[VIEWPOINT]Money trail is not very complex

There is a fierce battle going on in political circles over the allegations that Hyundai Group handed 490 billion won ($400 million) to the North Korean government through its affiliate, Hyundai Merchant Marine in June 2000 despite its own financial troubles. I must begin by saying I have no inside information on the subject, only what I have read in the press, but I would like to propose, as a teacher of accounting, a way to verify the facts of these allegations.

The Grand National Party's claim is as follows: Korea Development Bank lent 400 billion won to Hyundai Merchant Marine in June 2000. The loan was disbursed in checks from three separate branch offices to the company and the checks were delivered to the National Intelligence Service. The government agency, in turn, laundered the money through foreign bank branches in Korea and later sent the money to a paper company in North Korea.

The Korea Development Bank has published a response to this allegation, confirming that it extended the loan to Hyundai. The statement by the bank reads: "An overdraft loan of 400 billion won was extended on June 7, 2000. On June 29, an emergency loan of 90 billion won for general business management purposes was also extended. On Sept. 28 of that year, 30 billion won was repaid, and another 140 billion won was repaid on Oct. 28. Ten billion won of the general business loan was also repaid on February 26, 2002."

The Grand National Party also claims that Hyundai Merchant Marine's 2000 first-half semiannual financial statement showed only a loan of 100 billion won, an overdraft, borrowed on May 27, and says there was no mention of the 400 billion won loan disbursed in June.

Hyundai Merchant Marine answered the GNP allegations by claiming that it had received only 100 billion won, not 400 billion, by the end of June, and that the remaining 300 billion won was disbursed from July to September of that year. The company denied any involvement with the National Intelligence Service. It said that the 400 billion won was used to redeem maturing commercial paper and to meet other financial responsibilities.

It would only take one look at Korea Development Bank's financial records to see whether the bank's explanation of the June 7 loan is true or not. It could also easily be determined whether or not the money was deposited in the bank accounts of Hyundai Merchant Marine by looking at the bank records of Hyundai Merchant Marine. The Financial Supervisory Service could inspect the accounting records of Korea Development Bank at any time and banks that own bonds issued by Hyundai Merchant Marine could also inspect those records.

If 400 billion won was not deposited in Hyundai Merchant Marine's bank accounts on June 7, then the possibility that the money was misappropriated would be greater.

According to the semiannual report of Hyundai Merchant Marine, the first loan from Korea Development Bank in the year 2000 was for 100 billion won received on June 30. The borrowings increased to 130 billion won by the end of 2000 and to 230 billion won by the end of 2001. By the end of the first half of this year, they had decreased to 119 billion won. The interest rate also decreased from the 10-14 percent level to about 8.5 percent. Aside from the loan already mentioned, Hyundai Merchant Marine borrowed 166.5 billion won for foreign currency operations from KDB and this June, the loan increased to 251.1 billion won.

The total amount of Hyundai Merchant Marine short-term loans from Korea Development Bank went from 190 billion won at the end of June 2000 to 386.5 billion won at the end of 2000. At the end of 2001, such outstanding loans totaled 482 billion won; the figure dropped to 450 billion won at the end of June 2001. The 170 billion won that Hyundai Merchant Marine claims to have repaid in the third quarter of 2000 seems to have been the foreign currency operating loan.

Judging from the materials that have been disclosed so far, the loans from Korea Development Bank do not seem to have gone into the pockets of Hyundai Asan. But the accounting records of Hyundai Merchant Marine and the explanations by Korea Development Bank do not coincide. At present, it seems that there is a high possibility that the bank's statements and the uses of the money that Hyundai Merchant Marine gave are true, despite the discrepancies in the statements of the two entities over exactly when the loans were approved and when they were disbursed. These are the facts that should be verified first.

Once the dates are checked, further tracing of the path of the checks that were issued by the Korea Development Bank during the period becomes necessary. The amount of money is huge and the parties to the transaction are clear, so the tracing of the money itself would not take a long time.

News reports have said that the Financial Supervisory Service is opposed to the tracing of the checks because of financial secrecy laws. That may be correct, but there are many who would say that the service has not always been so eager to work "by the book" in other instances. What is important here is a determination of the truth. Moreover, Hyundai Merchant Marine is soon due to sell its automobile parts subsidiary. In order for this sale to be conducted transparently and for it to succeed, the truth about the rumors must be dug out and made public.

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The writer is a vice president of Ewha Womans University.

by Kim Il-sup