Lawmakers Slam Hyundai Bailout

Opposition lawmakers criticized the government's handling of the ailing Hyundai Engineering & Construction Co. Wednesday. One called for an Assembly investigation into the bailout, and others accused the government of trading favors.

At a meeting of the National Assembly's National Policy Committee, Rep. Kim Boo-kyum of the opposition Grand National Party demanded an investigation.

Lee Keun-young, chairman of the Financial Supervisory Commission, denied that the debt-for-equity swap and reduction of capital involved any favoritism.

Opposition lawmakers asked why the decision on the swap was made before the auditor's report of the company's losses and its chances of survival was released.

"The arrangement represents a collusion between the government and Hyundai," said Rep. Eom Ho-sung.

"The government provided 12.7 trillion won ($9.5 billion) to Hyundai affiliates in 13 months," Rep. Lee Sung-hun said. "Is this an appropriate policy?"

Rep. Chung Hyung-keun asked whether the government was using its aid to Hyundai to influence Kim Yoon-kyu, the company president. Mr. Kim said on April 9 that the company would stop its tours to Mt. Kumgang, but reversed himself the next day, saying the tour project should not be abandoned.

Lawmakers from the ruling Millennium Democratic Party focused their queries on Hyundai's chances of survival and what they called the government's ineffective policy.

Rep. Park Joo-sun said the debt-for-equity swap hurt the credibility of the Korea Exchange Bank, Hyundai's main creditor. He also said the company leadership should step down.

Rep. Park Byeong-seog said the swap was an arrangement to resuscitate Hyundai and not to help majority shareholders recover losses.

"The decision to support Hyundai was made voluntarily by the creditors to maximize the value of their shares in the company, and to minimize the burden that would fall on the Korean people," replied Mr. Lee, the commission chairman.

by Lee Jung-min