[Reader-list] Migration, Money Flow and Western Union

[Ananth S]

November 22, 2007
Border Crossings
Western Union Empire Moves Migrant Cash Home
By JASON DePARLE

http://www.nytimes.com/2007/11/22/world/22western.html? 
_r=1&hp=&oref=slogin&pagewanted=all

WASHINGTON, Nov. 21 — To glimpse how migration is changing the world,  
consider Western Union, a fixture of American lore that went bankrupt  
selling telegrams at the dawn of the Internet age but now earns  
nearly $1 billion a year helping poor migrants across the globe send  
money home.

Migration is so central to Western Union that forecasts of border  
movements drive the company's stock. Its researchers outpace the  
Census Bureau in tracking migrant locations. Long synonymous with  
Morse code, the company now advertises in Tagalog and Twi and runs  
promotions for holidays as obscure as Phagwa and Fiji Day. Its  
executives hail migrants as "heroes" and once tried to oust a  
congressman because of his push for tougher immigration laws.

"Global migration is the cornerstone of how we've grown," said  
Christina A. Gold, Western Union's chief executive.

With five times as many locations worldwide as McDonald's, Starbucks,  
Burger King and Wal-Mart combined, Western Union is the lone behemoth  
among hundreds of money transfer companies. Little noticed by the  
public and seldom studied by scholars, these businesses form the  
infrastructure of global migration, a force remaking economics,  
politics and cultures across the world.

Last year migrants from poor countries sent home $300 billion, nearly  
three times the world's foreign aid budgets combined.

Western Union's dominance of the industry casts it in a host of  
unlikely new roles: as a force in development economics, a player in  
American immigration debates and a target of contrasting attacks.

Its unparalleled reach gives millions of migrants a safe way to  
transmit money, and may even increase the amounts sent. But critics  
have long complained about its fees, which can run from about 4  
percent to 20 percent or more. And the company's lobbying for  
immigrant-friendly laws has raised the ire of people who say it  
profits from, or even promotes, illegal immigration.

Western Union tracks migrants so closely that it has made pitches to  
illegal immigrants just released from detention camps. Its agent in  
Panama offered customers legal aid to keep them from being deported.

After settling a damaging lawsuit that accused it of hiding large  
fees, Western Union set out a few years ago to recast its image,  
portraying itself as the migrants' trusted friend. It has spent more  
than $1 billion on marketing over the past four years, selectively  
cut prices and charged into American politics, donating to  
immigrants' rights groups and advocating a path to legalization for  
illegal immigrants.

While some migrant groups still complain of predatory pricing, the  
company has won unlikely praise.

"Western Union has become a company that values and protects its  
customers," said Matthew J. Piers, the Chicago lawyer who sued the  
company over its fees. "Nobody was more surprised at the change than  
me, because I was Western Union critic Numero Uno."

Western Union's zealous pursuit of migrants can be seen in a  
government office in Manila, where a half million Filipinos a year  
wait to have their papers processed before leaving for overseas jobs.  
Everything in the waiting room is labeled "Western Union": the backs  
of the chairs, the tops of the desks, the bottom of the queue sign  
and the front of the menu in the adjacent cafeteria. The walls are  
even painted Western Union yellow.

The Philippines requires each outbound migrant to attend a  
predeparture seminar. Western Union paid to offer migrants  
instructions on sending money home. "We tell them about the services  
of Western Union," said Steve Peregrino, the marketing director in  
the Philippines, "with the basic idea of seeking out Western Union  
when they go abroad." In and around the waiting room, reviews are  
positive.

Ernald Vincent Mendoza, a restaurant supervisor in Saudi Arabia,  
dismissed his wife's argument that the company's pricing hurt the  
poor. Though banks are cheaper, the money can take a week to arrive,  
he said, while Western Union sends it instantly. "If they have good  
quality and service, you have to pay for that," he said.

Emmanuel Ellorian, a waiter in Dubai, said Western Union agents came  
to the hotel where he worked and processed the transfers there. "If  
any of the Filipino clubs have an event," he said, "one of the  
sponsors is Western Union."

A Telegraph Giant Evolves

Western Union's founders set out in 1851 to build the first telegraph  
giant. A decade later, they had linked the coasts, a feat celebrated  
in a Zane Grey novel and a Hollywood film, both called "Western  
Union." Airmail and faxes left telegrams obsolete, and the company  
went bankrupt in 1992.

It emerged two years later with a focus on its money transfer service  
and was acquired in 1995 by the Colorado corporation First Data.  
Flush times followed. Fueled by the surge in migration, international  
money transfers were growing by 20 percent a year.

In 1998, Mr. Piers sued the company, alleging that Western Union and  
a rival, MoneyGram, deceived customers with advertisements like "Send  
$300 to Mexico for $15," since the companies typically made much more  
(in this case an additional $25) by setting foreign exchange rates to  
their advantage. While denying any wrongdoing, the companies paid  
millions to settle the case.

Western Union appeared "money oriented" and "cold," warned an  
internal marketing document that called for a more empathetic image.  
The goal, as one plan put it, was to capture a "share of mind" and a  
"share of heart" to preserve a "share of wallet."

Having once stressed efficiency ("the fastest way to send money"),  
Western Union now emphasizes the devotion the money represents. One  
poster pairs a Filipino nurse in London with her daughter back home  
in cap and gown, making Western Union an implicit partner in the  
family's achievements. "Sending so much more than money" is a common  
tag line.

The company sponsors hundreds of ethnic festivals, concerts and  
sporting events, from cricket matches for Indians in Dubai to sack  
races for Jamaicans in Queens. Last year it paid a Filipino pop star,  
Jim Paredes, to record a Tagalog song urging migrants to send money  
home. It paid the producers of a Bollywood film, "Namastey London,"  
for a scene in which a Western Union wire transfer helps rescue the  
heroine.

The Western Union agent in Panama played the rescuer's role himself.  
With many of his customers illegal immigrants — mostly from Colombia  
— he put three lawyers on retainer and started a radio show. The  
lawyers answered callers' questions and scheduled free appointments  
to get them legalized.

"Every time an immigrant is forced outside the country, we lose a  
potential customer," said the agent, Jaime Lacayo, who provided the  
legal services for two years and still runs the radio show. "We have  
participated in many marriages of foreigners marrying Panamanian  
ladies, because that is the best way to legalize your status."

A Global Operation

Western Union boasts of 320,000 locations worldwide. Many agents are  
large organizations, like the Chinese postal system or grocery store  
chains. (About 60 percent of Western Union's person-to-person  
transfers occur wholly outside the United States.) But companies also  
battle block by block for trusted local figures.

Among them is Michael Lee, 35, who owns an electronics store called  
World Top Communications in New York's Chinatown. Sharing a building  
with a "lupus and tumor consultant," on a block of East Broadway that  
smells of dried shrimp, he was told by Western Union to expect a few  
hundred transactions a month.

He now does 100,000 a year, he said. Mr. Lee, who earns about $2.50  
per transaction, is so enthusiastic he persuaded his landlord to  
paint the building yellow, and the company donated $16,000 worth of  
paint.

Many of his customers are in the country illegally. Mr. Lee, who was  
once an illegal immigrant, said his business fell by about 40 percent  
last spring after a series of nationwide immigration raids. "A lot of  
people don't have green cards — they are afraid," he said.

Salo Eduardo Levy, Western Union's Mexico director, echoed that theme  
at a September meeting of industry executives. "We have customers  
calling agents before they go: 'Is it safe? Is La Migra around?'"

A 2006 survey by the Inter-American Development Bank found that  
illegal immigrants made up 41 percent of the Latin Americans in the  
United States who used money transfer companies.

Western Union says it does not know what share of its customers are  
illegal immigrants, but at times it has made pitches directly to  
them. As Central Americans surged across the Texas border in 1999, an  
overflowing federal detention center bused them to a homeless shelter  
in Brownsville, the Ozanam Center. Western Union sponsored a lunch  
there, dispensing T-shirts, bandannas and fliers in Spanish with the  
company's toll-free telephone number.

Western Union also held marketing events around the same time for  
people deported from the United States to Honduras and El Salvador.

"They would arrive in a special holding area, and we would have an  
agent in there — a young lady in tight jeans, tight T-shirt" to  
promote Western Union products, said a former company official who  
spoke only on the condition of anonymity. "We knew that within a week  
they would be back on their way to the U.S."

Fred Niehaus, a company vice president, said, "I can tell you that's  
something the company would not do now."

Immigration and Politics

Western Union's views on immigration have brought conflicts with Tom  
Tancredo, the Republican congressman who represents the Denver suburb  
where the company has its headquarters, Three years ago, when Mr.  
Tancredo, a fierce critic of illegal immigration, proposed taxing the  
money that migrants send, First Data formed a political action  
committee to drive him from office.

"We're tired of his antics," Mr. Niehaus told The Rocky Mountain  
News. "We're opting for change."

After winning re-election, Mr. Tancredo attacked Western Union for co- 
sponsoring a Spanish guide that he said promoted illegal immigration.  
The guide said that schools and clinics would not check migrants'  
papers and advised them to "always carry the name and number of an  
attorney."

Mr. Tancredo, who is running for president, said the company's  
activities occupied "a gray area" between aggressive marketing and  
"aiding and abetting illegal immigration."

"Western Union wants to encourage illegal immigration in order to  
expand the number of people in their market," he said. "Believe me,  
if I were president, I would ask the Justice Department to look into  
it."

In 2004, Charles T. Fote, then First Data's chairman, gave a speech  
calling for "comprehensive" reform, a term used by supporters of  
legalization plans for illegal immigrants.

The company sponsored public forums to promote the idea and donated  
$100,000 to a group unsuccessfully fighting Proposition 200 in  
Arizona, which requires proof of citizenship from people seeking to  
vote or collect certain public benefits.

As the debate moved to Washington, Western Union gave money to many  
groups supporting legalization plans. The United States Chamber of  
Commerce received "in the high six figures," a Chamber official said,  
while an Illinois group used some Western Union money to bring  
busloads of immigrants to Capitol Hill. When a bipartisan Senate bill  
emerged last spring, company officials flew to Washington to lobby  
directly, urging Senator Ken Salazar, a Colorado Democrat, to support  
the measure. He did, though it ultimately failed.

"Most companies are afraid to speak up," said Frank Sharry, executive  
director of the National Immigration Forum, which has received  
$40,000 from Western Union in the past three years. "When it got hot,  
they stayed with it."

But proponents of stricter border controls see commerce, not courage,  
at play. "Western Union has decided that its business model depends  
on a continuing flow of illegal immigrants," said Mark Krikorian,  
director of the Center for Immigration Studies, which advocates low  
levels of immigration.

Western Union's latest battle is with the Arizona attorney general,  
Terry Goddard, who in 2004 began seizing money transfers into Arizona  
that he suspected were meant to pay human smugglers. The effort led  
to hundreds of arrests but also froze legitimate transfers and scared  
away customers, costing Western Union millions.

After two years of cooperation, the company resisted in court last  
year when Mr. Goddard, a Democrat, expanded his request to cover  
transfers from across the United States to Sonora, Mexico. In  
September, an Arizona court ruled for Western Union.

The company's resistance won plaudits from migrant groups but left  
Mr. Goddard angry. The company is "protecting an illegal enterprise  
in human smuggling," he said. "It's outrageous."

The company spun off from First Data a year ago, and it has an  
estimated global market share of 14 percent, versus 3 percent for its  
closest competitor, MoneyGram. Though Western Union has responded to  
increased competition by cutting its charges, it typically remains  
the most expensive service.

An Oakland group, the Transnational Institute for Grassroots Research  
and Action, began a boycott campaign in September, demanding that  
Western Union lower its prices and increase its corporate giving. But  
it has gained little traction, in part because of the company's  
recent courtship of migrant groups.

One critic who now gives Western Union grudging credit is Donald F.  
Terry, an official at the Inter-American Development Bank. He has  
spent years trying to get more migrants to use banks, so they could  
establish financial histories and qualify for loans.

But banks have not fully welcomed migrants, he said, while Western  
Union and other money transfer companies have more locations, better  
hours and agents who know their customers' language and culture.

"You could say they were ripping people off, or you could also say  
they're providing a service that poor people desperately needed and  
were willing to pay for," Mr. Terry said. "Any consumer company in  
the world would like to have the customer loyalty they have. They're  
doing something right."

Margot Williams contributed research.