"Was It Not Intentional Default? What Has the Government Been Doing for a Month?"... Economic Crisis Question Raised by Kim Jin-tae and the Opposition

Opposition Raises "Political Default Possible Despite Ability to Repay Debt"
Financial Supervisory Service and Others Could Not Have Been Unaware but Remained Passive for a Month
Kim Ki-sik Says "The System Has Collapsed"

Kim Jong-min, head of the Emergency Financial Crisis Investigation Team initiated by Kim Jin-tae of the Democratic Party, is attending and speaking at the 'Emergency Financial Crisis Investigation Team Meeting initiated by Kim Jin-tae' held on the 28th at the National Assembly Floor Leader's Office. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Naju-seok] The Democratic Party of Korea raised the possibility of ‘intentional default’ regarding Gangwon Governor Kim Jin-tae’s decision to default on a debt guarantee that triggered the bond market turmoil. There are also calls to examine the economic and financial authorities’ systems, which stood by passively as the situation escalated beyond Governor Kim’s responsibility.

At the ‘Emergency Fact-Finding Committee Meeting on the Economic Crisis Triggered by Kim Jin-tae’ held at the National Assembly on the 28th, Kim Jong-min, a Democratic Party lawmaker and head of the investigation team, asserted, "Based on the investigation results, this was not due to ignorance but was done intentionally." He added, "If it were due to ignorance, there might be grounds for leniency, but intentional default for personal motives is unforgivable," criticizing it as a "politically motivated intentional default."

According to the investigation team, "Contrary to Governor Kim’s claim that the Jungdo Development Corporation (GJC), which filed for rehabilitation, was ‘unable to even pay interest,’ the Gangwon Provincial Council sold land worth approximately 299.7 billion won, and recovered 120 billion won from this, making it possible to repay both interest and principal," adding, "Furthermore, by the maturity date in November next year, at least 160 billion won, which is over 80% of the total debt, can be repaid."

Democratic Party lawmaker Heo Young, representing Chuncheon, pointed out, "They intentionally filed for rehabilitation to cause default, then invalidated the already sold plans, and now, since land prices have risen, they are trying to nullify the contracts and repay debts by re-contracting at the higher land prices," criticizing, "It’s as if a public institution is making money by re-contracting after already signing contracts."

Lawmaker Heo also noted, "The final maturity date of GJC’s debt was December 28, 2023, more than a year away, and September 29 was the first maturity date," adding, "Since GJC paid four months’ interest in advance, the maturity would have been automatically extended if only interest was paid, yet Governor Kim declared default." He further pointed out, "According to the Local Finance Act and others, changes to debt guarantees require approval from local councils, but no such approval was obtained," suggesting, "This could be an abuse of authority or breach of trust."

[Image source=Yonhap News]

Kim Ki-sik, former Financial Supervisory Service chief and director of the The Future Research Institute, said, "After Governor Kim declared default on September 28, the government’s measures came out on the 22nd of this month, but the Financial Supervisory Service has a monitoring team for bond market trends, so they could not have been unaware of the rapidly worsening credit crunch," adding, "Reports should have been made about the rapidly freezing situation, but Deputy Prime Minister Choo Kyung-ho said in New York that it was not serious." He continued, "Why was there no reporting to policy decision-makers and no policy formulation process? This is a key issue in holding the Yoon Seok-yeol administration accountable," emphasizing, "We need to find out when and how reports on bond market trends were received and what instructions Deputy Prime Minister Choo and financial authorities issued."

Kim also said, "If the system was not operating, it shows that the system is completely broken," adding, "It is important to reorganize the system and hold those responsible accountable even now."

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