KDIC Wins Legal Battle to Return Money to Depositors Suffering from Camko City Project Failure
President Wi of KDIC vows not to stop making efforts to revise law on wrong remittance
President Wi Sung-baek of Korea Deposit Insurance Corp.(KDIC). (Photos: KDIC)
Since taking office as president of the Korea Deposit Insurance Corporation, Wi Sung-baek, has put a lot of effort into solving the Camko City Project in Cambodia.
“I have paid a lot of attention to the Camko City Project in Cambodia, which sparked bankruptcies of Korean savings banks. After visiting Cambodia four times and sparing no efforts in addressing the problem, I finally won a fierce legal battle after six years.”
Camko City is a new city in the northwest of the Cambodian capital of Phnom Penh that was supposed to be built in six stages from 2005 to 2018.
A South Korean businessman surnamed Lee set up a development company in Cambodia to promote the project. Five Busan-based savings banks, including Busan Savings Bank, loaned 236.9 billion won to Lee for the project.
But the project is currently suspended due to problems selling property, among other issues. Interest on loans snowballed, to stand at 684.7 billion won as of the end of 2019.
“Busan-based savings banks suffered a great deal from the failure of the project. Their business was suspended in February 2011, 38,000 people with a deposit of 50 million won or more, and subordinated creditors were not able to get their money back,” Wi said.
“The urgent task is to normalize the Camko City Project and make profits from the project to return some of the money to them.”
KDIC, which injected 6.5 trillion won in public funds into the Busan-based savings banks, sought to restart the project by taking the management rights to World City, a local developer.
However, it faced difficulties in February 2014 when debtor Lee filed a lawsuit to return the stake to him. Lee filed the lawsuit with a Cambodian court to get back a 60 percent stake in World City that KDIC held, saying, “The Busan-based savings banks did not lend money to me properly, kindling problems in the project.”
The problem became bigger as KDIC lost the first and second trial.
“When I visited Cambodia for the first time in November 2018, I felt strongly that the interested parties including the Cambodian government were not favorable to KDIC,” Wi said. “I urgently asked the National Assembly and the Prime Minister’s Office for help because I thought the South Korean government should take part in solving the problem.”
The lawsuit process played out in favor of Lee, who had extensively lobbied Cambodian politicians and Cambodian government officials. But things began to change when South Korean President Moon Jae-in met with Cambodian Prime Minister Hun Sen in March last year.
President Moon asked Prime Minister Hun Sen to resolve the Camko City Incident smoothly.
“I was included in the economic delegation during President Moon’s visit to Cambodia and met with high-ranking Cambodian government officials,” Wi said.
“When I explained to them that World City project received hard earned money from tens of thousands of depositors in Busan, and that the money should be returned to the depositors after the normalization of the project, they began to recognize the importance of the issue little by little.”
Despite such efforts, a Cambodian court ruled in favor of debtor Lee in the second trial in July last year. “Although many lawmakers, Busan city officials and prosecution officials visited the site to fill up the narrow court to put pressure on the Cambodian government, losing the second trial made me confused,” Wi said.
“I continued to increase my contacts with senior Cambodian officials because I thought I should not give up until the end.”
Meanwhile, President Moon and Prime Minister Hun Sen met at the ASEAN Summit held in Bangkok, Thailand and another meeting between the two took place in February 2020 when Prime Minister Hun Sen visited Korea to attend the World Summit 2020.
The Camko City Project was brought up as the main topic of the meeting, which changed the Cambodian government’s mind.
“KDIC has reached a big turning point in an appeal trial for a stock return in Cambodia’s Supreme Court in February 2020,” Wi said. “The follow-up process is now underway to secure the management control of World City.”
Along with the Camko City Project, Wi’s ambitious project to save wrong remittance has failed to revise a related law in the 20th National Assembly.
The total amount of wrong remittance in the financial sector in 2019 amounted to 158,000 cases and 320.3 billion won. But Wi vowed not to stop making efforts to revise the law.
A view of the building where KDIC has its offices in Seoul.