With Regard to ABCPs Sold in May
The police searched Hanwha Investment & Securities' head office on Oct. 26 on suspicion that it had sold asset-backed commercial papers (ABCPs) to investors in May this year without informing them of important matters.
The Seoul Metropolitan Police Department sent six investigators to the offices of the securities company on Yeouido Island in Seoul.
The police began the investigation after receiving a complaint from Hyundai Motor Securities Co. that it suffered damage due to Hanwha’s failure to disclose important matters when it sold ABCPs.
Hanwha and EBEST Investment & Securities Co. sold ABCPs worth 164.5 billion won that were backed by corporate bonds issued by China Energy Reserve & Chemicals Group Overseas Capital Company (CERCG Overseas Capital), a subsidiary of CERCG, a little known energy company in China.
CERCG Overseas Capital failed to pay the principal amount and accrued interest of the $350 million bond due on 11 May 2018. The default triggered cross-defaults on the ABCPs issued by Hanwha and EBEST.
In a parliamentary audit of the Financial Supervisory Services (FSS) on Oct. 12, FSS Governor Yoon Suk-heun said Hanwha and EBEST were to blame for the losses suffered by the nine investors.
The police plan to investigate whether Hanwha violated the relevant law in selling the ABCPs.