KDIC Have Difficulty Collecting 650 Bil. Won Loans
A Cambodian court ruled in favor of World City Co. instead of the Korea Deposit Insurance Corp. (KDIC) in a trial on the "Camko City" case. Accordingly, the KDIC will have difficulty in recouping 650 billion won (US$549.45 million) worth of loans extended by Busan Savings Bank to World City, the promoter of the Camko City development project. The savings bank went bankrupt, making it impossible for about 38,000 customers to withdraw their deposits. As the KDIC had trouble persuading the Cambodian court, it is expected to need more time to collect the assets and relieve the victims.
The state-run deposit insurer announced on July 9 that it has lost a lawsuit filed by World City, the promoter of the Camko City project, with a Cambodian court in 2013 to take back KDIC’s stake in the real estate project. The KDIC will closely look into the ruling of the second trial and plans to appeal to a top court in Cambodia. In addition, it will closely work with an investigation team at the Supreme Prosecutors' Office to repatriate the World City CEO, a Korean surnamed Lee, who is on the Interpol's Red Corner Notice list. This is to prevent him from exercising an unfair influence in Cambodia and adversely affecting the trial result in the future.
KDIC President Wi Sung-baek, who had been working hard to relieve the bank’s victims, is also disappointed with the latest ruling. After taking office in September last year, he visited Cambodia in November last year and March and June this year and contacted the Cambodian government to address the Camko City issue.
A KDIC official said, “We disagree with the latest ruling of the Cambodian court. We will thoroughly prepare for the appeal hearing and focus on normalizing the Camko City project to compensate the 38,000 victims for their damages.”
The Cambodian court’s ruling does not mean that there are no relief measures left for the victims. This is because the KDIC has secured a court order allowing it to take possession of the assets of Busan Savings Bank in Cambodia.
A KDIC official said, “The latest lawsuit was filed by Lee to get back the KDIC’s stake in the project in order to escape from the KDIC’s influence. The ruling does not mean that the KDIC’s rights to collect the 650 billion won (US$549.45 million) worth of loans have lapsed.”
Financial authorities are also unsatisfied with the latest ruling on the Camko City case. During a news conference on July 9, Financial Services Commission (FSC) Chairman Choi Jong-ku said, “The ruling on the Camko City trial is undesirable. The KDIC will continuously deal with it and the FSC will provide support.”
Meanwhile, Camko City, which means Cambodia and Korea City, is a new city development project in suburban Phnom Penh, Cambodia. It was promoted by World City CEO Lee who took out a huge loan from Busan Savings Bank Group. He borrowed 236.90 billion won (US$200.34 million) from Busan Savings Bank. The project was halted in 2010 due to a lack of demand for the commercial facilities developed. Busan Savings Bank was declared bankrupt by a court in March 2012, creating a considerable number of victims. The lawsuit for the Camko City project has been ongoing for five years now, including several times of first and second trials.