[EDITORIALS]Too Many Hands in the TillWe find out again, through an announcement by the Supreme Public Prosecutor's Office on Wednesday, about the rampant misuse and theft of taxpayers' money. The prosecutor's office said that misuse of funds by financial institutions through illegal loans and embezzlement amounted to 1.4 trillion won ($1.1 billion). Another 520 billion won in public funds has been embezzled by companies, through falsified credit guarantees and fraudulent documentation.
We have had reports of scattered incidents of public fund misuse since the beginning of the year, when the prosecutor's office began investigations of activities that led to losses of public funds. We found out once again about financial institution officials embezzling clients' money they were entrusted with, and business executives embezzling government assistance intended for businesses started up by working-class families. It is appalling, once again, to discover how widespread corruption and immorality is in our society. It should be granted that the government, through agencies such as the Financial Supervisory Service, the National Tax Service, Korea Deposit Insurance Corporation and the prosecutors' offices, have been going after financial institution officials and business executives responsible for losses in public funds. The government has also tried to maximize the rate of recovery of public funds provided to bail out failed and troubled financial firms.
But the announcement Wednesday means that the efforts have not been enough. The degree of corruption involving public funds is greater than we feared. So far nearly 140 trillion won has been used to bail out financial firms and just 24 percent of that has been recovered as of the end of April. Those losses are already precariously close to triggering a drastic increase in the financial burden on taxpayers. A state-run think tank has concluded that if funds recovery does not reach 60 percent, the government will have no choice but to raise tax rates significantly.
Of course we realize that excessively intrusive investigations by the government can act to discourage financial sector officials and harm financial markets. But that is a matter of technique, and it does not mean that illegal activities and corruption can go unpunished if we are to set the rules of society straight and restore morality in business entities. It is for that reason that we want to recall the responsibility of the former Daewoo group and its creditors, which received 20 trillion won in public funds. We also consider it necessary to review the responsibility and morality of executives of Seoul Guarantee Insurance, which required a few trillion won to prop it up, and Korean Credit Guarantee Fund and Korean Technology Credit Guarantee Fund, where mismanagement prompted the government to pump in equally significant financial assistance. The government must also consider that some will say Wednesday's announcement of 2 trillion won in misuse and theft amounts to nothing more than nabbing the little guys.
What is more important is that the government must not repeat policy failures that prompt illegality and immorality in financial institutions and corporations. It should be abundantly clear, as in the case of the bankrupt Dong-Ah Construction Co., that the government must not disregard market principles and try to artificially prop up failing businesses. It must cease using questionable methods, like pressuring financial institutions and public corporations, to keep the Hyundai group of companies on life support. The government must keep in mind that actions against economic or legal logic beget corruption.