Problems with `foreign nationality Koreans`

A dead body is found in Nowon District in northern Seoul. Soon after, another dead body is found at another place, and soon a flock of dead bodies float on the Han River. The cause is hairworm mutation, according to the government. Hairworms parasitic on insects have become mutant and infected persons causing them fatal disease. This is the story of Korean movie “Deranged,” which was released in 2012. In this movie, the reversal starts when it is found that behind the disaster was a “foreigner with black hair” who committed the act to raise stock prices of a pharmaceutical firm.

With advances in internationalization, the number of foreign nationality Koreans, so-called foreigners with black hair, has increased significantly. Many children from leading people in the society are giving up Korean nationality to avoid mandatory military service. Singer Yoo Seung-joon posted a video where he apologized with his knees bent but is still banned from entering Korea. Nevertheless, 30 sons of Korea’s 26 high ranking government officials were found to have given up Korean nationality according to recent national audit results. There are also many cases of giving birth to a baby overseas to make them a foreigner. Former Korean Air executive Cho Hyun-ah who was jailed over “nut rage” gave birth to her twin sons in Hawaii, an example of an anchor baby.

Such a case is also rampant in the securities firm sector. The government has recently uncovered 206 Koreans who set up a paper company in overseas tax havens and invested in domestic stocks. They established paper companies in Luxembourg and the Cayman Islands disguising them as foreigners and invested in Korean stock markets. Foreign investors receive various benefits when going public including exception of subscription deposits. Among 40,000 foreign investors, 20 percent of them are based in tax havens, and a considerable number is estimated to be Koreans with foreign nationality.

Tax evasions via tax havens are a global problem. Global companies such as Google and Apple are criticized for setting up firms in tax havens to avoid paying corporate taxes. Governments around the world discuss joint response measures, including exchanging tax information, in international meetings, but they have yet to come up with sufficient measures. The Korean government has exposed many cases of foreign exchange transaction law violations, but imposed only soft punishments. Authorities should thoroughly examine illegal acts like stock price manipulation by using internal corporate information should.