[Deputy Editor's Column] Who Benefits from the Injection of Public Funds?

[Asia Economy Reporter Jo Gang-wook] There is great interest in the 40 trillion won-scale Industrial Stabilization Fund (ISF) established to support companies facing liquidity crises due to the novel coronavirus disease (COVID-19) pandemic. As companies pushed to the brink are clamoring for financial support, the question remains as to which companies will actually qualify for assistance.

The first company expected to receive support is Korean Air. This is because the 1.2 trillion won in support funds from the Korea Development Bank and the Export-Import Bank of Korea to Korean Air will be converted into the ISF. According to financial authorities, these funds were initially injected by state-run banks in a 'pre-support' format before the fund was activated to urgently rescue Korean Air from its critical crisis. Additionally, since Korean Air has approximately 4 trillion won in borrowings maturing this year, there is a high possibility of additional support through the fund separate from this amount.

The problem is that there are signs of another management rights dispute emerging over Korean Air, whose situation has become so dire that massive public funds are being injected. The three-party shareholder coalition consisting of former Korean Air Vice President Cho Hyun-ah, KCGI, and Bando Construction, known as the 'Anti-Ko Won-tae Alliance,' recently filed a lawsuit to cancel the resolution of the March shareholders' meeting. It is also reported that they are pushing for an extraordinary shareholders' meeting aiming to appoint three internal and external director candidates they recommend. If this happens, Hanjin KAL, the largest shareholder of Korean Air, will once again be dragged into a muddy battle over management rights. If the management dispute prolongs, Korean Air's recovery efforts will be hindered, and the already plummeting corporate value will inevitably decline further.

The business community points out that the government is excessively concerned about so-called 'preferential treatment controversies' regarding corporate support. However, if, even while emergency support funds are being injected, one side is engaged in a fierce struggle to seize management rights without regard for the crisis, it is questionable whether one can confidently claim that this is not preferential treatment. The ISF's resources come from government-guaranteed fund bonds. Ultimately, this is a deficit-ridden national debt that must be repaid with taxpayers' money. Besides Korean Air, there are numerous companies seeking assistance, such as Doosan Heavy Industries, Asiana Airlines, and SsangYong Motor. Each company must not forget the justification for why they should be supported with taxpayers' money.

This content was produced with the assistance of AI translation services.