KDB grilled over validity of selling DSME, Daewoo E&C, Asiana

Asia's Tech News Daily

KDB grilled over validity of selling DSME, Daewoo E&C, Asiana

Korea Development Bank Chairman Lee Dong-gull speaks during the National Assembly audit in Seoul, Friday. Joint Press Corps

By Park Jae-hyuk

Lawmakers peppered Korea Development Bank (KDB) Chairman Lee Dong-gull with questions about the validity of the state-run lender’s ongoing attempts to dispose of financially vulnerable companies in key industries.

During the National Assembly audit of the bank, Friday, Rep. Park Yong-jin of the ruling Democratic Party of Korea (DPK) suggested KDB consider alternatives to its plan to sell Daewoo Shipbuilding & Marine Engineering (DSME) to Hyundai Heavy Industries (HHI). He proposed selling DSME shares to the public or forming a council to discuss ways to foster the country’s shipbuilding industry.

Lee, however, rejected the proposal, saying that KDB should prioritize selling DSME to HHI at this moment, given that DSME is still facing huge losses, despite a temporary increase in shipbuilding orders of late.

The lawmaker also asked the KDB chairman to provide proof backing up his previous remarks that the DSME union protesting the acquisition deal has caused a delay in the European Union’s (EU) approval of the merger of the two Korean shipbuilders.

“It is difficult to say that the union’s opposition is the only reason for the delay, but the atmosphere has had a negative impact on the approval,” Lee answered.

Rep. Bae Jin-gyo of the minor opposition Justice Party requested the Board of Audit and Inspection to investigate KDB Investment’s sale of Daewoo Engineering & Construction (Daewoo E&C) to Jungheung Construction.

“Jungheung, which initially offered 2.3 trillion won ($1.9 billion), asked the seller to allow lowering the bidding price, and then it was selected as the preferred bidder by offering 2.1 trillion won,” the lawmaker said. “This consequently led the government to lose 200 billion won.”

The KDB chairman responded that the procedure was legal, saying that the KDB subsidiary guaranteed equal opportunities for all bidders.

Regarding Korean Air’s acquisition of Asiana Airlines, he emphasized again that the Fair Trade Commission should approve the merger of the two carriers as soon as possible, maintaining a skeptical stance about Asiana’s independent survival.

“All countries across the globe are bolstering the competitiveness of their aviation industries through the mergers of their air carriers,” Lee said. “We have been left behind in the global competition, due to the impossibility of taking measures to enhance the competitiveness of our aviation industry.”

The KDB chief also said that he will discuss ways to support SsangYong Motor with representatives from the government and the carmaker’s management and labor, once the preferred bidder to acquire the company is selected.

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