Strict Management Needed on FundsInvestigations by government prosecutors have confirmed rumors that some executives of ailing companies have been involved in major irregularities. These have ranged from the customary funneling of assets into newly created foundations just before going bankrupt, to the shameless tactic of declaring bankruptcy and then buying a company at a bargain price, using another person''s name.
Some owners of the companies under court receivership or on debt restructuring plans have managed to bilk billions of won, while certain court-appointed managers were in the forefront of creating slush funds for purposes of embezzlement. It is like asking a cat to keep on eye on a fishmonger''s.
The money stolen by these corrupt business people and bankers is behind the collapse of many financial institutions, making the infusion of public funds necessary. It is no wonder that no reforms have been instituted despite the injection of 110 trillion won ($91.7 billion) of public funds so far.
The primary responsibility for such irregularities, of course, rests with those unscrupulous business people and bank employees. As if ruining their companies and driving the national economy to the brink of collapse have not been enough, they have brazenly stolen taxpayers'' money as well.
Their actions go beyond all bounds of ethical conduct; these are criminal acts. Severe punishments should be the government''s next order of business.
But blame also rests on the government for turning a blind eye to the ubiquitous loopholes in its supervising channels and management systems, allowing irregularities of such magnitude to go on undetected. Not only must responsible parties be held accountable, the entire system urgently needs repair.
First and foremost, the Financial Supervisory Service, the police and the prosecution must work closely together to prevent similar corrupt practices from happening again.
Owners of ailing companies should be deprived of their management rights and their stashed assets tracked down so as to stanch the further siphoning of money. Not just company officials and bank employees, but related civil servants must also be held accountable if serious wrongdoing is discovered.
Most crucially, it is urgent to correct the system to prevent the repetition of the same mistakes, with the additional 40 trillion won in public funds to be infused in the economy soon.
A Public Funds Management Committee should be formed and operated with maximum transparency to ensure an efficient execution of the entire process from investment decisions, to supervision, to repayment. Civilian experts conversant with management theory and practice, and not government officials, should be appointed to the committee.
For their part, the Korea Deposit Insurance Corporation and the Korea Asset Management Corporation must be given clear responsibilities and rights, so as to ensure the proper response for any eventuality.
At the same time, these agencies should be given the authority to maintain checks and balances. The National Assembly''s supervisory function should also be enhanced, so long as it does not hamper the sound management of public funds.
Recent investigations have revealed that large amounts of public funds infused so far have disappeared into the pockets of domestic swindlers. Without ending this gross mismanagement and the vicious cycle of corruption that goes with it, economic reform and recovery will remain an extremely elusive goal.