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[EDITORIALS]Hotbeds of social crime

Published: 06 Jan. 2003, 00:30

Several private capital lenders have been accused of hiring bank employees and turning in false reports of loans. Prosecutors have charged a lender in Myeong-dong, Ban Jae-bong, with conspiring with bank employees to make false business loans. They said Mr. Ban's corporation turned over about 30 billion to 50 billion won ($40 million) a day. He is charged with arranging a false payment of 30 billion won for Lee Yong-ho, the chairman of G&G Group, who was sentenced Tuesday for fraud. He also allegedly illegally provided funds for Kim Young-jun, the former owner of Daeyang Mutual Savings, to acquire KOSDAQ-listed businesses.

The marriage of the black money of private lenders with the greed of bank employees breeds crime. If Mr. Ban is convicted, it means that Mr. Lee and other entrepreneurs may have engaged in even more acts of fraud.

Start-up businesses often hire people like Mr. Ban to arrange false share payments, and these people in turn use their commission fees as capital for private loan businesses. This allows empty businesses with no real capital to be set up. Such economic distortions become hotbeds of social crime.

Coincidentally, a new act on the loan business was passed Tuesday calling for illegal private lenders to be legalized and thus more strictly regulated. The government should encourage these lenders to register and make all the efforts to prevent illegal underground financial transactions.

Prosecutors plan a large-scale investigation of 10,000 or so businesses allegedly involved with false share-payment reports. One question remains. How can it be that Lee Yong-ho, the businessman arrested for mani-pulating stock prices with the help of a string of influential politicians and officials, turns out to be connected with this case? Mr. Lee's case and Mr. Ban's case seem to be related. Mr. Ban's rise to become the leading private lender of Myeong-dong also may indicate that he had help from above. The prosecutors should not stop at disclosing Mr. Ban's deeds but dig deeper into the source of his money.