FSS chief hints he has evidence of more funding irregularities
Published : 2013-10-18 20:40
Updated : 2013-10-18 20:40
The chief financial regulator said Friday that four more local conglomerates had been involved in dubious funding schemes similar to embattled Tong Yang Group.
“We have documents on cases (of irregular funding) at four local business groups,” said Financial Supervisory Service Gov. Choi Soo-hyun during the National Assembly’s audit of the regulatory agency.
Choi, however, declined to reveal the names of the four.
His remarks came after Rep. Kim Young-hwan of the main opposition Democratic Party asked the top regulator to reveal if there was another Tong Yang-like case in the market.
Though Choi downplayed the risks for retail investors in the four unidentified groups, both ruling and opposition lawmakers raised suspicions that the four conglomerates were also exploiting their financial subsidiaries to bail out their non-finacial affiliates.
A lawmaker of the ruling Saenuri Party alleged that the four conglomerates have sold commercial paper or bonds of their financially distressed manufacturing units at their brokerage units, which may be linked to huge losses for retail investors.
The FSS and the prosecution allege that some of Tong Yang Group’s six financial units were implicated in illegal intragroup trading amid chairman Hyun Jae-hyun’s attempt to rescue the debt-saddled nonfinancial units.
The FSS is scrutinizing TY Money amid allegations that chairman Hyun abused the lender as a key funding source.
Hyun and his family hold an 80 percent stake in TY Money, followed by Tong Yang Inc. ― the group’s de facto holding firm ― and Tong Yang Financial Services, the other financial unit, with 10 percent each.
TY Money is the majority shareholder of Tong Yang Networks, which was placed under court receivership over cash-flow woes, with a 23.1 percent stake.
Earlier this month, the embattled group’s five nonfinancial units, including the holding firm Tong Yang Inc. filed for court receivership, as part of chairman Hyun’s alleged efforts to prevent default on maturing bills worth some 1 trillion won ($909 million).