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[Editorial] KTCU Suspicions

Posted March. 10, 2006 02:59,   


Full disclosure is needed regarding the Korea Teachers Credit Union (KTCU), an organization that maintains retirement grants and carries out welfare work for teachers in Korea, investing a huge sum in Young Nam Flour Mills, a company listed on the KOSDAQ exchange. There will be a great uproar if the “KTCU suspicions” that originated from Prime Minister Lee Hae-chan’s “golf suspicions” turn out to be valid, because Lee’s Ministry of Education and Human Resources Development and Busan City contacts are involved.

The first suspicion is why KTCU invested such a huge amount in a small-sized company, neglecting its own regulations. Noting that conservative investment organizations usually invest in blue chip stocks, KTCU’s investment methods do not make sense. 10.2 billion won out of 12.2 billion won invested in three companies listed on the KOSDAQ exchange was invested in Young Nam Flour Mills. Investment experts were appalled by the fact KTCU owned nine percent of all Young Nam Flour Mills stock. It ignored its own regulations forbidding investing in companies involved in stock price manipulation and the suggestions of its investment division urging that the union should wait and see, because the stock price was likely to fall.

The second suspicion is if KTCU bought Young Nam Flour Mills stocks expecting stock prices to go up on knowledge that the company would make a request to Busan Metropolitan City to change the purpose of the factory land from residential to commercial.

The third suspicion is that KTCU bought and held 27.77 percent of Samyang Food for Young Nam Flour Mills after it failed to acquire it in last October.

The business community believes that this is enough to prove that high-ranking politicians were involved. The public’s attention is focused on the fact that KTCU chairman Kim Pyeong-soo and vice Education Minister Lee Ki-woo (former chairman of KTCU) are “golf buddies” of chairman of Young Nam Flour Mills, and that they are connected to the “Busan contacts” which pay respects to Lee.

These suspicions must be looked into for the sake of all teachers and stock investors. The implicated members should come forward and give an honest explanation. If they lie again, like they did about the golf outing, authorities, including the ministry of Education, Financial Supervisory Service and prosecutors, must act.