[EDITORIAL] Yet More Financial Abuses

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[EDITORIAL] Yet More Financial Abuses

The Dong-A Mutual Savings Co. illegal loan incident is shocking. We find it hard to comprehend how a major stockholder could illegally borrow more than 250 billion won ($198 million), which amounts to close to 40 percent of the company's total loans, and how the Financial Supervisory Service could be so inept as not to uncover this earlier and so negligent as to let the culprit escape overseas with his assets. Astoundingly, the total illegally taken here is more than four times the amount involved in the Korea Digital Line case last year. The perpetrator's shrewd management of his criminal activities transcends amorality. With the emphasis that has been placed on reform of the financial sector, it is mystifying how a stockholder in such an institution could get away with treating the company as if it were his personal cash box. This may affect the credibility of the entire financial sector.

The fact that this illegal siphoning went on continuously for more than five years without the FSS's catching on shows how appallingly slipshod it is in carrying out its duties. The FSS investigated Dong-A twice in 1999, yet somehow failed to notice anything out of the ordinary. They say that they were deceived. Is that an excuse or an admission of incompetence? If showing them a few sheets of trumped-up data is all it takes to put one over on them, who needs the FSS in the first place?

It appears likely that public funds will be used to patch up Dong-A, too, and it angers us to think that yet more of the taxpayers' money may be spent on failed government policies, financial rip-off artists and incapable financial supervisors. A thorough investigation is called for to find out who is responsible for letting this happen, how Kim Dong-won found out in time to make a getaway and how a troubled company was able to successfully disguise itself as financially healthy.

More and more such financial scandals have been coming to light, and each is bigger than the last. The stockholders, management and staff of financial institutions must change their way of thinking, and outside directors and auditors must be brought in. And of course, the FSS has to do a much better job, including conducting regular on-site investigations.
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