[Editorial] Expecting What Would Be Brought Up in BAI’s Auditing of Industrial Bank

The Board of Audit and Inspection of Korea (BAI) is scheduled to embark on an audit of Industrial Bank as of today. The bank gave an emergency bailout loan of $400 million to Hyundai Merchant Marine Co., which is suspected of having secretly given the money to North Korea on behalf of Kim Dae Jung administration. Many people, however, worry that the audit would end up just giving a smell of legitimacy to Hyundai. In fact, the BAI is reportedly determined to focus its investigation more on the legality of the loan, rather than on the allegation of the secret aid to North. It also shows its negative position against the account-tracking, which could easily bring up the whole picture of the case.

The BAI, however, will surely know that this case requires sincere efforts on its part to find out the truth. Citizens of Korea expect that this audit would bring up everything related to the secret-aid allegation. They want to know the whole truth of it.

So far, more and more evidence is building up against Industrial Bank and Hyundai, supporting the allegation that the bank loaned out the money without taking any procedural steps. Even the main creditor of Hundai, Foreign Exchange Bank did not know anything about it. The genuineness of the signature of Kim Choong-sik, then the president of Hyundai, smells fishy. The database jointly run by all banks in Korea did not contain any information regarding the loan. It is also suspected that the accounting books were manipulated. Some testified that then President’s Chief of Staff pressured the bank to load the money to Hyundai. Citizens of Korea want to know the whole truth concerning all of these.

Even under these circumstances, all government agencies are showing reluctance in commencing an investigation into this case. If the BAI fails to tell us the truth even after its investigation, people’s suspicion that the government agencies are making joint efforts to cover up the case will be sure to get larger.

In addition, the BAI has argued that corporate entities are not subject to its investigative authority. But it does not sound natural at all to argue that it can bring out the truth without the recipient of the loan. The section 50 of the Act for Board of Audit and Investigation of Korea provides, in relevant part, “The [BAI] may request, if necessary, an entity for production of documents even if it is not subject to the investigative authority of the [BAI].” It is a commonsense that the harder trying to cover up, the more serious the problem will get. The government should keep this in mind, too that, as long as Lee Keun-young, then head of Industrial Bank, leads the Financial Supervisory Service, fairness of any investigation or audit will hardly be secured. Consequently, no one would believe any results of the investigation or audit.