Government Will Run a Joint Investigation Team to Retrieve Embezzled Public Funds

The government decided to constitute a committee of the related governmental agencies, including the Ministry of Finance and Economy (MFE) and the Ministry of Justice (MJ) etc., to strengthen the management and the withdrawal of the public funds, during the next week. And the government will establish a joint investigation team under the committee to trace the concealed properties of the former and incumbent executives of the financial institutions and corporations that received the public funds and to retrieve the funds.

The government also decided to exclude the investment of the small-sized savings cooperatives from the list of government guarantees from 2002, and to review the plan to exclude the customer deposit of the small-sized savings cooperatives from the list of government guarantees in the long run.

Deputy Prime Minister and Finance and Economy Minister (DPMFEM) Jun Nyum said, "The government will constitute a committee of the related governmental agencies, which will be headed by the Vice Minister of the MFE and consisted by the Vice Governor of the Financial Supervisory Service (FSS), the Chairman of the Korea Deposit Insurance Corporation (KDIC), the Deputy Commissioners of the National Tax Service (NTS) and the Korea Customs Service (NCS), the Head of the Prosecution Bureau of the MJ, etc., during the next week, and will reform the management problems of the public funds that the Board of Audit and Inspection (BAI) indicated." in the meeting with reporters on 30th.

He also said, "The government will establish a joint investigation team under the committee, including the Prosecutions and will trace and retrieve the concealed properties of the owners and executives of the troubled financial institutions and corporations as much as possible. The government will finish all legal actions on the embezzled 7.1 trillion won, which was revealed by the investigation of the BAI, by the first quarter of the next year."

He continued, "Although the National Assembly included the deposits of the small-sized savings cooperatives to the deposit insurance system at the end of 1997, it should be corrected based on principle. The government is reviewing a plan to exclude the deposits from the deposit insurance system with a minimized side effect because a sudden decision of the exclusion will cause the collapse of the small-sized savings cooperatives and will produce the ill effect to the financial market."

Regarding the retrieve of the public funds, Jin said, "The invested public funds to the financial institutions are dependent on the self-relief efforts of the financial institutions and the situations of the stock market. The government will try to minimize the burden of the people by selling the stocks of several banks injected with the public funds during the first half of next year."

Deputy Prime Minister Jin added, "The government will establish the plan to share the losses, such as swapping the losses to the national bonds after estimating the amount of the losses of the public funds by the first half of next year."

Meanwhile, the BAI pointed out yesterday that as of the end of June, the injected public funds actually amounted to 152 trillion and 248.5 billion won, 14 trillion and 748.5 billion won larger than 137 trillion and 500 billion won that the MFE had announced. And the retrieved funds were only 25 trillion and 962.6 billion won, which were 8 trillion and 229.2 billion won smaller than the MFE`s original estimation of 34 trillion and 191.8 billion won.

However, the MFE insisted that the public funds do not include the current funds that were injected to the investment banks, the interests of bonds, and the guaranteed payments for deposits of the Hanarum Savings Cooperatives. The MFE also said that it indicated the points raised by the BAI in the complete report on the public funds as annotations in August.

Chan-Sun Hong hcs@donga.com