By Park Si-soo
It is now considered a total failure that was brought on through a mixture of mismanagement, lack of supervision and an ill-prepared state drive.
The case in question occurred when the head of the Korea National Oil Corp. (KNOC) purchased a Canadian refining firm, North Atlantic Refining Limited (NARL), in 2009 without much care for its highly inflated price. This happened because the firm's supervisors didn't stop the sale, nor did the government, which turned a blind eye amid a reckless pursuit of developing overseas natural resources.
Eventually, a combination of these faults merged together, with disastrous consequences for all those concerned.
The state oil company suffered huge losses of around $297 million after reselling its controlling stake in NARL for a "giveaway" price, amid deteriorating market conditions.
Kang Young-Won, then KNOC chief, is now set to stand trial for pushing forward with the takeover deal despite the fact he was well aware of the risky nature of the investment. Kang is also expected to face a damages suit by the Ministry of Trade, Industry and Energy.
The controversial investment will soon be reviewed by lawmakers to discern those also responsible for the fiasco.
"KNOC recklessly acquired an unhealthy refining firm without a sufficient review in order to make up for its stagnant M&A performance," said the Board of Audit and Inspection in a statement last week.
The state auditor said that Kang knew of the prospects of losses, but went ahead with the acquisition to attain yearly performance goals, adding that it had referred Kang to the prosecution on negligence charges. It is also urging the trade ministry to pursue a damages suit against him.
These measures were the first crackdown on what opposition politicians claim was a catastrophic "resource diplomacy" policy initiated by former President Lee Myung-bak.
Critics claim that massive amounts of state funds were wasted on overseas natural resources development projects pursued under the Lee administration.
Opposition lawmakers and critics have called on Lee to appear before lawmakers for a special parliamentary audit hearing, although it is unlikely the 74-year-old former president will do so.
During a meeting with ruling Saenuri Party lawmakers last week, Lee said it was too early to judge his overseas energy projects because it takes up to 10 years to see the yields of such resources projects.
The board of audit did not blame Finance Minister Choi Kyung-hwan, however, who was in a position to oversee KNOC's 2009 purchase. It said there was no evidence that he was involved in the deal.
According to the main opposition New Politics Alliance for Democracy, the Lee government invested nearly 41 trillion won in overseas resource development ventures, which included 25 trillion won from state-run corporations. So far, the government has only recovered 5 trillion won from the investments.
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| Kang Young-won |
The case in question occurred when the head of the Korea National Oil Corp. (KNOC) purchased a Canadian refining firm, North Atlantic Refining Limited (NARL), in 2009 without much care for its highly inflated price. This happened because the firm's supervisors didn't stop the sale, nor did the government, which turned a blind eye amid a reckless pursuit of developing overseas natural resources.
Eventually, a combination of these faults merged together, with disastrous consequences for all those concerned.
The state oil company suffered huge losses of around $297 million after reselling its controlling stake in NARL for a "giveaway" price, amid deteriorating market conditions.
Kang Young-Won, then KNOC chief, is now set to stand trial for pushing forward with the takeover deal despite the fact he was well aware of the risky nature of the investment. Kang is also expected to face a damages suit by the Ministry of Trade, Industry and Energy.
The controversial investment will soon be reviewed by lawmakers to discern those also responsible for the fiasco.
"KNOC recklessly acquired an unhealthy refining firm without a sufficient review in order to make up for its stagnant M&A performance," said the Board of Audit and Inspection in a statement last week.
The state auditor said that Kang knew of the prospects of losses, but went ahead with the acquisition to attain yearly performance goals, adding that it had referred Kang to the prosecution on negligence charges. It is also urging the trade ministry to pursue a damages suit against him.
These measures were the first crackdown on what opposition politicians claim was a catastrophic "resource diplomacy" policy initiated by former President Lee Myung-bak.
Critics claim that massive amounts of state funds were wasted on overseas natural resources development projects pursued under the Lee administration.
Opposition lawmakers and critics have called on Lee to appear before lawmakers for a special parliamentary audit hearing, although it is unlikely the 74-year-old former president will do so.
During a meeting with ruling Saenuri Party lawmakers last week, Lee said it was too early to judge his overseas energy projects because it takes up to 10 years to see the yields of such resources projects.
The board of audit did not blame Finance Minister Choi Kyung-hwan, however, who was in a position to oversee KNOC's 2009 purchase. It said there was no evidence that he was involved in the deal.
According to the main opposition New Politics Alliance for Democracy, the Lee government invested nearly 41 trillion won in overseas resource development ventures, which included 25 trillion won from state-run corporations. So far, the government has only recovered 5 trillion won from the investments.
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