|Kolon Group chairman Lee Woong-ryeol visits the 21st Century Hospital funeral hall in Ulsan on Tuesday to express his condolences to the victims of Monday’s collapse of a gymnasium at the company’s resort in Gyeongju, North Gyeongsang Province. (Yonhap)|
Kolon Group was placed under public scrutiny on Monday night following the sudden collapse of a gymnasium in a resort it had built in Gyeongju of North Gyeongsang Province. The accident left 10 dead and many more injured.
The incident was only the latest in a series of mishaps for the company, which has experienced a downturn in business performance that was punctuated by a large-scale damage claim filed by U.S.-based business giant DuPont.
Kolon Group suffered a deficit of about 83 billion won ($75 million) last year due to sagging performance at its core business units. Its combined sales fell 7.3 percent on-year to 4.4 trillion won.
According to corporate assessment operator CEO Score, its asset ranking in the nation’s conglomerate sector dropped by eight notches from 23rd in 2004 to 31st in 2013.
Further, the ongoing legal dispute with DuPont has been aggravating the conglomerate’s financial situation. Kolon has been accumulating provisions of up to 10 billion won per quarter to dole out to DuPont in case it loses the suit.
Kolon Industries Inc. has been accused of hiring former employees of DuPont and making them smuggle trade secrets related to its Kevlar brand of anti-ballistic fiber.
In August 2012, the U.S. District Court for the Eastern District of Virginia ruled in favor of DuPont, ordering Kolon’s outdoor fashion unit to pay $920 million to the U.S. company and cease making its aramid fiber for 20 years.
Kolon Industries appealed immediately and the verdict is likely to come during the first half of 2014 as an appeal generally takes a year and a half, according to local lawyers.
The “Kevlar,” which was developed and first sold in 1973 by DuPont, is used in applications ranging from bicycle tires and racing yacht sails to anti-ballistic body armor.
In 2005, Kolon began commercially selling its version of the synthetic fiber, called Heracron.
In addition, another U.S. court ordered the Korean defendant to return all documents allegedly containing DuPont’s secrets to the American firm and delete related files from its computers.
Some say the coming result of the suit may bring liquidity woes to the Korean conglomerate.
In the meantime, Kolon will have to address the accusations of shoddy construction at the Gyeongju resort. President Park Geun-hye has personally called for a “thorough” investigation into the matter.
As Kolon may also have allowed the resort to pay for minimum insurance coverage to cut costs, the company is likely to face even more financial distress as it would have to dip into its own pockets to compensate the victims and their family, industry watchers said.
By Kim Yon-se (firstname.lastname@example.org)