Probe into MB projects now in gear

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Probe into MB projects now in gear

With a special parliamentary investigation into the country’s overseas resource development now in full swing, the political stakes loom large for both the ruling and opposition parties, which must decide how the costly energy projects of the previous administration will be defined.

The opposition New Politics Alliance for Democracy (NPAD) is determined to put key officials from the former Lee Myung-bak administration on the stand to testify before lawmakers at the National Assembly.

Those officials are set to be ruthlessly questioned over what has been described by opposition lawmakers as a series of mismanaged projects that resulted in the loss of more than 35 trillion won ($32.3 billion) in tax money.

The ruling Saenuri Party has refuted the NPAD’s offense, warning against turning the investigation into a politically motivated front to criticize Lee, President Park Geun-hye’s predecessor.

While it is generally agreed across party lines that it is crucial for Korea to secure energy resources elsewhere, the main opposition argues that too many energy deals were paid for at exorbitant prices and signed without due diligence. It also claims that more than 35 trillion won in state money was wasted on Lee’s resource development initiative.

According to the Ministry of Trade, Industry and Energy, the Lee administration spent about $37 billion on resource development projects.

Of that, a mere $4.9 billion, or 13.2 percent, has since been recovered, which is markedly low when compared to the recovery rate of the Roh Moo-hyun government, at 72.8 percent, and the average recovery rate of 51.9 percent.

In its argument that Lee was responsible for those losses, the NPAD claims that the government agencies related to energy development hastily pushed to purchase foreign energy companies under immense pressure from the Lee Blue House, which made securing overseas resources one of its top priorities.

The main opposition has repeatedly cited the business deal concerning North Atlantic Refining Limited (NARL), a Canadian oil refinery, for which the state-run Korea National Oil Corporation (KNOC) paid 1.37 trillion won in a 2009 acquisition deal.

The investment quickly turned into a financial liability for KNOC, with the Canadian refinery sustaining some 100 billion won in losses annually.

Pressured by the Park government to curb the deficit, the KNOC sold NARL to an American investment bank last August for 32.9 billion won - a fraction of what it paid four years earlier.

The NPAD has been scrambling to collect similar examples for the investigation, which will run until April 7 and may be additionally extended for 25 days.

The opposition demands that former senior officials in the Lee government testify over the failed investment deals inked during his term since 2008. It is adamant that Lee also be questioned.

The NPAD is seeking other key influential figures from the former government, including Lee Sang-deuk, a former five-term lawmaker and the older brother of former President Lee, 74, and incumbent Finance Minister Choi Kyung-hwan, who at the time oversaw resource diplomacy projects as the economic minister.

The NPAD has been gearing up to bring in the former president for what is likely to be an intense questioning by lawmakers, though it remains to be seen whether the party will have that chance.

No former president has ever been questioned by lawmakers in a legislative investigation, and it is likely that there will be strong backlash from Saenuri lawmakers close to Lee.

However, public sentiment could shift in favor of having the former president testify, which would increase the pressure on the ruling party to concede.

Former officials in the Lee government claim that the specifics of the resource deals were determined by relevant government agencies and that the presidential office did not intervene in the decision-making process.

“The Blue House was not briefed on the specific terms of the investment contracts,” said Kim Du-woo, the former presidential secretary for public relations under the Lee government. “Lee just worked to show bureaucrats that there were energy development opportunities outside the country.”


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