The Problem of Remittances and Financial Literacy for Immigrants

ACORN International GSU Team: (left to right) Jennifer Phillips, Fred Brooks, Charlene Davison, Alice Lee, Brittany Burgess, Tim Zdencanovic

Atlanta   I got lucky and five students, now calling themselves the ACORN International Team at Georgia State University, picked as their major project at the GSU School of Social Work helping us develop information and support for our Remittance Justice Campaign.   We assembled at a Nepalese restaurant in an Atlanta neighborhood that is at the epicenter of immigrant and refugee resettlement so that we could compare notes and make out plans for the kind of deep and extensive look at remittance experience and costs in a US-city, similar to what we have done in Toronto and Mexico City previously during this campaign.

Going around the table, the reports were encouraging.   The survey instrument had taken shape.  We were making progress securing translators for the target communities among Burmese, Ethiopians, and Latinos.  Several churches and agencies where the students were doing field placements had already been enlisted to help and were showing some interest and enthusiasm in what we would find.  The team was committed to doing blogs and social networking to communicate and get the word out.  The goals of 100 completed surveys per team member could find us with 500 pieces of rich data to work into a report for ACORN International to release in Atlanta, Social Policy, and wider to engage more discussion about the need to change public policy.  We were on our way.

The one roadblock that kept cropping up in some of the reports was a repeated expression of disbelief, if not outright warning, to the team from the “gatekeepers” that immigrants would refuse to share information about the real costs of remittances with us.  One outfit offered to circulate it for us so that maybe they could extend more legitimacy to our questions about costs and transfer methods.  Another well intentioned soul suggested we not ask specifically what the cost of remittances were or the amount sent but give “ranges” between high and low dollar amounts.

As well meaning as the comments might have been, I was amazed at how clearly they and these notions were actually building the infrastructure for financial exploitation and illiteracy for “new” Americans that would inevitably and predictably lead them now predatory and perilous paths.  By avoiding real questions, discussion and engagement on practice and costs, immigrants and refugees would be relying on “word of mouth” recommendations about “best practices” rather than real data on the least expensive and most secure remittance streams and most reputable, reliable money transfer organizations (MTOs).  The gatekeepers were also assuming and projecting cultural values about the appropriateness of discussions about money that might be more common here, than elsewhere, and, more importantly, were making predictions not premised on field experiences.  They were projecting their own lack of comfort around financial issues onto the students before our team was in the field and could evaluate the credibility of their advice.  All of this was also in the face of information from the team already that those groups receiving resettlement grants from US-based sources almost invariably sent most of the money home immediately to their families left behind, and were also clearly not getting advice on the cheapest ways to make such remittances.  It also goes without saying that the team was not even asking for people’s names on the survey, unless volunteered.

In truth our experience in Canada, Mexico, and around the world where we have collected the data for the Remittance Justice Campaign is the opposite.  People can hardly wait to talk about their experiences in making remittances, especially since the dollars are dear and few can believe how much the middle men are raking off.  The Pew Trust and InterAmerican Bank have also contracted for such surveys repeatedly through “cold calls” and usual methodology without any difficulty.

Why would community organizers and total strangers have found that immigrants are anxious to share remittance experiences, yet some gate keeping agencies been resistant to real discussions with their “clients” about such critical issues?  The answer may lie right there:  seeing them as clients, rather than people, like the rest of us, trying to navigate confusing financial systems with limited information, and desperate for help.  New immigrants and refugees deserve better frankly, and in this area they deserve and have earned justice not continued exploitation.

Convicting Corporate Criminals: British Petroleum and Walmart

U.S. Attorney General Eric Holder at Press Conference on BP Criminal Charges

New Orleans    US-Attorney General Eric Holder was in New Orleans yesterday to announce a $4.5 billion settlement with British Petroleum on criminal charges.  It isn’t easy in this country to convict corporations of criminality, all evidence to the contrary, so having them plead out to their obvious culpability in the environmental and human tragedy caused by their criminal negligence off the Louisiana Gulf Coast was a small step forward.  Holder also indicated that he is charging several managers with criminal negligence as well, but the company is fighting those charges.  We still have the civil cases pending which will no doubt render huge penalties.  BP has $30 billion or more set aside in expectations of their conviction, proving how much money oil companies have to burn these days.

As interesting to me was Walmart’s front page efforts to spin away their acknowledged criminality in bribing officials in Mexico.  They have finally admitted that their criminal like culture includes China, India, and Brazil.   From the first day Mexico hit the press, I had the dead certain likelihood that their bribery was not limited to that country, but almost surely engulfed India and China as well.  Such activity is patently in violation of the Foreign Corrupt Practices Act (FCPA), so why have criminal charges and penalties not be levied against Walmart yet?  This spin is clearly the company’s effort to dance away from danger by pretending to be turning over every rock to uncover their own misdeeds.

A lot of their spin has to do with the money they are spending on their internal “investigation.”  The company in an SEC filing for its shareholders claims to have spent $35 million on a “compliance” program and “$99 million on the current investigation.”  This is chump change for Walmart obviously, but it is clearly not simply a bit of transparency theater for the stockholders as much as it is a message to a strapped US government that the cost of an appropriate external investigation of their criminality would be daunting to the feds.  The Justice Department hardly has the capacity to peel off $100 million and many millions more to root out Walmart corrupt overseas, so Walmart is preening to mask its criminal culpability and intimidate other investigations.

There are huge consequences to their activity that they have not yet disclosed to their shareholders.  In India these corruption issues have led to a call for investigations into their Indian corporate practices which could exclude them from participation in the proposed relaxation of foreign direct investment in multi-brand retail.  Dharmendra Kumar who directs the India FDI Watch Campaign supported since its beginning by ACORN International has reported this week that all of these matters are currently moving to a vote in the Indian Parliament which still could bring down the government.

There is no word of whether or not Walmart has followed British Petroleum in setting aside billions for its potential assignment of criminality liabilities for violations of the FCPA.  They need to do so.  There are also key executives, including former CEO Lee Scott, that have already lawyered up, but need to see Attorney General Holder moving to file criminal charges for their impunity in the face of the law and in pursuit of their predatory profits.

Saving Money, Lives, and Mexico by Raising the White Flag in the Drug War

March in Mexico of individuals who had family members who were murdered or disappeared in the drug war

New Orleans    Sitting in the jury pool in Orleans Parish Criminal Court and watching each case tainted by a touch with drugs and the huge waste of police and court resources and being force to think for hours at a time about exactly what I thought about the huge divisions and lack of security in the community over public safety and its agents, it was hard not to feel that locally the 30-year War on Drugs had been our worse defeat since Vietnam and much more deadly.  Visiting Mexico for the ACORN International leadership and staff meeting, the impact of the drug violence was everywhere and dominated the political discussion that culminated in what seems to be the return of the PRI to power after a dozen years in no small measure due to the loss of 50,000 lives to drug violence in the failing militarization of the drug war conducted by the now departing President Calderon of the conservative PAN party.  A recent shooting of police by either other police or narcotrafficos dressed as police happened in one of the International terminals where we had gathered to meet our organizers from Honduras and Canada.

Eduardo Porter, a financial columnist for the New York Times, made a devastating argument economic argument on this score including these key facts:

  • Retail price of one gram of cocaine now is $177.26 according to the DEA.  The price represents a 74% decrease over 30 years, meaning in class economic supply-demand terms that the supply has increased.
  • A gram of cocaine can be purchased on the streets for 16% less today than 10 years ago despite an expenditure of 20-25 billion a year by the United States alone to “fight” the drug war.
  • Early experimental drug use for high school seniors has risen from 30% 20 years ago to roughly 40% now.  Seems they it’s “just say yes” to drugs now.
  • Porter cites several polls to buttress his argument that the real purpose of the expenditure is political, and that is the only way the billions are providing a return, since less than one-third of the American people even care to think the drug problem is that important (where are the other 2/3rds living?!?) and only 31% think we are “winning” and they may actually be on drugs.
  • 1.64 million people were arrested in the USA in 2010 for drug violations.  80% of the arrests were simply for possession.  Almost 50% were for “often-tiny” amounts of marijuana.  20% of the inmates in state prisons are in for drugs and 50% in federal prisons are doing drug time.  In NYC each arrest alone costs close to $2000 to process and they arrest 85,000 people per year.

This is all crazy expensive and has made minority and lower income urban communities (and some meth crazed rural areas) mini-war zones as well.  Add the 55,000 Mexican dead over the last 6 years, tens of thousands claimed by drug violence in Central America, and the murder rate for minority youth which has claimed a generation of young men and the body count is devastating.

from the National Post

The drug war has produced a river of blood that no amount of money can continue to conceal, and the money.  The money is not spent in the USA on rehab, needle exchanges, and other acknowledgments of reality which also means higher health care costs, higher HIV rates, and more devastation in families and communities.

Porter cites a economist at Harvard named Jeffrey Miron who estimates that legalization could save $65 billion per year.  A RAND Corporation study suggests that legalization of only marijuana in only California would take away 20% of the $6.5 billion income Mexican cartels strip from the USA.   Presidents of Latin American countries, including many where ACORN International organizes, have asked the USA to consider “market solutions” to the drug crisis, which is a euphemism for legalization, particularly of marijuana.

Porter tries to find someone to make the case for a continued pursuit of the failed “war on drugs” strategy and can only muster one generalized position from one professor who is “worried” that legalization could lead to more usage and health care costs.  Hell, we’re all worried, but that doesn’t justify continuing to pursue a ruinous strategy that is killing our cities in the USA and the whole economies of many of our Latin American neighbors.

When you are worried, you do something to relieve your concern.  We could make that list pretty quickly.  There seems to be no excuse other than political cowardice for continuing to throw good money after bad and fill our jails and city streets with the blood and bodies that are the victims of this war.  We’re all losing now.  Why not choose a winning strategy or at least a different strategy?



A Break in the Remittance Campaign Comes from the Somalian Hawala Crisis!

Hawala in Minneapolis, St. Paul

New Orleans   ACORN International’s Remittance Justice Campaign has begun to pick up steam.  A private member’s bill to cap rates has now been introduced in Queen’s Park for the Ontario provincial government.  Similar efforts are being pushed in British Columbia and later this year legislators have committed to introducing measures in Honduras and perhaps even Mexico once the election fever settles down today.   The hardest nut to crack has been in the United States, but we may have a break from an unexpected quarter:  32,000 Somalians in Minnesota.

The failed state of Somalia in the wake of its civil war sent refugees around the world, including the United States, and particularly the Twin Cities area.  There is currently no banking system in Somalia which makes transmitting remittances from relatives in the USA back to desperate relatives in Somalia very difficult.  Somalians have been using the largely informal hawala system which is a critical piece of the money transfer system especially in India (where it is illegal), other south Asian countries, and some parts of Africa.  According to an excellent story by Miriam Jordan and Erica E. Phillips in the Wall Street Journal, about $100 million is moving through federally licensed US-based Somali hawalas.  ACORN International had done a report recommending the expansion of hawalas because their cost is usually less than 1.5% rather than the more predatory pricing of Western Union, MoneyGram, and of course the banks.  Most money transfer organizations (MTOs) are licensed at the state and provincial level, so it was a revelation to us to find that hawalas were under federal jurisdiction and licensing in the USA, contrary to our earlier research.

The crisis is that mainline US-based banks in the wake of the banking regulations implemented post-9/11 ostensibly in the name of homeland security, have increasingly been refusing to handle transactions for hawalas.   “U.S. banks are permitted to deal with hawals, typically small businesses that have anti-money laundering, reporting, and record keeping obligations in the U.S.”  This is unique since many hawalas have operated for centuries on the basis of trust and personal handling with no records.  U.S. banks are bridling now because of concerns that the money might be funneled to terrorist groups.  Families are demonstrating, especially in Minnesota because their families are “starving” without being able to receive the remittances.

Representative Keith Ellison (D-Minnesota) is drafting legislation to deal with this crisis.  Representative Carolyn Maloney (D-NY) has attempted to deal with this issue in the past.   Scott Rembrandt of the US Department of Treasury’s Office of Terrorist Financing and Financial Crimes has argued that the hawalas should not be shunned, which raises hopes as well.  According to the Journal he says that the Treasury “doesn’t assume money transmitters present a uniform or unacceptably high risk of money laundering, terrorist financing or sanctions violations.”  Such a position would seem to point, not surprisingly, at the larger banks like Wells Fargo and U.S. Bancorp as being overly cautious and therefore squeezing Somalians and others desperate for reasonable relief for high costs and for workable solutions.

Deborah Bortner, a regulator in Washington state, correctly notes that without a system that works legally to transmit money, “it’s going to go underground,” which is exactly what is happening with many hawalas around the world and precisely one of the arguments that ACORN International has made about the need for regulations in this area.   We can only hope that this crisis will finally force all of our voices to be heard and allow progress for immigrants families and migrant workers who are desperate for remittance justice.

Ad from Western Union steering folks away from hawalas

Ontario Bill a Big Step Forward for Remittance Justice Campaign

ACORN members Amadeo Flores, left, regularly sends money to his elderly parents in Spain, while Rohan Jagroo has been wiring money to friends and family in Trinidad for 17 years.

New Orleans     After a year of stirring the pot in one country after another about the crime of predatory price gouging of migrant and immigrant workers through ACORN International’s Remittance Justice Campaign and our multiple reports exposing these abuses, ACORN Canada has led the way to the next step having secured a sponsor for legislation that would finally put a hard cap on money transfer organizations and the rates they charge.   A member’s bill is being introduced today in Toronto at Queen’s Park in the Provincial Parliament by NDP’s rising star, MPP Jagmeet Singh (Bramalea-Gore-Malton).

Simply put, the text of the bill indicates that it would amend the Consumer Protection Act in Ontario to require that MTO’s like Western Union, MoneyGram, and a host of others cannot exceed 5% in charges for remittances.  A Toronto Star article yesterday pictured one of the ACORN members, Amadeo Flores, originally from Spain, and Rohan Jagroo from Trinidad, and detailed the thousands of dollars that they were fleeced over many years of wiring money to friends and families in their home countries.  In their cases the charges to these established routes were more than 10%, though ACORN International studies have shown that the full package usually exceeds 20%.

Nonetheless the G-8, including Canada, the United States, United Kingdom, and others, joined by the World Bank, have called for a cap on the cost of such transfers of only 5% and that is what the Ontario legislation is demanding.  Many banks have even higher rates than some of the MTO’s but those are national banking matters subject to federal legislation in countries like Canada and the United States, so we will continue pushing on those fronts.

Similar legislation is planned for British Columbia and later in the year for Honduras.  ACORN Italy has this on its agenda for later in the year as well.  With research support from the Clinton School of Public Service in Little Rock, we are deepening our survey, research, and policy initiative currently in Mexico with the help of a full-time summer researcher on the ground with ACORN Mexico in la Neza right now.

What’s at stake?  Billions that could dwarf the collective foreign aid budgets of all the developed countries back to the developing world.

This campaign is entering a new and important stage and building momentum for huge changes that could make an amazing difference to lower income families and their communities around the world.


Who Wants to Bet that Walmart’s Bribery Policy Was Not in Play in India and China?

New Orleans  It still doesn’t mean that Walmart won’t walk away scot-free from its $24 million Mexican bribery scandal (and who knows how much more might have been spent in other countries like India?), but at least some directors may lose their soft perches and have their hands pried loose from the rubberstamps they have been holding for CEOs and others gone wild and rogue, given news that the California State Teachers’ Retirement System has sued in behalf of the company itself against the directors.  CalSTRS is one of the USA’s largest pension funds and owns a whooping $313 million in Walmart shares, which is nothing to sniff about.

These so-called “derivative” suits are often dog piles with other folks, big and small jumping in.  Hopefully, this means CalPERS, the other gargantuan state workers pension fund will be close behind along with other state funds that have large stakes in Walmart.  The business press has noted how rare it is for funds this size not to simply negotiate directly, and argue they must be mad as wet hens.  Damn, I hope so, because I certainly am.

The corporate culture over there has been bad, and now we are finding out how evil they really rolled.  We still have no indication that the “investigation” of their business practices goes past Mexico, but it needs to be company-wide.  At the same time Lee Scott was presiding over the company and allowing Eduardo Castro-Wright to run a criminal enterprise in Latin America, Michael Duke, the current CEO, was heading the whole international operations and flying in and out of India and China on a regular and routine basis in 2005 trying to break the opposition to modifying foreign direct investment in India and expand radically in China.

We now know that corruption at top government levels in both countries was epidemic.  Bribes of almost a billion dollars were paid to get cheap access to telecom licenses in India.  China is now in the middle of a huge political struggle that revolves around financial corruption and self-enrichment of top party and governmental officials and their families which is shaking the very foundations of the government.

Walmart’s communication spin since the Mexican bribes were surfaced by the Times has been essentially, “that’s the way they do business there.”  Someone please convince me that they are not laying the groundwork for the same “defense” in India and China, where, truth to tell, bribery and corruption are not also commonplace, as they are in much of the world.  To me this proves the corporate culture and expansion program is founded on bribery and corruption.  It is not other countries that are corrupting Walmart, but Walmart that is embracing the worst and most destructive practices if finds there.  Where a sewer runs, Walmart swims in splashing!

I’m taking bets that Walmart is as dirty, if not dirtier, in India and China.  Government officials in both countries need to start looking hard there.  ACORN International’s India FDI Watch Campaign will be calling on our parliamentary allies in India to launch such investigations there.  Shareholders, pension funds, and reporters here in the USA need to also join the call for more intensive, outside investigations of Walmart’s corrupt corporate culture and international operations immediately.