[OUTLOOK]Bureaucratic wars and alarmsOne hardly knows whether to laugh or cry. Recent events have been too comical for indignation and anguish; too tragic to be written off as an absurd display of farce.
On June 19th, the audit results on the Korea Exchange Bank sale were announced by the Board of Audit and Inspection. The verdict: an underpriced mistake of a sale. The bank executives, as well as the overseeing authorities, were held strictly accountable.
The very next day, the Ministry of Finance and Economy and the Financial Supervisory Commission issued a joint statement in their defense. It is extremely rare for an audited body to rebut the results of the intimidating Board of Audit and Inspection in such a meticulous fashion, grappling over every small detail.
There have been past informal complaints alleging unfairness, of course, but never in public and never in an official capacity. The ministry and commission evidently felt that they were so wrongfully charged that they had to take extreme measures.
Two days later, on June 21, a new statement was issued by the auditors, asserting that the audit results were accurate and that the public condemnation by the other two agencies was a thoroughly irresponsible act. Result: a head-on fight pitting the auditors, with the highest degree of auditing authority conferred by the Constitution, against the Finance Ministry, the overreaching authority on economic policy. Moreover, this was not a simple tiff over technical issues ― it was a fundamental difference of opinion regarding the validity and legality of the sale of a major national bank. Exciting, yes, but far too serious to watch as light-heartedly as one might a soccer match on TV.
Both sides have already sustained injuries. The audit board has seen its credibility and authority dented from the public denunciation of its auditing conclusions. The ministry and commission have been publicly humiliated for their role in selling off the bank at a below-market price. It will now be decidedly awkward for them to direct and instruct other financial organizations, and even more difficult to extol the virtues of “acting on one’s convictions.”
The problems regarding the general consensus of the government itself have also surfaced.
This entire episode has essentially been a brawl in broad daylight. At first glance, it appears that none of the parties are in the wrong. For the past three months, the board, at the request of the Finance and Economy Committee of the National Assembly, tried its best to properly audit the official and unofficial documents and interested parties. The ministry and commission simply did their part to reveal the truth of the matter. There will always be complaints when audit results are announced; but this time, the whole thing has gone too far.
Such vast disparities in opinion would be understandable in a theological dispute, perhaps, but how was it that such a controversy arose in the financial sphere? And why were the parties not able to find a compromise beforehand? In essence, it is a collision between entities that were both correct on the working level. The only things that could have made up for the differences were politics, statesmanship and leadership ― but in the absence of all three, everyone has been hurt. For now, the ball has been passed into the prosecutors’ court. They inevitably face an extremely boring and tiring road ahead. Because Lone Star made such a large profit in such a short time, resulting in an outflow of national wealth, the nation has high hopes for finding and punishing those involved. That was probably why the Finance and Economy Committee, tired of appealing to the National Assembly, commissioned the auditors to look into the matter.
The current situation has several parallels with the aftermath of the 1997 financial crisis. Due to the ceaseless grievances of the public, the National Assembly held hearings and the board embarked on a series of extensive audits. The ministry and the Bank of Korea were its main targets. When the audit board proved insufficient, the final stages of the investigation were conducted by the prosecutors’ office ― but ultimately, the public did not get the gratifying conclusion it had expected. The financial crisis was due to a number of overlapping factors and the Supreme Court ruled that policy decisions are not subject to judicial discipline.
Although the Korea Exchange Bank incident differs from the financial crisis, difficulty in clearly discerning facts is one characteristic that both cases share, even more so when policy decision-making prudence is taken into account. The prosecutors’ office now has an overwhelmingly tough job to handle.
Even in the released audit results, there are phrases such as, “Although there have been investigative flaws, such as the way in which we were authorized to make an exceptional audit, no evidence of fraud by Lone Star has been discovered in the process...”
The prosecutors’ investigation has begun, so if there were any individual acts of dishonesty, they should be revealed in due course. When it comes to policy decisions, however, discerning the guilty parties will take a series of long and repetitious battles.
The process will provide another judicial precedent on policymaking and responsibility. Perhaps we can be consoled by thinking of this incident as growing pains as we work to be a developed, advanced nation.
* The writer is a columnist for JoongAng Ilbo. Translation by JoongAng Daily staff.
by Choi Woo-seok
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