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Stealthy law broadens debt burden

A law that was passed virtually unnoticed will come into effect this month and has prompted many strategic and financial investors to question whether any investment in Korea’s financial sector is wise.

       
Wilfred Horie

As if wooing potential foreign buyers to buy Korean banks wasn't tricky enough, the government has decided to make it harder for itself to hold on to the foreign investors it already has. A curious piece of legislation passed in July is due to come into effect this month. It has split the banking community down the middle with regards to the problems it will cause and has also prompted many strategic and financial investors to question whether any investment in Korea's financial sector is wise.


On July 18 2001, Korea's judiciary committee tabled the corporate restructuring promotion law. The same day, late in the evening, when most congressmen had disappeared from the National Assembly for their long-awaited holidays and evening entertainment, the judiciary committee sent it down to the floor. It was passed, in the words of bankers, without anyone's knowledge.


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