[EDITORIALS]The bailout fund messThe Supreme Public Prosecutors Office announced yesterday the result of its third round of investigations into irregularities involving public funds to prop up Korea’s shaky financial system in the wake of the 1997-1998 financial crisis. The probe showed, once again, how the bailout funds were squandered or embezzled. Irregularities and the lack of moral standard by some business heads and executives at local financial institutions are increasingly shocking.
Prosecutors said that a professional manager in charge of turning around ailing Dong Ah Construction Industrial Co., which was being kept barely afloat by lifeline loans provided by local banks, illegally raised 3.8 billion won ($3 million) in slush funds to bribe politicians. In addition, some 60 politicians allegedly took money from the troubled builder.
It is unfair for prosecutors to detain business people involved in the bribe scandal while doing nothing about those politicians, saying that the amount of the bribes was not big or that there was not enough evidence.
The government spent 160 trillion won from 1998 until February to bail out troubled financial institutions, a larger amount than the government’s budget for this year. Of the amount, 69 trillion won has evaporated, with no prospect of being recovered. Considering interest on that money, the amount totals 87 trillion won. Because the funds were raised through the government’s debt issuance, the funds are taxpayers’ money. The government and prosecutors must deliver harsher punishment to those who wasted or embezzled the money to serve their personal interests.
The prosecutors’ office said that it was investigating a former head of another ailing company that received a bailout and executives at insolvent financial institutions. Prosecutors must dig more thoroughly into the bailout of the failed Nara Merchant Bank, which caused a loss of 2.9 trillion won in public funds.
Bailout funds are still being used. The government must be stricter in monitoring and supervising the use of those funds to prevent further breaches and waste of money.