Shareholders to Get Help In Fighting Stock Fraud

The chief presidential secretary for economic affairs, Lee Ki-ho, said Friday that class action suits for securities-related cases would be allowed next March.

Mr. Lee was speaking to foreign business leaders on Seoul's policy to promote foreign investment.

The statement is the first by a high-ranking government official that mentioned a specific schedule for the introduction of the highly-debated measure.

Mr. Lee said that legislation would be sent to the National Assembly as early as November. Consultations with scholars, legal professionals and industry experts will begin in September, he said.

"The system will be an effective way for minor shareholders to exercise their rights against false disclosures, accounting fraud and share price manipulations," he said.

Mr. Lee also told the foreign business leaders that accounting standards would be improved to bring them more in line with internationally accepted standards.

"A peer review system within the audit profession will be set up," he said, "and the independence of auditors will be demanded."

Incompetence and irregularities in accounting practices will not be tolerated, he said. "We will also toughen penalties against executives and accountants responsible for fraud," he said.

The business leaders voiced concern about labor relations. Jeffrey Jones, the president of the American Chamber of Commerce in Korea, said news reports of violent labor rallies put Korea in a bad light.

But Mr. Lee said relations are improving. "Conflicts are down compared with last year," he said.

by Hong Seung-il