More Accountability for Funds

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More Accountability for Funds

Following the disclosure of problems over the decisionmaking process and executions of public funds, questions in postdelivery management are coming to the fore. The Korea Deposit Insurance Corporation has filed lawsuits against large shareholders and executives of financial institutions for damages totaling 530 billion won ($414 million) and revealed that it has already recovered 54.6 billion won. As the KDIC says, winning 76 percent of the cases in the first trials is not a bad performance. However, given that the losses in public funds deriving from the bank employees mistakes amount to a whopping 8.17 trillion won, the KDIC is hard put to avoid the criticism that it has been too passive in recovering funds.

Furthermore, the government and the KDIC neglected their duties because they have yet to establish the rules such as who to take to court and how much to seek in restitution, even though a few years have passed since the release of public funds. As we witnessed in the Yeollin Mutual Savings case, when large shareholders incurred losses, the government often filled the gap with taxpayers money.

Even when companies went under, the responsible people usually live comfortably on what they have embezzled from their companies. To sever such a vicious cycle, efforts to reclaim the funds should be reinforced. Most important, adequate systematic mechanisms the eligible targets for lawsuits and reparation standards ?should be introduced urgently and carried out transparently. Now that a way has opened to demand reparation from corporate executives, more efforts should be extended to watch out for their attempts to hide their assets and trace them down.

Additional public funds of 10 to 15 trillion won are to be provided in February. If they are managed as sloppily as now, we cannot rule out their futility, not to mention that the recovery of the already disappeared portion may end in vain. To prevent such a scenario, it should be deter mined who is responsible for the disappeared money, followed by a thorough recovery and punishment. The ruling party and the opposition should also reopen hearings on public funds to unveil all problems.
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