Seoul Considers Revoking Aid to Troubled Businesses

SEOUL, South Korea -- South Korea's Finance and Economy Ministry has signalled it is giving serious thought to abolishing a four-month-old bailout program that has kept three major business groups afloat.


A senior ministry official said Thursday that the ministry would review problems with the bailout pact and possibly scrap it.


Analysts said the announcement constituted a warning to the troubled Kia Group, the country's eighth-largest conglomerate, which has defied creditors' demands after receiving program protection in July.


"Problems regarding the anti-bankruptcy agreement and a plan to abolish the pact will be reviewed," Yoon Jeung-hyun, deputy minister for the ministry's financial policy said.


Yoon criticized Kia Group for refusing to meet creditors' demands despite benefitting from the program.


Creditor banks established the bailout program in April after the nation's 19th-largest conglomerate Jinro Group, whose flagship is the country's largest and oldest distillery, faced default and bankruptcy.


The program's aim was to keep promising groups afloat. "It was like putting someone who's brain-dead on a life-support system," said Lee Keun-mo, research head at ING-Barings Securities.