The 2003 sale of Korea Exchange Bank (KEB) to the American private equity fund Lone Star Funds remains controversial. Lone Star recently started moving to sell KEB, and the controversy is being amplified by the fact many think it will walk away with W3 trillion in profit when the deal is done.
The questions are not that complicated. All that needs to be clarified is who gave the country's financial supervisory authorities the basis for giving KEB a poor rating as a financial company by determining its equity capital rating to be 6 percent back at the end of 2003, how the government, having seen a mere "five page fax" on the matter approved of the sale to Lone Star based on an exception in banking laws. Much of the suspicion leads to the role played by Lee Gang Won, KEB's president at the time.
It is not good to have the controversy go on like this. In the eyes of foreigners it could look like it was fine when the bank was sold and now only becomes a problem because the fund that bought it is going to leave with such a massive profit, regardless of what our motives for questioning the situation may be. The quickest way to put an end to the unanswered suspicions would be to get the relevant records and documentation from the government agencies that had authority in the matter, review them, and disclose the results. Even if the National Assembly's National Policy Committee does not have a channel for performing audits, an audit by the Board of Audit and Inspection (BAI) seems unavoidable. The question of whether or not the prosecution needs to investigate would come after that.
There is a lesson to be learned here that must not be lost. People need to be painfully aware that thorough lack of competence led to the giving away of a preposterous portion of the national wealth. The country needs to retrace the steps that were taken one by one to find the mistakes in order to make sure the same kind of price is never paid again. The government is not the only entity at fault. What were Korean financial companies doing when Lone Star saw the bonanza that was KEB and came ready to invest? The financial industry needs to reflect on its behavior; only now are Korean institutions maneuvering to buy the bank – and at many more times the price – now that the uncertainty is gone and KEB is making money again.
The Hankyoreh, 22 February 2006.
[Translations by Seoul Selection]
[Editorial] Don't Ignore the Lone Star Controversy |
