Cleaning Up Financial Mess

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Cleaning Up Financial Mess

The state-run Korea Deposit Insurance Corp. said Sunday that it had sued 2,741 executives and major shareholders of insolvent local financial institutions for damages amounting to 646.2 billion won ($496 billion) as of the end of last month.

The deposit insurer said that it filed the lawsuits after an investigation into 264 of a total of 294 domestic financial institutions that were liquidated after the country's economic crisis in late 1997. Prior to the suits, the institution put 781.3 billion won worth of the defendants' personal wealth under provisional seizure.

The agency sued 188 executives and large shareholders of 22 merchant banks for damages of 223.8 billion won and 1,946 persons at 166 credit unions for 190.3 billion won in damages. It also asked for 168.2 billion won in compensation from 514 top managers and big shareholders at 64 mutual savings and finance companies; 33.3 billion won of damages from 37 persons at insurance companies; 24.3 billion won from 40 persons at five commercial banks, and 6.3 billion won from 16 persons at two brokerage firms.

Through April, the state-run insurer had won 86.9 billion won, or 80.2 percent of the total amount it claimed damages for. Still, the amount of damage claims filed by the agency accounted for a mere 7.6 percent of the 8.49 trillion won of losses allegedly caused by mismanagement.

An official at the insurer explained that the amount of damages sought was less than the amount of losses because the institution had to consider the likelihood of winning and the legal costs before filing suits.


by Cheong Chul-gun

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