Taxpayers have right to know reasons for defeat
The Korean government has lost a legal dispute with an Iranian company over the latter's abortive takeover of Daewoo Electronics in 2011, officials said last week.
Iran's Dayyani group, a major shareholder of Enterkhab Industrial Group, sought an investor-state dispute (ISD) settlement after the Korea Asset Management Corp. (KAMCO) nullified a contract to sell a major stake in Daewoo Electronics due to funding ambiguities at the time.
Dayyani took the case to the International Center for Settlement of Investment Disputes (ICSID), blaming the Korean government for violating a bilateral investment treaty and demanding the respondent pay 93.5 billion won ($86.9 million). The ICSID recently ordered Seoul to pay 73 billion won, according to the Financial Services Commission.
This is the first time for government has lost an ISD case filed by a foreign business.
The problem is government officials here are refusing to explain why. Not just the financial regulator but all other related agencies, including the foreign ministry, have remained silent about the reasons for the legal defeat. They reiterate KAMCO's move was legitimate and the government is preparing an action to nullify the decision, claiming the disclosure of reasons for the loss would do more harm than good for the future.
We beg to differ. The government needs to make public what happened throughout the suit for no other reason than not to repeat such a defeat in the future. Similar suits are sure to occur in years to come as international investments and business transactions will increase. To avoid defeats, government and business officials have to study and prepare more thoroughly. Equally urgent is the need to check legal loopholes in the domestic systems and regulations.
The government should in this regard reveal not just the reasons for the defeat but all essential details, ranging from the selloff process seven years ago to significant bones of contention raised by the Iranian side and its plans to minimize the damage. That is the least taxpayers can demand of a government run using their money.
The Korean government has lost a legal dispute with an Iranian company over the latter's abortive takeover of Daewoo Electronics in 2011, officials said last week.
Iran's Dayyani group, a major shareholder of Enterkhab Industrial Group, sought an investor-state dispute (ISD) settlement after the Korea Asset Management Corp. (KAMCO) nullified a contract to sell a major stake in Daewoo Electronics due to funding ambiguities at the time.
Dayyani took the case to the International Center for Settlement of Investment Disputes (ICSID), blaming the Korean government for violating a bilateral investment treaty and demanding the respondent pay 93.5 billion won ($86.9 million). The ICSID recently ordered Seoul to pay 73 billion won, according to the Financial Services Commission.
This is the first time for government has lost an ISD case filed by a foreign business.
The problem is government officials here are refusing to explain why. Not just the financial regulator but all other related agencies, including the foreign ministry, have remained silent about the reasons for the legal defeat. They reiterate KAMCO's move was legitimate and the government is preparing an action to nullify the decision, claiming the disclosure of reasons for the loss would do more harm than good for the future.
We beg to differ. The government needs to make public what happened throughout the suit for no other reason than not to repeat such a defeat in the future. Similar suits are sure to occur in years to come as international investments and business transactions will increase. To avoid defeats, government and business officials have to study and prepare more thoroughly. Equally urgent is the need to check legal loopholes in the domestic systems and regulations.
The government should in this regard reveal not just the reasons for the defeat but all essential details, ranging from the selloff process seven years ago to significant bones of contention raised by the Iranian side and its plans to minimize the damage. That is the least taxpayers can demand of a government run using their money.
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