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Owners of ill-fated ferry operator under probe for possible illegal FX trading, tax evasion

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Published : 2014-04-22 15:42
Updated : 2014-04-24 10:43

South Korea's financial watchdog is investigating Chonghaejin Marine Co., the operator of the ill-fated ferry Sewol, and its owner family for possible illegal foreign exchange trading, officials said Tuesday.

According to the officials, the Financial Supervisory Service is looking into details of foreign exchange transactions by the ferry operator, and Yoo Byung-eon, a former chief of Semo Marine Co., and his two sons.

"We are probing Chonghaejin, its affiliates and the owner family over possible illegal foreign exchange trading and other illegal activities in purchasing overseas assets," said an official at the FSS.

Chonghaejin Marine is virtually a successor to Semo Marine, which went bankrupt in 1997, hit by a series of scandals, including a sinking of its cruise boat.

Chonghaejin was set up in 1999 by taking over ships and assets held by Semo Marine's affiliate, and Yoo's two sons control of Chonghaejin through a cobweb-like ownership structure.

Some 40 percent of Chonghaejin is owned by Chonhaiji Co., a shipbuilder controlled by I-One-I Holdings Co. Yoo's two sons hold a combined 40 percent in I-One-I Holdings.

I-One-I Holdings has 13 unlisted firms under its wings, with their total assets reaching 560 billion won ($539 million). Yoo and his family members are estimated to own at least 240 billion won in assets such as stocks and properties.

Industry data show I-One-I Holdings and its affiliates had set up 13 overseas units in the U.S., France, Hong Kong and other countries with their combined assets reaching up to 100 billion won. The overseas units had jacked up their assets by purchasing properties.

Also, the country's tax agency is probing the ferry operator and the owner family over possible tax evasion. Up to 44 executives and shareholders of Chonghaejin Marine, including Yoo's two sons, are already banned from leaving the country.

On Tuesday, President Park Geun-hye vowed harsh punishments against all irregularities involved in the ferry's operations and to force those responsible to take criminal and civil responsibilities regardless of their ranks.

The ferry sank off South Korea's southern coast Wednesday with 476 people aboard, mostly high school students on a field trip. As of Tuesday morning, over 100 people had been confirmed dead while some 200 others were still unaccounted for, feared to be trapped inside the sunken ship.

The sinking is expected to be one of South Korea's deadliest maritime accidents. (Yonhap)

 

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