By Chung Ah-young
The former Lee Myung-bak administration pushed ahead with a controversial four-river refurbishment project costing a total of 22 trillion won without a national consensus.
The river project, which focused on increasing leisure and tour activities, under the motto of "green growth," was one of Lee's main projects during his presidency. The construction started in June 2009 and finished in early 2013.
Over the past five years, however, the project has transformed the rivers into artificial reservoirs and lakes, obstructing their natural flow and resulting in environmental problems. Also, it is turning into a money-eater.
After jumping into the four-river project, the state-run Korea Water Resources Corporation (K-Water) has ended up 8 trillion won in debt.
It was supposed to retrieve its leveraged investment with revenue to be generated from resorts and other leisure facilities to be built alongside the rivers. But such facilities have not been constructed, leaving K-Water mired in heavy debt and accruing an interest burden.
The Ministry of Land, Infrastructure and Transport has requested the finance and strategy ministry to allocate 80 billion won for the K-Water's repayment of part of its debt principal and interest in its 2015 budget.
The ministry's request is based on the result of a national policy meeting back in 2009. At the meeting, the government decided that the K-Water would invest 8 trillion won in the river project with interest being paid by the national treasury and the principal repaid from project profits from real estate businesses along the rivers, which have been sluggish amid the property market slump.
It also decided that the repayment would be decided depending on the financial situation when the project ends.
K-Water was reluctant to invest 8 trillion won in the project from the start because the company couldn't afford it as its annual revenue was 200 to 300 billion won and there was no relevant rule regarding the investment. Also, the project was deemed unprofitable and didn't belong within the company's business scope.
But after Kim Kuen-ho, Lee's close aide, became CEO of K-Water, the investment was decided on at a board meeting.
In return for the investment, the company was recognized with an A-grade management evaluation of state-run institutions from 2008 to 2011 after it took part in the project.
Also, from 2009 to 2012, Kim received 552 million won worth of extra bonuses, according to Alio, a government-run portal that provides data on the public sector.
Also, its employees received 52 million won in performance-based bonuses over the last four years.
The debt owed by K-Water has soared from less than 2 trillion won in 2008 to 3 trillion won in 2009, 8.1 trillion won in 2010, 12.6 trillion won in 2011, 13.8 trillion won in 2012 and 14 trillion won in 2013. At this rate, its debt is expected to reach 19 trillion won around 2017.
K-Water has said it will repay 1.3 trillion won from its own pocket through other profit-making projects such as the Eco Delta City Project in Busan and other waterfront development projects.
It is expected to request government support for the remaining 6.67 trillion won for the repayment of the principal aside from 320 billion won interest. If other projects fail to earn profits for the company, the government might have to set aside more money for the company to help it repay the bill.
At the National Assembly, lawmakers criticized the K-Water for passing the debt onto taxpayers.
"While increasing its debt every year, K-Water's employees and executives received incentives, giving the debt payment burden to taxpayers," Rep. Kim Kyung-hyub from the New Politics Alliance for Democracy (NPAD) said.
Rep. Lee Un-ju of the NPAD, also said that the relevant ministers and the former President should be responsible for the budget waste on the river project and should not pass the buck to the taxpayers.
The former Lee Myung-bak administration pushed ahead with a controversial four-river refurbishment project costing a total of 22 trillion won without a national consensus.
The river project, which focused on increasing leisure and tour activities, under the motto of "green growth," was one of Lee's main projects during his presidency. The construction started in June 2009 and finished in early 2013.
Over the past five years, however, the project has transformed the rivers into artificial reservoirs and lakes, obstructing their natural flow and resulting in environmental problems. Also, it is turning into a money-eater.
After jumping into the four-river project, the state-run Korea Water Resources Corporation (K-Water) has ended up 8 trillion won in debt.
It was supposed to retrieve its leveraged investment with revenue to be generated from resorts and other leisure facilities to be built alongside the rivers. But such facilities have not been constructed, leaving K-Water mired in heavy debt and accruing an interest burden.
The Ministry of Land, Infrastructure and Transport has requested the finance and strategy ministry to allocate 80 billion won for the K-Water's repayment of part of its debt principal and interest in its 2015 budget.
The ministry's request is based on the result of a national policy meeting back in 2009. At the meeting, the government decided that the K-Water would invest 8 trillion won in the river project with interest being paid by the national treasury and the principal repaid from project profits from real estate businesses along the rivers, which have been sluggish amid the property market slump.
It also decided that the repayment would be decided depending on the financial situation when the project ends.
K-Water was reluctant to invest 8 trillion won in the project from the start because the company couldn't afford it as its annual revenue was 200 to 300 billion won and there was no relevant rule regarding the investment. Also, the project was deemed unprofitable and didn't belong within the company's business scope.
But after Kim Kuen-ho, Lee's close aide, became CEO of K-Water, the investment was decided on at a board meeting.
In return for the investment, the company was recognized with an A-grade management evaluation of state-run institutions from 2008 to 2011 after it took part in the project.
Also, from 2009 to 2012, Kim received 552 million won worth of extra bonuses, according to Alio, a government-run portal that provides data on the public sector.
Also, its employees received 52 million won in performance-based bonuses over the last four years.
The debt owed by K-Water has soared from less than 2 trillion won in 2008 to 3 trillion won in 2009, 8.1 trillion won in 2010, 12.6 trillion won in 2011, 13.8 trillion won in 2012 and 14 trillion won in 2013. At this rate, its debt is expected to reach 19 trillion won around 2017.
K-Water has said it will repay 1.3 trillion won from its own pocket through other profit-making projects such as the Eco Delta City Project in Busan and other waterfront development projects.
It is expected to request government support for the remaining 6.67 trillion won for the repayment of the principal aside from 320 billion won interest. If other projects fail to earn profits for the company, the government might have to set aside more money for the company to help it repay the bill.
At the National Assembly, lawmakers criticized the K-Water for passing the debt onto taxpayers.
"While increasing its debt every year, K-Water's employees and executives received incentives, giving the debt payment burden to taxpayers," Rep. Kim Kyung-hyub from the New Politics Alliance for Democracy (NPAD) said.
Rep. Lee Un-ju of the NPAD, also said that the relevant ministers and the former President should be responsible for the budget waste on the river project and should not pass the buck to the taxpayers.
