[EDITORIALS]Hyundai and Government FavorsThe JoongAng Ilbo has learned that the government sent an official letter in November 2000 to public corporations ordering them to help Hyundai Engineering & Construction. The incident casts serious doubts on the administration's reliability, fairness, transparency and its ways of administering policies. These questions are critical issues that must be resolved to uproot the age-old practice of "government controls everything" in the financial sector.
The gist of the document that was drawn up by the finance ministry is that Korea Land Corporation and Korea Agriculture and Rural Infrastructure Corporation were ordered to take care of disposing of Hyundai's farm in Seosan, South Chungchong province. Korea Land Corp. then signed a contract with Hyundai and handed over 345 billion won ($268 million) that the land corporation borrowed from H&CB to Hyundai as payment for the land. The money contributed significantly to Hyundai's ability to ride out its bankruptcy crisis.
The outline of the incident is well-known already. We also understand how desperate the situation was. Hyundai Construction went into its first bankruptcy last October. The government stood on the dividing line: whether to let Hyundai Construction collapse and then deal with the repercussions or to rescue it. The government chose to support Hyundai and as a result, Hyundai now has a second chance.
Whether the government's choice was good or bad depends Hyundai's chances of survival. We want Hyundai to succeed, considering its contribution to Korea's economy and its accumulated expertise in the industry.
But we also want to know the truth about the document for two reasons. First, it seems that the government ordered official support to an individual company. Second, the government guaranteed that the state corporations involved would not incur any financial damage.
That favoritism to a single company is troubling. Aside from this incident, creditor banks frequently extended helping hands to Hyundai over the protests of other companies. The endless aid to Hyundai Asan's Mount Kumgang tourism project or to Hynix Semiconductor is similar. Each time, the government explained that the reason was economic recovery, not favoritism, because the government put strict conditions on Hyundai's recovery plans. But now we have evidence of a mobilization of official government support for the firm. The dispute feeds skepticism about the transparency of restructuring.
Economic ministers, including Jin Nyum, the minister of finance and economy, have emphasized market principles and voluntary decisions of companies and creditors whenever they talk about restructuring. The ministers never admitted any direct intervention in a company's affairs. But the document illustrates the reality: The government is still an autocrat in the economy. We are deeply concerned about the reaction from foreign governments, international organizations and financial institutions, which have harbored doubts over how the government is addressing our corporate problems.
We demand an explanation. Was the economic ministers' meeting mentioned on the document actually held? Perhaps it was not, according to hints from involved officials and the timetable of the affair. Was the document simply written and sent without full government approval? We also demand that the government clarify whether its favors were extended to Hynix as well. We demand the government's candid explanation to stem further repercussions.