Bad Spending Policy Must Be Challenged

The government has poured more public money into restructuring the financial sector than there is in the national budget. But the effort has failed, resulting in an additional appropriation of public funds, amounting to more than 40 trillion won ($30 billion). The National Assembly, which has the right to carry out an investigation of the funding, has not done so yet. Under current circumstances, that is treason against the people.

Had the National Assembly carried out a prompt and proper investigation of the matter and had it taken appropriate followup measures, restructuring and normalization in financial sector could have been done in the first round of government funding, which was worth 64 trillion won. And the nation could have escaped the economic crisis by now. Moreover, corporate restructuring would have been already completed. To this end, the National Assembly is also responsible for the failure. In an investigations, lawmakers should make clear their views on the funding question. First, it is necessary to closely examine where the responsibility for this fiasco lies and where the 109.6 trillion won, which had been poured into the restructuring already, is. The Assembly should find out the mistakes and wrongdoings by thoroughly investigating every procedure from the initial plan to the completion of the program. It is possible that tremendous amount of money has been wasted because of stopgap measures, conflicts of interests, slack moral discipline, misjudgments and deceptive policies.

It is important to determine clearly why restructuring ended in failure. In particular, the Assembly investigation should focus on financial institutions, which received funds and then acted abusively because impure motives and corruption may have affected decision making. The National Assembly should identify wrongdoers and strictly examine their responsibilities. The most serious failure of the current administration is the inappropriate appointment of officials, and the government should admit and reveal the details of its mistakes.

Because wrongdoers repeat their mistakes, the condition of financial sector worsens, and financial institutions become insolvent although the government continues to pour in public funds. Based on an investigation, the Assembly should devise policies on future bailout programs. It also needs to specify the fairness of the policy and who is to take responsibility. It should spend enough time to check the entire economic policy making process and funding procedures, on the basis of macroeconomic policy and with regard to the issues of corporate finance of individual companies. In order to prevent the waste of public funds, it is necessary to adjust the current macroeconomic policy to economic expansion.

Unless insolvency in the financial sector, caused by the shortcut rescue plans such as government driven programs, court receivership and mediation, is controlled, it is impossible to prevent public funds from being used ineffectively again. An alternative proposal would be a set of preconditions before injecting public funds and not allowing the government to do so unless it meets the requirements. The top priority is replacing responsible persons. At least in financial circle, it is mandatory to appoint officials, who respect the principles in every way, on the right spot.

Investigation and supervision on the uses of public funds by the National Assembly should continue. While the administration has its end of term, the economy lasts forever. The government tends to cover up problems with shortterm resolutions. Instead of having a onetime special investigation, the National Assembly should systemize standing activities of investigation and supervision to monitor all direct and indirect processes of injecting public funds. Current conditions, in which the inconsistent policy to shut down or rescue insolvent companies and lack of policy on financial institutions are repeated, is seriously paralyzing our financial market.

It is not only late, but also too difficult for the government to recover trust on its own. For the people and the government, the National Assembly investigation on public funds should be reinforced. Otherwise, the vicious cycle, in which the government pours in public funds to rescue financial institutions, which became insolvent as a result of company bankruptcies, will continue. In order to break such bad practices, the National Assembly should establish a turning point by reinstating its Investigatory function on state affairs. The National Assembly investigation on public funds should be carried, realizing that it is their most important mission and responsibility to serve our people.