KDIC to probe insolvent companies

The Korea Deposit Insurance Corp. (KDIC) said Monday that it would launch an investigation into two bankrupt companies, Daewoo Corp. and Kohap Corp., whose bankruptcies necessitated that their creditors receive public funds injections. Under a law to protect depositors and the insured, suits for damages can be filed against such companies.

KDIC officials said the investigation would look into the possibility that Kim Woo-Choong and Chang Chi-Hyeok, former chairmen of the Daewoo and Kohap Groups, respectively, were also responsible for the bankruptcies at these firms. Former and incumbent executives and employees of the two companies will be questioned on whether they used forged documents to obtain loans from the financial institutions, rigged their accounting books or embezzled funds through subsidiaries.

Those found accountable for company bankruptcies are open to lawsuits. Daewoo Corp. owes 9 trillion won to financial institutions that later received public funds. Of that amount, 1.6 trillion won was deemed to be bad loans. Kohap Corp. has 1.2 trillion won in bad loans.

Choi Young-Hae moneychoi@donga.com