KDB under Fire in Connection with Sale of Daewoo E&C

Controversy over the sale of Daewoo Engineering & Construction continues.

Korea Development Bank is under fire regarding the sale of Daewoo Engineering & Construction (Daewoo E&C).

The labor union of Daewoo E&C is set to stage a strike in protest of KDB Investment’s poor handling of the sale process. Together with the Financial Services Commission (FSC), KDB is looking into the sale process that has been promoted by its subsidiary KDB Investment (KDBI). But critics as well as the Daewoo E&C union suspect that the bank would turn a blind eye to the problems of the sale process.

KDBI has selected Jungheung Construction as a preferred bidder, but a bumpy road is ahead before it wrap up the sale process.

In particular, some politicians and the Daewoo E&C union say that they do not expect a thorough investigation in the matter as KDB will directly investigate KDBI, its subsidiary. KDB and the FSC are not responding to the National Assembly’s request for the submission of data related to Daewoo E&C sale.

Rep. Yoon Jae-ok, a member of the National Assembly’s National Policy Committee, recently asked the FSC to submit documents, such as bidding proposals, the revised proposal of Jungheung Construction, and bidding documents submitted by Jungheung Construction and DS Networks. But the FSC rejected the request, saying that the documents contain a confidentiality clause and some sensitive information that can affect the ongoing negotiations between KDBI and Jungheung.

“If KDB keeps the proposals and papers under wraps while investigating its affiliate, nobody will trust the results of the investigation,” said a lawmaker of National Policy Committee. “Isn’t the inspection intended to justify KDBI’s selection of Jungheung Construction as the preferred bidder? Nobody can say that a similar case will not take place in the sale of HMM later. Controversies over this matter may continue until a parliamentary audit in the fall.”

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