Park, Vice President of Industrial Bank, Breached Guideline for Loan

Park Sang-bae, Vice President, is indicated as having breached the loan guideline when he extended matured loan of 400 billion won to Hyundai Shipping. He approved loan to Hyundai Shipping as a director in June of 2000.

When an overdraft is approved, it can be done by a director`s discretion, and the rollover should be decided in Credit Committee. However Park Vice President decided the rollover of the overdraft was decided by director’s discretion.

According to the ‘Operation Manual about Duty Discretion’ submitted to Lim Tae-hee, Parliament member of the GNP Party by Industrial Bank at 15th, the approval of a new overdraft can be decided by a directors’ discretion, but the rollover for a more than certain amount (in case of ‘BB’ Credit, over 30 billion won) should be decided by Credit Committee.

Hyundai Shipping marking ‘BB” credit repaid 300 billion won one day before matured at 29th June 2000 and the mature of 100 billion won was extended.

Lim, parliament member, mentioned, “The fact was known that the rollover was decided by a director`s discretion.” and added “The reason that why the rollover of the overdraft was not discussed in the Credit Committee and why the rollover was not informed to other directors should be audited completely by the Board of Audit and Inspection of Korea.”

Financial industry also judged it as abnormal loan. Even though a temporary overdraft is approved because of urgent and serious difficulties of a company, it is a kind of financial support, but the applying of rollover reflects chronic financial difficulties of the company. So it is normal that the rollover is decided in Credit Committee.

A person concerned in financial industry commented, “It is impossible that the approval and rollover of huge amount of 400 billion won is decided by a director in financial industry.”

For the doubt, Chung Kun-young, the President of Industrial Bank, announced, “From 14th, the Board of Audit and Inspection of Korea has been performing auditing, so if any problem is discovered, the person concerned will be censured.”

Kwu-Jin Lim Chi-Young Shin mhjh22@donga.com higgledy@donga.com