The Korea Herald


[Ferry Disaster] FSS expands Semo inquiry to all affiliates

By Korea Herald

Published : April 25, 2014 - 22:22

    • Link copied

The nation’s financial watchdog is widening its probe into all financial subsidiaries of the now-defunct Semo Group, a suspected source of funds for Yoo Byung-un, the owner of Chonghaejin Marine Co. and the sunken ferry Sewol.

The Financial Supervisory Service is preparing an extensive audit on Semo Credit Union and other affiliated financial companies, FSS officials said Friday.

The FSS will also further investigate the allegations that several of the local banks granted loans to the financially pressed marine company.

Also on Friday, it dispatched examining officials to Korea Development Bank, Industrial Bank of Korea, Woori Bank and Kyongnam Bank to review their loan processes for Chonghaejin Marine Co.

KDB on Monday issued a statement refuting the allegation and claiming that the lending was legitimate.

As of the end of last year, Semo Group held a total debt of 203 billion won ($195 million) and depended on loans for 61.4 percent of its financing, according to the FSS.

“We decided to scrutinize all companies and people who might have been involved in the ferry Sewol and its operator,” said an FSS official.

Along with the financial authorities, the National Tax Service and the Korea Customs Service are looking into possible tax evasion and illegal overseas transactions.

Semo Credit Union is a cooperative association within Semo Group, which is suspected of having provided low-interest loans to I-One-I Holdings, the holding company of Chonghaejin Marine Co.

Since the 6,825-ton ferry Sewol capsized last Wednesday, 174 of 476 passengers have survived. The majority of the deceased and the missing are students of Danwon High School who were heading to Jejudo Island for a school trip.

As officials sought the root cause of the disaster, the probe led to Yoo and his family members, the former stakeholders of the disputed Chonghaejin Marine Co.

Yoo’s two sons are currently the largest shareholders of I-One-I Holdings, through the shipbuilding company Chonhaiji, which in turn owns a majority share in Chonghaejin Marine Co.

Through this intertwined governance structure, Yoo and his family are estimated to have earned more than 200 billion won in assets, while taking little responsibility for the marine company’s management or safety.

Yoo, however, has so far refuted all allegations of illegal monetary transactions or negligence of duty, though he said through his attorney that he shares responsibility for the tragedy.

With the financial probe picking up speed, the Sewol investigation unit at the Incheon District Prosecutor’s Office summoned Yoo’s younger son and daughter, who are currently in the United States, for questioning.

By Bae Hyun-jung (