[EDITORIALS]The railroad’s dubious oil deal

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[EDITORIALS]The railroad’s dubious oil deal

The Korean Rail Traffic Development Foundation, an affiliate of Korea National Railroad, may lose a $6.2 million deposit it put down toward the purchase of a Russian oil company. The Russian government did not approve the acquisition, and the contract was terminated. There are rumors that Kim Se-ho, vice minister of construction and transportation, Shin Kwang-ho, president of Korea National Railroad, and Lee Kwang-jae, Uri Party assemblyman, are involved in the case. We hope that the various suspicions surrounding the case will be scrupulously clarified.
The Board of Audit and Inspection said it would focus its investigation into the matter on the Korea National Railroad’s motive for getting involved in the oil business. The railroad, which is Korea’s second-largest consumer of oil, said it did so to reduce the burden of high oil prices with a stable supply. But oil development is a business that requires specialized skill, and the chances of success in such a venture would seem to have been extremely low ―especially considering that the oil field the railroad had planned to develop had been abandoned once before by the Korea National Oil Corp.
It should be made clear whether the decision to develop the field was that of Korea National Railroad, which has no relevant experience, or whether outside pressure was involved. It is said that representatives of Korea Crude Oil, a company that the Korea Rail Traffic Development Foundation established for oil development, are hometown friends of Lee Kwang-jae.
Mr. Lee presented a report on energy policy last year; for that reason, Mr. Lee is suspected of pressuring the railroad to get into the oil business. Mr. Lee, however, denies any involvement. Whether he was involved or not should be clarified.
It is also suspicious that Shin Kwang-ho, president of Korea National Railroad, personally visited Mr. Lee to report on the oil development business.
The deposit for the acquisition was loaned to Korea Crude Oil by Woori Bank. Even though Korea National Railroad was the guarantor, it is suspicious that such a large amount of money was so easily handed over. The role played by Kim Se-ho, who headed the Korea National Railroad when the oil venture began, should also be clarified. Only a strict audit will ease the public’s concern over whether taxpayers’ money was wasted in an instance of reckless business misconduct.
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