Korea Deposit Insurance Corp. staff on haven list

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Korea Deposit Insurance Corp. staff on haven list

Newstapa, the Web site operated by the Korea Center for Investigative Journalism, reported yesterday that six employees of Korea Deposit Insurance Corporation (KDIC) were listed as owners of two shell companies in tax havens overseas.

According to the seventh list posted by Newstapa on Saturday, the employees owned Sunart Finance Limited and Trackvilla Holdings Limited in the British Virgin Islands. It said the companies were established in September and December of 1999, after the Asian financial crisis.

Newstapa emphasized that the KDIC did not properly report the establishment and operation of the shell companies to regulatory agencies or the National Assembly.

However, the KDIC strongly denied the allegations, saying the establishment of the shell companies was a reasonable measure to reclaim public funds.

KDIC said it was forced to take over the insolvent Samyang Merchant Bank, which had assets hidden abroad. To claim those assets, KDIC told Newstapa, it was necessary to establish a foreign branch, which according to Korean law at the time could not be done in its own name.

“When we tried to establish a subsidiary, we had to go through an amendment of the law and the enforcement decree, which would have required a long time. If we just left the assets abroad, Samyang Merchant Bank would have stolen them,” a KDIC official said.

KDIC said it reclaimed $22 million out of $54 million in Samyang Merchant Bank assets, excluding losses due to depreciation and insolvency, in February 2002 through the shell companies.

However, the government watchdog Financial Supervisory Service said that trades in foreign exchange must be reported and it will investigate if the KDIC failed to do so.

Newstapa disclosed the information on 180 shell companies reportedly established abroad in tax havens.

Among the names on the list are Lee Gil-woo, CEO of oil importer Petro Korea with sales of 770 billion won ($682 million) last year, and Lee Chung-gu, chairman of the midsized home electronics company Unix.

BY KIM JUNG-YOON [kjy@joongang.co.kr]
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