The controversy about excusing companies for past activities relating to falsifying their records just can't get any more intense. First the government said it would seek a 2-year delay in the "Securities Class Action Suit" taking effect, but now it is working on a plan that would not even engage in corporate audits and reviews. You're dumbfounded, and you wonder if the government has lost its senses. It set out to ignore past cases of account book manipulation and now the situation is out of control, like a boat so lost it is sailing up a mountain.
The government is responsible in a big way for the situation coming to this. At first it said there would be no big problem with the class action lawsuit act taking effect as planned. Later it started giving ground under pressure from big business. Now it has come up with the idea it will not even engage in the audits that would reveal cases of dishonest account keeping. It is particularly hard to understand how the Financial Supervisory Service (FSS), of all places, can be leading the whole initiative when it is the agency charged with cracking down on such activity. All you can say is that this is a government completely without principles and consistency.
The FSS is abandoning the mission it was entrusted with when it says it won't perform the proper audits so as to excuse even civil responsibility for past manipulation of financial records. Regular shareholders need to be able to know whether companies have been falsifying their records before filing class action lawsuits, and the way they find out is through audits. It just cannot be possibly saying it is going to refrain from performing audits in order to prevent instances of such wrongful activity being revealed. That is like saying the government is going to exclude bad book keeping from what can be the object of class action lawsuits.
And as we have noted before, separating such activity and excusing it exclusively is technically something very difficult to do. The majority of people in the accounting industry say it will be impossible. Even if it is possible, as the FSS claims, it is doubtful companies will come out and truly confess to past accounting practices. What that means is that this leaves room for companies to abuse the situation and continue their practices just the same.
The class action lawsuit act must take effect on schedule. Forgetting that and giving into the demands of big business led to the current situation, in which manipulating accounting records might get excluded from such lawsuits. We hope the government returns to the spirit of the law when it was originally enacted and put an end to further unnecessary controversies.
The Hankyoreh, 3 February 2005.
[Translations by Seoul Selection (PMS)]
[Editorial] No Audits for Financial Record Manipulation? |
