[EDITORIALS]Is bank’s time past?The Korea Development Bank has again been tangled in a corporate scandal. This time, the prosecution found the bank’s senior manager received a sizable bribe for writing off the debts of a Hyundai Motor Group affiliate. Scandals involving the bank’s workers so far include accepting bribes from venture firms, illegally sending money to North Korea and illicitly lending money to insolvent companies.
Such cases not only stem from the workers' lack of morality and the management's negligence over employee supervision but also from the bank's structural problems. It is not a matter that may be resolved simply by strengthening moral education and regulations.
The Korea Development Bank was established by the government to offer long-term facility investment funds to budding enterprises in the 1970s. Until the 1980s, it sincerely performed its role to supply money to large-scale projects that could not be handled by commercial banks at the time.
However, its duties were notably reduced after the 1990s. Under the circumstances, the government should have broken the bank down or privatized, it but instead, it grew.
When its role was reduced, the bank jumped into rivalry with commercial banks, increasing its branches and attracting general ordinary deposits. It set up its own security firm, which is far from the key purpose of establishing the bank, while joining venture finance and credit evaluation businesses.
After the Asian currency crisis, the bank took part in restructuring private companies and ended up having large debts dishonored. It was also used as a channel through which illegal money was transferred to North Korea. When the bank had no cash, national taxes made up for it, which meant the bank had nothing to worry about.
Given this situation, it would have been strange for corruption not to have occurred in the bank.
Now we are at a critical point where we should deliberate why a government-operated bank is necessary. Reshuffling staff members and partially mending the corporate structure will not cure the chronic disease that has spread inside the bank over the past decades. Its top positions have been filled by former bureaucrats and ex-staff are landing jobs at the bank’s affiliates.
It is not to be expected that the bank or the Ministry of Finance and Economy will voluntarily push ahead with reforming plans on the bank.
How long do we have to keep a state-run bank when the meaning of its existence has gone away, along with taxpayers’ money?
with the Korea JoongAng Daily
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