[EDITORIALS]Bidding brings questionsThe Public Fund Oversight Committee, which is in charge of the use and recovery of public funds used to bail out insolvent financial institutions, has selected a consortium led by the Hanwha Group as the chief negotiating partner for the sale of the ailing Korea Life Insurance Co.
We have emphasized that while the government should be quick to handle companies that failed in the wake of the 1997 financial crisis, it should also try to sell those firms to the best qualified buyers at the most favorable prices possible. That is the right way to minimize losses of public funds and save ailing companies and jobs. The government should follow such a principle in its attempt to sell Korea Life, which received a hefty 3.6 trillion won ($3 billion) bailout from the government.
But there is something incomprehensible about the process of selecting the Hanwha consortium as the single preferred bidder through the committee's vote. First of all, some members of the oversight panel made strong opposing arguments against the bidder's qualifications and the method of the planned sale. In particular, a subcommittee in charge of the sale of Korea Life is said to have made a report, in which it cited reasons for rejecting Hanwha's bid: Hanwha Merchant Bank, a subsidiary of the conglomerate, was bailed out by the government at the height of the economic crisis. The report also raised questions about the sale price offered by the government during talks with Hanwha.
Some argue that the government does not have to sell the life insurer as hurriedly as it did Hynix Semiconductor Inc. Unlike the debt-ridden chipmaker, which sees its losses snowballing every day, Korea Life posted a net profit of 870 billion won last year and is expected to earn some 500 billion won in each fiscal year of 2002 and 2003. Therefore, they say, it is more important to get the price the insurer deserves than to sell it as quickly as possible. The government may be able to sell the insurance firm at a higher price after 2003, when the country's five biggest conglomerates are allowed to enter the insurance market. In the meantime, the negotiations must not leave any suspicions in the course of talks with Hanwha.