KIC faces state auditor's inspection

By Yoon Ja-young

The Korea Investment Corporation (KIC) is facing an inspection by the Board of Audit and Inspection over a planned investment in the Los Angeles Dodgers.

The National Assembly Strategy and Finance Committee held a meeting, Tuesday, and approved a request for an audit of the KIC.

According to lawmakers, the country’s sovereign fund is planning to invest $400 million to gain a 19 percent stake in the Major League Baseball (MLB) team from Guggenheim Baseball Management, its largest shareholder.

However, there has been concern that it might result in huge losses because the team has been in deficit for some few years. Analysts also point out that the KIC won’t be participating on the board either even if it becomes a co-owner of the team according to the deal.

The committee determined that the KIC may have been slack in assessing profitability and the risk in diverse alternative investments it is making.

Rep. Kim Hyun-mee of the main opposition New Politics Alliance for Democracy (NPAD) said the deal is risky because it blocks the KIC from selling its stake in the Dodgers for 10 years once it buys it, while the KIC is obliged to withdraw its investments if Korea suffers from a lack of foreign reserves.

Meanwhile, Rep. Park Won-suk of the minor opposition Justice Party demanded the dismissal of KIC Chairman Ahn Hong-chul.

He said that Ahn violated regulations twice in the investment process for the LA Dodgers.

“According to KIC Act, the steering committee can dismiss executives if they violate regulations. Strategy and Finance Minister Choi Kyung-hwan or Bank of Korea Governor Lee Ju-yeol, who are ex-officio members of the committee, should take steps to dismiss Ahn,” the lawmaker said.

He said that Ahn met executives of the Dodgers and Guggenheim prior to the start of the official investment decision process, which is against the regulations. He added that the KIC hid the fact that this meeting took place from the National Assembly, omitting it from Ahn’s overseas business trip record.

He also blamed Ahn for having revealed the investment plan to the media early this month.

“It is a violation of the no disclosure agreement that KIC signed with Guggenheim. If Guggenheim takes issue with this and files a civil lawsuit, there is little possibility of KIC winning the case. It is also a violation of the regulation.”

KIC, however, said it has been abiding by all regulations with regard to its investment.

The spokesperson for KIC said that Ahn’s business trip was made at the request of Guggenheim. He added that the media interview was also made with the consent of Guggenheim.

Ahn has been clashing with the opposition parties after it was revealed that he had slandered late former President Roh Moo-hyun and the opposition party on a social networking service.