Financial Supervisory Service Suspected of Making a False Report for Hyundai

It transpired that Hyundai Marine Merchant had received 2.2 trillion won (or, approximately $2 billion) in bailout aid from various banks since May of 2000, when the company started suffering from low flow of cash. Originally, the Financial Supervisory Service reported to Congress that Hyundai received an amount, which was 470 billion won less than the actual sum given to the company.

Consequently, it is being suspected why the service made a false report.

Industrial Bank submitted a report last October to the Congressional Finance and Economic Committee, and testified in the report, "Creditor banks supported Hyundai Marine Merchant with bailout packages amounting to 1.5 trillion won in 2000 and 798.1 billion won in 2001," confirmed a source yesterday.

Out of the total amount, the loan of Industrial Bank to Hyundai came to 370 billion won in 2000 and 509.7 billion won in 2001. The former was a sum of the fund for general operation (50 billion won) and the outstanding balance (320 billion won) on the loan (500 billion won) that was lent to Hyundai as a short-term loan. Industrial Bank, however, computed the total amount of the 2000-2001 bailout packages as 1.5 trillion won in a report submitted in last August to Rep. Lee Han-goo of the Grand National Party. Later, when the secret monetary aid scandal emerged to the surface, it added 490 billion won to the sum, in total amounting to 1.97 trillion won.

A Grand National Party member disclosed, "The total sum of 1.97 trillion won includes 630 billion won for acquiring CDs, 400 billion for issuance of asset-backed securities and the problematic 490 billion won.” The supervisory service included in the 490 billion the portion of the loan that Hyundai paid back from September to October of 2000 [i.e. 170 billion won].

Therefore, the difference between the sums on the service`s report and that of the bank amounts to 471.2 billion won (or, the sum of 2.2712 trillion won – 1.97 trillion won + 170 billion won).

A senior member of a creditor bank opined, "It is highly possible that some of the banks may have downsized their bailout packages to Hyundai, or may not have reported on them at all."

Do-Young Kim Chi-Young Shin nirvana1@donga.com higgledy@donga.com