The "Keh" to Korean prosperity

Running from the hot stove to the buffet table, Boyoung Kim helps her mother prepare a large meal for a gathering of close friends and family. This month her parents will come into some cash, around $20,000, but it's nothing new or unfamiliar. Her parents usually receive large sums of money every few years. The first time they received the collection was to help out her dad's landscaping business, the next few times to help pay tuition and bills. This time they just want it.

As her mother scrambles hastily around the kitchen panicking about the meat overcooking or the wine not chilling quickly enough, Kim answers the doorbell. On her way down she complains to her sisters who are sitting in front of the big-screen television; she always ends up doing all the work.

As the guests trickle in one by one, Kim sits them down and offers a cool drink. The hesitation the company has at first, comparable to entering a party early, dissipates as the laughter picks up, which begins a discussion about business and children. Her mother grins, and her mood rises as the guests compliment her wonderful dinner display.

One reason many Korean immigrants have "climbed" the ladder of economic success-or at least gotten a leg up-is through the formation of mutual financial support systems called keh. A fairly common practice in the Korean community, this arrangement is a carry-over from the old country that remains a tradition for immigrants.

An average group of 10 to 20 family members and trusted friends form an informal financial support group. Every month, depending on financial need and the size of the group, each member will contribute anywhere from $500 to $5,000 to the pot and take turns receiving and the funds. Depending upon the group's leader, or keh-ju, the members then sign a financial agreement as you would for a bank loan, and often show proof of property or have a cosigner for reference, to stabilize a position in the club.

"Keh is for helping people out," says Hyesook Chong, a restaurant owner in the East Bay who applies her loans to help pay business bills and employees. "It is a team effort."

Keh is common for the 40,000 plus Koreans living in the San Francisco Bay Area and for the 25 percent who own small businesses, says Inho Kim of the San Francisco Korean Chamber of Commerce. "It's about Korean people doing what they used to do."

Banks are a hassle for Chong. Many Korean immigrants aren't fluent in English and have trouble filling out the necessary paperwork. Aside from the time you put in attempting to receive a loan, you are not guaranteed one.

This system makes room for Koreans to bypass banks whose veiled discrimination and endless paperwork offer no reward-or loan. It allows many Koreans who do not speak fluent English a chance to avoid the corporate runaround and utilize keh as a source of tax-free and interest-free loans.

The history of kehs mark their beginning centuries back when people came together to help one another in times of need. Where keh is usually financial, hundreds of years ago they also used it to pool farm workers to help one another during the harvest so they wouldn't have to pay for extra labor, says Hong Nam of the Korea Times.

There is an official law in Korea to punish people who have broken kehs, either unintentionally or maliciously. While these instances are infrequent, they do happen. In the Bay Area, kehs are not officially protected by law, but victims of keh-related fraud can seek legal relief, if there's a paper trail to prove the transactions.

Chong belongs to an intimate group of 15 family members and friends. Kehs are lighthearted by nature but mean serious business. They trust each other and trust that no one will break down the group. But these days people in need of cash will start up kehs at the drop of a hat, then run off with the money.

"Keh is a very good thing to help people out," says Boyong Il Kim, a reporter for the Korea Times, "but people sometimes take advantage of the system's goodwill."

Boyoung Kim's friend was told by her mother to avoid dealing with financial matters with another male friend. His family has been in a feud with other families including her girlfriends over a large sum of money lost in a keh formed years ago when his grandmother collected her share of the pot money only to run off with it and escape to Korea, without contributing further. Her mother considers his family a disgrace and wants nothing to do with them.

Prior to 1980s, people who lost money with fraudulent keh-ju's rarely went to the police. Now they are fighting back. In a well-publicized case in 1987, 23 South Korean immigrants filed a class-action fraud suit in San Francisco Superior Court to recover over $40,000 lost in four different kehs organized by Soon Duk Cabling, former owner of an apparel shop on Mission Street. Cabling soon declared bankruptcy and the charges were dropped, but the event left its mark on the community.

Just last month, one Korean restaurant owner in Oakland was involved with two or three different kehs before she collected her share and disappeared. Her business was reported as failing and she soon closed down before anyone was aware of wrongdoing. The group is currently not pressing charges and will decide upon the fate of the group within a matter of weeks, Boyong Il Kim says.

"There are so many fake keh-ju's out there. They start many kehs at once, impressing people with fake businesses, looking rich. You have to bevery careful," Chong stresses. "You have to trust each other."

Everyone at Kim's house is full. The women move off to one side of the room while the men gather opposite them drinking and smoking cigarettes. The keh-ju and the member receiving this month's hefty pot huddle off to the other side of the room and shuffle the money over and over to make sure they calculate it right. Their hands furiously tabulate the checks and recount the cash. Kim sits next to her aunt, who's set to receive next month's collection and envisions a new car.

[ Prism Online November 1995 Homepage ]

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