S. Korean firms at joint park fail to meet North's accounting deadline

By Kim Hyun
SEOUL, May 22 (Yonhap) -- Scores of South Korean firms operating at an industrial
complex in North Korea failed to submit their yearly accounting reports to the
North by the March deadline due to procedural restrictions, officials said
Friday.
Such a delay has been a regular annual occurrence, given a regulation that allows
only two South Korean accounting agencies to audit more than 100 factories at the
joint complex in the North's border town of Kaesong, said Unification Ministry
spokeswoman Lee Jong-joo.
North Korea is pressing for the submission so as to grasp the firms' business
performances for the 2008 fiscal year, and inter-Korean discussions are underway
to smoothen the process, Lee said.
"For the North, it has to get the reports to know how the firms are doing," Lee
told reporters.
According to North Korea's Code of the Act and Regulations for the Kaesong
Industrial Zone, South Korean firms that have invested more than US$1 million in
the joint park or whose yearly sales revenue has surpassed $3 million have to
submit their accounting reports to North Korea by the end of March.
Only two South Korean auditors -- currently Deloitte Anjin LLC and Fine
Management & Accounting Corp. -- are commissioned to cross the border to audit
the firms according to the North Korean law, which was set up at the outset of
the park development in 2002.
The traffic restrictions North Korea imposed in March have hampered the firms'
ability to meet the deadline, Lee said. The North sealed the inter-Korean border
three times that month in protest at South Korea's military exercise with the
United States.
"With the traffic blockage and so forth, the businesses say their accounting
inspection process has been delayed," she said.
Among the 106 firms operating at the park, 62 are subject to the accounting
reporting, and only about a third of them have done so, Lee said. Last year, the
reporting was completed in September.
Those who fail to present their audit results are subject to a $10,000 fine, and
those file falsified report report can be fined up to $5,000. No firms have faced
such charges yet, Lee said.
Officials say the two Koreas may consider increasing the number of commissioned
South Korean auditors to meet the deadline when government-level talks are held.
Seoul wants official talks with Pyongyang, but earlier negotiations to set them
up broke down due to an agenda difference.
South Korea calls on the North to release its fellow countryman who was detained
at the Kaesong park in March on charges of criticizing the North's political
system.
North Korea refuses to discuss the detained worker, saying official talks should
deal with operational issues, such as wages and land fees.
Pyongyang sent a letter to Seoul last week, saying it has scrapped all
inter-Korean accords on the joint park and would unilaterally set new terms.
The Kaesong park, just an hour's drive from Seoul, is the last surviving
reconciliatory project between the two Koreas, with other ventures -- tourism
programs to the North's attractions -- all suspended last year due to unraveling
political relations.
More than 40,000 North Koreans work at Kaesong for the South Korean firms
producing clothes, utensils, electronic equipment and other labor-intensive
goods. Their output reached $250 million last year.
hkim@yna.co.kr
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