Government fails to monitor bailout funds: Kim Dae Jung
Government fails to monitor bailout funds: Kim Dae Jung
Associated Press, Seoul
President Kim Dae-jung admitted Saturday that his government has failed to properly supervise the use of US$116.8 billion it has supplied to bail out struggling banks in the wake of the 1997-98 Asian financial crisis.
His acknowledgment came two days after government auditors said 4,976 businessmen receiving government bailout funds pocketed $5.1 billion in hidden real estate, bogus overseas investment and other forms of embezzlement.
The finding prompted charges that the government has bungled in regulating the huge funds. It also tainted the reputation of Kim's government ahead of next year's presidential elections.
"The government is also responsible for failing to strictly supervise" the funds, Kim said during an interview with the national MBC-TV Saturday.
Kim promised to punish those who will be found responsible for the failure. He also vowed to confiscate the hidden properties of corrupt businessmen and punish bank executives who failed to prevent those businessmen from embezzling company funds.
"The biggest blame should go to those business owners who stole properties for their personal sake although their companies collapsed," Kim said.
"The government will collect the money by holding them accountable in both criminal and civil court procedures."
After a nine-month investigation, the Board of Audit and Inspection asked prosecutors on Thursday to file criminal charges against 44 businessmen and former bank executives.
It ordered many others to face discipline after coughing up pocketed funds. The names of those executives and their companies weren't revealed.
When the Asian financial crisis engulfed South Korea, one of the first to suffer was its overstretched banking sector, saddled with mounds of bad loans incurred by thousands of companies that collapsed.
The government rushed to rescue the banks with funds, virtually nationalizing them.
The bailout funds helped those banks afloat. But those banks continued lending to Hyundai and other troubled conglomerates, or chaebol, despite the country's financial woes being blamed largely on big businesses' reckless expansion in the past.
The lending policy raised questions about the credibility of the government, which has promised to end the past practice of showering favors on the nation's family-controlled conglomerates and liquidate any company whose debts exceed equity.
Government auditors began an investigation after political opposition and activist groups charged that some of the bailout funds were wasted because bankrupt businessmen were embezzling company funds.