[2013. 11. 19] USFK earning millions in interest off defense funds, bank data show (by Hankyoreh newspaper 2013.11.19)
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[A member of Solidarity for Peace and Reunification of Korea holds a one-person demonstration against the cost-sharing agreement for maintaining U.S. troops stationed in South Korea in front of the Foreign Ministry, Seoul on July 22.]
Defense Ministry maintaining that no interest has been earned by the US from S. Korean
contribution to defense costs
By Kim Kyu-won, staff reporterUnited States Forces Korea (USFK) earned over 56.6 billion won (US million) in interest during 2006 and 2007 from the balance of the South Korean government’s sharing to defense costs, bank account information shows.Total USFK interest earnings for the five years for which balance and interest figures were available are believed to amount to over 162.7 billion won (US4 million). The numbers contradict South Korean government claims that no interest is being earned off of USFK-administrated share of defense costs.According to an announcement by the group Solidarity for Peace and Reunification of Korea (SPRK) on Nov. 18, a certificate of deposit transaction details from USFK’s Community Bank and the Seoul branch of Bank of America, obtained by courts as part of a state lawsuit on the eighth defense cost sharing agreement, showed USFK earning 20.4 billion won (US.3 million) in interest in 2006, and 36.2 billion won (US.3 million) in 2007.The calculations reflect the tax rate of 12% according to the South Korea-US Income Tax Convention. USFK was required to pay 2.4 billion won (US.3 million) in interest in 2006, and 4.3 billion won (US.1 million) in 2007, but failed to do so.The funds deposited by USFK are believed to represent the balance of military construction costs from the 2006 and 2007 defense contributions. Based on the interest earnings to Community Bank from the Bank of America and the interest rate for the two years, the total amounts invested in certificates of deposits (CDs) by the USFK are thought be around 455.3 billion won (US1.4 million) in 2006 and 701.5 trillion won (US4.7 million) in 2007 - or around half the cumulative military construction totals of 1,010.9 billion won (US8 million) for 2006 and 1,308.5 billion won (UStpf=board/list&board_code=11.24 billion) for 2007.As of October 2008, the cumulative construction costs stood at 1,572.7 billion won (UStpf=board/list&board_code=11.49 billion), with a balance of 1,119.3 billion won (UStpf=board/list&board_code=11.06 billion). The construction total rose to 2,069.8 billion won (UStpf=board/list&board_code=11.96 billion) in 2012 and 2,116.0 billion won (US.0 billion) in 2013, while the balance dropped to 761.1 billion won (US1.2 million) in 2012 and 738.0 billion won (US9.3 million) in 2013 as the funding was put to use.If USFK did put the balances into CDs as it did in 2006 and 2007, it would have earned an estimated 61.4 billion won (US.2 million) in interest for 2008, 25.1 billion won (US.8 million) in 2012, and 19.6 billion won (US.6 million) in 2013. The total for 2006 through 2008, where construction cost balance data are available, plus estimates for 2012 and 2013 comes out to around 162.7 billion won (US4.2 million) in interest earnings for USFK over the five years. And if the other seven years since 2002 - for which no construction cost balance data are available - are factored in, estimates as high as 200-300 billion won (US0-284 million) are possible.Meanwhile, the South Korean government has insisted that the USFK-administered defense contribution produces no interest earnings.In response to questioning from Democratic Party lawmaker Shim Jae-kwon last October, the Ministry of National Defense said it had been “confirmed four times that the USFK administers [the balance] at the Community Bank and that no interest is generated.”Yu Young-jae, head of SPRK’s USFK issues team, said the South Korean government should administer the military construction costs balance in its defense contribution.“They also need to reclaim the hundreds of billions of won in interest that USFK has earned to date and put it back into the state coffers,” Yu added.(by Hankyoreh newspaper 2013.11.19)