Gangwon-do, "No problem with guarantee extension? Irresponsible idea" Choi Moon-soon refutes

Board of Audit and Inspection, "Approved 205 Billion Won Debt Guarantee on 2014. 11. 27 Without Provincial Council Resolution"
"GJC with Expenditures Exceeding Income Refuses to Submit Data, Making Accurate Scale Assessment Impossible"

[Gangwon Provincial Government]

[Asia Economy Reporter Ra Young-cheol] On the 25th, former Gangwon Governor Choi Moon-soon’s remarks regarding the Legoland incident were rebutted by Gangwon Province as "factually incorrect."

On the same day, Gangwon Province responded to former Governor Choi’s claim that "GJC is a company with no problems as long as the guarantee is extended" by stating, "The annual guaranteed revenue from Legoland admission fees (based on 2 million visitors) for the Jungdo Development Corporation is only about 200 million KRW," emphasizing, "This suggests why the 205 billion KRW debt has not been addressed for the past eight years."

They continued, "Since additional project costs will be incurred for infrastructure construction and the establishment of the historic park and museum, the business structure inevitably accumulates deficits," and pointed out, "The perception that 'there is no problem as long as the guarantee is extended' reflects a lack of responsibility regarding debt repayment."

Regarding the claim that "GJC is a financially sound and profitable company according to its financial statements," they stated, "Excluding the current loan of 205 billion KRW, GJC’s business balance is estimated to have a massive deficit of approximately 170.8 billion KRW, and the exact scale cannot be determined due to GJC’s refusal to submit data."

They further rebutted, "Former Governor Choi discusses profitability based on assets and liabilities, but 'assets minus liabilities' and 'profit versus loss' are entirely unrelated concepts, indicating a lack of understanding of accounting principles."

They explained that in financial statements, "assets" are the sum of "capital and liabilities," so it is natural for assets to exceed liabilities.

Regarding the claims that "money was paid unnecessarily" and "if the company had been left alone, it could have repaid the debt by paying interest through guarantee extensions," they said, "The interest alone on the 205 billion KRW debt exceeds 10 billion KRW annually," adding, "Since the construction defects had already been revealed and CP extensions were being made, extending the final repayment grace period beyond November 2023 was impossible."

The logic is that the principal must be repaid to clear the massive interest.

Regarding the 'lack of approval from the provincial council,' they cited the Board of Audit and Inspection’s 'Audit Status Report' to refute former Governor Choi’s claims.

According to the December 2015 audit report on local government financial operations by the Board of Audit and Inspection, Gangwon Province approved expanding the debt guarantee amount to 205 billion KRW on November 27, 2014, without obtaining the provincial council’s resolution, because the Merlin Group was required to prepare a definite funding plan before the Legoland Korea groundbreaking ceremony (November 28, 2014).

Earlier that same November, during the 251st regular session of the Gangwon Provincial Council, council member Choi Sung-hyun pointed out, "The province provided a debt guarantee of 205 billion KRW to LL Development, the developer of Legoland, without the council’s resolution. Although the province would have to repay the loan in case of emergency, it did not even explain this to the council in advance."

Regarding the claim that "BNK, the lead securities firm, agreed to extend the maturity one day before it was due," they dismissed it by stating, "At that time, Gangwon Province was negotiating a rehabilitation application with BNK, and what former Governor Choi claims refers to a 'maturity extension based on the assumption of a rehabilitation application.'"

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