South Korea's top financial regulator said Tuesday the government will swiftly proceed with negotiations with General Motors Co. on a turnaround plan, including the government's potential support measures, for the US carmaker's troubled local unit.

Choi Jong-ku, chairman of the Financial Services Commission, told lawmakers that due diligence on GM Korea will be conducted without delay.

Earlier this month, GM, which asked the Korean government to provide financial support for GM Korea, said it will close one of its plants in South Korea by May and the fate of its remaining three plants here will be decided within weeks.

The Korean government has set out three principles for talks with GM. They include "responsible roles" for GM and all stakeholders, including GM Korea's labor union, and a "long-term and viable" plan to get the carmaker back on its feet.

"In line with these principles, the government will conduct due diligence (on GM Korea) without setbacks and swiftly proceed with GM on a normalization plan for GM Korea, including the government's potential support measures," Choi told lawmakers.

If GM and GM Korea's labor union want help from the Korean government, Choi said they should "share the pain."

Choi did not specifically comment on what steps the two sides should take, but local media reports said GM needs to convert GM Korea's debt into equity and allow the Korean unit to produce new models.

The labor union has been asked to accept a cut in wages and other benefits.

The remarks by Choi came as GM Korea plans to resume annual wage talks with its labor union on Wednesday.

Last year, GM Korea, which has an annual production capacity of 910,000 units, produced 520,000 vehicles.

Choe Heung-sik, governor of the Financial Supervisory Service, told lawmakers that the FSS will look closely into the accounting books of GM Korea before it makes any decision on whether the government will provide financial support.

The State-run Korea Development Bank holds a 17-percent stake in GM Korea.

KDB Chairman Lee Dong-gull told lawmakers that the viability of GM Korea depends on its cost structure.

"(The Korean government) has been in consultations with GM on the scope and limit of due diligence to verify the issue of cost structure," Lee said.
 
Kim Sang-jo, chairman of South Korea's corporate watchdog, the Fair Trade Commission, meanwhile, said the FTC will consult with the National Tax Service for a possible tax inspection into the company over the firm's transfer pricing and its high ratio of sales prices to raw material costs. (Yonhap)