Rep. Chung Woo-taik presiding over the National Policy Committee meeting as the chairman.(Photo:Saenuri Party)

Rep. Chung Woo-taik, who is also chairman of the National Policy Committee of the National

Assembly, said it is a good idea to set up a professional independent unit to take charge of corporate structural reform. He said Korea Development Bank cannot continue to take care of the structural reform of corporations in financial trouble, pointing to Daewoo Shipbuilding and Marine Engineering, which suffered huge losses in their operations while under supervision by the state-run policy loan bank.

The lawmaker called for changes in restructuring business firms in default, or those in financial trouble, now being managed by KDB. Firstly, he said Korea should determine whether KDB has done well during the upcoming parliamentary inspection of the government and its agencies, including state-run corporations.

The National Policy Committee’s core concerns will be the problem of Daewoo Shipbuilding’s financial problems just as it is for the financial sector, which has become such a huge concern around the country, and Lotte Group for the business sector as it aroused such a social problem.

The National Assembly should find out what really happened by having key personnel testify at the parliament if necessary. 

The legislature should delve into the responsibility of KDB as a majority stakeholder in the shipbuilding firm and find out whether the state-run bank performed its function well enough. Key executives of the shipyard should be called to testify on their job performance, especially, in connection with the accounting records of the shipbuilder, as there is much interest around the country regarding what truly happened at the shipyard.

The legislator also urged for the reform of the systems which provide funds to financially-troubled companies continuously, comparing them to players earning yellow cards after misconduct. “Those “zombie’ companies continue to dump their products even endangering the operations of the healthy companies,” Rep. Chung said.

When a company goes sour, KDB is tasked with taking care of the company, and if the state-run company fails to normalize it, then KDB takes all the blame, which shows the current system doesn’t work, the lawmaker said.

He went on to say that financial authorities should be given the authority to take preemptive measures to overhaul a troubled company before it goes belly up. The legislator said that would involve reforming the Corporate Restructuring Law, which he officially proposed at a parliamentary meeting. 

The law will be dead at the end of this year, but should be extended and expanded to open the way to preemptive restructuring of companies headed for default, as most companies go belly up due to excessive plant facilities.

Chung said without the expanded powers, nothing can be done to keep companies from going under, and in the end, the burden on the government could be too heavy.