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[Editorial] Expel workout failed enterprisers

Posted July. 21, 2000 10:06,   


Management insolvency and moral laxity for some workout enterprisers have reached their peak. Even President Kim Dae-Jung pointed out that workout businesses refused to spin off their affiliates because their creditor banks tolerated them.

The Miju Group, which started workout last April, has achieved only some 10 percent of its target due to a lagging self-rescue effort that involves the sell-off of its subordinate companies. Nevertheless, group chairman Park Sang-Hee assumed parliamentary membership while holding the chairmanship of the central committee of the of the Small-Medium Industries Cooperative Association. To our dismay, the workout enterprise owner has been assigned to the Political Affairs Committee of the National Assembly, which oversees the Financial Supervisory Commission that in turn supervises the workout businesses.

The Miju Group, in a sense, has survived by increasing the people`s financial burden, since its creditor, Seoul Bank, injected 4.5 trillion won of public funds into the enterprise. Despite the group`s dire plight, the chairman has made a boastful offer to donate 2 billion won to a certain university, which should be frowned upon.

Woobang Group chairman Lee Soon-Mok, who applied for an additional 15,510 million loan, still holds chairmanship of the Korea Housing Cooperative Association. And Kohap Group chairman Chung Chi-Hyuk, despite contributing his own assets to recapitalizing his ailing enterprise, is assuming the chairmanship of the Inter-Korean Economic Cooperation Committee of the Federation of Korean Industries. The group owners, who hold only 2 to 3 percent of his group shares due to capital reduction, are provided by his company with confidential funds, sedans and offices. and still exercise managerial and personnel power. This unsavory practice is partially ascribed to the supervisory agencies` negligence of their proper duties.

The same problems exist with the companies whose owners quit and where new managers were put in place. The managerial body of the Dong-A Construction Group amassed a large slush fund contributed by its subsidiary companies and spent it on politicking during the elections, but the management supervisors dispatched by the creditor bank had no idea this was taking place, indicating that they neglected their duties.

In this way, as owners of workout businesses cling to their posts and newly introduced managers from outside are lax, some former owners who quit their companies are trying to return to them, apparently unhappy with their seemingly premature retirement.

The purpose of the workout system is to rehabilitate cash-strapped businesses with the provision of cooperative loans, capital conversion, reduction of bank interest, and other means. The Taegu Department, affiliated with Anam Semiconductor Co., has revived itself through this workout system, through selling-off its affiliates and managerial renovation. Therefore, the problem is not with the workout system itself, but with the enterprisers` old-fashioned views and the government`s negligence of its supervisory functions.

If the workout enterprises are not able to pay off their debts within the prescribed period and normalize their management through spinning off their

subsidiary companies and cost reduction measures, their failures will lead to insolvency of the creditor banks and ultimately to an additional financial burden on the people as a whole.

The Financial Supervisory Commission has set a plan to finish its probes of the 44 workout enterprises this year and will hold delinquent owners and managers responsible for any transgressions. At any rate, the government will have to take stringent action against managerial supervisors and business managers who are responsible for causing problems on the basis of the

results of the ongoing investigations. At the same time, the former owners must be expelled from the office and forbidden from taking chairmanships of related cooperative associations or their affiliated organizations.