No More Gift Certificate Insurance?

It was revealed that the Seoul Guarantee Insurance Company (SGIC), which stood security for gift certificate issuers, selected companies for printing and disposing gift certificates instead of the Korea Game Development Institute (KGDI).

The SGIC fell under suspicion of presenting a false reason while it returned its business to select companies for the KGDI.

On August 30, the Financial Supervisory Service (FSS) gave a direction to SGIC to stop selling gift certificate insurance for the prevention of further possible illegal acts in the circulation process of gift certificates.

Since last July 14, SGIC has managed and selected printing and disposing companies on behalf of KGDI for a year.

SGIC said it took the business in response to KGDI’s request for managing the selection process because of KGDI’s manpower shortage. SGID mentioned it did not receive any commission from KGDI.

However, experts say it is exceptional that a guarantee insurance company does business as a proxy without any rewards, and furthermore, takes over the business that has nothing to do with its own work.

There is also criticism pointing out some problems of SGIC in the process of selecting printing and disposing companies.

SGIC selected 18 companies until May 17 in this year since it had picked five companies including JDC tech for gift certificate printing on August 4, 2005.

KGDI, however, took back the business of choosing printing and disposing companies on this July 14, and canceled the appointment of the printing company Secutech and other three disposing companies such as Shredit Service and Shredfast Korea.

KGDI explained that they were withdrawn because they have some of the missing documents to be submitted and poor business outcome.

SGIC sent an official letter to KGDI that requests KGDI to take back the authority to select, manage and supervise companies of printing and disposing gift certificates this February.

The official letter also includes the remarks, “We cannot take this business any more because FSS pointed out the selecting work is not suitable for SGIC.”

According to our report coverage, however, FFS did not give any advice on this matter.

SGIC explained about this, saying, “We gave an excuse because KGDI did not want to take the task back.”

sanhkim@donga.com jinhup@donga.com