Posted May. 01, 2005 23:37,
Credit guarantee institutions, including the Korea Credit Guarantee Fund (KCGF), Korea Technology Credit Guarantee Fund (KOTEC), and local credit guarantee foundations paid up to around 3.5 trillion in subrogation last year as companies which the institutions guaranteed failed to repay their loans.
In addition, the government spent about 13.2 trillion last year to cover the deficit of KCGF (about 8.75 trillion) and KOTEC (about 4.45 trillion).
This fact was revealed by the Korean Independent Commission Against Corruption (KICAC). On May 1, the commission released a report on credit guarantee conditions of the major credit guarantee institutions, including KCGF, KOTEC and the 16 local credit guarantee foundations run by local governments.
According to the report, the amount of subrogation increased by 102.2 percent from 2002 (about 1.39 trillion) to 2003 (about 2.82 trillion), and by 23.7 percent from 2003 to 2004 (about 3.49 trillion).
Meanwhile, the Ministry of Finance and Economy, which is responsible for supervising the KCGF and KOTEC, has not investigated the institutions since 1991 and 1997, respectively. Moreover, though the executives are responsible for incurring losses according to regulations, the ministry failed to ask who was responsible for the losses that were in trillions.
Despite the losses, KCGF and KOTEC raised their chairmans annual salary from 240 million won in 2002 to 450 million won and 400 million won, respectively, last year, citing the need to raise the compensation level of their CEOs to those of other financial institutions.