Sunken Ferry Owner’s Malpractice: Chonghaejin Marine Company under Suspicion of Offshore Tax Evasion | BusinessKorea

Tuesday, March 31, 2015

sewol ferry sinking.jpg

Only one part of the hull of the capsized Sewol Ferry remains above water on April 17.
Only one part of the hull of the capsized Sewol Ferry remains above water on April 17.
23 April 2014 - 1:52pm

The Public Prosecutors’ Office announced an investigation into former Semo Group CEO Yoo Byeong-eon, de facto owner of Chonghaejin Marine Company that ran the sunken Sewol ferry. It is going to launch an investigation into the owner’s property concealment, tax evasion, lobbying, embezzlement, and misappropriation allegations, with the entire nation being grief-stricken since the sinking of the ferry.

However, the investigation is not only motivated by the country’s deep anguish, but by a series of suspicions and testimonies that have come to the surface. These days, the former CEO’s and his family’s past asset accumulation is raising a lot of doubts. The combined value of the assets of their 30 or so subsidiaries in Korea amounts to 560 billion won (US$538 million), while about half of it is liabilities. In addition, the stocks and real estate of the family members are considered to be worth approximately 240 billion won (US$230.9 million).

It is also said that the family members have much more properties abroad than what they reported to the National Tax Service and the auditing authorities. The Public Prosecutors’ Office suspects that they concealed most of their wealth and were engaged in offshore tax evasion during the asset building process. Testimony has also come out supporting such allegations.

The investigation authorities are planning to look into the entire range of such suspicions, and the financial and taxation authorities are looking into their alleged malpractice in foreign exchange transactions. For instance, the Financial Supervisory Service is looking into the possibility of negligent reporting during their purchase of overseas assets such as luxury apartments in New York and Los Angeles. Similar suspicions have been raised against Chonghaejin Marine Company as well.

The former CEO is one of the masterminds of the Odaeyang scandal that broke out back in 1987, in which 32 cult members committed collective suicide. At that time, he was under suspicion of leading the cult and accumulating huge personal debts. The prosecutors’ office failed to prove the former, and he was jailed for only four years. The scandal led to the bankruptcy of the Semo Group in 1997, and people became less and less interested in his family and company before the recent sinking of the Sewol ferry.


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