[Editorial] We've seen enough

It is fortunate to see that ailing Hyundai Engineering and Construction (HEC) has at last found a way to resuscitate itself with rescue financing from the firms owned by HEC chairman's brothers. Many hurdles still do not readily allow us to entertain any rash hopes for HEC's early normalization. We hope that the Chung brothers' firms, which assured the nation of their efforts to rescue HEC, will strictly keep their public commitment so as to bring about HEC's early normalization. HEC's rescue plan this time must be the final one.

HEC's crisis has been one of the most unsettling factors to threaten our economy since its first default last month on the payment of its matured bills. Although the firm will soon come to the stage of its normalization, the process and efforts for its rescue in the meantime have shown us many policy failures that cannot go unnoticed here.

First, the government's role in resolving the Hyundai case has surely left a bad precedent for government intervention in business deals among private firms. It was, indeed, a foolhardy act on the part of Financial Supervisory Service chairman Lee Keun-Young to solicit Chung Mong-Koo and Chung Mong-Joon to aid their troubled brother Chung Mong-Hun. As foreign news media strongly criticized with one voice, this surely goes against the government's professed principles of reform and restructuring of the business conglomerates, since the foreign exchange crisis, to spin off their affiliates. The administration has in the end betrayed its principles by taking self-contradictory actions before the big crisis.

Take, for example, the issue of reforming the structure of business ownership. The administration once exerted enormous pressure to separate management from ownership. In the case of Hyundai conglomerates, that forced elder Chung and his two sons to renounce at one time, their rights to business management. The ugly feature here is that the government is now asking the retired, elder Chung to come to HEC's rescue.

We must draw our attention to the fact that Hyundai Motor's plummeting stock prices may reflect a market reprisal of a sort to the administration's inconsistent and double standard, which goes against the principles of market mechanism. Daewoo Motor, which defaulted on the payment of its bills at almost same time as Hyundai Motor, was forced to promptly take the process of liquidation. But, in the case of Hyundai, the government and the creditor banks have rendered exceptional measures to rescue the firm.

The general public finds this very hard to understand. What were the criteria behind the government¡¯s inconsistent stand? To be sure, no one would like to see the bankruptcy of a big cooperation in view of tens of thousands of laid-off workers and many thousands of subcontractors and parts suppliers.

What is worse yet is our inane and incompetent government and financial institutions that belatedly take measures only after business bankruptcies and their threats to the market. In this regard, we should like to know what sort of measures, if any, the government and the creditor banks have in mind to prevent beforehand Hyundai Electronics Industries' anticipated liquidity crunches next year, when the company will have to redeem bonds amounting to some 5 trillion won. Hyundai Electronics Industries' loans are double HEC's debts, but the electronics firm has much better prospects for profit making than the HEC. It would be the height of foolishness if one can come to one's sound senses only after the painful experience.

Our economy is in such a fragile state that it can be torn asunder whenever anything goes wrong even to the slightest degree. It's enough that we have had a painful experience over the Hyundai case, but there should be no more such cases. The government should be able to demonstrate its confidence and just principles in its efforts to prevent any recurrence of such crises as the Hyundai case. We urge the government to take long-term, preventive measures to check such eventualities.