Korean Prosecutors Raid Home of Ferry's Owner

Joseph Keefe
Wednesday, April 23, 2014

Prosecutors investigating the fatal sinking of a South Korean ferry have raided the home of Yoo Byung-un, the head of a family that owns the Chonghaejin Marine Co. Ltd, the company that operated the ship.

Kim Hoe-Jong, a prosecutor on the case, said Wednesday's raid was part of a probe into "overall corruption in management".

Of the 476 passengers and crew on board the Sewol, 339 were children and teachers on a high school outing to the holiday island of Jeju. Only 174 people have been rescued and the remainder are presumed to have drowned.

The confirmed death toll on Wednesday was 150.

South Korean prosecutors and agencies tend to adopt a blanket approach in raids, rather than targeting specific lines of inquiry.

They raided the home of one of Yoo's sons on Wednesday, but found that he was away and the door was locked and they could not enter the house. They also raided an office in the premises of a branch of a church that Yoo founded.

Financial regulators are also investigating whether the wider conglomerate group illegally used overseas borrowings.

No one from the family or the businesses they own was available for comment.

The finances of Chonghaejin and its complex share structure have come into the spotlight after the ferry disaster, which has shocked South Korea. Yoo was jailed for fraud for four years in the early 1990s.

There is no suggestion that the past financial difficulties in any way contributed to the ferry sinking. Yoo's conviction for fraud in 1992 showed that funds from members of the church he founded, the Evangelical Baptist Church of Korea, were used in his businesses.

Around 1976, Yoo acquired a financially troubled trading company called Samwo Trading in a bid to create jobs for church members and increase their wealth, the transcript of the court case finding said.

The company became deeply integrated with the church. Many of its church members were equity stakeholders of the company and some were even hired by the company, while church assets including its main building were offered as collateral to secure Samwo's finance, it said.

In 1982, when Samwo's cash requirement was at its height, a colluding employee of Yoo even urged its church members to borrow from their acquaintances to finance Yoo's business, the court findings said.

Yoo is not known to have a stake in Chonghaejin or to have any direct management control of the company.

Yoo's two sons, Yoo Dae-kyun and Yoo Hyuck-ki, have direct or indirect stakes in nine business affiliates that include the Sewol operator Chonghaejin, shipbuilder Chonhaiji and cosmetics firm Dapanda Co, through an investment vehicle I-One-I, according to data from South Korea's Financial Supervisory Service.


By Miyoung Kim

Maritime Reporter October 2014 Digital Edition
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