Parties Collide over Hyundai, Monetary Policy

Korea Times (Seoul, Korea), April 19, 2001 | Go to article overview
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Parties Collide over Hyundai, Monetary Policy

Continuing three days of question-and-answer sessions in the National Assembly, the ruling and opposition parties yesterday locked horns over the government's alleged favors for the ailing Hyundai Construction & Engineering Co. and grilled the central bank's governor over monetary policy.

At a meeting of the National Policy Committee, the main opposition Grand

National Party (GNP) alleged that collusive links between the government and Hyundai precipitated creditor banks' recent decision to write off the company's debts in a debt-for-equity swap and extend fresh financial aid to the near-bankrupt HEC.

On March 29, HEC's creditor banks announced that they would convert HEC's debts of 1.4 trillion won into equities and make an additional capital investment of 1.5 trillion won. They also agreed to extend an emergency fresh loan of 390 billion won to the troubled firm.

Citing creditor banks' swift action on the ailing Hyundai construction, Rep. Eom Ho-sung of the GNP raised strong suspicions about the government's special treatment of Hyundai. He contended that it flied in the face of the much-touted market principle to save the company, while leaving Dong-Ah Construction in the process of being liquidated.

GNP lawmaker Suh Sang-sup warned that the debt-for-equity swap scheme stands a high chance of necessitating the further injection of public funds into involved creditor banks because the decision was made while the accounting company has yet to finalize due diligence on the troubled construction firm.

``It is unclear whether the creditor banks can stand additional losses,'' Suh said, demanding the punishment of HEC's management.

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