[EDITORIALS]Let bygones be bygonesKorean financial circles requested that a class-action lawsuit system that takes effect beginning next year be first applied only to accounting fraud that take place from next year or later.
Their request sought consideration of their circumstances. Their reasoning was that if a new law is applied to a situation that has not yet mended the faults of the past, companies will be unable to perform normal business activities while dealing with reams of lawsuits.
For many Korean companies, accounting fraud is like a wound from the past that has not yet healed. Companies “wrapped up” their performance reports by adjusting accounting records in the past. Although some companies intended to set aside slush funds under pressure from politicians, accounting fraud was a practice in the past and regulations on accounting system were less strict and more obscure. Then, the system changed almost overnight, and companies were not in a position to correct their wrongdoings due to the stagnant economy.
A study by the Federation of Korean Industries shows the seriousness of the situation ― about 86 percent of the companies surveyed said that they were worried about becoming targets of class-action lawsuits for accounting fraud.
Some may protest unconditionally cleaning companies’ records of past accounting frauds just because it was “customary.” But as the class-action lawsuit system takes effect, there is also the problem of applying the system to past acts.
Even without this new system, Korean companies are already in dire straits because of anti-corporate sentiment among the public, high oil prices and changing foreign exchange rates. If we add a long line of lawsuits to the list, the effort to recover the economy through a rise in investment, a revival of consumption and the creation of jobs will become fruitless.
It is also questionable how many companies could survive a string of lawsuits. Past wrongdoings can be punished by other laws.
Companies were “born” with these problems because of structural weaknesses in Korea’s economy. Companies will have to shake them off. If they do not, they will always have to look over their shoulders. The Assembly must accept the voice of the business community. The businesses, in turn, must be determined to take responsibility if this type of problem occurs again.