Eximbank criticised for going against government’s green drive

20-Oct-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

The Export-Import Bank of Korea (Eximbank) has come under criticism for assisting in investments of hundreds of billions of won in overseas coal projects, in a contradictory move against the government’s green drive and global growth of renewable energy.

The state-run lender took part in coal development projects abroad multiple times despite fierce opposition from environmentalist organisations. Its latest involvement overseas coal investments was announced last week when the Korea Electric Power Corp. (KEPCO) decided to build the Vung Ang 2 coal plant in Vietnam. Eximbank will partner with KEPCO by offering loans for the project worth 2.6 trillion won ($2.2 billion).

In 2017, the state-run bank provided loans worth 292.3 billion won for the establishment of the Cirebon 2 coal-fired power plant in Indonesia. The lender also offered 136.5 billion won in loans for the Nghi Son 2 plan in Vietnam in 2018.

Rep. Kim Du-kwan of ruling Democratic Party of Korea denounced Eximbank for failing to be side with the global energy paradigm shift and urged the lender to stop wasting taxpayers’ money on the environmentally threatening projects.

“The government is seeking to achieve a paradigm shift into safer and cleaner energy sources, but the state-run lender is taking contradictory steps by exporting coal power plants to developing countries,” Kim said Monday. “Eximbank should declare its withdrawal from coal investments and drop the plan to join the Vung Ang 2 project so as not to be further disgraced internationally.”

Unsurprisingly, Eximbank CEO Bang Moon-kyu came under harsh criticism during a National Assembly audit surrounding the lender’s apparent failure in tight budget management. The lender reported losses of 445.5 billion won in 2019, hit by a drop in the share price of Korea Aerospace Industries (KAI). Eximbank holds a 26 percent stake in KAI, but lost hundreds of billions of won after the firm’s stock price dropped by a quarter over the past four years.

Lawmakers criticised Bang for failing to play a proper role as a major shareholder of the defense company, instead passively watching the stock price decline for three consecutive years.

Eximbank bought KAI shares twice from Korea Development Bank (KDB) in 2016 and 2017. But the aerospace firm has since been mired in accounting fraud, which drove down its stock value. The firm’s stock value has yet to recover due to the virus-induced aerospace market uncertainty.

“We are going to come up with measures ? such as sales of the KAI shares,” Bang said during the audit. “But the company is still struggling due to sluggish aircraft sales in the wake of the COVID-19 pandemic.”

Moral hazards

The Eximbank chief has also come under fire for moral hazard of its employees. Lawmaker Yoo Gyeong-joon claimed the number of scandals surrounding the employees’ moral risks was on the steep rise since Bang took office in October 2019.

According to data by the state-run lender, it took disciplinary action on 10 cases this year involving situations such as sexual harassment and inappropriate housing investments.

But the lawmaker took issue with weak disciplinary action of the lender against moral hazard in employees. Eximbank runs a special programme to lighten punishment for those who have received an accolade. But about 65 percent of all employees from the lender obtain the accolade, which is why a growing number of employees are mired in such scandals there, according to the lawmaker.

“We are sorry for the shameful incidents revealed after carrying out an internal inspection,” Bang said. “To prevent the recurrence of such incidents, Eximbank is going to enhance internal discipline by making efforts to receive anti-corruption certificates from international organisations.”



Category: Korea

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