for Japanese citizenship. In fact, the Japanese government is actively informing applicants that they may freely determine their names after naturalization. The Constitution of Japan also stipulates that all people including Korean residents in Japan shall have the right to receive equal education, and that any foreign child may attend a public elementary or junior high school for free, just as a Japanese student does, if the student so wishes. With regard to entering a college or university, all students including Korean school graduates who meet the standards set by the individual college or university are eligible. the Japanese government has acceded to the International Convention on the Elimination of All Forms of Racial Discrimination and other major international human rights instruments and conventions, and has been making sincere efforts for their implementation. The Japanese government proactively engages in activities TOKYO 00003347 004 OF 004 aimed at the elimination of racial discrimination in a variety of United Nations fora. With reference to the efforts by Japan to achieve Security Council reform, the position and aspirations of Japan with regards to this matter have been reiterated many times in the United Nations and other fora and are well known. Japan stands ready to contribute actively and positively to international peace and security at any time. I should be grateful if you would have the present letter circulated as a document of the General Assembly, under agenda items 60, 65, 67 and 111 of the sixty-first session. Please accept, Excellency, the renewed assurances of my highest consideration. Kenzo Oshima Permanent Representative of Japan to the United Nations End Text. ¶7. (U) This message has been cleared by A/S Hill. SCHIEFFER