[EDITORIALS]Issues cloud Korea Life saleThe Public Fund Oversight Committee, which oversees the use and recovery of state bailout funds, has finally approved a planned sale of nationalized Korea Life Insurance Co. to a consortium led by the Hanwha Group. The conglomerate will pay 823.6 billion won ($674.5 million) for the ownership of a controlling stake in Korea Life, Shindongah Fire & Marine Insurance Co. and Korea's tallest building, the 63 Building in Yeouido.
The deal for Korea Life took three and a half years to complete. It paves the way for the government to retrieve part of 3.5 trillion won in public funds that was used to bail out the ailing insurer. It will also likely improve the country's international confidence, which was hurt by the failed attempt to sell Hynix Semiconductor Inc. to a foreign buyer. Finding a new owner of Korea Life, the nation's third-largest insurer, is good for the company and its customers.
Nevertheless, the Korea Life deal should not be wholly applauded. The oversight panel made the decision through a vote, after its eight members failed to reach an agreement on the sale.
Three civilian members, who voted against the deal, raised doubts about Hanwha's qualifications and its price. They noted that the Hanwha conglomerate is highly indebted; that the bankruptcy of its merchant-banking subsidiary in the wake of the 1997 financial crisis forced the government to inject public funds; and that state financial regulators discovered in March that the Hanwha business group had rigged its accounting books.
The members also argued that the government should not rush the sale of Korea Life since the company is expected to earn at least 600 billion won in profit this year. Their position has roused considerable public support. Based on these claims, some suspect the government is pushing ahead due to political considerations.
If the government wants to complete the sale, it should not leave any suspicions. It should explain why it has to rush the sale and why it chose Hanwha despite the controversy over the conglomerate's qualifications. The government should also ensure that the rest of the sale process remains transparent.
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