Moneuel Scandal
Korean government officials said on August 2 that the Export-Import Bank of Korea (Korea Eximbank) will file a claim for damages against the Chinese importers, following US importers, in order to recover damages it suffered owing to the Moneual Incident.
The Korea Exim Bank executed a loan of 113.5 billion won to Moneual last September 2014
But the loan was a loan scam where Moneual exaggerated its export records to receive the loan. Moneual illegally received 3.4 trillion in loans from ten Korean banks by fabricating its export records. The banks failed to recover 54 billion won. The Korea Eximbank failed to recoup all of 113.5 billion won which the bank lost due to the scam.
Earlier, the Korea Exim Bank filed a compensation lawsuit against US importer for the same purpose. The bank filed a compensation claim amounting to US$40 million against two companies which traded with Moneual in the California Central District Court in March.
Observing the loaning process for Moneual, after selling products to importers, Moneual received export receivables and the bank purchased the export receivables. Export receivables are used in credit export transactions and are a kind of financial product which support export companies to prevent them from not exporting their products as they failed to receive money.
The point is that due to the characteristics of export receivables, export receivables have a “without recourse” condition. In plain words, in the case that an importer of Moneual’s products becomes unable to pay Moenual money, a financial institution that purchased export receivables cannot ask the exporter (Moneual) for a refund. The exporter which sold export receivables to banks, Moneual has no repayment responsibility.
If an exporter colludes with an importer and fabricate export records like Moneual, the exporter can receive unlimited loans from banks. Needless to say, banks is responsible for credit management such as conducting due diligence. But if a company sets its jaw and intends to deceive a bank like Moneual, the bank has no choice but to be swindled, Korean financial companies including the Korean Eximbank said.
The Korea Eximbank is filing a claim for compensation against Chinese importers following US importers after judging that importers also have responsibility to repay the money.
Banks which loaned to Moneual during the same period include Industrial the Bank of Korea, Korea Exchange Bank, Korea Development Bank(KDB), NH Nonghyup, Kookmin Bank, the National Federation of Fisheries Cooperatives. Woori Bank, one of the largest creditors, withdrew all of its loans from Moneual before the dark secrets of the loan scam were brought to light.
Other damaged banks have a keen interest in the progress of the Korea Exim Bank’s lawsuit. If the Korea Eximbank receives a judgment in favor of the bank, the other banks are highly likely to follow suit one after another.