Pathetic Conduct
The Korea Exchange’s feasibility study report for its investment in the Laos Stock Exchange was completely copied from a Cambodian report. This misinformation has cost the Korea Exchange huge losses in the investment for years.
According to Unified Progressive Party lawmaker Lee Sang-kyu, the report that was drawn up in March 2008 for the establishment of the Laos Stock Exchange was plagiarized from an outsourced report about the Cambodian Stock Exchange. “The last 20 pages of the 90-page report are perfectly identical to the Cambodian report, except for the country names and a couple of additional paragraphs,” he said, adding, “The overview of the industry, economy and politics of Laos at the front of the report was copied from the Laos Embassy as well.”
A total of 17 million won was invested in the preparation of the Laos Stock Exchange document. The Korea Exchange invested US$12 million when it exported its infrastructure to Laos three years ago.
At present, only three companies are listed on the Laos Stock Exchange. This is why the Korea Exchange recorded losses of 490 million won (US$466,068) in 2011, 1.24 billion won (US$1.18 million) in 2012, and 1.28 billion won (US$1.21 million) in 2013, let alone brokerage income, despite its 49 percent stake in the bourse. The mistake is also likely to be repeated in other countries such as Thailand, Vietnam, Uzbekistan, and the Philippines, as the Korea Exchange is planning to expand its business to these regions.
“Less-developed countries like Laos and Cambodia share similar political and economic conditions, which means the reports tend to be similar to one another,” a representative from the Korea Exchange explained, continuing, “We need to take a long-term perspective in these markets, and early stage losses are inevitable in many cases.”