[EDITORIAL] Who Is to Blame?

The government and political circles are vacillating over what to do about the Hankook Real Estate Trust. The government, which had been insisting that contractors must bear their share of the loss, yesterday did an about-face, announcing a six-month grace period for court receivership. The story is that the extra time will be used to discuss how the case should be handled and how the losses should be divided up. Since Hankook is already in a state of default, it will have to get more support from its creditors if it is to continue building and paying salaries. There are some reports that the government is unofficially pushing for a grace period on the repayment of principal and interest and for conversion of investments as well as new investments.

If this is the truth, it shows irresponsibility on the part of the government and the politicians. A "solution" that demands sacrifice on the part of the creditors alone will only make matters worse. The more difficult a problem is, the more important it is to follow principles in attempting to solve it. Hankook was financed by the government and has been managed by government-appointed former officials, but the government should treat it like any other failed enterprise.

Just as in other cases where the government has demanded that the biggest stockholders contribute some of their private assets to the effort to save their businesses, so must the government find a way to maximize its investment. Those who are responsible for Hankook's failure should be punished and their property confiscated. The creditors should conduct their own investigations to determine what they may be able to recoup and decide whether to provide more support on that basis. Projects that can be revived should be transferred to other contractors and those that cannot should be liquidated. If in this process it turns out that some losses are unavoidable, then they should be divided up, and the contractors will probably have to bear some of the loss, too.

The government has simply eliminated this entire process and, without any proper countermeasures in hand, expects the creditors, the contractors and the construction companies to bear the losses. This is unacceptable. It is the government which is mostly responsible for the failure of Hankook, yet it seems unwilling to accept its resonsibility. And expecting the creditors to accept all the loss to make up for the losses incurred by the contractors and contruction firms is utter nonsense. And the causes of this failure must be brought to light.