7.1197 Trillion Won Worth of Public Funds Misused

It was revealed that the government excessively aided 11.4062 trillion won worth of public funds for nonviable firms due to the misjudgment.

Since it was disclosed that 5,281 executives and owners of nonviable firms possessed 6.6545 trillion won under one`s own name or illegally transferred the ownership, 1.6939 trillion won was provisionally seized. It was reported that 8 major shareholders of four nonviable firms including `J` company have smuggled up to 400 million dollar out of the country.

The Board of Audit and Inspection (BAI) announced that it uncovered 182 illegal and unjust cases in its inspection of public fund operation and management, and has indicted or asked the prosecution to investigate 60 responsible people, four companies and four accounting corporations. The BAI order four people to compensate 2 billion won and reprimanded 20 including the director of the Financial Supervisory Commission (FSC).

The BAI announced that the government excessively aided the public funds amounting to 6.0209 trillion won by paying for trust deposit, which is not subject to the public fund aid, or by not evaluating insolvent assets properly. Moreover, the government spent 5.3853 trillion won worth of public funds because it included deposit of the trust cooperative union into the list of deposit protection and it did not conduct the management of the Daehan Banking Corporation and the Nara Banking Corporation properly.

3,423 major shareholders and the joint sureties including the former representative of `K` heavy industry company owned 6.0497 trillion won under the name of their spouses and children, and 1,543 executives and employees of financial institutions have hidden 559.5 billion won.

The BAI also announced that 12 ailing financial institutions, which received the public funds, lent 520 billion won to their executives with no interest rate or 1 percent annual interest rate, and 234 bankrupt financial corporations did not conduct their businesses even though an average of one and six months has passed, thus, damaging 54 billion won annually. The bankrupt foundations of 28 ailing financial institutions including `K` bank were revealed to have owned 76 golf memberships (10.7 billion won worth of acquisition cost).

91 companies (in the process of improvement) were highly likely to have window-dressed the settlement because the amount of net asset is short of 10 trillion won than the book value. However, according to the BAI, the prescription of prosecution (3 years) of 66 companies including the `S` construction company was over because the FSC did not supervise.

The BAI said that the recovery of more than 30 trillion won out of 148.3 trillion won would be impossible, and forecasted that it would take long time to recover 44.2020 trillion won, which was invested to the financial institutions.

Chan-Sun Hong hcs@donga.com