Fair Trade Commission Extends Account Tracing Rights

The government and the governmental party plan to reintroduce the Fair Trade Commission’s financial intelligence request act (account tracing rights) against the conglomerates for three years.

However, they limited the subjects from whom they request financial intelligence to specified enterprises of financial firms, including banks, and planned to strengthen the penal clauses in cases of leaked information being obtained through account tracing.

The Uri Party and the Fair Trade Commission held a party conference on June 2 at a VIP restaurant attended by Hong Jae-hyung, the Uri Party’s chief policy-maker, and Fair Trade Commission Chairman Kang Chul-kyu, and made the final agreement on the revised bill of the fair trade law with the aforementioned contents as the backbone. The government and the governmental party decided to submit the revised bill to the National Assembly sometime this month to have it dealt with promptly.

According to the government and its party agreement, the FTC will possess account tracing rights for a limited period of three years in cases which the Fair Trade Commission investigates unjust internal transactions of large conglomerate organizations (groups) with over two trillion won in assets. The time of holding the account tracing rights will depend on when it is carried out; however, it is expected to be around the end of this year ~ late 2007, or early 2005~ early 2008.

In order to prevent excessive issuance of account tracing rights, the government and its party decided that the Fair Trade Commission should request financial intelligence only from specified enterprises and not from the head office of financial firms. In addition, in cases of pertinent information being leaked, they are planning to impose a fine of less than 30 million won or fewer than five years of prison term.

To extend the account tracing rights that expired in February this year, the Fair Trade Commission submitted a revised bill of fair trade law last year; however, trouble is expected this time as the bill has been dissipated due to the resistance of the opposition party and the financial world.

In relation to this matter, Chairman Hong stated, “Due to concerns on the part of the financial world towards account tracing rights, we confirmed the policy of not introducing the rights after three years.”

In addition, the government and its party decided to maintain the policy for firms affiliated to large conglomerate with over five trillion won, which limits financing for other companies to less than 25 percent of net assets; however, they planned to introduce four types of completion standards and expand the exception policy.

Also, they decided to reduce up to 15 percent step-by-step of the permitted limit (currently 30 percent) on voting rights in the ownership of financial firm affiliates belonging to large conglomerates for three years starting from April 2006.

Moreover, in order to eradicate unjust practices during the transactions of large conglomerates and small and medium enterprises, they decided to submit a revised bill of outsourcing law during the regular session of the National Assembly this year.

Chi-Young Shin Hoon Lee higgledy@donga.com dreamland@donga.com