[Editorial] Public Funds Are Recklessly Leaking out

The Board of Audit and Inspection of Korea (BAI) successfully found the concealed money in domestic and foreign countries by the former owners of nonviable companies that have been sustained by government-raised public funds. It was reported that the amount of money concealed or diverted to the foreign countries by the former owners of about 10 nonviable companies is worth of 500 billion won (4 million US dollar).

The Korea Deposit Insurance Corporation (KDIC) announced early this month that it had found the former owner of Daewoo Kim Woo-Jung`s assets amounting to billions of won. However, the BAI`s findings were unknown to the KDIC. If the BAI could have found such huge concealed assets during its 7-month investigation, it is questionable as to what the KDIC has been doing.

It was reported that the BAI has been cooperated by the National Tax Service, the Korea Customs Service, and banks during its investigation. The KDIC said that it, unlike the BAI, was difficult to have a wide-range help from the government institutions. We wonder what the Ministry of Finance and Economy, which is in charge of the KDIC investigation, has been doing.

If the concealment of assets by the owners is a big hole in which public funds leak out, the moral hazard of the employees of the KDIC is a small hole. According to the inspection result, those who were in charge of insolvent finance management, who are employees of the KDIC, did not sell the corporate golf membership, but played golf.

Among the concealed assets found by the BAI, there are unrecoverable assets. If the KDIC had found them earlier, some of them could have been recovered. Unrecoverable assets among more than 100 trillion public funds are to become people`s burden.

The outlook is not optimistic as to whether the government can successfully complete the structural adjustment of finance and companies only with currently established funds. If the government argues to establish another public fund while it has poorly managed the public funds, then, people will not understand. The government should chase the immoral owners, who bankrupted companies while doing business with bank loans and diverted money, to recover the concealed money. The government should reestablish the distorted business culture not to discourage good-willed people who run the business in the midst of difficult condition.

With the special inspection of the BAI, the government should show stronger willingness to trace and recover the concealed assets of former owners of the nonviable companies.