[EDITORIALS]Encouraging words for businessPrime Minister Lee Hai-chan has said, “The government will give businesses a chance to be exempt from lawsuits over book rigging that was done in the past.” This means the government intends to help businesses escape a thorny situation. The business community welcomed the remark and expressed expectations for action.
In Korea, not many companies are likely to be free of accounting irregularities. It was a common practice in the past; businesses tampered with their stated profits by either inflating accounts or underreporting them. During the foreign exchange crisis of 1997-98, such practices were deemed illegal, and businesses became lawbreakers because they had not had time to correct their mistakes. Moreover, the class-action lawsuit system that went into effect this month exposes them to additional pressure. The danger is that the business community will be inundated with class-action suits and many companies will face serious difficulties. This will damage the economy further.
In this context, Mr. Lee’s remark was realistic and reasonable. However hard a company may try to do business transparently, if wrongdoings of the past are not corrected, fully transparent management will not be possible. If “window dressing” was an accepted practice in those days, it is right to give businesses a chance to clarify matters, even if the past deeds can’t be erased. This process is necessary in order to mitigate the consequences of the class-action system and to promote management transparency. In the United States, where the side effects of class-action suits have reached a serious level, the government is preparing measures to protect businesses.
The governing party and the Roh administration are considering a revision bill that would exempt companies from class-action suits over accounting irregularities in the past two years. Now we must find a more comprehensive way to drastically eliminate obstacles to business. Past illegalities could be exempted from punishment, with businesses to be punished more severely if they commit them in the future. From Mr. Lee’s words, “The government is determined to take responsibility now for creating a transparent management culture,” we see a change in the government’s attitude toward business. If exemption from a lawsuit is unavoidable and a must for economic recovery, boosting the morale of the business community in a big way will help the economy recover.