Sunday, Dec 21, 2014Sunday, Dec 21, 2014
 

South Korea ferry disaster: Owners of ferry operator under probe for illegal FX trading

Published on Apr 22, 2014 5:05 PM
 

SEOUL (THE KOREA HERALD/ASIA NEWS NETWORK) - South Korea's financial watchdog is investigating Cheonghaejin Marine Co., the operator of the ill-fated ferry Sewol, and its owner's family for possible illegal foreign exchange trading, officials said on Tuesday.

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

"We are probing Cheonghaejin, 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, Yonhap reported.

Cheonghaejin 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.

South Korean rescue workers on a boat inject oxygen into the capsized passenger ship Sewol which sank in the sea off Jindo on April 18, 2014. South Korea's financial watchdog is investigating Cheonghaejin Marine, the operator of the ill-fated ferry Sewol, and its owner's family for possible illegal foreign exchange trading, officials said on Tuesday, April 22, 2014. -- FILE PHOTO: REUTERS

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

Some 40 percent of Cheonghaejin 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 (S$678 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 US, 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, South Korea's tax agency is probing the ferry operator and the owner family over possible tax evasion. Up to 44 executives and shareholders of Cheonghaejin 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 last 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.

South Korea ferry sinking graphic

Videos