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Gov't to intensify checks of state trade insurance

The government on Thursday announced a set of measures to prevent fraud involving state trade insurance following a recent high-profile scam committed by a local home appliance maker.

The move comes after Moneual Inc. used false reports to secure trade insurance from the Korea Trade Insurance Corp. (K-Sure) for its nonexistent exports.

An investigation by the prosecution has found the false reports, along with the trade insurance from K-Sure, allowed the company to borrow some 3.4 trillion won ($3.12 billion) over a seven-year period starting in 2007.

The company was declared bankrupt late last year with about 550 billion won in outstanding loans from 10 local lenders.

To prevent any company from securing trade insurance or bank loans based on false or inflated trade reports, the trade insurance company will be required to check and verify the authenticity of any export deal, through on-site inspections if necessary, when the deal requires more than $1 million in insurance, according to the Ministry of Trade, Insurance and Energy.

K-Sure will also be required to introduce an assessment program that can expose accounting fraud.

The company is already subject to annual audits by the ministry and the national board of audit and inspection, but it will freshly be subject to inspections by the Financial Supervisory Service, which can better check the financial soundness of trade insurance extended by the company, ministry officials said.

They said this may also help expose possible corruption by company officials by checking the validity of trade insurance.

The prosecution investigation has concluded that a number of former K-Sure officials, as well as tax investigators, may have received financial kickbacks from Moneual in exchange for letting the company dodge any scrutiny. (Yonhap)

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