Report: authorities complicit in Ssangyong crisis

Posted on : 2012-10-30 16:33 KST Modified on : 2019-10-19 20:29 KST
New report reveals web of misdeeds that led to laid-off and distraught workers

By Park Hyun-chul and Lee Jung-gook, staff reporters

The Seoul Bar Association released a report on Oct. 29 on the special investigation into the case of Ssangyong Motor. The report clearly outlines how national authorities, including the court and police did not properly fulfill their duties of mediating the dispute between labor and management. Instead, the authorities ended up exacerbating conflict, which led to tragedy.

The report states that Shanghai Automotive Industry Corporation (SAIC) planned to invest US$1 billion in Ssangyong Motor when acquiring the automaker in 2005, but never made a direct investment or efforts to overcome the liquidity crisis. SAIC then filed for court receivership in January 2009, bringing about the current state of Ssangyong Motor. In other words, the report suggests that primary responsibility is with SAIC for triggering the tragedy.

A key part of the report is that in a decisive moment, the court failed to perform its duty. On Feb. 6, 2009 the court decided to undertake restructuring measures to save the struggling company, which resulted in layoffs of 2,646 employees. This proved to be the turning point that drove the already critical situation into tragedy.

The “suspicions on over-reporting impairment losses” mentioned in the report back up the allegations on “intentional insolvency” that have been made by the labor union and civil groups. The report reads, “The accounting corporation Deloitte Anjin LLC. had aggressively advised Ssangyong to record its impairment losses in its accounting report since November 2008, before the filing was made for revival procedures (January 2009). It is strongly assumed that reflecting impairment losses on the accounting report was planned from the outset.”

The report also pointed out, “After all, the Deloitte’s assessments on impairment losses were never verified by any other accounting firms or the court.”

The Seoul Bar Association argued, “To dispel suspicions that they fabricated the numbers for accounts related to impairment losses, detailed audit materials by the Deloitte Anjin LLC., which assessed and summed up impairment losses should be disclosed and reviewed, and the basis used by the Financial Supervisory Service for detailed accounting inspection must be disclosed.”

The report suggested measures to resolve the Ssangyong case, including putting into practice the August 6, 2009 agreement between labor and management which stated that all workers who take unpaid leave will be reinstated within one year. Other measures were compromising on pending lawsuits; and attaining a labor-management agreement through third-party mediation. As for the government, the report suggested revisions in the Labor Standards Act to reinforce requirement for layoff, prohibition of human rights violation by police while suppressing strikes, and stronger oversight of private security firms.

Meanwhile, the National Association of Professors for Democratic Society (NAPDS) held a press conference on Oct. 29 in Seoul and made public its “Declaration to Support the Reinstatement and Struggle by Ssangyong Motor Employees”. The document was signed by 75 renowned foreign scholars including Noam Chomsky, emeritus professor of MIT and John Duncan, professor of UCLA.

Prof. Chomsky wrote in an email to the NAPDS, “I am very uneasy upon hearing that employees of Ssangyong were laid off and the police cruelly treated those who participated in strikes. I believe and hope the very reasonable demands of the employees attract the attention they deserve and draw a response.”

 

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