[Editorial] Unethical ferry owner

By Korea Herald

Ill-gotten money should be used for victims

  • Published : Apr 27, 2014 - 20:46
  • Updated : Apr 27, 2014 - 20:46
Prosecutors investigating the tragic sinking of the Sewol ferry are shifting their focus from the ship’s crew members to its owner family.

Thus far, they have arrested all of the 15 key crew members on charges of abandoning the vessel without seeking to rescue passengers trapped in the cabins.

Now they are zeroing in on the ferry’s owner family, especially Yoo Byeong-eon, a retired businessman suspected of having remotely controlled the ship’s operator, Chonghaejin Marine Co.

Yoo, 73, is a former chairman of Semo Group, which went bankrupt in 1997 under a combined debt exceeding 200 billion won. Yet he has since mysteriously rebuilt the group and is now in control of 13 companies with assets totaling 560 billion won.

What was the magic behind Yoo’s comeback? Investigators are suspecting that the group’s bankruptcy in 1997 might have been a fraudulent scam aimed at getting out of its heavy debt burden.

After the group went belly up, its affiliates were placed under court receivership. For companies under court-supervised rehabilitation processes, creditors forgive their debt. When companies get revitalized, the court sells them to new owners.

Most of Semo’s affiliates were acquired by a new group established by Yoo. Miraculously, he turned his debt-ridden companies into healthy ones at the expense of their creditors.

Investigators are suspecting that he might have concealed valuable assets of Semo affiliates before filing for bankruptcy protection and used those assets to repurchase them at bargain prices.

In this process, he must have used illegal practices because a court-rehabilitated company is seldom resold to its previous owner, as he is responsible for its bankruptcy. Investigators need to undertake a thorough probe into these allegations.

Although Yoo controls a business empire, he owns no stake in it as he has transferred his stakes to his two sons. Prosecutors should examine the stake transfer process as Yoo is likely to have used expedient methods.

Yoo and his sons are also suspected of having accumulated huge family wealth by siphoning off corporate funds in illegal ways. As the investigation proceeds, the list of their assets grows. Their confirmed assets include more than 20 square kilometers of real estate and overseas properties worth tens of millions of dollars.

Investigators need to trace their assets thoroughly as they say their entire assets are worth several billion won, much less than the estimated 240 billion won. Their ill-gotten money should be used to pay damages to the Sewol tragedy victims and their families.

One way Yoo used to divert corporate money was to sell the photos he had taken to group firms at exorbitant prices. He reportedly sold his photos at 50 million won per piece.

Among foreign photographers, Yoo is known as “the reclusive billionaire photographer from Korea” with the pseudonym Ahae. He held exhibitions in the Versailles palace and the Louvre in Paris.

Yoo and his two sons sought to increase Chonghaejin Marine’s profits at the expense of the safety of ferry passengers. To reduce labor costs, they have recruited temporary crew members and paid them the lowest wages in the industry, about 70 percent of the rate of other companies.

They also minimized spending on safety equipment to squeeze more money out of the shipping company. Prosecutors should bring justice to these unconscionable entrepreneurs.