Tension is escalating over the South Korean government’s inspection into GM Korea, following the automaker’s decision to shut down a factory here last week.

State-run Korea Development Bank, the second-biggest stockholder of the local unit with 17.02 percent shares, is currently looking into GM Korea’s management, including high-interest loans levied by the US headquarters. The country‘s financial watchdog Financial Supervisory Service is examining GM Korea’s research and development expenses, which has been a source of debates by exceeding the company’s operating loss in amount.

“Korea Development Bank-led inspection has been going on for a while. But the problem is GM’s lack of cooperation. When the government asks for detailed documents or confirmation, it has backed off citing business confidentiality,” said Lee Hang-koo, a senior researcher at the Korea Institute for Industrial Economics & Trade.

“GM has a history of existing from Australia after the government stopped supporting the company. It is up to the local government to put on a poker face and make it clear that US headquarters is also responsible for GM Korea’s status quo.”

Based on its plans to focus on profitable markets such as the US and China, GM has been carrying out restructuring efforts on a global scale, withdrawing from less profitable countries and selling underperforming brands since 2013.

As its first step for restructuring here, GM Korea finalized the suspension of its plant in Gunsan, North Jeolla Province, where productions had dropped below 20 percent, by May.

The latest move sent jitters across the country of a possible Korea-exodus, which would leave a total 156,000 workers of GM Korea and subcontractors at stake, according to data from the Ministry of Trade, Industry and Energy.

Authorities are investigating GM Korea’s financial records as high expenses on research and development had sparked doubts over GM’s efforts to save the falling local unit.

GM Korea spent 614.1 billion won ($575.5 million) on research and development, more than its operating losses of 521.9 billion won in 2016, according to the FSS.

Higher than market average interest rates GM headquarters levied to the local unit is also up for inspection.

GM Korea’s interest payments totaled 462 billion won between 2013 and 2016, due to the 5 percent annual interest rate on the 2.4 trillion won it borrowed from headquarters in 2013. This is about two times the market average interest rate.

According to GM Korea, local banks had refused to make loans to the automaker due to its low credit rating.

In terms of GM Korea’s exports, the rate of cost to selling price, which reached as high as 97 percent in 2015, is also debated. Critics point out that GM Korea delivered complete knock down vehicles at a price close to production cost to its overseas affiliates, which has led to the automaker‘s ratio of cost to selling price reaching over 90 percent.

GM Korea’s rate of cost to selling price jump has remained above 90 percent since 2009, which is about 10 percent higher than the market average of 80.1 percent, according to a lawmaker Ji Sang-wook from the Bareun Party.

GM Korea sold 524,547 units -- 132,377 units here and 392,170 units overseas -- last year, down 12.2 percent on-year, the company said.

Its net losses rose to 631.5 billion won in 2016 from 333.2 billion in 2014, according to the FSS.

By Kim Bo-gyung (lisakim425@heraldcorp.com)