Suspicions are swirling around Rep. Lee Sang-jik of the ruling Democratic Party of Korea, who founded Eastar Jet.
The budget airline has not paid wages it owes amounting to 24 billion won ($19.9 million). This issue is one of the stumbling blocks that stalled its sell-off negotiations with Jeju Air, which is seeking to purchase it. Eastar Jet said on June 29 that Lee’s family members would donate their entire stake in the budget air carrier in a move to bring the negotiations back on track.
Eastar’s largest shareholder is Eastar Holdings, which is a paper company owned entirely by Lee’s two children. They founded it in 2015 with 30 million won in capital. At that time, Lee’s daughter was 26, and his son 16. Not long after its founding, the new company acquired 68 percent of Eastar Jet shares with 10 billion won, despite being profitless. It says it borrowed 8 billion won on the security of the airline.
Finally, his children took over the ownership of the airline founded by their father in 2007.
Lee says he is not involved anymore in managing Eastar Jet, but reportedly he still possesses its shares in a borrowed name through its second-largest shareholder. Its union says he has effectively issued business instructions and that he founded the paper company to give his equities to his children without paying taxes.
If Eastar Jet is sold to Jeju Air, which signed a deal in March to acquire a controlling 51.17 percent stake in the carrier for 54.5 billion won, Lee’s children will rake in huge profits.
A high-ranking official of the ruling party was found to have intervened in the dispute regarding Eastar Jet’s overdue wages.
A vice spokesperson of the party is said to have called Eastar Jet’s union and encouraged it to accept the company’s offer on the back pay. The management has proposed to pay only 11 billion won of the overdue wages.
The union rejected the party official’s demand, saying it cannot give up on the remaining 13 billion won. Eastar Jet reportedly wants Jeju Air to shoulder the remaining wage burden after taking it over, but Jeju Air is said to oppose the idea.
The vice spokesperson said he “tried to mediate in good faith.” He also said he did so as a former high-ranking official of the Korean Confederation of Trade Unions, not as a vice spokesperson of the party.
One cannot but wonder why a senior ruling party official “mediated” in the labor dispute of a private company that he has nothing to do with, and further why a former labor group official took the side of a business owner, not the laborers demanding their back wages be paid.
One cannot but ask, “What is it about the relationship between Eastar Jet and the current regime that made a senior ruling party official step in to support the profits of its owner’s family?”
Lee worked for Moon Jae-in’s 2017 presidential campaign. He was appointed as president of Korea SMEs and Startups Agency in 2018, but resigned with more than a year left till the end of his term to run for a ruling party lawmaker in the April 15 general election. He was elected in a constituency regarded as a safe seat for the party.
The party is saving its breath. If allegations surrounding Eastar Jet were raised for a company, the party, which takes pride in advocating laborers, would have condemned it. But a vice spokesperson of the party tried to coax its union to accept less than half of the back pay. Something is fishy.
Lee was mentioned last year in connection with suspicions raised by an opposition party lawmaker that Moon’s son-in-law may have been recruited by a foreign joint venture with Eastar Jet.
His alleged employment came after Moon’s daughter and her husband emigrated -- the first time family members of a sitting Korean president have done so.
The presidential office says the suspicions are groundless, but many are still suspicious. The truth must be uncovered about the suspicions surrounding Lee.