There is a lot of tension surrounding the South Korean government and GM over due diligence timing and its method. GM is exerting pressure on the South Korean government to come up with a decision on whether it will provide financial support until the end of February. On the other hand, as the government intends to review various allegations and suspicions thoroughly, the date of decision may be made after the end of February.
The Korea Development Bank temporarily designated an accounting firm to conduct the due diligence. The bank is currently coordinating the schedule, procedure and scope with GM.
The South Korean government made clear that it would investigate all allegations involving GM Korea’s due diligence process. “We do not necessarily think that the deadline for negotiation between GM and the South Korean government should be the end of February,” said a government official. “We will check the sincerity of future growth direction that GM provided and review various doubts thoroughly and come up with a decision on whether to support GM.”
In the past, GM closed down the factories in Australia immediately after the Australian government withdrew its financial support. The Australian government had provided 1.7 trillion won worth of support from 2001 to 2013. As criticism over the Australian government’s support grew, however, it halted its support in 2013. Against this backdrop, GM decided to withdraw its factories in December 2013 on the grounds of deteriorating productivity and performance, and closed down factories in Australia last year.
GM had been restructuring in places where productivity fell or where sales went sluggish such as Indonesia, Thailand, Russia and India.
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