Gov¡¯t will tighten corporate governance

The government will create a special body to regulate corporate behavior and unfair trading practices.

At a meeting of economic ministers, which will be presided over by Finance and Economy Minister Lee Hun-Jae, the government plans to study ways to investigate corporate irregularities through an enforcement body under the Financial Supervisory Commission. The projected joint investigation team will have participation by the Ministry of Finance and Economy, Financial Supervisory Commission, Fair Trade Commission and the National Tax Administration.

The prosecutor`s office and police department will join the team as well.

If such a proposal is finalized, the government function to supervise corporate activities and unfair trade practices will be strengthened substantially. The new body will focus on investigation of false postings on the stock market, and poor auditing and accounting practices, in addition to internal stock trading.

A high-ranking official of the government said that there was no way to prevent trouble among financial institutions without solving corporate insolvency, noting that the investigation team is designed to implement such a task.

He said that some financial institutions affiliated with chaebol groups are managing assets with favoritism and that these unfair activities have yet to be stamped out, adding that it is vital to take such a measure to create a desirable atmosphere for corporate competition.

Also, the government will introduce a prepackaged bankruptcy system through revision of corporate law, as the existing corporate workout system is to be completed at the end of this year. The government intends to shorten the period required for court receivership from the current 13 months to less than six months. It also plans to study ways of allowing merger-and-acquisition funds to inject vitality into the domestic M&A market.